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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549 FORM 20-F / A VIRTUAL MEDIA HOLDINGS INC.FILE NO. 333-70836 [   ] REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934 OR [ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934, for the fiscal year ended: JUNE 30, 2006 
OR [   ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934, for the transition period from 
  OR [   ] SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 BIOMASS SECURE POWER INCPreviously called VIRTUAL MEDIA HOLDINGS INC.(Exact name of registrant as specific in its charter) Province of British Columbia, Canada(Jurisdiction of incorporation or organization) 40218 Wellsline Road 
Abbotsford, British Columbia 
Canada V2G 2K7(Address of principal executive offices, including Postal Code) Registrant's area code and telephone number: (604) 807 4957 Name of each exchange on which registered: None Securities to be registered pursuant to Section 12(g) of the Act: The following financial statements and comments represent are submitted as an amendment to 20F filing of January 16, 2007 for year ended June 30, 2006.


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Virtual Medial Holdings, Inc.Balance Sheet June 30,
        
        
        
        June 30,2006
        
        
        
        2005(unaudited)ASSETSCURRENT ASSETSCash
        
        53,762
        
        
        $
        32,397Accounts receivable
        
        16,618
        
        
        
        30,449Prepaid expenses
        
        1,324
        
        
        
        -Sales tax receivable
        
        4,370
        
        
        
        17,732Inventory
        
        104,909
        
        
        
        445,125TOTAL CURRENT ASSETS
        
        180,983
        
        
        
        525,703PROPERTY AND EQUIPMENTProperty and equipment, net
        
        38,688
        
        
        
        22,693TOTAL PROPERTY AND EQUIPMENT
        
        38,688
        
        
        
        22,693OTHER ASSETSWebsite and technology, net of amortization
        
        21,667
        
        
        
        43,162DVD Marketplace assets, net of amortization
        
        123,888
        
        
        
        -Deposits
        
        4,587
        
        
        
        5,209TOTAL OTHER ASSETS
        
        150,142
        
        
        
        48,371TOTAL ASSETS
        $
        369,813
        
        
        $
        596,767LIABILITIES AND STOCKHOLDERS' EQUITYCURRENT LIABILITIESAccounts payable and accrued expenses
        $
        293,974
        
        
        $
        471,053Refunds due - Amazon
        
        37,309
        
        
        
        -Line of credit
        
        22,831
        
        
        
        16,906Payable to director
        
        44,432TOTAL CURRENT LIABILITIES
        
        398,546
        
        
        
        487,959COMMITMENTS AND CONTINGENCIES
        
        -
        
        
        
        -STOCKHOLDERS' EQUITYCommon stock,no par, 200,000,000 shares authorized; 79,581,348and 32,793,757 shares issued and outstanding, respectively
        
        88,165Subscription receivable
        
        (15,000
        )Deferred compensation
        
        (130,000
        )Additional paid in capital
        
        4,752,645
        
        
        
        1,106,483Accumulated deficit
        
        (4,724,543
        )
        
        
        (997,675
        )TOTAL STOCKHOLDERS'EQUITY
        
        (28,733
        )
        
        
        108,808TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
        $
        369,813
        
        
        $
        596,767


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Virtural Media Holdings, Inc. Statement of Operations Year EndedJune 30
        
        
        
        June 302006
        
        
        
        2005(unaudited)
        
        
        
        (unaudited)REVENUES, net of refunds and charge backs
        **$**
        1,140,346
        
        
        **$**
        3,600,049COST OF GOODS SOLD
        
        830,342
        
        
        
        2,315,272GROSS PROFIT
        
        310,004
        
        
        
        1,284,777EXPENSESConsulting
        
        190,328
        
        
        
        225,284Sales and marketing expense
        
        808,301
        
        
        
        929,771General and administrative
        
        171,262
        
        
        
        42,399Website and server
        
        80,949
        
        
        
        14,236Amortization and depreciation
        
        40,504
        
        
        
        30,720Professional fees
        
        420,035
        
        
        
        47,500Rent and lease
        
        19,282
        
        
        
        15,470Management salaries
        
        2,008,459
        
        
        
        -Wages
        
        309,401
        
        
        
        226,018Foreign currency transaction (gain) loss
        
        (11,649
        )TOTAL EXPENSES
        
        4,036,872
        
        
        
        1,531,398LOSS FROM OPERATIONS
        
        (3,726,868
        )
        
        
        (246,621
        )OTHER INCOME (EXPENSES)Interest expense
        
        -
        
        
        
        (2,218
        )Miscellaneousexpense
        
        
        
        
        
        (1,341
        )TOTAL OTHER INCOME (EXPENSES)
        
        -
        
        
        
        (3,559
        )INCOME (LOSS) BEFORE INCOME TAXES
        
        (3,726,868
        )
        
        
        (250,180
        )INCOME TAXES
        
        -
        
        
        
        -NET INCOME (LOSS)
        
        (3,726,868
        )
        
        
        (250,180
        )BASIC AND DILUTED NET LOSS PERCOMMON SHARE
        $
        0.05
        
        
        **$**
        0.01**WEIGHTED AVERAGE NUMBER OF BASIC****AND DILUTED COMMON STOCK SHARES OUTSTANDING**
        
        60,554,094
        
        
        
        30,050,757


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Virtural Media Holdings, Inc. Statements of Stockholders' Equity June 30, 2006 TotalCommon Stock
        
        Accumulated
        
        
        Stockholder'sShares
        
        Amount
        
        Deficit
        
        
        EquityBalance, July I, 2005
        32,793,757
        $
        1,106,483
        $
        (997,675
        )
        $
        108,808Payment for stock previously issuedfrom the exercise of options
        0
        
        8,584
        
        
        
        
        8,584Stock issued for services at $0.01 to$0.21 per share
        44,802,591
        
        3,528,368
        
        
        
        
        3,528,368Stock issued from private placementat $0.02 to $0.075 per share
        1,985,000
        
        52,375
        
        
        
        
        52,375Net loss for the year endedJune 30, 2006
        
        
        
        
        (3,726,868
        )
        
        (3,726,868
        )Balance, June 30, 2006
        79,581,348
        $
        4,695,810
        $
        (4,724,543
        )
        $
        (28,733
        )


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Virtual Media Holdings, Inc.Statements of Cash Flows Year EndedJune 30,
        
        
        
        June 30,2006
        
        
        
        2005(unaudited)
        
        
        
        (unaudited)(Restated)CASH FLOWS FROM OPERATING ACTIVITIESNet Loss (loss)
        $
        (3,726,868
        )
        
        $
        (250,180
        )Adjustments to reconcile net loss to net cash provided(used) by operations:Amortization and depreciation
        
        40,504
        
        
        
        30,720Stock issued for services
        
        3,528,368
        
        
        
        206,500Stock issued for website
        
        
        
        
        
        65,000Stock issued for employee bonuses
        
        
        
        
        
        2,410Options issued for services
        
        
        
        
        
        15,900(Increase) decrease in:Receivables
        
        31,563
        
        
        
        16,073Inventory
        
        340,216
        
        
        
        (219,157
        )Deposits
        
        622
        
        
        
        (804
        )Prepaid expenses
        
        (1,324
        )Increase (decrease) in:Accounts payable - related parties
        
        -
        
        
        
        (7,532
        )Accounts payable
        
        (181,449
        )
        
        
        169,226Line of credit
        
        5,925Refunds payable to Amazon
        
        37,309Net cash provided (used) by operating activities
        
        74,866
        
        
        
        28,156CASH FLOWS FROM INVESTING ACTIVITIESProperty & Equipment
        
        (21,067
        )
        
        
        (293
        )Website
        
        (172
        )
        
        
        (65,000
        )DVD Marketplace assets
        
        (137,653
        )Net cash (used) by investing activities
        
        (158,892
        )
        
        
        (65,293
        )CASH FLOWS FROM FINANCING ACTIVITIESDue to director
        
        44,432Proceeds from exercise of options
        
        8,584
        
        
        
        9,025Proceeds from issue of shares (private placement)
        
        52,375Note payable
        
        
        
        
        
        10,487Net cash provided (used) by financing activities
        
        105,391
        
        
        
        19,512NET INCREASE (DECREASE) IN CASH
        
        21,365
        
        
        
        (17,625
        )Other comprehensive gain (loss) - foreign currency translationCASH - Beginning of period
        
        32,397
        
        
        
        50,022CASH - End of period
        $
        53,762
        
        
        $
        32,397SUPPLEMENTAL CASHFLOW DISCLOSURESInterest expense paid
        
        -
        
        
        $
        2,837Income taxes paid
        
        -
        
        
        $
        -NON-CASH TRANSACTIONSCommon stock issued for services
        $
        3,528,368
        
        
        $
        287,400Common stock issued for management fees
        $
        
        
        
        $
        2,410Forgiveness of debt recorded as capital contribution
        $
        
        
        
        $
        33,321


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Virtual Media Holdings, Inc. 
    Notes to Financial Statements 
    June 30, 2006 NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS VMH VideoMovieHouse.comInc. (originally Flamingos Beach Resort Inc.) was Incorporated in the Province of British Columbia on March 7, 1989. VMH VideoMovieHouse.comInc. (hereinafter "VMH" or "the Company") has developed an internet sales site designed to sell videos, CDs, DVDs and books and, as technology advancements permit, to become a virtual video rental store. VMH possesses domain names, a web page, and technology for the sale of videos, DVD's, and CD's through the Internet. In September 1999, the Company entered into an agreement with First American Scientific Corp. a Nevada corporation, whereby First American Scientific Corp. acquired 100% of the common shares of VMH in return for cash consideration of 5250,000. In September 2002, the Company completed a spin-off whereby VMH became anindependent, publicly reporting entity. The Company is headquarter in Abbotsford, British Columbia, Canada. See Note 5. The Company's year-end is June 301°. NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES This summary of significant accounting policies of VMH is presented to assist in understanding the Company's financial statements. The financial statements and notes are representations of the Company's management, which is responsible for their Integrity and objectivity. These accounting policies conform to accounting principles generally accepted in the United States of America and have been consistently applied In the preparation of the financial statements. Accounting Method The Company uses the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America. Accounting for Stock Options and Warrants Granted to Employees and Nonemployees Statement of Financial Accounting Standards No. 123, "Accounting for Stock-Based Compensation" (hereinafter "SFAS No. 123"), defines a fair value-based method of accounting for stock options and other equity instruments. The Company has adopted this method, which measures compensation costs based on the estimated fair value of the award and recognizes that cost over the service period.


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Accounting Pronouncements Recent In December 2004, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 153. This statement addresses the measurement of exchanges of nonmonetary assets. The guidance in APB Opinion No. 29, "Accounting for Nonmonetary Transactions," is based on the principle that exchanges of nonmonetary assets should be measured based on the fair value of the assets exchanged. The guidance in that opinion, however, included certain exceptions to that principle. This statement amends Opinion 29 to eliminate the exception for nonmonetary exchanges of similar productive assets and replaces it with a general exception for exchanges of nonmonetary assets that do not have commercial substance. A nonmonetary exchange has commercial substance if the future cash flows of the entity are expected to change significantly as a result of the exchange. This statement is effective for financial statements for fiscal years beginning after June 15, 2005. Earlier application is permitted for nonmonetary asset exchanges incurred during fiscal years beginning after the date of this statement is issued. Management believes the adoption of this statement will have no impact on the financial statements of the Company. In December 2004, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 152, which amends FASB statement No. 66, "Accounting for Sales of Real Estate," to reference the financial accounting and reporting guidance for real estate time-sharing transactions that is provided in AICPA Statement of Position (SOP) 04-2, "Accounting for Real Estate rime-Sharing Transactions." This statement also amends FASB Statement No. 67, 'Accounting for Costs and Initial Rental Operations of Real Estate Projects," to state that the guidance for (a) incidental operations and (b) costs Incurred to sell real estate projects does not apply to real estate time-sharing transactions. The accounting for those operations and costs is subject to the guidance in SOP 04-2. This statement is effective for financial statements for fiscal years beginning after June 15, 2005. Management believes the adoption of this statement will have no impact on the financial statements of the Company. In December 2004, the Financial Accounting Standards Board issued a revision to Statement of Financial Accounting Standards No. 123R, " Accounting for Stock Based Compensations." This statement supersedes APB Opinion No. 25, "Accounting for Stock Issued to Employees," and its related implementation guidance. This statement establishes standards for the accounting for transactions in which an entity exchanges its equity instruments for goods or services. It also addresses transactions in which an entity Incurs liabilities in exchange for goods or services that are based on the fair value of the entity's equity instruments or that may be settled by the issuance of those equity instruments. This statement focuses primarily on accounting for transactions in which an entity obtains employee services in share-based payment transactions. This statement does not change the accounting guidance for share based payment transactions with parties other than employees provided in Statement of Financial Accounting Standards No. 123. This statement does not address the accounting for employee share ownership plans, which are subject to AICPA Statement of Position 93-6, "Employers' Accounting for Employee Stock Ownership Plans." The Company has not yet determined the impact to its financial statements from the adoption of this statement. In November 2004, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards No. 151, " Inventory Costs-- an amendment of ARB No. 43, Chapter 4." This statement amends the guidance in ARB No. 43, Chapter 4, "Inventory Pricing," to clarify the accounting for abnormal amounts of Idle facility expense, freight, handling costs, and wasted material (spoilage). Paragraph 5 of ARB 43, Chapter 4, previously stated that ".. . under some circumstances, items such as idle facility expense, excessive spoilage, double freight, and rehandling costs may be so abnormal as to require treatment as current period charges...." This statement requires that those items be recognized as current-period charges regardless of whether they meet the criterion of "so abnormal." In addition, this statement requires that allocation of Fixed production overheads to the costs of conversion be based on the normal capacity of the production facilities. This statement is effective for inventory costs incurred during fiscal years beginning after June 15, 2005. Management does not believe the adoption of this statement will have any Immediate material impact on the Company.


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Accounts Receivable The Company carries its accounts receivable at net realizable value. As of June 30, 2006 and 2005, accounts receivable balances were $16,618 and $30,449, respectively. The Company estimates bad debts utilizing the allowance method, based upon past experience and current market conditions. At June 30, 2006 and 2005, the Company determined that no allowance was required, as most sales are transacted via credit card or electronic transfer and therefore are considered immediately collectible. Advertising Expenses Advertising expenses consist primarily of costs incurred in the design, development, and printing of Company literature and marketing materials. The Company expenses all advertising expenditures as incurred. The Company's advertising expenses were $16,416 and $110, for the years ended June 30, 2006 and 2005, respectively. Cash and Cash Eauivalents For purposes of its statement of cash flows, the Company considers all short-term debt securities purchased with a maturity of three months or less to be cash equivalents. Compensated Absences Employees of the Company's office in Abbotsford, B.C. are entitled, by Canadian law, to paid time off equal to four percent of their wages. At June 30, 2006 and 2005, the accrued amount is approximately $5,400 and $4,600, respectively. Comprehensive Income In June 1997, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 130, 'Reporting Comprehensive Income" (hereinafter "SFAS No. 130"). SFAS No. 130 establishes standards for reporting and displaying comprehensive income, its components and accumulated balances. SFAS No. 130 is effective for periods beginning after December 15, 1997. The Company adopted this accounting standard, and its adoption has had no material effect on the Company's financial statements and disclosures. Concentration of Risk The Company maintains its cash accounts in primarily one commercial bank in Vancouver, British Columbia, Canada. The Company's cash accounts are business checking accounts in Canadian and United States dollars. The United States dollar account is not insured. Derivative Instruments The Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 133, "Accounting for Derivative Instruments and Hedging Activities" (hereinafter "SFAS No. 133'), as amended by SFAS No. 137, "Accounting for Derivative Instruments and Hedging Activities - Deferral of the Effective Date of FASB No. 133", and SFAS No. 138, "Accounting for Certain Derivative Instruments and Certain Hedging Activities", and SFAS No. 149, "Amendment of Statement 133 on Derivative Instruments and Hedging Activities". These statements establish accounting and reporting standards for derivative instruments, Including certain derivative instruments embedded in other contracts, and for hedging activities. They require that an entity recognize all derivatives as either assets or liabilities in the balance sheet and measure those instruments at fair value. If certain conditions are met, a derivative may be specifically designated as a hedge, the objective of which is to match the timing of gain or loss recognition on the hedging derivative with the recognition of (I) the changes in the fair value of the hedged asset or liability that are attributable to the hedged risk or (II) the earnings effect of the hedged forecasted transaction. For a derivative not designated as a hedging instrument, the gain or loss is recognized in income in the period of change.


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Historically, the Company has not entered into derivatives contracts to hedge existing risks or for speculative purposes. At June 30, 2005 and 2004, the Company has not engaged in any transactions that would be considered derivative instruments or hedging activities. Fair Value of Financial Instruments The carrying amounts for cash, accounts receivable, accounts payable and accrued liabilities approximate their fair value. Foreign Currency Translation The Company's functional currency is U.S. dollars. Assets and liabilities of the Company's operations are translated into U.S. dollars at the period-end exchange rates, and revenue and expenses are translated at the average exchange rates during the period. Exchange differences arising on translation are disclosed as a separate component of shareholders' equity. Realized gains and losses from foreign currency transactions are reflected in the Company's results of operations. Going Concern The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. This basis of accounting contemplates the recovery of the Company's assets and the satisfaction of its liabilities in the normal course of operations. As shown in the accompanying financial statements, the Company has incurred an accumulated deficit of $4,724,543 through June 30, 2006 and has limited cash resources. Management plans to undertake a comprehensive review of its ongoing business to substantially increase sales through current channels and develop new sales opportunities. Management has established plans designed to increase the sales of the Company's products by advertising its products in newspapers, radio and television commercials and via e-mail in the British Columbia area and has established inbound links that connect directly to Its website from Half.com. Management intends to seek additional capital from new equity securities offerings which will, if successful, provide funds needed to increase liquidity, fund internal growth and fully implement its business plan. However, there is no assurance that the Company will raise the required capital. If the Company is unable to raise the required capital, then it will assess its future business viability. The Company's financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts and classification of liabilities that might be necessary in the event the Company cannot continue in existence. Impared Asset Policy In August 2001, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets" (hereinafter "SEAS No. 144"). SFAS No. 144 replaces SEAS No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of." This standard establishes a single accounting model for long-lived assets to be disposed of by sale, including discontinued operations. SFAS No. 144 requires that these long-lived assets be measured at the lower of carrying amount or fair value less cost to sell, whether reported in continuing operations or discontinued operations. In complying with this standard, the Company reviews its long-lived assets quarterly to determine if any events or changes in circumstances have transpired which indicate that the carrying value of its assets may not be recoverable. The Company determines Impairment by comparing the undiscounted future cash flows estimated to be generated by its assets to their respective carrying amounts.


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The Company does not believe any adjustments are needed to the carrying value of its assets at June 30, 2005 or June 30, 2004. Inventory Inventories, consisting of products available for sale, are recorded using the specific-identification method and valued at the lower of cost or market value. Inventory at June 30, 2006 and June 30, 2005 consists of DVD's and videos for resale at a cost of $104,909 and $445,125, respectively. Loss Per Share In June 1999, the Company adopted Statement of Financial Accounting Standards Statement (SFAS) No. 128, "Earnings Per Share." Basic earnings (loss) per share is computed using the weighted average number of common shares outstanding. Diluted net loss per share is the same as basic net loss per share as there are no common stack equivalents outstanding at the financial reporting dates. Provision for Taxes Income taxes are provided based upon the liability method of accounting pursuant to Statement of Financial Accounting Standards No. 109, ' Accounting for Income Taxes" (hereinafter "SFAS No.109"). Under this approach, deferred income taxes are recorded to reflect the tax consequences in future years of differences between the tax basis of assets and liabilities and their financial reporting amounts at each year-end. A valuation allowance is recorded against deferred tax assets if management does not believe the Company has met the more likely than not" standard imposed by SFAS No. 109 to allow recognition of such an asset. At June 30, 2006 and June 30, 2005, the Company had net deferred tax assets of approximately $1,606,330 and $339,000, respectively, principally arising from net operating loss carryforwards for income tax purposes, which were calculated using a 34% average Canadian tax rate. As management of the Company cannot determine that It is more likely than not that the Company will realize the benefit of the net deferred tax asset, a valuation allowance equal to the net deferred tax asset has been recorded at each reporting date. The change in the deferred tax asset valuation allowance from June 30, 2004 to June 30, 2005 was $85,000. The significant components of the deferred tax asset at June 30, 2005 and June 30, 2004 were approximately as follows: June 30,
        
        
        
        June 30,2006
        
        
        
        2005Net operating loss carryforward
        $
        4,724,500
        
        
        $
        998,000Deferred tax asset
        $
        1,606,330
        
        
        **$**
        339,000Deferred tax asset valuation allowance
        $
        (1,606,330
        )
        
        $
        (339,000
        )


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At June 30, 2006, the Company has net operating loss carryforwards of approximately $1,606,330 that begin to expire in the year 2020. Revenue Recoonirion The Company's policies on revenue and cost recognition are stated in Note 6. Use of Estimates The process of preparing financial statements in conformity with accounting principles generally accepted in the United States of America requires the use of estimates and assumptions regarding certain types of assets, liabilities, revenues, and expenses. Such estimates primarily relate to unsettled transactions and events as of the date of the financial statements. Accordingly, upon settlement, actual results may differ from estimated amounts. Website Develooment Effective January 1, 2000, the Company adopted SOP 98-1 as amplified by EITF00-2, "Accounting for Web Site Development Costs." In accordance with this early adoption, the Company has capitalized $126,155 In website development costs. These capitalized costs were amortized over three years. NOTE 3 - PROPERTY AND EQUIPMENT Equipment is recorded at cost before accumulated depreciation. Depreciation is provided using the straight-line method over the estimated useful lives of the assets. The useful lives of equipment for purposes of computing depreciation is three to fifteen years. Depreciation expense for the years ended June 30, 2006 and 2005 was $5,072 and $8,888, respectively. The Company evaluates the recoverability of property and equipment when events and circumstances indicate that such assets might be impaired. The Company determines impairment by comparing the undiscounted future cash flows estimated to be generated by these assets to their respectivecarrying amounts. Maintenance and repairs are expensed as incurred. Replacements and betterments are capitalized. The cost and related reserves of assets sold or retired are removed from the accounts, and any resulting gain or loss is reflected in results of operations. The following table sets forth the Company's principal categories of property and equipment: **June 30,**
        
        
        
        June 30,**2006**
        
        
        
        2005Office equipment
        $
        31,250
        
        
        $
        31,238Leasehold improvements
        
        43,998
        
        
        
        20,858Less accumulated depreciation
        
        (36,560
        )
        
        
        (29,395
        )Total Property and Equipment
        $
        38,688
        
        
        $
        22,701


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NOTE 4 - INTANGIBLE ASSETS Technology and website are recorded at cost before accumulated amortization. Amortization is provided using the straight-line method over the estimated useful lives of the assets, which is three years. Amortization expense for technology and website for the years ended June 30, 2006 and 2005 was $21,667 and $21,667, respectively. The following is a summary of technology and website: June 30,
        
        
        
        June 30,**2006**
        
        
        
        2005Website
        $
        **191,155**
        
        
        **$**
        190,984Less amortization
        
        (169,489
        )
        
        
        (147,822
        )21,666
        
        
        
        43,162Technology assets
        
        250,000
        
        
        
        250,000Less amortization
        
        (250,000
        )
        
        
        (250,000
        )-
        
        
        
        -**Total website and technology, net of amortization**
        $
        21,666
        
        
        **$**
        43,162
  NOTE 5 - DVD MARKETPLACE ASSETS On December 2, 2005, VMH purchased the assets of DVD Marketplace for $75,000 from Wide Open Technologies Inc. ("Wide Doerr). All consideration was to be paid by the issuance of shares. In order to secure this transaction, VHM was asked to sign a non-interest bearing promissory note for $100,000, which would be offset by the issuance of the shares, and was secured against the assets of DVD Marketplace acquired by the Company. As of March 31, 2006, the following transactions transpired:


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Event
        
        **Amount**DateDecember 2, 2005
        Assets purchased
        $
        100,000December 2, 2005
        Issuance of shares
        
        (18,750
        )January 8, 2006
        Issuance of shares
        
        (63,697
        )January 23, 2006
        Issuance of shares
        
        (17,553
        )June 30, 2006
        Promissory note balance
        $
        -
  NOTE 6 - COMMON STOCK The Company has 200,000,000 shares of no par common stock authorized. In September 1999, the Company sold all its outstanding shares of common stock to First American Scientific Corp. for $250,000 cash. See Note 1. Upon acquisition by First American Scientific Corp. ("FASC), the Company had one share of stock outstanding. Although FASC continued to pay expenses through contributions of capital, no additional shares were issued. On September 20, 2001, the Company's board of directors approved a forward split of 13,243,500 to one. Per-share amounts in the accompanying financial statements have been adjusted for the split. This was subsequently modified as of December 20, 2001 to be 14,222,750 to equal the shares necessary to distribute to FASC shareholders. On June 11, 2001, the Company's board of directors recommended and approved a motion that VW/ VideoMovieHouse.comInc. spin off into its own separate fully reporting company. In August 2002, the Company finalized its registration with the Securities and Exchange Commission to become a separate reporting entity. In September 2002, the Company issued 14,222,750 shares of common stock in accordance with the spin-off agreement. An additional seven shares of common stock were Issued to complete the stock exchange. During the year ended June 30, 2006, the Company issued 1,985,000 shares from private placement proceeds of $52,375 and 44,802,591 shares in consideration for services performed with a fair market value of $3,528,368.


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NOTE 7 - REVENUE AND COST RECOGNITION The Company recognizes revenue for product sales when there is a mutually executed sales contract, when the products are shipped and title passes to customers, when the contract price and terms are fixed, and when collectibility is reasonably assured. All Internet sales are paid via credit card and are considered immediately collectible. Cost of sales consists of the purchase price of products sold, related shipping charges if applicable, purchase returns, and foreign currency transaction gain or loss. The Company has sub-distributor relationships with Half.com. When the Company acts as the subdistributor, it records accounts receivable for funds to be transferred to VMH's bank account. The transfer of funds usually takes four to fourteen days. Economic Dependency During the fiscal years ended June 30, 2006 and 2005, approximately 97% the Company's sales were through Amazon.comandHalf.com. NOTE 8 - RELATED PARTY TRANSACTIONS No related party transactions noted for 2006 or 2005. NOTE 9 - NOTES PAYABLE On June 30, 2003, the Company converted accrued wages and expenses due to a former officer to an unsecured demand note in the amount of $60,449 with a 6% Interest rate and no stated date of maturity. During the period ending December 31, 2003 the note balance increased to $69,238. During the period ending June 30, 2004, 3,000,000 shares of the Company's common stock were issued as consideration for retirement of $60,000 of the aforementioned debt. The remaining balance of the note was cancelled by termination of a letter of credit. On June 25, 2004, the Company issued a $19,500 unsecured demand note with a 12% interest rate and a stated maturity date of December 25, 2004. The note was issued in consideration for consulting services received from a related party. The balance, in addition to interest, was subsequently forgiven and recorded as contributed capital. The Company has an operating line of credit with a Canadian bank for $26,500. The interest rate is prime plus 3.5%. At June 30, 2006, the balance on this line of credit was approximately $22,831.


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NOTE 10 - COMMITMENTS AND CONTINGENCIES Operating Leases The Company has a five-year lease agreement, which began on May 1, 2002, for office and warehouse space. The rent for this space is approximately $1,185 per month. The Company also pays a variable "top up" for its share of taxes and common area costs. Rent expense for the years ended June 30, 2006 and 2005 was $19,282 and $15,471, respectively. Following Is a summary of projected lease payments for the next fiscal year: 2007
        $
        13,000
  NOTE 11 - COMMON STOCK OPTIONS On March 24, 2004, the Company's board of directors approved the VMH VIdeoMoviellouse.com2004 Nonqualified Stock Option Plan. This plan, subject to the authorization of the Company's board of directors, allows the Company to distribute up to 5,000,000 options on common stock shares to officers, directors, employees and consultants at an exercise price of up to $0.25 per share. On October 8, 2004 the board of directors approved an increase In S-8 stock to 15,000,000 options on common stock shares to officers, directors, employees and consultants at an exercise price of up to $0.03 per share. On August 4, 2005, the Company's board of directors approved the VMH 2005 Nonqualified Stock Option Plan. This plan, subject to the authorization of the Company's board of directors, allows the Company to distribute up to 12,000,000 options on common stock shares to officers, directors, employees and consultants at an exercise price of up to $0.15 per share. As of June 30, 2006 there were no options outstanding The following Is a summary of the Company's open stock option plans: Number of securities to be
        
        Number of securities remainingEquity compensation plans not
        issued upon exercise of
        Weighted-average exercise
        available for future issuance underapproved by shareholders
        outstanding options
        price of outstanding options
        equity compensation plans2004 Stock Option Plan
        -
        -
        70,000**Total**
        -
        -
        -
  During the year ended June 30, 2004, the Company granted 3,400,000 common stock options at exercise prices ranging from $0.02 to $0.08 per share in consideration for debt retirement. The options were valued at $90,000. The Company also granted 100,000 common stock options as payment for consulting services valued at $5,000. These options were immediately exercised.


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During the year ended June 30, 2005 the Company granted 190,000 common stock options for services. The options were exercised at the exercise price of 50.04. The following is a summary of the status of fixed options outstanding at June 30, 2006: Weighted AverageNumber of
        
        
        
        ExerciseShares
        
        
        
        PriceOutstanding, July 1, 2005
        -
        
        
        $
        -Granted
        9,510,000
        
        
        
        0.04Exercised
        (9,510,000
        )
        
        
        0.04Outstanding, June 30, 2006
        -
        
        
        $
        -
  NOTE 12 - CONCENTRATIONS The Company's revenues are derived predominantly from Half.comsales via the Internet.


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