UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


WASHINGTON,
D.C. 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





OR


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





For the transition period
fromto





Commission
file number: 000-30949


NuMobile, Inc.


(Exact
name of registrant as specified in its charter)


Nevada
            
            61-1342734(State
      or other jurisdiction of incorporation or organization)
            
            (I.R.S.
      Employer Identification No.)2520
      South Third Street, Suite 206
              Louisville,
      Kentucky
            
            40208(Address
      of principal executive offices)
            
            (Zip
      Code)





Registrant’s
telephone number:(502)
636-2807





Securities
registered pursuant to Section 12(b) of the Act: None


Securities
registered pursuant to Section 12(g) of the Act: Common Stock, par value $0.001 per
share





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 þ





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 þ





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 þNo o





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





Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K (§229.405 of this chapter) is not contained herein, and will
not be contained herein, 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. o





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




Large accelerated
      filer o
            Accelerated filer
      o
            Non-accelerated
      filer o
            Smaller reporting
      company þ




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





At June
30, 2009, the end of our second fiscal quarter, the aggregate market value of
common stock held by non-affiliates of the registrant was approximately $369,000
based on the closing price of $0.02 as reported on the Over-the-Counter Bulletin
Board Market.





Number of
shares of common stock outstanding as of March 25,
2010:  312,955,483.











TABLE
OF CONTENTS


TO
ANNUAL REPORT ON FORM 10-K


FOR
YEAR ENDED DECEMBER 31, 2009





PagePART
      I
            
            
            
            1Item
      1.
            
            Business
            
            1Item
      1A.
            
            Risk
      Factors
            
            6Item
      1B.
            
            Unresolved
      Staff Comments
            
            8Item
      2.
            
            Properties
            
            8Item
      3.
            
            Legal
      Proceedings
            
            8Item
      4.
            
            [Removed
      and Reserved]
            
            8PART
      II
            
            
            
            8Item
      5.
            
            Market
      for Registrant's Common Equity, Related Stockholder Matters and Issuer
      Purchases of Equity Securities
            
            8Item
      6.
            
            Selected
      Financial Data
            
            9Item
      7.
            
            Management's
      Discussion and Analysis of Financial Condition and Results of
      Operations
            
            9Item
      7A.
            
            Quantitative
      and Qualitative Disclosures About Market Risk
            
            11Item
      8.
            
            Financial
      Statements and Supplementary Data
            
            11Item
      9.
            
            Changes
      in and Disagreements With Accountants on Accounting and Financial
      Disclosure
            
            11Item
      9A.
            
            Controls
      and Procedures
            
            11Item
      9B.
            
            Other
      Information
            
            11PART
      III
            
            
            
            11Item
      10.
            
            Directors,
      Executive Officers and Corporate Governance
            
            11Item
      11.
            
            Executive
      Compensation
            
            13Item
      12.
            
            Security
      Ownership of Certain Beneficial Owners and Management and Related
      Stockholder Matters
            
            13Item
      13.
            
            Certain
      Relationships and Related Transactions, and Director
      Independence
            
            14Item
      14.
            
            Principal
      Accounting Fees and Services
            
            14PART
      IV
            
            
            
            15Item
      15.
            
            Exhibits,
      Financial Statement Schedules
            
            15Signatures
            
            
            
            16













i





The
statements contained in this annual report that are not historical facts are
“forward-looking statements” with respect to our financial condition, results of
operations and business, which can be identified by the use of forward-looking
terminology, such as “estimates,” “projects,” “plans,” “believes,” “expects,”
“anticipates,” “intends,” or the negative thereof or other variations thereon,
or by discussions of strategy that involve risks and
uncertainties.  Management wishes to caution the reader of the
forward-looking statements that such statements, which are contained in this
annual report, reflect our current beliefs with respect to future events and
involve known and unknown risks, uncertainties and other factors, including, but
not limited to, economic, competitive, regulatory, technological, key employee,
and general business factors affecting our operations, markets, growth,
services, products, licenses and other factors discussed in our other filings
with the Securities and Exchange Commission ("SEC"), and that these statements
are only estimates or predictions.  No assurances can be given
regarding the achievement of future results, as actual results may differ
materially as a result of risks facing us, and actual events may differ from the
assumptions underlying the statements that have been made regarding anticipated
events.





These
forward-looking statements are subject to numerous assumptions, risks and
uncertainties that may cause our actual results to be materially different from
any future results expressed or implied by us in those statements. Some of these
risks are described in “Risk Factors” in Item 1A of this annual
report.





These
risk factors should be considered in connection with any subsequent written or
oral forward-looking statements that we or persons acting on our behalf may
issue. All written and oral forward-looking statements made in connection with
this annual report that are attributable to us or persons acting on our behalf
are expressly qualified in their entirety by these cautionary
statements.  Given these uncertainties, we caution investors not to
unduly rely on our forward-looking statements. We do not undertake any
obligation to review or confirm analysts’ expectations or estimates or to
release publicly any revisions to any forward-looking statements to reflect
events or circumstances after the date of this document or to reflect the
occurrence of unanticipated events. Further, the information about our
intentions contained in this document is a statement of our intention as of the
date of this document and is based upon, among other things, the existing
regulatory environment, industry conditions, market conditions and prices, the
economy in general and our assumptions as of such date. We may change our
intentions, at any time and without notice, based upon any changes in such
factors, in our assumptions or otherwise.





PART
I





In this
Annual Report on Form 10-K, we will refer to NuMobile, Inc., a Nevada
corporation, and our subsidiaries, Enhance Network Communication, Inc. and
Stonewall Networks, Inc., as "NuMobile," "our company," "we," "us," and "our"
unless the context otherwise requires.





ITEM
1. BUSINESS





GENERAL
INFORMATION




We were
organized under the laws of Nevada on March 25, 1999 as Thoroughbred Interests,
Inc. Effective May 18, 2004, we changed our name to Phoenix Interests, Inc. and
effective July 14, 2009 we changed our name to NuMobile,Inc. In connection with
this latter name change, our stock ticker symbol on the Over-the-Counter
Bulletin Board was changed from “PXIT” to “NUBL.”Our prior business operations
consisted of purchasing, training and selling of thoroughbred horses. We have
recently launched a new business strategy to create a comprehensive and global
mobile computing technology business.




On
September 17, 2009, we acquired 100% of the outstanding capital stock of Enhance
Network Communications, Inc. (“Enhance” or “Enhance Network Communication”).
Enhance is an information technology company headquartered in Cupertino,
California, that has developed a proprietary large enterprise network security
technology designed for managing the information management requirements of
network delivered government services.




On
October 12, 2009, we acquired 100% of the outstanding capital stock of Stonewall
Networks, Inc., a Delaware corporation (“Stonewall” or “Stonewall Networks”).
Stonewall is a development stage information technology security product company
headquartered in Cary, North Carolina.




Our
business address is 2520 South Third Street, Suite 206, Louisville, Kentucky
40208, and our telephone number is (502) 636-2807.




NuMobile,
Inc




NuMobile
currently conducts its operations through its subsidiaries Enhance and
Stonewall. NuMobile’s plan and focus is to strategically acquire corporations
that focus on four major vertical markets. The first of these markets is
applications providing for smart phones and mobile computing trending to cloud
network support and scaling. The second is infrastructure, architect design and
management for wireless and land based networking. The third is the creation of
mobile framework and applications for healthcare services and products. The
fourth and last is providing infrastructure and support to the hospitality and
gaming sectors with emphasis on mobile monitoring of fleet management,
infrastructure security and communication for security detailing. We have no
current arrangements or agreements for any specific acquisitions.




1




Enhance
Network Communication




Enhance
provides a wide variety of services from infrastructure architect to software as
a service supplier. This positions Enhance to continue working with local and
national government to provide service and support to the educational sector
through to commercial usage such as conventions and local business
markets.




Stonewall
Networks




Stonewall
Networks has built the Cornerstone Security Policy
Manager.  Cornerstone, a centralized IT security policy manager, is an
engine for security policy modeling, implementation, monitoring, enforcement,
and auditing.  Product features include consistent security policy
implementation across all (multi-vendor) network security devices, policy
auditing, mobile device security, rapid support of new network security devices,
and rapid threat response.




Principal
products and services and their markets




Enhance
Network Communications




Enhance’s
current and primary vertical market is the education sector, in particular
K-12.




Enhance
provides the following services to this vertical market space:




●
            Voice
      over IP (VOIP)




●
            Network
      Architecting




●
            Network
      Implementation




●
            Network
      Support




●
            Network
      Monitoring




●
            Network
      Management




●
            Software
      as a Service (SaaS)




Stonewall
Networks




Stonewall’s
current and primary vertical markets are:




●
            Wireless




●
            Telecom




●
            Hospitality




●
            Gaming




●
            Health




Stonewall
provides the following products/services to these vertical markets:




●
            Cornerstone
      Security Policy Manager




●
            Device
      Portability




●
            Mobile
      security integration




●
            Architect
      design and review




●
            Security
      Auditing




2




In March
2010, Stonewall released Policy Manager 2.0 (PM 2.0), the latest version of its
software suite allowing companies to set comprehensive security policies for
both wired and mobile assets within a company's network. We are currently Beta
testing the latest release of the software at a company with an extensive
network across the United States, Africa and Asia.




About
Policy Manager 2.0 (“PM 2.0”)




PM 2.0,
is the latest version of a software suite developed by Stonewall Networks. PM
2.0 allows companies to set comprehensive security policies for both wired and
mobile assets in a company's network. These policies help organizations meet
specific regulatory and audit requirements such as PCS, Sarbanes-Oxley, HIPAA,
GLBA and FDA. Policy Manager also allows enterprises to audit and enforce
corporate-wide security policies in a quick, comprehensive, automated manner. PM
2.0 also allows for managed security, service providers, and large enterprises
to gather real-time data needed for both internal asset protection and
regulatory auditing and reporting.




Distribution
method of products




Enhance
Network Communication




Enhance
provides all services and technology directly to the vertical markets being
serviced. This is done by hiring engineers and sales/marketing associates to
work with its offices in California.




Stonewall
Networks




Stonewall
provides all services and products through one of two methods. First is through
its internal sales and marketing team. Second is through strategic partnerships
with value added resellers and distributors.




Competition




Enhance
Network Communication




Enhance
competes in the IT Systems Integration business, also known as System
Integration, Convergence, Network Systems Integration, Integration, Digital
Convergence, Integrating Systems, Integrated Systems, and Technology
Integration.




A systems
integrator (SI) is an individual or business that builds computing systems for
clients by combining hardware and software products from multiple vendors. Using
a systems integrator, a company can align cheaper, pre-configured components and
off-the-shelf software to meet key business goals, as opposed to more expensive,
customized implementations that may require original programming or manufacture
of unique components. Creation of these information systems may include
designing or building a customized architecture or application, integrating it
with new or existing hardware, packaged and custom software, and communications
infrastructure. Some systems integrators working in specialized areas, like SAP
or ERP installations or upgrades, may offer more customization for specific
applications. Systems integration has traditionally been a crucial specialty in
the defense contracting industry. Proprietary, closed systems needs to be
upgraded or, as is often the case, legacy hardware or software.




The
growth of data and mobile applications has led to the need for a more flexible
systems integration market. Operators, with their margins squeezed, are faced
with whether to take a bigger slice of their action by acquiring greater
integration skills, or opt to make deals with a range of partners to provide
customized solutions for businesses.




The
onward march of global business and converging technologies is challenging some
established telecoms business practices. As the scope of data and voice services
grows, telecoms companies increasingly need to acquire a range of different
business skills to meet customers' expectations.




At the
heart of that change is the evolving role of systems integration (SI), which
underpins the networks and systems that provide those services
(source:http://findarticles.com/p/articles/mi_m0UKG/is_2001_August_13/ai_77574951/).




The
market for systems integration (SI) solutions is becoming more competitive as
the traditional outsourcers, such as Computer Sciences Corporation (CSC),
Electronic Data Systems (EDS), and KAZ Group, make their move into the SI
business. This benefits buyers of IT services, as these new entrants and more
traditional integrators have increased their focus on outcomes and client
satisfaction to ensure that their business continues to grow. The service
normalization and downward rate pressure have brought systems integration
offerings to the reach of companies that haven't used such services in the
past.




3




Stonewall
Networks




Security
management is a broad field of management related to asset management, physical
security and human resource safety functions. It entails the identification of
an organization's information assets and the development, documentation and
implementation of policies, standards, procedures and guidelines.




Security
management includes the set of functions that protects telecommunications
networks and systems from unauthorized access by persons, acts, or influences
and that includes many subfunctions, such as creating, deleting, and controlling
security services and mechanisms; distributing security-relevant information;
reporting security-relevant events; controlling the distribution of
cryptographic keying material; and authorizing subscriber access, rights, and
privileges.




Management
tools such as information classification, risk assessment and risk analysis are
used to identify threats, classify assets and to rate system vulnerabilities so
that effective control can be implemented.




Security
outsourcing is now the fastest-growing segment of IT security budgets, according
to a Forrester Research report. Although IT security spending was relatively
flat in 2009, investments in managed security service providers (MSSPs) grew by
roughly 8 percent.




Reasons
include pressures in staffing and expertise, an ever-shifting threat landscape,
and a growing compliance burden. Service providers are also broadening their
offerings and sometimes providing valuable advisory services.




MSSPs
have traditionally helped companies in areas such as network firewall monitoring
and e-mail and Web filtering. Such services are still among the most prevalent,
according to Forrester, but services are now offering assistance with more
holistic security needs such as log management and event monitoring.
Organizations’ technology and processes churn out large amounts of data, says
Forrester; some MSSPs can sift through it and even present findings in a neat
dashboard.




A growing
percentage of attacks are also targeting applications as opposed to network
infrastructure. MSSPs can provide managed application firewalls and application
security scanning and penetration testing.




MSSPs are
also helping companies take a more risk-based approach to security. Rather than
helping with one or more regulations, they are increasingly helping clients make
decisions based on a standard or risk-based framework, according to Forrester.
Some MSSPs are also providing metrics in areas such as efficiency and return on
investment. Companies are also turning to MSSPs because of their 24 x 7
support.




Conducting
adequate due diligence is important before hiring a service provider, says
Forrester. Companies should understand MSSPs’ strengths and weaknesses and also
speak to customer references. Organizations should also continue to make key
policy and strategy decisions themselves. MSSPs can provide “the bare minimum,
but you still need to understand your environment and what it requires.”
(source:
http://www.securitymanagement.com/news/managed-security-market-booming-006903).




Competition
comes from original equipment manufacturers, or OEM, vendors (e.g. Cisco,
Juniper, Checkpoint), security information management consolidators (e.g.
ArcSight, NetForensics, Exaprotect, Symantec), homegrown applications, and brute
force labor.




OEM
vendors provide management software with their security devices to simplify
device configuration.  This device-centric approach is fine for
smaller networks but does not scale to larger networks and introduces the issue
of consistent policy implementation amongst security devices.  Rather
than directly compete, Stonewall Networks will look to build OEM alliances to
augment OEM security solutions and provide non-OEM capabilities such as
multi-vendor support and a network approach, rather than a device approach, to
security.  Already, Stonewall Networks has signed one OEM agreement
and has had preliminary discussions with several other OEMs.




Security
information management (SIM) vendors provide the ability to identify attacks,
analyze network security, identify weaknesses, and take corrective
action.  Although competitors, SIM vendors are actually ideal
candidates for partnership agreements since their products are often weakest at
vulnerability remediation, Cornerstone’s strength.  Cornerstone will
work in tandem with SIM products, taking findings from these products and
implementing them quickly, globally, and consistently in the enterprise
network.  One competitor in particular, Exaprotect, acquired a company
called Solsoft that provides a capability similar to Stonewall Networks’
Cornerstone product.   Based on discussions with both customers
and industry experts, we believe Cornerstone’s flexibility in supporting new
devices and scalability both provide clear advantages to the Solsoft
product.  However, Exaprotect’s entry into this market does provide
validation of the need for sophisticated policy management
products.




Homegrown
solutions and brute force labor also provide competition to
Cornerstone.  This approach is widely prevalent because the market is
not providing adequate technology solutions and because it is often easier to
use existing headcount to solve a problem than it is to get budget approval for
a new product purchase.  Homegrown tools will never provide the
sophistication of Cornerstone, but they may provide enough functionality to
stave off the need for 3rd party products.  Manual processes are also
currently used at most organizations for security setup and
auditing.  Cornerstone provides an excellent return on investment to
displace these solutions justified based on numerous factors such as total cost
of ownership, ongoing threat mitigation, and compliance.  For example,
as previously discussed, a financial company may hire outside consultants to
perform mandatory periodic compliance audits.  Although this approach
may meet the specific business audit requirement, it is both costly and lacks
timeliness.  Periodic audits provide ample opportunity for
vulnerabilities to be created and exploited without the company
knowing.




4




Sources
and availability of raw materials and principal suppliers




Enhance
Network Communication




Enhance
obtains products and services from the manufacturer or distributors
directly.




Providers/distributors:




●
            Micro
      D




●
            Microsoft




●
            Tech
      Data




●
            3Com




●
            Xirrus




Stonewall
Networks




Stonewall
owns and maintains critical proprietary source code. Stonewall utilizes open
source technologies that have no limitations with regard to bundling. Stonewall
also retains in escrow a copy of the open source code for backup to any industry
failures on behalf of the open source provider. In that event Stonewall will
allow in-house developers/engineers take on the service and
support.




Providers/distributors:




●
            Enhance
      Networks




●
            Linux




●
            Java




●
            Jabber




Dependence
on one or a few major customers




Enhance
Network Communication




In 2008
and 2009, the Department of Education (Hawaii) accounted for 3% and 50% of
Enhance’s sales, respectively.




Intellectual
property




Enhance
Network Communications




Enhance
Network Communication does not own any intellectual property.




Stonewall
Networks




Stonewall
Networks owns copyright to its proprietary software, Cornerstone Policy Manager.
Cornerstone is a Security Policy Manager that strengthens, centralizes, and
greatly simplifies network security for mid to large enterprises.  With
Cornerstone, security policies are consistently implemented to seamlessly secure
the entire enterprise network.




Research
and Development




Enhance
Network Communication




Enhance
did not have any spending on research and development during the years ending
December 31, 2009 and 2008, respectively.




Stonewall
Networks




Stonewall
spent $7,320 and $136,667 on research and development during the years ending
December 31, 2009 and 2008, respectively.




Employees




We have
seven employees, all of whom are full-time, including our chief executive
officer and six employees of Stonewall. Enhance does not have any employees as
it currently retains only contract personnel.




5




RISK
FACTORS




We are
subject to various risks that may materially harm our business, financial
condition and results of operations. If any of these risks or uncertainties
actually occurs, the trading price of our common stock could decline and you
could lose all or part of your investment.




Risks
Related to our Business




We
have historically lost money, and our losses may continue in the
future.




We have
historically lost money. As of December 31, 2009, we had an accumulated deficit
of $(9,552,051). Further such losses are likely to occur in the future, and we
may experience significant liquidity and cash flow problems if we are not able
to raise additional capital as needed and on acceptable terms. We can give no
assurances that we will be successful in reaching or maintaining profitable
operations.




We
will need to raise additional capital to finance operations.




We have
relied almost entirely on external financing to fund our operations. This
financing has historically come from a combination of borrowings and from the
sale of common stock and assets to third parties. We will need to raise
additional capital to fund our anticipated operating expenses and future
expansion. Among other things, external financing will be required to cover our
operating costs. We cannot assure you that financing, whether from external
sources or related parties, will be available if needed or on favorable terms.
The sale of our common stock to raise capital may cause dilution to our existing
shareholders. Our inability to obtain adequate financing will result in the need
to curtail business operations. Any of these events would be materially harmful
to our business and may result in a lower stock price.




There
is substantial doubt about our ability to continue as a going concern due to
recurring losses and working capital shortages.




The
report of our independent accountants on our December 31, 2009, financial
statements includes an explanatory paragraph indicating that there is
substantial doubt about our ability to continue as a going concern due to
recurring losses and working capital shortages. Our ability to continue as a
going concern will be determined by our ability to obtain additional
funding.




We
could lose the services of our chief executive officer.




Our
future success depends, in significant part, on the continued services of James
D. Tilton, Jr., our chief executive officer. Our loss of his services could
adversely affect our ability to develop our business plan. We do not have an
employment agreement with Mr. Tilton, nor do we currently maintain key-man life
insurance policies on him.




Our business could
be materially adversely affected as a result of a lessening demand in the
information technology market.




Our
revenue and profitability depend on the overall demand for our products and
services. Delays or reductions in IT spending, domestically or internationally,
could materially adversely affect demand for our products and services which
could result in decreased revenues or earnings.




Competitive
pricing, sales volume, mix and component costs could materially adversely affect
our revenues, gross margins and earnings.




Our gross
margins are impacted by a variety of factors, including competitive pricing,
component and product design costs as well as the volume and relative mixture of
product and services revenues. Increased component costs, increased pricing
pressures, the relative and varying rates of increases or decreases in component
costs and product price, changes in product and services revenue mixture or
decreased volume could have a material adverse effect on our revenues, gross
margins or earnings.




The
markets in which we do business are highly competitive, and we may encounter
aggressive price competition for all of our products and services from numerous
companies. There also has been and may continue to be a willingness on the part
of certain competitors to reduce prices or provide IT products or services, at
minimal or no additional cost in order to preserve or gain market share. Such
price competition may result in pressure on our product and service prices, and
reductions in product and service prices may have a material adverse effect on
our revenues, gross margins and earnings. We currently believe that pricing
pressures will continue.




We
may be unable to keep pace with rapid industry, technological and market
changes.




The
markets in which we compete are characterized by rapid technological change,
frequent new product introductions, evolving industry standards and changing
needs of customers. There can be no assurance that our existing products will be
properly positioned in the market or that we will be able to introduce new or
enhanced products into the market on a timely basis, or at all. We spend a
considerable amount of money on research and development and introduce new
products from time to time. There can be no assurance that enhancements to
existing products and solutions or new products and solutions will receive
customer acceptance.




Risks
associated with the development and introduction of new products include delays
in development and changes in data storage, networking virtualization,
infrastructure management, information security and operating system
technologies which could require us to modify existing products. Risks inherent
in the transition to new products include:





●
            
            the
      difficulty in forecasting customer preferences or demand
      accurately;


●
            
            the
      inability to expand production capacity to meet demand for new
      products;




6




●
            
            the
      impact of customers’ demand for new products on the products being
      replaced, thereby causing a decline in sales of existing products and an
      excessive, obsolete supply of inventory;
and


●
            
            delays
      in initial shipments of new
products.




Further
risks inherent in new product introductions include the uncertainty of
price-performance relative to products of competitors, competitors’ responses to
the introductions and the desire by customers to evaluate new products for
extended periods of time. Our failure to introduce new or enhanced products on a
timely basis, keep pace with rapid industry, technological or market changes or
effectively manage the transitions to new products or new technologies could
have a material adverse effect on our business, results of operations or
financial condition.




The markets we serve are highly
competitive and we may be unable to compete effectively.




We
compete with many companies in the markets we serve. Some of these companies
(whether independently or by establishing alliances) may have substantially
greater financial, marketing and technological resources, larger distribution
capabilities, earlier access to customers and greater opportunity to address
customers’ various IT requirements than us. In addition, as the IT industry
consolidates, companies may improve their competitive position and ability to
compete against us. We compete on the basis of our products’ features,
performance and price as well as our services. Our failure to compete on any of
these bases could affect demand for our products or services, which could have a
material adverse effect on our business, results of operations or financial
condition.




Companies
may develop new technologies or products in advance of us or establish business
models or technologies disruptive to us. Our business may be materially
adversely affected by the announcement or introduction of new products,
including hardware and software products and services by our competitors, and
the implementation of effective marketing or sales strategies by our
competitors. The material adverse effect to our business could include a
decrease in demand for our products and services and an increase in the length
of our sales cycle due to customers taking longer to compare products and
services and to complete their purchases.




Our
business could be materially adversely affected as a result of the risks
associated with acquisitions and investments.




As part
of our business strategy, we seek to acquire businesses that offer complementary
products, services or technologies. These acquisitions are accompanied by the
risks commonly encountered in an acquisition of a business, which may include,
among other things:





●
            
            the
      effect of the acquisition on our financial and strategic position and
      reputation;


●
            
            the
      failure of an acquired business to further our
  strategies;


●
            
            the
      failure of the acquisition to result in expected benefits, which may
      include benefits relating to enhanced revenues, technology, human
      resources, cost savings, operating efficiencies and other
      synergies;


●
            
            the
      difficulty and cost of integrating the acquired business, including costs
      and delays in implementing common systems and procedures and costs and
      delays caused by communication difficulties or geographic distances
      between the two companies’ sites;


●
            
            the
      assumption of liabilities of the acquired business, including
      litigation-related liability;


●
            
            the
      potential impairment of acquired
assets;


●
            
            the
      lack of experience in new markets, products or technologies or the initial
      dependence on unfamiliar supply or distribution
  partners;


●
            
            the
      diversion of our management’s attention from other business
      concerns;


●
            
            the
      impairment of relationships with customers or suppliers of the acquired
      business or our customers or
suppliers;


●
            
            the
      potential loss of key employees of the acquired company;
    and


●
            
            the
      potential incompatibility of business
cultures.




These
factors could have a material adverse effect on our business, results of
operations or financial condition. To the extent that we issue shares of our
common stock or other rights to purchase our common stock in connection with any
future acquisition, existing shareholders may experience dilution. Additionally,
regardless of the form of consideration issued, acquisitions could negatively
impact our net income and our earnings per share.




In
addition to the risks commonly encountered in the acquisition of a business as
described above, we may also experience risks relating to the challenges and
costs of closing a transaction. Further, the risks described above may be
exacerbated as a result of managing multiple acquisitions at the same
time.




Risks
Related to our Common Stock




Our
common stock may be affected by limited trading volume and may fluctuate
significantly.




There has
been a limited public market for our common stock, and we can give no assurances
that an active trading market for our common stock will develop. The lack of an
active trading market could adversely affect our shareholders’ ability to sell
our common stock without delay, or possibly at all. Our common stock has
experienced, and is likely to experience in the future, significant price and
volume fluctuations that could adversely affect the market price of our common
stock regardless of our operating performance. In addition, we believe that
factors such as quarterly fluctuations in our financial results and changes in
the overall economy or the condition of the financial markets could cause the
price of our common stock to fluctuate substantially. Substantial fluctuations
in our stock price could significantly reduce the price of our
stock.




7




Our
common stock is traded on the Over-the-Counter Bulletin Board, which may make it
more difficult for investors to resell their shares due to suitability
requirements.




Our
common stock is currently traded on the Over-the-Counter Bulletin Board (OTCBB),
where we expect it to remain for the foreseeable future. Broker-dealers often
decline to trade in OTCBB stocks because the market for such securities is often
limited, the stocks are more volatile, and the risks to investors are greater.
These factors may reduce the potential market for our common stock by reducing
the number of potential investors. This may make it more difficult for investors
in our common stock to find buyers for their shares. This could cause our stock
price to decline.




Nevada
law and our articles of incorporation may inhibit a takeover of our company that
stockholders may consider favorable.




Provisions
of Nevada law, such as its business combination statute, may have the effect of
delaying, deferring, or preventing a change in control of our company. As a
result, these provisions could limit the price some investors might be willing
to pay in the future for shares of our common stock.




The holder of our
Class A Preferred Stock owns the majority of the voting power of our
shareholders.




Our Class
A Preferred Stock votes on an-converted basis with the common stock. As of March
25, 2010, the holder of our 2,656 outstanding shares of Class A Preferred Stock,
Beachhead LLC, owns 64% of the voting power of our shareholders. As a result,
the holder of our Class A Preferred Stock will have the ability to control all
matters submitted to shareholders.





ITEM
1B. UNRESOLVED STAFF COMMENTS





Not
applicable.





ITEM
2. PROPERTIES





Our
executive and administrative office is located in Louisville, Kentucky. Monthly
rent is $1,300 and we are on a month-to-month lease.




Our
subsidiary, Enhance Network Communication, Inc., rents 642 square feet of office
space for its main corporate office in San Jose, California on a lease that runs
through April 30, 2010.  The amount of future lease payments due from
July 1, 2009 through April 30, 2010 under this agreement is
$11,880.




Our
subsidiary, Stonewall Networks, Inc., rented shared office space on a lease that
ran through October 31, 2008.  The Company then made arrangements for
its employees to work from home until it signed a new one-year lease that
started on November 9, 2009. Future monthly rent under this new lease is $840.
Total rent expense under the new lease will be $10,080.




ITEM
3. LEGAL PROCEEDINGS





As of
December 31, 2009, and as of the date of this filing, the Company is not a party
to any pending or threatened litigation, claim or assessment.





ITEM
4. [REMOVED AND RESERVED]





Not
applicable.




PART II





ITEM 5. MARKET FOR COMMON EQUITY,
RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY
SECURITIES





Market
Information





A limited
public market for our common stock exists on the Over-the-Counter Bulletin Board
under the symbol “PXIT” from November 30, 2001 through July 14, 2009 and under
the symbol “NUBL” beginning July 15, 2009.




The
following table sets forth the range of high and low closing prices for our
common stock for each quarterly period indicated, as reported by brokers and
dealers making a market in the capital stock. Such quotations reflect
inter-dealer prices without retail markup, markdown or commission, and may not
necessarily represent actual transactions. Our common stock commenced trading on
November 30, 2001.




High
            
            
            LowFor
      the year ended December 31, 2009:Fourth
      quarter
            
            $
            0.0301
            
            
            $
            0.0054Third
      quarter
            
            $
            0.0630
            
            
            $
            0.0140Second
      Quarter
            
            $
            0.0320
            
            
            $
            0.0160First
      quarter
            
            $
            0.0320
            
            
            $
            0.0160For
      the year ended December 31, 2008:Fourth
      quarter
            
            $
            0.0160
            
            
            $
            0.0320Third
      quarter
            
            $
            0.0160
            
            
            $
            0.0320Second
      Quarter
            
            $
            0.0320
            
            
            $
            0.0320First
      quarter
            
            $
            0.0320
            
            
            $
            0.0320





As of
March 24, 2010, there were approximately 1,000 record holders of our common
stock.




8




Dividends





We have
not paid any cash or other dividends on our common stock since our company was
formed and we do not anticipate paying any such dividends in the foreseeable
future. We intend to retain any earnings to use in our operations and to finance
the expansion of our business.




Recent
Issuances of Unregistered Securities





For the
year ended December 31, 2009, the Company issued, pursuant to exemption from
registration provided by Section 4(2) of the Securities Act of 1933, as amended,
for transactions not involving a public offering:




●
              59,636,299
      shares of common stock for the for conversion of Series D stock and
      preferred stock dividends of $531,100 and $250,593,
      respectively;




●
              415,500
      shares of common stock for services valued at $9,310 (the value was
      determined the fair value of the Company’s stock at the date of issuance);
      and




●
              91,972,792
      shares of common stock for the conversion of convertible debt/notes
      payable of $2,336,919.




Issuer
Repurchases of Equity Securities





None.








ITEM 6. SELECTED
FINANCIAL DATA





Intentionally
Omitted.





ITEM 7. MANAGEMENT’S DISCUSSION AND
ANALYSISOF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS





This
Annual Report on Form 10-K and the information incorporated by reference may
include “forward-looking statements”. All statements regarding our expected
financial position and operating results, our business strategy, our financing
plans and the outcome of any contingencies are forward-looking statements. The
forward-looking statements are subject to risks and uncertainties that could
cause actual results to differ materially from those set forth or implied by any
forward-looking statements.




The
following discussion should be read in conjunction with NuMobile’s consolidated
financial statements and the related notes included in this Form 10-K included
elsewhere in this Annual Report.




Overview




We were
organized under the laws of Nevada on March 25, 1999 as Thoroughbred Interests,
Inc. Effective May 18, 2004, we changed our name to Phoenix Interests, Inc. and
effective July 14, 2009 changed our name to NuMobile,Inc. In connection with
this name change, our stock ticker symbol on the Over-the-Counter Bulletin Board
was changed from “PXIT” to “NUBL.”Our prior business operations consisted of
purchasing, training and selling of thoroughbred horses. We have recently
launched a new business strategy to create a comprehensive and global mobile
computing technology business.




On
September 17, 2009, we acquired 100% of the outstanding capital stock of Enhance
Network Communication, Inc. (“Enhance”).  Enhance is an information
technology company headquartered in Cupertino, California, that has developed a
proprietary large enterprise network security technology designed for managing
the information management requirements of network delivered government
services.




On
October 12, 2009, we acquired 100% of the outstanding capital stock of Stonewall
Networks, Inc., a Delaware corporation (“Stonewall”). Stonewall is a development
stage information technology security product company headquartered in Cary,
North Carolina.




Critical Accounting
Policies




Accrued Derivative Liability
- The convertible debenture and the Series A, D and E preferred stock can be
converted into common stock at a conversions price that is a percentage of the
market price; therefore the number of shares that could be required to be
delivered upon “net-share settlement” is essentially indeterminate. In
accordance with ASC 815, we have bifurcated the beneficial conversion features
embedded in our convertible debentures and preferred stock and have recorded the
fair value of these beneficial conversion features as a current
liability.




Convertible Preferred Stock -
Our Series A, D and E preferred stock are presented as a current liability since
we have financial instruments that are convertible into common stock at a
conversions price that is a percentage of the market price; therefore the number
of shares that could be required to be delivered upon “net-share settlement” is
essentially indeterminate and we do not have enough authorized shares to satisfy
the conversion of our convertible preferred stock.




Revenue Recognition - Revenue
is recognized at the time the services are performed under contract
agreements.




9




Operating Results for the Years Ended
December 31, 2009 and 2008




Revenue.Our revenue for the
years ended December 31, 2009 and 2008 were $177,815 and $7,282, respectively.
The increase in revenue in 2009 is primarily the result of revenue earned from
our two recently acquired subsidiaries, Enhance Network Communication, Inc. and
Stonewall Networks, Inc. subsequent to their respective acquisition
dates.




Operating Expenses.Our
operating expenses for the years ended December 31, 2009 and 2008 were $980,182
and $235,177, respectively.  The increase from 2008 to 2009 is
primarily the result of the operational expenses incurred from our two recently
acquired subsidiaries, Enhance Network Communication, Inc. and Stonewall
Networks, Inc. subsequent to their respective acquisition dates.




Interest Expense and Financing
Costs.Our interest expense and financing costs for the year ended
December 31, 2009 and 2008 were $149,537 and $23,550,
respectively.  The increase in the interest expense and financing
costs is the result of increased borrowings and interest incurred from existing
borrowings assumed from the acquisition of Enhance Network Communication, Inc.
and Stonewall Networks, Inc.




Change in Accrued Derivative
Liability.Change in accrued derivative liability for the years ended
December 31, 2009 and 2008 was $577,887 and $(108,708), respectively. The change
in derivative liability is directly related to the change in the accrued
derivative liability balance, which fluctuates based on fair value.





Net Loss.Our net loss for
the years ended December 31, 2009 and 2008 was $1,502,715 and $360,153,
respectively.  The difference is principally due to the consolidation
of operating results of our two recently acquired subsidiaries, Enhance Network
Communication, Inc. and Stonewall Networks, Inc. subsequent to their respective
acquisition dates.




Changes In Balance Sheet.We
had current assets of $308,447 at December 31, 2009.  We had total
assets of $5,184,342 at December 31, 2009, total liabilities of $9,339,447 at
December 31, 2009 and stockholders’ deficit of $4,155,105 at December 31,
2009.




Liquidity, Capital Resources and
Cash Requirements.During the year ended December 31, 2009 net cash used
in operating activities was $587,209 as compared to $89,011 for the year ended
December 31, 2008.   Net cash provided by investing activities
during the year ended December 31, 2009 was $96,118, of which $103,438 in cash
was acquired from the acquisition of Enhance Network Communication, Inc. and
Stonewall Networks, Inc. Net cash provided by financing activities during the
year ended December 31, 2009 was $650,907 primarily as a result of the proceeds
from notes payable.




As a
result of the above, as of December 31, 2009, we had a cash position of
$177,436.




We have
historically financed our operations via convertible-debt and preferred-stock
financing obtained from various private equity firms. These funds intend, over
time, to convert their positions into shares of our common stock. This will
cause significant dilution to existing shareholders.




In the
immediate future, we have no commitments or plans to finance our
business.




Change in Number of
Employees




In
connection with the recent acquisitions of Stonewall Networks, Inc. and Enhance
Network Communication, Inc., we anticipate hiring additional employees to allow
us to expand our business. With the acquisitions, our workforce increased in
2009 by approximately five employees.




Contractual
Obligations




At
December 31, 2009, our significant contractual obligations were as
follows:




Payments
      due by PeriodLess
      than
            
            
            One
      to
            
            
            Three
      to
            
            
            More
      ThanOne
      Year
            
            
            Three
      Years
            
            
            Five
      Years
            
            
            Five
      Years
            
            
            TotalOperating
      lease obligations
            
            $
            13,152
            
            
            $
            -
            
            
            $
            -
            
            
            $
            -
            
            
            $
            13,152Total
            
            $
            13,152
            
            
            $
            -
            
            
            $
            -
            
            
            $
            -
            
            
            $
            13,152





Off-Balance
Sheet Arrangements




We do not
maintain any off-balance sheet arrangements, transactions, obligations or other
relationships with unconsolidated entities that would be expected to have a
material current or future effect upon our financial condition or results of
operations.




10




ITEM 7A. QUANTITATIVE AND QUALITATIVE
DISCLOSURES ABOUT MARKET RISK





Not
applicable.





ITEM 8. FINANCIAL
STATEMENTS AND SUPPLEMENTARY DATA





The
financial statements are listed in the Index to Financial Statements on page
F-1.





ITEM
9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURES





None.





ITEM 9A. CONTROLS AND
PROCEDURES





Disclosure Controls and
Procedures





Our
principal executive officer and principal financial officer, based on his
evaluation of our disclosure controls and procedures (as defined in Rules
13a-15(e) and 15d-15(e) promulgated under the Securities Exchange Act of 1934,
as amended) as of the end of the period covered by this Annual Report on Form
10-K, has concluded that our disclosure controls and procedures are effective
for ensuring that information required to be disclosed by us in the reports that
we file or submit under the Securities Exchange Act of 1934, as amended, is
recorded, processed, summarized and reported within the time periods specified
in the Securities and Exchange Commission’s rules and forms.





Internal
Control over Financial Reporting





Management’s
Annual Report on Internal Control over Financial Reporting





Management
is responsible for establishing and maintaining adequate internal control over
financial reporting, as such term is defined in Rules 13a-15(f) promulgated
under the Securities Exchange Act of 1934, as amended. Our management conducted
an evaluation of the effectiveness of our internal control over financial
reporting based on the framework in Internal Control – Integrated Framework
issued by the Committee of Sponsoring Organizations of the Treadway Commission.
Based on this evaluation under the framework in Internal Control – Integrated
Framework, our management concluded that our internal control over financial
reporting was effective as of December 31, 2009.





This
Annual Report on Form 10-K does not include an attestation report of the
company’s registered public accounting firm regarding internal control over
financial reporting. Management’s report was not subject to attestation by the
company’s registered public accounting firm pursuant to temporary rules of the
Securities and Exchange Commission that permit the company to provide only
management’s report in this annual report.





Changes
in Internal Control over Financial Reporting





There
were no changes in internal control over financial reporting (as defined in Rule
13a-15f under the Exchange Act) that occurred during the fourth quarter of 2009
that have materially affected, or are reasonably likely to materially affect,
our internal control over financial reporting.





ITEM 9B. OTHER
INFORMATION





None.


PART III





ITEM 10. DIRECTORS,
EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE





The
following table sets forth the name, age and position with the Company of each
officer and director of the Company as of the date of this report.




Name
            
            Age
            
            
            PositionJames
      D. Tilton, Jr.
            
            49
            
            
            Chairman
      of the Board,
              President,
      Chief Executive Officer and Secretary





Background
of Executive Officers and Directors





James D.
Tilton, Jr., has served as chairman of our board of directors, chief executive
officer, president, secretary, treasurer and sole director since we were formed.
Mr. Tilton has more than 11 years’ experience in the securities industry. From
1995 to 1996, he was stockbroker at Morgan Keegan. From 1997 to 1999, he worked
independently in the securities industry, specializing in corporate finance and
investment banking. Mr. Tilton has been involved in the financing of private and
public small-growth companies. Since January 1999, Mr. Tilton has also been
TuneIn Media, Inc.’s chief executive officer and president. TuneIn Media, Inc.
was an interactive media content provider. Mr. Tilton formally resigned this
position in October of 2005, and was re-appointed in October 2008. In January
2010, Tune-In Media acquired Infotel Technologies Limited, a Singapore-based IT
company. In February 2010, Mr. Tilton was appointed Chief Operating Officer of
Nova Energy, Inc. (OTCBB: NVAE). Mr. Tilton is currently a director of Girasolar
(OTCBB: GRSR). Mr. Tilton has a B.A. in Political Science with an emphasis in
Accounting/Business from the University of Louisville.




11





Board
of Directors





Our
Directors are elected by the vote of a plurality in interest of the holders of
our voting stock and hold office for a term of one year and until a successor
has been elected and qualified.





A
majority of the authorized number of directors constitutes a quorum of the Board
for the transaction of business. The directors must be present at the meeting to
constitute a quorum. However, any action required or permitted to be taken by
the Board may be taken without a meeting if all members of the Board
individually or collectively consent in writing to the action.





Committees





Our board
of directors acts as our audit committee. No member of our board of directors is
an “audit committee financial expert,” as that term is defined in Item 401(e) of
Regulation S-K promulgated under the Securities Act. To date, we have conducted
limited operations and generated only minimal revenue since inception. In light
of the foregoing, and on evaluating our internal controls, our board of
directors determined that our internal controls are adequate to insure that
financial information is recorded, processed, summarized, and reported in a
timely and accurate manner in accordance with applicable rules and regulations
of the Securities and Exchange Commission. Accordingly, our board of directors
concluded that the benefits of retaining an individual who qualifies as an
“audit committee financial expert” would be outweighed by the costs of retaining
such a person.




Board
Leadership Structure and Role in Risk Oversight




Although
we have not adopted a formal policy on whether the Chairman and Chief Executive
Officer positions should be separate or combined, we have traditionally
determined that it is in the best interests of the Company and its shareholders
to combine these roles. James Tilton has served as Chairman and Chief Executive
Officer of the Company since inception. Due to the small size and early stage of
the Company, we believe it is currently most effective to have the Chairman and
Chief Executive Officer positions combined.




Our board
of directors is primarily responsible for overseeing our risk management
processes, and acts as our audit committee.  The board of directors
receives and reviews periodic reports from management, auditors, legal counsel,
and others, as considered appropriate regarding our company’s assessment of
risks. The board of directors focuses on the most significant risks facing our
Company and our Company’s general risk management strategy, and also ensure that
risks undertaken by our Company are consistent with the board’s appetite for
risk. While the board oversees our Company’s risk management, management is
responsible for day-to-day risk management processes. We believe this division
of responsibilities is the most effective approach for addressing the risks
facing our Company and that our board leadership structure supports this
approach.




Board
Compensation





Directors
may receive compensation for their services and reimbursement for their expenses
as shall be determined from time to time by resolution of the Board. No director
of the Company received compensation as director during the year ended December
31, 2009.





Employment
Agreements





Our
employment agreement with James D. Tilton, Jr., ended on December 31, 2002. This
agreement provided for payment of an annual base salary of $90,000 for calendar
year 2000, $120,000 for calendar year 2001, and $180,000 for calendar year 2002.
During those years, we did not pay him a salary. We agreed to pay Mr. Tilton a
salary of $180,000 during 2003, but did not actually pay him a
salary.




The
shortfall between the salary we undertook to pay Mr. Tilton between January 1,
2000 and December 31, 2003, and the compensation payments actual made to him
equaled $350,000. In recognition of that fact, in December 2003 we agreed to pay
to Mr. Tilton, as and when the board of directors determines that funds are
available to do so and in one or more payments of $200,000. In 2004, we paid Mr.
Tilton $169,478 of this $200,000.




Mr.
Tilton’s employment agreement also provided for the one-time grant under our
Millennium Stock Option Plan of 3,000,000 incentive stock options (reduced to
300,000 by the ten-for-one reverse stock split effected in January 2004) to Mr.
Tilton at 110% of the fair market value of our common stock on the date of the
grant. These options vested but were cancelled upon our electing to be regulated
as a business development company.




As of yet
we have not entered into a new employment agreement with Mr.
Tilton.




12




Family
Relationships





None





Beneficial
Ownership Reporting Compliance





Under
section 16 of the Exchange Act, our directors and executive officers and
beneficial owners of more than 10% of the our common stock are required to file
certain reports, within specified time periods, indicating their holdings of and
transactions in our common stock and derivative securities. Based solely on a
review of those reports provided to us and written representations from those
persons regarding the necessity to file any such reports, we are not aware of
any failures to file reports or report transactions in a timely manner during
our fiscal year ended December 31, 2009.




Code
of Ethics





Our board
of directors had adopted a code of ethics applicable to persons at our company
who are responsible for financial management. A copy of the code of ethics is
attached to this Annual Report as Exhibit 14.1.




Nominating
Procedures





During
2009 there were no material changes to the procedures by which security holders
may recommend nominees to our Board of Directors.





ITEM 11. EXECUTIVE
COMPENSATION





Executive
Compensation





The
following table sets forth the compensation awarded to, earned by or paid to Mr.
Tilton. We had no other officers during this period.




Long-Term
      Compensation AwardsName
      and Principal
              Position
            
            Year
            
            Salary
      ($)
            
            
            Other
      Annual
              Compensation
      ($)
            
            
            Restricted
              Stock
              Awards
      ($)
            
            
            Securities
              Underlying
              OptionsJames
      D. Tilton, Jr
              Chairman
      of the Board,
              Chief
      Executive Officer
              and
      President
            
            2008
            
            
            96,000
            (1)
            
            
            -
            
            
            
            -
            
            
            
            -2009
            
            
            231,000
            (1)
            
            
            -
            
            
            
            -
            
            
            
            -




(1)
Accrued and unpaid





ITEM
12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
STOCKHOLDER MATTERS





The
following table shows, as of March 24, 2010, the beneficial ownership of our
common stock and preferred stock (1) by any person or group that we know
beneficially owns more than 5% of the outstanding common stock or any class of
preferred stock, (2) by each director and executive officer, and (3) by all
directors and executive officers as a group. Unless otherwise indicated, the
holders of the shares shown in this table have sole voting and investment power
with respect to those shares. The address of all individuals for whom an address
is not otherwise indicated is 2520 South Third Street, Suite 206, Louisville,
Kentucky 40208.




Shares
      beneficially ownedNumber
      of
              shares
            
            
            Percentage
      of
              class
      (1)StockholdersBeachhead,
      LLC (2)
              14860
      Montfort Drive, Suite 210
              Dallas,
      TX 75254
            
            
            200,000,000
      (3)
            
            
            
            100
            %Directors
      and Officers:James
      Tilton
              2520
      South Third Street, Suite 206
              Louisville,
      KY 40208
            
            
            6,367
      (4)
            
            
            
            *All
      executive officers and directors as a group (1 person)
            
            
            6,367
            
            
            
            *






13




(*) Less
than one percent.




(1)
Beneficial Ownership is determined in accordance with the rules of the
Securities and Exchange Commission and generally includes voting or investment
power with respect to securities. Shares of common stock subject to options or
warrants currently exercisable or convertible, or exercisable or convertible
within 60 days of March 24, 2010 are deemed outstanding for computing the
percentage of the person holding such option or warrant but are not deemed
outstanding for computing the percentage of any other person. Except as pursuant
to applicable community property laws, the persons named in the table have sole
voting and investment power with respect to all shares of common stock
beneficially owned.




(2)
Philip Verges has voting and investment power over the securities of the Company
owned by Beachhead, LLC.




(3)
Represents shares of common stock issuable upon conversion of 2,656 shares of
Series A Preferred Stock plus accrued dividends.




(4)
Includes 1,367 shares of outstanding Common Stock and 5,000 shares of Common
Stock issuable upon conversion of 5,000 shares of Series C Preferred
Stock.




EQUITY
COMPENSATION PLAN INFORMATION




We
currently have no equity compensation plan.




ITEM 13.CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR
INDEPENDENCE





Related
Party Transactions




The
premises housing our executive and administrative office are owned by James D.
Tilton, Jr., our chief executive officer. See “Item 2. Properties.” Starting
July 1, 2003, he has charged us $1,250 per month for our use of these premises,
and during 2005 rent was increased to $1,500 per month.  Since August
2006, the Company, due to lack of funds has been unable to pay rent. From June
2008 through July 2009, we moved to a space on Riverbend Drive in Ludlow,
Kentucky. Rent was $1,500 per month, and Mr. Tilton paid the monthly rent on our
behalf. Total rent expense accrued to Mr. Tilton, our CEO, for the year ended
December 31, 2009 and 2008 was $4,500 and $18,000, respectively.




We have
multiple notes payable outstanding as of December 31, 2009 and 2008 with various
related parties. Below is a summary:




●
              Note
      payable to officer for $100,000 and $0 at December 31, 2009 and 2008,
      respectively.


●
              Loan
      payable to company wholly owned by officer of Stonewall Networks, Inc. in
      the amount of $386,153 and $0 as of December 31, 2009 and 2008,
      respectively.


●
              Note
      payable to employee of Stonewall Networks, Inc. in the amounts of $105,026
      and $0 as of December 31, 2009 and 2008,
  respectively.


●
              Note
      payable to company wholly owned by officer of Stonewall Networks, Inc. in
      the amount of $61,439 and $0 as of December 31, 2009 and 2008,
      respectively.


●
              Note
      payable to officer of Stonewall Networks, Inc. in the amount of $18,075
      and $0 at December 31, 2009 and 2008,
  respectively.


●
              Note
      payable to company wholly owned by officer of Enhance Network
      Communications, Inc. in the amount of $10,100 and $0 as of December 31,
      2009 and 2008, respectively.





ITEM 14.PRINCIPAL ACCOUNTING FEES AND
SERVICES




Aggregate
fees billed to us for the fiscal years ended December 31, 2009 and 2008 by our
principal accountants, Gruber and Company, LLC, are as follows:




For
      the Years Ended
              December
      31,2009
            
            
            2008Audit
      Fees
            
            $
            9,000
            
            
            $
            15,000Audit-Related
      Fees
            
            $
            10,000
            
            
            $
            12,000Tax
      Fees
            
            $
            –
            
            
            $
            –Other
      Fees
            
            $
            –
            
            
            $
            –




The
audit-related fees relate to review services performed by our accountant; the
tax fees relate to preparation of our tax returns by our
accountant.




Under the
Sarbanes-Oxley Act of 2002, all audit and non-audit services performed by our
independent accountants must now be approved in advance by the audit committee
to assure that those services do not impair the accountants’ independence. We do
not have an audit committee, so our board of directors reviews and approves
audit and permissible non-audit services performed by Gruber and Company LLC as
well as the fees they charge for performing those services.




14




PART
IV





ITEM 15.EXHIBITS, FINANCIAL STATEMENT
SCHEDULES





Financial
Statements





A list of
the financial statements of the Company filed as part of this Report can be
found in the Index to Financial Statements on page F-1.




The
following Exhibits are filed herewith and made part hereof.




3.1
            
            Articles
      of incorporation of the registrant (incorporated by reference to the
      registrant’s registration statement on Form 10-KSB, as amended, filed with
      the Commission on July 5, 2000).3.2
            
            Certificate
      of designations of Series A preferred stock of the registrant filed with
      the Nevada Secretary of State on April 18, 2002 (incorporated by reference
      to the registrant’s quarterly report on form 10-QSB filed with the
      Commission on June 6, 2004).3.3
            
            Certificate
      of designations of Series B preferred stock of the registrant filed with
      the Nevada Secretary of State on December 17, 2003 (incorporated by
      reference to the registrant’s quarterly report on form 10-QSB filed with
      the Commission on June 6, 2004).3.4
            
            Certificate
      of amendment of the registrant filed with the Nevada Secretary of State on
      December 31, 2003 (incorporated by reference to the registrant’s quarterly
      report on form 10-QSB filed with the Commission on June 6,
      2004).3.5
            
            Certificate
      of designations of Series C preferred stock of the registrant filed with
      the Nevada Secretary of State on January 13, 2004 (incorporated by
      reference to the registrant’s quarterly report on form 10-QSB filed with
      the Commission on June 6, 2004).3.6
            
            Corrected
      certificate of designation of Series D preferred stock of the registrant
      (incorporated by reference to the registrant's annual report on form
      10-KSB filed with the Commission on March 31, 2005).3.7
            
            Bylaws
      of the registrant (incorporated by reference to the registrant’s
      registration statement on Form 10-KSB, as amended, filed with the
      Commission on July 5, 2000).10.1
            
            Debenture
      issued by the registrant to Patrick L. Brown due April 30, 2004
      (incorporated by reference to the registrant’s quarterly report on form
      10-QSB filed with the Commission on June 6, 2004).10.2
            
            Debenture
      issued by the registrant to Pinnacle Investment Partners, L.P. due
      February 7, 2005 (incorporated by reference to the registrant’s quarterly
      report on form 10-QSB filed with the Commission on June 6,
      2004).10.3
            
            Securities
      purchase agreement dated February 7, 2004, between the registrant and
      Pinnacle Investment Partners, L.P. (incorporated by reference to the
      registrant’s quarterly report on form 10-QSB filed with the Commission on
      June 6, 2004).10.4
            
            Form
      of securities purchase agreement providing for purchase of shares of
      Series D preferred stock and shares of common stock (incorporated by
      reference to current report on Form 8-K of the registrant filed with the
      Commission on January 4, 2005).10.5
            
            Stock
      Purchase Agreement, dated September 9, 2009, among NuMobile, Inc., Enhance
      Network Communication, Inc., and the shareholders of Enhance Network
      Communication, Inc. (incorporated by reference to the registrant’s current
      report on Form 8-K filed with the Commission on September 18,
      2009).10.6
            
            Form
      of Promissory Note, dated September 9, 2009 (incorporated by reference to
      the registrant’s current report on Form 8-K filed with the Commission on
      September 18, 2009).10.7
            
            Stock
      Purchase Agreement, dated October 7, 2009, among NuMobile, Inc., Stonewall
      Networks, Inc., and the shareholders of Stonewall Networks, Inc.
      (incorporated by reference to the registrant’s current report on Form 8-K
      filed with the Commission on October 16, 2009).10.8
            
            Form
      of Promissory Note, dated October 7, 2009 (incorporated by reference to
      the registrant’s current report on Form 8-K filed with the Commission on
      October 16, 2009).14.1
            
            Code
      of Ethics (filed herewith).21.1
            
            Subsidiaries
      of Registrant (filed herewith).31.1
            
            Certification
      of the Chief Executive Officer and principal financial officer under 18
      U.S.C. section 1350, as adopted in accordance with section 302 of the
      Sarbanes-Oxley Act of 2002 (filed herewith).32.1
            
            Certification
      of the Chief Executive Officer and principal financial officer under 18
      U.S.C. section 1350, as adopted in accordance with section 906 of the
      Sarbanes-Oxley Act of 2002 (filed
herewith).






15


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.




NuMobile,
      Inc.
              
              RegistrantDate:
      April
      7, 2010
            By:
            /s/ James
      D. Tilton, Jr.James
      D. Tilton, Jr.
              Chairman,
      President, Secretary and Chief Executive Officer
              (Principal
      Executive Officer, Principal Financial Officer and
              Principal
      Accounting Officer)





Pursuant
to the requirements of the Securities Exchange Act of 1934, this report is
signed below by the following persons on behalf of the Registrant in the
capacities and on the dates indicated.




Signature
            
            Title
            
            Date/s/
      James D. Tilton, Jr.
              
              James
      D. Tilton, Jr.
              (Principal Executive Officer,
      Principal Financial Officer and Principal Accounting
      Officer)
            
            Chairman,
      President and Chief Executive Officer
            
            April
      7, 2010













16


NuMobile,
Inc and Subsidiaries
 Consolidated
Financial Statements
 For
the Years Ended December 31, 2009 and 2008
     Contents
   PageReport of Independent
      Registered Public Accounting Firm
              F-1Financial
      Statements:Consolidated Balance Sheets as
      of December 31, 2009 and 2008
              F-2Consolidated Statements of
      Operationsfor
      the years ended December 31, 2009 and 2008
              F-3Consolidated Statement of
      Stockholders' Deficitfor
      the years ended December 31, 2009 and 2008
              F-4Consolidated Statements of
      Cash Flowsfor
      the years ended December 31, 2009 and 2008
              F-5Notes to Consolidated
      Financial Statements
              F-6
  
 
 Report
of Independent Registered Public Accounting Firm
 
 
 
 To The
Board of Directors and Stockholders of
 NuMobile,
Inc.
 Louisville,
Kentucky
 
 
 We have
audited the accompanying consolidated balance sheet of NuMobile, Inc. and
subsidiaries as of December 31, 2009 and 2008, and the related consolidated
statements of operations, stockholders’ deficit and cash flows for the years
then ended. These consolidated financial statements are the responsibility of
the Company’s management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audit.
  We
conducted our audit in accordance with standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
  In our
opinion, the consolidated financial statements referred to above present fairly,
in all material respects, the financial position of NuMobile, Inc. and
subsidiaries as of December 31, 2009 and 2008, and the consolidated results of
their operations and cash flows for the years then ended, in conformity with
accounting principles generally accepted in the United States of
America.
  The
accompanying consolidated financial statements have been prepared assuming that
the Company will continue as a going concern. As discussed in Note 1, the
Company has incurred a net loss of $1,502,715, used cash for operations of
$587,209 for the year ended December 31, 2009, has an accumulated deficit of
$9,552,051 as of December 31, 2009 and has a working capital deficit of
$9,031,000 as of December 31, 2009. These conditions raise substantial doubt
about the Company's ability to continue as a going concern. Management's plans
in regard to these matters are also described in Note 1. The consolidated
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.
  
 
 
 /s/
Gruber and Company, LLC
 Certified
Public Accountants
 
 Lake St.
Louis, Missouri
 April 5,
2010
  F-1
 
 NuMobile,
Inc and Subsidiaries
 Consolidated
Balance Sheet
 As
of December 31, 2009 and 2008
   2009
              
              
              2008ASSETSCURRENT
      ASSETSCash
      and cash equivalents
              
              $
              177,436
              
              
              $
              17,620Accounts
      receivable
              
              
              130,171
              
              
              
              -Prepaid
      expenses
              
              
              840
              
              
              
              -TOTAL
      CURRENT ASSETS
              
              
              308,447
              
              
              $
              17,620PROPERTY
      AND EQUIPMENT, net
              
              
              14,277
              
              
              
              -INTANGIBLE
      ASSETS, net
              
              
              4,811,618
              
              
              
              -DEPOSIT
              
              
              50,000
              
              
              
              -TOTAL
      ASSETS
              
              $
              5,184,342
              
              
              $
              17,620LIABILITIES
      AND STOCKHOLDERS' DEFICITCURRENT
      LIABILITIESCash
      overdraft
              
              $
              -
              
              
              $
              22,249Convertible
      debt - related party
              
              
              -
              
              
              
              264,022Convertible
      debt
              
              
              28,844
              
              
              
              72,480Notes
      payable - related parties
              
              
              680,793
              
              
              
              -Notes
      payable
              
              
              3,830,033
              
              
              
              110,000Accounts
      payable and accrued expenses
              
              
              1,072,186
              
              
              
              243,873Due
      to related party
              
              
              7,295
              
              
              
              -Dividends
      payable
              
              
              996,189
              
              
              
              966,679Accrued
      derivative liability
              
              
              1,313,307
              
              
              
              1,844,625Preferred
      stock; Series A; $0.001 par value; 5,000 shares
authorized;2,656
      and 2,656 shares issued and outstanding
              
              
              265,600
              
              
              
              265,600Preferred
      stock; Series D convertible; $0.001 par value; 25,000 shares
      authorized;9,034
      and 11,575 shares issued and outstanding
              
              
              903,400
              
              
              
              1,157,500Preferred
      stock; Series E convertible; $0.001 par value; 25,000 shares
      authorized;2,418
      and 5,708 shares issued and outstanding
              
              
              241,800
              
              
              
              570,800TOTAL
      CURRENT LIABILITIES
              
              
              9,339,447
              
              
              
              5,517,828COMMITMENTS
      AND CONTINGENCIES
              
              
              -
              
              
              
              -STOCKHOLDERS'
      DEFICITPreferred
      stock; Series B; $0.001 par value; 100,000 shares
    authorized;0
      and 0 shares issued and outstanding
              
              
              -
              
              
              
              -Preferred
      stock; Series C; $0.001 par value; 12,000,000 shares
      authorized;5,000
      and 5,000 shares issued and outstanding
              
              
              5
              
              
              
              5Common
      stock; $0.001 par value; 5,000,000,000 shares authorized;162,069,338
      and 10,044,747 shares issued and outstanding
              
              
              162,069
              
              
              
              10,045Additional
      paid-in capital
              
              
              5,234,872
              
              
              
              2,258,975Accumulated
      deficit
              
              
              (9,552,051
              )
              
              
              (7,769,233
              )TOTAL
      STOCKHOLDERS' DEFICIT
              
              
              (4,155,105
              )
              
              
              (5,500,208
              )TOTAL
      LIABILITIES AND STOCKHOLDERS' DEFICIT
              
              $
              5,184,342
              
              
              $
              17,620
 
 
 The
accompanying notes are an integral part of these consolidated financial
statements.
  F-2
  NuMobile,
Inc and Subsidiaries
 Consolidated
Statements of Operations
 For
the Years Ended December 31, 2009 and 2008
 
 2009
              
              
              2008REVENUES
              
              $
              177,815
              
              
              $
              7,282COST
      OF REVENUE
              
              
              48,529
              
              
              
              -GROSS
      PROFIT
              
              
              129,286
              
              
              
              7,282OPERATING
      EXPENSESGeneral
      and adminstative
              
              
              665,202
              
              
              
              235,177Depreciation
      and amortization
              
              
              314,980
              
              
              
              -TOTAL
      OPERATING EXPENSES
              
              
              980,182
              
              
              
              235,177LOSS
      FROM OPERATIONS
              
              
              (850,896
              )
              
              
              (227,895
              )OTHER
      INCOME (EXPENSE)Interest
      expense and financing costs
              
              
              (149,537
              )
              
              
              (23,550
              )Change
      in accrued derivative liability
              
              
              577,887
              
              
              
              (108,708
              )Loss
      on conversion of debt to equity
              
              
              (1,080,169
              )
              
              
              -TOTAL
      OTHER INCOME (EXPENSE)
              
              
              (651,819
              )
              
              
              (132,258
              )LOSS
      BEFORE PROVISION FOR INCOME TAXES
              
              
              (1,502,715
              )
              
              
              (360,153
              )PROVISION
      FOR INCOME TAXES
              
              
              -
              
              
              
              -NET
      LOSS
              
              
              (1,502,715
              )
              
              
              (360,153
              )PREFERRED
      STOCK DIVIDENDS
              
              
              (280,103
              )
              
              
              (286,815
              )NET
      LOSS ATTRIBUTED TO COMMON STOCKHOLDERS
              
              $
              (1,782,818
              )
              
              $
              (646,968
              )NET
      LOSS PER SHARE ATTRIBUTED TO COMMONSTOCKHOLDERS
      - BASIC AND DILUTED:
              
              $
              (0.04
              )
              
              $
              (0.06
              )WEIGHTED
      AVERAGE SHARES OUTSTANDING:BASIC
      AND DILUTED
              
              
              48,437,360
              
              
              
              10,036,647
 
 
 The
accompanying notes are an integral part of these consolidated financial
statements.
  F-3
 
 NuMobile,
Inc and Subsidiaries
 Consolidated
Statement of Stockholders' Deficit
   Additional
              
              
              
              
              
              TotalSeries
      C
              
              
              Common
      Stock
              
              
              Paid-in
              
              
              Accumulated
              
              
              Stockholders'Shares
              
              
              Amount
              
              
              Shares
              
              
              Amount
              
              
              Capital
              
              
              Deficit
              
              
              DeficitBalance,
      December 31, 2007
              
              
              228,000
              
              
              $
              228
              
              
              
              9,307,247
              
              
              $
              9,307
              
              
              $
              2,474,230
              
              
              $
              (7,122,265
              )
              
              $
              (4,638,500
              )Common
      stock issued for conversion of Series D preferred stockand
      preferred stock dividends
              
              
              
              
              
              
              
              
              
              
              737,500
              
              
              
              738
              
              
              
              7,522
              
              
              
              
              
              
              
              8,260Accrued
      preferred stock dividends
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              (286,815
              )
              
              
              (286,815
              )Conversion
      of Series C preferred stock to Series D preferred stock
              
              
              (223,000
              )
              
              
              (223
              )
              
              
              
              
              
              
              
              
              
              
              (222,777
              )
              
              
              
              
              
              
              (223,000
              )Net
      loss
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              (360,153
              )
              
              
              (360,153
              )Balance,
      December 31, 2008
              
              
              5,000
              
              
              
              5
              
              
              
              10,044,747
              
              
              
              10,045
              
              
              
              2,258,975
              
              
              
              (7,769,233
              )
              
              
              (5,500,208
              )Common
      stock issued for conversion of Series D preferred stockand
      preferred stock dividends
              
              
              
              
              
              
              
              
              
              
              59,636,299
              
              
              
              59,636
              
              
              
              722,056
              
              
              
              
              
              
              
              781,692Accrued
      preferred stock dividends
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              (280,103
              )
              
              
              (280,103
              )Conversion
      of debt to equity
              
              
              
              
              
              
              
              
              
              
              91,972,792
              
              
              
              91,972
              
              
              
              2,244,947
              
              
              
              
              
              
              
              2,336,919Shares
      issued for services
              
              
              
              
              
              
              
              
              
              
              415,500
              
              
              
              416
              
              
              
              8,894
              
              
              
              
              
              
              
              9,310Net
      loss
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              (1,502,715
              )
              
              
              (1,502,715
              )Balance,
      December 31, 2009
              
              
              5,000
              
              
              $
              5
              
              
              
              162,069,338
              
              
              $
              162,069
              
              
              $
              5,234,872
              
              
              $
              (9,552,051
              )
              
              $
              (4,155,105
              )
 
 
 The
accompanying notes are an integral part of these consolidated financial
statements.
  F-4
 
 NuMobile,
Inc and Subsidiaries
 Consolidated
Statements of Cash Flows
  
 2009
              
              
              2008CASH
      FLOW FROM OPERATING ACTIVITIES:Net
      loss
              
              $
              (1,502,715
              )
              
              $
              (360,153
              )Adjustment
      to reconcile net loss to net cash used
      in operating activities:Depreciation
      and amortization
              
              
              314,980
              
              
              
              -Amortization
      of debt discount
              
              
              23,413
              
              
              
              -Change
      in accrued derivative liability
              
              
              (577,887
              )
              
              
              108,708Non-cash
      financing charge
              
              
              -
              
              
              
              20,000Issuance
      of Series D preferred stock for services
              
              
              -
              
              
              
              90,000Loss
      on convertion of debt to equity
              
              
              1,080,169
              
              
              
              -Common
      stock issued for services
              
              
              9,310
              
              
              
              -Note
      payable - related party issued for compensation
              
              
              100,000
              
              
              
              -Changes
      in operating assets and liabilities:Accounts
      receivable
              
              
              120,239
              
              
              
              -Prepaid
      expenses
              
              
              2,043
              
              
              
              -Accounts
      payable and accrued expenses
              
              
              (164,056
              )
              
              
              7,434Due
      to related party
              
              
              7,295
              
              
              
              -Accrued
      compensation - related party
              
              
              -
              
              
              
              45,000Net
      cash used in operating activities
              
              
              (587,209
              )
              
              
              (89,011
              )CASH
      FLOW FROM INVESTING ACTIVITIES:Cash
      purchased with acquisition
              
              
              103,438
              
              
              
              -Purchase
      of intangible assets
              
              
              (7,320
              )Net
      cash provided by financing activities
              
              
              96,118
              
              
              
              -CASH
      FLOW FROM FINANCING ACTIVITIES:Cash
      overdraft, net
              
              
              -
              
              
              
              1,631Proceeds
      from notes payable
              
              
              688,498
              
              
              
              105,000Payments
      on notes payable
              
              
              (37,591
              )
              
              
              -Net
      cash provided by financing activities
              
              
              650,907
              
              
              
              106,631NET
      INCREASE IN CASH AND CASH EQUIVALENTS
              
              
              159,816
              
              
              
              17,620CASH
      AND CASH EQUIVALENTS, Beginning of period
              
              
              17,620
              
              
              
              -CASH
      AND CASH EQUIVALENTS, End of period
              
              $
              177,436
              
              
              $
              17,620SUPPLEMENTAL
      DISCLOSURES OF CASH FLOW INFORMATION:Interest
      paid
              
              $
              -
              
              
              $
              -Income
      taxes paid
              
              $
              -
              
              
              $
              -SUPPLEMENTAL
      NON-CASH INVESTING AND FINANCING ACTIVITIES:Conversion
      of debentures/notes payable to common stock
              
              $
              2,336,918
              
              
              $
              -Conversion
      of Series D & E dividends to common stock
              
              $
              250,593
              
              
              $
              1,260Conversion
      of Series A, D & E preferred stock to common stock
              
              $
              531,100
              
              
              $
              7,000Accrued
      compensation converted to convertible note - related party
              
              $
              -
              
              
              $
              35,000
 
 
 The
accompanying notes are an integral part of these consolidated financial
statements.
 
 F-5
 
 NuMobile,
Inc and Subsidiaries
 Notes
to Consolidated Financial Statements
 For
the Years Ended December 31, 2009 and 2008
 
 
 NOTE
1 – ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
  Organization and Basis of
Presenation
  NuMobile,
Inc. (the “Company”) was organized under the laws of Nevada on March 25, 1999 as
Thoroughbred Interests, Inc.  Effective May 18, 2004, the Company
changed its name to Phoenix Interests, Inc. and effective July 14, 2009 changed
its name to NuMobile,Inc.  The Company’s prior business operations
consisted of purchasing, training and selling of thoroughbred
horses.  The Company has recently launched a new business strategy to
create a comprehensive and global mobile computing technology
business.
  Going
Concern
  The
accompanying consolidated financial statements have been prepared in conformity
with accounting principles generally accepted in the United States of America,
which contemplate continuation of the Company as a going concern.  The
Company has incurred a net loss of $1,502,715, used cash for operations of
$587,209 for the year ended December 31, 2009, has an accumulated deficit of
$9,552,051 as of December 31, 2009 and has a working capital deficit of
$9,031,000 as of December 31, 2009.  These conditions raise
substantial doubt as to the Company’s ability to continue as a going concern.
These consolidated financial statements do not include any adjustments that
might result from the outcome of this uncertainty.  These consolidated
financial statements do not include any adjustments relating to the
recoverability and classification of recorded asset amounts, or amounts and
classification of liabilities that might be necessary should the Company be
unable to continue as a going concern. Management believes that it can continue
to raise equity or debt financing to support its operations or find an
acquisition candidate to complete a merger. Management believes that this could
cause additional dilution to its shares of common stock. During September 2009,
the Company acquired, through a stock purchase, Enhance Network Communication,
Inc., which has developed a proprietary large enterprise network security
technology designed for managing the information management requirements of
network delivered government services.  During October 2009, the
Company also acquired, through a stock purchase, Stonewall Networks, Inc. which
has developed a proprietary software solution for mobile network security,
including an innovative security policy management product for enterprise
customers.
  Stock
Splits
  On
January 7, 2004, the Company affected a one-for-ten (1 for 10) reverse stock
split of its common stock.  On January 20, 2006, the Company
authorized a one-for-fifty (1 for 50) reverse stock splits of its common
stock.  On June 1, 2009, the Company authorized a one-for-one hundred
sixty (1 for 160) reverse stock split of its common stock. All share information
for common shares has been retroactively restated for these three reverse stock
splits.
  Consolidated Financial
Statements
  The
accompanying consolidated financial statements include the accounts of the
Company and its wholly-owned subsidiaries, Online Enterprises, Inc., Enhance
Network Communication, Inc. from the date of acquisition (September 17, 2009),
and Stonewall Networks, Inc. from the date of acquisition (October 2, 2009). The
accompanying consolidated financial statements have been prepared in accordance
with accounting principles generally accepted in the United States of America.
All inter-company accounts and transactions have been eliminated.
  F-6
 
 NuMobile,
Inc and Subsidiaries
 Notes
to Consolidated Financial Statements
 For
the Years Ended December 31, 2009 and 2008
 Stock Based
Compensation
  The
Company records stock-based compensation in accordance with ASC Topic 718,
“Compensation – Stock Compensation.”  ASC 718 requires companies to
measure compensation cost for stock-based employee compensation at fair value at
the grant date and recognize the expense over the employee’s requisite service
period. The Company recognizes in the statement of operations the grant-date
fair value of stock options and other equity-based compensation issued to
employees and non-employees. There were no options outstanding as of December
31, 2009.
 Use of
Estimates
  The
preparation of consolidated financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosures of contingent assets and liabilities at
the date of the consolidated financial statements and the reported amounts of
revenue and expenses during the reporting periods.  As of December 31,
2009, the Company used estimates in determining accrued expenses, the value of
stock based compensation issued for services and the value of the accrued
derivative liability. Actual results could differ from these
estimates.
  Fair Value of Financial
Instruments
  For
certain of the Company’s financial instruments, including cash and cash
equivalents, accounts receivable, accounts payable and accrued expenses and
notes payable, the carrying amounts approximate their fair values due to their
short maturities.
 
 ASC Topic
820, “Fair Value Measurements and Disclosures,” requires disclosure of the fair
value of financial instruments held by the Company. ASC Topic 825, “Financial
Instruments,” defines fair value, and establishes a three-level valuation
hierarchy for disclosures of fair value measurement that enhances disclosure
requirements for fair value measures.  The carrying amounts reported
in the consolidated balance sheets for receivables and current liabilities each
qualify as financial instruments and are a reasonable estimate of their fair
values because of the short period of time between the origination of such
instruments and their expected realization and their current market rate of
interest. The three levels of valuation hierarchy are defined as
follows:
  ●
              Level
      1 inputs to the valuation methodology are quoted prices for identical
      assets or liabilities in active markets.●
              Level
      2 inputs to the valuation methodology include quoted prices for similar
      assets and liabilities in active markets, and inputs that are observable
      for the asset or liability, either directly or indirectly, for
      substantially the full term of the financial
instrument.●
              Level
      3 inputs to the valuation methodology are unobservable and significant to
      the fair value measurement.
  F-7
  NuMobile,
Inc and Subsidiaries
 Notes
to Consolidated Financial Statements
 For
the Years Ended December 31, 2009 and 2008
 
 The
Company analyzes all financial instruments with features of both liabilities and
equity under ASC 480, “Distinguishing Liabilities from Equity,” and ASC
815.
 
 The
following table represents our assets and liabilities by level measured at fair
value on a recurring basis at December 31, 2009.
 
 Description
              
              Level
      1
              
              Level
      2
              
              Level
      3LiabilitiesAccrued
      derivative liability
              
              -
              
              $1,313,307
              
              -
 
 Cash and Cash
Equivalents
  For
purposes of the statements of cash flows, the Company defines cash equivalents
as all highly liquid debt instruments purchased with a maturity of three months
or less, plus all certificates of deposit.
  Accounts
Receivable
 
 The
Company maintains reserves for potential credit losses on accounts receivable.
Management reviews the composition of accounts receivable and analyzes
historical bad debts, customer concentrations, customer credit worthiness,
current economic trends and changes in customer payment patterns to evaluate the
adequacy of these reserves.
 
 Concentration of Credit
Risk
  Financial
instruments, which potentially subject the Company to concentrations of credit
risk, consist of cash and accounts receivables. The Company places its cash with
high quality financial institutions and at times may exceed the FDIC $250,000
insurance limit. The Company extends credit based on an evaluation of the
customer’s financial condition, generally without collateral. Exposure to losses
on receivables is principally dependent on each customer’s financial condition.
The Company monitors its exposure for credit losses and maintains allowances for
anticipated losses, as required.
  F-8
  NuMobile,
Inc and Subsidiaries
 Notes
to Consolidated Financial Statements
 For
the Years Ended December 31, 2009 and 2008
  Property and
Equipment
 
 Property
and equipment are stated at cost. Expenditures for maintenance and repairs are
charged to earnings as incurred; additions, renewals and betterments are
capitalized. When property and equipment are retired or otherwise disposed of,
the related cost and accumulated depreciation are removed from the respective
accounts, and any gain or loss is included in operations. Depreciation of
property and equipment is provided using the straight-line method for
substantially all assets with estimated lives as follows:
 
 Computer
      equipment
              5
      yearsOffice
      furniture and fixtures
              7
      yearsOffice
      equipment
              5
      years
 
 The
following are the details of property and equipment at December 31,
2009:
  2009Computer
      equipment
              
              $
              9,418Office
      furniture and fixtures
              
              
              705Office
      equipment
              
              
              7,625Total
              
              
              17,748Less
      accumulated depreciation
              
              
              (3,471
              )$
              14,277
 
 Intangible
Assets
 
 Intangible
assets consist of purchased technology in connection with the acquisition of
Enhance Network Communication, Inc. and Stonewall Networks, Inc. (See Note
7).  The Company evaluates intangible assets for impairment, at least
on an annual basis and whenever events or changes in circumstances indicate that
the carrying value may not be recoverable from its estimated future cash flows.
Recoverability of intangible assets is measured by comparing its net book value
to the related projected undiscounted cash flows from these assets, considering
a number of factors including past operating results, budgets, economic
projections, market trends and product development cycles. If the net book value
of the asset exceeds the related undiscounted cash flows, the asset is
considered impaired, and a second test is performed to measure the amount of
impairment loss.
  F-9
  NuMobile,
Inc and Subsidiaries
 Notes
to Consolidated Financial Statements
 For
the Years Ended December 31, 2009 and 2008
 The
following are the details of intangible assets at December 31,
2009:
  2009Software
              
              $
              485,078Purchased
      technology
              
              
              4,638,049Total
              
              
              5,123,127Less
      Accumulated amortization
              
              
              (311,509
              )Intangibles,
      net
              
              $
              4,811,618
 
 The
following table summarizes the amortization over the next 5 years:
 
 Year
      Ended December 31,
              
              Amount2010
              
              $
              1,228,9562011
              
              
              997,5712012
              
              
              910,5282013
              
              
              910,5282014
              
              
              764,035
 
 Impairment of Long-Lived
Assets
  The
Company applies the provisions of ASC Topic 360, “Property, Plant, and
Equipment,” which addresses financial accounting and reporting for the
impairment or disposal of long-lived assets. ASC 360 requires impairment losses
to be recorded on long-lived assets used in operations when indicators of
impairment are present and the undiscounted cash flows estimated to be generated
by those assets are less than the assets’ carrying amounts. In that event, a
loss is recognized based on the amount by which the carrying amount exceeds the
fair value of the long-lived assets. Loss on long-lived assets to be disposed of
is determined in a similar manner, except that fair values are reduced for the
cost of disposal. Based on its review, the Company believes that as of December
31, 2009 and 2008, there was no significant impairment of its long-lived
assets.
 
 Accrued Derivative
Liability
  The
convertible debenture and the Series A, D and E preferred stock can be converted
into common stock at a conversion price that is a percentage of the market
price; therefore the number of shares that could be required to be delivered
upon “net-share settlement” is essentially indeterminate. The Company has
bifurcated the beneficial conversion features embedded in its convertible
debentures and preferred stock and has recorded the fair value of these
beneficial conversion features as a current liability.
  Convertible Preferred Stock
and Convertible Note
  The
Company’s Series A, D and E preferred stock and convertible note are presented
as a current liability since the Company has financial instruments that are
convertible into common stock at a conversion price that is a percentage of the
market price; therefore the number of shares that could be required to be
delivered upon “net-share settlement” is essentially indeterminate and the
Company does not have enough authorized shares to satisfy the conversion of its
convertible preferred stock.
  F-10
 
 NuMobile,
Inc and Subsidiaries
 Notes
to Consolidated Financial Statements
 For
the Years Ended December 31, 2009 and 2008
 Revenue
Recognition
  The
Company's revenue recognition policies are in compliance with SEC Staff
Accounting Bulletin (SAB) 104. Revenue is recognized when services are rendered
to customers when a formal arrangement exists, the price is fixed or
determinable, the delivery is completed, no other significant obligations of the
Company exist and collectability is reasonably assured. Payments received before
all of the relevant criteria for revenue recognition are satisfied are recorded
as unearned revenue.
 
 Income
Taxes
  The
Company accounts for income taxes in accordance with ASC Topic 740, “Income
Taxes.” ASC 740 requires a company to use the asset and liability method of
accounting for income taxes, whereby deferred tax assets are recognized for
deductible temporary differences, and deferred tax liabilities are recognized
for taxable temporary differences. Temporary differences are the differences
between the reported amounts of assets and liabilities and their tax bases.
Deferred tax assets are reduced by a valuation allowance when, in the opinion of
management, it is more likely than not that some portion, or all of, the
deferred tax assets will not be realized.  Deferred tax assets
and liabilities are adjusted for the effects of changes in tax laws and rates on
the date of enactment.
 
 Under ASC
740, a tax position is recognized as a benefit only if it is “more likely than
not” that the tax position would be sustained in a tax examination, with a tax
examination being presumed to occur. The amount recognized is the largest amount
of tax benefit that is greater than 50% likely of being realized on examination.
For tax positions not meeting the “more likely than not” test, no tax benefit is
recorded. The adoption had no effect on the Company’s consolidated financial
statements.
 
 Loss Per
Share
  The
Company reports loss per share in accordance with ASC Topic 260, “Earnings Per
Share.”  Basic earnings per share is based upon the weighted average
number of common shares outstanding.  Diluted earnings per share is
based on the assumption that all dilutive convertible shares and stock warrants
were converted or exercised. Dilution is computed by applying the treasury stock
method. Under this method, warrants are assumed to be exercised at the beginning
of the period (or at the time of issuance, if later), and as if funds obtained
thereby were used to purchase common stock at the average market price during
the period.  The following potential common shares have been excluded
from the computation of diluted net loss per share for the years ended December
31, 2009 and 2008 because the effect would have been anti-dilutive:
  2009
              
              
              2008Common
      stock issuable (approximate) upon conversion of notes
    payable
              
              
              -
              
              
              
              42,237,750Common
      stock issuable (approximate) upon conversion of preferred
      stock
              
              
              640,729,453
              
              
              
              261,341,065
 
 F-11
  NuMobile,
Inc and Subsidiaries
 Notes
to Consolidated Financial Statements
 For
the Years Ended December 31, 2009 and 2008
  Comprehensive
Loss
  For the
year ended December 31, 2009 and 2008, the Company did not have items that
represented other comprehensive income and, accordingly, a statement of
comprehensive loss has not been included herein.
  Reclassification
  Certain
reclassifications have been made to the 2008 balances to conform to the 2009
presentation.
  Recently Issued Accounting
Pronouncements
  On July
1, 2009, the Company adopted Accounting Standards Update (“ASU”) No.
2009-01, “Topic 105 - Generally Accepted Accounting Principles - amendments
based on Statement of Financial Accounting Standards No. 168, “The FASB
Accounting Standards CodificationTM and the Hierarchy of Generally Accepted
Accounting Principles” (“ASU No. 2009-01”).  ASU No. 2009-01
re-defines authoritative GAAP for nongovernmental entities to be only comprised
of the FASB Accounting Standards CodificationTM (“Codification”) and, for SEC
registrants, guidance issued by the SEC.  The Codification is a
reorganization and compilation of all then-existing authoritative GAAP for
nongovernmental entities, except for guidance issued by the SEC.  The
Codification is amended to effect non-SEC changes to authoritative
GAAP.  Adoption of ASU No. 2009-01 only changed the referencing
convention of GAAP in Notes to the Consolidated Financial
Statements.
 
 In
October 2009, the FASB issued an Accounting Standards Update
("ASU") regarding accounting for own-share lending arrangements in
contemplation of convertible debt issuance or other financing.  This
ASU requires that at the date of issuance of the shares in a share-lending
arrangement entered into in contemplation of a convertible debt offering or
other financing, the shares issued shall be measured at fair value and be
recognized as an issuance cost, with an offset to additional paid-in capital.
Further, loaned shares are excluded from basic and diluted earnings per share
unless default of the share-lending arrangement occurs, at which time the loaned
shares would be included in the basic and diluted earnings-per-share
calculation.  This ASU is effective for fiscal years beginning on or
after December 15, 2009, and interim periods within those fiscal years for
arrangements outstanding as of the beginning of those fiscal years. The Company
is currently evaluating the impact of this ASU on its consolidated financial
statements.
 
 On
December 15, 2009, the FASB issued ASU No. 2010-06 Fair Value Measurements and
Disclosures Topic 820 “Improving Disclosures about Fair Value
Measurements”.  This ASU requires some new disclosures and clarifies
some existing disclosure requirements about fair value measurement as set forth
in Codification Subtopic 820-10. The FASB’s objective is to improve these
disclosures and, thus, increase the transparency in financial
reporting.  The adoption of this ASU will not have a material impact
on the Company’s consolidated financial statements.
 
 NOTE
2 – RELATED PARTY TRANSACTIONS
  Total
rent expense accrued to Mr. Tilton, the Company’s CEO for the year ended
December 31, 2009 and 2008 was $4,500 and $18,000, respectively.
  For
additional related party transactions see Note 5.
  F-12
 
 NuMobile,
Inc and Subsidiaries
 Notes
to Consolidated Financial Statements
 For
the Years Ended December 31, 2009 and 2008
 
 
 NOTE
3 – CONVERTIBLE DEBT
 
 In 2007,
the Company converted at total of $37,480 of accounts payable and $229,022 of
officer compensation into convertible debt.  In addition, in 2008 the
Company converted $35,000 of officer compensation into convertible
debt.   In 2009, the convertible debt due to an officer was sold
to a non-related party.  The convertible debt can be converted at the
option of the debt holder into shares of the Company’s common stock at a 50%
discount to the market price at the date of conversion.  During the
year ended December 31, 2009, all of these convertible debentures were converted
into common stock.
 
 On
September 21, 2009, the Company exchanged with a Holder 3,000 shares of its
Series D preferred stock for a $301,250 convertible note, due March 21, 2010.
The note accrues interest at 12% per annum. The balance of the note was $52,000
at December 31, 2009. The number of shares to be received on conversion is
determined by multiplying the principal being converted by 1% times the number
of months from January 1, 2004 through the conversion notice date. The
conversion price is equal to the lesser of 70% of the closing bid price on the
date of the notice of conversion by the Holder and $0.0192. The Company recorded
a beneficial conversion feature liability on September 21, 2009, valued at
$46,569, which was recorded against the face value of the note and is being
amortized over the note’s term. The Company valued the beneficial conversion
feature liability on September 21, 2009 with the following assumptions: (1)
Exercise price of $0.0192, (2) Term of 0.5 years, (3) Volatility of 0% and (4)
Risk-free rate of 0.15%. The value of the liability at December 31, 2009 was
$35,476, and the change has been recorded through operations as a change in fair
value of derivative liabilities in the amount of $11,094. The Company valued the
beneficial conversion feature liability on December 31, 2009 with the following
assumptions: (1) Exercise price of $0.00378, (2) Term of 0.25 years, (3)
Volatility of 0% and (4) Risk-free rate of 0.20%.
  NOTE
4 – NOTE PAYABLE
  Notes
payable consisted of the follows at December 31, 2009 and 2008:
  2009
              
              
              2008Note
      payable to investor; interest accrues at 12%; note is unsecured and due
      upon demand
              
              $
              108,400
              
              
              $
              25,000Note
      payable to investor; interest accrues at 12%; note is unsecured and due
      upon demand
              
              
              -
              
              
              
              50,000Note
      payable to investor; interest accrues at 18%; note is unsecured and due
      upon demand
              
              
              10,000
              
              
              
              10,000Note
      payable to investor; interest accrues at 18%; note is unsecured and due
      upon demand
              
              
              19,119
              
              
              
              25,000Note
      payable assumed in connection with purchase of Enhance Network
      Communication, Inc.
              
              
              425,000
              
              
              
              -Note
      payable to shareholders of Stonewall Networks, Inc.; note is due on
      September 9, 2010
              
              
              1,350,000
              
              
              
              -Note
      payable to shareholders of Enhance Network Communication,
      Inc.;  note is due on September 9, 2010
              
              
              1,000,000
              
              
              
              -Note
      payable to investor; note is unsecured; interest accrues at 8% and due
      March 31, 2010
              
              
              182,440
              
              
              
              -Note
      payable to investor; note is unsecured; interest accrues at 8% and due
      June 15, 2010
              
              
              100,000
              
              
              
              -Note
      payable to investor; note is unsecured; interest accrues at 8% and due
      December 31, 2008. Note is past due.
              
              
              25,016
              
              
              
              -Note
      payable to investor; note is unsecured; interest accrues at 8% and due
      October 15, 2011
              
              
              610,058
              
              
              
              -$
              3,830,033
              
              
              $
              110,000
 
 F-13
  NuMobile,
Inc and Subsidiaries
 Notes
to Consolidated Financial Statements
 For
the Years Ended December 31, 2009 and
2008
   NOTE
5 – NOTE PAYABLE – RELATED PARTIES
  Notes
payable – related parties consisted of the follows at December 31, 2009 and
2008:
 
 2009
              
              
              2008Note
      payable to officer; note is unsecured and does not accrue interest; due on
      December 31, 2009
              
              $
              100,000
              
              
              $
              -Loan
      payable to company wholly owned by officer of Stonewall Networks, Inc.;
      interest accrues at Prime Rate plus 1%; note is unsecured and due upon
      demand
              
              
              386,153
              
              
              
              -Note
      payable to employee of Stonewall Networks, Inc.; does not accrue interest;
      note is unsecured and due on demand
              
              
              105,026
              
              
              
              -Note
      payable to company wholly owned by officer of Stonewall Networks, Inc.;
      does not accrue interest; note is unsecured and due on
    demand
              
              
              61,439
              
              
              
              -Note
      payable to officer of Stonewall Networks, Inc.; does not accrue interest;
      note is unsecured and due on demand
              
              
              18,075
              
              
              
              -Note
      payable to company wholly owned by officer of Enhance Network
      Communication, Inc.; does not accrue interest;  note is
      unsecured and due on demand
              
              
              10,100
              
              
              
              -$
              680,793
              
              
              $
              -
  F-14
  NuMobile,
Inc and Subsidiaries
 Notes
to Consolidated Financial Statements
 For
the Years Ended December 31, 2009 and 2008
  NOTE
6 – STOCKHOLDERS’ DEFICIT
  On
January 2, 2004, the Company filed a Certificate of Amendment to its Articles of
Incorporation for the State of Nevada to amend its capitalization. The amendment
grants the Company the authority to issue 1 billion shares of par value $0.001
stock consisting of 20,000,000 preferred shares and 980,000,000 common
shares.
  On
October 5, 2005, the Company filed an Information Statement requesting approval
from the stockholders to give the Company’s board of directors the authority to
(1) effect a reverse stock split of each share of common stock of the Company at
a ratio of one share for up to 50 shares of common stock outstanding, as
determined by the Company’s board of directors at its discretion, and (2) amend
the Company’s Articles of Incorporation to increase from 980,000,000 to
5,000,000,000 the number of shares of common stock the Company is authorized to
issue. The stockholders approved items (1) and (2) above and on November 9,
2005, the Company filed a Certificate of Amendment with the Nevada Secretary of
State increasing the number of authorized common shares to
5,000,000,000.
  On
January 7, 2004, the Company affected a one-for-ten reverse stock split of its
common stock. On January 20, 2006, the Company authorized a one for fifty
reverse stock split of its common stock. On June 1, 2009, the Company authorized
a one for one hundred sixty reverse stock splits of its common stock. All share
information for common shares has been retroactively restated for these two
reverse stock splits.
 Common
Stock
 The
Company had the following transactions in its common stock.
 For the
year ended December 31, 2009, the Company issued:
  ●
              59,636,299
      shares of common stock for the for conversion of Series D stock and
      preferred stock dividends of $531,100 and $250,593,
      respectively;●
              415,500
      shares of common stock for services valued at $9,310 (the value was
      determined the fair value of the Company’s stock at the date of issuance);
      and●
              91,972,792
      shares of common stock for the conversion of convertible debt/notes
      payable of $2,336,919.
 For the
year ended December 31, 2008, the Company issued:
 ●
              737,500
      of common stock for the for conversion of Series D stock and preferred
      stock dividends of $7,000 and $1,260,
  respectively.
 Preferred
Stock
  The
Company has debt and equity instruments that can be converted into common stock
at a conversion prices that are a percentage of the market price; therefore the
number of shares that could be required to be delivered upon “net-share
settlement” is essentially indeterminate. Therefore, the Series A, D and E
Preferred Stock which can be converted into shares of common stock are shown in
the accompanying consolidated balance sheet as a current liability.
  F-15
  NuMobile,
Inc and Subsidiaries
 Notes
to Consolidated Financial Statements
 For
the Years Ended December 31, 2009 and 2008
  Series A Preferred Stock -
There are 5,000 shares of Series A preferred stock authorized. Each share of
Series A preferred stock is entitled to receive a monthly dividend of $2.00 per
share, payable quarterly in arrears, and is convertible into common stock at the
rate of $100 per share ($500,000 in the aggregate) at a discount of (1) 75% of
the closing bid price of the common stock (if at the option of the holder), or
(2) 60% of the closing bid price of the common stock (if at the option of our
company). In the event of liquidation, all shares of Series A preferred stock
would automatically be converted into shares of our common stock at rate of $100
per share, with holders of shares of Series A preferred stock being entitled to
receive, in the aggregate, shares of our common stock valued at $500,000. Shares
of Series A preferred stock vote with shares of our common stock on an
as-converted basis.
  Series B Preferred Stock -
There are 100,000 shares of Series B preferred stock authorized. In the event of
liquidation, each share of Series B preferred stock ranks equivalent to one
share of our common stock. Shares of Series B preferred stock are not entitled
to participate in dividends declared on our common stock. The Series B preferred
stock votes together with our common stock on the basis of 1,000 votes per
share.
  Series C Preferred Stock -
There are 12,000,000 shares of Series C preferred stock authorized. Each share
of Series C preferred stock is convertible into one share of our common stock.
The Series C preferred stock is non-interest bearing, does not have voting
rights, and is not entitled to receive dividends. In the event of a liquidation,
each share of Series C preferred stock will automatically convert into one share
of our common stock and will otherwise not be entitled to any preference over
shares of our common stock or any shares of our preferred stock. Shares of
Series C preferred stock are entitled to name two members of our board of
directors.
  Series D Preferred Stock -
There are 25,000 shares of Series D preferred stock authorized. Shares of Series
D preferred stock are entitled to participate, on an as-converted basis, in any
dividends declared on the common stock. In the event of a voluntary or
involuntary liquidation, dissolution or winding up of the Corporation, holders
of Series D preferred stock shall be entitled to share pari passu with the
holders of shares of common stock in the assets of the Corporation, on an as
converted basis, whether such assets are capital or surplus of any nature. Any
outstanding shares of Series D preferred stock may, at the option of the holder,
be converted at any time or from time to time into fully paid and nonassessable
shares of common stock at the conversion rate in effect at the time of
conversion, determined as provided herein, except that (1) a holder of shares of
Series D preferred stock may at any given time convert only up to that number of
shares of Series D preferred stock as would result in the aggregate beneficial
ownership of the Company’s common stock (calculated in accordance with Rule
13d-3 of the Securities Exchange Act of 1934, as amended) of that holder and all
persons affiliated with that holder not being more than 4.99% of the Company’s
common stock then outstanding and (2) a holder of shares of Series D preferred
stock may not convert more than half of that holder’s shares of Series D
preferred stock within any 30-day period. The number of shares into which one
share of Series D preferred stock is convertible will be determined by dividing
(1) the sum of (A) Stated Value plus (B) an amount equal to 1% of the Stated
Value multiplied by the number of months from the original issue date until the
date of conversion (pro rated for any period of less than a month) by (2) the
conversion price at that time. The conversion price is the lesser of (1) 70% of
the closing bid price and (2) $0.0192 (the amount being 120% of the closing bid
price on December 22, 2004).
  Series E Preferred Stock -
There are 25,000 shares of Series E preferred stock authorized. Shares of Series
E preferred stock may, at the option of the holder, be converted into shares of
common stock at the conversion rate in effect at the time of conversion. The
number of shares into which one share of Series E preferred stock is convertible
will be determined by dividing (1) the sum of (A) the “Stated Value” (equal to
$100) plus (B) an amount equal to 1.5% of the Stated Value multiplied by the
number of months from the date of issuance until the date of conversion (pro
rated for any period of less than a month) by (2) the lesser of (A) $0.006 and
(B) the Conversion Price at that time. For these purposes, “Conversion Price”
means 70% of the Closing Bid Price, and “Closing Bid Price” on a given day means
the lowest closing bid price of the common stock out of the closing bid price of
the common stock on each of the five immediately preceding trading days on
NASDAQ or any other principal securities price quotation system or market on
which prices of the common stock are reported.
  F-16
 NuMobile,
Inc and Subsidiaries
 Notes
to Consolidated Financial Statements
 For
the Years Ended December 31, 2009 and 2008
   NOTE
7 – ACQUISITION
  On
September 17, 2009 the Company entered into a stock purchase agreement with
Enhance Network Communication, Inc., a California corporation
("Enhance").  Enhance is an information technology company
headquartered in Cupertino, California, that has developed a proprietary large
enterprise network security technology designed for managing the information
management requirements of network delivered government services. The Company
purchased from the shareholders of Enhance 1,500 shares of common stock of
Enhance, representing 100% of the outstanding capital stock of Enhance. The
Company issued to the Enhance shareholders a note in the principal amount of
$5,000,000 (the "Note"). $1,000,000 of the principal amount of the Note (the
"Initial Principal Amount") will be due and payable on September 9, 2010. The
Company's obligation to repay the remaining $4,000,000 principal amount of the
Note (the "Final Principal Amount") is conditioned upon Enhance entering into a
contract for its proprietary technology that contemplates the generation of at
least $20,000,000 in revenue and $8,000,000 in gross margin prior to April 1,
2011 (the "Final Principal Amount Conditions"). If the Final Principal Amount
Conditions are met, the Final Principal Amount will be due and payable on
September 9, 2014. If the Final Principal Amount Conditions are not met, the
Note shall be deemed paid in full and cancelled on April 1, 2011, subject to the
payment of the Initial Principal Amount, interest thereon, and any other amounts
due thereon. Interest on the Note accrues at the rate of 8% per annum commencing
on September 9, 2009, with respect to the Initial Principal Amount and April 1,
2011 with respect to the Final Principal Amount, and is due and payable upon
maturity of the Initial Principal Amount and Final Principal Amount (provided
the Final Principal Amount Conditions are met) respectively. If the Final
Principal Amount Conditions are met, the shareholders of Enhance will have the
option to repurchase the 1,500 shares of common stock of Enhance for $5,000,000
in cash and the cancellation of the Note.  The Final
Principal Amount of $4,000,000 is considered a contingent note and will not be
recorded on the balance sheet until the Final Principal Amount Conditions are
met.
 
 The Company purchased Enhance as part of its
strategy to build a portfolio of security and software solution
companies.  The following table summarizes the fair values of the
assets acquired and liabilities assumed at the date of
acquisition.
 
 Cash
              
              $
              98,421Accounts
      receivable
              
              
              250,410Property
      and equipment
              
              
              16,024Intangible
      asset
              
              
              1,889,681Accounts
      payable and accrued expenses
              
              
              (429,536
              )Notes
      payable
              
              
              (825,000
              )Purchase
      price
              
              $
              1,000,000
  F-17
 NuMobile,
Inc and Subsidiaries
 Notes
to Consolidated Financial Statements
 For
the Years Ended December 31, 2009 and 2008
 The
intangible asset is being amortized over 5 years using the straight line
method.
 
 On
October 12, 2009, the Company entered into a stock purchase agreement, dated
October 7, 2009 with Stonewall Networks, Inc., a Delaware corporation
(“Stonewall”) and the shareholders of Stonewall. Stonewall is a development
stage information technology security product company headquartered in Cary,
North Carolina. Pursuant to the Purchase Agreement, on October 15, 2009, the
Company purchased from the shareholders of Stonewall 3,720,000 shares of common
stock and 5,924,243 shares of Series A preferred stock of Stonewall,
representing 100% of the outstanding capital stock of Stonewall. The Company
issued to the Stonewall shareholders notes in the aggregate principal amount of
$1,350,000.
 
 The Company purchased Stonewall as part of its
strategy to build a portfolio of security and software solution
companies.  The following table summarizes the fair values of the
assets acquired and liabilities assumed at the date of
acquisition.
 
 Cash
              
              $
              5,017Prepaid
      expenses
              
              
              2,883Property
      and equipment
              
              
              1,724Intangible
      asset
              
              
              3,226,126Accounts
      payable and accrued expenses
              
              
              (669,308
              )Notes
      payable
              
              
              (1,216,442
              )Purchase
      price
              
              $
              1,350,000
 
 The
intangible asset is being amortized over 5 years using the straight line
method.
 
 The
following pro forma financial information presents the consolidated operations
of the Company as if the above mentioned acquisitions had occurred on January 1,
2008.
  For the
years ended December 31, 2009 and 2008:
 
 2009
              
              
              2008Revenues
              
              $
              839,844
              
              
              $
              1,143,297Gross
      profit
              
              $
              462,786
              
              
              $
              356,087Loss
      from operations
              
              $
              (1,772,076
              )
              
              $
              (1,929,197
              )Net
      loss
              
              $
              (2,530,762
              )
              
              $
              (2,242,480
              )Net
      loss attributed to common stockholders
              
              $
              (2,810,865
              )
              
              $
              (2,529,295
              )Loss
      per share
              
              $
              (0.06
              )
              
              $
              (0.25
              )
 
 F-18
 
 NuMobile,
Inc and Subsidiaries
 Notes
to Consolidated Financial Statements
 For
the Years Ended December 31, 2009 and 2008
 NOTE
8 – INCOME TAXES
  Deferred
income taxes reflect the net tax effects of temporary differences between the
carrying amounts of assets and liabilities for financial statement purposes and
the amounts used for income tax purposes. Significant components of the
Company’s deferred tax liabilities and assets as of December 31, 2009 and 2008
are as follows:
 
 December
      31,
              
              
              December
      31,2009
              
              
              2008Deferred
      tax assets:Federal
      net operating loss
              
              $
              2,246,000
              
              
              $
              1,760,000State
      net operating loss
              
              
              341,000
              
              
              
              266,000Total
      deferred tax assets
              
              
              2,587,000
              
              
              
              2,026,000Less
      valuation allowance
              
              
              (2,587,000
              )
              
              
              (2,026,000
              )$
              -
              
              
              $
              -
 
 At
December 31, 2009, the Company had federal and state net operating loss (“NOL”)
carryforwards of approximately $6,605,000 and $6,826,000, respectively. NOLs
could, if unused, expire in varying amounts in the years 2018 through
2020.
  The
valuation allowance increased by $561,000 and $134,000 during 2009 and 2008,
respectively. The Company has provided a 100% valuation allowance on the
deferred tax assets at December 31, 2009 and 2008 to reduce such asset to zero,
since there is no assurance that the Company will generate future taxable income
to utilize such asset. Management will review this valuation allowance
requirement periodically and make adjustments as warranted.
  The reconciliation of the effective
income tax rate to the federal statutory rate for the years ended December 31,
2009 and 2008 is as follows:
 
 2009
              
              
              2008Federal
      income tax rate
              
              
              (34.0%
              )
              
              
              (34.0%
              )State
      tax, net of federal benefit
              
              
              (5.0%
              )
              
              
              (5.0%
              )Increase
      in valuation allowance
              
              
              39.0%
              
              
              
              39.0%Effective
      income tax rate
              
              
              0.0%
              
              
              
              0.0%
 
 Utilization
of the net operating loss and tax credit carryforwards is subject to significant
limitations imposed by the change in control under I.R.C. 382, limiting its
annual utilization to the value of the Company at the date of change in control
times the federal discount rate.
  F-19
 
 NuMobile,
Inc and Subsidiaries
 Notes
to Consolidated Financial Statements
 For
the Years Ended December 31, 2009 and 2008
 NOTE
9 – COMMITMENTS AND CONTINGENCIES
  The
Company’s executive and administrative office is located in Louisville,
Kentucky. These premises are owned by James D. Tilton, Jr., the Company’s chief
executive officer. Through June 30, 2003, he did not charge the company any rent
for our use of these premises. Starting July 1, 2003, he has charged the company
$1,250 per month for its use of these premises, and during 2005 increased it to
$1,500 per month.  Since August 2006, the Company has not been able to
pay any rent. From June 2008 through July 2009, we moved to a space on Riverbend
Drive in Ludlow, Kentucky. Rent was $1,500 per month, and Mr. Tilton paid the
monthly rent on behalf of the Company. Total rent expense accrued to Mr. Tilton
for the year ended December 31, 2009 and 2008 was $4,500 and $18,000,
respectively.
  The
Company’s subsidiary, Enhance Network Communication, Inc., rents 642 square feet
of office space for its main corporate office in San Jose, California on a lease
that runs through April 30, 2010.  The amount of future lease payments
due from July 1, 2009 through April 30, 2010 under this agreement is
$11,880.
  The
Company’s subsidiary, Stonewall Networks, Inc., rented shared office space on a
lease that ran through October 31, 2008.  The Company then made
arrangements for its employees to work from home until it signed a new one-year
lease that started on November 9, 2009. Future monthly rent under this new lease
is $840. Total rent expense under the new lease will be $10,080.
  Rent
expense recorded in the financial statements for the years ended December 31,
2009 and 2008 was approximately $24,700 and $18,000, respectively.
  See Note
7 for disclosure of contingent liabilities in the amount of $4,000,000 related
to the acquisition of Enhance Network Communication, Inc.
  NOTE
10 – SUBSEQUENT EVENTS
  On
February 26, 2010, the Company exchanged with a Holder 2,000 of its Series D
preferred stock for a convertible promissory note in the amount of $201,250. The
note is due August 26, 2010 and bears interest at 12% per annum. The number of
shares to be received on conversion is determined by multiplying the principal
being converted by 1% times the number of months from January 1, 2004 through
the conversion notice date. The conversion price is equal to the lesser of 70%
of the closing bid price on the date of the notice of conversion by the Holder
and $0.0192.
  F-20