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
      quarter ended March 31, 2007





 ̈ TRANSITION
      REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 for
      the
      transition period from _______ to _______





Commission
      file number 000-32231









**WINSONIC
      DIGITAL MEDIA GROUP, LTD.**


(Name
      of small business issuer in its charter)





Nevada
            
            52-2236253(State
                or other jurisdiction of incorporation or organization)
            
            (I.R.S.
                Employer Identification No.)





101
                Marietta Street, Suite 2600Atlanta,
                Georgia
              (Address
                of principal executive offices)
            
            30303
              (Zip
                Code)





Issuer’s
      telephone number (404) 230-5705





(not
      applicable)


(former
      name, former address, 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 past 90 days. Yes  ̈ No x





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





The
      issuer had 49,578,057 shares of common stock outstanding as of June 27,
      2007 .









**Quarterly
      Report on Form 10-QSB**


**Quarter
      Ended March 31, 2007**





**Table
      of Contents**




PagePART
                I - FINANCIAL INFORMATION
            2Item
                1. Financial Statements:Balance
                Sheets as of March 31, 2007 (Unaudited) and December 31, 2006 (Audited)
            3Statements
                of Operations for Three Months Ended March 31, 2007 and 2006 and
                from
                September 10, 2002 (Inception) to March 31, 2007 (Unaudited)
            4Statements
                of Cash Flows for the Three Months Ended March 31, 2007 and 2006
                and from
                September 10, 2002 (Inception) to March 31, 2007 (Unaudited)
            5Statement
                of Stockholder's Deficit (Unaudited)
            6Notes
                to the Unaudited Condensed Financial Statements
            12Item
                2. Management’s Discussion and Analysis or Plan of Operation
            34Item
                3. Controls and Procedures
            44PART
                II - OTHER INFORMATIONItem
                1. Legal Proceedings
            45Item
                2. Unregistered Sales of Equity Securities and Use of Proceeds
            45Item
                3. Defaults Upon Senior Securities
            45Item
                4. Submission of Matters to a Vote of Security Holders
            45Item
                6. Exhibits
            45SIGNATURES
            47EXHIBIT
                INDEX




2


**PART
      I - FINANCIAL INFORMATION**





**Item
      1. Financial Statements.**





WINSONIC
      DIGITAL MEDIA GROUP, LTD.


(A
      DEVELOPMENT STAGE COMPANY)


**BALANCE
      SHEETS**


AS
      OF MARCH 31, 2007 (UNAUDITED) & DECEMBER 31, 2006 (AUDITED)


**Unaudited**
              **3/31/2007**
            
            **Audited**
              **12/31/2006****ASSETS**ASSETS:Cash
            
            $
            -
            
            $
            3,506Accounts
                receivable
            
            
            496,347
            
            
            464,612Prepaid
                expense
            
            
            116,679
            
            
            67,667Inventory
            
            
            4,236
            
            
            5,387Construction
                in process
            
            
            228,957
            
            
            254,640**Total
                current assets**
            
            
            **846,219**
            
            
            **795,812**Fixed
                assets:Computer
                equipment
            
            
            1,116,277
            
            
            1,114,994Infrastructure
            
            
            158,400
            
            
            158,400Software
            
            
            101,775
            
            
            89,970Furniture
                & fixtures
            
            
            87,478
            
            
            84,503Automobiles
            
            
            74,631
            
            
            74,631Equipment
                and tools
            
            
            41,960
            
            
            44,935Less:
                accumulated depreciation
            
            
            (820,354
            )
            
            (784,318
            )**Total
                fixed assets**
            
            
            **760,167**
            
            
            **783,115**Goodwill
            
            
            984,291
            
            
            984,291Other
                assets
            
            
            27,500
            
            
            25,000**TOTAL
                ASSETS**
            
            **$**
            **2,618,177**
            
            **$**
            **2,588,218**




**LIABILITIES
                AND STOCKHOLDERS'
                DEFICIT**


LIABILITIES:Current
                liabilities:Accounts
                payable and accrued expenses
            
            $
            3,065,311
            
            $
            2,859,371Bank
                overdraft
            
            
            160,251
            
            
            -Billings
                on construction in process
            
            
            414,767
            
            
            489,261Accrued
                payroll and related taxes
            
            
            3,038,988
            
            
            2,138,152Legal
                settlement liabilities
            
            
            775,000
            
            
            775,000Loans
                payable
            
            
            389,932
            
            
            347,743Loans
                payable -related party
            
            
            664,909
            
            
            414,555Derivative
                liability related to convertible debentures
            
            
            145,807
            
            
            339,450Warrant
                liability related to convertible debentures
            
            
            112,967
            
            
            300,420Convertible
                debentures
            
            
            260,588
            
            
            257,469Share
                notes, net of debt discount totaling $683,083 and $794,784,
                respectively
            
            
            824,373
            
            
            507,524Current
                portion of long term liabilities
            
            
            90,339
            
            
            90,197**Total
                current liabilities**
            
            
            **9,943,232**
            
            
            **8,519,142****Long
                term debt**
            
            
            **41,506**
            
            
            **44,822****TOTAL
                LIABILITIES**
            
            
            **9,984,738**
            
            
            **8,563,964**Stockholders'
                deficit:Preferred
                stock, $0.001 par value, 5,000,000 shares authorized, zero shares
                issued
                and outstanding at March 31, 2007 and December 31, 2006.
            
            
            -
            
            
            -Common
                stock, $0.001 par value, 50,000,000 shares authorized, 49,578,057
                shares
                issued and outstanding at March 31, 2007 and December 31,
                2006.
            
            
            49,578
            
            
            49,578Additional
                paid-in capital
            
            
            14,399,695
            
            
            13,609,264Common
                stock advance for future services
            
            
            (24,500
            )
            
            (48,175
            )Common
                stock payable
            
            
            2,216,809
            
            
            1,107,426Accumulated
                deficit during development stage
            
            
            (24,008,143
            )
            
            (20,693,839
            )**Total
                stockholders' deficit**
            
            
            (7,366,561
            )
            
            (5,975,746
            )**TOTAL
                LIABILITIES AND STOCKHOLDERS' DEFICIT**
            
            **$**
            **2,618,177**
            
            **$**
            **2,588,218**




*The
      accompanying notes to the financial statements should be*


*read
      in conjunction with these Balance Sheets.*


3


WINSONIC
      DIGITAL MEDIA GROUP, LTD.


(A
      DEVELOPMENT STAGE COMPANY)


**STATEMENTS
      OF OPERATIONS**


FOR
      THE THREE MONTHS ENDED MARCH 31, 2007 & 2006


AND
      FROM SEPTEMBER 10, 2002 (INCEPTION) TO


MARCH
      31, 2007


(UNAUDITED)





**For
                the three months ended**
              **March
                31,**
            
            **September
                10, 2002****(Inception)
                to****2007**
            
            **2006**
            
            **March
                31, 2007**REVENUE
            
            $
            654,514
            
            $
            -
            
            $
            1,471,820COST
                OF GOODS SOLD
            
            
            499,657
            
            
            -
            
            
            2,147,556GROSS
                PROFIT
            
            
            154,857
            
            
            -
            
            
            (675,736
            )EXPENSES:Selling,
                general and administrative
            
            
            497,206
            
            
            215,720
            
            
            6,407,358Payroll
                expense
            
            
            1,229,603
            
            
            291,571
            
            
            3,294,699Payroll
                expense - related party
            
            
            643,994
            
            
            211,917
            
            
            4,547,152Consulting
                Services - related party
            
            
            2,000
            
            
            -
            
            
            2,425,297Depreciation
                and amortization expense
            
            
            36,036
            
            
            36,818
            
            
            1,094,333Total
                expenses
            
            
            2,408,839
            
            
            756,026
            
            
            17,768,839OPERATING
                LOSS
            
            
            (2,253,982
            )
            
            (756,026
            )
            
            (18,444,575
            )OTHER
                INCOME/ (EXPENSES):Interest
                expense
            
            
            (1,396,063
            )
            
            (19,776
            )
            
            (4,535,246
            )Interest
                expense - related party
            
            
            (45,355
            )
            
            (17,283
            )
            
            (339,520
            )Legal
                Settlement Costs
            
            
            -
            
            
            (5,000
            )
            
            (1,218,000
            )Unrealized
                gain (loss) on adjustment of derivative and warrant liability to
                fair
                value of underlying securities
            
            
            381,096
            
            
            (595,825
            )
            
            408,524Interest
                income
            
            
            -
            
            
            211
            
            
            730Other
                income
            
            
            -
            
            
            -
            
            
            119,944Total
                other income/ (expenses)
            
            
            (1,060,322
            )
            
            (637,673
            )
            
            (5,563,568
            )NET
                LOSS BEFORE PROVISION FOR INCOME TAXES
            
            
            (3,314,304
            )
            
            (1,393,699
            )
            
            (24,008,143
            )PROVISION
                FOR INCOME TAXES
            
            
            -
            
            
            -
            
            
            -**NET
                LOSS**
            
            **$**
            (3,314,304
            )
            **$**
            (1,393,699
            )
            **$**
            (24,008,143
            )Basic
                weighted average number of common shares outstanding
            
            
            49,578,057
            
            
            40,654,556Net
                loss per basic and diluted common share
            
            $
            (0.07
            )
            $
            (0.03
            )





*The
      accompanying notes to the financial statements should be*


*read
      in conjunction with these Statements of Operations.*




4




WINSONIC
      DIGITAL MEDIA GROUP, LTD.


(A
      DEVELOPMENT STAGE COMPANY)


**STATEMENTS
      OF CASH FLOWS**


FOR
      THE THREE MONTHS


ENDED
      MARCH 31, 2007 & 2006


AND
      FROM SEPTEMBER 10, 2002 (INCEPTION) TO


MARCH
      31, 2007


(UNAUDITED)








**September
                10,****For
                the three months ended**
            
            **2002****(Inception)****March
                31,**
            
            **to****2007**
            
            **2006**
            
            **March
                31, 2007****CASH
                FLOWS FROM OPERATING ACTIVITIES:**Net
                loss
            
            **$**
            (3,314,304
            )
            $
            (1,393,699
            )
            $
            (24,008,143
            )Adjustments
                to reconcile net loss to net cash used in operating activities:Depreciation
            
            
            36,036
            
            
            36,818
            
            
            1,094,333Accretion
                of principal and interest related to convertible debentures
            
            
            308,148
            
            
            18,391
            
            
            2,226,083Unrealized
                gain on adjustment of derivative and warrant   liability to fair
                value of underlying securities
            
            
            (381,096
            )
            
            595,825
            
            
            (408,524
            )Stock
                based compensation
            
            
            610,931
            
            
            115,984
            
            
            5,007,565Operating
                expenses paid with stock, options and warrants
            
            
            -
            
            
            -
            
            
            1,036,822Operating
                expenses paid by note payable
            
            
            -
            
            
            -
            
            
            60,000Interest
                expense paid with stock
            
            
            -
            
            
            -
            
            
            185,621Financing
                costs paid with stock payable
            
            
            1,109,383
            
            
            -
            
            
            1,109,383Amortization
                of common stock advances for future services
            
            
            23,675
            
            
            -
            
            
            23,675Interest
                accrued and added to notes
            
            
            23,937
            
            
            -
            
            
            203,498Forgiveness
                of accrued interest - Digital Services International, Inc.
            
            
            -
            
            
            -
            
            
            152,592Change
                in operating assets and liabilities:Increase
                in accounts receivable
            
            
            (31,735
            )
            
            -
            
            
            (305,564
            )Increase
                in prepaid expenses
            
            
            (49,012
            )
            
            (17,247
            )
            
            (114,359
            )Decrease
                in inventory
            
            
            1,151
            
            
            -
            
            
            1,151Decrease
                (increase) in construction in process
            
            
            25,683
            
            
            -
            
            
            (198,993
            )Increase
                in other assets
            
            
            (2,500
            )
            
            -
            
            
            (27,500
            )Increase
                in advances to related company
            
            
            -
            
            
            (39,350
            )
            
            -Increase
                in accounts payable and accrued expenses
            
            
            205,940
            
            
            147,310
            
            
            3,278,627(Decrease)
                increase in billings on construction in process
            
            
            (74,494
            )
            
            -
            
            
            272,446Increase
                in accrued payroll and related taxes
            
            
            900,836
            
            
            226,687
            
            
            4,091,344Increase
                in legal settlement liabilities
            
            
            -
            
            
            5,000
            
            
            1,225,000**Net
                cash used in operating activities**
            
            
            (286,919
            )
            
            (304,281
            **)**
            
            (4,774,441
            )**CASH
                FLOWS FROM INVESTING ACTIVITIES:**Cash
                acquired through business acquisitions
            
            
            -
            
            
            -
            
            
            16,670Purchase
                of fixed assets
            
            
            (13,088
            )
            
            (131,947
            )
            
            (1,461,552
            )**Net
                cash used in investing activities**
            
            
            (13,088
            )
            
            (131,947
            **)**
            
            (1,444,882
            )**CASH
                FLOWS FROM FINANCING ACTIVITIES:**Increase
                (decrease) in bank overdraft
            
            
            160,251
            
            
            (14,468
            )
            
            160,251Proceeds
                from loans payable
            
            
            40,000
            
            
            17,867
            
            
            475,251Payment
                on loans payable
            
            
            -
            
            
            -
            
            
            (23,335
            )Proceeds
                from loan payable - related party
            
            
            242,530
            
            
            16,478
            
            
            1,181,241Payment
                on note payable - related party
            
            
            -
            
            
            (28,000
            )
            
            (277,970
            )Payment
                on note payable
            
            
            (5,278
            )
            
            -
            
            
            (5,278
            )Proceeds
                from share notes
            
            
            179,500
            
            
            -
            
            
            1,826,315Proceeds
                from convertible debentures
            
            
            -
            
            
            504,200
            
            
            1,203,250Proceeds
                from common stock issued
            
            
            -
            
            
            -
            
            
            2,000,100**Net
                cash provided by financing activities**
            
            
            **617,003**
            
            
            **496,077**
            
            
            **6,539,825****NET
                (DECREASE) INCREASE IN CASH**
            
            
            (3,506
            )
            
            ******59,849**
            
            
            **-********CASH,
                BEGINNING OF PERIOD**
            
            
            **3,506**
            
            
            **-**
            
            
            **-********CASH,
                END OF PERIOD**
            
            **$**
            **-**
            
            **$**
            **59,849**
            
            **$**
            **-****SUPPLEMENTARY
                INFORMATION:**Interest
                paid
            
            $
            2,104
            
            $
            24,354
            
            $
            49,228Income
                taxes paid
            
            $
            -
            
            $
            -
            
            $
            -**NON-CASH
                ACTIVITIES:**Issuance
                of common stock for common stock payable
            
            $
            -
            
            $
            -
            
            $
            820,000Forgiveness
                of salary payable to officer
            
            $
            -
            
            $
            -
            
            $
            702,644Forgiveness
                of payroll tax for officer
            
            $
            -
            
            $
            -
            
            $
            20,655Issuance
                of common stock as deposit on lease obligation
            
            $
            -
            
            $
            -
            
            $
            250,000Issuance
                of common stock and stock payable as payment for subsidiaries acquired
            
            $
            -
            
            $
            -
            
            $
            939,528Issuance
                of common stock as payment on notes payable - related party
            
            $
            -
            
            $
            -
            
            $
            311,000Issuance
                of common stock and warrants for salary payable
            
            $
            -
            
            $
            -
            
            $
            515,679Issuance
                of common stock upon conversion of debentures
            
            $
            -
            
            $
            -
            
            $
            1,641,184Adjustment
                to paid in capital for Accumulated Depreciation
            
            $
            -
            
            $
            -
            
            $
            281,481Issuance
                of common stock for legal settlement
            
            $
            -
            
            $
            450,000
            
            $
            450,000





*The
      accompanying notes to financial statements should be*


*read
      in conjunction with these Statements of Cash Flows.*




5




WINSONIC
      DIGITAL MEDIA GROUP, LTD.


(A
      DEVELOPMENT STAGE COMPANY)


**STATEMENT
      OF STOCKHOLDERS' DEFICIT**


(UNAUDITED)












Common
            
            
            AccumulatedStock
            
            
            DeficitAdditional
            
            
            Common
            
            
            Advance
                for
            
            
            During
            
            
            TotalPreferred
                Stock
            
            
            Common
                Stock
            
            
            Paid-in
            
            
            Stock
            
            
            Future
            
            
            Development
            
            
            Stockholders'Shares
            
            
            Amount
            
            
            Shares
            
            
            Amount
            
            
            Capital
            
            
            Payable
            
            
            Services
            
            
            Stage
            
            
            Deficit**Balance,
                September 10, 2002 (Inception) - No Par Stock**
            
            
            **10,000,000**
            
            $
            -
            
            
            **10,000,000**
            
            **$**
            **-**
            
            **$**
            **-**
            
            **$**
            **-**
            
            **$**
            **-**
            
            **$**
            **-**
            
            **$**
            **-**Reverse
                Merger - Reacquisition of all outstanding shares of Winsonic Acquisition
                Sub, Inc. - No Par Stock (Recasted to inception)
            
            
            (10,000,000
            )
            
            -
            
            
            (10,000,000
            )
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -Issuance
                of common stock to founder for services
            
            
            -
            
            
            -
            
            
            6,004,200
            
            
            6,004
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            6,004**Balance,
                September 10, 2002 (Recasted)**
            
            
            **-**
            
            $
            -
            
            
            **6,004,200**
            
            **$**
            **6,004**
            
            **$**
            **-**
            
            **$**
            **-**
            
            **$**
            **-**
            
            **$**
            **-**
            
            **$**
            **6,004**Issuance
                of stock warrants (December 26, 2002)
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            990,600
            
            
            -
            
            
            -
            
            
            990,600Net
                loss
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            (647,417
            )
            
            (647,417
            )**Balance,
                December 31, 2002 (Restated)**
            
            
            **-**
            
            $
            -
            
            
            **6,004,200**
            
            **$**
            **6,004**
            
            **$**
            **-**
            
            **$**
            **990,600**
            
            **$**
            -
            ****
            **$**
            **(647,417**
            **)**
            **$**
            **349,187**Issuance
                of stock warrants
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            1,009,500
            
            
            -
            
            
            -
            
            
            1,009,500Net
                loss
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            (1,905,884
            )
            
            (1,905,884
            )**Balance,
                December 31, 2003 (Restated)**
            
            
            **-**
            
            $
            -
            
            
            **6,004,200**
            
            **$**
            **6,004**
            
            **$**
            **-**
            
            **$**
            **2,000,100**
            
            **$**
            **-**
            ****
            **$**
            **(2,553,301**
            **)**
            **$**
            **(547,197**
            **)**Issuance
                of common stock for services, $0.75 average price per
                share
            
            
            -
            
            
            -
            
            
            1,980,946
            
            
            1,981
            
            
            1,488,328
            
            
            -
            
            
            -
            
            
            -
            
            
            1,490,309Issuance
                of common stock in satisfaction of debts of $331,000 and deemed interest
                of $242,500
            
            
            -
            
            
            -
            
            
            758,000
            
            
            758
            
            
            572,742
            
            
            -
            
            
            -
            
            
            -
            
            
            573,500




6




Issuance
                of common stock, $1.00 price per share
            
            
            -
            
            
            -
            
            
            921,600
            
            
            922
            
            
            920,678
            
            
            (921,600
            )
            
            **-**
            
            
            -
            
            
            -Conversion
                of common stock payable to loan payable
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            60,000
            
            
            (258,500
            )
            
            **-**
            
            
            -
            
            
            (198,500
            )Issuance
                of common stock related to reverse-merger
            
            
            -
            
            
            -
            
            
            23,956,138
            
            
            23,956
            
            
            (123,487
            )
            
            -
            
            
            -
            
            
            -
            
            
            (99,531
            )Net
                loss
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            (5,790,794
            )
            
            (5,790,794
            )**Balance,
                December 31, 2004 (Restated)**
            
            
            **-**
            
            $
            -
            
            
            **33,620,884**
            
            **$**
            **33,621**
            
            **$**
            **2,918,261**
            
            **$**
            **820,000**
            
            **$**
            **-**
            ****
            **$**
            **(8,344,095**
            **)**
            **$**
            **(4,572,213**
            **)**Issuance
                of common stock for services, $1.30 average price per
                share
            
            
            **-**
            
            
            **-**
            
            
            94,615
            
            
            95
            
            
            122,905
            
            
            **-**
            
            
            **-**
            
            
            **-**
            
            
            123,000Issuance
                of common stock for services, $0.82 average price per
                share
            
            
            **-**
            
            
            **-**
            
            
            91,463
            
            
            91
            
            
            74,909
            
            
            **-**
            
            
            **-**
            
            
            **-**
            
            
            75,000Issuance
                of common stock for services, $0.68 average price per
                share
            
            
            **-**
            
            
            **-**
            
            
            66,667
            
            
            67
            
            
            45,267
            
            
            **-**
            
            
            **-**
            
            
            **-**
            
            
            45,334Issuance
                of common stock for equity investment in NATVN
            
            
            **-**
            
            
            **-**
            
            
            1,670,000
            
            
            1,670
            
            
            (1,670
            )
            
            **-**
            
            
            **-**
            
            
            **-**
            
            
            -Issuance
                of common stock founder to relieve related party note payable due
                him, at
                $0.33 average price per share
            
            
            **-**
            
            
            **-**
            
            
            700,000
            
            
            700
            
            
            230,300
            
            
            **-**
            
            
            **-**
            
            
            **-**
            
            
            231,000Issuance
                of common stock to founder for services, $0.33 average price per
                share
            
            
            **-**
            
            
            **-**
            
            
            500,000
            
            
            500
            
            
            164,500
            
            
            **-**
            
            
            **-**
            
            
            **-**
            
            
            165,000Issuance
                of common stock for services, $0.70 average price per
                share
            
            
            **-**
            
            
            **-**
            
            
            900,000
            
            
            900
            
            
            629,100
            
            
            **-**
            
            
            **-**
            
            
            **-**
            
            
            630,000Issuance
                of common stock for services, $0.48 average price per
                share
            
            
            **-**
            
            
            **-**
            
            
            225,000
            
            
            225
            
            
            107,775
            
            
            **-**
            
            
            **-**
            
            
            **-**
            
            
            108,000




7




Issuance
                of common stock in satisfaction of convertible debentures debts of
                $118,000, at $0.20 average price per share
            
            
            **-**
            
            
            -
            
            
            590,000
            
            
            590
            
            
            117,410
            
            
            **-**
            
            
            **-**
            
            
            **-**
            
            
            118,000Issuance
                of common stock as lease deposit, $0.27 average price per
                share
            
            
            **-**
            
            
            **-**
            
            
            925,927
            
            
            926
            
            
            249,074
            
            
            (250,000
            )
            
            **-**
            
            
            **-**
            
            
            -Issuance
                of common stock for common stock payable, $1.00 average price per
                share
            
            
            **-**
            
            
            **-**
            
            
            820,000
            
            
            820
            
            
            819,180
            
            
            (820,000
            )
            
            **-**
            
            
            **-**
            
            
            -Return
                of pledged assets, reversal of accumulated depreciation, and forgiveness
                of debt - related party
            
            
            **-**
            
            
            **-**
            
            
            **-**
            
            
            **-**
            
            
            281,481
            
            
            **-**
            
            
            **-**
            
            
            **-**
            
            
            281,481Forgiveness
                of interest expense - related party
            
            
            **-**
            
            
            **-**
            
            
            **-**
            
            
            **-**
            
            
            152,592
            
            
            **-**
            
            
            **-**
            
            
            **-**
            
            
            152,592Vested
                common stock award for officer
            
            
            **-**
            
            
            **-**
            
            
            **-**
            
            
            **-**
            
            
            185,000
            
            
            **-**
            
            
            **-**
            
            
            **-**
            
            
            185,000Common
                stock payable to officer for separation agreement, $0.33 average
                price per
                share
            
            
            **-**
            
            
            **-**
            
            
            **-**
            
            
            **-**
            
            
            -
            
            
            270,000
            
            
            **-**
            
            
            **-**
            
            
            270,000Record
                forgiveness of accrued salary for officer per separation
                agreement
            
            
            **-**
            
            
            **-**
            
            
            **-**
            
            
            **-**
            
            
            270,000
            
            
            **-**
            
            
            **-**
            
            
            **-**
            
            
            270,000Record
                adjustment for accrued payroll taxes for officer per separation
                agreement
            
            
            **-**
            
            
            **-**
            
            
            **-**
            
            
            **-**
            
            
            20,655
            
            
            **-**
            
            
            **-**
            
            
            **-**
            
            
            20,655Vested
                stock options granted to officer for separation agreement
            
            
            **-**
            
            
            **-**
            
            
            **-**
            
            
            
            
            
            131,068
            
            
            -
            
            
            -
            
            
            -
            
            
            131,068Net
                loss
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            (4,105,613
            )
            
            (4,105,613
            )**Balance,
                December 31, 2005**
            
            
            **-**
            
            $
            -
            
            
            **40,204,556**
            
            **$**
            **40,205**
            
            **$**
            **6,517,807**
            
            **$**
            **20,000**
            
            **$**
            **-**
            ****
            **$**
            **(12,449,708**
            **)**
            **$**
            **(5,871,696**
            **)**




8




Issuance
                of common stock in accordance with mutual general release and settlement
                agreement at $0.50 average price per share
            
            **-**
            **-**
            
            900,000
            
            
            900
            
            
            449,100
            
            
            -
            
            
            -
            
            
            -
            
            
            450,000Issuance
                of common stock in conversion of shareholder note payable, 0.20 per
                share
            
            **-**
            **-**
            
            3,184,899
            
            
            3,185
            
            
            633,795
            
            
            -
            
            
            -
            
            
            -
            
            
            636,980Shares
                issued to employee upon exercise of warrant at $0.01 per share
            
            **-**
            **-**
            
            500,000
            
            
            500
            
            
            4,500
            
            
            -
            
            
            -
            
            
            -
            
            
            5,000Issuance
                of stock in acquisition of subsidiary
            
            **-**
            **-**
            
            411,956
            
            
            412
            
            
            168,490
            
            
            -
            
            
            -
            
            
            -
            
            
            168,902Issuance
                of stock for services to employees
            
            **-**
            **-**
            
            750,000
            
            
            750
            
            
            299,250
            
            
            -
            
            
            -
            
            
            -
            
            
            300,000Issuance
                of common stock subject to conversion of option for services at $0.39
                average price per share
            
            **-**
            **-**
            
            82,051
            
            
            82
            
            
            31,918
            
            
            -
            
            
            -
            
            
            -
            
            
            32,000Incentive
                stock options for employees
            
            **-**
            **-**
            
            -
            
            
            -
            
            
            1,167,419
            
            
            -
            
            
            -
            
            
            -
            
            
            1,167,419Discount
                allocated to warrant on convertible debt
            
            **-**
            **-**
            
            -
            
            
            -
            
            
            1,248,688
            
            
            -
            
            
            -
            
            
            -
            
            
            1,248,688Initial
                fair value of embedded derivative related to convertible
                debt
            
            **-**
            **-**
            
            -
            
            
            -
            
            
            605,479
            
            
            -
            
            
            -
            
            
            -
            
            
            605,479Fair
                market value of options to purchase shares of common stock at $0.01
                to
                $0.53 per share, issued to consultants for financial consulting
                services
            
            -
            -
            
            -
            
            
            -
            
            
            197,847
            
            
            -
            
            
            -
            
            
            -
            
            
            197,847To
                record forgiveness of accrued salary for officer
            
            **-**
            **-**
            
            -
            
            
            -
            
            
            399,919
            
            
            -
            
            
            -
            
            
            -
            
            
            399,919Issuance
                of stock to shareholder in repayment of funds loaned to Company at
                $0.53
                per share
            
            **-**
            **-**
            
            489,850
            
            
            490
            
            
            259,129
            
            
            -
            
            
            -
            
            
            -
            
            
            259,619




9




To
                record forgiveness of debt by related party
            
            
            **-**
            
            
            **-**
            
            
            
            
            
            
            
            
            6,000
            
            
            -
            
            
            -
            
            
            -
            
            
            6,000Issuance
                of shares upon exercise of convertible notes at $0.40 per
                share
            
            
            **-**
            
            
            **-**
            
            
            2,153,010
            
            
            2,153
            
            
            859,051
            
            
            -
            
            
            -
            
            
            -
            
            
            861,204Issuance
                of common stock subject to conversion of option for services at $0.65
                per
                share
            
            
            **-**
            
            
            **-**
            
            
            89,231
            
            
            89
            
            
            57,911
            
            
            -
            
            
            -
            
            
            -
            
            
            58,000Fair
                market value of shares issued to financial consultant for services
                at fair
                market value ranging from $0.01 to $0.53 per share
            
            
            **-**
            
            
            **-**
            
            
            410,000
            
            
            410
            
            
            160,940
            
            
            -
            
            
            (42,875
            )
            
            -
            
            
            118,475Shares
                issued upon exercise of warrant by consultant at $0.01 per
                share
            
            
            -
            
            
            -
            
            
            300,000
            
            
            300
            
            
            2,700
            
            
            -
            
            
            -
            
            
            -
            
            
            3,000Shares
                issued as repayment of loans valued at $0.40 per share
            
            
            -
            
            
            -
            
            
            62,504
            
            
            62
            
            
            24,940
            
            
            -
            
            
            -
            
            
            -
            
            
            25,002Discount
                of beneficial conversion feature on convertible notes
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            97,475
            
            
            -
            
            
            -
            
            
            -
            
            
            97,475Forgiveness
                of salary by related party
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            32,725
            
            
            -
            
            
            -
            
            
            -
            
            
            32,725Fair
                market value of warrants issued to employees for services
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            324,058
            
            
            -
            
            
            -
            
            
            -
            
            
            324,058Fair
                market value of warrants issued as interest payment for cash
                advance
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            44,163
            
            
            -
            
            
            -
            
            
            -
            
            
            44,163Fair
                market value of shares issued for consulting services at $0.40 per
                share
            
            
            -
            
            
            -
            
            
            40,000
            
            
            40
            
            
            15,960
            
            
            -
            
            
            -
            
            
            -
            
            
            16,000Stock
                to be issued in acquisition of subsidiary
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            630,626
            
            
            -
            
            
            -
            
            
            630,626Stock
                to be issued for consulting services
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            316,800
            
            
            (5,300
            )
            
            -
            
            
            311,500




10




Stock
                to be issued in acquisition of subsidiary
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            140,000
            
            
            -
            
            
            -
            
            
            140,000Net
                loss
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            (8,244,131
            )
            
            (8,244,131
            )**Balance,
                December 31, 2006**
            
            
            **-**
            
            $
            -
            
            
            **49,578,057**
            
            **$**
            **49,578**
            
            **$**
            **13,609,264**
            
            **$**
            **1,107,426**
            
            **$**
            **(48,175**
            **)**
            **$**
            **(20,693,839**
            **)**
            **$**
            **(5,975,746**
            **)**Incentive
                stock options for employees
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            610,931
            
            
            -
            
            
            -
            
            
            -
            
            
            610,931Stock
                payable for financing costs
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            1,109,383
            
            
            -
            
            
            -
            
            
            1,109,383Amortization
                of common stock advance for future services
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            23,675
            
            
            -
            
            
            23,675Discount
                allocated to warrant on convertible debt
            
            
            **-**
            
            
            **-**
            
            
            -
            
            
            -
            
            
            109,542
            
            
            -
            
            
            -
            
            
            -
            
            
            109,542Initial
                fair value of embedded derivative related to convertible
                debt
            
            
            **-**
            
            
            **-**
            
            
            -
            
            
            -
            
            
            69,958
            
            
            -
            
            
            -
            
            
            -
            
            
            69,958Net
                loss
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            (3,314,304
            )
            
            (3,314,304
            )**Balance,
                March 31, 2007**
            
            
            **-**
            
            $
            -
            
            
            **49,578,057**
            
            **$**
            **49,578**
            
            **$**
            **14,399,695**
            
            **$**
            **2,216,809**
            
            **$**
            **(24,500**
            **)**
            **$**
            **(24,008,143**
            **)**
            **$**
            **(7,366,561**
            **)**





*The
      accompanying notes to the financial statements should be*


*read
      in conjunction with this Statement of Stockholders’ Deficit.*




11





**WINSONIC
      DIGITAL MEDIA GROUP, LTD**





**NOTES
      TO THE UNAUDITED CONDENSED FINANCIAL STATEMENTS**





**NOTE
      1 -****BASIS
      OF PRESENTATION**





Winsonic
      Digital Media Group, Ltd. (the “Company”) is a media
      distribution solutions company which historically has focused on distributing
      digital content to the public and providing high-speed, high-quality, low-cost
      solutions that enable users to view, interact, and listen to all types of audio,
      online video and digital TV in full screen format.





During
      2006, the Company acquired a 49% equity interest in Winsonic Diversity, LLC
      and
      completed the acquisitions of Automated Interiors, LLC (“AI”), Tytess Design and
      Development, Inc. (“Tytess”), and DV Photo Shop, Ltd. (“the “Store”). These
      actions represent a series of strategic investments in new markets and new
      services that expand the offerings of the Company while complimenting our
      existing business. Together with our existing digital distribution platform,
      comprised of the Winsonic Digital Cable Systems Network, Ltd. network, we are
      now able to deliver customized, bundled solutions to a wider range of customers
      that include custom wiring, centrally-located utilities, project management,
      telephone, internet, audio/video and digital TV.





The
      accompanying financial statements have been prepared in accordance with the
      Statement of Financial Accounting Standards (“SFAS”) No. 7 “Accounting and
      Reporting by Development Stage Enterprises.” A development stage enterprise is
      one in which planned principal operations have not commenced; or if its
      operations have commenced, there has been no significant revenues derived
      therefrom. As of March 31, 2007, the Company has not fully commenced nor has
      it
      received significant revenues from its planned principal
      operations.





The
      accompanying consolidated financial statements have been prepared by the Company
      without audit. In the opinion of management, all adjustments (which include
      normal recurring adjustments) necessary to present fairly the financial
      position, results of operations and cash flows at March 31, 2007 and for all
      periods presented have been made.





Certain
      information and footnote disclosures normally included in financial statements
      prepared in accordance with generally accepted accounting principles in the
      United States of America have been condensed or omitted for purposes of filing
      interim financial statements with the Securities and Exchange Commission. It
      is
      suggested that these condensed financial statements be read in conjunction
      with
      the consolidated financial statements and notes thereto included in the
      Company’s audited financial statements for the year ended December 31, 2006 and
      the supplementary information filed in connection with the acquisition of AI,
      including audited December 31, 2005 financial statements of AI. The results
      of
      operations for the three month period ended March 31, 2007 are not necessarily
      indicative of the operating results for the full year.








**NOTE
      2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES**





**Principles
      of Consolidation:**





The
      attached consolidated financial statements include the accounts of the Company
      and its wholly owned subsidiaries. All significant inter-company transactions
      have been eliminated in consolidation. ****





**Definition
      of Fiscal Year:**





The
      Company’s fiscal year end is December 31.





**Cash
      and Cash Equivalents:**




12




Cash
      equivalents consist of highly liquid investments with maturities of three months
      or less when purchased. Cash and cash equivalents are on deposit with financial
      institutions without any restrictions.





**Concentration
      of Credit Risk:**





The
      Company maintains its cash and cash equivalents in bank accounts in three
      financial institutions. The Federal Deposit Insurance Corporation insures
      deposits up to $100,000 per account. As
      of
      March 31, 2007, the Company did not have any accounts with balances in excess
      of
      the insured balances. As
      of March 31, 2007, the Company had a bank overdraft of $160,251. As of December
      31, 2006, the Company had a balance in its cash accounts of $3,506. Currently
      cash management is handled by Company management. Typically, the cash balances
      are less than $100,000 per account.





**Accounts
      Receivable:**





Accounts
      receivable is uncollateralized customer obligations due under normal trade
      terms
      requiring payment within 30 days from the invoice date. The carrying amount
      of
      accounts receivable is reviewed for collectibility. Should management determine
      that collection is unlikely, an allowance that reflects management’s best
      estimate of the amounts that will not be collected will be provided. Management
      reviews each accounts receivable balance that exceeds 30 days from the invoice
      date and, based on an assessment of creditworthiness, estimates the portion,
      if
      any, of the balance that will not be collected. At March 31, 2007 and December
      31, 2006, there was no reserve for doubtful accounts.





**Fair
      Value of Financial Instruments**





SFAS
      No.
      107, “Disclosures About Fair Value of Financial Instruments,” requires the
      Company to disclose, when reasonably attainable, the fair market values of
      its
      assets and liabilities that are deemed to be financial instruments. The carrying
      amounts of the Company’s financial instruments approximate their fair value due
      to their short-term nature.




**Use
      of Estimates:**





The
      preparation of financial statements in conformity with generally accepted
      accounting principles requires management to make estimates and assumptions
      that
      affect the reported amounts of assets and liabilities and disclosures of
      contingent assets and liabilities at the date of the financial statements and
      the reported amounts of revenue and expense during the reported period. Actual
      results could differ from those estimates.





**Stock
      Based Compensation: Stock Options:**





The
      Company has a stock incentive plan that provides for stock-based employee
      compensation, including the granting of stock options to certain key employees
      and other individuals. For stock options and warrants issued as compensation
      and
      reported in periods beginning after December 15, 2005, the Company applies
      SFAS
      No. 123(R), “Share-Based Payment,” which requires the recognition of
      compensation cost based upon the fair value of stock options at the grant date
      (using option pricing models), and recognizing the cost over the period during
      which the services are provided (vesting period).





During
      the three months ended March 31, 2007, the Company granted options for 2,475,000
      shares of common stock to employees, and recorded a related compensation expense
      of $292,000 for the vested portion. The compensation expense is based on the
      fair market value of the options utilizing the Black-Scholes option pricing
      model. The Company’s Employee Stock Option activity for the three months ended
      March 31, 2007 is presented below:




13






**March
                31, 2007**
            
            **March
                31, 2006**Weighted
            
            
            
            
            
            WeightedAverage
            
            
            
            
            
            AverageExercise
            
            
            
            
            
            ExerciseOptions
            
            
            Price
            
            
            Options
            
            
            PriceOutstanding
                - Beginning of Period
            
            
            9,309,304
            
            $
            0.78
            
            
            4,000,000
            
            $
            1.00Granted
                or committed
            
            
            2,475,000
            
            
            0.69
            
            
            1,500,000
            
            
            1.00Exercised
            
            
            -
            
            
            -
            
            
            -
            
            
            -Cancelled
            
            
            (296,458
            )
            
            0.55
            
            
            -
            
            
            -Outstanding
                - End of Period
            
            
            11,487,846
            
            $
            0.69
            
            
            5,500,000
            
            $
            1.00Exercisable
                - End of Period
            
            
            7,009,033
            
            $
            0.79
            
            
            3,883,271
            
            $
            1.00





**Option
      Pricing Model:**





The
      Company has elected to utilize the Black-Scholes option valuation model in
      deriving fair market values for stock based compensation and embedded
      derivatives. The Black-Scholes option valuation model was developed for use
      in
      estimating the fair value of traded options that have no vesting restrictions
      and are fully transferable. In addition, option valuation models require the
      input of highly subjective assumptions including the expected stock price
      volatility. Since the Company’s employee stock options and embedded warrants
      have characteristics significantly different from those of traded options,
      and
      because changes in the subjective input assumptions can materially affect the
      fair value estimate, in management’s opinion, the existing models do not
      necessarily provide a reliable single measure of the fair value of its employee
      stock options.





In
      accordance with SFAS No. 123(R) titled "Share-based Payment," which was
      revised in 2004, the Company recognized the fair value of the
      options in the statement of operations on the
      date of grant.   Fair value was determined using
      the Black-Scholes option pricing model
      based on the following assumptions: risk free interest rate of
      4.5%; no dividend yield; and volatility factors of the expected market price
      of
      the Company’s stock of 185% to 205%; and weighted average expected life of the
      options of three years (for options issued at $1.00 per share strike price)
      and
      one and one-half years (for options issued at $0.01 per share strike
      price).  The determined fair value recognized in the three months ended
      March 31, 2007 was $610,931.





**Fixed
      Assets:**





Fixed
      assets are stated at cost. Expenditures that materially increase the life of
      the
      assets are capitalized. Ordinary maintenance and repairs are charged to expense
      as incurred. When assets are sold or otherwise disposed of, the cost and the
      related accumulated depreciation are removed from the accounts, and any
      resulting gain or loss is recognized at that time. Depreciation is computed
      primarily on the straight-line method for financial statement purposes over
      the
      following estimated useful lives:





Telecommunication
                Equipment
            15
                YearsFurniture
                & Fixtures
            7 YearsComputer
                Equipment
            5 YearsTransportation
                Equipment
            5 YearsSoftware
            3 Years





**Impairment
      of Long-Lived Assets:**





In
      accordance with SFAS No. 144, “Accounting for the Impairment or Disposal of
      Long-Lived Assets," long-lived assets, such as property and equipment and
      intangible assets subject to amortization, are reviewed for impairment whenever
      events or changes in circumstances indicate that the carrying amount of an
      asset
      group may not be recoverable. Recoverability of asset groups to be held and
      used
      is measured by a comparison of the carrying amount of an asset group to
      estimated undiscounted future cash flows expected to be generated by the asset
      group. If the carrying amount of an asset group exceeds its estimated future
      cash flows, an impairment charge is recognized for the amount by which the
      carrying amount of an asset group exceeds fair value of the asset group.




14




**Revenues
      and Expenses Recognition:**





Revenues
      for the Company will be recognized upon rendering services to customers. Costs
      and expenses are recognized during the period in which they are
      incurred.





Tytess,
      a subsidiary of the Company, has elected to recognize revenue on a percentage
      of
      contract completion method. This method requires Tytess to do progress billings
      based upon completion of preset milestones. Revenues and expenses for each
      milestone are recognized as each milestone has been completed.





AI,
      another subsidiary of the Company, has elected to recognize revenue on a
      completed contract method, due to the short duration of its contracts. The
      completed contract **** method
      requires AI to defer revenue and expense recognition until the contract has
      been
      substantially completed.





Revenues
      for the Store are recognized upon rendering services to customers. Costs and
      expenses are recognized during the period in which they are
      incurred.





**Advertising
      Costs:**





The
      Company expenses all costs of advertising as incurred. There were no material
      advertising costs incurred for the three months ended March 31, 2007 and 2006.





**Research
      and Development Costs:**





Research
      and development costs are charged to expenses as incurred. There were no
      material research and development costs incurred for the three months ended
      March 31, 2007 and 2006.




**Income
      Taxes:**





Income
      taxes are generally provided for the tax effects of transactions reported in
      the
      financial statements, and consist of taxes currently due plus deferred taxes
      related primarily to differences between the basis of fixed assets for financial
      and income tax reporting. The Company has no deferred tax assets and liabilities
      representing the future tax return consequences of those differences because,
      currently, the Company has no material temporary timing differences that give
      rise to these tax assets and liabilities. Currently there are no federal income
      taxes due.





**Recently
      Issued Accounting Pronouncements:**




In
      June
      2006, the FASB issued FASB Interpretation No. 48, *Accounting
      for Uncertainty in Income Taxes - an interpretation of FASB Statement
      109* (“FIN
      48”), which prescribes a recognition threshold and measurement attribute for the
      financial statement recognition and measurement of a tax position taken or
      expected to be taken in a tax return. Under FIN 48, the benefit of a tax
      position may be recognized only if it is more likely than not that the tax
      position will be sustained, based on the technical merits of the position,
      by a
      taxing authority having full knowledge of all relevant information. FIN 48
      became effective for fiscal years after December 31, 2006. The Company has
      adopted FIN 48 beginning in 2007 and it had no material impact on the Company’s
      financial statements.




15




In
      February 2007, the FASB issued SFAS 159, *The
      Fair Value Option for Financial Assets and Financial Liabilities, including
      an
      amendment of FASB Statement No. 115* (“SFAS
      159”) which permits entities to choose to measure eligible items at fair value
      at specified election dates. Unrealized gains and losses on items for which
      the
      fair value option has been elected will be reported in earnings at each
      subsequent reporting date. The following balance sheet items are within the
      scope of SFAS 159:




Recognized
      financial assets and financial liabilities unless a special exception applies




Firm
      commitments that would otherwise not be recognized at inception and that involve
      only financial instruments




Non-financial
      insurance contracts




Host
      financial instruments resulting from separation of an embedded non-financial
      derivative instrument from a non-financial hybrid instrument




SFAS
      159
      will be effective for fiscal years beginning after November 2007 with early
      adoption possible but subject to certain requirements. We do not plan early
      adoption and we do not expect a material impact on our financial statements
      from
      the eventual adoption of SFAS 159.




**Earnings
      (Loss) Per Share Calculations:**





Basic
      earnings (loss) per share exclude any dilutive effects of options, warrants
      and
      convertible securities. Basic earnings (loss) per share are computed using
      the
      weighted-average number of outstanding common stocks during the applicable
      period. Diluted earnings per share are computed using the weighted-average
      number of common and common stock equivalent shares outstanding during the
      period. Common stock equivalent shares are excluded from the computation if
      their effect is antidilutive. For all periods presented, the Company has
      sustained losses, which would make use of equivalent shares antidilutive and,
      as
      such, the calculation has not been included.





**NOTE
      3 - MERGERS AND ACQUISITIONS**





During
      the year ended December 31, 2006, the Company acquired three subsidiaries,
      which
      include purchases of Automated Interiors, LLC on April 18, 2006, Tyess Design
      and Development, Inc. on November 2, 2006 and DV Photo Shop on November 20,
      2006. The purchases were facilitated by the issuance or the promise to issue
      common stock of the Company, as follows:





Purchase
                Price
            
            Shares
                Issued
            
            Unissued
                Shares
            
            Other
                ConsiderationAutomated
                Interiors, LLC
            
            $
            168,902
            
            
            411,956
            
            
            -
            
            
            -Tytess
                Design and Development
            
            $
            630,626
            
            
            -
            
            
            1,146,593
            
            
            -DV
                Photo Shop
            
            $
            200,000
            
            
            -
            
            
            241,379
            
            $
            60,000
                (a
            )





(a)
            Convertible
                Note Payable issued, convertible at $0.58 per
                share.





**Automated
      Interiors:**





Effective
      as of April 18, 2006, the Company purchased the membership interests of AI
      for
      411,956 shares of restricted common stock, valued at $0.41 per share for a
      total
      price of $168,902.





AI
      was
      established on November 17, 2003 in the State of Georgia, and has offices and
      design facilities located in Atlanta, Georgia. AI designs and engineers the
      installation of electronic components to facilitate “smart” buildings. It has
      partnered with developers and builders who now offer structured wiring in newly
      constructed homes and buildings as a result of a dramatic increase in broadband
      use and consumer demand for the latest technological innovations in home and
      security automation. AI’s operations are centered primarily in the Southeast
      region of the United States. AI has, through December 31, 2006, utilized the
      services of independent subcontractors for staffing needs. Consistent with
      the
      business plan of AI, the operations have started to employ, subsequent to
      December 31, 2006, the core staff. The employees are being employed through
      at-will employment agreements, which may include offers of equity as part of
      the
      incentive to be employed. Due to the training and the expected growth of the
      business, management feels that it will become progressively more important
      for
      AI to retain experienced staff.




16




The
      purchase price was allocated as follows:





Net
                tangible assets acquired
            
            $
            65,131Intangible
                assets acquired
            
            
            -Goodwill
            
            
            103,771Total
                purchase price
            
            $
            168,902





The
      following table summarizes the components of the tangible assets acquired at
      fair value:




Cash
            
            $
            20,511Accounts
                receivable
            
            
            190,783Fixed
                assets
            
            
            66,532Other
                assets
            
            
            6,775Current
                liabilities
            
            
            (87,569
            )Long-term
                liabilities
            
            
            (131,901
            )Net
                tangible assets acquired
            
            $
            65,131





**Tytess
      Design and Development:**





Effective
      as of November 2, 2006, the Company purchased the ownership rights of the sole
      shareholder in Tytess for 1,146,593 shares of restricted common stock, valued
      at
      $0.55 per share, for a total purchase price of $630,626. Tytess thereby became
      a
      wholly owned subsidiary of the Company.





Tytess
      was incorporated on May 16, 2003 in the State of Georgia, and has offices and
      design facilities located in Atlanta, Georgia. The operations of Tytess,
      consisting of contracts for the building of two residential homes and one church
      facility, were transferred to the corporation from a partnership at the time
      of
      the acquisition. Tytess designs, engineers and provides project management
      services for construction projects, primarily buildings. In addition to the
      construction projects currently being designed and managed by Tytess, the
      combined operation of Tytess and Winsonic have successfully contracted with
      a
      major telephone network to design (architectural and engineering services)
      and
      manage the construction and installation of telephone infrastructure and the
      design and deployment of network services. Tytess will also provide engineering
      services to facilitate the deployment of telecommunication services being
      offered by the Company and the Company’s network. Tytess’s operations are
      centered primarily in the Southeast region of the United States. Tytess has,
      to
      date, utilized the services of independent subcontractors for staffing needs.





The
      purchase price was allocated as follows:





Net
                tangible assets (liabilities) acquired
            
            $
            (90,141
            )Intangible
                assets acquired
            
            
            -Goodwill
            
            
            720,767Total
                purchase price
            
            $
            630,626





The
      following table summarizes the components of the tangible assets acquired at
      fair value:




Cash
            
            $
            (3,840
            )Accounts
                receivable
            
            
            -0-Fixed
                assets
            
            
            10,075Other
                assets
            
            
            25,510Current
                liabilities
            
            
            (121,886
            )Long-term
                liabilities
            
            
            -0-Net
                tangible assets (liabilities) acquired
            
            $
            (90,141
            )




17




**DV
      Photo Shop** **:**





On
      November 20, 2006 the Company purchased the net assets of DV Photo Shop. The
      net
      assets and operations acquired were transferred to a new Georgia corporation
      and
      the name was changed to Winsonic Digital Store, Ltd. The net assets were
      purchased for 241,379 shares of restricted common stock, valued at $0.58 per
      share and a convertible note payable of $60,000, for a total purchase price
      of
      $200,000. The note is convertible into shares of the Company’s restricted common
      stock at $0.58 per share.





The
      store
      has its only retail facilities located in Atlanta, Georgia. The operations
      of
      the store, included an urban retail store located in downtown Atlanta, which
      specialized in photography development, digital photography and the sale of
      mobile phones, accessories, and wireless communications services. The Store,
      of
      which the Company is now a one hundred percent (100%) equity owner, will offer
      the same products and services it offered before the acquisition; however,
      its
      future offerings will include music downloads, digital photo depot, on-line
      storage, video conferencing, content development, a music lab for mixing and
      mastering, and film, video and photo editing.





The
      purchase price was allocated as follows:





Net
                tangible assets acquired
            
            $
            40,247Intangible
                assets acquired
            
            
            -Goodwill
            
            
            159,753Total
                purchase price
            
            $
            200,000





The
      following table summarizes the components of the tangible assets acquired at
      fair value:




Cash
            
            $
            5,387Accounts
                receivable
            
            
            -0-Fixed
                assets
            
            
            34,860Current
                liabilities
            
            
            -0-Long-term
                liabilities
            
            
            -0-Net
                tangible assets acquired
            
            $
            40,247





**Goodwill:**





Goodwill,
      which represents the excess of the purchase price over the fair value of
      tangible and identified intangible assets acquired, is not being amortized
      but
      will be reviewed annually for impairment, or more frequently if impairment
      indicators arise, in accordance with Statement of Financial Accounting Standards
      No. 142, “Goodwill and Other Intangible Assets” (“SFAS 142”). In part, goodwill
      reflects the competitive advantages the Company expects to realize from the
      synergy of AI and Tytess services, the expanded product offerings through the
      Store facilities, and the Winsonic product line. The Company will review
      Goodwill annually to determine if impairment has occurred, and if so, to what
      extent. As of March 31, 2007, there was no impairment cost recognized. Goodwill
      is not expected to be deducted for tax purposes.





The
      results of operations of AI, Tytess and the Store have been included in the
      Company’s consolidated financial statements subsequent to the date of each
      acquisition. The financial information in the table below summarizes the
      combined results of operations of the Company and AI. The operations of Tytess
      and the Store have not been included as they were immaterial to the operations
      of the Company, have an immaterial affect on the current operations of the
      consolidated group, and in the case of Tytess, was included in the operations
      of
      a private partnership. Further, the Company anticipates expanding the range
      of
      services and products to be offered by both Tytess and the Store to include
      those which are synergistic with the business plan of the Company and the value
      attributed to the acquisition price.




18




On
      an
      unaudited pro forma basis, the combined information for March 31, 2006 and
      March
      31, 2007 represents the combined operations of the Company and AI, as though
      both of the companies had been combined as of the beginning of each of the
      periods presented:






**For
                the three months ended March 31,****2007**
            
            **2006****(unaudited)**
            
            **(unaudited)**Total
                pro forma revenues
            
            
            313,012
            
            
            425,527Pro
                forma net loss
            
            
            (3,232,781
            )
            
            (1,317,703
            )Pro
                forma net loss per share - basic and diluted
            
            
            0.07
            
            
            0.03Reported
                net loss
            
            
            (3,314,304
            )
            
            (1,393,699
            )





**NOTE
      4 - STOCKHOLDERS’ EQUITY**





**Issuance
      of Common Stock** **:** ****





During
      the quarter ended March 31, 2007 the Company did not issue any shares of its
      Common Stock.





**Convertible
      Notes and Warrants:**





Since
      inception the Company has issued convertible notes with detachable warrants
      to
      fund current operations and other transactions. The notes included interest
      of
      6% and were due on various dates or upon the occurrence of certain events
      relating to the capital structure of the Company. To date, no warrants have
      been
      exercised. During the first quarter of 2007, the Company raised an additional
      $179,500 of proceeds in connection with a convertible note offering. (For a
      more
      detailed discussion, see “Note 10 - Convertible Debentures” and “Note 12 -
      Subsequent Events.”)





The
      following table summarizes the Company’s detachable stock warrant activities for
      the period ending March 31, 2007:





Number
                of
              Warrants
            
            Exercise
                PriceBalance
                as of December 31, 2003
            
            
            -
            
            
            -Warrants
                issued
            
            
            1,164,286
            
            
            0.70Warrants
                cancelled/expired
            
            
            -
            
            
            -Warrants
                exercised
            
            
            -
            
            
            -Balance
                as of December 31, 2004
            
            
            1,164,286
            
            
            0.70Warrants
                issued
            
            
            285,714
            
            
            0.70Warrants
                cancelled due to extension agreement
            
            
            (1,450,000
            )
            
            0.70Warrants
                replaced due to extension agreement
            
            
            2,537,500
            
            
            0.40Warrants
                issued
            
            
            941,250
            
            
            0.20Warrants
                exercised
            
            
            -
            
            
            -Balance
                as of December 31, 2005
            
            
            3,478,750
            
            
            0.35Warrants
                issued
            
            
            8,598,210
            
            
            0.21Warrants
                exercised
            
            
            -
            
            
            -Balance
                as of December 31, 2006
            
            
            12,076,960
            
            
            0.25Warrants
                issued
            
            
            872,500
            
            
            0.21Warrants
                exercised
            
            
            -
            
            
            -Balance
                as of March 31, 2007
            
            
            12,949,460
            
            
            0.24




19




**NOTE
      5 - RELATED PARTY TRANSACTIONS**





**Officers’
      Compensation:**





Officers’
      compensation for services for the three-month periods ended March 31, 2007
      and
      2006 was $192,000 and $190,000. During the first quarter of 2007, the Company
      recorded the vesting of 260,667 shares of a common stock award for officers,
      for
      the net vested value of $97,600. (For further information, see “Note 2 - Summary
      of Significant Accounting Policies”). The compensation expense including vesting
      of common stock was included in payroll expense - related party.





**Loans
      Payable - Related Party**





During
      2006, the Company received two non-interest bearing notes from an officer of
      the
      Company in the amounts of $78,192 and $1,793. Under the terms of the note,
      the
      officer had the right to demand repayment prior to September 29, 2007 and the
      Company had the right to repay the amounts by issuing shares of the Company’s
      restricted common stock at a per share price of $0.20. Subsequent to March
      31,
      2007 the officer requested repayment and the Company will issue 399,924 shares
      of restricted common stock in the third quarter of 2007. (See “Note 12 -
      Subsequent Events” of the Notes to the Financials for further details regarding
      this transaction.)





**Loans
      from Founder:**





**2007** :
      During the first quarter of 2007, the CEO of the company loaned $262,530 to
      the
      Company on an interest-free basis.





**2006:** During
      2006, the CEO of the Company loaned $20,000 to the Company on an interest-free
      basis. During 2006, $15,000 was repaid leaving an unpaid obligation of $5,000
      as
      of March 31, 2007.





**2005** : On
      September 15, 2005, the Company received a loan of $80,000 from the CEO. Under
      the terms of the promissory note governing the loan, interest will be paid
      at
      the rate of 10% annually, with principal and interest payable on December 1,
      2005. Unpaid principal and interest after December 1, 2005 is subject to
      interest of five percent (5%) in excess of the rate otherwise applicable to
      the
      unpaid balance. During the fiscal year 2006, the Company issued 400,000 shares
      to repay the principal of the loan and the balance of the accrued interest
      does
      not accrue additional interest. The shares issued represented the security,
      which had been agreed to by the Company at the time of the original loan. The
      balance of the accrued interest at March 31, 2007 totaled $13,074.




**2004:** As
      of
      March 31, 2007 and December 31, 2006, respectively, the Company had a loan
      payable totaling $304,299 and $316,496 to the CEO which included principal
      of
      $189,000. The Company is also obligated to issue to the CEO 80,000 shares of
      common stock valued at $64,000. Under the terms of the Note, interest will
      be
      paid at the rate of 10% annually. Accrued interest included in the loan balances
      as of March 31, 2007 and December 31, 2006 was $51,299 and $43,496,
      respectively. During the first quarter of 2007, the Company paid $20,000 to
      the
      CEO against this loan.





**Native
      American Television Network, Inc (“NATVN”)**





During
      the third quarter of 2005, the Company issued 1,670,000 shares of common stock
      to NATVN in exchange for 4,000,000 shares of NATVN common stock. The former
      president of the Company and a Company shareholder are shareholders in NATVN,
      owning 9% of the total outstanding equity in NATVN.





The
      investment in NATVN is accounted for under the “equity” method. The equity
      method of accounting is used if the investor has the ability to significantly
      influence the investee’s financial and operating policies, or if an investor is
      accounting for an investment in a corporate joint venture, but holds less than
      50% of the investee. Under the equity method, an investment is initially
      recorded at cost. Thereafter, the carrying amount of the investment is increased
      for the investor’s proportionate share of the investee’s gains, or is reduced
      for the proportionate share of the investee’s losses or for distributions
      received from the investee. As of March 31, 2007, there has been no significant
      operations commenced by NATVN.




20




**Winsonic
      Diversity, LLC**





On
      May
      22, 2006, Winsonic Diversity, LLC (“Winsonic Diversity”) was organized in the
      State of Georgia by Winston D. Johnson and the Company. Mr. Johnson holds a
      majority of the ownership interests and is responsible for the management of
      Winsonic Diversity, while the Company holds a minority interest. As
      of
      March 31, 2007, there has been no significant operations commenced by Winsonic
      Diversity.





**NOTE
      6 - SUMMARY OF LEGAL PROCEEDINGS**





An
      estimated liability of $775,000 for legal settlements was recorded as of March
      31, 2007 and December 31, 2006, respectively. Other than as described below,
      the
      Company is not currently involved in any legal proceedings that may be deemed
      to
      be material to our financial condition.





**Colla** **zo
      vs. Media and Entertainment.com** (Superior
      Court of CA, Los Angeles County - complaint filed March 22, 2004)





On
      March
      22, 2004, the Company (then known as Media and Entertainment.com, Inc.)
      commenced a civil lawsuit in Los Angeles Superior Court (Case No. BC312530)
      against Caesar Collazo, a former officer of the Company, seeking damages in
      excess of $40,000, as well as, punitive and exemplary damages. The Company
      had
      purchased the assets of Nexcode of which Mr. Collazo was a founder, and Mr.
      Collazo received 400,000 shares of the Company’s common stock (the “Shares”) in
      consideration of the sale. While still employed by the Company, Mr. Collazo
      allegedly formed a competing company, stole proprietary property of the Company
      and solicited Company clients on behalf of the competitor. The Company sought
      a
      constructive trust, injunctive relief and the return of the Shares.




Prior
      to
      this suit, in February 2004, Mr. Collazo had commenced a lawsuit in Los Angeles
      Superior Court against the Company and its transfer agent seeking to remove
      the
      restrictive legend from the shares. The injunctive relief was denied and the
      court dismissed the complaint at Mr. Collazo’s request. In March 2004, the
      Company commenced a lawsuit in U.S. District Court, Clark Country Nevada (Case
      No. A480587) to enjoin the transfer of the shares. The Court issued an Order
      on
      March 19, 2004, enabling Mr. Collazo to sell 30,000 shares of common stock
      and
      issued a temporary restraining order with regard to the remaining 370,000
      shares, provided the Company posted a bond for the entire amount of $424,000.
      The Company’s principals chose not to pledge personal assets as collateral for
      the bond, and the Nevada action was dismissed.





In
      the
      above-described litigation brought by the Company against Mr. Collazo, the
      defendant denied the allegations, asserted 21 affirmative defenses and bought
      a
      cross-complaint against the Company. Mr. Collazo alleged that the Company
      breached the employment agreement with him because he had not been paid
      compensation due him, he had not received a percentage of gross profit earnings,
      the Company had not exercised a good faith effort to raise an additional
      $250,000 in capital, and he did not receive the equity promised him. The Company
      denied the allegations of the cross complaint and asserted 13 affirmative
      defenses. At a settlement conference on April 11, 2005, the Company agreed
      to
      issue 900,000 shares of common stock to Mr. Collazo as of September 20, 2002
      and
      to pay attorney fees of $120,000. The Company also agreed to issue 900,000
      shares of common stock to Mr. Nana Yalley, who was then an officer and current
      shareholder, as well as an equal partner of Mr. Collazo in Nexcode. The shares
      of common stock were valued as of the settlement date, and accordingly, 900,000
      shares of common stock, as well as, $120,000 of attorney fees, were charged
      as
      expenses in 2004. The settlement was not finalized by June 10, 2005; therefore,
      Mr. Collazo could have exercised, at his option, the right to enforce the
      settlement agreement for the issuance of the 900,000 shares of the Company’s
      stock to him and the payment of his attorneys’ fees or the issuance of 200,000
      shares of stock to his attorney in lieu of payment.




21




On
      March
      16, 2006, the Company issued 900,000 restricted shares to Mr. Collazo in
      settlement of this matter. However, this matter remains unresolved, as Mr.
      Collazo is seeking to have the Company reissue the 900,000 shares without
      restrictions.





On
      May 4, 2006, the Court relieved Mr. Collazo’s former attorneys from their
      representation of Mr. Collazo in this action as a result of a dispute between
      them.  In an attempt to force the Company to reissue without
      restrictions the 900,000 restricted shares already issued to
      him, Mr. Collazo, through his new attorneys, moved the Court to
      enforce the terms of the April 11, 2005 settlement agreement, wherein
      the Company agreed to issue the 900,000 shares to Mr. Collazo as of
      September 20, 2002.  The motion was heard, and the Court ordered the
      Company to reissue the 900,000 shares to Mr. Collazo as of
      September 20, 2002 without restrictions.





On
      July 7, 2006, Mr. Collazo’s former attorneys, Wilshire Palisades Law Group,
      P.C., filed an attorney lien on any and all judgments rendered in favor of
      Mr.
      Collazo.  Under advisement of counsel, the Company has not reissued the
      900,000 shares, nor has it made any additional payments to Mr. Collazo. As
      of the
      date of this report, no further action has been taken in this
      matter.





**Yellowbrix,
      Inc. vs. Media and Entertainment.com** (Superior
      Court of CA, Los Angeles County - complaint filed September 16,
      2004)





Yellowbrix,
      Inc. filed a collection suit against Media and Entertainment.com regarding
      an
      alleged contract authorized by the former CEO of Media and Entertainment.com.
      The pending lawsuit amount in dispute is $19,800, which was expensed in general
      and administrative expense in 2004 and accrued within accounts payable of the
      Company as of the
      fiscal years ended December 31, 2006 and 2005 .





On
      July 25, 2006, the Company learned that a judgment had been entered against
      it
      in this matter on February 15, 2006. The judgment amount included the $19,800
      in
      controversy, plus $3,000 in attorney fees. As of the
      date
      of this report ,
      Yellowbrix has not sought to enforce the judgment.





**Dell
      Marketing, LP vs. Winsonic Holdings, Ltd.** (District Court of Travis County, Texas - complaint filed December 13,
      2004)





On
      or
      about April 17, 2006, the Company was notified of a default judgment rendered
      against it in a collection suit in Travis County, Texas in the amount of
      $474,285. An additional charge of $90,000 in attorney fees was entered in the
      judgment; however, the Company is negotiating a forgiveness of the attorney
      fees
      based on timely payment of the judgment. The $474,285 in dispute was expensed
      as
      a general and administrative expense in 2005 and accrued within accounts payable
      of the Company as of March 31, 2007. The $90,000 in attorney fees has also
      been
      expensed and accrued.





On
      July
      27, 2006, the Company received notice that the judgment had been domesticated
      in
      the state of Georgia as of July 21, 2006. As of the date of this report, no
      significant action has been taken in this matter.





**Netscaler
      Inc. vs. Winsonic Holdings, Ltd.** (Superior
      Court of CA, Los Angeles County - complaint filed May 16, 2005)





The
      disputed amount of $75,000 in this collection lawsuit was expensed as a general
      and administrative expense in 2004 and accrued within accounts payable as of
      March 31, 2007 and 2006. Pursuant to a Stipulation for Entry of Judgment, the
      Company agreed to pay the sum of $75,000 in three (3) installment payments
      of
      $25,000, commencing in June 2006, in exchange for the dismissal of the action.
      The stipulation also provided that, in the event of a breach by the Company,
      plaintiff could enforce the entire amount sought in the complaint -i.e.,
      $100,769. As of March 31, 2007, the Company has accrued an additional $25,000
      accounts payable to reflect the breach.




22




On
      August
      15, 2006, Netscaler filed a declaration to set aside the dismissal and to enter
      judgment in the amount of $100,769 against the Company pursuant to the
      Stipulation for Entry of Judgment. As of the date of this report, no further
      action has been taken in this matter.





**Attorney
      Collection Services vs. Winsonic Holdings, Ltd.** (Superior
      Court of CA, Los Angeles County - complaint filed June 30, 2004)





The
      disputed amount of $25,000 in this collection lawsuit was expensed as a general
      and administrative expense in 2005 and accrued within accounts payable as of
      the
      three months ended March 31, 2007 and 2006. On
      September 15, 2006, this matter was dismissed by the court; however, Plaintiff
      has indicated that it will either file a Motion to Set Aside the Dismissal
      or
      bring a new action. As of the
      date
      of this report ,
      no further action has been taken in this matter.





**Crown
      Office Suites, Inc. vs. Winsonic Digital Media Group, Ltd.** (State
      Court of Cobb County, Georgia - complaint filed November 23, 2005)





This
      is
      an action for breach of a lease agreement against the Company. The disputed
      amount of $50,193 was expensed as a general and administrative expense in 2005
      and accrued within accounts payable of the Company as of March 31, 2007. On
      April 5, 2006, Crown filed a motion to change venue from Cobb County to Fulton
      County. On April 18, 2006, the Company, through its attorneys, filed an Answer
      contesting service, a Motion to Open Default and a Brief in Support of the
      Motion to Open Default. As
      of the
      date
      of this report ,
      no significant action has been taken in this matter.





**Lefkowitz
      vs. Winsonic Digital Media Group, Ltd.** (Superior
      Court of CA, Los Angeles County - complaint filed May 18, 2006)





This
      is
      an action for breach of contract brought by David Lefkowitz, Caesar Collazo’s
      attorney in Collazo vs. Media and Entertainment.com. Mr. Lefkowitz seeks payment
      of $125,000 in attorney fees, which he asserts he is entitled to pursuant to
      the
      Settlement Agreement of April 11, 2005 in the Collazo matter. The disputed
      amount was charged as expenses in 2004.




On
      June
      22, 2006, the Company filed its answer to the unverified complaint denying
      each
      allegation and asserting various affirmative defenses, including, failure to
      state a claim, waiver, ratification, etc. On July 17, 2006, Mr. Lefkowitz filed
      an offer to compromise requesting that the Company agree to a judgment in his
      favor in the amount of $120,000.





On
      January 26, 2007, mediation scheduled in this matter was cancelled and the
      Court
      ordered the parties to either settle the claim by April 17, 2007, or prepare
      for
      trial to
      be
      held some time in May 2007 . (See
      “Note 11 - Subsequent Events” of the Notes to the Financials for further details
      regarding this lawsuit.)





**Yalley
      vs. Winsonic Digital Media Group, Ltd.** (District
      Court of Nevada, Clark County - complaint filed October 13, 2006)





This
      is an action for declaratory and injunctive relief brought by Nana Yalley,
      a
      former director and officer of the Company, requesting that the court grant
      a
      declaratory judgment ordering the Company and its stock transfer agent to remove
      the restrictive legends from 2,724,998 restricted shares of common stock of
      the
      Company owned by Mr. Yalley, pursuant to Rule 144(k) of the Securities Act
      of
      1993. In addition to the foregoing, Mr. Yalley seeks an indeterminate amount
      of
      attorneys’ fees and costs. The Company and its stock transfer agent were each
      served with a summons and complaint on October 17, 2006.





On
      November 7, 2006, the Company, through local counsel in the State of Nevada,
      filed responses to the complaint on behalf of itself and the stock transfer
      agent, whom the Company has agreed to indemnify in this action. On November
      13,
      2006, Mr. Yalley filed a Motion for Partial Summary Judgment; Ex Parte Request
      for Order Shortening Time, wherein he requested that the Court hear his motion
      as soon as possible, and order the Company to remove the restrictive legends
      from his shares. The Company filed an opposition to this request soon thereafter
      and Mr. Yalley filed a reply to the opposition on December 13, 2006. During
      the
      hearing which was scheduled for December 19, 2006, the Court ordered the Company
      to remove the restrictive legends from Mr. Yalley’s shares, but did not set any
      particular deadline to do so.




23




In
      January of 2007, the restrictions
      were removed from Mr. Yalley’s shares. On March 19, 2007, the Court granted Mr.
      Yalley’s motion to amend his complaint to include allegations of breach of
      contract, and the amended complaint was filed on March 20, 2007. (See “Note 11 -
      Subsequent Events” of the Notes to the Financials for further details regarding
      this lawsuit.)





**Eric
      Young vs. Winsonic Digital Media Group, Ltd.** (State
      Court of Fulton County, Georgia - complaint filed January 11, 2007)





On
      November 29, 2006, the Company was notified by legal counsel for Mr. Eric Young,
      a former financial officer of the Company, that Mr. Young would be seeking
      compensation and severance for accounting services rendered during 2005 and
      2006. ****





On
      January 16, 2007, the Company was served with a summons and complaint in a
      breach of contract action brought by Eric Young, a former Chief Financial
      Officer and Director of the Board of Directors of the Company. Mr. Young seeks
      damages totaling $354,784, which includes $103,934 in unpaid wages, $50,850
      in
      unpaid consulting fees and an additional $200,000 in severance payments. The
      Company filed its response to the complaint on February 12, 2007. As of the
      date
      of this filing no significant action has been taken in this matter.





**McKenney’s,
      Inc. vs. Winsonic Digital Media Group, Ltd.** (State
      Court of Fulton County, Georgia - complaint filed March 21, 2007)





This
      is
      an action for breach of contract against the Company. The disputed amount of
      $56,527.34 was capitalized as computer equipment in 2006 and accrued within
      accounts payable of the Company as of December 31, 2006. (See “Note 11 -
      Subsequent Events” of the Notes to the Financials for further details regarding
      this lawsuit.)





**NOTE
      7 - GOING CONCERN**





These
      financial statements have been prepared in accordance with generally accepted
      accounting principles applicable to a going concern, which contemplates the
      realization of assets and the satisfaction of liabilities and commitments in
      the
      normal course of business. As of March 31, 2007, the Company has recognized
      approximately $1,472,000 of revenues, and has had accumulated losses of
      approximately $24,008,000 from operations since inception. The Company’s ability
      to continue as a going concern is contingent upon the successful completion
      of
      additional financing arrangements and its ability to achieve and maintain
      profitable operations. Management plans to raise equity capital to finance
      the
      operating and capital requirements of the Company. Amounts raised will be used
      for further development of the Company’s products, to provide financing for
      marketing and promotion, to secure additional property and equipment, and for
      other working capital purposes. While the Company is expending its best efforts
      to achieve the above plans, there is no assurance that any such activity will
      generate funds that will be available for operations. The Company’s financial
      statements do not include any adjustments that might result from the outcome
      of
      this uncertainty.





**NOTE
      8 - PROPERTY AND EQUIPMENT.NET**





The
      major classifications of property and equipment consist of the following as
      of
      March 31, 2007 and December 31, 2006:





**March
                31,**
              **2007**
            
            **December
                31,**
              **2006**Computer
                equipment
            
            $
            1,116,277
            
            $
            1,114,994Infrastructure
            
            
            158,400
            
            
            158,400Software
            
            
            101,775
            
            
            89,970Furniture
                & fixtures
            
            
            87,478
            
            
            84,503Automobiles
            
            
            74,631
            
            
            74,631Equipment
                and tools
            
            
            41,960
            
            
            44,935Less:
                accumulated depreciation
            
            
            (820,354
            )
            
            (784,318
            )Net
                Fixed Assets
            
            $
            **760,167**
            
            $
            **783,115**




24




Depreciation
      expense for the three-month periods ended March 31, 2007 and 2006 was $36,036
      and $36,818, respectively. Depreciation expense from September 10, 2002
      (Inception) to March 31, 2007 was $1,094,333.





**NOTE
      9 - LOANS PAYABLE**





The
      Company had loans outstanding of $389,932 and $347,743 as of March 31, 2007
      and
      December 31, 2006, respectively, payable to certain individuals. Proceeds from
      these loans were used for working capital purposes. The following is a summary
      of the loans payable:





**Interest
                Rate**
            
            **Loans
                Payable**
            
            **March
                31,**
              **2007**
            
            **December
                31,**
              **2006**Unstated
            
            
            The
                Company issued eight convertible promissory notes, due October 2005,
                convertible into shares of common stock at any time prior to maturity.
                During 2006, the Company and the creditors agreed to convert three
                of the
                notes into 6% convertible debenture with an attached warrant. The
                exchanged debentures and the warrants are both exercisable at $0.40
                per
                share. ( See Note 10 - Convertible Debentures). Currently five of
                the
                original notes are still are delinquent. No interest has been accrued
                upon
                the remaining notes.
            
            $
            111,000
            
            $
            111,0006.00%
            
            
            A
                loan consisting of principal of $108,000 with no stated interest
                rate,
                repayment terms or maturity date. Interest is imputed at 6% annually,
                based upon a 365-day calendar year. Accrued interest payable as of
                March
                31, 2007 and December 31, 2006 is $21,321 and $19,723,
                respectively.
            
            
            129,321
            
            
            127,7236.00%
            
            
            A
                loan consisting of principal of $40,000 with no stated interest rate,
                repayment terms or maturity date. Interest is imputed at 6% annually,
                based upon a 365-day calendar year. Accrued interest payable as of
                December 31, 2006 and 2005 is $9,611 and $9,020,
                respectively.
            
            
            49,611
            
            
            49,020Unstated
            
            
            The
                Company issued a promissory note to a financial consultant in connection
                with services rendered advising the Company on public market issues.
                The
                note is non-interest bearing, with no repayment terms or maturity
                date. No
                interest has been imputed.
            
            
            60,000
            
            
            60,000Unstated
            
            
            A
                loan consisting of principal of $40,000 with no stated interest rate
                and a
                maturity date of June 25, 2007.
            
            
            40,000
            
            
            -Total
                Loans Payable
            
            $
            389,932
            
            $
            347,743





Long
      Term
      Liabilities: Effective as of April 18, 2006, the Company acquired the net assets
      of AI, including long term liabilities of $131,901. The long term liabilities
      are due to an officer of AI representing cash he advanced to AI operations
      and
      the obligations for two vehicles purchased by AI. Following is a summary of
      AI’s
      long-term debt at March 31, 2007, with current maturities determined based
      upon
      the net reduction of debt arising from AI making the minimum agreed-to payments.




25




**March
                31,****2007**15.25%
                loan payable to an officer for the purchase of a vehicle; monthly
                payments
                of $575 through August 2011, secured by the vehicle
                purchased.
            
            $
            21,99219.50%
                loan payable to an officer for the purchase of a vehicle;
                monthly payments of $897 through January 3, 2011, secured by the
                vehicle purchased.
            
            
            28,903Unsecured,
                interest free loan payable to an officer for various cash advances,
                expenses paid and assets transferred to AI by the creditor; payoff
                due on
                December 4, 2007; 6% interest to be paid on any outstanding balance
                as of
                December 4, 2007.
            
            
            80,950Total
                long term debt
            
            
            131,845Less:
                Current portion of long-term debt
            
            
            (90,339
            )Net
                Long Term Debt
            
            $
            41,506




Under
      the
      terms of the loans described above, AI is obligated to pay at least the
      following principal amounts in the years specified below:





**Year**
            
            **Amount**2007
            
            
            87,8342008
            
            
            10,7192009
            
            
            12,7962010
            
            
            15,2822011
            
            
            5,214Total
            
            $
            131,845





**NOTE
      10 - CONVERTIBLE DEBENTURES**





**2004/2005
      Agreements** :
      During
      December 2004 and January 2005, the Company received proceeds of $815,000 and
      $200,000, respectively, from Convertible Note and Warrant Purchase Agreements
      (“the 2004/2005 Agreements”). The offering was made to accredited investors. The
      Convertible Notes, including interest of 6% were due in December 2005 or upon
      the occurrence of certain events relating to potential changes in the capital
      structure of the Company. The conversion feature portion of the 2004/2005
      Agreements included the right of the note holder to convert the face value
      of
      the note into common stock of the Company at the lower of $0.70 per share or
      85%
      of the market value of the common stock (at the time of conversion). The
      2004/2005 Agreements also included a detachable warrant, which allowed the
      warrant holders to purchase shares of common stock of the Company at $0.70
      per
      share (potentially, 1,450,000 shares of common stock) through December
      2007.





On
      December 15, 2005, the maturity dates of the 2004/2005 Agreements were extended
      to June 30, 2006. The conversion feature portion of the amended 2004/2005
      Agreements included the right of the note holders to convert the face value
      of
      the notes into common stock of the Company at the lower of $0.40 per share
      or
      85% of the market value of the common stock at the time of conversion.
      Additionally, the amended 2004/2005 Agreements reduced the purchase price of
      the
      warrants to $0.40 per share.





During
      the third quarter of 2006, following the expiration of the extension of the
      maturity dates of the 2004/2005 Agreements (i.e., June 30, 2006), all but three
      of the note holders agreed to convert their notes, plus accrued interest, into
      common stock of the Company at the rate of $0.40 per share. One note holder
      has
      requested that he be repaid in cash. The Company has continued to accrue
      interest on the notes through March 31, 2007 and subsequently, up to the date
      of
      conversion (or in one case, repayment), which was determined to be the date
      that
      the note holders signed their conversion agreements. The Company has, based
      upon
      the notes and the accrued interest, issued a total of approximately 2,153,011
      shares of its restricted common stock.




26




The
      transactions, to the extent that they are to be satisfied with common stock
      of
      the Company, would normally be included as equity obligations. However, as
      of
      March 31, 2007, due to the indeterminate number of shares which might be issued
      under the embedded host debt conversion feature of the note, the Company is
      required to record a liability relating to both the detachable warrant and
      the
      embedded convertible feature of the note (included in the current liabilities
      as
“derivative liability”). As of March 31, 2007, the contingency in share pricing
      which caused the determinate share calculation was resolved with the final
      conversion agreements for all but two of the note holders. During 2006, the
      Company transferred the derivative and warrant liabilities to paid-in capital.
      The following table summarizes the remaining embedded derivatives at March
      31,
      2007 and December 31, 2006:





**March
                31, 2007**
            
            **December
                31, 2006**Derivative
                liability
            
            $
            145,807
            
            $
            339,450Warrant
                liability
            
            
            112,967
            
            
            300,420Convertible
                debentures
            
            
            260,588
            
            
            257,469Subtotal
            
            
            519,362
            
            
            897,339Adjustment
                of derivative and warrant liability to fair value
            
            
            408,524
            
            
            27,428Accretion
                of principal and interest related to convertible
                debentures
            
            
            87,114
            
            
            90,233Total
                Proceeds from convertible debentures
            
            
            1,015,000
            
            
            1,015,000Plus:
                Accrued interest
            
            
            106,792
            
            
            103,673Less:
                Notes and interest converted
            
            
            (861,204
            )
            
            (861,204
            )Total
                Convertible debentures
            
            
            260,588
            
            
            257,469Less:
                Current portion of convertible debentures
            
            
            (260,588
            )
            
            (257,469
            )Total
                Non-current Convertible Debentures
            
            $
            -
            
            $
            -





**2005/2006/2007
      Debentures:** During
      the third quarter of 2005 and during 2006, the Company entered into a series
      of
      agreements with accredited investors, wherein the Company borrowed $1,835,064
      and issued convertible debentures with detachable warrants to the creditors.
      The
      debentures, which include interest of 6.0%, are due in 12 months, and are
      convertible into Company stock at $0.20 per share for notes issued for cash
      and
      $0.40 per share for notes issued to the five creditors converting the
      outstanding notes. Additionally, the creditors also received a warrant, which
      is
      exercisable for a period of three years and can be exercised at $0.20 (and
      $0.40
      per share for the converted notes). During the third quarter of 2005, the
      Company issued six convertible debentures ranging in value from $15,000 to
      $53,000, individually, and with a total principal amount of $188,250. During
      the
      fourth quarter of 2005, the debentures were converted into 590,000 restricted
      shares of common stock, and $118,000 in debentures was retired.





During
      2006, the Company continued to raise funds via issuance of convertible
      debentures under the same terms as the debentures issued during 2005. During
      2006, the Company raised $1,646,815 through the issuance of 123 debentures
      ranging in value from $1,000 to $100,000. During 2006, 40 of the investors
      elected to exercise the conversion feature of the notes and converted $632,477
      in principal plus accrued interest into 3,162,385 shares of restricted common
      stock.





In
      the
      three month period ended March 31, 2007, the Company raised additional funds
      via
      issuance of convertible debentures under the same terms as the previous
      debentures issued. In this period, the Company raised $179,500 through the
      issuance of 14 debentures ranging in value from $5,000 to $25,000.




27




At
      March
      31, 2007, the Company has outstanding 93 convertible debentures. The total
      includes 88 convertible debentures exchanged for cash, three convertible
      debentures exchanged for short-term loans, one convertible debenture exchanged
      for an account payable and one note issued as part of the acquisition of DV
      Photo. The combined convertible debentures represented a principal balance
      of
      $1,507,456 and a potential obligation for the Company to issue 6,981,174 shares
      of common stock.





In
      addition to the potential shares issuable under the convertible debentures,
      the
      Company has issued detachable warrants which are attached to the convertible
      debentures and provide the debenture holders with the right to subscribe to
      shares of restricted common stock at the $0.20 (and $0.40 for the warrants
      attached to the convertible debentures issued to four creditors). The total
      shares available for issue under the terms of the warrants as of March 31,
      2007
      is 10,411,960 shares in exchange for investments of $2,191,142. The Warrants
      will expire during the period of July 5, 2008 through February 27, 2010.





The
      following table summarizes the outstanding convertible debentures and related
      warrants:





**Summary
                of 2005/2006/2007 Debentures & Warrants**
            
            **Convertible
                Notes**
            
            **Warrants****Proceeds**
            
            **Shares**
            
            **Proceeds**
            
            **Shares**Proceeds
                received during third quarter of 2005
            
            $
            188,250
            
            
            941,250
            
            $
            -
            
            
            941,250Conversions
                during fourth quarter of 2005
            
            
            (118,000
            )
            
            (590,000
            )
            
            -
            
            
            -Total
                outstanding at December 31, 2005
            
            
            70,250
            
            
            351,250
            
            
            -
            
            
            941,250Proceeds
                received during 2006
            
            
            1,646,815
            
            
            8,234,075
            
            
            -
            
            
            8,234,075Accounts
                payable and loans converted to convertible notes
            
            
            176,577
            
            
            467,584
            
            
            -
            
            
            364,136Conversions
                during 2006
            
            
            (632,477
            )
            
            (3,162,385
            )
            
            -
            
            
            -Accrued
                Interest
            
            
            41,143
            
            
            212,110
            
            
            -
            
            
            -Total
                outstanding at December 31, 2006
            
            
            1,302,308
            
            
            6,102,634
            
            
            -
            
            
            9,539,460Proceeds
                received during first quarter of 2007
            
            
            179,500
            
            
            872,500
            
            
            -
            
            
            872,500Accrued
                Interest
            
            
            25,648
            
            
            6,040
            
            
            -
            
            
            -Total
                outstanding at March 31, 2007
            
            $
            1,507,456
            
            
            6,981,174
            
            $
            -
            
            
            10,411,960





The
      Company has determined that the convertible debentures contain a beneficial
      conversion feature and qualify for treatment under Emerging Issue Task Force
      No.
      00-27. The estimated fair value of the detachable warrants of $4,339,945 has
      been determined using Black-Scholes option pricing model under the following
      assumptions: stock price volatility ranging from 131% to 196%; risk free
      interest rate of 4.5%; dividend yield of 0%; and a three year term. The face
      amount of the convertible debentures (i.e., $2,131,142) was proportionately
      allocated to the convertible debentures and the warrants in the amount of
      $754,973 and $1,376,169, respectively. The convertible debentures proportionate
      allocation factor was then further allocated between the Notes and the
      beneficial conversion feature and $753,406 was allocated to the beneficial
      conversion feature and the balance of $1,567 was allocated to notes. The
      combined total value of the warrants and the beneficial conversion feature
      amounting to $2,129,575 has been accounted for as a debt discount which is
      being
      amortized and treated as interest expense over the term of the convertible
      debentures. For the three months ended March 31, 2007, the Company amortized
      a
      total of $308,148. The discounts and amortization are summarized in the
      following table:





**March
                31,**
              **2007**
            
            **December
                31,**
              **2006**BCF
                discount to Paid in capital
            
            $
            (753,406
            )
            $
            (702,953
            )Warrant
                Discount to Paid in capital
            
            
            (1,376,169
            )
            
            (1,248,688
            )Proceeds
                from convertible debentures
            
            
            2,191,142
            
            
            2,011,641Subtotal
            
            
            61,567
            
            
            60,000Deduct
                value converted to common stock
            
            
            (734,250
            )
            
            (734,250
            )Total
                discount to accrete
            
            
            1,456,892
            
            
            1,277,391Interest
                expense on convertible debentures - Amortized
            
            
            (713,517
            )
            
            (405,660
            )Interest
                expense on convertible debentures - Accrued
            
            
            (49,289
            )
            
            (41,864
            )Convertible
                debt not subject to accretion
            
            
            (61,567
            )
            
            (60,000
            )Total
                Current Liability
            
            $
            (824,373
            )
            $
            (507,524
            )




28




**Defaults
      on Convertible Debentures**





As
      of
      June 30, 2006, the Company had several of its convertible debentures mature
      without conversion or repayment. During the fourth quarter 2006, nineteen note
      holders converted their convertible debentures; one convertible debenture holder
      agreed to extend the term of his convertible debenture; three convertible
      debentures totaling $230,000 currently remain in default.





**NOTE
      11 - COMMITMENTS AND CONTINGENCIES**





**Network
      Operations and Office Lease Agreement**





***Centennial
      Tower Office Lease Agreement***





On
      October 12, 2005, the Company entered into a 132 month commercial lease
      agreement effective as of November 1, 2005 with Atlanta Centennial, LLC for
      approximately 9,415 square feet of rentable space. The space is located in
      Suite
      2600 on the 26 th floor of
      the Centennial Tower, located at 101 Marietta Street in Atlanta, Georgia and
      will be used as the Company’s corporate headquarters to house its executives and
      general, clerical and administrative personnel.





There
      is
      no option to renew this lease. Notwithstanding the foregoing, the monthly base
      rent was abated for 6 months following the commencement date of the lease,
      provided there is no default by the Company under the lease.





Concurrently
      with the execution of the Lease, the Company issued a Fixed Price Secured
      Convertible Note in the principal sum of $250,000 representing an increased
      security deposit requirement bearing simple interest at 9% per annum, payable
      monthly in arrears in cash or registered stock at the Company’s option, from
      December 1, 2005 through the earlier of (a) the maturity date, i.e., June 1,
      2006, (b) the prepayment date, i.e., the date on which the outstanding principal
      amount of the Note is repaid in full prior to the maturity date, or (c) the
      date
      on which the outstanding principal amount of the Note is automatically
      converted.





On
      October 12, 2005, the Company paid $16,476 as deposit on the office space.
      On
      December 14, 2005, the note was converted into 925,927 shares of the Company’s
      common stock valued at $250,000 or $0.27 per share.





The
      lease
      agreement was amended on February 23, 2006, to include expanded rental space
      of
      9,415 square feet, bringing the total rental square feet to 18,800.





***55
      Marietta Street Office Lease Agreements***





On
      May
      17, 2006, the Company entered into a Sublease Agreement with Rogers Telecom
      Inc., wherein the Company leased a portion of the 16 th floor of
      the building located at 55 Marietta Street, Atlanta, Georgia 30303. The lease
      commenced on June 1, 2006 and continues through April 29, 2007, the day before
      the due date of the master lease. The Company will use the space to house one
      of
      its telecom switches and to demonstrate the functionality of its telecom
      equipment. The space provides the Company exposure for the typical high-end
      automation and communication equipment. The Company is obligated to pay monthly
      rents of $8,397 per month through April 30, 2007.




29




On
      February 8, 2007, the Company entered into a Telecom/Office Lease Agreement
      and
      First Amendment to Lease agreement with Bank Building Limited Partnership for
      approximately 12,080 square feet of rentable space located at 55 Marietta Street
      in Atlanta, Georgia.





The
      term
      of the lease commenced on May 1, 2007 and expires on April 30, 2017. However,
      the landlord has agreed to provide the Company with access to the premises
      for
      the limited purpose of making improvements. An improvement allowance of $123,000
      has been provided to the Company, of which the unused portion after May 1,
      2008
      may be applied to base monthly rental at the Company’s sole option.




Under
      this lease, the Company is required to remit to the landlord, upon execution
      of
      the lease, a security deposit in the amount of $17,566 and first month’s rental
      payment in the amount of $8,778. Thereafter, the Company is obligated to make
      monthly rental payments in the amount of $8,778 from May 1, 2007 to February
      28,
      2008; $17,566 from March 1, 2008 to April 30, 2012; and $19,127 from May 1,
      2012
      through termination. In addition to the monthly rent, the Company is responsible
      for its share of the operating expenses, utilities, taxes and other costs and
      expenses associated with the Leased Premises.





The
      Company will use this space to operate WDCSN’s network operations, data center,
      broadcast controls, switch site and application development lab. In addition,
      the space shall be utilized by the Company to house its network services billing
      and provisioning departments and for training its current and future
      staff.





Additionally,
      on June 22, 2006, the Company entered into a two-year lease agreement with
      JT
      Communications, LLC for the exclusive right to use a cabinet and the
      non-exclusive right to use the office space located on JT Communications’
premises on the 5 th floor of
      55 Marietta Street in Atlanta, Georgia. The term of the lease commenced on
      July
      1, 2006 and expires on June 30, 2008; however, it is subject to automatic
      renewals for a one-year periods on the same terms and conditions, unless the
      Company notifies JT Communications that it does not want to renew. Under the
      lease, the Company will make monthly rental payments in the amount of $1,350
      for
      the first year; $1,418 in the second year; and $1,488 in the third year of
      the
      lease. This lease was canceled in May of 2007.




As
      of
      March 31, 2007, approximate future commitments under the Centennial Tower and
      55
      Marietta Street office leases are as follows:





2007
            
            $
            389,3652008
            
            $
            628,8792009
            
            $
            657,4422010
            
            $
            668,7272011
            
            $
            680,3562012
                through 2017
            
            $
            3,439,361








**Employment
      Agreements**




On
      October 8, 2004, the Company entered into a binding offer letter with Winston
      Johnson, as Chairman and CEO. Under the terms of employment, Mr. Johnson was
      to
      receive a base salary of $290,000 per annum with $7,000 per month deferred
      until
      the next funding occurs or January 1, 2005, whichever occurred first. Mr.
      Johnson is eligible for annual incentive bonuses based on performance. The
      agreement is terminable at will with or without cause (as defined
      therein).




30




Mr.
      Johnson’s employment agreement also provided for the grant of an aggregate of
      3,000,000 incentive or non-statutory stock options for the three executive
      officers to purchase 1,000,000 shares each of common stock for $1.00 per share.
      These options primarily vest equally over a twelve-month period effective with
      date of the employment agreement.





Additionally,
      on June 13, 2006, Jon Jannotta resigned from his position as President of the
      Company; however, he continued to serve as a member of the Board of Directors
      of
      the Company until his resignation from the Board on February 7, 2007. Mr.
      Jannotta has agreed to forgive all accrued salary as well as the 1,000,000
      options he had received pursuant to the employment agreement. (See “Item 12 -
      Certain Relationships and Related Transactions” for further
      details.)





On
      November 5, 2005, the Company entered into a binding offer letter with Eric
      Young, as Chief Operating Officer and Chief Financial Officer. Under the terms
      of his employment, Mr. Young was to receive a base salary of $200,000 per annum,
      with $5,000 per month deferred until the next funding occurs or January 1,
      2006,
      whichever occurred first. Mr. Young was eligible for an annual incentive bonus
      based on performance. The agreement was terminable at will with or without
      cause
      (as defined therein). Mr. Young received non-qualified incentive stock options
      to purchase 500,000 shares of common stock at an exercise price of $1.00 per
      share in accordance with the Company's Employee Stock Option Plan. 10% of the
      options vested immediately upon the signing of the employment agreement and
      the
      remaining options were to vest at the rate of 1/12th per month for 12 months.
      In
      addition, upon his execution of the employment agreement, Mr. Young received
      additional options to purchase 750,000 shares of common stock of the Company
      at
      a purchase price of $0.01 per share, in which 1/3 vested upon the signing of
      the
      employment agreement, 1/3 vested at the closing of the next round of financing
      or January 1, 2006, whichever occurred earlier, and the remaining 1/3 would
      vest
      when the Company’s Common Stock resumed trading on the OTCBB. The fair value of
      the options granted totaled $438,883. As was disclosed on the Company’s Form 8-K
      filed on August 24, 2006, Mr. Young resigned on August 1, 2006 to pursue other
      opportunities. The Company is currently in litigation with Mr. Young concerning
      the number of options that vested upon his resignation and the expiration of
      the
      exercise period of said options.





Effective
      June 6, 2006, Joseph Morris succeeded Eric Young as Chief Operating Officer
      of the Company. Previously, Mr. Morris served as Chief Operating
      Officer of AI, which was acquired on April 18, 2006.  Mr. Morris' base
      salary is $150,000 per annum. As an employment incentive, Mr. Morris was granted
      stock options to purchase 50,000 shares of the Company’s Common Stock at an
      exercise price of $0.01, of which 1/3 vested immediately upon the signing of
      the
      Employment Agreements, 1/3 at the closing of the next round of funding, and
      the
      remaining 1/3 when the Company’s Common Stock resumes trading on the OTCBB. Additionally,
      Mr. Morris was granted stock options to purchase 100,000 of the Company's Common
      Stock at an average price of $1.00 per share, of which 10% vested immediately
      upon signing the employment agreement and the remaining 90% will vest at the
      rate of 1/12 th per
      month for twelve months. The fair value of the options granted totaled $53,329.
      On March 12, 2007, Mr. Morris’ base salary was increased to $200,000 per annum
      and he was granted additional stock options. As of March 12, 2007, Mr. Morris
      was granted additional stock options to purchase 200,000 shares of the Company’s
      Common Stock at an
      exercise price of $0.01, of which 1/3 vested immediately upon the signing of
      the
      Employment Agreements, 1/3 at the closing of the next round of funding, and
      the
      remaining 1/3 when the Company’s Common Stock resumes trading on the OTCBB. Additionally,
      Mr. Morris was granted additional stock options to purchase 400,000 of the
      Company's Common Stock at an average price of $1.00 per share, of which 10%
      vested immediately upon signing the employment agreement and the remaining
      90%
      will vest at the rate of 1/12 th per
      month for twelve months. The fair value of the additional options granted
      totaled $232,441.





Effective
      August 8, 2006, Jeffrey L. Burke succeeded Mr. Yalley as Executive Vice
      President of the Company. Mr. Burke's base salary is $270,000 per annum. As
      an
      employment incentive, Mr. Burke was granted stock options to purchase 750,000
      shares of the Company’s Common Stock at an
      exercise price of $0.01, of which 1/3 vested immediately upon the signing of
      the
      Employment Agreements, 1/3 at the closing of the next round of funding, and
      the
      remaining 1/3 when the Company’s Common Stock resumes trading on the OTCBB.
      Additionally, Mr.
      Burke
      was granted options to purchase 500,000 of the Company's Common Stock at an
      average price of $1.00 per share, of which 10% vested immediately upon signing
      the employment agreement and the remaining 90% will vest at the rate of
      1/12 th per
      month for twelve months. The fair value of the options granted totaled $481,492.




31




Options
      granted to officers of the Company beginning September 10, 2002 were treated
      in
      accordance with APB Opinion No. 25, “Accounting for Stock Issued to Employees
      (“APB 25”)”. Under APB 25, if the exercise price of the Company’s employee stock
      options is equal to or greater than the market price of the underlying stock
      on
      the date of the grant, no compensation expense is recognized. For stock options
      and warrants issued as compensation and reported in periods beginning after
      December 15, 2005, the Company applies SFAS No. 123(R), “Share-Based Payment,”
which requires the recognition of compensation cost based upon the fair value
      of
      stock options at the grant date (using option pricing models), and recognizing
      the cost over the period during which the services are provided (vesting
      period). (See “Note 2 - Summary of Significant Accounting Policies,” for further
      details regarding stock options issued to employees of the
      Company.)





In
      addition to the employment agreements with the officers and directors, the
      Company also signed employment agreements with 37 employees. Under the terms
      of
      the officers, director and employee agreements, the Company has committed to
      compensation expenses of approximately $4,555,000, of which $1,387,000 will
      be
      deferred until the Company has completed its next round of financing and its
      common stock is traded on the OTCBB. On March 30, 2007, the Company gave notice
      to all employees that the terms of their employment agreements would change
      effective immediately. The change consisted of ceasing all salary deferrals
      until such time as the Company’s common stock resumes trading on the OTCBB.
      Deferred salary amounts not accrued by March 30, 2007 are considered to be
      forfeited. This should be a monthly savings of approximately $116,000.





**NOTE
      12 - SUBSEQUENT EVENTS**





**Increase
      in Authorized Share Capital**





On
      May
      21, 2007, the Company submitted a consent solicitation statement to its
      stockholders seeking their approval of an amendment to the Company’s Articles of
      Incorporation to increase the number of shares of common stock the Company
      is
      authorized to issue from 50,000,000 to 200,000,000 and the number of shares
      of
      preferred stock the Company is authorized to issue from 5,000,000 to 20,000,000.
      On June 22, 2007, the Company filed a Certificate of Amendment to its Articles
      of Incorporation which increased the number of shares of common stock the
      Company is authorized to issue from 50,000,000 to 200,000,000 and which
      increased the number of shares of preferred stock the Company is authorized
      to
      issue from 5,000,000 to 20,000,000. There was no change to the par value of
      the
      shares of the Company’s common or preferred stock, the par value of each of
      which remains $0.001 per share. The amendment to the Company’s Articles of
      Incorporation to increase its authorized share capital was unanimously approved
      by Board of Directors of the Company and by the holders of 56.24%, or 27,884,847
      shares, of the Company’s common stock acting by written consent.





**Convertible
      Debentures and Other Financing Agreements**





Subsequent
      to the end of the first quarter of 2007, 41 of the 93 convertible debenture
      holders holding notes that matured during the first quarter or will mature
      in
      subsequent quarters agreed in writing to exercise their conversion options
      at
      $0.20 per share. Based on these agreements, the Company will convert $391,700
      in
      principal and $17,979 in accrued interest in exchange for 2,048,396 shares
      of
      common stock.  As a result of the conversions and the subsequent issuances,
      the Company will record the issuance of 2,048,396 shares of restricted common
      stock during the third quarter of 2007, thereby reducing the liability for
      convertible debentures payable by approximately $410,000 compared to the balance
      outstanding at December 31, 2006.





Subsequent
      to the end of the first quarter of 2007, the Company continued to raise funds
      via issuance of convertible debentures under the same terms as the debentures
      issued during 2005 and 2006. Through June 22, 2007, the Company raised $373,500
      through the issuance of 10 convertible debentures ranging in value from $5,000
      to $250,000. The debentures have various due dates and provide for warrants
      totaling 1,117,500. In addition, the Company and/or founder have committed
      to
      issue 900,000 shares of the Company’s common stock as a condition of the funds
      raised.




32




In
      addition, the founder of the Company has raised capital and has loaned an
      additional $42,263 to the Company. As a condition of the capital raised, the
      founder has assigned or committed to assign 211,315 of his personal shares.
      These shares are repayable by the Company to the founder.





**Employee
      Matters**





Subsequent
      to the end of the first quarter of 2007, the Company entered into at-will
      employment agreements with two executives. Under the terms of employment, the
      executives will receive a base salary, with a portion deferred on a monthly
      basis until the next funding occurs. The executives are also eligible for an
      annual incentive bonus based on performance. The employment agreements are
      terminable at will with or without cause (as defined therein). The employees
      will receive non-qualified incentive stock options to purchase a cumulative
      300,000 shares of common stock at an exercise price of $1.00 per share. Ten
      percent of the options vested immediately upon the signing of the employment
      agreement and the remaining options shall vest at the rate of 1/12th per month
      for 12 months. In addition, they will receive an additional restricted 350,000
      shares of stock at a purchase price of $.01 per share, in which 1/3 vested
      upon
      the signing of the employment agreement, 1/3 will vest at the closing of the
      next round of financing, and the remaining 1/3 when the Company’s Common Stock
      resumes trading on the OTCBB. The Company will issue the options as soon as
      a
      satisfactory employee stock option plan has been approved by its shareholders.
      Consistent with the written obligation to issue the options, the Company has
      elected to accrue the fair market value of the options as if they had been
      issued under the requirements of SFAS No. 123(R).





**Related
      Party Note Conversion**





Subsequent
      to the end of the first quarter of 2007, an
      officer of the Company requested repayment of two non-interest bearing notes
      in
      the amounts of $78,192 and $1,793. The notes will be repaid with 399,924
      restricted shares of the Company’s common stock at the agreed-upon rate of $0.20
      per share in the third quarter of 2007.





**Legal
      Proceedings**





**Lefkowitz
      vs. Winsonic Digital Media Group, Ltd.** (Superior
      Court of CA, Los Angeles County - complaint filed May 18, 2006)





The
      parties entered into a settlement agreement on May 4, 2007, wherein the Company
      agreed to issue 200,000 unrestricted shares to Plaintiff and $160,000 in
      installments, which would be discounted upon the sale of the stock. As of the
      date of this filing, the Company has not made any payments, nor has it issued
      any stock to the Plaintiff. Other than as described herein, no other significant
      events have occurred in this matter as of the date of this report.





**Yalley
      vs. Winsonic Digital Media Group, Ltd.** (District
      Court of Nevada, Clark County - complaint filed October 13, 2006)





On
      April 6, 2007, the Company filed its response to the amended complaint, which
      included a counter-claim for fraud against Mr. Yalley. The Company’s position is
      that Mr. Yalley deliberately withheld critical information from the Company
      during the negotiations of the reverse merger with Media and Entertainment.com
      and participated in fraudulent acts immediately preceding and after the merger.
      Other than as provided herein, no other significant events have occurred in
      this
      matter a s
      of the
      date of this filing.





**McKinney’s,
      Inc. vs. Winsonic Digital Media Group, Ltd.** (State
      Court of Fulton County, Georgia - Complaint filed March 21, 2007)





The
      Company was served with the summons and complaint on April 4, 2007 and filed
      its
      answer and defenses on May 15, 2007. Plaintiff subsequently filed a motion
      to
      strike the Company’s answer and moved for summary judgment. The Company is in
      the process of filing its responses to these pleadings. As of the date of this
      filing no significant action has been taken in this matter.




33




**Item
      2. Management’s Discussion and Analysis or Plan of Operation.**





**Forward-Looking
      Statements**





This
      report contains forward-looking statements about our business, financial
      condition and prospects that reflect management's assumptions and beliefs based
      on information currently available. We can give no assurance that the
      expectations indicated by such forward-looking statements will be realized.
      If
      any of our management's assumptions should prove incorrect, or if any of the
      risks and uncertainties underlying such expectations should materialize, our
      actual results may differ materially from those indicated by the forward-looking
      statements.





The
      key factors that are not within our control and that may have a direct bearing
      on operating results include, but are not limited to, acceptance of our
      services, our ability to attract customers, management's ability to raise
      capital in the future, the retention of key employees and changes in the
      regulation of our industry.





There
      may be other risks and circumstances that management may be unable to predict.
      When used in this Interim Report, words such as, “believe,” “expect,” “intend,”
“plan,” “anticipate,” “foresee,” “likely,” “will,” “goal,” “target,” “estimate”
and similar expressions are intended to identify forward-looking statements,
      as
      defined in Section 21E of the Securities Exchange Act of 1934, although there
      may be certain forward-looking statements not accompanied by such expressions.




**General**





Winsonic
      Digital Media Group, Ltd. is a digital media solutions company which
      historically has focused on distributing digital content to the public and
      providing high-speed, high-quality, low-cost solutions that enable users to
      view, interact, and listen to all types of audio, online video and digital
      TV in
      full screen format. ******




As
      described in more detail below, during fiscal year 2006, the Company acquired
      a
      49% equity interest in Winsonic Diversity, LLC and completed the acquisitions
      of
      Automated Interiors, LLC (“AI”), Tytess Design and Development, Inc. (“Tytess”),
      and DV Photo Shop. These actions represent a series of strategic investments
      in
      new markets and new services that expand the offerings of the Company while
      complimenting our existing business. Together with our existing digital
      distribution platform, comprised of the Winsonic Digital Cable Systems Network,
      Ltd’s network, we are now able to deliver customized, bundled solutions to a
      wider range of customers that include custom wiring, centrally-located
      utilities, facility construction, project management, telephone, internet,
      audio/video and digital TV distribution.






In
      the
      first quarter of 2007, as compared to the same period in 2006, the Company’s
      revenue increased from $0 to $678,000. The revenue increase is primarily
      attributable to the acquisitions of AI and Tytess. The addition of the Company’s
      skills, facilities and digital distribution platform allowed AI and Tytess’s
      success in Georgia to continue.






In
      the
      first quarter of 2007, we saw a trend in digital lifestyles continue to expand
      with new product and service offerings from companies such as Apple, Verizon,
      Helio and others. We expect the digital distribution industry will continue
      to
      grow at a rapid rate and believe that customers will gravitate toward companies
      that can deliver the most powerful and flexible converged solutions that will
      save time and money and boost productivity. We believe our actions in fiscal
      year 2006 and the first quarter of 2007 have positioned us well to develop
      further and to take advantage of these opportunities.




The
      Company was incorporated on April 27, 2000 in the state of Nevada as Media
      and
      Entertainment, Inc. On September 14, 2000, Media and Entertainment, Inc. changed
      its name to Media and Entertainment.com, Inc. On November 24, 2004, Media and
      Entertainment.com, Inc. changed its name to Winsonic Digital Media Group,
      Ltd.




34




The
      Company maintains a website at: ***www.winsonic.net*** .
      The
      information contained on our website is not incorporated by reference in this
      interim report and should not be considered a part of this interim
      report.





**Winsonic
      Digital Cable Systems Network, Ltd.**




Winsonic
      Digital Cable Systems Network, Ltd., a wholly owned subsidiary of the Company,
      (“WDCSN”), maintains and runs the Company’s facilities-based network (the
“Network”) which has been the historic focus of the Company. The Network
      concentrates on carrier-class, high-speed, digital connectivity solutions. While
      the Network is a state-of-the-art digital distribution platform, it has been
      in
      development for many years and has been involved in projects that date back
      over
      twenty-five years. With a shift to more market-based policies, due in part
      to
      the implementation of the Telecommunications Act of 1996, a new competitive
      and
      robust marketplace with diverse participants has developed and the Company,
      through WDCSN and the Network is capable of providing access to advanced
      communications services at affordable prices to a wide customer
      base.




**Automated
      Interiors, LLC**




The
      Company acquired Automated Interiors, LLC (“AI”), a Georgia limited liability
      company effective April 18, 2006. AI is a systems integration company, which plans
      and
      engineers the installation of electronic components to facilitate “smart”
buildings. As a result of the acquisition, AI has the capability to help
      developers of all sizes manage the transformation in technology and migrate
      from
      their traditional voice and data services to feature-rich digital services
      and
      solutions.




The
      acquisition of AI creates significant new opportunities for us. The combination
      of our Network with AI’s capabilities allowed AI to migrate from serving single
      homeowners to partnering with developers and builders in offering the latest
      technological innovations in home and security automation. We expect that as
      we
      continue to integrate AI with our existing business, that we will realize
      significant benefits from the acquisition.




**Tytess
      Design & Development, LLC**





The
      Company acquired Tytess Design and Development, Inc. (“Tytess”), a Georgia
      corporation, on November 2, 2006. Tytess provides architectural, engineering,
      construction and construction management services to residential and commercial
      customers. Specifically, this includes site analysis, pre-design, schematic
      design, bidding and negotiation services. Tytess has developed a consortium
      of
      architects, engineers, realtors, mortgage brokers and other contractors who
      provide solutions for the design and construction of commercial buildings,
      institutional facilities and residential communities. The acquisition of Tytess
      further complements the capabilities of AI and we believe additional expansion
      opportunities may be available as we continue to adapt these services to meet
      the requirements of supporting traditional telecommunications companies in
      the
      design and construction of their facilities.





**Winsonic
      Digital Store, Ltd.**





The
      Company acquired DV
      Photo
      Shop on November 20, 2006. Following the acquisition, the Company changed the
      name of DV Photo Shop to Winsonic Digital Store, Ltd. (the “Store”), and
      incorporated it in the State of Georgia on December 8, 2006. The Store is an
      urban retail store located at Centennial Tower, 101 Marietta Street, Atlanta,
      Georgia, and specializes in photography development, digital photography and
      the
      sale of mobile phones, accessories, and wireless communications services. The
      Store provides service to downtown Atlanta, specifically those in need of
      convenience for uploading, developing and printing digital photographs and
      activating mobile phone services. The acquisition of the Store provides an
      opportunity to create new and expanded consumer services in areas such as
      wireless communications, digital downloads, digital content development,
      mobility services and Voice over internet protocol (VOIP). The Store continues
      to offer the same products and services it offered before the acquisition;
      however, its future offerings will be expanded to include music downloads,
      digital photo depot, on-line storage, video conferencing, content development,
      a
      music lab for mixing and mastering, and film, video and photo editing.




35




**Winsonic
      Diversity, LLC**




Winsonic
      Diversity, LLC (“Winsonic Diversity”) was formed on May 22, 2006 in the State of
      Georgia by the Company and Mr. Winston Johnson, the Chairman and CEO of the
      Company. Mr. Johnson believed that the formation of Diversity would enable
      the
      Company to qualify for and pursue opportunities with various entities including
      the Federal Communications Commission, Public Utilities Commission, Universal
      Service, National Telecommunications and Information Administration, National
      Information Infrastucture and the Department of Commerce that focus on providing
      services to people from all economic backgrounds. After careful review and
      consideration, the Company’s Board of Directors determined that it was advisable
      and in the best interests of the Company and its stockholders to form Winsonic
      Diversity. The Company owns 49% of the equity interests of Winsonic Diversity
      and Mr. Johnson owns the remaining 51% of the equity interests. Winsonic
      Diversity is focused on developing urban and rural communities by providing
      resources and services that improve quality of life. Since its inception,
      Winsonic Diversity has identified, and is currently working on several urban
      community initiatives to include NATV, Morris Brown College in Atlanta, Georgia,
      West Angeles Community Development Corporation in Los Angeles, California,
      and
      Sweet Auburn at Renaissance Walk in Atlanta, Georgia. Winsonic Diversity offers
      a full portfolio of public and private network access points, media distribution
      solutions, and products to consumers and businesses. Additionally, Winsonic
      Diversity offers thorough information technology analysis, creative
      architectural and software designs, and a full range of technical and
      professional expertise .
      As a
      certified Minority Business Enterprise, Winsonic Diversity has access to major
      enterprises that have diversity initiatives. This has resulted in several new
      opportunities with companies such as Verizon Wireless, Verizon Communications,
      Verizon Business, AT&T, and Bank of America.




**Discussion
      of Material Transactions and Developments**





**Native
      American Television Network**





On
      September 29, 2005, the Company consummated a stock exchange agreement with
      the
      Native American Television Network (“NATVN”), based in Albuquerque, New Mexico.
      NATVN intends to launch the first Western Hemisphere, pan-tribal digital cable
      channel. The Company will provide to NATVN its nationwide distribution platform
      and technical support, expertise and personnel. NATVN will provide the Company
      with commercial airtime on regularly scheduled programming that offers air
      space
      to advertisers with the exception of paid programming or long form
      advertisements.





In
      accordance with the stock exchange agreement between the two parties, the
      Company issued 1,670,000 shares of its Common Stock to NATVN, and the Company
      acquired 4,000,000 shares of stock in NATVN, representing 27% of the NATVN
      equity.





The
      value
      of the investment to the Company is based upon the promising mutually beneficial
      opportunities of the relationship between the Company, NATVN and a significant
      number of potential digital-services subscribers within the American Indian
      community; however, currently there are no signed agreements in place. The
      Company has made tangible progress toward contractually capturing the target
      market, and NATVN is currently negotiating with representatives of the potential
      digital-services subscribers. As of yet, contractual agreements with the
      potential subscribers have not been secured. Without the agreements in place,
      the final number of subscribers to be serviced, the actual services to be
      provided (i.e. cable television, digital television, advertising revenues,
      telephony services, and high-speed internet) and the prices to be charged for
      the services are not certain.





This
      transaction was recorded in accordance with Staff Accounting Bulletin (SAB)
      Topic 5(g), which states that the transfer of non-monetary assets by
      shareholders should be recorded at the transferor’s historical cost basis as
      determined under Generally Accepted Accounting Principles (GAAP). The previous
      President of the Company and a Company shareholder are also shareholders and
      co-founders of NATVN, owning approximately 9% of the total outstanding equity
      in
      NATVN. Since NATVN is an early development stage company and there are no
      tangible or intangible assets or signed agreements in place, the historical
      cost
      and initial value of the non-monetary asset received was valued at zero as
      of
      December 31, 2006.




36




The
      Company and NATVN are currently in ongoing discussions to consider alternatives
      in the structure of the existing agreement, with the goal of providing both
      parties with an optimal structure and enhanced opportunities to service
      customers. Until then, the ongoing investment in NATVN will be accounted for
      under the “equity” method. The equity method of accounting is used if the
      investor has the ability to significantly influence the investee’s financial and
      operating policies or if an investor is accounting for an investment in a
      corporate joint venture, but holds less than 50% of the investee. Under the
      equity method, an investment is initially recorded at cost. Thereafter, the
      carrying amount of the investment is increased for the investor’s proportionate
      share of the investee’s gains or reduced for the proportionate share of the
      investee’s losses or for distributions received from the investee.





Subsequently,
      NATVN, working in conjunction with the Company, entered into a Memorandum of
      Understanding (“MOU”) with the Navajo Nation Office of Broadcast Services, and
      Diné College. Under the MOU the parties intend to collaborate and
      explore:


·
            The
                need for building a local education and training program that can
                provide
                Navajo Nation residents interested in entering the film and/or television
                industry with up-to-date digital media
                training.


·
            How
                to best utilize local workforce training and other resources so as
                to
                build and retain within the Navajo Nation an up-to-date well-trained
                media
                workforce.


·
            The
                need to assess the current state of the Navajo Nation’s communications
                infrastructure, as well as how to improve upon
                it.


·
            The
                establishment of a state-of -the-art digital news bureau/content
                production facility.





**Construction
      Agreements for Tytess Design and Development, Inc.**





On
      September 21, 2006, Tytess replaced View Point Group, LLC as the
      designer/builder in a design and construction agreement with Siloam Korean
      Church of Atlanta, Inc., which was originally executed on May 18, 2006. Pursuant
      to the agreement, Tytess agreed to design, engineer and build a sanctuary,
      fellowship hall, multipurpose room, classrooms, administrative offices and
      kitchen for the church within 365 days of the date of execution of the
      agreement. For its services, Tytess will be paid the sum of $2,007,000,
      including change orders, which is payable in increments based on a work
      completion percentage schedule.





On
      December 5, 2006, Tytess replaced View Point Group, LLC as the designer/builder
      in two design and construction agreements, which were originally executed in
      June and August of 2006. Pursuant to the agreements, Tytess will design,
      engineer and construct a 7,200 square foot single family residence in Atlanta,
      Georgia and a 4,200 square foot single family residence in Smryna, Georgia.
      Tytess’ compensation under these agreements will total $635,000, payable to
      Tytess in accordance with draw schedules determined by the percentage of work
      completed.





**Agreement
      for Project/FiOS Installation Services with Verizon**





On
      November 7, 2006, Winsonic Diversity and Verizon executed a FiOS Installation
      Services Agreement, pursuant to which Winsonic Diversity agreed to perform
      project management services, installation services, or both, as authorized
      by
      work orders issued by Verizon during the term of the agreement. The agreement
      became effective on January 1, 2007 and will continue in effect until December
      31, 2009 unless terminated or extended. This agreement will permit Verizon
      to employ the services of Winsonic Diversity on a nonexclusive basis for
      services identified in the agreement.





FiOS
      is a fiber to the premises (FTTP) telecommunications service offered in the
      United States by Verizon and has attracted consumer and media attention in
      the
      area of broadband Internet access as the first major carrier to offer such
      a
      service.




37




**Marketing
      Agreement with Point Source, LLC**





On
      February 6, 2007, the Company, Winsonic Diversity, and Point Source, LLC (“Point
      Source”), a construction and engineering firm specializing in residential
      developments in the southeast region, entered into a Marketing Agreement,
      pursuant to which Point Source was appointed by the Company as its non-exclusive
      marketing agent for a period of twenty (20) years.





Under
      the
      Agreement, Point Source will market the Company’s products and services to
      corporations and businesses using its network of affiliations with builders,
      developers, contractors, banks, accountants, lawyers, politicians and senior
      executives of corporations. Pursuant to the Agreement, Point Source is obligated
      to reasonably ensure that, for all projects owned and managed by Point Source
      for which the Company is selected as a provider, the Company will be the
      exclusive provider of said product/service. As consideration for its services,
      the Company agreed to pay to Point Source a 20% commission of the net profits
      from all sales referred to the Company by Point Source for the life of the
      service agreement between the Company and the referred customer.





**Construction
      Services Agreement with Verizon**





On
      February 15, 2007, Winsonic Diversity and Verizon Services Corporation
      (“Verizon”) executed a 2-year Construction Services Agreement, pursuant to which
      Winsonic Diversity has agreed to serve as a general contractor for Verizon
      in
      the construction of facilities at various sites. This agreement will permit Verizon
      to employ the services of Winsonic Diversity on a nonexclusive basis for
      services identified in the agreement. Upon receipt of an authorization letter
      from an authorized Verizon representative, the scope of work that Winsonic
      Diversity may be asked to perform and/or supervise includes the following:





*General
      Contractor:*


·
            Cell
                site construction on raw land;


·
            Cell
                site construction on existing telecommunications structures;
                and


·
            Cell
                site construction as rooftop
                additions.


*Site
      Construction*


·
            Site
                access roads;


·
            Fencing
                and gates;


·
            Site
                electrical;


·
            Construction
                stakeout;


·
            Foundations;


·
            Equipment
                shelters;


·
            Warehousing
                and material planning;


·
            Crane
                services;


·
            Tower;
                and


·
            Equipment
                installation services.


*Rigger*


·
            Installation
                of base antenna;


·
            Installation
                of coax cable;


·
            Installation
                of grounding system;


·
            Installation
                of pressurized antenna system; and


·
            Directional
                antenna mounting.





In
      addition to the services described above, Verizon may, by authorization letter,
      order additional services not listed in the agreement, at prices quoted to
      Verizon in writing.  Under
      the
      agreement, Verizon shall compensate Winsonic Diversity at the rates quoted
      by
      Winsonic Diversity for each specific service and/or skill set. Verizon can
      terminate the agreement or any authorization letters issued without cause,
      effective immediately, upon written notice to Winsonic Diversity.





**General
      A & E Services Agreement with Verizon**




38




On
      February 28, 2007, Winsonic Diversity executed a General Architectural and
      Engineering Services Agreement with Verizon) to provide architectural &
engineering and site analysis services to Verizon, to provide architectural
      & engineering and site analysis services to Verizon for an initial term of
      one (1) year; provided that such agreement is automatically renewable for
      subsequent one year periods at each annual anniversary. Upon
      receipt of an authorization letter from an authorized Verizon representative,
      and according to the schedule agreed to in advance by both parties, the scope
      of
      services that Winsonic Diversity may be asked to perform include the following:





·
            Architecture
                and Engineering Services for cell sites on raw
                land;


·
            Architecture
                and Engineering Services for cell sites on existing
                structures;


·
            Architecture
                and Engineering Services for cell sites as rooftop additions;
                and


·
            Structural
                analysis for cell sites on existing
                structures.





Winsonic
      Diversity may also be asked to perform the following services:


·
            Site
                visits;


·
            Project
                management;


·
            Evaluation
                of Verizon ‘s program, schedule and construction budget
                requirements;


·
            Review
                of alternate approaches to design and
                construction;


·
            Prepare
                schematic design documents;


·
            Document
                review;


·
            Tower
                appurtenance cataloging;


·
            Perform
                detailed structural analysis;


·
            Provide
                structural analysis report;


·
            Provide
                design development documents;


·
            Provide
                construction documents; and


·
            Provide
                administration of the construction
                contract.





Under
      the
      agreement, Verizon shall compensate Winsonic Diversity at the rates quoted
      by
      Winsonic Diversity for each specific service. Verizon can terminate the
      agreement or any authorization letter issued without cause, effective
      immediately, upon written notice to Winsonic Diversity.





**Memorandum
      of Understanding with Comtel Telcom Assets LP** ****





On
      March
      26, 2007 the Company and Comtel Telcom Assets LP (“Comtel”), executed a
      Memorandum of Understanding pursuant to which both parties agreed to enter
      into
      good faith, non-binding, non-exclusive negotiations to facilitate the purchase
      of five (5) of Comtel’s switch sites by the Company.





It
      is the
      Company’s intention to purchase from Comtel certain operating TDM systems
      (Nortel and Tellabs equipment) currently deployed and in-service with the
      understanding that the Company will arrange for any required licensing or RTUs
      from the manufacturer(s). Additionally the Company intends to purchase other
      miscellaneous telephony equipment, test gear, including, but not limited to
      DS1
      or DS3 patch panels, fiber patch panels, equipment/site alarming equipment
      and
      the existing switch site tool compliment. A detailed inventory of all purchased
      assets will be developed to determine the final pricing of the
      assets.





It
      is
      also the Company’s intention to purchase from Comtel certain installed power
      systems which will include the existing DC power plant with all rectifiers,
      batteries, distribution devices and cabling, plus the existing ACV power
      distribution system including any dedicated service, emergency generator and
      existing fueling systems.





As
      part
      of any agreement entered into with Comtel, the Company intends to develop a
      collocation agreement that will grant Comtel rack space for both current and
      future equipment requirements and grant access to employees of Comtel to the
      collocation site. The Company intends to provide Comtel with a service contract
      as part of the collocation agreement to support Comtel as may be required during
      certain specified periods.




39




The
      locations currently being considered for acquisition by the Company are located
      in the Atlanta, Georgia, Houston, Texas, Chicago, Illinois, Los Angeles,
      California, and Denver, Colorado markets. The Company has an interest in
      developing a reciprocal agreement with Comtel in markets the Company elects
      not
      to pursue a full switch site, but wishes to aggregate customer
      traffic.





**Sponsorship
      Agreement with Atlanta Jazz Festival**





In
      March,
      2007, the Company entered into a Sponsorship Agreement with the City of Atlanta,
      Office of Cultural Affairs (“the City”), pursuant to which the Company became
      the official technology sponsor for the Atlanta Jazz Festival.





Under
      the
      Agreement, the Company will design, develop, host, operate and maintain an
      interactive web portal for the City that will allow for the broadcast, download
      and purchase of festival content and merchandise. The Company will also provide
      promotional space and/or a link from the Atlanta Jazz Festival web site to
      the
      Company’s website during the period of the Atlanta Jazz Festival. The Agreement
      commenced upon execution by the Company and will be in effect for a period
      of
      two years.





**Material
      Changes in Results of Operations**





As
      a
“development stage company” the Company has not commenced material commercial
      operations. Prior to March 31, 2007, the Company has recorded $1,472,000 of
      revenue since inception. During the three months ended March 31, 2007, the
      consolidated operations of the Company, combined with AI, Tytess and Winsonic
      Digital Store (“WDS”) yielded revenue of $654,514.





The
      following schedules include the separate and consolidating information for
      the
      operations of the Company’s consolidated operations for the three months ended
      March 31, 2007 and 2006:





**For
                the three months ended March 31, 2007****WDMG**
            
            **AI**
            
            **Tytess**
            
            **WDS**
            
            **Combined**Revenue
            
            $
            -
            
            $
            313,012
            
            $
            338,395
            
            $
            3,107
            
            $
            654,514Gross
                Profit
            
            
            -
            
            
            111,814
            
            
            41,489
            
            
            1,554
            
            
            154,857SG
                & A expenses
            
            
            2,014,374
            
            
            269,898
            
            
            88,518
            
            
            36,049
            
            
            2,408,839Loss
                from operations
            
            
            (2,014,374
            )
            
            (158,084
            )
            
            (47,029
            )
            
            (34,495
            )
            
            (2,253,982
            )Net
                Loss
            
            $
            (3,072,644
            )
            $
            (160,136
            )
            $
            (47,029
            )
            $
            (34,495
            )
            $
            (3,314,304
            )Loss
                per share - basic and diluted
            
            $
            -
            
            $
            -
            
            $
            -
            
            $
            -
            
            $
            (0.07
            )











**For
                the three months ended March 31, 2006****WDMG**
            
            **AI**
            
            **Tytess**
            
            **WDS**
            
            **Combined**Revenue
            
            $
            -
            
            $
            -
            
            $
            -
            
            $
            -
            
            $
            -Gross
                Profit
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -SG
                & A expenses
            
            
            756,026
            
            
            -
            
            
            -
            
            
            -
            
            
            756,026Loss
                from operations
            
            
            (756,026
            )
            
            -
            
            
            -
            
            
            -
            
            
            (756,026
            )Net
                Loss
            
            $
            (1,393,699
            )
            $
            -
            
            $
            -
            
            $
            -
            
            $
            (1,393,699
            )Loss
                per share - basic and diluted
            
            $
            -
            
            $
            -
            
            $
            -
            
            $
            -
            
            $
            (0.03
            )




40




For
      the three months ended March 31, 2007, the Company incurred an operating loss
      of
      $2,254,000 compared to an operating loss of $756,000 in the comparable period
      of
      2006. Total operating expenses for the three-month period ended March 31, 2007
      primarily consisted of selling, general and administrative expenses of $497,000,
      payroll expense of $1,230,000, payroll expense - related party of $644,000,
      consulting expense of $2,000 and depreciation expense of $36,000, compared
      to
      selling, general and administrative expenses of $216,000, payroll expense of
      $291,000, payroll expense - related party of $212,000, and depreciation expense
      of $37,000, in the comparable period last year. The increases in the expenses
      are related to the acquisitions made in 2006 of AI, Tytess, and the Store and
      the addition of personnel and occupancy costs related to the planned expansion
      of the Company’s business operations.





During
      the year ended 2006, the Company applied SFAS No. 123(R), which requires the
      Company to recognize the expense of employee incentive options that vest during
      the reported period.  The payroll expense and payroll expense - related
      party for the three months ended March 31, 2007 and 2006 include compensation
      expenses of $611,000 and $116,000, respectively, arising from vested employee
      stock options committed to employees during each quarter.  For additional
      information, see “Note 2 - Summary of Significant Accounting Policies, Stock
      Based Compensation” of the financial statements.





For
      the three months ended March 31, 2007, the Company incurred interest expense
      of
      $1,396,000 compared to an interest expense of $20,000 in the comparable period
      of 2006. The increase in interest expense during the three months ended March
      31, 2007 is $1,376,000. The increase is primarily due to financing costs of
      $1,109,000 and the accretion of interest of $308,000 during the first quarter
      of
      2007 compared to $20,000 for principal and interest related to convertible
      promissory notes, which was accreted during the quarter, ended March 31, 2006.
      Interest expense - related party increased to $45,000 for the three months
      ended
      March 31, 2007 compared to $17,000 for the same period in 2006. The increase
      is
      related to the increase in the balance of related party notes payable.





During
      December of 2004 and January of 2005 the Company issued a total of approximately
      $1,015,000 in convertible debentures. The conversion feature of the debentures
      included the right of the debenture holder to convert the face value of the
      debenture into common stock of the Company at the lower of $0.70 per share
      or
      85% of the market value of the common stock (at the time of conversion). The
      agreement also included a detachable warrant, which allowed the warrant holders
      to purchase shares of common stock of the Company at $0.70 per share (1,450,000
      shares of common stock), through December 2006. During the period ended December
      31, 2005, the debentures were renegotiated and extended to June of 2006, and
      the
      conversion price was decreased from $0.70 to $0.40 or 85% of the market price
      of
      the stock at the time of conversion. Please reference “Note 10 - Convertible
      Debentures” of the financial statements for a more detailed explanation. The
      transaction, to the extent that it is to be satisfied with common stock of
      the
      Company, would normally be classified as an equity obligation. However, the
      Company could be required to issue an indeterminate number of shares of its
      common stock to satisfy the optional (85% of market value) conversion feature
      of
      the debentures. This could cause the Company to exceed the number of shares
      of
      common stock it is authorized to issue, which would also prevent the delivery
      of
      common shares if the warrants were exercised during that period of time as
      well.
      Under Generally Accepted Accounting Principles (“GAAP”), the Company is required
      to record the warrants and the convertible debentures as a liability. Changes
      in
      the value of the derivative liability and the warrant liability are reflected
      on
      our income statement as “ *Unrealized
      gain (loss) on adjustment of derivative and warrant liability to fair value
      of
      underlying securities.* ”
      During the three month period ended March 31, 2007 the Company recorded a gain
      of approximately $381,000 compared to a loss of approximately $596,000 during
      the period ended March 31, 2006 from the adjustment of the same liabilities.




41




For
      the three month period ending March 31, 2007, the Company recorded a net loss
      of
      $3,314,000, compared to the three month period ended March 31, 2006 when the
      Company recorded a net loss of approximately $1,394,000.





The
      components of change in loss recognized during the three month period ended
      March 31, 2007 compared to March 31, 2006 are the increase in operating expenses
      in the amount of $1,653,000 and an increase in other income (expense) of
      $423,000 offset by gross profit of $155,000. The gross profit relates to the
      business operations of AI, Tytess and the Store which were acquired subsequent
      to first quarter 2006. The increase in operating expenses is comprised of
      $394,000 related to expenses of AI, Tytess and the Store which were acquired
      in
      2006, $495,000 related to the increase stock compensation expense and the
      balance which relates to the addition of personnel and occupancy costs for
      the
      planned expansion of the Company’s business operations. The increase in other
      income (expense) relates to the charge to financing costs in the amount of
      $1,109,000 for stock to be issued in certain financing transactions and an
      increase in the accretion of interest related to share notes in the amount
      of
      $258,000 offset by a decrease in the “unrealized change in gain/loss on
      adjustment of derivative and warrant liability to fair value of underlying
      securities” in the amount of $977,000.





Management
      of the Company expects that, due to the volatile nature of the Company’s Common
      Stock price, these liabilities will be correspondingly volatile and as a result
      will cause the reported net income (loss) of the Company to fluctuate in such
      a
      manner as to make direct comparisons, between reporting periods, difficult.
      The
      management of the Company feels that as long as the derivative and warrant
      liabilities exist, the reported operating income (loss) will be a more accurate
      reference for the true performance of the Company.





**Material
      Changes in Financial Condition**





As
      of March 31, 2007, we had a working capital deficit of $9,097,000, compared
      to a
      deficit of $7,723,000 as of December 31, 2006.





If
      we are unable to generate sufficient sustainable revenues or obtain additional
      financing to meet our financial obligations, we will have to further reduce
      our
      operations, and we will not be able to continue as a going concern. Our
      independent accountants have indicated in their report that there is substantial
      doubt about our ability to continue as a going concern without increased
      revenues and additional financing.





For
      the three month period ending March 31, 2007 we used $447,000 in our operating
      activities, compared with $319,000 in the comparable period of 2006.





For
      the three month period ending March 31, 2007 our investing activities used
      $13,000 for the purchase of fixed assets, compared to $132,000 in the comparable
      period of 2006.





For
      the three month period ending March 31, 2007 our financing activities generated
      $457,000 compared to $511,000 being generated in the comparable period last
      year. The funds generated from our financing activities in the first quarter
      of
      2007 consists primarily of proceeds from loans payable, loans payable - related
      party and share loans of $462,000, which was partially offset by repayments
      of
      $5,000 on loan obligations. For the comparable period ended March 31, 2006,
      the
      Company raised $539,000 from loans payable, loans payable - related party and
      convertible notes, which was partially offset by a payment of related party
      loan
      payable of $28,000.





From
      inception, the Company has raised $6,380,000 to fund operations.  Of the
      total funds raised, $4,935,000 was used to provide the necessary resources
      for
      the development stage operations of the Company and $1,462,000 was used to
      purchase fixed assets. The funds include cash of $3,030,000 which was raised
      through convertible debentures and warrants for common stock; and cash of
      $1,350,000 which was raised through loans (net of repayments).  The Company
      also raised $2,000,000 from the issuance of common stock.




42




For
      the three-month period ending March 31, 2007 the Company’s net cash position
      decreased by $3,506 compared to a net increase of $60,000 in the comparable
      period of 2006.





**Continuing
      Operations**




The
      markets in which the Company operates include a large number of companies vying
      for customers and market share both domestically and internationally. The
      Company’s competitors include other digital service providers, home automation
      companies, and architectural and design firms. Some of the Company’s competitors
      may develop competing products and services that offer better pricing or that
      reach the market in advance of the Company’s offerings. Some competitors also
      have or may develop greater financial and other resources than the Company,
      with
      enhanced ability to compete for market share, in some instances through
      significant economic incentives to secure contracts. Some also may be better
      able to compete for skilled professionals. Any of these factors could have
      an
      adverse effect on the Company’s business. Future results will depend on the
      Company’s ability to mitigate the effects of aggressive competition on revenues,
      pricing and margins and on the Company’s ability to attract and retain talented
      people.





The
      Company’s future results will depend in part on the success of its ability to
      profitably grow revenues under the existing contracts and to control costs
      through the development and use of low-cost subcontractors, partnering and
      sourcing models. The Company’s current contracts are multiyear engagements under
      which the Company will provide project management, site construction,
      architectural and engineering services, and installation services for larger
      digital service providers. The planned expansion includes, among other things,
      commercial operations where the Company will deliver digital services across
      several platforms, the integration and continued growth of AI, Tytess, Winsonic
      Diversity, and Winsonic Digital Store. With potential joint ventures, such
      as
      NATVN, the Company’s facilities-based network and current service contracts are
      expected to provide a base of recurring revenue. The Company will need to have
      available sufficient financial resources in order to take on these obligations
      and make these investments.





The
      Company has, to date, focused almost exclusively upon the startup phase of
      its
      operations. To that end, management has focused on identifying and retaining
      key
      employees to provide the support necessary as operations move to revenue
      generation and expansion. The Company’s priorities for the next twelve months of
      operations are to expand our human resources to adequately service our existing
      contracts and to reach a sustainable profitability level. As we expand our
      operations with the expectation of growing revenue from our activities, we
      may
      elect to hire additional salaried or hourly employees to operate certain aspects
      of our business. While we will attempt to attract and retain qualified employees
      under terms similar to those currently in place, we may not be able to obtain
      agreements allowing for deferral of payroll or payment of portions of
      compensation in the form of equity.





While
      management expects revenue generation to increase, the Company expects to
      operate with a deficit in cash flows for the next few months. The deficit,
      which
      arises primarily from payroll obligations, may be satisfied through a
      combination of employee salary deferrals and through cash raised primarily
      from
      the placement of the Company’s securities (either directly or through
      convertible debt offerings). On March 30, 2007, the Company gave notice to
      all
      employees that the terms of their employment agreements would change effective
      immediately. The change consisted of ceasing all salary deferrals until such
      time as the Company’s common stock resumes trading on the OTCBB. Deferred salary
      amounts not accrued by March 30, 2007 are considered to be forfeited. This
      should be a monthly savings of approximately $116,000. Management intends to
      focus substantial efforts on the funding of the current projects and operational
      deficit during the next few months. The funding effort will proceed at the
      same
      time as commercial operations continue. The Company believes that the current
      management team has the applicable skills to handle the challenge of covering
      the cash deficit and developing profitable operations. There is no guarantee
      that any such financings can be obtained or, if obtained, that such financings
      will be on adequate or reasonable terms.





**Off-Balance
      Sheet Arrangements**




43




As
      of March 31, 2007, the Company has not engaged in any off-balance sheet
      arrangements. Currently, management does not anticipate that the Company will
      be
      engaging in off-balance sheet arrangements in the foreseeable future.





**Item
      3. Controls and Procedures.**





Our
      management team, under the leadership and with the participation of our Chief
      Executive Officer, evaluated the effectiveness of our disclosure controls and
      procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities
      Exchange Act of 1934), as of March 31, 2007. Based on this evaluation, our
      management concluded that our disclosure controls and procedures were not
      effective as of March 31, 2007 to ensure that information required to be
      disclosed by us in the reports that we file or submit to the SEC is recorded,
      processed, summarized and reported within the time periods specified in the
      SEC’s rules and forms.





Our
      management team is diligently developing & implementing disclosure controls
      and procedures to ensure that such information required for disclosure is
      recorded, processed, summarized and reported timely and accurately. To date,
      our
      efforts have focused upon replacing our Chief Financial Officer, who resigned
      on
      August 1, 2006. The resignation of our CFO has exacerbated an existing problem
      of sufficiency of accounting personnel. To date, we have hired a Chief Operating
      Officer, a Vice President of Accounting Compliance & Disclosure, and a
      Controller. We are interviewing candidates to fill the CFO position and certain
      other accounting positions.





In
      connection with the growth of the Company, through mergers and acquisitions,
      we
      have instituted a policy of early review of accounting systems and personnel
      of
      all acquirees to discern their reporting systems and the effect such reporting
      will have on the consolidation of operations. The companies that we have
      considered for acquisition have been private companies and have not typically
      maintained the types of control and reporting procedures that are required
      of
      public companies. Although we attempt to perform thorough inspection of
      accounting records and reporting controls when we do our due diligence, it
      is
      likely that acquirees will not have the type of control and reporting procedures
      required by public companies. As such, depending upon the materiality of the
      operations of the acquiree, compared to our total assets and revenues, it is
      possible that the acquisition of private subsidiaries may lead to errors in
      reporting.




There
      was
      no change in the Company’s internal control over financial reporting during the
      period ended March 31, 2007, that has materially affected, or was reasonably
      likely to materially affect, the Company’s internal control over financial
      reporting.





Notwithstanding
      the above-mentioned weaknesses in our disclosure of controls and procedures,
      we
      believe that the consolidated financial statements included in this report
      fairly present our consolidated financial position.







Our
      management, including our Chief Executive Officer, does not expect that our
      disclosure controls and procedures or our internal controls over financial
      reporting are or will be capable of preventing or detecting all errors and
      all
      fraud. Any control system, no matter how well designed and operated, can provide
      only reasonable, not absolute, assurance that the control system’s objectives
      will be met. The design of a control system must reflect the fact that there
      are
      resource constraints, and the benefits of controls must be considered relative
      to their costs. Further, because of the inherent limitations in all control
      systems, no evaluation of controls can provide absolute assurance that
      misstatements due to error or fraud will not occur or that all control issues
      and instances of fraud, if any, have been detected. These inherent limitations
      include the realities that judgments in decision-making can be faulty and that
      breakdowns can occur because of simple error or mistake. Controls can also
      be
      circumvented by the individual acts of some persons, by collusion of two or
      more
      people, or by management’s override of the controls. The design of any system of
      controls is based in part on certain assumptions about the likelihood of future
      events, and there can be no assurance that any design will succeed in achieving
      our stated goals under all potential future conditions. Projections of any
      evaluation of controls effectiveness to future periods are subject to
      risks.




44




**Part
      II - Other Information**





**Item
      1. Legal Proceeding.**





See
      “Note 6 - Summary of Legal Proceedings” and “Note 12 - Subsequent Events” for a
      description of the Company’s legal proceedings. Other than as described in such
      notes, the Company is not currently involved in any legal proceedings that
      may
      be deemed to be material to our financial condition.





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





During
      the quarter ended March 31, 2007, the Company received proceeds of $179,500
      from
      the issuance of convertible debentures and warrant purchase agreements to 14
      accredited investors. The Agreements also included detachable warrants, which
      allowed the warrant holders to purchase 872,500 shares of common stock of the
      Company. We neither received nor paid any commissions in connection with these
      issuances. We believe that the issuance of such securities was exempt from
      the
      registration requirements of the Securities Act of 1933, as amended, pursuant
      to
      the provisions of Section 4(2) of the Securities Act.





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





As
      of March 31, 2007, the Company has several convertible notes which matured
      without conversion or repayment. The balance of the notes currently in default
      is $230,000. The Company is seeking approval to extend or convert the notes
      into
      restricted shares of the Company’s common stock.





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





On
      May
      21, 2007 the Company submitted a consent solicitation statement to its
      stockholders seeking their approval of an amendment to the Company’s Articles of
      Incorporation to increase the number of shares of common stock the Company
      is
      authorized to issue from 50,000,000 to 200,000,000 and the number of shares
      of
      preferred stock the Company is authorized to issue from 5,000,000 to 20,000,000.
      On June 22, 2007, the Company filed a Certificate of Amendment to its Articles
      of Incorporation which increased the number of shares of common stock the
      Company is authorized to issue from 50,000,000 to 200,000,000 and which
      increased the number of shares of preferred stock the Company is authorized
      to
      issue from 5,000,000 to 20,000,000 There was no change to the par value of
      the
      shares of the Company’s common or preferred stock, the par value of each of
      which remains $0.001 per share. The amendment to the Company’s Articles of
      Incorporation to increase its authorized share capital was unanimously approved
      by Board of Directors of the Company and by the holders of 56.24%, or 27,884,847
      shares, of the Company’s common stock acting by written consent.





**Item
      6. Exhibits.**


10.1
            
            Office
                Lease Agreement for Centennial Tower, 101 Marietta Street, Atlanta,
                Georgia, by and between Bank Building Limited Partnership and Winsonic
                Digital Media Group, Ltd., dated February 8, 2007. (1)10.2
            
            First
                Amendment to Telecom/Office Lease Agreement between Bank Building
                Limited
                Partnership and Winsonic Digital Media Group, Ltd., dated February
                8,
                2007. (1)*31.1
            
            Certification
                pursuant to 17 CFR 240.13a-14 promulgated under Section 302 of the
                Sarbanes-Oxley Act of 2002.*32.1
            
            Certification
                pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section
                906 of
                the Sarbanes-Oxley Act of 2002.


_______________


*
      Filed herewith




45




(1)
            Incorporated
                by reference from the Company current report on Form 8-K filed with
                the
                Securities and Exchange Commission on February 14,
                2007




46








**Signatures**





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




WINSONIC
                DIGITAL MEDIA GROUP, LTD.(Registrant)July
                2, 2007
            By:
            /s/
                Winston JohnsonWinston
                Johnson
              Chairman
                & CEO
              (Principal
                Executive Officer and Principal Financial Officer)




47