Buildablock Corp. - FORM 10-Q/A

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EX-31 - EXHIBIT 31.1 - Buildablock Corp.	exh31_1.htm
EX-32 - EXHIBIT 32.2 - Buildablock Corp.	exh32_2.htm
EX-32 - EXHIBIT 32.1 - Buildablock Corp.	exh32_1.htm
EX-31 - EXHIBIT 31.2 - Buildablock Corp.	exh31_2.htm

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
___________________

FORM 10-Q/A
_________________________

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

For the quarterly period ended May 31, 2011

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

Commission file number 333-131599

HIPSO MULTIMEDIA, INC.
(Exact Name Of Registrant As Specified In Its Charter)

Florida	22-3914075
(State of Incorporation)	(I.R.S. Employer Identification No.)

550 Chemin du Golf, Suite 202, Ile de Soeurs, Quebec, Canada	H3E 1A8
(Address of Principal Executive Offices)	(ZIP Code)

Registrant's Telephone Number, Including Area Code: (514) 380-5353

Securities Registered Pursuant to Section 12(g) of The Act: Common Stock, $0.00001

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes &$120 No ¨

On May 31, 2011, the Registrant had 67,977,765 shares of common stock, par value $0.00001 outstanding.

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

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer.

Large accelerated filer ¨

Accelerated filer ¨

Non-Accelerated filer ¨

Smaller reporting company x

TABLE OF CONTENTS

Item	Description
PART I - FINANCIAL INFORMATION

ITEM 1.	FINANCIAL STATEMENTS.	3
ITEM 2.	MANAGEMENT'S DISCUSSION AND ANALYSIS AND RESULTS OF OPERATIONS AND FINANCIAL CONDITIONS.	18
ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	20
ITEM 4.	CONTROLS AND PROCEDURES.	20

PART II - OTHER INFORMATION

ITEM 1.	LEGAL PROCEEDINGS.	21
ITEM 1A.	RISK FACTORS	21
ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	21
ITEM 3.	DEFAULT UPON SENIOR SECURITIES.	21
ITEM 4.	SUBMISSION OF MATERS TO A VOTE OF SECURITY HOLDERS.	21
ITEM 5.	OTHER INFORMATION.	21
ITEM 6.	EXHIBITS.	21

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS Back to Table of Contents

INDEX TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Condensed Consolidated Balance Sheets as of May 31, 2011 (Unaudited) and November 30, 2010

Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) for the Three and Six Months Ended May 31, 2011 and 2010 (Unaudited)

Condensed Consolidated Statements of Cash Flows for the Six Months Ended May 31, 2011 and 2010 (Unaudited)

Notes to Condensed Consolidated Financial Statements

HIPSO MULTIMEDIA, INC. AND SUBSIDIARY
Condensed Consolidated Balance Sheets Back to Table of Contents
May 31, 2011 (Unaudited) and November 30, 2010


		In US$
		May 31, 2011		November 30, 2010
		(Unaudited)
ASSETS
Current assets:
Cash	$	327	$	13,005
Accounts receivable		30,719		18,319
Prepaid expenses and other current assets		9,509		8,975
Total current assets		40,555		40,299

Fixed assets:
Office and computer equipment, net		3,341		6,329

Other assets:
Deferred costs, net		74,776		122,104

Total assets	$	118,672	$	168,732

LIABILITIES AND STOCKHOLDERS' DEFICIT

Current liabilities:
Loan payable to shareholders	$	1,884,127	$	1,697,980
Liability for stock to be issued		20,000		25,000
Accounts payable		253,635		276,517
Accrued expenses		323,526		223,548
Total current liabilities		2,481,288		2,223,045

Total liabilities		2,481,288		2,223,045

Stockholders' deficit:
Common stock, $0.00001 par value, 100,000,000 shares authorized;
67,977,765 and 62,597,764 shares issued and outstanding
at May 31, 2011 and November 30, 2010, respectively		680		626
Additional paid-in capital		1,484,914		1,199,268
Additional paid-in capital - warrants		145,512		145,512
Accumulated deficit		(3,774,307)		(3,290,211)
Accumulated other comprehensive income (loss)		(219,415)		(109,508)
Total stockholders' deficit		(2,362,616)		(2,054,313)
Total liabilities and stockholders' deficit	$	118,672	$	168,732

See accompanying notes to condensed consolidated financial statements.

HIPSO MULTIMEDIA, INC. AND SUBSIDIARY
Condensed Consolidated Statements of Operations and Comprehensive Income (loss) Back to Table of Contents
For the Six and Three Months Ended May 31, 2011 and 2010

		In US$				In US$
		For the Six		For the Six		For the Three		For the Three
		Months Ended		Months Ended		Months Ended		Months Ended
		May 31, 2011		May 31, 2010		May 31, 2011		May 31, 2010

Revenue	$	103,987	$	101,017	$	57,819	$	53,638
Costs and expenses:
Cost of sales		164,144		153,563		84,278		78,640
Depreciation and amortization		57,179		46,088		28,800		23,421
Administrative expenses		304,344		336,293		212,662		197,368
Total costs and expenses		525,667		535,944		325,740		299,429
Operating loss		(421,680)		(434,927)		(267,921)		(245,791)

Non-Operating Income (Expenses):
Interest expense		(62,416)		(48,004)		(33,782)		(26,408)
Total Non-Operating Expense		(62,416)		(48,004)		(33,782)		(26,408)

Net loss	$	(484,096)	$	(482,931)	$	(301,703)	$	(272,199)

Net loss per common share (Basic and Diluted)	$	(0.01)	$	(0.01)	$	(0.00)	$	(0.01)

Weighted average shares outstanding		67,960,786		57,849,167		67,019,178		58,396,551

Other Comprehensive Income (Loss):
Comprehensive income (loss) - beginning of period	$	(484,096)	$	(482,931)	$	(301,703)	$	(272,199)
Cumulative translation adjustments		(109,907)		(9,417)		(10,235)		(869)
Comprehensive income (loss) - end of period	$	(594,003)	$	(492,348)	$	(311,938)	$	(273,068)

See accompanying notes to condensed consolidated financial statements.

HIPSO MULTIMEDIA, INC. AND SUBSIDIARY
(A Development Stage Company)
Condensed Consolidated Statements of Cash Flows Back to Table of Contents
For the Three Months Ended May 31, 2011 and May 31, 2010 (Unaudited)

		in US$
		For the Three		For the Three
		Months Ended		Months Ended
		May 31, 2011		May 31, 2010
		(Unaudited)		(Unaudited)

Cash flows from operating activities:
Net loss	$	(484,096)	$	(482,931)
Adjustments to reconcile net loss to cash used in operating activities:
Depreciation and amortization		57,179		46,088
Stock based compensation and shares issued for services, net of cancelled		88,270		65,600
Contributed expenses by management		20,430		20,430
Changes in operating assets and liabilities:
Accounts receivable		(11,312)		3,489
Prepaid expenses and other current assets		-		(5,202)
Accounts payable and accrued expenses		51,337		104,268
Net cash used in operating activities		(278,192)		(248,258)

Cash flows from financing activities:
Increase in cash overdraft		-		(361)
Cash received for common stock or liability to issue common stock		50,000		49,000
Loan payable to bank		-		(159,084)
Loan payable to shareholders		216,205		371,194
Net cash provided by financing activities		266,205		260,749

Effect of exchange rate on cash		(691)		3,147

Decrease in cash		(12,678)		15,638
Cash - beginning of year		13,005		-
Cash - end of period	$	327	$	15,638

Supplemental disclosure of cash flow information:
Cash paid for interest	$	-	$	6,218

NONCASH OPERATING AND FINANCING ACTIVITIES:
Conversion of notes payables - related parties for equity	$	122,000	$	-

See accompanying notes to condensed consolidated financial statements.

HIPSO MULTIMEDIA, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS Back to Table of Contents
FOR THE SIX MONTHS ENDED MAY 31, 2011 AND 2010 (UNAUDITED)

NOTE 1 - ORGANIZATION AND BASIS OF PRESENTATION

The unaudited condensed consolidated financial statements included herein have been prepared, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). The condensed consolidated financial statements and notes are presented as permitted on Form 10-Q and do not contain information included in the Company’s annual consolidated statements and notes. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to make the information presented not misleading. It is suggested that these condensed consolidated financial statements be read in conjunction with the November 30, 2010 audited financial statements and the accompanying notes thereto. While management believes the procedures followed in preparing these condensed consolidated financial statements are reasonable, the accuracy of the amounts are in some respects dependent upon the facts that will exist, and procedures that will be accomplished by the Company later in the year.

These condensed consolidated unaudited financial statements reflect all adjustments, including normal recurring adjustments which, in the opinion of management, are necessary to present fairly the consolidated operations and cash flows for the periods presented.

HIPSO Multimedia, Inc. (the “Company”) formerly Physicians Remote Solutions, Inc., a Florida Corporation incorporated in April 2005, operates a “triple play” network providing digital TV, voice over internet protocol (VoIP) and a high speed internet access all via fiber optic cable. The Company targets the multi-dwelling unit market in Montreal and eventually throughout the Canadian market. The Company offers its retail customer base a bundled package including IP telephony, internet bandwidth in 5 and 10 megabytes per second (Mbps) increments and 80 television channels. The Company also targets hotels, hospitals and retirement homes by offering bulk long-term agreements to their connected customers.

The Company is now offering and delivering high speed internet, telephone and high definition TV in one package to over 1,500 subscribers on a recurring revenue model. The Company is now launching the second phase of its international business plan. They have completed the design and engineering of the next phase of the network deployment. The Company is expanding its business from being a retail “triple play” service provider to adding and becoming a wholesale supplier of IPTV (Internet Protocol Television) services to thousands of North American ISP’s (Internet Service Providers) and small rural telecommunication companies that currently cannot offer these needed services to their customer base. The Company is currently in negotiations with service providers for long-term delivery of IPTV services. In addition, the Company has secured a North American distributor license agreement from Oriana Technologies, the licensee of

“Select TV S.A.”, for the distribution of the most advanced IP Set top box available on the market.

On June 2, 2008, the Company entered into a share exchange agreement with Valtech Communications, Inc. (“Valtech”) and issued 40,000,000 shares of its common stock to acquire Valtech. In connection with the share exchange agreement, Valtech became a wholly owned subsidiary of the Company and the Valtech officers and directors became the officers and directors of the Company. Prior to the merger, the Company had not generated any revenues. As a result of the transaction (the “reverse merger”) and for accounting purposes, the reverse merger has been treated as an acquisition of the Company by Valtech and a recapitalization of the Company. The historical financial statements are those of Valtech. Since the reverse merger is a recapitalization and not a business combination, pro-forma information is not presented.

Effective July 1, 2009, the Company adopted the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 105-10, Generally Accepted Accounting Principles – Overall (“ASC 105-10”). ASC 105-10 establishes the FASB Accounting Standards Codification (the “Codification”) as the source of authoritative accounting principles recognized by the FASB to be applied by nongovernmental entities in the preparation of financial statements in conformity with U.S. GAAP. Rules and interpretive releases of the SEC under authority of federal securities laws are also sources of authoritative U.S. GAAP for SEC registrants. All guidance contained in the Codification carries an equal level of authority. The Codification superseded all existing non-SEC accounting and reporting standards. All other non-grandfathered, non-SEC accounting literature not included in the Codification is non-authoritative. The FASB will not issue new standards in the form of Statements, FASB Positions or Emerging Issue Task Force Abstracts. Instead, it will issue Accounting Standards Updates (“ASUs”). The FASB will not consider ASUs as authoritative in their own right. ASUs will serve only to update the Codification, provide background information about the guidance and provide the bases for conclusions on the change(s) in the Codification. References made to FASB guidance throughout this document have been updated for the Codification.

Going Concern

As shown in the accompanying condensed consolidated financial statements the Company has incurred net losses of $484,096 and $482,931 for the six months ended May 31, 2011 and 2010, and has a working capital deficiency of $3,774,307 as of May 31, 2011.

Management’s plans include the raising of capital through the equity markets to fund future operations and generating adequate revenues through its business. Even if the Company does not raise sufficient capital to support its operating expenses and generate adequate revenues, there can be no assurance that the revenue will be sufficient to enable it to develop business to a level where it will generate profits and cash flows from operations. These matters raise substantial doubt about the Company’s ability to continue as a going concern. However, the accompanying condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. These financial statements do not include any adjustments relating to the recovery of the recorded assets or the classification of the liabilities that might be necessary should the Company be unable to continue as a going concern.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation

The condensed consolidated financial statements include the accounts of the Company and its subsidiary. All significant intercompany accounts and transactions have been eliminated in consolidation.

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. On an on-going basis, the Company evaluates its estimates, including, but not limited to, those related to investment tax credits, bad debts, income taxes and contingencies. The Company bases its estimates on historical experience and on various other assumptions 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 could differ from those estimates.

Cash and Cash Equivalents

The Company considers all highly liquid debt instruments and other short-term investments with an initial maturity of three months or less to be cash equivalents.

Comprehensive Income

The Company adopted ASC 220-10, “Reporting Comprehensive Income,” (formerly SFAS No. 130). ASC 220-10 requires the reporting of comprehensive income in addition to net income from operations.

Comprehensive income is a more inclusive financial reporting methodology that includes disclosure of information that historically has not been recognized in the calculation of net income.

Fair Value of Financial Instruments

The carrying amounts reported in the condensed consolidated balance sheets for cash and cash equivalents, accounts receivable and accounts payable approximate fair value because of the immediate or short-term maturity of these financial instruments. For the loans payable, the carrying amount reported is based upon the incremental borrowing rates otherwise available to the Company for similar borrowings.

Currency Translation

For subsidiaries outside the United States that prepare financial statements in currencies other than the U.S. dollar, the Company translates income and expense amounts at average exchange rates for the year, translates assets and liabilities at year-end exchange rates and equity at historical rates. The Company’s functional currency is the Canadian dollar, while the Company reports its currency in the US dollar. The Company records these translation adjustments as accumulated other comprehensive income (loss). Gains and losses from foreign currency transactions are included in other income (expense) in the results of operations.

Revenue Recognition

The Company receives revenue from subscribers to its triple play network in which it provides digital TV, voice over internet protocol (VoIP), and high speed internet access, all via fiber optic cable. The Company bills its subscribers on a monthly basis and recognizes the monthly revenue based upon the specific plan selected by the subscriber. The Company additionally provides contracted services to wire commercial buildings with fiber optic cable in order to provide for similar services.

Accounts Receivable

The Company conducts business and extends credit based on an evaluation of the customers’ financial condition, generally without requiring collateral.

Exposure to losses on receivables is expected to vary by customer due to the financial condition of each customer. The Company monitors exposure to credit losses and maintains allowances for anticipated losses considered necessary under the circumstances. The Company has an allowance for doubtful accounts of $14,857 at May 31, 2011.

Accounts receivable are generally due within 30 days and collateral is not required. Unbilled accounts receivable represents amounts due from customers for which billing statements have not been generated and sent to the customers.

Income Taxes

The Company accounts for income taxes utilizing the liability method of accounting. Under the liability method, deferred taxes are determined based on differences between financial statement and tax bases of assets and liabilities at enacted tax rates in effect in years in which differences are expected to reverse. Valuation allowances are established, when necessary, to reduce deferred tax assets to amounts that are expected to be realized.

Advertising Costs

The Company expenses the costs associated with advertising as incurred. Advertising expenses for the six months ended May 31, 2011 and 2010 are included in selling and promotion expenses in the consolidated statements of operations.

Fixed Assets

Fixed assets are stated at cost. Depreciation is computed using the straight-line method over the estimated useful lives of the assets; office and computer equipment – 5 years.

When assets are retired or otherwise disposed of, the costs and related accumulated depreciation are removed from the accounts, and any resulting gain or loss is recognized in income for the period. The cost of maintenance and repairs is charged to income as incurred; significant renewals and betterments are capitalized. Deduction is made for retirements resulting from renewals or betterments.

Impairment of Long-Lived Assets

Long-lived assets, primarily fixed assets, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets might not be recoverable. The Company does perform a periodic assessment of assets for impairment in the absence of such information or indicators. Conditions that would necessitate an impairment assessment include a significant decline in the observable market value of an asset, a significant change in the extent or manner in which an asset is used, or a significant adverse change that would indicate that the carrying amount of an asset or group of assets is not recoverable. For long-lived assets to be held and used, the Company recognizes an impairment loss only if its carrying amount is not recoverable through its undiscounted cash flows and measures the impairment loss based on the difference between the carrying amount and estimated fair value.

Loss Per Share of Common Stock

Basic net loss per common share is computed using the weighted average number of common shares outstanding. Diluted earnings per share (EPS) includes additional dilution from common stock equivalents, such as stock issuable pursuant to the exercise of stock options and warrants. Common stock equivalents were not included in the computation of diluted earnings per share when the Company reported a loss because to do so would be antidilutive for periods presented.

The following is a reconciliation of the computation for basic and diluted EPS:

		May 31, 2011		May 31, 2010

Net loss	$	(484,096)	$	(482,931)

Weighted-average common shares outstanding (basic)		65,960,786		(57,849,167)

Weighted-average common stock equivalents
Stock options		50,000		2,140,000
Warrants		2,714,256		-

Weighted-average common shares outstanding (diluted)		68,725,042		59,989,167

Stock-Based Compensation

In 2006, the Company adopted the provisions of ASC 718-10 “Share Based Payments” for its year ended November 30, 2008. The adoption of this principle had no effect on the Company’s operations.

The Company has elected to use the modified–prospective approach method. Under that transition method, the calculated expense in 2006 is equivalent to compensation expense for all awards granted prior to, but not yet vested as of January 1, 2006, based on the grant-date fair values. Stock-based compensation expense for all awards granted after January 1, 2006 is based on the grant-date fair values. The Company recognizes these compensation costs, net of an estimated forfeiture rate, on a pro rata basis over the requisite service period of each vesting tranche of each award. The Company considers voluntary termination behavior as well as trends of actual option forfeitures when estimating the forfeiture rate.

The Company measures compensation expense for its non-employee stock-based compensation under ASC 505-50, “Accounting for Equity Instruments that are Issued to Other Than Employees for Acquiring, or in Conjunction with Selling, Goods or Services”. The fair value of the option issued is used to measure the transaction, as this is more reliable than the fair value of the services received. The fair value is measured at the value of the Company’s common stock on the date that the commitment for performance by the counterparty has been reached or the counterparty’s performance is complete. The fair value of the equity instrument is charged directly to expense and additional paid-in capital.

Segment Information

The Company follows the provisions of ASC 280-10, “Disclosures about Segments of an Enterprise and Related Information”. This standard requires that companies disclose operating segments based on the manner in which management disaggregates the Company in making internal operating decisions. As of May 31, 2011 and for the six months ended May 31, 2011 and 2010, the Company operates in only one segment and in only one geographical location.

Reclassifications

The Company has reclassified certain amounts in their consolidated statement of operations for the six months ended May 31, 2010 to conform with the May 31, 2011 presentation. These reclassifications had no effect on the net loss for the six months ended May 31, 2010.

Uncertainty in Income Taxes

The Company follows ASC 740-10, “Accounting for Uncertainty in Income Taxes” (“ASC 740-10”). This interpretation requires recognition and measurement of uncertain income tax positions using a “more-likely-than-not” approach. ASC 740-10 is effective for fiscal years beginning after December 15, 2006. Management has adopted ASC 740-10 for 2009, and they evaluate their tax positions on an annual basis, and has determined that as of May 31, 2011, no additional accrual for income taxes other than the federal and state provisions and related interest and estimated penalty accruals is not considered necessary.

Fair Value Measurements

In September 2006, ASC issued 820, Fair Value Measurements. ASC 820 defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosure about fair value measurements. This statement is effective for financial statements issued for fiscal years beginning after November 15, 2007. Early adoption is encouraged. The adoption of ASC 820 is not expected to have a material impact on the financial statements.

In February 2007, ASC issued 825-10, The Fair Value Option for Financial Assets and Financial Liabilities – Including an amendment of ASC 320-10, (“ASC 825-10”) which permits entities to choose to measure many financial instruments and certain other items at fair value at specified election dates. A business entity is required to report unrealized gains and losses on items for which the fair value option has been elected in earnings at each subsequent reporting date. This statement is expected to expand the use of fair value measurement. ASC 825-10 is effective for financial statements issued for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years.

Recent Accounting Pronouncements

In December 2007, the ASC issued ASC 810-10-65, Noncontrolling Interests in Consolidated Financial Statements. ASC 810-10-65 establishes accounting and reporting standards for ownership interests in subsidiaries held by parties other than the parent, changes in a parent’s ownership of a noncontrolling interest, calculation and disclosure of the consolidated net income attributable to the parent and the noncontrolling interest, changes in a parent’s ownership interest while the parent retains its controlling financial interest and fair value measurement of any retained noncontrolling equity investment. ASC 810-10-65 is effective for financial statements issued for fiscal years beginning after December 15, 2008, and interim periods within those fiscal years. Early adoption is prohibited. Management is determining the impact that the adoption of ASC 810-10-65 will have on the Company’s financial position, results of operations or cash flows.

In December 2007, the Company adopted ASC 805, Business Combinations (“ASC 805”). ASC 805 retains the fundamental requirements that the acquisition method of accounting be used for all business combinations and for an acquirer to be identified for each business combination. ASC 805 defines the acquirer as the entity that obtains control of one or more businesses in the business combination and establishes the acquisition date as the date that the acquirer achieves control. ASC 805 will require an entity to record separately from the business combination the direct costs, where previously these costs were included in the total allocated cost of the acquisition. ASC 805 will require an entity to recognize the assets acquired, liabilities assumed, and any non-controlling interest in the acquired at the acquisition date, at their fair values as of that date.

ASC 805 will require an entity to recognize as an asset or liability at fair value for certain contingencies, either contractual or non-contractual, if certain criteria are met. Finally, ASC 805 will require an entity to recognize contingent consideration at the date of acquisition, based on the fair value at that date. This will be effective for business combinations completed on or after the first annual reporting period beginning on or after December 15, 2008. Early adoption is not permitted and the ASC is to be applied prospectively only. Upon adoption of this ASC, there would be no impact to the Company’s results of operations and financial condition for acquisitions previously completed. The adoption of ASC 805 is not expected to have a material effect on the Company’s financial position, results of operations or cash flows.

In March 2008, ASC issued ASC 815, Disclosures about Derivative Instruments and Hedging Activities”, (“ASC 815”). ASC 815 requires enhanced disclosures about an entity’s derivative and hedging activities. These enhanced disclosures will discuss: how and why an entity uses derivative instruments; how derivative instruments and related hedged items are accounted for and its related interpretations; and how derivative instruments and related hedged items affect an entity’s financial position, financial performance, and cash flows. ASC 815 is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008. The Company does not believe that ASC 815 will have an impact on their results of operations or financial position.

In April 2008, ASC 350-30 was issued, “Determination of the Useful Life of Intangible Assets”. The Company was required to adopt ASC 350-30 on December 1, 2008. The guidance in ASC 350-30 for determining the useful life of a recognized intangible asset shall be applied prospectively to intangible assets acquired after adoption, and the disclosure requirements shall be applied prospectively to all intangible assets recognized as of, and subsequent to, adoption. The Company does not believe ASC 350-30 will materially impact their financial position, results of operations or cash flows.

In May 2008, ASC 470-20 was issued, “Accounting for Convertible Debt Instruments That May Be Settled in Cash upon Conversion (Including Partial Cash Settlement)” (“ASC 470-20”). ASC 470-20 requires the issuer of certain convertible debt instruments that may be settled in cash (or other assets) on conversion to separately account for the liability (debt) and equity (conversion option) components of the instrument in a manner that reflects the issuer’s non-convertible debt borrowing rate. ASC 470-20 is effective for fiscal years beginning after December 15, 2008 on a retroactive basis. The Company does not believe that the adoption of ASC 470-20 will have a material effect on its financial position, results of operations or cash flows.

In June 2008, ASC 815-40 was issued, “Determining Whether an Instrument (or Embedded Feature) Is Indexed to an Entity’s Own Stock” (“ASC 815-40”), which supersedes the definition in ASC 605-50 for periods beginning after December 15, 2008. The objective of ASC 815-40 is to provide guidance for determining whether an equity-linked financial instrument (or embedded feature) is indexed to an entity’s own stock and it applies to any freestanding financial instrument or embedded feature that has all the characteristics of a derivative in accordance with ASC 815-20.

ASC 815-40 also applies to any freestanding financial instrument that is potentially settled in an entity’s own stock. The Company believes that ASC 815-40, will not have a material impact on their financial position, results of operations and cash flows.

In June 2008, ASC 470-20-65 was issued, Accounting for Convertible Securities with Beneficial Conversion Features or Contingently Adjustable Conversion Ratios (“ASC 470-20-65”). ASC 470-20-65 is effective for years ending after December 15, 2008. The overall objective of ASC 470-20-65 is to provide for consistency in application of all the standards issued for convertible securities. The Company has computed and recorded a beneficial conversion feature in connection with certain of their prior financing arrangements and does not believe that ASC 470-20-65 will have a material effect on that accounting.

Effective April 1, 2009, the Company adopted ASC 855, Subsequent Events (“ASC 855”). ASC 855 establishes general standards of accounting for and disclosure of events that occur after the balance sheet date but before financial statements are issued or are available to be issued. It requires disclosure of the date through which an entity has evaluated subsequent events and the basis for that date – that is, whether that date represents the date the financial statements were issued or were available to be issued. This disclosure should alert all users of financial statements that an entity has not evaluated subsequent events after that date in the set of financial statements being presented. Adoption of ASC 855 did not have a material impact on the Company’s results of operations or financial condition.

Effective July 1, 2009, the Company adopted FASB ASU No. 2009-05, Fair Value Measurement and Disclosures (Topic 820) (“ASU 2009-05”). ASU 2009-05 provided amendments to ASC 820-10, Fair Value Measurements and Disclosures – Overall, for the fair value measurement of liabilities. ASU 2009-05 provides clarification that in circumstances in which a quoted market price in an active market for the identical liability is not available, a reporting entity is required to measure fair value using certain techniques. ASU 2009-05 also clarifies that when estimating the fair value of a liability, a reporting entity is not required to include a separate input or adjustment to other inputs relating to the existence of a restriction that prevents the transfer of a liability. ASU 2009-05 also clarifies that both a quoted price in an active market for the identical liability at the measurement date and the quoted price for the identical liability when traded as an asset in an active market when no adjustments to the quoted price of the asset are required for Level 1 fair value measurements. Adoption of ASU 2009-05 did not have a material impact on the Company’s results of operations or financial condition.

In January 2010, the Company adopted FASB ASU No. 2010-06, Fair Value Measurement and Disclosures (Topic 820)- Improving Disclosures about Fair Value Measurements (“ASU 2010-06”). These standards require new disclosures on the amount and reason for transfers in and out of Level 1 and 2 fair value measurements. The standards also require new disclosures of activities, including purchases, sales, issuances, and settlements within the Level 3 fair value measurements. The standard also clarifies existing disclosure requirements on levels of disaggregation and disclosures about inputs and valuation techniques. These new disclosures are effective beginning with the first interim filing in 2010. The disclosures about the rollforward of information in Level 3 are required for the Company with its first interim filing in 2011. The Company does not believe this standard will impact their financial statements.

In February 2010, the FASB issued ASU 2010-09, “Subsequent Events (Topic 855): Amendments to Certain Recognition and Disclosure Requirements”. This update addresses both the interaction of the requirements of Topic 855, “Subsequent Events”, with the SEC’s reporting requirements and the intended breadth of the reissuance disclosures provision related to subsequent events (paragraph 855-10-50-4). The amendments in this update have the potential to change reporting by both private and public entities, however, the nature of the change may vary depending on facts and circumstances. Adoption of ASU 2010-09 did not have a material impact on the Company’s consolidated results of operations or financial condition.

Other ASU’s that have been issued or proposed by the FASB ASC that do not require adoption until a future date and are not expected to have a material impact on the financial statements upon adoption.

NOTE 3 - FIXED ASSETS

Fixed assets as of May 31, 2011 (unaudited) and November 30, 2010 were as follows:

	Estimated Useful		(Unaudited)
	Lives (Years)		May 31, 2011		November 30, 2010
Computer and office equipment	5	$	33,645	$	31,758
Less: accumulated depreciation			30,304		25,429
Property and equipment, net		$	3,341	$	6,329

There was $3,320 and $3,137 charged to operations for depreciation expense for the six months ended May 31, 2011 and 2010, respectively.

NOTE 4 - DEFERRED COSTS

Deferred costs as of May 31, 2011 (unaudited) and November 30, 2010 were as follows:

	Estimated Useful		(Unaudited)
	Lives (Years)		May 31, 2011		November 30, 2010
Deferred Costs	5	$	474,553	$	447,934
Less: accumulated depreciation			399,777		325,850
Property and equipment, net		$	74,776	$	122,104

There was $53,860 and $42,951 charged to operations for amortization expense for the six months ended May 31, 2011 and 2010, respectively.

NOTE 5 - RELATED PARTY LOANS

As of May 31, 2011, the four principal shareholders of the Company had advanced $1,884,127 to the Company for working capital purposes. These loans bear interest at an annual rate of 10% for individual amounts exceeding $150,000 (CDN$) ($154,830 (US$)). The loans have no specific terms of repayment and are unsecured. Interest expense for the six months ended May 31, 2011 and 2010 were $62,413 and $41,787, respectively. Accrued interest on these loans as of May 31, 2011 was $229,592.

NOTE 6 - LOAN PAYABLE - BANK

The Company had an overdraft facility with a Canadian bank for $500,000 (CDN$)) and converted this facility to an Operating Loan in April 2009. The loan is payable in monthly installments of $27,778 (CD$) through September 2010. In addition, interest will be charged at 4% over the bank’s prime lending rate and the Company will be charged monthly fees of approximately $150 per month. The loan was paid in full in September 2010. The loan was personally guaranteed by three principal shareholders.

Interest expense on the loan payable / line of credit for the six months ended May 31, 2010 was $6,218.

NOTE 7 - COMMITMENTS

Office Space

The Company occupies approximately 2,500 square feet of office space owned by a company that is owned by a shareholder of the Company. The occupancy is on a month-to-month basis, without a lease and without payment of rent. The Company has occupied the space since February 1, 2008. Accordingly, a rent expense was recorded at the fair value of the applicable rent and with an offset to additional paid-in capital.

Consulting Agreements

The Company has entered into consulting agreements for a period of no more than 6 months with various consultants. These agreements require the Company to pay for the consulting services and issue shares of common stock and stock options over the period of the agreements.

Service Agreement

In July 2009, the Company’s subsidiary, Valtech Communications, Inc. entered into a written agreement with Groupe Canvar Inc. (a related party through common ownership). The agreement provides for Groupe Canvar, Inc. to provide brochures, price lists, contact information and other literature relating to Valtech Communications, Inc. services to the tenants leasing the apartments or office space in the buildings owned by Groupe Canvar, Inc. In addition, the agreement provides for Valtech Communications, Inc. to install wiring in new and refurbished buildings owned by Groupe Canvar, Inc. to their server for these services. All pricing is at the same terms as those for Valtech Communications, Inc. other customers. The agreement was to expire July 2010, and was extended for another two years through July 2012.

Financing Agreement

On June 15, 2010, the Company entered into an Engagement Agreement with DME Securities LLC (“DME”) to raise $10,000,000 in debt or equity financing on a best efforts basis. The Engagement Agreement terminates on May 31, 2011 and the Company is responsible to pay a 10% success fee upon the successful completion of the Placement of funds. DME is also to receive Placement Agent Warrants upon the Placement. DME has not able to raise any funds for the Company as of May 31, 2011 and the agreement was not renewed.

On August 18, 2010, the Company executed an equity financing commitment of up to $5,000,000 from Dutchess Capital through its Dutchess Opportunity Fund, L.P. The commitment has a 3 year term, and the Company may sell its shares of common stock to Dutchess Capital up to the total committed amount. The Company will determine, at its sole discretion, the amount and timing of any sales of these shares. The purchase price of the shares shall be set at 95% of the lowest daily VWAP of the common stock of the Company during the 5 consecutive trading days immediately after the put date as defined in the term sheet. The Company has not sold any shares under this term sheet as of May 31, 2011.

On October 12, 2010, the Company entered into an agreement with Notre-Dame Capital Inc. to raise $15,000,000 through an equity and debt financing on a best effort basis. The debentures will be offered in tranches of $50,000 and will bear interest at a rate of 8% per annum, payable quarterly in arrears, and maturing five years from the date of issuance. The principal amount of each debenture will be convertible into common shares of the Company’s stock at the option of the holder. The conversion price will be $0.25 per share for the first two years from the date of issuance, and thereafter at a price per share of $0.30 until maturity.

In connection with the financing, Notre-Dame Capital Inc. will receive a cash fee equal to 8% of the gross proceeds raised under the offering plus 4% warrants of the raised funds. Each warrant entitling Notre-Dame Capital Inc. to purchase one share of common stock. The warrants will be exercisable at the financing price for a period of three years after the closing of the financing. In addition to the proposed financing, Notre-Dame Capital Inc. and its affiliates have purchased 3,000,000 common shares of the Company from the directors of the Company. As of May 31, 2011, there has been no money raised under this proposed financing.

Investor Relation/Public Relation Agreements

The Company on November 15, 2010 has entered into a Professional IR Industrial Relations Service Agreement with Constellation Asset Management, LLC and a Professional Consulting Services Agreement with Jens Dalsgaard, the principal of Constellation Asset Management, LLC for a period of 90 days, renewable for successive 90 day periods. Under the agreements, the services to be provided to the Company include; the identification of and presenting of potential business entities to enter into advantageous partnerships with the Company, including but not exclusive to, strategic marketing and sales alliances, joint ventures and/or mergers.; advising the Company on product or corporate image advertising; advising the Company on matters pertaining to business development, strategy or compensation; assistance with business plans and shareholder advice and assistance in drafting press releases and various communications to the shareholders.

The Company issued to both Constellation and to Mr. Dalsgaard 570,000 shares of common stock under both agreements as compensation for the services being provided.

The Company entered into an agreement with Complete Advisory Partners on April 12, 2011 to provide public relation services. The agreement is for a term of one year but the Company can terminate the services every 90 day. In accordance with the term of the agreement, the Company issued 400,000 shares of common stock as an initial payment.

Distribution Agreement

On April 11, 2011, the Company signed a long-term distribution agreement with Level Vision Electronics Ltd (“Level”). The five (5) year renewable distribution agreement with Level includes the distribution in North America of its 3-D Television screens technology, including High Definition, LCD screens and computer monitors for commercial applications. The Company will deploy and bring to market a unique new multimedia solution to enhance the advertising market.

Litigation

On April 7, 2008, the Company entered into a consulting agreement with Thomas Klein and Arshad Shaw (the “Consultants”), pursuant to which each Consultant was issued 300,000 restricted shares of the Company’s common stock, granted options to purchase 500,000 shares and options to purchase additional shares during the period commencing May 1, 2008 through October 1, 2008. As a result of the failure of Consultants to provide the services required under the consulting agreement, the Company terminated the consulting agreement on August 28, 2008.

The Company commenced a lawsuit against the Consultants and the former transfer agent for its common stock and filed an amended complaint on February 3, 2009, alleging, among other things, non-performance by the Consultants of their obligations under the consulting agreement and their failure to pay for the initial 500,000 options that each exercised.

On August 30, 2009, the Court entered a default judgment against the defendants which provide for an injunction against the transfer agent ordering it not to lift restrictions on the certificates evidencing the 300,000 restricted shares of common stock issued to and the 500,000 shares underlying the options granted to each Consultant. On January 26, 2011, the successor transfer agent cancelled the 600,000 restricted shares in the Consultants’ names. On March 1, 2011, attorneys for the Consultants filed a motion seeking legal fees from the Company not to exceed $1,762.50.

NOTE 8 - STOCKHOLDERS’ DEFICIT

Common Stock

As of May 31, 2011, the Company has 100,000,000 shares of common stock authorized with a par value of $.00001.

The Company has 67,977,764 shares issued and outstanding as of May 31, 2011.

During the quarter ended May 31, 2011, the Company issued:

The Company issued 2,930,001 shares of stock for cash and liability for stock to be issued ($75,000 of which $50,000 was received in the six months ended May 31, 2011) and services rendered ($124,700) at a value of $199,700.

During the quarter ended May 31, 2011, the Company occupied office space owned by a principal shareholder, and recorded $10,215 of rent expense as contributed capital for the space.

During the quarter ended February 28, 2011, the Company issued:

The Company issued 3,050,000 shares of common stock to three of its shareholders to convert $122,000 of loans to them.

The Company also issued cancelled 600,000 shares of stock to consultants at $0.06 to for services rendered to the Company back in 2008 (see Note 7).

The Company also incurred a $50,000 liability for stock to be issued for subscriptions of cash received in the three months ended February 28, 2011 for certificates not issued.

During the quarter ended February 28, 2011, the Company occupied office space owned by a principal shareholder, and recorded $10,215 of rent expense as contributed capital for the space.

During the quarter ended November 30, 2010, the Company issued:

The Company issued shares under a private placement memorandum dated April 5, 2010 to various individuals totaling 2,514,256 shares (of which 2,314,256 shares were accrued for during the year) of common stock at a price of $0.125 per share ($314,282). The individuals also were issued 2,514,256 warrants that expire in 3 years at an exercise price of $0.20 per share.

The Company also issued 1,440,000 shares of stock to consultants at $0.06 to $0.12 per share at a value of $154,800 for services rendered to the Company.

The Company converted $40,000 of a stock liability to officers to additional paid-in capital during the quarter ended November 30, 2010.

During the quarter ended November 30, 2010, the Company occupied office space owned by a principal shareholder, and recorded $10,215 of rent expense as contributed capital for the space.

During the quarter ended August 31, 2010, the Company issued:

The Company accrued the issuance of shares under a private placement memorandum dated April 5, 2010 to various individuals totaling 1,934,256 shares of common stock at a price of $0.125 per share ($241,782) for funds received during the quarter. These were reflected in the liability for stock to be issued.

During the quarter ended August 31, 2010, the Company occupied office space owned by a principal shareholder, and recorded $10,215 of rent expense as contributed capital for the space.

During the quarter ended May 31, 2010, the Company issued:

The Company accrued the issuance of shares under a private placement memorandum dated April 5, 2010 to various individuals totaling 380,000 shares of common stock at a price of $0.125 per share ($47,500) for funds received during the quarter. These were reflected in the liability for stock to be issued.

In addition, the Company issued common stock for the quarter ended May 31, 2010 at $0.14 per share for a total value of $14,000 to consultants for services rendered per their agreements; and 90,000 in the exercise of stock options for $12,600.

The Company reduced an invoice for the payment of $12,600 associated with 90,000 of these options. The Company also received $24,000 for the issuance of 500,000 shares of common stock.

During the quarter ended May 31, 2010, the Company occupied office space owned by a principal shareholder, and recorded $10,215 of rent expense as contributed capital for the space.

During the quarter ended February 28, 2010, the Company issued:

160,000 shares of common stock issued for the quarter ended February 28, 2010 at $0.06 per share for a total value of $9,600 to consultants for services rendered per their agreements; and 590,000 in the exercise of stock options for $30,400. Of the $30,400, the Company reduced an invoice for the payment of $5,400 associated with 90,000 of these options, and the remaining $25,000 is reflected as a subscription receivable for the exercise of 500,000 options. The Company also recorded $6,000 in stock based compensation for the value of an additional 100,000 options that vested in February 2010.

During the quarter ended February 28, 2010, the Company occupied office space owned by a principal shareholder, and recorded $10,215 of rent expense as contributed capital for the space.

During the quarter ended November 30, 2009, the Company issued:

480,000 shares of common stock to various consultants for services rendered. These shares were valued at their market prices of $0.105 and $0.16 per share, or $66,900, at the date of issue. In addition, 250,000 shares were issued for $25,000 cash received in August 2009.

During the quarter ended November 30, 2009, the Company occupied office space owned by a principal shareholder, and recorded $10,215 of rent expense as contributed capital for the space.

During the quarter ended August 31, 2009, the Company issued:

1,100,000 shares of common stock to various consultants including attorneys for services rendered. These shares were valued at their market prices of $0.15 and $0.16 per share, or $167,000, at the date of issue.

During the quarter ended August 31, 2009, the Company occupied office space owned by a principal shareholder, and recorded $10,215 of rent expense as contributed capital for the space.

$3,257 in stock based compensation was recognized for services performed for which shares were issued in the prior year.

During the quarter ended May 31, 2009, the Company occupied office space owned by a principal shareholder, and recorded $10,215 of rent expense as contributed capital for the space.

$1,890 in stock based compensation was recognized for services performed for which shares were issued in the prior year.

During the quarter ended February 28, 2009, the Company issued:

100,000 shares of common stock to the President and CEO for services. These shares were valued at their market price of $0.21 per share, or $21,000, at the date of issue.

85,000 shares of common stock for legal services. These shares were valued at their market price of $0.17 per share, or $14,450, at the date of issue.

300,000 shares of common stock to exercise stock options. The Company did not receive the required option payment of $15,000 from the consultant and thus included these amounts as administrative expenses.

During the quarter ended February 28, 2009, the Company occupied office space owned by a principal shareholder, and recorded $10,215 of rent expense as contributed capital for the space.

$12,156 in stock based compensation was recognized for services performed for which shares were issued in the prior year.

In connection with the consulting agreement dated August 8, 2008, referenced in Note 7-Litigation above, the Company granted the two Consultants options to purchase a total of 2,400,000 stock options, of which 1,000,000 options vested upon the execution of the consulting agreement and were exercised, 400,000 options vested on May 1, 2008, and the balance was to vest at the rate of 200,000 per month commencing June 1, 2008

through October 1, 2008. The Company commenced a lawsuit against the Consultants as a result of their failure to perform in accordance with the consulting agreement and failure to pay the option exercise price of $60,000 in connection with the exercise of the initial 1,000,000 options.

The Company has reflected a $36,000 charge for the value of the restricted shares, and $22,820 for the fair value of the stock options. In addition, the $60,000 has been recorded for the amount due for the option exercise price the consultants have not paid. Effective January 26, 2011, the transfer agent cancelled the 2 certificates evidencing 500,000 restricted shares in the name of each Consultant pursuant to a Court order.

On March 31, 2008, the Company issued 120,000 restricted shares of its common stock in connection with internal accounting services commencing March 18, 2008 for one year. Stock based compensation in the amount of $5,188 was recorded as compensation expense for the year ended November 30, 2008, with the remaining $2,012 to be expensed in the year ending November 30, 2009. The shares were valued at $0.06 per share, the current market value on the date of issuance.

On August 25, 2008, the Company issued 50,000 restricted shares of its common stock in connection with an agreement for investor relations services commencing August 25, 2008 for one year. Stock based compensation in the amount of $1,993 was recorded as compensation expense for the year ended November 30, 2008, with the remaining $5,507 to be expensed in the year ending November 30, 2009. The shares were valued at $0.15 per share, the current market value on the date of issuance.

On August 25, 2008, the Company issued 250,000 free-trading shares of its common stock in connection with the exercise of stock options.

On November 4, 2008, the Company issued 250,000 free-trading shares of its common stock in connection with the exercise of stock options.

Stock Options

The Company accounts for stock-based compensation using the fair value method. The fair value method requires the cost of employee services received for awards of equity instruments, such as stock options and restricted stock, to be recorded at the fair value on the date of the grant. The value of restricted stock awards, based upon market prices, is amortized over the requisite service period.

The estimated fair value of stock options and warrants on the grant date is amortized on a straight line basis over the requisite service period. During the six months ended February 28, 2011 and 2010, stock based compensation was $0 and $6,000, respectively.

In February 2010, the Company entered into a few option agreements for the issuance of options relating to various consulting agreements. The Company is obligated to issue to consultants in one agreement 270,000 options that vest evenly over a 3-month period of time at a $0.06 exercise price. The Company who is receiving the options has agreed to reduce their invoices by the cash required to exercise the options. These options expired in February 2011.

In another agreement entered into in February 2010, the Company is obligated to issue 600,000 options evenly over a 6-month period of time at a $0.06 exercise price. The Company expensed the fair value of these options ($36,000) as of August 31, 2010 to this consultant. These options also expired February 2011.

In February 2010, the Company issued 500,000 options to an individual at $0.05. The options were exercised. The Company received $25,000 for this exercise.

On March 13, 2008, in connection with the April 8, 2008 consulting agreement, 2,400,000 five-year stock options were granted exercisable at a price of $0.06 per share, as follows: 1,000,000 options on the date of the consulting agreement, 400,000 options vested on May 1, 2008, and the balance vested at the rate of 200,000 per month commencing June 1, 2008 through October 1, 2008.

These options were valued using the Black-Scholes Pricing Model with the following assumptions: volatility - 25%; risk free interest rate – 2.53%; expected life – 5 years; and dividend yield – 0%.

Due to the lack of sufficient historical trading information with respect to its own shares, the Company estimates expected volatility based on a company believed to have market and economic characteristics similar to its own.

Of the 2,400,000 options issued to the two consultants, 1,000,000 of the options that vested immediately, were exercised upon issuance. However, the Company has not received the required option payment of $60,000 from the two consultants. As noted, the Company received a default judgment in an effort to recover this amount. As a result, and due to the uncertainty of the recovery of the $60,000, the Company has expensed the entire amount. The remaining 1,400,000 vested but unexercised options were cancelled effective November 30, 2010.

On August 25, 2008 and October 30, 2008, the Company issued a total of 600,000 stock options to two consultants. Of these options, 500,000 vested upon issuance and the remaining options vest March 4, 2009. These options have a three-year life and are exercisable at $0.05. These options were issued in the money as the market value of the underlying shares was $0.18 and $0.14, respectively.

The fair value of these options were determined to be the intrinsic value at the date of issuance, or $32,500 ($0.13 per share) and $22,500 ($0.09 per share) on August 25, 2008 and October 30, 2008, respectively. Additionally, the Company did not receive the total required option payments of $25,000 (500,000 options at $0.05).

The Company has expensed the entire amount due to the uncertainty of the collectability of this amount. Of the 600,000 options, 50,000 options remain unexercised as of May 31, 2011.

On December 16, 2008, the Company issued 250,000 options at $0.05 ($25,000), which were expensed, and these options were exercised immediately.

The following is a summary of the outstanding stock options for the six months ended May 31, 2011 and 2010:

	Options		Weighted Average Exercise Price	Weighted Average Exercise Life		Aggregate Intrinsic Value
Outstanding, November 30, 2010	740,000	$	0.06	3.015	$	43,700
Granted	-		0.00	0.00		-
Exercised	-		0.00	0.00		(-)
Cancelled	(690,000)		(0.06)	1.00		(41,000)
Outstanding, May 31, 2011	50,000	$	0.06	2.015	$	2,300
Exercisable, May 31, 2011	50,000	$	0.06	2.015	$	2,300

	Options		Weighted Average Exercise Price	Weighted Average Exercise Life		Aggregate Intrinsic Value
Outstanding, November 30, 2009	1,450,000	$	0.06	4.87	$	86,500
Granted	1,370,000		0.056	1.00		77,200
Exercised	(680,000)		0.06	1.00		(36,000)
Cancelled	-		-	-		-
Outstanding, May 31, 2010	2,140,000	$	0.06	3.015	$	127,700
Exercisable, May 31, 2010	1,940,000	$	0.06	3.015	$	115,700

Warrants

The Company entered into private placement agreements with various individuals through November 30, 2010 for the issuance of 2,714,256 shares of common stock along with 2,714,256 warrants. The Company received the proceeds of $314,282 for these units. The warrants expire 3 years from issuance, at an exercise price of $0.20 per share. The warrants were valued using the black-scholes method and were recorded as additional paid in capital – warrants of $145,512. The criteria established for the valuation of these warrants were as follows: risk free interest rate – 1.25%; dividend yield – 0%; volatility – 185%. The warrants were issued in November, 2010.

Common Stock Purchase Warrants	Number of Warrants Outstanding and Exercisable	Date Warrants are Exercisable	Exercise Price	Date Warrants Expire
Investors from April 5, 2010 offering	2,714,256	May to September 2010	$ 0.20	May to September 2013
	2,714,256

NOTE 9 - PROVISION FOR INCOME TAXES

Deferred income taxes are determined using the liability method for the temporary differences between the financial reporting basis and income tax basis of the Company’s assets and liabilities. Deferred income taxes are measured based on the tax rates expected to be in effect when the temporary differences are included in the Company’s tax return. Deferred tax assets and liabilities are recognized based on anticipated future tax consequences attributable to differences between financial statement carrying amounts of assets and liabilities and their respective tax bases.

At May 31, 2011, deferred tax assets consist of the following:

Net operating losses	$	1,283,264
Valuation allowance		(1,283,264)
	$	-

At May 31, 2011, the Company had a net operating loss carryforward in the approximate amount of $3,774,307, available to offset future taxable income through 2031. The Company established valuation allowances equal to the full amount of the deferred tax assets due to the uncertainty of the utilization of the operating losses in future periods.

A reconciliation of the Company’s effective tax rate as a percentage of income before taxes and federal statutory rate for the periods ended May 31, 2011 and 2010 is summarized as follows:

	2011	2010
Federal statutory rate	(34.0)%	(34.0)%
State income taxes, net of federal benefits	3.3	3.3
Valuation allowance	30.7	30.7
	0%	0%

NOTE 10 - FAIR VALUE MEASUREMENTS

On January 1, 2008, the Company adopted ASC 820. ASC 820 defines fair value, provides a consistent framework for measuring fair value under generally accepted accounting principles and expands fair value financial statement disclosure requirements. ASC 820’s valuation techniques are based on observable and unobservable inputs. Observable inputs reflect readily obtainable data from independent sources, while unobservable inputs reflect our market assumptions. ASC 820 classifies these inputs into the following hierarchy:

Level 1 inputs: Quoted prices for identical instruments in active markets.

Level 2 inputs: Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations whose inputs are observable or whose significant value drivers are observable.

Level 3 inputs: Instruments with primarily unobservable value drivers.

NOTE 11 - CONCENTRATION OF CREDIT RISK

On May 31, 2011, $27,222, or 89% of the Company’s accounts receivable was with three customers. In addition, there was one customer who represented approximately 83% of the revenue for the six months ended May 31, 2011. This customer is considered a major customer of the Company.

On May 31, 2010, $17,718, or 35% of the Company’s accounts receivable were with two customers. This amount was with customers related to a significant shareholder of the Company. One of these two customers represented approximately 50% of the revenue for the six months ended May 31, 2010. This customer is considered a major customer of the Company.

NOTE 12 - POTENTIAL ACQUISITION

On January 24, 2011, the Company entered into a purchase agreement to acquire a private telecommunications company named Groupe Pagex Inc., which owns and operates an existing telecommunications network in Quebec City, and surrounding Lac St-Jean and Beauce areas.

Groupe Pagex specializes in the implementation and management of IP and Wi-Fi networks in the commercial and residential market. They have generated 1.7 million in prior year sales.

The Company anticipates the closing of this transaction to occur in the fiscal third quarter for a purchase price anticipated at approximately $1,500,000.

NOTE 13 - SUBSEQUENT EVENTS

The Company issued 100,000 shares of stock in June 2011 to various individuals for services rendered at a value of $5,000.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS AND RESULTS OF OPERATIONS AND FINANCIAL CONDITIONS Back to Table of Contents

Forward-Looking Statements

The following discussion contains forward-looking statements. Forward-looking statements give our current expectations or forecasts of future events. You can identify these statements by the fact that they do not relate strictly to historical or current facts. They use of words such as "anticipate," "estimate," "expect," "project," "intend," "plan," "believe," and other words and terms of similar meaning in connection with any discussion of future operating or financial performance. From time to time, we also may provide forward-looking statements in other materials we release to the public.

The following discussion should be read in conjunction with our financial statements and the related notes appearing elsewhere in this report. The following discussion contains forward-looking statements reflecting our plans, estimates and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to those discussed below and elsewhere in this report. For risk factors related to our business and our common stock please read section entitled "Risk Factors" of our Form 10-K for the year ended November 30, 2010 as filed with the SEC.

To the extent that statements in the report are not strictly historical, including statements as to revenue projections, business strategy, outlook, objectives, future milestones, plans, intentions, goals, future financial conditions, future collaboration agreements, the success of the Company's development, events conditioned on stockholder or other approval, or otherwise as to future events, such statements are forward-looking. The forward-looking statements contained in this annual report are subject to certain risks and uncertainties that could cause actual results to differ materially from the statements made. Other important factors that could cause actual results to differ materially include the following: business conditions and the amount of growth in the Company's industry and general economy; competitive factors; ability to attract and retain personnel; the price of the Company's stock; and the risk factors set forth from time to time in the Company's SEC reports, including but not limited to its annual report on Form 10-K; its quarterly reports on Forms 10-Q; and any reports on Form 8-K.

Overview

In June 2008, we acquired our wholly-owned subsidiary, Valtech Communications Inc. ("Valtech") in a reverse merger transaction, issuing 40 million restricted shares to the Valtech shareholders.

Valtech offers low-cost, highly reliable triple-play service of Digital Phone, Digital Voice, High-Speed Internet and Digital TV backed by fast, friendly and live customer service (“Telecommunication Services”). Our present plan is to expand our bundled services by providing an end-to-end IPTV solution consisting of IPTV middleware, video on demand, network based PVR, IPTV head ends, content protection, IPTV infrastructure, system integration and IPTV applications such as games. In order to expand our services to include end-to-end IPTV service, the Company is dependent upon its ability to raise sufficient capital to fund its agreement with Ericsson. To date, the Company has been unable to meet its obligations under the Ericsson agreement and at present no agreement with Ericsson has been negotiated and no negotiations with Ericsson are on-going.

We intend to use our limited resources to market our services to new residential and commercial building complexes and existing hotel chains. Further, we intend to market our bundled Telecommunication Services in industry publications and intend to develop our website and promote its presence in order to increase web traffic and possible sales to new clients (www.valtech.ca).

As of May 31, 2011, the Company had 405 customers. During the six-month period ended May 31, 2011, 83% of our revenues were generated by one customer and this customer is considered a major customer of the Company.

Provided the Company can secure additional funding, our plan to increase our marketing activities throughout Canada, pay industry compatible salaries to our executives and staff, hire additional salespersons, who among other activities, would engage in direct solicitations. At present, we have not received commitments for capital from third parties and there can be no assurance that we will be able to acquire additional capital on terms acceptable to the Company, if at all.

We believe that the our negative cash flow from operations will decrease steadily as our subscriber base increases. While we have a commitment from a principal shareholder to provide funding until we achieve positive cash flow from operations, if our affiliated control shareholders cease provided short-term interim funding through loans to expand our business, the Company may experience reduced growth in its revenues.

Regardless of the amount of funds available to us for marketing, we intend to continue to pursue strategic alliances with complementary businesses in an effort to enter and expand our Telecommunication Services. The complementary businesses we intend to solicit are those that have developed and maintain marketing channels to our potential customers.

At present, we use proceeds from shareholder loans to purchase telecommunication hardware, cables and equipment. It is our intention to secure alternative debt and/or equity funding sources in order to reduce depends from our current funding sources.

Our management believes that the trend in our business is toward greater convergence to high speed Internet and high definition television. We believe that our bundled Telecommunication Services are competitive in terms of reliability and pricing as compared to the services offered by incumbent operators. Since we have no patent protection, it is possible that a well-funded company could enter the field and diminish our prospective business growth. We face uncertainties regarding our future growth because we must compete on price and quality of service with traditional communications companies with far longer operating histories, more established customer relationships, greater financial, technical and marketing resources, larger customer bases and greater brand or name recognition. Furthermore, companies that may seek to enter our markets may expose us to severe price competition and future technological developments could make us less competitive.

Cash and Cash Equivalents. The Company considers all highly liquid fixed income investments with maturities of three months or less, to be cash equivalents. On May 31, 2011, the Company had $327 in cash.

Accounts Receivable. Management periodically reviews the current status of existing receivables and management's evaluation of periodic aging of accounts. The Company charges off accounts receivable to expense when deemed uncollectible. The Company had bad debt expenses at the end of May 31, 2011 of $14,857. The Company accounts receivable on May 31, 2011 were $30,719 compared to $18,319 on November 30, 2010.

Deferred Costs. The Company's deferred development costs were $474,553 at May 31, 2011 and $447,934 at November 30, 2010. The Company recorded $399,777 amortization expense as of May 31, 2011 and $325,850 as of November 30, 2010. The Company's deferred development costs are amortized over five (5) years. The level of development costs is directly related to the level of business development which we cannot predict with certainty, although Valtech is actively marketing its telecommunications services.

Revenue Recognition. The Company's wholly owned subsidiary, Valtech Communications, Inc. owns and operates a triple play (telephone, internet and TV channels distribution) network in Canada via fiber to individual customers, hotels and retirement homes. The Company bills its subscribers on a monthly basis and recognizes the monthly revenue based upon the specific plan selected by the subscriber. The Company also provides contract services to wire commercial buildings with fiber optic cable in order to provide for similar services.

Property and Equipment. Property and equipment are stated at cost and are depreciated using the straight line method over their estimated useful lives 5 - 7 years for equipment. The Company does not own real estate. As of May 31, 2011, the Company had $3,341 of equipment and $6,329 as of November 30, 2010. This decrease represents the depreciation of existing equipment.

Results of Operations For the Three Months Ended May 31, 2011 and May 31, 2010

Revenues: Revenue for the three-month period ended May 31, 2011 was $57,819 compared to $53,638 for three months ended May 31, 2010. The Company's revenues increased by $4,181 which represents a 7.8% increase from the same period in the prior year. The Company's increase in revenue is principally due to the fact that the Company started new installations of its Telecommunication Services during the period ended May 31, 2011.

Cost of Sales: Cost of Sales for the three months ended May 31, 2011 was $84,278 compared to $78,640 for the three months ended May 31, 2010. The Company's cost of sales increase was $5,638, which represents a 7.2% increase from the same period in the prior year and was due to higher costs associated with the increase in revenues and the costs of wiring and installation as well as equipment, such as set top boxes.

Depreciation and Amortization: For the three-month period ended May 31, 2011 we recorded $28,800 in depreciation and amortization expenses compared to $23,421 during the three months ended May 31, 2010.

General and Administrative Expenses: General and Administrative Expenses for the three-month period ended May 31, 2011 was $212,662 compared to $197,368 for the three months ended May 31, 2010. The Company's general and administrative expenses increase was $15,294, which represents a 7.7% increase from the same period in the prior year and was mainly due to higher costs related to non-cash compensation expenses.

Interest Expense: The Company's interest expense for the three month period was $33,782 compared to $26,408 interest expense during the same period in the prior year. This increase was related to interest payaments on outstanding loans.

Results of Operations For the Six Months Ended May 31, 2011 and 2010

Revenues: Revenue for the six-month period ended May 31, 2011 was $103,987 compared to $101,017 for six months ended May 31, 2010. The Company's revenues increase was $2,970 which represents a 2.94% increase from the same period in the prior year. The Company's increase in revenue is principally due to the fact that the Company started new installations of its Telecommunication Services during the period ended May 31, 2011.

Cost of Sales: Cost of Sales for the six months ended May 31, 2011 was $164,144 compared to $153,563 for the six months ended May 31, 2010. The Company's cost of sales increase was $10,581 which represents a 6.9% increase from the same period in the prior year and was due to higher costs associated with the increase in revenues and the costs of wiring and installation as well as equipment, such as set top boxes.

Depreciation and Amortization: For the six-month period ended May 31, 2011 we recorded $57,179 in depreciation and amortization expenses compared to $46,088 during the six months ended May 31, 2010.

General and Administrative Expenses: General and Administrative Expenses for the six-month period ended May 31, 2011 was $304,344 compared to $336,293 for the six months ended May 31, 2010. The Company's general and administrative expenses decrease was $31,949 which represents a 9.5% decrease from the same period in the prior year.

Interest Expense: The Company's interest expense for the six month period was $62,416 compared to $48,004 for the six months ended May 31, 2010. This increase was the direct result of utilizing our line of credit and interest paid on loans from shareholders.

Liquidity and Capital Resources

As of May 31, 2011, we had total cash resources of $327. During the three months ended May 31, 2011 and May 31, 2010, net cash used in operating activities was $278,192 and $248,258, respectively. This cash was used to fund our operations for the respective periods, adjusted for depreciation and amortization expenses, non-cash expenses and changes in operating assets and liabilities.

During the three-month periods ended May 31, 2011 and 2010, we had no investing activities.

Net cash provided by financing activities was $266,205 for the six months ended May 31, 2011 compared to $260,749 in net cash provided by financing activities for the three months ended May 31, 2010. During the three months ended May 31, 2011, the Company received loans from shareholders in the amount of $216,206. The net cash proceeds from financing activities for the period ended May 31, 2010 resulted from $159,084 in repayments of bank loans, $49,000 in proceeds from the issuance of common stock and loan proceeds of $371,194 from affiliated shareholders.

Our continued operations will depend on whether we are able to raise additional funds through third parties, such as equity and debt financing, as well as additional loans from our affiliated shareholders. However, there can be no assurance that such additional funds will be available on acceptable terms and there can be no assurance that any additional funding that we do obtain will be sufficient to meet our needs in the long term. We will continue to fund operations from cash on hand and through the similar sources of capital previously described. We can give no assurances that any additional capital that we are able to obtain will be sufficient to fully fund our growth plan.

Current and Future Financing Needs

We have incurred an accumulated deficit of $3,774,307 through May 31, 2011. We have incurred negative cash flow from operations since we started our Telecommunication Services business. We have spent, and expect to continue to spend, substantial amounts in connection with implementing our business strategy, including equipment related to our Telecommunications Services. Based on our current plans, we believe that our cash will not be sufficient to enable us to meet our planned operating needs, including our plan for expansion, at least for the next 18 months. Our cash requirements for fiscal year 2011 are estimated to be $600,000 based on our present revenues. We have short-term funding commitments of $500,000 from one of our controlling shareholders until such time the Company generates positive cash flow from operations or is able to secure alternative long-term funding through the issuance of debt and/or equity. We expect to be able to meet our current debt obligations provided that our current customer base does not decrease. At present, the Company is unable to meet its obligations under the Ericsson agreement unless it raises additional funding, and no negotiations are on-going with Ericsson at present.

However, the actual amount of funds we will need to operate is subject to many factors, some of which are beyond our control. These factors include the following:

- the progress of our revenue growth under the current uncertain business environment;
- the number and additional subscriber to out bundled Telecommunications Services;
- our ability to retain our current subscriber base and licensing arrangements;
- our ability to achieve secure equipment financing;
- the costs involved in marketing our Telecommunication Services; and
- the costs involved being a public company.

We have based our estimate on assumptions that may prove to be wrong. We may need to obtain additional funds sooner or in greater amounts than we currently anticipate. Potential sources of financing include strategic relationships, public or private sales of our shares or debt and other sources. We may seek to access the public or private equity markets when conditions are favorable due to our long-term capital requirements. We do not have any committed sources of financing at this time, and it is uncertain whether additional funding will be available when we need it on terms that will be acceptable to us, or at all. If we raise funds by selling additional shares of common stock or other securities convertible into common stock, the ownership interest of our existing stockholders will be diluted. If we are not able to obtain financing when needed, we may be unable to carry out our business plan. As a result, we may have to significantly limit our operations and our business, financial condition and results of operations would be materially harmed.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Back to Table of Contents

We have not entered into, and do not expect to enter into, financial instruments for trading or hedging purposes.

ITEM 4. CONTROLS AND PROCEDURES Back to Table of Contents

Evaluation of disclosure controls and procedures. As of May 31, 2011, the Company's chief executive officer and chief financial officer conducted an evaluation regarding the effectiveness of the Company's disclosure controls and procedures (as defined in Rules 13a-15(e) or 15d-15(e) under the Exchange Act. Based upon the evaluation of these controls and procedures, our chief executive officer and chief financial officer concluded that our disclosure controls and procedures were effective as of the end of the period covered by this report.

Changes in internal controls. During the quarterly period covered by this report, no changes occurred in our internal control over financial reporting that materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS Back to Table of ContentsN

N/A.

ITEM 1A. RISK FACTORS Back to Table of Contents

In addition to the other information set forth in this report, you should carefully consider the factors discussed in Part I, “Item 1. Description of Business, subheading Risk Factors” in our Annual Report on Form 10-K for the year ended November 30, 2010, which could materially affect our business, financial condition or future results. The risks described in our Annual Report on Form 10-K are not the only risks facing our company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS Back to Table of Contents

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES Back to Table of Contents

None.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS Back to Table of Contents

None.

ITEM 5. OTHER INFORMATION Back to Table of Contents

None.

ITEM 6. EXHIBITS Back to Table of Contents

(a) The following documents are filed as exhibits to this report on Form 10-Q or incorporated by reference herein.

Exhibit No.	Description
31.1	Certification of CEO pursuant to Rule 13a-14(a) or 15d-14(a) of the Exchange Act pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of CFO pursuant to Rule 13a-14(a) or 15d-14(a) of the Exchange Act pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certification of CEO pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	Certification of CFO pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the date indicated.

/s/ Rene Arbic

Chief Executive Officer

Dated: July 20, 2011

Ile des Soeurs, Quebec, Canada

/s/ Alex Kestenbaum

Chief Financial Officer

Dated: July 20, 2011

Ile des Soeurs, Quebec, Canada

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