----

| x | QUARTERLY                REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE                ACT OF                1934. For the quarter ended September 30, 2006 |
|---|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| o | TRANSITION                REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF                1934                                                               |

M      POWER 

|                        |                                                                                                                                                                                       | PAGE   |
|-----------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
| **PART                I.**  | **FINANCIAL                INFORMATION**                                                                                                                                                   |   |
|                        |                                                                                                                                                                                       |   |
| Item                1.      | Financial                Statements                                                                                                                                                        |   |
|                        |                                                                                                                                                                                       |   |
|                        | Consolidated                Balance Sheets as of September 30, 2006                (unaudited) and December 31, 2005                                                                       | 3      |
|                        |                                                                                                                                                                                       |   |
|                        | Consolidated                Statements of Operations for the Three and Nine                Months Ended September 30, 2006 and 2005 (unaudited)                                  | 4      |
|                        |                                                                                                                                                                                       |   |
|                        | Consolidated                Statements of Stockholders’ Deficiency for the                period from July 1, 1999 (Inception) to September 30,                2006 (unaudited) | 5      |
|                        |                                                                                                                                                                                       |   |
|                        | Consolidated                Statements of Cash Flow for the Nine Months Ended                September 30, 2006  and 2005 (unaudited)                                            | 10     |
|                        |                                                                                                                                                                                       |   |
|                        | Notes                to Consolidated Financial Statements                (unaudited)                                                                                                       | 11     |
|                        |                                                                                                                                                                                       |   |
| Item                2.      | Management's                Discussion and Analysis of Financial                Condition and Results of Operations                                                                        | 14     |
|                        |                                                                                                                                                                                       |   |
| Item                3.      | Controls                and Procedures                                                                                                                                                     | 16     |
|                        |                                                                                                                                                                                       |   |
| **PART                II.** | **OTHER                INFORMATION**                                                                                                                                                       |   |
|                        |                                                                                                                                                                                       |   |
| Item                1.      | Legal                Proceedings                                                                                                                                                           | 16     |
|                        |                                                                                                                                                                                       |   |
| Item                2.      | Changes                in Securities and Use of                Proceeds                                                                                                                    | 17     |
|                        |                                                                                                                                                                                       |   |
| Item                3.      | Defaults                Upon Senior Securities                                                                                                                                             | 18     |
|                        |                                                                                                                                                                                       |   |
| Item                4.      | Submission                of Matters to a Vote of Security                Holders                                                                                                          | 18     |
|                        |                                                                                                                                                                                       |   |
| Item                5.      | Other                Information                                                                                                                                                           | 18     |
|                        |                                                                                                                                                                                       |   |
| Item                6.      | Exhibits                                                                                                                                                                                   | 18     |
|                        |                                                                                                                                                                                       |   |
| CERTIFICATIONS              | 18                                                                                                                                                                                         |
|                        |                                                                                                                                                                                       |   |
| SIGNATURES                  | 19                                                                                                                                                                                         |
|                        |                                                                                                                                                                                       |   |

**PART      I - FINANCIAL INFORMATION**

| M                POWER ENTERTAINMENT, INC.(A                DEVELOPMENT STAGE COMPANY)CONSOLIDATED                BALANCE SHEETS                                                              |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
|                                                                                                                                                                                          |   | Sept                30,2006 (unaudited) |   | Dec                31,2005 |   |
|                                                                                                                                                                                          |   |   |   |   |   |   |   |
| ASSETS                                                                                                                                                                                        |   |   |   |   |   |   |   |
| CURRENT                ASSETS                                                                                                                                                                 |   |   |   |   |   |   |   |
| Cash                                                                                                                                                                                          |   | $ | 949,039 |   | $ | 75,928 |   |
| OTHER                ASSETS                                                                                                                                                                   |   |   |   |   |   |   |   |
| Deferred                Financing Costs, net                                                                                                                                                  |   |   | 371,855 |   |   | - |   |
| Deposits                                                                                                                                                                                      |   |   | 4,475 |   |   | 4,000 |   |
| Fixed                Assets, net of accumulated depreciation of $966 and $208,                respectively                                                                                    |   |   | 4,582 |   |   | 4,999 |   |
|                                                                                                                                                                                          |   |   |   |   |   |   |   |
| TOTAL                ASSETS                                                                                                                                                                   |   | $ | 1,329,951 |   | $ | 84,927 |   |
|                                                                                                                                                                                          |   |   |   |   |   |   |   |
| LIABILITIES                AND STOCKHOLDERS' DEFICIT                                                                                                                                          |   |   |   |   |   |   |   |
|                                                                                                                                                                                          |   |   |   |   |   |   |   |
| CURRENT                LIABILITIES                                                                                                                                                            |   |   |   |   |   |   |   |
| Accounts                payable - trade                                                                                                                                                       |   | $ | 16,121 |   | $ | 189,692 |   |
| Accounts                payable - related parties                                                                                                                                             |   |   | - |   |   | 19,306 |   |
| Accrued                expenses                                                                                                                                                               |   |   | 787,746 |   |   | 899,964 |   |
| Accrued                expenses - related parties                                                                                                                                             |   |   | - |   |   | 16,649 |   |
| Notes                Payable                                                                                                                                                                  |   |   | 199,361 |   |   | 107,000 |   |
| Convertible                debentures 6%, net of discount of $1,876,304                                                                                                                       |   |   | 115,800 |   |   | - |   |
| Convertible                debenture derivative liability                                                                                                                                     |   |   | 5,312,202 |   |   | - |   |
|                                                                                                                                                                                          |   |   |   |   |   |   |   |
| Total                current liabilities                                                                                                                                                      |   |   | 6,431,231 |   |   | 1,232,611 |   |
|                                                                                                                                                                                          |   |   |   |   |   |   |   |
| COMMITMENTS                AND CONTINGENCIES                                                                                                                                                  |   |   | - |   |   | - |   |
|                                                                                                                                                                                          |   |   |   |   |   |   |   |
| STOCKHOLDERS'                DEFICIT                                                                                                                                                          |   |   |   |   |   |   |   |
| Series                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;                62,197,688 and 42,657,688 shares issued and outstanding,                respectively |   |   | 62,198 |   |   | 42,658 |   |
| Additional                paid-in capital                                                                                                                                                     |   |   | 61,357,371 |   |   | 60,093,751 |   |
| Accumulated                deficit                                                                                                                                                            |   |   | (39,610,977 | ) |   | (39,610,977 | ) |
| Accumulated                deficit during development stage                                                                                                                                   |   |   | (26,909,872 | ) |   | (21,673,116 | ) |
|                                                                                                                                                                                          |   |   |   |   |   |   |   |
| Total                stockholders' deficit                                                                                                                                                    |   |   | (5,101,280 | ) |   | (1,147,684 | ) |
|                                                                                                                                                                                          |   |   |   |   |   |   |   |
| TOTAL                LIABILITIES AND STOCKHOLDERS' DEFICIT                                                                                                                                    |   | $ | 1,329,951 |   | $ | 84,927 |   |

----

Table      of Content

| M                POWER ENTERTAINMENT, INC(A                DEVELOPMENT STAGE COMPANY)CONSOLIDATED                STATEMENTS OF OPERATIONS (Unaudited) |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
|                                                                                                                                                  |   |   |   |
|                                                                                                                                                  |   | For                the Three Months EndedSept                30 |   | For                the Nine Months EndedSept                30 |   | For                The Period from June 20,1999 (Inception) To Sept 30,2006 |   |
|                                                                                                                                                  |   |   | 2006 |   |   | 2005 |   |   | 2006 |   |   | 2005 |   |   |   |   |
| OPERATING                EXPENSES                                                                                                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Depreciation                and amortization                                                                                                          |   | $ | 139 |   | $ | 670 |   | $ | 416 |   | $ | 1,594 |   |   | 2,332 |   |
| Compensation                expense                                                                                                                   |   |   | 70,500 |   |   | - |   |   | 967,276 |   |   |   |   |   | 1,837,691 |   |
| Professional                fees                                                                                                                      |   |   | 67,764 |   |   | 9,289,861 |   |   | 307,110 |   |   | - |   |   | 18,818,906 |   |
| Consulting                fee                                                                                                                         |   |   |   |   |   | 3,300,275 |   |   |   |   |   | 13,116,429 |   |   |   |   |
| General                and administrative                                                                                                             |   |   | (62,346 | ) |   | 91,704 |   |   | 624,699 |   |   | 239,782 |   |   | 3,558,964 |   |
| Impairment                of goodwill                                                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 1,584,865 |   |
|                                                                                                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| LOSS                FROM OPERATIONS                                                                                                                   |   |   | (76,057 | ) |   | (3,392,649 | ) |   | (1,899,501 | ) |   | (13,357,805 | ) |   | (25,802,758 | ) |
|                                                                                                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| OTHER                INCOME (EXPENSES)                                                                                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest                expense and loan discount fee                                                                                                 |   |   | (137,751 | ) |   | (28,651 | ) |   | (226,939 | ) |   | (73,747 | ) |   | (1,928,909 | ) |
| Gain/(Loss)on                derivative liability                                                                                                     |   |   | (1,790,273 | ) |   | - |   |   | (3,173,650 | ) |   | - |   |   | (3,173,650 | ) |
| Gain                on extinguishment of debt                                                                                                         |   |   | - |   |   | - |   |   | 77,834.33 |   |   | - |   |   | 1,878,140 |   |
| Gain                on release of debt                                                                                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 2,223,032 |   |
| Interest                income                                                                                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 7,663 |   |
| Lawsuit                settlement                                                                                                                     |   |   | (14,500 | ) |   |   |   |   | (14,500 | ) |   | - |   |   | (14,500 | ) |
|                                                                                                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                other income (expenses)                                                                                                          |   |   | (1,942,524 | ) |   | (28,651 | ) |   | (3,337,254 | ) |   | (13,431,552 | ) |   | (1,008,223 | ) |
|                                                                                                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| INCOME                (LOSS) FROM DISCONTINUED OPERATIONS                                                                                             |   |   |   |   |   | (136,839 | ) |   |   |   |   | (136,839 | ) |   | (98,890 | ) |
|                                                                                                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| NET                LOSS                                                                                                                               |   | $ | (2,018,581 | ) | $ | (3,558,139 | ) | $ | (5,236,756 | ) | $ | (13,568,391 | ) | $ | (26,909,872 | ) |
|                                                                                                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| TOTAL                BASIC AND DILUTED NET LOSS PER SHARE                                                                                             |   |   | (0.14 | ) |   | (0.14 | ) |   | (0.08 | ) |   | (0.63 | ) |   | (0.46 | ) |
| BASIC                AND DILUTED WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING                                                                        |   |   | 14,572,739 |   |   | 25,502,084 |   |   | 61,847,688 |   |   | 21,400,510 |   |   | 58,584,891 |   |

----

Table      of Content

M        POWER 

|                                                                                                                              |   | Preferred                Stock |   | Common                Stock |    | Additional                Paid-in                Capital |   | Accumulated                Deficit DuringDevelopment                Stage |      | AccumulatedDeficit |    | UnearnedCompensation |   | SubscriptionReceivable |       | TotalEquity |   |
|-----------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------|--------|-----------------------------|---------|----------------------------------------------------------|--------|---------------------------------------------------------------------------|-----------|--------------------|---------|----------------------|--------|------------------------|------------|-------------|--------|
|                                                                                                                              |   | Shares                         |   | Amount                      |    | Shares                                                   |   | Amount                                                                    |      |               |    |                 |   |                   |       |        |   |   |   |   |   |
|                                                                                                                              |   |                           |   |                        |    |                                                     |   |                                                                      |      |               |    |                 |   |                   |       |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                              |   |                           |   |                        |    |                                                     |   |                                                                      |      |               |    |                 |   |                   |       |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance,                June 30, 1999 -                                                                                           |   |                           |   |                        | $       | -                                                        |   |                                                                      | 3,272,559 |               | $       | 3,273                |   | $                      | 37,017,241 |        |   | - |   | $ | (39,610,977 | ) | $ | - |   | $ | - |   | $ | (2,590,463 | ) |
|                                                                                                                              |   |                           |   |                        |    |                                                     |   |                                                                      |      |               |    |                 |   |                   |       |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                Loss for the 3 months ended Sept 30,1999                                                                       |   |                           |   |                        |    |                                                     |   |                                                                      |      |               |    |                 |   |                   |       |        |   | (293,991 | ) |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                              |   |                           |   |                        |    |                                                     |   |                                                                      |      |               |    |                 |   |                   |       |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Shares                issued for conversion of debt at $0.13 on Dec 10,1999                                                       |   |                           |   |                        |    |                                                     |   |                                                                      | 3,750,000 |               |    | 3,750                |   |                   | 495,582    |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                              |   |                           |   |                        |    |                                                     |   |                                                                      |      |               |    |                 |   |                   |       |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Additional                shares issued to reconcile to transfer agent                                                            |   |                           |   |                        |    |                                                     |   |                                                                      | 500       |               |    |                 |   |                   |       |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                              |   |                           |   |                        |    |                                                     |   |                                                                      |      |               |    |                 |   |                   |       |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                loss for the 3 months ended December 31,1999                                                                   |   |                           |   |                        |    |                                                     |   |                                                                      |      |               |    |                 |   |                   |       |        |   | (817,933 | ) |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                              |   |                           |        |                        |    |                                                          |   |                                                                      |           |               |    |                      |   |                   |            |        |   |  |   |   |  |   |   |  |   |   |  |   |   |  |   |
| Balance,                December 31,1999                                                                                          |   |                           | -      |                        |  $ | -                                                        |   |                                                                      | 7,023,059 |               |  $ | 7,023                |   |                   | 37,512,823 |        |   | (1,111,924 | ) |  $ | (39,610,977 | ) |  $       | - |   |  $ | - |   | $ | (3,203,055 | ) |
|                                                                                                                              |   |                           |   |                        |    |                                                     |   |                                                                      |      |               |    |                 |   |                   |       |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                loss for the year ended December 31,2000                                                                       |   |                           |        |                        |    |                                                          |   |                                                                      |           |               |    |                      |   |                   |            |        |   | (917,709 | ) |   |  |   |   |  |   |   |  |   |   |  |   |
|                                                                                                                              |   |                           |   |                        |    |                                                     |   |                                                                      |      |               |    |                 |   |                   |       |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance,                December 31,2000                                                                                          |   |                           | -      |                        |  $ | -                                                        |   |                                                                      | 7,023,059 |               |  $ | 7,023                |   |                   | 37,512,823 |        |   | (2,029,633 | ) |  $ | (39,610,977 | ) |   | - |   |   | - |   | $ | (4,120,764 | ) |
|                                                                                                                              |   |                           |   |                        |    |                                                     |   |                                                                      |      |               |    |                 |   |                   |       |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Shares                issued for deferred Professional fees                                                                       |   |                           |   |                        |    |                                                     |   |                                                                      | 1,200,000 |               |    | 1,200                |   |                   | 10,800     |        |   |   |   |   |   |   |   | (12,000 | ) |   |   |   |   |   |   |
|                                                                                                                              |   |                           |   |                        |    |                                                     |   |                                                                      |      |               |    |                 |   |                   |       |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Amortization                of deferred professional fees                                                                         |   |                           |   |                        |    |                                                     |   |                                                                      |      |               |    |                 |   |                   |       |        |   |   |   |   |   |   |   | 9,000 |   |   |   |   |   |   |   |
|                                                                                                                              |   |                           |   |                        |    |                                                     |   |                                                                      |      |               |    |                 |   |                   |       |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                loss for the year ended December 31,2001                                                                       |   |                           |        |                        |    |                                                          |   |                                                                      |           |               |    |                      |   |                   |            |        |   | (777,810 | ) |   |  |   |   |  |   |   |  |   |   |  |   |
|                                                                                                                              |   |                           |   |                        |    |                                                     |   |                                                                      |      |               |    |                 |   |                   |       |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance,                December 31,2001                                                                                          |   |                           | -      |                        |  $ | -                                                        |   |                                                                      | 8,223,059 |               |  $ | 8,223                |   |                   | 37,523,623 |        |   | (2,807,443 | ) |  $ | (39,610,977 | ) |   | (3,000 | ) |   | - |   | $ | (4,889,574 | ) |
|                                                                                                                              |   |                           |   |                        |    |                                                     |   |                                                                      |      |               |    |                 |   |                   |       |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Common                stock issued in April 2002 for conversion of debt at $0.10 to $0.50                per                share |   |                           |   |                        |    |                                                     |   |                                                                      | 6,475,000 |               |    | 6,475                |   |                   | 796,168    |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                              |   |                           |   |                        |    |                                                     |   |                                                                      |      |               |    |                 |   |                   |       |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

----

Table      of Content

|                                                                                                                               |   | Preferred                Stock |   | Common                Stock @ Par .001 |    | Additional                Paid-inCapital |   | Accumulated                Deficit During Development                Stage |       | Accumulated                Deficit |    | Unearned                Compensation |   | Subscription                Receivable |       | TotalEquity |   |
|------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------|--------|----------------------------------------|---------|------------------------------------------|--------|----------------------------------------------------------------------------|------------|------------------------------------|---------|--------------------------------------|--------|----------------------------------------|------------|-------------|--------|
| Common                stock issued in March and April 2002 for services at $0.005 to $0.10                per                share |   |                           |   |                                   |    |                                     |   |                                                                       | 2,775,000  |                               |    | 2,775                                |   |                                   | 265,225    |        |   |   |   |   |   |   |   | (268,000 | ) |   |   |   |   |   |   |
|                                                                                                                               |   |                           |   |                                   |    |                                     |   |                                                                       |       |                               |    |                                 |   |                                   |       |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Common                stock issued in June 2002 for services at $0.10 per share                                                    |   |                           |   |                                   |    |                                     |   |                                                                       | 2,250,000  |                               |    | 2,250                                |   |                                   | 222,750    |        |   |   |   |   |   |   |   | (165,000 | ) |   |   |   |   |   |   |
|                                                                                                                               |   |                           |   |                                   |    |                                     |   |                                                                       |       |                               |    |                                 |   |                                   |       |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Common                stock issued in October 2002 for conversion of debt at $1.58 per                share                        |   |                           |   |                                   |    |                                     |   |                                                                       | 46,980     |                               |    | 47                                   |   |                                   | 74,382     |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                               |   |                           |   |                                   |    |                                     |   |                                                                       |       |                               |    |                                 |   |                                   |       |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Common                stock issued in December 2002 for services at $0.22 to $0.25 per                share                        |   |                           |   |                                   |    |                                     |   |                                                                       | 325,000    |                               |    | 325                                  |   |                                   | 80,282     |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                               |   |                           |   |                                   |    |                                     |   |                                                                       |       |                               |    |                                 |   |                                   |       |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Common                stock issued for cash in December 2002 at $0.25 per share                                                    |   |                           |   |                                   |    |                                     |   |                                                                       | 700,000    |                               |    | 700                                  |   |                                   | 174,300    |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                               |   |                           |   |                                   |    |                                     |   |                                                                       |       |                               |    |                                 |   |                                   |       |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Amortization                of deferred compensation                                                                               |   |                           |   |                                   |    |                                     |   |                                                                       |       |                               |    |                                 |   |                                   |       |        |   |   |   |   |   |   |   | 389,100 |   |   |   |   |   |   |   |
|                                                                                                                               |   |                           |   |                                   |    |                                     |   |                                                                       |       |                               |    |                                 |   |                                   |       |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                loss for the year ended December 31,2002                                                                        |   |                           |        |                                   |    |                                          |   |                                                                       |            |                               |    |                                      |   |                                   |            |        |   | (1,176,485 | ) |   |  |   |   |  |   |   |  |   |   |  |   |
|                                                                                                                               |   |                           |   |                                   |    |                                     |   |                                                                       |       |                               |    |                                 |   |                                   |       |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance,                December 31,2002                                                                                           |   |                           | -      |                                   |  $ | -                                        |   |                                                                       | 20,795,039 |                               |  $ | 20,795                               |   |  $                                | 39,136,730 |        |   | (3,983,928 | ) |  $ | (39,610,977 | ) |  $ | (46,900 | ) |  $ | - |   | $ | (4,484,280 | ) |
|                                                                                                                               |   |                           |   |                                   |    |                                     |   |                                                                       |       |                               |    |                                 |   |                                   |       |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Warrants                issued for conversion of debt in January 2003                                                              |   |                           |   |                                   |    |                                     |   |                                                                       |       |                               |    |                                 |   |                                   | 130,000    |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                               |   |                           |   |                                   |    |                                     |   |                                                                       |       |                               |    |                                 |   |                                   |       |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Common                stock issued in February 2003 for services at $0.17 and $0.12 per                share                       |   |                           |   |                                   |    |                                     |   |                                                                       | 275,000    |                               |    | 275                                  |   |                                   | 42,475     |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                               |   |                           |   |                                   |    |                                     |   |                                                                       |       |                               |    |                                 |   |                                   |       |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Common                stock issued in February 2003 for conversion of debt at $0.17 per                share                       |   |                           |   |                                   |    |                                     |   |                                                                       | 588,235    |                               |    | 588                                  |   |                                   | 99,412     |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                               |   |                           |   |                                   |    |                                     |   |                                                                       |       |                               |    |                                 |   |                                   |       |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Common                stock issued in March 2003 for services at $0.16 per share                                                   |   |                           |   |                                   |    |                                     |   |                                                                       | 520,000    |                               |    | 520                                  |   |                                   | 82,680     |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                               |   |                           |   |                                   |    |                                     |   |                                                                       |       |                               |    |                                 |   |                                   |       |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Amortization                of unearned compensation                                                                               |   |                           |   |                                   |    |                                     |   |                                                                       |       |                               |    |                                 |   |                                   |       |        |   |   |   |   |   |   |   | 46,900 |   |   |   |   |   |   |   |
|                                                                                                                               |   |                           |   |                                   |    |                                     |   |                                                                       |       |                               |    |                                 |   |                                   |       |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Common                stock issued in April 2003 for cash at $0.25 per share                                                       |   |                           |   |                                   |    |                                     |   |                                                                       | 550,000    |                               |    | 550                                  |   |                                   | 136,950    |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                               |   |                           |   |                                   |    |                                     |   |                                                                       |       |                               |    |                                 |   |                                   |       |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Common                stock issued in April 2003 for services at $0.15 per share                                                   |   |                           |   |                                   |    |                                     |   |                                                                       | 100,000    |                               |    | 100                                  |   |                                   | 14,900     |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                               |   |                           |   |                                   |    |                                     |   |                                                                       |       |                               |    |                                 |   |                                   |       |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

----

Table            of Content

|                                                                                                                                        |   | Preferred                Stock |   | Common                Stock |   | Additional                Paid-in Capital |   | Accumulated                Deficit During Development                Stage |   | Accumulated                Deficit |   | Unearned                Compensation |   | Subscription                Receivable |    | TotalEquity |   |
|---------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------|--------|-----------------------------|--------|-------------------------------------------|--------|----------------------------------------------------------------------------|--------|------------------------------------|--------|--------------------------------------|--------|----------------------------------------|---------|-------------|--------|
| Common                stock issued in May 2003 for the conversion of debt and for services                at                $0.15 per share |   |                           |   |                        |   | 500,000                                   |   |                                                                       | 500    |                               |   | 74,500                               |   |                                   |    |        |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                        |   |                           |   |                        |   |                                      |   |                                                                       |   |                               |   |                                 |   |                                   |    |        |   |   |   |   |   |   |   |   |   |   |   |   |
| Common                stock issued in June 2003 for conversion of debt at $0.18 per                share                                    |   |                           |   |                        |   | 33,000                                    |   |                                                                       | 33     |                               |   | 5,907                                |   |                                   |    |        |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                        |   |                           |   |                        |   |                                      |   |                                                                       |   |                               |   |                                 |   |                                   |    |        |   |   |   |   |   |   |   |   |   |   |   |   |
| Common                stock issued in June 2003 for services at $.016 per share                                                             |   |                           |   |                        |   | 805,000                                   |   |                                                                       | 805    |                               |   | 127,995                              |   |                                   |    |        |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                        |   |                           |   |                        |   |                                      |   |                                                                       |   |                               |   |                                 |   |                                   |    |        |   |   |   |   |   |   |   |   |   |   |   |   |
| Common                stock issued in July 2003 for cash at $0.25 per share                                                                 |   |                           |   |                        |   | 350,000                                   |   |                                                                       | 350    |                               |   | 87,150                               |   |                                   |    |        |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                        |   |                           |   |                        |   |                                      |   |                                                                       |   |                               |   |                                 |   |                                   |    |        |   |   |   |   |   |   |   |   |   |   |   |   |
| Common                stock issued in September 2003 for services at $0.10 and $0.15 per                share                               |   |                           |   |                        |   | 300,000                                   |   |                                                                       | 300    |                               |   | 44,700                               |   |                                   |    |        |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                        |   |                           |   |                        |   |                                      |   |                                                                       |   |                               |   |                                 |   |                                   |    |        |   |   |   |   |   |   |   |   |   |   |   |   |
| Common                stock issued in September 2003 for services at $0.10 and $0.15 per                share                               |   |                           |   |                        |   | 1,400,000                                 |   |                                                                       | 1,400  |                               |   | 198,600                              |   |                                   |    |        |   |   |   |   | (194,300 | ) |   |   |   |   |   |   |
|                                                                                                                                        |   |                           |   |                        |   |                                      |   |                                                                       |   |                               |   |                                 |   |                                   |    |        |   |   |   |   |   |   |   |   |   |   |   |   |
| Common                stock issued in September 2003 for the conversion of debt at at $0.17                per                share         |   |                           |   |                        |   | 500,000                                   |   |                                                                       | 500    |                               |   | 49,500                               |   |                                   |    |        |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                        |   |                           |   |                        |   |                                      |   |                                                                       |   |                               |   |                                 |   |                                   |    |        |   |   |   |   |   |   |   |   |   |   |   |   |
| Common                stock issued in October 2003 for services at $0.14 and $0.20 per                share                                 |   |                           |   |                        |   | 750,000                                   |   |                                                                       | 750    |                               |   | 119,250                              |   |                                   |    |        |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                        |   |                           |   |                        |   |                                      |   |                                                                       |   |                               |   |                                 |   |                                   |    |        |   |   |   |   |   |   |   |   |   |   |   |   |
| Common                stock issued in November 2003 for cash at $0.25 per share                                                             |   |                           |   |                        |   | 100,000                                   |   |                                                                       | 100    |                               |   | 24,900                               |   |                                   |    |        |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                        |   |                           |   |                        |   |                                      |   |                                                                       |   |                               |   |                                 |   |                                   |    |        |   |   |   |   |   |   |   |   |   |   |   |   |
| Common                stock issuance cancelled in November 2003                                                                             |   |                           |   |                        |   | (1,910,000                                | )      |                                                                       | (1,910 | )                                  |   | (23,690                              | )      |                                   |    |        |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                        |   |                           |   |                        |   |                                      |   |                                                                       |   |                               |   |                                 |   |                                   |    |        |   |   |   |   |   |   |   |   |   |   |   |   |
| Common                stock issued in November 2003 for services at $0.10 per                share                                          |   |                           |   |                        |   | 1,160,000                                 |   |                                                                       | 1,160  |                               |   | 134,840                              |   |                                   |    |        |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                        |   |                           |   |                        |   |                                      |   |                                                                       |   |                               |   |                                 |   |                                   |    |        |   |   |   |   |   |   |   |   |   |   |   |   |
| Common                stock issued in December 2003 for services at $0.08 and $0.09 per                share                                |   |                           |   |                        |   | 745,830                                   |   |                                                                       | 746    |                               |   | 63,379                               |   |                                   |    |        |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                        |   |                           |   |                        |   |                                      |   |                                                                       |   |                               |   |                                 |   |                                   |    |        |   |   |   |   |   |   |   |   |   |   |   |   |
| Warrants                issued at compensation to a director                                                                                |   |                           |   |                        |   |                                      |   |                                                                       |   |                               |   | 24,000                               |   |                                   |    |        |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                        |   |                           |   |                        |   |                                      |   |                                                                       |   |                               |   |                                 |   |                                   |    |        |   |   |   |   |   |   |   |   |   |   |   |   |
| Amortization                of unearned compensation                                                                                        |   |                           |   |                        |   |                                      |   |                                                                       |   |                               |   |                                 |   |                                   |    |        |   |   |   |   | 59,300 |   |   |   |   |   |   |   |
|                                                                                                                                        |   |                           |   |                        |   |                                      |   |                                                                       |   |                               |   |                                 |   |                                   |    |        |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                income for the year ended December 31,2003                                                                               |   |                           |        |                        |   |                                           |   |                                                                       |        |                               |   |                                      |   |                                   | 825,174 |        |   |  |   |   |  |   |   |  |   |   |  |   |

----

Table        of Content

|                                                                                                    |   | Preferred                  Stock |   | Common                  Stock |    | Additional                  Paid-in Capital |   | Accumulated                  Deficit During Development                  Stage |       | Accumulated                  Deficit |    | Unearned                  Compensation |   | Subscription                  Receivable |       | TotalEquity |    |
|---------------------------------------------------------------------------------------------------------|--------|----------------------------------|--------|-------------------------------|---------|---------------------------------------------|--------|--------------------------------------------------------------------------------|------------|--------------------------------------|---------|----------------------------------------|--------|------------------------------------------|------------|-------------|---------|
| Balance,                  December 31 2003(Pre-Split)                                                   |   |                             | -      |                          |  $ | -                                           |   |                                                                           | 27,562,104 |                                 |  $ | 27,562                                 |   |  $                                  | 40,574,178 |        |  $ | (3,158,754 | ) |  $ | (39,610,977 | ) |  $ | (135,000 | ) |  $ | - |   | $ | (2,302,991 | ) |
|                                                                                                    |   |                             |   |                          |    |                                        |   |                                                                           |       |                                 |    |                                   |   |                                     |       |        |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Retroactive                  effect of 200:1 stock split in 2005                                        |   |                             |   |                          |    |                                        |   |                                                                           |       |                                 |    |                                   |   |                                     | 65,611     |        |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                    |   |                             |        |                          |    |                                             |   |                                                                           |            |                                 |    |                                        |   |                                     |            |        |    |  |   |   |  |   |   |  |   |   |  |   |   |  |   |
| Balance,                  December 31 2003 (Post Split)                                                 |   |                             | -      |                          |  $ | -                                           |   |                                                                           | 137,811    |                                 |  $ | 138                                    |   |                                     | 40,639,789 |        |    | (3,158,754 | ) |  $ | (39,610,977 | ) |  $ | (135,000 | ) |  $ | - |   | $ | (2,264,804 | ) |
|                                                                                                    |   |                             |   |                          |    |                                        |   |                                                                           |       |                                 |    |                                   |   |                                     |       |        |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Common                  stock issued for services                                                       |   |                             |   |                          |    |                                        |   |                                                                           | 581,326    |                                 |    | 581                                    |   |                                     | 3,355,408  |        |    |   |   |   |   |   |   | (1,265,130 | ) |   |   |   |   |   |   |
|                                                                                                    |   |                             |   |                          |    |                                        |   |                                                                           |       |                                 |    |                                   |   |                                     |       |        |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Common                  stock issued for debt                                                           |   |                             |   |                          |    |                                        |   |                                                                           | 14,183     |                                 |    | 14                                     |   |                                     | 139,313    |        |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                    |   |                             |   |                          |    |                                        |   |                                                                           |       |                                 |    |                                   |   |                                     |       |        |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Common                  stock issued for cash                                                           |   |                             |   |                          |    |                                        |   |                                                                           | 41,667     |                                 |    | 42                                     |   |                                     | 524,956    |        |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                    |   |                             |   |                          |    |                                        |   |                                                                           |       |                                 |    |                                   |   |                                     |       |        |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Common                  stock issued for subscription receivable                                        |   |                             |   |                          |    |                                        |   |                                                                           | 83,333     |                                 |    | 83                                     |   |                                     | 499,917    |        |    |   |   |   |   |   |   |   |   |   | (500,000 | ) |   |   |   |
|                                                                                                    |   |                             |   |                          |    |                                        |   |                                                                           |       |                                 |    |                                   |   |                                     |       |        |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Common                  stock issued in acquisitions of Stellar Software Networks,                  Inc |   |                             |   |                          |    |                                        |   |                                                                           | 40,126     |                                 |    | 40                                     |   |                                     | 190,960    |        |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                    |   |                             |   |                          |    |                                        |   |                                                                           |       |                                 |    |                                   |   |                                     |       |        |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Common                  stock issued in acquisitions of Texas Source Group, Inc                         |   |                             |   |                          |    |                                        |   |                                                                           | 214,286    |                                 |    | 214                                    |   |                                     | 1,499,786  |        |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                    |   |                             |   |                          |    |                                        |   |                                                                           |       |                                 |    |                                   |   |                                     |       |        |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Amortization                  of unearned compensation                                                  |   |                             |   |                          |    |                                        |   |                                                                           |       |                                 |    |                                   |   |                                     |       |        |    |   |   |   |   |   |   | 1,400,130 |   |   |   |   |   |   |   |
|                                                                                                    |   |                             |   |                          |    |                                        |   |                                                                           |       |                                 |    |                                   |   |                                     |       |        |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                  loss for the year ended December 31,2004                                           |   |                             |        |                          |    |                                             |   |                                                                           |            |                                 |    |                                        |   |                                     |            |        |    | (4,656,826 | ) |   |  |   |   |  |   |   |  |   |   |  |   |
|                                                                                                    |   |                             |   |                          |    |                                        |   |                                                                           |       |                                 |    |                                   |   |                                     |       |        |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance,                  December 21,2004 (Post split)                                                 |   |                             | -      |                          |  $ | -                                           |   |  $                                                                        | 1,112,732  |                                 |    | 1,112                                  |   |  $                                  | 46,850,129 |        |  $ | (7,815,580 | ) |  $ | (39,610,977 | ) |  $ | - |   |  $ | (500,000 | ) | $ | (1,075,316 | ) |
|                                                                                                    |   |                             |   |                          |    |                                        |   |                                                                           |       |                                 |    |                                   |   |                                     |       |        |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Common                  stock issued for services                                                       |   |                             |   |                          |    |                                        |   |                                                                           | 41,544,957 |                                 |    | 41,545                                 |   |                                     | 13,243,622 |        |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                    |   |                             |   |                          |    |                                        |   |                                                                           |       |                                 |    |                                   |   |                                     |       |        |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Stock                  Subscriptions deemed uncollectible                                               |   |                             |   |                          |    |                                        |   |                                                                           |       |                                 |    |                                   |   |                                     |       |        |    |   |   |   |   |   |   |   |   |   | 500,000 |   |   |   |   |
|                                                                                                    |   |                             |   |                          |    |                                        |   |                                                                           |       |                                 |    |                                   |   |                                     |       |        |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                  loss for the year ended December 31,2005                                           |   |                             |        |                          |    |                                             |   |                                                                           |            |                                 |    |                                        |   |                                     |            |        |    | (13,857,536 | ) |   |  |   |   |  |   |   |  |   |   |  |   |
|                                                                                                    |   |                             |   |                          |    |                                        |   |                                                                           |       |                                 |    |                                   |   |                                     |       |        |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance,                  December 31,2005 (post Split)                                                 |   |                             | -      |                          | $  | -                                           |   |                                                                           | 42,657,689 |                                 |  $ | 42,657                                 |   |  $                                  | 60,093,751 |        |  $ | (21,673,116 | ) |  $ | (39,610,977 | ) |   | - |   |  $ | - |   | $ | (1,147,685 | ) |
|                                                                                                    |   |                             |   |                          |    |                                        |   |                                                                           |       |                                 |    |                                   |   |                                     |       |        |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Common                  stock issued for services                                                       |   |                             |   |                          |    |                                        |   |                                                                           | 10,340,000 |                                 |    | 10,340                                 |   |                                     | 1,180,345  |        |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

----

Table        of Content

|                                                        |   | Preferred                Stock |   | Common                Stock |    | Additional                Paid-in Capital |   | Accumulated                Deficit During Development                Stage |       | Accumulated                Deficit |    | Unearned                Compensation |   | Subscription                Receivable |       | TotalEquity |    |
|-------------------------------------------------------------|--------|--------------------------------|--------|-----------------------------|---------|-------------------------------------------|--------|----------------------------------------------------------------------------|------------|------------------------------------|---------|--------------------------------------|--------|----------------------------------------|------------|-------------|---------|
| Common                stock issued for services             |   |                           |   |                        |    |                                      |   |                                                                       | 5,508,770  |                               |    | 5,509                                |   |                                   | 64,596     |        |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                        |   |                           |   |                        |    |                                      |   |                                                                       |       |                               |    |                                 |   |                                   |       |        |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Common                stock issued for conversion of debt   |   |                           |   |                        |    |                                      |   |                                                                       | 4,200,000  |                               |    | 4,200                                |   |                                   | 21,775     |        |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                        |   |                           |   |                        |    |                                      |   |                                                                       |       |                               |    |                                 |   |                                   |       |        |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Shares                issued Julie Morento lawsuit          |   |                           |   |                        |    |                                      |   |                                                                       | 1,000,000  |                               |    | 1,000                                |   |                                   | 13,500     |        |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                        |   |                           |   |                        |    |                                      |   |                                                                       |       |                               |    |                                 |   |                                   |       |        |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Shares                Cancelled                             |   |                           |   |                        |    |                                      |   |                                                                       | (1,508,770 | )                                  |    | (1,509                               | )      |                                   | (16,596    | )           |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                        |   |                           |   |                        |    |                                      |   |                                                                       |       |                               |    |                                 |   |                                   |       |        |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Preferred                stock to G Kimmons                 |   |                           | 1,000  |                        |    | 1                                         |   |                                                                       |       |                               |    |                                 |   |                                   |       |        |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                        |   |                           |   |                        |    |                                      |   |                                                                       |       |                               |    |                                 |   |                                   |       |        |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                loss for the nine months ended Sept 2006 |   |                           |        |                        |    |                                           |   |                                                                       |            |                               |    |                                      |   |                                   |            |        |    | (5,236,756 | ) |   |  |   |   |  |   |   |  |   |   |  |   |
|                                                        |   |                           |   |                        |    |                                      |   |                                                                       |       |                               |    |                                 |   |                                   |       |        |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance,                Sept 30 2006                        |   |                           | 1,000  |                        |  $ | 1                                         |   |                                                                       | 62,197,689 |                               |  $ | 62,197                               |   |  $                                | 61,357,371 |        |  $ | (26,909,872 | ) |  $ | (39,610,977 | ) |  $ | - |   |  $ | - |   | $ | (5,101,280 | ) |

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| M                POWER ENTERTAINMENT, INC(A                DEVELOPMENT STAGE COMPANY)CONSOLIDATED                STATEMENTS OF CASH FLOW(Unaudited) |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------|--------|
|                                                                                                                                                |   | Nine                Months Ended Sept 30, |   | For                The Period From Jul 31, 1999 (Inception) to Sept                30, 2006 |   |
|                                                                                                                                                |   | 2006                  |   | 2005  |   |
| CASH                FLOWS FROM OPERATING ACTIVITIES                                                                                                 |   |   |   |   |   |   |   |   |   |   |
| Net                loss                                                                                                                             |   | $ | (5,236,756 | ) | $ | (13,568,391 | ) |   | (26,909,872 | ) |
| Adjustments                to reconcile net loss to net cash used in operating                activities                                            |   |   |   |   |   |   |   |   |   |   |
| Depreciation                and amortization expense                                                                                                |   |   | 416 |   |   | 1,594 |   |   | 3,015 |   |
| Common                stock and warrants issued for services                                                                                        |   |   | 1,242,686 |   |   | 12,794,512 |   |   | 20,393,598 |   |
| Gain                (Loss) Derivative Liability                                                                                                     |   |   | 3,020,973 |   |   | - |   |   | 3,020,973 |   |
| Gain                on forgiveness of debt                                                                                                          |   |   | (78,034 | ) |   | - |   |   | (4,101,372 | ) |
| Accrued                Interest and loan disc fees                                                                                                  |   |   | 137,952 |   |   |   |   |   | 137,952 |   |
| Shares                issued for lawsuit                                                                                                            |   |   | 14,500 |   |   |   |   |   | 14,500 |   |
| Impairment                of goodwill                                                                                                               |   |   |   |   |   | 136,839 |   |   | 1,688,650 |   |
| Discontinued                operations - Stellar                                                                                                    |   |   |   |   |   |   |   |   | 33,054 |   |
| Stock                subscriptions deemed un-collectible                                                                                            |   |   |   |   |   |   |   |   | 500,000 |   |
| Changes                in operating assets and liabilities:                                                                                         |   |   |   |   |   |   |   |   |   |   |
| Accounts                receivable                                                                                                                  |   |   | - |   |   | 183,104 |   |   | 137,989 |   |
| Other                assets                                                                                                                         |   |   | (19,953 | ) |   | (527 | ) |   | 99,085 |   |
| Accounts                payable and accrued expenses                                                                                                |   |   | (192,024 | ) |   | (49,500 | ) |   | 1,198,379 |   |
| Accounts                payable and accrued expenses - related party                                                                                |   |   | (16,649 | ) |   | 26,551 |   |   | 1,020,034 |   |
|                                                                                                                                                |   |   |   |   |   |   |   |   |   |   |
| Net                cash provided by (used in) operating activities                                                                                  |   |   | (1,126,889 | ) |   | (475,818 | ) |   | (2,764,015 | ) |
|                                                                                                                                                |   |   |   |   |   |   |   |   |   |   |
| CASH                FLOWS FROM INVESTING ACTIVITIES                                                                                                 |   |   |   |   |   |   |   |   |   |   |
| Purchase                of fixed assets                                                                                                             |   |   | - |   |   | (3,746 | ) |   | (5,549 | ) |
| Sale                of fixed assets                                                                                                                 |   |   | - |   |   | 2,090 |   |   | 9,964 |   |
| Increase                in deposit                                                                                                                  |   |   |   |   |   |   |   |   | (4,000 | ) |
|                                                                                                                                                |   |   |   |   |   |   |   |   |   |   |
| Net                Cash provided by (used in)  Investing activities                                                                       |   |   | -  |   |   | (1,646 | ) |   | 415 |   |
|                                                                                                                                                |   |   |   |   |   |   |   |   |   |   |
| CASH                FLOWS FROM FINANCING ACTIVITIES                                                                                                 |   |   |   |   |   |   |   |   |   |   |
| Common                stock issued for cash                                                                                                         |   |   |   |   |   |   |   |   | 947,894 |   |
| Cash                received on acquisition of subsidiaries                                                                                         |   |   |   |   |   |   |   |   | 105,085 |   |
| Proceeds                from subscription receivable                                                                                                |   |   |   |   |   |   |   |   | 10,000 |   |
| Borrowing                on notes payable                                                                                                           |   |   | 2,000,000 |   |   | 492,135 |   |   | 2,575,500 |   |
| Borrowing                on notes payable - related party                                                                                           |   |   |   |   |   |   |   |   | 473,723 |   |
| Repayment                of notes payable                                                                                                           |   |   |   |   |   |   |   |   | (14,512 | ) |
| Repayment                of notes payable - related party                                                                                           |   |   | - |   |   | (27,435 | ) |   | (385,051 | ) |
|                                                                                                                                                |   |   |   |   |   |   |   |   |   |   |
| Net                cash provided by financing activities                                                                                            |   |   | 2,000,000 |   |   | 464,700 |   |   | 3,712,639 |   |
|                                                                                                                                                |   |   |   |   |   |   |   |   |   |   |
| NET                INCREASE IN CASH AND CASH EQUIVALENTS                                                                                            |   |   | 873,111 |   |   | (12,764 | ) |   | 949,039 |   |
|                                                                                                                                                |   |   |   |   |   |   |   |   |   |   |
| CASH                AND CASH EQUIVALENTS, BEGINNING OF PERIOD                                                                                       |   |   | 75,928 |   |   | 54,096 |   |   |   |   |
|                                                                                                                                                |   |   |   |   |   |   |   |   |   |   |
| CASH                AND CASH EQUIVALENTS, END OF PERIOD                                                                                             |   | $ | 949,039 |   | $ | 41,332 |   |   | 949,039 |   |
|                                                                                                                                                |   |   |   |   |   |   |   |   |   |   |
| Supplemental                Information                                                                                                             |   |   |   |   |   |   |   |   |   |   |
| Interest                paid                                                                                                                        |   | $ | - |   | $ | - |   |  $ | -  |   |
| Income                taxes paid                                                                                                                    |   | $ | - |   | $ | - |   |  $ | -  |   |
| Investing                activities                                                                                                                 |   |   |   |   |   |   |   |   |   |   |
| Increase                in deferred financing costs                                                                                                 |   |   | 371,855 |   |   |   |   |   |   |   |
| Financing                activities                                                                                                                 |   |   |   |   |   |   |   |   |   |   |
| Discount                on convertible debt                                                                                                         |   | $ | 1,876,304 |   |   |   |   |   |   |   |
| Increase                in derivative liabilities                                                                                                   |   | $ | 2,472,194 |   |   |   |   |   |   |   |

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M      Power 

|                        |   | September                30, |    | December                31, |   |
|-----------------------------|--------|------------------------------|---------|-----------------------------|--------|
|                        |   | 2006(unaudited)              |    | 2005                        |   |
| Cash                in bank |   | $                            | 949,039 |                        | $      | 75,928 |   |

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| Face                value of note                           | $                1,992,104 |
|-------------------------------------------------------------|----------------------------|
| Less:                discount for fair value of derivatives | (1,957,763)                |
| Add:                amortization of discount                | 81,459                     |
| Carrying                value at Sept 30, 2006              | $                115,800   |

|                                                                        |   | Inception |       | Sept                30, 2006 |   | Gain/(Loss) |   |
|-----------------------------------------------------------------------------|--------|-----------|------------|-----------------------------------|--------|-------------|--------|
| Embedded                derivative                                          |   | $         | 4,847,410  |                              | $      | 5,257,197   |   | $ | (409,787 | ) |
| Freestanding                derivative                                      |   |      | 191,630    |                              |   | 54,823      |   |   | 136,807 |   |
| Fair                value of derivatives in excess of proceeds at inception |   |      | -          |                              |   | -           |   |   | (2,900,670 | ) |
| Totals                                                                      |   | $         | $5,039,040 |                              | $      | $5,312,202  |   | $ | $(3,173,650 | ) |

| Volatility                    | 213%                          |
|-------------------------------|-------------------------------|
| Discount                rate  | 4.91%                         |
| Term                in years  | 3                yrs          |
| Grant                date     | April                18, 2006 |
| Exercise                price | $0.0012                       |
| Stock                price    | $0.0033                       |

| Volatility                    | 213%                          |
|-------------------------------|-------------------------------|
| Discount                rate  | 4.91%                         |
| Term                in years  | 7                yrs          |
| Grant                date     | April                18, 2006 |
| Exercise                price | $0.0012                       |
| Stock                price    | $0.0033                       |

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Table        of Content

| DESCRIPTION                            |   | AMOUNT |    |
|----------------------------------------|--------|--------|---------|
| Deferred                financing cost |   |   | 371,855 |   |
| Total                                  |   | $      | 371,855 |   |

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Table        of Content

ITEM      3. CONTROLS AND PROCEDURES.

**PART      II - OTHER INFORMATION.**

ITEM      1. LEGAL PROCEEDINGS

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Table        of Content

ITEM      2. CHANGES IN SECURITIES

| **Lender**                            |   | **Date** |      | **Shares                Converted** |   | **Conversion                Price** |   | **Principle                Converted** |     |
|---------------------------------------|--------|----------|-----------|-------------------------------------|--------|-------------------------------------|--------|----------------------------------------|----------|
|                                  |   |     |      |                                |   |                                |   |                                   |     |   |   |   |   |
| AJW                Offshore Ltd       |   |     | 8/7/2006  |                                |   | 206,675                             |   |                                   | 0.002400 |   | $ | 496.02 |   |
| AJW                Offshore Ltd       |   |     | 8/23/2006 |                                |   | 206,675                             |   |                                   | 0.002000 |   | $ | 413.35 |   |
| AJW                Offshore Ltd       |   |     | 8/24/2006 |                                |   | 206,675                             |   |                                   | 0.002000 |   | $ | 413.35 |   |
| AJW                Offshore Ltd       |   |     | 8/29/2006 |                                |   | 206,675                             |   |                                   | 0.001926 |   | $ | 398.06 |   |
| AJW                Offshore Ltd       |   |     | 8/31/2006 |                                |   | 206,675                             |   |                                   | 0.001926 |   | $ | 398.06 |   |
| AJW                Offshore Ltd       |   |     | 9/6/2006  |                                |   | 206,675                             |   |                                   | 0.001864 |   | $ | 385.24 |   |
| AJW                Offshore Ltd       |   |     | 9/8/2006  |                                |   | 206,675                             |   |                                   | 0.001864 |   | $ | 385.24 |   |
| AJW                Offshore Ltd       |   |     | 9/12/2006 |                                |   | 206,675                             |   |                                   | 0.001864 |   | $ | 385.24 |   |
| AJW                Offshore Ltd       |   |     | 9/15/2006 |                                |   | 206,675                             |   |                                   | 0.001800 |   | $ | 372.02 |   |
| AJW                Offshore Ltd       |   |     | 9/19/2006 |                                |   | 206,675                             |   |                                   | 0.001776 |   | $ | 367.05 |   |
| AJW                Offshore Ltd       |   |     | 9/21/2006 |                                |   | 206,675                             |   |                                   | 0.001714 |   | $ | 354.24 |   |
| AJW                Offshore Ltd       |   |     | 9/26/2006 |                                |   | 206,675                             |   |                                   | 0.001426 |   | $ | 294.72 |   |
|                                  |   |     |      |                                |   | 2,480,100                           |   |                                   |     |   | $ | 4,662.58 |   |
|                                  |   |     |      |                                |   |                                |   |                                   |     |   |   |   |   |
| AJW                Partners LLC       |   |     | 8/7/2006  |                                |   | 38,850                              |   |                                   | 0.002400 |   | $ | 93.24 |   |
| AJW                Partners LLC       |   |     | 8/23/2006 |                                |   | 38,850                              |   |                                   | 0.002000 |   | $ | 77.70 |   |
| AJW                Partners LLC       |   |     | 8/24/2006 |                                |   | 38,850                              |   |                                   | 0.002000 |   | $ | 77.70 |   |
| AJW                Partners LLC       |   |     | 8/29/2006 |                                |   | 38,850                              |   |                                   | 0.001926 |   | $ | 74.83 |   |
| AJW                Partners LLC       |   |     | 8/31/2006 |                                |   | 38,850                              |   |                                   | 0.001926 |   | $ | 74.82 |   |
| AJW                Partners LLC       |   |     | 9/6/2006  |                                |   | 38,850                              |   |                                   | 0.001864 |   | $ | 72.42 |   |
| AJW                Partners LLC       |   |     | 9/8/2006  |                                |   | 38,850                              |   |                                   | 0.001864 |   | $ | 72.42 |   |
| AJW                Partners LLC       |   |     | 9/12/2006 |                                |   | 38,850                              |   |                                   | 0.001864 |   | $ | 72.42 |   |
| AJW                Partners LLC       |   |     | 9/15/2006 |                                |   | 38,850                              |   |                                   | 0.001800 |   | $ | 69.93 |   |
| AJW                Partners LLC       |   |     | 9/19/2006 |                                |   | 38,850                              |   |                                   | 0.001776 |   | $ | 69.00 |   |
| AJW                Partners LLC       |   |     | 9/21/2006 |                                |   | 38,850                              |   |                                   | 0.001714 |   | $ | 66.59 |   |
| AJW                Partners LLC       |   |     | 9/26/2006 |                                |   | 38,850                              |   |                                   | 0.001426 |   | $ | 55.40 |   |
|                                  |   |     |      |                                |   | 466,200                             |   |                                   |     |   | $ | 876.46 |   |
|                                  |   |     |      |                                |   |                                |   |                                   |     |   |   |   |   |
| AJW                Qualified Partners |   |     | 8/7/2006  |                                |   | 99,750                              |   |                                   | 0.002400 |   | $ | 239.40 |   |
| AJW                Qualified Partners |   |     | 8/23/2006 |                                |   | 99,750                              |   |                                   | 0.002000 |   | $ | 199.50 |   |
| AJW                Qualified Partners |   |     | 8/24/2006 |                                |   | 99,750                              |   |                                   | 0.002000 |   | $ | 199.50 |   |
| AJW                Qualified Partners |   |     | 8/29/2006 |                                |   | 99,750                              |   |                                   | 0.001926 |   | $ | 192.12 |   |
| AJW                Qualified Partners |   |     | 8/31/2006 |                                |   | 99,750                              |   |                                   | 0.001926 |   | $ | 192.12 |   |
| AJW                Qualified Partners |   |     | 9/6/2006  |                                |   | 99,750                              |   |                                   | 0.001864 |   | $ | 185.93 |   |
| AJW                Qualified Partners |   |     | 9/8/2006  |                                |   | 99,750                              |   |                                   | 0.001864 |   | $ | 185.93 |   |
| AJW                Qualified Partners |   |     | 9/12/2006 |                                |   | 99,750                              |   |                                   | 0.001864 |   | $ | 185.93 |   |
| AJW                Qualified Partners |   |     | 9/15/2006 |                                |   | 99,750                              |   |                                   | 0.001800 |   | $ | 179.55 |   |
| AJW                Qualified Partners |   |     | 9/19/2006 |                                |   | 99,750                              |   |                                   | 0.001776 |   | $ | 177.16 |   |
| AJW                Qualified Partners |   |     | 9/21/2006 |                                |   | 99,750                              |   |                                   | 0.001714 |   | $ | 170.97 |   |
| AJW                Qualified Partners |   |     | 9/26/2006 |                                |   | 99,750                              |   |                                   | 0.001426 |   | $ | 142.24 |   |
|                                  |   |     |      |                                |   | 1,197,000                           |   |                                   |     |   | $ | 2,250.36 |   |

| New                Millenium Capital |   |   | 8/7/2006  |   |   | 4,725  |   |   | 0.002400 |   | $ | 11.34  |   |
|--------------------------------------|--------|--------|-----------|--------|--------|--------|--------|--------|----------|--------|---|--------|--------|
| New                Millenium Capital |   |   | 8/23/2006 |   |   | 4,725  |   |   | 0.002000 |   | $ | 9.45   |   |
| New                Millenium Capital |   |   | 8/24/2006 |   |   | 4,725  |   |   | 0.002000 |   | $ | 9.45   |   |
| New                Millenium Capital |   |   | 8/29/2006 |   |   | 4,725  |   |   | 0.001926 |   | $ | 9.10   |   |
| New                Millenium Capital |   |   | 8/31/2006 |   |   | 4,725  |   |   | 0.001926 |   | $ | 9.10   |   |
| New                Millenium Capital |   |   | 9/6/2006  |   |   | 4,725  |   |   | 0.001864 |   | $ | 8.81   |   |
| New                Millenium Capital |   |   | 9/8/2006  |   |   | 4,725  |   |   | 0.001864 |   | $ | 8.81   |   |
| New                Millenium Capital |   |   | 9/12/2006 |   |   | 4,725  |   |   | 0.001864 |   | $ | 8.81   |   |
| New                Millenium Capital |   |   | 9/15/2006 |   |   | 4,725  |   |   | 0.001800 |   | $ | 8.51   |   |
| New                Millenium Capital |   |   | 9/19/2006 |   |   | 4,725  |   |   | 0.001776 |   | $ | 8.39   |   |
| New                Millenium Capital |   |   | 9/21/2006 |   |   | 4,725  |   |   | 0.001714 |   | $ | 8.10   |   |
| New                Millenium Capital |   |   | 9/26/2006 |   |   | 4,725  |   |   | 0.001426 |   | $ | 6.74   |   |
|                                 |   |   |      |   |   | 56,700 |   |   |     |   | $ | 106.60 |   |

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ITEM      3.

ITEM      4.

ITEM      5.

ITEM      6. EXHIBITS

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