UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


WASHINGTON,
D.C. 20549


_______________





FORM
10-Q


_______________





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





For
the quarterly period ended August 31, 2009





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





For the transition period from
______to______.





MASS
HYSTERIA ENTERTAINMENT COMPANY, INC.


(Exact
name of registrant as specified in Charter





Nevada
            
            000-53739
            
            20-3107499(State
      or other jurisdiction of
              incorporation
      or organization)
            
            (Commission
      File No.)
            
            (IRS
      Employee Identification No.)





5555
Melrose Avenue, Swanson Building


Suite
400


Hollywood,
CA 90038


(Address
of Principal Executive Offices)


_______________





(323)
956-8388


(Issuer
Telephone number)


_______________





Michael
Lambert, Inc.


360 Main
Street, P.O. Box 393


Washington,
VA 22747


(Former
Name or Former Address if Changed Since Last Report)





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 preceding 12 months (or for such shorter
period that the issuer was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes x  No o





Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this
chapter) during the preceding 12 months (or for such shorter period that the
registrant was required to submit and post such files).
Yes  No 




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





Large
Accelerated Filer o     Accelerated
Filer o     Non-Accelerated
Filer o     Smaller
Reporting Company x





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





State the
number of shares outstanding of each of the issuer’s classes of common equity,
as of October 29, 2009: 67,028,952 shares of common stock.
















MASS
HYSTERIA ENTERTAINMENT COMPANY, INC.


(Formerly,
Michael Lambert, Inc.)





FORM
10-Q





August
31, 2009





TABLE
OF CONTENTS














PART I--FINANCIAL
      INFORMATIONItem
      1.
            Financial
      Statements
            F-1Item
      2.
            Management’s
      Discussion and Analysis of Financial Condition and Results of
      Operations
            1Item
      3.
            Quantitative
      and Qualitative Disclosures About Market Risk
            3Item
      4T
            Control
      and Procedures
            3PART II--OTHER
    INFORMATION


Item
      1
            Legal
      Proceedings
            4Item
      1A
            Risk
      Factors
            4Item
      2.
            Unregistered
      Sales of Equity Securities and Use of Proceeds
            4Item
      3.
            Defaults
      Upon Senior Securities
            4Item
      4.
            Submission
      of Matters to a Vote of Security Holders
            4Item
      5.
            Other
      Information
            4Item
      6.
            Exhibits
            4SIGNATURE






















MASS
HYSTERIA ENTERTAINMENT COMPANY, INC.


(Formerly,
Michael Lambert, Inc.)





FORM
10-Q





August
31, 2009






















ITEM 1. FINANCIAL
STATEMENTS




MASS
HYSTERIA ENTERTAINMENT COMPANY, INC.


(Formerly,
Michael Lambert, Inc.)


(A
Development-Stage Company)


BALANCE
SHEETS


As of
August 31, 2009 and November 30, 2008


(Unaudited)




August
      31, 2009
              
              November
      30, 2008CURRENT
      ASSETSCash
              
              $
              -
              
              $
              186Inventory
              
              
              -
              
              
              4,401Prepaids
              
              
              64
              
              
              -Total
      Current Assets
              
              
              64
              
              
              4,587Intangible
      Assets, net
              
              
              3,140
              
              
              -TOTAL
      ASSETS
              
              $
              3,204
              
              $
              4,587LIABILITIES
      & STOCKHOLDERS’ DEFICITCURRENT
      LIABILITIESAccounts
      payable
              
              $
              22,777
              
              $
              2,229Accounts
      payable – related party
              
              
              11,786
              
              
              12,400Accrued
      liabilities
              
              
              30,088
              
              
              2,489Bank
      credit line payable
              
              
              1,156
              
              
              17,138Convertible
      short-term debt - related party
              
              
              73,268
              
              
              10,151Total
      current liabilities
              
              
              139,075
              
              
              44,407Long-
      term debt - related party
              
              
              75,240
              
              
              49,325TOTAL
      LIABILITIES
              
              
              214,315
              
              
              93,732Commitments
      and contingenciesSTOCKHOLDERS’
      DEFICITPreferred
      stock, $.001 par value,  10,000,000 shares authorized, none
      issued and
                outstanding
              
              
              -
              
              
              -Common
      stock, $.001 par value, 140,000,000 shares authorized, 67,028,952
      and
                11,593,500
      shares issued and outstanding as of August 31, 2009 and
                November
      30, 2008, respectively.
              
              
              67,029
              
              
              11,592Additional
      paid-in capital
              
              
              4,434,238
              
              
              2,814,902Accumulated
      deficit
              
              
              (4,712,378
              )
              
              (2,915,639
              )TOTAL
      STOCKHOLDERS’ DEFICIT
              
              
              (211,111
              )
              
              (89,145
              )TOTAL
      LIABILITIES & STOCKHOLDERS’ DEFICIT
              
              $
              3,204
              
              $
              4,587




See notes
to financial statements




F-1




MASS
HYSTERIA ENTERTAINMENT COMPANY, INC.
 (Formerly,
Michael Lambert, Inc.)
 (A
Development-Stage Company)
 STATEMENTS
OF OPERATIONS
 Three and
Nine Months Ended August 31, 2009 and 2008
 (Unaudited)




Three
      Months Ended August 31,
              
              
              Nine
      Months Ended August 31,2009
              
              
              2008
              
              
              2009
              
              
              2008Sales
      revenue
              
              $
              -
              
              
              $
              -
              
              
              $
              -
              
              
              $
              -Cost
      of revenue
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -Operating
      expenses:General
      and administrative expenses
              
              
              99,915
              
              
              
              -
              
              
              
              99,915
              
              
              
              -Selling
      expense
              
              
              590
              
              
              
              
              
              
              
              590Total
      operating expenses
              
              
              100,505
              
              
              
              
              
              
              
              100,505Other
      income (expenses):Interest
      expense
              
              
              376
              
              
              
              -
              
              
              
              376
              
              
              
              -Loss
      from continuing operations
              
              
              (100,881
              )
              
              
              -
              
              
              
              (100,881
              )
              
              
              -Loss
      from discontinued operations
              
              
              (1,388,276
              )
              
              
              (22,696
              )
              
              
              (1,695,858
              )
              
              
              (192,136
              )Net
      loss
              
              $
              (1,489,157
              )
              
              $
              (22,696
              )
              
              $
              (1,796,739
              )
              
              $
              (192,136
              )Basic
      and diluted loss from continuing operationsper
      share
              
              
              (0.00
              )
              
              
              -
              
              
              
              (0.01
              )
              
              
              -Basic
      and diluted loss from discontinued operationsper
      share
              
              
              (0.04
              )
              
              
              (0.00
              )
              
              
              (0.08
              )
              
              
              (0.02
              )Total
      basic and diluted net loss per share
              
              $
              (0.00
              )
              
              $
              (0.00
              )
              
              $
              (0.09
              )
              
              $
              (0.02
              )Basic
      and diluted weighted average shares outstanding
              
              
              34,751,984
              
              
              
              11,593,500
              
              
              
              19,974,642
              
              
              
              11,423,865





See notes
to financial statements




F-2




MASS
HYSTERIA ENTERTAINMENT COMPANY, INC.
 (Formerly,
Michael Lambert, Inc.)
 (A
Development-Stage Company)
 STATEMENTS
OF STOCKHOLDERS’ DEFICIT
 Balances
for the three months ended August 31, 2009
 (Unaudited)




Common
      Shares
            
            Common
      Stock at Par Value
            
            Additional
      Paid-in-Capital
            
            Accumulated
      Deficit
            
            TotalBalances
      at May 31, 2009 (as reported)
            4,404,500
            
            $
            4,404
            
            $
            3,096,863
            
            $
            (3,223,221
            )
            $
            (121,954
            )Adjustment
      for three for one stock split
            8,809,000
            
            
            8,809
            
            
            (8,809
            )
            
            -
            
            
            -Balances
      at May 31, 2009 (as adjusted)
            13,213,500
            
            
            13,213
            
            
            3,088,054
            
            
            (3,223,221
            )
            
            (121,954
            )Common shares issued to extinguish debt of
    predecessors
            4,800,000
            
            
            4,800
            
            
            1,147,200
            
            
            -
            
            
            1,152,000Common stock issued for services rendered
            1,000,000
            
            
            1,000
            
            
            239,000
            
            
            -
            
            
            240,000Common
      stock issued in change ofcontrol
            48,015,452
            
            
            48,016
            
            
            (40,016
            )
            
            -
            
            
            8,000Net
      loss
            -
            
            
            -
            
            
            -
            
            
            (1,489,157
            )
            
            (1,489,157
            )Balances
      at August 31, 2009
            67,028,952
            
            $
            67,029
            
            $
            4,434,238
            
            $
            (4,712,378
            )
            $
            (211,111
            )





F-3




MASS
HYSTERIA ENTERTAINMENT COMPANY, INC.
 (Formerly,
Michael Lambert, Inc.)
 (A
Development-Stage Company)
 STATEMENTS
OF CASH FLOWS
 Nine
Months Ended August 31, 2009 and August 31, 2008
 (Unaudited)
  August
      31, 2009
              
              
              August
      31, 2008CASH
      FLOWS FROM OPERATING ACTIVITIESNet
      loss
              
              $
              (1,796,739
              )
              
              $
              (192,136
              )Adjustments
      to reconcile net loss to cash used in operating
activities:Amortization
      expense
              
              
              90Share-based
      compensation
              
              
              510,000
              
              
              
              150,000Loss on extinguishment of debt
              
              
              1,144,000
              
              
              
              -Imputed
      rent expense
              
              
              1,800
              
              
              
              299Imputed
      interest on debt
              
              
              3,349
              
              
              
              1,604Amortization
      of discount on short term debt
              
              
              -
              
              
              
              2,320Changes
      in:Prepaids
              
              
              (64
              )Inventory
              
              
              4,401
              
              
              
              (1,293
              )Accounts
      payable & Accrued  liabilities
              
              
              63,157
              
              
              
              15,468Accounts
      Receivable
              
              
              -
              
              
              
              301NET
      CASH USED IN OPERATING ACTIVITIES
              
              
              (70,006
              )
              
              
              (23,437
              )CASH
      FLOWS FROM INVESTING ACTIVITIESPurchase
      of
      intangibles
              
              
              (3,230
              )
              
              
              -NET
      CASH USED IN INVESTING ACTIVITIES
              
              
              (3,230
              )
              
              
              -CASH
      FLOWS FROM FINANCING ACTIVITIESLoans
      from stockholders
              
              
              89,032
              
              
              
              23,942Principal
      payments on loans from stockholders
              
              
              (15,982
              )
              
              
              (950
              )NET
      CASH PROVIDED BY FINANCING ACTIVITIES
              
              
              73,050
              
              
              
              22,992NET
      CHANGE IN CASH
              
              
              (186
              )
              
              
              (445
              )Cash
      balance, beginning of period
              
              
              186
              
              
              
              864Cash
      balance, end of period
              
              $
              -
              
              
              $
              419




See notes
to financial statements
  F-4
 MASS
HYSTERIA ENTERTAINMENT COMPANY, INC.
 (Formerly,
Michael Lambert, Inc.)
 (A
Development-Stage Company)
 
 NOTES
TO FINANCIAL STATEMENTS
 (Unaudited)
 
 NOTE
1 – ORGANIZATION, BUSINESS AND CHANGE IN CONTROL
 
 Michael
Lambert, Inc. (“MLI”) was incorporated in Nevada on November 2,
2005.  We are the successor entity to Robert Kremer D/B/A Michael
Lambert, a sole proprietorship that was formed on July 1, 2005.  MLI
was in the business of manufacturing handbags, but in June 2009, ceased
operations.
  On June
9, 2009, the Company entered into a material definitive agreement with Belmont
Partners, LLC by which Belmont acquired 11,286,000 shares of the Company’s
common stock in a private transaction. Following the transaction, Belmont
Partners, LLC controlled approximately 85.41% of the Company’s outstanding
capital stock.  As part of this transaction, a member of the change in
control group discussed in the following paragraphs acquired $83,268 of the
MLI’s existing short-term loans from former management and shareholders for a
nominal amount.  Immediately thereafter, the board of directors
approved the modification of the notes to include a conversion feature at
$0.001667 per share and $8,000 of notes was converted by the predecessor
management into 4,800,000 shares.  Additionally, the member of the
control group above converted $10,000 of notes acquired into 6,000,000 shares of
common stock.
 
 On June
5, 2009, Joseph Meuse, a Managing Member of Belmont Partners, LLC was appointed
to the Board of Directors as well as President and Secretary of the Company.
  On the same date, Robert Kremer resigned from all positions held in
the Company, and Carey G. Birmingham resigned from his position as Chief
Financial Officer of the Company.
 
 To better
reflect the Company’s new business plan, on June 25, 2009, MLI filed a
Certificate of Amendment to their Certificate of Incorporation with the
Secretary of State for the State of Nevada changing their name to “Mass Hysteria
Entertainment Company, Inc.” (“MHe” or the “Company”). MHe is an innovative
motion picture production company that will produce branded young adult film
content for theatrical, DVD, and television distribution. MHe’s plan is to
produce a minimum of three theatrical films a year that appeal specifically to
the youth market.
  As of
August 5, 2009, Daniel Grodnik was appointed as the Company's President, Chief
Executive Officer, Chief Financial Officer, Chairman of the Board and Secretary.
Mr. Grodnik has worked in the movie industry for almost thirty years. He has
served as the Chairman and CEO of the National Lampoon, a publicly-traded
entertainment company. On August 5, 2009 (the "Effective Date"), pursuant to the
terms of a stock purchase agreement, an affiliate of Mr. Grodnik purchased a
total of 7,984,548 shares of issued and outstanding common stock of MHe from
Belmont Partners. At this time, Belmont Partners’ designee was the sole officer
and director of the Company. In addition to the shares sold by Belmont Partners,
the Company also issued 42,015,452 shares to Mr. Grodnik and certain affiliated
parties in connection with the change of control (the “Control Group”). The
total of 50,000,000 shares were issued to, or purchased by, Daniel Grodnik and
the affiliated parties represents 74.6% of the shares of outstanding common
stock of the Company at the time of transfer. There were no identifiable assets
assigned to the Company which would have been recorded at the transferor’s
historical cost. For financial accounting purposes, this change in control by
MHe was treated as a recapitalization with the assets contributed and
liabilities assumed recorded at their historical basis. There were no assets
acquired or liabilities assumed by MHe shareholders after the change in control,
which would have been recorded at fair value.  Also, effective August
5, 2009, the Company requested a Control Group member to modify the conversion
feature in the notes payable acquired as discussed in the preceding paragraphs
to limit the number of shares to be converted at 10,000,000 shares common stock
for the remaining balance acquired of $73,268 (after the note conversion amount
of $10,000), as an anti-dilution safeguard.  Under this new agreement,
the debt can be converted in whole or in part, but in no event shall the
combined amounts of all conversions result in the noteholder owning more than 5%
of the total shares outstanding.  As a result of above transactions,
the Control Group is expected to increase their collective ownership from 74.6%
to 77.9% assuming they convert the remaining $73,268 into the maximum number of
shares allowed.
 
 
 NOTE
2 – BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES
 
 The
accompanying unaudited interim financial statements of MHe have been prepared in
accordance with accounting principles generally accepted in the United States of
America and the rules of the Securities and Exchange Commission, and should be
read in conjunction with the audited financial statements and notes thereto
contained in the Form 10-K filed with the SEC.  In the opinion of
management, all adjustments, consisting of normal recurring adjustments,
necessary for a fair presentation of financial position and the results of
operations for the interim periods presented have been reflected
herein.  The results of operations for interim periods are not
necessarily indicative of the results to be expected for the full
year.  Notes to the financial statements which would substantially
duplicate the disclosure contained in the audited financial statements for
fiscal 2008 as reported in the Form 10-K have been omitted.
  F-5
 
 Significant
Accounting Policies
 
 Development-Stage
Company
 
 On August
5, 2009 (“Inception”), the Company entered into the development stage with its
intended new business, which currently has no revenues. Management expects to
sustain losses from operations until such time it can generate sufficient
revenues sufficient to meet its anticipated cost structure. The Company is
considered a development-stage company in accordance with Statement of Financial
Accounting Standards (“SFAS”) No. 7 “Accounting and Reporting by Development
Stage Enterprises”. Upon distribution of the Company’s products, it will exit
the development stage. As a development-stage company, we are required to report
our financial data from Inception to the most reporting date.
 
 Discontinued
Operations
 
 When
specific operations of a business are sold, abandoned, or otherwise disposed of,
the business must account for these related revenues and expenses (including any
gains or losses on related assets disposed of) as gain (loss) from discontinued
operations. Continuing operations must be reported separately in the income
statement from discontinued operations, and any gain or loss from the disposal
of a segment be reported along with the operating results of the discontinued
segment.
 
 Stock
Splits
 
 In the
case of a stock split, all shares of stock are retroactively restated for all
periods presented.  During June 2009, the Company effected a three (3)
for one (1) forward stock split; all share information presented herein has been
retroactively adjusted to reflect this stock split.
 
 Use
of Estimates
 
 The
preparation of financial statements in conformity with U.S. generally accepted
accounting principles requires the Company to make estimates and assumptions
that affect the amounts reported in the consolidated financial statements and
accompanying notes. The accounting estimates that require the Company's most
significant, difficult and subjective judgments include the recognition and
measurement of certain assets and liabilities; the valuation of recoupable costs
and producer advances; the assessment of film costs and the forecast of
anticipated revenue ("ultimate" revenue), which is used to amortize film costs,
intangible and other long-lived assets; and the valuation and recognition of
share-based compensation.
 
 The
Company bases its estimates and judgments on historical experience and on
various other factors that are considered reasonable under the circumstances,
the results of which form the basis for making judgments that are not readily
apparent from other sources. Actual results could differ materially from these
estimates.
 
 Cash
and Cash Equivalents
 
 Cash and
cash equivalents include cash on hand, cash in banks and cash equivalents, which
are highly liquid investment instruments with original maturities of less than
90 days.
 
 Equipment
and Furniture
 
 Equipment
and furniture are stated at historical cost less accumulated depreciation. The
cost of maintenance and repairs to equipment and furniture is expensed as
incurred, and significant additions and improvements are capitalized. The
capitalized costs of leasehold and building improvements are depreciated using a
straight-line method over the estimated useful life of the assets or the term of
the related leases, whichever is shorter. All other equipment and furniture
assets are depreciated using a straight-line method over the estimated useful
life of the assets. At August 31, 2009, the Company owned a website costing
$3,230 and had an estimated useful life of three (3) years.
  F-6
 Website
Development Costs
 
 Website
development costs are for the development of the Company's Internet website.
These costs have been capitalized when acquired and installed, and are being
amortized over its estimated useful life of three years on a straight line
basis. The Company accounts for these costs in accordance with EITF00-2, "Accounting for Website Development Costs," which
specifies the appropriate accounting for costs incurred in connection with the
development and maintenance of websites.
  Recoupable
Costs and Producer Advances
 
 Recoupable
costs and producer advances represent amounts paid by the Company that are
expected to be subsequently recouped through the collection of fees associated
with the Company's licensing of repped content. In connection with the Film
Production segment's repped content operations, the Company enters into sales
agency agreements whereby the Company acts as a sales agent for a producer's
film ("Sales Agency Agreements"). These Sales Agency Agreements typically
include provisions whereby certain costs that are incurred for promotion related
activities will be paid by the Company on behalf of the producer (such as movie
trailer and ad material costs). The Company may also pay the producer an advance
for the related film prior to the distribution of such film. As the Company
subsequently licenses the producer's film and license fees are collected, the
recoupable costs and producer advances are recovered by the Company through
these license fee collections. License fees typically are not paid to the
producer of the related film until such recoupable costs and producer advances
have been fully recovered by the Company.
 
 Producers
Fees
 
 Producer
fees are recognized upon receipt of the fees and delivery of the related
services.  If upon receipt of the fees all services have not been
provided, the fees are deferred and recognized as the services are
performed.
 
 Royalties
 
 Royaltyand profit
participation are recognized when the amounts are known and the receipt of the
royalties is reasonably assured.  Accordingly, recognition generally
occurs upon receipt (usually quarterly or semi-annually).
 
 Distribution
Revenues
 
 Distribution
Revenues are recognized when earned and appropriately reported by third (3rd)
party Distribution companies and recorded Gross along with any distribution
expenses charged by the Distributor and upon receipt of such
revenues.
 
 Producer
Development, Production Service Fees and Film Distribution Fees
 
 As these
services are provided, these fees are invoiced to the third party financiers and
producers and are recognized when the amount has been determined and receipt is
reasonably assured.
 
 Stock
Options
 
 In
accordance with the provisions of SFAS No. 123(R), the Company accounts for
employee and non-employee director stock options under the fair value method
which requires the use of an option pricing model for estimating fair value.
Accordingly, share-based compensation is measured at grant date based on the
estimated fair value of the award. The Company uses the straight-line
attribution method to recognize share-based compensation costs over the
requisite service period of the award.
 
 Film
Costs
 
 The
Company capitalizes film production costs in accordance with Statement of
Position ("SOP") 00-2, Accounting by Producers or
Distributors of Films. Film costs include costs to develop and produce
films, which primarily consist of salaries, equipment and overhead costs, as
well as the cost to acquire rights to films. Film costs include amounts for
completed films and films still in development.
  F-7
 
 Capitalized
film costs are amortized as an expense within cost of sales using the film
forecast method. Under this method, capitalized film costs are expensed based on
the proportion of the film's revenue recognized for such period relative to the
film's estimated remaining ultimate revenue, not to exceed ten years. Ultimate
revenue is the estimated total revenue expected to be recognized over a film's
useful life. Ultimate revenue for new film titles and events is typically
estimated using actual historical performance of comparable films that are
similar in nature (such as production cost and genre). Film revenue associated
with this method includes amounts from all sources on an
individual-film-forecast-computation method, as defined by SOP 00-2.
Estimates of ultimate revenue are reviewed quarterly and adjusted if
appropriate, and amortization is also adjusted on a prospective basis for such a
change in estimate. Changes in estimated ultimate revenue could be due to a
variety of factors, including the proportional buy rates of the content as
compared to competitive content as well as the level of market acceptance of the
television product.
 
 Goodwill
and Other Intangible Assets
 
 The
Company records goodwill when the purchase price of an acquisition exceeds the
estimated fair value of the net identified tangible and intangible assets
acquired. Under SFAS No. 142,Goodwill and Other Intangible Assets , goodwill is not amortized but is
tested for impairment at the operating segment level on an annual basis (March
31 for the Company) and between annual tests if an event occurs or circumstances
change that would more likely than not reduce the fair value of a reporting unit
below its carrying value. These events or circumstances could include, but are
not limited to, a significant change in the business climate, legal factors,
operating performance indicators, competition, or sale or disposition of a
significant portion of a reporting unit. Application of the goodwill impairment
test requires judgment in the determination of the fair value of each reporting
unit. The fair value of each reporting unit is estimated using considerations of
various valuation methodologies which could include income and market valuation
approaches. The income approach involves discounting the reporting unit's
projected free cash flow at its weighted average cost of capital, and the market
approach considers comparable publicly traded company valuations and recent
merger and acquisition valuations. The analysis requires significant judgments,
including estimation of future cash flows, which is dependent on internal
forecasts; estimation of the long-term rate of growth; determination of the
weighted average cost of capital; and other similar estimates. Changes in these
estimates and assumptions could materially affect the determination of fair
value for each reporting unit. The Company allocates goodwill to each operating
segment based on the operating segment expected to benefit from the related
acquisition and/or combination.
 
 Other
identifiable intangible assets subject to amortization primarily include amounts
paid to acquire non-compete agreements with certain key executives, contractual
and non-contractual customer relationships, intellectual property rights,
patents and websites. These costs are capitalized and amortized on a
straight-line basis over their estimated useful lives which is typically five
years. Intangible asset balances are removed from the gross asset and
accumulated amortization amounts in the period in which they become fully
amortized and are no longer in use. Other intangible assets that are subject to
amortization are reviewed for impairment in accordance with SFAS
No. 144,Accounting for
the Impairment or Disposal of Long-Lived Assets, as described below
within the Long-Lived Assets discussion.
 
 Long-Lived
Assets
 
 The
Company continually reviews long-lived assets held and used and certain
identifiable intangible assets that are subject to amortization for possible
impairment whenever events or changes in circumstances indicate that the
carrying amount of an asset may not be recoverable in accordance with SFAS
No. 144. In evaluating the fair value and future benefits of such assets,
the Company considers whether the estimated undiscounted future net cash flows
of the individual assets is less than the related assets' carrying value and if
so, the Company records an impairment loss for the excess recorded carrying
value of the asset as compared to its fair value.
 
 Deferred
Producer Liabilities
 
 Deferred
producer liabilities represent outstanding amounts due to the producer or to be
retained by the Company upon the collection of license fee amounts related to
the sale of repped content by the Film Production segment. In accordance with
the Sales Agency Agreements entered into by the Company and repped content
producers, when license fees associated with the Company's sale of repped
content are collected, the amounts are paid to the producer and/or retained by
the Company. Amounts are paid to the Company for its sales agency commission,
recoupment of outstanding film costs and producer advances ("Recoupable Costs")
or as market fee revenue. The terms of the Sales Agency Agreements provide that
collected license fees are distributed to the producer and/or retained by the
Company based on a specific allocation order as defined by each agreement. The
allocation order is dependent on certain criteria including total license fee
collections, outstanding Recoupable Cost balances and certain other criteria as
specified by the Sales Agency Agreements. Because these criteria cannot be
reasonably determined until the license fees are collected, the appropriate
allocation order of uncollected license fees cannot be established. Accordingly,
the uncollected license fee amounts are recorded as deferred producer
liabilities until such time as the amounts are collected and the allocation
order can be reasonably determined.
  F-8
 
 Loss
per Share
 
 Loss per
share is computed on the basis of the weighted average number of common shares
outstanding. Diluted loss per share is computed on the basis of the weighted
average number of common shares outstanding. During the three and nine months
ended August 31, 2009, the Company had 10,000,000 shares issuable under its
convertible note to related party.
  Income
Taxes
 
 The
Company makes certain estimates and judgments in determining its income tax
provision expense. These estimates and judgments are used in the determination
of tax credits, benefits and deductions, and the calculation of certain tax
assets and liabilities which are a result of differences in the timing of the
recognition of revenue and expense for tax and financial statement purposes. The
Company also uses estimates and judgments in determining interest and penalties
on uncertain tax positions. Significant changes to these estimates could result
in a material change to the Company's tax provision in subsequent
periods.
 
 The
Company is required to evaluate the likelihood that it will be able to recover
its deferred tax assets. If the Company's evaluation determines that the
recovery is unlikely, it would be required to increase the provision for taxes
by recording a valuation allowance against the deferred tax assets equal to the
amount that is not expected to be recoverable. The Company currently estimates
that its deferred tax assets will be recoverable. If these estimates were to
change and the Company's assessment indicated it would be unable to recover the
deferred tax assets, the Company would be required to increase its income tax
provision expense in the period of the change in estimate.
 
 The
calculation of the Company's tax liabilities involves dealing with uncertainties
in the application of tax regulations.  The Company adopted the
provisions of Financial Accounting Standards Interpretation ("FIN")
No. 48,Accounting for
Uncertainty in Income Taxes—an interpretation of FASB Statement
No. 109 . FIN No. 48 contains a two-step approach to
recognizing and measuring uncertain tax position liabilities accounted for in
accordance with SFAS No. 109,Accounting for Income Taxes
.. The first step is to evaluate the tax position for recognition by determining
if the weight of available evidence indicates that it is more likely than not
that the position will be sustained on audit, including resolution of related
appeals or litigation processes, if any. The second step is to measure the tax
benefit as the largest amount that is more than 50% likely of being realized
upon ultimate settlement. This process is based on various factors including,
but not limited to, changes in facts and circumstances, changes in tax law,
settlement of issues under audit, and new audit activity. Changes to these
factors and the Company's estimates regarding these factors could result in the
recognition of a tax benefit or an additional charge to the tax
provision.
 
 Recently
Issued Accounting Pronouncements
 
 On
July 1, 2009, FASB issued SFAS No. 168, “The FASB Accounting Standards
Codification and the Hierarchy of Generally Accepted Accounting
Principles”, also known as FASB Accounting Standards Codification (“ASC”)
105, “Generally Accepted Accounting Principles” (“ASC 105”) (the Codification”).
ASC 105 establishes the exclusive authoritative reference for U.S. GAAP for use
in financial statements, except for SEC rules and interpretive releases, which
are also authoritative GAAP for SEC registrants. The Codification will supersede
all existing non-SEC accounting and reporting standards. Management is currently
working on its transition to incorporate this codification within its financial
statements and footnotes.
 
 In
April 2009, the FASB issued ASC 825 — Financial Instruments
(formerly Staff Position No. FAS 107-1 and APB 28-1, “Interim Disclosures about Fair Value
of Financial Instruments”). ASC 825 amends FASB Statement No. 107,
“Disclosures about Fair Value
of Financial Instruments” to require disclosures about fair value of
financial instruments in interim reporting periods. These disclosures were
previously only required in annual financial statements. The adoption of ASC 825
did not have a material impact on our consolidated financial statements as this
only requires additional disclosures.
 
 In
May 2009, the FASB issued ASC 855 — Subsequent Events (formerly
SFAS No. 165 — Subsequent
Events), which is effective for interim and annual periods ending after
June 15, 2009. ASC 855 establishes general standards of accounting for and
disclosure of events that occur after the balance sheet date but before
financial statements are issued or are available to be issued. ASC 855 did not
have a material impact on our consolidated financial
statements.
 
 In April
2009, the FASB issued Staff Position No. FAS 157-4, Determining Fair Value When Volume
and Level of Activity for the Asset or Liability Have Significantly Decreased
and Identifying Transactions That Are Not
Orderly  ("FSP 157-4"). FSP 157-4 provides guidance
on how to determine the fair value of assets and liabilities when the volume and
level of activity for the asset/liability has significantly decreased.
FSP 157-4 also provides guidance on identifying circumstances that indicate
a transaction is not orderly. In addition, FSP 157-4 requires disclosure in
interim and annual periods of the inputs and valuation techniques used to
measure fair value and a discussion of changes in valuation techniques.
FSP 157-4 is effective for the Company beginning July 1, 2009. The
Company does not expect the adoption of FSP 157-4 will have a material
impact on its results of operations and financial position.
 
  F-9
  In
October 2008, the FASB issued Staff Position No. FAS 157-3, Determining the Fair Value of a
Financial Asset When the Market for That Asset Is Not
Active  ("FSP 157-3"). FSP 157-3 clarified the
application of SFAS No. 157. FSP 157-3 demonstrated how the fair value
of a financial asset is determined when the market for that financial asset is
inactive. FSP 157-3 was effective upon issuance, including prior periods
for which financial statements had not been issued. The implementation of this
standard did not have an impact on the Company's results of operations and
financial position.
 
 In
April 2008, the FASB issued Staff Position No. FAS 142-3, Determination of the Useful Life of
Intangible Assets ("FSP 142-3"). FSP 142-3 amends the factors
that should be considered in developing renewal or extension assumptions used to
determine the useful life of a recognized intangible asset under SFAS
No. 142,Goodwill and
Other Intangible Assets . The intent of FSP 142-3 is to improve the
consistency between the useful life of a recognized intangible asset under SFAS
No. 142 and the period of expected cash flows used to measure the fair
value of the asset under SFAS No. 141(R) and other applicable accounting
literature. FSP 142-3 is effective for fiscal years beginning after
December 15, 2008. The Company does not expect the adoption of
FSP 142-3 will have a material impact on its results of operations and
financial position.
  NOTE
3 - GOING CONCERN
 
 The
accompanying financial statements have been prepared in conformity with
generally accepted accounting principles in the United States of America, which
contemplates continuation of the Company as a going concern. However, the
Company is a development-stage company, limited available capital and no
revenues from intended operations. These matters raise substantial doubt about
the Company's ability to continue as a going concern. In view of these matters,
realization of certain of the assets in the accompanying balance sheet is
dependent upon the Company's ability to meet its financing requirements, raise
additional capital, and the success of its future operations. There is no
assurance that future capital raising plans will be successful in obtaining
sufficient funds to assure the eventual profitability of the Company. Management
believes that actions planned and presently being taken to revise the Company's
operating and financial requirements provide the opportunity for the Company to
continue as a going concern. The financial statements do not include any
adjustments that might result from these uncertainties.
 
 NOTE
4 - RELATED PARTY BORROWINGS
  Since
August 2009, a Control Group member has loaned operating capital to the
Company.  This related party has verbally agreed to charge interest at
6%, annually, and not demand the repayment until after September 1, 2010, and
accordingly, management has report such amounts due as a non-current liability. During
the quarter ended August 31, 2009, the Company had borrowed $75,240 and accrued
related interest of $376.  Additional advances have been made by this
individual subsequent to August 31, 2009 to meet obligations as they become
due.  A formal agreement is being prepared by
management.
 
 NOTE
5 - COMMITMENTS AND CONTINGENCIES
  Month-to-Month
Office Space Rental
 
 On
September 1, 2009, the Company started renting office space on a month to month
basis from a related party (Charter Consulting Group, Inc,). The master lease
was entered into by Charter Consulting Group for a two year term at $4,818 per
month. The lease requires a security deposit of $9,636 from Charter Consulting
Group and includes an escalation clause of 3% per year, beginning with the one
year anniversary date (September 1, 2010). The Company paid the security deposit
and first month’s rent to Charter Consulting Group on September 1,
2009.
  NOTE 6 - CAPITAL STOCK
 The
Company has two classes of stock:
 
 ·
                Preferred
      stock, $.001 par value,   10,000,000 shares authorized,
      none issued and outstanding; and,
 ·
                Common
      stock, $.001 par value, 140,000,000 shares authorized, 67,028,952 and
      11,593,500 shares issued and outstanding as of August 31, 2009 and
      November 30, 2008, respectively. (Note: shares have been adjusted for
      Forward Split effective June 23,
2009.)
 On June
23, 2009, the directors of the Company approved a three (3) for one (1) stock
split (the “Forward Split”) of the Company’s issued and outstanding common stock
by written consent in lieu of a special meeting in accordance with the Nevada
Corporation Law.
 
 On June
29, 2009, we notified FINRA of the Name Change and the Forward
Split.  On July 31, 2009, FINRA declared the Name Change effective and
as a result of the effectiveness of the Name Change our symbol was changed to
MHYS.  FINRA also declared our Forward Split effective with a record
date of June 23, 2009 and a payable date of August 5, 2009.
 F-10
 On August
5, 2009 as discussed in Note 1, the Company issued 4,800,000 shares of common
stock upon conversion of notes with predecessors which resulted in an
extinguishment charge of $1,152,000, based on the closing price of the Company’s
common stock of $0.24 per share after the extinguish.
  On August
5, 2009 as discussed in Note 1, the Control Group acquired or received
50,000,000 shares of common stock, as well as 6,000,000 shares of common stock
from the conversion of $10,000 of notes acquired.
  Also on
August 5, 2009, the Belmont Partners were issued an additional 1,000,000 shares
for services rendered. The Company has recorded related stock compensation of
$240,000, based on the closing price of the Company’s common stock of $0.24 per
share after the extinguish.
 NOTE 7
- DISCONTINUED OPERATIONS
  The
Company’s decision to discontinue the operations of its handbag business
coincided with the Control Change which occurred at the beginning of June
2009.  As a result, all financial data pertaining directly to the
operations relative to the handbag business was collapsed with the net amount
reported separately from the continuing operations.  This collapsing
effect was used to restate the financials for all periods
presented.  For the three and nine months ended August 31, 2009,
losses from discontinued operations were $1,388,276 and $1,695,858,
respectively.  Loss per weighted average share from discontinued
operations for the nine month periods ended August 31, 2009, and August 31, 2008
were $(0.08) and $(0.02), respectively
 
 NOTE
8 - SUBSEQUENT EVENTS
 
 On
September 1, 2009, the Company entered into an employment agreement with
successful comedy writer Pat Proft (the “Employment Agreement”) to hire him as
the Senior VP of Comedy.  His role is to create and write our
movies.  Per the terms of his engagement, Mr. Proft will receive
200,000 shares of our common stock and be paid $10,000 per month for a minimum
of one (1) year.


F-11


ITEM 2. MANAGEMENT'S
DISCUSSION AND ANALYSIS





CERTAIN
STATEMENTS IN THIS QUARTERLY REPORT ON FORM 10-Q (THIS "FORM 10-Q"), CONSTITUTE
"FORWARD LOOKING STATEMENTS" WITHIN THE MEANING OF SECTION 27A OF THE SECURITIES
ACT OF 1934, AS AMENDED, AND THE PRIVATE SECURITIES LITIGATION REFORM ACT OF
1995 (COLLECTIVELY, THE "REFORM ACT"). CERTAIN, BUT NOT NECESSARILY ALL, OF SUCH
FORWARD-LOOKING STATEMENTS CAN BE IDENTIFIED BY THE USE OF FORWARD-LOOKING
TERMINOLOGY SUCH AS "BELIEVES", "EXPECTS", "MAY", "SHOULD", OR "ANTICIPATES", OR
THE NEGATIVE THEREOF OR OTHER VARIATIONS THEREON OR COMPARABLE TERMINOLOGY, OR
BY DISCUSSIONS OF STRATEGY THAT INVOLVE RISKS AND UNCERTAINTIES. SUCH
FORWARD-LOOKING STATEMENTS INVOLVE KNOWN AND UNKNOWN RISKS, UNCERTAINTIES AND
OTHER FACTORS WHICH MAY CAUSE THE ACTUAL RESULTS, PERFORMANCE OR ACHIEVEMENTS OF
MICHAEL LAMBERT, INC. ("THE COMPANY", "MLI", "WE", "US" OR "OUR") TO BE
MATERIALLY DIFFERENT FROM ANY FUTURE RESULTS, PERFORMANCE OR ACHIEVEMENTS
EXPRESSED OR IMPLIED BY SUCH FORWARD-LOOKING STATEMENTS. REFERENCES IN THIS FORM
10-Q, UNLESS ANOTHER DATE IS STATED, ARE TO AUGUST 31, 2009.





DESCRIPTION
OF BUSINESS


History





Michael Lambert, Inc. was
incorporated in Nevada on November 2, 2005.  Up until August 5, 2009,
the Company manufactured handbags.  We produced only 613 handbags from
inception to May 31, 2009 and no other clothing accessories.  We only
sold our products under the brand “Michael Lambert” and only sold our products
at two independently owned clothing stores in the San Antonio, Texas
area.   We manufactured the handbags, which were hand-sewn by a
third party, Fuerza Unida, a sewing cooperative in San Antonio, Texas consisting
of minority women.





On August
5, 2009 (the "Effective Date"), pursuant to the terms of a Stock Purchase
Agreement, Daniel Grodnik and affiliated parties purchased a total of 7,984,548
shares of our issued and outstanding common stock. This constituted a majority
control of the Company.  In addition to the shares purchased, the
Company also issued 42,015,452 shares to Daniel Grodnik and certain affiliated
parties in connection with the Change of Control.  The total of
50,000,000 shares issued to Daniel Grodnik and the affiliated parties represents
75.72% of the shares of outstanding common stock of the Company at the time of
transfer.





In
connection with the Change of Control, the Company has changed our name to Mass
Hysteria Entertainment Company, Inc. and also changed our business
plan.  Mass Hysteria Entertainment Comany, Inc. (“MHe”) is an
innovative motion picture studio that produces branded young adult film content
for theatrical, DVD, and television distribution managed by the former
Chairman/CEO of National Lampoon, Inc. MHe’s plan is to produce a minimum
of three theatrical films a year that appeal specifically to the youth
market.





Plan
of Operations For The Next Twelve Months





Mass
Hysteria Entertainment is a development stage company at a time of great change
in the entertainment business. Like much of corporate America, the entertainment
sector is currently going through an upheaval. The motion picture business has
had four significant revenue streams (theatrical, home video, cable and
broadcast) since the early 1980's. Today, home video is in decline and new
profit centers are opening up such as video-on-demand and internet portals that
rely on micro-transactions.  Mass Hysteria Entertainment is
endeavoring to be a company at the forefront of creating new revenue streams as
they relate to the motion picture experience. Over the next twelve months, Mass
Hysteria will be creating movies that will take advantage of traditional revenue
streams that are still viable, and at the same time, identifying those
micro-transactions that will define new media's involvement in the film business
such as downloading applications to smart phones that will allow the
theater-goer to "participate" with the on-screen experience. Mass Hysteria is
working with filmmakers who have realized great success such as producer Albert
Ruddy (two Academy Awards for best picture, The Godfather and Million Dollar
Baby), writer Pat Proft (Police Academy, Hot Shots, Naked Gun, and Scary Movie)
and also also with executives from the video game and social networking sectors.
Mass Hysteria Entertainment's plan is to combine these individual entertainment
experiences and destinations into an alternative theatrical experience for the
youth audience.




1





COMPARISON
OF OPERATING RESULTS





Results
of Operation for the Three Months Ended August 31, 2009 Compared to the Three
Months Ended August 31, 2008




We did
not have any sales revenues or related costs of sales for the three month
periods ended August 31, 2009, or August  31, 2008, other than those
related to the discontinued operations (handbag company).  We
recognized $1,388,276 net loss from discontinued operations during the three
months ended August 31, 2009 vs. $22,696 in net losses from discontinued
operations during the three months ended August 31, 2008.  The lack of
sales in current period is a direct reflection of the change of control and
introducing a new focus and business plan.  As the new Company meets
its business plan goals, we expect to generate revenue in the
future.




For the
three months ended August 31, 2009, we had general and administrative expenses
of $99,915, selling expenses of $590, and interest expense of $376. For the
three months ended August 31, 2008, all expenses incurred were for the handbag
business which has since been discontinued. The general and administrative,
selling, and interest expenses were a result of expenses incurred relative to
the change in control and overall business focus to the film and entertainment
industry.




We had a
net loss from continuing operations of $100,881, and a net loss from
discontinued operations of $1,388,276 for the three months ended August 31,
2009, compared to a net loss from continuing operations of $0, and discontinued
operations of $22,696 for the three months ended August 31, 2008, an increase in
total net loss of $1,466,461 from the prior period.  The increase in
net loss was mainly attributable to the $99,915 in general and administrative
expenses incurred for the new business focus, and the $1,388,276 loss from
discontinued operations due primarily to extinguishment of prior
debt.




Liquidity
and Capital Resources




We had
total assets of $3,204 as of August 31, 2009, including $64 of prepaid
webhosting fees and $3,140 of fixed assets (website), net accumulated
amortization of $90.




We had
total liabilities of $214,315 as of August 31, 2009, consisting of current
liabilities, which included $34,563 of accounts payable; $30,088 of accrued
liabilities; $1,156 of bank credit line payable; and $73,268 of related party
debt.  We had long-term liabilities including a related party loan
payable of $75,240.




We had
negative working capital of $139,011, a total shareholders’ deficit of $211,111
as of August 31, 2009 and an accumulated deficit as of August 31, 2009 of
$4,712,378.




We had
$70,006 in net cash used in operating activities for the nine months ended
August 31, 2009, which included $1,796,739 in net loss, offset by $510,000 in
shares issued for services; $1,144,000 loss on the extinguishment of debt;
$63,157 in change in accounts payable and accrued liabilities, $4,401 of change
in inventory; $(64) change in prepaids; $1,800 of imputed rent expense and
$3,349 of imputed interest on debt.




We had
$3,230 net cash used in investing activities to purchase a website.




We had
$73,050 of net cash provided by financing activities for the nine months ended
August 31, 2009, which included $89,032 in loans from stockholders, and $15,982
in repayments.




We depend
to a great degree on the ability to attract external financing in order to
conduct our business activities and in order that we have sufficient cash on
hand to expand our operations.  We are currently funded solely by our
shareholders.  We anticipate that our founders and shareholders will
continue to support our operations and loan us additional funds on an as needed
basis until such time as we can support our operations with revenues from our
products, if ever.




2




If we are
unable to raise additional capital from conventional sources, including
increases in the Line of Credit and/or additional sales of additional stock, we
may be forced to curtail or cease our operations. Even if we are able to
continue our operations, the failure to obtain financing could have a
substantial adverse effect on our business and financial results.




In the
future, we may be required to seek additional capital by selling debt or equity
securities, selling assets, or otherwise be required to bring cash flows in
balance when it approaches a condition of cash insufficiency. The sale of
additional equity securities, if accomplished, may result in dilution to our
shareholders. We cannot assure you, however, that financing will be available in
amounts or on terms acceptable to us, or at all.




ITEM
3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK




Pursuant
to Item 305(e) of Regulation S-K (§ 229.305(e)), the Company is not required to
provide the information required by this Item as it is a “smaller reporting
company,” as defined by Rule 229.10(f)(1).




ITEM
4. CONTROLS AND PROCEDURES




(a)
Evaluation of disclosure controls and procedures. Our Chief Executive Officer
and Principal Financial Officer, after evaluating the effectiveness of our
"disclosure controls and procedures" (as defined in the Securities Exchange Act
of 1934 Rules 13a-15(e) and 15d-15(e)) as of the end of the period covered by
this Quarterly Report on Form 10-Q (the "Evaluation Date"), have concluded that
as of the Evaluation Date, our disclosure controls and procedures were not
effective to provide reasonable assurance that information we are required to
disclose in reports that we file or submit under the Exchange Act is recorded,
processed, summarized and reported within the time periods specified in the
Securities and Exchange Commission rules and forms, and that such information is
accumulated and communicated to our management, including our Chief Executive
Officer and Chief Financial Officer, as appropriate, to allow timely decisions
regarding required disclosure. They were deemed not effective due to adjustment
and disclosure omissions identified by our Independent Registered Public
Accounting firm. The Company will continue to take steps to identify matters of
accounting and disclosure.




(b)   Changes
in internal control over financial reporting. During the quarter ended August
31, 2009, the Company elected a new CEO/CFO as a result of the change in control
and new business focus.  This was not as a result of any control
weaknesses or acts by the incumbent CEO or CFO.  Other than these
changes, there were no changes in our internal control over financial reporting
during our most recent fiscal quarter that materially affected, or were
reasonably likely to materially affect, our internal control over financial
reporting.




Because
of its inherent limitations, internal control over financial reporting may not
prevent or detect misstatements. Also, projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance
with the policies or procedures may deteriorate.





INHERENT
LIMITATIONS OF INTERNAL CONTROLS





Our
internal control over financial reporting is designed to provide reasonable
assurance regarding the reliability of financial reporting and the preparation
of financial statements for external purposes in accordance with the U.S. GAAP.
Our internal control over financial reporting includes those policies and
procedures that:




-
            pertain
      to the maintenance of records that, in reasonable detail, accurately and
      fairly reflect the transactions and dispositions of our
      assets;


-
            provide
      reasonable assurance that transactions are recorded as necessary to permit
      preparation of financial statements in accordance with the U.S. GAAP, and
      that our receipts and expenditures are being made only in accordance with
      authorizations of our management and directors;
  and


-
            provide
      reasonable assurance regarding prevention or timely detection of
      unauthorized acquisition, use, or disposition of our assets that could
      have a material effect on the financial
  statements.





Management
does not expect that our internal controls will prevent or detect all errors and
all fraud. A control system, no matter how well designed and operated, can
provide only reasonable, not absolute, assurance that the objectives of the
control system are met. Further, the design of a control system must reflect the
fact that there are resource constraints, and the benefits of controls must be
considered relative to their costs. Because of the inherent limitations in all
control systems, no evaluation of internal controls can provide absolute
assurance that all control issues and instances of fraud, if any, have been
detected. Also, any evaluation of the effectiveness of controls in future
periods are subject to the risk that those internal controls may become
inadequate because of changes in business conditions, or that the degree of
compliance with the policies or procedures may deteriorate.




3




PART II - OTHER
INFORMATION





ITEM
1. LEGAL PROCEEDINGS




From time
to time, we may become party to litigation or other legal proceedings that we
consider to be a part of the ordinary course of our business. We are not
currently involved in legal proceedings that could reasonably be expected to
have a material adverse effect on our business, prospects, financial condition
or results of operations. We may become involved in material legal proceedings
in the future.




ITEM
1A. RISK FACTORS




Not
required for smaller reporting companies.




ITEM
2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF
PROCEEDS




In
October 2009, in connection with an Employment Agreement with Pat Proft as our
VP of Comedy, we issued 200,000 shares of common stock to Pat Proft as
compensation for services.  We claim an exemption from registration
afforded by Section 4(2) of the Securities Act of 1933, as amended, since the
foregoing issuances did not involve a public offering, the recipients took the
shares for investment and not resale and we took appropriate measures to
restrict transfer. No underwriters or agents were involved in the foregoing
issuances and we paid no underwriting discounts or commissions.





In June
2009, we issued an aggregate of 42,015,452 restricted shares of our common stock
to Dan Grodnik and certain affiliated parties in connection with the Change of
Control.  We claim an exemption from registration afforded by Section
4(2) of the Securities Act of 1933, as amended, since the foregoing issuances
did not involve a public offering, the recipients took the shares for investment
and not resale and we took appropriate measures to restrict transfer. No
underwriters or agents were involved in the foregoing issuances and we paid no
underwriting discounts or commissions.




ITEM
3. DEFAULTS UPON SENIOR SECURITIES.




None.




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




On June
25, 2009, our shareholders voted and approved an amendment to our Certificate of
Incorporation with the Secretary of State for the State of Nevada changing our
name to “Mass Hysteria Entertainment Company, Inc.,” to better reflect our
business plan.




ITEM
5. OTHER INFORMATION




None.





ITEM
6.  EXHIBITS





(a)  
Exhibits





31.1
Certifications of Chief Executive Officer pursuant to Section 302 of Sarbanes
Oxley Act of 2002





32.1
Certifications of Chief Executive Officer pursuant to Section 906 of Sarbanes
Oxley Act of 2002





4




SIGNATURES





In
accordance with the requirements of the Exchange Act, the registrant caused this
report to be signed on its behalf by the undersigned, thereunto duly
authorized.





MASS
      HYSTERIA ENTERTAINMENT COMPANY, INC.DATED:
      November 4, 2009
            By:/s/ Daniel GrodnikDaniel
      Grodnik
              Chief
      Executive Officer and Principal Accounting
  Officer