MY SCREEN MOBILE, INC. - FORM 10-Q

Attached files

file	filename
EX-31.2 - CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO RULE 13A-14 OR 15D-14 OF TH - MY SCREEN MOBILE, INC.	exhibit_31-2.htm
EX-31.1 - CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER PURSUANT TO RULE 1 - MY SCREEN MOBILE, INC.	exhibit_31-1.htm
EX-32.2 - CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO 18 U.S.C. SECTION 1350, AS - MY SCREEN MOBILE, INC.	exhibit_32-2.htm
EX-32.1 - CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER PURSUANT TO 18 U.S.C. SECTION 1350, - MY SCREEN MOBILE, INC.	exhibit_32-1.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark one)

x QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2009

o TRANSITION REPORT UNDER SECTION 13 OR 15 (d) OF THE EXCHANGE ACT OF 1934

For the transition period from ________ to ________

Commission file number: 000-20675

My Screen Mobile, Inc.

(Exact name of issuer as specified in its charter)

Delaware	23-2932617
(State or other jurisdiction of incorporation or organization)	(IRS Employer Identification No.)

70 Yorkville Ave, Suite 300, Toronto, ONT, Canada M5R 1B9

(Address of principal executive offices)

866-936-8333

(Issuer's telephone number)

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the issuer (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes o No x

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

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

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

The number of shares of the registrant's common stock, outstanding as of December 31, 2009 was 136,536,877, and there were 260 stockholders of record.

My Screen Mobile, Inc.

Index to Form 10-Q

		Page

PART I	FINANCIAL INFORMATION	3

Item 1.	Financial Statements (Unaudited)	3

	Consolidated Balance Sheet – As of September 30, 2009	3

	Consolidated Statements of Income – Three and nine Months Ended September 30, 2009 and 2008	4

	Consolidated Statements of Cash Flows - Nine Months Ended September 30, 2009 and 2008	5

	Notes to Consolidated Financial Statements	7

Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	19

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	19

Item 4.	Controls and Procedures	19


PART II	OTHER INFORMATION	20

Item 1A.	Legal Proceedings	20

Item 1B.	Risk Fastors	20

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	27

Item 3.	Defaults Upon Senior Securities	27

Item 4.	Submission of Matters to a Vote of Security Holders	27

Item 5.	Other Information	27

Item 6.	Exhibits	28


SIGNATURES		28

PART I FINANCIAL INFORMATION

Item 1.

Financial Statements

MY SCREEN MOBILE, INC.
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED BALANCE SHEETS
AS AT September 30, 2009



	September 30			December 31.
	2009			2008
	UNAUDITED			AUDITED
	$			$
ASSETS


CURRENT ASSETS:
Cash		514,313			31,135
Restricted cash		-			2,196,599
Prepaid expenses		28,486			24,604
Notes receivable		18,576			438,337
		561,375			2,690,675

Property and equipment (net)		136,112			182,332

TOTAL ASSETS		697,487			2,873,007

LIABILITIES AND STOCKHOLDERS' EQUITY


CURRENT LIABILITIES:
Accrued expenses		1,510,042			263,805
Convertible debenture payable		500,000			-
Convertible promissory note payable, net of discount		-			90,560

TOTAL CURRENT LIABILITIES		2,010,042			354,365

TOTAL LIABILITIES		2,010,042			354,365


STOCKHOLDERS' EQUITY (DEFICIT)

Common stock: $.001 par value;
200,000,000 shares authorized;
131,152,383 and 129,172,098 shares issued and outstanding
at September 30,2009 and December 31, 2008 , respectively		131,152			129,171
Additional paid-in capital		64,463,648			56,585,810
Deficit accumulated during development stage		(65,907,355	)		(54,196,339	)

TOTAL STOCKHOLDERS' EQUITY (DEFICIT)		(1,312,555	)		2,518,642

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)		697,487			2,873,007


(THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL STATEMENTS)

MY SCREEN MOBILE, INC.
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
													FOR THE PERIOD FROM
													January 10, 1996
	FOR THE THREE MONTHS ENDED,						FOR THE NINE MONTHS ENDED,						(INCEPTION)
	September 30			September 30			September 30			September 30			To September 30
	2009			2008			2009			2008			2009
	$			$			$			$			$

REVENUE
Net sales		-			-			-			-			563,382
Cost of goods sold		-			-			-			-			516,031
Gross Profit		-			-			-			-			47,351

EXPENSES
Consulting		1,922,813			3,380,498			3,446,116			33,901,676			43,940,940
Programming		1,222,898			466,103			2,067,101			1,587,584			6,194,385
Advertising and promotion		24,694			437,166			220,536			551,017			909,713
Salaries and benefits		2,286,737			327,212			4,709,594			330,329			8,497,146
General, selling and administrative expenses		128,880			264,949			457,447			542,998			1,166,872
Depreciation		23,552			32,189			78,080			57,368			308,018
Travel and entertainment		87,249			203,691			296,102			257,072			694,112
Legal and Audit		51,059			62,353			135,828			118,239			428,391
Foreign currency translation (gain) loss		5,816			- 6,125			9,235			4,507			72,181
Impairment loss on intellectual property intangible asset		-			-			-			-			2,912,000
Bank Charges		721			1,038			2,201			1,495			5,254
Total Operating Expense		5,754,419			5,169,074			11,422,240			37,352,285			65,129,012
OPERATING LOSS		(5,754,419	)		(5,169,074	)		(11,422,240	)		(37,352,285	)		(65,081,661	)

OTHER INCOME (EXPENSE)
Interest expense		(282,229	)		(8,844	)		(291,969	)		(108,369	)		(874,738	)
Interest income		-			20,387			3,193			21,092			49,044
Total other expense		(282,229	)		11,543			(288,776	)		(87,277	)		(825,694	)

Loss before income taxes		(6,036,648	)		(5,180,617	)		(11,711,016	)		(37,439,562	)		(65,907,355	)

Provision for income taxes		-			-			-			-			-

Net (loss)		(6,036,648	)		(5,180,617	)		(11,711,016	)		(37,439,562	)		(65,907,355	)


NET LOSS PER COMMON SHARE -
- BASIC AND FULLY DILUTED		(0.05	)		(0.05	)		(0.09	)		(0.30	)


WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING
- BASIC AND FULLY DILUTED		130,251,943			114,830,607			129,670,675			125,922,098

(THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL STATEMENTS)

MY SCREEN MOBILE, INC.
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
							FOR THE PERIOD FROM
							January 10, 1996
	FOR THE NINE MONTHS ENDING,						(INCEPTION)
	September 30			September 30			To September 30,
	2009			2008			2009
	$			$			$


Cash flows provided by (used for) operating activities:
Net loss		(11,711,016	)		(37,439,562	)		(65,907,355	)

Adjustments to reconcile net loss to net cash
provided by operating activities:
Common stock issued for services		730,561			10,173,662			9,612,883
Stock purchase warrants issued for services		2,136,577			24,569,751			31,901,422
Common stock options issued for services		3,252,681						3,365,616
Convertible debenture beneficial conversion interest		286,351			98,563			845,229
Bad debt expense		-			-			28,770
Depreciation		78,080			57,368			308,019
Impairment loss on intellectual property		-			-			2,912,000
Discount for warrant valuation		-			-			244,802
		-			-
Changes in operating assets and liabilities:
(Increase) decrease in accounts receivable		-			-			(22,274	)
(Increase) decrease in notes receivable		-						-
(Increase) decrease in inventory		-			-			(216,867	)
(Increase) decrease in prepaid expenses		(3,882	)		(2,928,743	)		(20,820	)
( Decrease ) Increases in accounts payable and accrued expenses:
Prepetition		-			-			(59,032	)
Postpetition		1,244,326			(265,758	)		2,222,383
Decrease in settlement receivable		-			-			362,694
Advances from related party		-			(149,373	)		-
( Decrease ) in fees payable		-			-			(75,000	)
Net cash ( used in ) provided by operating activities		(3,986,322	)		(5,884,092	)		(14,497,530	)



CASH FLOWS USED IN INVESTING ACTIVITIES:
Payment of debt		-			-			(118,623	)
Cash paid for note receivable		(200,000	)					(638,337	)
Proceeds from note receivable		619,761						619,761
Loans made to stockholders		-			(492,000	)		(100,000	)
Purchase of LBS assets								(882,000	)
Purchase of property and equipment		(31,860	)		(161,605	)		(519,242	)
Net cash ( used in ) provided by investing activities		387,901			(653,605	)		(1,638,441	)

CONSOLIDATED STATEMENTS OF CASH FLOWS - continued

CASH FLOWS FROM FINANCING ACTIVITIES:
Sale of common stock	1,385,000	10,325,000	12,710,000
Proceeds from issuance of convertible debentures	500,000	400,000	1,481,500
Proceeds from issuance of convertible promissory notes		100,000	100,000
Sale of preferred stock	-	-	3,500,000
Proceeds from short term borrowing	-	-	1,615,000
Payment of offering costs for sale of preferred stock	-	-	(500,000	)
Payment of offering costs for sale of Senior Notes	-	-	(290,715	)
Payment of prepetition liabilities	-	-	(1,781,737	)
Loans repaid to stockholder	-	-	(183,764	)


Net cash ( used in ) provided by financing activities	1,885,000		10,825,000	16,650,284

NET ( DECREASE ) INCREASE IN CASH AND CASH EQUIVALENTS	(1,713,421	)	4,287,303	514,313

CASH AND CASH EQUIVALENTS:
- beginning of period	2,227,734		244	-

CASH AND CASH EQUIVALENTS (BANK INDEBTEDNESS):
- end of period	514,313		4,287,547	514,313


SUPPLEMENTAL disclosure of CASH FLOW INFORMATION:
Cash paid during the year

Interest paid	5,618		-	26,094

Income taxes paid	-		-	-

Non cash financing activities:
Common stock issued for intellectual property	-		-	2,030,000
Issuance of common stock to settle accrued liabilities	-		-	100,000
Common stock issued for conversion of debenture	-		831,500	981,500
Cancelation of common stock	-		418,831	418,831
Common stock issued for conversion of promissory notes	100,000			100,000

(THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL STATEMENTS)

MY SCREEN MOBILE, INC.

(A DEVELOPMENT STAGE COMPANY)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2009

NOTE 1 – ORGANIZATION AND BASIS OF PRESENTATION

Organization and Nature of Operations

My Screen Mobile, Inc. (the "Company"), is organized for the purpose of developing or acquiring the expertise to produce computer software to be compatible with mobile phone technology. From 1996 until 2006, the Company was named Nouveau International, Inc. and experienced a period of dormancy, during which several reorganizations were attempted, but never completed. On April 19, 2007 the Company filed a Certificate of Amendment with the state of Delaware and changed its legal name and management was established with the above purposes planned.

The Company is a Development Stage Company and was incorporated under the laws of the state of Delaware on January 10, 1996. The Company acquired 2089207 Ontario Inc. which operates as MyScreen Mobile in Canada on April 2, 2007.

These financial statements and related notes are presented in accordance with accounting principles generally accepted in the United States, and are expressed in US dollars.

The accompanying unaudited financial statements included herein have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X. They do not include all information and notes required by generally accepted accounting principles for complete financial statements. However, except as disclosed herein, there has been no material change in the information disclosed in the notes to financial statements included in the 10-K report for the year ended December 31, 2008. In the opinion of management, all adjustments considered necessary for a fair presentation of the results for the interim periods have been made and are of a normal, recurring nature. Operating results for the three and nine months ended September 30, 2009 are not necessarily indicative of the results that may be expected for any interim period or the entire year. For further information, these financial statements and the related notes should be read in conjunction with the Company’s audited financial statements for the year ended December 31, 2008 included in the Company’s 10-K report.

Basis of Presentation

These consolidated financial statements include the accounts My Screen Mobile, Inc. and its wholly-owned subsidiary 2089207, with all inter-company transactions and balances having been eliminated.

These consolidated financial statements and related notes are presented in accordance with accounting principles generally accepted in the United States, and are expressed in US dollars.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Cash and Cash Equivalents

The Company considers all highly liquid instruments with an original maturity or remaining maturity at the date of purchase of three months or less to be cash equivalents.

MY SCREEN MOBILE, INC.

(A DEVELOPMENT STAGE COMPANY)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2009

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - continued

Property and Equipment

Property, plant, and equipment are stated at cost less accumulated depreciation. No amortization is provided for construction in progress until the assets are ready for their intended use. Repairs and maintenance expenditures are charged to operating expense as incurred. Depreciation is calculated on a straight line basis over the expected useful life as follows:

Computer equipment and software	3 years
Office furniture and equipment	5 years
Leasehold improvements	term of the lease

Fair Value of Financial Instruments

The Company’s financial instruments include cash, notes receivable, subscription receivable accrued expenses, debentures payable and notes payable. The fair value of these financial instruments approximates their carrying values due to their short maturities.

Accounting Estimates

The preparation of the 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. Actual results could differ from those estimates.

Revenue Recognition

Revenue is recognized as the advertising contracts are fulfilled by delivering advertisements to mobile devices.

Foreign Currency Translation

The Company’s functional and reporting currency is the United States dollar. Monetary assets and liabilities denominated in foreign currencies are translated using the exchange rate prevailing at the balance sheet date. Historical cost balances are remeasured using historical exchange rates. Gains and losses arising on settlement of foreign currency denominated transactions or balances are included in the determination of income. Foreign currency transactions are primarily undertaken in Canadian dollars. The Company has not to the date of these financial statements, entered into derivative instruments to offset the impact of foreign currency fluctuations.

Income Taxes

Income tax expense is based on pre-tax financial accounting income. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets, including tax loss and credit carryforwards, and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Deferred income tax expense represents the change during the period in the deferred tax assets and deferred tax liabilities. The components of the deferred tax assets and liabilities are individually classified as current and non-current based on their characteristics. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized.

MY SCREEN MOBILE, INC.

(A DEVELOPMENT STAGE COMPANY)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2009

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - continued

Basic and Diluted Net (Loss) Per Common Share (“EPS”)

Basic net (loss) per share is computed by dividing the net (loss) attributable to the common stockholders by the weighted average number of common shares outstanding during the reporting period. Diluted net (loss) per common share does not include the potential common shares that could occur upon exercise of warrants, stock options or conversion of debt to acquire common stock, as their effect would be anti-dilutive. Therefore, basic and diluted EPS are the same.

At September 30, 2009, the Company had issued and outstanding 131,152,383 common shares, and 27,376,197 common stock purchase warrants. The board authorized the issuance of options to purchase up to an aggregate of 15,283,333 shares of common stock to certain officers, employees and directors subject to approval by the stockholders.

Stock-Based Compensation

The Company records expense for stock-based compensation to employees using the fair value method. Occasionally, the Company will issue shares of stock and stock warrants in exchange for services. The Company values the issuance of shares based on the fair value of its stock on the date of issuance. The Company values the warrants it issues using the Black-Scholes model.

Recent Accounting Pronouncements

We do not expect the adoption of any recent accounting pronouncements to have a material effect on the financial statements.

NOTE 3 – GOING CONCERN

These financial statements have been prepared on a going concern basis, which implies the Company will continue to realize its assets and discharge its liabilities in the normal course of business. The Company has not generated any revenues since inception and has never paid any dividends and is unlikely to pay dividends or generate earnings in the immediate or foreseeable future. The continuation of the Company as a going concern is dependent upon the continued financial support from its shareholders, the ability of the Company to obtain necessary equity financing to continue operations, and the attainment of profitable operations. At September 30, 2009, the Company had a deficit accumulated during Development Stage of $65,907,355. These factors raise substantial doubt regarding the Company’s ability to continue as a going concern. There is no assurance that the Company will be able to generate revenues in the future. The Company is currently seeking additional equity and debt financing to sustain its operations. These financial statements do not give any effect to any adjustments that would be necessary should the Company be unable to continue as a going concern and therefore be required to realize its assets and discharge its liabilities in other than the normal course of business and at amounts different from those reflected in the accompanying financial statements.

MY SCREEN MOBILE, INC.

(A DEVELOPMENT STAGE COMPANY)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2009

NOTE 4 – PREPAID EXPENSES

Prepaid expenses include $26,985 for prepaid rent and $1,501 for prepaid insurance.

NOTE 5 – NOTES RECEIVABLE

Notes receivable of $18,576 are due from one Company and are due on demand. The Notes include interest of 7% per annum on the unpaid balance.

NOTE 6 – PROPERTY AND EQUIPMENT

Property and equipment consist of the following:

			Accumulated				December 31,
	Cost		Depreciation		Net		2008

Leasehold improvements	$	70,276	$	60,992	$	9,284	$	30,939

Computer equipment	$	189,746	$	105,335	$	84,411	$	94,404

Computer software	$	9,191	$	5,362	$	3,829	$	6,128

Office furniture and equipment	$	79,538	$	40,950	$	38,588	$	50,861

Total	$	348,752	$	212,640	$	136,112	$	182,332

Total depreciation expense for the three months ended September 30, 2009 was $23,552 (2008 - $32,189)

NOTE 7 – INTANGIBLE ASSETS

On November 10, 2008 the Company issued 4,000,000 shares of its common stock and paid cash of $882,000 to purchase the assets of LBS Ventures, Inc. for a total purchase price of $4,922,000. Subsequently, the Company and LBS Ventures, Inc. agreed to reduce the consideration by 2,000,000 shares and the Company cancelled 2,000,000 shares. On April 4, 2007 the Company issued 10,000,000 shares of its common stock to acquire patents and intellectual property, for $10,000. The Company determined these intangible assets were impaired due to lack of foreseeable cash flows generated by these assets, and accordingly recorded an impairment loss of $2,902,000 in 2008 and $10,000 in 2007.

NOTE 8 – ACCRUED EXPENSES

Accrued expenses totalled $1,510,042 and included the following. Payments due for programming work performed $665,675, salary amounts payable, $296,917, general and administration payables $199,839, amounts payable to consultants $220,244, and amounts payable for travel, $87,521,advertising payable $21,803 and accrued legal expenses,$18,043.

MY SCREEN MOBILE, INC.

(A DEVELOPMENT STAGE COMPANY)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2009

NOTE 9 – CONVERTIBLE DEBENTURE

The convertible debenture matures three years from the date of issuance. Simple interest on the unpaid principal balance accrues monthly during the term of the debenture. The convertible debenture may be converted at any time in whole or in part, at the option of the holder, into restricted common shares of the Company at a conversion price of $1.00.

Principal amount of Debenture	Maturity Date	Interest Rate	Conversion Price	FV of stock on date of issuance
$500,000	September 30, 2012	6%	$1.00	$1.55

The convertible debenture contains a beneficial conversion feature which has been calculated based on the difference between the conversion price and fair value of the stock on the date the notes were issued. Since the debt is convertible on the date of issuance, the amount of the related debt discount in the amount of $275,000 was immediately charged to interest expense.

NOTE 10 – CONVERTIBLE PROMISSORY NOTES

Convertible promissory notes mature three years from the date of issuance and have a 7.5% interest rate calculated and compounded annually. Interest is paid semi annually in arrears. The convertible debentures may be converted at any time after the one year anniversary in whole or in part, at the option of the holders into restricted common shares of the Company at a conversion price of $1.50. The convertible promissory notes contain a beneficial conversion feature which has been calculated based on the difference between the conversion price and fair value of the stock on the date the notes were issued. As the debt is convertible at any time after the one year anniversary $3,479 out of a total $18,666 of the related debt discount was charged to interest expense during the quarter ended September 30, 2009. Effective September 11, 2009, the two individuals holding the $100,000 Convertible Promissory Notes converted their notes into 66,666 restricted common shares.

NOTE 11 – RELATED PARTY TRANSACTIONS

The Company had an agreement with one of its shareholders (approximate 20% owner) whereby the shareholder’s company performed programming services to the Company in developing its mobile phone technology. This agreement was completed on May 28, 2008. On occasion, the shareholder’s company also advanced operating capital to the Company, on an as needed basis. There was no outstanding balance at September 30, 2009 or September 30, 2008. No formal note payable was established for such advances, and as such no related interest expense was accrued. Total programming expenses recorded for this related party during the period April 4, 2007 to May 28, 2008 $3,335,126. The Company and the shareholder agreed to cancel 523,539 previously issued shares to the shareholder valued at $418,307 effective May 28, 2008 to reflect a revised agreed upon amount for the services provided. The Company purchased the assets of LBS Ventures, Inc. from the same shareholder for $882,000 and 4,000,000 restricted common shares on November 10, 2008. The parties subsequently agreed to reduce the purchase price by 2,000,000 shares. The total purchase price recorded by the Company in 2008 was $2,902,000.

NOTE 12 – STOCKHOLDERS’ EQUITY

Effective January 29, 2009, the Company issued one entity, 25,000 shares of common stock in exchange for consulting services to be provided to the Company. The related consulting expense was valued using the fair value of the Company’s common stock on the date of issuance, and totalled $28,500.

MY SCREEN MOBILE, INC.

(A DEVELOPMENT STAGE COMPANY)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2009

NOTE 12 – STOCKHOLDERS’ EQUITY - continued

During March, 2009, the Company issued 100,000 shares of common stock in return for $100,000 in cash. The Company entered into an employment contract effective April 1, 2009 which requires 70,000 shares of Company’s common stock to be issued in 6 equal monthly installments of 11,666 shares beginning May 1, 2009 as long as the individual is still employed with the Company. The Company valued these services for the quarter ended September 30, 2009 at $51,335.

On April 1, 2009 the Company granted 750,000 options to purchase common shares to an employee at $1.00 under the Company’s Long Term Incentive Plan. The options are based on length of service and vest over 3 years. The options were valued on the date of issuance using the Black-Scholes model that generated a total fair value $729,149. This amount is being recognized ratably as salary expense over the three year period.

The Company entered into an employment contract effective May 1, 2009 which requires 3,000,000 shares of Company’s common stock to be issued., The shares are earned in 6 equal installments of 500,000 shares, six months, twelve months, eighteen months, twenty four months, thirty months and thirty-six months after May 1, 2009 as long as the individual is employed as of the applicable date. All shares are deemed to be earned in the event of termination without cause. The Company also granted 7,000,000 options to this same employee to purchase common shares at $1.00 under a separate Executive Incentive Plan. 3,000,000 options are based on length of service and vest in 4 equal installments of 750,000 shares, at six months, twelve months, twenty four months and thirty six months after May 1, 2009. These options were valued on the date of issuance using the Black-Scholes model that generated a total fair value of $3,475,410. This amount is being recognized ratably over three years as salary expense. 4,000,000 of the 7,000,000 options granted above are performance based.These options were valued on the date of issuance using the Black-Scholes model that generated a total fair value $4,633,871. This amount is being recognized ratably as salary expense over the periods the Company expects the performance conditions to be met and will be reassessed at each reporting period. The salary expense for both the service and performance options for the quarter ended September 30, 2009 was $838,393

On June 26, 2009 the Company issued 560,000 shares of the Company’s common stock for $560,000. Each share of Common Stock was issued together with a warrant to purchase one half of a share of Common Stock exercisable at $1.00 per share, and a warrant to purchase one half of a share of Common Stock exercisable at $2.00 per share. The warrants were valued on the date of issuance using the Black-Scholes model that generated a total fair value $548,074. This amount was recorded as consulting expense.

On June 27, 2009 the Company issued 55,000 shares of its common stock to an individual in return for services provided to the Company. The related consulting expense was valued using the fair value of the Company’s common stock on the date of issuance, and totalled $66,000.

Effective June 30, 2009, we issued an individual, 55,370 shares of common stock as compensation due under an Amended Employment Agreement. The revised agreement is effective April 1, 2009 and was originally entered into between the Company and such individual on January 1, 2008. The related consulting expense and number of shares to be issued is calculated monthly by taking $CDN 25,000 converting it at the average exchange rate for the month and dividing by the average closing share price for the 20 days prior to the first day of each month. In total for the three months ending June 30, 2009 the consulting expense was $61,916.

On August 28, 2009 the Company issued 175,000 shares of the Company’s common stock for $175,000. Each share of Common Stock was issued together with a warrant to purchase one half of a share of Common Stock exercisable at $1.00 per share, and a warrant to purchase one half of a share of Common Stock exercisable at $2.00 per share. The warrants were valued on the date of issuance using the Black-Scholes model that generated a total fair value $212,303. This amount was recorded as consulting expense.

On August 31, 2009 the Company issued 50,000 shares of the Company’s common stock for $50,000. Each share of Common Stock was issued together with a warrant to purchase one half of a share of Common Stock exercisable at $1.00 per share, and a warrant to purchase one half of a share of Common Stock exercisable at $2.00 per share. The warrants were valued on the date of issuance using the Black-Scholes model that generated a total fair value $65,742. This amount was recorded as consulting expense.

On August 31, 2009 the Company issued 27,500 shares of its common stock to an individual in return for services provided to the Company. The related consulting expense was valued using the fair value of the Company’s common stock on the date of issuance, and totalled $44,000.

MY SCREEN MOBILE, INC.

(A DEVELOPMENT STAGE COMPANY)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2009

NOTE 12 – STOCKHOLDERS’ EQUITY - continued

On September 9, 2009, the Company issued one entity, 200,000 shares of common stock in exchange for programming services to be provided to the Company. The related Programming expense was valued using the fair value of the Company’s common stock on the date of issuance, and totalled $300,000.

Effective September 11, 2009, the two individuals holding the $100,000 Convertible Promissory Notes converted their notes into 66,666 restricted common shares.

On September 15, 2009 the Company granted 1,200,000 options to purchase common shares to an employee at $1.45 under the Company’s Long Term Incentive Plan. The options are based on length of service. The options vest over three years. The options were valued on the date of issuance using the Black-Scholes model that generated a total fair value $1,493,652. This amount will be expensed as salary expense over the three year period. The salary expense for the quarter ended September 30, 2009 was $41,490.

During September, 2009 the Company issued 500,000 shares of the Company’s common stock for $500,000. Each share of Common Stock was issued together with a warrant to purchase one half of a share of Common Stock exercisable at $1.00 per share, and a warrant to purchase one half of a share of Common Stock exercisable at $2.00 per share. The warrants were valued on the date of issuance using the Black-Scholes model that generated a total fair value $515,537. This amount was recorded as consulting expense.

On September 21, 2009 the Company issued 17,500 shares of the Company’s common stock to a Company and 14,000 shares of the Company’s common stock to an individual for services provided to the Company. The related consulting expense was valued using the fair value of the Company’s common stock on the date of issuance, and totalled $41,500. Each share of Common Stock was issued together with a warrant to purchase one half of a share of Common Stock exercisable at $1.00 per share, and a warrant to purchase one half of a share of Common Stock exercisable at $2.00 per share. The warrants were valued on the date of issuance using the Black-Scholes model that generated a total fair value $32,399. This amount was recorded as consulting expense.

On September 30, 2009, in exchange for $500,000, we issued a company a convertible debenture in the principle amount of $500,000, together with a warrant to purchase 250,000 shares of common stock exercisable at $1.00 per share and a warrant to purchase 250,000 shares of common stock exercisable at $2.00 per share. The warrants were valued on the date of issuance using the Black-Scholes model that generated a total fair value $762,924. This amount was recorded as consulting expense.

On September 30, 2009, the Company issued one individual, 25,000 shares of common stock in exchange for services provided to the Company. The related consulting expense was valued using the fair value of the Company’s common stock on the date of issuance, and totalled $38,750.

Effective September 30, 2009, we issued an individual, 50,916 shares of common stock as compensation due under an Amended Employment Agreement. The revised agreement is effective April 1, 2009 and was originally entered into between us and such individual on January 1, 2008. The related consulting expense and number of shares to be issued is calculated monthly by taking $CDN 25,000 converting it at the average exchange rate for the month and dividing by the average closing share price for the 20 days prior to the first day of each month. In total for the three months ending September 30, 2009 the consulting expense was $65,628.

NOTE 13 – SUBSEQUENT EVENTS

From October 1 to the 16th, 2009 the Company issued 80,000 shares of the Company’s common stock for $80,000. Each share of Common Stock was issued together with a warrant to purchase one half of a share of Common Stock exercisable at $1.00 per share, and a warrant to purchase one half of a share of Common Stock exercisable at $2.00 per share. The warrants were valued on the date of issuance using the Black-Scholes model that generated a total fair value $87,684. This amount was recorded as consulting expense.

On October 1, 2009 the Company granted 2,150,000 options to purchase common shares at $1.25 under the Company’s Long Term Incentive Plan to six employees. The options are based on length of service, with 637,500 options vesting immediately, and the balance vest over two years. The options were valued on the date of issuance using the Black-Scholes model that generated a total fair value $2,654,781. $787,173 was recognized as expense on October 1, 2009 and the balance of $1,867,608 will be recognized ratably as salary expense over the two year

On October 13, 2009 the Company granted 1,000,000 options to purchase common shares at $1.25 under the Company’s Long Term Incentive Plan to two employees. The options are based on length of service and vest over three years. The options were valued on the date of issuance using the Black-Scholes model that generated a total fair value $1,123,870. This amount is being recognized ratably as salary expense over the three year period.

On October 20, 2009 the Company granted 1,700,000 options to purchase common shares at $1.25 under the Company’s Long Term Incentive Plan to six employees. The options are performance based. These options were valued on the date of issuance using the Black-Scholes model that generated a total fair value $1,795,897. This amount will be expensed as salary expense over the periods we expect the performance conditions to be met and will be reassessed at each reporting period.

MY SCREEN MOBILE, INC.

(A DEVELOPMENT STAGE COMPANY)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2009

NOTE 13 – SUBSEQUENT EVENTS - continued

On October 30, 2009, the Company issued one entity 15,000 shares of common stock in exchange for consulting services provided to the Company. The related consulting expense was valued using the fair value of the Company’s common stock on the date of issuance, and totalled $18,750.

On November 18, 2009 the Company granted 2,800,000 options to purchase common shares at $1.18 under the Company’s Long Term Incentive Plan to six employees. The options are performance based. These options were valued on the date of issuance using the Black-Scholes model that generated a total fair value $3,089,030. This amount will be expensed as salary expense over the periods we expect the performance conditions to be met and will be reassessed at each reporting period.

On November 19, 2009, the Company issued one entity 123,981 shares of common stock in exchange for consulting services provided to the Company. The related consulting expense was valued using the fair value of the Company’s common stock on the date of issuance, and totalled $142,578.

On November 19, 2009, we issued an entity 1,250,000 shares of common stock, in exchange for services provided to us by such entity. The related consulting expense was valued using the fair value of the Company’s common stock on the date of issuance, and totalled $1,437,500.

On December 2, 2009, we issued one entity 100,000 shares of common stock, upon its partial conversion of its Demand Note we issued to such entity during 2009.

On December 15, 2009, we issued 40,000 shares of common stock to an individual in exchange for legal services provided. The related legal expense was valued using the fair value of the Company’s common stock on the date of issuance, and totalled $44,000.

On December 15, 2009, the Company issued one entity 710,000 shares of common stock in exchange for consulting services provided to the Company The related consulting expense was valued using the fair value of the Company’s common stock on the date of issuance, and totalled $781,000.

Effective December 31, 2009, we issued an individual, 53,836 shares of common stock as compensation due under an Amended Employment Agreement. The revised agreement is effective April 1, 2009 and was originally entered into between us and such individual on January 1, 2008. The related consulting expense and number of shares to be issued is calculated monthly by taking $CDN 25,000 converting it at the average exchange rate for the month and dividing by the average closing share price for the 20 days prior to the first day of each month. The total consulting expense was $70,405.

Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

We intend for this discussion to provide the reader with information that will assist in understanding our financial statements, the changes in certain key items in those financial statements from period to period, and the primary factors that accounted for those changes, as well as how certain accounting principles affect our financial statements. To the extent that our analysis contains statements that are not of a historical nature, these statements are forward-looking statements, which involve risks and uncertainties. See “Special Note Regarding Forward-Looking Statements”. The following should be read in conjunction with our Consolidated Financial Statements and the related Notes included elsewhere in this filing, and in conjunction with our consolidated financial statements as of December 31, 2008, and the year then ended, and Management's Discussion and Analysis of Financial Condition and Results of Operations, which are contained in our Annual Report on Form 10-K for the year ended December 31, 2008.

Overview

My Screen Mobile, Inc., a Delaware corporation, was incorporated in the State of Delaware on January 10, 1996, under the name Nouveau Health Management, Inc. On January 16, 1996, the company entered into a Merger Agreement with Health Management, Inc., a Florida corporation, in which Health Management, Inc. was merged with and into us. In connection with our merger with Health Management, Inc., we changed our name to Nouveau International, Inc. On January 17, 1996, we entered into an Agreement and Plan of Merger with Nouveau International, Inc., a Pennsylvania corporation, and Nouveau Acquisition Corp., a Delaware corporation and our wholly owned subsidiary, pursuant to which Nouveau Acquisition Corp. was merged with and into Nouveau International, Inc., which became our wholly owned subsidiary. On March 31, 1998, we ceased all of our operations and remained dormant until September 27, 2006, when we filed a Certificate of Renewal of Charter with the Delaware Secretary of State.

On April 4, 2007 we acquired the technology that forms the basis of our current business, and on April 19, 2007, we changed our name to My Screen Mobile, Inc.

Our technology is an application for direct incentive-based advertising to mobile telephones that allows mobile subscribers to be compensated for viewing targeted advertisements that is viewed on their mobile telephones or other mobile devices in the form of images.

Critical Accounting Policies and Estimates

The Management's Discussion and Analysis of Financial Condition and Results of Operations section discusses our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires management 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 reporting period. On an on-going basis, management evaluates its estimates and judgments, including those related to revenue recognition, accrued expenses, financing operations, and contingencies and litigation. Management bases its estimates and judgments on historical experience and on various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or

conditions.

The discussion and analysis set forth below covers the following comparative periods: the three months and nine ended September 30, 2009 and 2008.

Liquidity and Capital Resources

We had cash of $514,313 as of September 30, 2009. At December 31, 2008, we had cash of $31,135 and restricted cash of $2,196,599. We had prepaid expenses of $28,486 and notes receivable of $18,576 which are due on demand. Property and equipment net of depreciation was $136,112. Total assets, at September 30, 2009 were $697,487. Total assets as of December 31, 2008 were $2,873,007 which consisted of cash, prepaid expenses of $24,604, notes receivable of $438,337 and property and equipment net of depreciation $182,332. Total Liabilities as of September 30, 2009 was $2,010,042 which consisted of accrued expenses of $1,510,042 and convertible debenture payable $500,000. Accrued expenses include $665,675 for software development and system expense, consultants $220,244, and salary amounts payable $296,917. Total Liabilities as of December 31, 2008 was $354,365 which consisted of accrued expenses of $263,805 and convertible promissory note payable, net of discount $90,560.

Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations - continued

Liquidity and Capital Resources - continued

During the first nine months the company issued 1,385,000 shares and 1,285,000 warrants for cash of $1,385,000. Management believes that without obtaining additional financing and developing an ongoing source of revenue, we will not be able to complete the development of our software and launch successfully. Although we have actively been pursuing new business operations, we cannot give assurance that we will succeed in this endeavor, or be able to enter into necessary agreements to pursue our business on terms favorable to us. Should we be unable to generate additional revenues or raise additional capital, we could eventually be forced to cease business activities altogether.

Results of Operations for the Three and Nine Months Ended September 30, 2009 and 2008 and for the period from inception (January 10, 1996) to September 30, 2009

Income

Our predecessor corporation was operational from January 1996 to March 1998. We were dormant from March 1998 through March 2007. In April 2007, we commenced developing our software application and gathered interest from parties to deploy our software. We have no expectation of earning revenue until the first quarter of 2010 and as such, we had no income during the three or nine months ended September 30, 2009 and 2008. For the period from our inception on January 10, 1996 through September 30, 2009, we had net sales of $563,382, less $516,031 for cost of goods sold, resulting in gross profit of $47,351.

Expenses

For the three months ended September 30, 2009, we incurred an operating loss of $5,754,419. Programming expense totaled $1,222,898, all made to a third party service provider and were expensed as incurred. Consulting was $1,922,813 and included $1,554,732 relating to the fair market value of warrants issued during the quarter and 192,478 for common stock issued for services. Salaries and benefits totaled $2,286,737 and included $1,691,070 in expense for options expensed over the requisite service period.. None of the options granted, subject to shareholder approval, became vested during the quarter ended September 30, 2009. These options were valued using a Black-Scholes model in accordance with SFAS No.123R. There were no forfeitures to September 30, 2009.

For the three months ended September 30, 2008, we incurred an operating loss of $5,169,074. Consulting for the quarter was $3,380,498 and includes $2,980,845 in expense relating to common shares and warrants issued in return for services. Programming expense totaled $466,103. Programming payments were all made to third party service providers and were expensed as incurred. General, selling and administrative expense for the three months ended September 30, 2008 were $264,949. Advertising and promotion totaled $437,166 and included a payment of $ 287,225 to Zimmerman Advertising. Travel and entertainment totaled $203,691 for the quarter and included costs associated with two major trade shows and travel to market our product to mobile operators.

For the nine months ended September 30, 2009, we incurred an operating loss of $11,422,240. Programming expense totaled $2,067,101, all made to third party service providers and were expensed as incurred. Consulting was $3,446,116 and included $2,103,806 relating to the fair market value of warrants issued, $150,000 for executive recruiting and 192,478 for common stock issued for services. Salaries and benefits totaled $4,709,594 and included $3,252,681 in expense related to the granting of options to purchase shares of the Company’s common stock.

For the nine months ended September 30, 2008, we incurred an operating loss of $37,352,285. Consulting for the nine months was $33,901,676 and included $23,861,952 in expense relating to the Black-Scholes valuation of the 20,000,000 warrants issued as part of the $10 million financing and $6,279,866 in expense relating to common shares and warrants issued in return for services. Programming expense totaled $1,587,584. Programming payments were all made to third party service providers and were expensed as incurred. Included in programming was $1,022,126 in payments made to a related party. General, selling and administrative expense for the nine months ended September 30, 2008 were $542,998 including $258,267 relating to the leasing of permanent office space as well as temporary office space. Advertising and promotion totaled $551,017 and included a payment of $287,225 to Zimmerman Advertising. Travel and entertainment totaled $257,072 and included costs associated with two major trade shows and travel to market our product to mobile operators.

The Company incurred $282,229 (2008-$8,844) in interest expense relating to its debt financings during the quarter, $278,479 (2008-$NIL) of this expense was a result of beneficial conversion features included in our convertible debenture agreement. The Company earned $20,387 in interest income on invested cash during the quarter ended September 30, 2008. For the nine months ended September 30, 2009 the Company incurred $291,969 (2008 - $108,369) in interest expense. $286,351 related to beneficial conversion features included in our convertible debenture agreement. In 2008 $9,524 was accrued interest payable and $98,844 related to beneficial conversion features included in our convertible debenture agreement. The Company earned $3,193 (2008 - $21,092) in interest income on invested cash during the nine months ended September 30, 2009.

Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations - continued

Expenses - continued

The operating loss for the three months ended September 30, 2009 was $5,754,419 (2008 – 5,169,074), for the nine months ended September 30, 2009 $11,422,240 (2008 - $37,352,285) and for the period from our inception on January 10, 1996 through September 30, 200, we had total an operating loss of $65,081,661. The Other (income) expense for the three months ended September 30, 2009 was $282,229 (2008 - ($11,543)), for the nine months ended September 30, 2009 $288,776 (2008 - $87,277) and for the period from our inception on January 10, 1996 through September 30, 2009, we had total other expenses of $825,694.

The Net loss for the three months ended September 30, 2009 was $6,036,648 (2008 -$5,180,617), for the nine months ended September 30, 2009 $11,711,016 (2008 - $37,439,562) and for the period from our inception on January 10, 1996 through September 30, 2009, we had total Net loss of $65,907,355.

Our Plan of Operation for the Next Twelve Months

On September 30, 2009 we had cash of $514,313 and $1,510,042 in Current Liabilities.

As of the date of this report our current liabilities are in excess of $2,100,000.We are continuing to develop our business of providing marketing and advertising tools for the mobile communications industry. There is no guarantee that we will be able to successfully develop our business or that we will generate sufficient revenues to sustain our operations. We need to continue to invest in our software, operating software and hardware platforms as we near commercial launch over the next few months.

In August 2009 the Company completed a very successful trial launch with Turkcell in Turkey and is in negotiations to complete a commercial contract for this market. If successful the Company plans to be operational in Turkey in early 2010.We have a firmly established relationship with America Movil in Latin America and have established a deployment schedule for services in Mexico, Brazil, Chile and Argentina. We have already begun a controlled launch and expect to be fully deployed in these countries during the first half of 2010. America Movil has approximately 182 million subscribers who become potential MyScreen customers throughout the region.

Other relationships in Latin America are expected to be solidified in the coming months. We expect that opportunities in these areas will be able to be deployed in the second half of 2010. We are also working on opportunities with one of our significant investors, Orascom Telecom Holdings S.A.E., to launch our product in Europe in the second half of 2010. In the targeted areas, there are approximately 70 Million subscribers who become potential MyScreen customers.

Our efforts in educating both brands and their advertising agencies are being well received, and we have already received commitments from a number of internationally recognized brands to advertise as we launch services. Unilever and Grupo Bimbo have both agreed to deliver advertisements to millions of mobile customers in Mexico and throughout Latin America.

We anticipate that additional capital will likely have to come from issuing additional equity or convertible interests in order to meet our business plan in 2010. This cannot occur without diluting the existing equity ownership of our existing common stockholders. We are continuing our efforts to raise additional capital from both of these sources.

Off-Balance Sheet Arrangements

There are no off balance sheet arrangements that have or are reasonably likely to have a current or future material effect on our financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

Working Capital

Under the Securities Purchase Agreement dated May 15, 2008, between us and Orascom Telecom Holdings, S.A.E. we agreed to set aside $3,000,000 to fund certain technical expenditures and have expended this amount.

Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations - continued

Our Plan of Operation for the Next Twelve Months - continued

Contractual Obligations and Other Commercial Commitments

The following table sets forth information concerning our obligations and commitments to make contractual future payments, such as debt agreements, purchase obligations and contingent commitments.

	Payments Due During Fiscal Years Ending December 31,
	Total		2009		2010-2011	2012-2013	Thereafter
Contractual Obligations:

Software development contract		2,249,550		2,249,550

Server Hosting IP Transit Contract*		1,562,881		253,959	980,316	328,606

Convertible promissory note obligations**		300,000			300,000

Convertible Debentures***		2,500,000				2,500,000

Unrecorded Contractual Obligations:

Purchase obligations	NIL

* Server Hosting IP Transit Contract was entered into effective August 1, 2009.

**On September 11, 2009 the holders of $100,000 notes exercised their option and converted into 66,666 restricted common shares. On November 30, 2009 the Company borrowed $1,000,000 and repaid $800,000 during December 2009. The remaining $200,000 is convertible at any time at $1.00 per share.

***On September 30, 2009, we issued a Convertible Debenture in the principal amount of $500,000 which is convertible into shares of common stock at $1.00 per share. On December 15, 2009 we issued a Convertible Debenture in the principal amount of $2,000,000 which is convertible into shares of common stock at $1.05 per share.

Warrants

As of September 30, 2009, we had warrants outstanding to purchase an aggregate of 27,376,197 shares of our common stock, 20,970,750 of which are exercisable at $2.00 per share, and the balance of which are exercisable at $1.00 per share. The warrants expire between October 2011 and September 2012. For the three and nine months ended September, 2009 and September 30, 2008, no warrants were exercised.

Common Stock

During the nine month period ended September 30, 2009, the Company issued 1,385,000 shares of common stock for cash of $1,385,000 and 528,619 shares of common stock for services which the company valued at $730,561. Holders of $100,000 convertible promissory notes converted into 66,666 shares of common stock. The total number of shares of common stock outstanding as of September 30, 2009 was 131,152,383.

Special Note Regarding Forward-Looking Statements

The Private Securities Litigation Reform Act of 1995 (the “Reform Act”) provides a safe harbor for forward-looking statements made by or on behalf of the Company. We and our representatives may, from time to time, make written or verbal forward-looking statements, including statements contained in our filings with the Securities and Exchange Commission and in our reports to stockholders. Generally, the inclusion of the words "believe", "expect", "intend", "estimate", "anticipate", "will", and similar expressions identify statements that constitute "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 and that are intended to come within the safe harbor protection provided by those sections.

Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations - continued

Special Note Regarding Forward-Looking Statements - continued

All statements addressing operating performance, events, or developments that we expect or anticipate will occur in the future, including statements relating to sales growth, earnings or earnings per share growth, and market share, as well as statements expressing optimism or pessimism about future operating results (in particular, statements under Part I, Item 2, Management's Discussion and Analysis of Financial Condition and Results of Operations), contain forward-looking statements within the meaning of the Reform Act. The forward-looking statements are and will be based upon management's then-current views and assumptions regarding future events and operating performance, and are applicable only as of the dates of such statements. There can be no assurance that any statements of expectation or belief will result or be achieved or accomplished. In addition, we undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.

By their nature, all forward-looking statements involve risk and uncertainties. Actual results may differ materially from those contemplated by the forward-looking statements for a number of reasons. You should carefully review Item 1B of Part II of this 10-Q which sets forth various Risk Factors.

Recent Accounting Pronouncements

We do not expect the adoption of any recent accounting pronouncements to have a material effect on our financial statements.

Item 3.

Quantitative and Qualitative Disclosures about Market Risk.

Not applicable

Item 4.

Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

In connection with the preparation of this report on Form 10-Q, an evaluation was carried out by our management, with the participation of the Chief Executive Officer and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 ("Exchange Act")) as of September 30, 2009. Disclosure controls and procedures are designed to ensure that information required to be disclosed in reports filed or submitted under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC rules and forms and that such information is accumulated and communicated to management, including the Chief Executive Officer and the Chief Financial Officer, to allow timely decisions regarding required disclosures.

Based on that evaluation, our management concluded, as of the end of the period covered by this report, that our disclosure controls and procedures were not effective in recording, processing, summarizing, and reporting information required to be disclosed, within the time periods specified in the SEC's rules and forms. Management has taken steps to ensure that all future filings contain all required disclosures and that such filings are made within the time periods specified.

Management's Report on Internal Control Over Financial Reporting

Management of our company is responsible for establishing and maintaining adequate internal control over financial reporting. Our company's internal control over financial reporting is a process, under the supervision of the Chief Executive Officer and the Chief Financial Officer, designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the Company's financial statements for external purposes in accordance with United States generally accepted accounting principles. Internal control over financial reporting includes those policies and procedures that:

•	Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the Company's assets;

•

Provide reasonable assurance that transactions are recorded as necessary to permit preparation of the financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures are being made only in accordance with authorizations of management and the Board of Directors; and

•	Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company's assets that could have a material effect on the financial statements.

Item 4.

Controls and Procedures. - continued

Management's Report on Internal Control Over Financial Reporting - continued

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate.

Our management conducted an assessment of the effectiveness of our internal control over financial reporting as of September 30, 2009, based on criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO").

Management did not file the quarterly financial statements in a timely manner. Such errors are deemed by management to have occurred due to material weaknesses in our controls and procedures. Accordingly, based on our assessment we have concluded that, as of September 30, 2009, our internal controls over financial reporting were not effective based on those criteria outlined under the Securities Exchange Act. Our Chief Executive Officer and Chief Financial Officer, the (“Certifying Officers”) have evaluated the effectiveness of our disclosure controls and the timeliness of our regulatory filings and believe that our disclosure controls and procedures were not effective based on the required evaluation as of the date of this Report. As stated previously, we were dormant from March 1998 until April 2007. We intend to take steps to remediate these material weaknesses, including either engaging an outside consulting firm or hiring qualified staff with the requisite expertise to assist with certain complex accounting of our convertible securities and our long term incentive plan and to ensure timelier reporting.

Changes in Internal Control over Financial Reporting

As of the end of the period covered by this report, there have been no changes in internal control over financial reporting (as defined in Rule 13a-15(f) of the Exchange Act) during the quarter ended September 30, 2009, that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II - OTHER INFORMATION

Item 1A.

Legal Proceedings

We are not a party to any pending litigation and none is contemplated or threatened; except a former consultant has claimed that he is entitled to shares of common stock of the Company, although he has not filed a formal complaint. The Company believes such claim does not have merit and in the event a complaint is filed the Company intends to vigorously defend itself.

Item 1B.

Risk Factors

Our business is subject to numerous risks. We caution you that the following important factors, among others, could cause our actual results to differ materially from those expressed in forward-looking statements made by us or on our behalf in filings with the SEC, press releases, communications with investors and oral statements. Any or all of our forward-looking statements in this Form 10-Q and in any other public statements we make may turn out to be wrong. They can be affected by inaccurate assumptions we might make or by known or unknown risks and uncertainties. Many factors mentioned in the discussion below will be important in determining future results. Consequently, no forward-looking statement can be guaranteed. Actual future results may vary materially from those anticipated in forward-looking statements. We undertake no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise. You are advised, however, to consult any further disclosure we make in our reports filed with the SEC.

We immediately need additional funding to continue our operations. If we are unable to obtain additional funding, we may be required to cease operations and you could lose your investment.

We need substantial amounts of additional capital in the near term, to continue our operations. At the present time, we are not generating any revenue, and our cash reserves are very low. As of the date of this report, our outstanding debt and accrued expenses exceeded two million one hundred thousand dollars ($2,100,000). As a result of our current financial condition, our ability to continue as a going concern is dependent on our ability to quickly obtain additional financing, and ultimately achieve and maintain profitable operations. We are in the process of seeking additional capital through the issuance of debt and/or equity securities. Although we believe that we are taking steps to rectify our liquidity position, we cannot assure you that our actions will be successful or that we will be able to continue as a going concern. If we are unable to obtain such additional funding, we may be required to cease operations and you could lose your investment.

Item 1B.

Risk Factors - continued

Our limited operating history makes evaluation of our business difficult.

We acquired our current mobile technology in April 2007, and have not yet commercially deployed our technology. We, therefore, have limited historical financial data related to our current business, upon which to base planned operating expenses or forecast accurately our future operating results. Our limited operating history will make it difficult for investors to evaluate our business and prospects. Our failure to address these risks and difficulties successfully could seriously harm us.

We expect that our anticipated future growth may strain our management, administrative, operational and financial infrastructure, which could adversely affect our business.

We have recently undergone significant expansion of our operations, and anticipate that further significant expansion of our present operations will be required to capitalize on the potential growth in market opportunities. This expansion has placed, and is expected to continue to place, a significant strain on our management, operational and financial resources. We expect to add a significant number of additional key personnel in the future, including key managerial, sales and technical employees who will have to be fully integrated into our operations. To manage our growth, we will be required to continue to implement and improve our operational and financial systems, to expand existing operations, to attract and retain superior management, and to train, manage and expand our employee base. We cannot assure you that we will be able to effectively manage the expansion of our operations, that our systems, procedures or controls will be adequate to support our operations or that our management will be able to successfully implement our business plan. If we are unable to manage growth effectively, our business, financial condition and results of operations could be materially adversely affected.

Our executive officers and certain key personnel are critical to our success, and the loss of these officers and key personnel could harm our business.

Our performance is substantially dependent on the continued services and performance of our executive officers and other key personnel, and our ability to retain and motivate our officers and key employees. The loss of the services of one or more of our officers or other key employees could have a material adverse effect on our business, prospects, financial condition and results of operations. Our future success also depends on our ability to identify, attract, hire, train, retain and motivate other highly skilled technical, managerial and marketing personnel. Competition for such personnel is intense, and we cannot assure you that we will be successful in attracting and retaining such personnel. The failure to attract and retain our officers or the necessary technical, managerial and marketing personnel could have a material adverse effect on our business, prospects, financial condition and results of operations.

The market for mobile advertising services is in the early stages of development, and if that market does not develop as we anticipate, it will have a material adverse effect on our business, prospects, financial condition and results of operations.

Mobile marketing and advertising, in general, are in the early stages of development. Our future revenue and profits are substantially dependent upon the widespread acceptance, growth, and use of mobile telephony as effective advertising medium. Most advertisers have generally relied upon more traditional forms of media advertising and have no, or only limited, experience advertising on mobile telephones. Mobile marketing may not be accepted by advertisers and/or consumers for many reasons. If advertisers or consumers reject our services, or opt-in mobile advertising in general, the commercial utility of our technology and services may not develop as we anticipate.

We will rely on our advertiser network partners to provide us access to their advertisers, and if they do not, it could have an adverse impact on our business.

We will rely on our advertiser network partners to provide us with access to their advertisers so that we can deploy their advertisements to customers in order to generate revenue when a consumer views an advertisement. Our success depends, in part, on the maintenance and growth of our advertiser network partners. If we are unable to develop or maintain relationships with these partners, our operating results and financial condition will suffer.

We may experience downward pressure on our advertising revenues if advertisers do not obtain a competitive return on investment, which could have a material and adverse effect on our financial results.

We may experience downward pressure on our future advertising revenues if advertisers do not obtain a favorable return on investment from our mobile advertising in comparison to traditional advertising or mobile advertising offered by competitors. Our technology employs certain filtering processes with respect to the quality and demographics of the consumer traffic to which our advertisers’ messages will be targeted, including, having our customers complete a registration on which they identify their lifestyle preferences and other demographic information. In addition, we will limit the number of paid advertisements each consumer may receive per day, to, among other things, decrease the risk that consumers will become inundated with too many advertisements, thereby reducing the effectiveness of each advertisement. There is a risk, however, that a certain number of advertisements will be directed to consumers deemed to be less valuable by our advertisers. This may adversely affect the return on investment of our advertisers, harm our relationships with our advertisers and slow the growth of, or prevent us from growing, our advertiser base, which would adversely affect our revenues.

Item 1B.

Risk Factors - continued

We will depend on mobile telecommunication providers to attract a significant percentage of our customers, and if we are unable to effectively develop relationships with mobile telecommunication providers or any of our relationships with them deteriorates or terminates, we may be unable to attract customers, which would adversely affect our business and results of operations.

To succeed, we must attract and retain a large number of customers on a cost-effective basis. We will rely on a variety of methods to attract customers, namely by partnering with telecommunications providers to promote our services to their customers. As a result, we expect that many of our customers will be generated through our telecommunication provider partners. If we are unable to grow our base of telecommunications provider partners or maintain relationships with our existing partners, or our partners do not adequately promote our services, we may not be able to attract new customers or retain existing customers on a cost-effective basis and, as a result, our revenue and results of operations would be affected adversely. In addition, if our network of telecommunications providers does not grow and does not improve over time, advertisers may reduce or terminate their business with us, which would have an adverse effect on our revenue and results of operations.

Failure to adequately protect our intellectual property and proprietary rights could harm our competitive position.

Our success is substantially dependent upon our proprietary technology, which relates to a variety of business, technology, and transactional processes associated with our mobile advertising technology. We rely on a combination of patent, trademark, copyright and trade secret laws, as well as confidentiality agreements and technical measures, to protect our proprietary rights. Although we have filed for patent protection over aspects of our technology, much of our proprietary information may not be patentable. We cannot assure you that any pending patent applications will be issued or that their scope is broad enough to provide us with meaningful protection. Although we have filed to obtain trademarks over certain of the marks we use in our business, we cannot assure you that we will be able to secure significant protection for these marks. Despite our efforts to protect our proprietary rights, unauthorized parties may attempt to copy aspects of our technology and/or services or to obtain and use information that we regard as proprietary. We cannot assure you that our means of protecting our proprietary rights will be adequate or that our competitors will not independently develop similar technology or duplicate our services or design around patents issued to us or our other intellectual property rights. If we are unable to adequately protect our intellectual property and proprietary rights, our business and our operations could be adversely affected.

We may be subject to intellectual property claims that create uncertainty about ownership of technology essential to our business and divert our managerial and other resources.

There has been a substantial amount of litigation in the technology industry regarding intellectual property rights. Our success depends, in part, on our ability to protect our intellectual property and to operate without infringing on the intellectual property rights of others in the process. There can be no guarantee that any of our intellectual property will be adequately safeguarded, or that it will not be challenged by third parties. We may be subject to patent or trademark infringement claims or other intellectual property infringement claims that would be costly to defend and could limit our ability to use certain critical technologies. We may also become subject to interference proceedings conducted in the patent and trademark offices of various countries to determine the priority of inventions.

Any patent litigation or interference proceedings could negatively impact our business by diverting resources and management attention away from other aspects of our business and adding uncertainty as to the ownership of technology and services that we view as proprietary and essential to our business. Furthermore, because of the substantial amount of discovery required in connection with intellectual property litigation, there is a risk that some of our confidential information could be compromised by disclosure during this type of litigation. In addition, during the course of this kind of litigation, there could be public announcements of the results of hearings, motions or other interim proceedings or developments in the litigation. If investors perceive these results to be negative, it could have an adverse effect on the trading price of our common stock.

In addition, a successful claim of patent or trademark infringement against us and our failure or inability to obtain a license for the infringed or similar technology or trademark on reasonable terms, or at all, could have a material adverse effect on our business. Also, an adverse determination of any litigation or defense proceedings could cause us to pay substantial damages, including treble damages, if we willfully infringe, and, also, could put our patent applications at risk of not being issued.

Government and legal regulations may damage our business.

Because the mobile advertising business is in its infancy, we are not currently subject to direct regulation by any government agency, other than

regulations generally applicable to the mobile telecommunications, marketing and advertising industries. The mobile telecommunications industry in general is subject to regulation by the Federal Communications Commission and other foreign, federal, state and local agencies. Existing or future laws and regulations may inhibit our ability to expand our business and introduce new products and services, or may restrict the use of our services or the features we offer. In addition, changes to the existing regulatory framework could adversely affect our business plans.

Item 1B.

Risk Factors - continued

The mobile telecommunications, marketing and advertising industries face uncertainty related to future government regulation through the application of new or existing federal, state and international laws. Due to the rapid growth and widespread use of mobile telephones, legislatures at the international, federal and state level have enacted and may continue to enact various laws and regulations relating to the mobile telecommunications industry.

Laws and regulations may be adopted in the future that directly govern mobile advertising. The adoption of laws or regulations relating to the placement of advertisements, defamation or taxation may inhibit the growth in use of mobile advertising, which in turn, could decrease the demand for our technology and services and increase our cost of doing business or otherwise have a material adverse effect on our business, prospects, financial condition and results of operations.

We may incur liabilities for the activities of our advertisers, distribution partners and other users of our services, which could adversely affect our business.

In obtaining advertisements, we may rely on the content and information provided to us by our advertisers or advertiser network partners on behalf of their individual advertisers. We may not investigate the individual business activities of these advertisers other than the information provided to us, or analyze the legality of, or verify the accuracy or content of advertisements. As a result, we may not successfully avoid liability for unlawful activities carried out by our advertisers and other users of our services.

Our potential liability for unlawful activities of our advertisers and other users of our services could require us to implement measures to reduce our exposure to such liability, which may require us, among other things, to spend substantial resources, to discontinue certain service offerings or to terminate certain partner relationships. For example, as a result of the actions of advertisers in our network, we may be subject to private or governmental actions relating to a wide variety of issues, such as privacy, gambling, promotions, and intellectual property ownership and infringement. We may be required to indemnify these distribution partners against liabilities or losses resulting from the content of the advertisements we deliver or resulting from third-party intellectual property infringement claims. Any costs incurred as a result of such liability or asserted liability could have a material adverse effect on our business, operating results and financial condition.

We face competition from internet and traditional media companies, and we may not be included in the advertising budgets of large advertisers, which could harm our operating results.

Although we believe our product and services have certain advantages over the products and services currently offered by our competitors, the mobile advertising industry is very competitive. Many of our competitors, such as Third Screen Media, which was purchased by a division of AOL, have substantially greater financial, technical, and marketing resources, larger customer bases, longer operating histories, greater name recognition, and more established relationships in the industry than us. They can also devote greater resources to the marketing and sale of their products and adopt more aggressive pricing policies than we can. If we are unable to successfully compete in our markets, our operating results will be adversely affected.

In addition, we face competition from companies that offer internet advertising and traditional media advertising opportunities. Most large advertisers have set advertising budgets. Since our industry is so new, there may not be any funds available in advertising budgets for mobile advertising. We expect that large advertisers will continue to focus most of their advertising efforts on internet and traditional media. If we fail to convince these companies to spend a portion of their advertising budgets with us, or if our existing advertisers reduce the amount they spend on our programs, our operating results would be harmed.

If we are not able to respond to the rapid technological change characteristic of our industry, our products and services may cease to be competitive.

The mobile telecommunications industry is characterized by rapid change in business models and technological infrastructure, and we will need to constantly adapt to changing markets and technologies to provide new and competitive products and services. If we are unable to ensure that our users, advertisers, and distribution partners have a high-quality experience with our services, then they may become dissatisfied and stop using our products and services. Accordingly, our future success will depend, in part, upon our ability to develop and offer competitive products and services. We may not, however, be able to successfully do so, and our competitors may develop innovations that render our products and services obsolete or uncompetitive.

Item 1B.

Risk Factors - continued

We have not fully completed commercial development of our mobile marketing platform and tested it on a large scale.

We have not yet fully completed the commercial development of our mobile marketing technology and tested our platform on a large scale. The inability to successfully complete development of our technology and introduce our service would have a material adverse affect on our business and operations. In addition, the mobile telecommunications industry is characterized by rapidly changing technology with continuous improvements. We may not successfully develop or adopt new technologies, introduce new services or enhance our existing services on a timely basis and new technologies, new services or enhancements we use or develop may never achieve market acceptance. If we fail to address these developments, our business, operating results and financial condition will be materially adversely affected.

Our technical systems are vulnerable to interruption and damage that may be costly and time-consuming to resolve and may harm our business and reputation.

A disaster could interrupt our services for an indeterminate length of time and severely damage our business, prospects, financial condition and results of operations. Our systems and operations are vulnerable to damage or interruption from:

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Fire, floods and other natural disasters;

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network failure;

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hardware failure;

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software failure;

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power loss;

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telecommunications failures;

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break-ins;

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terrorism, war or sabotage;

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computer viruses;

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penetration of our network by unauthorized computer users and “hackers” and other similar events;

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	MY SCREEN MOBILE, INC.

	By:	/s/ Bruce MacInnis
		Bruce MacInnis
		Chief Financial Officer

Attached files

MY SCREEN MOBILE, INC. Reports

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