**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**Washington,
      DC 20549**





**FORM
      10-Q**




x
            **QUARTERLY
                REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
                1934****For
                the quarterly period ended March 31, 2007**OR ̈
            **TRANSITION
                REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
                1934**




Commission
      file number 000-26809




**SMARTVIDEO
      TECHNOLOGIES, INC.**


(Exact
      name of registrant as specified in its charter)




**Delaware**
            
            **91-1962104**(State
                or other jurisdiction of incorporation)
            
            (IRS
                Employer Identification No.)




**3505
                Koger Boulevard, Suite 400, Duluth, Georgia**
            **30096**(Address
                of principal executive offices)
            (Zip
                Code)




**(770)
      279-3100**


Issuer's
      telephone number, including area code




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




Indicate
      by check mark whether the registrant is a large accelerated filer, an
      accelerated filer, or a non-accelerated filer. See definition of accelerated
      filer and large accelerated filer in Rule 12(b)-2 of the Exchange
      Act.




Large
      Accelerated Filer  ̈ Accelerated Filer  ̈ Non-accelerated Filer x




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




The
      total
      number of shares of the issuer's common stock, $.001 par value, outstanding
      on
      May 9, 2007 was 61,795,300.










**SMARTVIDEO
      TECHNOLOGIES INC.**





**Index
      to Form 10-Q**


Forward-Looking
                    Statements**PART
                    I - FINANCIAL INFORMATION**Item
                    1. Financial StatementsHistorical
                    Financial StatementsCondensed
                    Consolidated Balance Sheet (Unaudited)
                1Condensed
                    Consolidated Statements of Operations (Unaudited
                2Condensed
                    Consolidated Statements of Cash Flows (Unaudited)
                3Notes
                    to Condensed Consolidated Financial Statements (Unaudited)
                4-18Item
                    2. Management's Discussion and Analysis of Financial Condition
                    and Results
                    of Operations
                19Item
                    3. Quantitative and Qualitative Disclosures About Market
                    RiskItem
                    4. Controls and Procedures
                23**PART
                    II - OTHER INFORMATION**
                25Item
                    1. Legal Proceedings
                25Item
                    2. Unregistered Sales of Equity Securities and Use of
                    Proceeds
                25Item
                    3. Submission of Matters to a Vote of Security Holders
                25Item
                    6. Exhibits
                26Signatures
                27


-i-





*Unless
      the context otherwise requires, all references to “SmartVideo*TM*,”
      “uVuMobile*TM***,******”****the
“Company,” “we,” “us” or “our” refers to SmartVideo Technologies, Inc. and its
      subsidiary. References in this report to annual financial data for SmartVideo
      refer to fiscal years ended December 31.*




*General
      information about SmartVideo can be found at www.smartvideo.com and
      www.uvumobile.com. We make our annual report on Form 10-K, quarterly reports
      on
      Form 10-Q, current reports on Form 8-K and amendments to these reports filed
      or
      furnished pursuant to Section 13 or 15(d) of the Securities Exchange Act of
      1934
      available free of charge on our website, as soon as reasonably practicable
      after
      they are electronically filed with the SEC. The information on our websites
      is
      not incorporated into this report.*




**FORWARD-LOOKING
      STATEMENTS**




We
      caution readers that this report includes “forward-looking statements” as that
      term is used in the Private Securities Litigation Reform Act of 1995.
      Forward-looking statements are based on current expectations rather than
      historical facts and they are indicated by words or phrases such as
“anticipate,” “could,” “may,” “might,” “potential,” “predict,” “should,”
“estimate,” “expect,” “project,” “believe,” “intend,” “plan,” “envision,”
“continue,” “target,” “contemplate,” or “will” and similar words or phrases or
      comparable terminology. We have based such forward-looking statements on our
      current expectations, assumptions, estimates and projections. While we believe
      these expectations, assumptions, estimates and projections are reasonable,
      such
      forward-looking statements are only predictions and involve known and unknown
      risks and uncertainties, and other factors that may cause actual results,
      performance or achievements to be materially different from any future results,
      performance or achievements expressed or implied by such forward-looking
      statements, many of which are beyond our control. Some of the factors that
      could
      affect our financial performance, cause actual results to differ from our
      estimates, or underlie such forward-looking statements, are set forth below
      and
      in various places in this report, including under the heading Item 2
“Management's Discussion and Analysis of Financial Condition and Results of
      Operations”. Additional factors that could lead to material changes in
      performance are contained in Item 1A. “Risk Factors” of our Annual Report on
      Form 10-K for the year ended December 31, 2006. These factors
      include:




·
            lack
                of funding to continue our operations and our ability to obtain future
                financing or funds;·
            general
                economic conditions;·
            significant
                uncertainty inherent in the mobile entertainment services
                industry;·
            we
                face intense and increasing competition from the telecommunications
                industry and the satellite and cable television industry; new competitors
                are likely to emerge and new technologies may further increase
                competition;·
            our
                programming costs may increase beyond our current expectations and
                we may
                be unable to obtain or renew programming agreements on acceptable
                terms or
                at all;·
            we
                are heavily dependent on complex information technologies and their
                support infrastructures; weaknesses in our information technology
                systems
                could have an adverse impact on our business; we may have difficulty
                attracting and retaining qualified personnel to maintain our information
                technology infrastructure;·
            our
                ability to successfully obtain a diverse customer base or retain
                our
                existing customers;·
            our
                ability to protect our intellectual property through patents, trademarks,
                copyrights and confidentiality agreements;·
            our
                ability to attract and retain a qualified employee
                base;·
            our
                ability to respond to new developments in technology and new applications
                of existing technology before our competitors;·
            our
                ability to develop, maintain and enhance our strategic relationships
                with
                wireless carriers, Multi-Service Operators (MSO's), handset manufacturers
                and distributors, key streaming media technology companies and content
                providers;·
            acquisitions,
                business combinations, strategic partnerships, divestures, and other
                significant transactions may involve additional
                uncertainties;




·
            our
                ability to maintain and execute a successful business strategy;
                and·
            we
                may face other risks described from time to time in periodic and
                current
                reports we file with the United States Securities and Exchange Commission
                (“SEC”).





You
      are
      cautioned not to place undue reliance on these forward-looking statements,
      which
      are valid only as of the date they were made. We undertake no obligation to
      update or revise any forward-looking statements to reflect new information
      or
      the occurrence of unanticipated events or otherwise.


-ii-




**PART
      I - FINANCIAL INFORMATION**




**SMARTVIDEO
      TECHNOLOGIES, INC. AND SUBSIDIARY**


**Consolidated
      Balance Sheets**


**March
      31, 2007 and December 31, 2006**








**March
                31,**
            
            **December
                31,****2007**
            
            **2006****Assets****Current
                Assets**Cash
            
            $
            1,248,687
            
            $
            3,696,581Certificate
                of deposit
            
            
            203,600
            
            
            201,447Accounts
                receivable - net of allowance for doubtful accounts of $0 and
                $0
            
            
            310,272
            
            
            162,795Broadcast
                rights - net of accumulated amortization of $2,273,192 and
                $2,273,192
            
            
            268,745
            
            
            301,281Prepaid
                expenses
            
            
            78,631
            
            
            125,189**Total
                Current Assets**
            
            
            **2,109,935**
            
            
            **4,487,293****Property
                and Equipment, net of accumulated depreciation of $1,147,628 and
                $936,614**
            
            
            **1,597,028**
            
            
            **1,541,390****Other
                Assets**Broadcast
                rights, net of current portion
            
            
            268,230
            
            
            310,384Intangible
                assets - net of accumulated amortization of $36,811 and
                $14,725
            
            
            228,231
            
            
            250,317Other
            
            
            102,261
            
            
            102,261**Total
                Other Assets**
            
            
            **598,722**
            
            
            **662,962****Total
                Assets**
            
            **$**
            **4,305,685**
            
            **$**
            **6,691,645****Liabilities
                and Stockholders' Deficit****Current
                Liabilities**Accounts
                payable and accrued expenses
            
            $
            2,421,839
            
            $
            2,048,129Contracts
                payable - broadcast rights
            
            
            2,333,300
            
            
            2,454,725Capital
                lease obligations - current
            
            
            33,491
            
            
            33,255Deferred
                current liabilities
            
            
            20,329
            
            
            20,248Accrued
                settlement expenses
            
            
            5,000
            
            
            5,022,000Loan
                payable and related accrued interest
            
            
            63,837
            
            
            63,042**Total
                Current Liabilities**
            
            
            **4,877,796**
            
            
            **9,641,399****Long-Term
                Liabilities**Contracts
                payable - broadcast rights - net of current portion
            
            
            562,776
            
            
            979,851Capital
                lease obligations - net of current portion
            
            
            152,821
            
            
            161,089**Total
                Long-Term Liabilities**
            
            
            **715,597**
            
            
            **1,140,940****Total
                Liabilities**
            
            
            **5,593,393**
            
            
            **10,782,339****Commitments
                and Contingencies****Stockholders'
                Deficit**Preferred
                stock, Series A-1, Convertible, $.001 par value, 50,000,000 sharesauthorized,
                11,666,666 shares issued and 2,433,333 outstanding as ofMarch
                31, 2007, 2,633,333 shares issued and 2,633,333 outstanding as of
                December
                31, 2006
            
            
            2,434
            
            
            2,634Common
                stock, $.001 par value, 150,000,000 shares authorized, 53,667,284
                shares
                issued and outstanding as of March 31, 2007, 47,292,284 shares issued
                and
                outstanding as ofDecember
                31, 2006
            
            
            53,663
            
            
            47,288Additional
                paid-in capital
            
            
            66,952,226
            
            
            61,179,644Less:
                Deferred consulting fees
            
            
            (51,832
            )
            
            (877,628
            )Accumulated
                deficit
            
            
            (68,244,199
            )
            
            (64,442,632
            )**Total
                Stockholders' Deficit**
            
            
            **(1,287,708**
            **)**
            ****
            **(4,090,694**
            **)****Total
                Liabilities and Stockholders' Deficit**
            
            **$**
            **4,305,685**
            
            **$**
            **6,691,645**




**See
      accompanying notes to consolidated financial statements**





-1-




**SmartVideo
      Technologies, Inc. and Subsidiary**


**Consolidated
      Statements of Operations**


**(Unaudited)**


**For
                the Three Months Ended****March
                31,****2007**
            
            **2006****Revenues**Revenue
            
            $
            334,732
            
            $
            112,967**Total
                Revenues**
            
            
            **334,732**
            
            
            **112,967****Cost
                of Goods Sold**Cost
                of goods sold
            
            
            138,000
            
            
            —**Total
                Cost of Goods Sold**
            
            
            **138,000**
            
            
            —**Gross
                Profit**
            
            
            **196,732**
            
            
            **112,967****Operating
                Expenses**Broadcast
                rights
            
            
            99,807
            
            
            527,713Compensation
                and benefits
            
            
            662,625
            
            
            491,089Consulting
                and professional fees
            
            
            638,437
            
            
            732,267Data
                center
            
            
            227,568
            
            
            219,621Depreciation
            
            
            233,100
            
            
            56,837Stock-based
                compensation
            
            
            1,645,261
            
            
            776,560Selling,
                general and administrative
            
            
            509,431
            
            
            740,091**Total
                Operating Expenses**
            
            
            **4,016,229**
            
            
            **3,544,178****Loss
                from Operations**
            
            
            **(3,819,497**
            **)**
            ****
            **(3,431,211**
            **)****Other
                Income**Interest
                income
            
            
            22,818
            
            
            45,567Interest
                expense
            
            
            (4,888
            )
            
            (760
            )**Total
                Other Income, Net**
            
            
            **17,930**
            
            
            **44,807****Net
                Loss**
            
            **$**
            **(3,801,567**
            **)**
            **$**
            **(3,386,404**
            **)**Net
                Loss per Share - Basic and Diluted
            
            $
            (0.07
            )
            $
            (0.11
            )Weighted
                Average Common SharesOutstanding
                during the Period
            
            
            52,719,920
            
            
            29,700,178





**See
      accompanying notes to unaudited consolidated financial
      statements**




-2-




**SmartVideo
      Technologies, Inc. and Subsidiary**


**Consolidated
      Statements of Cash Flows**


**(Unaudited)**





**For
                the Three Months Ended March 31,****2007**
            
            **2006****Cash
                Flows from Operating Activities**Net
                loss
            
            $
            (3,801,567
            )
            $
            (3,386,404
            )Adjustments
                to reconcile net loss to net cash used in operating
                activities:Amortization
                of stock based compensation
            
            
            825,796
            
            
            1,346,260Amortization
                of broadcast rights
            
            
            74,690
            
            
            608,396Bad
                debt
            
            
            —
            
            
            21,564Depreciation
            
            
            233,100
            
            
            56,837Issuance
                of common stock for legal settlement
            
            
            755,582
            
            
            —Changes
                in operating assets and liabilities:(Increase)
                Decrease in:Accounts
                receivable
            
            
            (147,477
            )
            
            (21,564
            )Prepaid
                expenses
            
            
            (46,558
            )
            
            (50,000
            )Other
                assets
            
            
            —
            
            
            4,613Increase
                (Decrease) in:Accounts
                payable and accrued expenses
            
            
            343,061
            
            
            (1,001,973
            )Accrued
                interest payable
            
            
            (795
            )
            
            (7,783
            )Contracts
                rights payable
            
            
            (417,075
            )
            
            —Repayments
                on acquired broadcast rights
            
            
            —
            
            
            (758,000
            )**Net
                Cash Used in Operating Activities**
            
            
            **(2,181,243**
            **)**
            ****
            **(3,188,054**
            **)****Cash
                Flows from Investing Activities**Purchase
                of equipment
            
            
            (266,651
            )
            
            (599,131
            )**Net
                Cash Used in Investing Activities**
            
            
            **(266,651**
            **)**
            ****
            **(599,131**
            **)****Cash
                Flows from Financing Activities**Proceeds
                from warrant exercises
            
            
            —
            
            
            632,864**Net
                Cash Provided By Financing Activities**
            
            
            —
            
            
            **632,864**Net
                (Decrease) in cash and cash equivalents
            
            
            (2,447,894
            )
            
            (3,154,321
            )Cash
                - Beginning of Period
            
            
            3,696,581
            
            
            5,792,566**Cash
                - End of Period**
            
            $
            1,248,687
            
            $
            2,638,245**Supplemental
                Disclosure of Cash Flow Information**Cash
                paid for:Income
                taxes
            
            $
            —
            
            $
            —Interest
            
            $
            —
            
            $
            —**Supplemental
                Disclosure of Non-Cash Investing and Financing
                Activities**Acquisition
                of broadcast rights
            
            $
            —
            
            $
            84,000Issuance
                of common stock to acquire software
            
            $
            —
            
            $
            208,000Issuance
                of common stock for settlement of accounts payable
            
            $
            —
            
            $
            149,937Issuance
                of convertible preferred stock to settle accrued
                litigation
            
            $
            —
            
            $
            4,750,000Issuance
                of common stock pursuant to anti-dilution agreement
            
            $
            —
            
            $
            1,122Conversion
                of convertible preferred stock to common stock
            
            $
            200
            
            $
            7,844Forfeiture
                of stock based compensation
            
            $
            37,147
            
            $
            $271,563





**See
      accompanying notes to unaudited consolidated financial
      statements**




-3-


**SmartVideo
      Technologies, Inc.**


**Notes
      to condensed consolidated financial statements**


**(Unaudited)**





**Note
      1 - Organization**




SmartVideo
      Technologies, Inc. (“smarTVideoTM” or “the Company”) was incorporated in Florida
      on August 17, 1984, and on December 19, 2000, changed its corporate domicile
      to
      Delaware. Its wholly-owned subsidiary, OVT, Inc., d/b/a smarTVideoTM (“OVT”) was
      incorporated in the state of Georgia on August 31, 2000. smarTVideoTM is a media
      distribution services company. smarTVideoTM is in the business of obtaining the
      rights to video and television content for the mobile handset market and
      delivering the video content to mobile subscribers for a monthly fee or a
      portion of the associated advertising revenue. The Company specializes in the
      distribution of high-quality video and programming through devices connected
      to
      the public Internet and is currently focused on distribution to mobile display
      devices, cell phones and PDAs connected to the public Internet via wireless
      data
      networks and Wi-Fi.





In
      January 2007, the Company announced its intent to seek stockholder approval
      to
      change the name of the Company to uVuMobile, Inc. to better reflect the
      corporate brand and new products. More specifically, the Company is developing
      a
      new suite of products and platforms, which are expected to include backend
      media
      hosting, application development, mobile marketing, messaging, content
      aggregation, billing, advertising and other services directed towards the mobile
      business-to-business market. On February 14, 2007, the Company initiated this
      process by distributing a consent solicitation statement to its stockholders
      seeking consent to amend its Certificate of Incorporation to effect the name
      change. On
      May 3,
      2007, the Company announced that as of April 9, 2007 it had received the consent
      of the holders of approximately 58% of its stock to change its
      corporate name to uVuMobile, Inc.  The Company intends to implement
      the name change as soon as practicable.





**Note
      2 - Going Concern, Significant Accounting Policies and Risks and
      Uncertainties**




***(A)
      Going Concern***




As
      reflected in the accompanying unaudited consolidated financial statements,
      the
      Company has a net loss of $3,801,567 and net cash used in operations of
      $2,181,243, respectively for the three month period ended March 31, 2007. The
      Company also has an accumulated deficit of $68,244,199 at March 31,
      2007.





Based
      on
      information currently available regarding our proposed plans and assumptions
      relating to operations we anticipate that the net proceeds from the closing
      of
      our last financing in 2006, together with revenues generated from operations,
      will not be sufficient to meet our cash requirements for working capital and
      capital expenditures beyond the second quarter of 2007. There can be no
      assurance that the Company will be able to secure additional financing on
      acceptable terms at or prior to the depletion of existing funds, or at all.
      If
      adequate funds are not available or not available on acceptable terms, the
      Company will be unable to continue as a going concern. The Company has no firm
      commitment for any additional capital.





***(B)
      Basis of Presentation***





The
      accompanying unaudited condensed consolidated financial statements have been
      prepared in accordance with accounting principles generally accepted in the
      United States (“GAAP”) and with the instructions to Form 10-Q for interim
      financial information. Accordingly, these unaudited condensed consolidated
      financial statements do not include all of the information and notes required
      for complete financial statements. In the Company’s opinion, all adjustments
      (consisting of normal recurring adjustments) considered necessary for a fair
      presentation have been included. Certain prior year amounts have been
      reclassified to conform to the current year presentation. Operating results
      for
      the three months ended March 31, 2007 are not necessarily indicative of the
      results that may be expected for the year ending December 31, 2007. For
      further information, refer to the consolidated financial statements and notes
      thereto included in the Company’s Annual Report on Form 10-K for the year
      ended December 31, 2006.





***(C)
      Use of Estimates***





In
      preparing financial statements, management is required to make estimates and
      assumptions that affect the reported amounts of assets and liabilities,
      disclosure of contingent assets and liabilities at the date of the financial
      statements, and revenues and expenses during the periods presented. Actual
      results may differ from these estimates.





-4-




**SmartVideo
      Technologies, Inc.**


**Notes
      to condensed consolidated financial statements**


**(Unaudited)**




Significant
      estimates during 2007 and 2006 include depreciable lives on property and
      equipment, the valuation of stock options/warrants granted for services, the
      value of warrants issued in connection with debt and equity related financings,
      valuation and related amortization of intangible broadcast rights pursuant
      to
      Statement of Financial Accounting Standards (“SFAS”) No. 63 and the valuation
      allowance for deferred tax assets since the Company had continuing operating
      losses.





***(D)
      Cash and Cash Equivalents***





For
      the
      purpose of the cash flow statements, the Company considers all highly liquid
      investments with original maturities of three months or less at the time of
      purchase to be cash equivalents.




The
      Company minimizes its credit risk associated with cash by periodically
      evaluating the credit quality of its primary financial institution. The balance
      at times may exceed federally insured limits. At March 31, 2007, the balance
      exceeded the federally insured limit by $1,148,687. Additionally,
      at March 31, 2007, the Company had $15,000 maintained under a compensating
      balance agreement. The $15,000 is retained due to potential credit card charge
      backs that are unforeseen.





***(E)
      Equipment***




Equipment
      consisting primarily of computer equipment is stated at cost. Depreciation
      is
      computed using the straight-line method over the estimated useful lives of
      the
      assets, which is generally three years. Depreciation expense for the three
      month
      periods ended March 31, 2007 and 2006, respectively are detailed as
      follows:





**For
                  the three Months Ended****March
                  31,****2007**
              
              
              
              **2006****Revenues**Business-to-business
              
              $
              2,293
              
              
              1
              %
              
              
              
              $
              23,791
              
              
              21
              %Direct-to-consumer
              
              
              128,939
              
              
              38
              %
              
              
              
              
              89,176
              
              
              79
              %Mobile
                  Advertising
              
              
              —
              
              
              0
              %
              
              
              
              
              —
              
              
              0
              %Custom
                  applications
              
              
              203,500
              
              
              61
              %
              
              
              
              
              —
              
              
              0
              %Total
                  Revenue
              
              $
              334,732
              
              
              100
              %
              
              
              
              $
              112,967
              
              
              100
              %








Equipment
      consists of the following:




**March
                31,**
            
            **December
                31,****2007**
            
            **2006**Computer
                equipment
            
            $
            2,665,156
            
            $
            2,398,504Proprietary
                software development
            
            
            79,500
            
            
            79,5002,744,656
            
            
            2,478,004Less
                accumulated depreciation
            
            
            (1,147,628
            )
            
            (936,614
            )Property
                and equipment, net
            
            $
            1,597,028
            
            $
            1,541,390





***(F)
      Broadcast Rights***




The
      Company acquires rights to programming so that it may deliver this programming
      to its subscribers. The costs incurred in acquiring programs are capitalized
      and
      amortized over the license period or projected useful life of the programming.
      The broadcast rights are accounted for according to SFAS No. 63 “Financial
      Reporting by Broadcasters”. Program rights and the related liabilities are
      recorded at the gross amount of the liabilities when the license period has
      begun, the cost of the program is determinable, and the program is accepted
      and
      available for airing.








***(G)
      Accounts Receivable***





Substantially
      all of the Company's accounts receivable are due from end-users. Collateral
      is
      not required. Credit losses are provided for in the consolidated financial
      statements. The Company has a limited history in evaluating such credit
      losses.





***(H)
      Allowance for Doubtful Accounts***





Management
      estimates the amount of required allowances for potential non-collectibility
      of
      accounts receivable based upon past collection experience and consideration
      of
      other relevant factors. However, past experience may not be indicative of future
      collections and therefore additional charges could be incurred in the future
      to
      reflect differences between estimated and actual collections.





-5-




**SmartVideo
      Technologies, Inc. and Subsidiary**


**Notes
      to condensed consolidated financial statements**


**(Unaudited)**





***(I)
      Earnings (Loss) Per Share***




In
      accordance with SFAS No. 128, “Earnings per Share” (“EPS”), basic earnings per
      share is computed by dividing the net income (loss) less preferred dividends
      for
      the period by the weighted average number of shares outstanding. Diluted
      earnings per share is computed by dividing net income (loss) less preferred
      dividends by the weighted average number of shares outstanding including the
      effect of share equivalents. Common share equivalents consist of shares issuable
      upon the exercise of certain common stock purchase warrants, stock options,
      and
      Convertible Preferred Stock. The Company has excluded these common share
      equivalents from its computation of earnings per share due to their antidilutive
      effect as the Company has reflected a net loss at March 31, 2007 and 2006,
      respectively. Accordingly, the basic and diluted EPS are the same.





The
      following table is a summary of common stock equivalents outstanding at March
      31, 2007 and 2006, respectively.





**For
                the Quarter ended March 31,****2007**
            
            **2006**Common
                Stock Options
            
            
            8,576,875
            
            
            4,630,000Common
                Stock Warrants
            
            
            35,010,149
            
            
            20,875,302Total
                Common Stock Options and Warrants
            
            
            43,587,024
            
            
            25,505,302





***(J)
      Stock-based Compensation***




Effective
      January 1, 2006, we adopted SFAS No. 123(R), *Share-Based
      Payment* utilizing the prospective method. SFAS No. 123(R) requires the measurement
      of
      stock-based compensation expense based on the fair value of the award on the
      date of grant. Under the prospective method, the provisions of SFAS No. 123(R)
      apply to all awards granted or modified after the date of adoption.








***(K)
      Revenue Recognition***




The
      Company follows the guidance of the SEC's Staff Accounting Bulletin No. 104
      for
      revenue recognition.  In general, the Company records revenue when
      persuasive evidence of an arrangement exists, services have been rendered or
      product delivery has occurred, the sales price to the customer is fixed or
      determinable, and collectability is reasonably assured.




The
      Company provides services to our business-to-business customers under
      volume-based usage arrangements of our digital media and multimedia broadcast
      products and services. Under certain arrangements, the customers are subject
      to
      a base monthly fee or minimum monthly usage requirement in order to maintain
      a
      customer's preferential negotiated rates. From time-to-time, the Company may
      also lease hardware to its customers enabling them to facilitate a live
      broadcast. In certain situations, the Company may sell hardware to its resellers
      under the specific terms of the agreements with them.




Revenue
      is also recognized as earned upon the delivery of services to the Company's
      subscription-based customers. This is typically when a digital media or
      multimedia broadcast is viewed. Many of the Company's subscription-based
      customers access its programming through the purchase of a monthly, semi-annual,
      or annual subscription fee for SmartVideo's mobile entertainment services.
      Revenue received on annual subscriptions is deferred and therefore is recognized
      ratably over the term of the contract.




-6-





**SmartVideo
      Technologies, Inc. and Subsidiary**


**Notes
      to condensed consolidated financial statements**


**(Unaudited)**




***(L)
      Income Taxes***




The
      Company accounts for income taxes under the Financial Accounting Standards
      (“FAS”) No. 109 “Accounting for Income Taxes” (“Statement 109”). Under Statement
      109, deferred tax assets and liabilities are recognized for the future tax
      consequences attributable to differences between the financial statement
      carrying amounts of existing assets and liabilities and their respective tax
      bases. Deferred tax assets and liabilities are measured using enacted tax rates
      expected to apply to taxable income in the years in which those temporary
      differences are expected to be recovered or settled. Under Statement 109, the
      effect on deferred tax assets and liabilities of a change in tax rates is
      recognized in income in the period, which includes the enactment
      date.





***(M)
      Derivative Liabilities***





In
      June
      2005, the Emerging Issues Task Force ("EITF") issued EITF 05-2, “The Meaning of
      Conventional Convertible Debt Instrument in Issue No. 00-19". EITF 05-2 retained
      the definition of a conventional convertible debt instrument as set forth in
      EITF 00-19, and which is used in determining certain exemptions to the
      accounting treatments prescribed under SFAS 133, "Accounting for Derivative
      Instruments and Hedging Activities". EITF 05-2 also clarified that certain
      contingencies related to the exercise of a conversion option would not be
      outside the definition of "conventional" and determined that Convertible
      Preferred Stock with a mandatory redemption date would also qualify for similar
      exemptions if the economic characteristics of the preferred stock are more
      akin
      to debt than equity. EITF 05-2 is effective for new instruments entered into
      and
      instruments modified in periods beginning after June 29, 2005. We adopted the
      provisions of EITF 05-2 on July 1, 2005, which did not have a material effect
      on
      our unaudited consolidated financial position, results of operations and cash
      flows.





In
      July
      2005, the FASB issued FASB Staff Position ("FSP") 150-5, "Accounting Under
      SFAS
      150 for Freestanding Warrants and Other Similar Instruments on Redeemable
      Shares". FSP 150-5 clarifies that warrants on shares that are redeemable or
      puttable immediately upon exercise and warrants on shares that are redeemable
      or
      puttable in the future qualify as liabilities under SFAS 150, regardless of
      the
      redemption feature or redemption price. The FSP is effective for the first
      reporting period beginning after June 30, 2005, with resulting changes to prior
      period statements reported as the cumulative effect of an accounting change
      in
      accordance with the transition provisions of SFAS 150. We adopted the provisions
      of FSP 150-5 on July 1, 2005, which did not have a material effect on our
      unaudited consolidated financial position, results of operations and cash
      flows.





-7-





**SmartVideo
      Technologies, Inc. and Subsidiary**


**Notes
      to condensed consolidated financial statements**


**(Unaudited)**




***(N)
      Product Concentration***





The
      Company derives a substantial portion of its revenues from four types of
      products: business-to-business, direct-to-consumer mobile video service, mobile
      advertising and custom applications.




**For
                  the three Months Ended****March
                  31,****2007**
              
              
              
              **2006****Revenues**Business-to-business
              
              $
              2,293
              
              
              1
              %
              
              
              
              $
              23,791
              
              
              21
              %Direct-to-consumer
              
              
              128,939
              
              
              38
              %
              
              
              
              
              89,176
              
              
              79
              %Mobile
                  Advertising
              
              
              —
              
              
              0
              %
              
              
              
              
              —
              
              
              0
              %Custom
                  applications
              
              
              203,500
              
              
              61
              %
              
              
              
              
              —
              
              
              0
              %Total
                  Revenue
              
              $
              334,732
              
              
              100
              %
              
              
              
              $
              112,967
              
              
              100
              %





The
      Company could experience declines in demand for products, whether as a result
      of
      general economic conditions, new competitive product releases, price
      competition, lack of market acceptance, technological change or other
      factors.





***(O)
      Long-Lived Assets***





The
      Company accounts for long-lived assets in accordance with the provisions of
      SFAS
      No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets.” SFAS
      No. 144 requires that long-lived assets be reviewed for impairment whenever
      events or changes in circumstances indicate that the carrying amount of an
      asset
      may not be recoverable. Recoverability of assets to be held and used is measured
      by a comparison of the carrying amount of an asset to future undiscounted net
      cash flows expected to be generated by the asset. If such assets are considered
      to be impaired, the impairment to be recognized is measured by the amount by
      which the carrying amount of the assets exceeds the fair value of the assets.
      Assets to be disposed of are reported at the lower of the carrying amount or
      fair value less costs to sell the asset.





***(P)
      Intangible Assets***





The
      Company accounts for intangible assets in accordance with the
      provisions of Statement of Financial Accounting Standards No. 142, “Goodwill and
      Other Intangible Assets” (“SFAS 142”), which requires goodwill and intangible
      assets with indefinite useful lives not be amortized, but be tested for
      impairment annually or whenever indicators or impairments arise. Intangible
      assets that have finite lives continue to be amortized over their estimated
      useful lives. Our intangible assets consist of contract based
      intangibles.





During
      November 2006, we entered into an agreement with Diggit Entertainment Group
      (“Diggit”) for the distribution arrangements to provide for the management of
      the mobile platform, assets and carrier relationships for both Vibe and Spin
      magazines for an aggregate price of $253,000, plus transactions
      costs.





As
      of
      March 31, 2007 and December 31, 2006, our identifiable intangible assets subject
      to amortization consisted of the following:





**As
                of****March
                31, 2007**
            
            **December
                31, 2006**IntangibleAssets
            
            AccumulatedAmortization
            
            IntangibleAssets
            
            AccumulatedAmortizationContract
                based
            
            $
            265,042
            
            $
            36,811
            
            $
            265,042
            
            $
            14,725**Total**
            
            **$**
            **265,042**
            
            **$**
            **36,811**
            
            **$**
            **265,042**
            
            **$**
            **14,725**





Amortization
      of these intangible assets, recorded on a straight line basis over an average
      finite useful life of 3 years was $14,725 for the year ended December 31, 2006.
      The aggregate amortization expense is estimated to be approximately $88,347
      for
      2007, $88,347 for 2008, and $73,623 for 2009.




-8-





***(Q)
      Capital Lease Obligations***





Capital
      lease obligations consist of the following:





**As
                of****March
                31, 2007**
            
            **December
                31, 2006**Equipment
                financed under capital lease obligations
            
            $
            186,312
            
            $
            194,344Total
            
            $
            186,312
            
            $
            194,344Less
                current portion
            
            
            (33,491
            )
            
            (33,255
            )Capital
                lease obligations, net of current portion
            
            $
            152,821
            
            $
            161,089





In
      December 2006, we financed the purchase of equipment for our data center from
      Banc of America Capital Lease. We are required to make monthly payments to
      Banc
      of America Capital Lease for this equipment beginning in December
      2006.




**Payment
                due by period****Total**
            
            **2007**
            
            **2008
                - 2009**
            
            **2010
                - 2011**
            
            **Thereafter**Capital
                lease obligations
            
            $
            194,344
            
            $
            33,255
            
            $
            75,589
            
            $
            85,500
            
            $
            —**Total**
            
            $
            194,344
            
            **$**
            **33,255**
            
            **$**
            **75,589**
            
            **$**
            **85,500**
            
            **$**
            —





-9-





**SmartVideo
      Technologies, Inc. and Subsidiary**


**Notes
      to condensed consolidated financial statements**


**(Unaudited)**








**Note
      3 - Broadcast Rights**





**(A)**
            **Asset**





For
      the
      three months ended March 31, 2007, amortization expense of broadcast rights
      accounted for $74,690 of the total broadcast rights expense of $99,807. Included
      in the total expense of  $99,807 is approximately  $25,117 in credits
      that were reflected in the three months ended March 31, 2007. For the three
      months ended March 31, 2006, amortization expense of broadcast rights accounted
      for $608,396 of the total broadcast rights expense of $527,713.





For
      the
      three months ended March 31, 2007 the Broadcast Rights Assets - net of
      accumulated amortization was $268,745. Broadcast Rights Assets - net of current
      portion was $268,230. At December 31, 2006 the Broadcast Rights Assets - net
      of
      accumulated amortization were $301,281. Broadcast Rights Assets - net of current
      portion was $310,384.





**(B)**
            **Liability**





At
      March
      31, 2007 and 2006, the Company paid $70,500 and $758,000, respectively to
      content providers pursuant to the terms of the related contracts.





Contracts
      payable - short term at March 31, 2007 were $2,333,300. Contracts payable -
      long-term at March 31, 2007 were $562,776. Contracts payable - short term at
      December 31, 2006 were $2,454,725. Contracts payable - long-term at December
      31,
      2006 were $979,851.








**Note
      4 - Shareholders' Equity**





**(A)**
            **Preferred
                Stock**




***(1)*** ***Capital
      Structure***




As
      of
      March 31, 2007 the authorized Preferred Stock of the Company consists of
      50,000,000 shares of $.001 par value Series A-1 Preferred Stock of which
      11,666,666 shares are issued and 2,433,333 shares are outstanding and are
      designated as convertible.





**(B)**
            **Common
                Stock Issuances**





***(1)***  ***Capital
      Structure***





As
      of
      March 31, 2007, the authorized common stock of the Company consists of
      150,000,000 shares of $.001 par value.




***(2)***  ***Preferred
      Stock Conversions***




During
      the three months ended March 31, 2007, the Company converted 200,000 shares
      of
      Series A-1 Convertible Preferred Stock to shares of common stock on a one-to-one
      basis.




***(3)***  ***Settlements***




During
      the three months ended March 31, 2007, the Company settled two outstanding
      legal
      matters with unrelated third parties by issuing an aggregate of 6,175,000 shares
      of common stock having an aggregate fair value of $4,863,000. Fair value was
      determined based on the quoted closing trading price on the dates of settlement.
      The share prices on the dates of issuance ranged from $0.36 - $0.80 per
      share.





-10-




**SmartVideo
      Technologies, Inc. and Subsidiary**


**Notes
      to condensed consolidated financial statements**


**(Unaudited)**




***(4)***  ***Warrant
      Conversions***




During
      the quarter ended March 31, 2007, the Company redeemed 6,375 callable warrants
      at a price of $0.10 per warrant for a total payment of $638 which also reduced
      additional paid-in capital by $638.





On
      March
      9, 2007, we commenced an Offer to Amend and Exchange certain of our outstanding
      warrants. The offer provided holders of certain warrants the opportunity to
      amend and immediately exercise any or all of their warrants for a significantly
      reduced exercise price by either paying the exercise price in cash or by
      tendering a specified number of warrants for each share of common stock being
      purchased. The offer expired at 5:00 p.m., Eastern Time, on April 20, 2007.
      As
      of that time, approximately 80% of warrants subject to the offer had been
      tendered. Upon waiver by our Board of Directors of a specified closing condition
      that had not been met as of the time our offer expired, we accepted all warrants
      validly tendered pursuant to the terms of the offer on April 20, 2007. Through
      the offer, we generated approximately $738,000 in gross proceeds available
      for
      our use to fund our operations.





The
      following is a summary of all common stock issued during the three months ended
      March 31, 2007:





**QUANTITY****ACTIVITY**
            
            **OF
                SHARES**
            
            **VALUATION**Preferred
                Stock Conversion
            
            
            200,000
            
            $
            —Settlements
            
            
            6,175,000
            
            
            4,863,000Other
            
            
            —
            
            
            —Totals
            
            
            6,375,000
            
            $
            4,863,000




**(C)**
            **Other
                Grants of Common Stock Options and
                Warrants**




***(1)***  ***2004
      Equity Incentive Plan***




The
      Board
      of Directors of the Company adopted the 2004 Stock Incentive Plan (“2004 Plan”)
      effective January 1, 2004, to provide incentives to attract and retain officers,
      directors, and key employees. The 2004 Plan allows for the issuance of up to
      5,000,000 shares of common stock and was approved by the shareholders at the
      annual meeting held on August 31, 2004.





-11-





**SmartVideo
      Technologies, Inc. and Subsidiary**


**Notes
      to condensed consolidated financial statements**


**(Unaudited)**




***(2)***  ***2005
      Equity Incentive Plan***




The
      Board
      of Directors of the Company adopted the 2005 Equity Incentive Plan (“2005 Plan”)
      on January 3, 2006 to provide incentives to attract and retain participating
      officers, directors, employees, consultants and advisors. The 2005 Plan allows
      for the issuance of 10,000,000 shares of common stock in the form of incentive
      awards, including, without limitation, stock options and restricted stock and
      was approved by the shareholders on February 23, 2006.





The
      following tables summarize all stock option grants to employees and
      non-employees as of March 31, 2007:





**Number
                of Options**
            
            **Weighted**
              **Average**
              **Exercise
                Price****Stock
                Options**Balance
                at December 31, 2006
            
            
            9,030,000
            
            $
            1.80Granted
            
            
            —
            
            
            —Exercised
            
            
            —
            
            
            —Forfeited
            
            
            453,125
            
            $
            1.90Balance
                at March 31, 2007
            
            
            8,576,875
            
            $
            1.80Options
                exercisable at March 31, 2007
            
            
            4,293,593
            
            $
            1.89Weighted
              average fair value of options granted
              during the three months ended March 31, 2007
            
            
            
            
            $
            —




-12-


**SmartVideo
      Technologies, Inc. and Subsidiary**


**Notes
      to condensed consolidated financial statements**


**(Unaudited)**





**Options
                Outstanding**
            
            **Options
                Exercisable****Exercise
                Price**
            
            **Number
                Outstanding at March 31, 2007**
            
            **Weighted
                Average Remaining Contractual Years**
            
            **Weighted
                Average Exercise Price**
            
            **Number
                Exercisable at March 31, 2007**
            
            **Weighted
                Average Exercise Price**$
            0.90
            
            
            250,000
            
            
            8.28
            
            $
            0.90
            
            
            250,000
            
            $
            0.90$
            0.97
            
            
            200,000
            
            
            9.41
            
            $
            0.97
            
            
            28,125
            
            $
            0.97$
            1.00
            
            
            385,000
            
            
            7.60
            
            $
            1.00
            
            
            319,375
            
            $
            1.00$
            1.02
            
            
            265,000
            
            
            9.33
            
            $
            1.02
            
            
            
            
            $
            1.02$
            1.31
            
            
            946,250
            
            
            9.35
            
            $
            1.31
            
            
            
            
            $
            1.31$
            1.36
            
            
            275,000
            
            
            9.16
            
            $
            1.36
            
            
            131,250
            
            $
            1.36$
            1.40
            
            
            331,250
            
            
            9.27
            
            $
            1.40
            
            
            57,813
            
            $
            1.40$
            1.44
            
            
            75,000
            
            
            10.20
            
            $
            1.44
            
            
            18,750
            
            $
            1.44$
            1.48
            
            
            250,000
            
            
            8.90
            
            $
            1.48
            
            
            137,500
            
            $
            1.48$
            1.50
            
            
            250,000
            
            
            8.72
            
            $
            1.50
            
            
            31,250
            
            $
            1.50$
            1.55
            
            
            1,700,000
            
            
            8.12
            
            $
            1.55
            
            
            1,275,000
            
            $
            1.55$
            1.58
            
            
            25,000
            
            
            8.16
            
            $
            1.58
            
            
            6,250
            
            $
            1.58$
            1.75
            
            
            9,375
            
            
            9.07
            
            $
            1.75
            
            
            2,344
            
            $
            1.75$
            1.86
            
            
            75,000
            
            
            9.07
            
            $
            1.86
            
            
            37,500
            
            $
            1.86$
            1.90
            
            
            500,000
            
            
            8.59
            
            $
            1.90
            
            
            500,000
            
            $
            1.90$
            1.91
            
            
            280,000
            
            
            9.03
            
            $
            1.91
            
            
            140,000
            
            $
            1.91$
            1.95
            
            
            100,000
            
            
            8.98
            
            $
            1.95
            
            
            100,000
            
            $
            1.95$
            2.10
            
            
            1,200,000
            
            
            8.92
            
            $
            2.10
            
            
            313,750
            
            $
            2.10$
            2.20
            
            
            150,000
            
            
            9.02
            
            $
            2.20
            
            
            150,000
            
            $
            2.20$
            2.25
            
            
            170,000
            
            
            5.79
            
            $
            2.25
            
            
            76,250
            
            $
            2.25$
            2.30
            
            
            150,000
            
            
            7.68
            
            $
            2.30
            
            
            95,000
            
            $
            2.30$
            2.77
            
            
            25,000
            
            
            8.93
            
            $
            2.77
            
            
            9,375
            
            $
            2.77$
            2.90
            
            
            20,000
            
            
            8.03
            
            $
            2.90
            
            
            5,000
            
            $
            2.90$
            2.91
            
            
            30,000
            
            
            8.05
            
            $
            2.91
            
            
            7,500
            
            $
            2.91$
            2.95
            
            
            15,000
            
            
            7.51
            
            $
            2.95
            
            
            6,562
            
            $
            2.95$
            3.27
            
            
            150,000
            
            
            8.90
            
            $
            3.27
            
            
            20,000
            
            $
            3.27$
            3.50
            
            
            750,000
            
            
            7.27
            
            $
            3.50
            
            
            575,000
            
            $
            3.508,576,875
            
            
            8.57
            
            $
            1.80
            
            
            4,293,593
            
            $
            1.89





At
      March
      31, 2007, the Company had a total of 35,010,149 warrants outstanding. All of
      these warrants are exercisable. The life of the warrants range from zero to
      five
      years. The exercise price of these warrants range from $0.75 to $6.50. See
      additional disclosure above regarding warrant activity.




***(3)***  ***Stock Plans***





In
      2006,
      the Company adopted SFAS No. 123(R). Under SFAS No. 123(R), companies are
      required to measure the compensation costs of share-based compensation
      arrangements based on the grant-date fair value and recognize the costs in
      the
      financial statements over the period during which employees are required to
      provide services. Share-based compensation arrangements include stock options,
      restricted share plans, performance-based awards, share appreciation rights
      and
      employee share purchase plans.




-13-




**SmartVideo
      Technologies, Inc. and Subsidiary**


**Notes
      to condensed consolidated financial statements**


**(Unaudited)**




**Note
      5 - Office Space**





In
      May
      2005, the Company assumed a sublease for approximately 25,000 square feet of
      office space in Duluth, Georgia. This office space currently serves as the
      Company's corporate headquarters. This sublease calls for monthly rental
      payments of approximately $23,000 and terminates on August 31, 2007. Rent
      expense for the three months ended March 31, 2007 and 2006 was $69,397 and
      $69,499, respectively.




**Note
      6 - Promissory Notes**





Concurrent
      with the OVT merger on November 26, 2002, the Company agreed to assume a $50,000
      loan payable to a third party. The loan bears interest at 5% and is payable
      on
      demand. The accrued interest on the loan payable was approximately $13,837
      as of
      March 31, 2007. At March 31, 2007, the Company has recorded an aggregate $63,837
      for loans payable and related accrued interest.




**Note
      7 - Commitments and Contingencies**





From
      time-to-time, the Company is a party to claims and legal proceedings arising
      in
      the ordinary course of business. The Company's management evaluates the exposure
      to these claims and proceedings individually and in the aggregate and allocates
      additional monies for potential losses on such litigation if it is possible
      to
      estimate the amount of loss and determine if the loss is probable.





On
      or
      about April 6, 2004, Rene Hamouth filed a Writ of Summons in the Supreme Court
      of British Columbia (Case No. SO41955) against us, our former chief executive
      officer and director, Richard E. Bennett, Jr. and our former securities counsel,
      Edwards & Angell, LLP, a predecessor to Edwards Angell Palmer & Dodge
      LLP, seeking an unspecified amount of damages and costs for alleged libel of
      Mr.
      Hamouth resulting from two letters to his stockbroker, First Associates
      Investments, Inc. We and the other defendants have made an appearance in the
      court through respective legal counsel. On June 29, 2004, Mr. Hamouth filed
      an
      Amended Statement of Claim with the court. On November 19, 2004, the Court
      of
      Appeal for British Columbia granted Edwards Angell Palmer & Dodge LLP the
      right to appeal a chambers judge's decision that the alleged libelous
      correspondence in question is covered by absolute privilege and granted a stay
      of the proceeding pending the outcome of the appeal. The appeal was heard in
      February 2005. On March 30, 2005, the court granted the appeal and dismissed
      the
      claim against Edwards Angell Palmer & Dodge LLP. Since the court's entry of
      judgment in the appeal and to our knowledge, Mr. Hamouth has taken no further
      steps to pursue his claims against us or Mr. Bennett. We intend to vigorously
      defend any further actions taken by Mr. Hamouth in this matter.





On
      or
      about April 22, 2004, we filed a complaint in the United States District Court,
      North District of Georgia (Case No. 1:04-CV-1123) against Rene Hamouth, seeking
      the recovery of all profits realized by Mr. Hamouth resulting from his alleged
      violations of Section 16(b) of the Securities Exchange Act of 1934 (the
“Exchange Act”) relating to his purchases and sales of our common stock since
      approximately January 1, 2003. We are seeking damages in the amount of at least
      $151,428, interest on the amount of profits recovered and all other general
      and
      equitable relief to which we may be entitled. Since filing the complaint and
      serving Mr. Hamouth, Mr. Hamouth has filed an answer. The court has entered
      a
      scheduling order, approving the Joint Preliminary Planning Report and Discovery
      Plan. On March 16, 2005, we received notice that Mr. Hamouth's attorney in
      this
      matter has withdrawn from the case. On April 15, 2005, we filed a motion for
      summary judgment on this matter. The motion was unopposed. On October 5, 2005,
      the Court granted our motion and executed a judgment for us in the amount of
      $172,342.




-14-




**SmartVideo
      Technologies, Inc.**


**Notes
      to Consolidated Financial Statements**


**December
      31, 2006, 2005 and 2004**




On
      March
      9, 2005, SmartVideo Europe, Ltd., or SVEL, which is not an affiliate of ours,
      announced its intention to bring legal action in the form of a
      mediation/arbitration against us in regard to our alleged repudiation and breach
      of a distribution agreement between the parties, dated April 2, 2004, which
      involved certain rights to distribute certain of our products. The dispute
      includes claims of SVEL that we had anticipatorily breached our agreement with
      SVEL, thus allegedly inhibiting the development of SVEL's business utilizing
      our
      technology on an exclusive basis in 25 countries throughout the European Union.
      We contend that we had the right to terminate the agreement because of breaches
      by SVEL. On or about December 13, 2006, SVEL filed its Statement of Claim with
      the American Arbitration Association. The Company filed its response to the
      Statement of Claim on or about January 22, 2007. The parties have now agreed
      to
      mediate the matter prior to proceeding with arbitration. We intend to defend
      against the claim vigorously, although there can be no assurances that we will
      be successful.





On
      November 29, 2005, ProNetworkTV, Inc. filed a Complaint for Equitable Relief
      in
      the Superior County Court of Gwinnett County, State of Georgia, (Civil Action
      Number 05-A-13684-2) against OVT, Inc. seeking the recovery of late fees in
      the
      amount of $100,615 alleged to be owed pursuant to a Promissory Note executed
      by
      OVT, Inc. in favor of ProNetworkTV, Inc. in the principal amount of $325,000.
      ProNetworkTV, Inc. alleges that OVT, Inc. failed to make payments when due
      under
      the Promissory Note. As a result of the alleged failure to makes such payments,
      ProNetworkTV, Inc. alleges that late fees accrued under the Promissory Note.
      On
      March 26, 2006, the Company filed a Motion to Dismiss with the Court. On May
      8,
      2006, the Company's Motion to Dismiss was granted. On September 11, 2006,
      ProNetworkTV, Inc. filed a Complaint against the Company and OVT, Inc. in the
      Superior Court of Gwinnett County, State of Georgia (Civil Action Number
      06A-08430-5) seeking recovery of the same late fees referenced above, but this
      time in the amount of $105,262, which is alleged to be owed pursuant to the
      same
      Promissory Note referenced above. Further, the Complaint seeks a declaratory
      judgment that ProNetworkTV, Inc. is the owner of certain technology belonging
      to
      the Company, which is the subject of a services agreement between the parties.
      The Complaint also alleges that ProNetworkTV, Inc. is entitled to monetary
      damages arising out of the Company's alleged breach of the services agreement.
      On September 15, 2006, the Company reached a settlement agreement with
      ProNetworkTV, Inc. relating to this and certain other unrelated matters.
      Pursuant to the terms of the settlement agreement, both parties agreed, among
      other things, to provide mutual general releases of any existing alleged claims
      either party may have had as of the date of the settlement agreement, including,
      but not limited to, any claims relating to the promissory note that was the
      subject of this lawsuit. After reaching the September 15, 2006 agreement
      referenced above, ProNetworkTV, Inc. took the position that a “final” agreement
      had not, in fact, been reached. Currently, the parties are proceeding as they
      were prior to reaching the September 15, 2006 settlement agreement. A hearing
      on
      ProNetwork TV, Inc.’s Motion for Declaratory Judgment has been set for May 24,
      2007. The Company intends to defend against the claims vigorously, although
      there can be no assurances that the Company will be successful.




On
      January 19, 2006, the Company received a letter on behalf of Mantra Films,
      Inc.
      demanding that the Company pay cash damages of $791,244 as a result of the
      Company's alleged breach of certain guarantee obligations under an agreement
      between Cell Phone Entertainment, LLC, Mantra Films, Inc. and the Company (as
      Guarantor), dated September 30, 2004. Mantra Films, Inc. alleges that Cell
      Phone
      Entertainment, LLC and the Company failed to make certain guaranteed minimum
      license payments due under the agreement. As a result of the alleged failure
      to
      make such minimum payments, Mantra Films, Inc. terminated the agreement. The
      $791,244 demand represents the entire contract amount, including both past
      due
      payments and future guaranteed license fees, totaling minimum payments due
      pursuant to the agreement of $900,000, which amount has been reduced by payments
      made and certain prepaid insurance premiums in the amount of $108,756. On June
      12, 2006, Mantra Films, Inc. filed suit against Cell Phone Entertainment, LLC
      and the Company in the Superior Court for the State of California, County of
      Los
      Angeles (Civil Action File NO. SC090022). Mantra Films, Inc.'s Complaint sets
      forth the same basic facts discussed above, as well as certain additional facts
      regarding the alleged failure of the Company to return certain property to
      Mantra Films, Inc. In its Complaint, Mantra Films, Inc. has asserted claims
      for
      breach of contract, conversion, unjust enrichment, specific recovery of personal
      property accounting and interference with prospective economic advantage. The
      Complaint seeks damages in the amount discussed above, in addition to certain
      unspecified damages to be proven at trial. On October 5, 2006, the Company
      filed
      a Motion to Compel Arbitration. A hearing on the Motion took place on December
      27, 2006 and at the hearing the Court ordered the case to arbitration. The
      parties agreed to mediate the case prior to commencing arbitration proceedings.
      On January 12, 2007, the mediation took place, but the parties were unable
      to
      come to a successful resolution of the matter. Thereafter, on February 15,
      2007,
      the Company and Cell Phone Entertainment, LLC entered into a settlement
      agreement with Mantra Films, Inc. and ROAR Productions (as a signatory to the
      contract at issue in the lawsuit filed by Mantra Films, Inc.). Pursuant to
      the
      terms of the settlement agreement, the Company agreed to pay Mantra Films,
      Inc.
      the total sum of one hundred and fifty thousand dollars ($150,000), which sum
      is
      to be paid in eight (8) equal installments of $18,750, to be allocated between
      Mantra Films, Inc. and ROAR Productions as solely agreed to by and between
      Mantra Films, Inc. and ROAR Productions. Payment of the obligation is secured
      by
      a lien on certain assets of the Company in favor of Mantra Films, Inc. in the
      amount of one hundred and fifty thousand dollars ($150,000), which lien shall
      be
      released upon full and final payment under the agreement. Any breach of the
      payment obligations by the Company shall allow Mantra Films, Inc. to assert
      a
      claim in any proceeding in bankruptcy, reorganization, merger, sale, or an
      assignment for the benefit of creditors for the value of their claims in the
      Mantra Lawsuit in the amount of three hundred ninety-nine thousand ($399,000),
      less any payments that have been made, which amount includes a claim for any
      sums remaining due on the secured interest of one hundred fifty thousand
      ($150,000), and a claim as a general unsecured creditor for the balance of
      the
      three hundred ninety nine thousand ($399,000). In consideration of the
      foregoing, and once all required payments have been made, Mantra Films, Inc.
      and
      ROAR Productions agreed to give the Company and Cell Phone Entertainment, LLC,
      among other things, a dismissal with prejudice of the lawsuit, a
      non-disparagement clause and a confidentiality clause.




-15-





**SmartVideo
      Technologies, Inc.**


**Notes
      to Consolidated Financial Statements**


**December
      31, 2006, 2005 and 2004**





On
      or
      about January 18, 2006, Wilson W. Hendricks, III filed a Complaint in the County
      Court, Seventh Judicial Circuit, in and for St. John's County, Florida against
      the Company. Mr. Hendricks claimed damages in excess of $600,000 relating to
      lost wages and unreimbursed business expenses. In addition, he claimed the
      Company failed to issue 500,000 non-qualified stock options, to which he alleges
      he was entitled. Mr. Hendrick's main claims are that the he was wrongfully
      discharged from the Company and that the Company failed to grant him promised
      stock options. On June 22, 2006, the Court entered an Order requiring the
      parties mediate the case on or before October 31, 2006. The parties began the
      mediation process on August 29, 2006. On February 22, 2007, the Company and
      Mr.
      Hendricks agreed to the basic terms of a settlement which was memorialized
      in a
      settlement agreement dated March 7, 2007. Pursuant to the terms of the
      settlement agreement, the Company issued Mr. Hendricks 175,000 shares of the
      Company's common stock, and paid $10,000 for attorney's fees and expenses
      (payable in two monthly installments), in exchange for, among other things,
      a
      dismissal with prejudice of the lawsuit. Among other items, the settlement
      agreement also includes mutual general releases, mutual non-disparagement
      clauses, a confidentiality clause and a “non-cooperation” clause on behalf of
      Mr. Hendricks.





On
      or
      about July 18, 2006, Manhattan Investments, Inc. (“Manhattan”) filed a Complaint
      against the Company in the United States District Court, Northern District
      of
      California (Case No. C-06-4379), alleging that the Company has wrongfully
      refused to remove the restrictive legend on a stock certificate representing
      49,795 shares. The Complaint includes claims for breach of fiduciary and
      statutory duties, conversion and fraud, and seeks injunctive relief, as well
      as
      monetary damages. On October 2, 2006, the Company filed a Motion to Transfer
      for
      Improper Venue. The Motion was granted by the Court on November 13, 2006. The
      Company intends to vigorously defend against these claims, although there
      can be no assurances that the Company will be successful.




On
      or
      about October 20, 2006, Hamouth Family Trust (“Hamouth”) filed a Complaint
      against the Company in the Court of Chancery of the State of Delaware, in which
      Hamouth seeks declaratory and injunctive relief, as well as damages in an
      unspecified amount, related to the Company's alleged wrongful refusal to issue
      new stock certificates without restrictive legends for 800,000 shares of stock
      owned by Hamouth. The Company has filed an Answer to the Complaint and the
      discovery period has commenced. The Company intends to vigorously defend against
      these claims, although there can be no assurances that the Company will be
      successful.





On
      November 13, 2006, James A. Jones filed a Complaint in the U.S. District Court
      for the Northern District of Georgia against the Company and Richard E. Bennett,
      Jr., the Company's former President and Chief Executive Officer. Mr. Jones
      alleges a violation of Section 806 of the Corporate Criminal and Fraud
      Accountability Act of 2002, 18 U.S.C. § 1514 et. seq. (“Sarbanes Oxley”), and is
      seeking compensatory damages, back pay and reimbursement for lost wages,
      pension, insurance, and other employment benefits, front pay and reimbursement
      for lost wages, pension, insurance, and other employment benefits, and attorneys
      fees. Mr. Jones claims that he was unlawfully terminated in retaliation for
      investigating and opposing allegedly improper conduct by the Company and Mr.
      Bennett. The Company and Mr. Bennett filed their Answers to the Complaint on
      December 21, 2006. The discovery period has commenced. The Company and Mr.
      Bennett intend to vigorously defend against Mr. Jones' claim, although there
      can
      be no assurances that the Company and Mr. Bennett will be
      successful.





-16-




**SmartVideo
      Technologies, Inc.**


**Notes
      to Consolidated Financial Statements**


**December
      31, 2006, 2005 and 2004**





The
      Company was named as a defendant in four lawsuits brought by a total of eighteen
      investors in the United States District Court, Northern District of Georgia
      (Case No. 1:06- CV-0850-MHS filed on or about April 10, 2006, and Case Nos.
      1:06-CV-2388, 1:06-CV-2390, and 1:06-CV-2391 filed on or about October 6, 2006).
      The investors alleged, among other things, that the Company breached certain
      Registration Rights Agreements. The investors also claimed, among other things,
      that as a result of the Company's breach of the registration rights agreements
      they were denied certain rights they were allegedly owed under the agreements,
      and were inappropriately prevented from exercising warrants and selling shares
      during a specific period of time. In the aggregate, the investors claimed that
      as a result of the Company's actions they suffered damages in excess of $13
      million dollars. On January 11, 2007 the Company entered into a Settlement
      Agreement with these investors and certain other interested parties (the
“Claimants”). Pursuant to the terms of the Settlement Agreement, the Company
      issued 6,000,000 shares of the Company's common stock to the Claimants in
      exchange for the Claimants agreeing to release the Company and its owners,
      predecessors, successors, directors, officers, stockholders, employees,
      representatives, attorneys, subsidiaries and affiliates from all suits, claims,
      charges, liabilities and causes of action of any nature whatsoever which the
      Claimants had, have or may in the future have, arising out of any acts or events
      occurring up to and including the effective date of the Settlement Agreement.
      Among other items, the Claimants further agreed not to use confidential
      information against the Company in the future. The Settlement Agreement also
      contains mutual non-disparagement clauses.





On
      September 9, 2006 and February 14, 2007, respectively, the Company received
      correspondence from Epsom Investment Services, N.V. (“Epsom”) demanding
      repayment of an alleged outstanding Demand Loan made in 2002 from Epsom to
      Sharps Eliminations Technologies, Inc. (“Sharps”) in the amount of $50,000
      bearing interest at 5%. Epsom claims that the Company agreed to repay this
      loan
      on behalf of Sharps. The Company is still investigating this claim, but
      currently does not believe any such amounts are due and owing to
      Epsom.





On
      February 28, 2007, the Company filed a Complaint in the United States District
      Court, North District of Georgia (Case No. 1:07-CV-0503) against Leslie L.
      Croland, Esq., the Company's former securities counsel, seeking the recovery
      of
      damages as a result of Mr. Croland's professional negligence and breach of
      fiduciary duties to the Company. More specifically, the Company seeks to recover
      compensatory damages for, among other things, losses sustained and attorneys'
      fees, costs, and expenses and liabilities incurred due to claims asserted by
      certain investors against the Company, as well as punitive damages, attorneys
      fees, costs of suit and any other relief the Court deems equitable and just.
      On
      April 27, 2007, Mr. Croland filed an Answer to the Complaint. Discovery in
      the
      case will now commence.




On
      April
      18, 2007 MobiTV, Inc. (“MobiTV”) filed a lawsuit in the United States District
      Court, District of Massachusetts (Case No. 1:07-cv-10755-RGS) against Jeremy
      De
      Bonet (“De Bonet”), Skyward Mobile LLC (“Skyward”), and the Company in which
      MobiTV alleges that the Defendants have (a) infringed MobiTV’s United States
      Patent No. 7,073,178 (“the ‘178 patent”) entitled “Method and System of
      Performing Transactions Using Shared Resources and Different Applications”; (b)
      infringed MobiTV’s copyright in software programs entitled “Mobi Radio Encoder”,
“Mobi Radio 1 Client” and “Far Reach”; (c) misappropriated trade secrets; and
      (d) unfairly competed. MobiTV makes further claims against De Bonet individually
      for Breach of Contract and Breach of Fiduciary Duty. MobiTV’s claims relate to,
      among other things, the departure of De Bonet from MobiTV in January 2006;
      his
      subsequent formation of Skyward in March 2006; and the joint development of
      software by Skyward and the Company known as uVuRadioTM and MobilecastingTM. The
      Company will file an Answer to the Complaint and in tends
      to
      vigorously defend against these claims, although there can be no assurances
      that
      the Company will be successful.





Except
      as
      set forth above, we believe that there are no material litigation matters at
      the
      current time. The results of such litigation matters and claims cannot be
      predicted with certainty, and an adverse outcome in one or more of such matters
      and claims could have a material adverse impact on our financial position,
      liquidity, or results of operations.





-17-





**Note
      9 - Subsequent Events**








In
      January 2007, the Company announced its intent to seek stockholder approval
      to
      change the name of the Company to uVumobile, Inc. to better reflect the
      corporate brand and new products. More specifically, the Company is developing
      a
      new suite of products and platforms, which are expected to include backend
      media
      hosting, application development, mobile marketing, messaging, content
      aggregation, billing, advertising and other services directed towards the mobile
      business- to- business market. On February 14, 2007, the Company initiated
      this
      process by distributing a consent solicitation statement to its stockholders
      seeking consent to amend its Certificate of Incorporation to effect the name
      change. On
      May 3,
      2007, the Company announced that as of April 9, 2007 it had received the consent
      of the holders of approximately 58% of its stock to change its
      corporate name to uVuMobile, Inc.  The Company intends to implement
      the name change as soon as practicable.








On
      March
      9, 2007, we commenced an Offer to Amend and Exchange certain of our outstanding
      warrants. The offer provided holders of certain warrants the opportunity to
      amend and immediately exercise any or all of their warrants for a significantly
      reduced exercise price by either paying the exercise price in cash or by
      tendering a specified number of warrants for each share of common stock being
      purchased. The offer expired at 5:00 p.m., Eastern Time, on April 20, 2007.
      As
      of that time, approximately 80% of warrants subject to the offer had been
      tendered. Upon waiver by our Board of Directors of a specified closing condition
      that had not been met as of the time our offer expired, we accepted all warrants
      validly tendered pursuant to the terms of the offer on April 20, 2007. Through
      the offer, we generated approximately $738,000 in gross proceeds available
      for
      our use to fund our operations.





As
      previously reported, on April 27, 2007, the Company entered into a General
      Release and Settlement Agreement effective April 30, 2007 (the “Agreement”) with
      Richard E. Bennett, Jr., the ex-chief executive officer of the Company
      (“Bennett”). Pursuant to the Agreement, the parties agreed that 600,000 of the
      3,510,000 shares of the Company’s common stock held in trust by RB Family
      Holdings, Ltd. (the “RB Trust”) for the benefit of Bennett would be cancelled
      and returned to the Company and the remaining 2,910,000 of such shares of the
      Company’s common stock (the “Remaining Shares”) would be reissued to Bennett
      without restrictive legend. The Agreement further provides that 291,000 of
      the
      Remaining Shares will be transferred by Bennett to Bennett’s legal counsel and
      such shares will be subject to certain specified sale volume restrictions until
      December 31, 2007. Except for 150,000 of the Remaining Shares and the 291,000
      Remaining Shares transferred to Bennett’s legal counsel, the Remaining Shares
      will also be subject to certain specified sales volume restrictions until
      December 31, 2007. The Agreement provides that Bennett shall cooperate with
      and
      assist the Company in connection with certain legal proceedings involving the
      Company and that Bennett shall be entitled to be indemnified in the same manner
      as set forth in the Company’s Bylaws. The Agreement also provides for a release
      of the Company and other specified parties by Bennett from any and all claims
      of
      any nature whatsoever, whether known or unknown which Bennett now has, or claims
      to have, or which Bennett at any time may have or claim to have, against the
      Company and such persons occurring up to and including the effective date of
      the
      Agreement. The Agreement also provides for a release of Bennett and the RB
      Trust
      by the Company from any and all claims which the Company now has, or claims
      to
      have, or which the Company at any time may have or claim to have, against
      Bennett occurring up to and including the effective date of the Agreement.




-18-





**Item
      2.** **Management’s
      Discussion and Analysis of Financial Condition and Results of
      Operation** s





*The
      discussion in this report contains forward-looking statements that involve
      risks
      and uncertainties. SmartVideo's actual results could differ materially from
      those discussed below. Factors that could cause or contribute to such
      differences include, but are not limited to, those identified in “Forward
      Looking Statements.” You should also carefully review the risk factors set forth
      in other reports or documents that SmartVideo files from time to time with
      the
      United States Securities and Exchange Commission, particularly our Annual
      Reports on Form 10-K, other Quarterly Reports on Form 10-Q and any Current
      Reports on Form 8-K. You should also read the following discussion and
      analysis in conjunction with our condensed consolidated financial statements
      and
      related notes to condensed consolidated financial statements included in this
      report.*





***Overview***




SmartVideo
      Technologies, Inc. (hereinafter sometimes referred to as “SmartVideo,”
“uVuMobileTM”,” the “Company,” “we,” “us,” or “our”) is a provider of video
      content distribution services and technology.





Incorporated
      in 1984, the Company acquired OVT, Inc., d/b/a SmartVideo, in November 2002
      and
      subsequently changed its name to SmartVideo Technologies, Inc. Although the
      core business of the Company has remained constant, the Company has changed
      its
      focus from distributing business-to-business services to the distribution of
      video content to consumers.




Since
      2002, the Company has been a provider of technology engaged in the aggregation
      and distribution of streaming video content to consumers connected to the public
      Internet. The Company has been in the business of purchasing the rights to
      video
      and television content and delivering that content to subscribers for a fee.
      Additionally, the Company also provides managed services for Internet
      network operators (carriers) and for major producers, owners and distributors
      of
      content. The Company intends to continue expanding its market opportunities
      by
      delivering video services to all forms of devices capable of receiving an
      Internet Protocol (IP) data stream and rendering that data stream into visible
      images on displays.




In
      January 2005, the Company launched its direct-to-consumer mobile video service
      providing its customers with access to high-quality video programming that
      is
      transmitted directly to SmartPhone cellular handsets and to Wi-Fi enabled PDA
      devices. In addition, the Company has developed Real Time Streaming
      Protocol (RTSP) and Java 2 Platform, Micro Edition (J2ME)
      compatibility.





During
      the fourth quarter of 2006, the Company expanded its product offerings to
      include a new suite of mobile technology and content solutions, bringing
      together a myriad of implementation choices, business models and marketing
      plans. The Company believes these new products will aid our customers seeking
      to
      capitalize on mobile technology opportunities. These new media services combine
      TV, radio, and other media platforms with user-friendly personalization,
      interactivity and targeted advertising.




-19-





**Recent
      Developments**




In
      January 2007, the Company announced its intent to seek stockholder approval
      to
      change the name of the Company to uVumobile, Inc. to better reflect the
      corporate brand and new products. More specifically, the Company is developing
      a
      new suite of products and platforms, which are expected to include backend
      media
      hosting, application development, mobile marketing, messaging, content
      aggregation, billing, advertising and other services directed towards the mobile
      business- to- business market. On February 14, 2007, the Company initiated
      this
      process by distributing a consent solicitation statement to its stockholders
      seeking consent to amend its Certificate of Incorporation to effect the name
      change. On
      May 3,
      2007, the Company announced that as of April 9, 2007 it had received the consent
      of the holders of approximately 58% of its stock to change its
      corporate name to uVuMobile, Inc.  The Company intends to implement
      the name change as soon as practicable.








On
      March
      9, 2007, we commenced an Offer to Amend and Exchange certain of our outstanding
      warrants. The offer provided holders of certain warrants the opportunity to
      amend and immediately exercise any or all of their warrants for a significantly
      reduced exercise price by either paying the exercise price in cash or by
      tendering a specified number of warrants for each share of common stock being
      purchased. The offer expired at 5:00 p.m., Eastern Time, on April 20, 2007.
      As
      of that time, approximately 80% of warrants subject to the offer had been
      tendered. Upon waiver by our Board of Directors of a specified closing condition
      that had not been met as of the time our offer expired, we accepted all warrants
      validly tendered pursuant to the terms of the offer on April 20, 2007. Through
      the offer, we generated approximately $738,000 in gross proceeds available
      for
      our use to fund our operations.





As
      previously reported, on April 27, 2007, the Company entered into a General
      Release and Settlement Agreement effective April 30, 2007 (the “Agreement”) with
      Richard E. Bennett, Jr., the ex-chief executive officer of the Company
      (“Bennett”). Pursuant to the Agreement, the parties agreed that 600,000 of the
      3,510,000 shares of the Company’s common stock held in trust by RB Family
      Holdings, Ltd. (the “RB Trust”) for the benefit of Bennett would be cancelled
      and returned to the Company and the remaining 2,910,000 of such shares of the
      Company’s common stock (the “Remaining Shares”) would be reissued to Bennett
      without restrictive legend. The Agreement further provides that 291,000 of
      the
      Remaining Shares will be transferred by Bennett to Bennett’s legal counsel and
      such shares will be subject to certain specified sale volume restrictions until
      December 31, 2007. Except for 150,000 of the Remaining Shares and the 291,000
      Remaining Shares transferred to Bennett’s legal counsel, the Remaining Shares
      will also be subject to certain specified sales volume restrictions until
      December 31, 2007. The Agreement provides that Bennett shall cooperate with
      and
      assist the Company in connection with certain legal proceedings involving the
      Company and that Bennett shall be entitled to be indemnified in the same manner
      as set forth in the Company’s Bylaws. The Agreement also provides for a release
      of the Company and other specified parties by Bennett from any and all claims
      of
      any nature whatsoever, whether known or unknown which Bennett now has, or claims
      to have, or which Bennett at any time may have or claim to have, against the
      Company and such persons occurring up to and including the effective date of
      the
      Agreement. The Agreement also provides for a release of Bennett and the RB
      Trust
      by the Company from any and all claims which the Company now has, or claims
      to
      have, or which the Company at any time may have or claim to have, against
      Bennett occurring up to and including the effective date of the Agreement.





***Critical
      Accounting Policies and Estimates***




The
      Company relies on the use of estimates and makes assumptions that impact its
      financial condition and results. These estimates and assumptions are based
      on
      historical results and trends as well as the Company's forecasts as to how
      results and trends might change in the future. While we believe that the
      estimates we use are reasonable, actual results could differ from those
      estimates.




We
      believe that the accounting policies described below are critical to
      understanding our business, results of operations and financial condition
      because they involve more significant judgments and estimates used in the
      preparation of our consolidated financial statements. An accounting policy
      is
      deemed to be critical if it requires an accounting estimate to be made based
      on
      assumptions about matters that are highly uncertain at the time the estimate
      is
      made, and any changes in the different estimates that could have been used
      in
      the accounting estimates that are reasonably likely to occur periodically could
      materially impact our consolidated financial statements. We have discussed
      the
      development, selection and application of our critical accounting policies
      with
      the Audit Committee of our Board of Directors, and our Audit Committee has
      reviewed our disclosure relating to our critical accounting policies in this
      “Management's Discussion and Analysis.”





The
      Company's most critical accounting policies and estimates that may materially
      impact the Company's results of operations include:




-20-




*Revenue
      Recognition*




The
      accounting related to revenue recognition in the digital media and multimedia
      broadcast industry is complex and affected by interpretations of the rules
      and
      an understanding of various industry practices, both of which are dynamic in
      nature and subject to change. As a result, revenue recognition accounting rules
      require us to make significant judgments.




We
      typically provide services to our business-to-business customers under
      volume-based usage arrangements of our digital media and multimedia broadcast
      products and services. Under certain arrangements, our customers are subject
      to
      a base monthly fee or minimum monthly usage requirements in order to maintain
      their preferential negotiated rates. Revenue is recognized as earned upon the
      delivery of service to our subscription-based customers. This typically occurs
      when a digital media or multimedia broadcast is viewed. Many of our
      subscription-based customers access our programming through the purchase of
      a
      monthly, semi-annual, or daily subscription for our mobile entertainment
      services. Revenue from mobile advertising is recognized when the related
      services are performed. See Note 2(K) to the consolidated financial statements
      included elsewhere in this report.




*Valuation
      and Recoverability of Long-Lived Assets*




See
      Note
      2(O) to the consolidated financial statements included elsewhere in this report
      for a description of the valuation and recoverability of long-lived
      assets.





*Income
      Taxes*




Income
      taxes are accounted for using the liability method in accordance with SFAS
      No.
      109, *Accounting for Income Taxes* (SFAS
      109). Deferred tax assets and liabilities are recognized for the future tax
      consequences attributable to differences between the financial statement
      carrying amounts of existing assets and liabilities and their respective tax
      bases and operation loss and tax credit carry forwards. Deferred tax assets
      and
      liabilities are measured using enacted tax rates expected to apply to taxable
      income in the years in which those temporary differences are expected to be
      recovered or settled. The effect on deferred tax assets and liabilities of
      a
      change in tax rates is recognized in income in the period that includes the
      enactment date. We continue to record a valuation allowance for the full amount
      of deferred income taxes, which would otherwise be recorded for tax benefits
      related to operating loss carry forwards, as realization of such deferred tax
      assets cannot be determined to be more likely than not likely.





*Accounting
      for Stock-Based Compensation*




In
      December 2004, the FASB issued SFAS No. 123(R), “Share-Based Payment,” which
      replaces SFAS No. 123 and supersedes APB Opinion No. 25. Under SFAS No. 123(R),
      companies are required to measure the compensation costs of share-based
      compensation arrangements based on the grant-date fair value and recognize
      the
      costs in the financial statements over the period during which employees are
      required to provide services. Share-based compensation arrangements include
      stock options, restricted share plans, performance-based awards, share
      appreciation rights and employee share purchase plans. In March 2005, the SEC
      issued Staff Accounting Bulletin No. 107, or “SAB 107”. SAB 107 expresses views
      of the staff regarding the interaction between SFAS No. 123(R) and certain
      SEC
      rules and regulations and provides the staff's views regarding the valuation
      of
      share-based payment arrangements for public companies. SFAS No. 123(R) permits
      public companies to adopt its requirements using one of two methods. On
      April 14, 2005, the SEC adopted a new rule amending the compliance dates
      for SFAS No. 123R. Companies may elect to apply this statement either
      prospectively, or on a modified version of retrospective application under
      which
      financial statements for prior periods are adjusted on a basis consistent with
      the pro forma disclosures required for those periods under SFAS No. 123.
      Effective January 1, 2006, we have adopted SFAS No. 123(R) using the prospective
      method.




***Results
      of Operations***




*Three
      Months Ended March 31, 2007 compared to 2006*





*Revenues*




Revenues
      for the three month period ended March 31, 2007 consisted primarily of a
      subscription based service delivering live and on-demand mobile entertainment
      services directly to consumers and revenues attributable to custom applications.
      Our revenues increased by approximately $222,000 for the three months ended
      March 31, 2007 as compared to the same period in 2006. This increase is
      primarily attributable to our decision to change our focus to a subscription
      based model delivering mobile entertainment services direct-to-the-consumer
      and
      the revenues generated from custom applications.





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*Broadcast
      rights*




Broadcast
      rights expense for the three months ended March 31, 2007 were $100,000 as
      compared to $528,000 for the same period in 2006. This change is attributable
      to
      our decision to change our focus to a subscription based model delivering mobile
      entertainment services direct to the consumer. This amount reflects the costs
      associated with acquiring the rights to deliver our mobile entertainment
      services.





*Compensation
      and benefits*




Our
      compensation and benefits expenses increased by approximately $172,000 for
      the
      three months ended March 31, 2007 as compared to the same period in 2006. As
      our
      industry and company continues to grow and develop, we are continuing to fill
      key positions that will enable us to leverage our future prospects and growth
      and relying less on the use of consultants for discrete projects.





*Consulting
      and professional fees*




Our
      consulting and professional fees decreased by approximately $151,000 for the
      three months ended March 31, 2007 as compared to the same period in 2006. This
      decrease is primarily attributable to fees associated with the consulting
      agreement with Growth Consultants LLC that was reflected in the three months
      ended March 31, 2006 which were not incurred in the three months ended March
      31,
      2007.





*Data
      Center*




Our
      data
      center expenses consist primarily of those items related to the maintenance
      of
      certain facilities and equipment at a third-party data center. The increase
      in
      data center expenses of approximately $8,000 for the three months ended March
      31, 2007 as compared to 2006 is primarily due to an increase in the utilization
      of bandwidth and additional services provided by our third-party data
      center.





*Stock-based
      Compensation*




For
      the
      three months ended March 31, 2007, we recorded approximately $1,645,000, as
      compared to $777,000 for the three months ended March 31, 2006, in non-cash,
      stock-based compensation expense. The increase in stock-based compensation
      expense was primarily attributable to an increase in the number of stock options
      issued. The compensation expense has been determined using the Black-Scholes
      fair value method. The remainder of the non-cash, stock-based compensation
      is
      related to the amortization of the deferred portion of previous warrant
      grants.





*Depreciation*




Depreciation
      expense for the three months ended March 31, 2007 increased by approximately
      $176,000 when compared to the same period in 2006. This increase is primarily
      attributable to the deployment of additional equipment in the process of
      increasing the overall capacity and quality of our services.





*Interest
      Expense*




Interest
      expense for the three months ended March 31, 2007 and 2006 was approximately
      $4,900 and $800, respectively.




*Selling,
      General and Administrative Expenses*




Selling,
      general and administrative expenses consist primarily of travel expenses related
      to the marketing of our product and services, lease payments related to the
      use
      of our corporate facilities and space at trade shows, and other general and
      administrative expenses. Our selling, general and administrative costs decreased
      approximately $231,000 for the three months ended March 31, 2007 when compared
      to the same period in 2006. This decrease is attributable to the conversion
      of
      temporary workers to full time employment and a decrease in travel related
      expenses.




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**Liquidity
      and Capital Resources and Going Concern (to be reviewed after completion of
      cash flow statement)**





We
      have
      incurred recurring losses and negative cash flows since inception. As of and
      for
      the three months ended March 31, 2007, we had an accumulated deficit of
      $68,244,199, a consolidated net loss of $3,801,567 and consolidated net cash
      flows used in operations of $2,181,243. As a result, our operations are not
      an
      adequate source of cash to fund future operations and these matters raise
      substantial doubt about our ability to continue as a going concern. To fund
      our
      cash requirements, we have relied on private placements of equity and loans
      from
      stockholders and other related entities. Although we closed on a $9.0 million
      equity financing on July 17, 2006, our ability to continue our operations is
      contingent upon obtaining additional financing and attaining profitable
      operations.





Cash
      flows generated from operating activities during the year ended December
      31, 2006 were not sufficient to offset our operating expenditures. Based on
      information available regarding our proposed plans and assumptions relating
      to
      operations, we anticipate that the net proceeds from our last financing in
      2006,
      together with projected cash flow from operations, will not be sufficient to
      meet our cash requirements for working capital and capital expenditures beyond
      the second quarter of 2007. As a result, it will be necessary for us to secure
      additional financing to support our operations. There can be no assurance that
      we will be able to obtain such financing on acceptable terms, or at all. If
      adequate funds are not available or not available on acceptable terms, the
      Company will be unable to continue as a going concern. We currently have no
      firm
      commitments for any additional capital.





On
      February 28, 2007, our Board of Directors determined that it would be advisable
      to retain a financial advisor to assist the Company in evaluating various
      strategic alternatives, including recapitalization, sale of stock, merger or
      asset disposition possibilities, all with the goal of maximizing stockholder
      value. On March 21, 2007, after reviewing several candidates, the Board of
      Directors of the Company unanimously approved the engagement of Daniels &
Associates as the Company's exclusive investment banker, financial advisor,
      and
      Consultant for these purposes.





On
      March
      9, 2007, we commenced an Offer to Amend and Exchange certain of our outstanding
      warrants. The offer provides holders of certain warrants the opportunity to
      amend and exercise any or all of their warrants for a significantly reduced
      exercise price by either paying the exercise price in cash or by tendering
      a
      specified number of warrants for each share of common stock being purchased.
      If
      all of the warrant holders to whom our offer was extended elect to exercise
      their warrants at the reduced cash exercise price set forth in the offer, we
      will generate approximately $9 million in gross proceeds available for our
      use
      to fund our operations. The offer expired at 5:00 p.m., Eastern Time, on April
      20, 2007. As of that time, approximately 80% of warrants subject to the offer
      had been tendered. Upon waiver by our Board of Directors of a specified closing
      condition that had not been met as of the time our offer expired, we accepted
      all warrants validly tendered pursuant to the terms of the offer on April 20,
      2007. Through the offer, we generated approximately $738,000 in gross proceeds
      available for our use to fund our operations.





**Item
      4. Controls and Procedures**





Our
      chief
      executive officer and chief financial officer (the “Certifying Officers”) are
      responsible for establishing and maintaining disclosure controls and procedures
      for our Company and our subsidiary. Such officers have concluded (based upon
      their evaluation of these controls and procedures as of the end of the period
      covered by this report) that our disclosure controls and procedures are
      effective to ensure that information required to be disclosed by us in
      reports we file and submit under the Exchange Act is recorded, processed,
      summarized and reported as and when required. In addition, the Certifying
      Officers have concluded that our disclosure controls and procedures have been
      designed to ensure that information required to be disclosed in reports filed
      by
      us under the Exchange Act is accumulated and communicated to management,
      including our principal executive officers as appropriate, in a manner to allow
      timely decisions regarding the required disclosure.




-23-





There
      were no significant changes in our internal controls or other factors that
      could
      significantly affect such controls subsequent to the date of his evaluation,
      and
      there were no corrective actions taken with regard to significant deficiencies
      and material weaknesses.




Our
      management, including the Certifying Officers, do not expect that our disclosure
      controls or our internal controls will prevent all error and all fraud. A
      control system, no matter how well conceived and operated, can provide only
      reasonable, not absolute, assurance that the objectives of the control system
      are met. In addition, the design of a control system must reflect the fact
      that
      there are resource constraints, and the benefits of controls must be considered
      relative to their costs. Because of the inherent limitations in all control
      systems, no evaluation of controls can provide absolute assurance that all
      control issues and instances of fraud, if any, within a company have been
      detected. These inherent limitations include the realities that judgments in
      decision-making can be faulty, and that breakdowns can occur because of simple
      error or mistake. Additionally, controls can be circumvented by the individual
      acts of some persons, by collusion of two or more people or by management
      override of the control. The design of any systems of controls also is based
      in
      part upon certain assumptions about the likelihood of future events, and there
      can be no assurance that any design will succeed in achieving its stated goals
      under all potential future conditions. Because of these inherent limitations
      in
      a cost-effective control system, misstatements due to error or fraud may occur
      and not be detected.





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**PART
      II - OTHER INFORMATION**





**Item
      1. Legal Proceedings**




See
      Note
      7 - Commitments and Contingencies to the Financial Statements included elsewhere
      in this report which discuss material pending legal proceedings to which the
      Company is a party and which are incorporated herein by
      reference.




**Item
      2.  Unregistered Sales of Equity Securities and Use of
      Proceeds**





As
      is
      described in Note
      7 -
      Commitments and Contingencies to
      the
      Financial Statements, we issued 175,000 shares of common stock to Wilson W.
      Hendricks, III in connection with a settlement agreement dated March 7, 2007.
      We
      did not receive any cash proceeds from the issue of shares of our common stock
      to Mr. Hendricks.





As
      previously reported, the Company was named as a defendant in four lawsuits
      brought by a total of eighteen investors in the United States District Court,
      Northern District of Georgia (Case No. 1:06- CV-0850-MHS filed on or about
      April
      10, 2006, and Case Nos. 1:06-CV-2388, 1:06-CV-2390, and 1:06-CV-2391 filed
      on or
      about October 6, 2006). On January 11, 2007 the Company entered into a
      Settlement Agreement with these investors and certain other interested parties
      (the “Claimants”). Pursuant to the terms of the Settlement Agreement, the
      Company issued 6,000,000 shares of the Company's common stock to the Claimants
      in exchange for the Claimants agreeing to release the Company and its owners,
      predecessors, successors, directors, officers, stockholders, employees,
      representatives, attorneys, subsidiaries and affiliates from all suits, claims,
      charges, liabilities and causes of action of any nature whatsoever which the
      Claimants had, have or may in the future have, arising out of any acts or events
      occurring up to and including the effective date of the Settlement Agreement.




In
      each
      of these unregistered issuances of equity securities, the Company relied on
      Section 4(2) of the Securities Act of 1933, as amended.





**Item
      3. Submission of Matters to a Vote of Security Holders**




In
      January 2007, the Company announced its intent to seek stockholder approval
      to
      change the name of the Company to uVumobile, Inc. to better reflect the
      corporate brand and new products. More specifically, the Company is developing
      a
      new suite of products and platforms, which are expected to include backend
      media
      hosting, application development, mobile marketing, messaging, content
      aggregation, billing, advertising and other services directed towards the mobile
      business- to- business market. On February 14, 2007, the Company initiated
      this
      process by distributing a consent solicitation statement to its stockholders
      seeking consent to amend its Certificate of Incorporation to effect the name
      change. On
      May 3,
      2007, the Company announced that that as of April 9, 2007 it had received the
      consent of the holders of approximately 58% of its stock
      to change its corporate name to uVuMobile, Inc.  The Company
      intends to implement the name change as soon as practicable.




-25-




**Item
      6. Exhibits**




*Exhibits*


31.1
            
            Certification
                of the Chief Executive Officer and President pursuant to Rule
                13a-14(a)/15d-14(a) of the Securities and Exchange Act of
                1934.31.2
            
            Certification
                of the Chief Financial Officer and Principal Accounting Officer pursuant
                to Rule 13a-14(a)/15d-14(a) of the Securities and Exchange Act of
                1934.32.1
            
            Certification
                of the Chief Executive Officer and President pursuant to 18 U.S.C.
                Section
                1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act
                of
                2003.32.2
            
            Certification
                of the Chief Financial Officer and Principal Accounting Officer pursuant
                to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of
                the
                Sarbanes-Oxley Act of 2003.


_________________________





-26-








**SIGNATURES**




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




**SMARTVIDEO
                TECHNOLOGIES, INC**By:
            /s/
                William J. Loughman
            
            Date:
            May
                11, 2007William
                J. LoughmanChief
                Financial Officer
              *(Chief
                Financial Officer and Principal Accounting Officer)*




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