UNITED STATES SECURITIES AND EXCHANGE
COMMISSION Washington, DC 20549  FORM 10-K  [X] ANNUAL REPORT PURSUANT TO SECTION
13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934  For the fiscal year ended December 31,
2009  [
  ] TRANSITION REPORT PURSUANT TO
SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934  For the transition period from
  to
.  Commission File No. 000-29397  MONTAVO, Inc. (Exact Name of Registrant as Specified in
Its Charter)  Delaware
33-0619528(State or Other Jurisdiction of
 Incorporation or Organization)
(I.R.S. Employer Identification
No.)  4957 Lakemont Blvd., Suite 239Bellevue, Washington
98006 (Address of Principal Executive Offices)(425)
474-5500(Registrants Telephone Number, Including Area Code)  Securities registered under Section 12(b) of
the Exchange Act:  None.  Securities registered under Section 12(g) of the Exchange Act:
 Common Stock, Par Value $0.001.  Indicate by check mark if the registrant is a well-known
seasoned issuer, as defined in Rule 405 of the Securities Act.  Yes
  o  No x  Indicate by check mark if the registrant is not required
to file reports pursuant to Section 13 or Section 15(d) of the Act.  Yes
 o   No x  Indicate by check mark whether the registrant (1) has
filed all reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.  Yes  x No  o  Indicate by check mark whether the registrant has
submitted electronically and posted on its corporate Website, if any, every
Interactive Data File required to be submitted and posted pursuant to Rule 405
of Regulation S-T during the preceding 12 months (or for such shorter period
that the registrant was required to submit and post such files. Yes o Nox  Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of registrants knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K    x  1     Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, or a non-accelerated filer. See
definition of large accelerated filer, accelerated filer and smaller
reporting company in Rule 12b-2 of the Exchange Act.  (Check One):  Large accelerated filer o Accelerated
filer o Non-accelerated filer o Smaller
reporting company x  Indicate by check mark whether the registrant is a shell
company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x  On April 9, 2010, 52,531,408 shares of the registrants
common stock were outstanding.  The aggregate market value of the registrants voting
stock held by non-affiliates of the registrant was approximately $3,634,600 as
of June 30, 2009.  Shares of voting stock held by each executive officer
and director of the registrant and each person who beneficially owns 10% or more
of the registrants outstanding voting stock has been excluded from the
calculation.  This determination of affiliated status may not be conclusive
for other purposes.      2    TABLE OF CONTENTS  FORWARD-LOOKING
STATEMENTS 4 PART
I 5 ITEM
1.  BUSINESS 5 ITEM
1B.  UNRESOLVED STAFF COMMENTS. 9 ITEM
2.  PROPERTIES 9 ITEM
3.  LEGAL PROCEEDINGS 9 PART
II 9 ITEM
5. MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND
ISSUER PURCHASES OF EQUITY SECURITIES9 ITEM
7.  MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS11 ITEM
8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA 17 ITEM
9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE41 ITEM
9A(T).CONTROLS AND PROCEDURES 41 Part
III 44 ITEM
10.  DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE 44 ITEM
12.   SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS48 ITEM
13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE49 ITEM
14.   PRINCIPAL ACCOUNTING FEES AND SERVICES 50 PART
IV 52 ITEM
15.  EXHIBITS  AND FINANCIAL STATEMENT SCHEDULES. 52 SIGNATURES 54         3    FORWARD-LOOKING STATEMENTS  This Annual Report on Form 10-K and
the documents incorporated herein by reference, if any, contain forward-looking
statements within the meaning of Section 27A of the Securities Act of 1933, an
amended (the Securities Act), and Section 21E of the Securities Exchange Act
of 1934, as amended (the Exchange Act). These forward-looking statements
reflect our current views with respect to future events or our financial
performance, and involve certain known and unknown risks, uncertainties and
other factors, including those identified below, which may cause our or our
industrys actual or future results, levels of activity, performance or
achievements to differ materially from those expressed or implied by any
forward-looking statements or from historical results. We intend such
forward-looking statements to be covered by the safe harbor provisions for
forward-looking statements contained in Section 27A of the Securities Act of
1933 and Section 21E of the Securities Exchange Act of 1934.
 Forward-looking statements include information concerning our possible or
assumed future results of operations and statements preceded by, followed by, or
that include the words may, will, could, would, should, believe,
expect, plan, anticipate, intend, estimate, predict, potential or
similar expressions.  Forward-looking statements are
inherently subject to risks and uncertainties, many of which we cannot predict
with accuracy and some of which we might not even anticipate.  Although we
believe that the expectations reflected in such forward-looking statements are
based upon reasonable assumptions at the time made, we can give no assurance
that such expectations will be achieved.  Future events and actual results,
financial and otherwise, may differ materially from the results discussed in the
forward-looking statements.  Readers are cautioned not to place undue
reliance on these forward-looking statements.  We have no duty to update,
supplement or revise any forward-looking statements after the date of this
report or to conform them to actual results, new information, future events or
otherwise.  The following factors, among others,
could cause our or our industrys future results to differ materially from
historical results or those anticipated:  (1) the availability of
additional funds to enable us to successfully pursue our business plan; (2) the
uncertainties related to the appeal and acceptance of our planned products and
service offerings; (3) the success or failure of our development of additional
products and services; (4) our ability to maintain, attract and integrate
management personnel; (5) our ability to secure suitable advertising inventory
partners; (6) our ability to effectively market and sell our services to new
customers; (7) changes in the rules and regulations governing our business; (8)
the intensity of competition; and (9) general economic conditions.  As a
result of these and other factors, we may experience material fluctuations in
future operating results on a quarterly or annual basis, which could materially
and adversely affect our business, financial condition, operating results and
stock price.     4    PART I  In this Annual Report on Form 10-K, we will refer to
Montavo, Inc., a Delaware corporation, as our company, we, us and
our.    ITEM
1.  BUSINESS  Overview  We have developed technology that
allows wireless subscribers to search a proprietary advertisement delivery
system by category of service and location.  The content is delivered to
subscribers via mobile handsets, personal navigation devices or navigation
devices installed in vehicles.  Subscribers can download and view
advertisements, redeem special incentives and obtain turn-by-turn directions to
the nearest retail location.  We expect that our core revenues will
be derived from advertisers, who will be charged impression views and/or monthly
fees for inclusion in our permission-based database, from impressions,
click-through and redemption fees for the redemption of incentives, or from fees
for the development of national campaigns for brand advertisers. We plan to seek
distribution agreements with advertisement campaign aggregators, including
global advertising agencies, search-engine marketing optimization agencies,
membership organizations and direct marketing organizations.  We also
intend to employ a small team of account executives that will act as a sales
force and seek and solicit clients among national and regional brand
leaders.  There can be no assurance that we will
achieve our objectives or succeed in our business plan.  We have prepared
our financial statements assuming that we will continue as a going concern,
which contemplates realization of assets and the satisfaction of liabilities in
the normal course of business.  As of December 31, 2009, we had a deficit
accumulated during the development stage of approximately $3.5 million, negative
cash flows from operations since inception and expect to incur additional losses
in the future as we continue to develop and grow our business.  We have
funded our losses primarily through sales of common stock and warrants in
private placements and borrowings from related parties and other investors.
 The further development of our business will require capital.  At
December 31, 2009, we had a working capital deficit (current assets less current
liabilities) of approximately $0.5 million and no cash.  We are dependent on existing cash
resources and external sources of financing to meet our working capital needs.
 Current sources of liquidity are insufficient to provide for budgeted and
anticipated working capital requirements.  We will therefore be required to
seek additional financing to satisfy our working capital requirements.  No
assurances can be given that such capital will be available to us on acceptable
terms, if at all.  In addition to equity financing and strategic
investments, we may seek additional related party loans.  If we are unable
to obtain any such additional financing, or if such financing cannot be obtained
on terms acceptable to us, we may be required to delay or scale back our
operations, including the development of our mobile marketing solution, which
would adversely affect our ability to generate future revenues and may force us
to curtail or cease our operating activities.  To attain profitable operations, managements plan is to
execute its strategy of (i) continuing the development of our proprietary mobile
marketing solution; (ii) building additional strategic partnerships with
technology partners; (iii) building strategic partnerships with premier
advertising inventory partners; and (iv) executing sales relationships with
national and global brands in order to drive profitability.  We will
continue to be dependent on outside capital to fund our operations for the
foreseeable future, and continue to be involved in discussions and negotiations
with investors in order to raise additional funds to provide sufficient working
capital for operations with a near-term goal of generating positive cash flow
from operations.  Any financing we obtain may further dilute or otherwise
impair the ownership interest of our current stockholders.  If we fail to
generate positive cash flows or fail to obtain additional capital when required,
we could modify, delay or abandon some or all of our plans.  These factors,
among others, raise substantial doubt about our ability to continue as a going
concern.  Our financial statements do not include any adjustments that
might result from the outcome of this uncertainty.    5    Our principal executive
offices are located at 4957 Lakemont Blvd, Suite 239, Bellevue, Washington
98006, and our telephone number at that address is (425) 747-5500.  We
maintain an Internet website at www.montavo.com.  Information on our
website is not part of this Annual Report.  Principal Products and Markets  Our mDeal-Finder mobile consumer
client application can be used on mobile phones and other personal mobile
devices, personal navigation devices and factory-installed in-dash automobile
navigation systems.  The application enables end-user consumers on the go
to access and find offers, including sales, discounts, coupons, product
information and new product launches, from their mobile wireless devices.
 Our advertisement delivery platform mMAP is also used as an ad delivery
network to mobile websites and mobile applications.  Our mDeal-Finder end-user client
application will be marketed to wireless carriers, handset manufacturers,
personal and vehicle navigation device manufacturers and application
aggregators, by a small team of dedicated account executives.  The
advertising media will be marketed to global advertising agencies, search engine
market optimization agencies, membership organizations and direct marketing
organizations, as well as national and regional brand leaders.  We have executed our first two
platform aggregation agreements, which provide for the distribution of our
end-user consumer application on three of the five major wireless carriers in
the U.S. and several carriers and handset manufacturers in Europe.  These
agreements enable us to integrate our system so that it operates within one
platform instead of many individual handset operating systems.   Growth Strategy  We have developed technology that is
incorporated into our Montavo Mobile Advertising Platform (mMAP), which allows
wireless subscribers to search a proprietary advertisement delivery system by
category of service, keyword search and location.  This application can
simultaneously generate ROI (return on investment) ratios on revenue and profit
for the advertiser.  The content is delivered to subscribers via mobile
handsets and other personal mobile wireless devises as well as personal
navigation devices or in-dash navigation systems installed in vehicles.
 Subscribers can download and view advertisements, redeem special
incentives and obtain turn-by-turn directions to the nearest retail location.  We expect that our core revenues will
be derived from advertisers, who will pay fees for inclusion in our mMAP, from
click-through pull ads as well as opt-in push ads, and custom development of
mobile applications and mobile websites.  We plan to seek distribution
agreements with advertisement campaign aggregators, including global advertising
agencies, search-engine marketing optimization agencies, membership
organizations and direct marketing organizations.  We also intend to employ
a small team of account executives that will act as a sales force and seek and
solicit clients among global, national and regional brand leaders.  Competition  There is substantial competition in
the mobile marketing industry, including competition from well-established
providers such as MSN, Google and Yahoo, and competition from smaller providers
that focus specifically on the mobile environment, such as Admob, Jump Tap,
Cellfire and ShopSavvy.  Admob is a network of mobile web sites that
display mobile banner advertisements generated by Admobs advertising engine.
 Jump Tap is a search engine designed for the mobile environment, which
allows users to search the Internet using mobile phones instead of personal
computers.  Cellfire is a mobile coupon distributor, which allows
advertisers to develop and publish mobile coupons through mobile phones.
 ShopSavvy is a mobile application that allows mobile users to search for
deals on their cell phone.  Currently, we know of no other competitor that
has a similar product to the mMAP and the patent-pending technology that can
deliver a ROI on sales, revenue and profits for the advertiser.  This
technology would  provide data for physical store locations and the
advertiser without requiring a change in normal business development and
advertisements for potential customers.  6     Sales and Marketing  We expect to hire a small team of
experienced sales executives with prior relationships and experience in each of
our market sectors both domestic and internally (such as advertising agencies,
retailers and brand name manufacturers), to expand upon our existing
relationships.  We anticipate that their compensation structures will
consist of base salaries with incentive commission payments.  We expect
that our account executives will be attending various trade shows and
conventions including, but not limited to, those held by the Mobile Marketing
Association and the National Restaurants Association.  Regulation  We are unaware of and do not
anticipate having to expand significant resources to comply with any
governmental regulations of the mobile marketing industry.  We are not
currently subject to direct federal, state or local regulation other than
regulations applicable to businesses generally or directly applicable to online
commerce.  However, it is possible that a number of laws and regulations
may be adopted with respect to our sales and distribution channels.  The
adoption of additional laws could increase the difficulty of conducting our
business and reduce the demand for our products.  Research and Development  We are not engaged in any meaningful
research and development activities and we do not have a research and
development staff.  Intellectual Property  We create, own and distribute intellectual property.
 It is our practice to protect our technology through patents, trademarks,
copyrights, trade secret laws, restrictions on disclosure and other methods.  We filed a U.S. utility patent application (Application
No. 11/053,095) for the invention, entitled Method and Distribution System for
Location Based Wireless Presentation of Electronic Coupons with respect to our
unique wireless delivery technology.  The patent application is currently
pending.  We have a registered trademark for the name Montavo and
its related logo.  We have applied for registration for the following
marks: Spend Speedometer, mDeal-Finder and mMap.  We have no foreign patents or other foreign trademarks.
 Prior to expanding our services into foreign markets, we plan to take
measures to protect our intellectual property in such markets.  Our primary Internet domain is montavo.com.  We also
own the following domain names:   MDEALFINDER.BIZ
MDEALFINDER.TVMDEAL-FINDER.BIZ
MDEAL-FINDER.TVMDEALFINDER.CO.UK
MDEALFINDER.USMDEAL-FINDER.CO.UK
MDEAL-FINDER.USMDEALFINDER.COM
MDEALFINDER.WSMDEAL-FINDER.COM
MDEAL-FINDER.WSMDEALFINDER.INFO
MONTAVO.BIZMDEAL-FINDER.INFO
MONTAVO.COMMDEALFINDER.MOBI
MONTAVO.INFOMDEAL-FINDER.MOBI
MONTAVO.MOBIMDEALFINDER.NAME
MONTAVO.NAMEMDEAL-FINDER.NAME
MONTAVO.NETMDEALFINDER.NET
MONTAVO.ORGMDEAL-FINDER.NET
MONTAVO.TVMDEALFINDER.ORG
MONTAVO.USMDEAL-FINDER.ORG
MONTAVO.WS  7      We also rely on trade secrets,
know-how and other unpatented proprietary information in our business.
 Most of our consultants and contractors are required to enter into
confidentiality and non-competition agreements.  However, there is no
assurance that these agreements would be enforceable if they are breached or, if
enforced, that they would adequately protect us or provide an adequate remedy
for the damages that may be caused by such a breach.  Industry Overview  The Internet and Online
Commerce  The internets development into a
significant global medium for communication, content and commerce has led do
substantial growth in online shopping for goods and services.  As use of
the internet to research and purchase products and services increases,
businesses are seeking ways to more effectively reach consumers online.  As
a result, both online and traditional retail businesses are increasingly using
the internet to advertise their products and services.  The
advertising industry, and specifically online advertising, is evolving to meet
the increasing online demands of both consumers and businesses.  We believe
the high-traffic financial services vertical reflects one of the most
significant growth opportunities in the line advertising industry.  We
expect to leverage these favorable market trends through our mDeals program.  Seasonality  Both seasonal fluctuations in internet
usage and traditional retail seasonality can affect our business.  Internet
usage generally slows during the summer months, and commercial queries typically
increase significantly in the fourth quarter of each year. These seasonal trends
could cause fluctuations in our quarterly results, including fluctuations in
sequential revenues, as well as paid click and average cost-per-click growth
rates.  Employees  As of December 31, 2009,
we had no employees but were utilizing the services of independent contractors
and consultants.  Development of Business  We were incorporated under the laws of
the State of Delaware on April 20, 1994.  From incorporation until December
13, 2004, we had no operating history other than organizational matters.
 On December 13, 2004, we acquired all of the issued and outstanding shares
of Trans Media Inc., a Wyoming corporation engaged in the production and
distribution of musical compact discs and musical performances.  Through
Trans Media, we engaged in the production and distribution of compact discs and
musical performances targeted to the South Asian immigrant population in North
America, and to date completed the production of eight compact discs.  In November 2007, we engaged in a new
line of business, in the mobile communications industry, with the objective of
becoming a mobile enabler and identifying, deploying and commercializing
innovative mobile applications and technologies to offer targeted brand
messaging.  Business of Predecessor  Trans Media, in which we acquired a 100% interest on
December 13, 2004, was formed in 2004.  As indicated above, Trans Media was
engaged in the production and distribution of musical compact discs and musical
performances.  Since Trans Media was considered to be the acquirer for
financial reporting purposes, our historical financial statements for any period
prior to December 13, 2004, are those of Trans Media.      8    ITEM 1B.
 UNRESOLVED STAFF COMMENTS.  None.    ITEM
2.  PROPERTIES  We do not own any real property.
 We have offices at 4957 Lakemont Blvd., Suite #239, Bellevue, Washington
98006, and have an engineering facility including a meeting room and server
room.  We are also provided space in Seattle, Washington at no cost by our
chief development officer.   ITEM
3.  LEGAL PROCEEDINGS  In August
2009, Robert Half International sued us claiming unpaid fees for services
rendered.  On February 24, 2010, a judgment was granted against us in the
amount of $87,248.91.  We have included the judgment in accounts payable at
December 31, 2009.  As of December 31, 2009, we were not a party to any
other pending legal proceeding and were not aware of any pending legal
proceeding to which any of our officers, directors, or any beneficial holders of
5% or more of our voting securities are adverse to us or have a material
interest adverse to us.     PART II    ITEM
5.  MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND
ISSUER PURCHASES OF EQUITY SECURITIES  Our common stock became eligible for
trading on the Over-The-Counter Bulletin Board on December 19, 2007, having the
trading symbol MTVO.  As of December 31, 2009, we had 43,418,467 shares
issued and outstanding.  The following table reflects the high
and low quarterly bid prices for the fiscal year ended December 31, 2009, and
incorporates a change in our fiscal year end effected October 8, 2008.  Period
High Bid
Low BidPeriod from 12/19/07  2/29/08
$1.00
$0.742nd Quarter 2008 ended 5/31/08
$1.00
$0.753rd Quarter 2008 ended 8/31/08
$0.75
$0.40Transition period ended 9/30/08
$0.75
$0.504th Quarter 2008 ended 12/31/08
$0.87
$0.311st Quarter 2009 ended 3/31/09
$0.60
$0.182nd Quarter 2009 ended 6/30/09
$0.26
$0.113rd Quarter 2009 ended 9/30/09
$0.19
$0.064th Quarter 2009 ended 12/31/09
$0.21
$0.04  These quotations may reflect
inter-dealer prices without retail mark-up/mark-down/commissions and may not
reflect actual transactions.  We have authorized 99,000,000 shares
of common stock and 5,000,000 shares of preferred stock, par value $.001. As of
March 31, 2010, we had approximately 180 stockholders of record.  Dividends  We have never declared or paid any
cash dividends on our common stock nor do we anticipate paying any in the
foreseeable future.  Furthermore, we expect to retain any future earnings
to finance our operations and expansion.  The payment of cash dividends in
the future will be at the discretion of our board of directors and will  9    depend upon our earnings
levels, capital requirements, any restrictive loan covenants and other factors
our board of directors considers relevant.  Equity Compensation Plans  In 2005, we adopted the 2005 Stock
Option Plan (the 2005 Plan).  The 2005 Plan provided for the granting of
stock options to employees and consultants for services.  Options granted
under the 2005 Plan may be either incentive stock options or nonqualified stock
options.  Incentive stock options (ISO) may be granted only to employees
(including officers and directors who are also employees).  Nonqualified
stock options (NSO) may be granted to employees and consultants.  We
reserved 1,000,000 shares of common stock for issuance under the 2005 Plan.  In 2009, we adopted the 2009 Stock
Incentive Plan for Employees and Consultants (the 2009 Plan).  The 2009
Plan provided for the granting of stock options to employees and consultants for
services rendered to the Company.  Options granted under the 2009 Plan may
be either incentive stock options or nonqualified stock options.  Incentive
stock options (ISO) may be granted only to employees or consultants (including
officers and directors who are also employees).  Nonqualified stock options
may be granted to employees and consultants.  We reserved 15,000,000 shares
of common stock for issuance under the 2009 Plan.  Recent Sales of Unregistered Securities; Use of
Proceeds from Registered Securities  On October 1, 2009, we entered into a
six-month business development services contract with Openbridge, pursuant to
which we issued 650,000 shares of our common stock for services to be provided
under the agreement.  The shares were recorded at their fair value of
$65,000 based on the closing market price of our common stock on the date of
issuance, and during the fourth quarter of 2009, we recognized $32,500 in
operating expenses related to these shares, and the remaining $32,500 is
recorded as prepaid expenses as of December 31, 2009.  In accordance with
the terms of the agreement, an additional 650,000 shares are issuable on April
1, 2010 to be earned in equal monthly installments over the next six-month term
of the agreement, and on April 1, 2010, we issued those shares, plus an
additional 200,000 shares as a bonus for performance under the contract.
 The 200,000 shares were fully vested on the date of issuance.  On October 9, 2009, we issued
1,000,000 units at $0.025 per unit for gross proceeds of $25,000, with each unit
comprised of one share of our common stock and a two-year warrant to purchase
two shares of our common stock at $0.10 per share.  The warrants were
immediately exercisable.  We evaluated the warrants and determined that the
warrants do not contain any provisions equivalent to net-cash settlement
provisions, and accordingly are accounted for as equity. The relative fair value
of the common stock was estimated to be $10,000 and the relative fair value of
the warrants was estimated to be $15,000, as determined based on the relative
fair value allocation of the proceeds received.  In November 2009, we issued 340,000
shares of our common stock to vendors in settlement of accounts payable in the
aggregate amount of $46,000.  In 2009, we issued 5,000 shares of our
common stock to a consultant for recruiting services provided.  The fair
value of the shares of $1,000 was recorded to operating expenses in the fourth
quarter of 2009.  An additional 20,000 shares are issuable to the
consultant for future services pursuant to the terms of the contract, none of
which were issuable as of December 31, 2009.  In 2009, we issued 100,000
shares of our common stock to a consultant for consulting services provided.
 The fair value of the shares of $20,000 was recorded to operating expenses
in the fourth quarter of 2009.  An additional 100,000 shares are issuable
to the consultant for future services pursuant to the terms of the contract,
none of which were issuable as of December 31, 2009.  In the fourth quarter
2009, 190,000 shares of our common stock were issued or issuable to consultants
for services provided.  The aggregate fair value of the shares of $9,500
based on the closing price of our common stock on December 31, 2009, was
recorded to operating expenses in the fourth quarter of 2009.  An
additional 205,000 shares of our common stock are issuable to the consultants
for future services to be provided pursuant to the terms of the contracts, none
of which had yet been earned as of December 31, 2009.  In the fourth quarter 2009, we issued
400,000 shares of our common stock for future software development  10    services valued at $100,000
based on the closing market price on the date of issuance of the shares,
pursuant to a three-year contract with Treemo, Inc.  As of December 31,
2009, none of the software development services had been utilized, and
accordingly these costs are recorded as prepaid expenses in our balance sheet as
of that date. On December
4, 2009, we entered into an agreement with Fuselier Holdings I, Inc.
 (Fuselier Holdings).  Under the terms of the agreement, Fuselier
Holdings will negotiate with vendors on our behalf and settle certain accounts
payable with shares of our common stock.  Fuselier Holdings is authorized
under the agreement to settle accounts payable in incremental amounts up to
$25,000, and negotiate settlement in shares of our common stock at a per share
price determined by averaging the closing price of the previous three (3) full
trading days as reported on the over-the-counter bulletin board (OTCBB),
commencing on the day immediately preceding the day on which our stock is deemed
to be freely tradable upon delivery to Fuselier Holdings (Per Share Price
Calculation).  On December 4, 2009, we also entered into a consulting
agreement with Dr. Jean Fuselier Sr., whereby we will issue shares of our common
stock to Dr. Fuselier equal to the amount of the accounts payable settled, at a
per share price determined in accordance with the Per Share Price Calculation.
 In connection with these agreements, in December 2009, 382,848 shares of
our common stock were issued or issuable to Dr. Fuselier for services, and
714,286 shares of our common stock were issued or issuable to Fuselier Holdings
in settlement of accounts payable of $25,000.  In connection with the
drafting of these agreements, we issued an additional 232,258 shares of our
common stock to Dr. Fuselier for legal services in October 2009.   The
fair value of the shares of $24,000 based on the closing price of our common
stock on the date of issuance was recorded to operating expenses in the fourth
quarter of 2009.  Purchases of equity securities by the issuer and
affiliated purchasers  During the third quarter of 2009, we
repurchased 1,051,268 shares of our common stock at par value, or $0.001 per
share, for a total of $1,051.  In the fourth quarter of 2009, we reissued
these shares.     ITEM
7.  MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS  Overview  The following managements discussion
and analysis of our financial condition and results of operations is intended to
provide information necessary to understand our audited consolidated financial
statements and highlight certain other information which, in the opinion of
management, will enhance a readers understanding of our financial condition,
changes in financial condition and results of operations.  In particular,
the discussion is intended to provide an analysis of significant trends and
material changes in our financial position and operating results of our business
during the year ended December 31, 2009, as compared to the year ended December
31, 2008.  The following discussion and analysis should be read in
conjunction with our consolidated financial statements and notes appearing
elsewhere in this Report.  This Item is organized as follows:  · The section entitled Background
describes our principal operational activities and summarizes significant trends
and developments in our business and in our industry.  · Recent Developments discusses
certain management changes and significant recent contractual agreements.  · Critical Accounting Policies and
Estimates and Recent Accounting Pronouncements discusses our most critical
accounting policies and new accounting standards.  · Liquidity, Capital Resources and
Going Concern discusses our cash requirements, sources and uses of cash and
liquidity, including going concern qualifications.  · Consolidated Results of Operations
discusses the primary factors that are likely to contribute to significant
variability of our results of operations for the year ended December 31, 2009,
as compared to the year ended December 31, 2008.  11     · Off-Balance Sheet Arrangements
indicates that we did not have any off-balance sheet arrangements as of December
31, 2009. In addition, Item 9A(T)
Controls and Procedures contains managements assessment of our internal
controls over financial reporting as of December 31, 2009.  Background  We were incorporated under the laws of
the State of Delaware on April 20, 1994. From our incorporation and until
December 13, 2004, we had no operating history other than organizational
matters. On December 13, 2004, we acquired all of the issued and outstanding
capital stock of Trans Media Inc. (Trans Media), a Wyoming corporation.
 The acquisition was consummated pursuant to a Plan of Arrangement and
Share Exchange Agreement, dated September 29, 2004, whereby Trans Media became
our wholly owned subsidiary.  This transaction is commonly referred to as a
reverse acquisition, in which all of the outstanding capital stock of Trans
Media was effectively exchanged for a controlling interest in our stock.
 This type of transaction is considered to be a recapitalization rather
than a business combination.  Accordingly, for accounting purposes, no
goodwill or other intangible assets were recorded.  On May 7, 2008, Trans Media, its
wholly owned subsidiary North Coast Acquisition Corp., a Delaware corporation
(Acquisition Corp.), and Montavo, Inc., a privately-held Washington
corporation (Montavo), executed an Agreement (the Merger Agreement).
Pursuant to the terms of the Merger Agreement, on August 29, 2008, Acquisition
Corp. was merged with and into Montavo, with Montavo being the surviving entity
as a wholly owned subsidiary, and all of the issued and outstanding common stock
of Montavo was exchanged for newly-issued, restricted shares of common stock.
 The merger was accounted for as a reverse merger and recapitalization due
to Montavo having control of the board of directors and control of management at
the date of merger.  We are a development stage company in
the process of developing a mobile Location Based Services (LBS) marketing
solution for wireless carriers, mobile handset manufacturers, wireless
carrier/device software aggregators, personal navigation device (PND)
manufacturers, and vehicle manufacturers.  We have a patent pending filed
for our method and distribution system for location based wireless presentation
of electronic coupons technology.  Recent Developments  Management Changes  Robert Montesano  Effective as
of May 19, 2009, Mr. Robert Montesano resigned from his position as a director
and as President.  Brook Lang  Effective as of
May 19, 2009, our board of directors appointed Mr. Brook Lang, our current Chief
Executive Officer and a member of our board of directors, as the new Chairman of
our Board of Directors.  Mr. Lang will not receive any additional
compensation for serving as Chairman of our Board of Directors.  Wong Peck Ling  Effective as
of April 23, 2009, Wong Peck Ling resigned from her position as Chief Financial
Officer and as a director.  Acxiom Corporation Agreement  In February 2010, we entered into a
database license agreement with Acxiom Corporation under which we will license
their InfoBase-X telephone directories commencing February 5, 2010, for an
initial term of six months (Initial Term).  Unless terminated, the
license term automatically extends to a period of one year (First One Year
Term), and will continue to automatically renew for successive one-year terms
(Renewal Term), unless terminated by either party upon 30 days notice or for
cause as defined in the agreement.  In consideration of the license grant,
we will pay no fees for the Initial Term, and will pay annual minimum fees of
$30,000 for the First  12    One Year Term and any Renewal
Term, payable monthly at a rate of $2,500 per month, plus certain additional
per-click volume-based fees, based upon the following schedule:  Volume-Based FeesUp to 2,500,000
$
-2,500,001  5,000,000

0.0105,000,001  7,500,000

0.0087,500,001  unlimited

-    infoUSA, Inc. Agreement  In April 2009, we entered into a
three-year database license agreement with infoUSA, Inc. under which we licensed
their Yellow Pages database commencing April 15, 2009.  In consideration of
the license grant, we will pay the greater of royalties calculated at $0.15 per
user per month, or calculated based on transaction volume, or annual minimum
license fees of $100,000 for the first year and $125,000 for the second year of
the agreement and thereafter.  The agreement automatically renews for an
additional two year term unless terminated upon 60-days notice by either party.
 Minimum fees under this agreement totaled $67,000 through December 31,
2009.  The remaining first year fees of $33,000 were due as of March 31,
2010.  The second year fees of $125,000 are payable in equal monthly
installments of approximately $10,400 beginning April 15, 2010.  Critical Accounting Policies and Estimates and
Recently Issued Accounting Standards  We prepare our consolidated
financial statements in conformity with accounting principles generally accepted
in the U.S.  As such, we are required to make certain estimates, judgments
and assumptions that we believe are reasonable based upon the information
available.  These estimates and assumptions affect the reported amounts of
assets and liabilities at the date of the consolidated financial statements and
the reported amounts of revenue and expenses during the periods presented.
 Actual results could differ significantly from those estimates under
different assumptions and conditions.  We believe that the following
discussion addresses our most critical accounting estimates, which are those
that we believe are most important to the portrayal of our financial condition
and results of operations and which require our most difficult and subjective
judgments, often as a result of the need to make estimates about the effect of
matters that are inherently uncertain.  Other key estimates and assumptions
that affect reported amounts and disclosures include estimates as to valuation
of share-based payments and valuation allowance for deferred income tax assets.
 We also have other policies that we consider key accounting policies;
however, these policies do not meet the definition of critical accounting
estimates because they do not generally require us to make estimates or
judgments that are difficult or subjective. Impairment
of Long-Lived Assets Long-lived assets, such as patents pending and
software developed for internal use are reviewed for impairment whenever events
or changes in circumstances indicate that the carrying amount of an asset may
not be recoverable.  Conditions that would necessitate an impairment
include a significant decline in the observable market value of an asset, a
significant change in the extent or manner in which an asset is used, or any
other significant adverse change that would indicate that the carrying amount of
an asset or group of assets is not recoverable.  Recoverability of assets
to be held and used is measured by a comparison of the carrying amount of an
asset to estimated undiscounted future cash flows expected to be generated by
the asset.  If the carrying amount of an asset exceeds its estimated future
cash flows, an impairment charge is recognized in the amount by which the
carrying amount of the asset exceeds the fair value of the asset. In the fourth
quarter of 2009, we determined that the amounts previously capitalized for
patent pending and software developed for internal use totaling approximately
$400,000 were impaired due to uncertainty regarding our ability to continue as a
going concern and accordingly recorded an impairment loss as of that date. Derivatives
Embedded in Certain Debt Securities We evaluate financial instruments for
freestanding or embedded derivatives.  Derivative instruments that have
been separated from the host contract are recorded at fair  13    value
with changes in value recognized as other income (expense) in the statements of
operations in the period of change. Income
taxes  We account for income taxes using an asset and liability method
which requires recognition of deferred tax assets and liabilities for the
expected future tax consequences of events that have been included in the
financial statements or tax returns.  Under this method, deferred income
taxes are recognized for the tax consequences in future years of differences
between the tax bases of assets and liabilities and their financial reporting
amounts at each period end based on enacted tax laws and statutory tax rates
applicable to the periods in which the differences are expected to affect
taxable income.  Valuation allowances are established, when necessary, to
reduce deferred tax assets to amounts expected to be realized.  The
provision for income taxes represents the tax payable for the period and change
during the period in net deferred tax assets and liabilities. We have
identified our federal tax return as our major tax jurisdiction, as defined.
 We do not believe any reserves for uncertain income tax positions are
required.  Our policy for recording interest and penalties associated with
uncertain income tax positions is to record such items as a component of
interest expense Debt Discounts Debt discounts
are being amortized through periodic charges to interest expense over the
maximum term of the related financial instrument using the effective interest
method.  Total amortization of debt discounts amounted to approximately
$27,000, nil and $29,000 during the years ended December 31, 2009, 2008, and the
period from inception to December 31, 2009, respectively.  Share-Based PaymentsWe have
granted shares of our common stock and stock options and warrants to purchase
shares of our common stock to various parties for services and in connection
with financing activities.  The fair values of shares issued have been
based on closing market prices for periods after October 1, 2009, and at prices
of recent cash transactions for periods prior.  We use the Black-Scholes
option-pricing model as our method of valuation for share-based awards.
 Share-based compensation expense is based on the value of the portion of
the stock-based award that will vest during the period, adjusted for expected
forfeitures.  Our determination of the fair value of share-based awards on
the date of grant using an option pricing model is affected by our stock price
as well as assumptions regarding a number of highly complex and subjective
variables.  These variables include, but are not limited to, the expected
life of the award, expected stock price volatility over the term of the award
and historical and projected exercise behaviors.  The estimation of
share-based awards that will ultimately vest requires judgment, and to the
extent actual or updated results differ from our current estimates, such amounts
will be recorded in the period estimates are revised.  Although the fair
value of share-based awards is determined in accordance with authoritative
guidance, the Black-Scholes option pricing model requires the input of highly
subjective assumptions and other reasonable assumptions could provide differing
results.  Non-cash compensation expense is recognized on a straight-line
basis over the applicable vesting periods of one to five years (deemed to be the
service period), based on the fair value of such share-based awards on the grant
date.  Recently Issued Accounting
StandardsIn October 2009, the Financial Accounting Standards Board issued
authoritative guidance on revenue arrangements with multiple deliverables that
are outside the scope of the software revenue recognition guidance (which does
not have an impact on our accounting).  Under the new guidance, when vendor
specific objective evidence or third party evidence for deliverables in an
arrangement cannot be determined, a best estimate of a selling price is required
to separate deliverables and allocate arrangement consideration using the
relative selling price method.  The new guidance includes new disclosure
requirements on how the application of the relative selling price method affects
the timing and amount of revenue recognition.  We adopted this
authoritative guidance on January 1, 2010, and the adoption of this new guidance
did not have a material effect on our financial statements.  Liquidity, Capital Resources and Going Concern  We have prepared our consolidated financial statements
assuming that we will continue as a going concern, which contemplates
realization of assets and the satisfaction of liabilities in the normal course
of business.  As of December 31, 2009, we had a deficit accumulated in the
development stage of approximately $3.5 million, negative cash flows from
operations since inception and expect to incur additional losses in the future
as we continue to develop and grow our business.  We have funded our losses
primarily through sales of common stock and warrants  14    in private placements and
borrowings from related parties and other investors.  The further
development of our business will require capital.  At December 31, 2009, we
had a working capital deficit (current assets less current liabilities) of $0.5
million and no cash.  Our operating expenses will consume a material amount
of our cash resources.  We are still in the early stages of executing our
business strategy.  Our current cash levels are not sufficient to enable us
to execute our business strategy.  We require additional financing to
execute our business strategy and to satisfy our near-term working capital
requirements.  In the event that we cannot obtain additional funds, on a
timely basis or our operations do not generate sufficient cash flow, we may be
forced to curtail or cease our activities, which would likely result in the loss
to investors of all or a substantial portion of their investment.  We are
actively seeking to raise additional capital through the sale of shares of our
capital stock to institutional investors and through strategic investments.
 If management deems necessary, we might also seek additional loans from
related parties.  However, there can be no assurance that we will be able
to consummate any of these transactions, or that these transactions will be
consummated on a timely basis or on terms favorable to us.  Discussion of Cash Flows  We used cash of approximately $198,000 in our operating
activities in 2009 compared with $241,000 in 2008.  Cash used in operating
activities relates primarily to funding net losses, partially offset by non-cash
expenses related to stock issued for services.  In 2009, we wrote off our
capitalized costs related to patents and software development costs due to
impairment, in the amount of $400,000.  We expect to use cash for operating
activities in the foreseeable future as we continue our operating activities.  Our investing activities used cash of $8,000 and
approximately $10,000 in 2009 and 2008, respectively. Changes in cash from
investing activities were due primarily to investments in patent.  Our financing activities provided cash
of approximately $204,000 in 2009 compared to $251,000 in 2008. In 2009, changes
in cash from financing activities primarily relate to issuance of common stock
and warrants and proceeds of convertible notes payable and stockholder
contributions.  Recent Financing Activities  On January 16, 2009, we entered into a
convertible promissory note for $4,950 at a stated interest rate of 5% per
annum.  On January 16, 2009, we entered into a convertible promissory note
for $5,000 at a stated interest rate of 7% per annum.  On January 26, 2009,
we entered into a convertible promissory note for $5,062 at a stated interest
rate of 5%.  In April 2009, we entered into a convertible promissory note
for $3,200 at a stated interest rate of 5% per annum.  The notes and
related accrued interest were convertible into shares of our common stock at
$0.20 per share at the option of the holder.  The convertible notes when
issued included a beneficial conversion feature because they allowed the holders
to acquire common shares of the company at an effective conversion price that
was less than their fair value per common share at issuance.  The discount
on the convertible notes payable related to the beneficial conversion feature
was valued at approximately $14,000, and was recognized as interest expense
related to the amortization of the beneficial conversion feature during 2009.
 In March 2009, the notes were converted into 75,060 shares of common stock
at a conversion rate of $0.20 per share.  On April 27, 2009, we issued
16,221 shares of our common stock at $0.20 per share pursuant to the conversion
of a related party promissory note with a principal balance of approximately
$3,200.  On April 6, 2009, we entered into a
convertible promissory note for $23,000 at a stated rate of 7% per annum. The
note and related accrued interest were convertible into shares of our common
stock at 0.10 per share beginning May 30, 2009.  The convertible notes when
issued included a beneficial conversion feature because they allowed the holders
to acquire common shares of the company at an effective conversion price that
was less than their fair value per common share at issuance.  The discount
on the convertible notes payable related to the beneficial conversion feature
was valued at $23,000, and was recognized as interest expense related to the
amortization of the beneficial conversion feature during 2009.  In April
2009, the notes and accrued interest were converted into 232,683 shares of
common stock for conversion of this debenture and accrued interest.   15    On
September 8, 2009, we entered into a convertible promissory note for $20,000 at
a stated interest rate of 15 %. The promissory note is due within twenty-four
months after date of issue, and on demand thereafter.  The note is
convertible into shares of our common stock at $0.10 per share.  Terms of
the convertible note provide that the conversion price of the notes will be
reduced in the event of subsequent financings at an effective price per share
less than the conversion or exercise price, such that in the event we secure a
future equity investment round totaling a minimum of $1,000,000 within 12 months
of the date of the note, the convertible note will automatically be converted
into shares of stock in the amount of 50% of the price per share of the equity
investment or the maximum price of $0.10 per share, whichever is lower. In
accordance with the authoritative guidance related to convertible notes with
down-round protection, we recorded a fair value liability for price adjustable
convertible notes of $12,330 at issuance.  The fair value liability is
revalued quarterly utilizing Black-Scholes valuation model computations with the
increase or decrease in fair value being reported in the statement of operations
as other income (expense).  At December 31, 2009, the weighted average
assumptions used in our Black-Scholes calculation were: expected life of 1.0
years, volatility equal to 162%, risk-free rate of 0.47% and dividend rate of
0%.  During the year ended December 31, 2009, the fair value decreased by
approximately $8,000, which was recorded as other income.  In 2009, we issued an aggregate of
461,625 shares of our common stock for gross proceeds of approximately $113,000.
  In addition, on October 9, 2009, we issued 1,000,000 units at $0.025
per unit for gross proceeds of $25,000, with each unit comprised of one share of
our common stock and a two-year warrant to purchase two shares of our common
stock at $0.10 per share.  The warrants were immediately exercisable.  On March 8, 2010,
we entered into a promissory note with Loren Pace for $6,000 at a stated
interest rate of 8% per annum, payable upon demand by the holder. On March 8,
2010, in accordance with the terms of the promissory note, we issued 100,000
shares of our common stock to Mr. Pace as loan fees under the terms of the
promissory note.  In addition, we entered into an advisory services
agreement with Mr. Pace, pursuant to which we will issue him 150,000 shares of
our common stock over a period of 12 months for services rendered under the
agreement.  In March 2010, we issued an aggregate
of 3,100,000 shares of our common stock for cash for gross proceeds of $40,000.  Going Concern  Our independent registered public accountant has added an
explanatory paragraph in its report relating to our financial statements for the
year ended December 31, 2009, which states that we have experienced recurring
losses from operations since inception and have a substantial accumulated
deficit.  These conditions give rise to substantial doubt about our ability
to continue as a going concern.  Our ability to expand operations and
generate additional revenue and our ability to obtain additional funding will
determine our ability to continue as a going concern.  Our financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.  Summary  We are dependent on existing cash resources and external
sources of financing to meet our working capital needs.  Current sources of
liquidity are insufficient to provide for budgeted and anticipated working
capital requirements.  We will therefore be required to seek additional
financing to satisfy our working capital requirements.  No assurances can
be given that such capital will be available to us on acceptable terms, if at
all.  In addition to equity financing and strategic investments, we may
seek additional related party loans.  If we are unable to obtain any such
additional financing or if such financing cannot be obtained on terms acceptable
to us, we may be required to delay or scale back our operations, which would
adversely affect our ability to generate future revenues and may force us to
curtail or cease our operating activities.  To attain profitable operations, managements plan is to
execute its strategy of (i) continuing the development of our proprietary mobile
marketing solution; (ii) building additional strategic partnerships with
technology partners; (iii) building strategic partnerships with premier
advertising inventory partners; and (iv) executing sales relationships with
national and global brands in order to drive profitability.  We will
continue to be dependent on outside capital to fund our operations for the
foreseeable future.  Any financing we obtain may further  16    dilute or otherwise impair the
ownership interest of our current stockholders.  If we fail to generate
positive cash flows or fail to obtain additional capital when required, we could
modify, delay or abandon some or all of our plans.  These factors, among
others, raise substantial doubt about our ability to continue as a going
concern.  Off-Balance Sheet Arrangements  As of December 31, 2009, we did not have any off-balance
sheet arrangements, as defined in Item 303(a)(4)(ii) of SEC Regulation S-K.  Comparison of the Year Ended December 31, 2009, to the
Year Ended December 31, 2008  We had no revenues in the years ended
December 31, 2009 and 2008, and from inception to December 31, 2009.  In
the years ended December 31, 2009 and 2008, and from inception to December 31,
2009, we incurred net losses of approximately $1,916,000, $843,000 and
$3,527,000, respectively.  Operating expenses increased to $1,881,000 in
the year ended December 31, 2009, from $823,000 in the year ended December 31,
2008, due primarily to the following:  · Professional fees, including
accounting, legal and consulting, increased from approximately $550,000 in the
prior year to approximately $780,000 in the current year, due primarily to
increased stock based compensation and increased consulting activities in the
current year, in support of our software development activities. · Management fees incurred increased
from $220,000 in the prior year to $323,000 in the current year, due to bonus
compensation payable to the CEO pursuant to his employment contract. · We recognized an impairment loss of
approximately $400,000 in the current year related to previously capitalized
software development and patent costs.  We expect that operating expenses will continue to
increase in 2010 as we implement our growth strategy.  Interest expense increased from
$20,000 in the prior year to $43,000 in the current year, due to the
amortization of beneficial conversion feature recorded related to convertible
notes payable.    ITEM
8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA  Page No.Report of
Independent Registered Public Accounting Firm
18Balance
Sheets as of December 31, 2009 and 2008
20Statements
of Operations for fiscal years ended December 31, 2009 and 2008 and for
the period from inception to December 31, 2009
21Statement
of Stockholders Equity (Deficit) from inception to December 31, 2009
22Statements
of Cash Flows for fiscal years ended December 31, 2009 and 2008 and for
the period from inception to December 31, 2009
24Notes to
Financial Statements
26  17      REPORT OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM    To the Board of Directors and
Stockholders Montavo, Inc. Bellevue, Washington   We have audited the accompanying balance
sheet of Montavo, Inc. (a development stage company) ("the Company") as of
December 31, 2009, and the related statements of operations, stockholders'
equity (deficit), and cash flows for the year then ended, and for the period
from December 23, 2004 (date of inception) to December 31, 2009.
 These financial statements are the responsibility of the Company's
management.  Our responsibility is to express an opinion on these financial
statements based on our audit.  The Company's financial statements for the
period from December 23, 2004 (date of inception) through December 31,
2008, were audited by other auditors whose report, dated April 14, 2009,
expressed an unqualified opinion on those statements and included an explanatory
paragraph that referred to substantial doubt about the Company's ability to
continue as a going concern.  The financial statements for the period from
December 23, 2004 (date of inception) through December 31, 2008,
reflect a net loss of $1,611 (in thousands) of the accumulated deficit as of
December 31, 2009.  The other auditors' report has been furnished to
us, and our opinion, insofar as it relates to the amounts included for such
prior periods, is based solely on the report of such other auditors.  We conducted our audit in accordance with
the standards of the Public Company Accounting Oversight Board (United States).
 Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  The Company has determined that it is not required to have,
nor were we engaged to perform, an audit of its internal control over financial
reporting.  Our audit included consideration of internal control over
financial reporting as a basis for designing audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Company's internal control over financial
reporting.  Accordingly, we express no such opinion.  An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements.  An audit also includes assessing
the accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation.  We
believe that our audit provides a reasonable basis for our opinion.        In our opinion, based on our audit and the
report of other auditors, the financial statements referred to above present
fairly, in all material respects, the financial position of Montavo, Inc. (a
development stage company) as of December 31, 2009, and the results of its
operations and its cash flows for the year then ended, and for the period from
December 23, 2004 (date of inception) to December 31, 2009, in
conformity with accounting principles generally accepted in the United
States.  The accompanying financial statements have
been prepared assuming the Company will continue as a going concern.  As
discussed in Note 2 to the financial statements, the Company has
experienced recurring losses from operations since inception, has a working
capital deficit, and has a deficit accumulated during the development stage.
 These conditions raise substantial doubt about the Company's ability to
continue as a going concern.  Management's plans regarding these matters
are also described in Note 2.  The financial statements do not include
any adjustments that might result from the outcome of this uncertainty.    /S/
PETERSON SULLIVAN LLP   Seattle, Washington April 15, 2010           REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM  To the Board
of Directors Montavo,
Inc. (A Development
Stage Company) Bellevue,
Washington  We have
audited the accompanying consolidated balance sheet of Montavo, Inc. (Montavo)
as of December 31, 2008, and the related consolidated statements of expenses,
cash flows and changes in stockholders deficit for the year then ended and the
period from December 23, 2004 (inception) through December 31, 2008. These
consolidated financial statements are the responsibility of Montavos
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audit.  We conducted
our audits in accordance with standards of the Public Company Accounting
Oversight Board (United States). Those standards require that we plan and
perform the audits to obtain reasonable assurance about whether the consolidated
financial statements are free of material misstatement. Montavo is not required
to have, nor were we engaged to perform, an audit of its internal control over
financial reporting. Our audit included consideration of internal control over
financial reporting as a basis for designing audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of Montavos internal control over financial
reporting. Accordingly, we express no such opinion. An audit includes examining,
on a test basis, evidence supporting the amounts and disclosures in the
consolidated financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.  In our
opinion, the consolidated financial statements referred to above present fairly,
in all material respects, the financial position of Montavo, Inc., as of
December 31, 2008, and the results of its operations and its cash flows for the
year then ended and the period from December 23, 2004 (inception) through
December 31, 2008, in conformity with accounting principles generally accepted
in the United States of America.  The
accompanying consolidated financial statements have been prepared assuming that
Montavo will continue as a going concern. As discussed in Note 2 to the
consolidated financial statements, Montavo has suffered recurring losses from
operations which raises substantial doubt about its ability to continue as a
going concern. Managements plans regarding those matters also are described in
Note 2. The consolidated financial statements do not include any adjustments
that might result from the outcome of this uncertainty.    Malone &
Bailey, PC www.malone-bailey.com Houston,
Texas April 14, 2009


MONTAVO, INC.(A Development Stage
Company)BALANCE SHEETSASSETSDecember 31,


December 31,2009


2008(in thousands, except share
amounts)Current assets:Cash






$
-

$
2Prepaid expenses and other assets




164


-Total Current Assets





164


2Software developed for internal use




-


320Patent pending






-


37Total assets




$
164

$
359LIABILITIES AND STOCKHOLDERS' EQUITY
(DEFICIT)Currrent liabilities:Accounts payable and accrued expenses



$
326

$
133Accounts payable - related parties




344


259Note payable to related party





25


25Accrued interest






3


1Convertible debt, net of discount of $10




10


-Fair value liability for price adjustable
convertible debt



4


-Total current liabilities





712


418Commitments and contingenciesStockholders' equity (deficit):Preferred stock, $0.001 par value; 5,000,000 shares
authorized:no shares issued and outstanding




-


-Common stock and additional paid-in capital, $0.001
par value;90,000,000 shares authorized:43,418,467 and 36,473,353 shares issued
and outstanding, respectively


2,978


1,552Deficit accumulated during the development
stage




(3,526)


(1,611)Total stockholders' equity (deficit)




(548)


(59)Total liabilities and stockholders' equity
(deficit)


$
164

$
359See notes to financial
statements





MONTAVO, INC.(A Development Stage
Company)Statements of OperationsDecember 31, 2004(Inception)ToYears ended December 31,


December 31,2009


2008


2009(in thousands, except share and per
share data)Operating expenses

$
(1,881)

$
823

$
3,407Loss from operations


(1,881)


(823)


(3,407)Other income (expense):Interest expense


(43)


(20)


(128)Change in fair value liability for price
adjustableconvertible debt


8


-


8Total other expense


(35)


(20)


(120)Net loss

$
(1,916)

$
(843)

$
(3,527)Loss per common share - basic and diluted:Net loss per common share - basic and
diluted

$
(0.05)

$
(0.06)Shares used in computing net loss per share
-basic and diluted

38,496,218

14,847,714See notes to financial
statements








MONTAVO, INC.(A Development Stage Company)Statements of Stockholders' Equity (Deficit)Common Stock and

Deficit Accumulated


TotalAdditional Paid-in Capital

During the Development

Stockholders'Shares

Amount

Stage

Equity (Deficit)(in
thousands, except share data)Issuance of
founder shares for cash, December 23, 2004
3,000,000


$
                71


$
                                 -


$
                 71Balance
December 31, 2004
3,000,000


71


-


71Common stock
issued for services in 2005
3,000,000


71


-


71Options and
warrants issued for services in 2005
-


4


-


4Imputed interest
on stockholder advances
-


1


-


1Net loss
-


-


(197)


(197)Balance
December 31, 2005
6,000,000


147


(197)


(50)Common stock
issued for cash in 2006
59,375


2


-


2Options and
warrants issued for services in 2006
-


9


-


9Expense related
to vesting of options and warrants
-


2


-


2Common stock
issued by stockholders on behalf of Montavo for loan
-modification
(accounted for as contribution of capital)
-


38


-


38Imputed interest
on stockholder advances
-


1


-


1Net loss
-


-


(344)


(344)Balance
December 31, 2006
6,059,375


199


(541)


(342)Common stock
issued for cash in 2007
15,000


-


-


-Options and
warrants issued for services in 2007
-


1


-


1Expense related
to vesting of options and warrants
-


2


-


2Imputed interest
on stockholder advances
-


1


-


1Net loss
-


-


(227)


(227)Balance
December 31, 2007
6,074,375


203


(768)


(565)Common stock
issued for services in 2008
2,525,000


310


-


310Common stock
issued for cash in 2008
296,625


84


-


84Expense related
to vesting of options and warrants
-


9


-


9Common stock
retained by North Coast in reverse merger
13,080,000


(264)


-


(264)Common stock
issued upon conversion of North Coast notes payable in 2008
1,398,841


250


-


250Common stock
issued upon conversion of Montavo notes payable, accruedinterest and
accounts payable in 2008
1,840,000


949


-


949Common stock
issued upon exercise of options by waiving of exercise priceof
options
1,169,000


10


-


10Recapitalization
10,089,512


-


-


-Imputed interest
on stockholder advances
-


1


-


1Net loss
-


-


(843)


(843)Balance
December 31, 2008
36,473,353


1,552


(1,611)


(59)Common stock
issued for cash in 2009
461,625


113


-


113Common stock
issued in settlement of accounts payable due to related partyin 2009
1,333,333


173


-


173Common stock
issued or issuable for services in 2009
2,771,906


445


-


445





Common stock
issued upon conversion of note payable and related accruedinterest
91,281


18


-


18Common stock
issued upon conversion of notes payable andaccrued
interest
232,683


23


-


23Common stock
issued in settlement of accounts payable
1,054,286


74


-


74Issuance of
units comprised of common stock and warrants for cash
1,000,000


25


-


25Warrants issued
for services
-


27


-


27Options issued
for services
-


485


-


485Stockholder
contribution of capital
-


5


-


5Imputed interest
on stockholder advances
-


1


-


1Beneficial
conversion feature of convertible debt
-


37


-


37Net loss
-


-


(1,916)


(1,916)Balance
December 31, 2009
43,418,467

$
2,978

$
(3,527)

$
(549)See
notes to financial statements








MONTAVO, INC.(A Development Stage Company)Statements of Cash FlowsDecember 23, 2004(Inception)ThroughYears ended December 31,

December 31,2009


2008

2009(in
thousands)Operating
activities:Net loss





$
(1,916)

$
(843)
$
(3,527)Adjustments to
reconcile net loss to net cash used by operating activities:Amortization of
debt discount



24


-

26Imputed interest
on stockholder advances



1


1

5Share-based
payments of consulting and other expenses


956


329

1,375Shares issued
for modification of debt terms



-


-

38Shares issued in
excess of liabilites converted (accounted for as compensation)

-


85

85Excess share
value issued for conversion of accounts payable-related party


73


-

73Change in fair
value liability for price adjustable convertible debt


8


-

8Impairment loss
on patent pending and software developed for internal use


400




400Changes in
operating assets and liabilities








-Prepaid expenses
and other assets



(164)




(164)Accounts payable
and accrued expenses



368


(5)

428Accounts payable
- related party



50


178

391Accrued
interest





2


14

46Net cash used in
operating activities



(198)


(241)

(816)Investing
activities:Investment in
patent




(8)


(10)

(45)Net cash used in
investing activities



(8)


(10)

(45)Financing
activities:Proceeds from
sale of units comprised of common stock and warrants


25


-

25Stockholder
contributions to capital



5


-

22Proceeds from
issuance of notes payable



61


167

652Principal
payments on notes payable



-


-

(108)Proceeds from
sale of common shares



113


84

270Net cash
provided by financing activities



204


251

861Net decrease in
cash




(2)


-

-Cash - beginning
of the period



2


2

-Cash - end of
the period



$
-

$
2
$
-Supplemental
disclosure:Cash paid for
income taxes



$
-

$
-
$
-Cash paid for
interest



$
-

$
-
$
-Non-cash
investing and financing activities:Seller-financed
software developed for internal use

$
35

$
209
$
355Shares retained
by North Coast in reverse merger


$
-

$
264
$
264Shares issued to
convert North Coast note payable and accrued interest

$
18

$
250
$
354Shares issued to
convert notes payable, accrued interest and notes payable

$
-

$
864
$
864Additional
shares issued to Montavo stockholders in merger

$
-

$
10
$
10Shares issued in
settlement of accounts payable


$
174

$
-
$
174Beneficial
conversion feature - notes payable


$
37

$
-
$
37See
notes to financial statements





MONTAVO, INC. (A Development Stage Company) NOTES TO FINANCIAL STATEMENTS  Note 1.  Business and
Organization  We were incorporated under the laws of
the State of Delaware on April 20, 1994. From our incorporation and until
December 13, 2004, we had no operating history other than organizational
matters. On December 13, 2004, we acquired all of the issued and outstanding
capital stock of Trans Media Inc. (Trans Media), a Wyoming corporation.
 The acquisition was consummated pursuant to a Plan of Arrangement and
Share Exchange Agreement, dated September 29, 2004, whereby Trans Media became
our wholly owned subsidiary.  This transaction is commonly referred to as a
reverse acquisition, in which all of the outstanding capital stock of Trans
Media was effectively exchanged for a controlling interest in our stock. This
type of transaction is considered to be a recapitalization rather than a
business combination.  Accordingly, for accounting purposes, no goodwill or
other intangible assets were recorded.  On May 7, 2008 Trans Media, its wholly
owned subsidiary North Coast Acquisition Corp., a Delaware corporation
(Acquisition Corp.), and Montavo, Inc., a privately-held Washington
corporation (Montavo), executed an Agreement (the Merger Agreement).
Pursuant to the terms of the Merger Agreement, on August 29, 2008, Acquisition
Corp. was merged with and into Montavo, with Montavo being the surviving entity
as a wholly owned subsidiary, and all of the issued and outstanding common stock
of Montavo was exchanged for newly-issued, restricted shares of common stock.
 The merger was accounted for as a reverse merger and recapitalization due
to Montavo having control of the board of directors and control of management at
the date of merger.  We are a development stage company in
the process of developing a mobile Location Based Services (LBS) marketing
solution for wireless carriers, mobile handset manufacturers, wireless
carrier/device software aggregators, personal navigation device (PND)
manufacturers, and vehicle manufacturers. We have a patent pending filed for our
method and distribution system for location based wireless presentation of
electronic coupons technology.  Note 2.  Going
Concern  We have prepared our financial
statements assuming that we will continue as a going concern, which contemplates
realization of assets and the satisfaction of liabilities in the normal course
of business. As of December 31, 2009, we had a deficit accumulated during the
development stage of approximately $3.5 million, negative cash flows from
operations since inception and expect to incur additional losses in the future
as we continue to develop and grow our business. We have funded our losses
primarily through sales of common stock and warrants in private placements and
borrowings from related parties and other investors. The further development of
our business will require capital. At December 31, 2009, we had a working
capital deficit (current assets less current liabilities) of approximately $0.5
million and no cash.  We are dependent on existing cash
resources and external sources of financing to meet our working capital
needs.  Current sources of liquidity are insufficient to provide for
budgeted and anticipated working capital requirements.  We will
therefore be required to seek additional financing to satisfy our working
capital requirements. No assurances can be given that such capital will be
available to us on acceptable terms, if at all. In addition to equity financing
and strategic investments, we may seek additional related party loans.  If
we are unable to obtain any such additional financing or if such financing
cannot be obtained on terms acceptable to us, we may be required to delay or
scale back our operations, including the development of our mobile marketing
solution, which would adversely affect our ability to generate future revenues
and may force us to curtail or cease our operating activities.  To attain profitable operations, managements plan is to
execute its strategy of (i) continuing the development of our proprietary mobile
marketing solution; (ii) building additional strategic partnerships with
technology partners; (iii) building strategic partnerships with premier
advertising inventory partners; and (iv) executing sales relationships with
national and global brands in order to drive profitability.   We will
continue to be dependent on outside capital to fund our operations for the
foreseeable future, and continue to be involved in discussions and negotiations
with investors in order to raise additional funds to provide sufficient working
capital for operations with a near-term goal of generating positive cash flow
from operations.  Any financing we obtain may further dilute or otherwise
impair the ownership interest of our current stockholders. If we fail to
generate positive cash flows or fail to obtain additional capital when required,
we could modify, delay or abandon some or all of our plans. These factors, among
others, raise substantial doubt about our ability to continue as a going
concern. Our financial statements do not include any adjustments that might
result from the outcome of this uncertainty.  Note 3.  Summary of Critical
Accounting Policies and Recently Issued Accounting Standards  Use of
EstimatesThe preparation of financial statements in conformity with
generally accepted accounting principles





requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and reported amounts of revenues and expenses during
the reporting period.  Actual results could differ from those estimates.
 The more significant accounting estimates inherent in preparation of our
financial statements include estimates as to valuation of equity related
instruments issued and valuation allowance for deferred income tax assets. Cash On
occasion, we maintain balances in excess of federal insurance limits. Financial
Instruments and Fair ValueOur financial instruments consist of cash,
accounts payable, accrued liabilities and other current liabilities, due to
related parties and notes payable to a related party and certain investors.
 We consider fair value to be an exit price representing the amount that
would be received upon the sale of an asset or the transfer of a liability.
 The fair value of financial instruments other than due to related parties
and notes payable to related party approximate the recorded value based on the
short-term nature of these financial instruments. The fair value of note and
interest payable to related party and due to related parties is presently
undeterminable due to the related party nature of the obligations. We currently
measure and report at fair value the liability for price adjustable convertible
debt. The following table summarizes our financial liabilities measured at fair
value on a recurring basis as of December 31, 2009 (in thousands):  Balance atDecember 31,2009

Level 1Quoted prices
inactive markets foridentical assets

Level
2Significant otherobservableinputs

Level
3SignificantunobservableinputsLiabilities:Fair
value liability for price adjustable convertible debt

$
4





$
4Total
financial liabilities at fair value

$
4





$
4 The following
table is a roll forward for the year ended December 31, 2009 of the fair value
liability of price adjustable convertible debt, as to which fair value is
determined by Level 3 inputs (in thousands):  Beginning
balance at January 1, 2009

$
Issuance
of convertible note with derivative liability


12Change
in fair value included in net loss


(8)Ending
balance at December 31, 2009

$
4  Software developed for internal useSoftware
development costs for internal use were capitalized in accordance with relevant
authoritative accounting literature and, once placed in service, amortized using
the straight-line method over the estimated useful life. We are currently
developing proprietary Deal-Finder mobile search and mobile advertising media
technology. A significant portion of the costs have been incurred through a
vendor which is 100%-owned by our Chief Development Officer, Brian Conte.
 See Note 6 regarding the funds owed to this related-party vendor.  As
of December 31, 2009, the software was still under development and had not been
placed in service and therefore amortization had not yet begun.  We
evaluated the software development costs and determined that the costs were
fully impaired, and accordingly, recorded an impairment loss of $355,000,
included in operating expenses, during the fourth quarter of 2009.  Patent pending The cost of patents represents
amounts paid to third parties, including legal costs associated with
successfully defending or obtaining patents. Amortization will be calculated on
a straight-line basis over the estimated useful life of the related asset
beginning when the patent is issued. If patent applications are unsuccessful,
cost associated with these patents is expensed immediately. We have a patent
pending technology filed for Method and Distribution System for Location Based
Wireless Presentation of Electronic Coupons. We had capitalized costs for
patent-related legal fees and as of December 31, 2009, the patent is still
pending and therefore amortization had not yet begun. We evaluated the
patent-related legal costs and determined that the costs were fully impaired,
and accordingly, recorded an impairment loss of $45,000, included in operating
expenses, during the fourth quarter of 2009. Impairment
of Long-Lived Assets Long-lived assets, such as patents pending and
software developed for internal use are reviewed for impairment whenever events
or changes in circumstances indicate that the carrying amount of an asset may
not be recoverable. Conditions that would necessitate an impairment include a
significant decline in the observable market value of an asset, a significant
change in the extent or manner in which an asset is used, or any other
significant adverse change that would indicate that the carrying amount of an
asset or group of assets is not recoverable. Recoverability of assets to be held
and used is measured by a comparison of the carrying amount of an asset to
estimated undiscounted future cash flows expected to be generated by the asset.
If





the carrying amount of an asset
exceeds its estimated future cash flows, an impairment charge is recognized in
the amount by which the carrying amount of the asset exceeds the fair value of
the asset. In the fourth quarter of 2009, we determined that the amounts
previously capitalized for patent pending and software developed for internal
use totaling approximately $400,000 were impaired due to uncertainty regarding
our ability to continue as a going concern and accordingly recorded an
impairment loss as of that date.  Derivatives
Embedded in Certain Debt Securities We evaluate financial instruments for
freestanding or embedded derivatives.  Derivative instruments that have
been separated from the host contract are recorded at fair value with changes in
value recognized as other income (expense) in the statements of operation in the
period of change. Income
taxes  We account for income taxes using an asset and liability method
which requires recognition of deferred tax assets and liabilities for the
expected future tax consequences of events that have been included in the
financial statements or tax returns. Under this method, deferred income taxes
are recognized for the tax consequences in future years of differences between
the tax bases of assets and liabilities and their financial reporting amounts at
each period end based on enacted tax laws and statutory tax rates applicable to
the periods in which the differences are expected to affect taxable income.
Valuation allowances are established, when necessary, to reduce deferred tax
assets to amounts expected to be realized. The provision for income taxes
represents the tax payable for the period and change during the period in net
deferred tax assets and liabilities. We have identified our federal tax return as our major
tax jurisdiction, as defined. We do not believe any reserves for uncertain
income tax positions are required. Our policy for recording interest and
penalties associated with uncertain income tax positions is to record such items
as a component of interest expense. Net loss per
common share Basic and diluted net loss per common share is computed by
dividing the net loss by the weighted average number of common shares
outstanding during the period. Diluted loss per share excludes the effect of
common stock equivalents (convertible notes, stock options and warrants) since
such inclusion in the computation would be anti-dilutive. The following numbers
of shares have been excluded (in thousands):  December
31,2009

2008Convertible note

200

-Stock options

11,483

-Warrants

2,200

-Total

13,883

-   Debt Discounts Debt discounts
are being amortized through periodic charges to interest expense over the
maximum term of the related financial instrument using the effective interest
method. Total amortization of debt discounts amounted to approximately $27,000,
nil and $29,000 during the years ended December 31, 2009, 2008 and the period
from inception to December 31, 2009, respectively.  Share-Based PaymentsWe
have granted shares of our common stock and stock options and warrants to
purchase shares of our common stock to various parties for services and in
connection with financing activities.  The fair values of shares issued
have been based on closing market prices for periods after October 1, 2009 and
at prices of recent cash transactions for periods prior.  We use the
Black-Scholes option-pricing model as our method of valuation for share-based
awards. Share-based compensation expense is based on the value of the portion of
the stock-based award that will vest during the period, adjusted for expected
forfeitures.  Our determination of the fair value of share-based awards on
the date of grant using an option pricing model is affected by our stock price
as well as assumptions regarding a number of highly complex and subjective
variables. These variables include, but are not limited to, the expected life of
the award, expected stock price volatility over the term of the award and
historical and projected exercise behaviors.   The estimation of
share-based awards that will ultimately vest requires judgment, and to the
extent actual or updated results differ from our current estimates, such amounts
will be recorded in the period estimates are revised. Although the fair value of
share-based awards is determined in accordance with authoritative guidance, the
Black-Scholes option pricing model requires the input of highly subjective
assumptions and other reasonable assumptions could provide differing results.
 Non-cash compensation expense is recognized on a straight-line basis over
the applicable vesting periods of one to five years (deemed to be the service
period), based on the fair value of such share-based awards on the grant date.  Reclassifications Certain
reclassifications have been made to prior period financial statements in order
to conform to the current periods presentation.  Recently Issued Accounting
StandardsIn October 2009, the Financial Accounting Standards Board issued
authoritative





guidance on revenue arrangements with multiple
deliverables that are outside the scope of the software revenue recognition
guidance (which does not have an impact on our accounting).  Under the new
guidance, when vendor specific objective evidence or third party evidence for
deliverables in an arrangement cannot be determined, a best estimate of a
selling price is required to separate deliverables and allocate arrangement
consideration using the relative selling price method.  The new guidance
includes new disclosure requirements on how the application of the relative
selling price method affects the timing and amount of revenue recognition.
 We adopted this authoritative guidance on January 1, 2010 and the adoption
of this new guidance did not have a material effect on our financial
statements.  Note 4.   Notes
Payable  In September 2008, we entered into a
promissory note with a stockholder in the principal amount of $25,000 with a
stated interest rate of 12%.   Interest expense of $378 was accrued as
of December 31, 2008 relating to this promissory note.  On January 16, 2009, we entered into a
convertible promissory note for $4,950 at a stated interest rate of 5% per
annum.  On January 16, 2009, we entered into a convertible promissory note
for $5,000 at a stated interest rate of 7% per annum. On January 26, 2009, we
entered into a convertible promissory note for $5,062 at a stated interest rate
of 5%. In April 2009, we entered into a convertible promissory note to a related
party for $3,200 at a stated interest rate of 5% per annum. The notes and
related accrued interest were convertible into shares of our common stock at
$0.20 per share at the option of the holder. The convertible notes when issued
included a beneficial conversion feature because they allowed the holders to
acquire shares of our common stock at an effective conversion price that was
less than the fair value per common share at issuance.  The discount on the
convertible notes payable related to the beneficial conversion feature was
valued at approximately $14,000, and was recognized as interest expense related
to the amortization of the beneficial conversion feature during 2009.  As
discussed above, in March 2009, the first three notes were converted into 75,060
shares of common stock at a conversion rate of $0.20 per share.  On April
15, 2009, we issued 16,221 shares of our common stock at $0.20 per share
pursuant to the conversion of a related party promissory note with a principal
balance of approximately $3,200.  On April 6, 2009, we entered into a
convertible promissory note for $23,000 at a stated rate of 7% per annum. The
note and related accrued interest were convertible into shares of our common
stock at 0.10 per share beginning May 30, 2009. The convertible notes when
issued included a beneficial conversion feature because they allowed the holders
to acquire common shares of the company at an effective conversion price that
was less than their fair value per common share at issuance.  The discount
on the convertible notes payable related to the beneficial conversion feature
was valued at $23,000, and was recognized as interest expense related to the
amortization of the beneficial conversion feature during 2009.  In April
2009, the notes and accrued interest were converted into 232,683 shares of
common stock for conversion of this debenture and accrued interest.  On September 8, 2009, we entered into
a convertible promissory note for $20,000 at a stated interest rate of 15%. The
promissory note is due within twenty-four months after date of issue, and on
demand thereafter. The note is convertible into shares of our common stock at
$0.10 per share.  Terms of the convertible note provide that the conversion
price of the notes will be reduced in the event of subsequent financings at an
effective price per share less than the conversion or exercise price, such that
in the event we secure a future equity investment round totaling a minimum of
$1,000,000 within 12 months of the date of the note, the convertible note will
automatically be converted into shares of stock in the amount of 50% of the
price per share of the equity investment or the maximum price of $0.10 per
share, whichever is lower. In accordance with the authoritative guidance related
to convertible notes with down-round protection, we recorded a fair value
liability for price adjustable convertible notes of $12,330 at issuance.
 The fair value liability is revalued quarterly utilizing Black-Scholes
valuation model computations with the increase or decrease in fair value being
reported in the statement of operations as other income (expense). At December
31, 2009, the weighted average assumptions used in our Black-Scholes calculation
were: expected life of 1.0 years, volatility equal to 162%, risk-free rate of
0.47% and dividend rate of 0%. During the year ended December 31, 2009, the fair
value decreased by approximately $8,000, which was recorded as other income.  Note 5.  Stockholders Equity (Deficit)  Preferred Stock On August 25,
2008, our stockholders approved an increase in the number of authorized shares
of our preferred stock from 1,000,000 to 5,000,000 shares.  Our board of
directors has the authority, without action by the stockholders, to designate
the rights, preferences and privileges of each series, any or all of which may
be greater than the rights of our common stock. No shares of preferred stock
have been designated or issued.  Common Stock  Holders of
our common stock are entitled to one vote for each share held of record on all
matters submitted to a vote of the holders of our common stock. Subject to the
rights of the holders of any class of our capital stock having any preference or
priority over our common stock, the holders of shares of our common stock are
entitled to receive dividends that are declared by our board of directors out of
legally available funds. In the event of our liquidation, dissolution or
winding-up, the holders





of common stock are entitled to share ratably in our net
assets remaining after payment of liabilities, subject to prior rights of
preferred stock, if any, then outstanding. Our common stock has no preemptive
rights, conversion rights, redemption rights or sinking fund provisions, and
there are no dividends in arrears or default. All shares of our common stock
have equal distribution, liquidation and voting rights, and have no preferences
or exchange rights.  On August 25, 2008,
our stockholders approved an increase in the number of authorized shares of our
common stock from 20,000,000 to 99,000,000. Common
Stock Issuances  In January 2008, we issued 2,000,000 shares of our
common stock for services. The shares were recorded at their fair value of
$47,400 and the expense was recorded to general and administrative expense
during the first quarter of 2008. In August
2008, we issued an additional  47,250 shares of our common stock related to
the bridge notes previously issued in fiscal 2007, valued at $1,057.
  In August 2008, we issued 13,080,000 shares of our common stock in
relation to the Merger Agreement with North Coast. In the nine
months ending September 30, 2008, we issued 44,375 shares of our common stock in
connection with the bridge notes and accounted for the issuance as stock for
cash totaling $1,114.  In September 2008, we converted the bridge notes,
accrued interest and accounts payable totaling $864,288 into 1,670,600 shares of
our common stock.  We issued an additional 169,400 shares of our common
stock in excess of the original agreed upon conversion price and current market
prices resulting in stock based compensation expense of $84,700.  In
September 2008, we issued 1,169,000 shares of our common stock for upon exercise
of options and warrants with an aggregate exercise price of $10,192.  We
waived the exercise price resulting in stock based compensation expense of
$10,192.  In September 2008, we issued 525,000 shares for services.
 The shares were recorded at their fair value of $262,500 and the expense
was recorded to general and administrative expense in the third quarter of 2008.
 In September 2008, $70,050 of principal and $15,628 of interest related to
notes payable which we assumed in connection with the reverse merger were
converted to 700,000 shares of our common stock. On November 5,
2008, we issued 130,000 shares of our common stock at $0.40 per share for gross
proceeds of $52,000.  On November 28, 2008, we issued 37,500 shares of our
common stock at $0.40 per share for gross proceeds of $15,000. On December
16, 2008, we issued 37,500 shares of our common stock at $0.40 per share for
gross proceeds of $15,000. In November
and December 2008, $163,549 of principal and $1,090 of interest related to notes
payable which we assumed in connection with the reverse merger were converted
into 698,841 shares of our common stock. On November
28, 2008, we issued 10,089,512 shares of our common stock in connection with the
recapitalization.  In February 2009, we issued an
aggregate of 22,000 shares of our common stock to consultants for advisory
services. The shares were recorded at their fair value of $11,453 and the
expense was recorded to operating expenses during the first quarter of 2009.
 In addition, in February 2009, we issued 25,000 shares of our common stock
to a consultant for services. The shares were recorded at their fair value of
$12,000 and the expense was recorded to operating expenses during the first
quarter of 2009.  On February 12, 2009, we issued 45,000 shares of our
common stock for cash at $0.40 per share for gross proceeds of $18,000.  In March 2009, we issued 335,000
shares of our common stock for cash at $0.20 per share for gross proceeds of
$67,000.    In March 2009, we issued 54,800 shares of our common
stock for advisory services. The shares were recorded at their fair value of
$20,782 and the expense was recorded to general and administrative expense
during the first quarter of 2009.  On March 25, 2009, we issued 75,060
shares of our common stock at $0.20 per share pursuant to the conversion of
three promissory notes having an aggregate principal balance of $15,012 (See
Note 4).  In April 2009, we issued 325,000
shares of our common stock to Wakabayashi Fund LLC for investor relations
services.  The shares were recorded at a fair value of $81,250 based on the
price of our common stock in recent stock sales and the expense was recorded to
operating expenses during the second quarter of 2009.  In addition,
pursuant to the consulting agreement dated April 1, 2009, we were to issue
162,500 shares of our common stock monthly for a period of four months on a
performance-basis, and at managements discretion, an additional 200,000 common
shares may be issued as an incentive bonus.   As of December 31, 2009,
no additional shares of our common stock are issuable relating to this
consulting agreement.  In April 2009, we issued 145,000
shares of our common stock for services. The shares were recorded at a fair
value of $29,000 based on the price of our common stock in recent stock sales
and the expense was recorded to operating expenses during the second quarter of
2009.  On April 3, 2009, we issued 16,000 shares of our common stock for
cash at $0.20 per share for gross proceeds of $3,200.  On April 24, 2009,
we issued 50,000 shares of our common stock for cash at $0.40 per share for
gross proceeds





of $20,000.  On April 15, 2009, we issued 16,221
shares of our common stock at $0.20 per share pursuant to the conversion of a
related party promissory note with a principal balance of approximately $3,200
and in April 2009, we issued an additional 232,683 shares of our common stock
pursuant to the conversion of a convertible promissory note and related accrued
interest in the aggregate amount of $23,268 (See Note 4). On May 19,
2009, we issued 1,333,333 shares of our common stock to a related party vendor
for reduction of accounts payable of $100,000. The shares when issued had an
estimated fair value of approximately $173,300 based on the closing market
prices on the issue dates, and as a result, we recorded additional expense of
approximately $73,300 in the second quarter 2009.  On June 16, 2009, we issued 200,000
shares of our common stock for legal services. The shares were recorded at a
fair value of $26,000 based on the price of our common stock in recent stock
sales and the expense was recorded to operating expenses during the second
quarter of 2009.  On June 23, 2009, we issued 15,625 shares of our common
stock for cash at $0.32 per share for gross proceeds of $5,000.  In April 2009, we entered into a
six-month software development services contract with Perfect Pixels Media
Group, pursuant to which we agreed to issue shares of our common stock at an
agreed upon rate of $0.50 per share for services to be provided under the
agreement.  In the fourth quarter of 2009, 40,000 shares of our common
stock were issuable under the terms of the agreement, which has terminated in
accordance with its terms, for software development services valued at
$20,000.  On October 1, 2009, we entered into a
six-month business development services contract with Openbridge, pursuant to
which we issued 650,000 shares of our common stock for services to be provided
under the agreement.  The shares were recorded at their fair value of
$65,000 based on the closing market price of our common stock on the date of
issuance, and during the fourth quarter of 2009, we recognized $32,500 in
operating expenses related to these shares, and the remaining $32,500 is
recorded as prepaid expenses as of December 31, 2009.  In accordance with
the terms of the agreement, an additional 650,000 shares are issuable on April
1, 2010 to be earned in equal monthly installments over the next six-month term
of the agreement, and on April 1, 2010, we issued those shares, plus an
additional 200,000 shares as a bonus for performance under the contract.
 The 200,000 shares were fully vested on the date of issuance (See Note 9,
Subsequent Events).  On October 9, 2009, we issued
1,000,000 units at $0.025 per unit for gross proceeds of $25,000, with each unit
comprised of one share of our common stock and a two-year warrant to purchase
two shares of our common stock at $0.10 per share.  The warrants were
immediately exercisable.  We evaluated the warrants and determined that the
warrants do not contain any provisions equivalent to net-cash settlement
provisions, and accordingly are accounted for as equity.  The relative fair
value of the common stock was determined to be $10,000 and the relative fair
value of the warrants was determined to be $15,000 based on the relative fair
value allocation of the proceeds received.  In November 2009, we issued 340,000
shares of our common stock to vendors in settlement of accounts payable in the
aggregate amount of $46,000.  In 2009, we issued 5,000 shares of our
common stock to a consultant for recruiting services provided.  The fair
value of the shares of $1,000 was recorded to operating expenses in the fourth
quarter of 2009.  An additional 20,000 shares are issuable to the
consultant for future services pursuant to the terms of the contract, none of
which were issuable as of December 31, 2009.  In 2009, we issued 100,000
shares of our common stock to a consultant for consulting services provided.
 The fair value of the shares of $20,000 was recorded to operating expenses
in the fourth quarter of 2009.  An additional 100,000 shares are issuable
to the consultant for future services pursuant to the terms of the contract,
none of which were issuable as of December 31, 2009.  In the fourth quarter
2009, 190,000 shares of our common stock were issued or issuable to consultants
for services provided.  The aggregate fair value of the shares of $9,500
based on the closing price of our common stock on December 31, 2009 was recorded
to operating expenses in the fourth quarter of 2009.  An additional 205,000
shares of our common stock are issuable to the consultants for future services
to be provided pursuant to the terms of the contracts, none of which had yet
been earned as of December 31, 2009.  In the fourth quarter 2009, we issued
400,000 shares of our common stock for future software development services
valued at $100,000 based on the closing market price on the date of issuance of
the shares, pursuant to a three-year contract with Treemo, Inc.  As of
December 31, 2009, none of the software development services had been utilized,
and accordingly these costs are recorded as prepaid expenses in our balance
sheet as of that date. On December
4, 2009, we entered into an agreement with Fuselier Holdings I, Inc.
 (Fuselier Holdings).  Under the terms of the agreement, Fuselier
Holdings will negotiate with vendors on our behalf and settle certain accounts
payable with shares of our common stock.  Fuselier Holdings is authorized
under the agreement to settle accounts payable in incremental amounts up to
$25,000, and negotiate settlement in shares of our common stock at a per share
price determined by averaging the closing price of the previous three (3) full
trading days as reported on the over-the-counter bulletin board (OTCBB)
commencing on the day immediately preceding the day on which our stock is deemed
to be freely tradable upon delivery to Fuselier Holdings (Per Share Price
Calculation).  On December 4, 2009, we also entered into a consulting
agreement with Dr. Jean Fuselier Sr., whereby we will issue





shares of our common stock to
Dr. Fuselier equal to the amount of the accounts payable settled, at a per share
price determined in accordance with the Per Share Price Calculation.  In
connection with these agreements, in December 2009, 382,848 shares of our common
stock were issued or issuable to Dr. Fuselier for services, and 714,286 shares
of our common stock were issued or issuable to Fuselier Holdings in settlement
of accounts payable of $25,000.  In connection with the drafting of these
agreements, we issued an additional 232,258 shares of our common stock to Dr.
Fuselier for legal services in October 2009.   The fair value of the
shares of $24,000 based on the closing price of our common stock on the date of
issuance was recorded to operating expenses in the fourth quarter of 2009.  Stock Incentive Plans  In
May 2009, our board of directors approved the 2009 Employee Stock Incentive Plan
(the 2009 Plan).  Under the 2009 Plan, up to 15,000,000 shares of our
common stock may be issued to directors, employees or consultants pursuant to
share awards or options to purchase our common stock.  We filed a Form S-8
on June 12, 2009 to register the shares of common stock issuable under the 2009
Plan.  At December 31, 2009, options to
purchase up to 11,483,333 shares of our common stock were outstanding and
3,516,667 shares were available for future grants or awards under our Amended
2009 Plan. Non-cash
compensation expense is recognized on a straight-line basis over the applicable
vesting periods of one to five years, based on the fair value on the grant date.
The vesting period is deemed to be the requisite service period.  Certain
option and share awards provide for accelerated vesting if there is a change in
control (as defined in the applicable plan and certain employment agreements we
have with key officers). The fair
value of stock-based option awards was estimated at the date of grant using the
Black-Scholes option valuation model with the following weighted average
assumptions for the periods presented as follows:  Years endedDecember 31,2009


2008Expected
dividend yield

0
%


*Risk
free interest rate

3.34
%


*Expected
stock volatility

162
%


*Expected
option life

6.1 years



*Fair
value of options granted
$
0.09



* * There were no option grants
during the year ended December 31, 2008. Stock
Options Stock options to purchase shares of our common stock are granted
under our existing stock-based incentive plan to certain employees and
consultants, at prices at or above the fair market value on the date of grant. Option
activity was as follows during the year ended December 31, 2009:   Options


WeightedAverageExercisePrice

WeightedAverageRemainingContractualLife

AggregateIntrinsicValue(in thousands)






(in thousands)Outstanding
December 31, 2008




$
Options
granted

11,613



0.09Options
exercised





Options
expired





Options
forfeited

(130)



0.01Options
cancelled





Outstanding
at December 31, 2009

11,483


$
0.07

9.6 years

$
545Exercisable
at December 31, 2009

4,670


$
0.004

9.3 years

$
222  As of
December 31, 2009, we had approximately $400,400 of total unrecognized
compensation cost related to unvested stock options. Total unrecognized
compensation cost will be adjusted for future changes in estimated forfeitures.
We expect to recognize this cost over a weighted average period of approximately
two and one third years.





The intrinsic value of stock options
outstanding and exercisable at December 31, 2009 is based on the $0.05 closing
market price of our common stock on that date, and is calculated by aggregating
the difference between $0.05 and the exercise price of each of the outstanding
vested and unvested stock options which have an exercise price less than $0.05.
The total fair value of options that vested during the year ended December 31,
2009, net of forfeitures, was approximately $485,000.   There were no
options which vested during the year ended December 31, 2008. Non-Employee
Stock Option Grants In June
2009, we issued options under our 2009 Plan to purchase 160,000 shares of our
common stock at an exercise price of $0.13 per share to a consultant engaged in
providing strategic advisory services to our company, of which options 30,000
were vested as of December 31, 2009.  The remaining options were forfeited
by the consultant due to his termination.  The options are exercisable
until December 31, 2010.  During the fourth quarter of 2009, we recorded
expense of approximately $3,800 related to the fair value of the options, which
was determined using the Black-Scholes model using the following assumptions:
 stock price of $0.13 (based on closing price on date of grant), volatility
of 162%, risk free rate of 0.56%, expected term of 1.5 years, dividend yield of
0.0%. In June 2009,
we issued options under our 2009 Plan to purchase 1,000,000 shares of our common
stock at an exercise price of $0.001 to our Chief Development Officer, who is
engaged in software development.  The options vested as follows:  1/3
vested immediately, and the remainder vested monthly over two years beginning
June 1, 2008.  Through December 2009, we recorded expense of approximately
$108,000 related to the fair value of the options, which was determined using
the Black-Scholes model using the following assumptions:  stock price of
$0.13, volatility of 162%, risk free rate of 3.40%, expected term of 5.75 years,
dividend yield of 0.0%.  The options expire on May 15, 2019. In June 2009,
we issued options under our 2009 Plan to purchase 1,000,000 shares of our common
stock at an exercise price of $0.001 to Armada Capital, who is engaged in
providing advisory services to the Company.  The options vested as follows:
 1/3 vested immediately, and the remainder vested monthly over two years
beginning June 1, 2008.  Through December 2009, we recorded expense of
approximately $108,000 related to the fair value of the options, which was
determined using the Black-Scholes model using the following assumptions:
 stock price of $0.13, volatility of 162%, risk free rate of 3.40%,
expected term of 5.75 years, dividend yield of 0.0%.  The options expire on
May 15, 2019. In June 2009,
we issued options under our 2009 Plan to purchase 1,500,000 shares of our common
stock at an exercise price of $0.001 to Brook Lang, who was engaged in providing
management services to the Company and is now the Companys CEO.  The
options vested as follows:  1/3 vested immediately, and the remainder
vested monthly over two years beginning June 1, 2008.  Through December
2009, we recorded expense of approximately $162,000 related to the fair value of
the options, which was determined using the Black-Scholes model using the
following assumptions:  stock price of $0.13, volatility of 162%, risk free
rate of 3.40%, expected term of 5.75 years, dividend yield of 0.0%.  The
options expire on May 15, 2019.    In addition, Mr. Lang was
granted 7,500,000 options under his employment agreement as described in Note
6. In July 2009,
we issued options under our 2009 Plan to purchase 125,000 shares of our common
stock at an exercise price of $0.10 per share to a consultant engaged in
providing financial advisory services to our company, of which options 55,000
vested immediately and the remainder vest in equal monthly installments of
10,000 options through July 2010.  During the fourth quarter of 2009, we
recorded expense of approximately $4,700 related to the fair value of the
options, which was determined using the Black-Scholes model using the following
assumptions:  stock price of $0.10, volatility of 162%, risk free rate of
3.01%, expected term of three years, dividend yield of 0.0%.   The
options expire on July 21, 2014. In July 2009,
we issued options under our 2009 Plan to purchase 185,000 shares of our common
stock at an exercise price of $0.13 per share to a consultant engaged in
providing strategic advisory services to our company, of which options 65,000
were vested as of December 31, 2009 and the remainder vest in monthly
installments of up to 15,000 options through August 2010 pursuant to the terms
of the advisory services contract.  During the fourth quarter of 2009, we
recorded expense of approximately $8,400 related to the fair value of the
options, which was determined using the Black-Scholes model using the following
assumptions:  stock price of $0.13 (based on closing price on date of
grant), volatility of 162%, risk free rate of 1.54%, expected term of three
years, dividend yield of 0.0%.   The options expire on July 24,
2014. In August
2009, we issued options under our 2009 Plan to purchase 83,333 shares of our
common stock at an exercise price of $0.01 per share to a consultant engaged in
providing strategic advisory services to our company, which options vest
according to performance under the terms of the consulting agreement.  As
the options were immediately vested on the date of grant, we recorded expense of
approximately $12,500 during the fourth quarter of 2009 related to the fair
value of the options, which was determined using the Black-Scholes model using
the following assumptions:  stock price of $0.15, volatility of 162%, risk
free rate of 1.78%, expected term of three years, dividend yield of 0.0%.
  The options expire on August 15, 2014.





In August
2009, we issued options under our 2009 Plan to purchase 60,000 shares of our
common stock at an exercise price of $0.01 per share to a consultant engaged in
providing strategic advisory services to our company, of which options 20,000
vested immediately and the remainder vest in equal monthly installments of 5,000
options through August 2010 pursuant to the terms of the advisory services
contract.  During the fourth quarter of 2009, we recorded expense of
approximately $2,100 related to the fair value of the options, which was
determined using the Black-Scholes model using the following assumptions:
 stock price of $0.11, volatility of 162%, risk free rate of 1.78%,
expected term of three years, dividend yield of 0.0%.   The options
expire on August 10, 2014. In January 2010, we issued options,
pursuant to terms of a consulting agreement for software design services, to a
consultant to purchase 55,000 shares of our common stock at an exercise price of
$0.05 per share, of which options 10,000 vested immediately and the remainder
vest in equal monthly installments of 5,000 options through September 2010
pursuant to the terms of the software design services contract (See Note 9,
Subsequent Events).  Warrants  On January 26,
2009, we entered into an agreement with Newport Capital for broker relations
services. Under the terms of the agreement, we issued a warrant to purchase
100,000 shares of our common stock at an exercise price of $0.80 and a warrant
to purchase 100,000 shares of our common stock at an exercise price of $1.00,
exercisable for two years.  The warrants vested immediately.  The
warrants were recorded as expense in 2009 at their fair value of approximately
$26,800, which was determined using the Black-Scholes model using the following
assumptions:  stock price of $0.20 (based on recent stock sales),
volatility of 162%, risk free rate of 0.47%, expected term of two years,
dividend yield of 0.0%. We evaluated the warrants and determined that the
warrants do not contain any provisions equivalent to net-cash settlement
provisions, and accordingly are accounted for as equity.  As noted above, on October 9, 2009, we
issued 1,000,000 units at $0.025 per unit for gross proceeds of $25,000, with
each unit comprised of one share of our common stock and a two-year warrant to
purchase two shares (2,000,000 total) of our common stock at $0.10 per share.
 The warrants were immediately exercisable.  We evaluated the warrants
and determined that the warrants do not contain any provisions equivalent to
net-cash settlement provisions, and accordingly are accounted for as equity.   The following
summarizes warrant activity during the year ended December 31, 2009 (in
thousands):  Warrants
outstanding, December 31, 2008


Warrants
issued


2,200Warrants
exercised


Warrants
expired


Warrants
outstanding, December 31, 2009


2,200Weighted
average exercise price, December 31, 2009

$
0.17  Note 6.   Related Party
Transactions  In June 2009, we entered into an
employment agreement with our CEO, pursuant to which, among other things, the
CEO will be entitled to annual base compensation at up to $196,000, an annual
bonus of up to 50% of base compensation (with actual amount to be determined by
our board of directors) and a grant of options to purchase 7,500,000 shares of
our common stock.  Pursuant to the employment contract, we are also
required to issue the CEO additional options to purchase shares of our common
stock over a three-year period to maintain the executives percentage ownership
in our common stock on a fully diluted basis at 10% of the Company.  Prior to his employment agreement, we
recorded management fees totaling $219,923 to the CEO for his services rendered
during the year ended December 31, 2008.  At December 31, 2009 and 2008,
approximately $302,000 and $94,000, which represented amounts due to our CEO
were included in accounts payable - related parties on the accompanying balance
sheet.  On June 15, 2009, we issued options
under the 2009 Plan to purchase 1,500,000 shares of our common stock to our CEO
outside of his employment agreement.  Options to purchase 1,000,000 shares
of our common stock were immediately vested as of the date of grant.  The
remainder vests in monthly installments of 41,667 through June 2010.  The
options have a term of ten years.  On December 31, 2009, we issued options
under the 2009 Plan to purchase 7,500,000 shares of our common stock at an
exercise price of $0.001 per share to our CEO pursuant to his employment
agreement.  The options vest in 1/60 monthly installments beginning January
1, 2009, over a period of five years.  The options have a term of ten
years. We recorded
software development costs totaling $165,469 for software development services
provided by a company owned by our Chief Development Officer (CDO) for the
year ended December 31, 2008.  On May 19, 2009, we issued 1,333,333 shares
of our common stock to our Chief Development Officer for reduction of accounts
payable of $100,000.  The shares when issued had an estimated fair value of
approximately $173,300 based on the closing market prices on the issue dates,
and as a result, we recorded additional expense of approximately $73,300 in the
second quarter of 2009.  As discussed in Note 5, above, in June 2009, we
issued





options under our 2009 Plan to
purchase 1,000,000 shares of our common stock at an exercise price of $0.001 to
our CDO, who is engaged in software development.  The options vested as
follows:  1/3 vested immediately, and the remainder vested monthly over two
years beginning June 1, 2008.  Through December 2009, we recorded expense
of approximately $108,000 related to the fair value of the options. The options
expire on May 15, 2019.  At December 31, 2009 and 2008, approximately
$42,000 and $165,000, which represented amounts due to our CDO, were included in
accounts payable  related parties on the accompanying balance sheet. A stockholder has made non-interest
bearing advances to us that are payable on demand.  Interest expense on
these loans has been imputed at 6%, and $848 and $856 was charged to interest
expense and credited to additional paid in capital for the years ended December
31, 2009 and 2008, respectively.  In September 2008 we entered into a
promissory note with a stockholder in the principal amount of $25,000 with a
stated interest rate of 12%.  We are provided office space in
Bellevue, Washington at no cost by our Chief Development Officer on a
month-to-month basis.  Note 7.  Income
Taxes Deferred income tax assets and related valuation
allowances are as follows as of December 31 (in thousands): Deferred tax assets:



2009


2008Net operating loss
carryforwards


$
652

$
362Other



361


-1,013


362Valuation allowance



(1,013)


(362)Deferred
tax assets, net of allowance



-

$
-  The difference
between taxes computed by applying the U.S. federal corporate tax rate of 34%
and the actual income tax provisions in 2009 and 2008 is primarily the result of
establishing a valuation allowance on the deferred tax assets. The valuation
allowance increased approximately 651,000 and $145,000 during 2009 and 2008,
respectively. At December 31, 2009, we had a net operating loss
carryforwards for federal income tax reporting purposes of approximately $1.9
million, which are available to offset future taxable income, and expire
beginning in 2029 if not otherwise utilized. Our ability to use such net
operating losses is dependent on future taxable income and could be subject to
an annual limitation due to change of control provisions under Sections 382 and
383 of the Internal Revenue Code. Note 8.  Commitments and
Contingencies  Acxiom Corporation  In
February 2010, we entered into a database license agreement with Acxiom
Corporation under which we will license their InfoBase-X telephone directories
commencing February 5, 2010 for an initial term of six months (Initial Term).
 Unless terminated, the license term automatically extends to a period of
one year (First One Year Term), and will continue to automatically renew for
successive one-year terms (Renewal Term) unless terminated by either party
upon 30 days notice or for cause as defined in the agreement.  In
consideration of the license grant, we will pay no fees for the Initial Term,
and will pay annual minimum fees of $30,000 for the First One Year Term and any
Renewal Term, payable monthly at a rate of $2,500 per month, plus certain
additional per-click volume-based fees, based upon the following schedule:  Volume-Based FeesUp to 2,500,000
$
-2,500,001  5,000,000

0.0105,000,001  7,500,000

0.0087,500,001  unlimited

-





infoUSA, Inc. In April
2009, we entered into a three-year database license agreement with infoUSA, Inc.
under which we licensed their Yellow Pages database commencing April 15, 2009.
In consideration of the license grant, we will pay the greater of royalties
calculated at $0.15 per user per month or calculated based on transaction
volume, or annual minimum license fees of $100,000 for the first year and
$125,000 for the second year of the agreement and thereafter.  The
agreement automatically renews for an additional two year term unless terminated
upon 60-day notice by either party.  Minimum fees under this agreement
totaled $67,000 through December 31, 2009.  The remaining first year fees
of $33,000 were due as of March 31, 2010.  The second year fees of $125,000
are payable in equal monthly installments of approximately $10,400 beginning
April 15, 2010. Note 9  Subsequent
Events  In January 2010, 654,450 shares of our
common stock were issued or issuable to Dr. Fuselier for services valued at
$25,000 under the contract as previously discussed in Note 5, and 797,658 shares
of our common stock were issued or issuable to Fuselier Holdings in settlement
of accounts payable totaling $25,000.  In April 2010, we entered into a
nine-month agreement with Radius Consulting for investor relations services.
 Pursuant to the terms of the agreement, we will issue Radius Consulting
500,000 shares of our common stock, with 300,000 shares of our common stock
issuable upon signing of the agreement and an additional 200,000 shares issuable
as of June 30, 2010.  In January 2010, we issued options,
pursuant to terms of a consulting agreement for software design services, to a
consultant to purchase 55,000 shares of our common stock at an exercise price of
$0.05 per share, of which options 10,000 vested immediately and the remainder
vest in equal monthly installments of 5,000 options through September 2010
pursuant to the terms of the software design services contract.  In February 2010, 1,250,000 shares of
our common stock were issued or issuable to Dr. Fuselier for services valued at
$25,000 under the contract as previously discussed in Note 5, and 1,250,000
shares of our common stock were issued or issuable to Fuselier Holdings in
settlement of accounts payable totaling $25,000.  In February 2010, we issued 133,333
shares of our common stock for legal services.  In February 2010, we entered into a
one-year agreement with Moxie Ventures, Inc. for business development services.
 Pursuant to the terms of the agreement, we will issue Moxie Ventures, Inc.
$5,000 in shares of our company stock on a monthly basis, as determined by
dividing $5,000 by the closing price of our common stock as of the first five
trading days of each month, up to a maximum of 20,000 shares per month.  In
addition, under the terms of the agreement, we will pay them certain cash
success fees upon capital raising activities.  On March 8, 2010,
we entered into a promissory note with Loren Pace for $6,000 at a stated
interest rate of 8% per annum, payable upon demand by the holder. On March 8,
2010, in accordance with the terms of the promissory note, we issued 100,000
shares of our common stock to Mr. Pace as loan fees under the terms of the
promissory note.  In addition, we entered into an advisory services
agreement with Mr. Pace, pursuant to which we will issue him 150,000 shares of
our common stock over a period of 12 months for services rendered under the
agreement.  In March 2010, we
entered into an agreement with Curing Capital Inc. for capital raising services.
 Under the terms of the agreement, we issued Curing Capital 150,000 shares
of our common stock upon signing.  Of the 150,000 shares, 75,000 are
refundable in May 2010 if Curing Capital does not perform under the contract.
 An additional 650,000 shares are issuable on a performance basis pursuant
to the terms of the contract.  In any event, if Curing Capital secures
financing for the Company of $1,000,000 or more, all 800,000 shares become
immediately earned and issuable.  Curing Capital is also entitled to a 10%
cash fee and 5% warrant coverage on qualified financings, such warrants to be
two-year warrants with exercise price at 10% above the price of the qualified
financing and be provided piggyback registration rights.  On March 19, 2010, we issued 1,000,000
shares of our common stock for cash at $0.10 per share for gross proceeds of
$10,000.  On March 22, 2010, we issued 500,000 shares of our common stock
for cash at $0.10 per share for gross proceeds of $5,000.  On March 25,
2010, we issued 1,000,000 shares of our common stock for cash at $0.10 per share
for gross proceeds of $10,000.  On March 29, 2010, we issued 600,000 shares
of our common stock for cash at $0.025 per share for gross proceeds of $15,000.  As of March 31, 2010, an additional
75,000 shares of our common stock were issuable pursuant to the terms of certain
consulting contracts as previously discussed in Note 5.  In addition,
options to purchase 691,360 shares of our common stock at an exercise price
$0.001 (par value) were granted pursuant to our CEOs employment contract as of
March 31, 2010.  The options were fully vested on the date of grant.  On April 1, 2010, 650,000 shares were
issuable pursuant to the terms of our contract with Openbridge, as previously
discussed





in Note 5, above, to be earned in equal monthly
installments over the next six-month term of the agreement.  In addition to
the 650,000 shares, which were issuable under the contract as of April 1, 2010,
we issued an additional 200,000 shares as a bonus for performance under the
contract.  The 200,000 shares were fully vested on the date of
issuance.





ITEM 9.  CHANGES
IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE  Malone &
Bailey, PC, served as the independent public accountants from February 15, 2005,
through the fiscal quarter ended September 30, 2009.  As previously
reported in our Current Report on Form 8-K dated April 9, 2010, Peterson
Sullivan LLP replaced Malone & Bailey, PC, as our independent public
accountants and audited our financial statements for the fiscal year ended
December 31, 2009.  During the years ended December 31, 2009 and 2008, and
through April 9, 2010 (the date of appointment), the Company did not consult
Peterson Sullivan LLP with respect to the application of accounting principles
to a specified transaction, either completed or proposed, or the type of audit
opinion that might be rendered on the Companys Financial Statements, or any
other matters or reportable events as defined in Item 304(a)(2)(i) and (ii) of
Regulation S-K.       ITEM 9A(T).  CONTROLS AND
PROCEDURES  (a)  Disclosure Controls and
Procedures.  As of the end of the period covered by this Annual Report on
Form 10-K, we carried out an evaluation, under the supervision and with the
participation of senior management, including Mr. Brook W. Lang, our Chief
Executive Officer (CEO) and Chief Financial Officer (CFO), of the
effectiveness of the design and operation of our disclosure controls and
procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the
Securities Exchange Act of 1934, as amended (the Exchange Act).  Based
upon that evaluation, our CEO/CFO concluded that our disclosure controls and
procedures were not effective in recording, processing, summarizing and
reporting, on a timely basis, information required to be disclosed by us in the
reports that we file or submit under the Exchange Act.  A discussion of the
material weaknesses in our controls and procedures is described below.  (b)  Internal Control over Financial Reporting.
 There have been no changes in our internal controls over financial
reporting or in other factors during the fourth fiscal quarter ended December
31, 2009, that materially affected, or are reasonably likely to materially
affect, our internal control over financial reporting subsequent to the date we
carried out our most recent evaluation.  (c)  Management Report on Internal Control.
 Management is responsible for establishing and maintaining adequate
internal control over financial reporting.  Internal control over financial
reporting, as such term is defined in Rules 13a-15(f) and 15d-15(f) under the
Exchange Act, is a process designed by, or under the supervision of, our
CEO/CFO, or persons performing similar functions, and effected by our board of
directors, management and other personnel, to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with generally accepted
accounting principles.  Our management, with the participation of our
CEO/CFO, has established and maintained policies and procedures designed to
maintain the adequacy of our internal control over financial reporting, and
include those policies and procedures that:  · pertain to the maintenance of records that in
reasonable detail accurately and fairly reflect the transactions and
dispositions of our assets;  · provide reasonable assurance that transactions
are recorded as necessary to permit preparation of financial statements in
accordance with generally accepted accounting principles, and that our receipts
and expenditures are being made only in accordance with authorizations of our
management and directors; and  · provide reasonable assurance regarding
prevention or timely detection of unauthorized acquisition, use or disposition
of our assets that could have a material effect on the financial statements.  Management has used the framework set
forth in the report entitledInternal Control  Integrated
Framework published by the Committee of Sponsoring Organizations (COSO) of
the Treadway Commission to evaluate the effectiveness of our internal control
over financial reporting.  As a result of the material weaknesses described
below, management has concluded that our internal control over financial
reporting was not effective as of December 31, 2009.  Managements Assessment  Management has determined that, as of the December 31,
2009, evaluation date, there were deficiencies in both the design and the
effectiveness of our internal control over financial reporting.  Management
has assessed these deficiencies and determined that there were various material
weaknesses in our internal control over financial reporting.  As a result
of our assessment that material weaknesses in our internal control over
financial reporting existed as of December 31, 2009, management has concluded
that our internal control over financial reporting was not effective as of
December 31, 2009.  The existence of a material weakness or  38





weaknesses is an indication that there is a more than
remote likelihood that a material misstatement of our financial statements will
not be prevented or detected in a future period.  Management has assigned a high priority to the short- and
long-term improvement of our internal control over financial reporting.  We
have listed below the nature of the material weaknesses we have identified, the
steps we are taking to remediate these material weaknesses and when we expect to
have the material weaknesses remediated.  Inadequate entity-level
controls.  As of December 31, 2009, we did not have
effective entity level controls with respect to our overall control environment
and monitoring efforts as defined in the COSO framework.  The pervasive
nature of the material weaknesses in our internal control over financial
reporting in itself constitutes a material weakness.  We failed to
systematically communicate company-wide policies and procedures and to uniformly
and consistently communicate the importance of controls.  We also had
failed to implement processes to ensure periodic monitoring of our internal
control activities.  As a result, management concluded that there are
deficiencies in the design and execution of our entity-level controls that
constitute a material weakness in our internal control over financial reporting
and errors in our financial statements that have not been prevented by our
entity level controls could occur.  · Remediation.
 In April 2010, we retained independent public accounting consultants to
advise our company on improving internal controls and procedures.  In
addition, we recently retained new legal counsel to advice on disclosure
requirements and new independent registered public accountants to audit our
financial statements.  Under the guidance of our CEO and new legal and
financial advisors, we began to implement new controls and procedures designed
to ensure that company-wide policies and procedures are systematically
communicated and that documentation evidencing employees receipt thereof is
retained.  In the second quarter of 2010, we also began developing an
ongoing monitoring system to facilitate continuous monitoring of our internal
control over financial reporting. · Timing.
 We are continuing to remediate these deficiencies and anticipate
completing our remediation efforts during the third quarter 2010. Deficiencies pertaining to
inadequate segregation of duties consistent with control objectives.
 The lack of segregation of duties among management resulted in
deficiencies in our financial reporting.  · Remediation.
 We recently hired a new CEO and retained independent public accounting
consultants to assist the company in meeting its control objects. · Timing.
We are continuing to remediate these deficiencies and anticipate completing our
remediation efforts during the third quarter 2010. Deficiencies
pertaining to insufficiently skilled personnel and a lack of human resources
within our finance and accounting reporting functions.  The
lack of appropriately skilled personnel could result in material misstatements
to financial statements not being detected in a timely manner. · Remediation.
 As discussed above, we retained independent public accounting consultants
to assist our finance and accounting reporting functions. · Timing.
 We are continuing to remediate these deficiencies and anticipate
completing our remediation efforts during the third quarter 2010. Insufficient
oversight of financially significant processes and systems, including
deficiencies relating to monitoring and oversight of the work performed by our
finance and accounting personnel.  Due primarily to the lack
of human resources in our accounting and finance department during 2008 and
2009, we noted deficiencies related to insufficient review and approval and
documentation of the review and approval of the work being performed by
employees within our accounting and finance department relating to the following
matters: · All journal entries;  · Periodic reconciliations of sub
ledgers, balance sheet and income statement accounts;  · Accrual of
expenses;  39





· Documents
supporting the monthly, quarterly and annual general ledger closing process;
and · Periodic
financial reporting. As a result, we do not have
sufficient internal control over financial reporting to ensure underlying
transactions are being appropriately and timely accounted for, which could lead
to material misstatements in the financial statements not being detected in a
timely manner. · Remediation.
 As discussed above, we retained independent public accounting consultants
to assist our finance and accounting reporting functions. · Timing.
 We are continuing to remediate these deficiencies and anticipate
completing our remediation efforts during the third quarter 2010. Deficiencies relating to
insufficient analysis, documentation and review of the selection and application
of generally accepted accounting principles, or GAAP, to significant non-routine
transactions, including the preparation of financial statement disclosures
relating thereto.  We did not have appropriate personnel in
place at December 31, 2009, to review and document the application of GAAP to
significant non-routine transactions, including the preparation of related
financial statement disclosures.  As a result, we do not have sufficient
internal control over financial reporting to ensure that underlying non-routine
transactions are appropriately and timely accounted for in the general
ledger.  · Remediation.
 As discussed above, we retained independent public accounting consultants
to assist our finance and accounting reporting functions. · Timing.
 We are continuing to remediate these deficiencies and anticipate
completing our remediation efforts during the third quarter 2010. Inability
to demonstrate through testing that our internal control over financial
reporting was effective as of December 31, 2009.  We were
unable to demonstrate through testing the effectiveness of our remediation
efforts with respect to the material weaknesses described above.  Our
processes with respect to quarterly and annual controls, such as our control
processes relating to general ledger close procedures and periodic financial
reporting, were not implemented as of the year ended December 31, 2009. · Remediation.
 We have dedicated significant internal and external resources to our
remediation efforts with respect to material weaknesses in our internal control
over financial reporting as noted above.  We expect to have a sufficient
sampling base to enable us to test the effectiveness of our remediation efforts
at future measurement dates and testing periods for our internal control over
financial reporting. · Timing.
 Due to lack of financial resources, management was unable to fully
implement its remediation efforts nor test the effectiveness of our remediation
efforts with respect to the remediation efforts described above.  We expect
to complete the testing of effectiveness in 2010. The steps described above, including
the hiring of additional qualified accounting and finance personnel, are
designed to ensure that managements evaluation of our internal control over
financial reporting is thorough and complete and that a timely and appropriate
remediation plan is implemented.  The effectiveness of the steps we have
taken to date and the steps we are still in the process of completing is subject
to continued management review, as well the oversight of our board of directors,
and we may make additional changes to our internal controls and procedures.
 Although we have undertaken the foregoing initiatives, in the future we
may identify further material weaknesses or significant deficiencies in our
internal control over financial reporting that have not previously been
identified.  Management estimates that we will
incur additional costs in connection with our remediation efforts including
outside advisor fees and incremental personnel costs.  Management estimates
that these costs will aggregate approximately $25,000 for the year ended
December 31, 2010.  There were no changes in our disclosure controls and
procedures, including our internal control over financial reporting, during the
quarter ended December 31, 2009, that had materially affected, or are
reasonably likely to materially affect, our disclosure controls and procedures,
including our internal control over financial reporting.   40





This annual report does not include an attestation report
of our registered public accounting firm regarding internal control over
financial reporting.  Managements report was not subject to attestation by
our registered public accounting firm pursuant to temporary rules of the
Securities and Exchange Commission that permit us to provide only managements
report in this annual report.   ITEM 9B.  OTHER INFORMATION  None.   Part III     ITEM
10.  DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE  The following
table sets forth the names and ages as of March 31, 2010, of each of our
executive officers and directors:   Name

Age

Positions and OfficesBrook W. Lang

45

Chief Executive Officer of the Company since May
19, 2008, director since April 22, 2009Brian Conte

49

Chief Development Officer of the Company since May
2008  Set forth
below is biographical information concerning our executive officers and
directors.  Brook W. Lang has served
as our chief executive officer since May 8, 2008.  Mr. Lang is a seasoned
executive with over 20 years of experience in sales and marketing, financial
management, operations, and product development capacities in high tech
industries. In several executive, senior executive, sales and business
development, advisory, board and board advisory roles, Mr. Lang has conducted
business domestically in the U.S. and internationally in Europe and Asia
building company relationships and working with industry, trade and standards -
setting organizations.  In 2002, Mr. Lang worked for T-Mobile, a leading
provider of wireless telecommunications services.  In his position, he was
directly responsible for $800 million in yearly acquisition revenue and
co-managed a field sales-force of over 400 salespeople.  Prior to joining
T-Mobile, in 1998, Mr. Lang founded and served as CEO of Infomove, and their
spin-out division Biospin, a leading wireless technology company, growing the
company from the intellectual property development phase to securing funding
through to successful product launch.  In 2003, Mr. Lang worked through a
company called L & S on several executive projects in the wireless industry,
helping launch products and services to the wireless market in hardware,
services, content, games, retail, distribution and enterprise markets.  In
December of 2004, as part of these projects, Mr. Lang was actively recruited,
together with some of his own intellectual property, to help lead Montavo, Inc.,
a wireless Location Based Services (LBS) mobile application company focused on
the mobile search and advertising market.  Mr. Lang works closely with the
technology team to develop and evolve the technologies and is responsible for
marketing, distribution and branding for our applications, targeting national
and regional brand advertisers and small to medium sized local advertisers.
 Mr. Lang is also responsible for development of relationships with mobile
software aggregators and global wireless carriers, to offer private labeled
solutions and other mobile marketing solutions.   Mr. Lang holds a
Bachelors degree in Business Administration from the University of
Washington.  Brian Conte has served
as our chief development officer since May 8, 2008.  Mr. Conte manages the
development and technological aspects of our mobile applications and solutions.
 He founded Fast Track Development in 1999 and has over 15 years of
entrepreneurial experience and technology expertise. Mr. Conte was among the
early employees of Microsoft, being the 225th employee hired, and
managed the development of Microsoft's first browser in 1985 and later founded
hDC/Express Systems, the first Windows software company.  Mr. Conte ran
hDC, later named Express Systems, for 10 years before selling it to WRQ Inc. in
1996, where he remained as CTO until 1999.  Mr. Conte spearheaded the
development of one of WRQ's most successful products, Express 2000, which
generated more than $10 million in its first year.   In 2002, Mr.
Conte launched a development company with an office in India which currently has
35+ employees, specializing in Microsoft.NET Development for desktop and mobile
platforms.  Mr. Conte designed and developed Fast Tracks Home Automation
product line, which won Electronic Houses 2006 Best Home of the Year award in
its debut year and was featured on the Discovery Channel.  Mr. Conte holds
a BSE in Electrical Engineering and Computer Science from Princeton
University.  41





**Composition of
Board of Directors**  Our bylaws authorize no less than one
(1) and no more than thirteen (13) directors.  We currently have one (1)
director on our board of directors (the Board):  Brook W. Lang.  Term of Office  Our directors are appointed for a
one-year term to hold office until the next annual general meeting of our
shareholders or until removed from office in accordance with our
bylaws.  Our officers are appointed by the Board and hold office until
removed by the Board.  Family Relationships  None.  Director or Officer Involvement in Certain Legal
Proceedings  Except as otherwise indicated below,
to the best of our knowledge, our directors and executive officers were not
involved in any legal proceedings as described in Item 401(f) of Regulation S-K.  One of our officers, Mr. Lang, backed
funds that were to be paid to him by a partner company of ComRoad AG.
 Comroad AG failed, and as such, he was required in 2002 to file a planned
restructure bankruptcy.We are not
aware of any proceedings to which any of our officers or directors, or any
associate of any such officers or directors, is a party adverse to the
Registrant, the Company or any of our subsidiaries or has a material interest
adverse to us.  Section 16(a) Beneficial Ownership Reporting
Compliance  Our officers,
directors and shareholders owning greater than ten percent (10%) of our shares
are not required to file beneficial ownership reports pursuant to Section 16(a)
of the Securities and Exchange Act (the Exchange Act) because we do not have a
class of securities registered under Section 12 of the Exchange Act.  Committees of the Board  We do not currently have a
separately-designated nominating or compensation committee.  Due to the
size of our company and the size of the Board, our Board performs the functions
of these committees.  Audit Committee  We do not have a separately-designated
audit committee.  The entire Board performs the functions of an audit
committee, but no written charter governs the actions of the Board when
performing the functions of what would generally be performed by an audit
committee.  The Board approves the selection of our independent accountants
and meets and interacts with the independent accountants to discuss issues
related to financial reporting. In addition, the Board reviews the scope and
results of the audit with the independent accountants, reviews with management
and the independent accountants our annual operating results, considers the
adequacy of our internal accounting procedures and considers other auditing and
accounting matters including fees to be paid to the independent auditor and the
performance of the independent auditor.  Summary Compensation  The following Summary Compensation
Table sets forth certain information concerning the compensation of (ii) our
Chief Executive Officer/Chief Financial Officer, (ii) our other two most highly
compensated executive officers, and (iii) other personnel required to be
disclosed by this Item whose compensation exceeds $100,000, for each of the
years ended December 31, 2009 and 2008 (collectively, our named executive
officers).  SUMMARY
COMPENSATION TABLEName
and
principal
position
Year
Salary
($)
Bonus
($)
Stock Awards
($)
Option
Awards
($)
Non-Equity
Incentive Plan
Compensation
($)
Nonqualified
Deferred
Compensation
Earnings ($)
All
Other
Compensation
($)
Total
($)  42





Brook W.
Lang(1)
Chief Executive
Officer and Director
2009
2008
0
0
0
0
0
0
236,900(2)
0
0
0
0
0
323,400 (3)
220,000 (3)
560,300
220,000Brian
Conte(4)
Chief
Development Officer
2009
2008
0
0
0
0
0
0
108,000(5)
0
0
0
0
0
0
0
108,000
0    (1) On May 8, 2008, Brook W. Lang was
appointed CEO and he was appointed to the Board of Directors on April 22,
2009. (2) Amount is the result of options to
purchase 1,500,000 shares of our common stock at an exercise price of $0.001 per
share outside of his employment agreement.  Options to purchase 1,000,000
shares of our common stock were immediately vested as of the date of grant.
 The remainder vests in monthly installments of 41,667 through June 2010.
 The options have a term of ten years.  On December 31, 2009, we
issued options under the 2009 Plan to purchase 7,500,000 shares of our common
stock at an exercise price of $0.001 per share to our CEO pursuant to his
employment agreement.  The options vest in 1/60 monthly installments
beginning January 1, 2009, over a period of five years.  The options have a
term of ten years.See Note
3 to Notes to Financial Statements for a description regarding the valuation
methodology of stock based awards. (3) The company has
retained a company called L & S, from which Mr. Lang receives compensation,
for management services & expenses.  These management services and
expenses incurred totaled approximately $323,000 in 2009 and $220,000 in
2008. (4) Brian Conte was appointed Chief
Development Officer in May 2008.  Mr. Conte is compensated as a
consultant. (5) Amount is the result of options to
purchase 1,000,000 shares of our common stock at an exercise price of $0.001 per
share. Options to purchase 333,333 shares of our common stock were immediately
vested as of the date of grant.  The remainder vests in monthly
installments through beginning June 1, 2008 through June 2010.  The options
have a term of ten years.  Narrative Disclosure to the Summary Compensation
Table  Brook W. Lang Employment Agreement  In June 2009, we entered into an
employment agreement (the Lang Agreement) with our CEO, pursuant to which,
among other things, the CEO will be entitled to annual base compensation at up
to $196,000, an annual bonus of up to 50% of base compensation (with actual
amount to be determined by our board of directors) and a grant of options to
purchase 7,500,000 shares of our common stock.  Pursuant to the employment
contract, we are also required to issue the CEO additional options to purchase
shares of our common stock over a three-year period to maintain the executives
percentage ownership in the companys common stock on a fully diluted basis at
10% of the Company.  On December 31, 2009, we issued
options under the 2009 Plan to purchase, over a five-year period, a total of
7,500,000 shares of our common stock at an exercise price of $0.001 per share to
our CEO pursuant to his employment agreement.  The options vest in 1/60
monthly installments beginning January 1, 2009, over a period of five years.
 The options have a term of ten years.  In the event that Mr. Langs
employment is terminated without cause or Mr. Lang chooses to terminate his
employment for good reason or upon a change of control, all options granted to
Mr. Lang pursuant to the Lang Agreement shall be fully vested and exercisable
upon such termination at a price of nil and shall remain exercisable in
accordance with the grant agreements.  In the event that Mr. Langs
employment is terminated by Mr. Lang for good reason or for any reason by the
Company other than cause, death or disability, Mr. Lang will receive an amount
equal to two years of his specified base salary and all other bonuses and
compensation at the rate in effect on the date of termination  Regardless of the nature of his
separation from the company, Mr. Lang will also receive salary, a pro-rated
amount of incentive cash compensation for the fiscal year in which the
termination occurs, pay for accrued but unused paid time off, and reimbursement
of expenses through the date of termination.   43





Outstanding Equity Awards At Fiscal Year-End  The following table provides
information related to outstanding equity awards for each of the Named Executive
Officers as of December 31, 2009:       OUTSTANDING
EQUITY AWARDS AT FISCAL YEAR-ENDOPTION
AWARDS

STOCK
AWARDSName (a)
Number of Securities Underlying Unexercised Options (#)
Exercisable (b)
Number of Securities Underlying Unexercised Options (#)
Unexercisable
(c)
Equity Incentive Plan Awards: Number of Securities Underlying
Unexercised Unearned Options (#)
(d)
Option Exercise Price
(e)
Option Expiration Date
(f)

Number of shares or Units of Stock That Have Not Vested
(#)
(g)
Market Value of Shares or Units of Stock That Have Not Vested
($)
(h)
Equity Incentive Plan Awards:  Number of Unearned
Shares, Units or Other Rights That Have Not Vested (#)
(i)
Equity Incentive Plan Awards:  Market or Payout Value of
Unearned Shares, Units or Other Rights That Have Not Vested ($)
(j)Brook W.
Lang
1,250,000
1,000,000
250,000(1)
6,500,000(2)
0
$0.001
$0.001
5/15/2019
12/31/2019

0
0
0
0Brian
Conte
833,333
166,667(3)
0
$0.001
5/15/2019

0
0
0
0   (1) The options vested as follows:
 1/3 vested immediately, and the remainder vested monthly over two years
beginning June 1, 2008. (2) The options vest in 1/60 monthly
installments beginning January 1, 2009, over a period of five years. (3) The options vested as follows:
 1/3 vested immediately, and the remainder vested monthly over two years
beginning June 1, 2008.    ITEM
12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
STOCKHOLDER MATTERS  The following table sets forth, as of
March 31, 2010, the names, addresses and number of shares of our common stock
beneficially owned by (i) all stockholders known to us to be the beneficial
owner of more than five percent (5%) of our common stock, (ii) each member of
our board of directors, (iii) each of our named executive officers and (iv) all
of our directors and executive officers as a group.  Beneficial ownership of shares is determined under the
rules of the Securities and Exchange Commission and generally includes any
shares over which a person exercises sole or shared voting or investment power.
 For purposes of the following table, a person is deemed to have beneficial
ownership of any shares of common stock that such person has the right to
acquire within 60 days after the date of this prospectus.  For purposes of
computing the percentage of outstanding shares of our common stock held by each
person, any shares that such person has the right to acquire within 60 days
after the date of this prospectus are deemed to be outstanding, but are not
deemed to be outstanding for the purpose of computing the percentage ownership
of any other person.  Except as otherwise noted, the persons named in the
table have sole voting and investment power with respect to all of the shares of
common  44





stock beneficially owned by them.  Unless otherwise
indicated, the address of each person listed is c/o Montavo, Inc., 4957 Lakemont
Blvd, Suite 239, Bellevue, Washington 98006.  Percentage ownership in the following
table is based on 51,681,408 shares of common stock outstanding on March 31,
2010.   PRINCIPAL
STOCKHOLDER TABLE  Title of
class
Name and
address of beneficial owner
Amount and
nature of
beneficial
ownership
Percent of
classCommon
Brook W.
Lang
4,274,693(1)
8.3%Common
Brian
Conte
6,556,695(2)
12.9%All Officers
and Directors as a Group
10,831,388
21.2%  (1) Includes 4,274,693 shares of common
stock issuable upon the exercise of options that vest within 60 days, including
options to purchase 691,360 shares of common stock at an exercise price of
$0.001 which were fully vested on the date of grant, or March 31, 2010.
 Excludes 5,416,667 shares of common stock issuable upon the exercise of
options that do not vest within 60 days.  Mr. Lang does not have voting and
dispositive control over the shares held by Tracie Lang.  (2) Consists of (i) 5,684,473 shares of
common stock held of record and (ii) 972,222 shares of common stock issuable
upon the exercise of options that vest within 60 days.  Excludes 27,778
shares of common stock issuable upon the exercise of options that do not vest
within 60 days.  Securities Authorized for Issuance under Equity
Compensation Plans  In 2005, we adopted the 2005 Stock
Option Plan (the 2005 Plan).  The 2005 Plan provided for the granting of
stock options to employees and consultants for services.  Options granted
under the 2005 Plan may be either incentive stock options or nonqualified stock
options.  Incentive stock options (ISO) may be granted only to employees
(including officers and directors who are also employees).  Nonqualified
stock options (NSO) may be granted to employees and consultants.  We
reserved 1,000,000 shares of common stock for issuance under the 2005 Plan.  In 2009, we adopted the 2009 Stock
Incentive Plan for Employees and Consultants (the 2009 Plan).  The 2009
Plan provided for the granting of stock options to employees and consultants for
services rendered to the Company.  Options granted under the 2009 Plan may
be either incentive stock options or nonqualified stock options.  Incentive
stock options (ISO) may be granted only to employees or consultants (including
officers and directors who are also employees).  Nonqualified stock options
may be granted to employees and consultants.  We reserved 15,000,000 shares
of common stock for issuance under the 2009 Plan.  The following table summarizes the
number of shares of our common stock authorized for issuance under our equity
compensation plans as of December 31, 2009.  Plan
Category
(a)
Number
of
Securities to
be
Issued
Upon
Exercise of
Outstanding
Options
(b)
Weighted-
Average
Exercise
Price
of
Outstanding
Options
(c)
Number
of
Securities
Remaining
Available
for
Future
Issuance
Under
Equity
Compensation
Plans
(excluding
securities
reflected
in
column(a))Equity
compensation plans approved by security holders
11,483,333
$0.07
3,516,667Equity
compensation plans not approved by security holders
-
-
0Total
11,483,333
$0.07
3,516,667     45





ITEM
13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE  Prior to his employment agreement, we
recorded management fees totaling $219,923 to the CEO for his services rendered
during the year ended December 31, 2008.  At December 31, 2009 and 2008,
approximately $302,000 and $76,000, which represented amounts due to our CEO,
were included in accounts payable - related parties on the accompanying balance
sheet. We recorded
software development costs totaling $165,469 for software development services
provided by a company owned by our Chief Development Officer (CDO) for the
year ended December 31, 2008.  On May 19, 2009, we issued 1,333,333 shares
of our common stock to our Chief Development Officer for reduction of accounts
payable of $100,000.  The shares when issued had an estimated fair value of
approximately $173,300 based on the closing market prices on the issue dates,
and as a result, we recorded additional expense of approximately $73,300 in the
second quarter of 2009.  At December 31, 2009 and 2008, approximately
$42,000 and $165,500, which represented amounts due to our CDO, were included in
accounts payable  related parties on the accompanying balance sheet.  A shareholder has made non-interest
bearing advances to the Company that are payable on demand.  Interest
expense on these loans has been imputed at 6%, and $848 and $856 was charged to
interest expense and credited to additional paid in capital for the years ended
December 31, 2009 and 2008, respectively.  In September 2008, we entered into a
convertible promissory note with a shareholder in the principal amount of
$25,000 with a stated interest rate of 12%.  The note is convertible at the
option of the holder into shares of our common stock at $0.50 per share.  We are provided office space in
Seattle, Washington at no cost by our Chief Development Officer on a
month-to-month basis.  Director Compensation  We do not currently provide
compensation to our directors for serving on our board of directors.     ITEM
14.   PRINCIPAL ACCOUNTING FEES AND SERVICES Audit Fees  The aggregate fees billed by our
auditors for professional services rendered in connection with a review of the
financial statements included in our quarterly reports on Form 10-Q and the
audit of our annual consolidated financial statements for the fiscal year ended
December 31, 2009 was approximately $25,000.  The aggregate fees billed by our
auditors for professional services rendered in connection with a review of the
financial statements included in our quarterly reports on Form 10-Q and the
audit of our annual consolidated financial statements for the fiscal year ended
December 31, 2008 was approximately $28,000.  Audit-Related Fees  The aggregate audit related fees
billed by our auditors for professional services rendered in connection with
audit-related fees, including review of Forms 8-K, was approximately $12,000 for
the year ended December 31, 2008.  We were not billed any fees by our
auditors for professional services for audit-related services in the fiscal year
ended December 31, 2009.  Tax Fees  We were not billed any fees by our
auditors for professional services for tax compliance, tax advice, and tax
planning in the fiscal years ended December 31, 2009 and 2008.  All Other Fees  We were not billed any fees by our
auditors for all other non-audit services in the fiscal years ended December 31,
2009 and 2008.    46





PART IV    ITEM
15.  EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.  (a)(1)(2) Financial Statements.  The financial statements listed in the
Index to Financial Statements are filed as part of this Annual Report on Form
10-K, immediately following the signature page.  (a)(3) Exhibits.  The exhibits required by this item are
set forth on the Exhibit Index attached hereto.      3.1
Certificate of Incorporation (filed as Exhibit 3.1
to our registration statement on Form 10-SB filed with the SEC on February
8, 2000 (SEC File No. 000-29397) (the 2000 Form 10-SB) and incorporated
herein by reference).3.1.1
Certificate of Amendment (filed as Exhibit 3.1.1 to
our Current Report on Form 8K filed with the SEC on August 29, 2008, and
incorporated herein by reference).3.2
Bylaws (filed as Exhibit 3.2 to the 2000 Form 10-SB
and incorporated herein by reference).10.1
Employment Agreement with Craig Moody (filed as
Exhibit 10.3 to our Current Report on Form 8K filed with the SEC on
November 14, 2007, and incorporated herein by reference).10.2
Mutual Release Agreement with Craig Moody (filed as
Exhibit 10.2 to our Current Report on Form 8K filed with the SEC on May 9,
2008, and incorporated herein by reference).10.3
Agreement between North Coast Partners, Inc. (now
Montavo, Inc.) and North Coast Acquisition Corp. (filed as Exhibit 10.1 to
our Current Report on Form 8K filed with the SEC on May 9, 2008, and
incorporated herein by reference).10.4
Asset Sale and Assignment Agreement (filed as
Exhibit 10.3 to our Current Report on Form 8k filed with the SEC on August
29, 2008, and incorporated herein by reference).10.5
Convertible Promissory Note dated August 28, 2008
(filed as Exhibit 10.4 to our Current Report on Form 8K filed with the SEC
on August 29, 2008, and incorporated herein by reference).10.6
Investment Agreement dated January 8, 2010 (filed
as Exhibit 10.1 to our Current Report on Form 8K filed with the SEC on
January 19, 2010, and incorporated herein by reference)10.7
Registration Rights Agreement dated January 8, 2010
(filed as Exhibit 10.2 to our Current Report on Form 8K filed with the SEC
on January 19, 2010, and incorporated herein by reference)10.8
Employment Agreement Brook Lang*31.1
Certification of Principal Executive Officer
pursuant to Section 302 of the Sarbanes-Oxley Act*31.2
Certification of Principal Financial Officer
pursuant to Section 302 of the Sarbanes-Oxley Act*32.1
Certification of Principal Executive Officer and
Principal Financial Officer pursuant to Section 906 of the
Sarbanes-Oxley* * Exhibit filed herewith.      47





SIGNATURES  Pursuant to the requirements of Section 13 or 15(d) of
the Securities Exchange Act of 1934, the registrant has duly caused this report
to be signed on its behalf by the undersigned, thereunto duly authorized.          MONTAVO, INC.       April 15,
2010 [montavo10k200941510finalm001.jpg]   Brook W. Lang,
Chief Executive Officer, Principal Accounting Officer   Pursuant to the requirements of the Securities Exchange
Act of 1934, this report has been signed below by the following persons on
behalf of the registrant and in the capacities and on the dates indicated.            April 15,
2010 By:[montavo10k200941510finalm002.jpg]   Name: Brook
Lang   Title: Chief
Executive Officer and Director                Supplemental Information to be Furnished With Reports
Filed Pursuant to Section 15(d) of the Act by Registrants Which Have Not
Registered Securities Pursuant to Section 12 of the Act.  As of the date of filing of this Annual Report on Form
10-K, we have not provided any annual report with respect to our last fiscal
year or any proxy materials to our shareholders.  We intend to provide
proxy materials to our shareholders with respect to our next annual meeting, and
if we do so, we shall concurrently furnish such materials to the Securities and
Exchange Commission.                                               48