UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


WASHINGTON,
D.C. 20549





FORM
10-Q





þ    QUARTERLY REPORT PURSUANT TO SECTION
13 OR 15(d) OF THE SECURITIES  EXCHANGE ACT OF
1934





For the
quarterly period ended: June 30, 2010





or





 ̈    TRANSITION REPORT PURSUANT TO SECTION
13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934





For the
transition period from ________________ to ________________





Commission
file number 000-50494







Upstream
Worldwide, Inc.


(Exact
name of registrant as specified in its charter)





Delaware
            
            98-0412432(State
      or other jurisdiction of
              incorporation
      or organization)
            
            (I.R.S.
      Employer
              Identification
      No.)200
      E. Broward Blvd., Suite 1200
              Ft.
      Lauderdale, FL
            
            33301(Address
      of principal executive offices)
            
            (Zip
      Code)





(954)
915-1550


(Registrant’s
telephone number, including area code)


Money4Gold
Holdings, Inc.
 (Former
name, former address and former fiscal year, if changed since last
report)







Indicate
by check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.   Yes   þ
   No    ̈




Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T during the
preceding 12 months (or for such shorter period that the registrant was required
to submit and post such files).  Yes    ̈
   No    ̈




Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer or a smaller reporting company. See
the definitions of “large accelerated filer,” “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act.




Large
accelerated filer o
     Accelerated filer o




Non-accelerated
filer o (Do not
check if a smaller reporting company)   Smaller reporting company
þ




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




Indicate
the number of shares outstanding of each of the issuer's classes of common
stock, as of the latest practicable date.




Class
                
                Outstanding
      as of August 19,
      2010Common
      Stock, $0.0001 par value per share
                
                195,776,816 shares













Upstream
Worldwide, Inc. and Subsidiaries




TABLE
OF CONTENTS





PagePART
      I – FINANCIAL INFORMATIONItem
      1.
              Financial
      Statements.
              3Item
      2.
              Management’s
      Discussion and Analysis of Financial Condition and Results of
      Operations.
              21Item
      3.
              Quantitative
      and Qualitative Disclosures About Market Risk.
              27Item
      4.
              Controls
      and Procedures.
              27PART
      II – OTHER INFORMATIONItem
      1.
              Legal
      Proceedings.
              28Item
      1A.
              Risk
      Factors.
              28Item
      2.
              Unregistered
      Sales of Equity Securities and Use of Proceeds.
              28Item
      3.
              Defaults
      Upon Senior Securities.
              28Item
      4.
              (Removed
      and Reserved)
              28Item
      5.
              Other
      Information.
              28Item
      6.
              Exhibits.
              29SIGNATURES
              31


2





PART
I – FINANCIAL INFORMATION




Item 1.
            Financial
      Statements.




Upstream
Worldwide, Inc. and Subsidiaries


Consolidated Balance
Sheets




June 30,
                                  
                                  
                                  December 31,2010
                                  
                                  
                                  2009(Unaudited)AssetsCurrent
      Assets:Cash
                                  
                                  $
                                  497,168
                                  
                                  
                                  $
                                  297,426Accounts
      receivable - related party
                                  
                                  
                                  286,725
                                  
                                  
                                  
                                  1,083,487Inventory
                                  
                                  
                                  217,383
                                  
                                  
                                  
                                  855,763Prepaid
      asset - related party - current portion
                                  
                                  
                                  187,627
                                  
                                  
                                  
                                  187,627Prepaid
      expenses and other current assets
                                  
                                  
                                  209,045
                                  
                                  
                                  
                                  667,605Total
      Current Assets
                                  
                                  
                                  1,397,948
                                  
                                  
                                  
                                  3,091,908Fixed
      Assets - net
                                  
                                  
                                  234,808
                                  
                                  
                                  
                                  75,908Other
      Assets:Intangible
      assets - net
                                  
                                  
                                  45,770
                                  
                                  
                                  
                                  10,668Intangible
      asset - related party - net
                                  
                                  
                                  170,281
                                  
                                  
                                  
                                  199,455Prepaid
      asset - related party - net of current portion
                                  
                                  
                                  359,619
                                  
                                  
                                  
                                  453,432Other
      assets
                                  
                                  
                                  87,815
                                  
                                  
                                  
                                  113,793Goodwill
                                  
                                  
                                  11,142,273
                                  
                                  
                                  
                                  11,142,273Total
      Other Assets
                                  
                                  
                                  11,805,758
                                  
                                  
                                  
                                  11,919,621Total
      Assets
                                  
                                  $
                                  13,438,514
                                  
                                  
                                  $
                                  15,087,437Liabilities
      and Stockholders' EquityCurrent
      Liabilities:Accounts
      payable
                                  
                                  $
                                  1,117,029
                                  
                                  
                                  $
                                  1,432,428Accounts
      payable - related party
                                  
                                  
                                  50,554
                                  
                                  
                                  
                                  45,984Accrued
      expenses
                                  
                                  
                                  391,021
                                  
                                  
                                  
                                  241,038Deferred
      revenue
                                  
                                  
                                  475,790
                                  
                                  
                                  
                                  1,576,462Total
      Current Liabilities
                                  
                                  
                                  2,034,394
                                  
                                  
                                  
                                  3,295,912Stockholders'
      Equity:Convertible
      Series A preferred stock, ($0.0001 par value, 25,000,000 shares
      authorized, 400,000 and 3,400,000 issued and outstanding,
      respectively)
                                  
                                  
                                  40
                                  
                                  
                                  
                                  340Common
      stock, ($0.0001 par value, 300,000,000 shares authorized, 195,594,998 and
      183,208,004 shares issued and outstanding, respectively)
                                  
                                  
                                  19,560
                                  
                                  
                                  
                                  18,321Additional
      paid in capital
                                  
                                  
                                  21,698,978
                                  
                                  
                                  
                                  19,080,568Accumulated
      deficit
                                  
                                  
                                  (10,070,825
                                  )
                                  
                                  
                                  (7,272,073
                                  )Accumulated
      other comprehensive loss
                                  
                                  
                                  (243,633
                                  )
                                  
                                  
                                  (35,631
                                  )Total
      Stockholders' Equity
                                  
                                  
                                  11,404,120
                                  
                                  
                                  
                                  11,791,525Total
      Liabilities and Stockholders' Equity
                                  
                                  $
                                  13,438,514
                                  
                                  
                                  $
                                  15,087,437




See
accompanying notes to unaudited interim condensed consolidated financial
statements.


3





Upstream
Worldwide, Inc. and Subsidiaries


Consolidated Statements of
Operations


(Unaudited)





Three Months Ended June 30,
                      
                      
                      Six Months Ended June 30,2010
                      
                      
                      2009
                      
                      
                      2010
                      
                      
                      2009Revenue
                      
                      $
                      7,756,322
                      
                      
                      $
                      1,490,560
                      
                      
                      $
                      25,028,455
                      
                      
                      $
                      2,676,002Cost
      of revenue
                      
                      
                      2,707,189
                      
                      
                      
                      581,666
                      
                      
                      
                      8,429,725
                      
                      
                      
                      1,072,886Gross
      Profit
                      
                      
                      5,049,133
                      
                      
                      
                      908,894
                      
                      
                      
                      16,598,730
                      
                      
                      
                      1,603,116Sales
      and marketing expenses
                      
                      
                      3,738,794
                      
                      
                      
                      1,024,384
                      
                      
                      
                      15,075,122
                      
                      
                      
                      1,937,331General
      and administrative expenses
                      
                      
                      1,633,398
                      
                      
                      
                      1,387,694
                      
                      
                      
                      4,315,793
                      
                      
                      
                      2,496,227Loss
      from Operations
                      
                      
                      (323,059
                      )
                      
                      
                      (1,503,184
                      )
                      
                      
                      (2,792,185
                      )
                      
                      
                      (2,830,442
                      )Other
      Income (Expense):Interest
      expense
                      
                      
                      -
                      
                      
                      
                      (43,347
                      )
                      
                      
                      -
                      
                      
                      
                      (70,621
                      )Loss
      on foreign exchange
                      
                      
                      4,229
                      
                      
                      
                      -
                      
                      
                      
                      (6,568
                      )
                      
                      
                      -Impairment
      of intangible assets
                      
                      
                      -
                      
                      
                      
                      (48,500
                      )
                      
                      
                      -
                      
                      
                      
                      (48,500
                      )Change
      in fair value of derivative liability - embedded conversion
      feature
                      
                      
                      -
                      
                      
                      
                      (86,025
                      )
                      
                      
                      -
                      
                      
                      
                      (87,185
                      )Warrant
      expense arising from repricing of investor warrants
                      
                      
                      -
                      
                      
                      
                      (41,837
                      )
                      
                      
                      -
                      
                      
                      
                      (41,837
                      )Total
      Other Income (Expense) - Net
                      
                      
                      4,229
                      
                      
                      
                      (219,709
                      )
                      
                      
                      (6,568
                      )
                      
                      
                      (248,143
                      )Net
      Loss
                      
                      $
                      (318,830
                      )
                      
                      $
                      (1,722,893
                      )
                      
                      $
                      (2,798,753
                      )
                      
                      $
                      (3,078,585
                      )Net
      loss per common share - basic and diluted
                      
                      $
                      (0.00
                      )
                      
                      $
                      (0.01
                      )
                      
                      $
                      (0.01
                      )
                      
                      $
                      (0.03
                      )Weighted
      average number of common shares outstanding during the period - basic and
      diluted
                      
                      
                      193,355,604
                      
                      
                      
                      127,712,613
                      
                      
                      
                      189,450,831
                      
                      
                      
                      104,711,174Comprehensive
      Loss:Net
      loss
                      
                      $
                      (318,830
                      )
                      
                      $
                      (1,722,893
                      )
                      
                      $
                      (2,798,753
                      )
                      
                      $
                      (3,078,585
                      )Foreign
      currency translation adjustment
                      
                      
                      (64,083
                      )
                      
                      
                      (3,570
                      )
                      
                      
                      (208,002
                      )
                      
                      
                      (3,236
                      )Comprehensive
      Loss
                      
                      $
                      (382,913
                      )
                      
                      $
                      (1,726,463
                      )
                      
                      $
                      (3,006,755
                      )
                      
                      $
                      (3,081,821
                      )





See
accompanying notes to unaudited interim condensed consolidated financial
statements.


4





Upstream
Worldwide, Inc. and Subsidiaries


Consolidated Statements of
Cash Flows


(Unaudited)




Six
      Months Ended June 30,2010
                            
                            
                            2009CASH
      FLOWS FROM OPERATING ACTIVITIES:Net
      loss
                            
                            $
                            (2,798,753
                            )
                            
                            $
                            (3,078,585
                            )Adjustments
      to reconcile net loss to net cash used in operating
      activities:Impairment
      of intangible assets
                            
                            
                            -
                            
                            
                            
                            48,500Loss
      (Gain) on debt settlement
                            
                            
                            8,405
                            
                            
                            
                            (12,426
                            )Warrant
      expense arising from repricing of investor warrants
                            
                            
                            -
                            
                            
                            
                            41,837Derivative
      expense
                            
                            
                            -
                            
                            
                            
                            87,086Stock
      based compensation expense
                            
                            
                            1,183,335
                            
                            
                            
                            338,221Amortization
      of debt discount
                            
                            
                            -
                            
                            
                            
                            36,585Amortization
      of debt issuance costs
                            
                            
                            -
                            
                            
                            
                            9,449Amortization
      of prepaid asset - related party
                            
                            
                            93,813
                            
                            
                            
                            93,813Depreciation
      and amortization
                            
                            
                            69,334
                            
                            
                            
                            36,719Changes
      in operating assets and liabilities:Decrease
      (increase) in:Accounts
      receivable - related party
                            
                            
                            779,125
                            
                            
                            
                            21,287Inventory
                            
                            
                            625,368
                            
                            
                            
                            (120,768
                            )Prepaid
      and other current assets
                            
                            
                            437,112
                            
                            
                            
                            (11,472
                            )Other
      assets
                            
                            
                            -
                            
                            
                            
                            (3,993
                            )Increase
      (decrease) in:Accounts
      payable
                            
                            
                            356,419
                            
                            
                            
                            386,239Accounts
      payable - related party
                            
                            
                            (343,189
                            )
                            
                            
                            (275,563
                            )Accrued
      expenses
                            
                            
                            123,957
                            
                            
                            
                            81,789Deferred
      Revenues
                            
                            
                            (1,075,678
                            )
                            
                            
                            136,000Net
      Cash Used In Operating Activities
                            
                            
                            (540,753
                            )
                            
                            
                            (2,185,282
                            )CASH
      FLOWS FROM INVESTING ACTIVITIES:Cash
      paid to purchase fixed assets
                            
                            
                            (189,556
                            )
                            
                            
                            (8,964
                            )Net
      cash acquired in acquisition
                            
                            
                            -
                            
                            
                            
                            15,360Cash
      paid to acquire intangible assets
                            
                            
                            -
                            
                            
                            
                            (4,207
                            )Net
      Cash Provided by (Used In) Investing Activities
                            
                            
                            (189,556
                            )
                            
                            
                            2,189





See
accompanying notes to unaudited interim condensed consolidated financial
statements.


5




Upstream
Worldwide, Inc. and Subsidiaries


Consolidated Statements of
Cash Flows (Continued)


(Unaudited)





Six Months Ended June 30,2010
                                
                                
                                2009CASH
      FLOWS FROM FINANCING ACTIVITIES:Bank
      overdrafts
                                
                                
                                -
                                
                                
                                
                                131,956Proceeds
      from sale of common stock
                                
                                
                                1,151,667
                                
                                
                                
                                -Cash
      paid for direct offering costs
                                
                                
                                (41,843
                                )
                                
                                
                                (27,591
                                )Proceeds
      from media line of credit
                                
                                
                                -
                                
                                
                                
                                300,000Proceeds
      from revolving line of credit
                                
                                
                                -
                                
                                
                                
                                263,016Repayment
      of line of credit
                                
                                
                                -
                                
                                
                                
                                (257,826
                                )Proceeds
      from convertible note payable
                                
                                
                                -
                                
                                
                                
                                250,000Repayment
      of other notes payable
                                
                                
                                -
                                
                                
                                
                                (50,000
                                )Proceeds
      from issuance of Series B Preferred Stock
                                
                                
                                -
                                
                                
                                
                                250,000Proceeds
      from issuance of common stock and warrants in private
      placement
                                
                                
                                -
                                
                                
                                
                                610,000Cash
      paid for direct offering costs pertaining to private
    placement
                                
                                
                                -
                                
                                
                                
                                (26,449
                                )Net
      Cash Provided By Financing Activities
                                
                                
                                1,109,824
                                
                                
                                
                                1,443,106Net
      Increase (Decrease) in Cash
                                
                                
                                379,515
                                
                                
                                
                                (739,987
                                )Effect
      of Exchange Rates on Cash
                                
                                
                                (179,773
                                )
                                
                                
                                (15,056
                                )Cash
      - Beginning of Period
                                
                                
                                297,426
                                
                                
                                
                                778,436Cash
      - End of Period
                                
                                $
                                497,168
                                
                                
                                $
                                23,393SUPPLEMENTARY CASH FLOW
      INFORMATION:Cash
      Paid During the Period for:Interest
                                
                                $
                                -
                                
                                
                                $
                                -Taxes
                                
                                $
                                -
                                
                                
                                $
                                2,402SUPPLEMENTARY DISCLOSURE OF NON-CASH INVESTING AND
      FINANCING ACTIVITIES:Accrual
      of covenant not to compete
                                
                                $
                                50,000
                                
                                
                                $
                                -Conversion
      of preferred stock into common stock
                                
                                $
                                300
                                
                                
                                $
                                220Shares
      issued in connection with A/P settlements
                                
                                $
                                311,643
                                
                                
                                $
                                -Shares
      issued in connection with repricing
                                
                                $
                                -
                                
                                
                                $
                                225Derivative
      liability arising from convertible note payable debt
    discount
                                
                                $
                                -
                                
                                
                                $
                                69,529Settlement
      of accounts payable with common stock
                                
                                $
                                -
                                
                                
                                $
                                13,600Accrual
      of dividends on Series B Preferred Stock
                                
                                $
                                -
                                
                                
                                $
                                2,925





See
accompanying notes to unaudited interim condensed consolidated financial
statements.


6


Upstream
Worldwide, Inc. and Subsidiaries
 Notes
to Unaudited Interim Condensed Consolidated Financial Statements
 June
30, 2010


Note 1 – Organization and
Business





Upstream
Worldwide, Inc. (formerly, Money4Gold Holdings, Inc.) is based in Florida and,
through our wholly-owned subsidiaries (collectively, “Upstream,” “Company,”
“we,” “us,” and/or “our”), operates in the United States, Canada, and several
countries in Europe. Through direct response advertising and marketing
campaigns, we purchase, aggregate and resell precious metals, including gold,
silver and platinum, and diamonds and other precious stones from the
public.




Note 2 – Basis of
Presentation




The
accompanying unaudited interim condensed consolidated financial statements have
been prepared in accordance with accounting principles generally accepted in the
United States of America (“GAAP”) for interim financial information and pursuant
to the instructions to Form 10-Q and Article 8 of Regulation S-X of
the United States Securities and Exchange Commission (“SEC”). Certain
information or footnote disclosures normally included in financial statements
prepared in accordance with accounting principles generally accepted in the
United States of America have been condensed or omitted, pursuant to the rules
and regulations of the SEC for interim financial reporting. 
Accordingly, they do not include all the information and footnotes necessary for
a comprehensive presentation of financial position, results of operations, or
cash flows. It is our opinion, however, that the accompanying unaudited interim
condensed consolidated financial statements include all adjustments, consisting
of a normal recurring nature, which are necessary for a fair presentation of the
financial position, operating results and cash flows for the periods
presented.




The
accompanying unaudited interim condensed consolidated financial statements
should be read in conjunction with our Annual Report on Form 10-K for the
year ended December 31, 2009 as filed with the SEC, which contains the
audited financial statements and notes thereto, together with Management’s
Discussion and Analysis, for the year ended December 31, 2009 and the
period from February 14, 2008 (inception) to December 31, 2008. The financial
information as of December 31, 2009 is derived from the audited financial
statements presented in the Company’s Annual Report on Form 10-K for the year
ended December 31, 2009.  The interim results for the three or six month
periods ended June 30, 2010 are not necessarily indicative of the results to be
expected for the year ending December 31, 2010 or for any future interim
period.




Note 3–Liquidity and
Management’s Plans




We
incurred a net loss of $318,830 and $2,798,753 for the three and six months
ended June 30, 2010, respectively (including $1,354,887 of non-cash charges
during the six months ended June 30, 2010).  As of June 30, 2010, we had an
accumulated deficit of $10,070,825 and working capital deficit of
$636,447.




As
discussed in Note 13, on August 5, 2010, our Board of Directors approved the
borrowing of up to $500,000 through the issuance of one-year secured notes
paying 25% interest per annum to a relative of our Chief Financial Officer and
another shareholder and authorized us to sell up to $4,000,000 of Units in a
private placement.  On July 21, 2010, we received an initial advance of
$70,000 under the secured notes. We sold 2,943,750 shares of Series B
Preferred Stock and 73,593,750warrants to purchase
our common stock for gross proceeds of $2,943,750,
of which $2,007,500 has been received as of  the filing day of this
report.





We
do not yet have a sustained history of financial
stability. Historically our principal source of liquidity has been the
issuances of debt and equity securities, including preferred stock, common stock
and various debt financing transactions. Our consolidated revenue for the
third and fourth quarter of 2009 of $6.8 million and $19.6 million,
respectively, increased dramatically over the respective prior quarters and the
fourth quarter of 2009 was profitable.  Our revenue during the first
quarter of 2010 however, declined to $17.3 million and declined again to $7.8
million during the second quarter of 2010.  We believe that the higher
level of revenue attained during the third and fourth quarters of 2009 and the
first quarter of 2010 is a result of the successful implementation of the first
stages of our business plan however, because of our limited size in the fourth
quarter of 2008 and our rapid growth during 2009, we do not have sufficient
comparable history to determine the level of seasonality of our business. 
We believe that the first half 2010 revenue was lower than second half 2009, in
part as a result of the holiday season in December 2009, during which time our
advertising and marketing campaigns appear to be less effective.  In
addition, we believe that increased competition and negative representation of
our industry by multiple media agencies in several of the markets in which we
operate resulted in pressure on our performance.  We believe that if we can
improve our returns on our media investments and control our costs accordingly,
continued implementation of our business plans, including expansion into
recycling of small electronics such as cellular phones, will generate steadily
improving results and cash flows in the future.





Management
believes that our cash balance on August 18,2010 of
approximately $2.0 million, current level of working capital, and anticipated
cash that will be received from revenue generated from advertisements that have
already aired will be sufficient to sustain operations through at least June 30,
2011. However, there can be no assurance that the plans and actions proposed by
management will be successful, that we will continue to generate revenue from
advertisements that have already aired, or that unforeseen circumstances will
not require us to seek additional funding sources in the future or effectuate
plans to conserve liquidity. In addition, there can be no assurance that our
efforts to raise additional funds through the issuance of debt and/or
equity securities will be successful or that in the event additional
sources of funds are needed to continue operations, that they will be available
on acceptable terms, if at all.


7


Upstream
Worldwide, Inc. and Subsidiaries
 Notes
to Unaudited Interim Condensed Consolidated Financial Statements
 June
30, 2010


Note 4–Significant Accounting
Policies




Principles
of Consolidation





The
accompanying unaudited interim condensed consolidated financial statements
include the accounts of Upstream and its wholly-owned subsidiaries. All
significant intercompany balances and transactions have been eliminated in
consolidation.




Use
of Estimates




The
preparation of unaudited interim condensed consolidated financial statements in
conformity with GAAP requires management to make estimates and
assumptions that affect the amounts reported in the unaudited interim condensed
consolidated financial statements and accompanying notes. Such estimates and
assumptions impact, among others, the following: the amount allocated to
goodwill and other intangible assets, the estimated useful lives for amortizable
intangible assets and property, plant and equipment, accrued expenses, deferred
revenue, the fair value of warrants granted in connection with various
financing transactions, share-based payment arrangements, and the fair value of
derivative liabilities.




Making
estimates requires management to exercise significant judgment. It is at least
reasonably possible that the estimate of the effect of a condition, situation or
set of circumstances that existed at the date of the unaudited interim condensed
consolidated financial statements, which management considered in formulating
its estimate could change in the near term due to one or more future confirming
events. Accordingly, the actual results could differ significantly from our
estimates.




Reclassification




We have
reclassified certain prior period amounts to conform to the current period
presentation. These reclassifications have no effect on the financial position
at December 31, 2009 or on the results of operations for the periods
presented.




Cash
and Cash Equivalents
 
 All
highly liquid investments with an original maturity of 90 days or less when
purchased are considered to be cash equivalents. At June 30, 2010 and December
31, 2009, there were no cash equivalents.




We
minimize credit risk associated with cash and cash equivalents by periodically
evaluating the credit quality of our primary financial institutions. At times,
our cash and cash equivalents may be uninsured or in deposit accounts that
exceed the Federal Deposit Insurance Corporation insurance limit. We had no
uninsured balances at June 30, 2010 or December 31, 2009.




Revenue
Recognition




We
generate revenue predominantly from the sale of precious metals, including gold,
silver and platinum, and from the sale of diamonds and other precious
stones. Revenue is recognized when all of the following conditions exist:
(1) persuasive evidence of an arrangement exists, (2) delivery has occurred, (3)
the sales price is fixed or determinable, and (4) collectability is reasonably
assured.




Precious
Metals




We grade
the quality of the precious metals purchased from the public and estimate the
total quantity of pure gold, silver and platinum received. We then
lock in the current spot rate of each metal sufficient to cover the total
quantity received in the current batch with the Refinery. After a
holding period of at least 10 days to allow for returns, the precious metals are
delivered to the Refinery to be melted. Upon melting the precious metals,
the Refinery validates the quality of pure gold, silver, and platinum
and remits payment to us based on the quantity of each precious metal
at the agreed upon spot rates, as described above. Revenue is recognized
upon melting of the precious metals and the validation of the quality and
quantity of each precious metal by the Refinery.





No returns are accepted from the Refinery and upon delivery of
the precious metals to the refiner, we have no further
obligations.




Diamonds
and Other Precious Stones




Diamonds
and other precious stones are generally purchased from the public in connection
with the purchase of precious metals. We value diamonds and other precious
stones based on a variety of factors including size and quality and then resell
them. To date, all diamonds and other precious stones have been sold to an
affiliate of an officer of one of our wholly-owned subsidiaries. Revenue is
recognized upon the acceptance of the diamonds and other precious stones by the
purchaser.


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Deferred
Revenue




Upon our
estimate of the total quantity of pure gold, silver, and platinum received and
the locking in of the current spot rate for each precious metal, we are able to
estimate the total value of the batch received. The Refinery advances to us, up
to 80% of the value of the precious metals we have received, but not yet
delivered. This amount is recorded as deferred revenue until the specific
batch is melted and processed as described above, at which time, it is recorded
as revenue.




Cost
of Revenue




Our cost
of revenue includes our cost of acquiring precious metals and stones as well as
any other direct costs and expenses required to ship, secure, grade, log and
process the metals and stones internally. In addition, fees and other costs
incurred in connection with processing at the Refinery are charged to cost of
revenue.




Advertising




Advertising
costs are expensed as they are incurred and are included in sales and
marketing expenses on our unaudited interim condensed consolidated
statements of operations. Advertising expense amounted to $11,410,328 and
$1,833,789 for the six months ended June 30, 2010 and 2009,
respectively.




Foreign
Currency Transactions




The
unaudited interim condensed consolidated financial statements are presented in
United States Dollars. The financial position and results of operations of our
foreign subsidiaries are measured using the local currency as the functional
currency. Assets and liabilities of our foreign subsidiaries have been
translated from their local currency (British pounds, Canadian dollars and
Euros) into the reporting currency, U.S. dollars, using period end exchange
rates. Equity transactions have been translated using the historical
exchange rate that was in effect when the transaction occurred. The resulting
translation adjustments are recorded as a separate component of accumulated
other comprehensive loss. Revenues and expenses have been translated using
weighted average exchange rates for the respective periods. Transaction gains
and losses resulting from foreign currency transactions are recorded as foreign
exchange gains or losses and are included in general and administrative
expense in the consolidated statement of operations. We have not entered
into any financial instruments to offset the impact of foreign currency
fluctuations.





Share-Based
Payment Arrangements




Generally,
all forms of share-based payments, including stock option grants, restricted
stock grants and stock appreciation rights are measured at their fair value on
the awards’ grant date, based on the estimated number of awards that are
ultimately expected to vest. Share-based compensation awards issued to
non-employees for services rendered are recorded at either the fair value of the
services rendered or the fair value of the share-based payment,
whichever is more readily determinable. The expense resulting from share-based
payments are recorded in cost of goods sold or general and administrative
expense in the consolidated statement of operations, depending on the nature of
the services provided. We have applied fair value accounting and the
related provisions of ASC 718 for all share based payment awards. The
fair value of share-based payments is recognized ratably over the stated vesting
period. In the event of termination, we will cease to recognize
compensation expense.





Net Loss per Share




Basic
earnings per share (“EPS”) is computed by dividing net loss available to common
stockholders by the weighted average number of common shares outstanding during
the period, excluding the effects of any potentially dilutive securities.
Diluted EPS gives effect to all dilutive potential of shares of common stock
outstanding during the period including stock options or warrants, using the
treasury stock method (by using the average stock price for the period to
determine the number of shares assumed to be purchased from the exercise of
stock options or warrants), and convertible debt or convertible preferred stock,
using the if-converted method. Diluted EPS excludes all dilutive potential of
shares of common stock if their effect is anti-dilutive.




The
computation of basic and diluted loss per share for the three and six months
ended June 30, 2010 and 2009 excludes the following potentially dilutive
securities because their inclusion would be anti-dilutive:





June 30, 2010
                                                          
                                                          
                                                          December 31, 2009Convertible
      Preferred Stock
                                                          
                                                          
                                                          400,000
                                                          
                                                          
                                                          
                                                          3,400,000Common
      Stock Purchase Warrants
                                                          
                                                          
                                                          18,675,003
                                                          
                                                          
                                                          
                                                          21,800,003Stock
      Options
                                                          
                                                          
                                                          16,305,659
                                                          
                                                          
                                                          
                                                          13,215,83435,380,662
                                                          
                                                          
                                                          
                                                          38,415,837


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Comprehensive
Loss




Other
comprehensive loss includes all changes in stockholders’ equity during a period
from non-owner sources and is reported in the consolidated statement of
stockholders’ equity. To date, other comprehensive loss consists of changes in
accumulated foreign currency translation adjustments.





Recent Accounting Pronouncements





In
January 2010, the FASB issued updated guidance to amend the disclosure
requirements related to recurring and nonrecurring fair value measurements. This
update requires new disclosures on significant transfers of assets and
liabilities between Level 1 and Level 2 of the fair value hierarchy
(including the reasons for these transfers) and the reasons for any transfers in
or out of Level 3. This update also requires a reconciliation of recurring
Level 3 measurements about purchases, sales, issuances and settlements on a
gross basis. In addition to these new disclosure requirements, this update
clarifies certain existing disclosure requirements. For example, this update
clarifies that reporting entities are required to provide fair value measurement
disclosures for each class of assets and liabilities rather than each major
category of assets and liabilities. This update also clarifies the requirement
for entities to disclose information about both the valuation techniques
and inputs used in estimating Level 2 and Level 3 fair value
measurements. This update is effective for the interim and annual reporting
periods beginning January 1, 2010, except for the requirement to provide
the Level 3 activity of purchases, sales, issuances, and settlements on a
gross basis, which will become effective for the interim and annual reporting
period beginning January 1, 2011. We will not be required to provide the
amended disclosures for any previous periods presented for comparative purposes.
Other than requiring additional disclosures, adoption of this update will not
have a material effect on our unaudited interim condensed consolidated financial
statements.





Note 5–Fair
Value





The fair
value of our financial assets and liabilities reflects our estimate of amounts
that we would have received in connection with the sale of the assets or paid in
connection with the transfer of the liabilities in an orderly transaction
between market participants at the measurement date. In connection with
measuring the fair value of our assets and liabilities, we seek to maximize the
use of observable inputs (market data obtained from independent sources) and to
minimize the use of unobservable inputs (internal assumptions about how market
participants would price assets and liabilities). The following fair value
hierarchy is used to classify assets and liabilities based on the observable
inputs and unobservable inputs used in order to value the assets and
liabilities:




Level 1:
              Quoted prices in active markets
      foridentical assets
      or liabilities. An active market for an asset or liability is a market in
      which transactions for the asset or liability occur with sufficient
      frequency and volume to provide pricing information on an ongoing
      basis.
 
 Level 2:
              Observable inputs other than Level 1
      inputs. Examples of Level 2 inputs include quoted prices in active
      markets for similar assets or liabilities and quoted prices for identical
      assets or liabilities in markets that are not
    active.
 
 Level 3:
              Unobservable inputs basedon our assessment of
      the assumptions that market participants would use in pricing the asset or
      liability.





Our
investment strategy is focused on capital preservation. We intend to invest in
instruments that meet credit quality standards.  The current expectation is
to maintain cash and cash equivalents, once these resources are
available.




The
following are the major categories of assets measured at fair value on a
nonrecurring basis at June 30, 2010, using quoted prices in active markets for
identical assets (Level 1); significant other observable inputs
(Level 2); and significant unobservable inputs (Level 3):




Level 1:
                                            Quoted Prices
                                            in Active
                                            Markets for
                                            Identical
                                            Assets
                                          
                                          
                                          Level 2:
                                            Quoted Prices
                                            in Inactive
                                            Markets for
                                            Identical
                                            Assets
                                          
                                          
                                          Level 3:
                                            Significant
                                            Unobservable
                                            Inputs
                                          
                                          
                                          Total at
                                            June 30, 2010Goodwill
                                          
                                          $
                                          -0-
                                          
                                          
                                          $
                                          11,142,273
                                          
                                          
                                          $
                                          -0-
                                          
                                          
                                          $
                                          11,142,273Total
                                          
                                          $
                                          -0-
                                          
                                          
                                          $
                                          11,142,273
                                          
                                          
                                          $
                                          -0-
                                          
                                          
                                          $
                                          11,142,273


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We have
determined the estimated fair value amounts presented in these unaudited interim
condensed Consolidated Financial Statements using available market information
and appropriate methodologies. However, considerable judgment is required in
interpreting market data to develop the estimates of fair value. The estimates
presented in the unaudited interim condensed Consolidated Financial Statements
are not necessarily indicative of the amounts that we could realize in a current
market exchange. The use of different market assumptions and/or estimation
methodologies may have a material effect on the estimated fair value amounts. We
have based these fair value estimates on pertinent information available as of
the respective balance sheet dates and have determined that, as of such dates,
the carrying value of all financial instruments approximates fair
value.




Note 6 –
Acquisitions




On
May 7, 2009, we acquired 100% of MGE Enterprises Corporation, a
Wyoming corporation (“MGE”). MGE operated in the United States under the
names mygoldenvelope.com and sobredeoro.com using a business model similar to
ours. In addition, their management has provided us with extensive experience in
creating and growing businesses that provide shareholder value in a broad array
of industries, including direct response, Internet marketing and national retail
distribution and sales. MGE’s ability to reach a broader number of
consumers through their experience in multi-language television advertising,
direct response, and retail distribution and sales greatly accelerated our
growth and increased our depth of management experience.




We used
the acquisition method of accounting in connection with the acquisition of MGE
and accordingly, our unaudited interim condensed consolidated financial
statements include the results of operations of MGE for the three and six months
ended June 30, 2010 and for the period from May 7, 2009 to June 30,
2009.




The
following unaudited condensed consolidated pro forma information gives effect to
the acquisition of MGE as if the transaction had occurred on January 1,
2009. The following pro-forma information is presented for illustration purposes
only and is not necessarily indicative of the results that would have been
attained had the acquisition been completed on January 1, 2009, nor are
they indicative of results that may occur in any future periods:





Three
                    
                    
                    SixMonths Ended
                    
                    
                    Months EndedJune 30, 2009
                    
                    
                    June 30, 2009Revenues
                    
                    $
                    2,371,318
                    
                    
                    $
                    5,615,666Net
      Loss
                    
                    
                    (1,568,901
                    )
                    
                    
                    (3,456,961
                    )Basic
      and Diluted Loss from Continuing Operations per Common
    Share
                    
                    $
                    (0.01
                    )
                    
                    $
                    (0.02
                    )Basic
      and Diluted Weighted Average Shares
Outstanding
                    
                    
                    159,643,081
                    
                    
                    
                    156,419,346





Note 7 –Fixed
Assets





Fixed
assets consist of the following at June 30, 2010 and December 31,
2009:





June 30, 2010
                      
                      
                      December 31,
                        2009
                      
                      Estimated
                        Useful   LifeLeasehold
      Improvements
                      
                      $
                      149,524
                      
                      
                      $
                      39,694
                      
                      *Security
      Equipment
                      
                      
                      78,012
                      
                      
                      
                      26,005
                      
                      7yearsComputers
                      
                      
                      18,227
                      
                      
                      
                      6,024
                      
                      3yearsFurniture
      and Fixtures
                      
                      
                      11,215
                      
                      
                      
                      2,397
                      
                      7yearsOffice
      Equipment
                      
                      
                      3,386
                      
                      
                      
                      3,386
                      
                      3years260,364
                      
                      
                      
                      77,506Less:
      Accumulated Depreciation
                      
                      
                      (25,556)
                      
                      
                      
                      (1,598
                      )Fixed
      Assets, Net
                      
                      $
                      234,808
                      
                      
                      $
                      75,908




* The
shorter of three years or the life of the lease.


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Depreciation
expense pertaining to fixed assets amounted to $14,927 and $0 for the three
months ended June 30, 2010 and 2009, respectively, and to $24,438 and $0 for the
six months ended June 30, 2010 and 2009, respectively.





Note 8 –Debt and Other
Financing




Convertible
Note Payable




On March
4, 2009, we issued a $250,000 Convertible Note Payable (the “Convertible Note”)
to Whalehaven Capital Fund Limited (“Whalehaven”). The Convertible Note had a
three month term, bore interest at an annual rate of 15% compounded monthly
beginning on the date of issuance, and was secured by all of our assets. The due
date for all principal and accrued interest of June 1, 2009 was subsequently
extended to June 1, 2010.  The Convertible Note was paid in full,
along with all accrued interest, on October 5, 2009. We used the $237,500 net
proceeds received from this Convertible Note to provide working capital. We
recorded interest expense of $6,948 and $9,642 for the three and six months
ended June 30, 2009, respectively, pertaining to the Convertible
Note.
 
 In
connection with the issuance of the Convertible Note, we paid costs of $27,591
which were capitalized as debt issuance costs. During the three and six months
ended June 30, 2009, we amortized $5,698 and $9,449, respectively, of the debt
issue costs to interest expense.
 
 The
relative fair value of the conversion feature, which amounted to $69,429, was
recorded as a discount to the Convertible Note and a corresponding derivative
liability – embedded conversion feature. During the three and six months ended
June 30, 2009, we amortized $15,656 and $36,485. respectively, of the discount
to interest expense.
 
 The fair
value of the derivative liability – embedded conversion feature was recalculated
at each subsequent quarterly balance sheet date and on the date that the
maturity date was extended.  We recorded expense of $86,025 and
$87,185 for the three and six months ended June 30, 2009, respectively,
representing the net increase in the fair value of the derivative liability –
embedded conversion feature.


Media
Line of Credit




We
obtained a line of credit of up to $300,000 in May 2009 to be used to
finance our media and advertising campaigns, as most of our vendors require
payment in advance. In July 2009, the total amount available under the line
of credit was increased to $500,000. This facility was due on demand, accrued
interest based on a percentage of revenue generated from the media
purchased with this money capped at 1.5% of the principal amount outstanding per
week and was secured by our accounts receivable and inventory. On
September 30, 2009, we converted the $500,000 outstanding principal balance
into 5,834,306 shares of our common stock resulting in a loss from conversion of
$550,175 based upon the fair value of the stock on the date of conversion of
$1,050,175. For the three and six months ended June 30, 2009, we recorded
interest expense of $12,643 pertaining
to this line of credit.


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Notes
Payable - Other




In
connection with the acquisition of MGE, we assumed certain notes payable
totaling $194,785 at the time of the acquisition. The notes bore interest at 12%
per annum and were due on December 31, 2009. On October 19, 2009, we
paid $153,322, which represented the entire remaining principal balance and all
accrued interest pertaining to these notes on that date. For the three and six
months ended June 30, 2009, we recorded interest expense of $2,402 pertaining to
these notes.





Note 9 – Commitments and
Contingencies




We lease
space for our corporate headquarters and for our aggregation facilities located
around the world under operating lease agreements that expire at various dates
through October 2014.  Aggregate rent expense for all operating leases
was $86,939 and $38,257 for the three months ended June 30, 2010 and 2009,
respectively, and $207,936 and $74,888 for the six months ended June 30, 2010
and 2009, respectively.





Economic
Risks and Uncertainties




The
recent global economic slowdown has caused a general tightening in the credit
markets, lower levels of liquidity, increases in the rates of default and
bankruptcy, and extreme volatility in credit, equity and fixed income markets.
These conditions not only limit our access to capital, but also make it
difficult for our customers, our vendors and us to accurately forecast and plan
future business activities. Furthermore, our operations are subject to
fluctuating prices of precious metals. A decrease in the value of gold, silver
or platinum could have an adverse effect on our business.




Foreign
Operations




Our
operations in various geographic regions expose us to risks inherent in doing
business in each of the countries in which we transact business. Operations in
countries other than the United States are subject to various risks particular
to each country. With respect to any particular country, these risks may
include, but are not limited to:




·
            Currency fluctuations,
      devaluations, conversion and expropriation
      restrictions;


·
            Confiscatory taxation or other
      adverse tax policies;


·
            Political and economic
      instability;


·
            Inflation;


·
            Trade restrictions and economic
      embargoes imposed by the United States and other
      countries;


·
            Expropriation and nationalization
      of our assets or of our customers in that
  country;


·
            Governmental activities that
      limit or disrupt markets, payments, or limit the movement of
      funds;


·
            Governmental activities that may
      result in the deprivation of contract
  rights;


·
            Civil unrest, acts of terrorism,
      force majeure, war or other armed conflict;
  and


·
            Natural disasters including those
      related to earthquakes, hurricanes, tsunamis and
      flooding.





Employment
Agreements




We have
entered into employment agreements with several of our current executives for
initial terms of up to three years, which can or will be renewed for additional
one year terms thereafter, unless written notice is provided by the respective
parties. The agreements provide, among other things, for the payment of
aggregate annual base salaries of approximately $825,000, as well as such
incentive compensation and discretionary bonuses as the Board of Directors may
determine. In addition, the employment agreements provide for up to eighteen
months of severance compensation for terminations under certain circumstances.
Aggregate potential severance compensation amounted to approximately $1,237,500
at June 30, 2010.  During the second quarter of 2010, the executives
covered by these employment agreements have accepted deferrals of their
salaries.  At June 30, 2010 the total amount deferred that pertains to
the executives covered by employment agreements was approximately
$75,000.  The timing of the repayment of the deferrals has not yet been
determined.


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 June
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Former
Chief Operating Officer – Todd Oretsky




On
February 2, 2010, Mr. Oretsky resigned as our Chief Operating Officer and as a
member of our Board of Directors on mutually agreeable terms with the Company to
pursue other opportunities. We have suspended payments to Mr. Oretsky previously
agreed to under a Consulting and Release Agreement.





Legal
Proceedings




From time
to time, we are periodically a party to or otherwise involved in legal
proceedings arising in the normal and ordinary course of business. As of the
date of this report, we are not aware of any proceeding, threatened or pending,
against us which, if determined adversely, would have a material effect on our
business, results of operations, cash flows or financial position.




Customer
and Vendor Concentrations




Our
revenues are predominantly generated from the sale of precious metals to a
related party. During each of the three and six month periods ended June 30,
2010 and June 30, 2009 this related party customer accounted for approximately
100% of our revenue.  At June 30, 2010 and December 31, 2009, the amount
due from this customer was approximately 63% and 93% of our accounts receivable,
respectively.




During
the six months ended June 30, 2010, 2 vendors accounted for approximately 14%
and 10% of our total purchases, and for the six months ended June 30, 2009, 1
vendor accounted for approximately 12 % of our total purchases.





At June
30, 2010, one vendor accounted for approximately 12% of our accounts payable,
and at December 31, 2009, a related party vendor and one other vendor
accounted for approximately 17% and 12% of our total accounts payable,
respectively.




Note 10 – Stockholders’
Equity




Convertible
Series A Preferred Stock




Our
Convertible Series A Preferred Stock (“Series A PS”) has no voting
rights, no liquidation preference, and are not entitled to receive dividends.
Each share of the Series A PS is convertible into one share of our common
stock at the election of the holder. We have determined that no beneficial
conversion feature or derivative financial instruments exist in connection with
the Series A PS as the conversion rate was fixed at an amount equal to the
market price of our common stock.




On
March 19, 2009, 2,200,000 shares of our Series A PS were converted
into 2,200,000 shares of our common stock of which, 950,000 shares were
converted by a family member of our Chief Financial Officer and 1,250,000
shares were converted by another shareholder.




On
January 25, 2010, 3,000,000 shares of our Series A PS were converted into
3,000,000 shares of our common stock by a family member of our Chief Financial
Officer.





Convertible
Redeemable Series B Preferred Stock




In 2009
we issued Convertible Redeemable Series B Preferred Stock (“2009
Series B PS”) which was non-voting, had a liquidation preference equal
to $250,000, was entitled to a 7% annual dividend, payable in cash or stock,
that accrued quarterly and was redeemable, at the option of the holder, 90 days
after the date of issuance.




On
April 30, 2009, a relative of our Chief Financial Officer invested $250,000
and received 25,000 shares of our 2009 Series B PS (stated value of
$10/share), which were, along with all
accrued dividends, subsequently converted into 1,695,754 shares of our
common stock.





As
discussed in more detail in Note 13, on August 19,2010, we sold 2,943,750 shares of a new Series B Preferred
Stock with different provisions and 73,593,750 warrants for gross proceeds
of $2,943,750.


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Common
Stock




In
connection with a private placement transaction that closed in
February 2009 (“February 2009 PP”), we issued 3,050,000 shares of our
common stock and warrants granting the right to purchase up to 3,050,000 shares
of our common stock to various investors. The warrants are exercisable for three
years and have an exercise price of $0.40 per share. Gross proceeds from the
sale amounted to $610,000, and were used for working capital purposes. In
connection with the February 2009 PP, we incurred direct offering costs of
$26,449.




In
connection with the February 2009 PP, we agreed that, under certain
conditions, if an investor in the February 2009 PP had also invested in the
private placement transaction that closed in September 2008 (the
“September 2008 PP”), we would re-price the shares purchased under the
September 2008 PP.




As a
result of this re-pricing, we issued an additional 2,250,000 shares of our
common stock. In addition, we agreed to cancel 4,500,000 common stock purchase
warrants from the September 2008 PP with an exercise price of $0.50 per
share and reissue 6,750,000 common stock purchase warrants with an exercise
price of $0.40 per share. The exchange of the common stock purchase warrants
resulted in an expense of $41,837, which was calculated as the excess of the
fair value of the replacement award over the fair value of the cancelled award
at the cancellation date.




We have
considered the re-pricings in terms of a ratchet down provision as discussed
in ASC 815 and have determined that, since these were isolated events,
and there are no outstanding equity holders who have ratchet down rights, there
are no potential derivative liabilities.





On March
31, 2010, we closed on a private placement transaction (the “March 2010 PP”)
whereby we issued 5,758,337 shares of our common stock at $0.20 per share. 
Gross proceeds from the sale amounted to $1,151,667, which will be used for
working capital.  Offering costs associated with this transaction
amounted to $41,843.





Included
in the March 2010 PP was an investment of $50,000 by Doug Feirstein, our Chief
Executive Officer and an investment of $25,000 from Michael Moran, our Vice
President of Corporate Development.


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 Share
Grants
 
 On
October 1, 2008, we granted 50,000 shares of restricted common stock to a
consultant for services rendered. The shares are fully vested and
non-forfeitable, and had a fair value of $44,500 based upon the quoted closing
price of the stock as of the issuance date. Furthermore, in accordance with a
consulting agreement, we were   to grant an additional 50,000 shares
of stock for future services six months from the date of the original grant. As
of June 30, 2009 the stock was valued at $18,000 based upon the quoted
closing price of the stock. The value of the stock is adjusted on a monthly
basis over the six-month term of the agreement so that the requisite portion of
the expense corresponding to the service period is being recognized. During
2008, we recognized $9,000 in consulting expenses and during the six months
ended June 30, 2009, we recognized the remaining $9,000 in consulting
expenses.
 
 On
October 20, 2008, we granted 300,000 shares of restricted common stock to a
director upon appointment to the Board. The grant had a fair value of $183,000
based upon the quoted closing trading price of the stock on the date of the
grant. The shares vest annually over a three-year period, subject to continued
service as a director on each applicable vesting date.  In connection
with his resignation on March 9, 2010, 200,000 shares of common stock that
had not yet vested, were immediately vested.  We recorded $110,030 for
the six months ended June 30, 2010 as expense pertaining to this grant,
including $94,780 as a result of the accelerated vesting.  We recorded
$15,250 and $ 31,500 for the three and six month periods ended June 30, 2009,
respectively as expense pertaining to this grant.
 
 On
December 22, 2008, we granted an aggregate of 2,000,000 shares of common stock
to two employees.  The grant had a fair value of $600,000 based upon
the quoted closing trading price of the stock on the date of the grant. Of the
2,000,000 shares, 500,000 were fully vested and the remaining 1,500,000 shares
vest over a period of 30 months.  We recorded $45,000 and $60,000 for
the three months ended June 30, 2010 and 2009, respectively, and $24,788 and
$125,110 for the six months ended June 30, 2010 and 2009, respectively, as
expense pertaining to this grant.
 
 During
March 2009, we granted 750,000 shares of common stock to two
employees.  The grant had a fair value of $292,500 based upon the
quoted closing trading price of the stock on the date of the grant and will vest
over a period of 36 months.  We recorded $24,375 and $32,500 for the
three months ended June 30, 2010 and 2009, respectively, and $48,750 and $32,500
for the six months ended June 30, 2010 and 2009, respectively, as expense
pertaining to this grant.
 
 During
April, 2009, we issued 3,223 shares of our common stock, with a fair value of
$1,000 based on the quoted closing price, to an employee for services rendered.
This amount was recorded as expense in the period the shares were
granted.
  During
June 2009, we issued 265,000 shares of our common stock, with a fair value
of $71,700 based on the quoted closing price, to consultants for services
rendered. This amount was recorded as expense in the period the shares were
granted.
  During
June 2009, we issued 46,500 shares of our common stock, with a fair value
of $13,600 based upon the quoted closing price, to vendors as payment on
outstanding liabilities. We recognized a gain on settlement of accounts payable
of $12,426 as a result of these transactions.
 
 During
October 2009, we issued 870,666 shares of restricted common stock, having a
fair value of $190,197, based upon the quoted closing trading price of our
common stock as of the issuance dates, to directors. The shares vest annually
over a three-year period, subject to continued service as a director on each
applicable vesting date.  We recorded $12,478 and $59,330 for the
three and six months ended June 30, 2010, respectively, as expense pertaining to
this grant.  Included in the total for the six months ended June 30,
2010 is a charge for $34,375 resulting from the accelerated vesting of shares
granted to Neil McDermott in connection with his resignation from the Board on
March 9, 2010.
 
 On
January 4, 2010, we issued 120,000 shares of common stock, having a fair value
of $36,000, based upon the quoted closing trading price of our common stock as
of the issuance dates, to a consultant for technology services. This amount was
recorded as expense in the period the shares were granted.
  On May
26, 2010, we issued 3,058,657 shares of common stock, having a fair value of
$326,188, based upon the quoted closing trading price of our common stock as of
the issuance dates, to vendors as consideration for outstanding accounts payable
owed to them. We agreed to issue an additional 181,818 shares of common stock to
one vendor when the registration statement registering the underlying shares
was declared effective by the SEC.  The SEC declared the
registration statement effective on July 17, 2010.  We recorded a loss
of $8,404 in connection with these transactions.
 
 Common
Stock Purchase Warrant Grants
 
 During
November 2009, we granted 5,000,000 warrants to a consultant for services to be
performed.  The warrants have an exercise price of $0.23, are
exercisable for three years and vest ratably over a twelve month
period.  The estimated fair value of these stock warrants on their
date of grant was $798,119, which we estimated using the Black-Scholes option
pricing model.
  16
  Upstream
Worldwide, Inc. and Subsidiaries
 Notes
to Unaudited Interim Condensed Consolidated Financial Statements
 June
30, 2010
 
 The
agreement was terminated effective March 15, 2010. As a result,
3,125,000 warrants were cancelled and no further warrants vested after
that date.  We recorded $166,275 for the six months ended June 30,
2010 as expense pertaining to this grant.
  The
following summarizes our warrant activity for the period from December 31, 2009
through June 30, 2010:
 Warrants
                      
                      
                      Weighted
                        Average Exercise
                        Price
                      
                      
                      Weighted
                        Average
                        Remaining
                        Contractual
                        Life (in years)Outstanding
      – December 31, 2009
                      
                      
                      21,800,003
                      
                      
                      $
                      0.35
                      
                      
                      
                      2.3Granted
                      
                      
                      —Exercised
                      
                      
                      —Forfeited
      or Cancelled
                      
                      
                      (3,125,000
                      )
                      
                      
                      0.23Outstanding
      – June 30, 2010
                      
                      
                      18,675,003
                      
                      
                      $
                      0.40
                      
                      
                      
                      1.7Exercisable
      – June 30, 2010
                      
                      
                      15,550,003
                      
                      
                      $
                      0.43
                      
                      
                      
                      1.6
 
 At June
30, 2010, the total intrinsic value of all warrants outstanding and exercisable
was $-0-.
  Stock
Option Grants
  On
October 20, 2008, we adopted the 2008 Equity Incentive Plan (the
“Plan”) covering 8,000,000 stock rights including options, restricted stock and
stock appreciation rights. Under the Plan, non-employee directors receive
initial and annual grants of options and restricted stock for their service as a
director and committee member. The initial grants will vest over a three-year
period and the annual grants vest on June 30 of each year, subject to
continued service on the applicable vesting dates.
 
 On
October 20, 2008, we granted 250,000 stock options to two non–employee
contractors for future services. The options were exercisable over a five-year
term, vesting quarterly in equal installments over a 3 year term. These options
were exercisable at $0.30 per share and had a fair value of $130,750 using the
Black-Scholes option-pricing model. We recorded $8,717 and $19,613 for the three
and six months ended June 30, 2009, respectively, as expense pertaining to this
grant.  During 2009, all 250,000 options were cancelled, therefore no
expense was recorded in 2010.
 
 On
October 20, 2008, we granted 573,134 stock options to contractors and
non-employee directors for services to be rendered. The options are exercisable
over a five-year term at $0.61 per share. Of the total options granted, 373,134
were issued to two non-employee directors under the terms of the Plan vesting
annually in equal increments over a three-year period. The remaining 200,000
options were fully vested upon issuance. These options had an aggregate fair
value of $275,964 using the Black-Scholes option-pricing model.  We
recorded $14,972 and $14,972 for the three months ended June 30, 2010 and 2009,
respectively, and $29,994 and $29,994 for the six months ended June 30, 2010 and
2009, respectively, as expense pertaining to the 373,134 option grant. The
200,000 fully vested options, had a fair value of $96,300, and were expensed in
full during 2008.
 
 On
December 31, 2008, we granted 250,000 stock options to an employee for
future services. The options were exercisable over a five-year term, vesting
quarterly in equal increments over a three-year term. These options were
exercisable at $0.36 per share and had a fair value of $75,225 using the
Black-Scholes option-pricing model.  On March 15, 2010, the remaining
unvested options were cancelled.   We recorded $0 and $6,269 for
the three months ended June 30, 2010 and 2009, respectively, and $6,269 and
$12,538 for the six months ended June 30, 2010 and 2009, respectively, as
expense pertaining to this grant.
  During
the second quarter of 2009, we granted 250,000 stock options to an employee for
future services.  The options are exercisable at $0.31 per share over
a five-year term, vesting quarterly in equal increments over a three-year
term.  We recorded $5,925 and $5,266 for the three months ended June
30, 2010 and 2009, respectively, and $11,850 and $5,266 for the six months ended
June 30, 2010 and 2009, respectively, as expense pertaining to this
grant.
  17
  Upstream
Worldwide, Inc. and Subsidiaries
 Notes
to Unaudited Interim Condensed Consolidated Financial Statements
 June
30, 2010
 
 During
the fourth quarter of 2009, we granted 1,164,709 stock options to the members of
our board of directors for future services.  The options are
exercisable at a weighted average $0.23 per share over a five-year term, vesting
quarterly in equal increments over a three-year term.  We recorded
$17,590 and $68,007 for the three and six months ended June 30, 2010,
respectively, as expense pertaining to this grant.  Included in the
total for the six months ended June 30, 2010 is a charge for $32,145 resulting
from the accelerated vesting of options granted to Neil McDermott in connection
with his resignation from the Board on March 9, 2010.
 
 During
December 2009, we granted 10,977,991 stock options to our employees for future
services.  The options are exercisable at an exercise price of $0.27
per share over a five-year term, vesting quarterly in equal increments over a
four-year term.  We recorded $171,141 and $504,558 for the three and
six months ended June 30, 2010, respectively, as expense pertaining to these
grants.  Included in the total for the six months ended June 30, 2010
is a charge for $156,910 resulting from the accelerated vesting of options
granted to our former Chief Operating Officer in connection with his separation
agreement.
 
 During
the second quarter of 2010, we granted 3,900,000 stock options to our employees
for future services, including 3,500,000 to our Chief Accounting
Officer.  The options are exercisable at a weighted average exercise
price of $0.15 per share over a five-year term, with 656,250 vesting immediately
and the remainder vesting quarterly in equal increments over a four-year
term.  We recorded $117,484 for the three and six months ended June
30, 2010 as expense pertaining to these grants. These
options had a fair value of $554,241 using the Black-Scholes option-pricing
model using the following assumptions:
 Risk-free
      interest rate
                          
                          
                          0.17 - 2.46
                          %Expected
      dividend yield
                          
                          
                          0
                          %Expected
      volatility
                          
                          
                          197.39 - 207.65
                          %Expected
      life
                          
                          6
      mos - 5 yearsExpected
      forfeitures
                          
                          
                          0
                          %
 
 On March
10, 2010, we increased the aggregate number of shares of common stock which may
be issued pursuant to the 2008 Equity Incentive Plan from 8,000,000 to
27,000,000.
 
 The
following table summarizes our stock option activity for the period from
December 31, 2009 through June 30, 2010:
  Number of
                      Options
                    
                    
                    Weighted
                      Average
                      Exercise
                      Price
                    
                    
                    Weighted
                      Average
                      Remaining
                      Contractual
                      Life
                      (in Years)
                    
                    
                    Aggregate
                      Intrinsic
                      ValueBalance
      at December 31, 2009
                    
                    
                    13,215,834
                    
                    
                    $
                    0.45
                    
                    
                    
                    4.8Granted
                    
                    
                    3,900,000
                    
                    
                    
                    0.15Forfeited
      or Cancelled
                    
                    
                    (810,175
                    )
                    
                    
                    0.27Balance
      at June 30, 2010
                    
                    
                    16,305,659
                    
                    
                    
                    0.25
                    
                    
                    
                    4.5
                    
                    
                    $
                    —Exercisable
      at June 30, 2010
                    
                    
                    3,610,653
                    
                    
                    $
                    0.27
                    
                    
                    
                    4.5
                    
                    
                    $
                    —
  The
following table summarizes our stock option activity for non-vested options for
the period from December 31, 2009 through June 30, 2010:
  Number of Options
                      
                      
                      Weighted Average
                        Grant Date
                        Fair ValueOutstanding
      – December 31, 2009
                      
                      
                      12,595,364
                      
                      
                      $
                      0.27Granted
                      
                      
                      3,900,000
                      
                      
                      
                      0.15Vested
                      
                      
                      (3,094,350
                      )
                      
                      
                      0.23Cancelled
      or Forfeited
                      
                      
                      (706,008
                      )
                      
                      
                      0.27Outstanding
      – June 30, 2010
                      
                      
                      12,695,006
                      
                      
                      $
                      0.24
 
 Total
unamortized compensation expense related to stock options at June 30, 2010
amounted to $3,338,930 and is expected to be recognized over a weighted average
period of 2.5 years.
  18
  Upstream
Worldwide, Inc. and Subsidiaries
 Notes
to Unaudited Interim Condensed Consolidated Financial Statements
 June
30, 2010
  Note 11 – Related Party
Transactions
  Refinery
  We recorded $46,906 and $93,813 for the
three and six month periods ended June 30, 2010 and 2009, respectively, as cost
of revenue pertaining to prepaid refining services and $14,593 and $29,186 for
the three and six month periods ended June 30, 2010 and 2009, respectively, as
amortization expense pertaining to a non-compete agreement, both of which
pertain to our service agreement with Republic Metals Corporation.
  Marketing
Services
 
 We
recorded $969,853 and $149,935 for the three months ended June 30, 2010 and
2009, respectively, and $2,018,509 and $664,391 for the six months ended June
30, 2010 and 2009, respectively, as marketing expense to an online marketing and
lead generation services company in which our President is a 50%
shareholder.
  Note 12 – Geographic
Information
  We
currently generate revenue predominantly from the sale of precious metals,
including gold, silver and platinum, and from the sale of diamonds and other
precious stones.  Our operations in each of our markets exhibit
similar financial performance metrics and have similar economic
characteristics.  As such, we have aggregated our operations around
the world into a single operating segment.
  Below is
a summary of our revenue and total assets by geographic region as of and for the
periods indicated:
  United States
                          
                          
                          Canada
                          
                          
                          Europe
                          
                          
                          ConsolidatedRevenue
      for the six months ended June 30, 2010
                          
                          $
                          10,864,508
                          
                          
                          $
                          7,022,363
                          
                          
                          $
                          7,141,584
                          
                          
                          $
                          25,028,455Total
      Assets at June 30, 2010
                          
                          $
                          12,786,173
                          
                          
                          $
                          223,997
                          
                          
                          $
                          428,344
                          
                          
                          $
                          13,438,514Revenue
      for the six months ended June 30, 2009
                          
                          $
                          1,977,301
                          
                          
                          $
                          651,117
                          
                          
                          $
                          47,584
                          
                          
                          $
                          2,676,002Total
      Assets at December 31, 2009
                          
                          $
                          13,143,253
                          
                          
                          $
                          558,884
                          
                          
                          $
                          1,385,300
                          
                          
                          $
                          15,087,437
 
 Note 13 – Subsequent
Events
 
 On August
3, 2010, our Board of Directors (the “Board”) approved the borrowing of up to
$500,000 through the issuance of one-year secured notes paying 25% interest per
annum to a relative of our Chief Financial Officer and another
shareholder.  The other shareholder made an initial advance of $70,000
on July 21, 2010.  Although the final documents have not yet been
executed, we expect that the notes will be secured by a first lien on the
accounts receivable generated from the sale of cellular phones to a third
party.
 
 On August
3, 2010, our Board authorized us to sell up to $4,000,000 of Units in a private
placement (the “August 2010 PP”).  In connection with the August 2010
PP, on August 19, 2010, we sold 2,943,750 shares of Series B PS
and 73,593,750 warrants to purchase our common stock for gross proceeds of
$2,943,750, of which $2,007,500 has been received as of the date of this
filing.  Each share of Series B is convertible into 50 shares of our
common stock upon the increase of our authorized capital to 650,000,000
shares of common stock.  The warrants are exercisable over a
three-year period and are exercisable at $0.06 per share.  All of the
securities issued in this private placement are subject to a lock-up agreement
and cannot be sold for a period of 12 months.  These securities were
sold without registration under Section 4(2) of the Securities Act of 1933 and
Rule 506 thereunder.
 
 Douglas Feirstein, our Chief Executive
Officer, invested $100,000 in the August 2010 PP through an entity
which he controls. This entity acquired 100,000 shares of Series B
and 2,500,000 warrants.
  On August 3, 2010, our Board
recommended that we increase our authorized capital to 650,000,000 shares
of common stock from the current 300,000,000 shares. The August 2010 PP and the
option grants described below can result in as many as 287,191,723 additional
shares of common stock being issued.
 
 19
 
 Upstream
Worldwide, Inc. and Subsidiaries
 Notes
to Unaudited Interim Condensed Consolidated Financial Statements
 June
30, 2010
 
 Also on August 3, 2010, our Board
authorized us to issue additional shares of common stock to investors in the
March 2010 PP who also invested in the August 2010 PP.  Each investor
who invested in the March 2010 PP and also invested in the August 2010 PP will
receive a number of shares of common stock such that, including the shares
purchased in the March 2010 PP (including the shares privately purchased from
our former Chief Operating Officer) and the shares purchased in the August 2010
PP, the average price paid per share will be $0.06.  As of August 19,
2010, we are required to issue 13,775,000 additional shares of common stock
in connection with this arrangement.
 
 Also on August 3, 2010, to incentivize
employees who were holding stock options with an exercise price below the
current market price, our Compensation Committee reduced the exercise price on
13,430,954 existing stock options to the closing stock price on August 18,
2010.  The re-pricing was subject to the receipt by us of at least
$2,000,000 in gross proceeds from the August 2010 PP.  Included in the
existing stock options that were repriced were  555,556 options held
by Douglas Feirstein, our Chief Executive Officer, 8,055,556 options held by
Daniel Brauser, our Chief Financial Officer, and 3,777,778 options held by
Michael Brachfeld, our Chief Accounting Officer.  Our compensation
committee agreed that it will approve a grant of options to the Company’s
management team making management’s total ownership of the Company’s outstanding
equity securities 26% post financing (excluding outstanding
warrants).
  20
  Item
2.  Management’s Discussion and Analysis of Financial Condition and Results
of Operations.
  The
following discussion and analysis should be read in conjunction with our
unaudited interim condensed consolidated financial statements and related notes
appearing elsewhere in this report on Form 10-Q. In addition to historical
information, this discussion and analysis contains forward-looking statements
that involve risks, uncertainties, and assumptions. Our actual results may
differ materially from those anticipated in these forward-looking statements as
a result of certain factors, including but not limited to those set forth under
“Risk Factors” in our Annual Report on Form 10-K for the year ended December 31,
2009, as filed with the United States Securities and Exchange Commission, or the
SEC.
  Management’s
discussion and analysis of financial condition and results of operations is
based upon our unaudited interim condensed consolidated financial statements,
which have been prepared in accordance with accounting principles generally
accepted in the United States of America. The preparation of these unaudited
interim condensed consolidated financial statements requires us to make
estimates and assumptions that affect the reported amounts of assets,
liabilities, revenues, and expenses, and related disclosure of contingent assets
and liabilities. On an ongoing basis, we evaluate our estimates and assumptions,
including, but not limited to, those related to revenue recognition, allowance
for doubtful accounts, income taxes, goodwill and other intangible assets, and
contingencies. We base our estimates on historical experience and on various
other assumptions that are believed to be reasonable under the circumstances,
the results of which form the basis for making judgments about the carrying
values of assets and liabilities that are not readily apparent from other
sources. Actual results may differ from these estimates and
assumptions.
  Company
Overview
  Overview
 
 Upstream
Worldwide, Inc. (“Upstream,” or the “Company,” formerly, Money4Gold Holdings,
Inc.) is an emerging global leader in direct-from-consumer, reverse logistics,
currently specializing in the procurement and aggregation of precious metals to
be recycled.  We utilize consumer oriented advertising efforts to
solicit individuals interested in liquidating unwanted items.  Through
our global platform, we facilitate an end-to-end consumer solution, from
acquisition through liquidation. We have a low cost, highly scalable and
flexible business model that allows us to quickly and efficiently adapt to entry
into new markets, changes in economic conditions, supply and demand levels and
other similar factors.
 
 Our focus
has been on providing a fast, secure and convenient service that enables the
public to discretely sell their precious metals from the comfort and security of
their home or office.  Our relationship with Republic Metals
Corporation, or the Refinery, allows us to secure current market prices for all
of the precious metals we purchase on a daily basis. We are currently exploring
additional future expansion plans that include the introduction of similar
reverse logistics services for products other than precious metals.
 
 Our
corporate headquarters are located at 200 East Broward Blvd., Suite 1200 in Ft.
Lauderdale, Florida. Our phone number is (954) 915-1550 and our corporate
website can be found at www.money4gold.com.
  Corporate
History and Acquisitions
 
 We were
incorporated in Delaware on November 18, 2003. On July 23, 2008, we
acquired Money4Gold, Inc., an early stage precious metals company, and changed
our name to Money4Gold Holdings, Inc.  On May 7, 2009, we acquired MGE
Enterprises Corporation, a Wyoming corporation, or MGE, operating in the United
States under the names mygoldenvelope.com and sobredeoro.com. MGE brought
extensive experience in creating and growing businesses that provide shareholder
value in a broad array of industries, including direct response, Internet
marketing and national retail distribution and sales. MGE’s ability to reach a
broader number of consumers through their experience in multi-language
television advertising, direct response, and retail distribution and sales
greatly accelerated our growth and increased our depth of management
experience.  On June 11, 2010, we changed our name to Upstream
Worldwide, Inc.
 
 Diversification
Plans
  We are
exploring several alternatives to diversify our business beyond precious metals
by evaluating reverse logistics services for small consumer electronics and
similar related components, such as cellular phones.  Revenue was
first generated from these additional services in June 2010, but was not
material.
 
 Recent
Trends
 
 Our
revenue during the third quarter 2009, the fourth quarter 2009, the first
quarter of 2010 and the second quarter of 2010 was $6.8 million, $19.6 million,
$17.3 million, and $7.8 million, respectively.  During the first
half of 2010, we experienced a lower Media Efficiency Rate (as defined below as
MER), as compared with the second half of 2009. As discussed in more detail
below under the Liquidity section, we believe this is a result of seasonality,
increased competition, recent negative portrayal of our industry by the media,
and an under-performing advertising and marketing campaign aired during the
first quarter of 2010, mainly in our European markets.  In response to
these recent trends and developments, we have replaced the underperforming
advertising and marketing campaign, adjusted our expense structure in each of
our markets, and have slowed and/or temporarily suspended some projects while we
re-evaluate our implementation strategy for our future plans.
  21
 
 Critical
Accounting Policies
  In
response to financial reporting release FR-60, Cautionary Advice Regarding
Disclosure About Critical Accounting Policies, from the SEC, we have
selected our more subjective accounting estimation processes for purposes of
explaining the methodology used in calculating the estimate, in addition to the
inherent uncertainties pertaining to the estimate and the possible effects on
the our financial condition. The accounting estimates are discussed below and
involve certain assumptions that, if incorrect, could have a material adverse
impact on our results of operations and financial condition. See Note 4 to
our unaudited interim condensed consolidated financial statements found
elsewhere in this report and Note 4 to our consolidated financial statements for
the year ended December 31, 2009 as filed with the SEC for further discussion
regarding our critical accounting policies and estimates.
  Revenue
Recognition
  We
generate revenue predominantly from the sale of precious metals, including gold,
silver and platinum, and from the sale of diamonds and other precious
stones. Revenue is recognized when all of the following conditions exist:
(1) persuasive evidence of an arrangement exists, (2) delivery has occurred, (3)
the sales price is fixed or determinable, and (4) collectability is reasonably
assured.
  Precious
Metals
  We grade
the quality of the precious metals purchased from the public and estimate the
total quantity of pure gold, silver and platinum received. We then
lock in the current spot rate of each metal sufficient to cover the total
quantity received in the current batch with the Refinery. After a holding
period of at least 10 days to allow for returns, the precious metals are
delivered to the Refinery to be melted. Upon melting the precious metals,
the Refinery validates the quality of pure gold, silver, and platinum and remits
payment to us based on the quantity of each precious metal at the agreed
upon spot rates, as described above. Revenue is recognized upon melting of
the precious metals and the validation of the quality and quantity of each
precious metal by the Refinery.
 
 No
returns are accepted from the Refinery and upon delivery of the precious metals
to the refiner, we have no further obligations.
  Diamonds
and Other Precious Stones
  Diamonds
and other precious stones are generally purchased from the public in connection
with the purchase of precious metals. We value diamonds and other precious
stones based on a variety of factors including size and quality and then resell
them. To date, all diamonds and other precious stones have been sold to an
affiliate of an officer of one of our wholly-owned subsidiaries. Revenue is
recognized upon the acceptance of the diamonds and other precious stones by the
purchaser.
  Deferred
Revenue
  Upon our
estimate of the total quantity of pure gold, silver, and platinum received and
the locking in of the current spot rate for each precious metal, we are able to
estimate the total value of the batch received. The Refinery advances to us, up
to 80% of the value of the precious metals we have received, but not yet
delivered. This amount is recorded as deferred revenue until the specific
batch is melted and processed as described above, at which time, it is recorded
as revenue.
  Share-Based
Payment Arrangements
  Generally,
all forms of share-based payments, including stock option grants, restricted
stock grants and stock appreciation rights are measured at their fair value on
the awards’ grant date, based on the estimated number of awards that are
ultimately expected to vest. Share-based compensation awards issued to
non-employees for services rendered are recorded at either the fair value of the
services rendered or the fair value of the share-based payment, whichever
is more readily determinable. The expense resulting from share-based payments
are recorded in cost of goods sold or general and administrative expense in the
consolidated statement of operations, depending on the nature of the services
provided. We have applied fair value accounting and the related provisions
of ASC 718 for all share based payment awards. The fair value of
share-based payments is recognized ratably over the stated vesting period. In
the event of termination, we will cease to recognize compensation
expense.
  22
 
 Results
of Operations
  We
currently generate revenue predominantly from the sale of precious metals,
including gold, silver and platinum, and from the sale of
diamonds.  Our operations in each of our markets exhibit similar
financial performance metrics and have similar economic
characteristics.  As such, we have aggregated our operations around
the world into a single operating segment.
 
 We
acquired MGE on May 7, 2009 using the acquisition method of
accounting.  As such, the results of operations for MGE are only
included in our consolidated results of operations from that date
onward.  The pro forma results of operations as if the acquisition of
MGE had occurred as of January 1, 2009 can be found in Note 6 to the unaudited
interim condensed consolidated financial statements found elsewhere in this
report, however the comparison of the pro forma results are not meaningfully
different than the comparison of the actual results as presented
below.
 
 Results for the Three and Six Months Ended June
30, 2010 Compared to the Three and Six Months Ended June 30,
2009
  Discussion
regarding our sequential quarterly results during the second half of 2009, when
we experienced rapid growth, and during the first half of 2010, when our revenue
declined, can be found in more detail under the Liquidity section
below.  Factors influencing the changes from the three months ended
June 30 2010, as compared with the same period in 2009, are similar to the
factors that influenced the changes from the six months ended June 30 2010 as
compared with the same period in 2009.  As such, we have presented
both comparisons in the tables below and discuss the comparisons
simultaneously.
 
 The
following tables set forth, for the periods indicated, results of operations
information from our unaudited interim condensed consolidated financial
statements:
 
 Three Months Ended June 30,
                      
                      
                      Change
                      
                      
                      Change2010
                      
                      
                      2009
                      
                      
                      (Dollars)
                      
                      
                      (Percentage)Revenue
                      
                      $
                      7,756,322
                      
                      
                      $
                      1,490,560
                      
                      
                      $
                      6,265,762
                      
                      
                      
                      420
                      %Cost
      of Revenue
                      
                      
                      2,707,189
                      
                      
                      
                      581,666
                      
                      
                      
                      2,125,523
                      
                      
                      
                      365
                      %Gross
      Profit
                      
                      
                      5,049,133
                      
                      
                      
                      908,894
                      
                      
                      
                      4,140,239
                      
                      
                      
                      456
                      %Sales
      and Marketing
                      
                      
                      3,738,794
                      
                      
                      
                      1,024,384
                      
                      
                      
                      2,714,410
                      
                      
                      
                      265
                      %General
      and Administrative
                      
                      
                      1,633,398
                      
                      
                      
                      1,387,694
                      
                      
                      
                      245,704
                      
                      
                      
                      18
                      %Depreciation
      and Amortization
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      0
                      %Operating
      Loss
                      
                      
                      (323,059
                      )
                      
                      
                      (1,503,184
                      )
                      
                      
                      1,180,125
                      
                      
                      
                      -79
                      %Interest
      Income (Expense), net
                      
                      
                      -
                      
                      
                      
                      (43,347
                      )
                      
                      
                      43,347
                      
                      
                      
                      -100
                      %Other
      Expense
                      
                      
                      4,229
                      
                      
                      
                      (176,362
                      )
                      
                      
                      180,591
                      
                      
                      
                      -102
                      %Net
      Loss
                      
                      $
                      (318,830
                      )
                      
                      $
                      (1,722,893
                      )
                      
                      $
                      1,404,063
                      
                      
                      
                      -81
                      %
 
 Six Months Ended June 30,
                      
                      
                      Change
                      
                      
                      Change2010
                      
                      
                      2009
                      
                      
                      (Dollars)
                      
                      
                      (Percentage)Revenue
                      
                      $
                      25,028,455
                      
                      
                      $
                      2,676,002
                      
                      
                      $
                      22,352,453
                      
                      
                      
                      835
                      %Cost
      of Revenue
                      
                      
                      8,429,725
                      
                      
                      
                      1,072,886
                      
                      
                      
                      7,356,839
                      
                      
                      
                      686
                      %Gross
      Profit
                      
                      
                      16,598,730
                      
                      
                      
                      1,603,116
                      
                      
                      
                      14,995,614
                      
                      
                      
                      935
                      %Sales
      and Marketing
                      
                      
                      15,075,122
                      
                      
                      
                      1,937,331
                      
                      
                      
                      13,137,791
                      
                      
                      
                      678
                      %General
      and Administrative
                      
                      
                      4,315,793
                      
                      
                      
                      2,496,227
                      
                      
                      
                      1,819,566
                      
                      
                      
                      73
                      %Depreciation
      and Amortization
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      0
                      %Operating
      Loss
                      
                      
                      (2,792,185
                      )
                      
                      
                      (2,830,442
                      )
                      
                      
                      38,257
                      
                      
                      
                      -1
                      %Interest
      Income (Expense), net
                      
                      
                      -
                      
                      
                      
                      (70,621
                      )
                      
                      
                      70,621
                      
                      
                      
                      -100
                      %Other
      Expense
                      
                      
                      (6,568
                      )
                      
                      
                      (177,522
                      )
                      
                      
                      170,954
                      
                      
                      
                      -96
                      %Net
      Loss
                      
                      $
                      (2,798,753
                      )
                      
                      $
                      (3,078,585
                      )
                      
                      $
                      279,832
                      
                      
                      
                      -9
                      %
 
 Our
revenue is largely dependent on the frequency and effectiveness of our direct
response advertising and marketing campaigns.  As such, advertising
and marketing expenditures represent our most significant costs, amounting to
48% and 69% of revenue for the three months ended June 30, 2010 and 2009,
respectively, and 60% and 72% of revenue for the six months ended June 30, 2010
and 2009, respectively.  We manage our advertising and marketing
campaigns, and make allocation decisions, by measuring their effectiveness
primarily based on projected revenue earned as compared to the cost of the
advertisement, referred to as a Media Efficiency Rate, or MER.  There
are a variety of factors that impact the MER including:
  23
 
 1.
              The number of leads generated
      from an advertisement,
 
 2.
              The rate at which those leads
      convert into actual packs submitted by members of the public (the
      “Sellers”), and
 
 3.
              The average revenue generated
      from the packs received.
 
 Each of
these factors, and hence our MERs, vary by market and by the particular
advertising method utilized within each market.
  The
substantial increases in revenue during the three and six month periods ended
June 30, 2010, as compared to the same periods in 2009 was driven by significant
increases in the volume of advertising in 2010, as well as an increase in the
overall effectiveness of those advertisements, as evidenced by the faster rate
of growth in revenue as compared to advertising.  The experience
brought by the MGE management team enabled us to identify and capitalize on
opportunities to increase our MERs in our various markets during late 2009 and
early 2010.  In addition, during 2009, we commenced operations in
several foreign markets, where less competition allows for higher
MERs.  In each market, we were able to increase the number of leads
generated by a single advertisement and/or increase the conversion rate of the
leads into packs received back from Sellers either through better time slot
placement or via more effective advertising content.  As discussed in
more detail below in the Liquidity section, MERs increased during the second
half of 2009 and into the first quarter of 2010, before beginning to decline in
the second quarter of 2010.  Also contributing to the higher revenue
was the increase in the value of an ounce of gold which has increased our
revenue per ounce of gold received.
  Direct
advertising and marketing costs are expensed as incurred, but generally
result in revenue being generated over a period of up to eight to twelve weeks
following the airing of the advertisement.  As a result, advertising
and marketing investments made during the latter part of a financial period tend
to have a disproportionately negative impact on profitability within that period
and a disproportionately favorable impact on profitability in future
periods.  This impact is generally difficult to measure as the future
revenue is generated over extended periods of time and is contingent upon a
variety of factors, including the receptiveness of our advertisements by the
public and the age of the current advertisement, as well as factors beyond our
control such as time of year, geography and significant television events that
skew normal viewing patterns.
  Cost of
revenue increased significantly during the three and six month periods ended
June 30, 2010, as compared to the same periods in 2009, mainly as a result of a
strong correlation to revenue. We generally pay the Sellers a percentage of
the market value of the gold we purchase from them.  Therefore a
portion of our cost of revenue is directly correlated to our revenue, both on a
volume and per unit basis. The other components of our cost of revenue, such as
the direct costs and expenses required to ship, secure, grade, log and process
the metals and stones internally are not directly correlated to the price of
gold and other precious metals. As a result, although these costs have
increased, our gross margin on a percentage basis is higher for the three
and six month periods ended June 30, 2010 as compared to the same periods in
2009 due to the increase in the value of an ounce of gold and other
precious metals.
  General
and administrative expenses include professional fees for technology
development, legal and accounting services as well as consulting and internal
personnel costs for our back office support functions. General and
administrative expenses for the three and six month periods ended June 30, 2010
increased 18% and 73%, respectively, over the same periods in 2009. The increase
is primarily a result of investments in our infrastructure to support our
expansion into new markets including initial development of a new technology
platform and the addition of several staff and multiple consulting projects
aimed at properly managing the growth and expansion into new product offerings
and new geographic markets.  As discussed below under the Liquidity
section, based on recent trends and developments, we are examining our expense
structure in each of our markets and have slowed and/or temporarily suspended
some projects while we re-evaluate our implementation strategy for our future
plans.  In addition, in 2010 we incurred depreciation expense on the
assets acquired to support the infrastructure investments.
  Interest
expense, net of interest income, during the three and six month periods ended
June 30, 2009 was primarily attributable to interest pertaining to the
convertible note payable issued on March 4, 2009.
  Liquidity
and Capital Resources
  During
the six months ended June 30, 2010, we incurred a net loss of $2,798,753
(including $1,354,887 of non-cash charges) and used $540,753 in cash from our
operations primarily as a result of the net loss and a decrease in deferred
revenues, partially offset by decreases in our accounts receivable – related
party, inventory and prepaid and other current assets and an increase in our
accounts payable. As of June 30, 2010, we had a $10,070,825 accumulated deficit
and working capital deficit of $636,447.
  24
 
 During
the six months ended June 30, 2010, our investing activities used net cash of
$189,556, to purchase fixed assets and our financing activities generated
$1,109,824 in net proceeds from the sale of common stock.  In
addition, as discussed in more detail below, after June 30, 2010, we entered
into a new note payable arrangement and sold shares of our Series B Preferred
Stock.
 
 As
discussed above, we utilize direct response advertising and marketing campaigns,
including television, radio, print and Internet to solicit precious metals
including gold, silver and platinum as well as diamonds from the public. These
advertising and marketing campaigns are our most significant use of cash from
operations. Payment policies for these campaigns vary by country and range from
standard 30 day payment terms to prepayments of up to one-month prior to the
advertisement running. Once the advertisements run, we receive requests for mail
order kits from potential Sellers, which they fill with the items they wish to
sell and send the kit to our processing facility. After payment to the Sellers
and holding the precious metals for a minimum period of time, we aggregate the
precious metals received at our local processing facilities and prepare them for
sale to the Refinery. The Refinery advances us 80% of the estimated value of the
precious metals received each week, at an interest rate of 8% per annum. Upon
physical receipt of the precious metals, up to three weeks later, the Refinery
evaluates them to ascertain the final definitive value. At that point, we settle
with the Refinery and they send us the additional amounts due.
  Mail
order kits are generally received back from the Sellers over a period of up to
eight to twelve weeks following the date of the advertisement. As such, we
generally realize the cash benefits resulting from our advertisements over a
similar time period.
  Our
international operations were initiated by launching direct response advertising
and marketing campaigns in Canada in late 2008 and then in the United Kingdom in
early 2009.  During 2009 we have experienced rapid growth in these
markets and, as a result, increased our advertising and marketing levels in
those countries and continued expanding by commencing operations in several
other European countries during the second half of 2009 and the first quarter of
2010.  During the second quarter of 2010, we lowered our volume of
advertising and marketing in the United States and abroad.
 
 Our
consolidated revenue for the third and fourth quarter of 2009 of $6.8 million
and $19.6 million, respectively, increased dramatically over the respective
prior quarters and the fourth quarter of 2009 was profitable.  Our
revenue during the first quarter of 2010 however, declined to $17.3 million and
declined again to $7.8 million during the second quarter of 2010.  We
believe that the higher level of revenue attained during the third and fourth
quarters of 2009 and the first quarter of 2010 is a result of the successful
implementation of the first stages of our business plan. However, because of our
limited size in the fourth quarter of 2008 and our rapid growth during 2009, we
do not have sufficient comparable history to determine the level of seasonality
of our business.  We believe that the recent declining revenue trend
was, in part, as a result of the holiday season in December 2009, during which
time our advertising and marketing campaigns appear to be less
effective.  In addition, we believe that increased competition and
negative representation of our industry by multiple media agencies in several of
the markets in which we operate resulted in pressure on our
performance.  We have experienced increased levels of competition and
negative portrayals by the media which may have reduced the confidence the
general public had in our industry in general.  Lastly, we
periodically revise and update our advertising and marketing campaigns to
replace certain aging commercials and keep our campaigns
fresh.  During the first quarter of 2010, we aired several new
commercials, mainly in our European markets.  These advertisements
were substantially less effective than campaigns we had run previously, and we
quickly reverted back to our prior campaigns.  We are constantly fine
tuning our existing advertising and marketing campaigns as well as developing
new advertisements to replace aging campaigns. During the second quarter of
2010, we lowered our volume of advertising and marketing.  There can
be no assurance that when existing advertisements are altered, or when new
advertisements are created and aired, that they will be successful.
 
 In
response to the lower revenues generated in recent quarters, we are
re-evaluating our advertising and marketing campaigns in each of our markets and
scaling back our spending levels to focus on the markets and campaigns that
continue to generate MER levels above certain minimum targets.  In
addition, to minimize the impact of lower revenue on profitability and cash
flows, we are adjusting our expense structure in each of our markets and have
slowed and/or temporarily suspended some projects while we re-evaluate our
implementation strategy for our future plans.  Specifically, we are
deferring all or part of our executive salaries, assessing staffing levels based
on current volume, reviewing contracts with minimum thresholds pertaining to
existing services to ensure we are utilizing these services in an optimal
fashion, and reassessing timing of our expansion plans. These adjustments have
enabled us to reduce our net loss from $2,479,923 during the first quarter of
2010 to $318,830 during the second quarter of 2010.  As of June 30,
2010 and August 6, 2010, our executive management and staff have deferred a
total of approximately $100,000 and $135,000 of their salaries,
respectively.  The timing of the repayment of the deferrals has not
yet been determined.
 
 Our
future expansion plans include the introduction of similar reverse logistics
services for products other than precious metals as a means of diversifying our
operations and minimizing the risks of having only one service
offering.  Recently, we placed advertisements combining precious
metals and cell phone recycling and have seen positive early
results.  Though the early results are encouraging, we are still
currently addressing the operational differences between aggregation and sale of
cellular phones as compared with precious metals including aspects such as
fulfillment, valuation, and most importantly, cash flows.  The resale
market for electronics is not as fluid as that for precious
metals.  As a result, the cycle time from the date we purchase the
phone to the date we collect the proceeds from the sale is significantly longer
than for precious metals.  To manage this gap, on August 5, 2010, our
Board of Directors (the “Board”) approved the borrowing of up to $500,000
through the issuance of one-year secured notes paying 25% interest per annum to
a relative of our Chief Financial Officer and another
shareholder.  The other shareholder made an initial advance of $70,000
on July 21, 2010.  Although the final documents have not yet been
executed, we expect that the notes will be secured by a first lien on
the accounts receivable generated from the sale of cellular phones to a third
party.
  25
  
 There can
be no assurance that we can improve our MER or that we will continue to be
successful with the execution of the first stages of our business plan, nor can
there be assurance that continued implementation of our existing plans will
generate profitability and positive cash flows in the future.  In
addition, our expansion plans into similar reverse logistics services for
products other than precious metals could require substantial amounts of capital
beyond our current capabilities.
  On March
31, 2010, we closed on a private placement transaction whereby we sold 5,758,337
shares of our common stock at $0.20 per share.  Gross proceeds from
the sale amounted to $1,151,667, which will be used for working
capital.  Offering costs associated with this transaction amounted to
$41,843.
 
 Included
in the March 2010 financing was an investment of $50,000 by Doug Feirstein, our
Chief Executive Officer, and an investment of $25,000 from Michael Moran, our
Vice President of Corporate Development.  In addition, as part of this
offering, Todd Oretsky, our former Chief Operating Officer, sold a number of
shares equal to the number of shares sold by us at $0.10 per share.
 
 In
connection with the August 2010 PP, on August 19, 2010, we sold 2,943,750
shares of Series B PS and 73,593,750 warrants to purchase our common stock
for gross proceeds of $2,943,750.
 
 Douglas Feirstein, our Chief Executive
Officer,  invested $100,000 in the August 2010 PP through an entity
which he controls. This entity acquired 100,000 shares of Series B
and 2,500,000 warrants.  See “Item
5. Other Information”
below.
 
 We
do not yet have a sustained history of financial
stability. Historically our principal source of liquidity has been the
issuances of debt and equity securities, including preferred stock, common stock
and various debt financing transactions. We believe that the higher level
of revenue attained during the third and fourth quarters of 2009 and the first
quarter of 2010 is a result of the successful implementation of the first stages
of our business plan and that, if we can improve our returns on our media
investments and control our costs accordingly, continued implementation will
generate steadily improving results and cash flows in the
future.
  Management
believes that our cash balance on August 18, 2010 of
approximately $2.0
million, current level of working capital, and anticipated cash that will be
received from revenue generated from advertisements that have already aired will
be sufficient to sustain operations through at least June 30, 2011.
  There can
be no assurance that the plans and actions proposed by management will be
successful, that we will continue to generate revenue from advertisements that
have already aired, or that unforeseen circumstances will not require us to seek
additional funding sources in the future or effectuate plans to conserve
liquidity. In addition, there can be no assurance that our efforts to
raise additional funds through the issuance of debt and/or equity
securities will be successful or that in the event additional sources of funds
are needed to continue operations, that they will be available on acceptable
terms, if at all.
 
 Related
Party Transactions
  Refinery
  On
June 1, 2008, we entered into an agreement with Refinery, whereby we agreed
to sell all of our precious metals in the United States exclusively to the
Refinery and the Refinery agreed to refrain from entering into a relationship
with any third party that is similar to our relationship with them. The
agreement is for an initial term of five years. As consideration for this
agreement, the Refinery received 10,000,000 fully vested shares of our
common stock valued at $1,230,000. Of this amount, we ascribed $938,135 to
prepaid refining services, which is being amortized into cost of revenue on a
straight line basis over the term of the agreement, and we ascribed $291,865 to
an intangible asset, representing the value of the non-compete agreement, which
is being amortized into cost of revenue on a straight line basis over the term
of the agreement. In addition, we lease space for our United States processing
center on a month-to-month basis from the Refinery. An officer of the Refinery
is a member of our Board of Directors.
  26
 
 Marketing
Services
  We
purchase online marketing and lead generation services from a company in which
our President is a 50% shareholder. Our pricing is calculated at a 10% markup to
their cost, capped at $1.50 per lead. This markup is exclusively for the
unrelated 50% shareholders. Our President does not share in any profits earned
by this vendor for services rendered to us.
  New
Accounting Pronouncements
  See Note
4 to our unaudited interim condensed consolidated financial statements included
in this report for a discussion of recent accounting
pronouncements.
  Forward-Looking
Statements
  This
report contains forward-looking statements including future expansion plans,
profitability and liquidity, cash expected to be received from advertisements
that have already run, our expectations regarding revenue, our belief regarding
decreased revenues, our belief regarding having sufficient cash and our belief
regarding working capital.   Forward-looking statements can be
identified by words such as “anticipates,” “intends,” “plans,” “seeks,”
“believes,” “estimates,” “expects” and similar references to future
periods.
 
 Forward-looking statements are based on
our current expectations and assumptions regarding our business, the economy and
other future conditions.  Because forward-looking statements relate to the
future, they are subject to inherent uncertainties, risks and changes in
circumstances that are difficult to predict.  Our actual results may differ
materially from those contemplated by the forward-looking statements.  We
caution you therefore against relying on any of these forward-looking
statements.  They are neither statements of historical fact nor guarantees
or assurances of future performance.  Important factors that could
cause actual results to differ materially from those in the forward-looking
statements include the future price of gold and precious metals which may cause
consumers to recycle their precious materials, the effectiveness of our
advertising campaigns, future economic conditions, the condition of the global
credit and capital markets and the willingness of people to use us to recycle
their cell phones.
 
 Further
information on our risk factors is contained in our filings with the SEC,
including our Prospectus dated July 15, 2010.  Any forward-looking
statement made by us in this report speaks only as of the date on which it is
made.  Factors or events that could cause our actual results to differ
may emerge from time to time, and it is not possible for us to predict all of
them.  We undertake no obligation to publicly update any
forward-looking statement, whether as a result of new information, future
developments or otherwise, except as may be required by law.
  Item 3.
              Quantitative and Qualitative
      Disclosures About Market
Risk.
  Not
applicable to smaller reporting companies.
  Item 4.
              Controls and
      Procedures.
  Evaluation
of Disclosure Controls and Procedures
  Our
management carried out an evaluation with the participation of our Chief
Executive Officer and Chief Financial Officer, required by Rule 13a-15 of
the Securities Exchange Act of 1934 (the “Exchange Act”) of the effectiveness of
our disclosure controls and procedures as defined in Rule 13a-15(e) under the
Exchange Act.
 
 Based on
their evaluation, our Chief Executive Officer and Chief Financial Officer
concluded that our disclosure controls and procedures were effective as of
the end of the period covered by this report to ensure that information required
to be disclosed by us in the reports that we file or submit under the Exchange
Act is recorded, processed, summarized and reported within the time periods
specified SEC rules and forms and is accumulated and communicated to our
management, including our Chief Executive Officer and Chief Financial Officer,
as appropriate to allow timely decisions regarding required
disclosure.
  Changes
in Internal Controls Over Financial Reporting
  There
were no changes in our internal control over financial reporting as defined in
Rule 13a-15(f) under the Exchange Act that occurred during the period covered by
this report that have materially affected, or are reasonably likely to
materially affect, our internal control over financial
reporting.
  27
  PART
II – OTHER INFORMATION
  Item 1.
              Legal
      Proceedings.
  From time
to time, we are periodically a party to, or otherwise involved in, legal
proceedings arising in the normal and ordinary course of business. As of the
date of this report, we are not aware of any proceeding, threatened or pending,
against us which, if determined adversely, would have a material effect on our
business, results of operations, cash flows or financial position.
  Item 1A.
              Risk
    Factors.
  Not
applicable to smaller reporting companies.
  Item 2.
              Unregistered Sales of Equity
      Securities and Use of
Proceeds.
  In
addition to those unregistered securities previously disclosed in filings
with the SEC, we have sold securities which are not registered under
the Securities Act of 1933 (the "Act"), as described below.
  Name
      or Class of
      Investor
                                                                  Date
      Sold
                                                                  No. of

      Securities
                                                                  Consideratio

      nPrivate Placement
      Investors(1)
                                                                  August
      19, 2010
                                                                  2,943,750 shares
      of Series B Convertible Preferred Stock and 73,593,750 three-year warrants
      exercisable at $0.06 per share
                                                                  Investors paid
      $100,000 per Unit(2)
  (1)
                  Exempt under Section
      4(2) of the Act and Regulation 506
thereunder.
 (2)
                  Each Unit consists
      of 100,000 shares of Series B and 2,500,000
  warrants.
  Item
3.
              Defaults Upon Senior
      Securities.
  None.
  Item 4.
              (Removed and
      Reserved).
 
 Item 5.
              Other
      Information.
  On August
5, 2010, our Board of Directors (the “Board”) approved the borrowing of up to
$500,000 through the issuance of one-year secured notes paying 25% interest per
annum to a relative of our Chief Financial Officer and another
shareholder.  The other shareholder made an initial advance of $70,000
on July 21, 2010.  The notes will be secured by a first lien on the
accounts receivable generated from the sale of cellular phones to a third party.
 
 On August
3, 2010, our Board authorized us to sell up to $4,000,000 of Units in the August
2010 PP.  In connection with the August 2010 PP, on August 19, 2010,
we sold 2,943,750 shares of Series B PS and 73,593,750 warrants to
purchase our common stock for gross proceeds of $2,943,750, of which $2,007,500
has been received as of the date of this filing. Each share of Series B is
convertible into 50 shares of our common stock upon the increase of our
authorized capital to 650,000,000 shares of common stock.  The
warrants are exercisable over a three-year period and are exercisable at $0.06
per share.  All of the securities issued in this private placement are
subject to a lock-up agreement and cannot be sold for a period of 12
months.  These securities were sold without registration under Section
4(2) of the Securities Act of 1933 and Rule 506 thereunder.
 
 Douglas Feirstein, our Chief Executive
Officer, invested $100,000, in the August 2010 PP through an entity which he
controls. This entity acquired 100,000 shares of Series B
and 250,000,000 warrants.
 
 28
 
 On August 3, 2010, our Board
recommended that we increase our authorized capital to 650,000,000 shares of
common stock from the current 300,000,000 shares. The August 2010 PP and
the option grants described below can result in as many as 287,191,723
additional shares of common stock being issued. We are currently in the
process of soliciting from up to 10 shareholders, holding more than 50% of
our voting stock, which is sufficient to increase our authorized common
stock.
 
 Also on August 3, 2010, our Board
authorized us to issue additional shares of common stock to investors in the
March 2010 PP who also invested in the August 2010 PP.  Each investor
who invested in the March 2010 PP and also invested in the August 2010 PP will
receive a number of shares of common stock such that, including the shares
purchased in the March 2010 PP (including the shares privately purchased from
our former Chief Operating Officer) and the shares purchased in the August 2010
PP, the average price paid per share will be $0.06.  As of August 19,
2010, we are required to issue 13,775,000 additional shares of common stock
in connection with this arrangement.
 
 Also on
August 3, 2010, to incentivize employees who were holding stock options with an
exercise price below the current market price, our Compensation Committee
reduced the exercise price on 13,430,954 existing stock options to the closing
stock price on August 18, 2010.  The re-pricing was subject to the
receipt by us of at least $2,000,000 in gross proceeds from the August 2010
PP.  Included in the existing stock options that were repriced
were  555,556 options held by Douglas Feirstein, our Chief Executive
Officer, 8,055,556 options held by Daniel Brauser, our Chief Financial Officer,
and 3,777,778 options held by Michael Brachfeld, our Chief Accounting
Officer.  Additionally, our compensation committee agreed that it will
approve a grant of options to the Company’s management team making management’s
total ownership of the Company’s outstanding equity securities 26% post
financing (excluding outstanding warrants).


On May 7,
2010, we entered into a letter of intent to acquire all of the stock of Office
Products Recycling Associates, a recycler of cell phones, smart phones, inkjet
printer cartridges and toners within the business-to-business and
direct-from-consumer markets.   On July 1, 2010, however, we elected
to allow the letter of intent to expire so we could remain focused on our
existing core competencies and our internal expansion approach to cell phone
recycling.
  Item
      6.
              Exhibits.
  Exhibit
                            
                            
                            
                            Incorporated by Reference
                            
                            Filed or
                              FurnishedNo.
                            
                            Exhibit Description
                            
                            Form
                            
                            Date
                            
                            Number
                            
                            Herewith2.1
                            
                            Share
      Exchange Agreement dated July 23, 2008 **
                            
                            8-K
                            
                            7/29/08
                            
                            2.12.2
                            
                            Share
      Exchange Agreement dated May 5, 2009 **
                            
                            10-Q
                            
                            8/19/09
                            
                            2.23.1
                            
                            Certificate
      of Incorporation
                            
                            10-QSB
                            
                            6/7/06
                            
                            3.13.2
                            
                            Certificate
      of Amendment – Increase in Capital
                            
                            10-QSB
                            
                            6/7/06
                            
                            3.13.3
                            
                            Certificate
      of Amendment – Effective Profitable Software
                            
                            10-QSB
                            
                            6/7/06
                            
                            3.13.4
                            
                            Certificate
      of Amendment – Money4Gold Holdings, Inc.
                            
                            8-K
                            
                            7/29/08
                            
                            3.13.5
                            
                            Certificate
      of Amendment – Increase in Capital
                            
                            10-K
                            
                            3/31/10
                            
                            3.53.6
                            
                            Certificate
      of Correction
                            
                            10-Q
                            
                            11/19/08
                            
                            3.23.7
                            
                            Certificate
      of Amendment – Increase in Capital
                            
                            10-Q
                            
                            8/19/09
                            
                            3.33.8
                            
                            Certificate
      of Amendment – Upstream Worldwide, Inc.
                            
                            S-1A
                            
                            7/12/10
                            
                            3.83.9
                            
                            Amended
      and Restated Bylaws
                            
                            10-Q
                            
                            5/20/09
                            
                            3.310.1
                            
                            Form
      of Executive Option Agreement *
                            
                            
                            
                            
                            
                            
                            
                            Filed10.2
                            
                            Form
      of Director Option Agreement
                            
                            
                            
                            
                            
                            
                            
                            Filed10.3
                            
                            Form
      of Director Restricted Stock Agreement
                            
                            
                            
                            
                            
                            
                            
                            Filed10.4
                            
                            Stock
      Purchase Agreement
                            
                            10-Q
                            
                            5/14/10
                            
                            10.210.5
                            
                            Registration
      Rights Agreement
                            
                            10-Q
                            
                            5/14/10
                            
                            10.331.1
                            
                            Certification
      of Principal Executive Officer (Section 302)
                            
                            
                            
                            
                            
                            
                            
                            Filed31.2
                            
                            Certification
      of Principal Financial Officer (Section 302)
                            
                            
                            
                            
                            
                            
                            
                            Filed32.1
                            
                            Certification
      of Principal Executive Officer and Principal Financial Officer
      (Section 906)
                            
                            
                            
                            
                            
                            
                            
                            Furnished
 
 *
Management compensatory plan or arrangement
  29
 
 **The
confidential disclosure schedules are not filed in accordance with SEC Staff
policy, but will be provided to the Staff upon request.  Certain
material agreements contain representations and warranties, which are qualified
by the following factors:
 
 (i)
              the
      representations and warranties contained in any agreements filed with this
      report were made for the purposes of allocating contractual risk between
      the parties and not as a means of establishing facts;(ii)
              the
      agreement may have different standards of materiality than standards of
      materiality under applicable securities laws;(iii)
              the
      representations are qualified by a confidential disclosure schedule that
      contains nonpublic information that is not material under applicable
      securities laws;(iv)
              facts
      may have changed since the date of the agreements; and(v)
              only
      parties to the agreements and specified third-party beneficiaries have a
      right to enforce the agreements.
 
 Notwithstanding
the above, any information contained in a schedule that would cause a reasonable
investor (or that a reasonable investor would consider important in making a
decision) to buy or sell our common stock has been included. We have been
further advised by our counsel that in all instances the standard of materiality
under the federal securities laws will determine whether or not information has
been omitted; in other words, any information that is not material under the
federal securities laws may be omitted. Furthermore, information which may have
a different standard of materiality will nonetheless be disclosed if material
under the federal securities laws.
 
 Copies of
this report (including the financial statements) and any of the exhibits
referred to above will be furnished at no cost to our shareholders who make a
written request to Upstream Worldwide, Inc., 200 E. Broward Boulevard, Suite
1200, Fort Lauderdale, Florida 33301 Attention: Mr. Michael
Brachfeld.
  30
  SIGNATURES
  Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.
 
 UPSTREAM
      WORLDWIDE, INCAugust
      20, 2010
                      
                      /s/ Douglas
      FeirsteinDouglas
      FeirsteinChief
      Executive Officer
                        (Principal
      Executive Officer)August
      20, 2010
                      
                      /s/ Daniel
      BrauserDaniel
      BrauserChief
      Financial Officer
                        (Principal
      Financial
Officer)
 31