----

|   NEVADA                                   |  68-0576847         |
|------------------------------------------------------|--------------------------|
| (State      or other jurisdiction of                 | (I.R.S.      Employer    |
| incorporation      or organization)                  | Identification      No.) |
|                                                 |                     |
| 5700      W. Plano Parkway, Suite 2600, Plano, Texas | 75093                    |
| (Address      of principal executive offices)        | (Zip      Code)          |

|  Large      accelerated filer  |  o |  Accelerated      filer   |  o |  Non-accelerated      filer   |  x |
|------------------------------------------|---------|------------------------------------------|---------|----------------------------------------------|---------|

----

|   | FORM      10-Q                                        |
|--------|-------------------------------------------------------|
|   |                                                  |   |   |   |
|   | CONTENTS                                              |
|   |                                                  |   |   |   |   |
|   | PART      I — FINANCIAL INFORMATION (Unaudited) | PAGE |   |
|   |                                                  |   |   |   |   |
|   | Item      1                                           | — | Financial      Statements |   |   |
|   |                                                  |   | Consolidated Balance Sheets at      March 31, 2008 and September 30, 2007 | 3 |   |
|   |                                                  |   | Consolidated Statements of      Operations for the three and six months ended March 31, 2008 and      2007 | 4 |   |
|   |                                                  |   | Consolidated Statements of Cash      Flows for the three and six months ended March 31, 2008 and March 31,      2008  | 5 |   |
|   |                                                  |   | Selected Notes to Consolidated      Financial Statements | 6 |   |
|   | Item      2                                           | — | Management’s Discussion and      Analysis of Financial Condition and Results of      Operations | 9 |   |
|   | Item      3                                           | — | Quantitative and      Qualitative Disclosures about Market Risk | 10 |   |
|   | Item      4                                           | — | Controls and      Procedures | 10 |   |
|   |                                                  |   |   |   |   |
|   |                                                  |   |   |   |   |
|   | PART      II — OTHER INFORMATION                |   |   |
|   |                                                  |   |   |   |   |
|   | Item      1                                           | — | Legal      Proceedings | 11 |   |
|   | Item      1A                                          | — | Risk      Factors | 11 |   |
|   | Item      2                                           | — | Unregistered Sales of      Equity Securities and Use of Proceeds | 11 |   |
|   | Item      3                                           | — | Defaults upon Senior      Securities | 11 |   |
|   | Item      4                                           | — | Submission of Matters to a      Vote of Security Holders | 11 |   |
|   | Item      5                                           | — | Other      Information | 11 |   |
|   | Item      6                                           | — | List of      Exhibits | 11 |   |
|   | Signature                                             |   | 15 |   |
|   |                                                  | EX-31.1      Section 302 Certification |   |   |
|   |                                                  | EX-31.2      Section 302 Certification |   |   |
|   |                                                  | EX-32.1      Section 906 Certification |   |   |
|   |                                                  | EX-32.2      Section 906 Certification |   |   |

----

| PART      I — FINANCIAL INFORMATION                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| The      consolidated financial statements of Espre Solutions,c Inc. (the      "Company") contained in this Report on Form 10-Q have not been reviewed by      the Company's independent public accountant in accordance with Securities      and Exchange Commission Rules 10-01(d) and 8-03.  The Company will      file an amended Report when the review by its independent public      accountant using professional standards and procedures for conducting such      review has been completed. |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |   |   |   |   |   |
| Item      1 — Financial Statements                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |   |   |   |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |   |   |   |   |   |
| ESPRE SOLUTIONS INC. AND SUBSIDIARY                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| Consolidated      Balance Sheets                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |   |   |   |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   | March      31, |   |   | September      30, |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   | 2008 |   |   | 2007 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   | (unaudited) |   |   |   |   |
| ASSETS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |   |   |   |   |   |
| Current      assets:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |   |   |   |   |   |
| Cash                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   | $ | 1,374,728 |   |   | $ | 3,850,666 |   |
| Accounts      receivable                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |   | 247,348 |   |   |   | 251,050 |   |
| Prepaid      expenses and advances                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |   | 93,065 |   |   |   | 34,564 |   |
| Total      current assets                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |   | 1,715,141 |   |   |   | 4,136,280 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |   |   |   |   |   |   |   |
| Equipment,      net                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |   | 341,992 |   |   |   | 296,758 |   |
| Intangible      assets, net                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |   | 79,037 |   |   |   | 73,191 |   |
| Loans      to related parties                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |   | 69,432 |   |   |   | 69,432 |   |
| Other      assets                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |   | 124,124 |   |   |   | 97,292 |   |
| Total      assets                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   | $ | 2,329,726 |   |   | $ | 4,672,953 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |   |   |   |   |   |   |   |
| LIABILITIES      AND STOCKHOLDERS’ (DEFICIT) EQUITY                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |   |   |   |   |   |   |   |
| Current      liabilities:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |   |   |   |   |   |   |   |
| Notes      payable to related parties                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   | $ | 25,000 |   |   | $ | 1,667,944 |   |
| Accounts      payable and accrued expenses                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |   | 1,229,812 |   |   |   | 1,449,399 |   |
| Total      current liabilities                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |   | 1,254,812 |   |   |   | 3,117,343 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |   |   |   |   |   |   |   |
| Deferred      revenue — related party                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |   | - |   |   |   | 1,000,000 |   |
| Minority      interest                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |   | 1,186,414 |   |   |   | 348,093 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |   |   |   |   |   |   |   |
| Stockholders’      (deficit) equity                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |   |   |   |   |   |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |   |   |   |   |   |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |   |   |   |   |   |   |   |
| Common      shares — $0.001 par value; authorized 500,000,000 shares; and 340,690,490      and      318,522,499 shares issued and outstanding , respectively                                                                                                                                                                                                                                                                                                                                          |   |   | 340,690 |   |   |   | 318,522 |   |
| Additional      paid-in capital                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |   | 78,782,089 |   |   |   | 71,110,086 |   |
| Stock      subscription receivable                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |   | (28,500 | ) |   | $ | (190,000 | ) |
| Retained      (deficit)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |   | (79,205,779 | ) |   | $ | (71,031,091 | ) |
| Total      stockholders’ equity                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   |   | (111,500 | ) |   |   | 207,517 |   |
| Total      liabilities and stockholders’ (deficit) equity                                                                                                                                                                                                                                                                                                                                                                                                                                             |   | $ | 2,329,726 |   |   | $ | 4,672,953 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |   |   |   |   |   |   |   |
| The      accompanying notes are an integral part of these consolidated financial      statements                                                                                                                                                                                                                                                                                                                                                                                                            |   |

----

| ESPRE SOLUTIONS INC. AND SUBSIDIARY                                                              |
|--------------------------------------------------------------------------------------------------|
| Consolidated      Statements of Operations                                                       |
| (Unaudited)                                                                                      |
|                                                                                             |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                             |   | Three      Months Ended |   |   | Six      Months Ended |   |
|                                                                                             |   | March      31, |   |   | March      31, |   |
|                                                                                             |   | 2008 |   |   | 2007 |   |   | 2008 |   |   | 2007 |   |
| Revenue:                                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |
| Software      licensing fees                                                                     |   | $ | - |   |   | $ | - |   |   | $ | 1,000,000 |   |   | $ | 1,990,000 |   |
| Custom      engineering fees                                                                     |   |   | 418,284 |   |   |   | 244,500 |   |   |   | 475,626 |   |   |   | 477,750 |   |
| Other                                                                                            |   |   | 13,380 |   |   |   | 116,534 |   |   |   | 63,130 |   |   |   | 124,160 |   |
| Total      revenue                                                                               |   |   | 431,664 |   |   |   | 361,034 |   |   |   | 1,538,756 |   |   |   | 2,591,910 |   |
|                                                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Expenses:                                                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| General,      administrative and selling expenses                                                |   |   | 2,441,707 |   |   |   | 1,218,772 |   |   |   | 5,211,890 |   |   |   | 2,383,800 |   |
| General,      administrative and selling expenses stock based    compensation                    |   |   | 1,801,577 |   |   |   | 1,726,334 |   |   |   | 3,798,318 |   |   |   | 2,810,408 |   |
| Research      and development                                                                    |   |   | 1.003,810 |   |   |   | 366,900 |   |   |   | 1,590,697 |   |   |   | 451,500 |   |
| Amortization      and depreciation                                                               |   |   | 25,886 |   |   |   | 23,399 |   |   |   | 57,673 |   |   |   | 46,746 |   |
| Total      operating expenses                                                                    |   |   | 5,272,980 |   |   |   | 3,335,405 |   |   |   | 10,658,578 |   |   |   | 5,692,454 |   |
| Loss      from operations                                                                        |   |   | (4,841,316 | ) |   |   | (2,974,371 | ) |   |   | (9,119,822 | ) |   |   | (3,100,544 | ) |
| Interest      income                                                                             |   |   | 36,030  |   |   |   | - |   |   |   | 36,030 |   |   |   | - |   |
| Interest      expense                                                                            |   |   | (1,575 | ) |   |   | (1,836 | ) |   |   | (1,575 | ) |   |   | (9,684 | ) |
| Net      loss before minority interest                                                           |   |   | (4,806,861 | ) |   |   | (2,976,207 | ) |   |   | (9,085,367 | ) |   |   | (3,110,228 | ) |
|                                                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Minority      interest                                                                           |   |   | 529,319 |   |   |   | - |   |   |   | 910,678 |   |   |   | - |   |
| Net      (loss)                                                                                  |   | $ | (4,277,542 | ) |   | $ | (2,973,207 | ) |   | $ | (8,174,689 | ) |   | $ | (3,110,228 | ) |
|                                                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Basic      and diluted net loss per share                                                        |   | $ | (0.01 | ) |   | $ | (0.01 | ) |   | $ | (0.03 | ) |   | $ | (0.01 | ) |
|                                                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Weighted      average shares outstanding, basic and diluted                                      |   |   | 333,383,737 |   |   |   | 220,393,640 |   |   |   | 324,883,439 |   |   |   | 220,393,640 |   |
|                                                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| The      accompanying notes are an integral part of these consolidated financial      statements |   |

----

| ESPRE      SOLUTIONS INC. AND SUBSIDIARY                                                         |
|--------------------------------------------------------------------------------------------------|
| Consolidated      Statements of Cash Flows                                                       |
| Six      Months Ended March 31                                                                   |
| (Unaudited)                                                                                      |
|                                                                                             |  2008 |   | 2007 |   |
| Cash      flows from operating activities:                                                       |   |   |   |   |   |   |
| Net      (loss) for period                                                                       |   | $ | (8,174,689 | ) |   | $ | (3,110,228 | ) |
|                                                                                             |   |   |   |   |   |   |   |   |
| Adjustments      to reconcile net loss to cash used in operatingactivities:                      |   |
|   Stock      and options issued for services                                           |   |   | 732,477 |   |   |   | 200,000 |   |
|   Stock      based compensation                                                        |   |   | 3,798,318 |   |   |   | 2,810,408 |   |
|   Amortization      and depreciation                                                   |   |   | 57,673 |   |   |   | 46,746 |   |
|   Minority      interest                                                               |   |   | (910,678 | ) |   |   | - |   |
| Changes      in assets and liabilities:                                                          |   |   |   |   |   |   |   |   |
|   Deferred      revenue                                                                |   |   | (1,000,000 | ) |   |   | 150,000 |   |
|   Accounts      receivable                                                             |   |   | 3,702 |   |   |   | (1,195,486 | ) |
|   Prepaid      expenses                                                                |   |   | (58,501 | ) |   |   | 27,811 |   |
|   Other      assets                                                                    |   |   | (26,832 | ) |   |   | (7,600 | ) |
|   Accounts      payable and accrued expenses                                           |   |   | (219,587 | ) |   |   | 254,809 |   |
| Total      cash used in operating activities                                                     |   |   | (5,798,117 | ) |   |   | (823,540 | ) |
|                                                                                             |   |   |   |   |   |   |   |   |
| Net      cash used in investing activities:                                                      |   |   |   |   |   |   |   |   |
|   Purchase      of equipment                                                           |   |   | (87,032 | ) |   |   | (19,348 | ) |
|   Purchase      of intangible assets                                                   |   |   | (21,721 | ) |   |   | (127,580 | ) |
|   Loan      to affiliate                                                               |   |   | - |   |   |   | (250,000 | ) |
| Net      cash used in investing activities                                                       |   |   | (108,753 | ) |   |   | (396,928 | ) |
|                                                                                             |   |   |   |   |   |   |   |   |
| Cash      flows provided by financing activities:                                                |   |   |   |   |   |
|   Payments      on notes payable to related parties                                    |   |   | (100,000 | ) |   |   | 102,957 |   |
|   Proceeds      from sale of stock                                                     |   |   | 1,781,932 |   |   |   | 1,140,000 |   |
|   Minority      capital raised                                                         |   |   | 1,749,000 |   |   |   | - |   |
| Net      cash provided by financing activities                                              |   |   | 3,430,932 |   |   |   | 1,242,957 |   |
|                                                                                             |   |   |   |   |   |   |   |   |
| Net      decrease in cash                                                                        |   |   | (2,475,938 | ) |   |   | 22,489 |   |
|                                                                                             |   |   |   |   |   |   |   |   |
| Cash,      beginning of period                                                                   |   |   | 3,850,666 |   |   |   | 291,426 |   |
|                                                                                             |   |   |   |   |   |   |   |   |
| Cash,      end of period                                                                         |   | $  | 1,374,728 |   |   | $ | 313,915 |   |
|                                                                                             |   |   |   |   |   |   |   |   |
| Supplemental      disclosures of cash flow information:                                          |   |   |   |   |   |
|   Cash      paid for interest                                                          |   |   | - |   |   |   | - |   |
| Non-cash      transactions:                                                                      |   |   |   |   |   |   |   |   |
|   Issuance      of common stock to retire debt                                         |   | $  | 1,542,943 |   |   | $  | 619,000 |   |
|                                                                                             |   |   |   |   |   |   |   |   |
| The      accompanying notes are an integral part of these consolidated financial      statements |   |

----

----

----

|        ●             |   | Market      its principal product, ESPRE Live, to customers wishing to build      applications using video and provide custom engineering services to those      customers as requested.                                                                                                                                                   |
|---------------------------------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                            |   |                                                                                                                                                                                                                                                                                                                                       |
|   ●             |   | Engage      in partnerships with firms in key vertical markets. These partners will be      market experts and have well defined application strategies that require      ESPRE Live to develop them.                                                                                                                                      |
|                            |   |                                                                                                                                                                                                                                                                                                                                       |
|          ● |   | Launch      Blideo as an application service provider                                                                                                                                                                                                                                                                                      |
|                            |   |                                                                                                                                                                                                                                                                                                                                       |
|         ●       |   | Obtain      additional debt and equity financing.                                                                                                                                                                                                                                                                                          |
|                            |   |                                                                                                                                                                                                                                                                                                                                       |
|   ●             |   | Establish      independent sales agreements with representatives to sell its products and      services. The Company will actively pursue the engagement of additional      independent sales representatives who can distribute the Company’s      existing video products and services both domestically and      internationally. |

----

|                                                                                                                                                                  |   | March      31, |   |   | September      30, |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------|--------|--------|--------------------|--------|
|                                                                                                                                                                  |   | 2008           |   |   | 2007               |   |
| Contingent      repurchase agreement to Video Software Partners, secured by certain      software products, payable on February 1, 2008, interest imputed at      10% |   | $              | -      |   |               | $      | 1,642,944 |   |
|                                                                                                                                                                  |   |           |   |   |               |   |   |   |
| Note      payable to a related individual, at 10%, due November 25, 2004, extended      year to year, unsecured                                                       |   |           | 25,000 |   |               |   | 25,000 |   |
|                                                                                                                                                                  |   | $              | 25,000 |   |               | $      | 1,667,944 |   |

|                                   |   | March 31,      2008 |      |   | September 30,      2007 |   |
|----------------------------------------|--------|---------------------|-----------|--------|-------------------------|--------|
| Accounts      payable - trade          |   | $                   | 847,475   |   |                    | $      | 543,485 |   |
| Accrued      expenses                  |   |                | 38,845    |   |                    |   | 242,151 |   |
| Due      to investment banker          |   |                | -         |   |                    |   | 139,825 |   |
| Accrued      vacation pay              |   |                | 76,640    |   |                    |   | 76,640 |   |
| Accrued      payroll and payroll taxes |   |                | 266,852   |   |                    |   | 297,296 |   |
| Customer      advances                 |   |                | -         |   |                    |   | 150,000 |   |
|                                   |   | $                   | 1,229,812 |   |                    | $      | 1,449,397 |   |

----

|                                   |   | Outstanding Stock Options |       |   | Exercisable Stock Options            |   |
|----------------------------------------|--------|---------------------------|------------|--------|--------------------------------------|--------|
|                                   |   | Shares                    |       |   | Weighted      Average exercise Price |   |   | Shares |   |   | Weighted      Average exercise Price |   |
|                                   |   |                      |       |   |                                 |   |   |   |   |   |   |   |
| Outstanding      at September 30, 2007 |   |                      | 66,814,634 |   |                                 | $      | 0.10 |   |   |   | 18,986,301 |   |   | $ | 0.12 |   |
| Granted      during period             |   |                      | 7,200,000  |   |                                 | $      | 0.09 |   |   |   | 10,053,975 |   |   | $ | 0.09 |   |
|                                   |   |                      |       |   |                                 |   |   |   |   |   |   |   |   |   |   |   |
| Outstanding      at March 31, 2008     |   |                      | 74,014,634 |   |                                 | $      | 0.10 |   |   |   | 29,040,275 |   |   | $ | 0.11 |   |

|                      |                |   | Outstanding      Stock Options |   |       | Exercisable      Stock Options |   |
|---------------------------|---------------------|--------|--------------------------------|--------|------------|--------------------------------|--------|
| Exercise      Price Range |                |   | Shares                         |   |       | Life                           |   |   | Weighted      Average exercise Price |   |   | Shares |   |   | Life |   |   | Weighted      Average exercise Price |   |
|                      |                |   |                           |   |       |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |
| $                         | 0.010      - $0.085 |   |                           |   | 48,239,634 |                           |   |   | 8.23 |   |   | $ | 0.08 |   |   |   | 12,156,942 |   |   |   | 8.25 |   |   | $ | 0.07 |   |
|                      |                |   |                           |   |       |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| $                         | 0.100      - $0.200 |   |                           |   | 23,855,000 |                           |   |   | 7.74 |   |   | $ | 0.10 |   |   |   | 15,123,333 |   |   |   | 6.60 |   |   | $ | 0.10 |   |
|                      |                |   |                           |   |       |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| $                         | 0.210      - $1.333 |   |                           |   | 1,920,000  |                           |   |   | 6.94 |   |   | $ | 0.48 |   |   |   | 1,760,000 |   |   |   | 6.94 |   |   | $ | 0.50 |   |
|                      |                |   |                           |   |       |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                      |                |   |                           |   | 74,014,634 |                           |   |   |   |   |   |   |   |   |   |   | 29,040,275 |   |   |   |   |   |   |   |   |   |

----

| Outstanding      Warrants           |   |   | Exercisable      Warrants |    |
|-------------------------------------|--------|--------|---------------------------|---------|
|                                |   |   |                      |    | Weighted |   |   |   |   |   | Weighted |   |
|                                |   |   |                      |    | Average |   |   |   |   |   | Average |   |
|                                |   |   |                      |    | Exercise |   |   |   |   |   | Exercise |   |
|                                |   | Shares |                      |    | Price |   |   | Shares |   |   | Price |   |
| Outstanding      at October 1, 2007 |   |   | 44,019,716                |    |   | $ | 0.10 |   |   |   | 44,019,716 |   |   | $ | 0.10 |   |
| Granted      during period          |   |   | -                         |    |   |   | - |   |   |   | - |   |   |   | - |   |
| Exercised      during the period    |   |   |  (892,858            | )  |   |   |  0.10 |   |   |   |  (892,858 | )  |   |   |  0.10 |   |
|                                |   |   |                      |    |   |   |   |   |   |   |   |   |   |   |   |   |
| Outstanding      at March 31, 2008  |   |   | 43,126,858                |    |   | $ | 0.10 |   |   |   | 43,126,858 |   |   | $ | 0.10 |   |

|                                      |   | 2007   |        |   | 2006   |   |
|-------------------------------------------|--------|--------|-------------|--------|--------|--------|
| Net      operating losses                 |   | $      | 19,624,000  |   |   | $      | 19,239,000 |   |
| In-      process research and development |   |   | 1,329,000   |   |   |   | 1,528,000 |   |
| Stock      based compensation             |   |   | 587,000     |   |   |   | 1,386,000 |   |
| Transition      adjustment                |   |   | 217,000     |   |   |   | 217,000 |   |
|                                      |   |   | 21,757,000  |   |   |   | 22,370,000 |   |
| Less      valuation                       |   |   | (21,757,000 | )      |   |   | (22,370,000 | ) |
| Net      deferred tax assets              |   | $      | -           |   |   | $      | - |   |

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|  ●       |   |  Revenues      were $431,664 for the three months ended March 31, 2008 (compared with      $361,034 for the same period last year, or an increase of  20%).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|---------------------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|        ● |   | In      April 2007 we entered into a license agreement an exclusive right to use      our technology license for the entertainment market for an initial amount      of $1,000,000 and a further $450,000 contingent on our delivering certain      design proofs of concept. The license agreement granted the license holder      a put option which could have required us to repurchase the license for      $2,000,000 at any time after January 31, 2008, and before April 31, 2010.      The revenue from this license was deferred and is included on our balance      sheet as deferred revenue at September 30, 2007. In December 2007, we      concluded an agreement with the licensee to waive the put option in return      for a waiver of the balance due under the license of $450,000, and      accordingly we recorded the full license fee of $1,000,000 in the quarter      ended December 31, 2007. |
|                |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|        ● |   | $453,000      for the design of our customers’ applications, including a major US      telecommunications carrier. We expect continued engineering revenues if      and when these customers successfully deploy their product and/or service      offerings.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |

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|        ● |   | Market      our principal product, ESPRE Live, to customers wishing to build      applications using video and provide custom engineering services to those      customers as requested. In August 2007 we expanded our sales and marketing      staff to achieve this objective.                                                                                                                                                                                                                                                                                                       |
|---------------------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|        ● |   | Engage      in partnerships with firms in key vertical markets. These partners will be      market experts and have well-defined application strategies that require      ESPRE Live to build them. Potential customers have been identified and we      are in active negotiations with them. No assurance can be given however      that we will be successful in entering into satisfactory commercial      arrangements with these or other customers.                                                                                                                              |
|                |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|        ● |   | Establish      independent sales agreements with representatives to sell our products and      services. We will actively pursue the engagement of additional independent      sales representatives that can distribute the Company’s existing video      products and services both domestically and internationally. Potential      partners have been identified and we are in active negotiations with them.      No assurance can be given however that we will be successful in entering      into satisfactory commercial arrangements with these or other      partners. |
|                |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|        ● |   | Obtain      additional debt and equityfinancing.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |

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Item 3.  Quantitative and Qualitative Disclosure About MarketRisk

Item 4.  Controls and Procedures

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Item 1.  LegalProceedings

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|                         | Date                    |   |                                       | Date                    |
|------------------------------|-------------------------|--------|--------------------------------------------|-------------------------|
| /s/ Peter      Leighton |  May      14, 2008 |   | /s/      Forres McGraw                     |  May      14, 2008 |
| Peter      Leighton          |                    |   | Forres      McGraw     |                    |
| President                    |                    |   | Chief      Financial Officer               |                    |

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