SECURITIES
      AND EXCHANGE COMMISSION


Washington,
      D.C. 20549





FORM
      10-KSB





ANNUAL
      REPORT UNDER SECTION 13 OR 15(d)


OF
      THE
      SECURITIES EXCHANGE ACT OF 1934





For
      the
      fiscal year ended: December 31, 2006





Commission
      File Number: 000-22057








M
      POWER
      ENTERTAINMENT, INC.


(Name
      of
      Small Business Issuer in its charter)





Delaware


(State
      or
      other jurisdiction of incorporation or organization)





76-0513297


(I.R.S.
      Employer Identification No.)





2602
      Yorktown Place


Houston,
      Texas 77056


(Address
      of principal executive office)





832-284-4276


(Issuer's
      telephone number)





Securities
      registered under Section 12(b) of the Exchange Act: None





Securities
      registered under Section 12(g) of the Exchange Act:


Common
      Stock, $0.001 Par Value


(Title
      of
      Class)





Check
      whether the issuer is not required to file reports pursuant to Section 13 or
      15(d) of the Exchange Act. o





Check
      whether the issuer: (1) has filed all reports required to be filed by Section
      13
      or 15(d) of the Exchange Act during the past 12 months (or for such shorter
      period that the registrant was required to file such reports), and (2) has
      been
      subject to such filing requirements for the past 90 days.


Yes x No o





Check
      if
      there is no disclosure of delinquent filers in response to Item 405 of
      Regulation S-B contained in this form, and no disclosure will be contained,
      to
      the best of registrant's knowledge, in definitive proxy or information
      statements incorporated by reference in Part III of this Form 10-KSB or any
      amendment to this Form 10-KSB. o





Indicate
      by check mark whether the registrant is a shell company (as defined in Rule
      12b-2 of the Exchange Act.)


Yes o No x





The
      Issuer's revenues for the most recent fiscal year ended December 31, 2006 were
      $0.00. The aggregate market value of the voting and non-voting common equity
      held by non-affiliates of the registrant on March 15, 2007 based upon the
      average bid and ask price of the common stock on the OTC Bulletin Board for
      such
      date, was $88,232.81. The number of shares of the Registrant's common stock
      issued and outstanding on March 15, 2007, was 148,057,688.





Transitional
      Small Business Disclosure Format (Check one): Yes o No x





Documents
      incorporated by reference: None




















**TABLE
      OF CONTENTS**





**PART
                I**ITEM
                1
            DESCRIPTION
                OF BUSINESS
            03ITEM
                2
            DESCRIPTION
                OF PROPERTY
            11ITEM
                3
            LEGAL
                PROCEEDINGS
            11ITEM
                4
            SUBMISSION
                OF MATTERS TO A VOTE OF SECURITY HOLDERS
            13**PART
                II**ITEM
                5
            MARKET
                FOR COMMON EQUITY AND RELATED STOCKHOLDER
                MATTERS
            13ITEM
                6
            MANAGEMENT’S
                DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                AND RESULTS OF OPERATIONS
            17ITEM
                7
            FINANCIAL
                STATEMENTS
            19ITEM
                8
            CHANGES
                IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
                AND FINANCIAL DISCLOSURE
            32ITEM
                8A
            CONTROLS
                AND PROCEDURES
            32ITEM
                8B
            OTHER
                INFORMATION
            33**PART
                III**ITEM
                9
            DIRECTORS,
                EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
                PERSONS; COMPLIANCE WITH SECTION 16(a)
            33ITEM
                10
            EXECUTIVE
                COMPENSATION
            34ITEM
                11
            SECURITY
                OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
                MANAGEMENT
            37ITEM
                12
            CERTAIN
                RELATIONSHIPS AND RELATED
                TRANSACTIONS
            39ITEM
                13
            EXHIBITS
            39ITEM
                14
            PRINCIPAL
                ACCOUNTANT FEES AND SERVICES
            39SIGNATURES
            39EXHIBIT
                INDEX
            40











**Forward-Looking
      Statements**





This
      report contains forward-looking statements. These forward-looking statements
      relate to our outlook or expectations for earnings, revenues, expenses, future
      financial or business performance, plans, goals, strategies, intent, beliefs
      or
      current expectations. Specifically, forward looking statements may include
      statements preceded by, followed by or that include the words: “believe,”
“plan,” “intend,” “anticipate,” “target,” “estimate,” “expect,” “project,”
“forecast” and the like, and /or future-tense or conditional constructions
      (“will,” “may,” “could,” “should,” etc.). Statements contemplating or making
      assumptions about actual or potential future sales, economic performance,
      financial condition, business prospects, revenue, income, market size,
      collaborations, and trends or operating results also constitute forward-looking
      statements.





Although
      these forward-looking statements reflect the good faith judgment of management
      based on currently available information, forward-looking statements involve
      a
      number of risks and uncertainties that may cause actual results to be materially
      different from those discussed in these forward-looking statements. Some of
      the
      factors, risks and uncertainties that could cause actual results to differ
      include general economic conditions, availability of financing on economic
      terms, cost and availability of feedstocks, engineering and construction delays,
      adverse weather conditions, wholesale and retail prices of petroleum-based
      diesel fuels, competitive rate fluctuations, continued government mandates
      and
      incentives for the use of alternative fuels and audits or tax assessments of
      various federal, state or local taxing authorities, including the Internal
      Revenue Service, and other risks referenced from time to time in our SEC filings
      and those factors listed under “Item 6  Management’s Discussion and
      Analysis or Plan of Operations—Risk Factors.”





You
      are
      urged not to place undue reliance on these forward-looking statements, which
      speak only as of the date of this report. We assume no obligation to update
      any
      forward-looking statements in order to reflect any event or circumstance that
      may arise after the date of this report, other than as may be required by
      applicable law or regulation. You are urged to carefully review and consider
      the
      various disclosures that we make in our reports filed with the SEC which attempt
      to advise interested parties of the risks and factors that may affect our
      business, financial condition, results of operation and cash flows. If one
      or
      more of these risks or uncertainties materialize, or if the underlying
      assumptions prove incorrect, our actual results may vary materially from those
      expected or projected.





**PART
      I**





**ITEM
      1. DESCRIPTION OF BUSINESS**





**Recent
      Events**





On
      January 20, 2006, M Power authorized and issued 1,000 shares of Series D
      Preferred Stock to CEO Gary Kimmons. These shares have the same dividend rights
      as the common stock of M Power and gives Mr. Kimmons the right to vote on all
      shareholder matters equal to 51 percent of the total vote. These shares of
      stock
      were issued for services and are valued at $762,976.





On
      April
      18, 2006, M Power completed a financing agreement for $2,000,000 with private
      investors. Three traunches of financing were received on April 18, 2006, May
      23,
      2006 and August 4, 2006 in the amounts of $600,000, $700,000, and $700,000
      respectively. M Power issued the Investors secured convertible debentures
      totaling $2,000,000 with a 6 percent interest rate and a maturity date of April
      18, 2009, May 23, 2009, and August 4, 2009. The debentures are convertible
      into
      common shares at a discount (using the "Applicable Percentage") of the average
      of the lowest three (3) trading prices during the twenty (20) trading day period
      prior to conversion. The Applicable Percentage means 50 percent; provided,
      however, that the Applicable Percentage shall be increased to (i) 55% in the
      event that a Registration Statement is filed within thirty days of the closing
      and (ii) 60 percent in the event that the Registration Statement becomes
      effective within one hundred and twenty days from the Closing. The registration
      statement was filed on May 18, 2006, within thirty days of closing, so the
      applicable percentage is 50%. M Power simultaneously issued to the private
      investors seven year warrants to purchase 30,000,000 common shares at an
      exercise price of $0.10. M Power has a commitment for funding of an additional
      $1,000,000 in the first quarter of 2007 to be used for a development of a
      prototype of *eDOORWAYS*.





M
      Power
      evaluated the convertible debentures and the warrants under SFAS 133 "Accounting
      for Derivatives" and EITF 00-19 "Accounting for Derivative Financial Instruments
      Indexed to and Potentially Settled in a Company's Own Stock". M Power determined
      the convertible debentures contained an embedded derivative for the conversion
      option and the warrants qualified as free standing derivatives. The conversion
      option allows for an indeterminate number of shares to potentially be issued
      upon conversion. This results in M Power being unable to determine with
      certainty they will have enough shares available to settle any and all
      outstanding common stock equivalent instruments. M Power would be required
      to
      obtain shareholder approval to increase the number of authorized shares needed
      to share settle those contracts. Because increasing the number of shares
      authorized is outside of M Power's control, this results in the these
      instruments being classified as liabilities under EITF 00-19 and derivatives
      under SFAS 133.





On
      June
      27, 2006, we filed a Certification of Amendment of Certificate of Incorporation
      with the Secretary of State of Delaware to increase the number of authorized
      shares of our common stock to one billion (1,000,000,000). The par value of
      each
      of such shares is one one-tenth of one cent ($0.001) dollars. The Board of
      Directors is expressly vested with the authority to fix the voting powers,
      full
      or limited, or no voting powers, and such designations, preferences and
      relative, participating, optional or other special rights, and qualifications,
      limitations or restrictions on any shares issued by the
      corporation.





M
      Power
      entered into a contract with Booke and Company Inc., an investor relations
      firm,
      on August 1st, 2006. The terms of this contract cover a seven month period
      beginning August 1, 2006. The monthly retainer is $5,800 through the end of
      2006. The contract has recently been extended an additional 6 months at the
      rate
      of $6,000 per month. Booke will perform services for M Power in all areas
      generally considered to be investor relations.





Effective
      October 4, 2006, the client auditor relationship between M Power Entertainment,
      Inc. (the "Company") and Malone & Bailey, PC, Certified Public Accountants,
      ("Malone") ceased as the former accountant was dismissed. Effective October
      10,
      the Company engaged Webb & Company, P.A., Certified Public Accountants
      ("Webb") as its principal independent public accountant for the fiscal year
      ended December 31, 2006. The decision to change accountants was recommended
      and
      approved by the Company's Board of Directors effective October 4, 2006. Malone
      had succeeded Hansen Barnett & Maxwell, LLC, Certified Public Accountants
      (“HBM”), who served as the Company’s principal independent accountant from May
      23, 2005 until January 13, 2006, when HBM was dismissed.





In
      September, 2006, M Power completed the search for the mark of *eDOORWAYS* and it’s
      availability was confirmed. Notification of approval for registration for the
      mark was received in February, 2007, and completion of the registration is
      anticipated in the 2 nd Quarter
      of 2007.





**History**





We
      were
      incorporated in Delaware on February 26, 1988 under the name Technicraft
      Financial, Ltd. In October 1991, we changed our name to LBM-US, Inc. In August
      1994, we acquired GK Intelligent Systems, Inc. and adopted that
      name.





During
      our initial years, our business was concentrated in advanced learning technology
      and products. However, we encountered difficulty securing the capital necessary
      to sustain our growth and brand our product. We closed our doors in June 1999
      with approximately $4 million in outstanding debt. We then became dormant and
      had no operations until 2002. In 2002, we focused on debt elimination and
      corporate restructuring activities. These issues were essentially resolved
      by
      the end of 2002.





**Current
      Business Activities**





M
      Power
      Entertainment plans to create a global ubiquitous lifestyle platform named
      Edoorways, designed to offer an enhanced form of interactivity and support
      for
      today's visually-oriented web surfing community. eDOORWAYS and the new Web
      are
      about online communities, participation, and peering. As users multiply, and
      eDOORWAYS’ easy to use tools proliferate, if could evolve into a global, living
      networked computer that everyone could benefit from and use.





*eDOORWAYS* is a
      web-based personal lifestyle information enhancement and problem solving
      gateway, lifestyle information source, and business-to-consumer marketplace.
      Our
      business strategy is to obtain revenue from lifestyle product and service
      purchases made while consumers visit our marketplace. Our brand idea is that
      lifestyle-related choices can be simple and easy, helping people transcend
      their
      daily problems. With this in mind, our brand driver, "Redefining The
      Possibilities,” reflects the belief that our *eDOORWAYS* brand
      can lead to effective solutions and even greater possibilities.





Our
      brand
      capitalizes on an emerging market-driven opportunity based on "the power of
      collective intelligence" and the proven brand strategies of eBay, Google and
      Wikipedia to empower consumers, retailers and manufacturers alike. *eDOORWAYS* does
      this by unifying and leveraging their collective strength in an exciting new
      way
      to become the ultimate lifestyle problem solver. The primary factor
      differentiating us from our competitors - About.com, Google, eBay, Yahoo and
      Craigslist - is the real-time problem solving collaborative venue we offer
      to
      consumers - giving them the correct solution the first time, every
      time.





We
      will
      benefit as the internet services market evolves into a commodity, and we will
      differentiate ourselves by
      partnering with large, powerful allies like Home Depot and other U.S. retail
      and
      service icons who will have a vested interest in our success and will push *eDOORWAYS* in  front
      of
      their users. Herein
      lies our added value: We will provide our end users the solution to a problem
      validated by millions of experts including the enabler who will then provide
      the
      "tools" needed to arrive at that solution, whether those tools be services
      or
      actual products. Our partners will also benefit from having the opportunity
      to
      attract new customers, embrace existing customers, learn about real-life
      business trends earlier and more efficiently than they do today, and grow sales
      while exploiting their existing web selling infrastructure.





Design
      Team





*eDOORWAYS* is
      comprised of a team of seasoned professionals leveraging our award-winning
      Smart
      One teaching technology and marketing expertise. Our team includes:





·
            Carmel
                Consulting - a seasoned Silicon Valley development firm specializing
                in
                developing collaborative web
                platforms.


·
            Technical
                Objectives, Inc. - an artificial intelligence scientist from AT&T
                research labs; a proven computer based training
                expert.


·
            Marty
                Lobkowitz - the former VP Mktg. for Office Depot; a channel marketing
                consultant to top retailers including Home Depot, Comp USA, Best
                Buy and
                others.


·
            Graj
                & Gustavsen - highly touted NYC branding consultants (branders of
                Oshkosh; Tommy Hilfiger; Target; many
                others).


·
            Telcordia
                - an innovative NJ based government contractor specializing in advanced
                software technology and network
                design.





Benchmarks





·
            $2
                  million in funding has been completed ; $165,000 committed on March
                  26,
                  2007 and to be funded March 30,
                  2007


·
            Working
                prototype of*eDOORWAYS*should be ready for demonstration - approximately June,
                2007


·
            *eDOORWAYS*anticipates being available to serve the public / generating revenue
                -
                approximately August, 2007





**Background**





In
      the
      first quarter of 2006, we elected to revise our previous business model, which
      involved making acquisitions of privately-held entertainment companies with
      the
      objective of linking them to a new form of Internet product/ service
      distribution. We decided that the change was necessary because we had
      experienced difficulty raising sufficient capital for expansion, and because
      our
      attempt at leveraging the assets/revenue of our acquisitions to help them grow
      has been difficult as well. A third key factor in our decision is that the
      subsidiaries were not passing a portion of their revenues along to the parent
      company.





In
      place
      of our previous model, we plan to implement a new approach whereby we will
      become an Internet technology and marketing services company. We believe that
      this move will prove to be advantageous to both the company and its shareholders
      for the following reasons: First, it will give us an opportunity to leverage
      our
      previous experience with software design and development and Internet
      technology. Second, it will be a more focused and coherent strategy. By focusing
      on a single objective, we believe we can be more effective as an
      organization.





As
      an
      Internet technology and marketing services company, we will adopt a business
      model with several components. The three most important are:





1.
            Creation
                and successful deployment of the*eDOORWAYS*initiative;


2.
            The
                acquisition of accretive (defined as an acquisition that is expected
                to
                increase earnings per share) Internet technology and audio-visual
                production entities; and


3.
            The
                pursuit of strategic relationships with other relevant
                entities.





We
      expect
      to earn revenue from an effective implementation of these components. For
      example, it is anticipated that the *eDOORWAYS* platform
      could become a forum, or marketplace, for business-to-consumer e-commerce.
      Should this occur, we will earn a specified percentage of all sales
      transactions. There is also the possibility of earning consultative revenue
      by
      assisting businesses in setting up their electronic "storefronts." Third, all
      future acquisitions will be required to pass along a specified percentage of
      their net earnings to our parent company.





Because
      it will take a number of months, or possibly years, before we anticipate seeing
      significant revenue from *eDOORWAYS* we
      anticipate that we will need to find ancillary sources of capital. Our current
      plan is to:





*
      Secure
      short-term financing of at least $10 million. These funds will be used to pay
      for developing a prototype of *eDOORWAYS* that is
      anticipated to cost approximately $500,000. Also, we will use the funds to
      finance our operational activities (server farm & facility, retire existing
      debt, valuation fees, audits, legal fees, etc.), and to cover anticipated travel
      expenses associated with securing the participation of businesses establishing
      " *eDOORWAYS* storefronts".








We
      plan
      to take the following actions in conjunction with our new imperative:





*
            Implement
                a new public relations campaign geared to bring attention to us and
                to*eDOORWAYS*





*
      Foster
      strategic relationships with well-established entities supportive of our mission
      and model, and who can help us gain access to potential venture partners,
      capital, etc.





**The
      Opportunity**





There
      is
      an opportunity to be an active participant in the business-to-consumer Internet
      e-commerce marketplace. We are preparing our new portal initiative, *eDOORWAYS* ,
      to be a
      leader in the next generation of "e-portals." We have coined the term
      "personalized lifestyle commerce" to describe a fundamental shift in emphasis
      toward true customer relationship building, sales and service within the context
      of the person's unique lifestyle orientation.





Our
      stated mission is to help people live life to the fullest by providing relevant,
      accessible help, guidance and support. Pursuant to this mission, we plan to
      pursue a technology initiative aimed at creating an advanced lifestyle
      information and entertainment portal that could change the way we seek help
      in
      managing our daily affairs. The initiative, *eDOORWAYS* ,
      would
      offer a unique alternative to existing Internet search engines and portals
      such
      as Google and Yahoo by introducing a new "lifestyle" search metaphor coupled
      with an advanced "intelligent" user interface. Together, these innovations
      might
      provide expert guidance, assistance, and support to anyone seeking help -
      whether it's for home improvement, gardening, car repair, sports or numerous
      other popular lifestyle avocations.





Aggregating
      expert help into a specific context, or lifestyle, the *eDOORWAYS* portal
      would create the possibility for searchers to access additional,
      context-relevant information not readily available through current search
      mechanisms. *eDOORWAYS* would
      offer an enhanced media-rich form of interactivity and support for today's
      visually-oriented surfing community, and ultimately could serve as a platform
      for distributing entertainment content. *eDOORWAYS* could
      also serve as a central forum for new media e-commerce business-to-consumer
      product marketing, customer support and distribution.





There
      currently is no place for consumers to go on the Internet to obtain practical,
      relevant and complete help solving their daily lifestyle problems. Many believe
      that we've lost the type of one-on-one, highly personalized service many of
      us
      remember from the '50's and '60's. Large corporations are searching for the
      best
      way to leverage the Internet, reach consumers at a one-to-one level, engage
      them, close sales, and build a longstanding relationship. In view of these
      factors, there is an opportunity for a company to become an active participant
      in the business-to-consumer Internet e-commerce marketplace. We have set our
      sights on becoming that company.





To
      serve
      this opportunity, it will be necessary to create a portal that offers
      unprecedented personalized service and support to consumers with lifestyle
      needs, problems and issues. It must also provide the kind of platform that
      businesses can use to deliver such a service. Whoever accomplishes this task
      could become a significant forum for commerce on the Internet, competing in
      a
      market which is estimated to have grown to $170 billion in 2006 according to
      eMarketer in a report dated May, 2005 on E-Commerce in the US: Retail
      Trends.





While
      there are currently no competitors known to offer Internet services similar
      to
      those contemplated by our *eDOORWAYS* portal,
      there are significant portal and search engine service providers with extensive
      resources that they can bring to bear, should they decide to compete with our
      initiative. Among these are Amazon.com, America Online, Yahoo, Google and
      approximately 200 other entities of lesser stature in the e-commerce
      marketplace.





To
      further differentiate ourselves and *eDOORWAYS* from
      these and other established competitors, we believe that it will be imperative
      for us to:





.
            Create*eDOORWAYS*to
                be a warm, friendly and convenient place for


consumers;


.
            Emphasize
                relationship building and servitude;
                and


.
            Become
                the complete resource for a broad range of lifestyles and
                avocations.





***eDOORWAYS*** **Description and Overview**





When
      created, *eDOORWAYS* will
      serve as a next-generation Internet portal offering consumers an opportunity
      to
      gain new, comprehensive and immersive experiences with a chosen lifestyle (i.e.,
      motorcycling, sailing, rock climbing, home improvement, gardening, etc.) *eDOORWAYS* will
      also serve as a forum for specialized problem solving related to lifestyle
      issues, and potentially for sales transactions stemming from solutions offered
      by businesses to their new customers. In addition, consumers desiring to
      increase their knowledge or skills related to a lifestyle aspect (i.e., how
      to
      lay tiles; build a roof; how to sew, etc.) will be able to access relevant
      training. *eDOORWAYS* characteristics will be:





.
            A
                business-to-consumer e-commerce
                marketplace;


.
            Specialized
                Intelligent Performance Support
                (IPS);


.
            Intelligent
                querying (searches);


.
            Aggregated
                data acquisition, management and storage;
                and


.
            Intelligent
                Training Support (ITS).





The
      following example offers an experience that a consumer might have while using *eDOORWAYS* services:





*eDOORWAYS* Service
      Example





As
      an
      example of how the *eDOORWAYS* portal
      might work, imagine that your hot water heater in your home is not working
      correctly. Unfortunately, troubleshooting malfunctioning hot water heaters
      is
      not your area of expertise. To garner the information you need, you enter the *eDOORWAYS* web
      portal on your laptop computer. In *eDOORWAYS* ,
      you are
      escorted to the Home Improvement lifestyle area, where subject matter experts
      representing home improvement product and service vendors offer to lend a hand.
      You select a local vendor who introduces John, the hot water heater
      troubleshooting expert. With John's knowledgeable guidance and support, you
      gain
      the expertise necessary to diagnose the nature of the problem - a worn out
      coil.
      John offers to have a new one sent over immediately from their store down the
      street, or they can have it waiting for you to pick up. However, you decide
      that
      maybe its time for a new and larger 75 gallon heater. John points you to their
      water heater manufacturer's representative, who assists you in making a purchase
      choice. Shortly thereafter, the new heater is on its way to your
      home.





While
      this is an example of how *eDOORWAYS* might
      help solve a home improvement problem, the concept of "lending a helping expert
      hand" to assist you in your moment of need is potentially applicable to all
      lifestyles and avocations. In each case, the service will be entirely free
      to
      consumers - we will be paid by vendors in the form of a percentage of each
      sales
      transaction.





Possible
      Benefits to *eDOORWAYS* Users





1.
            Serves
                as a user-friendly environment for today’s visually-oriented surfers,
                emphasizing a sense of personalized "human" connectivity, simplicity
                of
                interaction, ease of information access and availability of experts
                who
                can help solve consumer problems.


2.
            Offers
                surfers context-relevant information previously unavailable through
                current search mechanisms; surfers are offered new perspectives about
                lifestyles they would never have thought to ask
                about.


3.
            Provides
                consumers with context-specific expertise for solving practical daily
                problems related to health, the home, family,
                etc.


4.
            Serves
                as a resource for lifestyle education and personal
                improvement.





Possible
      Benefits for Participating Businesses





1.
            Offers
                emerging companies an opportunity to compete with the market-share
                leaders
                in their industry, and grow their revenues without a significant
                investment in physical
                infrastructure.


2.
            Offers
                market-share leaders a unique, affordable opportunity to attract
                additional new customers and more importantly, an avenue to cement
                a
                long-term relationship with existing customers by making services
                available every day, all year long.


3.
            Serves
                as a new platform for business commerce, delivering targeted prospects
                (consumers) to vendors. Offers vendors a forum for demonstrating
                credibility and an avenue for closing the prospective customer.


4.
            Provides
                an environment for customer relationship management and targeted
                marketing. Creates an avenue for personalized engagement and relationship
                building.





**Business
      Overview**





Twelve
      Month Plan of Operations





During
      the next 12 months, we will direct our resources to the development of the *eDOORWAYS* web
      portal. In order to achieve this goal, we have divested ourselves of any
      subsidiaries or other corporate relationships that did not directly support
      or
      complement the *eDOORWAYS* portal
      strategy and its development. We will continue to enter into strategic
      alliances, form joint ventures and acquire interests in companies whose products
      and services integrate into the *eDOORWAYS* platform.





As
      the
      transition to the *eDOORWAYS* business model has proceeded, we have
      raised $2 million in capital, and are receiving an additional $165,000 on
      March 30,2007, for the *eDOORWAYS* portal technology which will involve
      integrating existing technologies and creating a new platform to manage the
      technologies to make *eDOORWAYS* cohesive, friendly and informative. If
      the plan as outlined is achieved within 12 months, we will have raised
      approximately $10 million for working capital, $3,000,000 of which to retire
      debt, $250,000 for technology demonstration prototype creation and the remainder
      to launch the product successfully in the marketplace.





The
      corporate relationships between us, subsidiaries, joint ventures and strategic
      alliances will be collaborative, but decentralized so that shared functions,
      such as accounting are efficient, but existing, successful operations will
      continue without significant adjustment. New operations will require significant
      management and professional resources.





Material
      Contracts





M
      Power
      entered into a contract with Booke and Company Inc., an investor relations
      firm,
      on August 1st, 2006. The terms of this contract cover a seven month period
      beginning August 1, 2006. The monthly retainer is $5,800. The contract was
      recently extended for an additional 6 months at the rate of $6,000 per month.
      Booke will perform services for M Power in all areas generally considered to
      be
      investor relations.








Competitive
      Business Conditions





*eDOORWAYS* will be
      an "open" website with typical HTML interactivity that people can access through
      internet searches as well as from a variety of partner/client websites. *eDOORWAYS* will
      compete either directly or indirectly with the following web-based entities:
      Google; About.com; Craigslist; Ebay, and Ask.com. These competitors do not
      have
      a collaboratively-based contextual (real time) service offering of the type
      contemplated by this Plan. A brief summary of each competitor and their
      service(s) is listed below.





·
            Google
                ($6.1b GR).
                Google is a search engine, which is designed to provide a simple,
                fast way
                to search the Internet for information. Offering users access to
                an index
                comprised of URLs, Google is the largest search engine on the World
                Wide
                Web. Google maintains the largest online index of websites and other
                content, making the information freely available to anyone with and
                Internet connection.


·
            About.com
                ($3.4b GR):
                About.com is a Web property used by one out of every five people
                on the
                Internet. It holds a role in the lives of more than 29 million opinion
                leaders as a source of original consumer information and advice.
                About.com
                has a Guide System that features 24 content channels and promotes
                original
                content from 500 topical advisors or “Guides”. Guides share their passions
                across 57,000 topics and offer actionable information that is useful,
                practical and personally relevant. About.com offers individuals “How To”
                advice on a preferred topic as well as the tools to get the job done.


·
            Craigslist
                ($2.4b GR):
                Craigslist is a centralized network of online urban communities,
                featuring
                free classified advertisements (with jobs, housing, personals, for
                sale/barter/wanted, services, community, gigs and resumes categories)
                and
                forum sorted by various topics. Craigslist serves over 4 billion
                page
                views per month. The site receives over 10 million new classified
                ads each
                month and over 500,000 new job listings each month. Craigslist is
                established in 310 cities all over the world.


·
            eBay
                ($4.6b GR):
                eBay is an online marketplace enabling trade on a local, national
                and
                international basis. With a diverse community of individuals and
                small
                businesses, eBay offers an online platform where millions of items
                are
                sold each day. eBay’s items are available through auction style and fixed
                price trading. With buying and selling worldwide, eBay offers localized
                sites all over the world.


·
            Ask.com
                ($0.2b GR):
                Ask.com is a web search engine that allows users to find online
                information by asking a question, entering a phrase, or giving a
                key word.
                Also includes pictures, news and local search. Ask.com is one of
                the top
                five search engine companies. Ask.com’s ExpertRank ranking algorithm gives
                users relevant search results by identifying the most authoritative
                sites
                on the web. Ask.com syndicates its search technology and advertising
                units
                to a network of affiliate partners.




Based
      on
      the intended design of *eDOORWAYS* ,
      none of
      the five primary competitors we have identified is attempting to offer an
      intensive problem solving service of the nature that we are contemplating.
      It
      can be argued that Google and Ask.com offer their search capabilities as a
      problem solving tool. While we are willing to concede this fact, the searches
      that can be performed do not approximate the kind of collaborative problem
      solving service we are contemplating whereby the search function is combined
      with context-relevant "info-pedia" information (i.e., the wiki database to
      be
      created and maintained by an informed consumer population) and other useful
      functions such as placing the consumer in contact with real-time retailer and
      manufacturer product/service status and availability information, guidance
      and
      support and offering valuable context-relevant "community chat" solutions
      offered by other consumers familiar with the problem faced by the
      consumer.





Concerning
      our second contemplated service, a dedicated e-commerce marketplace with an
      extensive collaborative component, Craigslist and eBay both compete in the
      buy-sell arena, but do not offer a service that would allow retailers and
      manufacturers to collaborate with the consumer on a real-time basis. Our third
      contemplated service offering, an omnibus lifestyle "info-pedia", would compete
      directly with About.com. However, the service offering we are contemplating
      would be focused solely on lifestyle topics and hopefully, offer much greater
      depth of coverage.





Our
      branding strategy is based in a large part on our perception that the Internet
      services market is moving toward a new phase whereby there will be a major
      push
      in the direction of aggregating both static and contextual information of
      potential interest to consumers and rendering that information to consumers
      in a
      form that is easier to understand and relate to. It can be safely assumed that
      the larger, more dominant players in the market will take the lead in this
      effort. Our plan is to move quickly and effectively to assume a dominant role
      in
      the niche before the larger players are able to act. If we are not able to
      do
      this, we will find ourselves at a significant disadvantage.





Also,
      the
      implementation of the *eDOORWAYS* service
      offering is geared to a phased rollout of the three service components beginning
      with creation of an initial wiki community-driven info-pedia database. Our
      objective is to introduce the problem-solving components of our Plan as quickly
      as possible by offering initial inducements to retailers and manufacturers
      to
      play a role. As this process unfolds, there are problems or issues that could
      arise. Some of these are:





·
            The
                ability to reach "critical mass" regarding the initial population
                of the
                information database may take longer than anticipated if the public
                is
                slow to grasp what we are doing. This would be a significant limiting
                factor;


·
            Retailers
                and manufacturers could take a wait-and-see attitude regarding*eDOORWAYS*,
                choosing to wait until the gateway has a large amount of traffic
                before
                they jump in; and


·
            Competitors
                may quickly see the value of what we are doing and attempt to modify
                their
                service offerings to compete.


·
            *eDOORWAYS*is
                being introduced at a time when many believe that the internet
                services/search engine market is becoming
                "commoditized."




We
      are
      taking these possibilities into consideration as we move forward Our research
      has given us a reasonably high level of comfort that these occurrences are
      manageable. Should any of them occur, we believe that there are ways that we
      can
      continue to move forward toward profitability by focusing on alternative points
      of differentiation. In regard to the issue of "commoditization" of the internet
      services/search engine market, we believe that we will enjoy the benefit of
      a
      key differentiator - we will have a large, powerful ally (Home Depot or an
      equivalent) who will also have an interest in the site's success. They will
      provide a lot of "push" to get *eDOORWAYS* in front
      of users.





In
      view
      of the above, *eDOORWAYS* ' competitive
      advantage and value-add may be
      summarized as follows:





A)
            End-user
                benefits of*eDOORWAYS*





On
      the
      same web page, we will provide our users the solution to a problem, validated
      by
      millions of experts, as well as the enabler who can provide the “tools” needed
      to arrive at that solution, whether that is actual products or
      services.





B)
            Partner
                benefits





Our
      partners will have the opportunity to attract new customers, get closer to
      existing customers, learn about real-life business trends earlier and more
      efficiently than they do today, and grow sales while leveraging their existing
      infrastructure (ie: they are already invested in web selling.)











Technologies
      Used to Provide Services





Until
      we
      complete the Branding Plan, we will not be able to make a final determination
      of
      the technologies we will require to offer our contemplated services. Currently
      we believe that the *eDOORWAYS* service
      offering will be accomplished through the integration of the following software
      technologies:





·
            Wiki
                software - available for free to the public; used by Wikipedia and
                others
                for content management and
                presentation.


·
            "Targeting"
                software - used to pinpoint consumers' physical location and market
                availability; available from numerous
                vendors.


·
            "Push"
                software - used to drive "permission" marketing campaigns of our
                partners;
                available from numerous vendors.


·
            Systems
                integration software - used to "manage" all of the above; available
                from
                numerous vendors.


·
            Smart
                One teaching software - our proprietary expert systems based educational
                software; to be updated and revised to accommodate recent advances
                in
                presentation and transmission
                capabilities.














Research
      and Development





M
      Power
      is currently working with Digital Carmel Consulting and Telcordia to complete
      development of the prototype of the *eDOORWAYS* platform. We have completed the technical design specifications for the *eDOORWAYS* platform
      and distance learning component. During 2006 and 2005 we have spent
      approximately $25,000 in research and development and have plans to spend
      $500,000 in 2007 to complete the prototype of *eDOORWAYS* .





Customers





We
      currently have no customers and generate no revenues.





Intellectual
      Property and Proprietary Rights





In
      September, 2006, M Power completed the search for the mark of *eDOORWAYS* and it’s
      availability was confirmed. Notification of approval for registration for the
      mark was received in February, 2007, and completion of the registration is
      anticipated in the 2 nd Quarter
      of 2007.





Employees





As
      of
      December 31, 2006, we had one (1) employee. During 2006, we relied on
      consultants rather than employment contracts.





**ITEM
      2. DESCRIPTION OF PROPERTY**





On
      April
      20, 2006, we leased office space in Santa Monica, California so that we could
      be
      near the development firm who is helping us to develop our web platform. The
      term of the lease is for twelve months, and ends April 20, 2007. Monthly rent
      on
      the space is $3,200. After the lease term expires, the office space is available
      on a month to month basis, with 30 days notice being required by either party
      to
      terminate the existing lease agreement.





**ITEM
      3. LEGAL PROCEEDINGS**





Texas
      Workforce Commission. On February 10, 2000, the Texas Workforce Commission
      placed an administrative lien on us in the amount of $109,024 in connection
      with
      a claim for unpaid compensation by our former employees. This amount has been
      accrued in our financial statements under the heading “Accrued
      Expenses”.





11500
      Northwest, L.P. 11500 Northwest, L.P. commenced litigation against us on October
      31, 2003 in the 11th Judicial District Court for Harris County, Texas (Cause
      No.
      2003-60705). This case relates to a breach of a lease agreement allegedly
      entered into on or about March 5, 1999 for certain office space we never
      occupied. Plaintiff is requesting past due rents of an unspecified amount,
      broker's commission of $21,806, and tenant improvements of $51,439, attorney's
      fees, costs, and prejudgment interest. We defended the lawsuit, denied breach
      of
      the alleged lease agreement and further defended the claim for past due rents
      under Section 16.004 of the Texas Civil Practice & Remedies Code, i.e. we
      believe that the statute of limitations has tolled some or all of the claims.
      The case was tried on May 12, 2005. The Court ruled in our favor in the 11500
      Northwest, LP case stating that the statute of limitations did apply in this
      case and a Take Nothing Judgment has been signed by the Court and is now final.





Marathon
      Oil Company. A default judgment was taken against us in favor of Marathon Oil
      Company on August 31, 1999 in the amount of $326,943 representing past and
      future rentals under a lease agreement, together with $7,500 in attorney's
      fees
      and post judgment interest at 10% per annum until paid. Credit towards the
      judgment was ordered for sale of personal property by the Sheriff or Constable.
      We believe the personal property sold for approximately $28,000. To the extent
      that the property was leased during the unexpired term, it is possible that
      there would be a mitigation of the damages claim in our favor. We believe that
      some or all of the space was subsequently rented approximately 90 days later.
      The remaining $306,443 has been accrued in our financial statements under the
      heading "Accrued Expenses."





Awalt
      Group, Inc. Awalt Group, Inc. commenced litigation against MPE in January 2004
      in the United States District Court, Southern District of Texas, Houston
      Division (Cause No. H-03-5832). This case relates to advertising and promotional
      services rendered prior to July, 1999. The Plaintiff is requesting $77,189
      for
      actual amounts invoiced and $10,000 in attorney’s fees. Per their invoices,
      these are for services rendered from May 26, 1998 through June 15, 1999. We
      filed an answer and are defending the lawsuit under Section 16.004 of the Texas
      Civil Practice and Remedies Code, i.e., we believe that the statute of
      limitations has tolled the claim. The case was dismissed by the Federal court
      in
      2005 for lack of diversity, but the plaintiffs re-filed in state court alleging
      a sworn account in the amount of $78,294 plus costs, interest and attorney
      fees.
      We have filed an Answer asserting our statute of limitations defense. On August
      10, 2005, we filed a Motion for Summary Judgment based on the limitations
      defense and set it for hearing to be held on September 2, 2005. The court in
      the
      Awalt case ruled in our favor on our Motion for Summary Judgment and signed
      a
      Take Nothing Judgment in our favor on November 1, 2005. The Awalt Group has
      appealed that decision to the Fourteenth Court of Appeals in Houston, Texas
      where it is now pending. Both sides have filed their briefs and it was set
      on
      the submission docket in the Court of Appeals for the end of February, 2007.
      There has been no ruling by the Court of Appeals as of this date.





A
      lawsuit
      was filed by Julie Maranto, the former owner of Texas Source Group, Inc. ("TSG")
      against us, Texas Source Group, Inc. and Gary Kimmons as CEO. The cause of
      action from the pleadings appears to be breach of contract relating to her
      employment agreement against TSG, breach of contract, statutory fraud, breach
      of
      fiduciary duty, common law fraud and negligent misrepresentation against GKI.
      Damages have not been specified. We filed a Counterclaim for Rescission to
      unwind the transaction entered into effective August 19, 2004 based of material
      misrepresentation of material facts and fraud. The Maranto case has been settled
      through mediation and settlement documents have been executed. The 280th
      District Court of Harris County, Texas approved our Mutual Motion for Nonsuit
      and Dismissal with Prejudice on August 11, 2006.


Deanna
      S.
      Slater. On August 31, 2006, Deanna S. Slater, an independent contractor formerly
      with M Power Entertainment, Inc., brought suit in County Civil Court at Law
      Number Four in Harris County, Texas, Docket Number 872,560, alleging breach
      of
      contract, quantum meruit, promissory estoppel and for attorney’s fees. She has
      filed her Second Amended Petition alleging actual damages of at least $35,785
      in
      late January and has now dropped the claims for quantum meruit and promissory
      estoppel. The pre-lawsuit demand was for payment of $15,785.25. There is
      presently set a trial date of April 30, 2007.





We
      are
      not aware of other claims or assessments, other than as described above, which
      may have a material adverse impact on our financial position or results of
      operations.








**ITEM
      4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY
      HOLDERS**





No
      matters were submitted to a vote of securities holders during the fourth quarter
      of the Company's fiscal year.





**PART
      II**





**ITEM
      5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS**





Our
      common stock is presently traded in the over-the-counter market and quoted
      on
      the National Association of Securities Dealers' OTC Bulletin Board System under
      the ticker symbol "MPWE.OB."





The
      following table describes, for the respective periods indicated, the prices
      of M
      Power Entertainment Inc. common stock in the over-the-counter market, based
      on
      inter-dealer bid prices, without retail mark-up, mark-down or commissions and
      may not necessarily represent actual transactions.





Fiscal
                  2006
              High
              LowFirst
                  Quarter (1)
              $0.02
              $0.01Second
                  Quarter (1)
              $0.00
              $0.00Third
                  Quarter (1)
              $0.00
              $0.00Fourth
                  Quarter (1)
              $0.00
              $0.00Fiscal
                  2005
              High
              LowFirst
                  Quarter (1)
              $0.02
              $0.00Second
                  Quarter (1)
              $1.3000*
              $0.2000*Third
                  Quarter (1)
              $0.4000*
              $0.0700*Fourth
                  Quarter (1)
              $0.0750*
              $0.0500**Split-adjusted


**Holders**





Our
      registrar and transfer agent is American Registrar and Transfer Co. 342 East
      900
      South, Salt Lake City, Utah 84111. There were approximately 186 holders of
      record of our Common Stock as of March 15, 2007.





**Dividends**





We
      have
      not declared any cash dividends with respect to our common stock, and we do
      not
      intend to declare dividends in the foreseeable future. We anticipate that any
      earnings generated from our operations will be used to finance our ongoing
      operations and growth.





**Recent
      Sales of Unregistered Securities**





Preferred
      Stock





On
      January 20, 2006 the Board of Directors unanimously adopted a resolution
      providing for the issuance of a series of One Thousand (1,000) shares of Series
      D Preferred Stock to Gary Kimmons. These shares have the same dividend rights
      as
      the common stock of the company and gives Mr. Kimmons the right to vote on
      all
      shareholder matters equal to fifty-one (51%) percent of the total vote. These
      shares were issued for services and were valued at $762,976.





Debt
      Securities





On
      April
      18, 2006, M Power completed a financing agreement for $2,000,000 with private
      investors. Three traunches of financing were received on April 18, 2006, May
      23,
      2006 and August 4, 2006 in the amounts of $600,000, $700,000, and $700,000
      respectively. M Power issued the Investors secured convertible debentures
      totaling $2,000,000 with a 6 percent interest rate and a maturity date of April
      18, 2009, May 23, 2009, and August 4, 2009. The debentures are convertible
      into
      common shares at a discount (using the "Applicable Percentage") of the average
      of the lowest three (3) trading prices during the twenty (20) trading day period
      prior to conversion. The Applicable Percentage means 50 percent. M Power
      simultaneously issued to the private investors seven year warrants to purchase
      30,000,000 common shares at an exercise price of $0.10.





Common
        Stock
 
 In
        the
        year 2006, we issued 18,500,000 shares of our common stock to our convertible
        debentures holders which reduced the principle of the convertible debentures
        by
        $19,703. Our shares were issued in reliance on the exemption from registration
        provided by Section 4(2) of the Securities Act of 1933. No commissions were
        paid
        for the issuance of such shares.
 
 **Lender**
              
              
              **Date**
              
              
              **Shares
                  Converted**
              
              
              **Conversion
                  Price**
              
              
              **Principle
                  Converted**AJW
                  Offshore Ltd
              
              
              08/07/06
              
              
              206,675
              
              
              0.002400
              
              $
              496.02AJW
                  Offshore Ltd
              
              
              08/23/06
              
              
              206,675
              
              
              0.002000
              
              $
              413.35AJW
                  Offshore Ltd
              
              
              08/24/06
              
              
              206,675
              
              
              0.002000
              
              $
              413.35AJW
                  Offshore Ltd
              
              
              08/29/06
              
              
              206,675
              
              
              0.001926
              
              $
              398.06AJW
                  Offshore Ltd
              
              
              08/31/06
              
              
              206,675
              
              
              0.001926
              
              $
              398.06AJW
                  Offshore Ltd
              
              
              09/06/06
              
              
              206,675
              
              
              0.001864
              
              $
              385.24AJW
                  Offshore Ltd
              
              
              09/08/06
              
              
              206,675
              
              
              0.001864
              
              $
              385.24AJW
                  Offshore Ltd
              
              
              09/12/06
              
              
              206,675
              
              
              0.001864
              
              $
              385.24AJW
                  Offshore Ltd
              
              
              09/15/06
              
              
              206,675
              
              
              0.001800
              
              $
              372.02AJW
                  Offshore Ltd
              
              
              09/19/06
              
              
              206,675
              
              
              0.001776
              
              $
              367.05AJW
                  Offshore Ltd
              
              
              09/21/06
              
              
              206,675
              
              
              0.001714
              
              $
              354.24AJW
                  Offshore Ltd
              
              
              09/26/06
              
              
              206,675
              
              
              0.001426
              
              $
              294.72AJW
                  Offshore Ltd
              
              
              10/02/06
              
              
              206,675
              
              
              0.001264
              
              $
              261.24AJW
                  Offshore Ltd
              
              
              10/04/06
              
              
              206,675
              
              
              0.001226
              
              $
              253.38AJW
                  Offshore Ltd
              
              
              10/09/06
              
              
              206,675
              
              
              0.001100
              
              $
              227.34AJW
                  Offshore Ltd
              
              
              10/16/06
              
              
              206,675
              
              
              0.000924
              
              $
              190.97AJW
                  Offshore Ltd
              
              
              10/19/06
              
              
              206,675
              
              
              0.000924
              
              $
              190.97AJW
                  Offshore Ltd
              
              
              10/24/06
              
              
              206,675
              
              
              0.000924
              
              $
              190.97AJW
                  Offshore Ltd
              
              
              10/25/06
              
              
              206,675
              
              
              0.000862
              
              $
              178.15AJW
                  Offshore Ltd
              
              
              10/30/06
              
              
              206,675
              
              
              0.000862
              
              $
              178.15AJW
                  Offshore Ltd
              
              
              11/01/06
              
              
              206,675
              
              
              0.000862
              
              $
              178.15AJW
                  Offshore Ltd
              
              
              11/03/06
              
              
              206,675
              
              
              0.000862
              
              $
              178.15AJW
                  Offshore Ltd
              
              
              11/07/06
              
              
              206,675
              
              
              0.000960
              
              $
              198.41AJW
                  Offshore Ltd
              
              
              11/09/06
              
              
              206,675
              
              
              0.000786
              
              $
              162.45AJW
                  Offshore Ltd
              
              
              11/14/06
              
              
              206,675
              
              
              0.000862
              
              $
              178.15AJW
                  Offshore Ltd
              
              
              11/17/06
              
              
              206,675
              
              
              0.000862
              
              $
              178.15AJW
                  Offshore Ltd
              
              
              11/17/06
              
              
              236,200
              
              
              0.000862
              
              $
              203.60AJW
                  Offshore Ltd
              
              
              11/22/06
              
              
              442,875
              
              
              0.000824
              
              $
              364.93AJW
                  Offshore Ltd
              
              
              11/27/06
              
              
              442,875
              
              
              0.000798
              
              $
              353.41AJW
                  Offshore Ltd
              
              
              11/30/06
              
              
              442,875
              
              
              0.000798
              
              $
              353.41AJW
                  Offshore Ltd
              
              
              12/04/06
              
              
              442,875
              
              
              0.000798
              
              $
              353.41AJW
                  Offshore Ltd
              
              
              12/06/06
              
              
              442,875
              
              
              0.000786
              
              $
              348.10AJW
                  Offshore Ltd
              
              
              12/10/06
              
              
              442,875
              
              
              0.000786
              
              $
              348.10AJW
                  Offshore Ltd
              
              
              12/13/06
              
              
              442,875
              
              
              0.000724
              
              $
              320.64AJW
                  Offshore Ltd
              
              
              12/14/06
              
              
              442,875
              
              
              0.000724
              
              $
              320.64AJW
                  Offshore Ltd
              
              
              12/18/06
              
              
              442,875
              
              
              0.000724
              
              $
              320.64AJW
                  Offshore Ltd
              
              
              12/21/06
              
              
              442,875
              
              
              0.000724
              
              $
              320.64AJW
                  Offshore Ltd
              
              
              12/26/06
              
              
              442,875
              
              
              0.000724
              
              $
              320.64AJW
                  Offshore Ltd
              
              
              12/29/06
              
              
              442,875
              
              
              0.000676
              
              $
              299.38**10,924,250**
              
              
              
              
              **$**
              **11,634.79**
 
 **Lender**
              
              
              **Date**
              
              
              **Shares
                  Converted**
              
              
              **Conversion
                  Price**
              
              
              **Principle
                  Converted**AJW
                  Partners LLC
              
              
              08/07/06
              
              
              38,850
              
              
              0.002400
              
              $
              93.24AJW
                  Partners LLC
              
              
              08/23/06
              
              
              38,850
              
              
              0.002000
              
              $
              77.70AJW
                  Partners LLC
              
              
              08/24/06
              
              
              38,850
              
              
              0.002000
              
              $
              77.70AJW
                  Partners LLC
              
              
              08/29/06
              
              
              38,850
              
              
              0.001926
              
              $
              74.83AJW
                  Partners LLC
              
              
              08/31/06
              
              
              38,850
              
              
              0.001926
              
              $
              74.82AJW
                  Partners LLC
              
              
              09/06/06
              
              
              38,850
              
              
              0.001864
              
              $
              72.42AJW
                  Partners LLC
              
              
              09/08/06
              
              
              38,850
              
              
              0.001864
              
              $
              72.42AJW
                  Partners LLC
              
              
              09/12/06
              
              
              38,850
              
              
              0.001864
              
              $
              72.42AJW
                  Partners LLC
              
              
              09/15/06
              
              
              38,850
              
              
              0.001800
              
              $
              69.93AJW
                  Partners LLC
              
              
              09/19/06
              
              
              38,850
              
              
              0.001776
              
              $
              69.00AJW
                  Partners LLC
              
              
              09/21/06
              
              
              38,850
              
              
              0.001714
              
              $
              66.59AJW
                  Partners LLC
              
              
              09/26/06
              
              
              38,850
              
              
              0.001426
              
              $
              55.40AJW
                  Partners LLC
              
              
              10/02/06
              
              
              38,850
              
              
              0.001264
              
              $
              49.11AJW
                  Partners LLC
              
              
              10/04/06
              
              
              38,850
              
              
              0.001226
              
              $
              47.63AJW
                  Partners LLC
              
              
              10/09/06
              
              
              38,850
              
              
              0.001100
              
              $
              42.74AJW
                  Partners LLC
              
              
              10/16/06
              
              
              38,850
              
              
              0.000924
              
              $
              35.90AJW
                  Partners LLC
              
              
              10/19/06
              
              
              38,850
              
              
              0.000924
              
              $
              35.90AJW
                  Partners LLC
              
              
              10/24/06
              
              
              38,850
              
              
              0.000924
              
              $
              35.90AJW
                  Partners LLC
              
              
              10/25/06
              
              
              38,850
              
              
              0.000862
              
              $
              33.49AJW
                  Partners LLC
              
              
              10/30/06
              
              
              38,850
              
              
              0.000862
              
              $
              33.49AJW
                  Partners LLC
              
              
              11/01/06
              
              
              38,850
              
              
              0.000862
              
              $
              33.49AJW
                  Partners LLC
              
              
              11/03/06
              
              
              38,850
              
              
              0.000862
              
              $
              33.49AJW
                  Partners LLC
              
              
              11/07/06
              
              
              38,850
              
              
              0.000960
              
              $
              37.30AJW
                  Partners LLC
              
              
              11/09/06
              
              
              38,850
              
              
              0.000786
              
              $
              30.54AJW
                  Partners LLC
              
              
              11/14/06
              
              
              38,850
              
              
              0.000862
              
              $
              33.49AJW
                  Partners LLC
              
              
              11/17/06
              
              
              38,850
              
              
              0.000862
              
              $
              33.49AJW
                  Partners LLC
              
              
              11/17/06
              
              
              44,400
              
              
              0.000862
              
              $
              38.27AJW
                  Partners LLC
              
              
              11/22/06
              
              
              83,250
              
              
              0.000824
              
              $
              68.60AJW
                  Partners LLC
              
              
              11/27/06
              
              
              83,250
              
              
              0.000798
              
              $
              66.43AJW
                  Partners LLC
              
              
              11/30/06
              
              
              83,250
              
              
              0.000798
              
              $
              66.43AJW
                  Partners LLC
              
              
              12/04/06
              
              
              83,250
              
              
              0.000798
              
              $
              66.43AJW
                  Partners LLC
              
              
              12/06/06
              
              
              83,250
              
              
              0.000786
              
              $
              65.43AJW
                  Partners LLC
              
              
              12/10/06
              
              
              83,250
              
              
              0.000786
              
              $
              65.43AJW
                  Partners LLC
              
              
              12/13/06
              
              
              83,250
              
              
              0.000724
              
              $
              60.27AJW
                  Partners LLC
              
              
              12/14/06
              
              
              83,250
              
              
              0.000724
              
              $
              60.27AJW
                  Partners LLC
              
              
              12/18/06
              
              
              83,250
              
              
              0.000724
              
              $
              60.27AJW
                  Partners LLC
              
              
              12/21/06
              
              
              83,250
              
              
              0.000724
              
              $
              60.27AJW
                  Partners LLC
              
              
              12/26/06
              
              
              83,250
              
              
              0.000724
              
              $
              60.27AJW
                  Partners LLC
              
              
              12/29/06
              
              
              83,250
              
              
              0.000676
              
              $
              56.28**2,053,500**
              
              
              
              
              **$**
              **2,187.08****Lender**
              
              
              **Date**
              
              
              **Shares
                  Converted**
              
              
              **Conversion
                  Price**
              
              
              **Principle
                  Converted**AJW
                  Qualified Partners
              
              
              08/07/06
              
              
              99,750
              
              
              0.002400
              
              $
              239.40AJW
                  Qualified Partners
              
              
              08/23/06
              
              
              99,750
              
              
              0.002000
              
              $
              199.50AJW
                  Qualified Partners
              
              
              08/24/06
              
              
              99,750
              
              
              0.002000
              
              $
              199.50AJW
                  Qualified Partners
              
              
              08/29/06
              
              
              99,750
              
              
              0.001926
              
              $
              192.12AJW
                  Qualified Partners
              
              
              08/31/06
              
              
              99,750
              
              
              0.001926
              
              $
              192.12AJW
                  Qualified Partners
              
              
              09/06/06
              
              
              99,750
              
              
              0.001864
              
              $
              185.93AJW
                  Qualified Partners
              
              
              09/08/06
              
              
              99,750
              
              
              0.001864
              
              $
              185.93AJW
                  Qualified Partners
              
              
              09/12/06
              
              
              99,750
              
              
              0.001864
              
              $
              185.93AJW
                  Qualified Partners
              
              
              09/15/06
              
              
              99,750
              
              
              0.001800
              
              $
              179.55AJW
                  Qualified Partners
              
              
              09/19/06
              
              
              99,750
              
              
              0.001776
              
              $
              177.16AJW
                  Qualified Partners
              
              
              09/21/06
              
              
              99,750
              
              
              0.001714
              
              $
              170.97AJW
                  Qualified Partners
              
              
              09/26/06
              
              
              99,750
              
              
              0.001426
              
              $
              142.24AJW
                  Qualified Partners
              
              
              10/02/06
              
              
              99,750
              
              
              0.001264
              
              $
              126.08AJW
                  Qualified Partners
              
              
              10/04/06
              
              
              99,750
              
              
              0.001226
              
              $
              122.29AJW
                  Qualified Partners
              
              
              10/09/06
              
              
              99,750
              
              
              0.001100
              
              $
              109.73AJW
                  Qualified Partners
              
              
              10/16/06
              
              
              99,750
              
              
              0.000924
              
              $
              92.17AJW
                  Qualified Partners
              
              
              10/19/06
              
              
              99,750
              
              
              0.000924
              
              $
              92.17AJW
                  Qualified Partners
              
              
              10/24/06
              
              
              99,750
              
              
              0.000924
              
              $
              92.17AJW
                  Qualified Partners
              
              
              10/25/06
              
              
              99,750
              
              
              0.000862
              
              $
              85.98AJW
                  Qualified Partners
              
              
              10/30/06
              
              
              99,750
              
              
              0.000862
              
              $
              85.98AJW
                  Qualified Partners
              
              
              11/01/06
              
              
              99,750
              
              
              0.000862
              
              $
              85.98AJW
                  Qualified Partners
              
              
              11/03/06
              
              
              99,750
              
              
              0.000862
              
              $
              85.98AJW
                  Qualified Partners
              
              
              11/07/06
              
              
              99,750
              
              
              0.000960
              
              $
              95.76AJW
                  Qualified Partners
              
              
              11/09/06
              
              
              99,750
              
              
              0.000786
              
              $
              78.40AJW
                  Qualified Partners
              
              
              11/14/06
              
              
              99,750
              
              
              0.000862
              
              $
              85.98AJW
                  Qualified Partners
              
              
              11/17/06
              
              
              99,750
              
              
              0.000862
              
              $
              85.98AJW
                  Qualified Partners
              
              
              11/17/06
              
              
              114,000
              
              
              0.000862
              
              $
              98.27AJW
                  Qualified Partners
              
              
              11/22/06
              
              
              213,750
              
              
              0.000824
              
              $
              176.13AJW
                  Qualified Partners
              
              
              11/27/06
              
              
              213,750
              
              
              0.000798
              
              $
              170.57AJW
                  Qualified Partners
              
              
              11/30/06
              
              
              213,750
              
              
              0.000798
              
              $
              170.57AJW
                  Qualified Partners
              
              
              12/04/06
              
              
              213,750
              
              
              0.000798
              
              $
              170.57AJW
                  Qualified Partners
              
              
              12/06/06
              
              
              213,750
              
              
              0.000786
              
              $
              168.01AJW
                  Qualified Partners
              
              
              12/10/06
              
              
              213,750
              
              
              0.000786
              
              $
              168.01AJW
                  Qualified Partners
              
              
              12/13/06
              
              
              213,750
              
              
              0.000724
              
              $
              154.76AJW
                  Qualified Partners
              
              
              12/14/06
              
              
              213,750
              
              
              0.000724
              
              $
              154.76AJW
                  Qualified Partners
              
              
              12/18/06
              
              
              213,750
              
              
              0.000724
              
              $
              154.76AJW
                  Qualified Partners
              
              
              12/21/06
              
              
              213,750
              
              
              0.000724
              
              $
              154.76AJW
                  Qualified Partners
              
              
              12/26/06
              
              
              213,750
              
              
              0.000724
              
              $
              154.76AJW
                  Qualified Partners
              
              
              12/29/06
              
              
              213,750
              
              
              0.000676
              
              $
              144.50**5,272,500**
              
              
              
              
              **$**
              **5,615.44****Lender**
              
              
              **Date**
              
              
              **Shares
                  Converted**
              
              
              **Conversion
                  Price**
              
              
              **Principle
                  Converted**New
                  Millenium Capital
              
              
              08/07/06
              
              
              4,725
              
              
              0.002400
              
              $
              11.34New
                  Millenium Capital
              
              
              08/23/06
              
              
              4,725
              
              
              0.002000
              
              $
              9.45New
                  Millenium Capital
              
              
              08/24/06
              
              
              4,725
              
              
              0.002000
              
              $
              9.45New
                  Millenium Capital
              
              
              08/29/06
              
              
              4,725
              
              
              0.001926
              
              $
              9.10New
                  Millenium Capital
              
              
              08/31/06
              
              
              4,725
              
              
              0.001926
              
              $
              9.10New
                  Millenium Capital
              
              
              09/06/06
              
              
              4,725
              
              
              0.001864
              
              $
              8.81New
                  Millenium Capital
              
              
              09/08/06
              
              
              4,725
              
              
              0.001864
              
              $
              8.81New
                  Millenium Capital
              
              
              09/12/06
              
              
              4,725
              
              
              0.001864
              
              $
              8.81New
                  Millenium Capital
              
              
              09/15/06
              
              
              4,725
              
              
              0.001800
              
              $
              8.51New
                  Millenium Capital
              
              
              09/19/06
              
              
              4,725
              
              
              0.001776
              
              $
              8.39New
                  Millenium Capital
              
              
              09/21/06
              
              
              4,725
              
              
              0.001714
              
              $
              8.10New
                  Millenium Capital
              
              
              09/26/06
              
              
              4,725
              
              
              0.001426
              
              $
              6.74New
                  Millenium Capital
              
              
              10/02/06
              
              
              4,725
              
              
              0.001264
              
              $
              5.97New
                  Millenium Capital
              
              
              10/04/06
              
              
              4,725
              
              
              0.001226
              
              $
              5.79New
                  Millenium Capital
              
              
              10/09/06
              
              
              4,725
              
              
              0.001100
              
              $
              5.19New
                  Millenium Capital
              
              
              10/16/06
              
              
              4,725
              
              
              0.000924
              
              $
              4.37New
                  Millenium Capital
              
              
              10/19/06
              
              
              4,725
              
              
              0.000924
              
              $
              4.37New
                  Millenium Capital
              
              
              10/24/06
              
              
              4,725
              
              
              0.000924
              
              $
              4.37New
                  Millenium Capital
              
              
              10/25/06
              
              
              4,725
              
              
              0.000862
              
              $
              4.07New
                  Millenium Capital
              
              
              10/30/06
              
              
              4,725
              
              
              0.000862
              
              $
              4.07New
                  Millenium Capital
              
              
              11/01/06
              
              
              4,725
              
              
              0.000862
              
              $
              4.07New
                  Millenium Capital
              
              
              11/03/06
              
              
              4,725
              
              
              0.000862
              
              $
              4.07New
                  Millenium Capital
              
              
              11/07/06
              
              
              4,725
              
              
              0.000960
              
              $
              4.54New
                  Millenium Capital
              
              
              11/09/06
              
              
              4,725
              
              
              0.000786
              
              $
              3.71New
                  Millenium Capital
              
              
              11/14/06
              
              
              4,725
              
              
              0.000862
              
              $
              4.07New
                  Millenium Capital
              
              
              11/17/06
              
              
              4,725
              
              
              0.000862
              
              $
              4.07New
                  Millenium Capital
              
              
              11/17/06
              
              
              5,400
              
              
              0.000862
              
              $
              4.65New
                  Millenium Capital
              
              
              11/22/06
              
              
              10,125
              
              
              0.000824
              
              $
              8.34New
                  Millenium Capital
              
              
              11/27/06
              
              
              10,125
              
              
              0.000798
              
              $
              8.08New
                  Millenium Capital
              
              
              11/30/06
              
              
              10,125
              
              
              0.000798
              
              $
              8.08New
                  Millenium Capital
              
              
              12/04/06
              
              
              10,125
              
              
              0.000798
              
              $
              8.08New
                  Millenium Capital
              
              
              12/06/06
              
              
              10,125
              
              
              0.000786
              
              $
              7.96New
                  Millenium Capital
              
              
              12/10/06
              
              
              10,125
              
              
              0.000786
              
              $
              7.96New
                  Millenium Capital
              
              
              12/13/06
              
              
              10,125
              
              
              0.000724
              
              $
              7.33New
                  Millenium Capital
              
              
              12/14/06
              
              
              10,125
              
              
              0.000724
              
              $
              7.33New
                  Millenium Capital
              
              
              12/18/06
              
              
              10,125
              
              
              0.000724
              
              $
              7.33New
                  Millenium Capital
              
              
              12/21/06
              
              
              10,125
              
              
              0.000724
              
              $
              7.33New
                  Millenium Capital
              
              
              12/26/06
              
              
              10,125
              
              
              0.000724
              
              $
              7.33New
                  Millenium Capital
              
              
              12/29/06
              
              
              10,125
              
              
              0.000676
              
              $
              6.84**249,750**
              
              
              
              
              **$**
              **265.99**
 
 The
        above
        issuance of shares of our common stock qualified for exemption under Section
        4(2) of the Securities Act of 1933 since the issuance of such shares by us
        did
        not involve a public offering. The holders were sophisticated investors and
        had
        access to information normally provided in a prospectus regarding us. The
        offering was not a “public offering” as defined in Section 4(2) due to the
        insubstantial number of persons involved in the deal, size of the offering,
        manner of the offering and number of shares offered.
  **ITEM
      6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF
      OPERATION**





The
      following discussion should be read in conjunction with the financial statements
      and notes thereto included in Item 7 of this Form 10-KSB. All information
      presented herein is based on our fiscal calendar.





*Statements
      in this document that are not historical facts, including statements about
      plans
      and expectations regarding products and opportunities, demand and acceptance
      of
      new or existing product capital resources and future financial results are
      forward-looking. Forward-looking statements involve risks and uncertainties
      which may cause the Company's actual results in future periods to differ
      materially from those expressed. These uncertainties and risks include changing
      consumer preferences, lack of success of new products, loss of the Company's
      customers, competition and other factors discussed from time to time in the
      Company's filings with the Securities and Exchange Commission.*











**Twelve
      Month Plan of Operation**





During
      the next 12 months, we will direct our resources to the development of the *eDOORWAYS* web
      platform. In order to achieve this goal, we have divested ourselves of any
      subsidiaries or other corporate relationships that did not directly support
      or
      complement the *eDOORWAYS* platform
      strategy and its development. We will continue to enter into strategic
      alliances, form joint ventures and acquire interests in companies whose products
      and services integrate into the *eDOORWAYS* platform.




We
        have
        been successful in 2006 in raising $2,000,000, which was funded during the
        second and third quarters of 2006. An additional $165,000 is committed and
        will
        be received March 30, 2007. M Power intends to spend $250,000 over the next
        two
        months to develop the prototype of the *eDOORWAYS*
        platform.





M
      Power
      is working with investment bankers to raise $10,000,000 in 2007 to facilitate
      the implementation of our business plan for the next 12 months. Our business
      plan assumes that the $10,000,000 of funding will be received by mid-year,
      2007.
      In summary, this funding will be used for:


*
      $1,000,000
      in computer purchases and facility construction


*
      $3,000,000
      to retire existing debt


*
      $6,000,000
      as working capital and to launch the product successfully into the
      marketplace





More
      detailed descriptions of our revenue sources and use of the funds over the
      next
      12 months is as follows:





**Significant
      Equipment Purchases and Server Farm Construction:**





M
      Power
      anticipates that we will need to purchase $750,000 in computer servers to
      maintain our activity during the first year, with replacement being required
      every three years. To properly house these servers, we plan to construct a
      facility in a strategic location, which has yet to be determined. We expect
      the
      cost of this facility to be approximately $250,000, and to be depreciated over
      28 years.





**Revenues:**


Over
      the
      next 12 months, M Power anticipates generating a minimum of $2,500,000 in
      revenues from our e-Commerce platform, advertising , distance learning,
      consultative services and marketing services. The following defines our revenue
      streams mentioned above:





**Revenue
      Stream Definitions**





·
            e-Commerce
                Platform-
                Revenue derived from the sale of goods and services to consumers.
                Retailers/manufacturers will pay us a "rake", or percentage, of each
                e-commerce transaction in return for our having facilitated the sale
                on
                our platform. We also anticipate the possibility of payment in
                consumer-to-consumer transactions.





·
            Distance
                Learning-
                Revenue from the sale of educational services to consumers. Retailers
                will
                pay us a "transaction fee" for the use of our distance learning system
                platform and Smart One training technology to facilitate training
                they
                offer consumers. They will also ask us to assist them with creating
                the
                courses they offer.


·
            Advertising
                Services-
                Revenue from retailers/manufacturers paid to us for placement of
                advertising tiles and for other anticipated advertising services.





·
            Consultative
                Services-
                Revenue we receive in return for assisting retailers/manufacturers
                in
                creating and implementing their*eDOORWAYS*-based
                informational service to consumers. Retailers will be competing to
                assist
                consumers with their lifestyle problems. They may choose to show
                the
                consumer diagrams, animated reference information, and other forms
                of
                assistance. Or, they may choose to immerse the consumer in some form
                of
                relevant experience. Irrespective, we can help the retailer with
                these
                efforts.


·
            Marketing
                Services-
                Revenue we receive for assisting retailers/manufacturers in using
                our
                proprietary consumer date to facilitate their product/service marketing
                efforts. This includes data mining fees, consultative fees for assisting
                with permission marketing campaigns, and consultative fees for assisting
                with CRM programs.





**Operating
      and Overhead Expenses:**





**Production
      & Distribution Costs**


·
            Server
                Maintenance and Bandwidth is projected at
                $900,000


·
            Software
                development and maintenance
                $1,350,000





**Staffing
      Increases**


We
      intend
      to increase our employees from 1 to 16 in year one at an estimated cost of
      $1,290,000 as detailed below:


·
            CEO
                $240,000


·
            3
                Professionsals - $210,000


·
            6
                production staff members - $420,000


·
            6
                sales/marketing staff $420,000





**Overhead
      Costs**


·
            Audit
                and accounting costs are budgeted at $350,000 during the next 12
                months


·
            Legal
                fees are anticipated being approximately
                $210,000


·
            Facilities
                cost is expected to be $120,000, which includes server farm building
                maintenance


·
            Travel
                and entertainment of $100,000





**Other
      Costs**


·
            Corporate
                recapitalization - $50,000


·
            Filing
                and legal fees for listing on Amex/Nasdaz
                $150,000


·
            Annual
                Amex/Nasdaq fee is $75,000





**Liquidity**




Based
      on
      our current cash position of $598,000, and the $165,000 of funding to be
      received March 30, 2007, we will not be able to meet our current
      operating costs, and initial development costs for the next twelve months. 
To fully implement our current business plan, we will need to raise an
      additional $10,000,000, as discussed, by mid-year, 2007. We are currently in
      negotiations to secure this additional funding through efforts with investment
      bankers.




**Off-Balance
      Sheet Arrangements**





None.





**ITEM
      7. FINANCIAL STATEMENTS**





**Report
      of Independent Registered Public Accounting Firms**





To
      the
      Board of Directors of:


M
      Power
      Entertainment, Inc.





We
      have
      audited the accompanying balance sheet of M Power Entertainment, Inc. as of
      December 31, 2006, and the related statements of operations, changes in
      stockholders’ deficiency and cash flows for the year then ended. These financial
      statements are the responsibility of the Company’s management. Our
      responsibility is to express an opinion on these financial statements based
      on
      our audit.





We
      conducted our audit in accordance with the standards of the Public Company
      Accounting Oversight Board (United States). Those standards require that we
      plan
      and perform the audit to obtain reasonable assurance about whether the financial
      statements are free of material misstatement. An audit includes examining,
      on a
      test basis, evidence supporting the amounts and disclosures in the financial
      statements. An audit also includes assessing the accounting principles used
      and
      significant estimates made by management, as well as evaluating the overall
      financial statement presentation. We believe that our audit provides a
      reasonable basis for our opinion.





In
      our
      opinion, the financial statements referred to above present fairly in all
      material respects, the financial position of M Power Entertainment, Inc. as
      of
      December 31, 2006 and the results of its operations and its cash flows for
      the
      year then ended in conformity with accounting principles generally accepted
      in
      the United States of America.




The
        accompanying financial statements have been prepared assuming that the Company
        will continue as a going concern. As discussed in Note 10 to the financial
        statements, the Company has a loss from operations of $4,464,591, a negative
        cash flow from operations of $1,147,535, a working capital deficiency of
        $4,450,271 and a stockholders' deficiency of $4,275,133. These factors raise
        substantial doubt about the Company's ability to continue as a going concern.
        Management's plans concerning these matters are also described in Note 10.
        The
        financial statements do not include any adjustments that might result from
        the
        outcome of this uncertainty.





WEBB
      & COMPANY, P.A.





Boynton
      Beach, Florida


March
      19,
      2007




Except
      for note 11,


as
      to which the date is March 29, 2007


_______




**To
        the Board of Directors**
 **M
        Power Entertainment, Inc.**
 **(formerly
        GK Intelligent Systems, Inc.)**
 **Houston,
        Texas**
 
 We
        have
        audited the accompanying consolidated balance sheet of M Power Entertainment,
        Inc. (formerly GK Intelligent Systems, Inc.) as of December 31, 2005, and
        the
        related consolidated statements of operations, stockholders' deficit and
        cash
        flows for the year then ended. These consolidated financial statements are
        the
        responsibility of M Power's management. Our responsibility is to express
        an
        opinion on these consolidated financial statements based on our
        audit.
 
 We
        conducted our audit in accordance with standards of the Public Company
        Accounting Oversight Board (United States). Those standards require that
        we plan
        and perform the audit to obtain reasonable assurance about whether the
        consolidated financial statements are free of material misstatement. An audit
        also includes examining, on a test basis, evidence supporting the amounts
        and
        disclosures in the consolidated financial statements, assessing the accounting
        principles used and significant estimates made by management, as well as
        evaluating the overall consolidated financial statement presentation. We
        believe
        that our audit provides a reasonable basis for our opinion.
 
 In
        our
        opinion, the consolidated financial statements referred to above present
        fairly,
        in all material respects, the consolidated financial position of M Power
        Entertainment, Inc. as of December 31, 2005 and the results of their operations
        and their cash flows for the year then ended, in conformity with accounting
        principles generally accepted in the United States of America.
 
 Malone
        & Bailey, PC
 www.malone-bailey.com
 Houston,
        Texas
 
 April
        15,
        2006, except for
 Note
        9 as
        to which the
 date
        is
        April 18, 2006
 
 Table
              of Contents





M
                POWER ENTERTAINMENT, INC.BALANCE
                SHEETSFor
                the Year Ended December 31,2006
            
            
            2005
              Consolidated
              (Restated)ASSETSCURRENT
                ASSETSCash
            
            $
            728,393
            
            $
            75,928Prepaid
                Insurance
            
            
            14,809
            
            
            -OTHER
                ASSETSDeferred
                Financing Costs, net of accumulated amortization of
                $96,439
            
            
            295,191
            
            
            -Deposits
            
            
            4,800
            
            
            4,000Fixed
                Assets, net of accumulated depreciation of $1,105 and $208,
                respectively
            
            
            4,444
            
            
            4,999TOTAL
                ASSETS
            
            $
            1,047,637
            
            $
            84,927LIABILITIES
                AND STOCKHOLDERS' DEFICITCURRENT
                LIABILITIESAccounts
                payable - trade
            
            $
            51,512
            
            $
            189,692Accounts
                payable - related parties
            
            
            -
            
            
            19,306Accrued
                expenses
            
            
            826,781
            
            
            899,964Accrued
                expenses - related parties
            
            
            -
            
            
            16,649Notes
                Payable
            
            
            157,798
            
            
            107,000Convertible
                debenture derivative liability
            
            
            4,157,382
            
            
            -Total
                current liabilities
            
            
            5,193,473
            
            
            1,232,611LONG
                TERM LIABILITIESConvertible
                debentures 6%, net of discount of $1,851,000
            
            
            129,297
            
            
            -Total
                long term liabilities
            
            
            129,297
            
            
            -Total
                liabilities
            
            
            5,322,770
            
            
            1,232,611STOCKHOLDERS'
                DEFICITSeries
                D preferred stock, $0.001 par value per share; 1,000 shares authorized
                1,000 and 0 shares issued, respectively
            
            
            1
            
            
            -Common
                stock, $0.001 par value per share; 1,000,000,000 shares authorized;
                75,497,688 and 42,657,688 shares issued and outstanding,
                respectively
            
            
            75,498
            
            
            42,658Additional
                paid-in capital
            
            
            61,398,052
            
            
            60,093,751Accumulated
                Deficit
            
            
            (65,748,684
            )
            
            (61,284,093
            )Total
                stockholders' deficit
            
            
            (4,275,133
            )
            
            (1,147,684
            )TOTAL
                LIABILITIES AND STOCKHOLDERS' DEFICIT
            
            $
            1,047,637
            
            $
            84,927See
              summary of significant accounting policies and notes to financial
              statements.


Table
          of Contents








M
                POWER ENTERTAINMENT, INCSTATEMENTS
                OF OPERATIONSFor
                the Year Ended December 31,2006
            
            
            2005
              Consolidated
              (Restated)OPERATING
                EXPENSESDepreciation
                and amortization
            
            $
            555
            
            $
            550Compensation
                expense
            
            
            1,042,976
            
            
            -Professional
                fees
            
            
            401,848
            
            
            721,111General
                and administrative
            
            
            700,165
            
            
            13,718,866Lawsuit
                settlement
            
            
            14,500
            
            
            -Total
                operating expense
            
            
            2,160,044
            
            
            14,440,527LOSS
                FROM OPERATIONS
            
            
            (2,160,044
            )
            
            (14,440,527
            )OTHER
                INCOME (EXPENSES)Interest
                expense and loan discount fee
            
            
            (372,144
            )
            
            (79,405
            )Gain/(Loss)on
                derivative liability
            
            
            (2,071,004
            )
            
            -Gain
                on release of debt
            
            
            138,601
            
            
            799,235Total
                other income (expenses)
            
            
            (2,304,547
            )
            
            719,830LOSS
                FROM CONTINUING OPERATIONS
            
            
            (4,464,591
            )
            
            (13,720,697
            )INCOME
                (LOSS) FROM DISCOUNTINUED OPERATIONS
            
            
            -
            
            
            (136,839
            )NET
                LOSS
            
            $
            (4,464,591
            )
            $
            (13,857,536
            )BASIC
                AND DILUTED LOSS PER SHAREBasic
                and diluted loss from continuing operations
            
            $
            (0.08
            )
            $
            (0.70
            )Basic
                and diluted loss from discontinued operations
            
            $
            -
            
            $
            (0.01
            )Total
                basic and diluted loss per share
            
            $
            (0.08
            )
            $
            (0.71
            )BASIC
                AND DILUTED WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING
            
            
            58,702,161
            
            
            19,397,905See
              summary of significant accounting policies and notes to financial
              statements.








Table
          of Contents





M
                  Power Entertainment IncStatements
                  of Stockholder Equity (deficit)Preferred
                  Stock
              
              Common
                  Stock @ Par .001
              
              Additional
                  Paid-in Capital
              
              Accumulated
                  Deficit
              
              Subscription
                  Receivable
              
              TotalShares
              
              Amount
              
              Shares
              
              AmountBalance,
                  December 21,2004
              
              
              -
              
              
              -
              
              
              1,112,731
              
              $
              1,113
              
              $
              46,850,129
              
              $
              (47,426,557
              )
              
              (500,000
              )
              $
              (1,075,315
              )Common
                  stock issued for services
              
              
              
              
              
              
              
              
              41,544,957
              
              
              41,545
              
              
              13,243,622
              
              
              
              
              
              
              
              
              13,285,167Stock
                  Subscriptions deemed uncollectible
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              500,000
              
              
              500,000Net
                  loss for the year ended December 31,2005
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              (13,857,536
              )
              
              
              
              
              (13,857,536
              )Balances,
                  December 31,2005 (Restated)
              
              
              -
              
              
              -
              
              
              42,657,688
              
              $
              42,658
              
              $
              60,093,751
              
              $
              (61,284,093
              )
              
              -
              
              $
              (1,147,684
              )Common
                  stock issued for services
              
              
              
              
              
              
              
              
              14,340,000
              
              
              14,340
              
              
              487,949
              
              
              
              
              
              
              
              
              502,289Common
                  stock issued for conversion of debt
              
              
              
              
              
              
              
              
              18,500,000
              
              
              18,500
              
              
              1,203
              
              
              
              
              
              
              
              
              19,703Preferred
                  stock to G Kimmons
              
              
              1,000
              
              
              1
              
              
              
              
              
              
              
              
              762,975
              
              
              
              
              
              
              
              
              762,976Derivitave
                  liability converted to equity upon conversion of debt
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              52,174
              
              
              
              
              
              
              
              
              52,174Net
                  loss for the year ended December 31, 2006
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              (4,464,591
              )
              
              
              
              
              (4,464,591
              )Balances,
                  December 31, 2006
              
              
              1,000
              
              $
              1
              
              
              75,497,688
              
              $
              75,498
              
              $
              61,398,052
              
              $
              (65,748,684
              )
              
              -
              
              $
              (4,275,133
              )See
                summary of significant accounting policies and notes to financial
                statements.


Table
          of Contents





M
                POWER ENTERTAINMENTSTATEMENTS
                OF CASH FLOWFor
                the Year Ended December 31,2006
            
            2005ConsolidatedCash
                flows from operating activities:
            
            
            
            (Restated)Net
                Loss
            
            $
            (4,464,591
            )
            $
            (13,857,536
            )Adjustments
                To Reconcile Net Loss to Net Cash used in Operating
                ActivitiesDepreciation
            
            
            555
            
            
            550Amortization
                of offering costs
            
            
            96,439
            
            
            -Amortization
                of note payable discount
            
            
            149,000
            
            
            -Gain
                on disposal of liabilities
            
            
            (138,601
            )
            
            (799,235
            )Stock
                issued for services
            
            
            1,265,265
            
            
            13,628,609Discontinued
                operations
            
            
            -
            
            
            136,839Stock
                subscriptions deemed un-collectible
            
            
            -
            
            
            500,000(Gain)/Loss
                on Derivative Liability
            
            
            2,017,927
            
            
            -Changes
                in operating assets and liabilities:
            
            
            -
            
            
            -Accounts
                receivable
            
            
            -
            
            
            183,104Other
                current assets
            
            
            -
            
            
            3,473Prepaid
                expense
            
            
            (14,809
            )
            
            -Deposits
            
            
            (800
            )
            
            -Accountspayable
                related party
            
            
            (19,306
            )
            
            (152,525
            )Accrued
                expenses related party
            
            
            (16,649
            )
            
            -Accrued
                expenses
            
            
            116,216
            
            
            -Accounts
                payable
            
            
            (138,181
            )
            
            54,474**Net
                cash used in operating activities**
            
            
            **(1,147,535**
            **)**
            
            **(302,247**
            **)**Proceeds
                from disposition of assets
            
            
            -
            
            
            9,964Purchase
              of property, plant, and equipment
            
            
            
            
            
            (5,549
            )Deposit
            
            
            
            
            
            (4,000
            )**Net
                cash provided by (used in) investing activities**
            
            
            **-**
            
            
            **415**Cash
                flows from financing activities:Proceeds
                from related party notes payable
            
            
            -
            
            
            269,109Payments
              on related party notes
              payable
            
            
            -
            
            
            (269,109
            )Notes
                payable, net of offering costs
            
            
            1,800,000
            
            
            280,000**Net
                cash provided by financing activities**
            
            
            **1,800,000**
            
            
            **280,000**Net
                increase (decrease) in cash
            
            
            652,465
            
            
            (21,832
            )Cash
                at beginning of year
            
            
            75,928
            
            
            54,096Cash
                at end of year
            
            **$**
            **728,393**
            
            **$**
            **75,928****Non
                Cash investing and financing**Issued
                warrants for offering costs
            
            $
            191,630
            
            $
            -Conversion
                of Derivative Liability
            
            $
            52,174
            
            $
            -Conversion
                of N/P into equity
            
            $
            19,703
            
            $
            -Derivative
                Liability
            
            $
            2,000,000
            
            $
            -See
              summary of significant accounting policies and notes to financial
              statements.





Table
          of Contents


M
      Power
      Entertainment, Inc.


Notes
      to
      the Financial Statements


December
      31, 2006 and 2005





**Note
      1 - Summary of Significant Accounting Policies**





Nature
      of Business





The
      Company is a non-operating entity incorporated in Delaware in 1988, under the
      name "Technicraft Financial, Ltd." In August 1994, the Company acquired GK
      Intelligent Systems, Inc., a Texas corporation, and changed its name to GK
      Intelligent Systems, Inc. Through 1999, the company was principally engaged
      in
      the development and marketing of software products capable of interaction with
      and adaptation to the needs of software users and interpretation of data. The
      Company changed its name in 2005 to M Power Entertainment, Inc. ** M
      Power
      plans to create a lifestyle information/entertainment platform named *eDOORWAYS* ,
      designed to offer an enhanced form of interactivity and support for today's
      visually-oriented web surfing community.





*eDOORWAYS* is a
      web-based personal lifestyle information enhancement and problem solving
      gateway, lifestyle information source, and business-to-consumer marketplace.
      Our
      business strategy is to obtain revenue from lifestyle product and service
      purchases made while consumers visit our marketplace.




Use
      of
      Estimates





In
      preparing financial statements, management makes estimates and assumptions
      that
      affect the reported amounts of assets and liabilities in the balance sheet
      and
      revenue and expenses in the statement of operations. Actual results could differ
      from those estimates.





Cash
      and Cash Equivalents





For
      purposes of the statements of cash flows, M Power considers all highly liquid
      investments purchased with an original maturity of three months or less to
      be
      cash equivalents. These accounts may at times exceed federally insured limits.
      The Company has not experienced any losses on such accounts. At December 31,
      2006, the Company had approximately $650,890 in excess of FDIC insurance limits.





Revenue
      Recognition





M
      Power
      recognizes revenues when services have been performed, collections are
      reasonably assured and no further obligations exist. M Power had no revenues
      from continuing operations in 2006 or 2005.





Impairment
      of Long-Lived Assets





In
      accordance with SFAS No. 142 and SFAS No. 144, long-lived assets, including
      goodwill associated with other long-lived assets, are evaluated for impairment
      annually or whenever events or changes in circumstances indicate that the
      carrying amount of an asset may not be recoverable.





The
      amount of any impairment considered necessary would be determined by comparing
      the book value of the net assets in the applicable line of business to fair
      value using methods such as the present-value of estimated future cash flows,
      sale value or other valuation methodologies available at the time, depending
      on
      the stage of development of the line of business and M Power's intentions at
      the
      time an impairment adjustment were considered necessary.





Income
      Taxes





Income
      taxes are provided for the tax effects of transactions reported in the financial
      statements and consist of taxes currently due plus deferred taxes resulting
      from
      timing differences. Deferred tax assets and liabilities represent the future
      tax
      return consequences of those differences, which will either be taxable or
      deductible when the assets and liabilities are recovered or settled.





Stock-Based
      Compensation





M
      Power
      adopted the disclosure requirements of Financial Accounting Standards No. 123,
      Accounting for Stock-Based Compensation and FAS No. 148 with respect to pro
      forma disclosure of compensation expense for options issued. For purposes of
      the
      pro forma disclosures, the fair value of each option grant is estimated on
      the
      grant date using the Black-Scholes option-pricing model.





The
      following table illustrates the effects of net income (loss) and earnings (loss)
      per share if M Power had applied the fair value recognition provisions of FASB
      Statement No. 123, Accounting for Stock-Based Compensation, to stock-based
      employee compensation.





For
                the years ended December 31,2006
            
            2005Net
                loss, as reported
            
            $
            (4,464,591
            )
            $
            (13,857,536
            )Deduct:
                Total stock-based employee compensation expensedetermined
                under fair value based method for all awards,net
                of related tax effects
            
            
            -
            
            
            (36,022
            )Pro
                forma net income (loss)
            
            $
            (4,464,591
            )
            $
            (13,893,588
            )Basic
                - pro forma
            
            $
            (0.08
            )
            $
            (0.71
            )Diluted
                - pro forma
            
            $
            (
                0.08
            )
            $
            (0.71
            )




Property,
      Plant & Equipment





Property
      and equipment are carried at cost and as of December 31, 2006, and consists
      solely of computer equipment. Depreciation is provided using the straight-line
      method for financial reporting purposes based on estimated useful lives of
      three
      years. Accumulated depreciation as of December 31, 2006 amounted to
      $1,105.





The
      cost
      of asset additions and improvements that extend the useful lives of property
      and
      equipment are capitalized. Routine maintenance and repair items are charged
      to
      current operations. The original cost and accumulated depreciation of asset
      dispositions are removed from the accounts and any gain or loss is reflected
      in
      the statement of operations in the period of disposition.





Reclassification





Certain
      2005 balances have been reclassified to conform with the 2006 financial
      statement presentation.


Loss
          Per Share
  Basic
          and
          diluted net loss per common share is computed based upon the weighted average
          common shares outstanding as defined by Financial Accounting Standards
          No. 128,
“Earnings per Share.” The 2,828,995,714 and 0
          shares issuable upon conversion of the note payable were not included in
          the
          computation of loss per share for December 31, 2006 and 2005, because their
          inclusion is anti-dilutive. The 47,344,920 and 678,253 shares issuable upon
          the exercise of stock options were not included in the computation of loss
          per
          share for December 31, 2006 and 2005 because their inclusion is
          anti-dilutive.


Recently
      issued accounting pronouncements





M
      Power
      does not expect the adoption of the following recently issued accounting
      pronouncements to have a significant impact on its results of operations,
      financial position or cash flow.


In
          February 2006, the FASB issued FAS 155, Accounting for Certain Hybrid Financial
          Instruments. This statement amends FAS 133, Accounting for Derivative
          Instruments and Hedging Activities and FAS 140, Accounting for Transfers
          and
          Servicing of Financial Assets and Extinguishments of Liabilities. This
          statement
          permits fair value re-measurement for any hybrid financial instrument that
          contains an embedded derivative that otherwise would require bifurcation.
          This
          statement is effective for all financial instruments acquired or issued
          after
          the beginning of an entity’s first fiscal year that begins after September 15,
          2006. The Company expects to adopt this statement effective January 1,
          2007 and
          does not expect it to have a material effect on the financial statements.
 
 In
          March
          2006, the FASB released SFAS No. 156 “Accounting for Servicing of Financial
          Assets: an amendment of FASB Statement No. 140” to simplify accounting for
          separately recognized servicing assets, servicing liabilities. SFAS No.
          156
          permits an entity to choose either the amortization method or the fair
          value
          measurement method for measuring each class of separately recognized servicing
          assets and servicing liabilities after they have been initially measured
          at fair
          value. SFAS No. 156 applies to all separately recognized servicing assets
          and
          liabilities acquired or issued after the beginning of an entity’s fiscal year
          that begins after September 15, 2006. The Company does not anticipate the
          adoption of SFAS No. 156 will have a material impact on its consolidated
          financial statements.
 
 In
          September 2006, FASB issued FAS 157, Fair Value Measurement, which defines
          fair
          value, establishes a framework for measuring fair value and enhances disclosures
          about fair value measures required under other accounting pronouncements,
          but
          does not change existing guidance as to whether or not an instrument is
          carried
          at fair value. FAS 157 is effective for fiscal years beginning after November
          15, 2007, the year beginning January 1, 2008 for the Company. The Company
          does
          not anticipate the adoption of SFAS No. 156 will have a material impact
          on its
          consolidated financial statements.
 
 In
          September 2006, the FASB issued SFAS No. 158 “Employers’ Accounting for Defined
          Benefit Pension and Other Postretirement Plans : an amendment of FASB Statements
          No. 87, 88, 106 and 132 (R)” which requires an employer to recognize the over
          funded or under funded status of defined benefit and other postretirement
          plans
          as an assets or liability in its statement of financial position and to
          recognize changes in that funded status in the year in which the changes
          occur
          through and adjustment to comprehensive income. This statement also requires
          an
          employer to measure the funded status of a plan as of the date of its year-end
          statement of financial positions, which limited exceptions. The Company
          does not
          anticipate the adoption of SFAS No. 156 will have a material impact on
          its
          consolidated financial statements.
 
 In
          February 2007, the Financial Accounting Standards Board (FASB) issued SFAS
          No.
          159, “The Fair Value Option for Financial Assets and Financial Liabilities -
          Including an Amendment of FASB Statement No. 115”. This statement permits
          entities to choose to measure many financial instruments and certain other
          items
          at fair value. Most of the provisions of SFAS No. 159 apply only to entities
          that elect the fair value option. The Company does not anticipate the adoption
          of SFAS No. 156 will have a material impact on its consolidated financial
          statements.


**Note
      2 - Restatement**





Our
      financial statements for the year ended December 31, 2005 included herein have
      been restated for the following significant errors in the previously issued
      financial statements:





1.
            The
                financial statements as previously issued did not reflect the financial
                statement impact of 14,000,000 shares of common stock issued for
                services
                at $0.60 per share on May 18, 2005. The effect of this omission on
                results
                of operations was to increase the net loss as previously reported
                by
                $8,400,000. Additionally, common stock was understated in the amount
                of
                $14,000 and additional paid-in capital was understated in the amount
                of
                $8,386,000.





2.
            The
                previously issued financial statements did not provide adequate disclosure
                of the retroactive restatement to common stock amounts presented
                for the
                year ended December 31, 2004 for the reverse stock split described
                in note
                1 above. There were no changes to any dollar amounts on the basic
                financial statements.





**Note
      3 - Convertible Debentures**





On
      April
      18, 2006, M Power completed a financing agreement for $2,000,000 with private
      investors. Three traunches of financing were received on April 18, 2006, May
      23,
      2006 and August 4, 2006 in the amounts of $600,000, $700,000, and $700,000
      respectively. M Power issued the Investors secured convertible debentures
      totaling $2,000,000 with a 6 percent interest rate and a maturity date of April
      18, 2009, May 23, 2009, and August 4, 2009. The debentures are convertible
      into
      common shares at a discount (using the "Applicable Percentage") of the average
      of the lowest three (3) trading prices during the twenty (20) trading day period
      prior to conversion. The Applicable Percentage means 50 percent. M Power
      simultaneously issued to the private investors seven year warrants to purchase
      30,000,000 common shares at an exercise price of $0.10.





M
      Power
      evaluated the convertible debentures and the warrants under SFAS 133 "Accounting
      for Derivatives" and EITF 00-19 "Accounting for Derivative Financial Instruments
      Indexed to and Potentially Settled in a Company's Own Stock". M Power determined
      the convertible debentures contained an embedded derivative for the conversion
      option and the warrants qualified as free standing derivatives. The conversion
      option allows for an indeterminate number of shares to potentially be issued
      upon conversion. This results in M Power being unable to determine with
      certainty they will have enough shares available to settle any and all
      outstanding common stock equivalent instruments. M Power would be required
      to
      obtain shareholder approval to increase the number of authorized shares needed
      to share settle those contracts. Because increasing the number of shares
      authorized is outside of M Power's control, this results in the these
      instruments being classified as liabilities under EITF 00-19 and derivatives
      under SFAS 133.





Notes
                Payable
            
            $
            1,980,297Discount
            
            $
            1,851,000Net
            
            $
            129,297





Annual
      maturities of outstanding debt as of December 31, 2006 were as
      follows:





2006
            
            $
            -2007
            
            $
            -2008
            
            $
            -2009
            
            $
            1,980,297





**Note
      4 - Notes Payable**





At
      December 31, 2006, M Power had various unsecured notes payable totaling $102,000
      bearing imputed interest rates from 8% to 18% per annum, and accrued interest
      of
      $55,798 for a total of $157,798 as of December 31, 2006. These notes payable
      are
      due on demand. M Power is not currently making payments on any of these notes
      and is periodically reflecting gain from extinguishment of debt as the statute
      of limitations expires on individual note payment obligations.





M
      Power
      received $280,000 in loan proceeds from related parties during 2005. $275,000
      was forgiven in 2005 an $5,000 was forgiven in 2006.





**Gain
      on Extinguishment of Debt**





M
      Power
      has certain accounts payable, notes payable, accrued liabilities and accrued
      interest which have been outstanding since 1999 when we became dormant. Our
      policy has been to write off these debts as they become unenforceable, generally
      within the four year statute of limitations, as advised by counsel. $138,601
      and
      $799,235 have been written off in 2006 & 2005, respectively.





Interest
      expense related to these notes payable during 2006 and 2005 was $103,601 and
      $79,405, respectively.








**Note
      5 - Federal Income Tax**





At
      December 31, 2006, M Power had net operating loss carryforwards of approximately
      $5,684,451 that may be offset against future taxable income. All other losses
      incurred by M Power in 2005 and previous years are not available due to Internal
      Revenue Code Section 382 which restricts the deductibility of prior net
      operating losses where there has been a change in control. These net operating
      loss carryforwards will expire at approximately $19,750 annually through the
      year ending December 31, 2025.





The
      Valuation allowance at December 31, 2005 was $156,981. The net change in
      valuation allowance for the year ended December 31,2006 was an increase of
      $2,102,134.





The
      tax
      effects of significant temporary differences that give rise to significant
      portions of the deferred tax assets and deferred tax liabilities are presented
      below for the years end December 31,2006





2006
            
            2005Deferred
                tax assetNet
                operating loss carryforward
            
            $
            2,259,115
            
            $
            134,300Other
            
            
            -
            
            
            -Total
                gross deferred tax assets
            
            $
            2,259,115
            
            $
            134,300Less:
                Valuation allowance
            
            
            (2,259,115
            )
            
            (134,300
            )Net
                deferred tax asset
            
            $
            -
            
            $
            -













**Note
      6 - Commitments and Contingencies**





Texas
      Workforce Commission. On February 10, 2000, the Texas Workforce Commission
      placed an administrative lien on us in the amount of $109,024 in connection
      with
      a claim for unpaid compensation by our former employees.





11500
      Northwest, L.P. 11500 Northwest, L.P. commenced litigation against us on October
      31, 2003 in the 11th Judicial District Court for Harris County, Texas (Cause
      No.
      2003-60705). This case relates to a breach of a lease agreement allegedly
      entered into on or about March 5, 1999 for certain office space we never
      occupied. Plaintiff is requesting past due rents of an unspecified amount,
      broker's commission of $21,806, and tenant improvements of $51,439, attorney's
      fees, costs, and prejudgment interest. We defended the lawsuit, denied breach
      of
      the alleged lease agreement and further defended the claim for past due rents
      under Section 16.004 of the Texas Civil Practice & Remedies Code, i.e. we
      believe that the statute of limitations has tolled some or all of the claims.
      The case was heard on May 12, 2005. The Court ruled in our favor in the 11500
      Northwest, LP case stating that the statute of limitations did apply in this
      case and a Take Nothing Judgment has been signed by the Court and is now final.





Marathon
      Oil Company. A default judgment was taken against us in favor of Marathon Oil
      Company accrued in our financial statements under the heading “accrued expenses”
on August 31, 1999 in the amount of $326,943 representing past and future
      rentals under a lease agreement, together with $7,500 in attorney's fees and
      post judgment interest at 10% per annum until paid. Credit towards the judgment
      was ordered for sale of personal property by the Sheriff or Constable. We
      believe the personal property sold for approximately $28,000. To the extent
      that
      the property was leased during the unexpired term, it is possible that there
      would be a mitigation of the damages claim in our favor. We believe that some
      or
      all of the space was subsequently rented approximately 90 days later. The
      remaining $306,443 has been accrued in our financial statements under the
      heading "accrued expenses."





Awalt
      Group, Inc. Awalt Group, Inc. commenced litigation against MPE in January 2004
      in the United States District Court, Southern District of Texas, Houston
      Division (Cause No. H-03-5832). This case relates to advertising and promotional
      services rendered prior to July, 1999. The Plaintiff is requesting $77,189
      for
      actual amounts invoiced and $10,000 in attorney’s fees. Per their invoices,
      these are for services rendered from May 26, 1998 through June 15, 1999. We
      filed an answer and are defending the lawsuit under Section 16.004 of the Texas
      Civil Practice and Remedies Code, i.e., we believe that the statute of
      limitations has tolled the claim. The case was dismissed by the Federal court
      in
      2005 for lack of diversity, but the plaintiffs re-filed in state court alleging
      a sworn account in the amount of $78,294 plus costs, interest and attorney
      fees.
      We have filed an Answer asserting our statute of limitations defense. On August
      10, 2005, we filed a Motion for Summary Judgment based on the limitations
      defense and set it for hearing to be held on September 2, 2005. The court in
      the
      Awalt case ruled in our favor on our Motion for Summary Judgment and signed
      a
      Take Nothing Judgment in our favor on November 1, 2005. The Awalt Group has
      appealed that decision to the Fourteenth Court of Appeals in Houston, Texas
      where it is now pending. Both sides have filed their briefs and it has been
      set
      on the submission docket in the Court of Appeals at the end of February, 2007.
      There has been no ruling by the Court of Appeals as of this date.





A
      lawsuit
      was filed by Julie Maranto, the former owner of Texas Source Group, Inc. ("TSG")
      against us, Texas Source Group, Inc. and Gary Kimmons as CEO. The cause of
      action from the pleadings appears to be breach of contract relating to her
      employment agreement against TSG, breach of contract, statutory fraud, breach
      of
      fiduciary duty, common law fraud and negligent misrepresentation against GKI.
      Damages have not been specified. We filed a Counterclaim for Rescission to
      unwind the transaction entered into effective August 19, 2004 based of material
      misrepresentation of material facts and fraud. The Maranto case has been settled
      through mediation and settlement documents have been executed. The 280th
      District Court of Harris County, Texas approved our Mutual Motion for Nonsuit
      and Dismissal with Prejudice on August 11, 2006.





Deanna
      S.
      Slater. On August 31, 2006, Deanna S. Slater, an independent contractor formerly
      with M Power Entertainment, Inc., brought suit in County Civil Court at Law
      Number Four in Harris County, Texas, Docket Number 872,560, alleging breach
      of
      contract, quantum meruit, promissory estoppel and for attorney’s fees. She has
      filed her Second Amended Petition alleging actual damages of at least $35,785
      in
      late January and has now dropped the claims for quantum meruit and promissory
      estoppel. The pre-lawsuit demand was for payment of $15,785. There is presently
      set a trial date of April 30, 2007. Management feels that the case is without
      merit and based on Ms. Slater’s consulting agreement, she has been paid in full.
      Management intents to defend the lawsuit vigorously.





Employment
      Agreement





On
      February 1, 2003, the M Power entered into a compensation agreement with its
      president, Mr. Gary Kimmons. The agreement has a three-year term and
      automatically renews for consecutive one-year Terms. The agreement provides
      an
      annual base compensation of $240,000 and non-qualified stock options to 15,000
      shares of Common Stock under the Company's 2004 Stock Option Plan, at a purchase
      price of 110% of the closing market price on the date of grant. Upon his death
      or disability all unvested warrants will become immediately vested and
      exercisable. M Power may terminate the agreement for cause, or upon the extended
      disability or death of Mr. Kimmons. If the agreement is terminated in connection
      with a change of control, (1) M Power must pay Mr. Kimmons an amount equal
      to
      approximately three times the sum of his annual base salary and the average
      of
      the last annual incentive bonuses actually paid, (2) all outstanding warrants
      immediately vest, (3) welfare and fringe benefits are provided for one year,
      (4)
      the Company must pay the sum of any earned salary not yet paid.





**Note
      7 - Stock Options and Warrants**





During
      1998, M Power established a stock option plan subsequently amended and now
      known
      as the "2004 Stock Option Plan" to promote its interests by attracting and
      retaining exceptional employees and directors. Any employee is eligible to
      be
      designated a participant. The Board has sole and complete authority to determine
      the employees to whom options shall be granted, the number of each grant and
      any
      additional conditions and limitations. The exercise price shall not be less
      than
      the fair market value of the underlying shares.





In
      addition, M Power periodically issues warrants to purchase common stock as
      an
      incentive, as compensation for services or settlement of debt to officers,
      directors, employees, and consultants.





The
      following table is an analysis of warrants for the purchase of M Power's common
      stock outstanding as of December 31, 2006 & 2005.








2006
            
            2005Shares
            
            Weighted
                Average Exercise Price
            
            Shares
            
            Weighted
                Average Exercise PriceOutstanding,
                beginning of year
            
            
            678,253
            
            $
            0240
            
            
            28,253
            
            
            0.013Granted
            
            
            -
            
            
            -
            
            
            650,000
            
            
            0.227Expired/Cancelled
            
            
            -
            
            
            
            
            
            -
            
            
            -Exercised
            
            
            -
            
            
            -
            
            
            -
            
            
            -Outstanding,
                end of year
            
            
            678,253
            
            $
            0.240
            
            
            678,253
            
            $
            0.240Exercisable
            
            
            678,253
            
            $
            0.240
            
            
            678,253
            
            $
            0.240





**2005**
            
            Outstanding
            
            ExercisableRange
                of Exercise Prices
            
            Number
                of Outstanding at Dec. 31, 2005
            
            Weighted
                Average Remaining Contractual life
            
            Weighted
                Average Exercise Price
            
            Number
                Exercisable at Dec. 31, 2005
            
            Weighted
                Average Exercise Price$0.05
            
            
            100,000
            
            
            0.39
            
            $
            0.007
            
            
            100,000
            
            $
            0.007$0.08
            
            
            300,000
            
            
            0.89
            
            
            0.035
            
            
            300,000
            
            
            0.035$0.32
            
            
            28,253
            
            
            0.25
            
            
            0.013
            
            
            28,253
            
            
            0.013$0.50
            
            
            250,000
            
            
            0.98
            
            
            0.184
            
            
            250,000
            
            
            0.184678,253
            
            
            2.51
            
            $
            0.240
            
            
            678,253
            
            $
            0.240





**2006**
            
            Outstanding
            
            ExercisableRange
                of Exercise Prices
            
            Number
                of Outstanding at Dec. 31, 2006
            
            Weighted
                Average Remaining Contractual life
            
            Weighted
                Average Exercise Price
            
            Number
                Exercisable at Dec. 31, 2006
            
            Weighted
                Average Exercise Price$0.05
            
            
            100,000
            
            
            0.24
            
            $
            0.007
            
            
            100,000
            
            $
            0.007$0.08
            
            
            300,000
            
            
            0.44
            
            
            0.035
            
            
            300,000
            
            
            0.035$0.32
            
            
            28,253
            
            
            0.21
            
            
            0.013
            
            
            28,253
            
            
            0.013$0.50
            
            
            250,000
            
            
            0.62
            
            
            0.184
            
            
            250,000
            
            
            0.184678,253
            
            
            1.51
            
            $
            0.240
            
            
            678,253
            
            $
            0.240








In
      addition, M Power periodically issues warrants to purchase common stock as
      an
      incentive, as compensation for services or settlement of debt to officers,
      directors, employees, and consultants.





M
      Power
      has warrants outstanding to purchase 46,666,667 shares that were issued in
      connection with financing transactions. All of these warrants are currently
      exercisable. These warrants have an exercise price of $0.10 and expire in
      2009.








**Note
      8 - Stockholders Equity**





SERIES
      D PREFERRED STOCK





On
      January 20, 2006, M Power amended its Articles of Incorporation to include
      1,000
      shares of Series D preferred at a par value is one-tenth of one cent ($0.001).
      These shares were issued to CEO Gary Kimmons. The Series D Preferred shares
      have
      the same dividend rights as the common stock of M Power and gives Mr. Kimmons
      the right to vote on all shareholder matters equal to 51 percent of the total
      vote. These shares of stock were issued for services and are valued at
      $762,976.





INCREASE
      IN AUTHORIZED SHARES





On
      June
      27, 2006, M Power filed a Certification of Amendment of Certificate of
      Incorporation with the Secretary of State of Delaware to increase the number
      of
      authorized shares of our common stock to one billion (1,000,000,000). The par
      value of each of such shares is one one-tenth of one cent ($0.001) dollars.
      The
      Board of Directors is expressly vested with the authority to fix the voting
      powers, full or limited, or no voting powers, and such designations, preferences
      and relative, participating, optional or other special rights, and
      qualifications, limitations or restrictions on any shares issued by the
      corporation.





COMMON
      STOCK ISSUANCES





During
      2005, we issued 41,544,957 shares of our common stock for services, the fair
      value on the date of grant was $13,628,609. We wrote off $500,000 of stock
      subscription as uncollectible. This was reported as part of our acquisition
      costs during 2005 as it was related to our aborted entity
      acquisitions.





During
      2006, we issued common stock for services in the amount of 14,340,000 shares,
      the fair value on the dates of grant were $502,289.





In
      the
      year 2006, we issued 18,500,000 shares of our common stock to our convertible
      debentures holders which reduced the principle of the convertible debentures
      by
      $19,703. Our shares were issued in reliance on the exemption from registration
      provided by Section 4(2) of the Securities Act of 1933. No commissions were
      paid
      for the issuance of such shares.





REVERSE
      STOCK SPLIT





On
      May
      18, 2005, M Power effected a reverse stock split of its authorized and issued
      common stock on a one share for two hundred share basis. Following the reverse
      stock split, total outstanding shares of common stock was reduced to 1,374,759
      shares. Also effective on May 18, 2005, M Power's trading symbol on the Over
      the
      Counter Bulletin Board was changed from "GKIG" to "MPWE."





M
      Power
      retained the current par value of $0.001 per share for all shares of common
      stock. All references in the financial statements to the number of shares
      outstanding, per share amounts, and stock option data of M Power's common stock
      have been restated to reflect the effect of the reverse stock split for all
      periods presented.





**Note
      9 - Related Party Transactions**








Related
      party transactions include transactions with the President and Chief Executive
      Officer, Mr. Gary Kimmons. Transactions with Mr. Kimmons included in these
      financial statements include accounts payable and accrued expenses as of
      December 31, 2005 totaling $35,955. The statement of operations for the years
      ended December 31, 2005 includes interest expense to Mr. Kimmons in the amounts
      of $16,649. The statements of cash flows reflect short term borrowings of
      $549,109 for the year ended December 31, 2005 as well as repayments of
      short-term borrowings in the amounts of $549,109.





**Note
      10 - Going Concern**




As
      reflected in the accompanying financial statements, the Company has a loss
      from
      operations of $4,464,591, a negative cash flow from operations of $1,147,535,
      a
      working capital deficiency of $4,450,271 and has a stockholders deficiency
      of
      $4,275,133. This raises substantial doubt about its ability to continue as
      a
      going concern. The ability of the Company to continue as a going concern is
      dependent on the Company’s ability to raise additional capital and implement its
      business plan. The financial statements do not include any adjustments that
      might be necessary if the Company is unable to continue as a going
      concern.




Management
      believes that actions presently being taken to obtain additional funding and
      implement its strategic plans provide the opportunity for the Company to
      continue as a going concern.




**Note
      11 - Subsequent Events**





The
      existing non-employee director agreement with Dick Meador expired on December
      31, 2006, and it is under mutual agreement that he will no longer be on the
      Corporation’s Board of Directors as of January 1 st ,
      2007;
      and the corporation executed a non-employee director agreement with Lance
      Kimmons on January 1 st 2007,
      hereby making him a member of the Board. Lance Kimmons has joined the Board
      of
      Directors of M Power Entertainment as of January 1 st 2007,
      and in the event that he elects to receive 50,000 shares of the Corporation’s
      common stock in lieu of options or warrants as compensation for services
      rendered, that American Registrar & Transfer Co., the transfer agent and
      registrar for the Corporation’s common stock, is hereby authorized and
      instructed to make such issuance.





M
      Power
      entered into a contract with Booke and Company Inc., an investor relations
      firm,
      on August 1st, 2006. The terms of this contract cover a seven month period
      beginning August 1, 2006. The monthly retainer was $5,800 through the end of
      2006. The contract has recently been extended an additional 6 months at the
      rate
      of $6,000 per month. Booke will perform services for M Power in all areas
      generally considered to be investor relations.




Conversions





During
      2007, M Power issued 72,560,000 shares of its common stock to retire $45,820
      of
      convertible notes.








**ITEM
      8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
      ACCOUNTING AND** ****


**** **FINANCIAL
      DISCLOSURE**





Effective
      October 4, 2006, the client auditor relationship between M Power Entertainment,
      Inc. (the "Company") and Malone & Bailey, PC, Certified Public Accountants,
      ("Malone") ceased as the former accountant was dismissed. Effective October
      10,
      the Company engaged Webb & Company, P.A., Certified Public Accountants
      ("Webb") as its principal independent public accountant for the fiscal year
      ended December 31, 2006. The decision to change accountants was recommended
      and
      approved by the Company's Board of Directors effective October 4, 2006. The
      Company had no disagreement with Malone on any matter of accounting principles
      or practices, financial statement disclosure, or auditing scope or procedure,
      which disagreements, if not resolved to the satisfaction of Malone, would have
      caused them to make reference thereto in their report on the financial
      statements for such years.











**ITEM
      8A. CONTROLS AND PROCEDURES**





**(a)
      Evaluation of Disclosure Controls and Procedures.**





M
      Power
      maintains disclosure controls and procedures that are designed


to
      ensure
      that information required to be disclosed in its Exchange Act reports is
      recorded, processed, summarized and reported within the time periods specified
      in the SEC's rules and forms, and that such information is accumulated and
      communicated to its management, including its Chief Executive Officer, to allow
      timely decisions regarding required disclosure based closely on the definition
      of "disclosure controls and procedures" in Rule 13a-15(e). In designing and
      evaluating the disclosure controls and procedures, management recognized that
      any controls and procedures, no matter how well designed and operated, can
      provide only reasonable assurance of achieving the desired control objectives,
      and management necessarily was required to apply its judgment in evaluating
      the
      cost-benefit relationship of possible controls and procedures.





At
      the
      end of the period covered by this Annual Report, we carried out an evaluation,
      under the supervision and with the participation of our management, including
      its Chief Financial Officer, of the effectiveness of the design and operation
      of
      our disclosure controls and procedures. Based upon the foregoing, our Chief
      Executive Officer concluded that, as of December 31, 2006, our disclosure
      controls and procedures are effective in timely alerting them to material
      information required to be included in this report.








**(b)
      Changes in Internal Controls over Financial Reporting.**





In
      connection with the completion of its audit of, and the issuance of its report
      on the financial statements of M Power for the year ended December 31, 2005,
      Malone & Bailey, PC identified deficiencies in our internal controls related
      to the failure to record the value of common stock issued for services, the
      failure to properly record its failed acquisitions and disclosure controls
      relating to such transactions during the interim periods of 2005. The
      adjustments to these accounts and the footnote disclosure deficiencies were
      detected in the audit process and were appropriately recorded and disclosed
      in
      the Form 10-KSB/A for the year end December 31, 2005. During 2006, we took
      remediation steps by obtaining training for our new bookkeeper and working
      with
      outside advisors. We believe these actions have strengthened our internal
      control over financial reporting and address the weaknesses identified above,
      although we are continuing to identify, evaluate and implement additional
      measures to improve our internal control over financial reporting.





Other
      than the remediation steps described above, there have been no changes in our
      system of internal controls over financial reporting during the year ended
      December 31, 2006, that have materially affected, or are reasonably likely
      to
      materially affect, our internal controls over financial reporting.





**ITEM
      8B. OTHER INFORMATION**





None.





**PART
      III**





**ITEM
      9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
      PERSONS** **;
      COMPLIANCE WITH SECTION 16(A)**





**Directors
      and Executive Officers**





Name
            
            Age
            
            PositionGary
                F. Kimmons
            
            57
            
            Chairman
                of the Board
              President
              Chief
                Executive Officer
              Chief
                Financial OfficerDick
                Meador
            
            58
            
            DirectorKathryn
                Kimmons
            
            54
            
            Director
              Secretary




GARY
      F.
      KIMMONS, Age 57, has served as chairman of the board since August 1998, and
      from
      1993 until April 1998. Mr. Kimmons has also served as president and chief
      executive officer since 1993 and secretary since September 1998. Mr. Kimmons
      has
      extensive experience in the design, development and implementation of business
      management and technical training systems. Mr. Kimmons received a Bachelor
      of
      Science degree in psychology, anthropology, and behavioral science from Rice
      University in 1973 and a masters degree in applied industrial psychology and
      management science from Stevens Institute of Technology in 1975.





DICK
      MEADOR, age 58, previously served as Area Manager for Barrand, Inc., a large
      regional service provider in the food and beverage industry located in
      Pensacola, FL . Prior to Barrand, Mr. Whataburger, Mississippi Gulf Coast.
      Meador was COO/Partner in WQSR LP He was responsible for all issues corporate
      operations. Prior to his tenure with Whataburger, Inc., Meador worked with
      several other large food service providers in a similar capacity. Mr. Meador
      attended The University of Arkansas and the University of Houston, majoring
      in
      Economics and Psychology.





KATHRYN
      KIMMONS, age 54, currently serves as the Secretary and a


Director
      and has held the position from June, 2002. Mrs. Kimmons has over 20 years of
      experience in the entertainment industry as well as 10 years in retail sales
      and
      operations. A business entrepreneur who has founded her own entertainment
      business as well as a retail business selling antiques and collectibles, Mrs.
      Kimmons is experienced merchandising presentation, interior and retail
      buying.





**Family
      Relationships**





Gary
      Kimmons and Kathryn Kimmons are husband and wife. Lance Kimmons is the son
      of
      Gary and Kathryn Kimmons.





**Section
      16(a) Beneficial Ownership Compliance.**





Section
      16(a) of the Securities Exchange Act of 1934 requires our executive officers,
      directors and persons who own more than ten percent of our shares of common
      stock, to file initial reports of beneficial ownership on Form 3, changes in
      beneficial ownership on Form 4 and an annual statement of beneficial ownership
      on Form 5, with the SEC. Such executive officers, directors and greater than
      ten
      percent shareholders are required by SEC rules to furnish us with copies of
      all
      such forms that they have filed.





Based
      solely on our review of the copies of such forms filed with the SEC
      electronically, received by us and representations from certain reporting
      persons, for the fiscal year ended December 31, 2006, none of the officers,
      directors and more than 10% beneficial owners have filed Form 5's with the
      SEC.





**Code
      of Ethics**





M
      Power
      has adopted a code of ethics for our principal executive officers, which is
      posted on our internet website at www.mpe.us.








**ITEM
      10. EXECUTIVE COMPENSATION**





The
      following table sets forth the aggregate compensation paid for services rendered
      during the periods indicated:





SUMMARY
                COMPENSATION TABLEAnnual
                Compensation
            
            Long
                Term CompensationGary
                F. Kimmons
            
            Salary
            
            Bonus
            
            Other
            
            Restricted
                stock awards
            
            Options/SARs
            
            Long
                term compensation payouts
            
            All
                other compensation2006
            
            $
            240,000
            
            $
            40,000
            
            
            
            
            
            
            
            
            
            
            
            
            
            $
            762,9762005
            
            $
            240,0002004
            
            $
            240,000





*
            Mr.
                Kimmons, the President and CEO of the Company is currently subject
                to an
                Employment Agreement with the Company. See "Employment Contracts"
                below.





*
            For
                2006 and 2005, Mr. Kimmon's base salary was $240,000. In 2005, Mr.
                Kimmon's was paid through the issuance of 4,500,000 (pre-split) shares
                of
                common stock in February, 2005, which issuance paid overdue accrued
                compensation for 2004.





*
            In
                2006, Mr. Kimmons was issued 1,000 shares of Series D Preferred Stock.
                These shares were issued for services and were valued at
                $762,976.





*
            In
                2006, Mr. Kimmons was paid a $40,000 performance bonus for services
                provided in 2006.





*
            For
                2005, Mr. Kimmon's base salary was $240,000. $118,760 of which was
                paid in
                cash, $20,000 of which was paid through the issuance of warrants
                to
                acquire 80,000 shares of common stock exercisable at $0.35 per share
                until
                December 31, 2007, and $101,239 of which was paid on March 25, 2004
                in the
                form of 8,230,861 shares of restricted common stock issued to Mr.
                Kimmons
                at a price of $0.0123 per share. In 2002, Mr. Kimmons received a
                base
                salary of $240,000, $130,000 of which was paid through the issuance
                of
                1,300,000 post-reverse split adjusted restricted shares of common
                stock
                and $110,000 of which was paid in 2003 in the form of a warrant entitling
                Mr. Kimmons to (3) January 31, 2006. The agreement defines a change
                of
                control as:(1) any person acquiring 30% of Company or if Mr. Kimmons'
                voting rights are outstanding shares, (2) if during a two year the
                board
                of directors (and any new on purchase 520,000 shares of common stock
                at a
                price of $0.35 per share.





**Employment
      Contract**





On
      February 1, 2003, the Company entered into a new employment agreement with
      Mr.
      Kimmons. The agreement provides for a three-year term that automatically renews
      at the end of the term for consecutive one-year terms, and which provides for
      an
      annual base compensation of $240,000 and non-qualified stock options to
      3,000,000 shares of Common Stock under the Company's 2003 Stock Option Plan,
      at
      a purchase price of $0.18 per share (110% of the closing market price on the
      date of grant). Options to purchase 1,000,000 shares are exercisable
      immediately, options to purchase 1,000,000 shares vest and shall be exercisable
      at such time as the Company is current and filed its annual and quarterly
      reports for the years 2000, 2001 and 2002 and any reports then due for the
      fiscal year 2003, and options to purchase 1,000,000 shares vest and shall be
      exercisable at such time as the Company has raised a minimum of $500,000 in
      investment capital. Upon Mr. Kimmon's death or disability all unvested warrants
      will become immediately vested and exercisable. The Company may terminate the
      agreement for cause, or upon the extended disability or death of Mr. Kimmons.
      Mr. Kimmons may terminate the agreement for good reason, which is defined as
      (1)
      diminution of duties, (2) failure by the Company to comply with the agreement,
      (3) a requirement by the Company for Mr. Kimmons to move locations, (4) any
      purported termination other than as permitted in the agreement, (5) a change
      of
      control, or (6) failure to have a successor corporation assume the agreement.
      If
      the agreement is terminated in connection with a change of control, (1) the
      Company must pay Mr. Kimmons an amount equal to approximately three times the
      sum of his annual base salary and the average of the last annual incentive
      bonuses actually paid, (2) all outstanding warrants immediately vest, (3)
      welfare and fringe benefits are provided for one year, (4) the Company must
      pay
      the sum of any earned salary not yet paid, deferred compensation and an amount
      equal to 150% of the value of Mr. Kimmons accrued benefits in any Company long
      term incentive plan times a fraction equal to the months worked in the
      performance period before termination divided by the total performance period.
      If the agreement is terminated for cause or Mr. Kimmons terminates for other
      than good reason, the Company shall pay earned but unpaid salary and any vested
      benefits payable to him under a plan or policy. In the event of a change of
      control, Mr. Kimmons will remain with the Company until the later of: (1) 15
      days after the one year anniversary of the change of control, (2) 15 days after
      the anniversary date of any merger, the reduced to less than 30% of the period,
      individuals who were directors elected by two-thirds of directors in office
      at
      the beginning of the period or whose election or nomination was so approved)
      cease to be a majority of the board of directors, (3) if the shareholders
      approve a merger or consolidation (other than a merger in which company
      shareholders own at least 50% of surviving entity), or (4) a complete
      liquidation.








**Director
      Compensation**





On
      December 31, 2005, we entered into a Director's Agreement to retain the services
      of Dick Meador as a member of the Board of Directors. Under the Agreement Mr.
      Meador will serve as a Director from January 1, 2006 through December 31, 2006
      and will receive compensation of 300,000 restricted shares of common stock
      or
      warrants to purchase 300,000 restricted shares of common shares. As a result
      of
      this Agreement, Mr. Meador received a warrant on December 31, 2005 to purchase
      up to 300,000 shares of unregistered common stock exercisable at $0.08 per
      share
      until December 31, 2011.





On
      March
      31, 2004 the Board of Directors approved and adopted the GK Intelligent Systems,
      Inc. 2004 Stock Option Plan ("2004 Plan") which became effective April 5, 2004.
      The 2004 Plan was established in order to provide a method to attract and retain
      the best available personnel for positions of substantial responsibility, to
      provide additional incentive to employees and consultants and to promote the
      success of the Company's business through the issuance of options, stock
      purchase rights, other stock-based awards, and other benefits. Options granted
      under the 2004 Plan may be Incentive Stock Options as defined in Section 422
      of
      the Internal Revenue Code or Non-Qualified Stock Options. The number of common
      shares authorized under the 2004 Plan is thirty million
      (30,000,000).





All
      issuances in 2006 and 2005 were made against the 2004 plan. On August 22, 2005,
      the 2004 Stock Option Plan was amended to add 40,000,000 shares to the plan
      and
      became effective on September 9, 2005.





As
      of
      December 31, 2006, there were non-qualified stock options outstanding to
      purchase 678,253 shares of common stock, of which 678,253 were exercisable.
      For
      the fiscal year ended December 31, 2006, the Company did not maintain any
      long-term retirement or other benefit plan, except as described in this
      report.





Non-Employee-Directors
      and Consultants Retainer Stock Plan





On
      March
      31, 2004 the Board of Directors approved and adopted the Non Employee-Directors
      and Consultants Retainer Stock Plan for the Year 2004. The plan was established
      in order to provide a method whereby chosen directors and persons providing
      services to the Company may be offered incentives in addition to those presently
      available, and may be stimulated by increased personal involvement in the
      fortunes and success of the Company, thereby advancing the interests of the
      Company and its shareholders. The number of common shares authorized under
      the
      plan is two million (2,000,000).





All
      issuances in 2006 and 2005 were made against the 2004 plan.





**Option
      Grants Table**





The
      following tables reflect certain information, with respect to stock options
      granted under the Company's stock option plans to certain executive officers
      and
      directors during fiscal 2005.





OPTIONS/SAR
                GRANTS IN LAST FISCAL YEARName
            
            Number
                of
              Securities
                Underlying Options Granted (#)
            
            %
                Total Options
              Granted
                to
              Employees
                in
              Fiscal
                Year (%)
            
            Exercise
                or Base Price ($/sh.) (1)
            
            Expiration
                DateGary
                Kimmons
            
            
            0
            
            
            0
            
            
            0
            
            
            (Note
                1
            )Kathryn
                Kimmons
            
            
            0
            
            
            0
            
            
            0
            
            
            0Dick
                Meador
            
            
            300,000
            
            
            100
            
            
            0.08
            
            
            12/31/10








(1)
      In
      2005 and 2004 Gary Kimmons received no options. In 2003, Gary Kimmons received
      the following options and/or warrants: (a) a warrant to purchase up to 2,600
      shares at the exercise price of $70.00 per share exercisable until December
      31,
      2007, which represented part of Mr. Kimmons' compensation for 2002; (b) a
      warrant to purchase up to 400 shares at the exercise price of $70.00 per share
      exercisable until December 31, 2007; and (c) an option to purchase up to 15,000
      shares at the exercise price of $36.00 per share which was granted to Mr.
      Kimmons in connection with his February 1, 2003 employment agreement,
      exercisable until February 1, 2013 (of which 15,000 shares are presently
      exercisable, and the balance shall become exercisable when the Company has
      raised a minimum of $500,000 in investment capital).





**Option
      Exercise and Year End-Value Table**





The
      following tables reflect certain information, with respect to the exercise
      of
      stock options by certain executive officers during fiscal 2005, on a
      post-reverse split adjusted basis:





AGGREGATED
                OPTION/SAR EXERCISES IN THE LAST FISCAL YEAR
              AND
                YEAR-END OPTION/SAR VALUENumber
                of
              Securities
                Underlying Unexercised Options/Warrants
              at
                Fy-End
            
            Value
                of Unexercised
              In-The-Money
                Options at
              Fy-End
                (1)Name
            
            Shares
                Acquired on Exercise
            
            Value
                Realized
            
            Exercisable
                (E) / Unexercisable (U)
            
            Exercisable(E)
                / Unexercisable (U)Gary
                Kimmons
            
            
            0
            
            
            0
            
            
            18,000(E)/5,000(U
            )
            
            0(E)/0(U
            )Dick
                Meador
            
            
            0
            
            
            0
            
            
            304,500(E)/0(U
            )
            
            0(E)/0(U
            )Kathryn
                Kimmons
            
            
            0
            
            
            0
            
            
            0(E)/0(U
            )
            
            0(E)/0(U
            )










*Computed
      based on the differences between the closing market price and


aggregate
      exercise prices as of December 31, 2005.





(1)
      Includes warrants to purchase 3,000 shares of Company Common Stock exercisable
      at $70.00 per share, which were fully vested as of December 31, 2003. None
      of
      the warrants have been exercised, nor have any expired as of the date of this
      report.





**ITEM
      11.SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
      MANAGEMENT**





(a)
      Security Ownership of Certain Beneficial Owners





Equity
      Compensation Plan Information





Plan
                Category
            Number
                of securities to be issued upon exercise of outstanding options,
                warrants
                and rights
              (a)
            Weighted-average
                exercise price of outstanding options, warrants and rights
              (b)
            Number
                of securities remaining available for future issuance under equity
                compensation plans (excluding securities reflected in column
                (a))
              ©Equity
                compensation plans approved by security holders
            678,253
            0.2404
            39,321,747Equity
                compensation plans approved by security holders
            NA
            NA
            NATotal
            678,253
            0.2404
            39,321,747




The
      following table sets forth security ownership information as of the close of
      business on March 24, 2006, for any person or group, known by the Company to
      own
      more than five percent (5%) of our voting securities. The information set forth
      in this Item 11 has been adjusted to reflect the 1:200 reverse stock split
      effected May 18, 2005.





Name
                of Beneficial Owner
            
            Number
                of Shares Beneficially Owned
            
            %
                of Outstanding SharesGary
                F. Kimmons (2) (3)
            
            13,115,742
            
            18.1%Kathryn
                Kimmons (4)
            
            13,115,742
            
            18.1%Steven
                Reuther
            
            8,888,888
            
            12.3%





1.
      All
      amounts shown in this column include shares obtainable upon exercise of stock
      options or warrants currently exercisable or exercisable within 60 days of
      the
      date of this table.





2.
      Mr.
      Kimmons is a general partner of the Kimmons Family Partnership, Ltd., and as
      such has the sole voting, investment and disposition power over the 33,633
      shares of Common Stock owned by the partnership.





3.
      Mr.
      Kimmons is deemed to own 13,115,742 shares (a)13,064,106 shares owned of record
      by Mr. Kimmons, (b) 33,636 of these shares owned of record by the Kimmons Family
      Partnership, Ltd., by virtue of Mr. Kimmons being the General Partner of the
      Kimmons Family Partnership, Ltd., (c) 3,000 of these shares by virtue of
      warrants to purchase these shares, and (d) 15,000 of these shares by virtue
      of
      options to purchase these shares (options to purchase 15,000 of these shares
      have already vested.)





4.
      Mrs.
      Kimmons is deemed to have indirect beneficial ownership of these shares, as
      the
      spouse of Gary F. Kimmons.





The
      address of all persons listed above is 2602 Yorktown Place, Houston, Texas
      77056





(b)
      Security Ownership of Management





The
      following table sets forth security ownership information as of the close of
      business on January 21, 2006, of all directors, executive officer listed in
      the
      "Summary Compensation Table" set forth herein, and all directors and executive
      officers as a group.





Name
                of Beneficial Owner
            
            Number
                of Shares Beneficially Owned (1)
            
            Percent
                of Outstanding SharesGary
                F. Kimmons (2) (3)
            
            13,115,742
            
            18.10%Kathryn
                Kimmons (4)
            
            13,115,742
            
            18.10%Dick
                Meador (5)
            
            304,500
            
            0.17%All
                directors and executive officers
              (3
                persons)
            
            13,420,242
            
            26.505







1.
            All
                amounts shown in this column include shares obtainable upon exercise
                of
                stock options or warrants currently exercisable or exercisable within
                60
                days of the date of this table.





2.
            Mr.
                Kimmons is a general partner of a the Kimmons Family Partnership,
                Ltd.,
                and as such has the sole voting, investment and disposition power
                over the
                33,636 shares of Common Stock owned by the
                partnership.





3.
            Mr.
                Kimmons is deemed to own 13,115,742 shares (a)13,064,106 shares owned
                of
                record by Mr. Kimmons, (b) 33,636 of these shares owned of record
                by the
                Kimmons Family Partnership, Ltd., by virtue of Mr. Kimmons being
                the
                General Partner of the Kimmons Family Partnership, Ltd., (c) 3,000
                of
                these shares by virtue of warrants to purchase these shares, and
                (d)
                15,000 of these shares by virtue of options to purchase these shares
                (options to purchase 15,000 of these shares have already
                vested.)





4.
            Mrs.
                Kimmons is deemed to have indirect beneficial ownership of these
                shares,
                as the spouse of Gary F. Kimmons.





5.
            Mr.
                Meador is deemed to own 304,500 of these shares by virtue of a warrant
                to
                purchase these shares.





(c)
      Changes in Control.





To
      the
      best of our knowledge there are no present arrangements or pledges of our
      securities, which may result in a change in our control.





There
      are
      certain contractual provisions which may deter an outside party from attempting
      to acquire control of us. Such provisions include:





1.
            The
                Employment Agreement with Gary F. Kimmons. For a summary description
                of
                the Employment Agreement with Mr. Kimmons and its change in control
                provisions, see Item 10 Executive Compensation in this
                report.




2.
              Our
                  Non-Employee Directors and Consultants Retainer Stock Plan for
                  the year
                  2004 provides that in the event of a change in control (as defined
                  in the
                  Plan) occurs, certain deferred stock accounts under the plan will
                  be
                  immediately credited with the amount and kind of shares that the
                  holder
                  would ordinarily have received at a later date, certain other adjustments
                  may be made to reflect the effectiveness of the transaction, and
                  the
                  committee may adjust the plan. No shares have been issued and no
                  deferred
                  stock accounts have yet been credited under this Plan as of the
                  date of
                  this report.





3.
            Both
                our 2003 Stock Option Plan and 2004 Stock Option Plan have “change
                in control" or "transfer of control" provisions, which permit
                options
                to have accelerated or immediate vesting, and provide for certain
                other rights, in the event of a "change in control" or “transfer
                of control", as defined in the respective
                plans.





**ITEM
      12. CERTAIN RELATIONSHIPS AND RELATED
      TRANSACTIONS**




Related
      party transactions include transactions with the President and Chief Executive
      Officer, Mr. Gary Kimmons. Transactions with Mr. Kimmons included in these
      financial statements include accounts payable and accrued expenses as of
      December 31, 2005 totaling $35,955. The statement of operations for the years
      ended December 31, 2005 includes interest expense to Mr. Kimmons in the amounts
      of $16,649. The statements of cash flows reflect short term borrowings of
      $269,109 for the year ended December 31, 2005 as well as repayments of
      short-term borrowings in the amounts of $269,109. There were no related party
      transactions in 2006.





**ITEM
      13. EXHIBITS**





The
      exhibits listed in the accompanying Exhibit Index are filed as part of this
      Form
      10-KSB, or are incorporated herein by reference. Items filed as part of this
      Form 10-KSB are identified in such Exhibit Index by the symbol “*”.





**ITEM
      14.PRINCIPAL ACCOUNTANT FEES AND
      SERVICES**





**Independent
      Public Accountants**





Our
      independent accountants for the fiscal years ended December 31, 2006 and 2005
      were Hanson, Barnett, and Maxwell, CPAs of Salt Lake City, Utah; HJ Associates
      of Salt Lake City, Utah; Webb & Company, PA, of Boynton Beach, Florida; and
      Malone & Bailey, PC, of Houston, Texas.





(a)
      Audit
      Fees. During the fiscal years ended December 31, 2006 and 2005, the aggregate
      fees billed by Hanson, Barnett, and Maxwell, CPAs; HJ Associates; Webb
& Company; and Malone & Bailey for services rendered for the audit of
      our annual financial statements and the review of the financial statements
      included in our quarterly reports on Form 10-QSB or services provided in
      connection with the statutory and regulatory filings or engagements for those
      fiscal years, was $99,679 and $28,226, respectively.





(b)
      Audit-Related Fees. During the fiscal years ended December 31, 2006 and 2005
      our
      auditors Webb & Company and Malone & Bailey did not receive any fees for
      any audit-related services other than as set forth in paragraph (a)
      above.





(c)
      Tax
      Fees. Our auditors did not provide tax compliance or tax planning advice during
      the fiscal years ended December 31, 2006 and 2005.





(d)
      Other
      Fees. During the fiscal years ended December 31, 2006 and 2005, our auditors
      did
      not receive any fees for services rendered, other than those described
      above.




**Audit
        Committee**
 
 Currently
        our audit committee consists of our entire Board of Directors. We currently
        do
        not have nominating, compensation committees or committees performing similar
        functions. There has not been any defined policy or procedure requirements
        for
        shareholders to submit recommendations or nomination for directors.
 
 During
        fiscal years 2005 and 2006, there were informal meetings held by this Committee.
        The business of the Audit Committee was conducted by resolutions consented
        to in
        writing by all the members and filed with the minutes of the proceedings
        of the
        Audit Committee.
 
 The
        audit
        committee approved the appointment of Webb & Company, P.A. on October 4,
        2006, as our independent registered public accounting firm engaged by the
        company for the purpose of preparing or issuing an audit report or related
        work
        or performing other audit, review or attest services for the
        company.
 
 **Audit
        Committee Financial Expert**
 
 Our
        board
        of directors has determined that it does not have a member of its audit
        committee that qualifies as an "audit committee financial expert" as defined
        in
        Item 401(e) of Regulation S-B, and is "independent" as the term is used in
        Item
        7(d)(3)(iv) of Schedule 14A under the Securities Exchange Act of 1934, as
        amended.
 
 We
        believe that the members of our board of directors are collectively capable
        of
        analyzing and evaluating our financial statements and understanding internal
        controls and procedures for financial reporting. In addition, we believe
        that
        retaining an independent director who would qualify as an "audit committee
        financial expert" would be overly costly and burdensome and is not warranted
        in
        our circumstances given the early stages of our development and the fact
        that we
        have not generated any material revenues to date.





**SIGNATURES**





In
      accordance with Section 13 or 15(d) of the Exchange Act, the registrant has
      caused this report to be signed on its behalf by the undersigned, there unto
      duly authorized.







M
      Power
      Entertainment Inc.





Dated:
                March xx, 2007
            
            /s/
                Gary F. KimmonsBy:
                Gary F. Kimmons, Its: Chief Executive Officer
              and
                Chief Financial Officer








In
      accordance with the Exchange Act, this report has been signed by the following
      persons on behalf of the registrant and in the capacities and on the dates
      indicated.





Dated:
                March xx, 2007
            
            /s/
                Gary F. KimmonsGary
                F. Kimmons, Director








Dated:
                March xx, 2007
            
            /s/
                Dick MeadorDick
                Meador, Director








Dated:
                March xx, 2007
            
            /s/
                Kathryn KimmonsKathryn
                Kimmons, Director








**EXHIBIT
      INDEX**





List
      of
      Exhibits attached or incorporated by reference pursuant to Item 601 of
      Regulation SB.





Exhibit
                  Number
              Description
                  of Exhibit3.6
              Certificate
                  of Amendment to the Certificate of Incorporation filed on June
                  27, 2006
                  (included as Exhibit 3.6 to the Form 10-QSB filed June 10, 2006
                  and
                  incorporated herein by reference).10.32
              Callable
                  Secured Note between the Company and AJW Partners LLC., dated April
                  18,2006. (Filed with Form 10-QSB on May 17, 2006 and incorporated
                  herein
                  by reference).10.33
              Callable
                  Secured Note between the Company and AJW Offshore LTD., dated April
                  18,
                  2006. (Filed with Form 10-QSB on May 17, 2006 and incorporated
                  herein by
                  reference).10.34
              Callable
                  Secured Note between the Company and AJW Qualified Partners, LLC,
                  dated
                  April 18, 2006 (Filed with Form 10-QSB on May 17, 2006 and incorporated
                  herein by reference).10.35
              Callable
                  Secured Note between the Company and New Millennium Capital Partners
                  II,
                  LLC., dated April 18, 2006. (Filed with Form 10-QSB on May 17,
                  2006 and
                  incorporated herein by reference).10.36
              Stock
                  Purchase Warrant between the Company and AJW Partners LLC., dated
                  April
                  18, 2006. (Filed with Form 10-QSB on May 17, 2006 and incorporated
                  herein
                  by reference).10.37
              Stock
                  Purchase Warrant between the Company and AJW Offshore LTD., dated
                  April
                  18, 2006 (Filed with Form 10-QSB on May 17, 2006 and incorporated
                  herein
                  by reference).10.38
              Stock
                  Purchase Warrant between the Company and AJW Qualified Partners,
                  LLC.,
                  dated April 18, 2006.(Filed with Form 10-QSB on May 17, 2006 and
                  incorporated herein by reference).10.39
              Stock
                  Purchase Warrant between the Company and New Millennium Capital
                  Partners
                  II, LLC., dated April 18, 2006. (Filed with Form 10-QSB on May
                  17, 2006
                  and incorporated herein by reference).10.40
              Security
                  Agreement between the Company and AJW Qualified Partners, LLC.,
                  AJW
                  Offshore LTD., AJW Partners, LLC. and New Millennium Capital Partners
                  II,
                  LLC., dated April 18, 2006. Filed with Form 10-QSB on May 17, 2006
                  and
                  incorporated herein by reference).10.41
              Intellectual
                  Property Security Agreement between the Company and AJW Qualified
                  Partners, LLC., AJW Offshore LTD., AJW Partners, LLC. and New Millennium
                  Capital Partners II, LLC., dated April 18, 2006. (Filed with Form
                  10-QSB
                  on May 17, 2006 and incorporated herein by reference).10.42
              Registration
                  Rights Agreement between the Company and AJW Qualified Partners,
                  LLC., AJW
                  Offshore LTD., AJW Partners, LLC. and New Millennium Capital Partners
                  II,
                  LLC., dated April 18, 2006. (Filed with Form 10-QSB on May 17,
                  2006 and
                  incorporated herein by reference).10.43
              Securities
                  Purchase Agreement between the Company and AJW Qualified Partners,
                  LLC.,
                  AJW Offshore LTD., AJW Partners, LLC. and New Millennium Capital
                  Partners
                  II, LLC., dated April 18, 2006.(Filed with Form 10-QSB on May 17,
                  2006 and
                  incorporated herein by reference).10.44
              Stock
                  Purchase Warrant between the Company and E-Lionheart Associates,
                  LLC/ DBA
                  Fairhills Capital dated April 18, 2006. (Filed with Form 10- SB
                  on May 17,
                  2006 and incorporated herein by reference).10.45
              Structuring
                  Agreement between the Company and Lionheart Associates, LLC/ DBA
                  Fairhills
                  Capital dated March 6, 2006. (Filed with Form 10-QSB on May 17,
                  2006 and
                  incorporated herein by reference).10.49
              Consulting
                  Agreement between the Company and Booke and Company Inc dated August
                  1,
                  2006. (Filed with Form 10-QSB on August 21, 2006 and incorporated
                  herein
                  by reference).10.50
              Callable
                  Secured Note between the Company and AJW Partners LLC., dated August
                  4,2006. (Filed with Form 10-QSB on November 17, 2006 and incorporated
                  herein by reference).10.51
              Callable
                  Secured Note between the Company and AJW Offshore LTD., dated August
                  4,
                  2006. (Filed with Form 10-QSB on November 17, 2006 and incorporated
                  herein
                  by reference).10.52
              Callable
                  Secured Note between the Company and AJW Qualified Partners, LLC,
                  dated
                  August 4, 2006 (Filed with Form 10-QSB on November 17, 2006 and
                  incorporated herein by reference).10.53
              Callable
                  Secured Note between the Company and New Millennium Capital Partners
                  II,
                  LLC., dated August 4, 2006. (Filed with Form 10-QSB on November
                  17, 2006
                  and incorporated herein by reference).10.54
              Non-employee
                  director agreement with Lance Kimmons
                  making him a member of the Board on January 1st 2007. (Filed
                  herewith).10.55
              Securities
                Purchase Agreement dated March 30, 2007 by and among the Company
                and the
                Investors (incorporated by reference from Exhibit 4.1 of the
                Company’s Current Report on Form 8-K dated March 30, 2007 and filed on
                March 30, 2007).10.56
              Form
                of Callable Convertible Secured Note by and among the Company and
                the
                Investors (incorporated by reference from Exhibit 4.2 of the
                Company’s Current Report on Form 8-K dated March 30, 2007 and filed on
                March 30, 2007).10.57
              Form
                of Stock Purchase Warrant by and among the Company and the Investors
                (incorporated by reference from Exhibit 4.3 of the Company’s Current
                Report on Form 8-K dated March 30, 2007 and filed on March 30,
                2007).10.58
              Registration
                Rights Agreement dated March 30, 2007 by and among the Company and
                the
                Investors (incorporated by reference from Exhibit 4.4 of the
                Company’s Current Report on Form 8-K dated March 30, 2007 and filed on
                March 30, 2007).10.59
              Security
                Agreement dated March 30, 2007 by and among the Company and the Investors
                (incorporated by reference from Exhibit 4.5 of the Company’s Current
                Report on Form 8-K dated March 30, 2007 and filed on March 30,
                2007).10.60
              Intellectual
                  Property Security Agreement dated March 30, 2007 by and among the
                  Company
                  and the Investors (incorporated by reference from Exhibit 4.6 of
                  the Company’s Current Report on Form 8-K dated March 30, 2007 and filed on
                  March 30, 2007).16.1
              Letter
                  Regarding Change in Certifying Accountant (incorporated by reference
                  from
                  Exhibit 16.1 of the Company’s Current Report on Form 8-K dated November 1,
                  2006 and filed on November 1, 2006).31.1
              Certification
                  of the Chief Executive Officer/Chief
                  Financial Officer pursuant to Section 302 of the Sarbanes-Oxley
                  Act of
                  2002. (Filed herewith).32.1
              Certification
                  of Officers pursuant to 18 U.S.C. Section
                  1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
                  Act of
                  2002. (Filed
                  herewith).