SECURITIES
AND EXCHANGE COMMISSION
  WASHINGTON,
D.C. 20549
   FORM
10-KSB
  (Mark
One)
 ýANNUAL REPORT UNDER
      SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934.
  For the fiscal year ended December 31,
  2007
  OR
  oTRANSITION REPORT
      PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
      OF 1934. For the transition period
      from                    to
   Commission
File No.  333-124405
  DIGITALPOST
INTERACTIVE, INC.
  (fka:
HomAssist Corp)
  (Exact
Name of Registrant as Specified in Charter)
  Nevada
                
                
                20-3183236(State
      or Other Jurisdiction of Incorporation)
                
                
                (IRS
      Employer Identification No.)
 
 3240
El Camino Real, Suite 230, Irvine, CA 92602
 (Address
of Principal Executive Offices)(Zip Code)
 
 (714)
824-3000
 Registrant’s
Telephone Number
  Securities
registered under Section 12(b) of the Exchange Act: NONE
  Securities
registered under Section 12(g) of the Exchange Act: NONE
  Check
whether the issuer is not required to file reports pursuant to Section 13 or
15(d) of the Exchange Act.  x
  Check
whether the issuer (1) filed all reports required to be filed by Section 13 or
15(d) of the Exchange Act during the past 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has been subject
to such filing requirements for the past 90 days. Yes x No o
 
 Check if
there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure will be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB. x
 
 Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act). Yes oNo x
 Revenues
for its most recent fiscal year: $ 118,100
 
 Aggregate
market value of the voting and non-voting common equity held by non-affiliates
computed by reference to the price at which the common equity was sold, or
the average bid and asked price of such common equity, as of March 28, 2008: $
7,100,000
 
 Number of
common voting shares outstanding as of March 28, 2008: 56,468,369
 
 Documents
incorporated by reference: none.
 
 Transitional
Small Business Disclosure Format (Check one): Yes oNo x
 Table
      of Contents
                PagePART
      IItem
      1.   Description of Business
                2Item
      2.   Description of Property
                7Item
      3.   Legal Proceedings
                7Item
      4.   Submission of Matters to a Vote of Security
      Holders
                7PART
      IIItem
      5.   Market For Registrant’s Common Equity and Related
      Stockholder Matters and Small Business Issuer Purchases of Equity
      Securities
                8Item
      6.   Management’s Discussion and Analysis
                9Item
      7.   Financial Statements and Supplementary Data
                30Item
      8.   Changes in and Disagreements With Accountants on Accounting
      and Financial Disclosure
                30Item
      8A and 8A(T).  Controls and Procedures
                30Item
      8B.  Other Information
                31PART
      IIIItem
      9.   Directors, Executive Officers, Promoters and Control
      Persons and Corporate Governance;  Compliance With Section 16(a) of
      the Exchange Act
                32Item
      10. Executive Compensation
                34Item
      11. Security Ownership of Certain Beneficial Owners and
      Management
                38Item
      12. Certain Relationships and Related Transactions and Director
      Independence
                40Item
      13. Exhibits
                42Item
      14. Principal Accountant Fees and Services
                43Signatures
                44
  
   
   1
   CAUTIONARY
NOTE REGARDING FORWARD-LOOKING STATEMENTS
   This
report contains forward-looking statements within the meaning of Section 21E of
the Securities Exchange Act of 1934, and Section 27A of the Securities Act. Any
statements contained in this report that are not statements of historical fact
may be forward-looking statements. When we use the words “anticipates,” “plans,”
“expects,” “believes,” “should,” “could,” “may,” “will” and similar expressions,
we are identifying forward-looking statements. Forward-looking statements
involve risks and uncertainties, which may cause our actual results, performance
or achievements to be materially different from those expressed or implied by
forward-looking statements. These factors include, among others, our need to
raise additional financing, risks related to the development of our business,
our history of losses; the historical volatility of our stock prices; general
market conditions; and other factors that may affect our business.
   Except
as may be required by applicable law, we do not undertake or intend to update or
revise our forward-looking statements, and we assume no obligation to update any
forward-looking statements contained in this Annual Report on Form 10-KSB as a
result of new information or future events or developments. You should not
assume that our silence over time means that actual events are bearing out as
expressed or implied in such forward-looking statements. You should carefully
review and consider the various disclosures we make in this report and our other
reports filed with the Securities and Exchange Commission (the “Commission”)
that attempt to advise interested parties of the risks, uncertainties and other
factors that may affect our business.
   For
further information about these and other risks, uncertainties and factors,
please review the disclosure included in this report under the caption
“Management’s Discussion and Analysis—Risk Factors.”
  ITEM
1.     Description of Business.
 
 DigitalPost
Interactive, Inc. was incorporated on July 15, 2004, in the State of Nevada.
 The Company's principal executive offices are located at #2340 El Camino
Real, Suite #230, Irvine, CA  92602. Our telephone number is (714)
824-3000. We maintain Internet websites at www.DigitalPostInteractive.com
and www.TheFamilyPost.com. 
These websites, and the information contained therein, are not a part of this
current report.
 
 The
Merger
  Prior to
January 25, 2007, we were known as HomAssist Corporation, a Nevada corporation
(“HomAssist”).  On January 30, 2007, we acquired The Family Post, Inc., a
privately held California corporation (“Old TFP”), pursuant to an agreement and
plan of merger, dated as of January 16, 2007, as amended (the “Merger
Agreement”), by and among us, Old TFP and our wholly-owned subsidiary (“Merger
Sub”), providing for the merger of Merger Sub and Old TFP, with the Merger Sub
being the surviving corporation as our wholly-owned subsidiary (the
“Merger”).  Immediately following the Merger, we changed our name to
DigitalPost Interactive, Inc. (“DPI” or the “Company”), the Merger Sub changed
its name to The Family Post, Inc. (“New TFP”), and we began operating New TFPs
business of Internet content sharing.
  Effective
upon the closing of the Merger, the directors elected at the special meeting,
who comprise all of the then current HomAssist directors, resigned and the sole
director of Old TFP became the new sole director of DPI.
  Prior to
the Merger, HomAssist had 15,600,000 shares of common stock issued and
outstanding.  As part of the Merger, the Company issued 37,233,385
shares of our common stock to the former stockholders of Old TFP in exchange for
all of the issued and outstanding shares of common stock of Old TFP (16,478,175
shares).  As part of the Merger, HomAssist also adopted the existing stock
option agreements of Old TFP (“Old TFP Option Agreements”) outstanding under
which options to purchase 7,724,850 shares of common stock of Old TFP
outstanding prior to the Merger were converted into options to purchase
17,426,615 shares of common stock of DPI.
  As of
January 30, 2007, just immediately following the closing of the Merger, there
were 52,833,385 shares of DPI common stock outstanding, of which the pre-Merger
stockholders of HomAssist owned approximately 29.6% and the pre-Merger
stockholders of Old TFP owned approximately 70.4%.  As a result, Old TFP
has been treated as the acquiring company for accounting purposes.  The
Merger has been accounted for as a reverse acquisition in accordance
with
   2
  generally
accepted accounting principles in the United States of America, or “U.S.
GAAP.”  Reported results of operations of the combined group issued after
completion of the transaction will reflect Old TFP’s operations.
  On
January 25, 2007, the Company changed its fiscal year end from January 31st to
December 31st.
 
 Business
      of the Issuer
   We are a
pioneer in the rapidly expanding Web 2.0 (user generated content)
market.  We create new, interactive platforms for many vertical
markets for use within this new web space. Our platforms and tools enable
consumers to share and preserve their memories.  Consumers use our
tools and platforms to stay connected to their friends, family and
associates.  Our vision is to powerfully connect people online with
immersive and engaging platforms and technology.  Our mission is to
build the Web 2.0 space’s most advanced user content generating tools for
uploading content and digital media within a very easy user
interface.
   We
produce high-end family destination websites that allow users to securely share
photos, videos, calendars, message boards, newsletters, directories, family
stories and more. Our proprietary website administration system, Qwik-PostSM, and
online video uploading system, Video-PostSMallow
even novice PC users to easily manage their content.  With our
immersive and engaging platforms and technology, users go beyond simply sharing
their user-generated content to having a permanent destination to display photo
and video memories, discussions, and history for years to come.
  We earn
revenue primarily from monthly subscription fees for Website hosting services.
The typical subscription agreement includes the usage of a personalized website
and hosting services. Since beginning in July 2005, we developed our product,
began operations and generated our first revenues. As of March 28, 2008, we have
generated 3,462 subscribers, have 5,763 users, and have transferred more
than 1,968 gigabytes of consumer digital media across our
systems. However, our revenues are not sufficient to cover our operating
costs and expenses. During the year ended December 31, 2007, the year ended
December 31, 2006 and for the period from inception July 14, 2005 through
December 31, 2005, our revenues were $118,100, $13,900 and $4,500, respectively.
We are in the early phases of revenue generating activities and intend to market
our product more aggressively upon completion of additional debt or equity
financing.
  Industry Overview and
      Addressable Market
   Creating
Keepsakes Magazine estimates consumers annually spend $18 billion on greeting
cards, scrapbooks and photos in physical/digital form. The U.S. Census Bureau
projected 57 million U.S. family households in 2006. DPI represents a
multi-million dollar opportunity as Internet users move their user-generated
content online and will have a need for the elegant presentation and secured
lifetime storage of these precious memories in multiple vertical
markets.
   Internet
and image-based technology today enables consumers to create an abundance of
content that includes photos and video requiring highly functional, immersive
online destinations that can present, protect and preserve this
content.  This is the new web, also known as Web 2.0.  We
believe that the key forces driving the expansion of this segment of the Web 2.0
market are:
   ·
                The
      proliferation of digital cameras and camcorders to a broader base of
      consumers
  ·
                The
      strong consumer desire for secure sharing digital content on the
      Internet
  ·
                The
      growing consumer desire to find an easy, single location for storing their
      user-generated digital content
  ·
                The
      increasing participation by consumers in online
  communities
  ·
                The
      increasing penetration of high-speed connectivity to a broader base of
      consumers
  The
      addressable market for our platform and tools includes the vast population
      of users who create Internet content in text, and by digital photographic
      devices such as cameras and camcorders. We currently address several
      adjacent markets related to consumers’ desire to create and share content,
      including:
   ·
                The
      photo studio market
 3
  ·
                The
      wedding industry
  ·
                The
      baby industry
  ·
                The
      scrapbooking industry
  ·
                The
      military
  ·
                Consumer
      ISPs / Hosting & Domain
Services
   Our
platforms are highly scalable to a variety of additional vertical
markets.  Our tools fit well in sectors and industries where
simplified and powerful sharing of content, images, and video effectively brings
groups of people together in an interactive online environment.  As
the new web rushes forward, we will attempt to expand our market penetration to
include:
   ·
                The
      sports industry
   ·
                The
      education sector
   ·
                The
      pet industry
   ·
                The
      travel industry
   ·
                The
      religious sector
   ·
                The
      newborn sector
   ·
                And
      others...
   Competition
   The
user-generated content industry is competitive, and we expect competition to
increase in the future. These competitors include My Family, Famster, Family
Lobby, My Great Big Family, EasySite and Connected Family.
   The DPI Competitive
      Advantage
   We have
developed platforms and tools that allow us to offer consumers a better way to
enjoy, share and preserve their user-generated content. We believe that our
business model is supported by the following characteristics:
   Viral network effect. Our
customers create a viral network of new users and customers in a number of ways.
They generate most of the content on our service by uploading their photos. They
share their photos electronically with their friends and families, extending and
endorsing our brand and creating a sense of community.
  Loyal customer base. Our
high-quality products and services, together with our focus on continuous
innovation, have allowed us to establish high customer loyalty. Our conversion
of users within the free two week trial has consistently been over
90% for the past 6 months.  Post-trial, we enjoy a high subscription
retention rate of over 80%.  As users populate their websites with
content, photos, and videos, they remain as active subscribers, adding monthly
revenue until the consumer cancels their service.
  Premium pricing power. We
believe that we are able to maintain premium pricing for our services as a
result of our brand equity, the high-quality of our platform and tools, and the
loyal customer base we have created.
  Deep customer understanding.
Customer insights are an important source of new product and service innovation
for us, and we continually strive to understand our customers’ needs in order to
improve customer satisfaction. We had invested significant time and resources to
understand and address the needs of our customers through market research, focus
groups, customer surveys, usability testing, customer response to promotions and
customer service interactions.
  Trusted premium brand. Our
focus on ease of use, website quality, secure storage, continual product
advancement and attentive customer service has established DPI as a trusted
premium brand.
 4
  Customer-focused approach.
The entire DPI customer experience — including free trial, the ability to
upload, edit, store and share content in a dynamic website environment and the
fact that a single subscription can host an unlimited number of users — reflects
our customer-focused approach.
  With DPI
at the forefront of the Web 2.0 space, we face competition from dozens of
established Internet companies.
   Our Growth
Strategy
   Our goal
is to grow our suite of Internet services into a premium lifestyle brand and
become the potentially leading platform for highly functional, interactive
website destinations dedicated to improving the sharing, protection and
preservation of user-generated content. In addition to the strong market trends
supporting our business, we believe our growth will be supported by the
following initiatives:
   Expansion ofvertical integration. We
will continue to introduce our platform and tools into additional verticals
through strategic partnerships and acquisitions.
  Expansionproducts and services
offerings. We will continue to develop our technology to include
forward-thinking functionality and benchmarks increasing the widespread adoption
of our platform and tools.
  Promotion ofbrand awareness. We will
continue promote the DPI brand through marketing campaigns. We will leverage new
and existing channels, which include word-of-mouth marketing, print and online
advertising, affiliate and referral programs, search engine marketing and
complementary strategic alliances to generate high visibility to the DPI
brand.
  Expansion ofcustomer base. To quickly
and cost-effectively introduce DPI to the Web 2.0 marketplace, we intend to give
basic, limited storage and functionality DPI websites away for
free.  Utilizing this “freemium” marketing strategy we expect to
obtain thousands of users in a relatively short period of time.  We
believe that when people discover and adopt our remarkable online platform, they
will tell their friends, families, and business associates about it, who, in
turn, will tell others through word of mouth or email communications. Several
other successful web-based technology product launches including Skype, Firefox,
MySpace, Friendster, Hotmail, and others have successfully used this marketing
and distribution strategy, obtaining millions of members in a very short period
of time.
  International expansion. We
intend to develop additional business opportunities through international
expansion, targeting consumers in key geographic areas where user-generated
content is high and where Internet usage is widespread.
  Product
Overview
 
 The
DPI Platform
  
 The DPI
platform provides user content generating tools for uploading content and
digital media within a very easy user interface. Our platform is highly scalable
to a variety of market verticals, effectively bringing groups of people together
in an attractive and interactive online environment. The DPI platform includes
the following key features:
  Security/ Disaster
Recovery - Our members’ information is safe and secure in our data center
and further backed-up weekly to Iron Mountain,the industry
standard 3rd party
data vault.
  Ease Of Use - DPI
uses a browser based interface providing easy-to-use, intuitive management of
the customer sites.
 
 Powerful Application
Install – The DPI Management Interface, Qwik-Post, comes with the Aurigma
Image Uploader, giving users the ability to upload any number of files at one
time.  In addition, it also provides file compression before
uploading, thereby greatly reducing the time needed to upload
media.
 5
 Web Based - Because
DPI is web-based, the application is accessed through the internet and resides
on servers at our data center.  All standard browsers are 100%
compliant with the DPI Platform.
 
 Safe Access- Our
members can securely access their website and Qwik-Post administration panel at
anytime, from wherever they are, from any computer connected to the
internet.
  Unlimited Members-
Our members may grant website access into their accounts to as many other users
as they like.
  Compatibility- Our
members can access their DPI websites and Qwik-Post using Internet Explorer,
Firefox, Safari, Netscape and Opera Browsers.
  Support – Our
customer service team is available by email or phone, seven days a
week.
  Immediacy – Members
can have their website up and running in minutes.
  Affordability – Due
to the highly-refined automation of the DPI engine, pricing can be tiered to
accommodate all service levels and budgets.
 
 The
DPI Qwik-Post Application
 
 Qwik-Post
is the proprietary application that enables the user to administer all DPI
functionality.  Qwik-Post allows users to add content to their
websites within seconds and upload hundreds of pictures and videos in minutes.
Accessible anywhere in the world, yet password-protect­ed at the choice of
the user, our interactive technology enables extended user bases to
simultaneously upload and manage their digital media. With Qwik-Post, managing a
website or a digital platform is made easy for users of all ages and levels of
technical computer understanding.  The DPI Qwik-Post application
includes the following key functionality:
  Photo Albums - The
Qwik-Post Photo Album feature enables users to gather their digital photos and
post them quickly to their site. Users simply upload their images, then organize
them in any order they like using our simplified drag and drop interface. In a
matter of minutes users have created a professional quality multimedia slide
show to share with friends and family over the internet.
  Videos - The
Video-Post upload engine enables users to quickly upload video directly to their
websites regardless of the digital file format. Within three clicks, users can
securely share their self-generated content with other users over the
internet.
  Message Boards - Our
variety of Chat Rooms and Message Boards feature real time delivery of content
for conversation over the internet. These interfaces are password protected and
are enabled to be monitored through Qwik-Post. DPI provides a safe platform for
children and families of all ages to communicate.
  Site Calendar -
Coordinating schedules, planning get-togethers and celebrations can involve
endless phone calls and emails. DPI’s simple-to-use calendar makes event
planning efficient as important dates such as meetings, birthdays, games, or
anniversaries are all recorded in one place.
  Newsletter – The
newsletter feature enables users to create professional-looking newsletters that
can be emailed to family and friends. Users simply select one of the
pre-designed newsletter templates, add text, and insert photos from albums
already on their family website.
  Photo Store – The
Photo Store application allows users to purchase prints and photo-related gifts
such as mugs, T-shirts, calendars and more directly through their family
website.
  Many more features –
Including eMail, News, History, Kids Pages, Directory, and Blogs.
 6
 Additional
Product Enhancements
 
 Our
mission is to build the Web 2.0 space’s most advanced user content generating
tools for uploading content and digital media within a very easy user
interface.  In pursuit of that mission, we intend to rapidly respond
to ongoing customer feedback and feature requests.  Below are some
items on our product roadmap:
  Tiered
security settings: Tiered read/write access for family &
friends
 ·
                Calendar
      Enhancements
 1.
                Calendar
      Shortcut: Enables users to update their calendar page in fewer than 3
      clicks
 2.
                Calendar
      Evites: Calendar reminders systematically sent using
  eCards
 ·
                eCards
 1.
                User-generation
      of themed electronic postcards/
 2.
                Upon
      creation of new photo album, system sends eCards to users, directly
      linking them to the photo album
 ·
                Auto-generation
      of alternate user names: Reconciliation of duplicate user
      names
 ·
                Enhanced
      message board
 1.
                Larger
      and standardized across templates
 2.
                Ability
      to add links into text for enhanced
messaging
 ·
                Multiple
      kids pages: Enables user uploading of multiple subjects per
      child
 ·
                Basic
      on-line photo editing
 ·
                Family
      Tree: Allows user generation of relationships between family members in a
      visual and interactive format
 ·
                Website
      Counter: Enables notification of website changes and
  visits
 ·
                Additional
      themes
  Intellectual
Property
 
 We have
applied for certain trademarks and service marks and have a portfolio of
intellectual property. When necessary, we intend to enforce our
intellectual property rights by, among other things, searching the Internet to
detect unauthorized use of our intellectual property, identifying products that
feature unauthorized use of our intellectual property and seeking restraining
orders and/or damages in court against individuals or entities infringing upon
our intellectual property rights.  Our failure to thwart piracy,
infringement or other unauthorized use of our intellectual property rights
effectively could adversely affect our operating results.
 
 Employees
  As of
December 31, 2007, we had 11 full-time employees and several independent
contractors and consultants.  Our employees are located in Irvine,
California.  We believe that our relationships with our employees are
generally good.  None of our employees is represented by a
union.
  ITEM  2.
    Description Of Property.
  Our
principal office is located in Irvine, California where we lease
approximately 2,900 square feet of office space pursuant to a lease that
expires in March 2009. If we require additional space, we believe that we will
be able to obtain such space on commercially reasonable terms.
 ITEM
3.     Legal Proceedings.
 
 From time
to time, we may be involved in litigation relating to claims arising out of our
operations in the normal course of business.  We are not aware of any
pending or threatened legal proceeding that, if determined in a manner adverse
to us, could have a material adverse effect on our business and
operations.
  ITEM 4.
    Submission Of Matters To A Vote Of Security
Holders.
 
 None.
 
  7
  PART
II
   ITEM
5.     Market For Registrant’s Common Equity And Related
Stockholder Matters And Small Business Issuer Purchases Of Equity
Securities
  Our
shares of common stock, par value $0.001 per share, are quoted on the OTC
Bulletin Board under the symbol “DGLP.”  Prior to January 26, 2007, our
common stock was quoted on the OTC Bulletin Board under the symbol “HMAS.” 
Effective January 26, 2007, our stock quote symbol was changed to DGLP and
remains quoted on the OTC Bulletin Board.  The following table sets
forth the range of high and low closing sale prices for the common stock as
reported by the OTC Bulletin Board for the periods indicated
below.
  
  High
                
                Low2007Fourth Quarter
                $
                .87
                $
                .29Third Quarter
                
                1.15
                
                .35Second Quarter
                
                1.20
                
                .40First Quarter
                
                2.70
                
                .952006Fourth
      Quarter
                
                1.51
                
                1.10Third
      Quarter
                
                1.20
                
                1.10Second
      Quarter
                
                --
                
                --First
      Quarter
                
                --
                
                --
   The
closing sale prices in the table above reflect inter-dealer prices, without
retail mark-up or commissions and may not represent actual
transactions.
  Holders
  As of
March 28, 2008, there were approximately 327 holders of our common
stock.
  Dividend
      Policy
  We have
never declared or paid dividends on our common stock.  We intend to retain
earnings, if any, to support the development of our business and therefore do
not anticipate paying cash dividends for the foreseeable future.  Payment
of future dividends, if any, will be at the discretion of our board of directors
after taking into account various factors, including current financial
condition, operating results and current and anticipated cash
needs.
  Securities
      Authorized for Issuance Under Equity Compensation
  Plans
  The
following table sets forth information as of December 31, 2007 with respect to
the stock options issued under our 2007 Incentive and Nonstatutory Stock Option
Plan, for which our common stock is authorized for
issuance.
  Number of securities to
                  be issued upon exercise
                  of outstanding options
                
                Weighted average
                  exercise price of
                  outstanding options
                
                Number of securities
                  remaining available
                  for future issuanceEquity
      compensation plans or stock option agreements approved by security
      holders
                
                18,098,922
                
                $                          .21
                
                6,901,078Equity
      compensation plans or stock option agreements not approved by security
      holders
                
                —
                
                —
                
                —Total
                
                18,098,922
                
                
                $                         
      .21
                
                6,901,078
 
 Recent
Sales of Unregistered Securities
  None.
  8
  
  Item
6. Management’s Discussion and Analysis
  
 The
following discussion and analysis should be read in conjunction with our
financial statements and related notes included elsewhere in this report. This
discussion contains forward-looking statements that involve risks, uncertainties
and assumptions. Our actual results could differ materially from those
anticipated in the forward-looking statements as a result of certain factors
discussed in “Risk Factors” included elsewhere in this report.
 
 Effective January 30, 2007, our
capital structure and control changed as a result of the Merger, as
discussedpreviously inItem 1.SinceOld TFP is considered to be the
accounting acquirer and surviving operating entity, the discussion held with in
this section of Management’s Discussion and Analysis of Financial Condition and
Results of Operations only includes the activity of Old TFP.
 
 Business
Overview
 
 We
produce destination websites that allow subscribers and other users to securely
share digital media, including photos, calendars, videos, message boards and
history. Our proprietary website administration system, Qwik-PostTM, and online
video uploading system, Video-PostSMallow
PC users to manage these “virtual family rooms” and provides a destination to
display photo and video memories, discussions, and history.
 
 We earn
revenue primarily from subscriptions generated from monthly subscriptions for
website hosting services. The typical subscription agreement includes the usage
of a personalized website and hosting services. Since beginning in July 2005, we
developed our product, began operations and generated our first revenues. As of
March 28, 2008, we have generated 3,462 subscribers, have 5,763 users, and have
transferred more than 1,968 gigabytes of consumer digital media across our
systems. However, our revenues are not sufficient to cover our operating
costs and expenses. During the year ended December 31, 2007, the year ended
December 31, 2006 and for the period from inception July 14, 2005 through
December 31, 2005, our revenues were $118,100, $13,900 and $4,500, respectively.
We are in the early phases of revenue generating activities and intend to market
our product more aggressively upon completion of additional debt or equity
financing. On January 30, 2007, we completed the Merger further described in
Item 1. to assist us in raising additional working capital through equity or
debt financing.
 
 Current
Conditions
 
 Since the
inception of our business in 2005, we have incurred significant losses. 
We incurred net losses of $2,544,500, $743,000 and $206,700 for the year
ended December 31, 2007 and 2006 and for the period from inception July 14, 2005
through December 31, 2005, respectively. As of December 31, 2007, we had an
accumulated deficit of $3,494,200. We expect operating losses and negative cash
flow to continue for the foreseeable future.  We anticipate that our losses
will increase significantly from current levels because we expect to incur
significant additional costs and expenses related to being a public company,
brand development, advertising, marketing and promotional activities, as well as
the employment of additional personnel as our business activities expand. Our
ability to become profitable depends on our ability to generate new revenue and
sustain substantially higher revenue while maintaining reasonable expense
levels.  In particular, although we intend to increase significantly our
spending on marketing and promotional activities, these efforts may not be
effective in growing our brand, increasing our subscriber base or generating new
revenues.  If we do not achieve profitability, we may not be able to
continue our operations.
 
 Since
inception, we have operated and sustained ourselves primarily from cash
generated through equity and debt financings. During the period from inception,
July 14, 2005, through December 31, 2005, we received working
capital
  9
  from our
founder and chief executive officer in the amount of $168,000 and completed
additional capital raising in the amount of $100,000 from the sale of common
stock to an unrelated stockholder. Subsequent to December 31, 2005 through
January 30, 2007, we completed additional capital raising activities in the
amount of $895,000 from further issuances of our common stock as well as
receiving a cash advance from our chief executive officer in the amount of
$50,000. Since January 30, 2007, we received $1,130,000 as part of a $4 million
private placement. In October 2007, we did not expect to complete the entire $4
million private placement equity offering and commenced a new convertible debt
offering for $767,000 (see Note 7 to the Notes of the Consolidated Financial
Statements included elsewhere in this report).  In January 2008, the
Company entered into a $1 million private placement with foreign investors under
a Regulation S Stock Purchase agreement, which the Company had raised $430,100
as of March 28, 2008 (see Note 13 to the Notes of the Consolidated Financial
Statements included elsewhere in this report). We plan to use the proceeds of
the most recent offering for marketing of our product, increasing revenue
generating activities and for general working capital purposes.
 
 In
October 2007, along with raising $767,000 in sales of Convertible Notes, we
also closed our April 3, 2007 agreement for a $4 million private placement for
the issuance of up to 2.5 million restricted common shares of the Company at
$1.57 per share. We received $1,130,000 in aggregate from our $4 million private
placement.  Since this offering was closed in October 2007 we will not
receive any more proceeds from this offering.  Also, we don’t expect
to receive any additional funds from the convertible note
offering.  In addition to the $1 million Regulation S Stock Purchase
agreement we entered into in January 2008, we plan to continue to raise capital
by sales of additional private placement equity or debt offerings during 2008,
although we have no assurance that such financings will be
completed.
 
 
 Going
Concern
 
 We have
not established sufficient sources of revenue to cover our operating costs and,
as such, we have incurred operating losses since inception. Further, as of
December 31, 2007, our cash resources were insufficient to meet our current
working capital needs and on going business plan. These and other factors raise
substantial doubt about our ability to continue as a going concern. The report
of the independent registered public accounting firm accompanying the audit of
our financial statements for the year ended December 31, 2007, as filed with
this report, contains an explanatory paragraph expressing substantial doubt
about our ability to continue as a going concern because of our operating losses
and our need for additional capital.  Such doubt could make it more
difficult for us to raise additional capital and may materially and adversely
affect the terms of any financing that we may obtain. The accompanying
consolidated financial statements do not include any adjustments to reflect the
possible future effects on the recoverability and classification of assets or
the amounts and classification of liabilities that may result from the possible
inability of us to continue as a going concern.
 
 Results
of Operations
 
 The
Year Ended December 31, 2007 Compared to the Year Ended December 31,
2006
 
 Total
revenue was $118,100 and $13,900 for the year ended December 31, 2007 and 2006,
respectively, representing an increase of $104,200 or 750%. The increase was due
to an increase in subscription revenues of $84,200 or 606% during the year ended
December 31, 2007 as compared the same period last year and an increase in
professional services of $20,000 during the year ended December 31, 2007 as
compared to the same period last year.
 
 Subscription
revenues for the year ended December 31, 2007 was $98,100 as compared to $13,900
during the same period last year. Subscription revenue increased $84,200 due to
an increase in our customers to 2,775 subscribers as of December 31, 2007 from
476 subscribers as of December 31, 2006. The increase in subscriptions was due
to additional marketing activities performed during the year ended December 31,
2007 as compared to the same period last year. We were formed in July 2005 and
subscription revenues were just in the beginning stages during the start of
2006. As we continued marketing activities and promotions, subscription revenues
continued to increase through December 31, 2007.   Digital media
and related Web 2.0 products and services are relatively new, and as a result,
it is difficult to determine our current market share or predict our future
market share.  We believe that the market for Web 2.0 products and
services is growing and that related market opportunities are also expected to
grow.   Our revenue, profitability and future growth depend not
only on the anticipated market growth, but also our ability to execute our
business plan and ultimate customer acceptance of our products and services and
the success or failure of our competitors.  As a result, we expect the
trend of our revenues to be positive, however, provide no assurance that such
will occur.
  10
  
 Professional
services revenues for the year ended December 31, 2007 was $20,000 as compared
to none during the same period last year. The increase was due to us providing
custom website design services under a contract entered into on May 15,
2007 with a company which is a related party (see Note 9 to the Consolidated
Financial Statements included elsewhere in this report). There were no such
services rendered during the same period last year. The contract called for
services of $20,000 in aggregate which were completed in the third quarter of
2007.   From time to time, we may enter into professional
services agreements resulting from our strategic partnership marketing
activities and as a result, revenues from professional services may re-occur in
future periods. However, as of December 31, 2007, we had not entered into any
significant professional services agreements and don’t expect the trend of
future revenues from professional services to significantly increase in the
foreseeable future.
 
 Total
cost of revenue was $48,100 and $10,600 for the year ended December 31, 2007 and
2006, respectively, representing an increase of $37,500 or 354%. The increase
was due to an increase in subscription cost of revenues of $30,000 or 283%
during the year ended December 31, 2007 and increased cost of professional
services revenue of $7,500 during the year ended December 31, 2007.
 
 The
increase in cost of subscription revenues for the year ended December 31, 2007
as compared to the same period last year is due to primarily having an increase
in subscription sales. Cost of subscription revenues for the year ended December
31, 2007 were mostly derived from hosting and setup services incurred from
website services provided to our subscribers.
 
 The
increase in cost of professional services revenues for the year ended December
31, 2007 as compared to the same period last year is due to having provided
professional services during the year ended December 31, 2007 whereas there were
no such services provided during the same period last year.
 
 Research
and development expense was $361,700 and $106,400 for the year ended December
31, 2007 and 2006, respectively, representing an increase of $255,300 or 240%.
The increase was primarily due to higher amounts of research and development
activities, including increased costs of hiring new development personnel and
consultants in the amount of $143,400 during the year ended December 31, 2007 as
compared to the same period last year.
 
 Sales and
marketing expense was $685,400 and $171,700 for the year ended December 31, 2007
and 2006, respectively, representing an increase of $513,700 or 299%. The
increase was primarily due to higher amounts of sales and marketing activities
and promotions during the year ended December 31, 2007 as compared to the same
period last year. An increase in media advertising of $222,500 and an increase
in marketing salaries of $295,300 related to the addition of new marketing
personnel primarily contributed to the overall increase in sales and marketing
expense partially offset by a decrease in marketing consultants expense of
$17,300.
 
 General
and administrative expense was $1,568,100 and $467,900 for the year ended
December 31, 2007 and 2006, respectively, representing an increase of $1,100,200
or 235%. The increase was primarily due to increased staff personnel in the
amount of $521,550, increased public company expenses of $115,200 and increased
office space related expenses of $31,800. Also contributing to the change was
the increase in non cash stock compensation expense which included an increase
of $299,600. The increase is primarily due to a one-time expense of $210,600
associated with the vesting acceleration of options related to the Merger. As
part of the Merger, in exchange for options to purchase 7,724,850 shares of Old
TFP common stock, we issued to the holders thereof options to purchase an
aggregate of 17,426,615 shares of our common stock under the terms and
conditions of our 2007 incentive and non statutory stock option plan.  As
part of the terms and conditions of the Old TFP option agreements, 50% of the
options granted and outstanding just prior to the Merger fully vested and became
exercisable due to the Merger transaction itself. As a result, 8,713,308 of the
17,426,615 options issued became fully vested and exercisable and we recorded a
one-time expense in the amount of $210,600 during the year ended December 31,
2007. There was no such one-time expense during the same period last
year.
 
  11
  Liquidity
and Capital Resources
  Cash
Flows
  At December 31,
2007, our cash and cash equivalents were $88,400, a decrease of $248,600 from
$337,000 as of December 31, 2006. During the year ended December 31, 2007, we
received $1,130,000 related to our $4 million private placement, $722,000
related to our convertible note offering and used $1,724,700 during the same
period for operations. We had also used $153,000 cash for financing costs mostly
related to our financing transactions and had used $110,200 cash for payments
due to shareholder related to loans and other accrued amounts due (See Note 6
and Note 9 to the Consolidated Financial Statements included elsewhere in this
report). Additionally, we used $58,300 of cash in the acquisition of property
and equipment related to moving into our new offices in March 2007 and $54,400
of cash for development of software.
  Since
inception, we have incurred losses and have had capital and stockholders’
deficits and limited cash to fund our operations.  Since inception through
March 28, 2008 we have raised approximately $3.1 million through equity and debt
financings and have no other significant source of cash. Although we expect to
grow our revenues, they are not a significant source of cash at this time.
Because we expect that revenues from operations will continue to be insufficient
to meet our working capital needs, we will need to raise additional capital
through equity or debt financings in the near future.  We cannot be certain
that such capital will be available to us or whether such capital will be
available on terms that are acceptable to us.  Such financing likely would
be dilutive to existing stockholders and could result in significant financial
and operating covenants that would negatively impact our business.  If we
are unable to complete additional financings or to raise sufficient additional
capital on acceptable terms, we will have insufficient funds to operate our
business or pursue our planned growth.
 
 Private
Placement Equity Financing
 
 During
April 2007, we agreed to a $4 million private placement for the issuance of up
to 2,540,000 restricted common shares at $1.57 per share.  As of
December 31, 2007, we received $1,130,000 of the $4 million private
placement.  In October 2007, we closed the $4 million private
placement and issued 717,500 of restricted shares of our common stock for
the $1,130,000 cash proceeds received. The offer and sale of the securities were
effected in reliance on the exemptions for sales of securities not involving a
public offering, as set forth in Sections 4(2) and Section 4(6) of the
Securities Act of 1933 and/or Rule 506 of Regulation D adopted
thereunder.
 
 Private
Placement Debt Financing
 
 During
October 2007, we commenced a private offering of our securities for the purpose
of raising capital whereby we issued $767,000 of Convertible Notes. Pursuant to
the terms of the offering, the investors purchased an aggregate of $767,000 of
8% senior secured convertible notes and were issued warrants to purchase shares
of our common stock. The Convertible Notes in the event of default become
secured by our assets and are due in two years from the date of each
note.  Initially, each investor had the right, at any time, to convert
their note into shares of our common stock at a conversion ratio of one share of
common stock for each $0.40 of principal amount of their note for a maximum
potential aggregate of 1,917,500 shares of common stock; in addition, the
investors were issued warrants to purchase an aggregate of 1,917,500 shares of
our common stock at an exercise price of $0.50 per share that expire five years
from the date of issuance. For a period of twelve months after the effective
date, if we sell common stock at a price per share below the conversion price,
the conversion price will adjust accordingly downward to the new lower sales
price per share.  Since then, we have sold securities at a lower price
of $.1587 per share, as a result we are obligated to lower the initial
conversion price of $.40 per share to the $.1587 per share price which will give
each investor the right, at any time, to convert their note into shares of our
common stock at a conversion ratio of one share of common stock for each $.1587
of principal amount of their note for a maximum potential aggregate of 4,833,018
shares of common stock.
 
 In
October 2007, one of the five investors who entered into the Convertible Notes
(see Note 7 to Notes to Consolidated Financial Statements elsewhere included in
this report) was the chief financial officer of the Company.  The
Company owed the chief financial officer $92,300 at the time of the offering, of
which, the chief financial officer exchanged $45,000 of the $92,300 due for
$45,000 of Convertible Notes.   As a result, $45,000 of the
$767,000 notes issued were purchased by the chief financial officer and we
received $722,000 net cash proceeds from the $767,000 Convertible Note
financing.
 
 In
connection with this financing, a form of the Convertible Notes agreement was
filed with the Securities and Exchange Commission on Form 8-K, dated October 4,
2007. The offer and sale of the securities underlying the Convertible
Notes
  12
  were
effected in reliance on the exemptions for sales of securities not involving a
public offering, as set forth in Sections 4(2) and Section 4(6) of the
Securities Act of 1933 and/or Rule 506 of Regulation D adopted
thereunder.
 
 Foreign Private Placement Equity
Financing
 
 In
January 2008, the Company entered into a $1 million private placement with
foreign investors under a Regulation S Stock Purchase agreement, which the
Company had issued 2,710,004 restricted shares for cash proceeds of
$430,100 as of March 28, 2008.  The offer and sale of the
securities above were effected in reliance on the exemptions for sales of
securities not involving a public offering, as set forth in Rule 501 promulgated
under the Securities Act of Regulation S.
 
 Other Financings
 
 In
February 2008, the Company entered into a sale of it’s securities with
accredited investors for the issuance of 100,000 restricted common shares at
$.16 per share.  The offer and sale of the securities above were
effected in reliance on the exemptions for sales of securities not involving a
public offering, as set forth in Rule 506 promulgated under the Securities Act
and in Section 4(2) and Section 4(6) of the Securities Act and/or Rule 506 of
Regulation D.
 
 In
addition to the equity and debt financing discussed above, we intend to
conduct additional capital raising activities seeking additional private
financings through the issuance of our common stock or issuance of debt
instruments to increase our required working capital, increase the marketing of
our product and increase revenue generating activities. We plan to complete
additional private placement offerings during 2008, although we have no
assurance that such financing will be completed.
 
 Contractual
Obligations
 
 The
following table includes all the contractual obligations, including principal
and interest payments, as of December 31, 2007:
 
 Payments
      Due By PeriodLess
      than
                1-3
                3-5
                More thanTotal
                1
      year
                years
                years
                5
      yearsConvertible
      notes – principal
                
                $     767,000
                -
                $     767,000
                $        -
                $        -Convertible
      notes - interest payments
                
                $     122,800
                $      61,400
                $      61,400
                $        -
                $        -Operating
      leases
                
                $     114,800
                $      98,400
                $      16,400
                $        -
                $        -$  1,004,600
                $     159,800
                $     844,800
                $        -
                $        -
 
 Off-Balance
Sheet Arrangements
 
 As of
December 31, 2007, we had no off-balance sheet arrangements.
 
 Critical
Accounting Policies and Estimates
 
 Use of Estimates—The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States 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 revenues and expenses during the
reporting period.  Actual results could differ from those
estimates.
 
 Web Site Development
Costs—Under Emerging Issues Taskforce Statement 00-2, Accounting for Web Site Development
Costs (“EITF 00-2”), costs and expenses incurred during the planning and
operating stages of the Company’s web site are expensed as incurred. Under EITF
00-2, costs incurred in the web site application and infrastructure development
stages are capitalized by the Company and amortized to expense over the web
site’s estimated useful life or period of benefit.
  13
  Research and Development
Costs—We expense research and development costs as incurred.
 
 Revenue Recognition— Our
subscription revenue is generated from monthly subscriptions for Website hosting
services. The typical subscription agreement includes the usage of a
personalized website and hosting services. The individual deliverables are not
independent of each other and are not sold or priced on a standalone basis.
Costs to complete the Website and ready it for the end customer are minimal and
are expensed to cost of revenue as incurred. Upon the completion of a customer’s
signup and initial hosting of the Website, the subscription is offered free of
charge for a two week trial period during which the customer can cancel at
anytime. In accordance with Staff Accounting Bulletin (SAB) No. 104, after
the two week trial period has ended, revenue is recognized when all of the
following conditions are satisfied: (1) there is persuasive evidence of an
arrangement; (2) the service has been provided to the customer;
(3) the amount of fees to be paid by the customer is fixed or determinable;
and (4) the collection of our fees is probable. These criteria are met
monthly as our service is provided on a month-to-month basis and collections are
generally made in advance of the services. There is no provision for refunds as
of December 31, 2007, as the Company’s historical refund experience has been
minimal.
 
 Customers
signup and agree to purchase the website service on a monthly or annual basis,
at the customer’s option. The monthly customers pay monthly in advance of the
services and as the services are performed we recognize subscription revenue on
a daily basis.
 
 For
annual customers, upon payment of a full year’s subscription service, the
subscription revenue is recorded as deferred revenue in our balance sheet. As
services are performed, we recognize subscription revenue ratably on a daily
basis.
 
 Professional
services revenue is generated from custom website design services. Our
professional services revenue from contracts for custom Website design is
recorded using a proportional performance model based on labor hours incurred.
The extent of progress toward completion is measured by the labor hours incurred
as a percentage of total estimated labor hours to complete. Labor hours are the
most appropriate measure to allocate revenue among reporting periods, as they
are the primary input to the provision of our professional
services.
 
 Stock-Based
Compensation—Accounting for stock options issued to employees follows the
provisions of SFAS No. 123R, Share-Based Payment. 
This statement requires an entity to measure the cost of employee services
received in exchange for an award of equity instruments based on the grant-date
fair value of the award.  That cost will be recognized over the period
during which an employee is required to provide service in exchange for the
award. We use the Black-Scholes option pricing model to measure the fair value
of options granted to employees.
 
 Recently
Issued Accounting Standards
 
 In
September 2006, the FASB issued SFAS Board Interpretation No. 48, “Accounting for Uncertainty in Income
Taxes - an Interpretation of FASB statement No. 109” (“FIN 48”), which
clarifies the accounting for uncertainty in income taxes recognized in an
enterprise’s financial statements in accordance with FASB No. 109. The
interpretation 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. This interpretation also provides guidance
on derecognition, classification, interest and penalties, accounting in interim
periods, disclosure, and transition. FIN 48 is effective for fiscal years
beginning after December 15, 2006, and we adopted FIN 48 on January 1, 2007.
There was no material impact to our consolidated financial position or results
of operations.
 
 In
September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements.”
This statement defines fair value, establishes a framework for measuring fair
value in generally accepted accounting principles, and expands disclosure about
fair value measurements. This statement applies under other accounting
pronouncements that require or permit fair value measurement, the FASB having
previously concluded in those accounting pronouncement that fair value is the
relevant measurement attribute. This statement does not require any new fair
value measurements. However, for some entities, the application of the statement
will change current practice. This statement is effective for financial
statements issued for fiscal years beginning after November 15, 2007, and
interim periods within those fiscal years. We are currently reviewing the
effect, if any, that this new pronouncement will have on our financial
statements.
  14
  In
September 2006, the FASB issued SFAS No. 158, “Employers’ Accounting for Defined
Benefit Pension and Other Postretirement Plans - an amendment of FASB Statements
No. 87, 88, 106 and 123(R).” This statement improves financial reporting
by requiring an employer to recognize the overfunded or underfunded status of a
defined benefit postretirement plan (other than a multi-employer plan) as an
asset or liability in its statement of financial position and to recognize
changes in that funded status in the year in which the changes occur through
comprehensive income of a business entity or changes in unrestricted net assets
for a not-for-profit organization. This statement also improves financial
reporting by requiring an employer to measure the funded status of a plan as of
the date of its year-end statement of financial position, with limited
exceptions. We have reviewed the pronouncement, and we have determined it has no
material impact on our consolidated financial position or results of
operations.
 
 In
February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial
Assets and Financial Liabilities - including an amendment of SFAS No. 115,
Accounting for Certain Investments in Debt and Equity Securities”, which
applies to all entities with available-for-sale and trading securities. This
Statement permits entities to choose to measure many financial instruments and
certain other items at fair value. The objective is to improve financial
reporting by providing entities with the opportunity to mitigate volatility in
reported earnings caused by measuring related assets and liabilities differently
without having to apply complex hedge accounting provisions. This Statement is
effective as of the beginning of an entity’s first fiscal year that begins after
November 15, 2007. Early adoption is permitted as of the beginning of a fiscal
year that begins on or before November 15, 2007, provided that the entity also
elects to apply the provisions of FASB Statement No. 157, Fair Value
Measurements. We plan to adopt SFAS No. 159 effective January 1, 2008. We have
reviewed the pronouncement, and we do not expect it to have any material impact
on our consolidated financial position or results of operations.
 In
December 2007, FASB issued SFAS No. 141R, Business Combinations(SFAS 141R), which retains the underlying concepts of SFAS 141
in that all business combinations are still required to be accounted for at fair
value under the acquisition method of accounting but SFAS 141R changed the
method of applying the acquisition method in a number of significant aspects.
Acquisition costs will generally be expensed as incurred; noncontrolling
interests will be valued at fair value at the acquisition date; in-process
research and development will be recorded at fair value as an indefinite-lived
intangible asset at the acquisition date; restructuring costs associated with a
business combination will generally be expensed subsequent to the acquisition
date; and changes in deferred tax asset valuation allowances and income tax
uncertainties after the acquisition date generally will affect income tax
expense. The provision of SFAS 141R are effective for fiscal years
beginning after December 15, 2008 with earlier adoption prohibited. We are
currently analyzing the effect of adopting SFAS 141R.
 
 In
December 2007, FASB issued SFAS No. 160, Accounting and Reporting of
Noncontrolling Interest in Consolidated Financial Statements, an amendment of
ARB No. 51(SFAS 160), which requires the recognition of a
noncontrolling interest (minority interest) as equity in the consolidated
financial statements and separate from the parent’s equity. The amount of net
income attributable to the noncontrolling interest will be included in
consolidated net income on the face of the income statement. It also amends
certain aspects of ARB No. 51’s consolidation procedures for consistency
with the requirements of SFAS 141R. This statement also
includes expanded disclosure requirements regarding the interests of the parent
and its noncontrolling interest. The provisions of SFAS 160 are effective
for fiscal years beginning after December 15, 2008 with earlier adoption
prohibited. We are currently analyzing the effect of adopting
SFAS 160.
 
 Risk
      Factors
  An
investment in DPI involves a high degree of risk. Investors should carefully
consider the risks below before making an investment decision. Our business,
financial condition or results of operations could be materially adversely
affected by any of these risks. In such case, the trading price of our common
stock could decline and investors could lose all or part of their
investment.
  Risks
Related to Our Business
  We
have experienced continued losses and expect to incur substantial net losses in
the future.  If we do not achieve profitability, our financial condition
and stock price could suffer.
   15
  Since the
inception of our business in 2005, we have generated minimal revenues and we
have incurred significant losses.  For the year ended December 31, 2007,
and, 2006 and for the period from inception July 14, 2005 to December 31, 2005,
we had incurred net losses of $2,544,500, $743,000 and $196,700,
respectively.  As of December 31, 2007, we had an accumulated deficit
of $3,494,200.
  We expect
operating losses and negative cash flow from operations to continue for the
foreseeable future.  We anticipate that our losses will increase
significantly from current levels because we expect to incur additional costs
and expenses related to being a public company, brand development, advertising,
marketing and promotional activities, as well as the employment of additional
personnel as our business expands.
  Our
ability to become profitable depends on our ability to generate new revenue and
sustain substantially higher revenue while maintaining reasonable expense
levels.  In particular, although we intend to increase significantly our
spending on marketing and promotional activities, these efforts may not be
effective in growing our brand, increasing our subscriber base or generating new
revenues.  If we do not achieve profitability, we may not be able to
continue our operations.
  Our
revenues from operations are not expected to be sufficient to meet our capital
needs in the near future, and we will need to raise additional funds, which may
not be available to us on favorable terms, if at all, thereby potentially
disrupting the growth of our business and ability to generate
revenues.
  Since
inception, we have incurred losses, and have had capital and stockholders’
deficits, and limited cash to fund operations.  We believe that revenues
from operations will continue to be insufficient to meet our working capital
needs while we execute our operating strategy.  We estimate that we will
require a significant amount of additional capital, before our revenues and
cash flows from operations are sufficient to meet our cash outlays and sustain
our operations.
  In order
to fund our cash requirements, we will need to raise additional capital through
equity or debt financings in the near future.  We cannot be certain that
such capital will be available to us or, if it is available, whether such
capital will be available on terms that are acceptable to us.  Such
financing likely would be substantially dilutive to our existing stockholders
and could result in significant financial and operating covenants that would
negatively impact our business.  If we are unable to raise sufficient
additional capital on acceptable terms, we will likely have liquidity problems
which will disrupt our planned growth and would have a material adverse effect
on our financial condition or business prospects.  The holders of new
securities may also have rights, preferences or privileges which are senior to
those of existing holders of common stock. If new sources of financing are
insufficient or unavailable, we will be required to modify our current
operations and planned marketing and revenue generating activities to the extent
of available funding, which would harm our ability to grow or even sustain our
business.
  This annual
report is not an offer to sell, or a solicitation of an offer to buy, any of our
securities.
  Our
previous $4 million private placement was not completed.
 
 On April
3, 2007, we agreed to a $4 million private placement for the issuance of up to
2.5 million restricted common shares of DPI at $1.57 per share. We received only
$1,130,000 of the $4 million private placement and therefore closed that
investment round and commenced a new convertible debt offering for $767,000 (see
Note 7 of the Notes to Consolidated Financial Statements included elsewhere in
this report).   Additionally, in January 2008, we entered into a $1
million private placement with foreign investors under a Regulation S Stock
Purchase agreement, which we received $430,100 as of March 28, 2008 (see Note 13
of the Notes to Consolidated Financial Statements included elsewhere in this
report).  In addition to the above financings, we plan to seek out new
private placement financing opportunities in the remainder of 2008.
 
 Although
we plan to seek out new private placement financing opportunities, we have no
assurance that such financing will be completed. If we do not complete and raise
alternative capital, we will have insufficient funds to operate our business and
continue our operations.
  16
  Our 2007 and 2006 audited financial
statements contain, and our future audited financial statements are likely to
contain, an explanatory paragraph expressing substantial doubt about our ability
to continue as a going concern.  The inclusion of this paragraph may make
it more difficult for us to raise additional capital on acceptable
terms.
  The
report of the independent registered public accounting firm accompanying the
audit of our financial statements for the years ended December 31, 2007 and 2006
contain an explanatory paragraph expressing substantial doubt about our ability
to continue as a going concern because of our operating losses and our need for
additional capital.  Such doubt could make it more difficult for us to
raise additional capital and may materially and adversely affect the terms of
any financing that we may obtain.
  There
is no assurance of successful DPI marketing.
  We have
not launched our platform and tools into the new market verticals and there can
be no assurance that our product will be accepted by the marketplace. If the
marketplace finds any or DPI’s entire product unacceptable, we will be required
to make potentially time consuming and costly changes to our technology, which
may further delay the general rollout of the service. Such delays would deplete
our financial resources and would have a material adverse effect on our
business, results of operations and financial condition.
  We
face competition from other Internet companies, including web search providers,
Internet advertising companies and destination web sites that may also bundle
their services with Internet access.
  We face
competition from other user-generated content service providers, including
companies that are not yet known to our management. We compete with Internet
companies, particularly in the areas of website design, and we may also compete
with companies that sell platforms and tools online because these companies are
attempting to attract users to their web sites to search for information about
platforms and tools. Some of our competitors have more employees and cash
reserves than we have. Many of our competitors also have longer operating
histories and more established relationships with customers and can use their
experience and resources in a variety of competitive ways against us, including
by making acquisitions, investing more aggressively in research and development
and competing more aggressively for advertisers and web sites. Some of our
competitors may have a greater ability to attract and retain users than we do
due to their broader range of content, platforms and tools. If our competitors
are successful in providing a similar or better website application compared to
our application or are able to leverage their platforms to make their services
easier to access, we could experience a significant decline in user base. Any
such decline in users could materially and adversely affect our revenues and
potential profitability.
  If
we do not continue to innovate and provide platforms and tools that are useful
to users, we may not remain competitive and our revenues and operating results
could suffer.
  Our
future success depends on providing platforms and tools that people use for a
high quality Internet experience in the Web 2.0 space. As a result, we must
continue to invest significant resources in research and development in order to
enhance our Web 2.0 technology and our existing platforms and tools.
Additionally, we will have to consistently introduce new high quality platforms
and tools that people can easily and effectively use. If we are unable to ensure
that users and customers have a high quality experience with our platforms and
tools, then these customers may become dissatisfied and move to competitors’
products. Moreover, if we are unable to predict user preferences or industry
changes, or if we are unable to modify our platforms and tools on a timely
basis, we may lose users, with any resulting decline in traffic potentially
having a material and adverse affect on our revenues and
profitability.
  Our
future operating results may also suffer if innovations are not responsive to
the needs of our users, are not appropriately timed with market opportunity or
are not effectively brought to market. As website technology continues to
develop, our competitors may be able to offer results that are, or that are
perceived to be, substantially similar or better than those generated by our
services. This may force us to expend significant resources in order to remain
competitive.
  We
may be unable to effectively manage our anticipated growth.
  If we are
unable to effectively manage our anticipated growth, our business and operating
results could be harmed and we may have to incur significant expenditures to
address the additional operational and control requirements of this
growth.
   17
  We may
also experience rapid growth in our headcount and operations, which may place
significant demands on our management and operational and financial
infrastructure. If we do not effectively manage our growth, the quality of our
platforms and tools could suffer, which could negatively affect our brand image
and operating results. To effectively manage this growth, we will need to
continue to improve our operational, financial and management controls and our
reporting systems and procedures. These systems enhancements and improvements
will require significant capital expenditures and allocation of valuable
management resources. If the improvements are not implemented successfully, our
ability to manage our growth will be impaired and we may have to make
significant additional expenditures to address these issues. Our failure to
manage growth effectively could have a material adverse effect on our business,
results of operations and financial condition.
  Our
business prospects depend on our ability to develop a strong brand image and
identity.
  We
believe that the creation of a brand identity will significantly contribute to
the success of our business. We also believe that maintaining and enhancing the
DPI brand are critical to expanding our base of members. Maintaining and
enhancing the brand may require us to make substantial investments and these
investments may not be successful. If we are unsuccessful in our efforts to
initially obtain, then promote and maintain the DPI brand, or if we incur
excessive expenses in this effort, our business, operating results and financial
condition may be materially and adversely affected. We anticipate that, as the
market for user-generated content platforms becomes increasingly competitive,
maintaining and enhancing our brand may become increasingly difficult and
expensive. Maintaining and enhancing our brand will depend largely on our
ability to be a technology leader and to continue to provide high quality
platforms and tools, which we may not do successfully.
 
 Our
intellectual property rights are valuable and any inability to protect them
could reduce the value of our products, services and brand.
  Our
trademarks, trade secrets, and other intellectual property rights are important
assets of the Company. There can be no assurance that these protections will be
adequate to prevent our competitors from misappropriating our technology or that
our competitors will not independently develop technologies that are
substantially equivalent or superior to our technology. There are events that
are outside of our control that could pose a threat to our intellectual property
rights. For example, effective intellectual property protection may not be
available in every country in which our platforms and tools are distributed or
made available through the Internet. Also, the efforts we have undertaken to
protect our proprietary rights may not be sufficient or effective. Any
significant impairment of our intellectual property rights could harm our
business or our ability to successfully compete. Additionally, protecting our
intellectual property rights is costly and time consuming. Any increase in the
unauthorized use of our intellectual property could make it more expensive to do
business and harm our operating results.
  We
may be subject to intellectual property rights claims in the future, which may
be costly to defend, could require the payment of damages and could limit our
ability to use certain technologies in the future.
  Companies
in the Internet, technology and media industries own large numbers of patents,
copyrights, trademarks and trade secrets and frequently enter into litigation
based on allegations of infringement or other violations of intellectual
property rights. As we face increasing competition, the possibility of
intellectual property rights claims increases. Our technologies may not be able
to withstand any third-party claims or rights against their use. Any
intellectual property claims, with or without merit, could be time consuming,
expensive to litigate or settle and could divert management resources and
attention. An adverse determination also could prevent us from offering our
platforms and tools to others and may require that we procure substitute
products or services for these members.
  With
respect to any intellectual property rights claim, we may have to pay damages or
stop using technology found to be in violation of a third party’s rights. We may
have to seek a license for the technology, which may not be available on
reasonable terms and may significantly increase our operating expenses. The
technology also may not be available for license to us at all. As a result, we
may also be required to develop alternative non-infringing technology, which
could require significant effort and expense. If we cannot license or develop
technology for the infringing aspects of our business, we may be forced to limit
our product and service offerings and may be unable to compete effectively. Any
of these results could harm our brand and operating results.
 
  18
  Expansion
into international markets is potentially important to achieving our long-term
financial and operational goals and we do not have experience operating in
foreign jurisdictions.
  Expansion
into international markets requires management attention and resources. In
addition, we face the following risks associated with our potential expansion
outside the United States:
  •
                Challenges
      caused by distance, language and cultural
  differences
 
 •
                Longer
      payment cycles in some countries
 
 •
                Credit
      risk and higher levels of payment
fraud
 
 •
                Legal
      and regulatory restrictions
 
 •
                Currency
      exchange rate fluctuations
 
 •
                Foreign
      exchange controls that might prevent us from repatriating cash earned in
      countries outside the United States
 
 •
                Political
      and economic instability
 
 •
                Potentially
      adverse tax consequences
 
 •
                Higher
      costs associated with doing business
  internationally
  These
risks could harm our international expansion efforts, which could adversely
affect our business prospects and operating results.
  We
may have difficulty scaling and adapting our infrastructure to accommodate
increased traffic and technology advances or changing business requirements,
which could lead to the loss of subscribers and cause us to incur expenses to
implement infrastructure changes.
  To be
successful, our network infrastructure has to perform well and be reliable. The
greater the user traffic and the greater the complexity of our platforms and
tools, the more computing power we will need. We expect to spend substantial
amounts to purchase and/or lease data centers and equipment and to upgrade our
technology and network infrastructure to handle traffic and to roll out new
platforms and tools. If this expansion is not successfully implemented, or if we
experience inefficiencies and operational failures during the implementation,
the quality of our platforms and tools and our users’ experience could decline.
Resulting cost increases, loss of subscribers and/or failure to accommodate new
technologies or changing business requirements could have a material adverse
affect on our operating results and financial condition.
  We
rely on bandwidth providers, data centers and other third parties for key
elements of providing users with our platforms and tools and any failure or
interruption in the services and products provided by these third parties could
harm our ability to operate our business and damage our reputation.
  We rely
on third-party vendors, including data center and bandwidth providers. Any
disruption in the network access or co-location services provided by these
third-party providers or any failure of these third-party providers to handle
current or higher volumes of use could adversely impact our business. Any
errors, failures, interruptions or delays experienced in connection with these
third-party technologies and information services could negatively impact our
relationship with users and adversely affect our business operations and could
expose us to liabilities to third parties.
  Our
systems are also heavily reliant on the availability of electricity, which also
comes from third-party providers.
  Interruption
or failure of our information technology and communications systems could impair
our ability to effectively provide our platforms and tools. Any damage to or
failure of our systems could result in interruptions in service. Interruptions
in service could reduce our revenues and profits, and our brand could be
damaged. Our systems are vulnerable to damage or interruption from earthquakes,
terrorist attacks, floods, fires, power loss, telecommunications failures,
computer viruses, computer denial of service attacks and similar events. Our
data center is located in an area with a high risk of major earthquakes. Our
data center is also subject to break-ins, sabotage and intentional acts of
vandalism and to potential disruptions if the operators of these facilities have
financial difficulties. Some of our systems are not fully
  19
  redundant
and our disaster recovery planning cannot account for all eventualities. The
occurrence of a natural disaster, a decision to close a facility we are using
without adequate notice or other unanticipated problems at our data centers
could result in lengthy interruptions in our service.
  We
may utilize insurance to mitigate certain risks and, to the extent the cost of
insurance increases and/or changes in coverage occur, our operating results may
be negatively affected.
  We may
utilize insurance to cover certain potential risks and liabilities. In the
current environment, insurance companies are increasingly specific about what
they will and will not insure. It is possible that we may not be able to secure
sufficient insurance to meet our needs, may have to pay higher than anticipated
prices for the coverage or we may not be able to acquire any insurance for
certain types of business risk. Additionally, we may elect to decline insurance
coverage in certain instances and this could leave us exposed to potential
claims. If we were found liable for a significant claim in the future, our
operating results could be negatively impacted.
  Our
business depends on increasing use of the Internet by users sharing information
and content.
  Our
future success is partially dependent on the continued growth and maintenance of
the Internet infrastructure. This includes maintenance of a reliable network
backbone with the necessary speed, data capacity and security for providing
reliable Internet services. Internet infrastructure may be unable to support the
demands placed on it if the number of Internet users continues to increase or if
existing or future Internet users access the Internet more often or increase
their bandwidth requirements. In addition, viruses, worms and similar programs
may harm the performance of the Internet. The Internet has experienced a variety
of outages and other delays as a result of damage to portions of its
infrastructure, and it could face outages and delays in the future. These
outages and delays could reduce the level of Internet usage as well as our
ability to provide our platforms and tools.
  Our quarterly financial results may
fluctuate, which may lead to volatility in our stock price.
   Our
future revenues and operating results may vary significantly from
quarter-to-quarter due to a number of factors, many of which are outside of our
control. Factors that could cause our quarterly operating results to fluctuate
include:
  •
                demand
      for our platforms and tools;•
                our
      pricing and marketing strategies and those of our
    competitors;•
                our
      ability to attract users to our free trail and convert those users into
      paying customers;•
                our
      ability to retain customers and generate new revenues through new
      subscriptions;•
                our
      ability to sustain our profit margins;•
                the
      costs of customer acquisition;•
                our
      ability to manage our production and customer service
      operations;•
                the
      costs of expanding or enhancing our website technology;•
                a
      significant increase in subscriber cancellations for customers who are not
      satisfied with our products;•
                volatility
      in our stock price, which may lead to higher stock-based compensation
      expense under newly adopted accounting
  standards.
  
   20
   Based on
the factors cited above, we believe that quarter-to-quarter comparisons of our
operating results are not a good indication of our future performance. It is
possible that in one or more future quarters, our operating results may be below
the expectations of public market analysts, if any and investors. In that event,
the trading price of our common stock may decline.
   Recent accounting changes may make
it more difficult for us toachieveprofitability.
   As a
publicly-traded company, we are subject to the Sarbanes-Oxley Act of 2002,
including Section 404 of the Sarbanes-Oxley Act, the implementation and
future audit requirements of which we expect to be costly and could impact our
results of operations in future periods.
   In
addition, the Financial Accounting Standards Board now requires us to follow
Statement No. 123 (revised 2004), “Share Based Payment,” or
SFAS No. 123R. Under SFAS No. 123R, companies must calculate
and record in their statement of operations the cost of equity instruments, such
as stock options or restricted stock, awarded to employees for services received
beginning in the first quarter of their 2006 fiscal year.
SFAS No. 123R adversely impacted our operating results for year ended
December 31, 2007 in the amount of approximately $435,100, and we expect an
adverse impact from the stock options in future periods in an aggregate amount
of approximately $1,109,300. This, together with the impact on net income of any
additional options we grant in the future, could make it difficult for us to
achieve profitability.
   We have a limited operating history,
which makes it difficult to evaluate our business and
prospects.
   Our
company was formed in July 2005, and we have only a limited operating history on
which investors can base an evaluation of our business and prospects. As an
Internet company in the early stage of development, we face increased risks,
uncertainties, expenses and difficulties. To address these risks and
uncertainties, we must do the following:
  •
                maintain
      and increase our number of customers;•
                maintain
      and enhance our brand;•
                maintain
      and grow our website properties and customer
operations;•
                enhance
      and expand our platforms and tools;•
                successfully
      execute our business and marketing strategy;•
                continue
      to develop and upgrade our technology and information processing
      systems;•
                continue
      to enhance our service to meet the needs of a changing
    market;•
                provide
      superior customer service;•
                respond
      to competitive developments; and•
                attract,
      integrate, retain and motivate qualified
  personnel.
  
   We may be
unable to accomplish one or more of these things, which could cause our business
to suffer. In addition, accomplishing one or more of these things might be very
expensive, which could harm our financial results.
   We may have difficulty managing
ouroperatinggrowth and
expanding our operations successfully.
   21
   We have
grown from 6 employees as of December 31, 2006 to 11 employees as of
December 31, 2007. Our growth has placed, and will continue to place, a strain
on our administrative and operational infrastructure. Our ability to manage our
operations and growth will require us to continue to refine our operational,
financial and management controls, human resource policies and reporting
systems.
   If we are
unable to manage future expansion, we may not be able to implement improvements
to our controls, policies and systems in an efficient or timely manner and may
discover deficiencies in existing systems and controls. Our ability to provide a
high-quality customer experience could be compromised, which would damage our
reputation and brand and substantially harm our business and results of
operations
   Competitive
pricing pressures may harm our business and results of
operations.
   Demand
for our platforms and tools is sensitive to price. Many external factors,
including our production and personnel costs and our competitors’ pricing and
marketing strategies, can significantly impact our pricing strategies. If we
fail to meet our customers’ price expectations, we could lose customers, which
would harm our business and results of operations.  Changes in our
pricing strategies have had, and may continue to have, a significant impact on
our net revenues and net income.  As we generate the majority of our
net revenues from recurring subscription prices. In the event that competitive
pressures require us to offer discounted subscription prices, our net revenues
and results of operations would be negatively impacted.
   We face intense
competition from a range of competitors and may be unsuccessful in competing
against current and future competitors.
   The
user-generated content industry is intensely competitive, and we expect
competition to increase in the future. Competition may result in pricing
pressures, reduced profit margins or loss of market share, any of which could
substantially harm our business and results of operations. We face intense
competition from some companies which have significantly longer operating
histories, larger and broader customer bases, greater brand recognition and
greater financial, research and development and distribution resources than we
do. These competitors include:
   ·
                My
      Family
 ·
                JotSpot
 ·
                Amiglia
 ·
                Family
      Lobby
 ·
                My
      Great Big Family
 ·
                EasySite
 ·
                Connected
      Family
  The
numerous choices for user-generated content website services can cause confusion
for consumers, and may cause them to choose to use one of our competitors, some
of whom may have greater name recognition than we do. In addition, some of our
competitors who are seeking to establish an online presence may be able to
devote substantially more resources to website and systems development. Also,
larger, more established and better capitalized entities may acquire, invest in
or partner with other online competitors. We may also face competition from new
entrants that are well funded and that may choose to prioritize growing their
market share and brand awareness instead of profitability. Competitors and new
entrants in the user-generated content industry may also seek to develop new
products, technologies or capabilities that could render obsolete or less
competitive many of the platforms and technology that we offer, which could harm
our business and results of operations.
  If we are
unable to adequately control the costs associated with operating our business,
our results of operations will suffer.
  The
primary costs in operating our business are related to product research and
development, acquiring customers, compensating our personnel, and
hosting.  If we are unable to keep these costs aligned with the level
of expected future revenues that we may generate, our results of operations
could be harmed. The challenge in controlling our business costs is made more
difficult by the fact that many of the factors that impact these costs are
beyond our control. For example, the costs of online advertising and keyword
search could increase significantly due to increased competition, which would
increase our customer acquisition costs.
  22
 The loss ofour
Chief Executive Officer,key personnel, an
inability to attract and retain additional personnel or difficulties in the
integration of new members of our management team into our company could affect
our ability to successfully grow our business.
   We are
highly dependent upon the continued service and performance of Mr. Michael
Sawtell, our Chief Executive Officer, President and Sole
Director.  Mr. Sawtell is also our principal shareholder and
founder.  The loss of Mr. Sawtell may significantly delay or prevent
the achievement of our business objectives.  Further, we are highly
dependent upon the continued service and performance of key technical, marketing
and production personnel. The loss of these key employees, each of whom is “at
will” could terminate his or her employment relationship with us at any time,
which may significantly delay or prevent the achievement of our business
objectives.
   We
believe that our future success will also depend in on our continued ability to
identify, hire, train and motivate qualified personnel. We face intense
competition for qualified individuals from numerous technology, marketing,
financial services, manufacturing and e-commerce companies. In addition,
competition for qualified personnel is particularly intense in the Irvine,
California area, where our headquarters are located. We may be unable to attract
and retain suitably qualified individuals who are capable of meeting our growing
operational and managerial requirements, or may be required to pay increased
compensation in order to do so, and our failure to attract and retain qualified
personnel could impair our ability to implement our business plan.
   We may not
succeed in promoting, strengthening and continuing to establish the DPI brand,
which would prevent us from acquiring new customers and increasing
revenues.
   A
component of our business strategy is the continued promotion and strengthening
of the DPI brand. Due to the competitive nature of the user-generated content
markets, if we are unable to successfully promote the DPI brand, we may fail to
achieve any substantial revenues. Customer awareness of, and the perceived value
of, our brand will depend largely on the success of our marketing efforts and
our ability to provide a consistent, high-quality customer experience. To
promote our brand, we have incurred, and will continue to incur, substantial
expense related to advertising and other marketing efforts.
   Our
ability to provide a high-quality customer experience also depends, in large
part, on external factors over which we may have little or no control, including
the reliability and performance of our suppliers and third-party Internet and
communication infrastructure providers. Our failure to provide customers with
high-quality services for any reason could substantially harm our reputation and
our efforts to develop DPI as a trusted brand. The failure of our brand
promotion activities could adversely affect our ability to attract new customers
and maintain customer relationships, and, as a result, substantially harm our
business and results of operations.
   The
success of our business depends on continued production of user-generated
content digital images, and videos.
   Our
growth is highly dependent upon the continued trend by consumers to generate
their own content, digital images, and videos. The user-generated
content market is rapidly evolving, characterized by changing technologies,
intense price competition, additional competitors, evolving industry standards,
frequent new service announcements and changing consumer demands and behaviors.
To the extent that user-generation of their own content, digital images, and
videos does not continue to grow as expected, our anticipated revenue growth
would likely suffer. Moreover, we face significant risks
    that, if
the user-generated content evolves in ways that we are not able to address due
to changing technologies or consumer behaviors, pricing pressures, or otherwise,
our current platforms and tools may become unattractive, which would likely
result in the loss of customers and a decline in net revenues and/or increased
expenses.
  23
 If affordable
broadband access does not become widely available to consumers, our revenue
growth will likely suffer.
   Because
our business currently involves consumers accessing memory-heavy websites and
uploading large data files, we are highly dependent upon the availability of
affordable broadband access to consumers. Many areas of the country still do not
have broadband access, and the cost of broadband access may be too expensive for
many potential customers. To the extent that broadband access is not available
or not adopted by consumers due to cost, our revenue growth would likely
suffer.
   Interruptions to
our websiteservers, information
technology systems, or customer service operations could damage our reputation
and brand and substantially harm our business and results of
operations.
   The
satisfactory performance, reliability and availability of our website servers,
information technology systems and customer service operations are critical to
our reputation, and our ability to attract and retain customers and to maintain
adequate customer satisfaction. Any interruptions that result in the
unavailability of our website or reduced service performance or customer service
could result in negative publicity, damage our reputation and brand and cause
our business and results of operations to suffer.
   Because
we depend in part on third parties for the implementation and maintenance of
certain aspects of our service hosting, and because many of the causes of system
interruptions or interruptions in the production process may be outside of our
control, we may not be able to remedy such interruptions in a timely manner, or
at all.
   Capacity
constraints and system failures could prevent access to our websiteservers, which could
harm our reputation and negatively affect our net revenues.
   Our
business requires that we have adequate capacity in our computer systems to cope
with the high volume of visits to our user websites. As our operations are
anticipated to grow in size and scope, we will need to improve and upgrade our
computer systems and network infrastructure in the ordinary course of business
to offer customers enhanced and new products, services, capacity, features and
functionality. The expansion of our systems and infrastructure may require us to
commit substantial financial, operational and technical resources before the
volume of our business increases, with no assurance that our
anticipated net revenues will increase.
   Our
ability to provide high-quality products and service depends on the efficient
and uninterrupted operation of our computer and communications systems. If our
systems cannot be expanded in a timely manner to cope with increased website
traffic, we could experience disruptions in service, slower response times,
lower customer satisfaction, and delays in the introduction of new platforms and
tools. Any of these problems could harm our reputation and cause us not to
achieve any revenues.
   If we are not
able to reliably meet our data storage and management requirements, customer
satisfaction and our reputation could be harmed.
   As a part
of our current business model, we offer our customers free trial websites and
sharing of their user-generated content and, as a result, must store and manage
hundreds of gigabytes of data. These results in immense system requirements and
substantial ongoing technological challenges, both of which are expected to
continue to increase over time. If we are not able to reliably meet these data
storage and management requirements, we could have disruptions in services which
could impair customer satisfaction and our reputation and lead to reduced net
revenues and increased expenses. Moreover, if the cost of meeting these data
storage and management requirements increases, our results of operations would
be harmed.
    Our technology,
infrastructure and processes may contain undetected errors or design faults that
could result in decreased production, limited capacity or reduced
demand.
   Our
technology, infrastructure and processes may contain undetected errors or design
faults. These errors or design faults may cause our website technology to fail
and result in loss of, or delay in, market acceptance of our platforms and
tools. If we experience a delay in a product release that results in customer
dissatisfaction during the period required to correct errors and design faults,
we would lose revenue or not achieve any new revenue. In the future, we may
encounter scalability limitations, in current or future product releases,
infrastructure and processes that could seriously harm our
business.
  24
 If
we are unable to develop, market and sell new platforms and tools to additional
market verticals, our results of operations may suffer.
   Although
historically we have focused our business on consumer markets for families, we
intend to address, and demand may shift to, expanding our platforms and
tools into new verticals. We may not successfully expand our existing services
or create new platforms and tools for new market segments or develop a
significantly broader customer base. Any failure to address additional market
opportunities could result in loss of market share, which would harm our
business, financial condition, and results of operations.
   We may undertake
acquisitions to expand our business, which may pose risks to our business and
dilute the ownership of our existing stockholders.
   A key
component of our business strategy includes the selective pursuit of businesses
acquisitions, technologies or services. Integrating any newly acquired
businesses, technologies or services is likely to be expensive and time
consuming. To finance any acquisitions, it may be necessary for us to raise
additional funds through public or private financings. Additional funds may not
be available on terms that are favorable to us, and, in the case of equity
financings, would result in dilution to our stockholders. If we do complete any
acquisitions, we may be unable to operate the acquired businesses profitably or
otherwise implement our strategy successfully. If we are unable to integrate any
newly acquired entities, technologies or services effectively, our business and
results of operations will suffer. The time and expense associated with finding
suitable and compatible businesses, technologies or services could also disrupt
our ongoing business and divert our management’s attention. Future acquisitions
by us could also result in large and immediate write-offs or assumptions of debt
and contingent liabilities, any of which could substantially harm our business
and results of operations. We have no agreements or commitments with respect to
any future acquisitions.
   The inability to
acquire or maintain domain names for our website could substantially harm our
business and results of operations.
   We
currently are the registrant of the “DPI” mark in numerous jurisdictions and of
the Internet domain name for our website, digitalpostinteractive.com, as well as
various related domain names. Domain names generally are regulated by Internet
regulatory bodies and are controlled also by trademark and other related laws.
If we lose the ability to use our DPI mark in a particular country or our domain
name, we could be forced to either incur significant additional expenses to
market our products within that country, including the development of a new
brand and the creation of new promotional materials and packaging, or elect not
to sell products in that country. Either result could substantially harm our
business and results of operations.
   Furthermore,
the regulations governing domain names and laws protecting trademarks and
similar proprietary rights could change in ways that block or interfere with our
ability to use relevant domains or our current brand. Also, we might not be able
to prevent third parties from registering or retaining domain names that
interfere with our consumer communications or infringe or otherwise decrease the
value of our trademarks and other proprietary rights. Regulatory bodies also may
establish additional generic or country-code top-level domains or modify the
requirements for holding domain names. As a result, we might not be able to
acquire or maintain the domain names that utilize the name DPI in all of the
countries in which we currently or intend to conduct business.
    Wemay be negatively
affected if we are required to charge sales taxes in additional jurisdictions or
other taxes on purchases.
   We do not
collect or have imposed upon us sales or other taxes related to the platforms
and tools we sell, except for certain corporate level taxes and sales tax in
California. However, additional states or one or more countries may seek to
impose sales or other tax collection obligations on us in the future. A
successful assertion by any country or state in which we do business that we
should be collecting sales or other taxes on the sale of our products could
result in substantial tax liabilities for past or future sales, if any,
discourage customers from purchasing products from us, decrease our ability to
compete with traditional retailers or otherwise substantially harm our business
and results of operations.
  25
 Currently,
decisions of the U.S. Supreme Court restrict the imposition of obligations
to collect state and local sales and use taxes with respect to sales made over
the Internet. However, implementation of the restrictions imposed by these
Supreme Court decisions is subject to interpretation by state and local taxing
authorities. While we believe that these Supreme Court decisions currently
restrict state and local taxing authorities in the United States from requiring
us to collect sales and use taxes from purchasers located within their
jurisdictions, taxing authorities could disagree with our interpretation of
these decisions. Moreover, a number of states in the United States, as well as
the U.S. Congress, have been considering various initiatives that could
limit or supersede the Supreme Court’s position regarding sales and use taxes on
Internet sales. If any state or local taxing jurisdiction were to disagree with
our interpretation of the Supreme Court’s current position regarding state and
local taxation of Internet sales, or if any of these initiatives were to address
the Supreme Court’s constitutional concerns and result in a reversal of its
current position, we could be required to collect additional sales and use taxes
from purchasers. The imposition by state and local governments of various taxes
upon Internet commerce could create administrative burdens for us and could
decrease our future net sales.
   Government
regulation of theInternetand e-commerce
is evolving, and unfavorable changes or failure by us to comply with these
regulations could substantially harm our business and results of
operations.
   We are
subject to general business regulations and laws as well as regulations and laws
specifically governing the Internet and e-commerce. Existing and future laws and
regulations may impede the growth of the Internet or other online services.
These regulations and laws may cover taxation, restrictions on imports and
exports, customs, tariffs, user privacy, data protection, pricing, content,
copyrights, distribution, electronic contracts and other communications,
consumer protection, the provision of online payment services, broadband
residential Internet access and the characteristics and quality of platforms and
tools. It is not clear how existing laws governing issues such as property
ownership, sales and other taxes, libel and personal privacy apply to the
Internet and e-commerce as the vast majority of these laws were adopted prior to
the advent of the Internet and do not contemplate or address the unique issues
raised by the Internet or e-commerce. Those laws that do reference the Internet
are only beginning to be interpreted by the courts and their applicability and
reach are therefore uncertain.
   Our practice of
offering freeplatforms and
toolscould be subject
to judicial or regulatory challenge.
   We
regularly offer free trials as an inducement for customers to try our products.
Although we believe that we conspicuously and clearly communicate all details
and conditions of these offers, we may be subject to claims from individuals or
governmental regulators that our free offers are misleading or do not comply
with applicable legislation, which claims may be expensive to defend and could
divert management’s time and attention. If we become subject to such claims in
the future, or are required or elect to curtail or eliminate our use of free
offers, our results of operations may be harmed.
   Our failure to
protect the confidential information of our customers and networks against
security breaches and the risks associated with credit card fraud could damage
our reputation and brand and substantially harm our business and results of
operations.
   A
significant prerequisite to online commerce and communications is the secure
transmission of confidential information over public networks. Our failure to
prevent security breaches could damage our reputation and brand and
substantially harm our business and results of operations. For example, a
majority of our sales are billed to our customers’ credit card accounts directly
and customers log on using their e-mail address. We rely on encryption and
authentication technology licensed
from third parties to effect the secure transmission of confidential
information, including credit card numbers. Advances in computer capabilities,
new discoveries in the field of cryptography or other developments may result in
a compromise or breach of the technology used by us to protect customer
transaction data. In addition, any party who is able to illicitly obtain a
user’s password could access the user’s transaction data or personal
information. Any compromise of our security could damage our reputation and
brand and expose us to a risk of loss or litigation and possible liability which
would substantially harm our business and results of operations. In addition,
anyone who is able to circumvent our security measures could misappropriate
proprietary information or cause interruptions in our operations. We may need to
devote significant resources to protect against security breaches or to address
problems caused by breaches.
  26
 In
addition, under current credit card practices, we are liable for fraudulent
credit card transactions because we do not obtain a cardholder’s signature. We
do not currently carry insurance against this risk. To date, we have experienced
minimal losses from credit card fraud, but we continue to face the risk of
significant losses from this type of fraud. Our failure to adequately control
fraudulent credit card transactions could damage our reputation and brand and
substantially harm our business and results of operations.
   Changes in
regulations or user concerns regarding privacy and protection of user data could
harm our business.
   Federal,
state and international laws and regulations may govern the collection, use,
sharing and security of data that we receive from our customers. In addition, we
have and post on our website our own privacy policies and practices concerning
the collection, use and disclosure of customer data. Any failure, or perceived
failure, by us to comply with our posted privacy policies or with any
data-related consent orders, Federal Trade Commission requirements or other
federal, state or international privacy-related laws and regulations could
result in proceedings or actions against us by governmental entities or others,
which could potentially harm our business. Further, failure or perceived failure
to comply with our policies or applicable requirements related to the
collection, use or security of personal information or other privacy-related
matters could damage our reputation and result in a loss of
customers.
   Risks Related to owning our
stock.
   There
hasbeen low volume and therefore littleprior
marketfor our common
stock, our stock price may be volatile or may decline regardless of our
operating performance, and you may not be able to resell your shares
at or above your stock purchase price.
   If you
purchase shares of our common stock, you may not be able to resell those shares
at or above your original purchase price. An active or liquid market in our
common stock may not develop or, if it does develop, it may not be sustainable.
The market price of our common stock may fluctuate significantly in response to
numerous factors, many of which are beyond our control, including:
  •
                price
      and volume fluctuations in the overall stock market;•
                changes
      in operating performance and stock market valuations of other technology
      companies generally, or those in our industry in
    particular;•
                actual
      or anticipated fluctuations in our operating results;•
                the
      financial projections, if any, we may provide to the public, any changes
      in these projections or our failure to meet these
    projections;•
                changes
      in financial estimates by any securities analysts who follow our company,
      if any, our failure to meet these estimates or failure of those analysts
      to initiate or maintain coverage of our stock;•
                ratings
      downgrades by any securities analysts who follow our company, if
      any;•
                the
      public’s response to our press releases or other public announcements,
      including our filings with the SEC;•
                announcements
      by us or our competitors of significant technical innovations,
      acquisitions, strategic partnerships, joint ventures or capital
      commitments;•
                introduction
      of technologies or product enhancements that reduce the need for our
      products;•
                market
      conditions or trends in our industry or the economy as a
      whole;•
                the
      loss of key personnel;•
                lawsuits
      threatened or filed against us;•
                future
      sales of our common stock by our executive officers, directors and
      significant stockholders; and•
                other
      events or factors, including those resulting from war, incidents of
      terrorism or responses to these
events.
  27
 In
addition, the stock markets, and in particular the OTC Bulletin Board market
(OTCBB), have experienced extreme price and volume fluctuations that have
affected and continue to affect the market prices of equity securities of many
technology companies. Stock prices of many technology companies have fluctuated
in a manner unrelated or disproportionate to the operating performance of those
companies. In the past, stockholders have instituted securities class action
litigation following periods of market volatility. If we were involved in
securities litigation, it could have substantial costs and divert resources and
the attention of management from our business.
   Purchasers of our
stock may suffer dilution.
  If you
purchase shares of our common stock, the value of your shares based on our
actual book value may become less than the price you paid due to our
planned equity financing. Since inception, our operations have incurred
losses, and we have funded these operating deficits through equity financings or
issuance of our common stock.  We plan to issue additional common
stock to raise additional cash to fund our operating deficits, as such, future
issuance of our common stock may cause immediate dilution to your holdings or
investment. More over, if previously granted options are exercised,
additional dilution will occur.
  A significant
portion of our total outstanding shares are restricted from immediate resale but
may be sold into the market in the near future. If there are substantial sales
of shares of our common stock, the price of our common stock could
decline.
  The price
of our common stock could decline if there are substantial sales of our common
stock and if there is a large number of shares of our common stock available for
sale. As of December 31, 2007, we  have 53,550,840 outstanding shares
of our common stock, of which 37,950,840 are unregistered and originally issued
as restricted and 15,600,000 shares of our common stock have been previously
registered under Form SB-2/A filed on or about December 27, 2005, and therefore
are freely sold in the public market.
  Also, we
may register the issuance of all shares of common stock that we have issued
related to the Merger and shares sold in or underlying convertible debt and
derivative instruments and other subsequent financings, as well as issue shares
under our employee equity incentive plans. Once we register the issuance of
these shares, they can be freely sold in the public market upon issuance.
Additionally, the SEC has recently revised Rule 144, generally easing the
limitations surrounding selling restricted shares in to the public market, and
having the legend removed from restricted shares, all without a registration
statement for such shares.
  The
market price of the shares of our common stock could decline due to sales of a
substantial number of our shares in the public market or the perception in the
market that the holders of a large number of shares intend to sell their
shares.
  Our directors,
executive officers and principal stockholders have substantial control overUSand could delay
or prevent a change in corporate control.
  As of
December 31, 2007, our directors, executive officers and holders of more than 5%
of our common stock, together with their affiliates, will beneficially own, in
the aggregate, approximately 59.6% of our outstanding common stock. As a result,
these stockholders, if acting together, may have the ability to determine the
outcome of matters submitted to our stockholders for approval, including the
election of directors and any merger, consolidation or sale of all or
substantially all of our assets. In addition, these persons, acting together,
may have the ability to control the management and affairs of our company.
Accordingly, this concentration of ownership may harm the market price of our
common stock by:
  •
                delaying,
      deferring or preventing a change in control of our
  company;•
                impeding
      a merger, consolidation, takeover or other business combination involving
      our company; or•
                discouraging
      a potential acquirer from making a tender offer or otherwise attempting to
      obtain control of our company.
  
 28
  Maintaining and
improving our financial controls and the requirements of beinga public company
may strain our resources, divert
management’s attention and affect our ability to attract and retain qualified
board members.
  As a
public company, we are subject to the reporting requirements of the Securities
Exchange Act of 1934, the Sarbanes-Oxley Act of 2002 and the rules and
regulations of the OTCBB. The requirements of these rules and regulations
increase our legal, accounting and financial compliance costs, make some
activities more difficult, time-consuming or costly and may also place undue
strain on our personnel, systems and resources.
  The
Sarbanes-Oxley Act will require, among other things, that we maintain effective
disclosure controls and procedures and internal control over financial
reporting. This can be difficult to do. In order to maintain and improve the
effectiveness of our disclosure controls and procedures and internal control
over financial reporting, significant resources and management oversight will be
required. We have a substantial effort ahead of us to improve the
effectiveness of our control environment and our internal control over financial
reporting. As a result, management’s attention may be diverted from other
business concerns, which could harm our business, financial condition and
results of operations. These efforts will also involve substantial accounting
related costs. In addition, if we are unable to continue to meet these
requirements, we may not be able to remain listed on the OTCBB
market.
  Under the
Sarbanes-Oxley Act and the rules and regulations of the OTCBB market, we are not
required to maintain a board of directors with a majority of independent
directors. To the extent we become required to do so, we expect that these rules
and regulations may make it more difficult and more expensive for us to maintain
directors’ and officers’ liability insurance, and we may be required to accept
reduced coverage or incur substantially higher costs to maintain coverage. If we
are unable to maintain adequate directors’ and officers’ insurance, our ability
to recruit and retain qualified directors, especially those directors who may be
considered independent and officers will be significantly
curtailed.
  We
are not required to meet or maintain any listing standards for our common stock
to be quoted on the OTC Bulletin Board, which could affect our stockholders’
ability to access trading information about our common stock.
  OTCBB
market is separate and distinct from the Nasdaq Stock Market and any national
stock exchange, such as the New York Stock Exchange or the American Stock
Exchange. Although the OTC Bulletin Board is a regulated quotation service that
displays real-time quotes, last sale prices, and volume information in
over-the-counter equity securities like our common stock, we are not required to
meet or maintain any qualitative or quantitative standards for our common stock
to be quoted on the OTCBB. Our common stock does not presently meet the minimum
listing standards for listing on the Nasdaq Stock Market or any national
securities exchange, which could affect our stockholders’ ability to access
trading information about our common stock. Additionally, we are required to
satisfy the reporting requirements under the Securities Exchange Act of 1934, as
amended. If we fail to do so, our shares may no longer be quoted on the
OTCBB.
  We
do not intend to pay dividends; you will not receive funds without selling
shares.
  We have
never declared or paid any cash dividends on our capital stock and do not intend
to pay dividends in the foreseeable future. We intend to invest our future
earnings, if any, to fund our growth. Therefore, you will not receive any funds
without selling your shares.
  Our
common stock may be subject to penny stock rules, which may make it more
difficult for our stockholders to sell their common stock.
  Broker-dealer
practices in connection with transactions in “penny stocks” are regulated by
certain penny stock rules adopted by the Securities and Exchange Commission
(“SEC”). Penny stocks generally are equity securities with a price of less than
$5.00 per share. The penny stock rules require a broker-dealer, prior to a
purchase or sale of a penny stock not otherwise exempt from the rules, to
deliver to the customer a standardized risk disclosure document that provides
information about penny stocks and the risks in the penny stock market. The
broker-dealer also must provide the customer with current bid and offer
quotations for the penny stock, the compensation of the broker-dealer and its
salesperson in the transaction, and monthly account statements showing the
market value of each penny stock held in the customer’s account. In addition,
the penny stock rules generally require that prior to a transaction in a penny
stock the broker-dealer make a special written determination that the penny
stock is a suitable investment for the purchaser and receive the purchaser’s
written agreement to the transaction. These disclosure requirements may have the
effect of reducing the level of trading activity in the secondary market for a
stock that becomes subject to the penny stock rules.
  29
 ITEM 7.      Financial
Statements And Supplementary Data.
 
 The
financial statements required by this Item begin on Page F-1 of this Form
10-KSB, and include:
 
 
 PageReport
      of Independent Registered Public Accounting Firm
                F-2Consolidated
      Financial Statements:Consolidated
      Balance Sheet
                F-3Consolidated
      Statement of Operations
                F-4Consolidated
      Statement of Stockholders’ Deficit
                F-5Consolidated
      Statement of Cash Flows
                F-6Consolidated
      Notes to Financial Statements
                F-7
  ITEM
8. Changes In And Disagreements With Accountants On Accounting And
Financial Disclosure
  On
February 26, 2007, we dismissed the accounting firm of Schumacher &
Associates Inc. as our principal accountant.  The report of Schumacher
& Associates Inc. on the financial statements for the fiscal year ended
January 31, 2006, did not include any adverse opinion or disclaimer of opinion,
or any qualification or modification as to uncertainty, audit scope or
accounting principles, except for the addition of an explanatory paragraph
regarding the Company's ability to continue as a going concern. There were no
disagreements with Schumacher & Associates Inc. on any matter of accounting
principles or practices, financial statement disclosure, or auditing scope or
procedure which, if not resolved to the satisfaction of Schumacher &
Associates Inc., would have caused it to make reference to the subject matter of
such disagreement in their reports on ouir financial statements.
 
 On March
7, 2007, we engaged the accounting firm of Haskell & White LLP as our
independent registered public accounting firm.
 
 The Board
of Directors approved the change in principal accountants discussed
above.
 
 ITEM
8A and 8A(T).  Controls and procedures
  Evaluation of Disclosure Controls and
Procedures
  Our
management has evaluated, under the supervision and with the participation of
our Chief Executive Officer and Chief Financial Officer, the effectiveness of
our disclosure controls and procedures as of the end of the period covered by
this report pursuant to Rule 13a-15(e) and 15d-15(e) under the Securities
Exchange Act of 1934, as amended (the “Exchange Act”). Based on that evaluation,
our Chief Executive Officer and our Chief Financial Officer have concluded that,
as of the end of the period covered by this report, our disclosure controls and
procedures were not effective due to the material weaknesses in our internal
control over financial reporting as of December 31, 2007, described
below.
 30
 Management’s Report on Internal
Control over Financial Reporting
  Our
management is responsible for establishing and maintaining adequate internal
control over financial reporting. Our internal control system is designed to
provide reasonable assurance to our management, the Board of Directors and
investors regarding reliable preparation and presentation of published financial
statements. Nonetheless, all internal control systems, no matter how well
designed, have inherent limitations. Even systems determined to be effective as
of a particular date can only provide reasonable assurance with respect to
reliable financial statement preparation and presentation.
  A
material weakness in internal control over financial reporting is a control
deficiency (within the meaning of the Public Company Accounting Oversight Board
(United States) Auditing Standard No. 5), or a combination of control
deficiencies, that result in there being a reasonable possibility that a
material misstatement in the annual or interim financial statements would not be
prevented or detected.
  Our
management assessed the effectiveness of our internal control over financial
reporting as of December 31, 2007. In making this assessment, management
used the criteria set forth by the Committee of Sponsoring Organizations of the
Treadway Commission in Internal Control — Integrated Framework (COSO).
Based on our assessment, we believe that, as of December 31, 2007, our
internal control over financial reporting was ineffective based on those
criteria, in consideration of the material weaknesses described
below.
  Control
environment.  We did not maintain an effective control
environment. Specifically, (i) our board of directors consists of a sole
director and no other members, (ii) our audit committee consists of a single
independent member, and, (iii) we did not maintain a sufficient number of
personnel in the areas of accounting and financial reporting.
 Financial close and
reporting.  We did not maintain sufficient number of accounting
personnel supporting the financial close and reporting processes to ensure:
(i) changes and entry to spreadsheets utilized in the financial reporting
process were properly reviewed, (ii) analysis and reconciliation of
significant accounts were properly reviewed, and, (iii) proper review of
period close entries and procedures.
 This
annual report does not include an attestation report of the Company’s registered
public accounting firm regarding internal control over financial
reporting.   Management’s report was not subject
to  attestation by the Company’ registered public accounting firm
pursuant to temporary rules of the Securities and Exchange Commission that
permit the Company to provide only management’s report in this annual
report.  Management’s report is deemed furnished, rather than filed,
for purposes of liability under Section 18 of the 1934 Act.
 
 Remediation
Activities
  The
following activities expect to remediate the material weaknesses: (i) we
anticipate appointing additional members of our Board of Directors and Audit
Committee, and, (ii) upon sufficient funding, we anticipate
hiring additional accounting personnel to improve our overall control
environment, account analysis and financial close and reporting
process. Management is committed to correcting material weaknesses and will
continue to evaluate appropriate remediation plans.
 
 Changes
in Internal Control Over Financial Reporting.
  There
have been no changes in our internal control over financial reporting during the
last fiscal year that has materially affected, or is reasonably likely to
materially affect, our internal control over financial
reporting.  However, our most recent assessment resulted in
discovering material weaknesses noted above.
  
 ITEM
8B.   Other Information
 
 None.
  31
  PART
III
 
  ITEM
      9.  Directors, Executive Officers, Promoters And Control Persons And
      Corporate Governance; Compliance With Section 16(A) Of The Exchange
      Act
  Changes
      in Directors and Executive Officers
  On
January 30, 2007, as part of the Merger, the then existing directors of
HomAssist, Ms. Irene Braham, Mr. Ernest Cheung and Mr. Danny Hon resigned and
Mike Sawtell, Old TFP’s single existing director was appointed as our new sole
director.  Also, on January 30, 2007, as part of the Merger, Irene
Braham, President and Chief Executive Officer and Ernest Cheung, Chief Executive
Officer resigned as the executive officers of HomAssist and were replaced by
Mike Sawtell and Steven Dong who were appointed as our new President and Chief
Executive Officer and Chief Financial Officer, respectively.
  Directors
and Executive Officers
  The
following persons are our current executive officers and directors since January
30, 2007, and hold the offices set forth opposite their names:
  Name
                
                Age
                
                PositionMichael
      Sawtell
                
                49
                
                Chairman
      and Sole Director of the Board of Directors, Chief Executive Officer and
      PresidentSteven
      Dong
                
                41
                
                Chief
      Financial Officer
   Michael
Sawtell is the founder and Chief Executive Officer of TFP since July
2005.  Prior to then, he was President and Chief Operating Officer of
Interchange Corporation, a publicly-held Internet advertising and local search
company from March of 2000 to April of 2005. From 1993 to 2000, Mr. Sawtell
was the Chief Operating Officer and the Vice President of Sales for Informative
Research, one of the largest mortgage services firms in the United States. From
1986 to 1993, Mr. Sawtell worked as a director of operations on the
B-2 Stealth Bomber program for Northrop Grumman Corporation, a global
defense company. He has also held key operational positions at General Dynamics,
another global defense company.
 
 Steven
Dong has been our Chief Financial Officer since January 30,
2007.  From March 2006, he served as TFP’s consulting CFO under an
agreement with a consulting firm owned by Mr. Dong.  Prior thereto,
from 1999 to 2002, Mr. Dong served as Chief Financial Officer of Taitron
Components, Inc., a publicly-held semi-conductor company. From 1995 to 1999, Mr.
Dong served as a financial consultant specializing in assisting publicly held
companies by serving as their interim Chief Financial Officer. From 1988 to
1995, Mr. Dong was employed by Coopers & Lybrand, LLP. Mr. Dong is a
Certified Public Accountant and a member in good standing with the American
Institute of Certified Public Accountants and California State Board of
Accountancy.
 
 Family
      Relationships
  There are
no family relationships among the individuals comprising our board of directors,
management and other key personnel.
   Involvement
in Certain Legal Proceedings.
   During
the past five years, none of the following have occurred that are material to an
evaluation of the ability or integrity of any director, person nominated to
become a director, executive officer, promoter or control person of the
Company:
   1.
 Any bankruptcy petition filed by or against any business of which such
person was a general partner or executive officer either at the time of the
bankruptcy or within two years prior to that time;
   32
   2.
 Any conviction in a criminal proceeding or being subject to a pending
criminal proceeding (excluding traffic violations and other minor
offenses);
   3.
 Being subject to any order, judgment, or decree, not subsequently
reversed, suspended or vacated, of any court of competent jurisdiction,
permanently or temporarily enjoining, barring, suspending or otherwise limiting
his involvement in any type of business, securities or banking activities;
and
  4.
 Being found by a court of competent jurisdiction (in a civil action) , the
Commission or the Commodity Futures Trading Commission to have violated a
federal or state securities or commodities law, and the judgment has not been
reversed, suspended, or vacated.
  Compliance
With Section 16(a) of the Exchange Act
   The
Company does not have a class of equity securities registered pursuant to
Section 12 of the Exchange Act, and therefore the Company’s officers, directors
and 10% stockholders are not required to file Forms 3, 4 and 5 with the
SEC.
  Changes
      to Nominating Process
   There
have been no changes to the nominating process or adoption of procedures by
which security holders may recommend nominees to the small business issuer's
board of directors.
  Board
      Committees
  Audit
      Committee
  David
Vanderhorst is our Audit Committee member. Mr. Vanderhorst is an “audit
committee financial expert” in accordance with SEC rules. Stockholders
should understand that this designation is a disclosure requirement of the SEC
related to Mr. Vanderhorst’s experience and understanding with respect to
certain accounting and auditing matters. The designation does not impose upon
Mr. Vanderhorst any duties, obligations, or liability that are greater than
are generally imposed on him as a member of the Audit
Committee.  Because we are not a listed issuer, the members of the
Audit Committee are not subject to the independence requirements of any national
securities exchange or association.  Mr. Vanderhorst is a non-related
party and independent to the Company.
  
 REPORT OF THE AUDIT
COMMITTEE
  The following Report of the Audit
Committee does not constitute soliciting material and should not be deemed filed
or incorporated by reference into any other Company filing under the Securities
Act of 1933 or the Securities Exchange Act of 1934, except to the extent we
specifically incorporate this Report by reference
therein.
 
  The Audit
Committee of the Board of Directors operates pursuant to a written charter. Our
Audit Committee charter is available on our website, www.dglp.com. The Committee
did not meet but once acted by unanimous written consent during fiscal 2007 to
fulfill its responsibilities. To ensure independence, the Audit Committee also
meets separately with the Company’s independent registered public accounting
firm and members of management. The sole member of the Audit Committee is a
non-employee and satisfies the SEC requirements with respect to independence,
financial sophistication and experience.
  The role
of the Audit Committee is to oversee the Company’s financial reporting process
on behalf of the Board of Directors. Management of the Company has the primary
responsibility for the Company’s consolidated financial statements as well as
the Company’s financial reporting process, principles and internal controls. The
independent registered public accounting firm is responsible for performing an
audit of the Company’s financial statements and expressing an opinion as to the
conformity of such consolidated financial statements with generally accepted
accounting principles.
  In this
context, the Audit Committee has reviewed and discussed the audited financial
statements of the Company as of and for the year ended December 31, 2007,
with management and the independent registered public accounting firm. These
reviews included discussion with the outside independent registered public
accountants of matters required to be
  33
  discussed
pursuant to Statement on Auditing Standards No. 61 (Communication with
Audit Committees). In addition, the Audit Committee has received the written
disclosures and the letter from the independent registered public accountants
required by Independence Standards Board Standard No. 1 (Independence
Discussions with Audit Committees), as currently in effect, and it has discussed
with the independent registered public accountants its independence from the
Company.
  Based on
the reports and discussions described above, the Audit Committee recommended to
the Board of Directors that the audited financial statements be included in the
Company’s Annual Report on Form 10-KSB for the fiscal year ended
December 31, 2007, for filing with the Securities and Exchange
Commission.
 /s/ David Vanderhorst
 March 28,
2008
 
  Other
Committees
  The Board
intends to appoint such persons and form such committees as are required to meet
the corporate governance requirements imposed by the national securities
exchanges.  Therefore, we intend that a majority of our directors will
eventually be independent directors and at least one director will continue to
qualify as an “audit committee financial expert.” Additionally, the Board is
expected to appoint a nominating committee and compensation committee, and to
adopt charters relative to each such committee. Until further determination by
the Board, the full Board will undertake the duties of the compensation
committee and nominating committee.
  Code
      of Ethics
  We have
formally adopted a written code of ethics that applies to our board of
directors, principal executive officer, principal financial officer and
employees; it can be found on our website at www.dglp.com.
  ITEM 10.     Executive
Compensation.
 
 Compensation
Discussion and Analysis
  With
respect to our executive compensation policies, the board of directors had
determined that until a business combination or other strategic transaction was
completed, we would continue to compensate our executive officer on a basis
commensurate with cash compensation and benefit levels suitable with our cash
position as a new company.
  The
following discussion and analysis reflects the compensation arrangements that we
had with our executive officers.  After the Merger, and upon additional
financing, if any, we expect to round out our management team. Our board of
directors intends to review and modify, as necessary, our executive compensation
policies in light of our current status as a new operating company and working
capital (deficit) positions.  This review will be conducted with the goal
of compensating our executives so as to maximize their, as well as our,
performance.
  Chief
      Executive Officer Compensation
  Mr.
Sawtell has served as our Chief Executive Officer and our Sole Director
from July 2005.  From July 2005 through December 31, 2006, Mr. Sawtell did
not have any employment agreement with us and received an annual salary of
$75,000. Effective January 30, 2007, we entered into an employment
agreement with Mr. Sawtell (See Executive Employment
Contractsbelow)
to serve as our Chief Executive Officer and President.
  Compensation
      of Other Executive Officers
  Mr. Dong
has served as our Consulting Chief Financial Officer from March 2006 under a
contract with a financial consulting firm owned by Mr. Dong.Effective
January 30, 2007, we entered into an employment agreement with Mr. Dong (See Executive Employment
Contractsbelow)
to serve as our Chief Financial Officer.
  34
  Stock
      Options
   Stock
      options generally have been granted to our executive officer at the time
      of hire and at such other times as the board of directors has deemed
      appropriate, such as in connection with a promotion or upon nearing full
      vesting of prior options.  In determining option grants, the board of
      directors has considered the same industry survey data as used in its
      analysis of base salaries and bonuses, and has strived to make awards that
      are in line with its competitors. In general, the number of shares of
      common stock underlying the stock options granted to each executive has
      reflected the significance of that executive’s current and anticipated
      contributions to us.
  In
addition, the stock option grants made by the board of directors are designed to
align the interests of management with those of the stockholders. In order to
maintain the incentive and retention aspects of these grants, the board of
directors has determined that a significant percentage of any officer’s stock
options should be unvested option shares.
  The value
that may be realized from exercisable options depends on whether the price of
the common stock at any particular point in time accurately reflects our
performance. However, each individual optionholder, and not the board of
directors, makes the determination as to whether to exercise options that have
vested in any particular year.
  During
2005, Mr. Sawtell was granted an option to purchase 4,511,833 shares of our
common stock and during 2006, Mr. Sawtell was granted an option to
purchase 6,767,749 shares of our common stock.  These
options were partially cancelled, as discussed further below inItem 7. Certain Relationships And
Related Transactions, And Director Independence.During 2007
Mr. Sawtell was not granted any options.
  In March
2006, options to purchase 902,367 shares of our common stock were granted to a
financial consulting firm owned by Mr. Dong and in November 2006, he was granted
an option to purchase 225,592 shares of our common stock. These options were
partially cancelled, as discussed further below in Item 7. Certain Relationships And
Related Transactions, And Director Independence. During 2007 Mr.
Dong was granted an option to purchase 875,000 shares of our common stock, as
discussed further below.
  Compliance
with Internal Revenue Code Section 162(m)
  Section
162(m) of the Internal Revenue Code generally disallows a tax deduction to a
public company for compensation over $1 million paid to its Chief Executive
Officer and its four other most highly compensated executive officers. However,
if certain performance-based requirements are met, qualifying compensation will
not be subject to this deduction limit.  Although the limitations of
Section 162(m) generally have not been of concern to us while we were a shell
corporation, we intend to consider the requirements of Section 162(m) in
developing our compensation policies now that we are an operating
company.
  Summary
      Compensation Table
  The
following table sets forth certain compensation information as to our Chief
Executive Officer and Chief Financial Officer who were our executive
officers (the “Named Executive Officers”), for each of the years ended December
31, 2007 and 2006; no other executive officers had compensation of more than
$100,000 annually for 2006, and 2007:
  SUMMARY
COMPENSATION TABLE
  Name and Principal Position
                
                Year
                
                Salary
                  ($)
      (1)
                Bonus
                  ($)
                Stock
      Awards
                  ($)
                Option
      Awards
                  ($)
      (2)
                
                Non-Equity
      Incentive Plan Compensation ($)
                Change
      in Pension Value and Nonqualified Deferred Compensation Earnings
      ($)
                All Other
                  Compensation
                  ($) (3)
                
                Total
                  ($)Michael
      Sawtell
                  President
      and Chief Executive Officer
                
                2007
                  2006
                
                185,800
                  75,000
                50,000
                  --
                --
                  --
                195,400
                  25,600
                
                --
                  --
                --
                  --
                18,900
                  15,000
                (3)
                450,100
                  115,600Steven
      Dong
                  Chief
      Financial Officer
                
                2007
                  2006
                (5)
                  (5)
                146,800
                  --
                --
                  --
                --
                  --
                18,900
                  --
                
                --
                  --
                --
                  --
                45,000
                  --
                (4)
                210,700
                  --
 
 (1)
                Mr.
      Sawtell and Mr. Dong entered into employment agreements on January 30,
      2007, (further discussed below) for annual salaries of $210,000 and
      $175,000, respectively.  The amounts shown above include the
      amounts paid starting on January 30, 2007 through December 31,
      2007.
 (2)
                The
      value of the options granted to our named executives has been estimated
      pursuant to Statement of Financial Accounting Standards
      No. 123R,  Share-Based Payment
      ("SFAS 123R"), using the Black-Scholes option pricing model with the
      following weighted average assumptions: For 2007: expected life of 4.5
      years, volatility of 45%, risk-free interest of 4.43%, and no dividend
      yield; for 2006: expected life of 4.5 years, volatility of 45%, risk-free
      interest of 4.69%, and no dividend yield.  See the table below for
      the grants made and see Note 8 of the Notes to the Consolidated Financial
      Statements included elsewhere in this report for a description of the
      vesting schedule of option awards granted under the 2007
    SOP.
 (3)
                Includes
      deferred salary for Mr. Sawtell in the amount of $8,100 that was accrued
      yet unpaid as of December 31, 2007, and car allowance paid in the amount
      of $10,800.
 (4)
                Includes
      deferred salary for Mr.Dong in the amount of $6,700, respectively, that
      was accrued yet unpaid as of December 31, 2007; and other compensation
      amounts due to Steven Dong in the amount of  $38,300; both the
      $6,700 and $38,300 were used as consideration from Mr. Dong to purchase
      $45,000 of convertible notes in October, 2004, see Note 7 of the Notes to
      the Consolidated Financial Statements included elsewhere in this report
      for a description of the convertible notes
  financing.
 (5)
                Mr.
      Dong became an employee on January 30, 2007, as a result, no amounts are
      shown paid to him as an employee during 2006. From March 2006 through
      January 30, 2007, Mr. Dong performed consulting work for us pursuant to a
      consulting agreement with a firm owned by Mr. Dong.  We paid
      this consulting firm $11,600 and $81,000 during 2006 and 2007,
      respectively, see Note 9 of the Notes to the Consolidated Financial
      Statements included elsewhere in this report for a description of
      transactions with the consulting firm owned by Mr.
      Dong.  Additionally, the consulting firm was granted options to
      purchase 1,127,958 shares of our common stock in 2006 which SFAS 123R
      related expense incurred amounted to $11,800 in 2006 and $21,500 in
      2007.
 
 35
 
 Grants of Plan-Based
Awards
  
 The
following table provides information regarding grants of plan-based awards that
we granted to the Named Executive Officers during the fiscal year ended
December 31, 2007. All options were granted at the fair market value of our
common stock on the date of grant, as determined by our board of
directors.  Each option represents the right to purchase one share of
our common stock. Generally, none of the shares subject to options are vested at
the time of grant and 25% of the shares subject to such option grants vest on
the date which is nine months from the date of grant. The remainder of the
shares vests in equal nine month installments over the remaining 27 months
thereafter.
 
 2007Plan-Based Awards Table andOutstanding Equity Awards at Fiscal
Year-End
 
 The
following table provides information regarding exercisable and unexercisable
stock options held by the Named Executive Officers as of December 31,
2007.
  
  
 
 Name
                
                Number
      of Securities Underlying Unexercised Options
                  (#)
                  Exercisable
                
                Number
      of Securities Underlying Unexercised Options
                  (#)
                  Unexercisable
                
                Option
      Exercise Price
                  ($)
                
                Option
      Expiration DateMike
      Sawtell, CEO
                
                5,075,811
                
                1,691,938
                (3)
                $               0.09
                
                11/13/2012Steven
      Dong, CFO
                
                -
                
                875,000
                (7)
                $               0.70
                
                10/4/2013338,387
                (2)
                112,796
                (2)
      (4)
                $               0.09
                
                3/15/2011191,409
                (2)
                112,799
                (2)
      (5)
                $               0.04
                
                3/15/2011169,194
                (2)
                56,398
                (2)
      (6)
                $               0.09
                
                4/3/2011
 
 
 (1)
      An option to purchase 4,511,833 shares of our common stock granted to Mr.
      Sawtell was cancelled unexercised
                  pursuant
      to the Merger on January 30, 2007.  None of the 4,511,833 remain
      outstanding as of December 31,
2007.
 (2)
      Mr. Dong became an employee on January 30, 2007. From March 2006 through
      January 30, 2007, Mr. Dong performed
                  consulting
      work for us pursuant to a consulting agreement with a firm owned by Mr.
      Dong.  We granted options to purchase
                  451,183,
      451,183 and 225,592 to this consulting firm owned by Mr.
    Dong.
 (3)
      1,691,938 option shares will vest on July 31,
  2008.
 (4)
      112,796 option shares will vest on July 31,
  2008.
 (5)
      112,799 option shares will vest on July 31,
  2008.
 (6)
      56,398 option shares will vest on July 31,
2008.
 (7)
      218,750 option shares will vest on each of the dates: July 4, 2008; April
      4, 2009; October 4, 2009; and April 4,
2010.
 
 Name
                
                Grant
      Date
                
                All
      Other Stock Awards: Number of Shares of Stock or Units(#)
                
                
                Exercise
      or Base Price of Option Awards ($/Sh)
                
                Grant
      Date Fair Value of Stock and Option AwardsMike
      Sawtell, CEO
                
                --11/13/2006
                
                6,767,749
                
                
                $            
             .09
                
                $         260,3007/14/2005
                (1)
                4,511,833
                
                
                $                   
      .04
                
                $           44,200Steven
      Dong, CFO
                
                10/4/2007
                
                875,000
                
                
                $    
                    
      .70
                
                $          263,4003/15/2006
                (2)
                451,183
                (2)
                
                $                   
      .04
                
                $           17,4003/15/2006
                (2)
                451,183
                (2)
                
                $                   
      .09
                
                $           25,9004/3/2006
                (2)
                225,592
                (2)
                
                $                   
      .09
                
                $           17,400
 
  Compensation
      of Directors and Committee Members
  We have
agreed to pay Mr. Vanderhorst, our sole audit committee member $2,500 per fiscal
quarter.  There are presently no other arrangements providing for
payments to directors for director or consulting services.  We expect to
establish these arrangements shortly upon increased business
activities.
  Executive
      Employment Contract
  Employment
Agreement with Michael Sawtell
  We
entered into an employment agreement with Mr. Sawtell, our Chief Executive
Officer on January 30, 2007. The employment agreement has a term of five years
and automatically renews for additional one year terms unless either party
terminates it with at least 30 days notice to the other
party.
 
 The
material terms of the agreement are:  (i) base annual salary of
$210,000; (ii) participation in our standard employee benefit plans; (iii)
initial one time bonus of $50,000 for successful closing of Merger; (iv)
reimbursable expenses customarily
given to Executives; (v) other bonuses at the discretion of the board of
directors and (vi) severance arrangements described below.
 36
 If we
terminate Mr. Sawtell’s employment agreement without cause, or if Mr.
Sawtell resigns for good reason, each as defined in the agreement, we are
obligated to pay Mr. Sawtell the greater of his annual salary for the
remaining term of the agreement or three years of his annual salary rate at the
time of termination without cause or resignation for good reason, benefits for
24 months following the date of termination, and the right for
24 months from the date of termination to exercise all vested options
granted to him prior to that time; provided that in the event the termination
occurs within 120 days of the execution of an agreement which results in a
change of control, as described below, vesting of all options will be
accelerated and in the event the termination occurs outside of such 120 day
period, all unvested options that would have vested had Mr. Sawtell’s
employment agreement remained in force through the end of the initial term will
be fully vested immediately prior to such termination.
 
 Employment
Agreement with Steven Dong
  We
entered into an employment agreement with Mr. Dong, our Chief Financial Officer
on January 30, 2007. The employment agreement has a term of two years and
automatically renews for additional one year terms unless either party
terminates it with at least 30 days notice to the other
party.
 
 The
material terms of the agreement are:  (i) base annual salary of
$175,000; (ii) participation in our standard employee benefit plans; (iii)
initial one time bonus of $30,000 for successful closing of Merger (iv)
reimbursable expenses customarily given to Executives; (v) various bonuses
related to performance metrics; (vi) other bonuses at the discretion of the
board of directors and (vii) severance arrangements described
below.
 
 If we
terminate Mr. Dong’s employment agreement without cause, or if Mr. Dong
terminates the agreement with good reason, each as defined in the agreement, we
are obligated to pay Mr. Dong: (i) his annual salary and other
benefits earned prior to termination, (ii) the greater of his annual salary
for the remaining term of the agreement or his annual salary payable over one
year, (iii) benefits for 12 months following the date of termination,
and (iv) the right for 12 months from the date of termination to
exercise all vested options granted to him prior to that time; provided that in
the event the termination occurs within 120 days of the execution of an
agreement which results in a change of control, as described below, vesting of
all options will be accelerated and in the event the termination occurs outside
of such 120 day period, all unvested options that would have vested had
Mr. Dong’s employment agreement remained in force through the end of the
initial term will be fully vested immediately prior to such
termination.
 
 Each
of the employment agreements discussed above provide for the immediate vesting
of stock options granted pursuant thereto upon (i) a change in control of
us or (ii) a termination of the executive’s employment without cause or for
good reason within 120 days prior to the execution and delivery of an
agreement which results in a change in control. Additionally, a change in
control constitutes “good reason” under the terms of each of the agreements,
thus permitting each of Mr. Sawtell and Mr. Dong to terminate his respective
employment and receive the severance benefits discussed above. Under the terms
of each employment agreement, a change in control is deemed to have occurred if,
as a result of a tender offer, other acquisition, merger, consolidation or sale
or transfer of assets, any person(s) (as used in Sections 13(d) or 14(d) of
the Securities Exchange Act of 1934) becomes the beneficial owner (as
defined in regulations promulgated under the Exchange Act) of a total of fifty
percent (50%) or more of either our outstanding common stock or our assets;
provided, however, that a change of control is not deemed to have occurred if a
person who beneficially owned fifty percent (50%) or more of our common stock as
of the effective date of the respective employment agreement continued to do so
during the term the employment agreement.
  The
employment agreements with Mr. Sawtell and Mr. Dong also contain standard
confidentiality provisions that apply indefinitely and non-solicitation
provisions that will apply during the term of the employment agreements and for
a 12-month period thereafter.
 
  Compensation
Committee Interlocks and Insider Participation
  During
2007, we did not have a compensation committee or another committee of the board
of directors performing equivalent functions.  Instead the entire board of
directors performed the function of compensation committee.  As a sole member of
the board of directors, Mr. Sawtell, our chief executive officer and sole board
of director, approved the executive compensation, however, there were no
deliberations relating to executive officer compensation during
2007.
 37
 
 ITEM 11.
Security Ownership Of Certain Beneficial Owners And Management
 
 The
following table set forth information regarding the beneficial ownership of our
common stock after consummation of the forward stock split and the Merger,
except as noted in the footnotes below, by:
  ·                 
      each person known to be the beneficial owner of 5% or more of our
      outstanding common stock;
  ·                 
      each of our executive officers;
  ·                 
      each of our directors; and
  ·                 
      all of our executive officers and directors as a
  group.
  Beneficial
ownership is determined in accordance with the rules of the SEC and is
calculated based on 53,550,840 shares of our common stock issued and outstanding
on December 31, 2007.  In computing the number of shares beneficially owned
by a person and the percentage of ownership of that person, shares of common
stock subject to options held by that person that are currently exercisable, as
appropriate, or will become exercisable within 60 days of the reporting date are
deemed outstanding, even if they have not actually been exercised.  Those
shares, however, are not deemed outstanding for the purpose of computing the
percentage ownership of any other person.
  Unless
otherwise indicated in the table, the persons and entities named in the table
have sole voting and sole investment power with respect to the shares set forth
opposite the stockholder’s name.  The address of each stockholder is listed
in the table.
  Name and Address of Beneficial Owner
                
                Beneficially
                  Owned
                
                Percent
                  of ClassMike
      Sawtell, CEO and Sole Director (1)
                
                27,760,566
                (3)
                47.35
                %Steve
      Pavlick (2)
                
                3,317,524
                
                6.20
                %Steven
      Dong, CFO (1)
                
                3,296,680
                (4)
                6.06
                %All
      executive officers and directors as a group (2 persons)
                
                31,057,246
                (3)(4)
                53.41
                %
 
 (1)
                3240
      El Camino Real, Suite #230, Irvine,
  CA  92602.
 (2)
                c/o
      DigitalPost Interactive, Inc., 3240 El Camino Real, Suite #230, Irvine,
      CA  92602.
 (3)
                Includes
      3,383,875 shares that can be issued to Mr. Sawtell pursuant to options to
      purchase
                  shares
      of our common stock within 60 days.
 (4)
                Includes
      698,989 shares that can be issued to a consulting firm owned by Mr. Dong
      pursuant to
                  options
      to purchase shares of our common stock within 60 days; 112,500 conversion
      shares that
                  can
      be issued upon conversion of convertible notes and 56,250 warrant shares
      that can be issued
                  pursuant
      to convertible note warrants.
 
  Stock
      Option Agreements
  Summary
      of Stock Option Agreements
  During
2005 and 2006, Old TFP had granted stock options under certain stock option
agreements as approved, amended and administered by its Board of Directors and
permitted the granting of options for the purchase of up to 7,724,850 shares of
Old TFP common stock.
 
 As part
of the Merger, in exchange for options to purchase 7,724,850 shares of Old TFP
common stock, we issued to the holders thereof options to purchase an aggregate
of 17,426,615 shares of our common stock under the terms and conditions of the
Company’s 2007 Incentive and Nonstatutory Stock Option Plan.  As part of
the terms and conditions of the Old TFP
  38
  Option
Agreements, 50% of the options granted and oustanding just prior to the Merger
fully vested and became exercisable as a result of the Merger transaction
itself.  As a result, 8,713,308 of the 17,426,615 options issued
became fully vested and exercisable.
 
 Stock
options granted under those certain stock option agreements were granted at
prices no less than the estimated fair value of the shares on the date of grant
as determined by the Board of Directors, provided, however, that (i) the
exercise price of an Incentive Stock Option  (“ISO”) and Nonstatutory
Stock Options (“NSO”) shall not be less than 100% of the estimated fair value of
the shares on the date of grant, respectively; and (ii) the exercise price of an
ISO and NSO granted to a 10% stockholder shall not be less than 110% of the
estimated fair value of the shares on the date of grant,
respectively.  ISO and NSO stock options generally vest every nine
months, over a three year period.
 
  2007
      Incentive and Nonstatutory Stock Option
Plan
  On
January 30, 2007, the Board of Directors approved and a majority of the
Company’s stockholders ratified by consent the Company’s 2007 Incentive and
Nonstatutory Stock Option Plan (“Plan”).  The 17,426,615 options to
purchase our common stock issued under the terms of the Merger (discussed above)
have been issued pursuant to the Plan.
  During
the year ended December 31, 2007, 11,267,533 options were granted, 10,595,226
have been cancelled and no options have been exercised.  As of
December 31, 2007, there were 18,098,922 options outstanding and 6,901,078
available to grant pursuant to the Plan.
  Summary
      of the Plan
  The Plan
is intended to further the growth and our financial success by providing
additional incentives to selected employees, directors, and consultants and our
subsidiary corporations, as those terms are defined in Sections 424(e) and
424(f) of the Internal Revenue Code of 1986, as amended (the "Code") (such
subsidiary corporations hereinafter collectively referred to as "Affiliates") so
that such employees and consultants may acquire or increase their proprietary
interest in us. Stock options granted under the Plan (hereinafter "Options") may
be either "Incentive Stock Options," as defined in Section 422A of the Code and
any regulations promulgated under said Section, or "Nonstatutory Options" at the
discretion of the Board of Directors of the Company (the "Board") and as
reflected in the respective written stock option agreements granted pursuant
hereto.
  The
      Plan reserves twenty five million (25,000,000) shares of the Company's
      Common Stock.
  Administration
  The Plan
shall be administered by the Board of Directors of the Company; provided
however, that the Board may delegate such administration to a committee of not
fewer than three (3) members (the "Committee"), at least two (2) of whom are
members of the Board and all of whom are disinterested administrators, as
contemplated by Rule 16b-3 promulgated under the Securities Exchange Act of
1934, as amended ("Rule 16b-3"); and provided further, that the foregoing
requirement for disinterested administrators shall not apply prior to the date
of the first registration of any of the securities of the Company under the
Securities Act of 1933, as amended.
  Eligibility
  The
persons who shall be eligible to receive Options shall be employees, directors,
or consultants of the Company or any of its Affiliates ("Optionees"). The term
consultant shall mean any person who is engaged by the Company to render
services and is compensated for such services, and any director of the Company
whether or not compensated for such services; provided that, if the Company
registers any of its securities pursuant to the Securities Act of 1933, as
amended (the "Act"), the term consultant shall thereafter not include directors
who are not compensated for their services or are paid only a director fee by
the Company.
   39
   The Plan
authorizes the granting of both incentive stock options, as defined under
Section 422 of the Internal Revenue Code of 1986 ("ISO"), and non-statutory
stock options ("NQO") to purchase Common Stock. All employees of the Company and
its affiliates are eligible to participate in the Plan. The Plan also authorizes
the granting of NQO's to non-employee Directors and others performing services
to the Company.
  Any
Incentive Stock Option granted to a person who at the time the Option is granted
owns stock possessing more than ten percent (10%) of the total combined voting
power of value of all classes of stock of the Company, or of any Affiliate,
("Ten Percent Holder") shall have an Option Price of no less than one hundred
ten percent (110%) of the fair market value of the common stock as of the date
of grant. Incentive Stock Options granted to a person who at the time the Option
is granted is not a Ten Percent Holder shall have an Option price of no less
than one hundred percent (100%) of the fair market value of the common stock as
of the date of grant. Nonstatutory Options shall have an Option Price determined
by the Board as of the date of grant.
  No option
granted pursuant to the Plan is transferable otherwise than by will or the laws
of descent and distribution. If there is a stock split, stock dividend, or other
relevant change affecting the Company's shares, appropriate adjustments would be
made in the number of shares that could be issued in the future and in the
number of shares and price under all outstanding grants made before the event.
Future options may also cover such shares as may cease to be under option by
reason of total or partial expiration, termination or voluntary surrender of an
option.
  The
aggregate fair market value (determined at the time an option is granted) of the
Common Stock with respect to which ISO's are exercisable for the first time by
any person during any calendar year under the Plan shall not exceed $100,000.
Any Option granted to an Employee of the Company shall become exercisable over a
period of no longer than five (5) years, and no less than twenty percent (20%)
of the shares covered thereby shall become exercisable annually. No Option shall
be exercisable, in whole or in part, prior to one (1) year from the date it is
granted unless the Board shall specifically determine otherwise, as provided
herein. In no event shall any Option be exercisable after the expiration of five
(5) years from the date it is granted. Unless otherwise specified by the Board
or the Committee in the resolution authorizing such option, the date of grant of
an Option shall be deemed to be the date upon which the Board or the Committee
authorizes the granting of such Option.
  FEDERAL
      INCOME TAX CONSEQUENCES
   The
holder of an ISO does not realize taxable income upon the grant or upon the
exercise of the option (although the option spread is an item of tax preference
income potentially subject to the alternative minimum tax). If the stock
acquired upon exercise of the options is sold or otherwise disposed of within
two (2) years from the option grant date or within one year from the exercise
date then, in general, gain realized on the sale is treated as ordinary income
to the extent of the option spread at the exercise date, and the Company
receives a corresponding deduction. Any remaining gain is treated as capital
gain. If the stock is held for at least two (2) years from the grant date and
one year from the exercise date, then gain or loss realized upon the sale will
be capital gain or loss and the Company will not be entitled to a deduction. A
special basis adjustment applies to reduce the gain for alternative minimum tax
purposes.
   An
optionee does not realize taxable income upon the grant of an NQO. In general,
the holder of a NQO realizes ordinary income in an amount equal to the
difference between the exercise price and the market value on the date of
exercise. The Company is entitled to an expense deduction at the same time and
in a corresponding amount.
  ITEM
12. Certain Relationships And Related Transactions and Director
Independence
  On May
15, 2007, we entered into an agreement with a company whereby its chief
executive officer is also a related party of ours pursuant to an advisory
agreement and is also a member of our Board of Advisors. The agreement called
for us to provide custom web site pages for a total amount of $20,000, of which
the $20,000 was paid and recorded to revenue during the year ended December 31,
2007.
 
 On June
15, 2007, pursuant to a consulting agreement, we granted an option to purchase
75,000 shares of our common stock to a consultant who is also a sibling of our
chief executive officer.
  40
  As of
December 31, 2007 we owed an executive officer $54,000 (see Note 6 to the
Consolidated Financial Statements enclosed elsewhere in this
report).
 
 Commencing
from March 1, 2006 through January 30, 2007, a stockholder also served as Old
TFP’s financial consultant under a consulting agreement with a firm owned by the
stockholder.  On January 30, 2007, we entered into an employment
agreement with the stockholder to become our chief financial officer (further
discussed below). From January 1, 2007 to January 30, 2007, for consulting
services rendered, the consulting firm received $11,700 cash proceeds. The
consulting agreement also provides cash finder’s fees of 10% of any gross
proceeds raised through an introduction made by the consultant and was amended
to 7.5% through December 31, 2007. During the twelve months ended December 31,
2007, the Company incurred $81,800 as financing costs of which $72,000 cash was
paid to the consulting firm for finder’s fees owed to the consulting firm during
the twelve months ended December 31, 2007.  The remaining amount of
$9,800 was relinquished by the consulting firm as partial consideration for
amending the 7.5% finder’s fee back to 10%. As a result, the Company owed no
amounts as of December 31, 2007 to the consulting firm. During the year ended
December 31, 2006, the Company paid the stockholder pursuant to the consulting
agreement $11,600 for services provided.
 
 In
October 2007, one of the five investors who entered into the Convertible Notes
(see Note 7 to the Consolidated Financial Statements included elsewhere in this
report) was our chief financial officer.  We owed the chief financial
officer $92,300 at the time of the offering, of which, the chief financial
officer exchanged $45,000 of the $92,300 due for $45,000 of Convertible
Notes.  As of December 31, 2007, the remaining $47,300 owed to the
officer was relinquished by the officer in partial consideration for amending
the finder’s fee related to an agreement with a consulting firm owned by the
officer (further discussed above) from 7.5% back to 10%.  As a result,
no amounts were due to the officer as of December 31, 2007.
 
 During
January 2007, Old TFP re-priced all common stock investor rounds made since
inception, July 14, 2005, and cancelled related stock options issued with those
investments. As a result, Old TFP issued an additional 4,419,979 shares of
common stock to its investors and cancelled options to purchase 7,162,534 shares
of common stock of Old TFP. As part of the 4,419,979 new shares issued,
3,383,875 shares of common stock were issued to the chief executive officer, and
as part of the options to purchase 7,162,534 shares cancelled, 4,511,833 options
were held by the chief executive officer, and were cancelled as part of this
transaction. As part of the 4,419,979 new shares of common stock issued, 132,702
shares were returned back to Old TFP by the then consulting chief financial
officer, and as part of the options to purchase 7,162,534 shares cancelled,
225,592 options were held by the then consulting chief financial officer, and
were cancelled as part of the this transaction.
 
 On
January 30, 2007, the Company entered into executive employment agreements with
its chief executive officer and chief financial officer. The agreements for the
chief executive officer and chief financial officer have terms of five and two
years, respectively. In connection with the Merger, the agreements were filed
with the Securities and Exchange Commission on Form 8-K, dated January 30,
2007.
 
 The
material terms of the chief executive officer’s agreement are: (i) base annual
salary of $210,000; (ii) participation in our standard employee benefit plans;
(iii) initial one time bonus of $50,000 for successful closing of Merger; (iv)
reimbursable expenses customarily given to executives; (v) other bonuses at the
discretion of the board of directors and (vi) severance arrangements described
below. If the Company terminates the chief executive officer’s employment
agreement without cause, or if the chief executive officer resigns for good
reason, each as defined in the agreement, the Company is obligated to pay the
chief executive officer the greater of his annual salary for the remaining term
of the agreement or three years of his annual salary rate at the time of
termination without cause or resignation for good reason, benefits for
24 months following the date of termination, and the right for
24 months from the date of termination to exercise all vested options
granted to him prior to that time; provided that in the event the termination
occurs within 120 days of the execution of an agreement which results in a
change of control, as described below, vesting of all options will be
accelerated and in the event the termination occurs outside of such 120 day
period, all unvested options that would have vested had the chief executive
officer’s employment agreement remained in force through the end of the initial
term will be fully vested immediately prior to such termination. The agreement
is partially cancelable because the Company did not raise a minimum of $2
million within 90 days of the Merger, however, the Company does not expect to
terminate the executive’s agreement as of the date of this
report.
  41
  The
material terms of the chief financial officer’s agreement are: (i) base annual
salary of $175,000; (ii) participation in our standard employee benefit plans;
(iii) initial one time bonus of $30,000 for successful closing of Merger (iv)
reimbursable expenses customarily given to executives; (v) various bonuses
related to performance metrics; (vi) other bonuses at the discretion of the
board of directors and (vii) severance arrangements described below. If the
Company terminates the chief financial officer’s employment agreement without
cause, or if the chief financial officer terminates the agreement with good
reason, each as defined in the agreement, the Company is obligated to pay the
chief financial officer: (i) his annual salary and other benefits earned
prior to termination, (ii) the greater of his annual salary for the
remaining term of the agreement or his annual salary payable over one year,
(iii) benefits for 12 months following the date of termination, and
(iv) the right for 12 months from the date of termination to exercise
all vested options granted to him prior to that time; provided that in the event
the termination occurs within 120 days of the execution of an agreement
which results in a change of control, as described below, vesting of all options
will be accelerated and in the event the termination occurs outside of such
120 day period, all unvested options that would have vested had the chief
financial officer’s employment agreement remained in force through the end of
the initial term will be fully vested immediately prior to such termination. The
agreement is partially cancelable because the Company did not raise a minimum of
$2 million within 90 days of the Merger, however, the Company does not expect to
terminate the executive’s agreement as of the date of this report.
 
  Director
      Independence
  Presently,
we are not required to comply with the director independence requirements of any
securities exchange.  In determining whether our directors are independent,
however, we intend to comply with the rules of the American Stock Exchange LLC,
or the AMEX.  The board of directors also will consult with counsel to
ensure that the board of director’s determinations are consistent with those
rules and all relevant securities and other laws and regulations regarding the
independence of directors, including those adopted under the Sarbanes-Oxley Act
of 2002 with respect to the independence of audit committee members.  The
AMEX listing standards define an “independent director” generally as a person,
other than an officer of a company, who does not have a relationship with the
company that would interfere with the director’s exercise of independent
judgment.
  Currently
we do not satisfy the “independent director” requirements of the American Stock
Exchange, which requires that a majority of a company’s directors be
independent.  Our board of directors intends to appoint additional members,
each of whom will satisfy such independence requirements.
  ITEM
13. Exhibits
  Exhibit
      No.
                
                Description2.1
                
                Merger
      Agreement, dated January 16, 2007, between HomAssist Corporation and The
      Family Post, Inc. as filed on Form 8k, filed February 1, 2007,
      incorporated by reference3.1
                
                Articles
      of Incorporation as filed on Form SB-2, filed April 28, 2005, incorporated
      by reference3.2
                
                Bylaws
      as filed on Form SB-2, filed April 28, 2005, incorporated by
      reference3.3
                
                Amendment
      to Bylaws as filed on Form 8-K, filed January 17, 2007, incorporated by
      reference3.4
                
                Certificate
      of Amendment to Articles of Incorporation as filed on Form 8-K, filed
      January 25, 2007, incorporated by reference10.1
                
                2007
      Incentive and Non Statutory Stock Option Plan as filed on Form 8-K, filed
      February 1, 2007, incorporated by reference10.2
                
                Independent
      Consultant Stock Option Agreement dated as of July 1, 2005 between The
      Family Post and William Sawtell as filed on Form 8-K, filed February 1,
      2007, incorporated by reference10.3
                
                Employment
      Agreement and Stock Option Agreement dated as of March 15, 2006 between
      The Family Post and Samir Patel as filed on Form 8-K, filed February 1,
      2007, incorporated by reference10.4
                
                Executive
      Employment and Indemnification Agreement dated as of January 30, 2007,
      between us and Michael Sawtell as filed on Form 8-K, filed February 1,
      2007, incorporated by reference10.5
                
                Executive
      Employment and Indemnification Agreement dated as of January 30, 2007,
      between us and Steven Dong as filed on Form 8-K, filed February 1, 2007,
      incorporated by reference10.6
                
                Form
      Stock Subscription Agreement, Form Stock Option Agreement, Form Amended
      Stock Subscription Agreement as filed on Form 8-K, filed February 1, 2007,
      incorporated by reference10.7
                
                Form
      of Stock Subscription Agreement, incorporated by reference from the
      Registrant’s Form 10-QSB, filed with the Securities and Exchange
      Commission on May 15, 2007.10.8
                
                Form
      of Convertible Note and Warrant Agreement, incorporated by reference from
      the Registrant’s Current Report on Form 8-K, filed with the Securities and
      Exchange Commission on October 9, 2007.10.9
                
                Form
      of Regulation-S Stock Purchase Agreement between the Registrant and Imini
      Enterprises Corporation, dated January 8, 200810.10
                
                Form
      of Stock Subscription Agreement between the Registrant and Step Management
      Limited dated April 20, 2007.10.11
                
                Financial
      Advisory Agreement between the Registrant and Norm Farra dated September
      29, 2007.10.12
                
                Investor
      Relations Agreement between the Registrant and Crown  Financial
      dated November 13, 200710.13
                
                Amendment
      to Investor Relations Agreement between the Registrant and
      Crown  Financial dated February 12, 200810.14
                
                Partner
      Agreement between DigitalPost Interactive, Inc and BowTie, Inc. dated
      October 26, 2007 incorporated by reference from the Registrant’s Form 8-K
      filed with the Securities and Exchange Commission on November 1,
      2007.10.15
                
                Agreement
      between DigitalPost Interactive, Inc and Upromise, Inc. dated November 9,
      2007 incorporated by reference from the Registrant’s Form 8-K filed with
      the Securities and Exchange Commission on November 9,
  2007.10.16
                
                Agreement
      between DigitalPost Interactive, Inc and Upromise, Inc. dated November 9,
      2007 incorporated by reference from the Registrant’s Form 8-K filed with
      the Securities and Exchange Commission on November 9,
  2007.10.17
                
                Agreement
      between DigitalPost Interactive, Inc and Pictage, Inc. dated November 27,
      2007 incorporated by reference from the Registrant’s Form 8-K filed with
      the Securities and Exchange Commission on November 28,
    2007.10.18
                
                Agreement
      between DigitalPost Interactive, Inc. and Mitsubishi Digital Electronics
      America, Inc. dated January 8, 2008, incorporated by reference from the
      Registrant’s Form 8-K filed with the Securities and Exchange Commission on
      January 9, 2008.10.19
                
                Agreement
      between DigitalPost Interactive, Inc. and Onscribe, Inc. dated February
      12, 2008, incorporated by reference from the Registrant’s Form 8-K filed
      with the Securities and Exchange Commission on February 15,
      2008.10.20
                
                Agreement
      between DigitalPost Interactive, Inc. and Disneyland® Resort, A
      Division of Walt Disney World Co. dated March 21, 2008, incorporated by
      reference from the Registrant’s Form 8-K filed with the Securities and
      Exchange Commission on March 21, 2008.10.21
                
                Agreement
      between DigitalPost Interactive, Inc. and Disneyland® Resort, A
      Division of Walt Disney World Co. and Taylor Morrison, Inc. dated March
      21, 2008, incorporated by reference from the Registrant’s Form 8-K filed
      with the Securities and Exchange Commission on March 21,
    2008.14.1
                
                Code
      of Business Conduct and Ethics as filed on form 8-K, filed January 30,
      2007, as filed on form 8k, filed February 1, 2007, incorporated by
      reference21.1
                
                List
      of Subsidiaries of the Company as filed on form 8-K, filed January 30,
      2007, as filed on form 8k, filed February 1, 2007, incorporated by
      reference31.1
                
                Rule
      13a-14(a)/ 15d-14(a) Certification of Michael Sawtell31.2
                
                Rule
      13a-14(a)/ 15d-14(a) Certification of Steven Dong32.1
                
                Certification
      Pursuant to 18 U.S.C. section 1350 of Michael Sawtell32.2
                
                Certification
      Pursuant to 18 U.S.C. section 1350 of Steven Dong
 
 42
 
  ITEM
      14. Principal Accountant Fees and Services
  Audit
Fees.
 
 The
aggregate fees billed by our independent registered public accounting firm for
professional services rendered for the audit of our annual financial statements
for the years ended December 31, 2007 and 2006 and for the reviews of the
financial statements included in our Quarterly Reports on Form 10-QSB during
those fiscal years were $53,750 and $10,000, respectively.
 
 The
aggregate fees billed by our predecessor auditors, for professional services
rendered for the audit of our annual financial statements for the year ended
January 31, 2006 and for the reviews of the financial statements included in our
Quarterly Reports on Form 10-QSB during that fiscal year were
$17,100.
 
 Audit
Related Fees.
 
 We
incurred no other audit related fees during the years ended December 31, 2007
and 2006.
 
 Tax
Fees.
 
 We
incurred fees for tax related services during the years ended December 31, 2007
and 2006 in the amounts of $3,000 and none, respectively.
 
 All
Other Fees.
 
 We did
not incur any other fees billed by auditors for services rendered to us, other
than the services covered in "Audit Fees" for the years ended December 31, 2007
and 2006.
 
 The Board
of Directors has considered whether the provision of non-audit services is
compatible with maintaining the principal accountant's
independence.
 
 Audit
Committee Pre-Approval Policies And Procedures
  The
Company’s Audit Committee has policies and procedures that require the
pre-approval by the Audit Committee of all fees paid to, and all services
performed by, the Company’s independent accounting firms. At the beginning of
each year, the Audit Committee approves the proposed services, including the
nature, type and scope of services contemplated and the related fees, to be
rendered by these firms during the year. In addition, Audit Committee
pre-approval is also required for those engagements that may arise during the
course of the year that are outside the scope of the initial services and fees
pre-approved by the Audit Committee.
  Pursuant
to the Sarbanes-Oxley Act of 2002, the fees and services provided as noted in
the table above were authorized and approved by the Audit Committee in
compliance with the pre-approval policies and procedures described
herein.
 
  43
  SIGNATURE
  Pursuant
to the requirements of the Securities Exchange Act of 1934, the Registrant has
duly caused this Report to be signed on its behalf by the undersigned hereunto
duly authorized.
  DigitalPost
      Interactive, IncBy:
      /s/ Mike SawtellName:
      Mike SawtellTitle:
      Chief Executive Officer, President and Sole DirectorBy:
      /s/ Steven DongName
      Steven DongTitle:
      Chief Financial Officer and Principal Accounting
  Officer
  Date:      
March 28, 2008
   
   
   44
 
 INDEX
TO CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER
31, 2007
 
 
 
 
 Consolidated
      Financial Statements:Report
      of Independent Registered Public Accounting Firm
              F-2Consolidated
      Balance Sheet as of December 31, 2007
              F-3Consolidated
      Statement of Operations for the years ended December 31, 2007 and
      2006
              F-4Consolidated
      Statement of Stockholders’ Deficit for the years ended December 31, 2007
      and 2006
              F-5Consolidated
      Statement of Cash Flows for the years ended December 31, 2007 and
      2006
              F-6Notes
      to Consolidated Financial Statements for the years ended December 31, 2007
      and 2006
              F-7
  F-1
  REPORT
      OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM
  
  To the
Board of Directors and Stockholders of
 DigitalPost
Interactive, Inc.
  We have
audited the accompanying consolidated balance sheet of DigitalPost Interactive,
Inc (the “Company”), a Nevada corporation, as of December 31,
2007, and the related consolidated statements of operations, stockholders’
deficit, and cash flows for the each of the years ended December 31, 2007 and
2006.  These consolidated financial statements are the responsibility
of the Company’s management. Our responsibility is to express an opinion on the
consolidated financial statements based on our audits.
  We
conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States of America).  Those
standards require that we plan and perform the audits to obtain reasonable
assurance about whether the consolidated financial statements are free of
material misstatement. The Company is not required to have, nor were we engaged
to perform, an audit of its internal control over financial reporting. Our
audits included consideration of internal control over financial reporting as a
basis for designing audit procedures that are appropriate in the circumstances,
but not for the purpose of expressing an opinion on the effectiveness of the
Company’s internal control over financial reporting. Accordingly, we express no
such opinion. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
  In our
opinion, the consolidated financial statements referred to above present fairly,
in all material respects, the  consolidated financial position of the
Company as of December 31, 2007, and the consolidated results of its
operations and its cash flows for each of the years ended December 31, 2007 and
2006, in conformity with accounting principles generally accepted in the
United States of America.
  The
accompanying consolidated financial statements have been prepared assuming that
the Company will continue as a going concern. As discussed in Note 3
to the consolidated financial statements, the Company has incurred losses
from operations and negative cash flows from operations since inception and has
limited working capital. These and other matters raise substantial doubt
about the Company’s ability to continue as a going
concern.  Management’s plans regarding those matters are also
described in Note 3. The accompanying consolidated financial statements do
not include any adjustments that may result from the outcome of this
uncertainty.
  
  /s/
HASKELL & WHITE LLP
  Irvine,
California
 March 28,
2008
 
  
   F-2
  DIGITALPOST
INTERACTIVE, INC.
 CONSOLIDATED
BALANCE SHEET
      
 December
      31,2007AssetsCurrent
      assetsCash
      and cash equivalents
              $
              88,400Other
      current assets
              
              2,400Total current
      assets
              
              90,800Property and
      equipment, net
              
              64,200Web
      site development costs, net
              
              103,300Other
      assets
              
              
              8,200Total assets
              
              $
              266,500Liabilities
      and Stockholders' DeficitCurrent
      liabilitiesAccounts
      payable
              
              $
              41,700Accrued
      expenses
              
              
              86,900Deferred
      revenue
              
              
              58,900Due
      to stockholder
              
              
              54,000Total
      current liabilities
              
              241,500Convertible
      promissory notes, net
              
              221,100Total
      liabilities
              
              462,600Commitments
      and contingencies (Note 10)Stockholders’
      deficit (Note 8)Preferred
      Stock, $.001; 20,000,000shares
      authorized; no sharesissued
      and outstanding
              
              -Common Stock, $.001
      par value; 480,000,000shares
      authorized; 53,550,840 sharesissued
      and outstanding
              
              53,600Additional paid
      in capital
              
              3,244,500Accumulated
      deficit
              
              
              (3,494,200)Stockholders’
      deficit
              
              (196,100)Total liabilities and stockholders’ deficit
              $
              266,500
  
  
  The
accompanying notes to consolidated financial
statements are
 an
integral part of this balance sheet.
  F-3
  DIGITALPOST
INTERACTIVE, INC.
 CONSOLIDATED
STATEMENTS OF OPERATIONS
  Year
              
              YearEnded
              
              EndedDecember
      31,
              
              December
      31,2007
              
              2006Revenues:Subscription
              
              
              $
              98,100
              $
              13,900Professional
      services
              
              
              
              20,000
              
              -Total
      Revenue
              
              
              
              118,100
              
              13,900Cost of
      Revenues:Subscription
              
              
              
              40,600
              
              10,600Professional
      services
              
              
              
              7,500
              
              -Total
      Cost of Revenue
              
              
              48,100
              
              10,600Gross
      Profit
              
              
              
              
              70,000
              
              3,300Operating
      expenses:Research
      and development
              
              
              
              361,700
              
              106,400Sales
      and marketing
              
              
              
              685,400
              
              171,700General
      and administrative
              
              
              1,568,100
              
              467,900Total
      operating expenses
              
              2,615,200
              
              746,000Loss
      from operations
              
              
              (2,545,200)
              
              (742,700)Other
      income (expenses), net
              
              
              700
              
              (300)Net
      loss
              
              
              
              $
              (2,544,500)
              $
              (743,000)Weighted
      average outstanding shares
              
              55,136,982
              
              69,380,822Basic
      and Diluted Loss Per Share
              $
              (.046)
              $
              (.011)
 
 
 
 
 
 
  The
accompanying notes to consolidated financial
statements are
 an
integral part of this statement.
  F-4
  DIGITALPOST
INTERACTIVE, INC.
 CONSOLIDATED
STATEMENTS OF STOCKHOLERS’ DEFICIT
 YEARS
ENDDED DECEMBER 31, 2006 AND 2007
  
  Common
      Stock, $.001 Par Value
              Additional
              
              TotalPaid
      In
              Accumulated
              Stockholders'Shares
              Amount
              Capital
              Deficit
              DeficitBalance
      at December 31, 2005
              21,882,389
              $                 21,900
              $                    256,100
              $               
      (206,700)
              $               
           71,300Issuance
      of common stock for cash
              10,476,476
              10,500
              884,500
              -
              895,000Issuance
      of common stock for services
              168,517
              200
              14,700
              -
              14,900Issuance
      of common stock for exercise of options
              146,975
              100
              6,400
              -
              6,500Financing
      cost related to issuance of common stock
              -
              -
              (46,500)
              -
              (46,500)Non
      cash stock based compensation related to stock options
    granted
              -
              -
              87,000
              -
              87,000Net
      loss
              -
              -
              
              (743,000)
              (743,000)Balance
      at December 31, 2006
              32,674,357
              32,700
              1,202,200
              (949,700)
              285,200Issuance
      of common stock for services
              78,957
              100
              -
              -
              100Issuance
      of common stock for reprice
              4,419,976
              4,400
              (4,400)
              -
              -Issuance
      of common stock related to merger
              15,660,000
              15,700
              (15,700)
              -
              -Issuance
      of common stock for cash
              717,550
              700
              1,129,300
              -
              1,130,000Beneficial
      conversion feature and warrants issued   related to
      issuance of convertible promissory notes
              -
              -
              623,900
              -
              623,900Financing
      cost related to issuance of common stock
              -
              -
              (153,000)
              -
              (153,000)Non
      cash stock based compensation related to stock options
    granted
              -
              -
              435,100
              -
              435,100Non
      cash stock based compensation related to warrants granted
              -
              -
              27,100
              -
              27,100Net
      loss
              -
              -
              -
              (2,544,500)
              (2,544,500)Balance
      at December 31, 2007
              53,550,840
              $             53,600
              $     
                 3,244,500
              $             
      (3,494,200)
              $              
         (196,100)
 
  
 
 
 
 
  
  The
accompanying notes to consolidated financial
statements are
 an
integral part of this statement.
  F-5
  
 DIGITALPOST
INTERACTIVE, INC.
 STATEMENTS
OF CASH FLOWS
  
 Year
              
              YearEnded
              
              EndedDecember
      31, 2007
              
              December
      31, 2006Cash
      flows from operating activitiesNet
      loss
              
              
              
              
              $
              (2,544,500)
              
              $
              (743,000)Adjustments
      to reconcile net loss to net cashused
      by operating activities:Depreciation
      and amortization
              
              
              55,500
              
              
              33,600Non-cash
      stock-based compensation
              
              
              462,200
              
              
              96,400Finders
      fee and compensation due to shareholders
              
              
              107,900
              
              
              -Amortization
      of debt discount
              
              
              78,000
              
              
              -Changes
      in operating assets and liabilities:Other
      assets
              
              
              
              (10,000)
              
              
              5,000Accounts
      payable
              
              
              
              4,000
              
              
              20,600Accrued
      expenses
              
              
              
              71,400
              
              
              13,000Deferred
      revenue
              
              
              
              50,800
              
              
              8,200Net
      cash used by operating activities
              
              
              (1,724,700)
              
              
              (566,200)Cash
      flows from investing activitiesAcquisition
      of property and equipment
              
              
              (58,300)
              
              
              (7,000)Acquisition
      and development of software
              
              
              (54,400)
              
              
              (34,600)Net
      cash used by investing activities
              
              
              (112,700)
              
              
              (41,600)Cash
      flows from financing activitiesProceeds
      from the issuance of common stock
              
              
              1,130,000
              
              
              895,000Proceeds
      from the issuance of convertible promissory notes
              
              
              722,000
              
              
              -Financing
      costs
              
              
              
              (153,000)
              
              
              (34,500)Due
      to shareholder
              
              
              (110,200)
              
              
              46,600Net
      cash provided by financing activities
              
              
              1,588,800
              
              
              907,100Net
      (decrease) increase in cash and cash equivalents
              
              
              (248,600)
              
              
              299,300Cash
      and cash equivalents, beginning of period
              
              
              337,000
              
              
              37,700Cash
      and cash equivalents, end of period
              
              $
              88,400
              
              $
              337,000Supplemental
      disclosures:Cash
      paid for income taxes
              
              
              $
              1,600
              
              $
              800Cash
      paid for interest
              
              
              $
              900
              
              $
              -Finders
      fees and additional compensation due to stockholders
    accrued
              
              $
              180,300
              
              $
              -Convertible
      promissory note issued for amount due to stockholder
              
              $
              45,000
              
              $
              -Common
      stock issued for finders fees and services
              
              $
              -
              
              $
              21,455
 
 
 
 
 The
accompanying notes to consolidated financial statements are
 an
integral part of this statement.
  F-6
  
 1.           BASIS
OF PRESENTATION, ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
 
 Organization
and Merger
 
 Prior to
January 30, 2007, the Company was known as HomAssist Corporation, a Nevada
corporation (“HomAssist”).  On January 30, 2007, the Company acquired The
Family Post, Inc, a privately held California corporation (“Old TFP”).
Immediately following the Merger (as defined below in Note 2), the Company
changed its name to DigitalPost Interactive, Inc. (“DPI”, “we” or the “Company”)
and began operating Old TFP’s business of internet content sharing as its
operating subsidiary (“New TFP”).
 
 The
Company produces destination web sites that allow subscribers to securely share
digital media, including photos, videos, calendars, message boards, and history.
The Company’s proprietary web site administration system, Qwik-PostTM, and online
video uploading system, Video-PostSM, allow users of personal computers to
manage these “virtual family rooms,” and provide a destination to display photo
and video memories, discussions, and history.
 
 Basis
of Presentation
 
 As
discussed further below in Note 2, immediately following the Merger, there were
52,833,385 shares of Company common stock outstanding, of which the pre-Merger
stockholders of Old TFP owned approximately 70.4% and the pre-Merger
stockholders of HomAssist owned approximately 29.6%. As a result, Old TFP has
been treated as the acquiring company for accounting purposes.  The Merger
has been accounted for as a reverse acquisition in accordance with generally
accepted accounting principles in the United States of America, or “U.S.
GAAP.”  Reported results of operations of the combined group after
completion of the transaction reflects Old TFP’s operations.
 
 Basis
of Consolidation
 
 The
accompanying consolidated financial statements include the accounts of DPI and
New TFP (as defined below in Note 2) its wholly-owned subsidiary.
 
 Cash
and Cash Equivalents
 
 For
purposes of reporting within the statement of cash flows, the Company considers
all cash on hand, cash accounts not subject to withdrawal restrictions or
penalties, and all highly liquid debt instruments purchased with a maturity of
three months or less to be cash and cash equivalents.
 
 Property
and Equipment
 
 TheCompany’s property and
equipment are stated at cost. Depreciation and amortization are provided using
the straight-line method over estimated useful lives of three to five years.
Maintenance and repairs are charged to operations when incurred. Significant
betterments are capitalized and depreciated over the estimated useful life of
the related asset.
 
 Web
Site Development Costs
 
 Under
Emerging Issues TaskForce Statement 00-2, Accounting for Web Site Development
Costs(“EITF 00-2”), costs and expenses incurred during the planning and
operating stages of the Company’s web site are expensed as incurred. Under EITF
00-2, costs incurred in the web site application and infrastructure development
stages are capitalized by the Company and amortized to expense over the web
site’s estimated useful life or period of benefit. As of December 31, 2007, the
Company capitalized $103,300, net of accumulated amortization, related to its
web site development.
 
 
  F-7
  Research
and Development Costs
 
 The
Company expenses research and development costs as incurred.
 
 Revenue
Recognition
 
 The
Company’s subscription revenues are generated from monthly subscriptions for web
site hosting services. The typical subscription agreement includes the usage of
a personalized web site and hosting services. The individual deliverables are
not independent of each other and are not sold or priced on a standalone basis.
Costs to complete the web site and prepare it for the use of an end customer are
minimal, and are expensed to cost of revenues as incurred. Upon the completion
of a customer’s signup and initial hosting of the web site, the subscription is
offered free of charge for a two week trial period during which the
customer can cancel at anytime. In accordance with SAB No. 104, after the
two week trial period has ended, revenue is recognized when all of the
following conditions are satisfied: (1) there is persuasive evidence of an
arrangement; (2) the service has been provided to the customer;
(3) the amount of fees to be paid by the customer is fixed or determinable;
and (4) the collection of the Company’s fees is probable. These criteria
are met monthly as the Company’s service is provided on a month-to-month basis,
and collections are generally made in advance of the services. There is no
provision for refunds as of December 31, 2007, as the Company’s historical
refund experience has been minimal.
 
 Customers
signup and agree to purchase the web site service on a monthly or annual basis,
at the customer’s option. The monthly customers pay monthly in advance of the
services, and as the services are performed, the Company recognizes subscription
revenue on a daily basis.
 
 For
annual customers, upon payment of a full year’s subscription service, the
subscription revenue is recorded as deferred revenue in the accompanying balance
sheet. As services are performed, the Company recognizes subscription revenue
ratably on a daily basis.
 
 Professional
services revenue is generated from custom website design services. The Company’s
professional services revenue from contracts for custom website design is
recorded using a proportional performance model based on labor hours incurred.
The extent of progress toward completion is measured by the labor hours incurred
as a percentage of total estimated labor hours to complete. Labor hours are the
most appropriate measure to allocate revenue among reporting periods, as they
are the primary input to the provision of our professional
services.
 
 Loss
per Common Share
 
 Basic
loss per share is computed by dividing the net loss attributable to the common
stockholders by the weighted average number of shares of common stock
outstanding during the period. Fully diluted loss per share is computed similar
to basic loss per share except that the denominator is increased to include the
number of additional common shares that would have been outstanding if the
potential common shares had been issued and if the additional common shares were
dilutive. Due to the anti-dilutive nature of the Company’s stock options, there
is no effect on the calculation of weighted average shares for diluted net loss
per common share. As a result, the basic and diluted net losses attributable per
common share amounts are identical. 21,366,422 and 24,453,793, shares of
potentially dilutive securities have been excluded for twelve month periods
ended December 31, 2007 and 2006, respectively, because their effect was
anti-dilutive.
 
 Stock-Based
Compensation
 
 In
December 2004, the Financial Accounting Standard Board (“FASB”) issued Statement
of Financial Accounting Standards (SFAS) No. 123R, Share-Based Payment, which
addresses the accounting for employee stock options. SFAS No. 123R requires that
the cost of all employee stock options, as well as other equity-based
compensation arrangements, be reflected in the consolidated  financial
statements based on the estimated fair value of the awards. That cost will be
recognized over the period during which an employee is required to provide
service in exchange for the award—the requisite service period (usually the
vesting period). The Company also applies the measurement provisions of EITF
96-18 to awards granted to nonemployees.
  F-8
  
 The
Company adopted SFAS No. 123R on January 1, 2006, using the modified-prospective
transition method. Under the modified-prospective transition method, prior
periods of the Company’s financial statements are not restated for comparison
purposes. In addition, the measurement, recognition and attribution provisions
of SFAS No. 123R apply to new grants and grants outstanding on the adoption
date. Estimated compensation expense for outstanding grants at the adoption date
will be recognized over the remaining vesting period using the compensation
expense calculated for the pro forma disclosure purposes under SFAS No. 123,
Accounting for Stock-Based
Compensation. The Company’s calculations were made using the
Black-Scholes option-pricing model with the following weighted average
assumptions: expected life of 4.5 years; 45 percent stock price volatility;
risk-free interest rate of 4.4%; forfeitures rate of 10% and no dividends during
the expected term. During twelve month periods ended December 31, 2007 and 2006,
the Company recognized employee stock option expense of $435,100 and $87,000,
respectively.
 
 Fair
Value of Financial Instruments
 
 The
Company estimates the fair value of financial instruments using the available
market information and valuation methods. Considerable judgment is required in
estimating fair value. Accordingly, the estimates of fair value may not be
indicative of the amounts the Company could realize in a current market
exchange. As of December 31, 2007, the carrying value of accounts payable, loans
from stockholders, and accrued liabilities approximated fair value due to the
short-term nature and maturity of these instruments.  The fair value
of the convertible promissory notes has not been estimated since the cost of
doing so would be excessively expensive and not practicable.  See Note
7 for the terms of the convertible promissory notes.
 
 Concentration
of Risk
 
 As of
December 31, 2007, the Company maintained its cash account at one commercial
bank. The cash balance at December 31, 2007, did not exceed the FDIC coverage
limit.
 
 Advertising
 
 Advertising
and promotion costs are charged to operations when incurred. For the year ended
December 31, 2007 and 2006, advertising and promotion costs amounted to $282,800
and $60,315, respectively.
 
 Impairment
of Long-Lived Assets
 
 The
Company evaluates the recoverability of long-lived assets and the related
estimated remaining lives when events or circumstances lead management to
believe that the carrying value of an asset may not be recoverable. For the year
ended December 31, 2007 and 2006, no events or circumstances occurred for which
an evaluation of the recoverability of long-lived assets was
required.
 
 Deferred
Finance Costs
 
 The
Company defers as other assets the direct incremental costs of raising capital
until such time as the offering is completed. At the time of the completion of
the offering, the costs are charged against the capital raised. Should the
offering be terminated, deferred offering costs are charged to operations during
the period in which the offering is terminated.
 
 Estimates
 
 The
consolidated financial statements are prepared on the basis of accounting
principles generally accepted in the United States of America. The preparation
of consolidated 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 as of December 31, 2007,
and expenses for the year ended December 31, 2007 and 2006. Actual results could
differ from those estimates made by management.
  F-9
  
 
 Stock
split
 
 On July
13, 2006, the Board of Directors authorized a 26-for-1 stock split of
HomeAssist  $0.001 par value common stock.  As a result of the
split, 70,000,000 additional shares were issued and capital and additional
paid-in capital were adjusted accordingly. All references in the accompanying
financial statements to the number of common shares and per share amounts have
been retroactively restated to reflect the stock split.
 
 2.           MERGER
 
 Prior to
January 25, 2007, the Company was known as HomAssist.  On January 30, 2007,
HomAssist acquired Old TFP, pursuant to an agreement and plan of merger, dated
as of January 16, 2007, as amended (the “Merger Agreement”), by and among
HomAssist, Old TFP and our wholly-owned subsidiary (“Merger Sub”), providing for
the merger of Merger Sub and Old TFP, with the Merger Sub being the surviving
corporation as our wholly-owned subsidiary (the “Merger”).  Immediately
following the Merger, HomAssist changed its name to DigitalPost Interactive,
Inc., the Merger Sub changed its name to The Family Post, Inc. (“New TFP”), and
the Company began operating New TFPs business of internet content
sharing.
 
 Prior to
the Merger, HomAssist had 15,660,000 shares of common stock issued and
outstanding. As part of the Merger, HomAssist issued 37,173,385 shares of its
common stock to the former stockholders of Old TFP in exchange for all of the
issued and outstanding shares of common stock of Old TFP (16,478,175
shares).  As part of the Merger, HomAssist also adopted the existing stock
option agreements of Old TFP (“Old TFP Option Agreements”) outstanding under
which options to purchase 7,724,850 shares of common stock of Old TFP
outstanding prior to the Merger were converted into options to purchase
17,426,615 shares of common stock of DPI.
 
 On
January 30, 2007, immediately following the Merger, there were 52,833,385 shares
of DPI common stock outstanding, of which the pre-Merger stockholders of
HomAssist owned approximately 29.6% and the pre-Merger stockholders of Old TFP
owned approximately 70.4%.  As a result, Old TFP has been treated as the
acquiring company for accounting purposes.  The Merger has been accounted
for as a reverse acquisition in accordance with generally accepted accounting
principles in the United States of America, or “U.S. GAAP.”  Reported
results of operations of the combined group after completion of the transaction
reflects Old TFP’s operations.
 
 Unless
otherwise indicated or the context otherwise requires, the terms “Company” and
“DPI,” refer to DigitalPost Interactive, Inc. (formerly known as HomAssist
Corporation) and its affiliates, including its subsidiary New TFP, after giving
effect to the Merger.
 
 3.           GOING
CONCERN AND MANAGEMENT’S PLANS
 
 During
the period from January 1, 2006 through January 30, 2007, the Company completed
capital formation activities, and raised an aggregate amount of $895,000 from
the sale of its common stock. On January 30, 2007, the Company completed the
Merger (see further discussion in Note 2) to conduct additional capital
formation activities through the issuance of its common stock as a source of
capital to more aggressively market its products and services, and increase its
revenue generating activities. On April 3, 2007, the Company agreed to a $4
million private placement for the issuance of up to 2.5 million restricted
common shares of the Company at $1.57 per share.  The Company received
$1,130,000 of the $4 million private placement which was closed in October
2007.  Subsequently, the Company commenced a convertible debt
financing (“Convertible Notes”), pursuant to which it had raised $767,000 as of
December 31, 2007 (see Note 7 for further discussion).  In January
2008, the Company entered into a $1 million private placement with foreign
investors under a Regulation S Stock Purchase agreement, which the Company has
received $430,100 as of March 28, 2008 (see Note 13 for further discussion). The
Company expects to raise additional funds either through sale of additional
Convertible Notes, or other debt or equity financings during the remaining of
2008.  The offer and sale of the securities above were effected in
reliance on the exemptions for sales of securities not involving a public
offering, as set forth in (i) Rule 506 promulgated under the Securities Act and
in Section 4(2) and Section 4(6) of the Securities Act and/or Rule 506 of
Regulation D or (ii) Rule 501 of Regulation S.
  F-10
  
 The
accompanying consolidated financial statements have been prepared in conformity
with accounting principles generally accepted in the United States of America,
which contemplate the continuation of the Company as a going concern. The
Company has not established sufficient sources of revenue to cover its operating
costs, and as such, has incurred an operating loss since inception. Further, as
of December 31, 2007, the cash resources of the Company are insufficient to meet
its current working capital needs and on going business plan. These and other
factors raise substantial doubt about the Company’s ability to continue as a
going concern. The accompanying consolidated financial statements do not include
any adjustments to reflect the possible future effects on the recoverability and
classification of assets or the amounts and classification of liabilities that
may result from the possible inability of the Company to continue as a going
concern.
 
 4.           PROPERTY
AND EQUIPMENT
 
 Property
and equipment consisted of the following:
 
 December
      31, 2007Computer
      equipment and software
              
              $
              49,800Furniture
      and fixtures
              
              
              37,500Less
      -accumulated depreciation and amortization
              
              
              (23,100)$
              64,200
 
 5.           WEB
SITE DEVELOPMENT COSTS
 
 Web site
development costs consisted of the following:
 December
      31, 2007Website
      development costs
              
              $
              173,300Less
      -accumulated amortization
              
              
              (70,000)$
              103,300
 
 
 6.           DUE
TO STOCKHOLDER
 
 As of
December 31, 2007, $54,000 was due to an officer of the Company and principal
stockholder. The amount due to the officer was partially generated from the
officer’s deferred salary. During the period from inception, July 14, 2005
through January 31, 2006, and for the first two weeks of August 2007, the
Company deferred the officer’s salary, which amounted to $52,500. In November
2006, the officer also made an advance to the Company for $50,000 cash which was
due December 8, 2007, and incurred annual interest at 10%.  During the
year ended December 31, 2007, pursuant to an employment agreement with the
officer, the Company accrued $50,000 additional compensation
expense.  During the year ended December 31, 2007, $48,500 of the
deferred salary was paid and $53,000 was paid as repayment for the $50,000
advance and $3,000 of interest. In addition to the above, in August 2007, the
officer also made another advance to the Company for $19,000 cash which was
fully repaid in October 2007.
 
 7.           CONVERTIBLE
PROMISSORY NOTES
 
 During
October 2007, the Company commenced a private offering of its securities for the
purpose of raising capital whereby it entered into Convertible Notes with nine
accredited investors, one of which is the chief financial officer of the
Company. As of December 31, 2007, pursuant to the terms of the offering, the
investors purchased an aggregate of $767,000 of 8% senior secured convertible
notes and were issued warrants to purchase shares of the Company’s
common
  F-11
  stock.
The senior secured convertible notes in the event of default become secured by
the Company’s assets and are due two years from the date of each
note.  Initially, each senior secured convertible note holder had the
right, at any time, to convert their note into shares of the Company’s common
stock at a conversion ratio of one share of common stock for each $0.40 of
principal amount of their note for a maximum potential aggregate of 1,917,500
shares of common stock; in addition, the investors were issued warrants to
purchase an aggregate of 1,917,500 shares of common stock at an exercise price
of $0.50 per share that expire five years from the date of
issuance.  Half of these warrants are exercisable immediately and the
remaining half are exercisable upon the conversion of the related notes payable.
For a period of twelve months after the effective date, if the Company sells
common stock at a price per share below the conversion price of $.40 per share,
the conversion price will adjust accordingly downward to the new lower sales
price per share.  Since then, the Company has sold securities at a
lower price of $.1587 per share, as a result the Company is obligated to lower
the conversion price from $.40 per share to the same $.1587 per share price
which gives each investor the right, at any time, to convert their note into
shares of the Company’s common stock at a conversion ratio of one share of
common stock for each $.1587 of principal amount of their note for a maximum
potential aggregate of 4,833,018 shares of common stock. In connection with this
financing, a form of the Convertible Notes agreement was filed with the
Securities and Exchange Commission on Form 8-K, dated October 4, 2007. The offer
and sale of the securities underlying the Convertible Notes were effected in
reliance on the exemptions for sales of securities not involving a public
offering, as set forth in Sections 4(2) and Section 4(6) of the Securities Act
of 1933 and/or Rule 506 of Regulation D adopted thereunder.
 
 One of
the five investors who entered into the Convertible Notes is the chief financial
officer of the Company.  The Company owed the chief financial officer
$92,300 at the time of the offering, of which, the chief financial officer
exchanged $45,000 of the $92,300 due for $45,000 of Convertible Notes. As a
result, $45,000 of the $767,000 notes issued were purchased by the chief
financial officer and the Company received $722,000 net cash proceeds from the
$767,000 Convertible Note financing.
 
 The
Company determined that the embedded conversion option in the Convertible Notes
qualifies for equity classification under EITF 00-19, qualifies for the scope
exception of paragraph 11(a) of SFAS 133, and is not bifurcated from the host
contract. The Company also determined that the warrants issued to the note
holders qualify for equity classification under the provisions of SFAS 133 and
EITF 00-19. In accordance with the provisions of Accounting Principles Board
Opinion No. 14, the Company allocated the net proceeds received in this
transaction to each of the convertible debentures and common stock purchase
warrants based on their relative estimated fair values. As a result, the Company
allocated $480,800 to the convertible debentures and $143,200 to the vested
portion of the common stock purchase warrants, which was recorded in additional
paid-in-capital. In accordance with the consensus of EITF issues 98-5 and 00-27,
management determined that the convertible debentures contained a beneficial
conversion feature based on the effective conversion price after allocating
proceeds of the convertible debentures to the vested portion of the common stock
purchase warrants. The amounts recorded for the common stock purchase warrants
are amortized as interest expense over the term of the convertible
debentures.  If there are conversions of the Convertible Notes, then
the Company will recognize the relative fair value of the warrants that vest
upon such conversion in the amount of $143,200.
 
 Interest
charges associated with the Convertible Notes, including amortization of the
discount totaled $78,000 for the year ended December 31, 2007.
 
 8.           STOCKHOLDERS’
DEFICIT
 
 Stock
Split and Amendments
 
 Effective
July 18, 2006, the Company filed a certificate of change to effect a forward
stock split of its issued and outstanding common stock.  The Board of
Directors approved the forward split pursuant to the laws of the State of Nevada
on July 13, 2006.  The filing was incorrect in regard to the certificate of
change and on August 14, 2006, the Company filed a certificate of correction in
regard to the forward split.   The forward split approved by the Board
of Directors required the issuance of an additional twenty-five common shares
for each one share issued.   On December 13, 2006, the Board of Directors
approved an increase in the authorized shares of common stock from 75,000,000 to
500,000,000.
  F-12
  On
January 25, 2007, the Board of Directors and shareholders approved the
reclassification of 20,000,000 shares of the Company’s capital stock to
preferred stock, no par value, without any series, rights or preferences
ascribed to it.
 
 Authorized
Capital Stock
 
 The
Company is authorized to issue 480,000,000 shares of common stock, par value
$0.001 per share, and 20,000,000 shares of preferred stock, par value $.001 per
share.
 
 Common
Stock
 
 Immediately
following the Merger on January 30, 2007 and as of December 31, 2007, there were
52,833,385 and 53,550,840 shares of our common stock issued and outstanding and
no shares of preferred stock issued and outstanding (see Note 2 for further
discussion on the Merger).
 
 The
common stock holders are entitled to one vote per share held and have the sole
right and power to vote on all matters on which a vote of stockholders is taken.
Voting rights are non-cumulative. Common stock holders are entitled to receive
dividends when, as, and if declared by the Board of Directors, out of funds
legally available therefore and to share pro rata in any distribution to
stockholders. Upon liquidation, dissolution, or the winding up of the Company,
common stock holders are entitled to receive the net assets of the Company in
proportion to the respective number of shares held by them after payment of
liabilities which may be outstanding. Common stock holders do not have any
preemptive right to subscribe for or purchase any shares of any class of stock
of the Company. The outstanding shares of common stock will not be subject to
further call or redemption and are fully paid and non-assessable. To the extent
that additional stock is issued, the relative interest of existing stockholders
will likely be diluted.
 
 Shares
Issued Prior to the Merger
 
 All
references below in this section to shares of common stock are made on a
post-Merger basis of Old TFP only:
 
 During
the period from July 15, 2005 (date of inception) through December 31, 2005, Old
TFP issued 20,754,431 shares of restricted common stock to Old TFP’s founder,
Sole Director, Chief Executive Officer, and President for cash in the amount of
$168,000.
 
 During
the fourth quarter of 2005, Old TFP issued 1,127,958 shares of restricted common
stock for cash in the amount of $100,000.
 
 During
the first quarter of 2006, Old TFP issued 2,678,901 shares of restricted common
stock for cash in the amount of $237,500.
 
 During
the second quarter of 2006, Old TFP issued 2,496,171 shares of restricted common
stock for cash in the amount of $187,500.
 
 During
the third quarter of 2006, Old TFP issued 1,127,958 shares of restricted common
stock for cash in the amount of $100,000.
 
 During
the fourth quarter of 2006, Old TFP issued 4,173,445 shares of restricted common
stock for cash in the amount of $370,000.
 
 During
January 2007, Old TFP re-priced all common stock investor rounds made since July
14, 2005, the date of inception and cancelled related stock options issued with
the investment. As a result, Old TFP issued an additional 4,419,979 shares of
common stock to investors and cancelled options to purchase 7,162,534 shares of
common stock. As part of the 4,419,979 new shares issued, 3,383,875 shares of
the common stock were issued to the Chief Executive Officer and as part of the
7,162,534 options cancelled, 4,511,833 of which were held by the Chief Executive
Officer and were cancelled as part of this transaction. As part of the 4,419,979
new shares issued, 132,702 shares were returned by
  F-13
  the then
Consulting Chief Financial Officer and as part of the 7,162,534 options
cancelled, 225,592 options were held by the then Consulting Chief Financial
Officer and were cancelled as part of this transaction.
 
 Shares
Issued in Connection with the Merger
 
 As part
of the Merger, the Company issued 37,173,385 shares of its common stock to the
former stockholders of Old TFP in exchange for all of the issued and outstanding
shares of common stock of Old TFP.  As part of the Merger, in exchange for
options to purchase 7,724,850 shares of Old TFP common stock, the Company issued
to the holders thereof options to purchase an aggregate of 17,426,615 shares of
common stock under the same terms and conditions as the Old TFP Option
Agreements.  As a result of the Merger, the former stockholders of Old TFP
became holders of Company common stock, and holders of Old TFP options became
holders of options to acquire shares of Company common stock.
 
 Following
the Merger, there were 52,833,385 shares of Company common stock outstanding, of
which the pre-Merger stockholders of HomAssist owned approximately 29.6% and the
pre-Merger stockholders of Old TFP owned approximately 70.4%.
 
 Shares
Issued After the Merger
 
 During
April 2007, the Company agreed to a $4 million private placement for the
issuance of up to 2,540,000 restricted common shares at $1.57 per
share.  As of December 31, 2007, the Company had received $1,130,000
of the $4 million private placement.  In October 2007, the Company
closed the $4 million private placement and issued 717,500 of restricted shares
of the Company’s common stock for the $1,130,000 cash proceeds
received.  Subsequently, the Company commenced the Convertible Note
offering, pursuant to which it had raised $767,000 (see Note 6 for further
discussion).  Under the Convertible Note agreements the Company may
issue up to 4,833,018 restricted shares if all the outstanding principal amounts
of the Convertible Notes converts into common stock of the Company. In January
2008, the Company entered into a $1 million private placement with foreign
investors under a Regulation S Stock Purchase agreement, which the Company had
issued 2,710,004 restricted shares for cash proceeds of $430,100 as of March 28,
2008. The offer and sale of the securities above were effected in reliance on
the exemptions for sales of securities not involving a public offering, as set
forth in (i) Rule 506 promulgated under the Securities Act and in Section 4(2)
and Section 4(6) of the Securities Act and/or Rule 506 of Regulation D; or (ii)
Rule 501 under Regulation S.
 
 Options
 
 Just
prior to the Merger, there were no outstanding options to
purchase HomAssist's stock.
 
 Effective
January 30, 2007, as part of the Merger, in exchange for options to purchase
7,724,850 shares of Old TFP common stock, the Company issued to the holders
thereof options to purchase an aggregate of 17,426,615 shares of the Company’s
common stock under the same terms and conditions as the Old TFP option
agreements. As part of the terms and conditions of the Old TFP option
agreements, 50% of the options granted and outstanding just prior to the Merger
fully vested and became exercisable as a result of the Merger transaction
itself. As a result, 8,713,308 of the 17,426,615 options issued became fully
vested and exercisable. See Note 2 for further discussion on the
Merger.
 
 Stock
options granted under those certain stock option agreements were granted at
prices no less than the estimated fair value of the shares on the date of grant
as determined by the board of directors, provided, however, that (i) the
exercise price of an incentive stock option (“ISO”) shall not be less than 100%
of the estimated fair value of the shares on the date of grant, respectively;
and (ii) the exercise price of an ISO granted to a 10% stockholder shall not be
less than 110% of the estimated fair value of the shares on the date of grant,
respectively. ISO and nonstatutory stock options (“NSO”) stock options generally
vest every nine months, over a three year period.
 
 Summary
of the 2007 Option Plan
 
 On
January 30, 2007, the board of directors approved and a majority of the
Company’s stockholders ratified by consent the Company’s 2007 incentive and
nonstatutory stock option plan (“Plan”). The 17,426,615 options to purchase the
Company’s common stock issued under the terms of the Merger (discussed above)
have been issued pursuant to the Plan.
  F-14
  
 The Plan
is intended to further the growth and financial success of the Company by
providing additional incentives to selected employees, directors, and
consultants to the Compay and its subsidiary corporations, as those terms are
defined in Sections 424(e) and 424(f) of the Internal Revenue Code of 1986, as
amended (“Code”) (such subsidiary corporations hereinafter collectively referred
to as “Affiliates”) so that such employees and consultants may acquire or
increase their proprietary interest in the Company. Stock options granted under
the Plan (hereinafter the “Options”) may be either “Incentive Stock Options,” as
defined in Section 422A of the Code and any regulations promulgated under said
Section, or “Nonstatutory Options” at the discretion of the Board of Directors
of the Company (the “Board”) and as reflected in the respective written stock
option agreements granted pursuant hereto.
 
 The Plan
reserves twenty five million (25,000,000) shares of the Company's common stock
for issuance.
 
 In
accordance with the provisions of SFAS 123R, and for nonemployees, the
measurement criteria of EITF 96-18, the Company recognized stock-based
compensation expense of $435,100 and $96,400 for the year ended December 31,
2007, and 2006, respectively. The fair value of each option granted was
estimated on the date of grant using the Black-Scholes option-pricing model. The
expected volatility is based on industry comparables as the Company recently
became a publicly held company and trading volumes have been low. The risk-free
rate is based on the U.S. Treasury yield curve in effect at the time of grant.
The expected term of options granted is based on the remaining expected life of
the option. The following weighted average assumptions were used for the
options granted during the years ended December 31, 2007 and 2006:
 
 
 Years
      Ended
                December
      31,2007
              
              2006Expected
      volatility
              
              
              45.0%
              
              
              45.0%Risk-free
      rate
              
              
              3.5%
              
              
              4.7%Expected
      Term
              
              
              4.5
      years
              
              
              4.5
      years
 
 
 A summary
of stock option activity for the year ended December 31, 2007, is as
follows:
 
 
 Number of
                Shares
              
              Weighted-
                Average
                Exercise
                Price
              
              Weighted-
                Average
                Remaining
                Contractual
                Term
              
              Aggregate
                Intrinsic
                ValueOutstanding
      as of December 31, 2006
              
              
              24,453,793
              
              $
              .09Granted
              
              
              4,240,355
              
              $
              .69Cancelled
              
              
              (10,595,226)
              
              $
              .09Outstanding
      as of December 31, 2007
              
              
              18,098,922
              
              $
              .21
              
              
              4.2
              
              $
              5,275,500
 
 
 
 
 
 
 
  F-15
  A summary
of the status of the nonvested options for the year ended December 31, 2007 is
presented below:
 
 Number of
                Shares
              
              Weighted-
                Average
                Grant
      Date
                Fair
      ValueNonvested
      as of December 31, 2006
              
              
              19,539,002
              
              $
              .09Granted
              
              
              4,240,355
              
              $
              .69Vested
              
              
              (9,387,019)
              
              $
              .09Cancelled
              
              
              (7,121,468)
              
              $
              .07Nonvested
      as of December 31, 2007
              
              
              7,270,870
              
              $
              .38
 
 Information
regarding the weighted-average remaining contractual life and weighted-average
exercise price of options outstanding and options exercisable at December 31,
2007, for selected price ranges is as follows:
 
 Options
      Outstanding
              
              Options
      ExercisableExercise
                Prices
              
              
              Number
                Outstanding
              
              
              Weighted
                Average
                Remaining
                Contractual
                Life(in
      Years)
              
              
              Weighted
      Average
                Exercise
                Price
                per
      Share
              
              
              Number
                Exercisable
              
              
              Weighted
      Average
                Exercise
                Price
                per
      Share$
      .05 - .50
              
              
              14,993,922
              
              
              4.1
              
              
              $  
      .08
              
              
              10,828,052
              
              
              $  
      .08$
      .50 - 1.20
              
              
              3,105,000
              
              
              4.5
              
              
              $  
      .70
              
              
              --
              
              
              $    
      --18,098,922
              
              
              
              
              
              
              
              
              10,828,052
 
 As
disclosed in Note 1, the Company applies SFAS No. 123R in accounting for its
stock-based awards.
 
 Warrants
 
 Just
prior to the Merger, there were no warrants to purchase HomAssist or Old TFP
stock outstanding.
 
 Effective
January 30, 2007, as part of the Merger, the Company assumed a license agreement
as amended which Old TFP entered into during 2006, part of which may obligate
the Company to issue warrants to purchase its common stock at a future date,
pending the achievement of certain milestones by the licensee. As of December
31, 2007, those milestones have not been met and no warrants have been issued.
See Note 2 for further discussion on the Merger.
 
 In
conjunction with the $767,000 raised pursuant to the Convertible Notes in
October 2007, the Company issued warrants to purchase an aggregate of 1,917,500
shares of common stock of the Company at an exercise price of $0.50 per share
that expire five years from the date of issuance (see Note 7 for further
discussion).
 
 In
October 2007, pursuant to a financial advisory agreement, the Company issued
warrants to purchase an aggregate of 350,000 shares of common stock of the
Company at an exercise price of $0.50 per share that expire five years from the
date of issuance. Also, i n
November 2007, pursuant to an investor relations fee agreement, the Company
agreed to grant warrants to purchase up to 3,000,000 common shares of the
Company.  As of December 31, 2007, the Company had issued warrants to
purchase an aggregate of 1,000,000 shares of common stock of the Company at an
exercise price of $1.20 per share that expire in May 2008.  In January
2008, these warrants were cancelled and the Company granted new warrants to
purchase up to an aggregate of 3,000,000 shares of common stock of the Company
at an exercise price of $.65 per share that expire in May 2008.  During the
year ended December 31, 2007, the Company expensed $27,100 related to these
warrants.
  F-16
  
 A summary
of warrant activity for the year ended December 31, 2007, is as
follows:
 
 Number of
                Shares
              
              Weighted-
                Average
                Exercise
                Price
              
              Weighted-
                Average
                Remaining
                Contractual
                Term
              
              Aggregate
                Intrinsic
                ValueOutstanding
      as of December 31, 2006
              
              
              -
              
              $
              -Granted
              
              
              3,267,500
              
              
              .74Cancelled
              
              
              -
              
              
              -Outstanding
      as of December 31, 2007
              
              
              3,267,500
              
              $
              .74
              
              
              3.5
              
              $
              -
 
 
 A summary
of the status of the non-vested warrants for the year ended December 31, 2007 is
presented below:
 
 Number of
                Shares
              
              Weighted-
                Average
                Grant
      Date
                Fair
      ValueNon-vested
      as of December 31, 2006
              
              
              -
              
              $
              -Granted
              
              
              3,267,500
              
              $
              .28Vested
              
              
              (2,308,750)
              
              $
              .24Cancelled
              
              
              -
              
              $
              -Non-vested
      as of December 31, 2007
              
              
              958,750
              
              $
              .37
 
 9.           RELATED
PARTY TRANSACTIONS
 
 On May
15, 2007, the Company entered into an agreement with a company whereby its chief
executive officer is also a related party of the Company pursuant to an advisory
agreement and is also a member of our Board of Advisors. The agreement called
for the Company to provide custom web site pages for a total amount of $20,000,
of which the $20,000 was paid and recorded to revenue during the year ended
December 31, 2007.
 
 On June
15, 2007, pursuant to a consulting agreement, the Company granted an option to
purchase 75,000 shares of common stock of the Company to a consultant who is
also a sibling of the chief executive officer of the Company.
 
 As of
December 31, 2007 the Company owed an executive officer $54,000 (see further
discussion in Note 6).
 
 Commencing
from March 1, 2006 through January 30, 2007, a stockholder of the Company also
served as Old TFP’s financial consultant under a consulting agreement with a
firm owned by the stockholder. On January 30, 2007, the Company entered into an
employment agreement with the stockholder to become the Company’s chief
financial officer (further discussed below). From January 1, 2007 to January 30,
2007, for consulting services rendered, the consulting firm received $11,700
cash proceeds. The consulting agreement also provides cash finder’s fees of 10%
of any gross proceeds raised through an introduction made by the consultant and
was amended to 7.5% through December 31, 2007. During the year ended December
31, 2007, the Company incurred $81,800 as financing costs of which $72,000 cash
was paid to the consulting firm for finder’s fees owed to the consulting firm
during the year ended December 31, 2007.  The remaining amount of
$9,800 was relinquished by the consulting firm as partial consideration for
amending the 7.5% finder’s fee back to 10%. As a result, the Company owed no
amounts as of December 31, 2007 to the consulting firm. During the year ended
December 31, 2006, the Company paid the stockholder pursuant to the consulting
agreement $11,600 for services provided.
  F-17
  
 In
October 2007, one of the five investors who entered into the Convertible Notes
(see further discussion in Note 7) was the chief financial officer of the
Company.  The Company owed the chief financial officer $92,300 at the
time of the offering, of which, the chief financial officer exchanged $45,000 of
the $92,300 due for $45,000 of Convertible Notes.  As of December 31,
2007, the remaining $47,300 owed to the officer was relinquished by the officer
in partial consideration for amending the finder’s fee related to an agreement
with a consulting firm owned by the officer (noted above) from 7.5% back to
10%.  As a result, no amounts were due to the officer as of December
31, 2007.
 
 During
January 2007, Old TFP re-priced all common stock investor rounds made since
inception, July 14, 2005, and cancelled related stock options issued with those
investments. As a result, Old TFP issued an additional 4,419,979 shares of
common stock to its investors and cancelled options to purchase 7,162,534 shares
of common stock of Old TFP. As part of the 4,419,979 new shares issued,
3,383,875 shares of common stock were issued to the chief executive officer, and
as part of the options to purchase 7,162,534 shares cancelled, 4,511,833 options
were held by the chief executive officer, and were cancelled as part of this
transaction. As part of the 4,419,979 new shares of common stock issued, 132,702
shares were returned back to Old TFP by the then consulting chief financial
officer, and as part of the options to purchase 7,162,534 shares cancelled,
225,592 options were held by the then consulting chief financial officer, and
were cancelled as part of the this transaction.
 
 On
January 30, 2007, the Company entered into executive employment agreements with
its chief executive officer and chief financial officer. The agreements for the
chief executive officer and chief financial officer have terms of five and two
years, respectively. In connection with the Merger, the agreements were filed
with the Securities and Exchange Commission on Form 8-K, dated January 30,
2007.
 
 The
material terms of the chief executive officer’s agreement are: (i) base annual
salary of $210,000; (ii) participation in our standard employee benefit plans;
(iii) initial one time bonus of $50,000 for successful closing of Merger; (iv)
reimbursable expenses customarily given to executives; (v) other bonuses at the
discretion of the board of directors and (vi) severance arrangements described
below. If the Company terminates the chief executive officer’s employment
agreement without cause, or if the chief executive officer resigns for good
reason, each as defined in the agreement, the Company is obligated to pay the
chief executive officer the greater of his annual salary for the remaining term
of the agreement or three years of his annual salary rate at the time of
termination without cause or resignation for good reason, benefits for
24 months following the date of termination, and the right for
24 months from the date of termination to exercise all vested options
granted to him prior to that time; provided that in the event the termination
occurs within 120 days of the execution of an agreement which results in a
change of control, as described below, vesting of all options will be
accelerated and in the event the termination occurs outside of such 120 day
period, all unvested options that would have vested had the chief executive
officer’s employment agreement remained in force through the end of the initial
term will be fully vested immediately prior to such termination. The agreement
is partially cancelable because the Company did not raise a minimum of $2
million within 90 days of the Merger, however, the Company does not expect to
terminate the executive’s agreement as of the date of this report.
 
 The
material terms of the chief financial officer’s agreement are: (i) base annual
salary of $175,000; (ii) participation in our standard employee benefit plans;
(iii) initial one time bonus of $30,000 for successful closing of Merger (iv)
reimbursable expenses customarily given to executives; (v) various bonuses
related to performance metrics; (vi) other bonuses at the discretion of the
board of directors and (vii) severance arrangements described below. If the
Company terminates the chief financial officer’s employment agreement without
cause, or if the chief financial officer terminates the agreement with good
reason, each as defined in the agreement, the Company is obligated to pay the
chief financial officer: (i) his annual salary and other benefits earned
prior to termination, (ii) the greater of his annual salary for the
remaining term of the agreement or his annual salary payable over one year,
(iii) benefits for 12 months following the date of termination, and
(iv) the right for 12 months from the date of termination to exercise
all vested options granted to him prior to that time; provided that in the event
the termination occurs within 120 days of the execution of an agreement
which results in a change of control, as described below, vesting of all options
will be accelerated and in the event the termination occurs outside of such
120 day period, all unvested options that would have vested had the chief
financial officer’s employment agreement remained in force through the end of
the initial term will be fully vested immediately prior to such termination. The
agreement is partially cancelable because the Company did not raise a minimum of
$2 million within 90 days of the Merger, however, the Company does not expect to
terminate the executive’s agreement as of the date of this
report.
  F-18
  
 10.           COMMITMENTS
 
 In
February 2007, the Company entered into a two year lease for its new principal
offices. Monthly rent is $8,200 under this lease. Rent expense during the years
ended December 31, 2007 and 2006 was $86,400 and $26,400,
respectively.
 
 Pursuant
to the office lease agreement, as of December 31,  2007 total
remaining rental payments of $98,400 are due through December 31, 2008; and;
total payments of $16,400 are due through December 31, 2009.
 
 11.           INCOME
TAXES
 
 Due to
operating losses, there is no federal tax provision and an $800 California
minimum franchise state provision for income taxes is due annually.
 
 Deferred
income tax benefits result from the recognition of temporary differences between
financial statements and income tax reporting of income and expenses and the
recognition of net operating loss and stock option expense, which, the related
deferred tax asset amounts were approximately $1 million and $200,000,
respectively, as of December 31, 2007. These deferred tax benefits have been
fully offset by a valuation allowance, as management could not determine that it
was “more likely than not” that the deferred tax assets would be realized. The
gross deferred tax asset and related valuation allowance was approximately $1.2
million at December 31, 2007.
 
 As of
December 31, 2007, federal and state net operating loss carry-forwards amount to
approximately $2.3 million and begin to expire in the year 2027 and 2017,
respectively.
 
 Pursuant
to Section 382 of the Internal Revenue Code, use of the Company’s net operating
loss and credit carry-forwards may be limited if the Company experiences a
cumulative change in ownership of greater than 50% in a moving three-year
period. Ownership changes could impact the Company’s ability to utilize net
operating losses and credit carry-forwards remaining at the ownership change
date.
 
 12.           RECENT
ACCOUNTING PRONOUNCEMENTS
 
 FASB
issued Interpretation No. 48, “Accounting for Uncertainty in Income
Taxes” (“FIN 48”) in September 2006. FIN 48 defines the threshold for
recognizing the benefits of tax return positions in the financial statements as
“more-likely-than-not” to be sustained by the taxing authority. A tax position
that meet the “more-likely-than-not” criterion shall be measured at the largest
amount of benefit that is more than 50% likely of being realized upon ultimate
settlement. FIN 48 applies to all tax positions accounted for under Statement of
Financial Accounting Standards No. 109, Accounting for Income Taxes
(“SFAS 109”). The Company adopted the provisions of FIN 48 as of January 1, 2007
and such adoption had no material impact on the Company’s consolidated financial
position or results of operations.
 
 In
September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements.”
This statement defines fair value, establishes a framework for measuring fair
value in generally accepted accounting principles, and expands disclosure about
fair value measurements. This statement applies under other accounting
pronouncements that require or permit fair value measurement, the FASB having
previously concluded in those accounting pronouncement that fair value is the
relevant measurement attribute. This statement does not require any new fair
value measurements. However, for some entities, the application of the statement
will change current practice. This statement is effective for financial
statements issued for fiscal years beginning after November 15, 2007, and
interim periods within those fiscal years. The Company is currently reviewing
the effect, if any, that this new pronouncement will have on its consolidated
financial statements.
 
 In
September 2006, the FASB issued SFAS No. 158, “Employers’ Accounting for Defined
Benefit Pension and Other Postretirement Plans - an amendment of FASB Statements
No. 87, 88, 106 and 123(R).” This statement improves financial reporting
by requiring an employer to recognize the overfunded or underfunded status of a
defined benefit postretirement plan (other than a multi-employer plan) as an
asset or liability in its statement of financial position and to recognize
changes in that funded status in the year in which the changes occur through
comprehensive income of a business entity or changes in unrestricted net assets
for a not-for-profit organization. This statement also improves
  F-19
  financial
reporting by requiring an employer to measure the funded status of a plan as of
the date of its year-end statement of financial position, with limited
exceptions. This statement is effective for financial statements issued for
fiscal years beginning after December 15, 2008, and interim periods within those
fiscal years. The Company is currently reviewing the effect, if any, that this
new pronouncement will have on its consolidated financial
statements.
 
 In
February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial
Assets and Financial Liabilities—including an amendment of SFAS No.115,
Accounting for Certain Investments in Debt and Equity Securities”, which
applies to all entities with available-for-sale and trading securities. This
Statement permits entities to choose to measure many financial instruments and
certain other items at fair value. The objective is to improve financial
reporting by providing entities with the opportunity to mitigate volatility in
reported earnings caused by measuring related assets and liabilities differently
without having to apply complex hedge accounting provisions. This Statement is
effective as of the beginning of an entity’s first fiscal year that begins after
November 15, 2007. Early adoption is permitted as of the beginning of a
fiscal year that begins on or before November 15, 2007, provided the entity
also elects to apply the provisions of FASB Statement No. 157, “Fair Value Measurements.” We
plan to adopt SFAS No. 159 effective January 1, 2008. Management is in the
process of determining the effect, if any, the adoption of SFAS No. 159
will have on the Company’s consolidated financial statements.
 
 In
December 2007, FASB issued SFAS No. 141R, Business Combinations(SFAS 141R), which retains the underlying concepts of SFAS 141
in that all business combinations are still required to be accounted for at fair
value under the acquisition method of accounting but SFAS 141R changed the
method of applying the acquisition method in a number of significant aspects.
Acquisition costs will generally be expensed as incurred; noncontrolling
interests will be valued at fair value at the acquisition date; in-process
research and development will be recorded at fair value as an indefinite-lived
intangible asset at the acquisition date; restructuring costs associated with a
business combination will generally be expensed subsequent to the acquisition
date; and changes in deferred tax asset valuation allowances and income tax
uncertainties after the acquisition date generally will affect income tax
expense. The provision of SFAS 141R are effective for fiscal years
beginning after December 15, 2008 with earlier adoption prohibited. We are
currently analyzing the effect of adopting SFAS 141R.
 
  In
December 2007, FASB issued SFAS No. 160, Accounting and Reporting of
Noncontrolling Interest in Consolidated Financial Statements, an amendment of
ARB No. 51(SFAS 160), which requires the recognition of a
noncontrolling interest (minority interest) as equity in the consolidated
financial statements and separate from the parent’s equity. The amount of net
income attributable to the noncontrolling interest will be included in
consolidated net income on the face of the income statement. It also amends
certain aspects of ARB No. 51’s consolidation procedures for consistency
with the requirements of SFAS 141R. This statement also
includes expanded disclosure requirements regarding the interests of the parent
and its noncontrolling interest. The provisions of SFAS 160 are effective
for fiscal years beginning after December 15, 2008 with earlier adoption
prohibited. We are currently analyzing the effect of adopting
SFAS 160.
 
 
 13.           SUBSEQUENT
EVENTS
 
 In
January 2008, the Company entered into a $1 million private placement with
foreign investors under a Regulation S Stock Purchase agreement, which the
Company had issued 2,710,004 restricted shares for cash proceeds of $430,100 as
of March 28, 2008. The offer and sale of the securities above were effected in
reliance on the exemptions for sales of securities not involving a public
offering, as set forth in Rule 501 promulgated under the Securities Act of
Regulation S.
 
 In
February 2008, warrants to purchase up to an aggregate of 3,000,000 shares of
common stock of the Company (see further discussion in Note 8) related to in
investor relations agreement were cancelled and the Company granted new warrants
to purchase up to an aggregate of 4,600,000 shares of common stock at an
exercise price of $.65 per share that expire in May 2008.
 
 
  F-20