<DOCUMENT>
<TYPE>SB-2/A
<SEQUENCE>1
<FILENAME>sb2a1-072007.txt
<TEXT>


As filed with the Securities and Exchange
Commission on July 20, 2007                         Registration No. 333-143025

================================================================================

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                -----------------


                          AMENDMENT NO. 1 TO FORM SB-2
                             REGISTRATION STATEMENT
                                    UNDER THE
                             SECURITIES ACT OF 1933


                                -----------------

                                NEW MOTION, INC.
                 (Name of Small Business Issuer in its Charter)

          DELAWARE                        8999                   06-1390025
  (State or Jurisdiction of    (Primary Standard Industrial    (I.R.S Employer
Incorporation or Organization)   Classification Code Number  Identification No.)

                          42 CORPORATE PARK, SUITE 250
                            IRVINE, CALIFORNIA 92606
                            TELEPHONE: (949) 777-3700
          (Address and Telephone Number of Principal Executive Offices)

                          42 CORPORATE PARK, SUITE 250
                            IRVINE, CALIFORNIA 92606
     (Address of Principal Place of Business or intended Place of Business)

                      BURTON KATZ, CHIEF EXECUTIVE OFFICER
                                NEW MOTION, INC.
                          42 CORPORATE PARK, SUITE 250
                            IRVINE, CALIFORNIA 92606
                            TELEPHONE: (949) 777-3700
            (Name, address and telephone number of agent for service)


                                    Copy to:
                             JONATHAN FRIEDMAN, ESQ.
                         STUBBS ALDERTON & MARKILES, LLP
                       15260 VENTURA BOULEVARD, 20TH FLOOR
                         SHERMAN OAKS, CALIFORNIA 91403
                                 (818) 444-4500


Approximate  date of proposed  sale to the  public:  From time to time after the
effective date of this Registration Statement.


If any of the  securities  being  registered on this Form are being offered on a
delayed or continuous  basis  pursuant to Rule 415 under the  Securities  Act of
1933, check the following box. [X]


If this form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the  Securities  Act  registration  statement  number of the  earlier  effective
registration statement for the same offering.   [_]

If this form is a  post-effective  amendment filed pursuant to Rule 462(c) under
the  Securities  Act,  check  the  following  box and  list the  Securities  Act
registration  statement number of the earlier effective  registration  statement
for the same offering.   [_]

If this form is a  post-effective  amendment filed pursuant to Rule 462(d) under
the  Securities  Act,  check  the  following  box and  list the  Securities  Act
registration  statement number of the earlier effective  registration  statement
for the same offering.   [_]

If delivery of the prospectus is expected to be made pursuant to Rule 434, check
the following box.   [_]



THE REGISTRANT HEREBY AMENDS THIS  REGISTRATION  STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE TIME UNTIL THE REGISTRANT  SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY  STATES THAT THIS REGISTRATION  STATEMENT
SHALL  THEREAFTER  BECOME  EFFECTIVE  IN  ACCORDANCE  WITH  SECTION  8(A) OF THE
SECURITIES  ACT OF  1933  OR  UNTIL  THE  REGISTRATION  STATEMENT  SHALL  BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION,  ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.

================================================================================


<PAGE>



                   Subject to Completion, Dated July 20, 2007


                                NEW MOTION, INC.
                          6,362,820 SHARES COMMON STOCK

                                -----------------

         This  prospectus  relates to the offer and sale from time to time of up
to 6,362,820 shares of our common stock that are held by the shareholders  named
in the "Selling  Shareholders"  section of this prospectus.  The prices at which
the selling shareholders may sell the shares in this offering will be determined
by the prevailing market price for the shares or in negotiated transactions.  We
will not receive any of the proceeds  from the sale of the shares.  We will bear
all expenses of  registration  incurred in connection  with this  offering.  The
selling shareholders whose shares are being registered will bear all selling and
other expenses.


         Our common stock is quoted on the Over-The-Counter  Bulletin Board (the
"OTC Bulletin  Board" or "OTCBB") under the symbol "NWMO." On July 16, 2007, the
last reported sales price of the common stock on the  Over-The-Counter  Bulletin
Board was $16.00 per share.


         INVESTING  IN OUR  COMMON  STOCK  INVOLVES  RISKS.  SEE "RISK  FACTORS"
BEGINNING ON PAGE 5.

                                -----------------

         Neither the Securities and Exchange Commission nor any state securities
commission has approved or  disapproved  of these  securities or passed upon the
accuracy or adequacy of this prospectus. Any representation to the contrary is a
criminal offense.

                                -----------------

                  The date of this prospectus is ______________


<PAGE>


                                TABLE OF CONTENTS

                                                                            PAGE
                                                                            ----

TABLE OF CONTENTS .........................................................    i

PROSPECTUS SUMMARY ........................................................    1

RISK FACTORS ..............................................................    5

RECENT CORPORATE EVENTS ...................................................   18

FORWARD-LOOKING STATEMENTS ................................................   23

USE OF PROCEEDS ...........................................................   24

MARKET FOR COMMON EQUITY AND RELATED SHAREHOLDER MATTERS ..................   24

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
  CONDITION AND RESULTS OF OPERATIONS .....................................   25

BUSINESS ..................................................................   42

MANAGEMENT ................................................................   52

EXECUTIVE COMPENSATION ....................................................   56

PRINCIPAL AND SELLING SHAREHOLDERS ........................................   63

RELATED PARTY TRANSACTIONS ................................................   68

DESCRIPTION OF CAPITAL STOCK ..............................................   73

PLAN OF DISTRIBUTION ......................................................   76

LEGAL MATTERS .............................................................   78

EXPERTS ...................................................................   78

WHERE YOU CAN FIND MORE INFORMATION .......................................   78

INDEX TO FINANCIAL STATEMENTS .............................................   79



         You should rely only on the information contained in this prospectus or
any supplement.  We have not authorized  anyone to provide  information  that is
different from that contained in this prospectus.  The information  contained in
this prospectus is accurate only as of the date of this  prospectus,  regardless
of the time of delivery of this prospectus or of any sale of our common stock.

         Except as otherwise indicated,  information in this prospectus reflects
a 1-for-300  reverse  stock split of our common  stock and the  conversion  of 1
share of our Series A  Preferred  Stock,  650  shares of our Series B  Preferred
Stock,  500,000  shares of our Series C Preferred  Stock and 8,333 shares of our
Series D Preferred Stock into a total of 11,430,346  shares of our common stock,
all which took effect on May 2, 2007.


                                       i
<PAGE>


                               PROSPECTUS SUMMARY

         THIS  SUMMARY  HIGHLIGHTS  SELECTED  INFORMATION  CONTAINED  IN GREATER
DETAIL  ELSEWHERE  IN THIS  PROSPECTUS.  THIS  SUMMARY  DOES NOT CONTAIN ALL THE
INFORMATION YOU SHOULD CONSIDER BEFORE INVESTING IN OUR COMMON STOCK. YOU SHOULD
READ THE ENTIRE  PROSPECTUS  CAREFULLY  BEFORE  MAKING AN  INVESTMENT  DECISION,
INCLUDING  "RISK  FACTORS" AND THE  CONSOLIDATED  FINANCIAL  STATEMENTS  AND THE
RELATED NOTES. REFERENCES IN THIS PROSPECTUS TO "NEW MOTION," "MPLC" "WE," "OUR"
AND "US" REFER TO NEW MOTION, INC. AND OUR CONSOLIDATED SUBSIDIARIES.

                                  OUR BUSINESS


         We  publish  wireless  entertainment  applications,   including  games,
ringtones, images and other entertainment content which is designed to appeal to
a broad range of wireless  subscribers.  Our  customers  typically  purchase and
download   our   applications   through   one   of   our   websites,   including
Mobilesidewalk.com and RingtoneChannel.com, or through their mobile handset. Our
customers are charged a one-time or monthly subscription fee for the application
which  appears on their  mobile  phone bills.  Typically  the carriers  (such as
Cingular  Wireless or Verizon Wireless) keep a portion of the fee they charge to
our customers, and then remit the balance to billing aggregators,  who act as an
intermediary between us and the carriers. The billing aggregators keep a portion
of the fee for their  services  and then remit the balance to us, which we share
with  our  third  party  content  providers,   if  any.  Generally  the  monthly
subscription fee remitted to us through our billing aggregators,  before refunds
and adjustments, is between 50% and 70% of the fee charged to our end consumers.
The wireless  distribution  of our products  eliminates  traditional  publishing
complexities,  including physical  production,  packaging,  shipping,  inventory
management and return processing. We are headquartered in Irvine, California.


                        THE WIRELESS ENTERTAINMENT MARKET

         The wireless  entertainment market has emerged as a result of the rapid
growth and significant  technological advancement in the wireless communications
industry.  Wireless  carriers  are  delivering  new handsets to new and existing
subscribers which have the capability to download rich media content. Due to the
proliferation  of advanced  mobile phones with the  capabilities  to handle rich
media  downloads,  the  potential  market for mobile  entertainment  services is
expected to increase significantly in the coming years.

                       OUR HISTORY AND CONTACT INFORMATION


         New Motion, Inc. (formerly known as MPLC, Inc., and prior to MPLC, Inc.
as The Millbrook Press,  Inc.) was  incorporated  under the laws of the State of
Delaware in 1994. Until 2004, we were a publisher of children's nonfiction books
for the  school  and  library  market  and the  consumer  market  under  various
imprints.  As a result of market factors,  and after an unsuccessful  attempt to
restructure  our  obligations  out of court,  on  February  6, 2004,  we filed a
voluntary  petition for relief under Chapter 11 of the Bankruptcy  Code with the
United States  Bankruptcy Court for the District of Connecticut (the "Bankruptcy
Court").  After  filing  for  bankruptcy,  we sold our  imprints  and  remaining
inventory  and by July  31,  2004,  we had paid all  secured  creditors  100% of
amounts  owed.  At this point in time,  we were a "shell"  company  with nominal
assets  and no  material  operations.  Beginning  in  January  2005,  after  the
Bankruptcy Court's approval,  all pre-petition unsecured creditors had been paid
100% of the amounts owed (or agreed) and all post petition administrative claims
submitted  had been paid.  In December  2005,  $0.464 per  eligible  share (on a
pre-Reverse  Split basis) was available for  distribution and was distributed to
our  stockholders  of record as of October 31, 2005. The bankruptcy  proceedings
were  concluded in January 2006 and no  additional  claims were  permitted to be
filed after that date.


                                       1
<PAGE>


         On October 24, 2006, we, and certain of our stockholders entered into a
Common  Stock  Purchase   Agreement  with  Trinad  Capital  Master  Fund,   Ltd.
("Trinad"),  pursuant  to which we  agreed to  redeem  23,448,870  shares of our
Common Stock from the existing stockholders of the company and sell an aggregate
of 69,750,000  shares of our Common Stock (both on a  pre-Reverse  Split basis),
representing 93% of our issued and outstanding shares of Common Stock, to Trinad
in a  private  placement  transaction  for  aggregate  gross  proceeds  to us of
$750,000.


         On  February  12,  2007,   pursuant  to  the  closing  of  an  exchange
transaction  (the  "Exchange"),  we  acquired  all  of  the  outstanding  voting
securities of New Motion  Mobile,  Inc.  (formerly  called New Motion,  Inc.), a
Delaware  corporation  ("New  Motion  Mobile"),  which  became our wholly  owned
subsidiary. We issued to the stockholders of New Motion Mobile 500,000 shares of
our Series C  Convertible  Preferred  Stock,  par value  $0.10 per share,  which
subsequently converted into 7,263,688 shares of our common stock on May 2, 2007.
In connection with the Exchange, we changed our year end for financial reporting
purposes from July 31 to December 31.


         We also assumed all of the  outstanding  options and warrants issued by
New Motion  Mobile.  These  options and  warrants now entitle  their  holders to
purchase  1,712,778  shares of our common stock and 23,534  shares of our common
stock, respectively.  In addition, we assumed a convertible promissory note (the
"IVG Note"), with a maximum principal amount of $2,320,000, issued by New Motion
Mobile in favor of Index Visual & Games,  Ltd., on substantially  the same terms
and  conditions as set forth in the IVG Note.  On July 11, 2007,  IVG elected to
convert the IVG Note into 172,572  shares of our common  stock.  For  accounting
purposes,  the  Exchange has been  treated as a  recapitalization  of New Motion
Mobile  with New  Motion  Mobile as the  accounting  acquirer,  and us the legal
acquirer.


         In combination with the Exchange,  on January 24, 2007, we entered into
the Series A Convertible  Preferred  Stock  Purchase  Agreement  with Trinad and
received  gross proceeds of $3.5 million in exchange for one share of our Series
A  Convertible  Preferred  Stock,  par  value  $0.10 per  share  (the  "Series A
Preferred Stock"). On January 31, 2007, we entered into the Series B Convertible
Preferred Stock Purchase Agreement with Watchung Road Associates,  L.P., Lyrical
Opportunity  Partners II LP, Lyrical Opportunity Partners II Ltd. and Destar LLC
and  received  gross  proceeds of $6.5 million in exchange for 650 shares of our
Series B  Convertible  Preferred  Stock,  par value  $0.10 per share  ("Series B
Preferred  Stock").  The closing of the  purchase and sale of Series B Preferred
Stock occurred on February 12, 2007.

         On February 28, 2007, we entered into a Securities  Purchase  Agreement
with various  accredited  investors and received gross proceeds of approximately
$10  million  in  exchange  for  8,333  shares  of our  Series D 8%  Convertible
Preferred Stock, par value $0.10 per share. This financing transaction closed on
March 6, 2007, when we received the net proceeds from the financing.

         In  connection  with the sale of our  Series A and  Series B  Preferred
Stock, we entered into a registration  rights  agreement with the holders of our
Series A and Series B Preferred  Stock  pursuant to which we granted the holders
certain registration rights with respect to the shares of our common stock owned
by the holders,  including  the common stock  underlying  the Series A Preferred
Stock and  Series B  Preferred  Stock  sold in the  offering.  In  addition,  in
connection  with  the  sale of our  Series  D  Preferred  Stock,  pursuant  to a
registration  rights agreement with the investors in the Series D financing,  we
granted the investors certain  registration rights with respect to the shares of
our  common  stock  issuable  upon  conversion  of the  shares  of our  Series D
Convertible  Preferred  Stock  and upon  conversion  of the  shares of any other
series of our preferred stock owned by the investors. We are required to prepare
and file  with the  Securities  and  Exchange  Commission  within 75 days of the
closing  of the Series D offering a  registration  statement  on Form S-3,  Form
SB-2,  or on  another  appropriate  form,  covering  the  resale  of  all of the
registerable securities.  In the event that we do not satisfy certain filing and
other  obligations in our  registration  rights agreement with the purchasers of
our Series D  Preferred  Stock,  we are  required to pay such Series D Preferred
Stock purchasers  liquidated  damages in an aggregate amount of up to 12% of the
gross  proceeds  of the Series D offering.  The common  stock held by the former
holders  of our  Series A,  Series  B, and  Series D  Preferred  Stock are being
registered for resale on this prospectus.


                                       2
<PAGE>



         Sanders Morris Harris, Inc. acted as placement agent in connection with
the sale of our  Series  A, B and D  Preferred  Stock.  For  their  services  as
placement  agent,  we paid  Sanders  Morris  Harris  a fee  equal  to  7.5%,  or
approximately $1,500,000, of the gross proceeds from the financing and five year
warrants to purchase 290,909 shares of common stock at an average exercise price
of $5.50 per share (on a post-Reverse  Split basis).  Of the $1,500,000 fee paid
to Sanders  Morris Harris,  Inc.,  $939,408 was paid in cash and $560,592 of the
fee was provided to Sanders Morris Harris,  Inc.  through the issuance of 467.16
shares of our Series D Preferred Stock.


         Effective on May 2, 2007, we changed our corporate  name to New Motion,
Inc. from MPLC,  Inc.,  completed a 1-for-300  reverse split of our common stock
(the  "Reverse  Split"),  increased our  authorized  shares of common stock from
75,000,000 to 100,000,000  and adopted our 2007 Stock  Incentive  Plan. Upon the
effectiveness  of the Reverse Split on May 2, 2007, all classes of our preferred
stock converted into common stock.

         The address of our  principal  executive  office is 42 Corporate  Park,
Suite 250, Irvine, CA 92606, and our telephone number is (949) 777-3700.


                                       3
<PAGE>


                                  THE OFFERING

Common stock offered..............  6,362,820 shares by the selling shareholders


Common stock outstanding
   before this offering...........  11,965,596 shares.

Common stock to be outstanding
   after this offering............  12,425,110 shares.


Use of proceeds...................  We will not receive any of the proceeds from
                                    the sale of  shares of our  common  stock by
                                    the  selling   shareholders.   See  "Use  of
                                    Proceeds."

OTC Bulletin Board symbol.........  NWMO

Risk Factors......................  See "Risk Factors" beginning on page 5 for a
                                    discussion   of  factors   that  you  should
                                    consider   carefully   before   deciding  to
                                    purchase our common stock.


         In the table above,  the number of shares to be outstanding  after this
offering is based on  11,965,596  shares  outstanding  as of July 16, 2007,  and
assumes the issuance to the selling  stockholders  of the  following  additional
shares which are being offered for sale under the prospectus:


         o        290,909  shares  issuable  upon the  exercise  of  outstanding
                  warrants  at a weighted  average  exercise  price of $5.50 per
                  share; and

         o        168,605 shares  issuable upon the conversion of an outstanding
                  promissory note, at a conversion price of $3.44 per share.

         In the table above,  the number of shares to be outstanding  after this
offering does not reflect the  following  shares which are not being offered for
sale under this prospectus:


         o        1,452,737  shares of common stock  reserved for issuance under
                  our 2005 Stock Incentive Plan, as of July 16, 2007;


         o        23,534  shares  issuable  upon  the  exercise  of  outstanding
                  warrants  at a weighted  average  exercise  price of $3.44 per
                  share; and


         o        1,400,000  shares of common stock  reserved for issuance under
                  our 2007 Stock Incentive Plan, as of July 16, 2007.



                                       4
<PAGE>


                                  RISK FACTORS

         INVESTING  IN OUR  COMMON  STOCK  INVOLVES A HIGH  DEGREE OF RISK.  YOU
SHOULD CAREFULLY  CONSIDER THE FOLLOWING RISK FACTORS AND ALL OTHER  INFORMATION
CONTAINED IN THIS PROSPECTUS  BEFORE  PURCHASING OUR COMMON STOCK. THE RISKS AND
UNCERTAINTIES  DESCRIBED BELOW ARE NOT THE ONLY ONES FACING US. ADDITIONAL RISKS
AND UNCERTAINTIES  THAT WE ARE UNAWARE OF, OR THAT WE CURRENTLY DEEM IMMATERIAL,
ALSO MAY BECOME IMPORTANT  FACTORS THAT AFFECT US. IF ANY OF THE FOLLOWING RISKS
OCCUR,  OUR  BUSINESS,  FINANCIAL  CONDITION OR RESULTS OF  OPERATIONS  COULD BE
MATERIALLY AND ADVERSELY AFFECTED. IN THAT CASE, THE TRADING PRICE OF OUR COMMON
STOCK COULD DECLINE, AND YOU MAY LOSE SOME OR ALL OF YOUR INVESTMENT.

                          RISKS RELATED TO OUR BUSINESS

WE HAVE A LIMITED  OPERATING  HISTORY IN AN EMERGING  MARKET,  WHICH MAY MAKE IT
DIFFICULT FOR YOU TO EVALUATE OUR BUSINESS.

         We were  incorporated  in March  2005 and  immediately  began  offering
entertainment  products and services  directly to consumers through the transfer
of the RingtoneChannel Pty Limited  ("RingtoneChannel")  business to New Motion.
These  services  and  products  are billed  through  wireless  carriers to their
subscribers.  Accordingly, we have a limited history of generating revenues, and
the future  revenue and income  potential  of our  business is  uncertain.  As a
result of our short  operating  history  in the  emerging  mobile  entertainment
industry,  we have  limited  financial  data  that you can use to  evaluate  our
business. Any evaluation of our business and our prospects must be considered in
light of our limited  operating  history and the risks and  uncertainties  often
encountered  by companies in our stage of  development.  Some of these risks and
uncertainties relate to our ability to do the following:

         -        maintain  our current and  develop  new  wireless  carrier and
                  billing  aggregator  relationships  upon  which  our  business
                  currently depends;

         -        respond effectively to competitive pressures;

         -        increase brand awareness and consumer recognition;

         -        attract and retain qualified management and employees;

         -        continue to upgrade our technology;

         -        continue to upgrade our information processing systems;

         -        continue to develop  and source  high-quality  mobile  content
                  that achieves significant market acceptance;

         -        maintain and grow our off-deck distribution, including through
                  our web sites and third-party direct-to-consumer distributors;
                  and

         -        execute our business and marketing strategies successfully.

         If we are unable to address these risks, our operating  results may not
meet the  expectations  of investors,  which would likely cause the price of our
common stock to decline.

OUR BUSINESS CURRENTLY RELIES ON WIRELESS CARRIERS AND AGGREGATORS TO FACILITATE
BILLING AND COLLECTIONS IN CONNECTION WITH OUR  ENTERTAINMENT  PRODUCTS SOLD AND
SERVICES  RENDERED,  AND THE LOSS OF,  OR A  MATERIAL  CHANGE  IN,  ANY OF THESE
RELATIONSHIPS  COULD  MATERIALLY  AND ADVERSELY  AFFECT OUR BUSINESS,  OPERATING
RESULTS AND FINANCIAL CONDITION.

         We  currently  generate,  and we expect to  continue to  generate,  the
majority of our revenues from the sale of our products and services  directly to
consumers which are billed through  wireless  aggregators and carriers.  For the
fiscal year ended December 31, 2006, we billed  approximately 60% of our revenue
through aggregation services provided by Goldpocket Wireless,  Inc. ("Goldpocket
Wireless") and 34% of our revenue  through our aggregator  Mobile  Messenger Pty
Ltd ("Mobile  Messenger").  In 2005, we billed


                                       5
<PAGE>


approximately  78% of our revenue with Buongiorno USA, Inc.  ("Buongiorno")  and
approximately 22% of our revenue through our aggregator Mobile Messenger. In the
first  quarter  of 2007,  we billed  approximately  85% of our  revenue  through
Goldpocket  Wireless and approximately  15% through Mobile Messenger.  We expect
that we will continue to generate a significant  portion of our revenues through
a limited  number of  aggregators  for the  foreseeable  future,  although these
aggregators may vary from period to period.

         Our  aggregator  agreements  are not  exclusive  and  generally  have a
limited term of one or two years with evergreen or automatic renewal  provisions
upon expiration of the initial term.  These  agreements set out the terms of our
relationships  with the carriers.  In addition,  any party can  terminate  these
agreements early, and in some instances, without cause.

         Many other  factors  outside  our  control  could  impair  our  carrier
relationships, including a carrier's:

         -        preference  for  or  decision  to  provision  delivery  of our
                  products and services to their customer base;

         -        decision   to   offer   its   own   competing    entertainment
                  applications, products and services;

         -        decision to offer similar entertainment applications, products
                  and services to its subscribers for free;

         -        network  encountering  technical  problems  that  disrupt  the
                  delivery of or billing for our applications; or

         -        decision  to  increase  the  fees it  charges  to  market  and
                  distribute  our  applications,   thereby  increasing  its  own
                  revenue and decreasing our share of revenue.

         If one or more of these wireless carriers decides not to offer off-deck
applications  we may be unable to replace the revenue  source with an acceptable
alternative,  causing  us to lose  access  to the  subscribers  covered  by that
wireless  carrier,  which could materially harm our business,  operating results
and  financial  condition.  The  off-deck  arena  refers  primarily  to services
delivered through the Internet, which is independent of the carriers.

THE  MARKETS  IN  WHICH  WE  OPERATE  ARE  HIGHLY  COMPETITIVE  AND  MANY OF OUR
COMPETITORS HAVE GREATER RESOURCES THAN WE DO.

         The  development,  distribution  and  sale  of  wireless  entertainment
applications is a highly competitive business. We compete primarily on the basis
of marketing  acquisition  cost, brand  awareness,  and carrier and distribution
breadth. We also compete for experienced and talented employees.

         Currently,   we  consider  our  primary   competitors  to  be  Jamster,
Buongiorno,   Flycell,   Thumbplay  and  Dada  Mobile.  In  the  future,  likely
competitors  may include  other major media  companies,  traditional  video game
publishers, content aggregators, wireless software providers and other pure-play
wireless entertainment publishers.  Wireless carriers may also decide to develop
and distribute their own similar wireless entertainment  applications,  products
and  services  and as such they might  refuse to  distribute  some or all of our
applications or may deny us access to all or part of their networks.

         Some of our competitors' advantages over us include the following:

         -        substantially greater revenues and financial resources;

         -        stronger brand names and consumer recognition;

         -        the capacity to leverage their marketing expenditures across a
                  broader portfolio of wireless and non-wireless products;

         -        pre-existing relationships with brand holders;


                                       6
<PAGE>


         -        more resources to make acquisitions; and

         -        broader geographic presence.

         If we are not as successful as our  competitors in our target  markets,
our sales could decline,  our margins could be negatively  impacted and we could
lose market share, any of which could materially harm our business.

OUR  SUCCESS  DEPENDS ON OUR ABILITY TO DEVELOP NEW  APPLICATIONS  PRODUCTS  AND
SERVICES THAT OUR CUSTOMERS WILL CONTINUE TO BUY.

         Our success  depends on providing  applications,  products and services
that  offer our  customers  a  high-quality  entertainment  experience.  We must
continue to invest significant  resources in research and development to enhance
our offering of wireless  applications and introduce new  applications  that our
customers  will  continue to buy.  Our  operating  results  would  suffer if our
applications  are not responsive to the  preferences of our customers or are not
effectively brought to market.

         The planned timing or  introduction  of new  applications is subject to
risks  and  uncertainties.   Unexpected  technical,   operational,   deployment,
distribution,  carrier  approval,  or other  problems could delay or prevent the
introduction of new applications,  which could result in a loss of, or delay in,
revenues or damage to our reputation and brand.  If any of our  applications  is
introduced  with  defects,  errors or failures,  we could  experience  decreased
sales,  loss of customers and damage to our reputation  and brand.  In addition,
new  applications  may not achieve  sufficient  market  acceptance to offset the
costs of  development.  Our  success  depends,  in part,  on  unpredictable  and
volatile factors beyond our control,  including customer preferences,  competing
applications and the availability of other entertainment  activities. A shift in
mobile phone usage or the entertainment preferences of our customers could cause
a decline  in our  applications'  popularity  that could  materially  reduce our
revenues and harm our business.

         We  continuously  develop and  introduce  new  applications  for use on
next-generation  mobile phones. We must make product  development  decisions and
commit significant resources well in advance of the anticipated  introduction of
a new mobile  phone model.  New mobile phone models for which we are  developing
applications  may be delayed,  may not be  commercially  successful,  may have a
shorter  life  cycle  than  anticipated  or may not be  adequately  promoted  by
wireless carriers or the mobile phone  manufacturer.  If the mobile phone models
for which we are  developing  applications  are not released when expected or do
not achieve broad market penetration, our potential revenues will be limited and
our business will suffer.

WE DEPEND ON A LIMITED  NUMBER OF  APPLICATIONS,  PRODUCTS  AND  SERVICES  FOR A
SIGNIFICANT PORTION OF OUR REVENUE.

         We derive a significant portion of our revenue from a limited number of
applications.  In fiscal 2005 and 2006, we generated  approximately 67% and 26%,
respectively,  of our revenue from our Ringtone  applications and  approximately
33% and 70%,  respectively of our revenue from our Trivia  applications.  In the
first  quarter  2006  and  2007,  we  generated   approximately   13%  and  12%,
respectively of our revenue from our Ringtone  applications,  approximately  87%
and 71%, respectively of our revenue from our Trivia applications, approximately
0% and 9%,  respectively  of our revenue  from our  Bid4Prizes  application  and
approximately  0% and 8%  respectively  of our  revenue  from  our  White  Label
services.  We expect to continue to derive a substantial portion of our revenues
from Ringtone and Trivia applications and a limited number of other applications
in the  foreseeable  future.  Due to this  dependence  on a  limited  number  of
applications,  the failure to achieve  anticipated results with any one of these
key applications may harm our business.  Additionally,  if we cannot develop new
applications  that are as  successful  as our  Trivia  application,  our  future
revenues could be limited and our business will suffer.


                                       7
<PAGE>


WE  RELY  ON  INDEPENDENT  THIRD  PARTIES  FOR  THE  DEVELOPMENT  OF MANY OF OUR
APPLICATIONS, PRODUCTS AND SERVICES.

         We rely on  independent  third-party  developers to develop many of our
entertainment  applications,  products and  services,  which  subjects us to the
following risks:

         -        key  developers  who  worked  for us in the past may choose to
                  work for our competitors;

         -        developers currently under contract may try to renegotiate our
                  agreements with them on terms less favorable to us; and

         -        our   developers  may  be  unable  or  unwilling  to  allocate
                  sufficient  resources to complete our applications on a timely
                  or satisfactory basis or at all.

WE FACE CHALLENGES IN MANAGING THE RAPID GROWTH OF OUR BUSINESS.

         We have  experienced,  and continue to experience,  rapid growth in our
business. This growth has placed, and may continue to place, significant demands
on our management and our  operational and financial  infrastructure.  To manage
our growth effectively, we must continue to improve and enhance our operational,
financial and management controls in order to maintain efficiency and innovation
in our growing  organization.  We must also  enhance our  reporting  systems and
procedures  to ensure  timely and accurate  periodic  public  disclosure  of our
operations  and we  will  need  to  hire  additional  personnel.  These  systems
enhancements  and  improvements  will  require   significant   expenditures  and
allocation  of  valuable  management  resources.  If we  fail  to  maintain  the
efficiency of our  organization as it grows, our profit margins will decline and
our earnings could be materially diminished.


         In order to meet  competitive  challenges  or take  advantage of market
opportunities, we may expand our technology, sales, administrative and marketing
organizations.  Any growth in or expansion of our business is likely to continue
to place a strain on our management and administrative resources, infrastructure
and systems.  As with other growing  businesses,  we expect that we will need to
further refine and expand our business development capabilities, our systems and
processes and our access to financing sources. We also will need to hire, train,
supervise  and manage new  employees.  These  processes  are time  consuming and
expensive, will increase management  responsibilities and will divert management
attention. We cannot assure you that we will be able to:


         -        expand our systems  effectively  or efficiently or in a timely
                  manner;

         -        allocate our human resources optimally;

         -        meet our capital needs;

         -        identify  and  hire  qualified   employees  or  retain  valued
                  employees; or

         -        incorporate  effectively  the  components  of any  business or
                  product  line that we may  acquire  in our  effort to  achieve
                  growth.

         Our inability or failure to manage our growth and expansion effectively
could harm our  business  and  materially  and  adversely  affect our  operating
results and financial condition.

WE  MAY  NEED   ADDITIONAL   FUNDING  TO  SUPPORT  OUR  OPERATIONS  AND  CAPITAL
EXPENDITURES,  WHICH MAY NOT BE AVAILABLE  TO US AND WHICH LACK OF  AVAILABILITY
COULD ADVERSELY AFFECT OUR BUSINESS.

         We expect we may need  additional  capital  to  continue  to expand our
operations, and to make strategic or necessary product or business acquisitions.
As part of our  planned  growth  and  expansion,  we  will be  required  to make
expenditures  necessary  to expand and  improve  our  operating  and  management
infrastructure.  We also plan to invest more heavily in research and development
of new  products and  services.  In addition,  we may need  additional  funds to
pursue  business   opportunities   (such  as   acquisitions   of   complementary
businesses),  to react to unforeseen  difficulties  or to respond to competitive
pressures.


                                       8
<PAGE>


         If our  capital  resources  are  insufficient,  we will  need to  raise
additional funds.  While we will continue to seek out additional debt and equity
financing,  we currently have no committed  sources of additional  capital,  and
there can be no assurance that any financing  arrangements  will be available in
amounts  or on  terms  acceptable  to us,  if at all.  Furthermore,  the sale of
additional  equity or  convertible  debt  securities  may  result in  additional
dilution  to  existing  stockholders.  If  adequate  additional  funds  are  not
available,  we may be  required  to  delay,  reduce  the  scope of or  eliminate
material parts of the implementation of our business  strategy.  This limitation
could  substantially  harm our  business,  results of  operations  and financial
condition.

WE MAY NOT BE ABLE TO ADEQUATELY PROTECT OUR INTELLECTUAL PROPERTY RIGHTS.

         We rely in part on trade secret,  unfair  competition,  trade dress and
trademark law to protect our rights to certain aspects of our product offerings,
including our software technologies, domain names and recognized trademarks, all
of which we  believe  are  important  to the  success  of our  products  and our
competitive  position.  There  can be no  assurance  that  any of our  trademark
applications will result in the issuance of a registered trademark,  or that any
trademark granted will be effective in thwarting competition or be held valid if
subsequently challenged. In addition, there can be no assurance that the actions
taken by us to  protect  our  proprietary  rights  will be  adequate  to prevent
imitation of our  products,  that our  proprietary  information  will not become
known to competitors,  that we can meaningfully protect our rights to unpatented
proprietary   information  or  that  others  will  not   independently   develop
substantially  equivalent  or  better  products  that  do  not  infringe  on our
intellectual  property  rights.  We  could be  required  to  devote  substantial
resources to enforce and protect our intellectual  property,  which could divert
our  resources  and  result in  increased  expenses.  In  addition,  an  adverse
determination  in  litigation  could  subject  us to the loss of our  rights  to
particular  intellectual  property,  could require us to grant licenses to third
parties,  could prevent us from selling or using certain aspects of our products
or could  subject  us to  substantial  liability,  any of which  could  harm our
business.

WE MAY BECOME SUBJECT TO LITIGATION FOR  INFRINGING  THE  INTELLECTUAL  PROPERTY
RIGHTS OF OTHERS.

         Others  may  initiate   claims  against  us  for  infringing  on  their
intellectual property rights. We may be subject to costly litigation relating to
such infringement claims and we may be required to pay compensatory and punitive
damages or license fees if we settle or are found  culpable in such  litigation.
In  addition,   we  may  be  precluded  from  offering  products  that  rely  on
intellectual property that is found to have been infringed by us. We also may be
required to cease  offering the affected  products while a  determination  as to
infringement  is considered.  These  developments  could cause a decrease in our
operating  income and  reduce our  available  cash  flow,  which  could harm our
business and cause our stock price to decline.

IF WE FAIL TO  DELIVER  OUR  APPLICATIONS  TO  CORRESPOND  WITH  THE  COMMERCIAL
INTRODUCTION OF NEW MOBILE PHONE MODELS, OUR SALES MAY SUFFER.

         Our business is tied, in part, to the  commercial  introduction  of new
mobile phone models with enhanced features,  including color screens and greater
processing power. Many new mobile phone models are released in the final quarter
of the year to coincide with the holiday shopping season.  We cannot control the
timing of these  mobile  phone  launches.  Some of our  customers  download  our
applications  soon  after  they  purchase  their new  mobile  phones in order to
experience the new features of those phones.  If we miss the opportunity to sell
applications when our customers upgrade to a new mobile phone due to application
launch  delays,  our sales may suffer.  In addition,  if we miss the key holiday
selling period,  either because the  introduction of a new mobile phone model is
delayed  or we do not  successfully  deploy  our  applications  in time  for the
holiday selling season, our sales may suffer.


                                       9
<PAGE>


OUR  BUSINESS  AND  GROWTH  MAY  SUFFER IF WE ARE  UNABLE TO HIRE AND RETAIN KEY
PERSONNEL WHO ARE IN HIGH DEMAND.


         We depend on the continued  contributions of our senior  management and
other key personnel, many of whom may be difficult to replace. In particular, we
are  dependant  on the  continued  service of Burton Katz,  our Chief  Executive
Officer.  The loss of the services of any of our executive officers or other key
employees  could harm our  business.  Our  future  success  also  depends on our
ability to identify,  attract and retain highly skilled  technical,  managerial,
finance,  marketing and creative  personnel.  Qualified  individuals are in high
demand,  and we may incur significant costs to attract them. If we are unable to
attract or retain the personnel we need to succeed, our business may suffer.


         Many of our senior  management  personnel and other key employees  have
become, or will soon become,  substantially vested in their initial stock option
grants.  Employees  may be more likely to leave us if their owned  shares or the
shares underlying their options have significantly appreciated in value relative
to the original purchase price of the shares or the option exercise price.

OUR SENIOR  MANAGEMENT'S  LIMITED EXPERIENCE  MANAGING A PUBLICLY TRADED COMPANY
MAY DIVERT MANAGEMENT'S ATTENTION FROM OPERATIONS AND HARM OUR BUSINESS.

         Our management team has relatively limited recent experience managing a
publicly traded company and complying with federal  securities  laws,  including
compliance with recently adopted disclosure  requirements on a timely basis. Our
management  will be required to design and  implement  appropriate  programs and
policies in responding to increased legal,  regulatory  compliance and reporting
requirements, and any failure to do so could lead to the imposition of fines and
penalties and harm our business.

SYSTEM OR NETWORK FAILURES COULD REDUCE OUR SALES, INCREASE COSTS OR RESULT IN A
LOSS OF CUSTOMERS.

         Any  disruption  to the  carriers' or our  services,  billing  systems,
information systems or communications  networks could result in the inability of
our customers to download our applications.  If any of these systems fail, there
is an interruption in the supply of power, an earthquake,  fire,  flood or other
natural disaster, or an act of war or terrorism,  our customers may be unable to
access our  applications.  Any  disruption to the carriers' or our systems could
cause us to lose  customers  or revenue or incur  substantial  repair  costs and
distract management from operating our business.

THE ACQUISITION OF OTHER COMPANIES,  BUSINESSES OR TECHNOLOGIES  COULD RESULT IN
OPERATING DIFFICULTIES, DILUTION AND OTHER HARMFUL CONSEQUENCES.

         We may selectively pursue strategic acquisitions, any of which could be
material to our  business,  operating  results and financial  condition.  Future
acquisitions  could  divert  management's  time and  focus  from  operating  our
business. In addition,  integrating an acquired company,  business or technology
is risky and may result in unforeseen  operating  difficulties  and expenditures
associated  with  integrating  employees  from  the  acquired  company  into our
organization and integrating each company's accounting,  management information,
human resources and other administrative systems to permit effective management.
Foreign  acquisitions  might  involve  unique risks  related to  integration  of
operations  across  different  cultures and  languages,  currency  risks and the
particular  economic,  political and regulatory  risks  associated with specific
countries.

THE ANTICIPATED BENEFITS OF OUR FUTURE ACQUISITIONS MAY NOT MATERIALIZE.  FUTURE
ACQUISITIONS OR DISPOSITIONS  COULD RESULT IN POTENTIALLY  DILUTIVE ISSUANCES OF
OUR EQUITY  SECURITIES,  INCLUDING  OUR COMMON  STOCK,  THE  INCURRENCE OF DEBT,
CONTINGENT  LIABILITIES OR AMORTIZATION EXPENSES, OR WRITE-OFFS OF GOODWILL, ANY
OF WHICH  COULD  HARM OUR  FINANCIAL  CONDITION.  FUTURE  ACQUISITIONS  MAY ALSO
REQUIRE  US TO  OBTAIN  ADDITIONAL  FINANCING,  WHICH  MAY NOT BE  AVAILABLE  ON
FAVORABLE TERMS OR AT ALL.


                                      10
<PAGE>


EXPANSION INTO INTERNATIONAL  MARKETS IS A COMPONENT OF OUR LONG-TERM  STRATEGY,
AND OUR LIMITED  EXPERIENCE IN THE OPERATION OF AN INTERNATIONAL  BUSINESSES MAY
BE A RISK TO OUR SUCCESS.

         An element of our business strategy is international  expansion.  Risks
associated with growing our international business include:

         -        expand our systems  effectively  or efficiently or in a timely
                  manner;

         -        challenges   caused  by   distance,   language   and  cultural
                  differences;

         -        multiple,  conflicting  and  changing  laws  and  regulations,
                  including difficulties enforcing intellectual property rights;

         -        foreign   exchange   controls   that  might  prevent  us  from
                  repatriating  income  earned in  countries  outside the United
                  States;

         -        political and economic instability;

         -        higher costs associated with doing business internationally;

         -        currency exchange rate fluctuations;

         -        restrictions on the export or import of technology;

         -        difficulties   in   staffing   and   managing    international
                  operations;

         -        variations  in  tariffs,   quotas,   taxes  and  other  market
                  barriers; and

         -        greater  fluctuations  in sales  to  customers  in  developing
                  countries,   including   longer  payment  cycles  and  greater
                  difficulty collecting accounts receivable.

         These risks could harm our international expansion efforts, which could
in turn  materially  and adversely  affect our business,  operating  results and
financial condition.

OUR FINANCIAL RESULTS COULD VARY  SIGNIFICANTLY  FROM QUARTER TO QUARTER AND ARE
DIFFICULT TO PREDICT.

         Our  revenues  and  operating  results  could vary  significantly  from
quarter to quarter because of a variety of factors, many of which are outside of
our control. As a result,  comparing our operating results on a period-to-period
basis may not be  meaningful.  In  addition,  we may not be able to predict  our
future revenues or results of operations. We base our current and future expense
levels on our internal  operating plans and sales  forecasts,  and our operating
costs are to a large extent fixed. As a result, we may not be able to reduce our
costs  sufficiently to compensate for an unexpected  shortfall in revenues,  and
even a small shortfall in revenues could disproportionately and adversely affect
financial  results for that  quarter.  Products  and carrier  relationships  may
represent  meaningful portions of our revenues and net income in any quarter. We
may incur  significant or unanticipated  expenses when licenses are renewed.  In
addition, any payments due to us from carriers may be delayed because of changes
or issues with those carriers' processes.

         In addition to other risk factors  discussed in this  section,  factors
that may contribute to the variability of our quarterly results include:

         -        the timing of  charges  related to  impairments  of  goodwill,
                  intangible assets, prepaid royalties and guarantees;

         -        changes in pricing  policies  by us,  our  competitors  or our
                  carriers and other distributors;

         -        changes in the mix of original  and  licensed  content,  which
                  have varying gross margins;

         -        the timing of successful mobile handset launches;

         -        fluctuations  in the  size  and  rate  of  growth  of  overall
                  consumer demand for mobile related content;

         -        strategic  decisions  by  us  or  our  competitors,   such  as
                  acquisitions,   divestitures,   spin-offs,   joint   ventures,
                  strategic investments or changes in business strategy;

         -        charges  related  to our  acquisition  of  certain  assets  of
                  Mobliss, and other acquisitions;

         -        accounting rules governing recognition of revenue;


                                       11
<PAGE>


         -        the timing of  compensation  expense  associated  with  equity
                  compensation grants; and

         -        decisions  by  us  to  incur  additional  expenses,   such  as
                  increases in marketing or research and development.

         As a result of these and other factors,  our operating  results may not
meet the  expectations  of  investors  or public  market  analysts who choose to
follow our company.  Failure to meet market  expectations would likely result in
decreases in the trading price of our common stock.

                          RISKS RELATED TO OUR INDUSTRY

WIRELESS  COMMUNICATIONS  TECHNOLOGY  IS  CHANGING  RAPIDLY,  AND WE MAY  NOT BE
SUCCESSFUL IN WORKING WITH THESE NEW TECHNOLOGIES.

         Wireless  network and mobile phone  technologies  are undergoing  rapid
innovation.  New mobile  phones with more  advanced  processors  and  supporting
advanced programming  languages continue to be introduced in the market. We have
no control over the demand for, or success of, these  products.  However,  if we
fail to  anticipate  and  adapt to these and other  technological  changes,  our
market  share and our  operating  results may suffer.  Our future  success  will
depend  on our  ability  to  adapt to  rapidly  changing  technologies,  develop
applications  to  accommodate   evolving  industry  standards  and  improve  the
performance and  reliability of our  applications.  In addition,  the widespread
adoption of networking or telecommunications technologies or other technological
changes  could  require   substantial   expenditures  to  modify  or  adapt  our
entertainment applications.

         The  markets  for our  applications,  products  and  services  are also
characterized  by frequent new mobile phone model  introductions  and shortening
mobile phone model life cycles. The development of new, technologically advanced
applications to match the  advancements in mobile phone  technology is a complex
process requiring  significant  research and development expense, as well as the
accurate  anticipation of technological  and market trends. As the life cycle of
mobile phone models and other wireless devices shortens,  we will be required to
develop and adapt our existing  applications  and create new  applications  more
quickly.  These  efforts  may  not  be  successful.  Any  failure  or  delay  in
anticipating technological advances or developing and marketing new applications
that respond to any  significant  change in technology or customer  demand could
limit the available channels for our applications and limit or reduce our sales.

OUR SUCCESS DEPENDS ON THE CONTINUING ADOPTION OF ENTERTAINMENT  APPLICATIONS BY
WIRELESS SUBSCRIBERS.

         We operate in a developing industry.  Currently,  only a limited number
of  wireless  subscribers  download  entertainment  applications,  products  and
services to their mobile phones.  Our success depends on growth in the number of
wireless subscribers who use their mobile phones to access data services and, in
particular,  entertainment  applications,  products and services. If this market
does not  continue  to grow or we are  unable  to  acquire  new  customers,  our
business growth,  operating results and financial  condition could be materially
and adversely affected.

ACTUAL OR PERCEIVED  SECURITY  VULNERABILITIES  IN MOBILE PHONES COULD ADVERSELY
AFFECT OUR REVENUES.


         Maintaining  the  security of mobile  phones and  wireless  networks is
critical  for our  business.  There are  individuals  and groups who develop and
deploy  viruses,  worms and other  malicious  software  programs that may attack
wireless networks and mobile phones. Recently,  security experts identified what
appears to be the first computer "worm" program targeted  specifically at mobile
phones. The worm, entitled "Cabir," targets mobile phones running the Symbian(R)
operating  system.  While the  "Cabir"  worm has not been  widely  released  and
presents little immediate risk to our business, we have distributed our products
to phones running the Symbian operating system and believe future threats


                                       12
<PAGE>


could lead some  customers to seek to return our  applications,  reduce or delay
future  purchases  or reduce or delay the use of their mobile  phones.  Wireless
carriers and mobile phone  manufacturers may also increase their expenditures on
protecting their wireless networks and mobile phone products from attack,  which
could delay adoption of new mobile phone models.  Any of these  activities could
adversely affect our revenues.


CHANGES  IN  GOVERNMENT  REGULATION  OF THE  MEDIA AND  WIRELESS  COMMUNICATIONS
INDUSTRIES MAY ADVERSELY AFFECT OUR BUSINESS.

         It is possible that a number of laws and  regulations may be adopted in
the United  States and  elsewhere  which could  restrict  the media and wireless
communications  industries,  including laws and regulations relating to customer
privacy, taxation, content suitability,  copyright,  distribution and antitrust.
Furthermore,  the growth and  development of the market for electronic  commerce
may prompt calls for more  stringent  consumer  protection  laws that may impose
additional  burdens  on  companies  such as  ours  conducting  business  through
wireless  carriers.  Changes in current laws or regulations or the imposition of
new laws and  regulations in the United States or elsewhere  regarding the media
and  wireless  communications  industries  may  lessen  the  growth of  wireless
communications  services  and may  materially  reduce our ability to increase or
maintain sales of our applications.

A DECLINE IN, OR LIMITATION ON, THE USE OF MOBILE PHONES WOULD NEGATIVELY IMPACT
OUR BUSINESS.

         A number of public and private  entities have begun to restrict the use
of  mobile  phones on their  premises.  For  example,  many  places of  worship,
restaurants,  hospitals, medical offices, libraries,  museums, concert halls and
other  private and public  businesses  restrict the use of mobile  phones due to
privacy  concerns,  the  inconvenience  caused  by mobile  phone  users to other
patrons and the disruption mobile phones may cause to other electronic equipment
at these locations.

         Legislation  has also been  proposed in the U.S.  Congress  and by many
states and municipalities to restrict or prohibit the use of mobile phones while
driving motor vehicles. Some states and municipalities in the United States have
already  passed laws  restricting  the use of mobile phones while  driving,  and
similar  laws  have  been  enacted  in other  countries.  These  laws and  other
potential laws  prohibiting or restricting the use of mobile phones could reduce
demand  for  mobile  phones  generally  and,  accordingly,  the  demand  for our
applications,  which could  reduce our ability to increase or maintain  sales of
our applications.

         A number of studies have  examined  the health  effects of mobile phone
use and the results of some of the  studies  have been  interpreted  as evidence
that mobile phone use causes adverse health effects. The establishment of a link
between the use of mobile  phone  services  and health  problems,  and any media
reports  suggesting  such a link,  could  reduce  demand for mobile  phones and,
accordingly, the demand for our applications.

OUR BUSINESS  DEPENDS ON THE GROWTH AND  MAINTENANCE OF WIRELESS  COMMUNICATIONS
INFRASTRUCTURE.

         Our success  will depend on the  continued  growth and  maintenance  of
wireless  communications  infrastructure  in the  United  States  and around the
world.  This includes  deployment and  maintenance  of reliable  next-generation
digital  networks  with the  necessary  speed,  data  capacity  and security for
providing reliable wireless  communications  services.  Wireless  communications
infrastructure  may be unable to support the demands  placed on it if the number
of customers continues to increase,  or if existing or future customers increase
their bandwidth requirements.  In addition, viruses, worms and similar break-ins
and  disruptions  from  illicit  code or  unauthorized  tampering  may  harm the
performance of wireless communications.  If a well-publicized breach of security
were to occur, general mobile phone usage could decline,  which could reduce the
demand for and use of our applications. Wireless communications


                                       13
<PAGE>


experience a variety of outages and other  delays as a result of  infrastructure
and equipment failures,  and could face outages and delays in the future.  These
outages and delays  could reduce the level of wireless  communications  usage as
well as our ability to distribute our applications successfully.

                        RISKS RELATED TO OUR COMMON STOCK

THE  LIQUIDITY  OF OUR COMMON  STOCK WILL BE  AFFECTED  BY ITS  LIMITED  TRADING
MARKET.

         Bid and ask prices for shares of our common stock are quoted on the OTC
Bulletin  Board under the symbol NWMO.  There is currently no broadly  followed,
established  trading  market for our  common  stock and an  established  trading
market for our shares of common stock may never develop or be maintained. Active
trading markets  generally  result in lower price  volatility and more efficient
execution  of buy and sell  orders.  The  absence  of an active  trading  market
reduces the  liquidity of our common  stock.  As a result of the lack of trading
activity,  the quoted price for our common stock on the OTCBB is not necessarily
a  reliable  indicator  of its fair  market  value.  Further,  if we cease to be
quoted,  holders of our common stock would find it more difficult to dispose of,
or to obtain  accurate  quotations  as to the market value of, our common stock,
and the market value of our common stock would likely decline.

IF AND WHEN A TRADING MARKET FOR OUR COMMON STOCK DEVELOPS,  THE MARKET PRICE OF
OUR  COMMON  STOCK  IS  LIKELY  TO  BE  HIGHLY  VOLATILE  AND  SUBJECT  TO  WIDE
FLUCTUATIONS,  AND YOU MAY BE  UNABLE  TO  RESELL  YOUR  SHARES  AT OR ABOVE THE
OFFERING PRICE.

         The market  price of our common  stock is likely to be highly  volatile
and could be subject to wide  fluctuations  in  response  to a number of factors
that are beyond our control, including announcements of new products or services
by our competitors.  In addition,  the market price of our common stock could be
subject to wide fluctuations in response to a variety of factors, including:

         -        quarterly variations in our revenues and operating expenses;

         -        developments  in the financial  markets,  and the worldwide or
                  regional economies;

         -        announcements of innovations or new products or services by us
                  or our competitors;

         -        fluctuations in merchant credit card interest rates;

         -        significant  sales of our common stock or other  securities in
                  the open market; and

         -        changes in accounting principles.

         In the past, stockholders have often instituted securities class action
litigation  after  periods  of  volatility  in the market  price of a  company's
securities. If a stockholder were to file any such class action suit against us,
we would  incur  substantial  legal  fees  and our  management's  attention  and
resources  would be  diverted  from  operating  our  business  to respond to the
litigation, which could harm our business.

SUBSTANTIAL  FUTURE SALES OF OUR COMMON  STOCK IN THE PUBLIC  MARKET COULD CAUSE
OUR STOCK PRICE TO FALL.

         Upon the  effectiveness of this  registration  statement and any others
that  we may  file  with  respect  to the  resale  of  shares  held  by  certain
stockholders,  a  significant  number of our  shares of common  stock may become
eligible for sale.  Sales of a significant  number of shares of our common stock
in the open market  could harm the market price of our common  stock.  A reduced
market price for our shares could make it more  difficult to raise funds through
future offering of common stock.

         Moreover, as additional shares of our common stock become available for
resale in the open market  (including  shares  issued  upon the  exercise of our
outstanding  warrants),  the supply of our publicly traded shares will increase,
which could decrease its price.


                                       14
<PAGE>



         Some of our shares  may also be  offered  from time to time in the open
market pursuant to Rule 144, and these sales may have a depressive effect on the
market for our shares. In general, a person who has held restricted shares for a
period of one year may,  upon  filing with the SEC a  notification  on Form 144,
sell  into the  market  shares up to an  amount  equal to 1% of the  outstanding
shares.  Currently,  6,198 of our issued restricted  securities are eligible for
resale under Rule 144.


THE SALE OF  SECURITIES  BY US IN ANY EQUITY OR DEBT  FINANCING  COULD RESULT IN
DILUTION TO OUR EXISTING  STOCKHOLDERS AND HAVE A MATERIAL ADVERSE EFFECT ON OUR
EARNINGS.

         Any sale of common stock by us in a future private  placement  offering
could result in dilution to the existing  stockholders as a direct result of our
issuance of additional  shares of our capital stock.  In addition,  our business
strategy  may  include   expansion   through  internal   growth,   by  acquiring
complementary  businesses,  by acquiring or licensing  additional  brands, or by
establishing strategic  relationships with targeted customers and suppliers.  In
order to do so, or to  finance  the cost of our other  activities,  we may issue
additional  equity   securities  that  could  dilute  our  stockholders'   stock
ownership.  We may also  assume  additional  debt and  incur  impairment  losses
related to goodwill and other tangible  assets if we acquire another company and
this could negatively impact our earnings and results of operations.

IF SECURITIES OR INDUSTRY  ANALYSTS DO NOT PUBLISH RESEARCH OR REPORTS ABOUT OUR
BUSINESS, OR IF THEY DOWNGRADE THEIR RECOMMENDATIONS REGARDING OUR COMMON STOCK,
OUR STOCK PRICE AND TRADING VOLUME COULD DECLINE.

         The  trading  market for our common  stock  will be  influenced  by the
research and reports that  industry or securities  analysts  publish about us or
our  business.  If any of the analysts who cover us downgrade  our common stock,
our common stock price would likely  decline.  If analysts cease coverage of our
company or fail to regularly  publish reports on us, we could lose visibility in
the  financial  markets,  which in turn could  cause our common  stock  price or
trading volume to decline.

THE  TRADING OF OUR COMMON  STOCK ON THE OTC  BULLETIN  BOARD AND THE  POTENTIAL
DESIGNATION  OF OUR COMMON  STOCK AS A "PENNY  STOCK"  COULD  IMPACT THE TRADING
MARKET FOR OUR COMMON STOCK.

         Our  securities,  as traded on the  OTCBB,  may be subject to SEC rules
that impose special sales practice requirements on broker-dealers who sell these
securities to persons other than established  customers or accredited investors.
For the  purposes  of the rule,  the phrase  "accredited  investors"  means,  in
general terms,  institutions with assets in excess of $5,000,000, or individuals
having a net worth in  excess of  $1,000,000  or  having an annual  income  that
exceeds  $200,000  (or that,  when  combined  with a  spouse's  income,  exceeds
$300,000).  For transactions  covered by the rule, the broker-dealer must make a
special suitability  determination for the purchaser and receive the purchaser's
written agreement to the transaction before the sale. Consequently, the rule may
affect the ability of  broker-dealers to sell our securities and also may affect
the  ability of  purchasers  to sell their  securities  in any market that might
develop therefore.

         In addition,  the SEC has adopted a number of rules to regulate  "penny
stock" that restrict transactions involving these securities. Such rules include
Rules 3a51-1,  15g-1,  15g-2, 15g-3, 15g-4, 15g-5, 15g-6, 15g-7, and 15g-9 under
the Exchange  Act.  These rules may have the effect of reducing the liquidity of
penny stocks.  "Penny stocks"  generally are equity  securities  with a price of
less than $5.00 per share (other than securities  registered on certain national
securities  exchanges or quoted on the Nasdaq Stock Market if current  price and
volume  information  with respect to transactions in such securities is provided
by the exchange or system).  Because our securities may constitute "penny stock"
within  the  meaning  of the  rules,  the  rules  would  apply  to us and to our
securities.


                                       15
<PAGE>


         Stockholders should be aware that, according to the SEC, the market for
penny stocks has suffered in recent years from patterns of fraud and abuse. Such
patterns  include  (i)  control of the market for the  security  by one or a few
broker-dealers   that  are  often  related  to  the  promoter  or  issuer;  (ii)
manipulation of prices through  prearranged  matching of purchases and sales and
false and misleading  press releases;  (iii) "boiler room"  practices  involving
high-pressure  sales tactics and unrealistic  price projections by inexperienced
sales persons;  (iv) excessive and undisclosed bid-ask differentials and markups
by selling broker-dealers;  and (v) the wholesale dumping of the same securities
by promoters and broker-dealers  after prices have been manipulated to a desired
level,  resulting in investor losses. Our management is aware of the abuses that
have occurred historically in the penny stock market.  Although we do not expect
to be in a position to dictate the  behavior of the market or of  broker-dealers
who  participate  in the market,  management  will strive within the confines of
practical  limitations to prevent the described  patterns from being established
with respect to our securities.

THE  REQUIREMENTS  OF  THE  SARBANES-OXLEY   ACT,  INCLUDING  SECTION  404,  ARE
BURDENSOME,  AND OUR FAILURE TO COMPLY  WITH THEM COULD HAVE A MATERIAL  ADVERSE
AFFECT ON OUR BUSINESS AND STOCK PRICE.

         Effective internal control over financial reporting is necessary for us
to provide reliable financial reports and effectively prevent fraud. Section 404
of the  Sarbanes-Oxley  Act of 2002  requires us to  evaluate  and report on our
internal  control over financial  reporting  beginning with our annual report on
Form  10-KSB for the fiscal year  ending  December  31,  2007.  Our  independent
registered   public  accounting  firm  will  need  to  annually  attest  to  our
evaluation,  and issue their own opinion on our internal  control over financial
reporting  beginning  with our annual  report on Form 10-KSB for the fiscal year
ending  December 31, 2008. We plan to prepare for compliance with Section 404 by
strengthening,  assessing  and  testing  our  system of  internal  control  over
financial  reporting  to  provide  the  basis for our  report.  The  process  of
strengthening  our internal control over financial  reporting and complying with
Section 404 is expensive and time consuming, and requires significant management
attention,  especially  given that we have not yet  undertaken  any  substantial
efforts to comply  with the  requirements  of Section  404. We cannot be certain
that the measures we will undertake  will ensure that we will maintain  adequate
controls over our financial processes and reporting in the future.  Furthermore,
if we are able to rapidly grow our business, the internal control over financial
reporting  that we will need will become more complex,  and  significantly  more
resources  will be  required  to ensure  our  internal  control  over  financial
reporting  remains  effective.   Failure  to  implement  required  controls,  or
difficulties  encountered  in their  implementation,  could  harm our  operating
results  or  cause us to fail to meet our  reporting  obligations.  If we or our
auditors  discover a material  weakness in our internal  control over  financial
reporting,  the  disclosure  of that  fact,  even  if the  weakness  is  quickly
remedied,  could diminish investors'  confidence in our financial statements and
harm our stock price. In addition, non-compliance with Section 404 could subject
us to a  variety  of  administrative  sanctions,  including  the  suspension  of
trading,  ineligibility  for  listing  on one of the  Nasdaq  Stock  Markets  or
national securities exchanges, and the inability of registered broker-dealers to
make a market in our common stock, which would further reduce our stock price.

WE DO NOT EXPECT TO PAY DIVIDENDS FOR THE FORESEEABLE  FUTURE, AND ANY RETURN ON
INVESTMENT MAY BE LIMITED TO POTENTIAL  FUTURE  APPRECIATION ON THE VALUE OF OUR
COMMON STOCK.

         We  currently  intend to retain any  future  earnings  to  support  the
development  and  expansion of our business  and do not  anticipate  paying cash
dividends in the foreseeable future. Our payment of any future dividends will be
at the  discretion of our board of directors  after taking into account  various
factors,  including  without  limitation,  our  financial  condition,  operating
results, cash needs, growth plans and the terms of any credit agreements that we
may be a party to at the time. To the extent we do not pay dividends,  our stock
may be less valuable  because a return on  investment  will only occur if and to
the extent our stock price  appreciates,  which may never  occur.  In  addition,
investors must rely on sales of


                                       16
<PAGE>


their common  stock after price  appreciation  as the only way to realize  their
investment,  and if the price of our stock does not appreciate,  then there will
be no return on investment. Investors seeking cash dividends should not purchase
our common stock.

OUR  OFFICERS,  DIRECTORS  AND  PRINCIPAL  STOCKHOLDERS  CAN  EXERT  SIGNIFICANT
INFLUENCE  OVER US AND MAY MAKE  DECISIONS THAT ARE NOT IN THE BEST INTERESTS OF
ALL STOCKHOLDERS.

         Collectively,   our  officers,  directors  and  principal  stockholders
(greater  than  5%  stockholders)  beneficially  own  approximately  88%  of our
outstanding common stock. As a result, these stockholders will be able to affect
the outcome  of, or exert  significant  influence  over,  all matters  requiring
stockholder  approval,  including  the election and removal of directors and any
change in control. In particular,  this concentration of ownership of our common
stock could have the effect of delaying or  preventing a change of control of us
or otherwise  discouraging or preventing a potential acquirer from attempting to
obtain control of us. This, in turn,  could have a negative effect on the market
price of our common stock. It could also prevent our stockholders from realizing
a premium over the market prices for their shares of common stock. Moreover, the
interests of this  concentration  of ownership may not always  coincide with our
interests or the interests of other  stockholders,  and accordingly,  they could
cause us to enter into  transactions  or agreements  that we would not otherwise
consider.

ANTI-TAKEOVER  PROVISIONS  MAY LIMIT THE ABILITY OF ANOTHER PARTY TO ACQUIRE US,
WHICH COULD CAUSE OUR STOCK PRICE TO DECLINE.

         Our restated  certificate of incorporation,  as amended, our bylaws and
Delaware law contain provisions that could discourage,  delay or prevent a third
party from acquiring us, even if doing so may be beneficial to our stockholders.
In addition,  these  provisions could limit the price investors would be willing
to pay in the future for shares of our common stock.


                                       17
<PAGE>


                             RECENT CORPORATE EVENTS

BACKGROUND


         New Motion, Inc. (formerly known as MPLC, Inc., and prior to MPLC, Inc.
as The Millbrook Press,  Inc.) was  incorporated  under the laws of the State of
Delaware in 1994. Until 2004, we were a publisher of children's nonfiction books
for the  school  and  library  market  and the  consumer  market  under  various
imprints.  As a result of market factors,  and after an unsuccessful  attempt to
restructure  our  obligations  out of court,  on  February  6, 2004,  we filed a
voluntary  petition for relief under Chapter 11 of the Bankruptcy  Code with the
United States  Bankruptcy Court for the District of Connecticut (the "Bankruptcy
Court").  After  filing  for  bankruptcy,  we sold our  imprints  and  remaining
inventory  and by July  31,  2004,  we had paid all  secured  creditors  100% of
amounts  owed.  At this point in time,  we were a "shell"  company  with nominal
assets  and no  material  operations.  Beginning  in  January  2005,  after  the
Bankruptcy Court's approval,  all pre-petition unsecured creditors had been paid
100% of the amounts owed (or agreed) and all post petition administrative claims
submitted  had been paid.  In December  2005,  $0.464 per  eligible  share (on a
pre-Reverse  Split basis) was available for  distribution and was distributed to
our  stockholders  of record as of October 31, 2005. The bankruptcy  proceedings
were  concluded in January 2006 and no  additional  claims were  permitted to be
filed after that date.

         On October 24, 2006, we, and certain of our stockholders entered into a
Common  Stock  Purchase   Agreement  with  Trinad  Capital  Master  Fund,   Ltd.
("Trinad"),  pursuant  to which we  agreed to  redeem  23,448,870  shares of our
Common Stock (on a pre-reverse stock split basis) from the existing stockholders
of the company and sell an  aggregate of  69,750,000  shares of our Common Stock
(on a  pre-reverse  stock  split  basis),  representing  93% of our  issued  and
outstanding shares of Common Stock, to Trinad in a private placement transaction
for  aggregate  gross  proceeds  to us of  $750,000.


         On November  22,  2006,  we executed a letter of intent  regarding  the
proposed  acquisition of New Motion Mobile,  Inc. (a Delaware  company  formerly
known as New Motion,  Inc.),  whereby we would  acquire  all of the  outstanding
capital stock of New Motion Mobile,  and in exchange,  the  stockholders  of New
Motion Mobile would acquire approximately 83% of our outstanding capital stock.

EXCHANGE TRANSACTION AND CAPITALIZATION

         On January 31, 2007, we entered into an exchange  agreement  ("Exchange
Agreement")  with New Motion Mobile,  the  stockholders of New Motion Mobile and
Trinad.  The closing of the transactions  contemplated by the Exchange Agreement
(the "Exchange")  occurred on February 12, 2007. At the Closing, we acquired all
of the  outstanding  shares of the capital  stock of New Motion  Mobile from the
Stockholders  in  exchange  for  500,000 of our Series C  Convertible  Preferred
Stock,  par value $0.10 per share (the  "Series C Preferred  Stock"),  which was
subsequently converted into 7,263,688 shares of our common stock on May 2, 2007,
immediately and  automatically  upon the  effectiveness  of a 1-for-300  reverse
stock split (the "Reverse Split").


         We also assumed all of the  outstanding  options and warrants issued by
New Motion  Mobile.  These  options and  warrants now entitle  their  holders to
purchase  1,712,778  shares of Common Stock and 23,534  shares of Common  Stock,
respectively.  In addition,  we assumed a convertible  promissory note (the "IVG
Note"),  with a maximum  principal  amount of  $2,320,000,  issued by New Motion
Mobile in favor of Index Visual & Games,  Ltd., on substantially  the same terms
and  conditions as set forth in the IVG Note.  On July 11, 2007,  IVG elected to
convert the IVG Note into 172,572 shares of our common stock.



                                       18
<PAGE>


         As a condition  to the closing of the  Exchange,  Trinad,  our majority
stockholder  immediately prior to the Closing,  and certain  stockholders of New
Motion Mobile entered into a voting agreement  whereby they agreed to vote their
shares  of our  voting  securities:  (i) to elect  one  member  to our  board of
directors to be  designated by Trinad (the "Trinad  Designate")  for a period of
one year  following  the Closing and to vote for such other  persons that may be
designated  by the  Stockholders  to fill any  vacant  position  on our board of
directors  (other than the Trinad  Designate),  and to approve (ii) the "Reverse
Split,  (iii) an increase our authorized  shares of common stock from 75,000,000
shares to 100,000,000  shares,  (iv) the adoption of a stock incentive plan, and
(v) the  change of our  corporate  name.  On March 15,  2007,  we  obtained  the
requisite vote from our stockholders to facilitate these corporate transactions.

         For accounting  purposes the Exchange was treated as a recapitalization
of New Motion  Mobile with New Motion  Mobile as the  acquirer.  The  historical
financial  statements  prior to the merger are those of New Motion  Mobile.  For
purposes of the Exchange,  the cost of the  acquisition  reflected on New Motion
Mobile's  balance  sheet was the value our net tangible  assets.  No goodwill or
other intangible  assets were recorded and no pro forma information is presented
because the recapitalization is not considered to be a business combination.

         In combination with the Exchange,  on January 24, 2007, we entered into
the Series A Convertible  Preferred  Stock  Purchase  Agreement  with Trinad and
received  gross proceeds of $3.5 million in exchange for one share of our Series
A  Convertible  Preferred  Stock,  par  value  $0.10 per  share  (the  "Series A
Preferred Stock"). On January 31, 2007, we entered into the Series B Convertible
Preferred Stock Purchase Agreement with Watchung Road Associates,  L.P., Lyrical
Opportunity  Partners II LP, Lyrical Opportunity Partners II Ltd. and Destar LLC
and  received  gross  proceeds of $6.5 million in exchange for 650 shares of our
Series B  Convertible  Preferred  Stock,  par value  $0.10 per share  ("Series B
Preferred  Stock").  The closing of the  purchase and sale of Series B Preferred
Stock  occurred on February 12, 2007. On May 2, 2007, the effective date of the
Reverse Split,  immediately  and  automatically  upon the  effectiveness  of the
Reverse Split, all issued and outstanding  Series A Preferred Stock and Series B
Preferred  Stock  converted  into  1,200,000 and 1,300,000  shares of our common
stock, respectively.

         On February 28, 2007, we entered into a Securities  Purchase  Agreement
with various  accredited  investors and received gross proceeds of approximately
$10  million  in  exchange  for  8,333  shares  of our  Series D 8%  Convertible
Preferred  Stock,  par value $0.10 per share (the  "Series D Preferred  Stock").
This  financing  transaction  closed on March 6, 2007,  when we received the net
proceeds from the financing.  Upon the effectiveness of the Reverse Split on May
2, 2007, all issued and  outstanding  Series D Preferred  Stock  immediately and
automatically converted into 1,666,658 shares of our common stock.

         In  connection  with the sale of our  Series A and  Series B  Preferred
Stock, we entered into a registration  rights  agreement with the holders of our
Series A and Series B Preferred  Stock  pursuant to which we granted the holders
certain registration rights with respect to the shares of our common stock owned
by the holders,  including  the common stock  underlying  the Series A Preferred
Stock and  Series B  Preferred  Stock  sold in the  offering.  In  addition,  in
connection  with  the  sale of our  Series  D  Preferred  Stock,  pursuant  to a
registration  rights agreement with the investors in the Series D financing,  we
granted the investors certain  registration rights with respect to the shares of
our  common  stock  issuable  upon  conversion  of the  shares  of our  Series D
Convertible  Preferred  Stock  and upon  conversion  of the  shares of any other
series of our preferred stock owned by the investors. We are required to prepare
and file  with the  Securities  and  Exchange  Commission  within 75 days of the
closing  of the Series D offering a  registration  statement  on Form S-3,  Form
SB-2,  or on  another  appropriate  form,  covering  the  resale  of  all of the
registerable securities.  In the event that we do not satisfy certain filing and
other  obligations in our  registration  rights agreement with the purchasers of
our Series D  Preferred  Stock,  we are  required to pay such Series D Preferred
Stock purchasers  liquidated  damages in an aggregate amount of up to 12% of the
gross  proceeds  of the Series D offering.  The common  stock held by the former
holders  of our  Series A,  Series  B, and  Series D  Preferred  Stock are being
registered for resale on this prospectus.


                                       19
<PAGE>



         Sanders Morris Harris, Inc. acted as placement agent in connection with
the sale of our  Series  A, B and D  Preferred  Stock.  For  their  services  as
placement  agent,  we paid Sanders Morris  Harris,  Inc. a fee equal to 7.5%, or
approximately  $1,500,000, of the gross proceeds from the financing and issued a
five year warrant to Sanders Morris Harris,  Inc. to purchase  290,909 shares of
our common stock. The warrant is fully vested and has a per share exercise price
of $5.50.  Of the $1,500,000 fee paid to Sanders Morris Harris,  Inc.,  $939,408
was paid in cash and $560,592 of the fee was provided to Sanders  Morris Harris,
Inc. through the issuance of 467.16 shares of our Series D Preferred Stock.


         On May 2, 2007, we amended our restated certificate of incorporation to
provide for an increase in our authorized shares of common stock from 75,000,000
to 100,000,000  and to effect the Reverse Split.  On the same date,  immediately
after the  effectiveness of the Reverse Split and as described above, all of our
outstanding  shares of preferred  stock were converted into shares of our common
stock.  Concurrent  with the  Reverse  Split,  we also  changed  our name to New
Motion, Inc.

PURCHASE OF CERTAIN MOBLISS ASSETS

         On January 19, 2007, we entered into an Asset  Purchase  Agreement with
Index Visual & Games,  Ltd.  ("IVG"),  pursuant to which we  purchased  from IVG
certain specified assets of Mobliss,  a Washington  corporation  affiliated with
IVG. Mobliss is involved in mobile marketing and messaging,  mobile gaming,  and
mobile  content  delivery,  and offers  brand  owners a spectrum of  proprietary
applications,  delivery  systems,  and  platforms to  capitalize  on the growing
capabilities of wireless devices.  Mobliss  technology powered the SMS campaigns
for the  television  phenomenon  American  Idol  and it is  among  the  very few
companies that have direct networking and billing connectivity with carriers for
executing  large-scale SMS campaigns and distributing mobile content to an array
of mobile devices across multiple carrier networks in the US and Canada.


         The assets we acquired from IVG include a message  delivery and billing
system and a messaging and connectivity  agreement with Cingular  Wireless.  The
message  delivery  and billing  system  primarily  consists of Mobliss  software
source code and computer hardware and networking  equipment  (including a number
of  application  and database  servers).  The Cingular  Wireless  messaging  and
connectivity  agreement  we  acquired  allows  us to  directly  interconnect  to
Cingular's  network.  As part of our purchase  price  allocation,  we assigned a
value of $500,000 to the hardware and  networking  equipment  purchased from IVG
and $580,000 to the Cingular contract.

         Our  strategy  with the  acquired IVG assets is to leverage the message
delivery  and billing  system and  Cingular  connectivity  agreement to directly
deliver our  products to  subscribers  of  Cingular  Wireless  and to bill those
subscribers efficiently, without having to utilize the services of a third party
aggregator.

         In exchange for the assets  specified in the Asset Purchase  Agreement,
we issued IVG a convertible  promissory note with an aggregate maximum principal
amount of up to $2,320,000  (the "IVG Note").  The IVG Note bore interest at the
rate of five  percent per annum  accruing  from the initial  issuance of the IVG
Note and matured on the earlier of November  30, 2007 or 30 days after  delivery
by IVG of written notice to us demanding payment.


         On  January  19,  2007,  we  consummated  the  initial  closing  of the
acquisition  and issued the IVG Note in the  principal  amount of  $500,000  and
received  hardware and software  assets to be purchased under the Asset Purchase
Agreement.  As a  result  of the  assignment  of one  of  the  cellular  carrier
connection  contracts  listed in the Asset  Purchase  Agreement,  on January 26,
2007,  we  increased  the


                                       20
<PAGE>


principal  amount of the IVG Note by $580,000  to  $1,080,000.  On February  26,
2007,  we repaid  $500,000 of the IVG Note.  Unless  requested by us, we have no
further obligation to purchase any cellular carrier connection  contracts listed
in the Asset Purchase Agreement.


         On July 11, 2007, IVG converted all  outstanding  principal and accrued
interest on the IVG Note into  172,572  shares of common  stock at a  conversion
price of $3.44 per share,  the fair market value of our common stock on the date
of issuance of the IVG Note.


MOBILE ENTERTAINMENT CHANNEL JOINT VENTURE


         Concurrent  with the signing of the Asset Purchase  Agreement with IVG,
we also entered into a Heads of Agreement with IVG, setting forth the terms of a
joint  venture with IVG to  distribute  IVG content  within North America and to
manage and service the assets acquired under the Asset Purchase  Agreement.  The
joint venture, The Mobile Entertainment Channel Corporation ("MEC"), is a Nevada
corporation  in which we will own a 49% stake and IVG will own a 51%  stake.  In
accordance with the terms of the Heads of Agreement,  we will split evenly (on a
50/50 basis) any revenue,  dividends  or other  distributions  made by the joint
venture  to  its  shareholders.  The  joint  venture  is  to  be  managed  by  a
three-member  board,  with each party  designating  one member and both  parties
mutually  designating  the  third  member of the  board.  We will  enter  into a
management  services  agreement with the joint venture pursuant to which we will
pay to the joint venture a management fee equal to the purchase price paid under
the Asset Purchase Agreement,  with a maximum fee of $2,320,000,  for management
services  rendered by the joint venture.  The Heads of Agreement does not have a
clause  pertaining  to contract  termination,  and thus the  agreement  does not
contemplate  any penalty  associated  with its  termination.  We made an advance
payment on the management fee of $500,000 on March 12, 2007,  with the remainder
of the management fee payable in quarterly installments,  through June 30, 2008.
Beyond the advance payments, each quarterly management fee payment made by us to
the joint  venture  will equal 10% of the revenue  generated  from the assets we
acquired from IVG. The joint venture has been  established and the Company is in
the process of evaluating,  with IVG, various Asian-themed content for placement
in the joint venture.


         See  "Note  4 - The  Mobile  Entertainment  Channel  Corporation  Joint
Venture,"  for more  information  concerning  the  accounting  treatment of this
consolidated joint venture.

SUMMARY COMMON STOCK, OPTIONS AND WARRANTS OUTSTANDING


         The  following  table  sets forth the  approximate  number of shares of
common  stock and common  stock  equivalents  as of July 16, 2007,  after giving
effect  to the  Reverse  Split  and  the  conversion  of all of our  issued  and
outstanding  shares of preferred stock into common stock,  which occurred on May
2, 2007:

                                                         COMMON STOCK, OPTIONS &
                                                          WARRANTS OUTSTANDING
                                                         -----------------------
New Motion Stockholders ..............................                  250,000*
Former Series A Preferred Stock Holders ..............                1,200,000
Former Series B Preferred Stock Holders ..............                1,300,000
Former New Motion Mobile Stockholders (Former
    Series C Preferred Stock Holders) ................                7,263,688
Former Series D Preferred Stock Holders ..............                1,666,700
Placement Agent Warrants .............................                  290,909
Convertible Debt .....................................                  172,572
Assumed New Motion Mobile Options ....................                1,575,383
Assumed New Motion Mobile Warrants ...................                   23,534
                                                         -----------------------
Total (fully diluted) ................................               13,742,786*


*        This  number  is an  estimate  as a  result  of the  special  treatment
         afforded to certain stockholders in the Reverse Split.


                                       21
<PAGE>


                           FORWARD-LOOKING STATEMENTS

         This  prospectus,  including  the  sections  entitled  "Risk  Factors,"
"Management's  Discussion  and  Analysis of Financial  Condition  and Results of
Operations" and "Business," contains  "forward-looking  statements" that include
information relating to future events, future financial performance, strategies,
expectations, competitive environment, regulation and availability of resources.
These  forward-looking   statements  include,  without  limitation,   statements
regarding:  proposed new services; our statements concerning litigation or other
matters; statements concerning projections, predictions, expectations, estimates
or  forecasts  for our  business,  financial  and  operating  results and future
economic performance; statements of management's goals and objectives; and other
similar expressions concerning matters that are not historical facts. Words such
as  "may,"  "will,"  "should,"   "could,"  "would,"   "predicts,"   "potential,"
"continue," "expects,"  "anticipates,"  "future," "intends," "plans," "believes"
and "estimates," and similar expressions, as well as statements in future tense,
identify forward-looking statements.

         Forward-looking  statements should not be read as a guarantee of future
performance or results,  and will not necessarily be accurate indications of the
times at, or by which,  that  performance  or those  results  will be  achieved.
Forward-looking  statements are based on information  available at the time they
are made and/or  management's  good faith belief as of that time with respect to
future  events,  and are  subject to risks and  uncertainties  that could  cause
actual  performance or results to differ  materially  from those expressed in or
suggested by the forward-looking statements.  Important factors that could cause
these differences include, but are not limited to:

         o        our limited operating history;

         o        our  reliance  on  wireless   carriers  and   aggregators   to
                  facilitate billing and collections;

         o        the highly competitive market in which we operate;

         o        the rapidly changing wireless marketplace;

         o        our ability to develop new applications and services;

         o        protection of our intellectual property rights;

         o        hiring and retaining key employees;

         o        successful   completion,   and   integration   of,   potential
                  acquisitions;

         o        increased costs and requirements as a public company;

         o        limited trading and liquidity of our common stock; and

         o        other factors  discussed  under the headings  "Risk  Factors,"
                  "Management's  Discussion and Analysis of Financial  Condition
                  and Results of Operations" and "Business."

         Forward-looking statements speak only as of the date they are made. You
should not put undue reliance on any  forward-looking  statements.  We assume no
obligation  to update  forward-looking  statements  to reflect  actual  results,
changes in  assumptions  or changes in other factors  affecting  forward-looking
information,  except to the extent required by applicable securities laws. If we
do update one or more forward-looking  statements,  no inference should be drawn
that  we  will  make   additional   updates  with  respect  to  those  or  other
forward-looking statements.


                                       22
<PAGE>


                                 USE OF PROCEEDS

         We will not receive any proceeds  from the sale of shares to be offered
by the  selling  shareholders.  The  proceeds  from  the  sale of  each  selling
shareholder's common stock will belong to that selling shareholder.

                            MARKET FOR COMMON EQUITY
                         AND RELATED SHAREHOLDER MATTERS

COMMON STOCK

         Our  common  stock is quoted  on the  Over-The-Counter  Bulletin  Board
("OTCBB")  under the symbol  "NWMO.OB" The following  table sets forth,  for the
periods  indicated,  the high and low bid  information  for our common stock, as
determined  from sporadic  quotations  on the OTCBB.  The  information  has been
adjusted to reflect a 1-for-300  reverse  stock split of our common  stock which
took  effect  on May  2,  2007,  after  the  periods  presented.  The  following
quotations reflect  inter-dealer  prices,  without retail mark-up,  mark-down or
commission and may not represent actual transactions.


                                                            HIGH         LOW
                                                         ----------   ----------
     First Quarter ended March 31, 2007 ..............   $   114.11   $    15.02

YEAR ENDED DECEMBER 31, 2006
     First Quarter ...................................   $    75.00   $    12.00
     Second Quarter ..................................   $    15.00   $    12.00
     Third Quarter ...................................   $    30.00   $    15.00
     Fourth Quarter ..................................   $   120.12   $    12.01

YEAR ENDED DECEMBER 31, 2005
     First Quarter ...................................   $    66.00   $    54.00
     Second Quarter ..................................   $    90.00   $    54.00
     Third Quarter ...................................   $   105.00   $    90.00
     Fourth Quarter ..................................   $   165.00   $     6.00


         On July 16, 2007,  the  closing  sales  price  of our  common  stock as
reported  on the OTCBB was  $16.00  per share.  As of July 16, 2007,  there were
approximately  81 record  holders of our common  stock.  Our  transfer  agent is
Continental  Stock  Transfer & Trust  Company  and their  phone  number is (212)
509-4000.


DIVIDENDS

         In  December  2005,  we paid a  one-time  dividend  of $0.46  (on a pre
Reverse  Split  basis) per  eligible  share of common  stock as  directed by the
Bankruptcy Administrator.

         We do not  anticipate  paying any dividends on our common stock for the
foreseeable  future. We intend to retain our future earnings to re-invest in our
ongoing  business.  The  declaration  of cash  dividends  in the future  will be
determined  by our  board  of  directors  based  upon  our  earnings,  financial
condition, capital requirements and other relevant factors.


                                       23
<PAGE>


         MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
                             RESULTS OF OPERATIONS

         THIS  DISCUSSION  SUMMARIZES  THE  SIGNIFICANT  FACTORS  AFFECTING  THE
OPERATING  RESULTS,  FINANCIAL  CONDITION  AND  LIQUIDITY  AND CASH FLOWS OF NEW
MOTION  MOBILE AND ITS  SUBSIDIARY  (WHICH  INCLUDES  THE  OPERATING  RESULTS OF
RINGTONECHANNEL  PRIOR TO ITS  ACQUISITION  BY NEW MOTION  MOBILE,  INC.  FROM A
COMPANY  WITH COMMON  OWNERSHIP,  AS DISCUSSED  HEREAFTER)  FOR THE THREE MONTHS
ENDED MARCH 31, 2007 AND 2006,  AND FOR THE FISCAL YEARS ENDED DECEMBER 31, 2005
AND 2006.  THE DISCUSSION AND ANALYSIS THAT FOLLOWS SHOULD BE READ TOGETHER WITH
THE  FINANCIAL  STATEMENTS  OF NEW MOTION  MOBILE AND THE NOTES TO THE FINANCIAL
STATEMENTS  INCLUDED  ELSEWHERE  IN  THIS  PROSPECTUS.   EXCEPT  FOR  HISTORICAL
INFORMATION,  THE MATTERS DISCUSSED IN THIS MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL  CONDITION AND RESULTS OF OPERATIONS ARE FORWARD LOOKING STATEMENTS
THAT INVOLVE RISKS AND  UNCERTAINTIES  AND ARE BASED UPON  JUDGMENTS  CONCERNING
VARIOUS  FACTORS THAT ARE BEYOND OUR CONTROL.  OUR ACTUAL  RESULTS  COULD DIFFER
MATERIALLY FROM THE RESULTS  ANTICIPATED IN ANY FORWARD LOOKING  STATEMENTS AS A
RESULT OF A VARIETY OF FACTORS, INCLUDING THOSE DISCUSSED IN "RISK FACTORS," AND
ELSEWHERE IN THIS PROSPECTUS.

OVERVIEW


         We provide a wide range of digital entertainment products and services,
using  the  power  of  the  Internet,  the  latest  in  mobile  technology,  and
traditional  marketing/advertising  methodologies.  We design our  products  and
services to be fun and  innovative.  We believe  product  quality and diversity,
customer and carrier support,  and brand recognition are the key components of a
publisher's  success.  We  focus  on  selectively   increasing  our  application
portfolio  with  high-quality,  innovative  applications.  The  monthly end user
subscription fees for our wireless entertainment products and services generally
range  from  $3.99  to  $9.99.  Across  all  of  our  applications,  the  median
subscription term of our users is approximately three and a half months. Premium
downloads  offered on an a-la-carte basis range from $0.99 to $5.99. We generate
95% of our revenue on a subscription basis versus 5% on an a-la-carte basis. Our
product  and service  portfolio  includes  games,  ringtones,  screensavers  and
wallpapers,  trivia  applications,  fan clubs  and  voting  services,  blogs and
information services.

         We have three major product lines: MobileSidewalk(TM),  RingtoneChannel
and Bid4Prizes. MobileSidewalk(TM) is a U.S.-based mobile entertainment company,
RingtoneChannel  is a mobile  storefront  provider,  and Bid4Prizes is a low-bid
mobile auction game.  Other products  include,  among others,  "MobileSidewalk's
Music  Trivia,"  "Ringtone  Club" and "Gator  Arcade." Our growing  portfolio of
applications and services are based primarily on internally  generated  content,
such as  MobileSidewalk's  Music  Trivia and  Bid4Prizes.  We also  license some
identifiable  content,  such as  ringtones,  wallpapers  and  images  from third
parties to whom we generally pay a licensing fee on a  per-download  basis.  The
majority of our revenue is derived from internally generated content.


         New  Motion  was formed in March  2005 and  subsequently  acquired  the
business of RingtoneChannel, an Australian aggregator of ringtones in June 2005.
Ringtone  Channel was  originally  incorporated  on February 23,  2004.  In 2004
RingtoneChannel  began to sell ringtones  internationally  and then launched its
first  ringtone  subscription  service in the U.S. in February  2005.  In August
2005, we launched our first successful text message campaign incorporating music
trivia.  In March of 2006,  we partnered  with  GoldPocket  Wireless,  a leading
provider of mobile technology  solutions for media and entertainment  companies,
to enhance the proficiency and performance of our mobile service offering.

         On January 19, 2007, we entered into an agreement  with IVG to purchase
certain  specified  assets of Mobliss,  a provider of proprietary  applications,
delivery  systems,  and  platforms  for  wireless  devices.  Mobliss  has direct
networking and billing connectivity with carriers for executing  large-scale SMS
campaigns  and  distributing  mobile  content to a wide array of mobile  devices
across multiple  carrier  networks in the US and Canada.  The primary  strategic
objective of this purchase is to allow us to more


                                       24
<PAGE>


efficiently  manage our business and  operations by enabling us to directly bill
and collect from mobile  carriers,  thus  eliminating  the fees  associated with
using third party  billing  processors  and  expediting  the  collection of open
carrier  receivables.  This  purchase  will also  enable us to better  serve our
customers and end users by  expediting  the time in which we react to changes in
the marketplace.

         Also on January 19,  2007,  we entered  into an  agreement  with IVG to
create an Asian-themed mobile entertainment  portal, the first major endeavor of
its kind in the  North  American  off-deck  arena.  This new  direct-to-consumer
service  provides  an  opportunity  for New Motion to tap into a new market with
Asian-themed  content,  delivering  sophisticated  mobile  products.  The  joint
venture  is to be  registered  under the name The Mobile  Entertainment  Channel
Corporation  and will assist New Motion in  expanding  its service  offerings by
partnering with IVG, a leading global player in the interactive games and mobile
space.

         In February,  2007,  we completed an exchange  transaction  pursuant to
which we merged with a publicly traded company,  MPLC,  Inc., so that New Motion
Mobile became a publicly traded company,  trading under the ticker "MPNC" on the
OTC Bulletin Board. In connection with the Exchange, we raised gross proceeds of
approximately  $20 million in equity financing  through the sale of our Series A
Preferred Stock, Series B Preferred Stock and Series D Preferred Stock.

         After receiving approval by written consent of holders of a majority of
all classes of our common and  preferred  stock voting  together and as a single
class,  on May 2, 2007,  we filed a  certificate  of  amendment  to our restated
certificate of incorporation  with the Delaware Secretary of State to effect the
following corporate actions: (i) increase the authorized number of shares of our
common stock from 75,000,000 to  100,000,000,  (ii) change our corporate name to
New Motion, Inc. from MPLC, Inc., and (iii) effect a 1-for-300 reverse split. In
connection with these corporate actions, we also changed our ticker to "NWMO" on
the OTC Bulletin Board.

KEY BUSINESS FACTORS

         In managing and  evaluating  our  business,  we  consider,  among other
factors the following:

         CONSISTENT  MONITORING  OF  OPERATIONAL  METRICS.  Our business  model,
regardless of the product sold, is primarily a subscription  based business.  To
that end, we frequently monitor a range of key metrics that have a direct impact
on our ability to retain  existing  subscribers  and our efficiency in acquiring
new  subscribers.  These metrics include:  cost per  acquisition,  churn rate of
existing subscribers,  churn rate of recurring subscribers,  average revenue per
user,  billability of new subscribers,  billability of existing  subscribers and
refund rates among others.  Our ability to receive  daily,  weekly,  and monthly
information  accurately,  in essence,  supplying data inputs to our  operational
metrics, is critical to successfully running our business.

         COMPOSITION OF OUR PRODUCTS AND SERVICES.  Our strategy is to publish a
diversified and balanced  portfolio of high-quality  products and services based
on both New Motion brands and brands that we license from third parties.  We aim
to provide a range of products  that  leverage  the fixed  Internet,  where U.S.
consumers  increasingly  purchase  and redeem  our  services,  alongside  mobile
delivery.  We believe that creating innovative Internet storefronts where online
content is wrapped around mobile  products  provides a richer  experience to the
consumer and a higher retention rate.

         Our third party license  agreements for  third-party  brands  typically
require that we pay a small advance or guaranteed payment. However, the majority
of our licensed content deals are based on revenue share so that our exposure to
high  priced,  up front  licenses is  limited.  We  generally  recoup all of the
advances we have paid from royalties earned from sales of the application before
the licensor receives


                                       25
<PAGE>


any further royalty payments from us. We also distribute  applications for other
publishers,  developers  and  licensors.  When we  distribute  applications,  we
generally do not assume the cost or  responsibility  associated with application
development,  which ultimately  results in a higher royalty payment to the third
party and therefore a lower gross margin for us on distributed products.

APPLICATION OF CRITICAL ACCOUNTING POLICIES AND ESTIMATES

         We have  identified  the  policies  below as critical  to our  business
operations  and  understanding  of our financial  results.  The  preparation  of
financial statements in conformity with accounting principles generally accepted
in the United States requires us to make estimates and  assumptions  that affect
the  reported  amounts of assets and  liabilities  at the date of the  financial
statements and the reported amounts of revenues and expenses during the reported
period.   Actual  results  may  differ  from  these  estimates  under  different
assumptions or conditions.

         REVENUE RECOGNITION AND RECEIVABLES. We recognize revenue from the sale
or subscription of our applications to wireless  subscribers under  distribution
agreements  with wireless  carriers and  aggregators  in the period in which the
applications  are purchased,  or over the period in which the  applications  are
subscribed,  assuming  that:  fees  are  fixed  and  determinable;  we  have  no
significant  obligations remaining;  and collection of the related receivable is
reasonably assured.

         We principally  derive  revenues from the licensing of our products and
services  to  wireless  subscribers  for a  one-time  purchase  fee or a monthly
subscription  fee.  Substantially  all of these  fees  appear on our  customers'
monthly mobile phone bill. In accordance  with our  third-party  aggregators and
carrier agreements, the aggregators and carriers, collectively,  perform billing
and collection  functions and remit a percentage of the fees to us. We recognize
the net amount of revenues due to us from the  wireless  carrier net of any fees
or other charges.  In addition,  we make  estimates on  chargebacks  and returns
based on historical trends and book this amount as a reduction in gross revenue.
Our  customers  initiate the  purchase of our  products  and  services  from our
website (www.mobilesidewalk.com), various Internet portal sites or through other
delivery  mechanisms and carriers are  responsible  for billing,  collecting and
remitting to us a percentage of those fees. We also  generate  limited  revenues
from third-party brands who wish to leverage the mobile channel.

         In  accordance  with  Emerging  Issues  Task  Force,  EITF,  No  99-19,
"Reporting  Revenue  Gross as a Principal  Versus Net As an Agent," we recognize
the net amount the wireless  carrier or distributor  pays to us upon the sale of
applications,  net of any  service or other  fees  earned  and  deducted  by the
wireless  carrier or  aggregator.  We have  evaluated  our wireless  carrier and
aggregator agreements and have determined that we are acting as an agent, not as
principal when selling our applications through wireless carriers.

         We estimate  revenues  from  carriers  and  aggregators  in the current
period when reasonable  estimates of these amounts can be made. Several carriers
and  aggregators  provide  reliable  sales data within a  reasonable  time frame
following  the end of each  month,  both of which  allow  us to make  reasonable
estimates of revenues and therefore to recognize  revenues  during the reporting
period  when  the end  user  subscribes  to our  service.  Determination  of the
appropriate amount of revenue  recognized  involves judgments and estimates that
we believe are  reasonable,  but it is possible  that actual  results may differ
from our estimates.  When we receive the final aggregator  reports broken out by
carrier,  to the extent these reports were not received within a reasonable time
frame  following  the end of each  month,  we  record  any  differences  between
estimated  revenues  and actual  revenues in the next  reporting  period once we
determine the actual amounts.


                                       26
<PAGE>


         Revenues earned from certain carriers may not be reasonably  estimated.
If we are unable to  reasonably  estimate the amount of revenue to be recognized
in the  current  period,  we  recognize  revenues  upon the receipt of a carrier
revenue report.  In order to mitigate the risk of a material  misstatement,  our
management reviews the revenues by carrier on a monthly basis and gross billings
on a daily basis to identify  unusual  trends that could  indicate  operational,
carrier or market  issues  which  could lead to a material  misstatement  in any
reporting  period.  Additionally,  on a weekly basis,  management  monitors cash
settlements made by carriers to our aggregators.

         We make  estimates  for future  refunds,  charge backs or credits,  and
create reserves  netted against  recorded  revenue,  in the period for which the
sale  occurs  based  on  analyses  of  previous  rates  and  trends  which  have
historically  varied  between  10% and 17% of Gross  Revenue.  This  reserve  is
reconciled  once  a  carrier  remits  total  payment  to  our  aggregator,   who
subsequently remits payment to us usually between 90-180 days after billing.

         Reserves recorded based on this estimation  process for the years ended
December  31,  2005  and  2006,  amounted  to  15%  and  13% of  gross  revenue,
respectively.  Reserves  recorded as of March 31,  2007  amounted to 5% of gross
revenue.  The  improvement  in our  reserves is due to more  accurate and timely
billing  information  received  from  our  aggregator  customers.  Historically,
differences  between our estimates and actual  revenues have not been materially
different  and,  as a  private  company,  we had  adequate  time to  adjust  our
estimated  revenues to actual  results  once we receive  final sales data.  On a
going forward  basis,  our quarterly  revenues will include a reserve  allowance
based on historical trends regarding chargebacks.

         IMPAIRMENT OF LONG-LIVED ASSETS. We assess impairment of our long-lived
assets in accordance  with the  provisions of Statement of Financial  Accounting
Standards  ("SFAS")  No.  144,  "Accounting  for the  Impairment  or Disposal of
Long-lived Assets." An impairment review is performed whenever events or changes
in  circumstances  indicate  that the  carrying  value  may not be  recoverable.
Factors  considered  by us include  significant  underperformances  relative  to
expected  historical or projected future operating results;  significant changes
in the manner of use of the  acquired  assets or the  strategy  for our  overall
business;  and  significant  negative  industry  or  economic  trends.  When  we
determine that the carrying  value of a long-lived  asset may not be recoverable
based upon the existence of one or more of the above  indicators of  impairment,
we estimate the future  undiscounted  cash flows expected to result from the use
of the asset and its eventual  disposition.  If the sum of the  expected  future
undiscounted  cash  flows and  eventual  disposition  is less than the  carrying
amount of the asset,  we recognize an  impairment  loss. We report an impairment
loss in the amount by which the  carrying  amount of the asset  exceeds the fair
value of the asset,  based on the fair market value if available,  or discounted
cash flows if not. To date, we have not had an impairment of long-lived assets.

         For each of the  periods  reported  herein,  the  Company's  management
believes  there is no  impairment  of its  long-lived  assets.  There  can be no
assurance,  however,  that market  conditions  will not change or demand for the
Company's products or services will continue which could result in impairment of
long-lived assets in the future.

         INCOME  TAXES.  Income  taxes  are  accounted  for  under the asset and
liability  method.  Deferred tax assets and  liabilities  are recognized for the
future tax  consequences  attributable  to  differences  between  the  financial
statement  carrying  amounts of 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.  The effect on deferred tax
assets and liabilities of a change in tax rates is recognized in the period that
includes the enactment date.

         We provide a valuation  allowance against a portion of its deferred tax
assets.  In  assessing  the  realization  of deferred  tax assets,  we weigh the
positive and  negative  evidence to determine if it is more likely than not that
some  or  all of  the  deferred  tax  assets  will  be  realized.  The  ultimate
realization  of deferred tax assets is dependent  upon the  generation of future
taxable income in the appropriate tax


                                       27
<PAGE>


jurisdiction. A decrease in our valuation allowance would result in an immediate
material  income tax  benefit,  an  increase in total  assets and  stockholder's
equity and could have a significant impact on earnings in future periods.

         Our  estimate  of the value of its tax  reserves  contains  assumptions
based on past  experiences and judgments about the  interpretation  of statutes,
rules and regulations by taxing jurisdictions.  It is possible that the ultimate
resolution of these matters may be greater or less than the amount estimated. If
payment  of  these  amounts  proves  to be  unnecessary,  the  reversal  of  the
liabilities would result in tax benefits being recognized in the period in which
it is determined that the liabilities are no longer  necessary.  If the estimate
of tax  liabilities  proves to be less than the ultimate  assessment,  a further
charge to expense would result.

         The  Company and its  subsidiaries  file income tax returns in the U.S.
and Australian federal  jurisdictions and the state of California  jurisdiction.
The Company is subject to U.S. and Australia federal examinations and California
state  examinations by tax authorities.  The statute of limitations for 2005 and
2006 in all  jurisdictions  remains open and are subject to  examination  by tax
authorities.

         The  Company  adopted the  provisions  of FASB  Interpretation  No. 48,
Accounting for  Uncertainty in Income Taxes,  on January 1, 2007. As a result of
the implementation of Interpretation 48, the Company recognized approximately $0
increase in the liability for unrecognized tax benefits, which was accounted for
as a reduction to the January 1, 2007, balance of retained earnings.  The amount
of  unrecognized  tax benefits as of January 1, 2007, and March 31, 2007, are $0
and $0, respectively.

         Included in the balance at January 1, 2007, are $0 of tax positions for
which the  ultimate  deductibility  is  highly  certain  but for which  there is
uncertainty  about the  timing of such  deductibility.  Because of the impact of
deferred tax accounting,  other than interest and penalties, the disallowance of
the shorter  deductibility period would not affect the annual effective tax rate
but would  accelerate  the payment of cash to taxing  authorities  to an earlier
period.  Also included in the balance at January 1, 2007, are $0 of unrecognized
tax benefits  that, if  recognized,  would impact the  effective  tax rate.  The
Company expects no adjustment to its amount of unrecognized  tax benefits during
2007.

         The  Company  recognizes  interest  and  penalties  accrued  related to
unrecognized  tax  benefits  in income tax  expense.  The  Company had no amount
accrued for the payment of interest and penalties at March 31, 2007.

         ACCOUNTING FOR STOCK-BASED COMPENSATION.  We have historically utilized
the fair value method of recording stock-based compensation as contained in SFAS
No. 123,  "Accounting for Stock-Based  Compensation,"  as amended.  Compensation
expense is  measured  at the grant  dated based on the value of the award and is
recognized  over the service period,  which is usually the vesting  period.  The
fair  value  of  stock  options  is  estimated  on  the  grant  date  using  the
Black-Scholes option pricing model.

         In  December  2004,  the FASB  issued  SFAS  No.  123  (revised  2004),
"Share-Based Payment," (SFAS No. 123(R)"),  which is a revision of SFAS No. 123.
SFAS  No.  123(R)  supersedes   Accounting  Principles  Board  Opinion  No.  25,
"Accounting for Stock Issued to Employees" and amends SFAS No. 95, "Statement of
Cash  Flows."  Generally,  the  approach  in SFAS  No.123(R)  is  similar to the
approach  described  in SFAS No. 123.  However,  SFAS No.  123(R)  requires  all
share-based  payments to employees,  including grants of employee stock options,
to be recognized in the income  statement based on their fair values.  Pro forma
disclosure  is no  longer  an  alternative.  SFAS No.  123(R)  also  establishes
accounting  requirements  for measuring,  recognizing and reporting  share-based
compensation,  including  income  tax  considerations.  One such  change was the
elimination of the minimum value method,  which under SFAS No. 123 permitted the
use of zero volatility when performing Black-Scholes valuations.


                                       28
<PAGE>


Under SFAS No.  123(R),  companies  are  required to use  expected  volatilities
derived  from  the  historical   volatility  of  the  company's  stock,  implied
volatilities from traded options on the company's stock and other factors.  SFAS
No. 123(R) also requires the benefits of tax  deductions in excess of recognized
compensation  cost to be reported as a  financing  cash flow,  rather than as an
operating cash flow as required under current accounting literature.

         The  provisions of SFAS No. 123(R) were effective for and adopted by us
as of January 1, 2006.  As we were using the fair market  value  accounting  for
stock based  compensation  pursuant to SFAS No.  123,  the  adoption of SFAS No.
123(R) was under the modified prospective method. Under the modified prospective
application,  the  cost  of new  awards  and  awards  modified,  repurchased  or
cancelled after the required  effective date and the portion of awards for which
the  requisite  service  has  not  been  rendered  (unvested  awards)  that  are
outstanding  as of  the  required  effective  date  will  be  recognized  as the
requisite  service is  rendered on or after the  required  effective  date.  The
compensation  cost for that portion of awards  shall be based on the  grant-date
fair value of those awards as calculated under SFAS No. 123.

         Since we had previously  recorded stock compensation  expense under the
fair value method  prescribed  by SFAS No. 123, the adoption of SFAS No.  123(R)
did not have a significant impact on our results of operations.

         PRODUCT  DEVELOPMENT COSTS. We expense product development costs, which
consist  primarily  of software  development  costs,  as they are  incurred.  We
account  for  software  development  costs  in  accordance  with  SFAS  No.  86,
"Accounting for the Costs of Computer Software to Be Sold,  Leased, or Otherwise
Marketed." We expense software  development  costs that we incur in the research
and  development  of software  products and  enhancements  to existing  software
products  until the time when we  establish  technological  feasibility,  and we
capitalize  costs from that time  until the  product is  available  for  general
release to customers. Under our current practice of developing new applications,
the  technological  feasibility  of the underlying  software is not  established
until  substantially  all  product  development  is  complete,  which  generally
includes the development of a working model.  As a result,  to date, we have not
capitalized any costs relating to our application  development because the costs
incurred  after  the   establishment   of   technological   feasibility  of  our
applications  have not been  significant.  In addition,  in the future,  we will
consider the following factors in determining  whether costs can be capitalized:
the emerging nature of the wireless entertainment market; the rapid evolution of
the platforms  and mobile phones on which we develop;  the lack of pre-orders or
sales history for our applications;  the uncertainty  regarding an application's
revenue-generating  potential;  our  lack of  control  over  the  sales  channel
resulting in uncertainty  as to when an application  will be available for sale,
if at all; and our historical practice of canceling applications throughout each
stage of the  development  process.  The Company does not consider the amount of
the  Company's  software  development  costs  to be  material  for  the  periods
presented.

         CONSOLIDATION.  We have  consolidated  the  accounts  of the  Company's
Mobile  Entertainment  Channel  Corporation ("MEC") joint venture, in accordance
with FASB Interpretation No. 46(R), "Consolidation of Variable Interest Entities
(revised  December 2003) - an  interpretation of ARB No. 51." The results of MEC
have been  consolidated  with the  Company's  accounts  because  the Company (i)
currently  controls the joint venture's  activities,  (ii) will share equally in
any  dividends  or other  distributions  made by the  joint  venture,  and (iii)
expects to fund the joint venture for the foreseeable future. The Company owns a
49% stake and IVG owns a 51% stake in the joint venture.

         The  consolidation  of MEC reflects the elimination of all intercompany
transactions.  MEC is reflected  with the  following  balances in the  Company's
consolidated  balance  sheet at March 31, 2007:  current  assets of $500,000 and
current  liabilities  of $190,000.  MEC's results of operations are reflected in


                                       29
<PAGE>


the Company's  consolidated  statement of operations  for the three months ended
March 31, 2007 as  minority  interest of  $155,000,  net of tax of $80,000.  The
$500,000  management fee paid to MEC has been  eliminated in the  consolidation.
The minority  interest reflects our joint venture partner's portion of MEC's net
income for the period.

         In the future,  we will consider the following  factors in  determining
whether this joint venture entity, or other entities should be consolidated: (i)
whether the variable  interest entity ("VIE") has sufficient  equity  investment
risk  and  (ii)  whether  equity  investors  in the VIE  lack  any of the  three
characteristics of controlling financial interest. (Investors with such interest
(a) participate in decision-making  processes by voting their shares, (b) expect
to shsare in  returns  generated  by the  entity  and (c)  absorb any losses the
entity may incur.)

RESULTS OF OPERATIONS

         The following table presents selected combined statements of operations
data, for each of the periods indicated, as a percentage of net sales.

<TABLE>
<CAPTION>
                                                        YEARS ENDED               THREE MONTHS ENDED
                                                        DECEMBER 31,                  MARCH 31,
                                                  ------------------------    -------------------------
                                                     2006          2005          2007           2006
                                                  ----------    ----------    ----------     ----------
<S>                                                      <C>           <C>          <C>             <C>
Net sales .....................................          100%          100%          100%           100%
Cost of sales .................................            3             5            13              2
                                                  ----------    ----------    ----------     ----------
Gross profit ..................................           97            95            87             98
Selling and marketing .........................           64            62            53             17
General and administrative expenses ...........           25            22            39             29
                                                  ----------    ----------    ----------     ----------
Income before provision for income taxes ......            7            11            (4)            52
Provision for income taxes ....................            4             5          --               13
                                                  ----------    ----------    ----------     ----------
Net income ....................................            4%            7%           (7)%           39%
                                                  ==========    ==========    ==========     ==========
</TABLE>


         COMPARISON  OF THREE MONTHS ENDED MARCH 31, 2007 AND THREE MONTHS ENDED
         MARCH 31, 2006

         The  following  analysis  and  discussion  pertains  to our  results of
operations for the three months ended March 31, 2007, compared to our results of
operations for the three months ended March 31, 2006.

NET SALES

                                 THREE MONTHS ENDED MARCH 31,
                                 ----------------------------         PERCENT
                                     2007             2006             CHANGE
                                 ----------        ----------        ----------
Net sales ...............        $5,642,000        $3,078,000               83%

         Net sales  increased 83% to $5,642,000 for the three months ended March
31, 2007, compared to $3,078,000 for the three months ended March 31, 2006. This
increase in net sales over the prior period was the  combined  result of several
factors,  including (i) a 59% increase in our first quarter 2007 average monthly
billable  customer base,  which was due to a more extensive and more  consistent
marketing program in the current and preceding quarters,  (ii) a 15% increase in
our first  quarter 2007  average  monthly  revenue per user,  which was due to a
modification  in our product mix,  and (iii) the benefit of a lower  returns and
allowances  reserve due to more efficient  aggregator billing through Goldpocket
Wireless for the entire first quarter 2007,  whereas during the first quarter of
2006, we were just  beginning to establish our new aggregator  partnership  with
Goldpocket.


                                       30
<PAGE>


         Our first  quarter  2007  product  mix  includes a  relatively  diverse
product  offering,  consisting of Music Trivia,  Ringtones,  Bid4Prizes  and our
White Label service,  which  compares  favorably to our less  diversified  first
quarter 2006 product offering which consisted of Music Trivia and Ringtones. Our
White  Label  services  typically  represent  partnerships  with well  known and
respected  brands,  where we offer a managed mobile  solution  through which our
partners offer their content,  with enhancements  provided by us. This change in
our  product  offering  composition  reflects  our  strategy  of  targeting  our
marketing  expenditures on our Music Trivia and other new product offerings that
present more  favorable  customer  acquisition  economics  and a higher  average
revenue per user over the subscription term.

COST OF SALES

                                 THREE MONTHS ENDED MARCH 31,
                                 ----------------------------         PERCENT
                                     2007             2006             CHANGE
                                 ----------        ----------        ----------
Cost of sales ...........        $  726,000        $   63,000            1,052%

         Cost of sales  increased  1,052% to $726,000 for the three months ended
March 31, 2007,  from  $63,000 for the three  months  ended March 31, 2006.  The
increase in cost of sales is  attributable  to costs relating to our White Label
products,  which we just started to market,  and  generate  revenue  from,  this
quarter.  These White Label cost of sales  represent  fixed fee  payments to our
partners for subscribers acquired during the first quarter 2007. The increase in
cost of sales  is also  attributable  to  higher  expenses  related  to  managed
hosting,  prize procurement and content license fees, all a result of our higher
general  level of sales  activity  for the three  months  ended  March 31,  2007
compared to the three months ended March 31, 2006.

GROSS PROFIT

                                 THREE MONTHS ENDED MARCH 31,
                                 ----------------------------         PERCENT
                                     2007             2006             CHANGE
                                 ----------        ----------        ----------
Gross profit ............        $4,916,000        $3,015,000               63%

         Gross profit  increased  63% to  $4,916,000  for the three months ended
March 31, 2007,  from  $3,015,000 for the three months ended March 31, 2006. Our
gross profit margin  decreased to 87% for the three months ended March 31, 2007,
from 98% for the three months ended March 31, 2006.  This  decrease in our gross
profit  margin was  principally  due to fixed fee  payments  to our White  Label
partners for the first quarter 2007,  which didn't exist in the year ago period.
Although  these White Label fees  impact our cost of sales and  resulting  gross
profit  margin,  we incur  substantially  less  selling  and  marketing  expense
associated with these White Label sales and thus a much larger proportion of our
White Label gross profit  contributes  to net income.  The decrease in our gross
profit margin was offset by higher average revenue per customer and economies of
scale  resulting  from a larger  subscriber  base for the first quarter 2007. We
expect that sales of our White  Label  products  will  continue to grow and thus
expect our future gross margins will be impacted by these sales.


                                       31
<PAGE>


SELLING AND MARKETING EXPENSE

                                 THREE MONTHS ENDED MARCH 31,
                                 ----------------------------         PERCENT
                                     2007             2006             CHANGE
                                 ----------        ----------        ----------
Selling and marketing ...        $2,987,000        $  514,000              481%

         Selling and marketing  expense  increased  481% to  $2,987,000  for the
three  months  ended March 31,  2007,  from  $514,000 for the three months ended
March 31, 2006.  As a percentage  of net sales,  selling and  marketing  expense
increased to 53% for the three  months ended March 31, 2007  compared to 17% for
the three months ended March 31, 2006.  This  increase in selling and  marketing
expense and higher  selling and marketing  expense as a percentage of net sales,
was due to the  anticipation of a new aggregator  relationship  during the first
quarter of 2006, which resulted in a significant  curtailment of our selling and
marketing  spending during that quarter.  The increase was also  attributable to
higher  overall  advertising  and  marketing  expense  spending  during the fist
quarter of 2007, primarily through our online direct marketing partners.

GENERAL AND ADMINISTRATIVE EXPENSE

                                 THREE MONTHS ENDED MARCH 31,
                                 ----------------------------         PERCENT
                                     2007             2006             CHANGE
                                 ----------        ----------        ----------
General and administrative ...   $2,200,000        $  880,000              150%


         General and administrative expense increased 150% to $2,200,000 for the
three  months  ended March 31,  2007,  from  $880,000 for the three months ended
March 31, 2006. As a percentage of net sales, general and administrative expense
increased to 39% for the three  months ended March 31, 2007  compared to 29% for
the  three  months  ended  March  31,  2006.   This   increase  in  general  and
administrative  expense  and  higher  general  and  administrative  expense as a
percentage of net sales,  is a result of a scaling up in our  operations and the
addition of 20 employees  compared to the  previous  period,  and also  reflects
higher  expenditure  on  consulting  costs and  office  and rent  expense.  Also
included in first quarter 2007 general and  administrative  expense was non-cash
amortization and stock compensation expense of approximately  $344,000 which did
not  exist in the  previous  period.  We  expect  that the rate of growth in our
general  and  administrative  expenditures  will  begin to slow over  subsequent
quarters,  as we reach a more  normalized  level of general  and  administrative
expenses.  This normalization of general and administrative expenses is expected
to result in a modest decline in our general and  administrative  expense,  as a
percentage of net sales, in the coming quarters.


INCOME (LOSS) BEFORE PROVISION FOR INCOME TAXES

                                 THREE MONTHS ENDED MARCH 31,
                                 ----------------------------         PERCENT
                                     2007             2006             CHANGE
                                 ----------        ----------        ----------
Income (loss) before provision
  for income taxes ......        $ (213,000)       $1,593,000             (113)%

         Income (loss) before  provision  for income taxes  decreased  113% to a
loss of $213,000 for the three months ended March 31,


                                       32
<PAGE>


2007,  from income of $1,593,000  for the three months ended March 31, 2006. Our
income (loss) before  provision for income taxes margin decreased to negative 4%
for the three months  ended March 31, 2007  compared to 52% for the three months
ended March 31, 2006.  This  decline in our pretax  income is a result of higher
levels of selling and  marketing  expense in the first  quarter 2007 and greater
general and administrative  expense, which is directly attributable to the build
out of our operating  infrastructure  and adding new employees  required to keep
pace with our current and expected sales growth.

NET INCOME (LOSS)

                                 THREE MONTHS ENDED MARCH 31,
                                 ----------------------------         PERCENT
                                     2007             2006             CHANGE
                                 ----------        ----------        ----------
Net income (loss) .......        $ (372,000)       $1,197,000             (131)%

         Net income  (loss)  decreased  131% to a loss of $372,000 for the three
months ended March 31, 2007,  from net income of $1,197,000 for the three months
ended March 31, 2006. Our net income (loss) margin  decreased to negative 4% for
the three months ended March 31, 2007 compared to 39% for the three months ended
March 31, 2006.  Our  provision for income taxes was $4,000 for the three months
ended March 31, 2007, compared to provision for income taxes of $396,000 for the
three months ended March 31, 2006.  Minority  interest of $155,000 for the three
months ended March 31, 2007  represents  our joint  venture  partner's  claim on
first  quarter  2007 net  income  of our  consolidated  subsidiary,  The  Mobile
Entertainment  Channel. This joint venture was formed in January, 2007. On a per
share basis,  basic and diluted net income (loss) per share  decreased to a loss
of $0.04 per share for the three months ended March 31, 2007,  compared to basic
net income of $0.16 per share and diluted net income of $0.15 per share, for the
three months ended March 31, 2006.

COMPARISON OF YEARS ENDED DECEMBER 31, 2006 AND 2005

NET SALES

                                    YEARS ENDED DECEMBER 31,
                                 -----------------------------        PERCENT
                                     2006             2005             CHANGE
                                 -----------       -----------       ----------
Net sales ...............        $18,721,000       $ 5,867,000             219%

         Net sales increased 219% to $18,721,000 for the year ended December 31,
2006,  from  $5,867,000  for the year ended  December 31, 2005.  The increase in
sales was due to  12-months of sales of our Music  Trivia  application  in 2006,
compared  to only six  months in 2005,  and  higher  average  monthly  marketing
expense in 2006,  which directly  translates  into a larger pool of subscribers.
This sales  increase was offset by a higher  allowance  for returns for the year
ended  December  31, 2006  compared to the year ended  December  31,  2005.  The
increase in returns  directly  correlated  with our higher  sales volume for the
year ended December 31, 2006. Our full year 2006 returns and allowances reserve,
as a percentage of gross  revenue,  decreased  when compared to the 2005 reserve
percentage.  During  the year ended  December  31,  2006,  our  average  monthly
billable  customer base increased 103% compared to our average monthly  billable
customer  base during the year ended  December  31, 2005.  Notwithstanding  this
increase  in our  billable  customer  base,  our average  revenue  per  customer
increased by 57% for the year ended  December 31, 2006 when  compared to average
revenue per customer for the year ended  December 31, 2005.  These dual benefits
were the result of greater  rates of  customer  acquisition  and a change in our
billing cycle, whereby we billed subscribers on a full-month  subscription-basis
(billing $9.99 once per


                                       33
<PAGE>


month) starting in late 2005, from a partial-month  subscription-basis  (billing
$0.99  approximately  10-times per month).  Thus,  for the full year of 2006, we
experienced  the  compounding  effect  of a larger  number  of users  under  the
full-month subscription model, compared to only nine months of activity in 2005,
most of which was billed under the partial-month subscription model.

COST OF SALES

                                   YEARS ENDED DECEMBER 31,
                                 ----------------------------         PERCENT
                                     2006             2005             CHANGE
                                 ----------        ----------        ----------
Cost of sales ...........        $  597,000        $  267,000              124%

         Cost of sales  increased  124% to $597,000 for the year ended  December
31, 2006,  from $267,000 for the year ended  December 31, 2005.  The increase in
cost of sales is primarily attributable to an increase in content licensing fees
- a direct  result of higher  sales of  licensed  content - and  higher  managed
hosting  fees,  a  result  of our  comparatively  larger  customer  base in 2006
compared to 2005.

GROSS PROFIT

                                    YEARS ENDED DECEMBER 31,
                                 -----------------------------        PERCENT
                                     2006             2005             CHANGE
                                 -----------       -----------       ----------
Gross profit ............        $18,124,000       $ 5,600,000             224%

         Gross profit  increased 224% to $18,124,000 for the year ended December
31, 2006, from $5,600,000 for the year ended December 31, 2005. Our gross profit
margin  increased to 97% for the year ended December 31, 2006,  from 95% for the
year ended  December 31, 2005.  This  increase in gross profit margin was due to
several  factors,  including a relatively  larger  subscriber  base for the year
ended December 31, 2006 compared to the year ended  December 31, 2005,  allowing
us to spread our cost of sales over a larger  number of  subscribers  and higher
average  revenue per customer for the year ended  December 31, 2006  compared to
the year ended  December 31, 2005 as well as a relatively  constant low level of
cost of sales.

SELLING AND MARKETING

                                    YEARS ENDED DECEMBER 31,
                                 -----------------------------        PERCENT
                                     2006             2005             CHANGE
                                 -----------       -----------       ----------
Selling and marketing ...        $11,971,000       $ 3,618,000             231%

         Total selling and marketing  expense  increased 231% to $11,971,000 for
the year ended December 31, 2006 from $3,618,000 for the year ended December 31,
2005.  We launched  our U.S.  text  services in July of 2005 and  marketed  very
sparingly as we evaluated our product  offerings.  The substantial  increase was
due to having a full year of  concentrated  marketing  in 2006 versus only eight
months in 2005.  As a percentage  of net sales,  selling and  marketing  expense
increased to 64% for the year ended  December  31, 2006  compared to 62% for the
year ended December 31, 2005.


                                       34
<PAGE>


GENERAL AND ADMINISTRATIVE

                                   YEARS ENDED DECEMBER 31,
                                 ----------------------------         PERCENT
                                     2006             2005             CHANGE
                                 ----------        ----------        ----------
General and administrative ...   $4,679,000        $1,289,000              263%

         Our  total  general  and   administrative   expenses   include  product
development,  customer  technical  support  and  general  expenses.  General and
administrative  expense increased 263% to $4,679,000 for the year ended December
31, 2006 from  $1,289,000 for the year ended December 31, 2005. This increase in
general  and  administrative  expense  was  due  to  our  larger  headcount  and
associated payroll and consulting fees, higher accounting and legal fees, higher
travel and entertainment  expense,  higher  telecommunications  expense, and bad
debt expense in 2006,  compared to no bad debt expense in 2005.  As a percentage
of net sales,  general and administrative  expense increased to 25% for the year
ended December 31, 2006 compared to 22% for the year ended December 31, 2005.

INCOME BEFORE PROVISION FOR INCOME TAXES

                                   YEARS ENDED DECEMBER 31,
                                 ----------------------------         PERCENT
                                     2006             2005             CHANGE
                                 ----------        ----------        ----------
Income before provision
  for income taxes ...........   $1,385,000        $  657,000              111%

         Income before  provision for income taxes  increased 111% to $1,385,000
for the year ended  December 31, 2006 from $657,000 for the year ended  December
31, 2005.  Our income before  provision for income taxes margin  decreased to 7%
for the year ended December 31, 2006 compared to 11% for the year ended December
31, 2005.  This  decrease in pretax  income as a percentage  of net sales is the
result of a scaling up of our operations to meet  anticipated  future demand for
our products and meet anticipated  sales growth.  In particular,  while our 2006
sales grew 219% over 2005,  selling and marketing and general and administrative
expense both grew at a faster rate over the same period.

NET INCOME

                                   YEARS ENDED DECEMBER 31,
                                 ----------------------------         PERCENT
                                     2006             2005             CHANGE
                                 ----------        ----------        ----------
Net income ..............        $  677,000        $  387,000               75%

         Net income increased 75% to $677,000,  or $0.09 per share, for the year
ended December 31, 2006, compared to $387,000,  or $0.05 per share, for the year
ended  December 31,  2005.  Our net income  margin  decreased to 4% for the year
ended December 31, 2006 compared to 7% for the year ended December 31, 2005 as a
result of the combination of the factors discussed above.

         We believe that as we continue to grow our sales, over time the rate of
our sales  growth  will  moderate  in line with the growth in the  overall  U.S.
mobile  entertainment  market.  In the  future,  we do not  expect  that we will
increase our sales at our historical  growth rate and  furthermore,  there is no
assurance that we will continue to meet our sales growth objectives, or those of
the overall mobile entertainment market.


                                       35
<PAGE>


LIQUIDITY AND CAPITAL RESOURCES

         As of March 31, 2007, we had cash and cash equivalents of approximately
$17,720,000 and a working capital balance of  approximately  $17,739,000.  As of
December 31, 2006, we had cash and cash  equivalents of  approximately  $544,000
and a working  capital  balance of  approximately  $694,000.  Our positive  cash
balance  results  primarily from financing  activities.  In the first quarter of
2007, we received  gross  proceeds of $20 million from the sale of capital stock
to institutional investors and other accredited investors.


         We believe that our existing cash and cash  equivalents and anticipated
cash flows from our operating  activities will be sufficient to fund our minimum
working  capital  and  capital  expenditure  needs for at least the next  twelve
months.   In  order  to  expand  and  improve  our  operating   and   management
infrastructure,  we expect to incur approximately  $250,000 of expenses over the
next twelve months  relating to improving our internal  controls and procedures,
which  includes  expenses  related  to  training  and hiring  additional  staff,
implementing   a  new  accounting   system  and  consulting   fees  relating  to
Sarbanes-Oxley  Act  compliance.  The extent of our future capital  requirements
will depend on many factors,  including our results of  operations.  If our cash
from operations is less than anticipated or our working capital  requirements or
capital expenditures are greater than we expect, or if we expand our business by
acquiring  or  investing  in  additional  technologies,  we may  need  to  raise
additional  debt or equity  financing.  We are  continually  evaluating  various
financing  strategies to be used to expand our business and fund future  growth.
There can be no  assurance  that  additional  debt or equity  financing  will be
available on acceptable terms or at all.


         CASH FLOWS

         We currently satisfy our working capital requirements primarily through
the  issuance  of  debt  and  equity  securities,   supplemented  by  cash  from
operations. Cash flows provided by (used in) operating,  investing and financing
activities  for the years ended  December  31, 2006 and 2005,  and for the three
months ended March 31, 2007 and 2006 are summarized in the following table:

<TABLE>
<CAPTION>
                              YEARS ENDED DECEMBER 31,      THREE MONTHS ENDED MARCH 31,
                                                                     (unaudited)
                            ----------------------------    ----------------------------
                                2006            2005            2007            2006
                            ------------    ------------    ------------    ------------
<S>                         <C>             <C>             <C>             <C>
Operating Activities ....   $    931,000    $    426,000    $   (367,000)   $  1,206,000
Investing Activities ....       (200,000)       (103,000)        (92,000)           --
Financing Activities ....       (537,000)         24,000      17,635,000         (54,000)
                            ------------    ------------    ------------    ------------
     Net increase in cash   $    194,000    $    347,000    $ 17,176,000    $  1,152,000
                            ============    ============    ============    ============
</TABLE>


         CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES

         New Motion's cash requirements are principally for working capital. For
the three  months ended March 31, 2007,  cash used in operating  activities  was
$367,000,  compared to cash provided by operating  activities of $1,206,000  for
the three months ended March 31, 2006. In fiscal year 2006, net cash provided by
operating  activities was $931,000.  Our operating  cash flows result  primarily
from cash received  from our  aggregator  customers,  offset by cash payments we
make for products and services, including sales and marketing expenses, employee
compensation  and consulting  fees. Cash received from our aggregator  customers
generally corresponds to our net sales.


                                       36
<PAGE>


         CASH USED IN INVESTING ACTIVITIES

         For the three  months  ended  March 31,  2007,  cash used in  investing
activities  was  $92,000,  compared to zero for the three months ended March 31,
2006.  Our investing  cash flows  correspond  with purchases of fixed assets for
cash and cash flows related to  acquisitions.  In the first  quarter  2007,  our
purchase  of the Mobliss  assets was  financed  through the  issuance of the IVG
Note.  During  the  quarter,  we also  made  capital  expenditures  relating  to
investment in our technology  infrastructure,  computer  equipment and furniture
for new employees.  Investing activities during fiscal year 2006 were the result
of capital expenditures,  primarily for office, computer and video equipment and
$123,000 of expenditures  related to the subsequent event acquisition of certain
assets of Mobliss. Net cash used in investing activities was $200,000 for fiscal
year 2006.

         CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES

         For the three months ended March 31, 2007,  cash  provided by financing
activities  was  $17,635,000,  compared to cash used in financing  activities of
$54,000  for the  three  months  ended  March  31,  2006.  Cash  from  financing
activities  result from  issuances  of stock,  issuance  and  repayment of notes
payable and payments on capital lease obligations.  Financing  activities during
the year ended  December  31,  2006  included a cash  payment  of  $213,000  for
expenses  related  to the  February  12,  2007  Exchange  with MPLC and  related
financing transactions.

         We had Secured Convertible Promissory Notes outstanding in 2006, in the
principal amounts of $15,000,  $100,000 and $50,000,  which were issued to Scott
Walker,  our then Chief  Executive  Officer and  President and our current Chief
Marketing Officer. In addition, in 2006, we had Secured Convertible Notes in the
principal  amounts of $35,000,  $50,000 and $20,000  which were issued to SGE, a
fictitious  business name for SGTI, Inc., a corporation  owned by Allan Legator,
our then and current Chief  Financial  Officer and Secretary.  All notes to both
Scott  Walker  and SGE were  repaid in full with  interest  in  September  2006.
Pursuant to the terms of the Secured Convertible Notes, each of Scott Walker and
SGE were  granted a right to receive a warrant to purchase a number of shares in
a qualified financing. On January 26, 2007, New Motion agreed with each of Scott
Walker and SGE that the warrants  would entitle  Scott Walker to purchase  9,900
and SGE to purchase 6,300 shares, respectively,  of New Motion's common stock at
an exercise  price of $5.00 per share.  After the Exchange and on a post-Reverse
Split basis,  Scott Walker's  warrant and SGE's warrant entitle them to purchase
14,384 and 9,153 shares,  respectively,  of common stock at an exercise price of
$3.44 per share.

         On  September  7, 2006 we loaned our Chief  Executive  Officer,  Burton
Katz,  $286,000 under a secured  promissory  note for the purpose of helping Mr.
Katz acquire stock  options  vested in a prior  employer.  This amount was fully
repaid, with interest, on November 21, 2006.

         In January 2007,  we sold one share of our Series A Preferred  Stock to
Trinad Capital Management, Ltd. for aggregate gross proceeds of $3.5 million. In
February 2007, we sold 650 shares of our Series B Preferred  Stock to the Series
B Investors for aggregate gross proceeds of $6.5 million. Also in February 2007,
we sold  8,333  shares of our  Series D  Preferred  Stock to  institutional  and
accredited  investors for aggregate gross proceeds of approximately $10 million.
These funds will be used for general working capital purposes and for the growth
of our business.


         In connection  with the Series A, B and D Preferred  Stock  financings,
Sanders Morris Harris,  Inc. acted as placement agent.  For their services,  the
Company paid  Sanders  Morris  Harris a fee equal to 7.5% of the gross  proceeds
from the financing,  or $1.5 million, and five year warrants to purchase 290,909
shares  of  common  stock  at an  average  exercise  price of  $5.50  per  share
(post-Reverse Split), which was equivalent to the average per share valuation of
the Company for the Series A, B and D


                                       37
<PAGE>


Preferred Stock financings. Of the $1,500,000 fee paid to Sanders Morris Harris,
Inc.,  $939,408 was paid in cash and $560,592 of the fee was provided to Sanders
Morris  Harris,  Inc.  through  the  issuance  of 467.16  shares of our Series D
Preferred Stock.

         On January 19, 2007, we entered into an Asset  Purchase  Agreement with
IVG,  pursuant  to which we  purchased  from IVG  certain  specified  assets  of
Mobliss.  In exchange for the assets specified in the Asset Purchase  Agreement,
we issued IVG a convertible  promissory note in the initial  principal amount of
$500,000 and with an aggregate maximum principal amount of up to $2,320,000 (the
"IVG  Note").  The IVG Note bore  interest at the rate of five percent per annum
accruing from the initial issuance of the IVG Note and matured on the earlier of
November  30,  2007 or 30 days after  delivery  by IVG of  written  notice to us
demanding payment.  As a result of the assignment of one of the cellular carrier
connection  contracts  listed in the Asset  Purchase  Agreement,  on January 26,
2007,  we  increased  the  principal  amount  of the  IVG  Note by  $580,000  to
$1,080,000.  On February 26, 2007,  we repaid  $500,000 of the IVG Note.  Unless
requested by us, we will have no  obligation  to purchase  any cellular  carrier
connection  contracts listed in the Asset Purchase Agreement and not assigned to
us by February  28,  2007.  On July 11,  2007,  IVG  converted  all  outstanding
principal  and accrued  interest on the IVG Note into  172,572  shares of common
stock at a  conversion  price of $3.44 per share,  the fair market  value of our
common stock on the date of issuance of the IVG Note.

         In connection with The Mobile  Entertainment  Channel Corporation joint
venture  with IVG, we are  obligated to pay the joint  venture a management  fee
equal to the purchase  price paid for  hardware and software  assets we acquired
from IVG, up to a maximum fee of $2,320,000, for management services rendered to
us by the joint  venture.  We made an advance  payment on the  management fee of
$500,000 on March 12, 2007,  with the remainder of the management fee payable in
quarterly  installments,  through June 30, 2008.  The  $500,000  management  fee
payment on March 12, 2007 was eliminated in the consolidation of MEC. Beyond the
advance payments,  each quarterly management fee payment made by us to the joint
venture will equal 10% of the revenue generated from the assets we acquired from
IVG.


CONTRACTUAL OBLIGATIONS AND OFF-BALANCE SHEET ARRANGEMENTS

         See  "Note 10 -  Commitments  and  Contingencies"  to our  Consolidated
Financial  Statements  included  elsewhere in this prospectus for details of our
future  contractual  obligations.  At  March  31,  2007,  we did  not  have  any
relationships with unconsolidated  entities or financial  partnerships,  such as
entities often referred to as structured  finance or special  purpose  entities,
which would have been  established for the purpose of  facilitating  off-balance
sheet arrangements or other contractually  narrow or limited purposes.  As such,
we are not exposed to any financing, liquidity, market or credit risk that could
arise if we had engaged in such relationships.

         Our factoring  arrangements  may subject us to off-balance  sheet risk.
Due to the payment terms of the carriers requiring in excess of 90 days from the
date of  billing  or  sale,  we  utilize  factoring  facilities  offered  by our
aggregators.  This  factoring  feature  allows  for  payment of 70% of the prior
month's billings 15 to 20 days after the end of the month. For this feature,  we
pay an additional fee of 2.5% to 5% of the amount factored. For the three months
ended March 31, 2007, the gross amount of invoices  subject to factoring  totals
approximately  $5,718,000.  The total factored  amount of these invoices  equals
approximately  $3,901,000.  As of March 31, 2007, we had reserves and allowances
of  approximately  $270,000  against these  factored  amounts.  This compares to
$1,853,000 of gross invoices  subject to factoring and the total factored amount
of these invoices of $1,337,000 for the three months ended March 31, 2006.  This
factoring  facility  is offered to us on a recourse  basis.  Our gross sales for
each month are  reported  net of any of these  factoring  fees.  We  continually
evaluate the best use of our cash assets  relating to our factoring  facility or
to alternative  uses of cash,  such as enhancing our  infrastructure  and making
selective acquisitions.


                                       38
<PAGE>


         We have operating leases with future minimum lease payments of $298,000
in 2007 and $188,000 in 2008.

         Pursuant to a registration  rights  agreement  entered into on February
28, 2007, the Company is required to file a registration  statement with the SEC
to register the common stock issued in  connection  with the  conversion  of the
Series D  Preferred  Stock.  The  Company is  subject  to payment of  liquidated
damages  of  one  percent  of the  Series  D  aggregate  purchase  price  if the
registration  statement  is not filed  within 75 days of the Series D financing,
which closed on March 6, 2007,  the date the Company  received the cash proceeds
of the Series D  financing.  The  Company is subject to a further 1%  liquidated
damages payment for each 30-day period in which the  registration  statement has
not been filed, up to a maximum of 12% of the Series D aggregate purchase price.

RECENT ACCOUNTING PRONOUNCEMENTS

         In June 2006,  the FASB issued  Interpretation  No. 48,  Accounting for
Uncertainty in Income Taxes --an interpretation of FASB Statement No. 109, which
clarifies  the  accounting  for  uncertainty  in income taxes  recognized  in an
enterprise's  financial  statements in accordance with SFAS No. 109,  Accounting
for Income Taxes. This Interpretation prescribes a comprehensive model for how a
company  should  recognize,  measure,  present and  disclose  in its  financials
statements uncertain tax positions that it has taken or expects to take on a tax
return,  including  a  decision  whether  to file or not to file a  return  in a
particular jurisdiction. Under the Interpretation, the financial statements must
reflect expected future tax consequences of these positions presuming the taxing
authorities'  full  knowledge  of the  position  and  all  relevant  facts.  The
Interpretation   also  revises   disclosure   requirements   and   introduces  a
prescriptive,  annual,  tabular  roll-forward of the  unrecognized tax benefits.
This  Interpretation  is effective for fiscal years beginning after December 15,
2006.  We  adopted  this  interpretation  in the first  quarter of 2007 and have
determined that it has not had a material impact on our  consolidated  financial
position, results of operations or cash flows.

         In  September   2006,   the  FASB  issued  SFAS  No.  157,  Fair  Value
Measurements.  SFAS No. 157 establishes a framework for measuring the fair value
of assets and  liabilities.  This  framework  is intended  to provide  increased
consistency  in how fair value  determinations  are made under various  existing
accounting  standards that permit,  or in some cases require,  estimates of fair
market  value.  SFAS No. 157 is  effective  for  fiscal  years  beginning  after
November 15, 2007,  and interim  periods  within  those  fiscal  years.  Earlier
adoption is  encouraged,  provided that the reporting  entity has not yet issued
financial  statements for that fiscal year,  including any financial  statements
for an interim  period  within that fiscal year. We are currently in the process
of  evaluating  the  impact  of  SFAS  No.  157  on our  consolidated  financial
statements.

         In September 2006, the Securities and Exchange  Commission issued Staff
Accounting  Bulletin  ("SAB")  No.  108,  Considering  the Effects of Prior Year
Misstatements   When   Quantifying   Misstatements  in  Current  Year  Financial
Statements,  or SAB No. 108,  which  provides  interpretive  guidance on how the
effects of the  carryover  or  reversal  of prior year  misstatements  should be
considered in quantifying a current year misstatement. We adopted the provisions
of SAB No. 108 in our fiscal year 2006. To date, the adoption of SAB No. 108 has
not had a material impact on our  consolidated  financial  position,  results of
operations or cash flows.

         In December  2006,  the FASB issued FASB Staff  Position  EITF 00-19-2,
"Accounting for Registration  Payment  Arrangements"  ("FSP EITF 00-19-2").  FSP
EITF 00-19-2 specifies that the contingent obligation to make future payments or
otherwise  transfer  consideration  under a  registration  payment  arrangement,
whether issued as a separate agreement or included as a provision of a financial
instrument or other agreement,  should be separately  recognized and measured in
accordance with SFAS


                                       39
<PAGE>


No. 5, "Accounting for Contingencies." FSP EITF 00-19-2 further clarifies that a
financial  instrument  subject to a registration  payment  arrangement should be
accounted for in accordance  with other  applicable  GAAP without  regard to the
contingent  obligation to transfer  consideration  pursuant to the  registration
payment  arrangement.  FSP EITF 00-19-2 is effective  for  registration  payment
arrangements and the financial  instruments  subject to those  arrangements that
are entered into or modified  subsequent to December 21, 2006. For  registration
payment  arrangements and financial  instruments  subject to those  arrangements
that were entered into prior to the issuance of FSP EITF  00-19-2,  the standard
is effective for financial  statements  issued for fiscal years  beginning after
December 15, 2006, and interim periods within those fiscal years. Early adoption
for interim or annual periods for which financial  statements or interim reports
have not been issued is permitted.  The adoption of FSP EITF 00-19-2 has not had
a  material  impact on the  Company's  consolidated  results  of  operations  or
financial position.

         In February  2007,  FASB issued FAS No. 159,  The Fair Value Option for
Financial Assets and Financial  Liabilities  ("FAS 159"),  which gives companies
the option to measure eligible financial assets,  financial liabilities and firm
commitments   at  fair   value   (i.e.,   the   fair   value   option),   on  an
instrument-by-instrument basis, that are otherwise not permitted to be accounted
for at fair value under other accounting standards. The election to use the fair
value option is available when an entity first  recognizes a financial  asset or
liability or upon entering into a firm  commitment.  Subsequent  changes in fair
value  must  be  recorded  in  earnings.  FAS  159 is  effective  for  financial
statements issued for fiscal year beginning after November 15, 2007. The Company
does  not  expect  adoption  of FAS  159  will  have a  material  impact  on our
consolidated results of operations or financial position.


                                       40
<PAGE>


                                    BUSINESS

OVERVIEW


         We  publish  wireless  entertainment  applications,   including  games,
ringtones, images and other entertainment content which is designed to appeal to
a broad range of wireless  subscribers.  Our  customers  typically  purchase and
download   our   applications   through   one   of   our   websites,   including
Mobilesidewalk.com and RingtoneChannel.com, or through their mobile handset. Our
customers are charged a one-time or monthly subscription fee for the application
which  appears on their  mobile phone bills.  Typically,  the carriers  (such as
Cingular  Wireless or Verizon Wireless) keep a portion of the fee they charge to
our customers, and then remit the balance to billing aggregators,  who act as an
intermediary between us and the carriers. The billing aggregators keep a portion
of the fee for their  services  and then remit the balance to us, which we share
with  our  third  party  content  providers,   if  any.  Generally  the  monthly
subscription fee remitted to us through our billing aggregators,  before refunds
and adjustments, is between 50% and 70% of the fee charged to our end consumers.
The wireless  distribution  of our products  eliminates  traditional  publishing
complexities,  including physical  production,  packaging,  shipping,  inventory
management and return processing. We are headquartered in Irvine, California and
our corporate website address is www.newmotioninc.com.


OUR PRODUCTS AND SERVICES


         We have  two  wholly  owned  subsidiaries  called  RingtoneChannel  Pty
Limited,  which is  inactive,  and New Motion  Mobile,  Inc.  Through New Motion
Mobile,  Inc.,  we provide a wide range of digital  entertainment  products  and
services, using the power of the Internet, the latest in mobile technology,  and
traditional marketing and advertising methodologies.  We design our products and
services to be fun and  innovative.  We believe  product  quality and diversity,
customer and carrier support,  and brand recognition are the key components of a
publisher's  success.  We  focus  on  selectively   increasing  our  application
portfolio  with  high-quality,  innovative  applications.  The  monthly end user
subscription fees for our wireless entertainment products and services generally
range  from  $3.99  to  $9.99.  Across  all  of  our  applications,  the  median
subscription term of our users is approximately three and a half months. Premium
downloads offered on an a-la-carte basis range from $0.99 to $5.99 and represent
less than 5% of our revenue.  Our product and service portfolio  includes games,
ringtones,  screensavers  and  wallpapers,  trivia  applications,  fan clubs and
voting services,  blogs and information services. Our entertainment products and
services are compatible with most modern cell phone  operating  systems of which
we are aware.

         We have three major product lines: MobileSidewalk,  RingtoneChannel and
Bid4Prizes.  Other products  include,  among others,  "Ringtone Club" and "Gator
Arcade." Our growing  portfolio of applications and services are based primarily
on  internally  generated  content,  which we offer through  MobileSidewalk  and
Bid4Prizes.  We also  license  some  identifiable  content,  such as  ringtones,
wallpapers  and images from third  parties to whom we generally  pay a licensing
fee on a  per-download  basis.  However,  the majority of our revenue is derived
from  internally  generated  content.  As a  percentage  of our  total  revenue,
Bid4Prizes   currently  generates   approximately  30%  of  our  total  revenue,
RingtoneChannel 24%, and MobileSidewalk 20%. The remaining 26% of our revenue is
generated from several  smaller  sources,  including  Gator Arcade and our White
Label business.  Our White Label services typically represent  partnerships with
well  known  and  respected  brands,  where we offer a managed  mobile  solution
through which our partners offer their content,  with  enhancements  provided by
us. The following is a brief description of our product lines:



                                       41
<PAGE>


         o        MOBILESIDEWALK(TM). MobileSidewalk (www.mobilesidewalk.com) is
                  a  leading  U.S.-based  mobile  entertainment  company.  Using
                  state-of-the-art applications,  MobileSidewalk provides highly
                  targeted  direct-to-consumer mobile content, including sports,
                  entertainment,   games,  lifestyle  interests,  ringtones  and
                  wallpapers,  as well as exclusive  fan clubs,  promotions  and
                  licenses.  Content  provided through  MobileSidewalk  includes
                  content from the following partners, among others:

                  o        SIGALERT.  Provides general and personalized traffic,
                           including travel times, via the Web, email, or phone.

                  o        RESTAURANTROW.COM. RestaurantRow.com, Inc. operates a
                           "go to"  destination  for restaurant  information and
                           services with over 170,000 restaurants  covering over
                           13,000 cities and towns worldwide. The company is the
                           on-line  and  handheld/wireless  site of  convenience
                           where  customers  (consumers and  businesses)  review
                           proprietary content (menus,  customer reviews, survey
                           results  and  digital  images   providing  a  virtual
                           restaurant  tour) and  ultimately  point and click to
                           make an on-line reservation  (real-time and concierge
                           style),  order food  on-line for delivery or take-out
                           and  conveniently  order products from the restaurant
                           branded product e-commerce mall.

                  o        THESPORTSPAGE(R).  TheSportsPage(R)  is a provider of
                           sports  information  via  pager,   including  scores,
                           breaking  news,  injury  and  weather  reports,  time
                           changes and starting  pitchers.  The service provides
                           data  on  pro   football,   college   football,   pro
                           basketball,  college  basketball,  baseball,  hockey,
                           Nascar, golf and boxing.

         o        RINGTONECHANNEL.  RingtoneChannel (www.ringtonechannel.com) is
                  a storefront service for companies that want to sell their own
                  content,  and / or earn  revenue from the sale of content from
                  New Motion's  library.  By  leveraging  New Motion's  in-house
                  capabilities, RingtoneChannel is able to offer a customizable,
                  turnkey  solution  to  businesses  of  any  size,  from  large
                  private-labeled  storefronts  for  major  consumer  brands  to
                  smaller niche  companies that want to add  additional  revenue
                  stream.

         o        BID4PRIZES.  Bid4Prizes  (www.bid4prizes.com)  is a  brand-new
                  concept in auction  games,  where the lowest  unique bid wins.
                  Using their cell phone,  or from their  desktop,  participants
                  "bid" on a wide  range  of  products,  including  automobiles,
                  consumer  electronics,   apparel,   trips,  games  and  mobile
                  content. Bidders can play for free on the web or sign up for a
                  premium  monthly  plan that  provides  them with  multiple bid
                  opportunities.  Mobile  tips  direct  them  in  their  bidding
                  decisions, letting them know if their current bid is unique or
                  the lowest,  and helping them  navigate  their way to win cash
                  and prizes.

         o        MOBLISS MOBILE MESSAGING ASSETS. The acquisition of certain of
                  the mobile  messaging  assets of Mobliss  provides  New Motion
                  with a proven and  scalable  interactive  messaging  platform.
                  This  expanded  capability  will  provide  New Motion with the
                  ability  to  offer  a  broader  range  of  interactive  mobile
                  services to media and entertainment companies.

         o        MOBILE  ENTERTAINMENT  CHANNEL. The joint venture between IVG,
                  an  Internet,  mobile  technology  and digital  media  holding
                  company,  and New Motion,  will form The Mobile  Entertainment
                  Channel  Corporation,  an  Asian-themed  mobile  entertainment
                  Portal.  We believe  this joint  venture will be unique in the
                  North  American  off-deck  arena  and  will  operate  under  a
                  consumer brand name to be announced at a later date.  This new
                  direct-to-consumer  service provides a unique  opportunity for
                  New Motion to tap into a new market with Asian-themed content,
                  delivering some of the most  sophisticated  mobile products in
                  the world.


                                       42
<PAGE>


         New Motion was formed in 2005 by the stockholders of BroadSpring, Inc.,
a  Delaware  corporation  ("Broadspring")  with the intent of  exploring  mobile
opportunities  in the U.S.  and the eventual  possibility  of  transferring  the
mobile business out of BroadSpring.  In June 2005,  BroadSpring  transferred the
business  of  RingtoneChannel  to  New  Motion  and  RingtoneChannel   continued
operations as a legal subsidiary of New Motion.  RingtoneChannel  was originally
incorporated  on February 23, 2004 and was acquired by  BroadSpring in June 2004
as a  wholly-owned  subsidiary  to explore  mobile  opportunities  in the United
States market. This transition was deemed a continuation of an existing business
controlled  by  common  ownership  and  the  historical   operating  results  of
RingtoneChannel  from  its  inception  in  February  2004  to  the  date  of the
transition are therefore included in the financial statements of New Motion. All
expenditures  by BroadSpring on behalf of  RingtoneChannel  during the period in
which  it was a  subsidiary  of  BroadSpring  were  recorded  in the  historical
operating  results of  RingtoneChannel  and thus were  included in the financial
statements  of the combined New  Motion-RingtoneChannel  entity.  The assets and
liabilities of  RingtoneChannel  were recorded at their historical cost basis at
that time of the transition  and not marked to fair value by either  BroadSpring
or New Motion. In 2004,  RingtoneChannel began to sell ringtones internationally
and then  launched  its  first  ringtone  subscription  service  in the U.S.  in
February  2005.  In August 2005, we launched our first  successful  text message
campaign  incorporating  music  trivia.  In  March of 2006,  we  partnered  with
GoldPocket Wireless, a leading provider of mobile technology solutions for media
and entertainment  companies,  to enhance the proficiency and performance of our
mobile service offering.

THE WIRELESS ENTERTAINMENT MARKET

         The wireless  entertainment market has emerged as a result of the rapid
growth and significant  technological advancement in the wireless communications
industry.  Wireless  carriers  are  delivering  new handsets to new and existing
subscribers which have the capability to download rich media content. Due to the
increase in advanced  mobile phones with the  capabilities  to handle rich media
downloads,  the potential market for mobile entertainment services will increase
significantly in the coming years.

         We believe  that growth in the wireless  entertainment  market has been
positively  influenced  by a number of key  factors and trends that we expect to
continue in the near future, including:


         o        GROWTH IN WIRELESS SUBSCRIBERS.  In 2005, the number of global
                  wireless  subscribers  surpassed  two billion  and  subscriber
                  growth is expected  to  continue  as  wireless  communications
                  increase  in  emerging  markets,  including  China and  India.
                  According  to  ITFacts  Mobile  Usage,  the  number  of global
                  wireless subscribers will grow from approximately 2 billion in
                  2005 to 2.3  billion  in 2009.  According  to  CITA,  the U.S.
                  wireless  subscriber base currently  exceeds 219 million.  New
                  handset  delivery  and  adoption  is  expected  to continue to
                  accelerate in the U.S.  market as current and new  subscribers
                  embrace newer mobile technology and media.


         o        DEPLOYMENT OF ADVANCED  WIRELESS  NETWORKS.  Wireless carriers
                  are deploying high-speed,  next-generation digital networks to
                  enhance wireless voice and data  transmission.  These advanced
                  networks  have  enabled the  provisioning  and billing of data
                  applications  and  have  increased  the  ability  of  wireless
                  subscribers  to  quickly   download  large  amounts  of  data,
                  including games, music and video.

         o        AVAILABILITY  OF MOBILE PHONES WITH  MULTIMEDIA  CAPABILITIES.
                  Annual  mobile  phone  sales  are  expected  to grow  from 520
                  million  units  in 2003 to over  one  billion  units  in 2009,
                  according  to Gartner Inc. In recent  years,  the mobile phone


                                       43
<PAGE>


                  has evolved  from a voice-only  device to a personal  data and
                  voice  communications  device that enables  access to wireless
                  content and data  services.  Mobile  phone  manufacturers  are
                  competing  for consumers by designing  next-generation  mobile
                  phones  with  enhanced  features  including  built-in  digital
                  cameras,   color   screens,   music  and  data   connectivity.
                  Manufacturers are also embedding application environments such
                  as  BREW,  Java and  Symbian  into  mobile  phones  to  enable
                  multimedia  applications,  including  gaming.  We believe  the
                  availability of these next-generation mobile phones is driving
                  demand  for   wireless   entertainment   applications   taking
                  advantage of these advanced multimedia capabilities.

         o        OFF  PORTAL  DIRECT  TO  CONSUMER  MARKET  DYNAMICS.  Prior to
                  November 2004, all U.S. carriers  maintained a "walled garden"
                  approach  that  prevented  any direct to  consumer  off portal
                  sites  from  succeeding,  while in Europe  and  Asia,  a large
                  percentage  of mobile  entertainment  revenue was generated by
                  off deck  direct  to  consumer  portals.  Witnessing  the huge
                  success  of  direct  to  consumer  portals  in those  regions,
                  specific  U.S.  carriers  opened their walled  gardens in late
                  2004 and early  2005.  By  allowing  premium  SMS  billing  to
                  direct-to-consumer  off portal sites, the carriers opened up a
                  potential multi-billion dollar industry opportunity.


         o        DEMAND FOR WIRELESS ENTERTAINMENT. Wireless carriers and other
                  off-deck  content  providers  are  increasingly  launching and
                  promoting wireless entertainment applications to differentiate
                  their  services and  increase  average  revenue per user.  The
                  delivery of games,  ringtones,  images and other entertainment
                  content to subscribers  enables wireless  carriers to leverage
                  both the increasing  installed base of next-generation  mobile
                  phones  and  their  investment  in   high-bandwidth   wireless
                  networks.  Consumers are  downloading  and paying for wireless
                  entertainment  content  offered by the  carriers  and off-deck
                  providers.   According  to  Juniper  Research,   total  mobile
                  entertainment  revenue  in North  America  will grow from $1.9
                  billion  in 2005 to  $11.3  billion  in 2009,  representing  a
                  compound annual growth rate of 56%.


         o        GROWTH IN OUR CORE MARKET - NORTH  AMERICA.  According to IDC,
                  the  wireless  messaging  market is forecast to grow from 54.6
                  billion messages in 2004 to 387.9 billion  messages  exchanged
                  in 2009, and Juniper  Research expects the North American user
                  base to increase  steadily  with a  compounded  growth rate of
                  around 28%, which is roughly twice that of Europe. Even though
                  Asia and Europe are expected to remain the largest  market for
                  mobile entertainment, the North American market will represent
                  the highest growth  potential.  According to Juniper Research,
                  North  America  will  represent  a total of 12% of the  mobile
                  entertainment industry in 2006 and growing to 19% in 2009.

WIRELESS ENTERTAINMENT PUBLISHER CHALLENGES

         We  believe  the  major  challenges  faced  by  wireless  entertainment
publishers, like us, include:

         o        DEPENDENCE  ON  WIRELESS  CARRIERS.   Wireless   entertainment
                  publishers  are highly  reliant on wireless  carriers  for the
                  successful delivery,  billing and revenue collection for their
                  products and services.  Many factors outside our control could
                  impair our ability to deliver our  applications  and  services
                  through wireless carriers. Wireless carriers heavily influence
                  and  control  our  ability  to create,  promote  and price our
                  products and  services to  consumers.  In  addition,  wireless
                  carriers  directly  determine  the amount of revenue share and
                  subsequent   margin  for  alternative   retail  price  points.
                  Cultivating  strong  relationships  with wireless  carriers is
                  critical to the success of a publisher's business.


                                       44
<PAGE>


         o        DEPENDENCE ON AGGREGATORS.  Wireless  entertainment  companies
                  are  frequently  reliant  on  third-party  aggregators  (i.e.,
                  billing service  providers) to successfully  report,  bill and
                  collect revenue for their products and services.

         o        NEED TO CREATE  COMPELLING  CONTENT.  Customers  are demanding
                  increasingly   sophisticated   and  compelling   applications.
                  Publishers must be able to develop or license content that can
                  satisfy  ever-changing  customer  needs. To meet these demands
                  for new and  compelling  content,  publishers  must license or
                  acquire externally developed  applications,  including brands,
                  or if they have the  necessary  resources,  invest in research
                  and  development  in order to enhance their current  offerings
                  and internally develop new applications.

         o        RAPIDLY EVOLVING MARKET. The wireless  entertainment market is
                  evolving  rapidly and publishers  must have the management and
                  technical  expertise to respond  adequately to the  increasing
                  technological  sophistication  and complexity of mobile phones
                  and wireless networks. To succeed, publishers must possess not
                  only  technological  skills  but also the  ability  to  manage
                  large, technically complex application development, deployment
                  and distribution efforts.

         o        INTENSE  COMPETITION.  It is critical to a publisher's ability
                  to effectively  compete in the wireless  entertainment  market
                  that  it  establishes  efficient  media  buying  capabilities,
                  adequate  working  capital  and  differentiated   applications
                  targeted at unique market segments.

         o        SALES,  MARKETING  AND  SUPPORT  REQUIREMENTS.  The  size  and
                  complexity  of  the  global  wireless   entertainment   market
                  requires    publishers   to   have   sophisticated    business
                  development,  marketing and customer support organizations. To
                  succeed in this market,  publishers  must develop and maintain
                  strong  relationships with wireless carriers.  The publisher's
                  business   development  and  marketing  teams  must  have  the
                  resources to track and understand  customers and  competitors,
                  and  successfully  reach a large  customer base while ensuring
                  the cost per acquisition is within an efficient price range to
                  ensure profitability.  In addition, off deck marketers such as
                  us will continue to assume the majority share of the marketing
                  cost of wireless entertainment  applications to consumers.

OUR COMPETITIVE STRENGTHS

         We believe that our competitive strengths include:


         o        IN DEPTH KNOWLEDGE OF ACQUIRING CUSTOMERS  EFFECTIVELY ONLINE.
                  Our primary medium for acquiring customers is online. Over the
                  past two  years,  we have  continued  to  effectively  acquire
                  customers  online at what we believe is a relatively  low cost
                  per acquisition.  During the year ended December 31, 2006, our
                  average monthly billable customer base increased 103% compared
                  to our average monthly billable  customer base during the year
                  ended December 31, 2005,  primarily as a result of our on-line
                  activities. During the first quarter of 2007, we experienced a
                  59% increase in our average  monthly  billable  customer base,
                  compared to the first quarter of 2006, also as a result of our
                  on-line marketing efforts.  We have continued to maintain what
                  we believe is a  relatively  low cost per  acquisition  in the
                  face of  growing  competition  within our  industry  and other
                  online media advertisers.


         o        EARLY  STAGE  INNOVATIVE   MOBILE  CONTENT.   We  develop  our
                  applications  with an emphasis  on  innovation,  quality,  and
                  speed to market.  We were one of the first  companies to bring
                  mobile trivia applications to U.S. consumers.


                                       45
<PAGE>



         o        DIVERSE  PORTFOLIO  OF ORIGINAL AND  LICENSED  PROPERTIES.  We
                  initially  focused on  licensing  lower cost  content  for our
                  subscription  services.  In  anticipation  of consumer  tastes
                  shifting towards higher quality mobile content, we initiated a
                  new  licensing  strategy to acquire  branded  content.  Recent
                  signings   include    Sigalert    realtime   traffic   alerts,
                  TheSportsPage  real time sports and odds  information  service
                  and RestaurantRow restaurant information service. We publish a
                  diverse  portfolio  of  wireless  entertainment  applications.
                  During the period from our  inception  through March 31, 2007,
                  we   derived   the   majority   of  our   revenues   from  New
                  Motion-branded applications,  including MobileSidewalk's Music
                  Trivia  and  Scavenger  Hunt.  Our  licensors   include  Music
                  Publishers, RestaurantRow, Sigalert and TheSportsPage.


         o        EXISTING SUBSCRIBER BASE. We believe that the time, complexity
                  and working  capital  necessary to build a broad  distribution
                  network  and large  subscriber  base,  such as ours,  forms an
                  entry barrier for prospective competitors.

         o        EXPERIENCED  MANAGEMENT  TEAM. Our senior  management team and
                  advisors  bring  deep  digital  experience  and a  history  of
                  substantial   success  in  accelerating   electronic   content
                  businesses.  This broad expertise allows us to design, develop
                  and deliver  increasingly  advanced  applications that satisfy
                  the  demands  of all  the  key  constituents  in  our  market,
                  including   wireless   carriers,   brand   licensors  and  our
                  customers.  We believe our  management  team's  expertise  and
                  continuity  is a  significant  competitive  advantage  in  the
                  increasingly complex wireless entertainment publishing market.

OUR STRATEGY

         Our business strategy involves increasing our profitability by offering
a large  number of diverse,  segmented  products  through a unique  distribution
network in the most cost  effective  manner  possible.  To achieve this goal, we
plan to:

         PUBLISH HIGH-QUALITY ENTERTAINMENT APPLICATIONS

         We believe  that  publishing  a  diversified  portfolio  of the highest
quality, most innovative applications is critical to our business. We intend to:

         DEVELOP INNOVATIVE APPLICATIONS. We will continue to devote significant
resources to the development of high-quality,  innovative products, services and
Internet  storefronts.  The U.S. consumer's propensity to use the fixed internet
to acquire,  redeem and use mobile  entertainment  products  is unique.  In this
regard, we aim to provide  complementary  services between these two high-growth
media channels.

         EMPHASIZE  NEW MOTION  BRANDED  APPLICATIONS.  We plan to emphasize the
creation of New Motion branded  applications  which  typically  generate  higher
margins for us. We intend to develop  sequels to our more  successful New Motion
applications,  such as Music  Trivia.  These  types  of  products  and  services
differentiate us from our competitors,  particularly those acting as aggregators
or distributors, who generally do not own or control intellectual properties.

         LICENSE  WORLD CLASS BRANDS.  We will  continue to license  well-known,
third-party  brands and  collaborate  with major media  companies,  professional
sports leagues and other brand holders to introduce third-party branded products
and services.  We believe that familiar  titles  facilitate  the adoption of our
products and services by wireless subscribers and wireless carriers,  and create
strong marketing opportunities.


                                       46
<PAGE>


         ENHANCE OUR DISTRIBUTION CHANNEL

         Strengthening  and expanding our  distribution  channels is critical to
our business. We will continue to:

         STRENGTHEN OUR WIRELESS  CARRIER  RELATIONSHIPS.  We plan to strengthen
our existing relationships with wireless carriers by continuing to support their
strategic  needs and by launching  new,  high-quality,  innovative  products and
services.  We also  intend  to  build  relationships  with  additional  wireless
carriers to reach a larger  subscriber  base.  Where  appropriate,  we intend to
enter new  markets to  leverage  our  expertise,  brands,  product  and  service
portfolio and technologies.

         EXPAND  CURRENT SALES AND MARKETING  CHANNELS.  We intend to expand our
existing  channels  to market  and sell our  products  and  services  online and
explore alternative  marketing mediums. Our own Internet storefronts also enable
us to market and sell our applications directly to wireless customers.

         BUILD WHOLLY-OWNED DISTRIBUTION CHANNELS.  Leveraging our unique online
affiliate  management  system,  we  intend to drive a  portion  of our  consumer
traffic  directly to our products and  services  without the use of  third-party
media outlets and media publishers.

         BUILD NEW  MOTION  BRANDS.  We intend to build the family of New Motion
properties  into widely  recognized  brands  within the  wireless  entertainment
market. We believe that the decisions of wireless carriers and our customers are
influenced  by brand  recognition.  We intend to  continue  building  our brands
through product and service quality,  customer and carrier support,  advertising
campaigns, public relations and other marketing efforts.

         GAIN SCALE THROUGH SELECT ACQUISITIONS

         We  believe  there  may be  future  opportunities  to  acquire  content
developers  and  publishers  in  the  mobile   entertainment   or  complementary
industries  and we  intend,  where  appropriate,  to  take  advantage  of  these
opportunities.

DISTRIBUTION CHANNELS

         We currently distribute the majority of our entertainment  products and
services directly to consumers,  or "off-deck,"  primarily through the Internet,
which is  independent  of the  carriers.  We bill and collect  revenues  for our
products and services through  third-party  aggregators who are connected to the
majority of U.S.  wireless  carriers  and their  customers.  We have  agreements
through  multiple  aggregators  who have  direct  access  to U.S.  carriers  for
billing.  Our  customers  download  products or  subscribe  to services on their
mobile phones and are billed monthly through their wireless carrier. Through our
aggregators,  the carrier  agreements  establish  the fees to be retained by the
carrier for access and billing our products and services to their customer base.
Our aggregator agreements are not exclusive and generally have a limited term of
one or two years, with evergreen or automatic renewal provisions upon expiration
of the initial term.  The  agreements  generally do not obligate the carriers or
aggregators  to  market or  distribute  any of our  products  and  services.  In
addition, any party can terminate these agreements early and, in some instances,
without cause.

         For the year ended  December 31, 2006, we received  indirectly  through
our aggregators  approximately 30% of our revenue from subscribers of Cingular /
AT&T and 25% of our revenue from  subscribers  of Sprint.  In 2005,  we received
approximately  52% of our revenue from subscribers of Cingular / AT&T and 16% of
our revenue from subscribers of Verizon.


                                       47
<PAGE>


         For the fiscal year ended  December 31, 2006,  we billed  approximately
60% of our revenue through aggregation services provided by Goldpocket Wireless,
Inc.  ("Goldpocket  Wireless")  and 34% of our revenue  through  our  aggregator
Mobile Messenger Pty Ltd ("Mobile Messenger").  In 2005, we billed approximately
78% of our revenue from a partnership  with Buongiorno USA, Inc.  ("Buongiorno")
and approximately 22% of our revenue through our aggregator Mobile Messenger. In
the first quarter of 2007, we billed  approximately  85% of our revenue  through
Goldpocket Wireless and approximately 15% through Mobile Messenger.


         Pursuant to the  Company's  Master  Agreement for Products and Services
dated  December  29,  2005,  between  New Motion  Mobile,  Inc.  and  Goldpocket
Wireless,  Inc.,  Goldpocket  provides to New Motion  products and services that
create,  manage,  and deliver  digital media content to subscribers of all major
U.S. wireless carriers. Under the terms of the agreement, New Motion is required
to pay Goldpocket an annual license fee, payable quarterly, and 5% to 10% of the
fees received from end user  payments,  net of carrier fees, in accordance  with
the agreement's  rate schedule.  Unless  materially  breached,  the agreement is
effective  until either party provides three weeks written notice of termination
to the other party.


SALES AND MARKETING

         Our sales and marketing organization works closely with our development
and media teams to ensure the best  possible  product  and  service  offering is
deployed. Their primary focus is creating specific media campaigns to market and
sell our offering  through our network of websites and search  engine  channels.
Further,  the  team is  focused  on  creating  viable  alternative  distribution
channels for our products and  services.  Our sales and  marketing  organization
works closely with our development, creative and licensing teams to identify and
evaluate wireless distribution opportunities for new products and services.

TECHNOLOGY

         We have developed a tool which allows us to monitor and analyze in real
time our marketing costs associated with any advertising  campaign.  This allows
us to be more  efficient and effective in our media buys. We believe we have one
of the lowest cost per  acquisition  rates in the  industry in large part due to
this software.  The software measures, in real time, our effective buys on a per
campaign  basis  which  allows us to adjust our  marketing  efforts  immediately
towards the most effective campaigns and mediums.

COMPETITION

         The  development,  distribution  and  sale  of  wireless  entertainment
applications is a highly competitive business. We compete primarily on the basis
of marketing  acquisition  costs,  brand strength,  and carrier and distribution
breadth. We also compete for experienced and talented individuals to support our
growth.

         The wireless  entertainment  applications  market is highly competitive
and characterized by frequent product introductions, evolving wireless platforms
and new  technologies.  As demand for  applications  continues to  increase,  we
expect new competitors to enter the market and existing  competitors to allocate
more  resources  to develop  and  market  applications.  As a result,  we expect
competition in the wireless entertainment market to intensify.

         The current and  potential  competition  in the wireless  entertainment
applications  market  includes  major media  companies,  traditional  video game
publishing companies,  wireless carriers,  wireless software providers and other


                                       48
<PAGE>


pure-play wireless entertainment  companies.  Larger, more established companies
are increasingly  focused on developing and distributing  wireless  applications
that directly compete with us.


         Currently,  we consider  our primary  competitors  in the U.S. off deck
mobile market to be Jamster,  Buongiorno / Blinko,  Flycell,  Thumbplay and Dada
Mobile.  We believe that our  extensive  experience in Internet  marketing,  our
existing subscriber base, our strong  relationships with wireless carriers,  our
range of products and services and what we believe is a relatively  low cost per
acquisition  of new customers  enables us to compete  effectively  in the mobile
entertainment market.


INTELLECTUAL PROPERTY

         Other than  proprietary  software  code, we do not possess any material
intellectual property.  During the course of operations, we have filed trademark
applications for the following marks:  Life For Your Phone,  MobileSidewalk  and
the RingtoneChannel.

GOVERNMENT REGULATION

         Our  products  and services  are  accessible  on mobile  phones and the
Internet and as a result,  we are exposed to legal and  regulatory  developments
affecting either Internet or telecommunications  services in general. Due to the
increasing  popularity and use of the Internet, a number of laws and regulations
have been  adopted at the  international,  federal,  state and local levels with
respect  to the  Internet.  Many of these  laws cover  issues  such as  privacy,
freedom  of  expression,   pricing,  online  products  and  services,  taxation,
advertising,  intellectual property, information security and the convergence of
traditional telecommunications services with Internet communications.  Moreover,
a number of laws and  regulations  have been  proposed and are  currently  being
considered by federal,  state,  local and foreign  legislatures  with respect to
these issues. The nature of any new laws and regulations and the manner in which
existing and new laws and  regulations may be interpreted and enforced cannot be
fully determined.

         There  is  substantial  uncertainty  as to  the  applicability  to  the
Internet  of  existing  laws  governing  issues  such  as  property   ownership,
copyrights  and  other  intellectual  property  issues,  taxation,   defamation,
obscenity and privacy. The vast majority of these laws were adopted prior to the
advent of the Internet and, as a result,  did not  contemplate the unique issues
of the  Internet.  In addition,  there have been various  regulations  and court
cases relating to companies' online business activities,  including in the areas
of data  protection,  trademark,  copyright,  fraud,  indecency,  obscenity  and
defamation.  Future  developments  in the law might  decrease  the growth of the
Internet,   impose  taxes  or  other  costly  technical   requirements,   create
uncertainty  in the market or in some other manner have an adverse effect on the
Internet.  These developments  could, in turn, have a material adverse effect on
our business, prospects, financial condition and results of operations.

         We provide many of our our services through carriers'  networks.  These
networks are subject to regulation by the U.S. Federal Communications Commission
("FCC"), state public utility commissions and foreign governmental  authorities.
However,  in our  capacity  of  providing  services  via  the  Internet,  we are
generally not subject to direct regulation by the FCC or any other  governmental
agency in the U.S., other than regulations  applicable to businesses  generally.
Nevertheless,  as Internet services and telecommunications  services converge or
the services we offer expand,  there may be increased regulation of our business
including  regulation by agencies having  jurisdiction  over  telecommunications
services.

         Future developments in laws that govern online activities (for example,
new laws that impose  Internet taxes or require costly  technical  requirements)
might inhibit the growth of the Internet and create  uncertainty  in the market,
or in  some  other  manner  have  an  adverse  effect  on  the  Internet.  These
developments could, in turn,  increasingly have a material adverse effect on our
business, prospects, financial condition and results of operations.


                                       49
<PAGE>


EMPLOYEES

         As of May 10, 2007, we had 38 employees and  full-time  consultants  in
the United  States.  We have never had a work stoppage and none of our employees
is  represented  by a labor  organization  or under  any  collective  bargaining
arrangements. We consider our employee relations to be good.

DESCRIPTION OF PROPERTY


         Our corporate  headquarters is located at 42 Corporate Park, Suite 250,
Irvine, California 92606, where we lease approximately 5,176 square feet under a
lease that expires in September 2008. We also lease  approximately  2,190 square
feet  located  in Suite  100 of the same  building  where we have our  corporate
headquarters under a sublease that expires in August 2008. In addition, we lease
approximately 500 square feet in Los Angeles under a short term lease agreement.
We  believe  our space is  adequate  for our  current  needs  and that  suitable
additional or substitute  space will be available to accommodate the foreseeable
expansion  of our  operations.  Our  telephone  number  is (949)  777-3700.  Our
corporate website address is www.newmotioninc.com.


LEGAL PROCEEDINGS

         On August 24,  2006,  New Motion and Burton Katz,  our Chief  Executive
Officer, filed an action against Buongiorno in the Superior Court of California,
County   of   Orange,   seeking   a   declaration   that  the   non-competition,
non-solicitation  and  non-interference  provisions of the Employment  Agreement
dated  April  11,  2005,  between  Burton  Katz  and  Buongiorno,  are  void and
unenforceable  under the California  Business and  Professions  Code. The action
also sought an order permanently  enjoining  Buongiorno from enforcing the above
referenced  provisions,  reasonable  attorneys' fees, and other costs related to
the action. Subsequent to filing, Buongiorno threatened to withhold payments due
to New Motion for previous sales totaling approximately $340,000.


         On October 24, 2006, New Motion filed a Demand for Arbitration with the
American  Arbitration  Association against Buongiorno,  pursuant to the terms of
the  Marketing  Agreement  dated  January  10,  2006,  between  New  Motion  and
Buongiorno, whereby New Motion agreed to market certain of Buongiorno's services
and the parties agreed to share revenue generated from such services. New Motion
sought payment of revenues in excess of $340,000 and  attorneys'  fees and other
costs related to the action.  Subsequently,  New Motion settled the dispute with
Buongiorno  for  $384,000,  which was received in the first  quarter of 2007. In
February  2007,  New Motion filed a request for dismissal of the action with the
Superior  Court of  California  and also filed a request  for  dismissal  of the
arbitration with the American Arbitration Association.  New Motion is not liable
for any additional costs related to this dispute.


         In addition to the  foregoing,  from time to time we may be involved in
other  litigation  relating  to  claims  of  alleged  infringement,   misuse  or
misappropriation  of intellectual  property rights of third parties. We may also
be subject  to claims  arising  out of our  operations  in the normal  course of
business.  As of this date, we are not a party to any such other litigation that
would have a material adverse effect on us.


                                       50
<PAGE>


                                   MANAGEMENT

EXECUTIVE OFFICERS AND DIRECTORS


         The  following  table sets forth the name,  age and position of each of
our executive officers and directors as of July 16, 2007.


     NAME                 AGE             POSITION HELD

Burton Katz                35             Chief Executive Officer and Director
Raymond Musci              46             President and Director
Allan Legator              36             Chief Financial Officer and Secretary
Scott Walker               45             Chief Marketing Officer
Drew Larner                42             Director
Robert S. Ellin            42             Director
Barry I Regenstein         50             Director
Jerome Chazen              79             Director


         BURTON KATZ. Mr. Katz became our Chief Executive Officer and a Director
on February 12, 2007. Mr. Katz also serves as the Chief Executive Officer of New
Motion Mobile and has served in such capacity since September 2006. Mr. Katz has
been involved in the mobile industry since its inception.  Since 2001,  Mr. Katz
was  with  Buongiorno  S.p.A.,  where he was  president  of  Buongiorno's  North
American operations and past executive of its U.K. operations.  Mr. Katz oversaw
strategic  planning and implementation of both Buongiorno's B2B business and the
successful U.S. launch of their consumer brand.  Prior to joining  Buongiorno in
2001, Mr. Katz was a principal in  PriceWaterhouseCooper's  E-Business Division,
where he advised global telecom and media clients on pioneering new products and
developing digital distribution  channels.  Mr. Katz holds a masters of business
administration  degree  in  marketing  and  interactive  technologies  from  the
University of Southern California.

         RAYMOND  MUSCI.  Mr.  Musci  became our  President  and a  Director  on
February  12,  2007.  Mr.  Musci also serves as  President  and Chief  Operating
Officer of New Motion Mobile and has served in this capacity  since August 2006.
Mr. Musci was a consultant to New Motion Mobile from January through August 2006
prior to joining the organization.  Mr. Musci brings over 25 years of high tech,
media,  entertainment and consumer product  experience to us. From 1999 to 2006,
Mr. Musci was Chief Executive Officer of Bam! Entertainment,  Inc., a company he
founded in 1999 that published and distributed  movie,  sports and cartoon video
games to a wide range of retailers.  Prior to Bam!, from 1996 to 1999, Mr. Musci
was president and chief  executive  officer of the U.S.  subsidiary of Infograms
Entertainment,  Inc.,  now better  known as Atari,  Inc.  In that  position,  he
oversaw all aspects of the company's  North American unit, was  responsible  for
250 employees,  and grew global  revenues from $60 million to $300 million,  and
U.S. revenues from $80 million to $150 million. Before joining  Infograms/Atari,
Mr.  Musci was  founder,  president  and  chief  executive  officer  of Ocean Of
America, Inc., a publisher and distributor of entertainment software. Founded in
1990, Mr. Musci built the company to annual revenues of $50 million, and sold it
to  Infograms/Atari in 1996. Mr. Musci holds a degree in criminal justice with a
minor in business  administration from Western New Mexico University.  Mr. Musci
is a director of publicly traded Tag-It Pacific, Inc.

         ALLAN  LEGATOR.  Mr.  Legator  became our Chief  Financial  Officer and
Secretary on February 12, 2007. Mr.  Legator also serves as the Chief  Financial
Officer and Secretary of New Motion Mobile and has served in this capacity since
March 2005. After a brief stint as chief financial officer of BroadSpring, Inc.,
he joined  Scott Walker to launch New Motion  Mobile in June 2005.  From 2000 to
2005, Mr. Legator served as director of finance for Sega Japan Gaming  Division,
where he helped to structure the


                                       51
<PAGE>


company's  Las  Vegas  gaming  strategy.  Sega  subsequently  named him chief of
operations for the newly formed Sega Gaming Technologies.  Mr. Legator began his
career in the early 1990s in the biotech area, and then in 1994 began working in
the audit practice of KPMG Peat Marwick,  specializing in the technology sector.
Mr.  Legator  has a BS in  Accounting  from San Diego  State  University  and is
licensed as a CPA in the State of California.

         SCOTT WALKER. Mr. Walker became our Chief Marketing Officer on February
12, 2007.  Mr. Walker is also the Chief  Marketing  Officer of New Motion Mobile
and has been with New Motion Mobile since 2005 when he founded the Company.  Mr.
Walker  has been a leader in new media and  emerging  technologies  for over two
decades.  Prior to becoming  Chief  Executive  Officer of New Motion  Mobile and
MobileSidewalk(TM)  in 2005, from 2004 to 2005, Mr. Walker was with  BroadSpring
Inc., a multi-million dollar new media company,  which he helped form. From 1997
to 2004, Mr. Walker headed up Mindset  Interactive,  Inc.,  known throughout the
industry for its PC planner,  which featured brands such as the N.Y. Yankees and
various Warner Bros. properties.  In 1995, he founded and built one of the first
Internet web hosting companies,  NetPage Communications,  which he sold in 1997.
Mr. Walker founded his first company in 1986 - World Travel, which was valued at
$15 million when sold.

         DREW LARNER.  Mr.  Larner  became a Director of the company on February
12,  2007.  Mr.  Larner is  currently a Managing  Director  at Europlay  Capital
Advisors,  a Los  Angeles-based  merchant bank and advisory firm specializing in
entertainment,  media and technology companies, and has held this position since
May of 2003.  Prior to  Europlay,  Mr.  Larner  spent  over  twelve  years as an
executive  in  the  motion   picture   industry,   most  recently  as  Executive
Vice-President at Spyglass Entertainment Group. In that role, he was involved in
all  operations  of Spyglass with  specific  oversight of business  development,
international  distribution  and business and legal affairs.  Prior to Spyglass,
Mr. Larner spent a total of five years at Morgan Creek Productions  during which
time he headed up the business and legal affairs department and then moved on to
run  Morgan  Creek  International,   the  company's  international  distribution
subsidiary.  Additionally, Mr. Larner spent two years as Vice President/Business
Affairs at Twentieth  Century Fox. Mr. Larner began his career as an attorney in
the Century City office of O'Melveny & Myers. Mr. Larner currently serves on the
Board of  Directors  of  BroadSpring,  Inc.,  an online  search and  advertising
company. Mr. Larner graduated with a B.A. from Wesleyan University,  after which
he earned a J.D. from Columbia Law School.

         ROBERT S. ELLIN. Robert S. Ellin is a Managing Member of Trinad,  which
is a hedge fund dedicated to investing in micro-cap public companies, and served
as our Chief  Executive  Officer and President from October 24, 2006 to February
12, 2007.  Mr. Ellin has served as one of our directors  since October 24, 2006.
Mr. Ellin currently sits on the board of Command  Security  Corporation  (CMMD),
ProLink  Holdings  Corporation  (PLKH),  U.S.  Wireless  Data,  Inc.  (USWI) and
Mediavest, Inc (MVSI). Prior to joining Trinad Capital LP in 2004, Mr. Ellin was
the founder and  President of Atlantis  Equities,  Inc.,  a personal  investment
company.  Founded in 1990, Atlantis has actively managed an investment portfolio
of  small  capitalization  public  company  as well as  select  private  company
investments.  Mr. Ellin  frequently  played an active role in Atlantis  investee
companies  including  Board  representation,   management  selection,  corporate
finance and other advisory services.  Through Atlantis and related companies Mr.
Ellin spearheaded investments into ThQ, Inc. (OTC:THQI), Grand Toys (OTC: GRIN),
Forward  Industries,  Inc. (OTC:  FORD) and completed a leveraged  buyout of S&S
Industries,  Inc. where he also served as President from 1996 to 1998.  Prior to
founding  Atlantis  Equities,  Mr.  Ellin  worked in  Institutional  Sales at LF
Rothschild and prior to that he was the Manager of Retail  Operations at Lombard
Securities. Mr. Ellin received a Bachelor of Arts from Pace University.

         BARRY I.  REGENSTEIN.  Barry I.  Regenstein  is the President and Chief
Financial  Officer of Command Security  Corporation and has served as one of our
directors since October 24, 2006. Trinad is a


                                       52
<PAGE>


significant  shareholder of Command Security  Corporation and Mr. Regenstein has
formerly served as a consultant for Trinad.  Mr. Regenstein has over 28 years of
experience with 23 years of such experience in the aviation  services  industry.
Mr. Regenstein was formerly Senior Vice President and Chief Financial Officer of
Globe  Ground  North  America  (previously  Hudson  General  Corporation),   and
previously served as the Corporation's Controller and as a Vice President. Prior
to  joining  Hudson  General  Corporation  in 1982,  he had been with  Coopers &
Lybrand in Washington,  D.C. since 1978.  Mr.  Regenstein  currently sits of the
boards of GTJ Co., Inc., ProLink  Corporation  (PLKH),  U.S. Wireless Data, Inc.
(USWI)  and  Mediavest,  Inc.  (MVSI).  Mr.  Regenstein  is a  Certified  Public
Accountant  and  received  his  Bachelor  of  Science  in  Accounting  from  the
University of Maryland and an M.S. in Taxation from Long Island University.

         JEROME A. CHAZEN.  Jerome A. Chazen has served as one of our  directors
since April 2005.  Mr. Chazen is also  Chairman of Chazen  Capital  Partners,  a
private  investment  company and has held this  position  since  1996.  Prior to
Chazen  Capital,  Mr. Chazen was one of the four founders of Liz Claiborne Inc.,
where  he is also  Chairman  Emeritus.  Mr.  Chazen  is  also  the  founder  and
Benefactor  of the Jerome A. Chazen  Institute of  International  Business,  the
focal  point of all  international  programs at Columbia  Business  School.  Mr.
Chazen received his Bachelor Degree from the University of Wisconsin and his MBA
from  Columbia  Business  School.  Mr.  Chazen  has been a  director  of Taubman
Centers, Inc. since 1992.


         None of our officers or directors has had any bankruptcy petition filed
by or against  any  business  of which such  officer or  director  was a general
partner or executive  officer either at the time of the bankruptcy or within two
years prior to that time. None of our officers and directors have been convicted
in a  criminal  proceeding  or are  subject  to a pending  criminal  proceeding,
excluding traffic violations or similar misdemeanors, nor have they been a party
to any judicial or administrative  proceeding during the past five years, except
for matters that were dismissed without sanction or settlement, that resulted in
a judgment,  decree or final order  enjoining the person from future  violations
of, or prohibiting activities subject to, federal or state securities laws, or a
finding  of any  violation  of federal or state  securities  laws.  There are no
family relationships among our executive officers and directors.

         SHANE MAIDY.  Shane Maidy became our Senior Vice  President,  Marketing
and Licensing in August 2005.  From 2003 to 2004, he served as Vice President of
National  Sales at  Universal  Music  and  Video  Distribution,  a  division  of
Universal  Music  Group,  where he managed  over $1.2 billion in sales with mass
market retailer clients, including Wal-Mart, Target, Best Buy, Kmart, Amazon and
Costco.  Prior to joining Universal,  from 2001 to 2003, he oversaw the category
sales management team at Brand Sense  Marketing,  a sister company to NASCAR and
was with  Precision  Entertainment  from 1998 to 2001. Mr. Maidy has worked with
numerous entertainment clients,  including MTV, Playboy, ABC, Sony Pictures, Fox
Family Worldwide,  Marvel Entertainment Group,  Precision  Entertainment,  Inc.,
O.S.P.  Publishing Inc., and J. Walter  Thompson.  Mr. Maidy holds a Bachelor of
Arts  degree  in  International   Relations  from  the  University  of  Southern
California,   and  a  Masters  in  Business   Administration   from   Pepperdine
University's Graziadio School of Business and Management.

BOARD COMPOSITION AND COMMITTEES

         Our board of directors currently consists of six members:  Burton Katz,
Raymond Musci,  Drew Larner,  Barry I.  Regenstein,  Robert S. Ellin, and Jerome
Chazen.  Each  director was elected  either at a meeting of  shareholders  or by
written consent of the  shareholders and serves until our next annual meeting or
until his or her successor is duly elected and qualified.

         We  do  not  have  a  separately  designated  audit,   compensation  or
nominating  committee of our board of directors  and the  functions  customarily
delegated to these  committees are performed by our full board of directors.  We
are not a "listed  company"  under SEC rules and are  therefore  not required to
have separate committees comprised of independent  directors.  We have, however,
determined that Drew


                                       53
<PAGE>


Larner,  Barry  Regenstein,  and Jerome Chazen are "independent" as that term is
defined in Section 4200 of the Marketplace Rules as required by the NASDAQ Stock
Market. In addition, our board of directors has determined that Barry Regenstein
is an "audit  committee  financial  expert"  within the meaning of the rules and
regulations of the SEC. The board of directors has  determined  that each of its
members is able to read and understand  fundamental financial statements and has
substantial   business  experience  that  results  in  that  member's  financial
sophistication.  Accordingly,  our board of directors  believes that each of its
members has sufficient  knowledge and experience necessary to fulfill the duties
and obligations that an audit committee would have.

         We intend to establish an audit committee,  compensation committee, and
nominating and corporate governance committee in the near future.


                                       54
<PAGE>


                             EXECUTIVE COMPENSATION

EXECUTIVE OFFICERS

         Prior to the  Closing  of the  Exchange,  MPLC,  Inc.  (now  called New
Motion,  Inc.) had its  fiscal  year end on July 31.  The  following  table sets
forth,  as to  MPLC's  named  executive  officers,  information  concerning  all
compensation  paid to its named executive  officers for services rendered during
its fiscal years ended July 31, 2006, 2005 and 2004. No other executive officers
received  salary and bonus in excess of $100,000 for the fiscal years ended July
31, 2006, 2005 and 2004.

<TABLE>
<CAPTION>
                                                                                    Long Term Compensation
                                                                          -------------------------------------------
                                          Annual Compensation                       Awards                Payouts
                       -------------------------------------------------- ---------------------------- -------------- --------------
        Name                                                  Other        Restricted     Securities
         and                                                  Annual          Stock       Underlying                      All Other
      Principal                                            Compensation     Award(s)       Options/         LTIP        Compensation
      Position          Year     Salary ($)  Bonus ($)         ($)             ($)       SARs (#) (2)    Payouts ($)         ($)
---------------------- -------- ----------- ----------- ----------------- ------------ --------------- -------------- --------------
<S>                     <C>      <C>         <C>               <C>            <C>            <C>            <C>             <C>
Isaac Kier (1)          2006        --          --             --             --             --             --              --
President,              2005        --          --             --             --             --             --              --
Secretary, Treasurer    2004        --          --             --             --             --             --              --
and Director
---------------------- -------- ----------- ----------- ----------------- ------------ --------------- -------------- --------------
David Allen (2)         2006        --          --             --             --             --             --              --
President, CEO, CFO     2005     $160,000    $100,000          --             --             --             --              --
and Secretary           2004     $160,000       --             --             --             --             --              --
---------------------- -------- ----------- ----------- ----------------- ------------ --------------- -------------- --------------
</TABLE>

(1)      Mr. Kier  received no  compensation  for his  services as a director of
         MPLC. Mr. Kier resigned as a director on January 24, 2007.

(2)      Mr. Allen served as MPLC's President,  Chief Executive  Officer,  Chief
         Financial  Officer and  Secretary  and  resigned  from these  positions
         effective April 26, 2005.

         OPTION/SAR  GRANTS IN LAST FISCAL YEAR.  MPLC granted no options during
the fiscal year ended July 31,  2006.  Pursuant to an order from the  Bankruptcy
Court, all outstanding  options were repurchased by MPLC for $0.01 per share and
cancelled.  Accordingly,  MPLC had no options  outstanding as of the fiscal year
ended July 31, 2006.

         AGGREGATED  OPTIONS/SARS  EXERCISED  IN LAST  FISCAL  YEAR  AND  FISCAL
YEAR-END  OPTION/SAR  VALUES. No executive officers exercised options during the
fiscal year ended July 31,  2006.  There were no  outstanding  options as of the
fiscal year ended July 31, 2006.

         EMPLOYMENT  CONTRACTS  WITH  EXECUTIVE  OFFICERS.  MPLC was party to an
employment  agreement  with Mr.  Allen.  Mr. Allen  voluntarily  terminated  his
employment  agreement  on April 26,  2005 and MPLC has no  obligation  remaining
under such agreement.

         DIRECTOR COMPENSATION.  MPLC did not pay any compensation to any of its
directors in fiscal 2006, 2005 or 2004.


                                       55
<PAGE>


NEW MOTION COMPENSATION

EXECUTIVE OFFICERS

         The following summary compensation table sets forth information,  as to
our named executive  officers,  information  concerning all compensation paid to
such named  executive  officers for services  rendered to New Motion (now called
New Motion Mobile) during the fiscal ended December 31, 2006:

<TABLE>
<CAPTION>
                                                                         All
                                                              Option    Other
                                                              Awards    Compen-
Name and Principal Position       Year    Salary($) Bonus($)  ($)(1)    sation($) Total($)
-----------------------------   -------   -------   -------   -------   -------   -------
<S>                                <C>    <C>        <C>       <C>       <C>      <C>
Burton Katz .................      2006    87,151    50,000    32,976      --     170,127
Chief Executive Officer(2)
-----------------------------   -------   -------   -------   -------   -------   -------
Raymond Musci ...............      2006   307,500      --        --        --     307,500
President and Chief
Operating Officer(3)
-----------------------------   -------   -------   -------   -------   -------   -------
Allan Legator ...............      2006   175,833    34,220      --      21,835   231,888
Chief Financial Officer and
Secretary(4)
-----------------------------   -------   -------   -------   -------   -------   -------
Scott Walker ................      2006   213,541   164,408      --      33,839   411,788
Senior Vice President of
Marketing(5)
-----------------------------   -------   -------   -------   -------   -------   -------
Shane Maidy .................      2006   139,607    34,220      --      10,420   184,247
Senior Vice President of
Licensing(6)
-----------------------------   -------   -------   -------   -------   -------   -------
</TABLE>

(1)      Assumptions  relating  to the  estimated  fair  value  of  these  stock
         options, which we are accounting for in accordance with SFAS 123(R) are
         as follows: risk-free interest rate of 5%; expected dividend yield zero
         percent; expected option life of seven years; and current volatility of
         86%. Please see our financial  statements for further discussion of our
         assumptions  relating  to the  estimated  fair  value  of  these  stock
         options.

(2)      Mr.  Katz became New  Motion's  Chief  Executive  Officer on August 28,
         2006. Mr. Katz is subject to an employment agreement the terms of which
         are  described  hereafter.  Mr.  Katz was granted an option to purchase
         250,000  shares  of the  common  stock  of New  Motion  at a per  share
         exercise  price of  $3.40.  Subsequent  to the  Exchange,  this  option
         entitles Mr. Katz to purchase  363,185  shares of our Common Stock at a
         per share exercise price of $2.34.

(3)      Mr. Musci became New Motion's  President and Chief Operating Officer on
         August 3, 2006. The compensation information reported for Mr. Musci was
         all paid to Mr. Musci as a consultant.  Mr. Musci is not an employee of
         New Motion.

(4)      Mr. Legator became New Motion's  Chief  Financial  Officer on March 21,
         2005 and became New Motion's Secretary on January 26, 2007. Mr. Legator
         is subject to an employment  agreement the terms of which are described
         hereafter.

(5)      Mr. Walker served as New Motion's  Chief  Executive  Officer from March
         21, 2005 through August 28, 2006, and has served as New Motion's Senior
         Vice  President of  Marketing  since  August 28,  2006.  Mr.  Walker is
         subject to an  employment  agreement  the terms of which are  described
         hereafter.

(6)      Mr.  Maidy became New  Motion's  Senior Vice  President of Licensing on
         October 1, 2005.  Mr. Maidy is subject to an  employment  agreement the
         terms of which are described hereafter.

NARRATIVE DISCLOSURE TO SUMMARY COMPENSATION TABLE

         We compensate  our executive  officers  through a combination of a base
salary,  a cash bonus,  and options to purchase  shares of our common stock.  In
addition, we provide other perquisites to some of our executive officers,  which
primarily  consist of car  expenses  and  allowances.  The  bonuses  paid to our
executive  officers in 2006 were determined by our Board of Directors,  and were
based on the


                                       56
<PAGE>


performance  of the executive  officer and the company.  We do not have a formal
plan for determining the compensation of our executive officers.  Instead,  each
executive officer negotiates their respective employment agreement with us.

OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END

         The following table presents information  regarding outstanding options
held by our named  executive  officers as of the end of New Motion's fiscal year
ending December 31, 2006. The information  below assumes that New Motion's named
executive  officers  were  entitled  to  purchase  shares of common  stock as of
December 31, 2006,  and  reflects  per share  exercise  prices after taking into
account the Exchange and Reverse Split.

<TABLE>
<CAPTION>

                                                                        EQUITY
                                                                      INCENTIVE
                                                                     PLAN AWARDS:
                                  NUMBER OF         NUMBER OF         NUMBER OF
                                 SECURITIES        SECURITIES        SECURITIES
                                 UNDERLYING        UNDERLYING        UNDERLYING
                                 UNEXERCISED       UNEXERCISED       UNEXERCISED
                                 OPTIONS (#)       OPTIONS (#)        UNEARNED       OPTION EXERCISE        OPTION
NAME                             EXERCISABLE      UNEXERCISABLE      OPTIONS (#)        PRICE ($)      EXPIRATION DATE
----------------------------   ---------------   ---------------   ---------------   ---------------   ---------------
<S>                                    <C>                  <C>            <C>                  <C>           <C>
Burton Katz(1) .............              --                --             363,185              2.34            9/1/16
Raymond Musci ..............              --                --                --                --                --
Allan Legator(2) ...........           145,274              --             145,274              0.48          11/15/15
Scott Walker(3) ............           290,548              --             290,548              0.53          11/15/10
Shane Maidy(4) .............            38,740              --              48,425              0.48          11/15/15
</TABLE>

(1)      On August 3, 2006,  Mr. Katz was granted an option to purchase  250,000
         shares of the common stock of New Motion at a per share  exercise price
         of $3.40.  Subsequent to the Exchange, this option entitles Mr. Katz to
         purchase  363,185  shares of common stock at a per share exercise price
         of $2.34. This option vests as follows:  33.3% of the shares subject to
         the option  vests on August 1,  2007,  and the  remaining  66.7% of the
         shares  subject  to the  option  vest  monthly  over the next 24 months
         thereafter.

(2)      On June 1, 2005, Mr. Legator was granted an option to purchase  200,000
         shares of the common stock of New Motion at a per share  exercise price
         of $0.70.  Subsequent to the Exchange, this option entitles Mr. Legator
         to  purchase  290,548  shares of common  stock at a per share  exercise
         price of $0.48.  This  option  vests as  follows:  33.3% of the  shares
         subject to the option vested on June 1, 2006,  and the remaining  66.7%
         of the  shares  subject  to the option  vest  monthly  over the next 24
         months thereafter.

(3)      On June 1, 2005,  Mr. Walker was granted an option to purchase  400,000
         shares of the common stock of New Motion at a per share  exercise price
         of $0.77.  Subsequent to the Exchange,  this option entitled Mr. Walker
         to  purchase  581,096  shares of common  stock at a per share  exercise
         price of $0.53.  This option was cancelled on March 8, 2007 and, on the
         same date,  Mr. Walker was granted an option to purchase  37,500 shares
         of common stock on a  post-Reverse  Split basis at an exercise price of
         $6.60 per share.  Thirty  three and  one-third  percent  (33.3%) of the
         shares subject to the option vest on the first anniversary of the grant
         date  (March 8, 2008),  and the  remaining  sixty six and  seven-tenths
         percent  (66.7%) of the shares  subject to the option  vest  monthly in
         equal installments over the next twenty four (24) months thereafter.

(4)      On August 1, 2005,  Mr. Maidy was granted an option to purchase  60,000
         shares of the common stock of New Motion at a per share  exercise price
         of $0.70. Subsequent to the Exchange, this option entitles Mr. Maidy to
         purchase 87,165 shares of common stock at a per share exercise price of
         $0.48. This option vests as follows: 33.3%


                                       57
<PAGE>


         of the shares  subject to the option vested on August 1, 2006,  and the
         remaining  66.7% of the shares  subject to the option vest monthly over
         the next 24 months thereafter.

EMPLOYMENT CONTRACTS

         We are subject to employment or consulting  contracts with Burton Katz,
Raymond Musci, Allan Legator,  Shane Maidy and Scott Walker. All agreements with
our new named  executive  officers  that  provide  for  payments  to such  named
executive  officers  at,  following  or  in  connection  with  the  resignation,
retirement or other termination of such named executive officers, or a change in
control  of our  company  or a  change  in the  responsibilities  of such  named
executive  officers  following  a  change  in  control  are  set  forth  in  the
description of the employment agreements below.

         BURTON KATZ


         Burton Katz is party to an Employment  Agreement  dated August 28, 2006
with New Motion. Mr. Katz's Employment Agreement has a term of three years which
term may be extended through December 31, 2009. Mr. Katz's Employment  Agreement
provides for an annual base salary of $300,000 with a guaranteed  increase of at
least 5% after each 12-month  period  during the term,  and also provides for an
advance of $30,000 for relocation  expenses which amount (or a portion  thereof)
must be repaid by Mr. Katz in the event that Mr.  Katz does not remain  employed
with us through the entire  initial  term of the  Employment  Agreement  and all
amounts owed to Mr. Katz upon his  cessation of service do not exceed the amount
of the advance. Mr. Katz's Employment Agreement also provides that Mr. Katz will
be  eligible  for a bonus of up to 30% (but no less than  $50,000) of the amount
set  aside by New  Motion,  based on its  earnings  before  interest  and  taxes
("EBIT"),  for payment to  executives  as  determined by the Board of Directors.
This management  incentive program fund is based upon New Motion's EBIT for each
fiscal year.  Mr.  Katz's EBIT bonus goal is 5% of New Motion's  annual EBIT for
2007 and 2008.  Mr. Katz is also  entitled to receive an allowance of $1,000 per
month for costs associated with the lease or purchase, maintenance and insurance
of an  automobile,  and an  additional  allowance  of $300 per  month  for costs
associated with the use of cellular equipment and mobile  communication  service
or  subscription  fees.  Upon the  termination of Mr. Katz'  employment with New
Motion for good  reason or without  cause,  Mr.  Katz is entitled to receive the
base salary  that would have been paid to Mr. Katz from the date of  termination
of his service  through the  expiration of his Employment  Agreement,  continued
healthcare  coverage for the same period,  and a pro-rated  portion of any bonus
that  would have been  earned by Mr.  Katz  during the fiscal  year in which his
employment  terminated.  Mr.  Katz  has  agreed  not  to  solicit  New  Motion's
customers,  suppliers,  employees or licensors for a period  terminating  on the
earlier of two years  after the  termination  of Mr.  Katz  employment  with New
Motion or June 30, 2011. Mr. Katz's  Employment  Agreement also provides for the
arbitration of disputes.


         RAYMOND MUSCI

         Raymond Musci is not an employee of New Motion. Mr. Musci is party to a
Contractor  Agreement dated January 11, 2006 with New Motion.  While Mr. Musci's
Contractor  Agreement  terminated on December 11, 2006, New Motion and Mr. Musci
continue to view the Contractor Agreement as the document governing the parties'
relationship. Under the terms of the Contractor Agreement, Mr. Musci is entitled
to receive a fee of $30,000 per month for services rendered under the Contractor
Agreement.

         ALLAN LEGATOR

         Allan Legator is party to an Employment Agreement dated October 1, 2005
with New Motion. Mr. Legator's  Employment Agreement terminates on June 1, 2008.
In the current year, Mr. Legator's base salary is $185,000,  which will increase
to $205,000 on June 1, 2007. Mr.  Legator's  Employment  Agreement also provides
that Mr.  Legator  will be eligible to receive an annual bonus of up to $120,000
based on an accrual of 1% of each calendar  month's net profits as determined in
accordance with


                                       58
<PAGE>


generally  accepted  accounting  principals.  Mr.  Legator is also  entitled  to
reimbursement  for costs associated with the lease or purchase,  maintenance and
insurance  of  an  automobile  in  an  amount  of  up to  $800  per  month,  and
reimbursement  of an  additional  amount  of up to  $300  per  month  for  costs
associated with the use of cellular equipment and mobile  communication  service
or subscription fees. Upon the termination of Mr. Legator's  employment with New
Motion without cause, Mr. Legator is entitled to receive the base salary and the
bonus that would have been paid to Mr.  Legator from the date of  termination of
his  service  through  the  expiration  of the  initial  term of his  Employment
Agreement.   After  the  expiration  of  his  Employment  Agreement,   upon  the
termination of Mr.  Legator's  employment  with New Motion  without  cause,  Mr.
Legator is entitled to receive one  month's pay at Mr.  Legator's  then  current
base  salary.  Mr.  Legator's   Employment   Agreement  also  provides  for  the
arbitration of disputes.

         SHANE MAIDY

         Shane Maidy is party to an Employment  Agreement  dated October 1, 2005
with New Motion. Mr. Maidy's Employment Agreement terminates on August 25, 2007.
In the current year, Mr. Maidy's base salary is $160,000. Mr. Maidy's Employment
Agreement  also  provides  that Mr.  Maidy will be eligible to receive an annual
bonus of up to $120,000  based on an accrual of 1% of each calendar  month's net
profits  as  determined  in  accordance  with  generally   accepted   accounting
principals.  Mr.  Maidy is also  eligible  to receive a bonus equal to 1% of the
monthly  net  profits of New  Motion's  licensing  division.  Mr.  Maidy is also
entitled  to  receive  commissions  according  to the terms set forth  under his
Employment  Agreement.  Pursuant to the terms of his Employment  Agreement,  Mr.
Maidy is  entitled  to  reimbursement  for  costs  associated  with the lease or
purchase,  maintenance and insurance of an automobile in an amount of up to $800
per month, and reimbursement of an additional amount of up to $300 per month for
costs  associated  with the use of cellular  equipment and mobile  communication
service or subscription  fees.  Upon the  termination of Mr. Maidy's  employment
with New Motion without cause, Mr. Maidy is entitled to receive the base salary,
bonus and  commissions  that would have been paid to Mr.  Maidy from the date of
termination  of his service  through the  expiration  of the initial term of his
Employment Agreement. After the expiration of his Employment Agreement, upon the
termination of Mr. Maidy's  employment with New Motion without cause,  Mr. Maidy
is entitled to receive one month's pay at Mr.  Maidy's then current base salary.
Mr. Maidy's Employment Agreement also provides for the arbitration of disputes.

         SCOTT WALKER

         Scott Walker is party to an  Employment  Agreement  dated March 8, 2007
with New Motion. Mr. Walker's Employment  Agreement  terminates on June 1, 2008.
In the current year, Mr. Walker base salary is $225,000,  which will increase to
$250,000 on June 1, 2007. Mr. Walker's  Employment  Agreement also provides that
Mr. Walker will be eligible to participate in the Company's Management Incentive
Program, pursuant to which the Company will set aside in a fund each fiscal year
for payment to Mr.  Walker and other  members of management an amount based upon
the Company's  EBIT for such fiscal year. The portion of the fund payable to Mr.
Walker will be  determined in the sole  discretion  of the Board.  Mr. Walker is
also  entitled to receive an option to purchase  37,500  shares of the Company's
common stock at an exercise  price per share of $6.60,  however,  all options to
purchase equity securities of New Motion,  Inc. which were previously granted to
Mr. Walker were cancelled pursuant to the terms of the Employment Agreement. Mr.
Walker is also entitled to reimbursement  for costs associated with the lease or
purchase,  maintenance  and  insurance  of an  automobile  in an amount of up to
$1,200 per month, and  reimbursement  of an additional  amount of up to $300 per
month  for  costs   associated  with  use  of  cellular   equipment  and  mobile
communication service or subscription fees. Upon the termination of Mr. Walker's
employment with New Motion without cause,  Mr.


                                       59
<PAGE>


Walker is entitled to receive the base salary and the bonus that would have been
paid to Mr.  Walker  from the date of  termination  of his  service  through the
expiration of the initial term of his Employment Agreement. After the expiration
of his Employment  Agreement,  upon the termination of Mr.  Walker's  employment
with New Motion without cause, Mr. Walker is entitled to receive one month's pay
at Mr. Walker's then current base salary. Mr. Walker's Employment Agreement also
provides for the arbitration of disputes.  Mr. Walker is also party to a lock-up
agreement with the Company  whereby he agrees not to sell or otherwise  transfer
any shares of common stock which he owns or later acquires until March 8, 2009.

DIRECTOR COMPENSATION

         Historically,  our non-employee  directors did not receive compensation
for their  services on our board.  However,  we  reimbursed  directors for their
travel  expenses  associated  with  attendance  at  meetings  of  our  board  of
directors.  There were no reimbursements for travel expenses for the fiscal year
ended December 31, 2006 or for the quarter ended March 31, 2007. On February 16,
2007, our non employee directors Drew Larner, Barry Regenstein and Jerome Chazen
were granted options to purchase 25,000, 25,000, and 50,000 shares of our common
stock,  respectively,  at an exercise price of $6.00 per share. The options vest
in equal monthly installments over a period of twelve months.

INDEMNIFICATION OF DIRECTORS AND EXECUTIVE OFFICERS AND LIMITATION OF LIABILITY

         The Delaware  General  Corporation  Law and certain  provisions  of our
certificate of incorporation and bylaws under certain  circumstances provide for
indemnification  of our officers,  directors  and  controlling  persons  against
liabilities  which  they  may  incur  in  such  capacities.  A  summary  of  the
circumstances in which such indemnification is provided for is contained herein,
but  this  description  is  qualified  in  its  entirety  by  reference  to  our
certificate of incorporation, bylaws and to the statutory provisions.

         In general, any officer, director, employee or agent may be indemnified
against expenses,  fines,  settlements or judgments arising in connection with a
legal  proceeding to which such person is a party, if that person's actions were
in good faith, were believed to be in our best interest,  and were not unlawful.
Unless  such  person  is   successful   upon  the  merits  in  such  an  action,
indemnification  may be  awarded  only  after  a  determination  by  independent
decision  of the  board  of  directors,  by legal  counsel,  or by a vote of the
stockholders,  that the applicable  standard of conduct was met by the person to
be indemnified.

         The circumstances under which  indemnification is granted in connection
with an action  brought on our behalf is  generally  the same as those set forth
above;  however,  with respect to such actions,  indemnification is granted only
with respect to expenses  actually  incurred in  connection  with the defense or
settlement of the action.  In such actions,  the person to be  indemnified  must
have  acted in good  faith  and in a manner  believed  to have  been in our best
interest, and have not been adjudged liable for negligence or misconduct.

         Indemnification may also be granted pursuant to the terms of agreements
which may be entered into in the future or pursuant to a vote of stockholders or
directors.  The statutory  provision  cited above also grants the power to us to
purchase  and maintain  insurance  which  protects  our  officers and  directors
against any  liabilities  incurred in  connection  with their  service in such a
position, and such a policy may be obtained by us.

         A stockholder's  investment may be adversely  affected to the extent we
pay the costs of settlement and damage awards against  directors and officers as
required by these indemnification  provisions.  At present,  there is no pending
litigation or proceeding  involving any of our directors,  officers or employees
regarding  which  indemnification  by us is  sought,  nor  are we  aware  of any
threatened litigation that may result in claims for indemnification.


                                       60
<PAGE>


         Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors,  officers or persons  controlling us pursuant
to the foregoing  provisions,  or otherwise,  we have been informed that, in the
opinion of the SEC, this  indemnification  is against public policy as expressed
in the Securities Act and is therefore unenforceable.

         We do not currently have any indemnification agreements with any of our
directors or executive officers.


                                       61
<PAGE>


                       PRINCIPAL AND SELLING SHAREHOLDERS


         The selling  security  holders each  acquired  shares of our  preferred
stock (which subsequently converted into shares of our common stock) as a result
of private  placement  transactions  entered into with us,  which are  described
elsewhere  in this  Registration  Statement on Form SB-2.  In addition,  Lyrical
Opportunity  Partners II, L.P., Lyrical  Opportunity  Partners II, Ltd., Destar,
LLC, Watchung Road Associates, L.P., and Margate Partners III acquired shares of
our Series C Preferred  Stock (which  subsequently  converted into shares of our
common stock) from Scott Walker in a private sale. Sanders Morris Harris,  Inc.,
a  selling  shareholder  under  the  prospectus,  acted  as  placement  agent in
connection  with the  sale of the  Company's  Series  A,  Series B and  Series D
Preferred Stock. For their services as placement agent, the Company paid Sanders
Morris Harris,  Inc. a fee equal to 7.5%, or  approximately  $1,500,000,  of the
gross  proceeds from the  financing  and five year warrants to purchase  290,909
shares of common  stock at an  average  exercise  price of $5.50 per share (on a
post-Reverse  Split basis). Of the $1,500,000 fee paid to Sanders Morris Harris,
Inc.,  $939,408 was paid in cash and $560,592 of the fee was provided to Sanders
Morris  Harris,  Inc.  through the  issuance of 467.16  shares of the  Company's
Series D Preferred Stock, which subsequently converted into 93,942 shares of the
Company's common stock on May 2, 2007.


         The selling security holders may offer and sell, from time to time, any
or all of the shares of common stock held by them.  Because the selling security
holders  may offer all or only some  portion of the  6,362,820  shares of common
stock to be registered,  we cannot  estimate how many shares of common stock the
selling security  holders may hold upon termination of the offering,  nor can we
express,  as a  percentage,  how this  number of shares will relate to the total
number of shares that we will have outstanding at that time.


         The following  table  presents  information  regarding  the  beneficial
ownership of our common  stock as of July 16, 2007,  and the number of shares of
common  stock  covered  by this  prospectus.  The  number of shares in the table
represents an estimate of the number of shares of common stock to be offered by:


         o        each of the executive officers;

         o        each of our directors;

         o        all of our directors and executive officers as a group;

         o        each  shareholder  known by us to be the  beneficial  owner of
                  more than 5% of our common stock; and

         o        each of the selling shareholders.


         Beneficial  ownership is determined in accordance with the rules of the
SEC  and  generally   includes  voting  or  investment  power  with  respect  to
securities.  Unless otherwise indicated below, to our knowledge, the persons and
entities  named in the table  have sole  voting and sole  investment  power with
respect to all shares  beneficially  owned,  subject to community  property laws
where applicable. Shares of our common stock subject to options from the company
that are currently  exercisable or  exercisable  within 60 days of July 16, 2007
are deemed to be outstanding and to be beneficially  owned by the person holding
the options for the purpose of computing the percentage ownership of that person
but are not treated as  outstanding  for the purpose of computing the percentage
ownership of any other person.

         The information  presented in this table is based on 11,965,596  shares
of our common stock  outstanding on July 16, 2007.  Unless otherwise  indicated,
the  address of each of the  executive  officers  and  directors  and 5% or more


                                       62
<PAGE>


shareholders  named below is c/o New Motion,  Inc., 42 Corporate  Park,  Irvine,
California 92606.  Unless noted, the number of shares presented in the table are
shares of common stock.

<TABLE>
<CAPTION>
                                                      SHARES BENEFICIALLY                           SHARES BENEFICIALLY
                                                          OWNED PRIOR                                   OWNED AFTER
                                                          TO OFFERING                                    OFFERING
                                                   --------------------------                    --------------------------
                                                                    PERCENT       NUMBER OF                       PERCENT
                                                                    OF OUT-         SHARES                        OF OUT-
           NAME OF BENEFICIAL OWNER                   NUMBER        STANDING       OFFERED         NUMBER         STANDING
-----------------------------------------------    -----------    -----------    ------------    -----------    -----------
<S>                                                 <C>                <C>          <C>           <C>                <C>
EXECUTIVE OFFICERS AND DIRECTORS:
Burton Katz                                                 -              *               0              0              0
Allan Legator (1)                                     218,992           1.8%               0        218,992           1.8%
Scott Walker (2)                                    1,583,907          13.2%               0      1,583,907          13.2%
Raymond Musci                                         435,821           3.6%               0        435,821           3.6%
Shane Maidy (3)                                        58,109              *               0         58,109              *
Drew Larner (4)                                        56,082              *               0         56,082              *
Robert S. Ellin (5)                                 1,432,500          12.0%       1,432,500              -              -
Jerome Chazen (6)                                      25,793              *               0         25,793              *
Barry I. Regenstein (7)                                12,500              *               0         12,500              *

All Executive Officers and Directors as a
   Group (9 persons) (8)                            3,823,705          31.0%       1,432,500      2,391,205              -

FIVE PERCENT STOCKHOLDERS:
MPLC Holdings, LLC (9)                              2,738,360          22.9%               0      2,738,360          22.9%
Jeffrey Akres (9)                                   2,773,901          23.2%               0      2,773,901          23.2%
Trinad Capital Master Fund, Ltd. (5)                1,432,500          12.0%       1,432,500              -              -
Jay A. Wolf (5)                                     1,449,166          12.1%       1,449,166              -              -
Brad Greenspan (10)                                   763,661           6.4%               0        763,661           6.4%
Destar, LLC (11)                                    1,237,116          10.3%       1,237,116              -              -
Europlay Capital Advisors, LLC (12)                   726,369           6.1%         726,369              -              -
Lyrical Opportunity Partners II, LP (13)            1,138,732           9.5%       1,138,732              -              -
Lyrical Opportunity Partners II, Ltd (13)           1,138,732           9.5%       1,138,732              -              -


OTHER SELLING STOCKHOLDERS:
Index Visual & Games Ltd. (14)                        172,572           1.4%         168,605              -              -
Watchung Road Associates, L.P. (15)                   280,267           2.3%         280,267              -              -
Game Boy Partners, LLC (16)                           208,332           1.7%         208,332              -              -
Sanders Morris Harris, Inc. (17)                      384,341           3.1%         384,341              -              -
Sandor Capital Master Fund L.P.(18)                    50,000              *          50,000              -              -
Landmark Charity Foundation (19)                       41,666              *          41,666              -              -
Weathervane Capital Partners, LP (20)                  41,666              *          41,666              -              -
Gina Robins                                            20,000              *          20,000              -              -
Arlene Scanlan                                         16,666              *          16,666              -              -
David Chamberlin Trustee, Paul Chamberlin
   Revocable Trust (21)                                16,666              *          16,666              -              -
Lisa Manganiello                                       16,666              *          16,666              -              -
Margate Partners III (22)                              21,666              *          21,666              -              -
Matthew Taubin                                         16,666              *          16,666              -              -
Patrick Scire                                          16,666              *          16,666              -              -
Randall Bernsohn                                       16,666              *          16,666              -              -
Simone Reitano                                         16,666              *          16,666              -              -
Steve Fetner                                           16,666              *          16,666              -              -
Steve S. Taylor                                        16,666              *          16,666              -              -
Jeffrey Tauber                                         16,666              *          16,666              -              -
Michelle Felman                                        16,666              *          16,666              -              -
Mary Wolf                                              16,666              *          16,666              -              -
Wendy Silverstein                                      16,666              *          16,666              -              -
Karen Z. Gardner, Trustee Jules E.
   Gardner 2005 GRAT (23)                               8,334              *           8,334              -              -
Gary Erlbaum, Trustee of the Adam J.
   Erlbaum Trust DTD 04/04/97 (24)                      8,334              *           8,334              -              -


                                       63
<PAGE>


Steven H. Erlbaum                                       8,334              *           8,334              -              -
Trevor Colby (25)                                       8,334              *           8,334              -              -
Dylan & Trevor Colby (26)                               8,334              *           8,334              -              -
Shadow Capital, LLC (27)                               41,666              *          41,666              -              -
Todd Kay, Trustee of the Kay Living Trust,
   DTD 7/14/06 (28)                                    25,000              *          25,000              -              -
David Chazen                                           16,666              *          16,666              -              -
Gerard Guez Family Trust, DTD 4/15/05 (29)             33,334              *          33,334              -              -
Cipher 06, LLC (30)                                    18,000              *          18,000              -              -
Jeffrey Bogatin                                        41,666              *          41,666              -              -
Mitchell Ratner (31)                                    4,166              *           4,166              -              -
Richard Molinsky                                       10,000              *          10,000              -              -
Brooks Family Company, LLC (32)                        16,666              *          16,666              -              -
Abundance Partners LP (33)                             12,600              *          12,600              -              -
Walter Grossman                                         8,334              *           8,334              -              -
RP Capital LLC (34)                                    16,800              *          16,800              -              -
Clifford Berger Retirement Plan (35)                   33,334              *          33,334              -              -
Fox Hollow Holdings, Inc. (36)                          8,000              *           8,000              -              -
Jason Cavalier                                          8,400              *           8,400              -              -
Michael J. Cavalier Jr                                  8,400              *           8,400              -              -
Brian Weitman                                           8,334              *           8,334              -              -
Robert Willard and Associates, LLC (37)                 8,400              *           8,400              -              -
Carlo Ghailian and Charles M. Ghailian                  8,400              *           8,400              -              -
Daniel Kim and Margaret Pak, JT in Common
   WROS                                                 3,400              *           3,400              -              -
Charles C. Bentz                                        5,000              *           5,000              -              -
</TABLE>


*       Less than 1%


(1)      Consists of 9,152 shares of common stock that may be acquired  upon the
         exercise of  outstanding  warrants  at an  exercise  price of $3.44 per
         share and 209,840  shares of common stock that may be acquired upon the
         exercise of outstanding stock options.


(2)      Includes  14,382  shares of common stock that may be acquired  upon the
         exercise of  outstanding  warrants  at an  exercise  price of $3.44 per
         share and 1,569,525 shares of common stock.

(3)      Consists of 53,267 shares of common stock that may be acquired upon the
         exercise of outstanding stock options.


(4)      Consists of 58,109 shares of common stock that may be acquired upon the
         exercise of outstanding stock options.

(5)      Trinad  Management,  LLC (as the manager of Trinad Capital Master Fund,
         Ltd.  and  Trinad  Capital  LP),  Robert S. Ellin and Jay A. Wolf (as a
         Managing Member and Managing Director, respectively, of Trinad Advisors
         GP, LLC and Trinad Management,  LLC) may be deemed to be the beneficial
         owners of the stock held by Trinad  Capital  Master Fund,  Ltd.  Trinad
         Capital  LP (as the  owner of 96.5% of the  shares  of  Trinad  Capital
         Master Fund,  Ltd.) and Trinad Advisors GP, LLC (as the general partner
         of Trinad Capital LP), each may be deemed to be the beneficial owner of
         96.5% of the share of common stock of New Motion,  Inc.  held by Trinad
         Capital Master Fund, Ltd. Each of Trinad Capital LP, Trinad Management,
         LLC and Trinad  Advisors GP, LLC disclaim  beneficial  ownership of the
         shares of common stock  directly  beneficially  owned by Trinad Capital
         Master  Fund,  Ltd.  Each of Robert S.  Ellin and Jay A. Wolf  disclaim
         beneficial   ownership   of  the  shares  of  common   stock   directly
         beneficially  owned by Trinad Capital Master Fund, Ltd.,  except to the
         extent of their pecuniary interest therein.  Robert S. Ellin and Jay A.
         Wolf have  shared  power to direct the vote and shared  power to direct
         the disposition of these shares of common stock.

         Mr. Ellin was the former Chief Executive Officer of MPLC, Inc. (now New
         Motion,  Inc.) and resigned  from these  positions on February 12, 2007
         upon the closing of the  Exchange.  Mr.  Ellin's  address is c/o Trinad
         Management LLC, 2121 Avenue of the Stars,  Suite 1650, Los Angeles,  CA
         90067.


         Jay A. Wolf also holds 16,666 shares of common stock as an  individual,
         which are being registered for re-sale on this prospectus. Mr. Wolf was
         the  former  Chief  Financial  Officer,  Chief  Operating  Officer  and
         Secretary of MPLC, Inc. (now New Motion,  Inc.) and resigned from these
         positions on February 12, 2007 upon the closing of the Exchange.


(6)      Includes  25,000  shares of common stock that may be acquired  upon the
         exercise of  outstanding  stock options and 793 shares of common stock.
         Mr. Chazen's address is c/o Chazen Capital Partners,  676 Fifth Avenue,
         New York, NY 10153.

(7)      Consists of 12,500 shares of common stock that may be acquired upon the
         exercise of outstanding stock options.


                                       64
<PAGE>


(8)      Includes  23,534  shares of common stock that may be acquired  upon the
         exercise of  outstanding  warrants  at an  exercise  price of $3.44 per
         share,  361,531  shares of common  stock that may be acquired  upon the
         exercise of  outstanding  stock options and 3,438,640  shares of common
         stock.


(9)      In addition to exercising  voting and dispositive power over the shares
         owned by MPLC Holdings,  LLC,  Jeffrey Akres  individually  owns 35,541
         shares of common stock. Jeffrey Akres disclaims beneficial ownership of
         the  shares  of  common  stock  directly  beneficially  owned  by  MPLC
         Holdings,  LLC except to the extent of his pecuniary interests therein.
         The address of MPLC  Holdings,  LLC is 15260  Ventura  Boulevard,  20th
         Floor, Sherman Oaks, CA 91403.

(10)     The address of Mr. Greenspan is c/o Palisades Capital,  Inc., 264 South
         La Cienega, Suite 1218, Beverly Hills, CA 90211.

(11)     David E.  Smith  exercises  voting  and  dispositive  power  over these
         shares.  While  Trinad  Management,  LLC has an  economic  interest  in
         Destar,  LLC,  it has no power to vote or dispose of the shares held by
         Destar, LLC and,  accordingly,  disclaims  beneficial  ownership of the
         shares  held by  Destar,  LLC  except to the  extent  of its  pecuniary
         interest therein.  The address of Destar,  LLC is 2450 Colorado Avenue,
         Suite 100, East Tower, Santa Monica, CA 90404.

(12)     Joseph M.  Miller,  one of the Managing  Directors of Europlay  Capital
         Advisors,  LLC,  exercises  voting  and  dispositive  power  over these
         shares.  Mr.  Miller  disclaims  beneficial  ownership of the shares of
         common stock  beneficially  owned by Europlay  Capital  Advisors,  LLC,
         except to the extent of his pecuniary interests therein. The address of
         Europlay Capital Advisors, LLC is 15260 Ventura Boulevard,  20th Floor,
         Sherman Oaks, CA 91403.


(13)     Includes  489,655  shares of common  stock held by Lyrical  Opportunity
         Partners  II, LP and  649,077  shares of common  stock  held by Lyrical
         Opportunity Partners II, Ltd. Jeffrey Keswin, as managing member of the
         general  partners  of  Lyrical  Opportunity  Partners  II,  LP,  and as
         Director of Lyrical Opportunity  Partners II, Ltd. exercises voting and
         dispositive  power  over  these  securities.  The  address  of  Lyrical
         Opportunity  Partners II LP and Lyrical Opportunity Partners II Ltd. is
         405 Park Avenue, 6th Floor, New York, NY 10022.

(14)     Consists of 172,572 shares of common stock.  Shigeki Takuechi exercises
         voting and dispositive power over these shares.


(15)     Leon G.  Cooperman,  as general  partner of Watchung  Road  Associates,
         L.P., exercises voting and dispositive power over these shares.

(16)     Craig  Effron,  Managing  Member of Game Boy  Partners,  LLC  exercises
         voting and dispositive power over these shares.

(17)     Consists  of warrants to acquire  290,909  shares of common  stock at a
         weighted average exercise price of $5.50 per share and 93,942 shares of
         common  stock.  The  warrants  are fully  vested,  and have a term of 5
         years.  Ben T.  Morris  serves as Chief  Executive  Officer  of Sanders
         Morris  Harris,  Inc.  and, in such  capacity may be deemed to exercise
         voting and dispositive power over these securities.  Additionally,  Don
         A. Sanders serves as Vice Chairman of Sanders Morris Harris,  Inc. and,
         in such capacity may also be deemed to exercise  voting and  investment
         authority  over the shares held by this  selling  stockholder.  Sanders
         Morris Harris,  Inc. is a registered  broker/dealer  and is a member of
         NASD.

(18)     John Lemak,  as general partner of the selling  shareholder,  exercises
         voting and dispositive power over these securities.

(19)     Gary Gelbfish,  of Landmark  Charity  Foundation,  exercises voting and
         dispositive power over these securities.

(20)     Steve  Shenfeld,  as  managing  partner  of  the  selling  shareholder,
         exercises voting and dispositive power over these securities.

(21)     David  Chamberlin,  as Trustee of the Paul Chamberlin  Revocable Trust,
         exercises voting and dispositive power over these securities.

(22)     Andrew  Perry,  the  managing  partner  of  the  selling   shareholder,
         exercises voting and dispositive  power over these  securities.  Andrew
         Perry is an  affiliate  of a  broker-dealer,  since he is  employed  by
         Deutsche  Bank.  The  selling   shareholder   bought  its   registrable
         securities in the ordinary  course of business,  and at the time of the
         purchase  of  the  registrable  securities  to be  resold,  it  had  no
         arrangements or understandings, directly or indirectly, with any person
         to distribute the registrable securities.


(23)     Karen Z.  Gardner,  as  Trustee  of the  Jules E.  Gardner  2005  GRAT,
         exercises voting and dispositive power over these securities.


(24)     Gary  Erlbaum,  as trustee of the Adam J. Erlbaum  Trust DTD  04/04/97,
         exercises voting and dispositive power over these securities.

(25)     Trevor Colby is affiliated with RBC Dain Rauscher,  a registered broker
         dealer. The selling  shareholder  bought its registrable  securities in
         the ordinary course of business, and at the time of the purchase of the
         registrable  securities  to  be  resold,  it  had  no  arrangements  or
         understandings,  directly or indirectly,  with any person to distribute
         the registrable securities.


                                       65
<PAGE>


(26)     Trevor Colby exercises voting and dispositive power over the securities
         held by this selling  shareholder.  Trevor Colby is affiliated with RBC
         Dain  Rauscher,  a registered  broker dealer.  The selling  shareholder
         bought its  registrable  securities in the ordinary course of business,
         and at the time of the  purchase of the  registrable  securities  to be
         resold,  it  had  no  arrangements  or   understandings,   directly  or
         indirectly, with any person to distribute the registrable securities.

(27)     Kent Garlinghouse, as Managing Member of Shadow Capital, LLC, exercises
         voting and dispositive power over these securities.

(28)     Todd Kay, as trustee of the Kay Living  Trust,  DTD 7/14/06,  exercises
         voting and dispositive power over these securities.

(29)     Gerard  Guez,  as  trustee  of the  Guez  Family  Trust,  DTD  4/15/05,
         exercises voting and dispositive power over these securities.

(30)     Jason Adelman,  as Managing Member of Cipher 06, LLC,  exercises voting
         and dispositive power over these securities.

(31)     Mitchell  Ratner is  affiliated  with T.R.  Winston &  Company,  LLC, a
         registered  broker  dealer.  Mr. Ratner works as a senior trader at the
         company.  The selling shareholder bought its registrable  securities in
         the ordinary course of business, and at the time of the purchase of the
         registrable  securities  to  be  resold,  it  had  no  arrangements  or
         understandings,  directly or indirectly,  with any person to distribute
         the registrable securities.

(32)     Ben F. Brooks,  as Manager of Brooks  Family  Company,  LLC,  exercises
         voting and dispositive power over these securities.

(33)     Vladimir  Efros,  as  Managing  Director  of  Abundance   Partners  LP,
         exercises voting and dispositive power over these securities.

(34)     Erick Richardson,  as President of RP Capital LLC, exercises voting and
         dispositive power over these securities.

(35)     Clifford  Berger,  as trustee of the Clifford Berger  Retirement  Plan,
         exercises voting and dispositive power over these securities.

(36)     Jared Shaw, as President of the selling  shareholder,  exercises voting
         and dispositive power over these securities.

(37)     Douglas B. Croxall, as President of the selling shareholder,  exercises
         voting and dispositive power over these securities.


                                       66
<PAGE>


                           RELATED PARTY TRANSACTIONS

         Other than the employment  arrangements  described  above in "Executive
Compensation" and the transactions described below, since January 1, 2005, there
has not been,  nor is there  currently  proposed,  any  transaction or series of
similar transactions to which we were or will be a party:

         o        in which the amount involved exceeds the lesser of $120,000 or
                  1% of the average of our assets at year-end for the last three
                  completed fiscal years; and

         o        in which any  director,  executive  officer,  shareholder  who
                  beneficially owns 5% or more of our common stock or any member
                  of  their  immediate  family  had or  will  have a  direct  or
                  indirect material interest.

NEW MOTION, INC. (FORMERLY MPLC, INC.)

         On March 8, 2007, New Motion entered into an employment  agreement with
Scott  Walker,  our Chief  Marketing  Officer,  the terms of which are described
above under the heading, "Employment Contracts."

         On February 28,  2007,  New Motion  entered into a Securities  Purchase
Agreement  with various  accredited  investors as listed on the signature  pages
thereto  pursuant  to which  New  Motion  agreed to sell to the  investors  in a
private  offering  approximately  8,333  shares  of its  Series  D Stock  for an
aggregate  purchase price of approximately  $10 million.  Trinad has an economic
interest  in Destar  LLC,  one of the Series D Investors  who  purchased  188.88
shares of Series D Stock with an aggregate  purchase  price of $226,651.  Trinad
has no power to vote or  dispose  of such  shares  and,  accordingly,  disclaims
beneficial ownership of the shares held by Destar LLC.

         On February 16, 2007,  New Motion  granted  Jerome  Chazen an option to
purchase  50,000  shares of common stock at an exercise  price of $6.00.  On the
same date, New Motion granted each of Drew Larner and Barry Regenstein an option
to purchase 25,000 shares of common stock at an exercise price of $6.00. Also on
February 16, 2007, New Motion  granted Burton Katz an option to purchase  81,250
shares of common stock at an exercise price of $6.00.

         On  February  12,  2007,  New  Motion   consummated  the   transactions
contemplated  under the Series B Purchase Agreement with the Series B investors.
Trinad has an economic interest in Destar LLC, one of the Series B investors who
purchased 376.315 shares of Series B Preferred Stock with an aggregate  purchase
price of $3,763,150.  Trinad has no power to vote or dispose of such shares and,
accordingly, disclaims beneficial ownership of the shares held by Destar LLC.

         On January 24, 2007,  New Motion  entered  into a Series A  Convertible
Preferred  Stock Purchase  Agreement with Trinad Capital Master Fund,  Ltd., New
Motion's controlling shareholder, pursuant to which New Motion agreed to sell to
Trinad in a private  offering  one share of its Series A  Convertible  Preferred
Stock,  par value  $0.10 per  share,  for an  aggregate  purchase  price of $3.5
million.

         In addition,  pursuant to a Registration  Rights Agreement with Trinad,
dated as of January 24, 2007, New Motion  granted  Trinad  certain  registration
rights  with  respect  to all of the  shares of common  stock  owned by  Trinad,
including the common stock  underlying the Series A Preferred  Stock sold in the
private  placement.  Pursuant  to  the  Registration  Rights  Agreement,  we are
registering Trinad's shares for re-sale pursuant to this prospectus.


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<PAGE>


         On October 24, 2006, MPLC and certain of its stockholders  entered into
a common stock Purchase  Agreement  with Trinad,  pursuant to which we agreed to
redeem  23,448,870  shares of common stock (on a pre-reverse  stock split basis)
from the stockholders  and sell an aggregate of 69,750,000  shares of our common
stock (on a pre-reverse  stock split basis),  representing 93% of our issued and
outstanding  shares of common stock on the closing  date, to Trinad in a private
placement  transaction for aggregate gross proceeds to us of $750,000,  $547,720
of which was used for the redemption  described  below, and $202,280 was used to
repay all loans to New Motion from Isaac Kier, a former  director and the former
president, treasurer and secretary of New Motion.


         Trinad  Management,  LLC (as the manager of Trinad Capital Master Fund,
Ltd.  and  Trinad  Capital  LP),  Robert S. Ellin and Jay A. Wolf (as a Managing
Member and  Managing  Director,  respectively,  of Trinad  Advisors  GP, LLC and
Trinad  Management,  LLC) may be deemed to be the beneficial owners of the stock
held by Trinad  Capital  Master Fund,  Ltd.  Trinad  Capital LP (as the owner of
96.5% of the shares of Trinad Capital Master Fund, Ltd.) and Trinad Advisors GP,
LLC (as the general  partner of Trinad Capital LP), each may be deemed to be the
beneficial owner of 96.5% of the share of common stock of New Motion,  Inc. held
by  Trinad  Capital  Master  Fund,  Ltd.  Each  of  Trinad  Capital  LP,  Trinad
Management, LLC and Trinad Advisors GP, LLC disclaim beneficial ownership of the
shares of common stock  directly  beneficially  owned by Trinad  Capital  Master
Fund, Ltd. Each of Robert S. Ellin and Jay A. Wolf disclaim beneficial ownership
of the shares of common  stock  directly  beneficially  owned by Trinad  Capital
Master Fund,  Ltd.,  except to the extent of their pecuniary  interest  therein.
Robert S. Ellin and Jay A. Wolf have shared  power to direct the vote and shared
power to direct the disposition of these shares of common stock.

         Mr. Ellin was the former Chief Executive Officer of MPLC, Inc. (now New
Motion,  Inc.) and resigned  from these  positions on February 12, 2007 upon the
closing of the Exchange.  Mr. Ellin's address is c/o Trinad Management LLC, 2121
Avenue of the Stars, Suite 1650, Los Angeles, CA 90067.

         Jay A. Wolf also holds 16,666 shares of common stock as an  individual,
which are being  registered  for  re-sale on this  prospectus.  Mr. Wolf was the
former Chief Financial  Officer,  Chief Operating Officer and Secretary of MPLC,
Inc. (now New Motion,  Inc.) and resigned  from these  positions on February 12,
2007 upon the closing of the Exchange.


         Simultaneously  with the sale of shares of common stock to Trinad,  New
Motion redeemed  23,448,870 shares of common stock (on a pre-reverse stock split
basis) from certain stockholders of New Motion for a purchase price of $547,720.
In  addition,  following  closing,  Mr. Kier or First  Americas  Management  LLC
("First Americas"), an affiliate of Mr. Kier, was no longer obligated to provide
office space or services to New Motion.

         On April 26, 2005, New Motion issued  25,828,983  restricted  shares of
its common  stock (on a  pre-reverse  stock  split  basis) to First  Americas in
exchange for $75,000 in cash.  Mr. Kier, a former  director of MPLC, is the sole
member of First Americas.  First Americas subsequently distributed shares to Mr.
Kier who sold shares to Mr. Chazen and three other individuals.

         In February 2005,  MPLC paid David Allen, a former officer and director
of  MPLC,  a  $100,000  bonus  for  continuing   with  MPLC  during   bankruptcy
proceedings. This payment was approved by the Bankruptcy Court.

NEW MOTION MOBILE, INC. (FORMERLY CALLED NEW MOTION, INC.)

         New Motion Mobile had Secured Convertible  Promissory Notes outstanding
in the principal  amounts of $15,000,  $100,000 and $50,000 which were issued to
Scott  Walker,  its Chief  Executive  Officer and  President,  on June 10, 2005,
August 2, 2005, and August 24, 2005,  respectively.  In addition, it had Secured


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Convertible Notes in the principal amounts of $35,000, $50,000 and $20,000 which
were issued to SGE, a corporation  owned by Allan Legator,  its Chief  Financial
Officer and  Secretary,  on June 10, 2005,  August 2, 2005, and August 24, 2005,
respectively.  The notes were  convertible  into  securities  issued in the next
financing  resulting  in  gross  proceeds  of  at  least  $500,000   ("Qualified
Financing")  at 80% of per share price in Qualified  Financing.  Pursuant to the
terms  of the  Secured  Convertible  Notes,  each of Scott  Walker  and SGE were
granted a right to  receive a warrant  to  purchase  that  number of shares in a
Qualified  Financing  equal to 30% of the shares  purchasable  by the  principal
amount of the  Convertible  Notes held by each of Walker and SGE  issuable  upon
consummation of Qualified Financing.

         On January 26, 2007, New Motion Mobile agreed with each of Scott Walker
and SGE that the warrants would entitle Scott Walker to purchase 9,900 shares of
New Motion Mobile's common stock at an exercise price of $5.00 per share and SGE
to purchase  6,300  shares of New Motion  Mobile's  common  stock at an exercise
price of $5.00 per share. After the Exchange and the assumption of the warrants,
Mr. Walker's  warrant now entitles him to purchase 14,384 shares of New Motion's
common  stock at an  exercise  price of $3.44 per share  and SGE's  warrant  now
entitles  SGE to  purchase  9,153  shares  of New  Motion's  common  stock at an
exercise price of $3.44 per share.  All notes referenced above were paid in full
with interest according to the terms of the notes by September 2006.

         Burton Katz is party to an Employment  Agreement with New Motion Mobile
dated August 28, 2006.  The terms of Mr. Katz's  Employment  Agreement have been
disclosed  under  Item  10,   "Executive   Compensation,"   "New  Motion  Mobile
Compensation." Mr. Katz received  compensation,  not including option awards, in
the amount of $137,151 in fiscal  2006  pursuant to the terms of his  Employment
Agreement.


         Raymond Musci is party to a Contractor Agreement with New Motion Mobile
dated January 11, 2006.  While Mr. Musci's  Contractor  Agreement  terminated on
December 11,  2006,  New Motion and Mr.  Musci  continue to view the  Contractor
Agreement as the document governing the parties'  relationship.  Under the terms
of the Contractor  Agreement,  Mr. Musci is entitled to receive a fee of $30,000
per month for  services  rendered  under the  Contractor  Agreement.  Mr.  Musci
received a fee of $307,500  under the terms of the Contractor  Agreement  during
fiscal 2006.


PROMOTERS AND CONTROL PERSONS

         Prior to February 12, 2007, MPLC (now called New Motion,  Inc.) existed
as a "shell  company"  with nominal  assets whose sole business was to identify,
evaluate and investigate various companies to acquire or with which to merge. On
February 12, 2007, we consummated  an exchange  transaction in which we acquired
all of the outstanding  ownership  interests of New Motion, Inc. (now called New
Motion Mobile,  Inc.), a Delaware  corporation from its stockholders in exchange
for an  aggregate  of 500,000  shares of our Series C  Preferred  Stock.  At the
closing  of  the  exchange  transaction,  New  Motion  became  our  wholly-owned
subsidiary.  The exchange  transaction  was  accounted  for as a reverse  merger
(recapitalization)  with New Motion deemed to be the  accounting  acquirer,  and
MPLC the legal acquirer.

         In  addition,  please see the  description  of the  transactions  which
occurred on October 24, 2006  between MPLC and certain of its  stockholders  set
forth above.

TRANSACTIONS WITH SELLING SHAREHOLDERS

         FINANCING TRANSACTIONS

         In combination with the Exchange,  on January 24, 2007, we entered into
the Series A Convertible  Preferred  Stock  Purchase  Agreement  with Trinad and
received  gross  proceeds of $3.5  million in exchange for one share of Series A


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Convertible  Preferred Stock, par value $0.10 per share (the "Series A Preferred
Stock"). On January 31, 2007, we entered into the Series B Convertible Preferred
Stock  Purchase   Agreement  with  Watchung  Road  Associates,   L.P.,   Lyrical
Opportunity  Partners II LP, Lyrical Opportunity Partners II Ltd. and Destar LLC
and  received  gross  proceeds of $6.5 million in exchange for 650 shares of our
Series B  Convertible  Preferred  Stock,  par value  $0.10 per share  ("Series B
Preferred  Stock").  The closing of the  purchase and sale of Series B Preferred
Stock  occurred on February 12, 2007. On May 2, 2007,  the effective date of the
Reverse Split,  immediately  and  automatically  upon the  effectiveness  of the
Reverse Split, all issued and outstanding  Series A Preferred Stock and Series B
Preferred  Stock  converted  into  1,200,000 and 1,300,000  shares of our common
stock, respectively.

         On February 28, 2007, we entered into a Securities  Purchase  Agreement
with various  accredited  investors and received gross proceeds of approximately
$10  million  in  exchange  for  8,333  shares  of our  Series D 8%  Convertible
Preferred  Stock,  par value $0.10 per share (the  "Series D Preferred  Stock").
This financing  transaction  closed on March 6, 2007.  Upon the effectiveness of
the Reverse Split on May 2, 2007, all issued and outstanding  Series D Preferred
Stock  immediately  and  automatically  converted into  1,666,658  shares of our
common stock.


         Sanders Morris Harris, Inc. acted as placement agent in connection with
the sale of our  Series  A, B and D  Preferred  Stock.  For  their  services  as
placement  agent,  we paid Sanders Morris  Harris,  Inc. a fee equal to 7.5%, or
approximately  $1,500,000, of the gross proceeds from the financing and issued a
five year warrant to Sanders Morris Harris,  Inc. to purchase  290,909 shares of
our common stock. The warrant is fully vested and has a per share exercise price
of $5.50.  Sanders  Morris  Harris,  Inc.  is a selling  shareholder  under this
prospectus.  Of the $1,500,000 fee paid to Sanders Morris Harris, Inc., $939,408
was paid in cash and $560,592 of the fee was provided to Sanders  Morris Harris,
Inc. through the issuance of 467.16 shares of our Series D Preferred Stock.


         Each  of  the   stockholders  who  received  shares  of  our  Series  A
Convertible  Preferred Stock, Series B Convertible Preferred Stock, and Series D
Convertible  Preferred Stock in the  aforementioned  financing  transactions are
also selling shareholders under this prospectus.

         IVG ASSET PURCHASE


         On January 19, 2007, we entered into an Asset  Purchase  Agreement with
Index Visual & Games,  Ltd.  ("IVG"),  pursuant to which we  purchased  from IVG
certain specified assets of Mobliss,  a Washington  corporation  affiliated with
IVG. In exchange for the assets  specified in the Asset Purchase  Agreement,  we
issued IVG a convertible  promissory  note with an aggregate  maximum  principal
amount of up to $2,320,000 (the "IVG Note"). On January 19, 2007, we consummated
the initial  closing of the acquisition and issued the IVG Note in the principal
amount of $500,000  and received  hardware  and software  assets to be purchased
under the Asset Purchase Agreement.  As a result of the assignment of one of the
cellular carrier connection contracts listed in the Asset Purchase Agreement, on
January 26, 2007, we increased the principal  amount of the IVG Note by $580,000
to $1,080,000. On February 26, 2007, we repaid $500,000 of the IVG Note. On July
11, 2007, IVG converted all  outstanding  principal and accrued  interest on the
IVG Note into 172,572 shares of common stock at a conversion  price of $3.44 per
share,  the fair market value of our common stock on the date of issuance of the
IVG Note.


         SALES OF STOCK BY SCOTT WALKER

         On March 8, 2007,  Scott Walker sold an aggregate of 53,538.859  shares
of Series C  Convertible  Preferred  Stock  which he  received  in the  Exchange
transaction  with New Motion Mobile,  Inc., to Watchung Road  Associates,  L.P.,
Lyrical  Opportunity  Partners II, LP,  Lyrical  Opportunity  Partners II, Ltd.,
Destar,  LLC and Margate  Partners III for proceeds of $3,500,000  (the purchase


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<PAGE>


price was $4.50 per share of common stock on a post-reverse  stock split basis).
On May 2, 2007,  the  aforementioned  shares of Series C  Convertible  Preferred
Stock  converted  into an aggregate of 777,779  shares of common stock.  Each of
Watchung Road Associates,  L.P.,  Lyrical  Opportunity  Partners II, LP, Lyrical
Opportunity  Partners II, Ltd., Destar, LLC and Margate Partners III are selling
shareholders under this prospectus.


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<PAGE>


                          DESCRIPTION OF CAPITAL STOCK


         As of July 16, 2007, our authorized capital stock consisted of:


         o        100,000,000 shares of common stock, par value $0.01 per share;
                  and

         o        1,000,000  shares of  preferred  stock,  par  value  $0.10 per
                  share, none of which were designated.


         As of July 16, 2007, there were outstanding:

         o        11,965,596  shares of common  stock held by  approximately  81
                  shareholders of record; and


         o        314,443  shares of common  stock  issuable  upon  exercise  of
                  outstanding warrants.


         o        1,575,383  shares of common stock  issuable  upon  exercise of
                  outstanding  options,  of which 680,355 are exercisable within
                  60 days of July 16, 2007.


COMMON STOCK

         DIVIDEND RIGHTS

         The holders of common  stock  shall be  entitled to receive  dividends,
when,  as and if declared by our board out of funds  legally  available for such
purpose and subject to any preferential  dividend rights of any then outstanding
preferred stock.

         VOTING RIGHTS

         Except as  otherwise  required by law or as  otherwise  provided in any
preferred stock  designation,  the holders of the common stock shall exclusively
possess all voting power and each share of common stock shall have one vote.

         NO PREEMPTIVE OR SIMILAR RIGHTS

         Holders  of our common  stock do not have  preemptive  rights,  and our
common stock is not convertible or redeemable.

         RIGHT TO RECEIVE LIQUIDATION DISTRIBUTIONS

         After  distribution in full of the preferential  amount,  if any, to be
distributed  to the holders of our preferred  stock in the event of voluntary or
involuntary  liquidation,   distribution  or  sale  of  assets,  dissolution  or
winding-up,  the holders of the common stock shall be entitled to receive all of
our remaining  assets,  tangible and intangible,  of whatever kind available for
distribution  to  stockholders  ratably in proportion to the number of shares of
common stock held by them respectively.

         AUTHORIZED BUT UNDESIGNATED PREFERRED STOCK

         We are authorized,  subject to limitations  prescribed by Delaware law,
to issue preferred  stock in one or more series,  to establish from time to time
the number of shares to be  included  in each  series,  to fix the  designation,
powers,  preferences  and  rights of the  shares of each  series  and any of its
qualifications,  limitations  or  restrictions.  Our board can also  increase or
decrease the number of shares of any series, but


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<PAGE>


not  below  the  number  of  shares  of that  series  then  outstanding,  by the
affirmative  vote of the holders of a majority of our capital stock  entitled to
vote,  unless  a vote of any  other  holders  is  required  by the  articles  of
incorporation  establishing the series.  Our board may authorize the issuance of
preferred stock with voting or conversion rights that could adversely affect the
voting power or other rights of the holders of the common stock. The issuance of
preferred  stock,  while  providing  flexibility  in  connection  with  possible
acquisitions and other corporate  purposes,  could, among other things, have the
effect of delaying,  deferring  or  preventing a change in control of New Motion
and may adversely affect the market price of our common stock and the voting and
other  rights of the holders of common  stock.  We have no current plan to issue
any shares of preferred stock.

WARRANTS AND PURCHASE RIGHTS


         At July 16,  2007,  there  were  outstanding  warrants  exercisable  to
purchase 314,443 shares of common stock, as follows:


         o        Warrants to  purchase  23,534  shares at an exercise  price of
                  $3.44 per share, which will expire on January 26, 2012.

         o        Warrants to purchase  290,909  shares at an exercise  price of
                  $5.50 per share, which will expire on February 28, 2012.



ANTI-TAKEOVER PROVISIONS

         Certain  provisions of our articles of  incorporation  and Delaware law
may have the effect of delaying,  deferring or discouraging  another person from
acquiring control of New Motion, Inc.

         CHARTER AND BYLAW PROVISIONS

         Our restated certificate of incorporation, as amended, allows our Board
to issue  1,000,000  shares of preferred  stock,  in one or more series and with
such rights and preferences including voting rights, without further shareholder
approval.  In the event that the board designates additional series of preferred
stock with rights and preferences,  including  super-majority voting rights, and
issues such preferred  stock,  the preferred stock could make our acquisition by
means of a tender offer, a proxy contest or otherwise, more difficult, and could
also make the removal of incumbent  officers and directors more difficult.  As a
result,  these provisions may have an anti-takeover  effect. The preferred stock
authorized in our restated certificate of incorporation, as amended, may inhibit
changes of control that are not approved by our board.  These  provisions  could
limit the price that future  investors might be willing to pay in the future for
our  common  stock.  This  could  have the  effect  of  delaying,  deferring  or
preventing  a change in  control.  The  issuance of  preferred  stock could also
effectively limit or dilute the voting power of our  shareholders.  Accordingly,
such provisions of our certificate of incorporation,  as amended, may discourage
or prevent an acquisition or disposition of our business that could otherwise be
in the best interest of our stockholders.

         DELAWARE LAW

         In addition,  Delaware has enacted the following  legislation  that may
deter or frustrate takeovers of Delaware corporations, such as our company:

         SECTION  203 OF THE  DELAWARE  GENERAL  CORPORATION  LAW.  Section  203
provides,  with some exceptions,  that a Delaware  corporation may not engage in
any of a broad range of business  combinations  with a person or  affiliate,  or
associate  of the person,  who is an  "interested  stockholder"  for a period of
three  years  from the date that the  person  became an  interested  stockholder
unless: (i) the transaction


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<PAGE>


resulting  in a person  becoming  an  interested  stockholder,  or the  business
combination, is approved by the board of directors of the corporation before the
person  becomes  an  interested  stockholder;  (ii) the  interested  stockholder
acquires 85% or more of the  outstanding  voting stock of the corporation in the
same transaction that makes it an interested stockholder, excluding shares owned
by persons who are both  officers and directors of the  corporation,  and shares
held by some employee stock  ownership  plans; or (iii) on or after the date the
person becomes an interested  stockholder,  the business combination is approved
by the  corporation's  board of directors and by the holders of at least 66 2/3%
of the corporation's  outstanding  voting stock at an annual or special meeting,
excluding   shares  owned  by  the   interested   stockholder.   An  "interested
stockholder"  is defined  as any person  that is (a) the owner of 15% or more of
the outstanding voting stock of the corporation or (b) an affiliate or associate
of the corporation  and was the owner of 15% or more of the  outstanding  voting
stock of the  corporation at any time within the three-year  period  immediately
prior to the date on which it is sought to be  determined  whether the person is
an interested stockholder.

         AUTHORIZED BUT UNISSUED  STOCK.  The authorized but unissued  shares of
our common stock are available for future issuance without shareholder approval.
These  additional  shares  may be used  for a  variety  of  corporate  purposes,
including  future  public  offering  to  raise  additional  capital,   corporate
acquisitions  and  employee  benefit  plans.  The  existence of  authorized  but
unissued shares of common stock may enable our Board to issue shares of stock to
persons friendly to existing management.

TRANSFER AGENT AND REGISTRAR

         The transfer  agent and registrar  for our common stock is  Continental
Stock Transfer & Trust Company.

LISTING

         Our common stock is quoted on the Over-The-Counter Bulletin Board under
the trading  symbol  "NWMO" Prior to our name change and the  1-for-300  reverse
stock split, which took effect as of May 2, 2007, our common stock was quoted on
the Over-The-Counter Bulletin Board under the trading symbol "MPNC."


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<PAGE>


                              PLAN OF DISTRIBUTION

         We are  registering the shares of common stock on behalf of the selling
security  holders.  Sales of shares  may be made by  selling  security  holders,
including   their   respective   donees,   transferees,    pledgees   or   other
successors-in-interest  directly to  purchasers  or to or through  underwriters,
broker-dealers or through agents. Sales may be made from time to time on the OTC
Bulletin Board or any exchange upon which our shares may trade in the future, in
the  over-the-counter  market or otherwise,  at market prices  prevailing at the
time of sale,  at prices  related to market  prices,  or at  negotiated or fixed
prices.  The  shares  may be sold by one or more of, or a  combination  of,  the
following:

         o        a block  trade in which  the  broker-dealer  so  engaged  will
                  attempt  to sell the  shares  as agent  but may  position  and
                  resell a portion of the block as principal to  facilitate  the
                  transaction  (including  crosses in which the same broker acts
                  as agent for both sides of the transaction);

         o        purchases by a  broker-dealer  as principal and resale by such
                  broker-dealer,  including resales for its account, pursuant to
                  this prospectus;

         o        ordinary brokerage  transactions and transactions in which the
                  broker solicits purchases;

         o        through options, swaps or derivatives;

         o        in privately negotiated transactions;

         o        in making short sales or in transactions to cover short sales;

         o        put or call option transactions relating to the shares; and

         o        any other method permitted under applicable law.

         The selling security  holders may effect these  transactions by selling
shares directly to purchasers or to or through broker-dealers,  which may act as
agents or principals.  These broker-dealers may receive compensation in the form
of discounts,  concessions  or  commissions  from the selling  security  holders
and/or the purchasers of shares for whom such  broker-dealers  may act as agents
or to  whom  they  sell  as  principals,  or both  (which  compensation  as to a
particular  broker-dealer  might be in excess  of  customary  commissions).  The
selling  security  holders  have  advised us that they have not entered into any
agreements,   understandings   or   arrangements   with  any   underwriters   or
broker-dealers regarding the sale of their securities.

         The selling security holders may enter into hedging  transactions  with
broker-dealers  or  other  financial  institutions.  In  connection  with  those
transactions,  the broker-dealers or other financial  institutions may engage in
short sales of the shares or of securities  convertible into or exchangeable for
the shares in the course of  hedging  positions  they  assume  with the  selling
security  holders.  The selling  security holders may also enter into options or
other  transactions with  broker-dealers or other financial  institutions  which
require  the   delivery  of  shares   offered  by  this   prospectus   to  those
broker-dealers  or other  financial  institutions.  The  broker-dealer  or other
financial institution may then resell the shares pursuant to this prospectus (as
amended or  supplemented,  if  required  by  applicable  law,  to reflect  those
transactions).

         The  selling  security  holders  and  any  broker-dealers  that  act in
connection with the sale of shares may be deemed to be "underwriters" within the
meaning of Section  2(11) of the  Securities  Act of 1933,  and any  commissions
received  by  broker-dealers  or any profit on the resale of the shares  sold by
them while acting as principals  may be deemed to be  underwriting  discounts or
commissions under the


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<PAGE>


Securities Act. The selling  security  holders may agree to indemnify any agent,
dealer or broker-dealer that participates in transactions involving sales of the
shares against liabilities,  including  liabilities arising under the Securities
Act. We have agreed to indemnify  certain selling  security  holders and certain
selling security holders have agreed, severally and not jointly, to indemnify us
against  some  liabilities  in  connection  with  the  offering  of the  shares,
including liabilities arising under the Securities Act.

         The selling security holders will be subject to the prospectus delivery
requirements  of the  Securities  Act. We have  informed  the  selling  security
holders that the anti-manipulative  provisions of Regulation M promulgated under
the Securities Exchange Act of 1934 may apply to their sales in the market.

         Selling security holders also may resell all or a portion of the shares
in open market  transactions in reliance upon Rule 144 under the Securities Act,
provided they meet the criteria and conform to the requirements of Rule 144.

         Upon  being  notified  by a selling  security  holder  that a  material
arrangement  has been entered into with a  broker-dealer  for the sale of shares
through a block trade,  special  offering,  exchange  distribution  or secondary
distribution  or a purchase by a broker or dealer,  we will file a supplement to
this prospectus,  if required  pursuant to Rule 424(b) under the Securities Act,
disclosing:

         o        the  name of each  such  selling  security  holder  and of the
                  participating broker-dealer(s);

         o        the number of shares involved;

         o        the initial price at which the shares were sold;

         o        the  commissions  paid or discounts or concessions  allowed to
                  the broker-dealer(s), where applicable;

         o        that such  broker-dealer(s)  did not conduct any investigation
                  to verify the information set out or incorporated by reference
                  in this prospectus; and

         o        other facts material to the transactions.

         In  addition,  if  required  under  applicable  law  or  the  rules  or
regulations of the Commission, we will file a supplement to this prospectus when
a selling  security  holder  notifies us that a donee or pledgee intends to sell
more than 500 shares of common stock.

         We are paying all expenses and fees in connection with the registration
of the  shares.  The  selling  security  holders  will  bear  all  brokerage  or
underwriting  discounts or commissions paid to broker-dealers in connection with
the sale of the shares.


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                                  LEGAL MATTERS

         Stubbs  Alderton  &  Markiles,  LLP ("SAM  LLP"),  has  provided  legal
services  to  us  in  connection  with  its  preparation  of  this  Registration
Statement.  SAM LLP owns 114  shares of our  common  stock,  and its  individual
partners,  in the aggregate,  own 11,341 shares of our common stock. SAM LLP has
rendered a legal opinion,  attached hereto as Exhibit 5.1, as to the validity of
the shares of the Registrant's common stock to be registered hereby. Neither SAM
LLP,  nor any  individual  partner  thereof,  has been  employed on a contingent
basis. Neither SAM LLP, nor any individual partner thereof, is connected with us
other than in their role as outside legal counsel for us.

                                     EXPERTS

         The financial  statements  of New Motion,  Inc. as of December 31, 2005
and 2006  included in this  prospectus  have been so included in reliance of the
audit report of Windes & McClaughry,  independent registered public accountants,
given on the authority of said firm as experts in auditing and accounting.

                       WHERE YOU CAN FIND MORE INFORMATION


         We file annual,  quarterly and current  reports,  proxy  statements and
other  information  with the SEC.  We have  also  filed  with the SEC  under the
Securities Act a registration  statement on Form SB-2 with respect to the common
stock offered by this prospectus. This prospectus, which constitutes part of the
registration  statement,  does not contain all the  information set forth in the
registration  statement  or the  exhibits  and  schedules  which are part of the
registration statement,  portions of which are omitted as permitted by the rules
and regulations of the SEC.  Statements  made in this  prospectus  regarding the
contents of any contract or other  document are summaries of the material  terms
of the contract or document.  With respect to each contract or document filed as
an exhibit to the registration statement, reference is made to the corresponding
exhibit.  For further information  pertaining to us and the common stock offered
by this prospectus,  reference is made to the registration statement,  including
the exhibits and  schedules  thereto,  copies of which may be inspected  without
charge at the public reference  facilities of the SEC at 100 F Street N.E., Room
1580,  Washington,  D.C. 20549. Copies of all or any portion of the registration
statement may be obtained from the SEC at prescribed  rates.  Information on the
public   reference   facilities   may  be   obtained   by  calling  the  SEC  at
1-800-SEC-0330. In addition, the SEC maintains a web site that contains reports,
proxy and information statements and other information that is filed through the
SEC's EDGAR System. The web site can be accessed at http://www.sec.gov.



                                       77
<PAGE>


                          INDEX TO FINANCIAL STATEMENTS


Report of Independent Registered Public Accounting Firm                      F-1

Consolidated Balance Sheet                                                   F-2

Consolidated Statements of Operations                                        F-3

Consolidated Statement of Stockholders' Equity                               F-4

Consolidated Statements of Cash Flows                                        F-5

Notes to the Consolidated Financial Statements                        F-6 - F-32


                                       78
<PAGE>


             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


To the Board of Directors and Stockholders of
New Motion, Inc.

We have audited the accompanying  consolidated balance sheet of New Motion, Inc.
and subsidiary as of December 31, 2006, and the related consolidated  statements
of income, stockholders' equity, and cash flows for each of the two years in the
period ended December 31, 2006. These consolidated  financial statements are the
responsibility of the Company's management.  Our responsibility is to express an
opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance  with the standards of the Public  Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements  are free of material  misstatement.  THE COMPANY IS NOT  REQUIRED TO
HAVE,  NOR WERE WE ENGAGED TO PERFORM,  AN AUDIT OF ITS  INTERNAL  CONTROL  OVER
FINANCIAL REPORTING.  OUR AUDIT INCLUDED  CONSIDERATION OF INTERNAL CONTROL OVER
FINANCIAL  REPORTING  AS  A  BASIS  FOR  DESIGNING  AUDIT  PROCEDURES  THAT  ARE
APPROPRIATE  IN THE  CIRCUMSTANCES,  BUT NOT FOR THE  PURPOSE OF  EXPRESSING  AN
OPINION ON THE  EFFECTIVENESS  OF THE COMPANY'S  INTERNAL CONTROL OVER FINANCIAL
REPORTING.  ACCORDINGLY  WE EXPRESS  NO SUCH  OPINION.  An audit  also  includes
examining,  on a test basis,  evidence supporting the amounts and disclosures in
the  financial   statements,   assessing  the  accounting  principles  used  and
significant  estimates  made by  management,  as well as evaluating  the overall
financial  statement  presentation.   We  believe  that  our  audits  provide  a
reasonable basis for our opinion.

In our opinion, the consolidated  financial statements referred to above present
fairly, in all material respects, the financial position of New Motion, Inc. and
subsidiary  as of December 31,  2006,  and the results of their  operations  and
their  cash  flows for each of the two years in the period  ended  December  31,
2006, in conformity with accounting  principles generally accepted in the United
States of America.


        /S/ WINDES & MCCLAUGHRY
-------------------------------------------
Windes & McClaughry Accountancy Corporation
Irvine, California
March 30, 2007


                                      F-1
<PAGE>


<TABLE>
                         NEW MOTION, INC. AND SUBSIDIARY

                           CONSOLIDATED BALANCE SHEETS
               (in thousands, except share and per share amounts)

<CAPTION>
                                                           DECEMBER 31,     MARCH 31,
                                                               2006           2007
                                                           ------------   ------------
                                                                           (Unaudited)
<S>                                                        <C>            <C>
                        ASSETS
CURRENT ASSETS
Cash ...................................................   $        544   $     17,720
Accounts receivable, net of allowance for doubtful
 accounts of $1,263 and $700 (unaudited), respectively .          3,527          3,627
Prepaid income taxes ...................................            578            733
Prepaid expenses and other .............................            167            359
Deferred income taxes ..................................            149            149
                                                           ------------   ------------
                                                                  4,965         22,588
                                                           ------------   ------------
PROPERTY AND EQUIPMENT
                                                                    146            865
                                                           ------------   ------------
OTHER ASSETS
Acquisition costs ......................................            336            130
Deposits and other assets ..............................             47             46
Intangible asset .......................................           --              460
                                                           ------------   ------------
                                                                    383            636
                                                           ------------   ------------

TOTAL ASSETS ...........................................   $      5,494   $     24,089
                                                           ============   ============

        LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
 Accounts payable ......................................          2,870          2,370
 Accrued expenses ......................................            837          1,245
 Short-term notes payable to related parties ...........           --              669
 Deferred income taxes .................................            564            564
                                                           ------------   ------------
                                                                  4,271          4,848
                                                           ------------   ------------

LONG TERM LIABILITIES
Note payable ...........................................           --               89

Minority interest in joint venture .....................           --              155

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY
Common stock, par value $0.01, 100,000,000 shares
 authorized, 7,263,688 and 11,680,346 issued and
 outstanding ...........................................             73            118
Additional paid-in-capital .............................             84         18,185
Retained earnings ......................................          1,066            694
                                                           ------------   ------------
                                                                  1,223         18,997
                                                           ------------   ------------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY .............   $      5,494   $     24,089
                                                           ============   ============
</TABLE>


The accompanying notes are an integral part of these consolidated statements.


                                      F-2
<PAGE>


<TABLE>
                         NEW MOTION, INC. AND SUBSIDIARY

                        CONSOLIDATED STATEMENTS OF INCOME
               (in thousands, except share and per share amounts)

<CAPTION>
                                             FOR THE YEAR ENDED      FOR THE THREE MONTHS ENDED
                                                DECEMBER 31,                  MARCH 31,
                                         -------------------------   --------------------------
                                             2005          2006          2006           2007
                                         -----------   -----------   -----------    -----------
                                                                     (Unaudited)    (Unaudited)
<S>                                      <C>           <C>           <C>            <C>
NET SALES ............................   $     5,867   $    18,721   $     3,078    $     5,642

COST OF SALES ........................           267           597            63            726
                                         -----------   -----------   -----------    -----------

GROSS PROFIT .........................         5,600        18,124         3,015          4,916
                                         -----------   -----------   -----------    -----------

EXPENSES
Selling and marketing ................         3,618        11,971           514          2,987
General and administrative ...........         1,289         4,679           880          2,200
                                         -----------   -----------   -----------    -----------
                                               4,907        16,650         1,394          5,187
                                         -----------   -----------   -----------    -----------

INCOME (LOSS) FROM OPERATIONS ........           693         1,474         1,621           (271)
                                         -----------   -----------   -----------    -----------

OTHER EXPENSE (INCOME)
Other expense, net ...................            27            75            24             21
Interest income ......................          --            --            --              (86)
Interest expense .....................             9            14             4              7
                                         -----------   -----------   -----------    -----------

                                                  36            89            28            (58)
                                         -----------   -----------   -----------    -----------
INCOME (LOSS) BEFORE PROVISION
   FOR INCOME TAXES ..................           657         1,385         1,593           (213)

PROVISION FOR INCOME TAXES ...........           270           708           396              4
                                         -----------   -----------   -----------    -----------

INCOME (LOSS) BEFORE MINORITY INTEREST           387           677         1,197           (217)

MINORITY INTEREST, NET OF PROVISION
   FOR INCOME TAX OF $80 .............          --            --            --              155

NET INCOME (LOSS) ....................   $       387   $       677   $     1,197    $      (372)
                                         ===========   ===========   ===========    ===========

NET INCOME (LOSS) PER SHARE:

Basic ................................   $      0.05   $      0.09   $      0.16    $     (0.04)
                                         ===========   ===========   ===========    ===========
Diluted ..............................   $      0.05   $      0.09   $      0.15    $     (0.04)
                                         ===========   ===========   ===========    ===========

WEIGHTED AVERAGE SHARES OUTSTANDING:

Basic ................................     7,263,688     7,263,688     7,263,688      9,483,004
                                         ===========   ===========   ===========    ===========
Diluted ..............................     7,263,688     7,263,688     7,750,426      9,483,004
                                         ===========   ===========   ===========    ===========
</TABLE>


The accompanying notes are an integral part of these consolidated statements.


                                      F-3
<PAGE>


<TABLE>
                         NEW MOTION, INC. AND SUBSIDIARY

                 CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
     FOR THE PERIOD FROM JANUARY 1, 2005 TO DECEMBER 31, 2006 (AUDITED) AND
                 JANUARY 1, 2007 TO MARCH 31, 2007 (UNAUDITED)
                      (in thousands, except share amounts)

<CAPTION>
                                            SERIES A                   SERIES B                   SERIES D
                                    ------------------------   ------------------------   ------------------------
                                      SHARES        AMOUNT       SHARES        AMOUNT       SHARES        AMOUNT
                                    ----------    ----------   ----------    ----------   ----------    ----------
<S>                                       <C>     <C>                <C>     <C>              <C>       <C>
BALANCE AT JANUARY 1, 2005 ......         --      $     --           --      $     --           --      $     --
Retroactive share conversion ....         --            --           --            --           --            --
2005 Recapitalization of New
Motion ..........................         --            --           --            --           --            --
Net income ......................         --            --           --            --           --            --
                                    ----------    ----------   ----------    ----------   ----------    ----------
BALANCE AT DECEMBER 31, 2005 ....         --            --           --            --           --            --

Stock-based compensation expense          --            --           --            --           --            --
Net income ......................         --            --           --            --           --            --
                                    ----------    ----------   ----------    ----------   ----------    ----------
BALANCE AT DECEMBER 31, 2006 ....         --            --           --            --           --            --


Financing Costs related to
reverse acquisition of MPLC .....         --            --           --            --           --            --
Issuance of Series A Preferred
(See Note 6) ....................            1          --           --            --           --            --
MPLC Common Exchange (See Note 6)         --            --           --            --           --            --
Issuance of Series B Preferred
(See Note 6) ....................         --            --            650          --           --            --
Issuance of Series D Preferred
(See Note 6) ....................         --            --           --            --          8,333             1
Equity issuance costs related to
issuance of preferred stock .....         --            --           --            --           --            --
Stock-based compensation expense          --            --           --            --           --            --
Value of warrants issued (See
Note 7) .........................         --            --           --            --           --            --
Reverse split and conversion
(See Note 6) ....................           (1)         --           (650)         --         (8,333)           (1)
Net loss ........................         --            --           --            --           --            --
                                    ----------    ----------   ----------    ----------   ----------    ----------
BALANCE AT MARCH 31, 2007 .......         --      $     --           --      $     --           --      $     --



<CAPTION>
                                             COMMON           ADDITIONAL
                                    -----------------------     PAID-IN      RETAINED
                                      SHARES       AMOUNT       CAPITAL      EARNINGS       TOTAL
                                    ----------   ----------   ----------    ----------    ----------
<S>                                 <C>          <C>          <C>           <C>           <C>
BALANCE AT JANUARY 1, 2005 ......    7,263,688   $     --     $     --      $        2    $        2
Retroactive share conversion ....         --             68          (68)         --            --
2005 Recapitalization of New
Motion ..........................         --              5            5          --              10
Net income ......................         --           --           --             387           387
                                    ----------   ----------   ----------    ----------    ----------
BALANCE AT DECEMBER 31, 2005 ....    7,263,688   $       73   $      (63)   $      389    $      399

Stock-based compensation expense          --           --            147          --             147
Net income ......................         --           --           --             677           677
                                    ----------   ----------   ----------    ----------    ----------
BALANCE AT DECEMBER 31, 2006 ....    7,263,688   $       73   $       84    $    1,066    $    1,223

Financing Costs related to
reverse acquisition of MPLC .....         --           --           (576)         --            (576)
Issuance of Series A Preferred
(See Note 6) ....................         --           --          3,500          --           3,500
MPLC Common Exchange (See Note 6)      250,000            3           (3)         --            --
Issuance of Series B Preferred
(See Note 6) ....................         --           --          6,500          --           6,500
Issuance of Series D Preferred
(See Note 6) ....................         --           --          9,999          --          10,000
Equity issuance costs related to
issuance of preferred stock .....         --           --         (1,529)         --          (1,529)
Stock-based compensation expense          --           --            194          --             194
Value of warrants issued (See
Note 7) .........................         --           --             57          --              57
Reverse split and conversion
(See Note 6) ....................    4,166,658           42          (41)         --            --
Net loss ........................         --           --           --            (372)         (372)
                                    ----------   ----------   ----------    ----------    ----------
BALANCE AT MARCH 31, 2007 .......   11,680,346   $      118   $   18,185    $      694    $   18,997
</TABLE>


The accompanying notes are an integral part of these consolidated statements.


                                      F-4
<PAGE>


<TABLE>
                         NEW MOTION, INC. AND SUBSIDIARY

                      CONSOLIDATED STATEMENT OF CASH FLOWS
                      (in thousands, except share amounts)

<CAPTION>
                                                                                          FOR THE THREE
                                                               FOR THE YEAR ENDED         MONTHS ENDED
                                                                  DECEMBER 31,              MARCH 31,
                                                              --------------------    --------------------
                                                                2005        2006        2006        2007
                                                              --------    --------    --------    --------
                                                                                     (Unaudited) (Unaudited)
<S>                                                           <C>         <C>         <C>         <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) .........................................   $    387    $    677    $  1,197    $   (372)
Adjustments to reconcile net income (loss)
 to net cash from operating activities:
Allowance for doubtful accounts ...........................      1,035         288        (566)       (563)
Depreciation and amortization .............................          9          25           7         194
Stock-based compensation expense ..........................       --           147        --           194
Deferred income taxes .....................................        232         183        --          --
Minority interest in joint venture ........................       --          --          --           155
Changes in operating assets and liabilities:
Accounts receivable .......................................     (2,378)     (2,388)        670         463
Prepaid income taxes ......................................       --          (578)       --          (155)
Prepaid expenses ..........................................        (43)       (124)        (25)       (192)
Deposits and other assets .................................        (42)         (5)         (1)          1
Accounts payable ..........................................      1,028       2,129        (239)       (500)
Accrued expenses ..........................................        198         637         163         408
                                                              --------    --------    --------    --------
 Net Cash Provided By (Used In) Operating Activities               426         931       1,206        (367)
                                                              --------    --------    --------    --------

CASH FLOWS FROM INVESTING ACTIVITIES
Expenditures fort Mobliss transaction .....................       --          (123)       --           (36)
Purchase of property and equipment ........................       (103)        (77)       --           (56)
                                                              --------    --------    --------    --------
Net Cash Used In Investing Activities .....................       (103)       (200)       --           (92)
                                                              --------    --------    --------    --------

CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from recapitalization ............................         10        --          --          --
Borrowings from short-term notes payable to related parties        355        --          --          --
Repayment of short-term notes payable to related parties ..       (341)       (324)        (54)       (530)
Expenditures for equity financing .........................       --          (213)       --          (363)
Issuance of warrants ......................................       --          --          --            57
Issuance of preferred stock ...............................       --          --          --        18,471
                                                              --------    --------    --------    --------
Net Cash Provided By (Used In) Financing Activities .......         24        (537)        (54)     17,635
                                                              --------    --------    --------    --------

NET CHANGE IN CASH ........................................        347         194       1,152      17,176
CASH AT BEGINNING OF PERIOD ...............................          3         350         350         544
                                                              --------    --------    --------    --------
CASH AT END OF PERIOD .....................................   $    350    $    544    $  1,502    $ 17,720
                                                              ========    ========    ========    ========

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
     Cash paid for interest and taxes .....................   $     (3)   $   (969)   $   (146)   $     (2)
                                                              ========    ========    ========    ========
     Non cash financing and investing disclosure (certain
        other non-cash transactions are disclosed in the
        financial statements footnotes):
          Assumption of note payable for expenses paid on
                behalf of the Company .....................   $    295    $   --      $   --      $   --
                                                              ========    ========    ========    ========
          Acquisition of property and equipment by
             isssuance of note payable ....................   $   --      $   --      $   --      $   (708)
                                                              ========    ========    ========    ========
          Acquisition of intangible assets by issuance
             of note payable ..............................   $   --      $   --      $   --      $   (580)
                                                              ========    ========    ========    ========
</TABLE>


The accompanying notes are an integral part of these consolidated statements.


                                      F-5
<PAGE>


                         NEW MOTION, INC. AND SUBSIDIARY

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
          FOR THE YEARS ENDED DECEMBER 31, 2006 AND 2005 (AUDITED) AND
             THREE MONTHS ENDED MARCH 31, 2007 AND 2006 (UNAUDITED)

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

NATURE OF BUSINESS

         New Motion,  Inc.  (the  "Company"  or "New  Motion"),headquartered  in
Irvine, California,  provides a wide range of digital entertainment products and
services, using the power of the Internet, the latest in mobile technology,  and
traditional  marketing / advertising  methodologies  in its three product lines:
MobileSidewalk(TM), RingtoneChannel and Bid4Prizes. MobileSidewalk(TM) is one of
the largest U.S.  based mobile  entertainment  companies,  RingtoneChannel  is a
mobile storefront provider,  and Bid4Prizes is a low-bid mobile auction game. In
2004 the Company began to sell ringtones  internationally  and then launched its
first ringtone subscription service in the USA in February 2005. In August 2005,
the Company launched its first  successful text message  campaign  incorporating
music trivia. In March of 2006, the Company  partnered with Goldpocket  Wireless
to enhance the proficiency and performance of its mobile service  offering.  The
Company manages its business under one entity.

HISTORY

         RingtoneChannel Pty Limited, an Australian  developer and aggregator of
ringtones  ("RingtoneChannel"),  was  incorporated  on February 23, 2004 and was
acquired by BroadSpring,  Inc., a Delaware corporation ("Broadspring"),  in June
2004 as a wholly-owned  subsidiary to explore mobile opportunities in the United
States market.  In March 2005,  Broadspring  stockholders  formed New Motion,  a
Delaware corporation with common ownership with Broadspring,  with the intent of
exploring  mobile  opportunities  in the  USA and the  eventual  possibility  of
transferring  the  mobile  business  out of  Broadspring.  Beginning  June 2005,
RingtoneChannel  continued  operations as a legal subsidiary of New Motion. This
transition  was deemed a  continuation  of an existing  business  controlled  by
common ownership and the historical  operating results of  RingtoneChannel  from
its inception in February 2004 to the date of the recapitalization  (see Note 6)
are  therefore  included  in  the  financial   statements  of  New  Motion.  All
expenditures  by BroadSpring on behalf of  RingtoneChannel  during the period in
which  it was a  subsidiary  of  BroadSpring  were  recorded  in the  historical
operating  results of  RingtoneChannel  and thus were  included in the financial
statements of the combined New  Motion-Ringtone  Channel entity.  The assets and
liabilities of  RingtoneChannel  were recorded at their historical cost basis at
that  time of the  recapitalization  and not  marked  to fair  value  by  either
BroadSpring or New Motion.

         On January 31, 2007,  the Company  entered  into an exchange  agreement
with MPLC, Inc. a Delaware corporation ("MPLC"), and Trinad Capital Master Fund,
Ltd. The closing,  ("Closing") of the transaction occurred on February 12, 2007.
At the Closing, MPLC acquired all of the outstanding shares of the capital stock
of the Company's stock so that New Motion became a publicly traded company,  now
trading  under  the  ticker  "NWMO"  on  the  Over-The-Counter  Bulletin  Board.
Accordingly,  for accounting purposes, the acquisition was treated as a "reverse
acquisition"  and the  Company  is the  "accounting  acquiror."  Therefore,  the
transaction is accounted for as a  recapitalization  of the Company and recorded
based on MPLC's net  tangible  assets  acquired by the  Company.  No goodwill or
other intangible  assets is to be recorded.  Effective at Closing,  MPLC changed
its fiscal year end to December 31. Since the Company is the  surviving  entity,
the financial statements and other data to be reported in MPLC's Form 10-KSB for
the year ended  December 31, 2006 reflects the Company's  historical  results of
operations prior to these transactions.


                                      F-6
<PAGE>


                         NEW MOTION, INC. AND SUBSIDIARY

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
          FOR THE YEARS ENDED DECEMBER 31, 2006 AND 2005 (AUDITED) AND
             THREE MONTHS ENDED MARCH 31, 2007 AND 2006 (UNAUDITED)

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

HISTORY (CONTINUED)

         Effective on May 2, 2007, after receiving the affirmative vote from the
Company's stockholders on March 15, 2007, MPLC changed its corporate name to New
Motion,  Inc.,  completed a  1-for-300  reverse  split of its common  stock (the
"Reverse  Split"),  and  increased  its  authorized  shares of common stock from
75,000,000 to 100,000,000. Upon the effectiveness of the Reverse Split on May 2,
2007, all classes of the Company's preferred stock converted into common stock.

INTERIM FINANCIAL INFORMATION

         The  unaudited  financial  statements  as of March 31, 2007 and for the
three  months  ended  March  31,  2006  and 2007  includes,  in the  opinion  of
management,   all  adjustments  (consisting  of  normal  recurring  adjustments)
necessary  to  present  fairly  the  Company's  financial  position,  results of
operations  and cash flows.  Operating  results for the three months ended March
31, 2007 are not  necessarily  an indication of the results that may be expected
for the entire fiscal year.

PRINCIPLES OF CONSOLIDATION

         The  consolidated   financial   statements   include  the  accounts  of
RingtoneChannel  from its  inception  in February  2004 and the  accounts of New
Motion from its inception in March 2005. All significant  intercompany  balances
and transactions have been eliminated in consolidation.

         The Company has focused its efforts on the high-growth opportunities in
the United  States market with less focus on the  international  market that was
historically  Ringtone  Channel's  business.  As such,  by September  2006,  the
operations of  RingtoneChannel  were essentially  blended into the operations of
New Motion and the Company began the process for the eventual dissolution of the
RingtoneChannel legal entity.


         Beginning in the three months  ended March 31, 2007,  the  consolidated
financial   statements  also  include  the  accounts  of  the  Company's  Mobile
Entertainment  Channel  Corporation  ("MEC") joint venture. On January 19, 2007,
the Company  entered  into a Heads of  Agreement  with Index Visual & Games Ltd.
("IVG")  setting forth the terms of the joint venture to distribute  IVG content
within  North  America and to manage and service the Mobliss,  Inc.  ("Mobliss")
assets  acquired from IVG. In  accordance  with FASB  Interpretation  No. 46(R),
"Consolidation  of  Variable  Interest  Entities  (revised  December  2003) - an
interpretation  of ARB No. 51," the results of MEC have been  consolidated  with
the  Company's  accounts  because the Company (i)  currently  controls the joint
venture's  activities,  (ii)  will  share  equally  in any  dividends  or  other
distributions  made by the joint  venture,  and (iii)  expects to fund the joint
venture and absorb the expected losses for the foreseeable  future.  The Company
owns a 49% stake and IVG owns a 51% stake in the joint  venture.  As a result of
the  consolidation,  the minority  interest  liability on the Company's  balance
sheet represents IVG's interest in operating results of the joint venture.


USE OF ESTIMATES

         The  preparation of financial  statements in conformity with accounting
principles   generally  accepted  in  the  United  States  of  America  requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities,  and disclosure of contingent  assets and liabilities at
the date of the financial  statements,  and the reported amounts of revenues and
expenses during the reporting period.  Significant  estimates made by management
are, among others, the recognition of revenue and related  chargebacks and other
credits,  realizability  of accounts  receivable,  recoverability  of long-lived
assets,  valuation of stock  options and deferred  taxes.  Actual  results could
materially differ from those estimates.


                                      F-7
<PAGE>


                         NEW MOTION, INC. AND SUBSIDIARY

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
          FOR THE YEARS ENDED DECEMBER 31, 2006 AND 2005 (AUDITED) AND
             THREE MONTHS ENDED MARCH 31, 2007 AND 2006 (UNAUDITED)

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

RISKS AND UNCERTAINTIES

         The  Company  operates  in  industries  that  are  subject  to  intense
competition, government regulation and rapid technological change. The Company's
operations  are  subject  to  significant  risks  and  uncertainties   including
financial,  operational,  technological,  regulatory and other risks  associated
with an operating business, including the potential risk of business failure.

FAIR VALUE OF FINANCIAL INSTRUMENTS

         The carrying  amounts of current assets and  liabilities are reasonable
estimates of their fair value because of the short maturity of these items.  The
Company  believes the fair value of its convertible  short-term notes payable to
related parties cannot be estimated as these  transactions can not be considered
to be arm's length transactions. These balances are carried at historical value.
The  Company  determined  that it was not  necessary  to  separately  value  the
conversion feature within the note agreements (See Note 3).

FOREIGN CURRENCY RISK

         The Company has conducted a small amount of sales activity in Australia
which is collected by our billing partner in Australian currency and remitted to
the Company in the U.S. In  addition,  the  Company's  subsidiary  in  Australia
conducts  its  business  in its local  currency.  The  Company  has  experienced
insignificant  foreign exchange gains and losses to date without engaging in any
hedging activities.

         The Company's foreign operations' functional currency is the applicable
local  currency.  Assets  and  liabilities  for  these  foreign  operations  are
translated at the exchange rate in effect at the balance sheet date,  and income
and expenses are  translated at average  exchange  rates  prevailing  during the
year. Translation gains or losses are reflected in the statement of operations.

CONCENTRATION OF CREDIT RISK

         Financial  instruments  that subject the Company to credit risk consist
primarily of cash and accounts  receivable.  The Company maintains cash balances
in bank deposit accounts that, at times,  may exceed  federally  insured limits.
Accounts are  guaranteed  by the Federal  Deposit  Insurance  Corporation  up to
$100,000.  The Company places its cash with high quality financial  institutions
and limits the amount of credit exposure to any one institution. At December 31,
2006 the  Company had  approximately  $400,000  in excess of  federally  insured
limits. The Company has not experienced any losses in such accounts. The Company
extends credit to its customers,  all on an unsecured  basis,  after  performing
certain credit analysis.  The Company performs ongoing credit evaluations of its
customers and maintains an allowance for doubtful  accounts for potential credit
losses.

         The Company is currently utilizing several billing partners in order to
provide  content  and  subsequent  billings  to  its  customers.  These  partner
companies have not had long operating  histories in the U.S. or operations  with
traditional business models. These companies face a greater business risk in the
market place, due to a constant  evolving  business  environment that stems from
the infancy of the U.S. mobile content industry.


                                      F-8
<PAGE>


                         NEW MOTION, INC. AND SUBSIDIARY

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
          FOR THE YEARS ENDED DECEMBER 31, 2006 AND 2005 (AUDITED) AND
             THREE MONTHS ENDED MARCH 31, 2007 AND 2006 (UNAUDITED)

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

CONCENTRATION OF CREDIT RISK (CONTINUED)

         The  Company's  sales were derived  entirely from two customers for the
year  ended  December  31,  2005 and from  three  customers  for the year  ended
December 31, 2006.  For the three  months  ended March 31, 2007,  the  Company's
sales were derived entirely from two customers. For the three months ended March
31,  2006,  the  Company's  sales  were  derived  entirely  from two  customers.
Approximately  99% of the Company's  sales for the year ended  December 31, 2005
and 2006 and for the three months  ended March 31, 2007,  were within the United
States.

The following table reflects the concentration of sales with these customers:

                              FOR THE YEAR ENDED         FOR THE THREE MONTHS
                                 DECEMBER 31,               ENDED MARCH 31,
                          -------------------------   -------------------------
                              2005          2006          2006          2007
                          -------------------------   -------------------------
SIGNIFICANT CUSTOMERS:
REVENUES
Customer A                     22%         34%              87%           15%
Customer B                     78%          6%              13%           - %
Customer C                     - %         60%              - %           85%

ACCOUNTS RECEIVABLE
Customer A                     91%         18%              67%           22%
Customer B                      9%         11%              33%           - %
Customer C                     - %         70%              - %           78%

         For the year ended  December 31, 2005,  the Company's  advertising  and
marketing expenses were concentrated with three vendors,  each of which provided
more than 10% of the total and  collectively  accounted for 58% of total selling
and  marketing  expenses.  For the year ended  December 31, 2006,  the Company's
advertising  and  marketing  expenses  were  concentrated  with one vendor,  who
accounted for 54% of total selling and marketing expenses.  For the three months
ended March 31, 2007,  the Company's  advertising  and  marketing  expenses were
concentrated with two vendors, each of which provided more than 10% of the total
and  collectively  accounted  for more than 50% of total  selling and  marketing
expenses  in the first  quarter of 2007.  For the three  months  ended March 31,
2006, the Company's  advertising and marketing  expenses were  concentrated with
two vendors who accounted for  approximately  40% of total selling and marketing
expenses in the period.

ACCOUNTS RECEIVABLE

         Accounts  receivable  are  stated at the amount  management  expects to
collect  from  outstanding  balances.  The Company  makes  estimates  for future
refunds,  charge backs or credits, and provides for these probable uncollectible
amounts  through a credit to a valuation  allowance  and a reduction of recorded
revenues in the period for which the sale  occurs  based on analyses of previous
rates and trends,  which have  historically  varied between 10% and 17% of gross
revenue.  This reserve is reconciled  once a carrier remits total payment to the
Company's aggregator,  who subsequently remits payments to the Company,  usually
between  90-180 days after  billing.  Balances  that are still  outstanding  and
deemed  uncollectible  after  management has performed this  reconciliation  are
written off through a charge to the  valuation  allowance  and a credit to trade
accounts  receivable.  The Company has an arrangement  with its aggregators that
allows  for  the  collection  of 70%  of the  outstanding  receivable  from  the
aggregator  within 30 days,  instead  of waiting  the 90-180  days for the final
carrier  confirmation of the receivable.  The Company  believes that the reserve
established  against the  accounts  receivable  balance is adequate to cover any
credits  and charge  backs from the  carrier  and that the  Company  will not be
required to repay any amounts to the aggregator.


                                      F-9
<PAGE>


                         NEW MOTION, INC. AND SUBSIDIARY

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
          FOR THE YEARS ENDED DECEMBER 31, 2006 AND 2005 (AUDITED) AND
             THREE MONTHS ENDED MARCH 31, 2007 AND 2006 (UNAUDITED)

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

PROPERTY AND EQUIPMENT

         The Company provides for depreciation  using the  straight-line  method
over the  estimated  useful lives of its property  and  equipment,  ranging from
three  to  five  years.  Repairs  and  maintenance   expenditures  that  do  not
significantly  add value to property  and  equipment,  or prolong its life,  are
charged to expense,  as incurred.  Gains and losses on  dispositions of property
and equipment are included in the operating results of the related period.

IMPAIRMENT OF LONG-LIVED ASSETS

         Long-lived   assets,   such  as  property  and  equipment   subject  to
amortization,  are  reviewed  for  impairment  whenever  events  or  changes  in
circumstances  indicate  that  the  carrying  amount  of an  asset  may  not  be
recoverable.  Assets to be disposed of, if any, would be separately presented in
the balance sheet and reported at the lower of the carrying amount or fair value
less  costs to sell,  and are no  longer  depreciated.  For each of the  periods
reported herein, the Company's management believes there is no impairment of its
long-lived assets.  There can be no assurance,  however,  that market conditions
will not change or demand for the  Company's  products or services will continue
which could result in impairment of long-lived assets in the future.

STOCK-BASED COMPENSATION

         The  Company  has  historically  utilized  the  fair  value  method  of
recording  stock-based  compensation  as  contained  in  Statement  of Financial
Accounting   Standards   ("SFAS")   No.   123,   "Accounting   for   Stock-Based
Compensation,"  as  amended,  whereby,  compensation  expense is measured at the
grant dated based on the value of the award and is  recognized  over the service
period,  which is usually the vesting period. The fair value of stock options is
estimated on the grant date using the Black-Scholes option pricing model.

         In December 2004,  the Financial  Accounting  Standards  Board ("FASB")
issued SFAS No. 123 (revised 2004),  "Share-Based Payment," ("SFAS No. 123(R)"),
which is a revision  of SFAS No.  123.  SFAS No.  123(R)  supersedes  Accounting
Principles Board Opinion No. 25,  "Accounting for Stock Issued to Employees" and
amends SFAS No. 95, "Statement of Cash Flows."  Generally,  the approach in SFAS
No.123(R) is similar to the approach  described in SFAS No. 123.  However,  SFAS
No. 123(R) requires all share-based  payments to employees,  including grants of
employee stock options,  to be recognized in the income statement based on their
fair values.  Pro forma disclosure is no longer an alternative.  SFAS No. 123(R)
also  establishes  accounting   requirements  for  measuring,   recognizing  and
reporting  share-based  compensation,  including income tax considerations.  One
such change was the  elimination  of the minimum value method,  which under SFAS
No. 123  permitted  the use of zero  volatility  when  performing  Black-Scholes
valuations.  Under SFAS No.  123(R),  companies  are  required  to use  expected
volatilities  derived from the  historical  volatility of the  company's  stock,
implied  volatilities  from  traded  options  on the  company's  stock and other
factors.  SFAS No. 123(R) also requires the benefits of tax deductions in excess
of recognized  compensation cost to be reported as a financing cash flow, rather
than as an operating cash flow as required under current accounting literature.


                                      F-10
<PAGE>


                         NEW MOTION, INC. AND SUBSIDIARY

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
          FOR THE YEARS ENDED DECEMBER 31, 2006 AND 2005 (AUDITED) AND
             THREE MONTHS ENDED MARCH 31, 2007 AND 2006 (UNAUDITED)

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

STOCK-BASED COMPENSATION (CONTINUED)

         The provisions of SFAS No. 123(R) were effective for and adopted by the
Company as of January 1, 2006.  As the Company  was using the fair market  value
accounting for stock based  compensation  pursuant to SFAS No. 123, the adoption
of SFAS No.  123(R) was made using the modified  prospective  method.  Under the
modified  prospective  application,  the cost of new awards and awards modified,
repurchased  or cancelled  after the required  effective date and the portion of
awards for which the requisite  service has not been rendered  (unvested awards)
that are outstanding as of the required effective date will be recognized as the
requisite  service is  rendered on or after the  required  effective  date.  The
compensation  cost for that portion of awards  shall be based on the  grant-date
fair value of those awards as calculated under SFAS No. 123.

         Since the Company had previously  recorded stock  compensation  expense
under the fair value method prescribed by SFAS No. 123, the adoption of SFAS No.
123(R) did not have a significant impact on the Company's results of operations,
income taxes or earnings per share.

         The Company estimates stock option forfeiture rates based on historical
trends of its employees.

REVENUE RECOGNITION

         The Company  recognizes  revenue from the sale or  subscription  of its
applications to wireless subscribers under distribution agreements with wireless
carriers  and other  distributors  in the period in which the  applications  are
purchased or over the period in which the applications are subscribed,  assuming
that:  fees are  fixed  and  determinable;  we have no  significant  obligations
remaining;  and collection of the related receivable is reasonably assured.  The
Company makes estimates and creates reserves for future refunds, charge backs or
credits in the period for which the sale  occurs  based on  analyses of previous
rates and trends,  which have  historically  varied between 10% and 17% of gross
revenue.  This reserve is reconciled  once a carrier remits total payment to the
Company's aggregator,  who subsequently remits payment usually 90-180 days after
billing.  Management reviews the revenue by carrier on a monthly basis and gross
billings  on a daily  basis to  identify  unusual  trends  that  could  indicate
operational,   carrier  or  market   issues  which  could  lead  to  a  material
misstatement  in  any  reporting  period.  Additionally,   on  a  weekly  basis,
management  monitors cash settlements  made by carriers to the aggregators.  The
Company's policy is to record differences between recognized revenues and actual
revenue in the next reporting period once the actual amounts are determined.  To
date,  differences  between estimates and ultimate  reconciled revenues have not
been significant.

         Revenue  earned  from  certain   aggregators   may  not  be  reasonably
estimated.  In these  situations,  the Company's policy is to recognize  revenue
upon the receipt of a carrier  revenue  report,  which  usually is received just
prior to actual cash collection  (i.e., on a cash basis).  These revenue amounts
are not significant.

         In  accordance  with  Emerging  Issues Task Force  ("EITF") No.  99-19,
"Reporting  Revenue  Gross as a  Principal  Versus Net as an Agent," the Company
recognizes as revenue the net amount the wireless carrier or distributor pays to
the  Company  upon the sale of  applications,  net of any  service or other fees
earned and  deducted by the  wireless  carrier or  distributor.  The Company has
evaluated its wireless  carrier and  distributor  agreements  and has determined
that it is not the  principal  when selling its  applications  through  wireless
carriers.


                                      F-11
<PAGE>


                         NEW MOTION, INC. AND SUBSIDIARY

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
          FOR THE YEARS ENDED DECEMBER 31, 2006 AND 2005 (AUDITED) AND
             THREE MONTHS ENDED MARCH 31, 2007 AND 2006 (UNAUDITED)

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

SOFTWARE DEVELOPMENT COSTS

         The Company accounts for software  development costs in accordance with
SFAS No. 86,  "Accounting for the Costs of Computer  Software to Be Sold, Leased
or  Otherwise  Marketed."  Costs  incurred in the research  and  development  of
software  products and enhancements to existing  software  products are expensed
until the time when  technological  feasibility is  established.  Costs incurred
from that point through the point the product is available  for general  release
to customers are capitalized. Under the Company's current practice of developing
new applications,  the technological  feasibility of the underlying  software is
not established until substantially all product  development is complete,  which
generally includes the development of a working model. As a result, to date, the
Company has not capitalized  any costs relating to its  application  development
because the costs incurred after the establishment of technological  feasibility
of  applications  have not been  significant.  The Company does not consider the
amount of the Company's software development costs to be material for the period
presented.

ADVERTISING AND MARKETING EXPENSE

         The Company expenses  advertising and marketing costs as incurred.  For
the quarters ended March 31, 2006 and 2007,  advertising and marketing  expenses
were $514,000 and  $2,987,000,  respectively.  For the years ended  December 31,
2005  and  2006,   advertising  and  marketing   expenses  were  $3,618,000  and
$11,971,000, respectively.

INCOME TAXES

         Income taxes are accounted  for under the asset and  liability  method.
Deferred  tax  assets  and   liabilities  are  recognized  for  the  future  tax
consequences   attributable  to  differences  between  the  financial  statement
carrying  amounts  of 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.  The effect on deferred tax
assets and liabilities of a change in tax rates is recognized in the period that
includes the enactment date. The Company increased it valuation  allowance as of
December 31, 2006 to $27,000, from $0 as of December 31, 2005.

         The  Company  provides a valuation  allowance  against a portion of its
deferred  tax assets.  In  assessing  the  realization  of deferred  tax assets,
management  weighs the positive and negative evidence to determine if it is more
likely than not that some or all of the  deferred  tax assets will be  realized.
The ultimate realization of deferred tax assets is dependent upon the generation
of future taxable income in the appropriate tax jurisdiction.  A decrease in the
Company's  valuation  allowance would result in an immediate material income tax
benefit,  an increase in total assets and stockholder's  equity and could have a
significant impact on earnings in future periods.

         The  Company's  estimate  of the  value  of its tax  reserves  contains
assumptions based on past experiences and judgments about the  interpretation of
statutes, rules and regulations by taxing jurisdictions. It is possible that the
ultimate resolution of these matters may be greater or less than the amount that
the Company estimated. If payment of these amounts proves to be unnecessary, the
reversal of the liabilities would result in tax benefits being recognized in the
period in which it is determined that the  liabilities are no longer  necessary.
If the  estimate  of  tax  liabilities  proves  to be  less  than  the  ultimate
assessment, a further charge to expense would result. Uncertainties are recorded
in accordance with SFAS No. 5, "Loss Contingencies."


                                      F-12
<PAGE>


                         NEW MOTION, INC. AND SUBSIDIARY

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
          FOR THE YEARS ENDED DECEMBER 31, 2006 AND 2005 (AUDITED) AND
             THREE MONTHS ENDED MARCH 31, 2007 AND 2006 (UNAUDITED)

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

INCOME TAXES (CONTINUED)

         The  Company and its  subsidiaries  file income tax returns in the U.S.
and Australian federal  jurisdictions and the state of California  jurisdiction.
The Company is subject to U.S. and Australia federal examinations and California
state  examinations by tax authorities.  The statute of limitations for 2005 and
2006 in all  jurisdictions  remains open and are subject to  examination  by tax
authorities.

         The  Company  adopted the  provisions  of FASB  Interpretation  No. 48,
Accounting for  Uncertainty in Income Taxes,  on January 1, 2007. As a result of
the implementation of Interpretation 48, the Company recognized approximately $0
increase  in  the  liability  for  unrecognized  tax  benefits.  The  amount  of
unrecognized  tax benefits as of January 1, 2007, and March 31, 2007, are $0 and
$0, respectively.

         Included in the balance at January 1, 2007, are $0 of tax positions for
which the  ultimate  deductibility  is  highly  certain  but for which  there is
uncertainty  about the  timing of such  deductibility.  Because of the impact of
deferred tax accounting,  other than interest and penalties, the disallowance of
the shorter  deductibility period would not affect the annual effective tax rate
but would  accelerate  the payment of cash to taxing  authorities  to an earlier
period.  Also included in the balance at January 1, 2007, are $0 of unrecognized
tax benefits  that, if  recognized,  would impact the  effective  tax rate.  The
Company expects no adjustment to its amount of unrecognized  tax benefits during
2007.

         The  Company  recognizes  interest  and  penalties  accrued  related to
unrecognized  tax  benefits  in income tax  expense.  The  Company had no amount
accrued for the payment of interest and penalties at March 31, 2007.


                                      F-13
<PAGE>


                         NEW MOTION, INC. AND SUBSIDIARY

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
          FOR THE YEARS ENDED DECEMBER 31, 2006 AND 2005 (AUDITED) AND
             THREE MONTHS ENDED MARCH 31, 2007 AND 2006 (UNAUDITED)

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

EARNINGS PER SHARE

         Basic  earnings  per share  ("EPS") is computed  by  dividing  reported
earnings by the weighted  average  number of shares of common stock  outstanding
for the  period.  Diluted EPS  includes  the  effect,  if any, of the  potential
issuance of  additional  shares of common  stock as a result of the  exercise or
conversion of dilutive  securities,  using the treasury stock method.  Potential
dilutive securities for the Company include outstanding stock options,  warrants
and  convertible  debt.  Basic and diluted EPS reflects the Exchange and Reverse
Split,  retroactively  applied to the common stock and common stock  equivalents
for the periods presented.

NEW ACCOUNTING PRONOUNCEMENTS

         In  September   2006,  the  FASB  issued  SFAS  No.  157,  "Fair  Value
Measurements." SFAS No. 157 establishes a framework for measuring the fair value
of assets and  liabilities.  This  framework  is intended  to provide  increased
consistency  in how fair value  determinations  are made under various  existing
accounting  standards that permit,  or in some cases require,  estimates of fair
market  value.  SFAS No. 157 is  effective  for  fiscal  years  beginning  after
November 15, 2007,  and interim  periods  within  those  fiscal  years.  Earlier
adoption is  encouraged,  provided that the reporting  entity has not yet issued
financial  statements for that fiscal year,  including any financial  statements
for an interim  period within that fiscal year.  The Company is currently in the
process  of  evaluating  the  impact  of  this  pronouncement  on its  financial
statements.

         In June 2006, the FASB issued  Interpretation  No. 48,  "Accounting for
Uncertainty  in Income Taxes --an  interpretation  of FASB  Statement  No. 109,"
which clarifies the accounting for uncertainty in income taxes  recognized in an
enterprise's  financial  statements in accordance with SFAS No. 109, "Accounting
for Income Taxes." This Interpretation  prescribes a comprehensive model for how
a company  should  recognize,  measure,  present and disclose in its  financials
statements uncertain tax positions that it has taken or expects to take on a tax
return,  including  a  decision  whether  to file or not to file a  return  in a
particular jurisdiction. Under the Interpretation, the financial statements must
reflect expected future tax consequences of these positions presuming the taxing
authorities'  full  knowledge  of the  position  and  all  relevant  facts.  The
Interpretation   also  revises   disclosure   requirements   and   introduces  a
prescriptive,  annual,  tabular  roll-forward of the  unrecognized tax benefits.
This  Interpretation  is effective for fiscal years beginning after December 15,
2006. The Company adopted this  interpretation  in the first quarter of 2007 and
has determined that it has not had a material impact on its financial  position,
results of operations or cash flows.

         In September 2006, the Securities and Exchange  Commission issued Staff
Accounting  Bulletin  ("SAB")  No. 108,  "Considering  the Effects of Prior Year
Misstatements   When   Quantifying   Misstatements  in  Current  Year  Financial
Statements",  which  provides  interpretive  guidance  on how the effects of the
carryover  or  reversal  of prior year  misstatements  should be  considered  in
quantifying a current year  misstatement.  The Company was required to adopt the
provisions  of SAB No. 108 in its fiscal  year 2006.  The  Company  adopted  the
provisions  of SAB No. 108 in the quarter  ended March 31,  2007.  To date,  the
adoption  of SAB  No.  108 has not had a  material  impact  on its  consolidated
financial position, results of operations or cash flows.


                                      F-14
<PAGE>


                         NEW MOTION, INC. AND SUBSIDIARY

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
          FOR THE YEARS ENDED DECEMBER 31, 2006 AND 2005 (AUDITED) AND
             THREE MONTHS ENDED MARCH 31, 2007 AND 2006 (UNAUDITED)

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

NEW ACCOUNTING PRONOUNCEMENTS (CONTINUED)

         In February  2007,  FASB issued FAS No. 159,  The Fair Value Option for
Financial Assets and Financial  Liabilities  ("FAS 159"),  which gives companies
the option to measure eligible financial assets,  financial liabilities and firm
commitments   at  fair   value   (i.e.,   the   fair   value   option),   on  an
instrument-by-instrument basis, that are otherwise not permitted to be accounted
for at fair value under other accounting standards. The election to use the fair
value option is available when an entity first  recognizes a financial  asset or
liability or upon entering into a firm  commitment.  Subsequent  changes in fair
value  must  be  recorded  in  earnings.  FAS  159 is  effective  for  financial
statements issued for fiscal year beginning after November 15, 2007. The Company
does  not  expect  adoption  of FAS  159  will  have a  material  impact  on our
consolidated results of operations or financial position.

         In December  2006,  the FASB issued FASB Staff  Position  EITF 00-19-2,
"Accounting for Registration  Payment  Arrangements" (" FSP EITF 00-19-2").  FSP
EITF 00-19-2 specifies that the contingent obligation to make future payments or
otherwise  transfer  consideration  under a  registration  payment  arrangement,
whether issued as a separate agreement or included as a provision of a financial
instrument or other agreement,  should be separately  recognized and measured in
accordance  with SFAS No. 5,  "Accounting for  Contingencies."  FSP EITF 00-19-2
further clarifies that a financial  instrument subject to a registration payment
arrangement  should be accounted for in accordance  with other  applicable  GAAP
without regard to the contingent obligation to transfer  consideration  pursuant
to the  registration  payment  arrangement.  FSP EITF 00-19-2 is  effective  for
registration payment arrangements and the financial instruments subject to those
arrangements that are entered into or modified  subsequent to December 21, 2006.
For registration payment arrangements and financial instruments subject to those
arrangements  that were entered into prior to the issuance of FSP EITF  00-19-2,
the  standard is  effective  for  financial  statements  issued for fiscal years
beginning  after  December 15,  2006,  and interim  periods  within those fiscal
years.  Early  adoption  for  interim  or annual  periods  for  which  financial
statements or interim reports have not been issued is permitted. The adoption of
FSP EITF 00-19-2 has not had a material  impact on our  consolidated  results of
operations or financial position.

NOTE 2 - PROPERTY AND EQUIPMENT

         Property and equipment consists of the following:

                                                   DECEMBER 31,      MARCH 31,
                                                       2006            2007
                                                   ------------    ------------
Computer hardware and software .................   $     71,000         815,000
Furniture and fixtures .........................        109,000         130,000
                                                   ------------    ------------
                                                        180,000         945,000
Less: accumulated depreciation .................        (34,000)        (80,000)
                                                   ------------    ------------
                                                   $    146,000    $    865,000
                                                   ============    ============

         Depreciation expense for the three months ended March 31, 2006 and 2007
totaled  $6,000 and  $7,000,  respectively.  Depreciation  expense for the years
ended to December 31, 2005 and 2006 totaled $9,000 and $25,000, respectively.


                                      F-15
<PAGE>


                         NEW MOTION, INC. AND SUBSIDIARY

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
          FOR THE YEARS ENDED DECEMBER 31, 2006 AND 2005 (AUDITED) AND
             THREE MONTHS ENDED MARCH 31, 2007 AND 2006 (UNAUDITED)

NOTE 3 - DEBT AND NOTES PAYABLE

NOTES TO FUND OPERATING EXPENSES

         During  June and August  2005,  the  Company  entered  into a series of
short-term  notes  with  certain of its  executives  to fund  general  operating
expenses.  The notes were all twelve month notes that bore 7.5% simple  interest
per annum.  The notes  included the right to convert the notes into common stock
of the Company,  at the option of the Company,  upon the first equity  financing
transaction of at least $500,000. The conversion price for these notes was to be
80% of the per share price of the equity transaction.  In addition, in the event
of such an equity financing transaction, under the terms of the note agreements,
the Company would have been required to issue stock warrants to the note holders
totaling 30% of the number of shares issuable upon conversion of the notes.  The
conversion price of the warrants would have been equal to the per share price of
the equity transaction. The Company reviewed the terms of the conversion feature
and  contingent  warrants  within these note  agreements  in light of EITF 98-5,
"Accounting for Convertible  Securities with Beneficial  Conversion  Features or
Contingently  Adjustable  Conversion  Ratios," and EITF 00-27,  "Application  of
Issue No. 98-5 to Certain Convertible  Instruments," and concluded that separate
accounting  for these  features at the date of issuance was not necessary  since
(i) the  conversion  was at the  option of the  Company,  (ii) this  option  was
contingent upon a future  undeterminable  event,  and (iii) the number of shares
and warrants to be issued was not determinable until the future event would have
occurred.  As of  December  31,  2005,  no  such  equity  transaction  had  been
consummated  by the  Company.  The  remaining  balances of these  notes  totaled
$270,000 as of December  31, 2005 and $0 as of December  31, 2006 as these notes
were repaid in full.

         In June 2005, in connection with the transaction with BroadSpring,  the
Company  issued a short-term  note payable to  Broadspring  related to marketing
expenses incurred by Broadspring on behalf of Ringtone Channel. Under this note,
the Company  undertook to reimburse the  marketing  expenses  totaling  $295,000
within one year.  This note  carried  interest at a rate of 3.4% per annum.  The
remaining  balance of this note was $53,730 as of December 31,  2005,  and as of
December 31, 2006 the note was repaid in full.


                                      F-16
<PAGE>


                         NEW MOTION, INC. AND SUBSIDIARY

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
          FOR THE YEARS ENDED DECEMBER 31, 2006 AND 2005 (AUDITED) AND
             THREE MONTHS ENDED MARCH 31, 2007 AND 2006 (UNAUDITED)

NOTE 3 - DEBT AND NOTES PAYABLE (CONTINUED)

PURCHASE OF MOBLISS ASSETS AND IVG NOTE

         On  January  19,  2007,  the  Company  entered  into an Asset  Purchase
Agreement  with IVG,  pursuant to which the Company  purchased  from IVG certain
mobile  associated  assets of Mobliss,  Inc.  ("Mobliss").  These  assets do not
constitute  substantially  all of the assets or the ongoing  business of Mobliss
and thus will be accounted for at cost  consistent with the purchase of specific
assets and not the acquisition of a business.  The Company  purchased the assets
specified  in the Asset  Purchase  Agreement  through  the  issuance to IVG of a
convertible  promissory note (the "IVG Note") with an aggregate principal amount
of up to $2,320,000.  Pursuant to the terms of the Asset Purchase Agreement,  on
January 19, 2007, the Company consummated the initial closing of the acquisition
wherein the Company  issued the IVG Note in the principal  amount of $500,000 to
IVG and  received  all of the assets to be  purchased  under the Asset  Purchase
Agreement,  other than certain cellular carrier connection  contracts  described
under the Asset Purchase  Agreement.  On January 26, 2007, the Company increased
the principal amount of the IVG Note by $580,000 to $1,080,000 in payment of the
assignment of one of the cellular  carrier  connection  contracts  listed in the
Asset Purchase  Agreement.  On February 26, 2007, the Company repaid $500,000 of
the IVG Note. The Company and IVG are continuing to use commercially  reasonable
efforts to facilitate an  assignment of the  agreements  not yet assigned to the
Company in the initial  closing or to  facilitate  the issuance and execution of
new  agreements  between the carriers and the Company.  Pursuant to the terms of
the Asset Purchase Agreement, the Company may pay additional sums to IVG for any
new cellular carrier  connection  contracts assigned or issued to the Company by
increasing  the principal  amount of the IVG Note up to a maximum of $2,320,000.
Unless requested by it, the Company has no obligation to purchase any additional
cellular  carrier  connection  contracts  beyond what was already  purchased  at
February 28, 2007.

         The IVG Note bears  interest at the rate of 5% per annum  accruing from
the time amounts are advanced  thereunder and matures on the earlier of November
30,  2007 or 30 days  after  delivery  by IVG of written  notice to the  Company
demanding payment. Prior to repayment,  IVG may convert the IVG Note into shares
of common  stock at a  conversion  price of $3.44  per share (on a  post-Reverse
Split basis). The IVG Note automatically converts into shares of common stock at
a conversion  price of $3.44 (on a post-Reverse  Split basis) upon the date that
the  common  stock is  listed on the New York  Stock  Exchange,  American  Stock
Exchange,  Nasdaq  Global  Market or Nasdaq  Capital  Market.  The Company  also
granted  IVG  piggyback   registration  rights  for  the  shares  issuable  upon
conversion  of the IVG Note.  However,  the Company is not obligated to register
these shares within any specific  period of time. In accordance  with EITF 98-5,
"Accounting for Convertible  Securities with Beneficial  Conversion  Features or
Contingently Adjustable Conversion Ratios, and EITF 00-27, "Application of Issue
No. 98-5 to Certain Convertible Instruments," the Company has accounted for this
note as short-term debt and has not separately valued the convertibility feature
of  the  IVG  Note  because  (i)  this  option  was  contingent  upon  a  future
undeterminable   event,  (ii)  the  number  of  shares  to  be  issued  was  not
determinable until the future event would have occurred and (iii) the derivative
component of the IVG Note is embedded and not detachable from the IVG Note.

         In addition to the IVG Note, the Company also has a note payable due to
Oracle for hardware and software  purchases  made on February 28, 2007. The term
of the note is two years and interest charged there under is approximately 8%.


                                      F-17
<PAGE>


                         NEW MOTION, INC. AND SUBSIDIARY

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
          FOR THE YEARS ENDED DECEMBER 31, 2006 AND 2005 (AUDITED) AND
             THREE MONTHS ENDED MARCH 31, 2007 AND 2006 (UNAUDITED)

NOTE 4 - THE MOBILE ENTERTAINMENT CHANNEL CORPORATION JOINT VENTURE

         Concurrent  with the signing of the Asset Purchase  Agreement with IVG,
the Company also entered into a Heads of Agreement  with IVG,  setting forth the
terms of a joint venture with IVG to distribute IVG content within North America
and to  manage  and  service  the  assets  acquired  under  the  Asset  Purchase
Agreement.  The joint  venture,  The Mobile  Entertainment  Channel  Corporation
("MEC"),  is a Nevada  corporation in which the Company will own a 49% stake and
IVG will own a 51% stake.  The joint venture is to be managed by a  three-member
board,  with  each  party  designating  one  member  and both  parties  mutually
designating  the third  member of the  board.  The  Company  will  enter  into a
management  services  agreement with the joint venture pursuant to which it will
pay the joint  venture a management  fee equal to the purchase  price paid under
the Asset Purchase Agreement,  with a maximum fee of $2,320,000,  for management
services  rendered by the joint venture.  The Company made an advance payment on
the  management  fee of $500,000 on March 12, 2007,  which was eliminated in the
consolidation of MEC into the Company's consolidated  financial statements,  and
expects to make another  $500,000  advance  payment on June 30,  2007,  with the
remainder of the management fee payable in quarterly installments,  through June
30, 2008.  Beyond the advance  payments,  each quarterly  management fee payment
made by the Company to the joint venture will equal 10% of the revenue generated
from the  assets the  Company  acquired  from IVG.  The joint  venture  has been
established and the Company is in the process of evaluating,  with IVG,  various
Asian-themed content for placement in the joint venture.


         The Company's condensed  consolidated  financial statements include the
accounts of the MEC joint venture.  In accordance with FASB  Interpretation  No.
46(R), "Consolidation of Variable Interest Entities (revised December 2003) - an
interpretation  of ARB No. 51," the results of MEC have been  consolidated  with
the  Company's  accounts  because the Company (i)  currently  controls the joint
venture's  activities,  (ii)  will  share  equally  in any  dividends  or  other
distributions  made by the joint  venture,  and (iii)  expects to fund the joint
venture and absorb the expected losses for the foreseeable  future.  As a result
of the  consolidation  of MEC,  for the first  quarter of 2007 the  Company  has
recorded  $155,000  of minority  interest,  net of  provision  for income tax of
$80,000,  which represents IVG's interest in the operating  results of the joint
venture.  This  minority  interest  also offsets the net tangible  assets of the
joint venture reflected on the Company's  consolidated balance sheet as of March
31, 2007.



                                      F-18
<PAGE>


                         NEW MOTION, INC. AND SUBSIDIARY

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
          FOR THE YEARS ENDED DECEMBER 31, 2006 AND 2005 (AUDITED) AND
             THREE MONTHS ENDED MARCH 31, 2007 AND 2006 (UNAUDITED)

NOTE 5 - INTANGIBLE ASSETS

         The  Company's   intangible   assets  consist  of  a  cellular  carrier
connection  contract acquired pursuant to the Asset Purchase Agreement with IVG.
The gross  carrying  amount  of the  cellular  carrier  connection  contract  is
$580,000 and as of March 31, 2007 the  amortization  applicable to this contract
was $120,000,  resulting in a net carrying amount of $460,000.  The value of the
contract is being amortized over the one year term of the contract.

NOTE 6 - STOCKHOLDERS' EQUITY

         RingtoneChannel  was  incorporated on February 23, 2004 with authorized
common stock of 100 shares at $1 par value. New Motion was incorporated on March
21,  2005 with an  authorized  common  stock of  10,000,000  shares at $.001 par
value.  As discussed in Note 1,  RingtoneChannel  was  transferred to New Motion
from  BroadSpring,  under common  ownership  with New Motion.  Accordingly,  New
Motion  from  its  inception  was  considered  to  be  a  continuation   of  the
RingtoneChannel  business. In connection with this transfer,  the Company issued
1,000,000  shares to its  stockholders  in May 2005 in return  for  $100,000  in
proceeds and then paid $90,000 of these proceeds back to Broadspring for all the
outstanding shares of RingtoneChannel. The change in the equity structure of the
Company at the time of the transfer was a recapitalization  with net proceeds of
$10,000 but no change in the percentage of ownership  amongst the  stockholders.
In June 2005,  the Board of  Directors  of the Company  approved a 5 for 1 stock
split, thus increasing issued and outstanding common stock to 5,000,000 shares.

         In November  2005,  the Board of Directors  approved an employee  stock
incentive  program  whereby  1,000,000  shares of common stock were reserved for
issuance under the Stock Incentive Plan.

         On January 31, 2007,  the Company  entered  into an exchange  agreement
with MPLC and Trinad  Capital  Master  Fund,  Ltd.  The closing of the  Exchange
occurred  on  February  12,  2007.  At the  closing,  MPLC  acquired  all of the
outstanding  shares of the capital  stock of the  Company.  In exchange  for the
stock,  MPLC issued to the New Motion's  stockholders  500,000  shares of MPLC's
Series C Convertible  Preferred  Stock, par value $0.10 per share (the "Series C
Preferred  Stock"),  which was  subsequently  converted into 7,263,688 shares of
MPLC's common stock on May 2, 2007. After the Exchange, the stockholders of MPLC
immediately prior to the Exchange owned approximately 250,000 post-Reverse Split
common shares of the Company.

         On  May 2,  2007  the  Company  filed  an  amendment  to  its  restated
certificate  of  incorporation  with the  Secretary  of  State  of the  State of
Delaware,  to change its corporate name to New Motion,  Inc. from MPLC, Inc., to
increase  the  authorized  shares of common stock from 75 million to 100 million
and to effect a 1-for-300  reverse  stock split.  These matters were approved by
the  requisite  vote of the  stockholders  of the Company on March 15, 2007.  As
such, for comparative purposes, the 7,263,688 shares of outstanding common stock
of the combined entity, after  recapitalization and the 1-for-300 Reverse Split,
has been retroactively applied consistently throughout all periods presented.


                                      F-19
<PAGE>


                         NEW MOTION, INC. AND SUBSIDIARY

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
          FOR THE YEARS ENDED DECEMBER 31, 2006 AND 2005 (AUDITED) AND
             THREE MONTHS ENDED MARCH 31, 2007 AND 2006 (UNAUDITED)

NOTE 6 - STOCKHOLDERS' EQUITY (CONTINUED)

         As a result of the $20 million in financing  transactions,  the Company
issued one share of Series A Preferred  Stock on January 19, 2007, 650 shares of
Series B  Preferred  Stock on  February  12,  2007 and 8,333  shares of Series D
Preferred  Stock on March 6, 2007. As a result of the Reverse  Split,  which was
approved on March 15, 2007 and effective May 2, 2007,  the one share of Series A
Preferred Stock  automatically  converted into 1,200,000 shares of common stock,
the 650  shares  of  Series  B  Preferred  Stock  automatically  converted  into
1,300,000  shares of common  stock  and the 8,333  shares of Series D  Preferred
Stock automatically  converted into 1,666,658 shares of common stock. The effect
of the Reverse  Split and of the  conversion  of all classes of preferred  stock
into  common  shares of the  Company  have  been  retroactively  applied  to the
financing transactions.

         Pursuant to a registration  rights  agreement  entered into on February
28, 2007, the Company is required to file a registration  statement with the SEC
to register the common stock issued in  connection  with the  conversion  of the
Series D  Preferred  Stock.  The  Company is  subject  to payment of  liquidated
damages  of  one  percent  of the  Series  D  aggregate  purchase  price  if the
registration  statement  is not filed  within 75 days of the Series D financing,
which closed on March 6, 2007,  the date the Company  received the cash proceeds
of the Series D  financing.  The  Company is subject to a further 1%  liquidated
damages payment for each 30-day period in which the  registration  statement has
not been filed, up to a maximum of 12% of the Series D aggregate purchase price.

NOTE 7 - STOCK BASED COMPENSATION

         To ensure  consistency  across all periods  presented,  the options and
warrants,  and the associated prices thereof,  have been retroactively  adjusted
for the Exchange and for the Reverse Split.

2005 STOCK INCENTIVE PLAN

         In 2005,  the  Company  established  the  Stock  Incentive  Plan,  (the
"Plan"),  for eligible employees and other directors and consultants.  Under the
Plan,  officers,  employees and non-employees may be granted options to purchase
the Company's  common stock at no less than 100% of the market price at the date
the option is granted.  Since the Company's stock was not publicly  traded,  the
market  price at the date of grant was  historically  determined  by third party
valuation. Incentive stock options granted to date typically vest at the rate of
33% on the  anniversary  of the  vesting  commencement  date,  and 1/24th of the
remaining  shares on the last day of each month  thereafter  until fully vested.
The options expire ten years from the date of grant subject to cancellation upon
termination  of  employment or in the event of certain  transactions,  such as a
merger of the Company. In connection with the Exchange transaction  discussed in
Note 12, there could be a modification to the stock incentive plan.

2007 STOCK INCENTIVE PLAN

         On February 16, 2007,  the  Company's  board of directors  approved our
2007 Stock  Incentive  Plan (the "2007  Plan").  On March 15, 2007,  the Company
received,  by written  consent of  holders of a majority  of all  classes of its
common and preferred  stock voting  together and as a single class,  approval of
the 2007 Plan. Under the 2007 Plan, officers, employees and non-employees may be
granted  options to purchase the Company's  common stock at no less than 100% of
the market  price at the date the option is  granted.  Incentive  stock  options
granted under the 2007 Plan typically vest at the rate of 33% on the anniversary
of the vesting commencement date, and 1/24th of the remaining shares on the last
day of each month  thereafter  until fully vested.  The options expire ten years
from the date of grant subject to cancellation upon termination of employment or
in the event of certain transactions, such as a merger of the Company.


                                      F-20
<PAGE>


                         NEW MOTION, INC. AND SUBSIDIARY

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
          FOR THE YEARS ENDED DECEMBER 31, 2006 AND 2005 (AUDITED) AND
             THREE MONTHS ENDED MARCH 31, 2007 AND 2006 (UNAUDITED)

NOTE 7 - STOCK BASED COMPENSATION (CONTINUED)

OPTION VALUATION

         To value  awards  granted,  the Company uses the  Black-Scholes  option
pricing model.  The Company  determines the assumptions in this pricing model at
the grant date.  For options  granted prior to January 1, 2006, the Company used
the minimum value method for volatility, as permitted by SFAS No. 123, resulting
in 0%  volatility.  For options  granted or modified  after January 1, 2006, the
Company bases expected  volatility on the historical  volatility of a peer group
of publicly  traded  entities.  The Company has limited  history  with its stock
option  grants,  during which time there has been limited stock option  exercise
and forfeiture activity on which to base expected maturity. Management estimates
that on average,  options will be outstanding  for  approximately  7 years.  The
Company bases the risk-free rate for the expected term of the option on the U.S.
Treasury Constant Maturity rate as of the grant date.

         The fair value of each option award within the 2005 Plan was  estimated
on the date of grant or modification using a Black-Scholes  valuation model that
used the assumptions noted in the following table:

<TABLE>
<CAPTION>
GRANT/MODIFICATION DATE                 JUNE 2005        JUNE 2005       SEPTEMBER 2006    SEPTEMBER 2006
----------------------------------   --------------    --------------    --------------    --------------
                                         (Grant)           (Grant)       (Modification)        (Grant)
<S>                                  <C>               <C>               <C>               <C>
Stock price ......................   $         0.22    $         0.22    $         1.17    $         1.17
Strike Price .....................   $         0.48    $         0.53    $         0.48    $         2.34
Maturity .........................          7 years           7 years           7 years           7 years
Risk free interest rate ..........                4%                4%                5%                5%
Volatility .......................                0%                0%               86%               86%
Fair market value per share ......             None              None    $         1.02    $         0.82
Forfeiture rate ..................                0%                0%                0%                0%
</TABLE>

         The fair value of each  option  award  under the 2007 Plan,  during the
quarter  ended  March  31,  2007 was  estimated  on the  date of  grant  using a
Black-Scholes  valuation model that used the assumptions  noted in the following
table:

                              FEBRUARY 2007
                              -------------
                                 (Grant)
Stock price ...............   $        6.00
Strike Price ..............   $        6.00
Maturity ..................         7 years
Risk free interest rate ...               5%
Volatility ................              86%
Fair market value per share   $        4.72
Forfeiture rate ...........               5%


                                      F-21
<PAGE>


                         NEW MOTION, INC. AND SUBSIDIARY

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
          FOR THE YEARS ENDED DECEMBER 31, 2006 AND 2005 (AUDITED) AND
             THREE MONTHS ENDED MARCH 31, 2007 AND 2006 (UNAUDITED)

NOTE 7 - STOCK BASED COMPENSATION (CONTINUED)

OPTION VALUATION (CONTINUED)

         As part  of  Scott  Walker's  2007  employment  agreement,  Mr.  Walker
received an option to purchase 37,500 shares of the Company's common stock at an
exercise  price per share of $6.60 (on a post  Reverse-Split  basis)  and a five
year term,  however,  all options to purchase  equity  securities of New Motion,
Inc. which were previously  granted to Mr. Walker were cancelled pursuant to the
terms of the Employment Agreement. The fair value of the option granted to Scott
Walker was estimated on the date of grant using a Black-Scholes  valuation model
that used the assumptions noted above, except that the strike price was $6.60.

         The  Company  determines  stock  option  forfeiture  rates based on the
historical trends of its employees.

STOCK INCENTIVE PLAN ACTIVITY

         Because the  following  tables  present  information  that reflects the
retroactive  application  of the  Exchange  and the Reverse  Split,  in order to
reconcile the number of shares presented in the following tables with the number
of shares presented in our most recent Form 10KSB,  which presents  pre-Exchange
and  pre-Reverse  Split  shares,  the  Exchange  ratio  of  1.452737  should  be
multiplied by the number of pre-Exchange, pre-Reverse Split shares to derive the
number of shares in this footnote.

         Stock option  activity under the 2005 Plan and 2007 Plan was as follows
(amounts presented on a post-Exchange and post-Reverse Split basis):

<TABLE>
<CAPTION>
                                                                 WEIGHTED-    ESTIMATED
                                                                  AVERAGE     AGGREGATE
                                                   NUMBER OF     EXERCISE     INTRINSIC
                                                    SHARES         PRICE        VALUE
                                                  ----------    ----------   ----------
<S>                                                <C>          <C>          <C>
Outstanding at January 1, 2005 ................         None
Granted .......................................    1,375,017    $     0.50
                                                  ----------
Outstanding at December 31, 2005 ..............    1,375,017    $     0.50
                                                  ==========
Exercisable at December 31, 2005 ..............       43,582    $     0.48
                                                  ==========

Granted .......................................        7,264    $     2.34
Forfeited or cancelled ........................      (32,687)   $     0.48
                                                  ----------
Outstanding at December 31, 2006 ..............    1,349,594    $     0.51   $  892,000
                                                  ==========
Vested or expected to vest at December 31, 2006    1,349,594    $     0.51   $  892,000
                                                  ==========
Exercisable at December 31, 2006 ..............      776,225    $     0.50   $  518,000
                                                  ==========

Granted .......................................      443,700    $     6.05
Forfeited or cancelled ........................     (581,095)   $     0.53
                                                  ----------
Outstanding at March 31, 2007 .................    1,212,199    $     2.53   $4,206,000
                                                  ==========
Vested or expected to vest at March 31, 2007 ..      538,683    $     0.57   $2,925,000
                                                  ==========
Exercisable at March 31, 2007 .................      538,683    $     0.57   $2,925,000
                                                  ==========
</TABLE>

         In connection  with the  termination  of an  executive,  the vesting of
approximately  110,408  options was  accelerated in September  2006.  Additional
compensation  expense  associated  with  these  options  was  valued  under SFAS
No.123(R),  resulting in $113,000  ($113,000 after tax) of compensation  expense
recorded immediately at the date of modification.


                                      F-22
<PAGE>


                         NEW MOTION, INC. AND SUBSIDIARY

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
          FOR THE YEARS ENDED DECEMBER 31, 2006 AND 2005 (AUDITED) AND
             THREE MONTHS ENDED MARCH 31, 2007 AND 2006 (UNAUDITED)

NOTE 7 - STOCK BASED COMPENSATION (CONTINUED)

ACTIVITY OUTSIDE OF PLANS

         In  September  2006,  the Company  issued  options to purchase  363,184
shares of the  Company's  common stock to an  executive  of the  Company.  These
options  were issued  outside of the Plan due to a  limitation  in the number of
shares  available  under the Plan,  and were issued at an  exercisable  price of
$2.34 with other terms  similar to those  issued  under the Plan.  There were no
other options granted outside of the Plan.

         Awards  granted  outside  the Plan are  valued  in the same  manner  as
options  granted  under the Plan,  including  the methods of  deciding  upon the
assumptions used in the  Black-Scholes  valuation.  The fair value of the option
award outside the Plan was estimated on the date of grant using a  Black-Scholes
valuation model that used the assumptions noted in the following table:

                     GRANT/MODIFICATION DATE       SEPTEMBER 2006
                     ---------------------------   --------------
                                                        (Grant)
                     Stock price ...............   $         1.17
                     Strike Price ..............   $         2.34
                     Maturity ..................          7 years
                     Risk free interest rate ...                5%
                     Volatility ................               86%
                     Fair market value per share   $         0.82
                     Forfeiture rate ...........                0%

         Stock  option  activity  outside  the 2005  Plan  and 2007  Plan was as
follows:

<TABLE>
<CAPTION>
                                                               WEIGHTED-  ESTIMATED
                                                                AVERAGE   AGGREGATE
                                                  NUMBER OF    EXERCISE   INTRINSIC
                                                   SHARES       PRICE       VALUE
                                                  ---------   ---------   ---------
<S>                                                 <C>       <C>              <C>

Outstanding at January 1, 2006 ................        None                    None
Granted .......................................     363,184   $    2.34
                                                  ---------
Outstanding at December 31, 2006 ..............     363,184   $    2.34        None
                                                  =========
Vested or expected to vest at December 31, 2006        None                    None
                                                  =========
Exercisable at December 31, 2006 ..............        None                    None
                                                  =========
</TABLE>

         There has been no stock option activity  outside the 2005 Plan and 2007
Plan during the quarter ended March 31, 2007.


                                      F-23
<PAGE>


                         NEW MOTION, INC. AND SUBSIDIARY

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
          FOR THE YEARS ENDED DECEMBER 31, 2006 AND 2005 (AUDITED) AND
             THREE MONTHS ENDED MARCH 31, 2007 AND 2006 (UNAUDITED)

NOTE 7 - STOCK BASED COMPENSATION (CONTINUED)

OUTSTANDING AND EXERCISABLE OPTIONS

         The  following  table  summarizes   information   concerning  currently
outstanding and exercisable stock options as of March 31, 2007:

<TABLE>
<CAPTION>
                                               WEIGHTED        WEIGHTED                      WEIGHTED
                                                AVERAGE         AVERAGE                       AVERAGE
                                  OPTIONS      REMAINING       EXERCISE        OPTIONS       EXERCISE
RANGE OF EXERCISE PRICES        OUTSTANDING   LIFE (YEARS)       PRICE       EXERCISABLE       PRICE
----------------------------   ------------   ------------   ------------   ------------   ------------
<S>                                 <C>                <C>   <C>                 <C>       <C>
2005 PLAN:
      $0.48 ................        761,235            8.7   $       0.48        530,350   $       0.48
      $2.34 ................          7,264            9.4   $       2.34           --     $       2.34

2007 PLAN:
      $6.00 ................        406,200            9.9   $       6.00          8,333   $       6.00
      $6.60 ................         37,500            4.9   $       6.60           --     $       6.60

OUTSIDE OF PLANS:
      $2.34 ................        363,184            9.4   $       2.34           --     $       2.34
</TABLE>


         The  following  table  summarizes  outstanding  and  exercisable  stock
options as of December 31, 2006:

<TABLE>
<CAPTION>
                                   WEIGHTED-
                                    AVERAGE        WEIGHTED-                     WEIGHTED
    RANGE OF                       REMAINING        AVERAGE                       AVERAGE
    EXERCISE          OPTIONS      CONTRACTUAL     EXERCISE        OPTIONS       EXERCISE
     PRICES         OUTSTANDING   LIFE (YEARS)       PRICE       EXERCISABLE       PRICE
----------------   ------------   ------------   ------------   ------------   ------------
<S>                     <C>                <C>   <C>                 <C>       <C>
WITHIN PLAN:
     $0.48 .....        761,235            9.0   $       0.48        485,678   $       0.48
     $0.53 .....        581,095            3.9   $       0.53        290,547   $       0.53
     $2.34 .....          7,264            9.6   $       2.34           --     $       2.34

OUTSIDE OF PLAN:
     $2.34 .....        363,184            9.7   $       2.34           --     $       2.34
</TABLE>

         For the three  months ended March 31, 2007,  $194,000  ($194,000  after
tax) of  compensation  relating  to  options  was  recorded.  For the year ended
December 31, 2006, $147,000 ($147,000 after tax) of compensation was recorded.


                                      F-24
<PAGE>


                         NEW MOTION, INC. AND SUBSIDIARY

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
          FOR THE YEARS ENDED DECEMBER 31, 2006 AND 2005 (AUDITED) AND
             THREE MONTHS ENDED MARCH 31, 2007 AND 2006 (UNAUDITED)

NOTE 7 - STOCK BASED COMPENSATION (CONTINUED)

OUTSTANDING AND EXERCISABLE OPTIONS (CONTINUED)

         For the year ended December 31, 2006,  $147,000 ($147,000 after tax) of
compensation  was  recorded.  As a result of the option  modification  discussed
above, there was no other compensation expense recorded related to stock options
for  any of the  periods  presented.  No  stock-based  compensation  costs  were
capitalized  as part of the cost of an asset for any of the  periods  presented.
Additionally,  SFAS  No.  123(R)  requires  that  the tax  benefit  from the tax
deduction  related to share-based  compensation  that is in excess of recognized
compensation costs be reported as a financing cash flow rather than an operating
cash flow.  Prior to January 1, 2006, the Company would have reported the entire
tax benefit  related to the exercise of stock options as an operating  cash flow
if options had been  exercised.  There was no tax benefit from option  exercises
for the period ended  December  31,  2006.  There was no tax benefit from option
exercises for the period ended March 31, 2007.

         Compensation cost of approximately $269,000 had not yet been recognized
on nonvested  awards through  December 31, 2006 and is expected to be recognized
as follows:

         YEAR ENDING        COMPENSATION
         DECEMBER 31,            COST
         ------------       ------------
             2007           $    101,000
             2008                101,000
             2009                 67,000
                            ------------

                            $    269,000
                            ============

WARRANTS

         To value warrants granted,  the Company uses the  Black-Scholes  option
pricing model.  The Company  determines the assumptions in this pricing model at
the grant date.  For warrants  granted or modified  after  January 1, 2006,  the
Company bases expected  volatility on the historical  volatility of a peer group
of publicly  traded  entities.  The  Company  bases the  risk-free  rate for the
expected term of the option on the U.S.  Treasury  Constant  Maturity rate as of
the grant date.

         The fair value of each warrant  issued  during the quarter  ended March
31, 2007 were  estimated  on the date of grant using a  Black-Scholes  valuation
model that used the following assumptions:


                                                JANUARY 2007      FEBRUARY 2007
                                               WALKER AND SGE         SMH
                                                  WARRANTS          WARRANTS
                                               --------------    --------------
                                                   (Grant)           (Grant)
Stock price ................................   $         3.44    $         6.00
Strike Price ...............................   $         3.44    $         5.50
Maturity ...................................          5 years           5 years
Risk free interest rate ....................                5%                5%
Volatility .................................               86%               86%
Fair market value per share ................   $         2.42    $         4.31


                                      F-25
<PAGE>


                         NEW MOTION, INC. AND SUBSIDIARY

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
          FOR THE YEARS ENDED DECEMBER 31, 2006 AND 2005 (AUDITED) AND
             THREE MONTHS ENDED MARCH 31, 2007 AND 2006 (UNAUDITED)

NOTE 7 - STOCK BASED COMPENSATION (CONTINUED)

WARRANTS (CONTINUED)

         The warrants  issued during the first quarter 2007 are fully vested and
exercisable on the date of grant

         In 2006, the Company issued Secured  Convertible  Notes to Scott Walker
and SGE, a corporation  owned by Allan Legator,  the Company's  Chief  Financial
Officer.  These Secured  Convertible  Notes were repaid in full with interest in
September  2006.  Pursuant to the terms of the  Secured  Convertible  Notes,  on
January  26,  2007,  Scott  Walker  was  granted a right to receive a warrant to
purchase,  on a  post-Reverse  Split basis,  14,384 shares of common stock at an
exercise  price of $3.44  per share  and SGE was  granted  a right to  receive a
warrant to purchase, on a post-Reverse Split basis, 9,153 shares of common stock
at an exercise price of $3.44 per share.  The per share fair market value of the
Company's  common stock on January 26, 2007 was $3.44.  The  warrants  issued to
Scott Walker and SGE are  freestanding  instruments and exercise of the warrants
requires a physical or net share  settlement.  Thus, in accordance with Emerging
Issues Task Force EITF 00-19,  "Accounting for Derivative Financial  Instruments
Indexed to, and  Potentially  Settled in, a Company's  Own Stock," the  warrants
have been classified in stockholders' equity and the Company recorded $57,000 of
expense  related to the  issuance  of the  warrants  to Scott  Walker and SGE on
January 26, 2007.

         In connection  with the Series A, B and D Preferred  Stock  financings,
Sanders Morris  Harris,  Inc. acted as placement  agent.  For its services,  the
Company  paid  Sanders  Morris  Harris  a cash fee  equal  to 7.5% of the  gross
proceeds from the financing and five year warrants to purchase 290,909 shares of
common  stock at an  average  exercise  price of $5.50 per  share  (post-Reverse
Split),  which was equivalent to the average per share  valuation of the Company
for the Series A, B and D Preferred  Stock  financings.  The warrants  issued to
Sanders Morris Harris are freestanding  instruments and exercise of the warrants
requires a physical or net share  settlement.  In addition,  the  warrants  were
issued as a fee for  Sanders  Morris  Harris'  services  as  placement  agent in
connection with the Series A, B and D financings.  Thus, in accordance with SFAS
No. 133,  "Accounting  for Derivative  Instruments  and Hedging  Activities" and
Emerging  Issues Task Force EITF 00-19,  "Accounting  for  Derivative  Financial
Instruments  Indexed to, and Potentially Settled in, a Company's Own Stock," the
Company recorded the issuance of the Sanders Morris Harris warrants based on the
value of the warrants  established by the Black-Scholes option pricing model and
credited  additional  paid  in  capital  in  the  amount  of  $1,253,000  with a
corresponding offset to the net proceeds from issuance of Preferred Stock.


                                      F-26
<PAGE>


                         NEW MOTION, INC. AND SUBSIDIARY

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
          FOR THE YEARS ENDED DECEMBER 31, 2006 AND 2005 (AUDITED) AND
             THREE MONTHS ENDED MARCH 31, 2007 AND 2006 (UNAUDITED)

NOTE 7 - STOCK BASED COMPENSATION (CONTINUED)

WARRANTS (CONTINUED)

The following table summarizes  information concerning currently outstanding and
exercisable common stock warrants as of March 31, 2007:

<TABLE>
<CAPTION>
                                      WEIGHTED       WEIGHTED                      WEIGHTED
     RANGE OF                         AVERAGE         AVERAGE                       AVERAGE
     EXERCISE          WARRANTS      REMAINING       EXERCISE       WARRANTS       EXERCISE
      PRICES          OUTSTANDING   LIFE (YEARS)      PRICE        EXERCISABLE      PRICE
------------------   ------------   ------------   ------------   ------------   ------------

<C>                       <C>                <C>   <C>                 <C>       <C>
$3.44 ............         16,200            4.8   $       3.44         16,200   $       3.44
$5.50 ............        290,909            4.9   $       5.50        290,909   $       5.50
</TABLE>


NOTE 8 - EARNINGS PER SHARE

         The following  tables  present  information,  where  appropriate,  that
reflect the retroactive application of the Exchange and the Reverse Split.

         The  computational  components of basic and diluted  earnings per share
are as follows:

                                                       WEIGHTED
                                                        AVERAGE
                                       NET INCOME       SHARES
                                         (LOSS)       OUTSTANDING       EPS
                                       -----------    -----------   -----------

QUARTER ENDED MARCH 31, 2007
Basic earnings per share ...........   $  (372,000)     9,483,004   $     (0.04)
Effect of dilutive stock options ...          --             --            --
                                       -----------    -----------   -----------
Diluted earnings per share .........   $  (372,000)     9,483,004   $     (0.04)
                                       ===========    ===========   ===========

QUARTER ENDED MARCH 31, 2006
Basic earnings per share ...........   $ 1,197,000      7,263,688   $      0.16
Effect of dilutive stock options ...         4,000        486,738         (0.01)
                                       -----------    -----------   -----------
Diluted earnings per share .........   $ 1,201,000      7,750,426   $      0.15
                                       ===========    ===========   ===========


                                                       WEIGHTED
                                                        AVERAGE
                                           NET          SHARES
                                          INCOME      OUTSTANDING       EPS
                                       -----------    -----------   -----------
YEAR ENDED DECEMBER 31, 2005
Basic earnings per share ...........   $   387,000      7,263,688   $      0.05
Effect of dilutive stock options ...          --             --            --
                                       -----------    -----------   -----------
Diluted earnings per share .........   $   387,000      7,263,688   $      0.05
                                       ===========    ===========   ===========

YEAR ENDED DECEMBER 31, 2006
Basic earnings per share ...........   $   677,000      7,263,688   $      0.09
Effect of dilutive stock options ...          --             --            --
                                       -----------    -----------   -----------
Diluted earnings per share .........   $   677,000      7,263,688   $      0.09
                                       ===========    ===========   ===========


                                      F-27
<PAGE>


                         NEW MOTION, INC. AND SUBSIDIARY

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
          FOR THE YEARS ENDED DECEMBER 31, 2006 AND 2005 (AUDITED) AND
             THREE MONTHS ENDED MARCH 31, 2007 AND 2006 (UNAUDITED)

NOTE 8 - EARNINGS PER SHARE (CONTINUED)

         For comparative  purposes,  the 7,263,688 shares of outstanding  common
stock of the Company,  after the recapitalization has been retroactively applied
and consistently  applied  throughout all periods  presented for the purposes of
earnings per share calculations.

         Common stock  underlying  outstanding  options and warrants and the IVG
note were not included in the computation of diluted  earnings per share for the
quarter ended March 31, 2007, because their inclusion would be antidilutive when
applied to the  Company's  net loss per share.  For the three months ended March
31, 2007, the Company's  weighted  average shares  outstanding  includes,  after
giving effect to the Reverse  Split,  (i) 1,200,000  common shares as of January
19, 2007, after the conversion of the Series A Preferred  Stock,  (ii) 1,300,000
common  shares as of February 12,  2007,  after the  conversion  of the Series B
Preferred  Stock,  (iii) 250,000 common shares which were issued and outstanding
shares of MPLC  immediately  prior to the Exchange as of February 12, 2007,  and
(iv)  1,666,658  common shares as of March 6, 2007,  after the conversion of the
Series D Preferred Stock.

         Under the treasury stock method,  options to purchase 448,934 shares of
common  stock and notes  convertible  into  37,804  shares of common  stock were
included in the computation of diluted  earnings per share for the quarter ended
March 31, 2006 because their exercise or conversion prices were greater than the
fair value of the common shares and therefore would be dilutive.

         Options to purchase an additional  520,000  shares of common stock were
not included in the computation of diluted earnings per share for the year ended
December  31, 2005,  because  their  exercise  price was greater than the market
price of the  common  shares and  therefore  would be  antidilutive.  Options to
purchase  an  additional  383,000  and  32,000  share of common  stock  were not
included in the computation of diluted  earnings per share for the periods ended
December 31, 2005 and 2006, for the same reasons.


                                      F-28
<PAGE>


                         NEW MOTION, INC. AND SUBSIDIARY

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
          FOR THE YEARS ENDED DECEMBER 31, 2006 AND 2005 (AUDITED) AND
             THREE MONTHS ENDED MARCH 31, 2007 AND 2006 (UNAUDITED)

NOTE 9 - PROVISION FOR INCOME TAXES

         The provision for income taxes consists of the following components for
the periods ended as follows:

                                          FOR THE YEAR ENDED
                                             DECEMBER 31,
                                         -------------------
                                           2005       2006
                                         --------   --------

                    CURRENT:
                    Federal ..........   $  4,000   $420,000
                    State ............      8,000    105,000
                    Foreign ..........     26,000       --
                                         --------   --------
                                           38,000    525,000
                                         --------   --------
                    DEFERRED:
                    Federal ..........    188,000    141,000
                    State ............     44,000     42,000
                                         --------   --------
                                          232,000    183,000
                                         --------   --------

                                         $270,000   $708,000
                                         ========   ========

         The income tax effects of  significant  items  comprising the Company's
deferred income tax liabilities are as follows:

                                                  DECEMBER 31,
                                                      2006
                                                  ------------
               Deferred tax assets:
                Allowance for doubtful accounts   $     91,000
                Professional fee accrual ......         22,000
                State taxes ...................         36,000
                Net operating loss carryforward         27,000
                                                  ------------
                                                       176,000
                Valuation Allowance ...........        (27,000)
                                                  ------------
                Total deferred tax assets .....        149,000
                                                  ------------

                Deferred tax liabilities:
                Prepaid expenses ..............         28,000
                Depreciation ..................         53,000
                Accrual to cash adjustments ...        483,000
                                                  ------------
                                                       564,000
                                                  ------------

                Net deferred tax liabilities: .   $    415,000
                                                  ============

         As of  December  31,  2006,  the Company  had  available  approximately
$90,000 of foreign net operating loss carryforward that relates to the Company's
Australian  entity  and may be applied  against  future  taxable  income of that
entity.  The foreign net operating  loss  carryforward  will expire in 2014. The
foreign net operating  loss has a 100%  valuation  allowance as the Company does
not expect to be able to utilize these losses.


                                      F-29
<PAGE>


                         NEW MOTION, INC. AND SUBSIDIARY

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
          FOR THE YEARS ENDED DECEMBER 31, 2006 AND 2005 (AUDITED) AND
             THREE MONTHS ENDED MARCH 31, 2007 AND 2006 (UNAUDITED)

NOTE 9- PROVISION FOR INCOME TAXES (CONTINUED)

         A  reconciliation  of the Company's income tax provision as compared to
the tax  provision  for  continuing  operations  is  calculated  by applying the
statutory  federal  tax rate at 34% to the  income  from  continuing  operations
before income taxes for the periods:

<TABLE>
<CAPTION>
                                                       FOR THE YEAR ENDED
                                                           DECEMBER 31,
                                       ---------------------------------------------------
                                                 2005                        2006
                                       -----------------------     -----------------------
<S>                                    <C>                  <C>    <C>                  <C>
Computed expected income tax expense
   at statutory rate ...............   $ 223,000            34%    $ 470,000            34%
Benefit for graduated federal rates       (8,000)           (1)%        --              - %
Permanent differences ..............       9,000             1%       65,000             5%
State taxes, net of federal benefit       53,000             8%      144,000            10%
Foreign rate differential ..........      (3,000)           - %        4,000            - %
Amortization of goodwill ...........      (1,000)           - %       (2,000)           - %
Change in valuation allowance ......      (3,000)           - %       27,000             2%
                                       ---------     ---------     ---------     ---------
                                       $ 270,000            42%    $ 708,000            51%
                                       =========     =========     =========     =========
</TABLE>

         For the three months ended March 31, 2007, the Company's  provision for
income taxes of  approximately  $4,000  represents a current tax benefit for the
Company of $155,000, offset by a tax provision of $159,000, for our consolidated
joint venture entity, MEC.

NOTE 10 - COMMITMENTS AND CONTINGENCIES

LITIGATION

         On August 24, 2006,  New Motion and Burton Katz filed an action against
Buongiorno USA, Inc. ("Buongiorno") in the Superior Court of California,  county
of Orange, seeking a declaration that the non-competition,  non-solicitation and
non-interference provisions of that certain Employment Agreement dated April 11,
2005, between Burton Katz and Buongiorno,  are void and unenforceable  under the
California  Business  and  Professions  Code,  an  order  permanently  enjoining
Buongiorno from enforcing the above referenced provisions, reasonable attorneys'
fees and other costs  related to the action.  Subsequent  to filing,  Buongiorno
threatened  to withhold  payments  due to New Motion  Inc.  for  previous  sales
totaling approximately $340,000.

         On October 24, 2006, New Motion filed a Demand for Arbitration with the
American  Arbitration  Association  against Buongiorno  pursuant to the terms of
that certain Marketing  Agreement dated January 10, 2006, between New Motion and
Buongiorno, whereby New Motion agreed to market certain of Buongiorno's services
and the  parties  agreed to share  revenue  generated  from such  services.  The
Company seeks payment of $340,000 and attorneys' fees and other costs related to
the action.  Subsequently,  the Company has settled the dispute with  Buongiorno
for $384,000, which it received in the first quarter of 2007. The Company is not
liable for any additional costs related to this dispute.

         In the normal  course of  business,  the Company  has been  involved in
various  disputes,  which are routine and  incidental  to the  business.  In the
opinion of  management  the results of such disputes will not have a significant
adverse  effect on the  financial  position or the results of  operations of the
Company.

REGISTRATION RIGHTS

         In  connection  with the  sale of New  Motion's  Series A and  Series B
Preferred Stock,  the Company entered into a registration  rights agreement with
the  holders of its Series A and Series B Preferred  Stock  pursuant to which it
granted the holders  certain  registration  rights with respect to the shares of
its common stock owned by the holders, including the common stock underlying the
Series A Preferred Stock and Series B Preferred  Stock sold in the offering.  In
addition, in connection with the sale of the Company's Series D Preferred Stock,
pursuant to a registration  rights  agreement with the investors in the Series D
financing,  it granted the investors certain registration rights with respect to
the shares of its common stock  issuable  upon  conversion  of the shares of its
Series D Convertible  Preferred  Stock and upon  conversion of the shares of any
other  series of its  preferred  stock  owned by the  investors.  The Company is
required to prepare and file with the Securities and Exchange  Commission within
75 days of the closing of the Series D offering a registration statement on Form
S-3, Form SB-2, or on another  appropriate  form,  covering the resale of all of
the  registerable  securities.  In the event that the  Company  does not satisfy
certain filing and other  obligations in its registration  rights agreement with
the  purchasers  of its Series D  Preferred  Stock,  it is  required to pay such
Series D Preferred Stock purchasers liquidated damages in an aggregate amount of
up to 12% of the gross proceeds of the Series D offering.  The common stock held
by the  former  holders  of the  Company's  Series  A,  Series  B, and  Series D
Preferred Stock are being registered for resale on this prospectus.


                                      F-30
<PAGE>


                         NEW MOTION, INC. AND SUBSIDIARY

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
          FOR THE YEARS ENDED DECEMBER 31, 2006 AND 2005 (AUDITED) AND
             THREE MONTHS ENDED MARCH 31, 2007 AND 2006 (UNAUDITED)

NOTE 10 - COMMITMENTS AND CONTINGENCIES (CONTINUED)

OPERATING LEASES

         In  September  2005,  the Company  entered into a lease  agreement  for
office  space.  Prior to that the Company  paid month to month rent at a monthly
rate of $3,000. Rent payments are $9,969, $10,228, and $10,487 per month through
September 30, 2006, 2007, and 2008,  respectively.  There is a separate 24 month
lease which originated in September 2006, with rent payments per month of $4,818
and $5,010 for the twelve  months  ending  August 31, 2007 and August 31,  2008,
respectively.  In August 2005, the Company  entered into an equipment  lease for
twenty four months at a monthly rental rate of $687 per month.

         The following is a schedule by years of future  minimum lease  payments
required under operating leases that have remaining  noncancellable  lease terms
in excess of one year at December 31, 2006.

                YEAR ENDING             MINIMUM
                DECEMBER 31,            PAYMENTS
                ------------           ---------
                    2007               $ 298,000
                    2008                 188,000
                                       ---------

                                       $ 486,000
                                       =========

         Rent  expense  for the three  months  ended March 31, 2006 and 2007 was
approximately $30,000 and $83,000, respectively. Rent expense for the year ended
to  December  31,  2005,  was   approximately   $39,000  for  office  space  and
approximately  $2,000 for office  equipment.  Rent expense for the year ended to
December 31, 2006, was approximately $155,000 for office space and approximately
$9,000 for office equipment, respectively.

EMPLOYMENT AGREEMENTS

         The  Company  has  various  employment  agreements  for  members of its
management.  Each employment  agreement states the compensation  benefits and if
termination   occurs  the  Company  shall   continue  to  pay  the   executive's
then-current  base  salary and bonus for the balance of the  initial  term.  The
average employment  contract is two to three years. The future commitments under
employment agreements are as follows:

                  YEAR ENDING              FUTURE
                  DECEMBER 31,           COMMITMENTS
                  ------------           -----------
                     2007                $ 1,578,000
                     2008                  1,034,000
                     2009                    233,000
                                         -----------

                                         $ 2,845,000
                                         ===========


                                      F-31
<PAGE>


                         NEW MOTION, INC. AND SUBSIDIARY

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
          FOR THE YEARS ENDED DECEMBER 31, 2006 AND 2005 (AUDITED) AND
             THREE MONTHS ENDED MARCH 31, 2007 AND 2006 (UNAUDITED)

NOTE 11 - EMPLOYEE BENEFIT PLAN

         The Company's  employee benefit plan covers all eligible employees with
over three months of service and includes a savings plan under Section 401(k) of
the Internal  Revenue Code. The savings plan allows  participants to make pretax
contributions  up to 90% of their  earnings,  with the Company  contributing  an
additional  35% of up to six percent of an employee's  compensation.  During the
year ended  December 31, 2005 and 2006,  the Company  contributed  approximately
$1,700 and  $20,000,  respectively,  to the plan.  During the three months ended
March 31,  2006 and 2007,  the  Company  contributed  approximately  $5,000  and
$6,000, respectively, to the plan.

NOTE 12 - RELATED PARTY TRANSACTIONS

         At various  periods  throughout  the year ended  December  31, 2005 and
2006, the Company rented a house owned by one of its officers to various Company
employees  visiting from out of town.  For the year ended  December 30, 2005 and
2006 rent payments to this officer totaled of $3,000 and $0, respectively.

         The Company utilizes the legal expertise of Stubbs, Alderton & Markiles
LLP law firm,  which is a  founding  shareholder  of the  Company.  Total  legal
services paid to Stubbs,  Alderton & Markiles LLP during the year ended December
31, 2005 and 2006 totaled approximately $46,000 and $112,000, respectively.


NOTE 13 - UNAUDITED SUBSEQUENT EVENTS

INCREASE IN AUTHORIZED SHARES, NAME CHANGE AND REVERSE SPLIT


         After receiving approval by written consent of holders of a majority of
all classes of the Company's common and preferred stock voting together and as a
single class,  on May 2, 2007,  the Company filed a certificate  of amendment to
its restated  certificate of incorporation  with the Delaware Secretary of State
to effect the following corporate actions: (i) increase the authorized number of
shares of the Company's common stock from 75,000,000 to 100,000,000, (ii) change
the Company's  corporate  name to New Motion,  Inc. from MPLC,  Inc.,  and (iii)
effect a 1-for-300 reverse split.


CONVERSION OF SERIES A, B, C AND D CONVERTIBLE PREFERRED STOCK INTO COMMON STOCK

         On May 2, 2007,  immediately  after the  effectiveness  of the  Reverse
Split and as described  above,  all of the  outstanding  shares of the Company's
Series A,  Series B,  Series C and  Series D  convertible  preferred  stock were
converted  into shares of its common stock.  The one share of Series A Preferred
Stock  automatically  converted into 1,200,000  shares of common stock,  the 650
shares of Series B Preferred Stock automatically converted into 1,300,000 shares
of common stock and the 8,333 shares of Series D Preferred  Stock  automatically
converted into 1,666,658  shares of common stock.  The Series C Preferred  Stock
was also  converted  into  7,263,688  shares of common stock on May 2, 2007. The
effect of the Reverse  Split and of the  conversion  of all classes of preferred
stock into common shares of the Company have been  retroactively  applied to the
financing transactions.

PURCHASE OF KATAZO ASSETS

         On May 25, 2007, the Company  purchased from Opera Telecom USA a number
of specified  assets,  including an established  subscriber base, for a purchase
price of $970,000.  The Company is currently evaluating the accounting treatment
of this  asset  purchase  in  accordance  with  SFAS  142,  "Goodwill  and Other
Intangible Assets".

IVG NOTE

         On July 11, 2007, IVG converted all  outstanding  principal and accrued
interest on the IVG Note into  172,572  shares of common  stock at a  conversion
price of $3.44 per share, the fair market value of the Company's common stock on
the date of issuance of the IVG Note.



                                      F-32
<PAGE>


                                     PART II
                     INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 24.  INDEMNIFICATION OF DIRECTORS AND OFFICERS.

         Section  145  of the  Delaware  General  Corporation  Law  provides  in
relevant part that a corporation  may indemnify any person who was or is a party
to or is threatened to be made a party to any  threatened,  pending or completed
action,  suit  or  proceeding,   whether  civil,  criminal,   administrative  or
investigative  (other than an action by or in the right of the  corporation)  by
reason of the fact that such person is or was a director,  officer,  employee or
agent of the corporation, partnership, joint venture, trust or other enterprise,
against expenses (including attorneys' fees), judgments,  fines and amounts paid
in settlement actually and reasonably incurred by such person in connection with
such  action,  suit or  proceeding  if such person  acted in good faith and in a
manner  such  person  reasonably  believed  to be in or not  opposed to the best
interests  of the  corporation,  and with  respect  to any  criminal  action  or
proceeding  had no  reasonable  cause  to  believe  such  person's  conduct  was
unlawful.

         In addition,  Section 145 provides that a corporation may indemnify any
person  who  was or is a  party  or is  threatened  to be  made a  party  to any
threatened,  pending  or  completed  action  or suit by or in the  right  of the
corporation  to procure a judgment  in its favor by reason of the fact that such
person is or was a director,  officer, employee or agent of the corporation,  or
is or was serving at the  request of the  corporation  as a  director,  officer,
employee or agent of another corporation,  partnership,  joint venture, trust or
other  enterprise  against  expenses  (including  attorneys'  fees) actually and
reasonably  incurred by such person in connection with the defense or settlement
of such action or suit if such  person  acted in good faith and in a manner such
person reasonably  believed to be in or not opposed to the best interests of the
corporation and except that no  indemnification  shall be made in respect of any
claim,  issue or matter as to which such person  shall have been  adjudged to be
liable to the corporation  unless and only to the extent that the Delaware Court
of  Chancery  or the  court in which  such  action  or suit  was  brought  shall
determine upon  application  that,  despite the adjudication of liability but in
view of all the  circumstances of the case, such person is fairly and reasonably
entitled to indemnity for such expenses  which the Delaware Court of Chancery or
such other court shall deem proper.  Delaware law further  provides that nothing
in the above-described  provisions shall be deemed exclusive of any other rights
to  indemnification  or  advancement  of  expenses  to which any  person  may be
entitled  under any bylaw,  agreement,  vote of  stockholders  or  disinterested
directors or otherwise.

         Paragraph  Ninth of our restated  certificate of  incorporation  states
that the personal liability of the directors is eliminated to the fullest extent
permitted  by  paragraph  (7) of  subsection  (b) of Section 102 of the Delaware
General Corporation Law.

         Paragraph  Tenth of our restated  certificate of  incorporation  states
that we shall,  to the fullest  extent  permitted  by Section 145 of the General
Corporation  Law of the  State  of  Delaware,  as the same  may be  amended  and
supplemented,  indemnify  any and  all  persons  whom we  shall  have  power  to
indemnify  under said  section  from and  against  any and all of the  expenses,
liabilities or other matters referred to in or covered by said section,  and the
indemnification  provided for herein shall not be deemed  exclusive of any other
rights to which those  indemnified may be entitled under any By-Law,  agreement,
vote of stockholders or disinterested directors or otherwise,  both as to action
in their official  capacities and as to action in another capacity while holding
such offices, and shall continue as to a person who has ceased to be a director,
officer,  employee  or agent  and  shall  inure  to the  benefit  of the  heirs,
executors and administrators of such a person.


                                      II-1
<PAGE>


         Article  Eight of our  By-Laws  states  that we shall have the power to
indemnify our officers,  directors,  employees,  and agents,  and any such other
persons as may be  designated by the board or as may be provided in our By-Laws,
to the full extent permitted by the laws of the State of Delaware.

         In  addition  to  the  indemnification  required  in  our  articles  of
incorporation  and bylaws,  we may enter into indemnity  agreements with each of
our current  officers and  directors to provide for the  indemnification  of our
directors and officers for all reasonable  expenses and liabilities  incurred in
connection  with any action or proceeding  brought against them by reason of the
fact that they are or were our agents.  To date,  we have not  entered  into any
indemnification agreements with our directors and officers.

         Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to our directors, officers and controlling persons pursuant
to the  foregoing  provisions,  or  otherwise,  we have been advised that in the
opinion of the  Securities  and  Exchange  Commission  such  indemnification  is
against  public  policy as expressed in the  Securities  Act and is,  therefore,
unenforceable.

         Reference is made to the following  documents filed as exhibits to this
Registration Statement regarding relevant  indemnification  provisions described
above and elsewhere herein:

                                                                   EXHIBIT
EXHIBIT DOCUMENT                                                   NUMBER
----------------                                                   -------

Restated certificate of incorporation, as amended...........         3.1
By-Laws of Registrant.......................................         3.5


ITEM 25.  OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

         The  Registrant  will bear all  expenses  of  registration  incurred in
connection with this offering.  The selling  shareholders whose shares are being
registered  will  bear all  selling  and other  expenses.  The  following  table
itemizes  the  expenses  incurred  by the  Registrant  in  connection  with  the
offering. All the amounts shown are estimates except the Securities and Exchange
Commission registration fee.


                                                                       AMOUNT
                                                                      -------

Registration fee - Securities and Exchange Commission .............   $ 2,642
Legal fees and expenses ...........................................   $60,000
Accounting fees and expenses ......................................   $10,000
Miscellaneous expenses ............................................   $ 5,000
                                                                      -------
     Total ........................................................   $77,642
                                                                      =======


ITEM 26.  RECENT SALES OF UNREGISTERED SECURITIES.

RECENT SALES BY NEW MOTION, INC.

      REDEMPTION AND SALE

         On October  24,  2006,  the company  (now called New Motion,  Inc.) and
certain of our stockholders  entered into a Common Stock Purchase Agreement with
Trinad,  pursuant to which we agreed to redeem 23,448,870 shares of common stock
from the stockholders  and sell an aggregate of 69,750,000  shares of our common
stock (on a pre-reverse stock split basis), representing 93% of our


                                      II-2
<PAGE>


issued and outstanding  shares of common stock on the closing date, to Trinad in
a private placement  transaction for aggregate gross proceeds to us of $750,000,
$547,720 of which was used for the redemption  described below, and $202,280 was
used to pay all loans to us from Isaac Kier, our former  director and our former
president, treasurer and secretary.


         The  securities  were acquired by Trinad for  investment and not with a
view of distribution thereof. No brokers,  underwriters or finders were involved
in the transaction and there was no general  solicitation or advertising used in
connection with the  transaction.  The issuance and sale of these securities was
deemed exempt from the registration and prospectus delivery  requirements of the
Securities  Act pursuant to Section 4(2) of the  Securities Act as a transaction
not involving any public offering.


         Simultaneously  with the sale of shares of common  stock to Trinad,  we
redeemed  23,448,870 shares of common stock (on a pre-reverse stock split basis)
from certain of our stockholders for a purchase price of $547,720.  In addition,
following the closing, Mr. Kier or First Americas, an affiliate of Mr. Kier, was
no longer obligated to provide office space or services to us.

         On April 26, 2005, we issued 25,828,983 restricted shares of our common
stock (on a pre-reverse  stock basis) to First  Americas in exchange for $75,000
in cash. Mr. Kier, our former  director,  is the sole member of First  Americas.
First Americas  subsequently  distributed  shares to Mr. Kier who sold shares to
Mr. Chazen and three other individuals.


         The securities  were acquired by Mr. Kier for investment and not with a
view of distribution thereof. No brokers,  underwriters or finders were involved
in the transaction and there was no general  solicitation or advertising used in
connection with the  transaction.  The issuance and sale of these securities was
deemed exempt from the registration and prospectus delivery  requirements of the
Securities  Act pursuant to Section 4(2) of the  Securities Act as a transaction
not involving any public offering.


     EXCHANGE TRANSACTION

         On January 31, 2007, we entered into an exchange  agreement  ("Exchange
Agreement")  with New Motion Mobile,  the  stockholders of New Motion Mobile and
Trinad.  The closing of the transactions  contemplated by the Exchange Agreement
(the "Exchange")  occurred on February 12, 2007. At the Closing, we acquired all
of the  outstanding  shares of the capital  stock of New Motion  Mobile from the
Stockholders  in  exchange  for  500,000 of our Series C  Convertible  Preferred
Stock,  par value $0.10 per share (the  "Series C Preferred  Stock"),  which was
subsequently converted into 7,263,688 shares of our common stock on May 2, 2007,
immediately and  automatically  upon the  effectiveness  of a 1-for-300  reverse
stock split (the "Reverse Split").


         The securities were acquired by the  stockholders of New Motion Mobile,
Inc. for investment  and not with a view of  distribution  thereof.  No brokers,
underwriters  or  finders  were  involved  in the  transaction  and there was no
general solicitation or advertising used in connection with the transaction. The
issuance and sale of these  securities  was deemed exempt from the  registration
and prospectus  delivery  requirements of the Securities Act pursuant to Section
4(2) of the Securities Act as a transaction not involving any public offering.


     FINANCING TRANSACTION

         In combination with the Exchange,  on January 24, 2007, we entered into
the Series A Convertible  Preferred  Stock  Purchase  Agreement  with Trinad and
received  gross  proceeds of $3.5  million in exchange for one share of Series A
Convertible  Preferred Stock, par value $0.10 per share (the "Series A Preferred
Stock"). On January 31, 2007, we entered into the Series B Convertible Preferred
Stock  Purchase   Agreement  with  Watchung  Road  Associates,   L.P.,   Lyrical
Opportunity  Partners II LP, Lyrical Opportunity Partners II Ltd. and Destar LLC
and  received  gross  proceeds of $6.5 million in exchange for 650 shares of our
Series B  Convertible  Preferred  Stock,  par value  $0.10 per share  ("Series B
Preferred  Stock").  The closing of the  purchase and sale of Series B Preferred
Stock  occurred on February 12, 2007. On May 2, 2007,  the effective date of the
Reverse Split,  immediately  and  automatically  upon the  effectiveness  of the
Reverse Split, all issued and outstanding  Series A Preferred Stock and Series B
Preferred  Stock  converted  into  1,200,000 and 1,300,000  shares of our common
stock, respectively.

         On February 28, 2007, we entered into a Securities  Purchase  Agreement
with various  accredited  investors and received gross proceeds of approximately
$10  million  in  exchange  for  8,333  shares  of our  Series D 8%  Convertible
Preferred  Stock,  par value $0.10 per share (the  "Series D Preferred  Stock").
This financing  transaction  closed on March 2, 2007, and upon the effectiveness
of the  Reverse  Split on May 2,  2007,  all  issued  and  outstanding  Series D
Preferred Stock immediately and automatically converted into 1,666,658 shares of
our common stock.

         Sanders Morris Harris, Inc. acted as placement agent in connection with
the sale of our  Series  A, B and D  Preferred  Stock.  For  their  services  as
placement  agent,  we paid Sanders Morris  Harris,  Inc. a fee equal to 7.5%, or
approximately  $1,500,000, of the gross proceeds from the financing and issued a
five year warrant to Sanders Morris Harris,  Inc. to purchase  290,909 shares of
our common  stock.  The  warrant is fully  vested and have a per share  exercise
price of $5.50.


                                      II-3
<PAGE>



         In connection with the above stock issuances,  other than as described,
we did not pay any underwriting  discounts or commissions.  None of the sales of
securities  described or referred to above was  registered  under the Securities
Act of 1933, as amended (the "Securities Act"). Each of the purchasers fell into
one or more of the categories that follow:  one of our existing  stockholders or
an  accredited  investor  with  whom  we or one of our  affiliates  had a  prior
business  relationship.  As a result, no general solicitation or advertising was
used in  connection  with the sales.  In making the sales  without  registration
under the  Securities  Act,  we relied upon one or more of the  exemptions  from
registration contained in Sections 4(2) of the Securities Act, and in Regulation
D promulgated thereunder.


RECENT SALES BY NEW MOTION MOBILE, INC.

         In May 2005, New Motion Mobile,  Inc. (formerly New Motion,  Inc.), our
wholly owned  subsidiary,  issued an aggregate of 5,000,000 shares of its common
stock  (7,263,688  shares  of Common  Stock on a  post-Reverse  Split  basis) in
connection  with the  capitalization  of the company by its  stockholders in the
amount of $100,000.

         New Motion Mobile had Secured Convertible  Promissory Notes outstanding
in the principal  amounts of $15,000,  $100,000 and $50,000 which were issued to
Scott  Walker,  then its Chief  Executive  Officer and President and our current
Chief Marketing Officer,  on June 10, 2005, August 2, 2005, and August 24, 2005,
respectively.  In addition,  New Motion Mobile had Secured  Convertible Notes in
the principal amounts of $35,000,  $50,000 and $20,000 which were issued to SGE,
a  corporation  owned by Allan  Legator,  then its Chief  Financial  Officer and
Secretary and our current Chief  Financial  Officer and  Secretary,  on June 10,
2005,  August 2,  2005,  and  August  24,  2005,  respectively.  The notes  were
convertible  into  securities  issued in the next  financing  resulting in gross
proceeds of at least  $500,000  ("Qualified  Financing") at 80% of the per share
price  in the  Qualified  Financing.  Pursuant  to  the  terms  of  the  Secured
Convertible  Notes, each of Scott Walker and SGE were granted a right to receive
a warrant to purchase that number of shares in the Qualified  Financing equal to
30% of the shares  purchasable by the principal amount of the Convertible  Notes
held by each of Scott Walker and SGE issuable upon consummation of the Qualified
Financing.  On January 26,  2007,  New Motion  Mobile  agreed with each of Scott
Walker and SGE that the warrants  would entitle  Scott Walker to purchase  9,900
shares of New Motion  Mobile's  common  stock at an exercise  price of $5.00 per
share and SGE to purchase 6,300 shares of New Motion Mobile's common stock at an
exercise price of $5.00 per share.  After the Exchange and the assumption of the
warrants,  Scott Walker's  warrant now entitles him to purchase 14,384 shares of
Common  Stock of New Motion,  Inc.  at an exercise  price of $3.44 per share and
SGE's  warrant now entitles SGE to purchase  9,153 shares of New Motion,  Inc.'s
Common Stock at an exercise price of $3.44 per share. All notes referenced above
were  paid in full  with  interest  according  to the  terms  of such  notes  by
September 2006.


         In connection with the above stock issuances, New Motion Mobile did not
pay any underwriting  discounts or commissions.  None of the sales of securities
described or referred to above was registered  under the Securities Act. Each of
the purchasers fell into one or more of the categories  that follow:  one of New
Motion Mobile's existing stockholders, one of New Motion Mobile's creditors, one
of New Motion Mobile's current or former officers or directors, or an accredited
investor  with  whom New  Motion  Mobile  or one of its  affiliates  had a prior
business  relationship.  As a result, no general solicitation or advertising was
used in  connection  with the sales.  In making the sales  without  registration
under the  Securities  Act,  New Motion  Mobile  relied  upon one or more of the
exemptions from  registration  contained in Sections 4(2) of the Securities Act,
and in Regulation D promulgated under the Securities Act.



                                      II-4
<PAGE>


ITEM 27.  EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.

         (a)      The following exhibits are filed herewith:


 EXHIBIT
   NO.                                      TITLE
--------      ------------------------------------------------------------------

2.1           Plan of  Reorganization  dated January 25, 2005.  Incorporated  by
              reference to Exhibit 2.1 to the Registrant's  Form 10-SB (File No.
              000-51353)  filed with the  Commission on June 10, 2005.

2.2           Order  Confirming Plan of  Reorganization  dated January 25, 2005.
              Incorporated by reference to Exhibit 2.2 to the Registrant's  Form
              10-SB (File No.  000-51353)  filed with the Commission on June 10,
              2005.

2.3           Exchange  Agreement dated January 31, 2007,  among MPLC, Inc., New
              Motion,  Inc.,  the  Stockholders  of New Motion,  Inc. and Trinad
              Capital  Master  Fund,  Ltd.  Incorporated  by  reference  to  the
              Registrant's  Current Report on Form 8-K (File No. 34-51353) filed
              with the Commission on February 1, 2007.

3.1           Restated  Certificate of Incorporation.  Incorporated by reference
              to Exhibit 3.1 to the Registrant's  Form 10-SB (File No. 34-51353)
              filed with the Commission on June 10, 2005.

3.2           Certificate   of  Amendment  to  the   Restated   Certificate   of
              Incorporation,  dated October 12, 2004.  Incorporated by reference
              to Exhibit 3.2 to the Registrant's  Form 10-SB (File No. 34-51353)
              filed with the Commission on June 10, 2005.

3.3           Certificate   of  Amendment  to  the   Restated   Certificate   of
              Incorporation,  dated April 8, 2005.  Incorporated by reference to
              Exhibit 3.3 to the  Registrant's  Form 10-SB  (File No.  34-51353)
              filed with the Commission on June 10, 2005.

3.4           Certificate   of  Amendment  to  the   Restated   Certificate   of
              Incorporation,  dated May 2, 2007.  Incorporated  by  reference to
              Exhibit 3.1 to the  Registrant's  current report on Form 8-K (File
              No. 34-51353) filed with the Commission on May 7, 2007.

3.5           Bylaws.   Incorporated   by   reference  to  Exhibit  3.4  to  the
              Registrant's  Form  10-SB  (File  No.  000-51353)  filed  with the
              Commission on June 10, 2005.

4.1           Certificate  of  Designation,  Preferences  and Rights of Series A
              Convertible Preferred Stock.  Incorporated by reference to Exhibit
              99.3 to the  Registrant's  Current  Report  on Form 8-K  (File No.
              34-51353) filed with the Commission on January 26, 2007.

4.2           Certificate  of  Designation,  Preferences  and Rights of Series B
              Convertible Preferred Stock.  Incorporated by reference to Exhibit
              99.2 to the  Registrant's  Current  Report  on Form 8-K  (File No.
              34-51353) filed with the Commission on February 1, 2007.

4.3           Certificate  of  Designation,  Preferences  and Rights of Series C
              Convertible Preferred Stock.  Incorporated by reference to Exhibit
              3.1.6 to the  Registrant's  Current  Report  on Form 8-K (File No.
              34-51353) filed with the Commission on February 13, 2007.

4.4           Certificate  of  Designation,  Preferences  and Rights of Series D
              Convertible Preferred Stock.  Incorporated by reference to Exhibit
              4.1 to the  Registrant's  Current  Report  on Form 8-K  (File  No.
              34-51353) filed with the Commission on March 6, 2007.

4.5           Series  A  Convertible   Preferred   Stock   Registration   Rights
              Agreement.  Incorporated  by  reference  to  Exhibit  99.2  to the
              Registrant's  Current Report on Form 8-K (File No. 34-51353) filed
              with the Commission on January 26, 2007.

4.6           Series  D  Convertible   Preferred   Stock   Registration   Rights
              Agreement.  Incorporated  by  reference  to  Exhibit  10.2  to the
              Registrant's  Current Report on Form 8-K (File No. 34-51353) filed
              with the Commission on March 6, 2007.

4.7           2005 Stock  Incentive  Plan.  Incorporated by reference to Exhibit
              4.3 to the  Registrant's  Current  Report  on Form 8-K  (File  No.
              34-51353) filed with the Commission on February 13, 2007.


                                      II-5
<PAGE>


4.8           Form of Stock  Option  Agreement.  Incorporated  by  reference  to
              Exhibit 4.4 to the  Registrant's  Current Report on Form 8-K (File
              No. 34-51353) filed with the Commission on February 13, 2007.

4.9           2007 Stock  Incentive  Plan.  Incorporated by reference to Exhibit
              4.9 to the  Registrant's  Current  Report on Form 10-QSB (File No.
              34-51353) filed with the Commission on May 15, 2007.


5.1           Opinion  of Stubbs  Alderton  &  Markiles,  LLP.  Incorporated  by
              reference  to  Exhibit  5.1  to  the   Registrant's   Registration
              Statement  on Form  SB-2  (File  No.  333-143025)  filed  with the
              Commission on May 16, 2007.


10.1          Common Stock Purchase Agreement, dated October 24, 2006, among the
              Registrant,  Trinad Capital Master Fund, Ltd., Isaac Kier,  Jerome
              A.  Chazen,   Sid  Banon,   Lawrence  S.  Coben  and  Ralph  Kier.
              Incorporated  by  reference  to Exhibit  10.1 to the  Registrant's
              Current  Report  on Form 8-K (File No.  34-51353)  filed  with the
              Commission on October 30, 2006.

10.2          Series A Convertible  Preferred  Stock  Purchase  Agreement  dated
              January 24, 2007, between the Registrant and Trinad Capital Master
              Fund,  Ltd.  Incorporated  by  reference  to  Exhibit  99.1 to the
              Registrant's Current Report on Form 8-K (File No. 000-51353) filed
              with the Commission on January 26, 2007.

10.3          Series B Convertible  Preferred  Stock  Purchase  Agreement  dated
              January 30, 2007, among the Registrant,  Watchung Road Associates,
              L.P.,  Lyrical  Opportunity  Partners II LP,  Lyrical  Opportunity
              Partners II Ltd.  and Destar LLC.  Incorporated  by  reference  to
              Exhibit  10..33  to the  Registrant's  Current  Report on Form 8-K
              (File No.  33-51353)  filed with the  Commission  on February  13,
              2007.

10.4          Series D Convertible  Preferred  Stock  Purchase  Agreement  dated
              February 28, 2007, between the Registrant and various  purchasers.
              Incorporated  by  reference  to Exhibit  10.1 to the  Registrant's
              Current  Report  on Form 8-K (File No.  33-51353)  filed  with the
              Commission on March 6, 2007.

10.5          Voting  Agreement  dated  February 12, 2007 among  Trinad  Capital
              Master Fund,  Raymond Musci, MPLC Holdings,  LLC, Europlay Capital
              Advisors,  LLC and Scott  Walker.  Incorporated  by  reference  to
              Exhibit 10.34 to the Registrant's Current Report on Form 8-K (File
              No. 34-51353) filed with the Commission on February 13, 2007.

10.6          Master SMS Services  Agreement  dated April 19, 2005,  between New
              Motion,  Inc.  and  Mobile  Messenger  Pty  Ltd.  Incorporated  by
              reference to Exhibit 10.1 to the  Registrant's  Current  Report on
              Form 8-K (File No. 34-51353) filed with the Commission on February
              13, 2007.

10.7          Addendum  dated  April 28, 2005 to Master SMS  Services  Agreement
              dated  April  19,  2005,  between  New  Motion,  Inc.  and  Mobile
              Messenger  Pty Ltd.  Incorporated  by reference to Exhibit 10.2 to
              the  Registrant's  Current Report on Form 8-K (File No.  34-51353)
              filed with the Commission on February 13, 2007.

10.8          Amendment to Mobile Gateway Agreement dated July 1, 2005,  between
              New Motion,  Inc. and Mobile  Messenger  Australia  Pty Ltd.  This
              amendment  is an  addendum  to the Master SMS  Services  Agreement
              dated  April  19,  2005,  between  New  Motion,  Inc.  and  Mobile
              Messenger  Pty Ltd.  Incorporated  by reference to Exhibit 10.3 to
              the  Registrant's  Current Report on Form 8-K (File No.  34-51353)
              filed with the Commission on February 13, 2007.

10.9          Standard Multi-Tenant Office Lease dated July 6, 2005, between New
              Motion, Inc. and Dolphinshire,  L.P.  Incorporated by reference to
              Exhibit 10.4 to the Registrant's  Current Report on Form 8-K (File
              No. 34-51353) filed with the Commission on February 13, 2007.

10.10         Software Development and Consulting Agreement dated July 19, 2005,
              between  New  Motion,  Inc.  and e4site,  Inc.  d/b/a  Visionaire.
              Incorporated  by  reference  to Exhibit  10.5 to the  Registrant's
              Current  Report  on Form 8-K (File No.  34-51353)  filed  with the
              Commission on February 13, 2007.

10.11         Engagement  Letter  dated  August 2, 2005 and amended  January 10,
              2006,  between New Motion,  Inc.  and Anest  Financial  Solutions.
              Incorporated  by  reference  to Exhibit  10.6 to the  Registrant's
              Current  Report  on Form 8-K (File No.  34-51353)  filed  with the
              Commission on February 13, 2007.

10.12         Master Equipment Lease Schedule dated August 5, 2005,  between New
              Motion,  Inc. and VAResources,  Inc.  Incorporated by reference to
              Exhibit 10.7 to the Registrant's  Current Report on Form 8-K (File
              No. 34-51353) filed with the Commission on February 13, 2007.

10.13         Premium Service  Agreement  dated  September 1, 2005,  between New
              Motion, Inc. and Mobile Messenger Australia Pty Ltd.  Incorporated
              by reference to Exhibit 10.8 to the Registrant's Current Report on
              Form 8-K (File No. 34-51353) filed with the Commission on February
              13, 2007.


                                      II-6
<PAGE>


10.14         Executive  Employment Agreement dated October 1, 2005, between New
              Motion,  Inc.  and Allan  Legator.  Incorporated  by  reference to
              Exhibit 10.9 to the Registrant's  Current Report on Form 8-K (File
              No. 34-51353) filed with the Commission on February 13, 2007.

10.15         Executive  Employment Agreement dated March 8, 2007, between MPLC,
              Inc. and Scott Walker.  Incorporated  by reference to Exhibit 10.1
              to the Registrants  Current Report on Form 8-K (File No. 34-51353)
              filed with the Commission on March 14, 2007.

10.16         Executive  Employment Agreement dated October 1, 2005, between New
              Motion, Inc. and Shane Maidy. Incorporated by reference to Exhibit
              10.11 to the  Registrants  Current  Report  on Form 8-K  (File No.
              34-51353) filed with the Commission on February 13, 2007.

10.17         Employment  Agreement  dated October 1, 2005,  between New Motion,
              Inc.  and Brian  Singleton.  Incorporated  by reference to Exhibit
              10.12 to the  Registrants  Current  Report  on Form 8-K  (File No.
              34-51353) filed with the Commission on February 13, 2007.

10.18         Letter Agreement dated October 20, 2005, between New Motion,  Inc.
              and The Strickholm  Company.  Incorporated by reference to Exhibit
              10.13 to the  Registrants  Current  Report  on Form 8-K  (File No.
              34-51353) filed with the Commission on February 13, 2007.

10.19         License Agreement dated December 1, 2005, between New Motion, Inc.
              and Jaytu  Technologies,  LLC dba  SigAlert.com.  Incorporated  by
              reference to Exhibit 10.14 to the  Registrants  Current  Report on
              Form 8-K (File No. 34-51353) filed with the Commission on February
              13, 2007.

10.20         Master  Agreement  for Products and  Services  dated  December 29,
              2005,  between New Motion,  Inc.  and  GoldPocket  Wireless,  Inc.
              Incorporated  by  reference  to Exhibit  10.15 to the  Registrants
              Current  Report  on Form 8-K (File No.  34-51353)  filed  with the
              Commission on February 13, 2007.

10.21         Marketing  Agreement  dated January 10, 2006,  between New Motion,
              Inc. and Buongiorno USA, Inc. Incorporated by reference to Exhibit
              10.16 to the  Registrants  Current  Report  on Form 8-K  (File No.
              34-51353) filed with the Commission on February 13, 2007.

10.22         Contractor  Agreement dated January 11, 2006,  between New Motion,
              Inc. and Raymond Musci. Incorporated by reference to Exhibit 10.17
              to the Registrants  Current Report on Form 8-K (File No. 34-51353)
              filed with the Commission on February 13, 2007.

10.23         US Premium  Master  Service  Agreement  dated  January  17,  2006,
              between New Motion,  Inc. and Mobile  Messenger  Americas Pty Ltd.
              Incorporated  by  reference  to Exhibit  10.18 to the  Registrants
              Current  Report  on Form 8-K (File No.  34-51353)  filed  with the
              Commission on February 13, 2007.

10.24         Addendum  dated  January  17,  2006 to US Premium  Master  Service
              Agreement  dated  January 17, 2006,  between New Motion,  Inc. and
              Mobile  Messenger  Americas Pty Ltd.  Incorporated by reference to
              Exhibit 10.19 to the Registrants  Current Report on Form 8-K (File
              No. 34-51353) filed with the Commission on February 13, 2007.

10.25         Addendum  dated  January  18,  2006 to US Premium  Master  Service
              Agreement  dated  January 17, 2006,  between New Motion,  Inc. and
              Mobile  Messenger  Americas Pty Ltd.  Incorporated by reference to
              Exhibit 10.20 to the Registrants  Current Report on Form 8-K (File
              No. 34-51353) filed with the Commission on February 13, 2007.

10.26         Sublease Agreement dated July 12, 2006,  between New Motion,  Inc.
              and Aeronet Worldwide.  Incorporated by reference to Exhibit 10.21
              to the Registrants  Current Report on Form 8-K (File No. 34-51353)
              filed with the Commission on February 13, 2007.

10.27         Engagement Letter dated August 4, 2006,  between New Motion,  Inc.
              and  Sanders  Morris  Harris Inc.  Incorporated  by  reference  to
              Exhibit 10.22 to the Registrants  Current Report on Form 8-K (File
              No. 34-51353) filed with the Commission on February 13, 2007.

10.28         Executive  Employment Agreement dated August 28, 2006, between New
              Motion, Inc. and Burton Katz. Incorporated by reference to Exhibit
              10.23 to the  Registrants  Current  Report  on Form 8-K  (File No.
              34-51353) filed with the Commission on February 13, 2007.

10.29         Employment  Agreement dated October 24, 2006,  between New Motion,
              Inc. and Derrin  Griffiths.  Incorporated  by reference to Exhibit
              10.24 to the  Registrants  Current  Report  on Form 8-K  (File No.
              34-51353) filed with the Commission on February 13, 2007.

10.30         Executive Employment Agreement dated October 28, 2006, between New
              Motion,  Inc. and Zach  Greenberger.  Incorporated by reference to
              Exhibit 10.26 to the Registrants  Current Report on Form 8-K (File
              No. 34-51353) filed with the Commission on February 13, 2007.


                                      II-7
<PAGE>


10.31         Employment  Agreement dated October 31, 2006,  between New Motion,
              Inc. and Farlan Dowell. Incorporated by reference to Exhibit 10.27
              to the Registrants  Current Report on Form 8-K (File No. 34-51353)
              filed with the Commission on February 13, 2007.

10.32         Asset  Purchase  Agreement  dated  January 19,  2007,  between New
              Motion,  Inc.  and  Index  Visual  & Games  Ltd.  Incorporated  by
              reference to Exhibit 10.28 to the  Registrants  Current  Report on
              Form 8-K (File No. 34-51353) filed with the Commission on February
              13, 2007.

10.33         Secured Convertible  Promissory Note issued on January 19, 2007 by
              New Motion in favor of Index Visual & Games Ltd.  Incorporated  by
              reference to Exhibit 10.29 to the  Registrants  Current  Report on
              Form 8-K (File No. 34-51353) filed with the Commission on February
              13, 2007.

10.34         SMS Connectivity Agreement dated January 8, 2004, between Mobliss,
              Inc. and Cingular  Wireless LLC,  assigned to New Motion,  Inc. on
              January 19, 2007.  Incorporated  by reference to Exhibit  10.30 to
              the  Registrants  Current  Report on Form 8-K (File No.  34-51353)
              filed with the Commission on February 13, 2007.

10.35         Heads of Agreement  dated  January 19,  2007,  between New Motion,
              Inc.  and Index Visual & Games Ltd.  Incorporated  by reference to
              Exhibit 10.31 to the Registrants  Current Report on Form 8-K (File
              No. 34-51353) filed with the Commission on February 13, 2007.


21.1          Subsidiaries  of the  registrant.  Incorporated  by  reference  to
              Exhibit 21.1 to the  Registrant's  Registration  Statement on Form
              SB-2 (File No.  333-143025)  filed with the  Commission on May 16,
              2007.


23.1          Consent of Windes McClaughry Accountancy Corporation

23.2          Consent of Stubbs,  Alderton & Markiles,  LLP (included in Exhibit
              5.1)


99.1          Form of Specimen Stock Certificate.


         (b)      Financial Statement Schedules

         Schedules  not listed above have been omitted  because the  information
required  to be  set  forth  therein  is  not  applicable  or is  shown  in  the
consolidated financial statements or notes thereto.

ITEM 28.  UNDERTAKINGS.

         The undersigned registrant hereby undertakes to:

         (1)      File,   during   any  period  in  which  it  offers  or  sells
securities, a post-effective amendment to this registration statement to:

                  (i) Include any prospectus required by Section 10(a)(3) of the
Securities Act;

                  (ii)  Reflect  in the  prospectus  any facts or events  which,
individually or together,  represent a fundamental  change in the information in
the registration  statement;  and notwithstanding the forgoing,  any increase or
decrease  in  volume  of  securities  offered  (if the  total  dollar  value  of
securities offered would not exceed that which was registered) and any deviation
from  the  low or  high-end  of the  estimated  maximum  offering  range  may be
reflected in the form of prospects  filed with the  Commission  pursuant to Rule
424(b) if, in the  aggregate,  the changes in the volume and price  represent no
more than a 20% change in the maximum aggregate  offering price set forth in the
"Calculation of Registration Fee" table in the effective registration statement.

                  (iii) Include any additional or changed  material  information
on the plan of distribution;

         (2)      For determining liability under the Securities Act, treat each
post-effective  amendment  as a new  registration  statement  of the  securities
offered,  and the  offering of the  securities  at that time as the initial bona
fide offering.

         (3)      File a  post-effective  amendment to remove from  registration
any of the securities that remain unsold at the end of the offering.


                                      II-8
<PAGE>



         (e)  Request  for   acceleration   of   effective   date.   Insofar  as
indemnification  for  liabilities  arising  under  the  Securities  Act  may  be
permitted to directors,  officers and controlling  persons of the small business
issuer pursuant to the foregoing  provisions,  or otherwise,  the small business
issuer has been  advised  that in the  opinion of the  Securities  and  Exchange
Commission  such  indemnification  is against  public policy as expressed in the
Securities Act and is, therefore, unenforceable.


         In the event that a claim for indemnification  against such liabilities
(other than the  payment by the small  business  issuer of expenses  incurred or
paid by a director,  officer or controlling  person of the small business issuer
in the successful defense of any action, suit or proceeding) is asserted by such
director,  officer or controlling person in connection with the securities being
registered, the small business issuer will, unless in the opinion of its counsel
the  matter  has been  settled by  controlling  precedent,  submit to a court of
appropriate  jurisdiction  the question  whether such  indemnification  by it is
against public policy as expressed in the Securities Act and will be governed by
the final adjudication of such issue.


         (g) RELIANCE ON 430C.  For the purpose of determining  liability  under
the  Securities  Act to any purchaser,  each  prospectus  filed pursuant to Rule
424(b) as part of a registration  statement relating to an offering,  other than
registration statements relying on Rule 430B or other than prospectuses filed in
reliance  on Rule  430A,  shall  be  deemed  to be part of and  included  in the
registration  statement  as of the date it is first  used  after  effectiveness.
Provided,  however,  that no  statement  made  in a  registration  statement  or
prospectus  that is part of the  registration  statement  or made in a  document
incorporated or deemed incorporated by reference into the registration statement
or prospectus that is part of the registration statement will, as to a purchaser
with a time of contract of sale prior to such first use, supersede or modify any
statement  that was made in the  registration  statement or prospectus  that was
part of the  registration  statement  or made in any such  document  immediately
prior to such date of first use.



                                      II-9
<PAGE>


                                   SIGNATURES


         Pursuant to the requirements of the Securities Act of 1933, as amended,
the Registrant certifies that it has reasonable grounds to believe that it meets
all  of  the  requirements  for  filing  on  Form  SB-2/A  and  authorized  this
Registration  Statement  to be signed on its behalf by the  undersigned,  in the
City of Irvine, California, on July 20, 2007.


                                     NEW MOTION, INC.
                                     (Registrant)

                                     By:  /s/ Burton Katz
                                          ----------------------------------
                                          Burton Katz
                                          Chief Executive Officer (Principal
                                          Executive Officer)



         Pursuant  to the  requirements  of the  Securities  Act of  1933,  this
Registration  Statement  has  been  signed  by  the  following  persons  in  the
capacities and on the dates stated.

         NAME                         TITLE                            DATE
         ----                         -----                            ----


  /s/ Burton Katz          Chief Executive Officer and            July 20, 2007
-----------------------        Director (Principal
      Burton Katz              Executive Officer)

 /s/ Allan Legator         Chief Financial Officer and            July 20, 2007
-----------------------        Secretary (Principal
     Allan Legator             Financial and Accounting
                               Officer)

  /s/ Raymond Musci        President, Director                    July 20, 2007
-----------------------
     Raymond Musci

  /s/ Drew Larner          Director                               July 20, 2007
-----------------------
      Drew Larner

          *                Director                               July 20, 2007
-----------------------
    Robert S. Ellin

          *                Director                               July 20, 2007
-----------------------
  Barry I. Regenstein

          *                Director                               July 20, 2007
-----------------------
     Jerome Chazen


*By:  /s/ Allan Legator
      ----------------------------------
      Allan Legator, as Attorney-in-Fact



<PAGE>


                                  EXHIBIT INDEX


 EXHIBIT
   NO.                                      TITLE
--------      ------------------------------------------------------------------

2.1           Plan of  Reorganization  dated January 25, 2005.  Incorporated  by
              reference to Exhibit 2.1 to the Registrant's  Form 10-SB (File No.
              000-51353)  filed with the  Commission on June 10, 2005.

2.2           Order  Confirming Plan of  Reorganization  dated January 25, 2005.
              Incorporated by reference to Exhibit 2.2 to the Registrant's  Form
              10-SB (File No.  000-51353)  filed with the Commission on June 10,
              2005.

2.3           Exchange  Agreement dated January 31, 2007,  among MPLC, Inc., New
              Motion,  Inc.,  the  Stockholders  of New Motion,  Inc. and Trinad
              Capital  Master  Fund,  Ltd.  Incorporated  by  reference  to  the
              Registrant's  Current Report on Form 8-K (File No. 34-51353) filed
              with the Commission on February 1, 2007.

3.1           Restated  Certificate of Incorporation.  Incorporated by reference
              to Exhibit 3.1 to the Registrant's  Form 10-SB (File No. 34-51353)
              filed with the Commission on June 10, 2005.

3.2           Certificate   of  Amendment  to  the   Restated   Certificate   of
              Incorporation,  dated October 12, 2004.  Incorporated by reference
              to Exhibit 3.2 to the Registrant's  Form 10-SB (File No. 34-51353)
              filed with the Commission on June 10, 2005.

3.3           Certificate   of  Amendment  to  the   Restated   Certificate   of
              Incorporation,  dated April 8, 2005.  Incorporated by reference to
              Exhibit 3.3 to the  Registrant's  Form 10-SB  (File No.  34-51353)
              filed with the Commission on June 10, 2005.

3.4           Certificate   of  Amendment  to  the   Restated   Certificate   of
              Incorporation,  dated May 2, 2007.  Incorporated  by  reference to
              Exhibit 3.1 to the  Registrant's  current report on Form 8-K (File
              No. 34-51353) filed with the Commission on May 7, 2007.

3.5           Bylaws.   Incorporated   by   reference  to  Exhibit  3.4  to  the
              Registrant's  Form  10-SB  (File  No.  000-51353)  filed  with the
              Commission on June 10, 2005.

4.1           Certificate  of  Designation,  Preferences  and Rights of Series A
              Convertible Preferred Stock.  Incorporated by reference to Exhibit
              99.3 to the  Registrant's  Current  Report  on Form 8-K  (File No.
              34-51353) filed with the Commission on January 26, 2007.

4.2           Certificate  of  Designation,  Preferences  and Rights of Series B
              Convertible Preferred Stock.  Incorporated by reference to Exhibit
              99.2 to the  Registrant's  Current  Report  on Form 8-K  (File No.
              34-51353) filed with the Commission on February 1, 2007.

4.3           Certificate  of  Designation,  Preferences  and Rights of Series C
              Convertible Preferred Stock.  Incorporated by reference to Exhibit
              3.1.6 to the  Registrant's  Current  Report  on Form 8-K (File No.
              34-51353) filed with the Commission on February 13, 2007.

4.4           Certificate  of  Designation,  Preferences  and Rights of Series D
              Convertible Preferred Stock.  Incorporated by reference to Exhibit
              4.1 to the  Registrant's  Current  Report  on Form 8-K  (File  No.
              34-51353) filed with the Commission on March 6, 2007.

4.5           Series  A  Convertible   Preferred   Stock   Registration   Rights
              Agreement.  Incorporated  by  reference  to  Exhibit  99.2  to the
              Registrant's  Current Report on Form 8-K (File No. 34-51353) filed
              with the Commission on January 26, 2007.

4.6           Series  D  Convertible   Preferred   Stock   Registration   Rights
              Agreement.  Incorporated  by  reference  to  Exhibit  10.2  to the
              Registrant's  Current Report on Form 8-K (File No. 34-51353) filed
              with the Commission on March 6, 2007.

4.7           2005 Stock  Incentive  Plan.  Incorporated by reference to Exhibit
              4.3 to the  Registrant's  Current  Report  on Form 8-K  (File  No.
              34-51353) filed with the Commission on February 13, 2007.


                                      EX-1
<PAGE>


4.8           Form of Stock  Option  Agreement.  Incorporated  by  reference  to
              Exhibit 4.4 to the  Registrant's  Current Report on Form 8-K (File
              No. 34-51353) filed with the Commission on February 13, 2007.

4.9           2007 Stock  Incentive  Plan.  Incorporated by reference to Exhibit
              4.9 to the  Registrant's  Current  Report on Form 10-QSB (File No.
              34-51353) filed with the Commission on May 15, 2007.


5.1           Opinion  of Stubbs  Alderton  &  Markiles,  LLP.  Incorporated  by
              reference  to  Exhibit  5.1  to  the   Registrant's   Registration
              Statement  on Form  SB-2  (File  No.  333-143025)  filed  with the
              Commission on May 16, 2007.


10.1          Common Stock Purchase Agreement, dated October 24, 2006, among the
              Registrant,  Trinad Capital Master Fund, Ltd., Isaac Kier,  Jerome
              A.  Chazen,   Sid  Banon,   Lawrence  S.  Coben  and  Ralph  Kier.
              Incorporated  by  reference  to Exhibit  10.1 to the  Registrant's
              Current  Report  on Form 8-K (File No.  34-51353)  filed  with the
              Commission on October 30, 2006.

10.2          Series A Convertible  Preferred  Stock  Purchase  Agreement  dated
              January 24, 2007, between the Registrant and Trinad Capital Master
              Fund,  Ltd.  Incorporated  by  reference  to  Exhibit  99.1 to the
              Registrant's Current Report on Form 8-K (File No. 000-51353) filed
              with the Commission on January 26, 2007.

10.3          Series B Convertible  Preferred  Stock  Purchase  Agreement  dated
              January 30, 2007, among the Registrant,  Watchung Road Associates,
              L.P.,  Lyrical  Opportunity  Partners II LP,  Lyrical  Opportunity
              Partners II Ltd.  and Destar LLC.  Incorporated  by  reference  to
              Exhibit  10..33  to the  Registrant's  Current  Report on Form 8-K
              (File No.  33-51353)  filed with the  Commission  on February  13,
              2007.

10.4          Series D Convertible  Preferred  Stock  Purchase  Agreement  dated
              February 28, 2007, between the Registrant and various  purchasers.
              Incorporated  by  reference  to Exhibit  10.1 to the  Registrant's
              Current  Report  on Form 8-K (File No.  33-51353)  filed  with the
              Commission on March 6, 2007.

10.5          Voting  Agreement  dated  February 12, 2007 among  Trinad  Capital
              Master Fund,  Raymond Musci, MPLC Holdings,  LLC, Europlay Capital
              Advisors,  LLC and Scott  Walker.  Incorporated  by  reference  to
              Exhibit 10.34 to the Registrant's Current Report on Form 8-K (File
              No. 34-51353) filed with the Commission on February 13, 2007.

10.6          Master SMS Services  Agreement  dated April 19, 2005,  between New
              Motion,  Inc.  and  Mobile  Messenger  Pty  Ltd.  Incorporated  by
              reference to Exhibit 10.1 to the  Registrant's  Current  Report on
              Form 8-K (File No. 34-51353) filed with the Commission on February
              13, 2007.

10.7          Addendum  dated  April 28, 2005 to Master SMS  Services  Agreement
              dated  April  19,  2005,  between  New  Motion,  Inc.  and  Mobile
              Messenger  Pty Ltd.  Incorporated  by reference to Exhibit 10.2 to
              the  Registrant's  Current Report on Form 8-K (File No.  34-51353)
              filed with the Commission on February 13, 2007.

10.8          Amendment to Mobile Gateway Agreement dated July 1, 2005,  between
              New Motion,  Inc. and Mobile  Messenger  Australia  Pty Ltd.  This
              amendment  is an  addendum  to the Master SMS  Services  Agreement
              dated  April  19,  2005,  between  New  Motion,  Inc.  and  Mobile
              Messenger  Pty Ltd.  Incorporated  by reference to Exhibit 10.3 to
              the  Registrant's  Current Report on Form 8-K (File No.  34-51353)
              filed with the Commission on February 13, 2007.

10.9          Standard Multi-Tenant Office Lease dated July 6, 2005, between New
              Motion, Inc. and Dolphinshire,  L.P.  Incorporated by reference to
              Exhibit 10.4 to the Registrant's  Current Report on Form 8-K (File
              No. 34-51353) filed with the Commission on February 13, 2007.

10.10         Software Development and Consulting Agreement dated July 19, 2005,
              between  New  Motion,  Inc.  and e4site,  Inc.  d/b/a  Visionaire.
              Incorporated  by  reference  to Exhibit  10.5 to the  Registrant's
              Current  Report  on Form 8-K (File No.  34-51353)  filed  with the
              Commission on February 13, 2007.

10.11         Engagement  Letter  dated  August 2, 2005 and amended  January 10,
              2006,  between New Motion,  Inc.  and Anest  Financial  Solutions.
              Incorporated  by  reference  to Exhibit  10.6 to the  Registrant's
              Current  Report  on Form 8-K (File No.  34-51353)  filed  with the
              Commission on February 13, 2007.

10.12         Master Equipment Lease Schedule dated August 5, 2005,  between New
              Motion,  Inc. and VAResources,  Inc.  Incorporated by reference to
              Exhibit 10.7 to the Registrant's  Current Report on Form 8-K (File
              No. 34-51353) filed with the Commission on February 13, 2007.

10.13         Premium Service  Agreement  dated  September 1, 2005,  between New
              Motion, Inc. and Mobile Messenger Australia Pty Ltd.  Incorporated
              by reference to Exhibit 10.8 to the Registrant's Current Report on
              Form 8-K (File No. 34-51353) filed with the Commission on February
              13, 2007.


                                      EX-2
<PAGE>


10.14         Executive  Employment Agreement dated October 1, 2005, between New
              Motion,  Inc.  and Allan  Legator.  Incorporated  by  reference to
              Exhibit 10.9 to the Registrant's  Current Report on Form 8-K (File
              No. 34-51353) filed with the Commission on February 13, 2007.

10.15         Executive  Employment Agreement dated March 8, 2007, between MPLC,
              Inc. and Scott Walker.  Incorporated  by reference to Exhibit 10.1
              to the Registrants  Current Report on Form 8-K (File No. 34-51353)
              filed with the Commission on March 14, 2007.

10.16         Executive  Employment Agreement dated October 1, 2005, between New
              Motion, Inc. and Shane Maidy. Incorporated by reference to Exhibit
              10.11 to the  Registrants  Current  Report  on Form 8-K  (File No.
              34-51353) filed with the Commission on February 13, 2007.

10.17         Employment  Agreement  dated October 1, 2005,  between New Motion,
              Inc.  and Brian  Singleton.  Incorporated  by reference to Exhibit
              10.12 to the  Registrants  Current  Report  on Form 8-K  (File No.
              34-51353) filed with the Commission on February 13, 2007.

10.18         Letter Agreement dated October 20, 2005, between New Motion,  Inc.
              and The Strickholm  Company.  Incorporated by reference to Exhibit
              10.13 to the  Registrants  Current  Report  on Form 8-K  (File No.
              34-51353) filed with the Commission on February 13, 2007.

10.19         License Agreement dated December 1, 2005, between New Motion, Inc.
              and Jaytu  Technologies,  LLC dba  SigAlert.com.  Incorporated  by
              reference to Exhibit 10.14 to the  Registrants  Current  Report on
              Form 8-K (File No. 34-51353) filed with the Commission on February
              13, 2007.

10.20         Master  Agreement  for Products and  Services  dated  December 29,
              2005,  between New Motion,  Inc.  and  GoldPocket  Wireless,  Inc.
              Incorporated  by  reference  to Exhibit  10.15 to the  Registrants
              Current  Report  on Form 8-K (File No.  34-51353)  filed  with the
              Commission on February 13, 2007.

10.21         Marketing  Agreement  dated January 10, 2006,  between New Motion,
              Inc. and Buongiorno USA, Inc. Incorporated by reference to Exhibit
              10.16 to the  Registrants  Current  Report  on Form 8-K  (File No.
              34-51353) filed with the Commission on February 13, 2007.

10.22         Contractor  Agreement dated January 11, 2006,  between New Motion,
              Inc. and Raymond Musci. Incorporated by reference to Exhibit 10.17
              to the Registrants  Current Report on Form 8-K (File No. 34-51353)
              filed with the Commission on February 13, 2007.

10.23         US Premium  Master  Service  Agreement  dated  January  17,  2006,
              between New Motion,  Inc. and Mobile  Messenger  Americas Pty Ltd.
              Incorporated  by  reference  to Exhibit  10.18 to the  Registrants
              Current  Report  on Form 8-K (File No.  34-51353)  filed  with the
              Commission on February 13, 2007.

10.24         Addendum  dated  January  17,  2006 to US Premium  Master  Service
              Agreement  dated  January 17, 2006,  between New Motion,  Inc. and
              Mobile  Messenger  Americas Pty Ltd.  Incorporated by reference to
              Exhibit 10.19 to the Registrants  Current Report on Form 8-K (File
              No. 34-51353) filed with the Commission on February 13, 2007.

10.25         Addendum  dated  January  18,  2006 to US Premium  Master  Service
              Agreement  dated  January 17, 2006,  between New Motion,  Inc. and
              Mobile  Messenger  Americas Pty Ltd.  Incorporated by reference to
              Exhibit 10.20 to the Registrants  Current Report on Form 8-K (File
              No. 34-51353) filed with the Commission on February 13, 2007.

10.26         Sublease Agreement dated July 12, 2006,  between New Motion,  Inc.
              and Aeronet Worldwide.  Incorporated by reference to Exhibit 10.21
              to the Registrants  Current Report on Form 8-K (File No. 34-51353)
              filed with the Commission on February 13, 2007.

10.27         Engagement Letter dated August 4, 2006,  between New Motion,  Inc.
              and  Sanders  Morris  Harris Inc.  Incorporated  by  reference  to
              Exhibit 10.22 to the Registrants  Current Report on Form 8-K (File
              No. 34-51353) filed with the Commission on February 13, 2007.

10.28         Executive  Employment Agreement dated August 28, 2006, between New
              Motion, Inc. and Burton Katz. Incorporated by reference to Exhibit
              10.23 to the  Registrants  Current  Report  on Form 8-K  (File No.
              34-51353) filed with the Commission on February 13, 2007.

10.29         Employment  Agreement dated October 24, 2006,  between New Motion,
              Inc. and Derrin  Griffiths.  Incorporated  by reference to Exhibit
              10.24 to the  Registrants  Current  Report  on Form 8-K  (File No.
              34-51353) filed with the Commission on February 13, 2007.

10.30         Executive Employment Agreement dated October 28, 2006, between New
              Motion,  Inc. and Zach  Greenberger.  Incorporated by reference to
              Exhibit 10.26 to the Registrants  Current Report on Form 8-K (File
              No. 34-51353) filed with the Commission on February 13, 2007.


                                      EX-3
<PAGE>


10.31         Employment  Agreement dated October 31, 2006,  between New Motion,
              Inc. and Farlan Dowell. Incorporated by reference to Exhibit 10.27
              to the Registrants  Current Report on Form 8-K (File No. 34-51353)
              filed with the Commission on February 13, 2007.

10.32         Asset  Purchase  Agreement  dated  January 19,  2007,  between New
              Motion,  Inc.  and  Index  Visual  & Games  Ltd.  Incorporated  by
              reference to Exhibit 10.28 to the  Registrants  Current  Report on
              Form 8-K (File No. 34-51353) filed with the Commission on February
              13, 2007.

10.33         Secured Convertible  Promissory Note issued on January 19, 2007 by
              New Motion in favor of Index Visual & Games Ltd.  Incorporated  by
              reference to Exhibit 10.29 to the  Registrants  Current  Report on
              Form 8-K (File No. 34-51353) filed with the Commission on February
              13, 2007.

10.34         SMS Connectivity Agreement dated January 8, 2004, between Mobliss,
              Inc. and Cingular  Wireless LLC,  assigned to New Motion,  Inc. on
              January 19, 2007.  Incorporated  by reference to Exhibit  10.30 to
              the  Registrants  Current  Report on Form 8-K (File No.  34-51353)
              filed with the Commission on February 13, 2007.

10.35         Heads of Agreement  dated  January 19,  2007,  between New Motion,
              Inc.  and Index Visual & Games Ltd.  Incorporated  by reference to
              Exhibit 10.31 to the Registrants  Current Report on Form 8-K (File
              No. 34-51353) filed with the Commission on February 13, 2007.


21.1          Subsidiaries  of the  registrant.  Incorporated  by  reference  to
              Exhibit 21.1 to the  Registrant's  Registration  Statement on Form
              SB-2 (File No.  333-143025)  filed with the  Commission on May 16,
              2007.


23.1          Consent of Windes McClaughry Accountancy Corporation

23.2          Consent of Stubbs,  Alderton & Markiles,  LLP (included in Exhibit
              5.1)


99.1          Form of Specimen Stock Certificate.



                                      EX-4


</TEXT>
</DOCUMENT>
