10KSB 1 maxim10k123106.txt UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-KSB (MARK ONE) |X| ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED - DECEMBER 31, 2006 OR |_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM ______ TO______ COMMISSION FILE NUMBER 333-45241 MAXIMUM AWARDS, INC. f/k/a Rising Fortune Incorporated (Name of small business issuer in its charter) Nevada 86-0787790 (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) 326 Old Cleveland Road, Coorparoo Queensland 4151, Australia (Address of principal executive offices) Issuer's telephone number: 61 733193110 Securities registered pursuant to Section 12(b) of the Act: None Securities registered pursuant to Section 12(g) of the Act: Common Stock, $0.001 par value Check whether the Issuer (1) 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 Registrant was required to file such reports) and (2) has been subject to such filing requirements for at least the past 90 days. Yes [X] No [_] Check if there is no disclosure of delinquent filers in response to Item 405 of Regulation S-B contained in this form and no disclosure will be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-KSB or any amendment to this Form 10-KSB. [_] Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes [_] No [X] Registrant had 36,842,000 shares of Common Stock, par value $0.001 per shares as of May 10, 2007. Transitional Small Business Disclosure Format (Check one): Yes [_] No [X] FORWARD LOOKING STATEMENTS -------------------------- This Annual Report on Form 10-KSB and any documents incorporated herein contain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. When used in this Annual Report, statements that are not statements of current or historical fact may be deemed to be forward-looking statements. Without limiting the foregoing, the words "plan", "intend", "may," "will," "expect," "believe", "could," "anticipate," "estimate," or "continue" or similar expressions or other variations or comparable terminology are intended to identify such forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. Except as required by law, the Company undertakes no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise. Any reference to the "Company" or the "Registrant", "we", "our" or "us" means Maximum Awards, Inc. Table of Contents Form 10-KSB Index PART I PAGE Item 1. Description of Business........................................... 2 Item 2. Description of Property........................................... 11 Item 3. Legal Proceedings................................................. 12 Item 4. Submission of Matters to a Vote of Security Holders............... 12 PART II Item 5. Market for Common Equity and Related Stockholder Matters.......... 12 Item 6. Management's Discussion and Analysis or Plan of Operation......... 16 Item 7. Financial Statements.............................................. 22 Item 8. Changes In and Disagreements with Accountants of Accounting and Financial Disclosure........................................ 22 Item 8A. Controls and Procedures........................................... 22 Item 8B. Other Information on Accounting and Financial Disclosure.......... 22 PART III Item 9. Directors, Executive Officers, Promoters and Control Persons; Compliance With Section 16(a) of the Exchange Act................. 23 Item 10. Executive Compensation............................................ 25 Item 11. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.................... 27 Item 12. Certain Relationships and Related Transactions ................... 29 Item 13. Exhibits.......................................................... 32 Item 14. Principal Accountant Fees and Services............................ 33 Signatures.................................................................. 34 PART I ------ ITEM 1. DESCRIPTION OF BUSINESS A. BUSINESS DEVELOPMENT 1. Form and Year of Organization Maximum Awards, Inc. is a Nevada corporation. The company was incorporated on March 7, 1995 under the name Rising Fortune Incorporated. 2. Any bankruptcy, receivership, or similar proceedings. None. 3. Any material reclassification, merger, consolidation or purchase or sale of a significant amount of assets not in the ordinary course of business. a. The Maximum Awards Pty Ltd Transaction On December 9, 2003, the Company acquired 100% of the outstanding shares of Maximum Awards Pty Ltd, an Australian company engaged in the business of operating a consumer rewards program in exchange for 22,000,000 common shares and 1,000,000 preferred shares of the Company. In anticipation of this transaction the Company's Articles of Incorporation were amended on November 19, 2003 to change the name of the Company to Maximum Awards, Inc. At the same time the Company's Articles with regard to its capital stock were amended to authorize 110,000,000 shares of capital stock, 100,000,000 shares of which are common stock with a par value of $0.001 per share and 10,000,000 of which are shares of preferred stock with a par value of $0.001 per share. The shares of common were given the right to elect directors and vote on all other corporate matters which come before the shareholders. The preferred shares were given rights to be granted by the Company's board of directors. The board of directors then granted each share of preferred stock voting rights equal to 50 shares of common stock on all matters to be voted upon by the shareholders, thus vesting effective control of the Company in the preferred stock. The board also determined that preferred shares shall be non-participating and shall not be entitled to share in any dividends or in any proceeds on the liquidation of the Company. The acquisition of Maximum Awards Ltd resulted in a change of control of the Company and was accounted for a recapitalization of Maximum Awards Pty Ltd. The business of Maximum Awards Pty Ltd is now the business of the Company. 2 b. The Travel Easy and Global Business Group Transaction On June 1, 2004, the Company acquired 100% of the issued and outstanding shares of Travel Easy Holidays Pty Ltd ("Travel Easy") and Global Business Group Pty Ltd ("Global Business"). These corporations are involved in the travel industry and mail order industries and were acquired to add to the Company's rewards program operations by providing an in-house travel agency and a consumer products retailer. Travel Easy is an Australian proprietary limited corporation. Travel Easy was organized under the law of the Province of Queensland, Australia on July 19, 2002. Travel Easy is engaged in the business of providing travel agent services and its operations are located in the Company's offices in Brisbane, Queensland, Australia. Prior June 1, 2004, Travel Easy was owned by Maxwell Thomas, the Company's chief executive officer and Michael Sullivan, a director of the Company. Mr. Thomas owned 60% of Travel Easy and Mr. Sullivan owned 40%. Under terms of the acquisition agreement between the Company and Mr. Thomas, the Company acquired Travel Easy for $1.00 Australian. Travel Easy now is a wholly-owned subsidiary of the Company. Global Business also is an Australian proprietary limited corporation. Global Business was organized under the law of the Province of Queensland, Australia in June 2003. Global Business does business under the name Easy Shopper Direct and is engaged in the business of selling consumer goods on-line and through published catalogs and its operations are located in the company's offices in Brisbane, Queensland, Australia. Prior to June 1, 2004, Global Business was owned by Maxwell Thomas, the Company's chief executive officer and Michael Sullivan, a director of the company. Mr. Thomas owned 60% of Global Business and Mr. Sullivan owned 40%. Under terms of the acquisition agreement between the company and Mr. Thomas, the company acquired Global Business for $1.00 Australian. Global Business now is a wholly-owned subsidiary of the company. C The Plays On The Net Transaction On May 14, 2007, the Company agreed to acquire 100 % of the issued and outstanding share capital of Plays on the Net Plc through the issue of 12,000,000 common shares (post split) of the Company common stock. Plays on the Net is a United Kingdom corporation which provides a comprehensive online guide to theatre, and services the online download market for plays and spoken word entertainment. Plays on the Net has a licence to sell audio book titles from the archives of BBC Audio books, and has developed into a online store and theatre information site, with more than 500,000 books and audio book titles available for download. The company also sells audio titles and books from other leading publishers including Time Warner, Harper Collins and Random House, Naxos and Little Brown. The Company's target is to become a one-stop site for information, tickets, reviews and news relating to theatre, and hopes to become the ultimate social networking site for drama enthusiasts. The website includes a forum (Playtalk) which is building a community of writers and actors who are able to post their personal profiles, reviews and resumes and provide unique profile page. Plays On The Net is a development stage company that does not yet have any significant sales. The Company expects to close the transaction before the end of May 2007. 3 B. BUSINESS OF ISSUER 1. Principal Products and Services and Principal Markets The Company's principal business is the operation of a loyalty rewards program, and the operation of a travel and on-line shopping centre. A) Loyalty and Rewards Program. The Company currently operates a loyalty and rewards program known as Myskymiles. The program was previously known as Maximum Awards. Under the loyalty rewards program, consumers earn points by purchasing products and services offered by the Company and its program partners. Accumulated points then can be redeemed in order to acquire additional desired products or services from the same list of such items offered by the Company. The Company operates its program in Australia and has done so under the name Maximum Awards since October 2002. The Company changed the program name to"Myskymiles" in 2005. Prior to June 2004, the Company charged consumers a membership fee of $16.50 Australian for a one-year membership in the Company's program. However, in June 2004, the Company changed its program and now no longer charges a membership fee to consumers participating in the program. Consumers are allowed to sign up for membership for free. Any person can become a consumer member of the Company's loyalty program. Consumers can register by calling the Company's service center. Once a consumer becomes a member, the consumer maintains membership status as long as the consumer uses the program at least once every year. As the consumer member purchases products or services from participating merchant members, the consumer member accumulates points in the Company's program. Accumulated points have a monetary equivalency value which can be used by the consumer member to "purchase" products such as consumer goods, air travel or vacation packages. At this time, the Company's program is operated only in Australia and all dollar amounts discussed in connection with the program are in Australian dollars. 4 Members who purchase products or services from program participating merchants earn points for every dollar that the member spends. Points are awarded based on the type of service or product purchased. The number of points awarded per dollar spent will vary from merchant to merchant. For example, a member purchasing a television using a program participating merchant might earn ten points for every dollar the television costs. Those points are assigned a value of $0.01 per point. Purchasing a $500 television would then earn the member 5,000 points with a value of $50.00. In this example the merchant awards 10 points for every dollar spent. Different merchants will award different points per dollar spent. However, the monetary value assigned to the point always is the same. That monetary value is $0.01 per point. As a member purchases products or services, the merchant member records the purchases and on a monthly basis reports the purchases to the Company. The Company then invoices the merchant member for the dollar value associated with the points the consumer earned from the purchase, plus a fraction of that dollar value. The Company also tracks the total points earned by each member. When the merchant member pays the invoice, the Company retains the added fraction amount for the Company's expenses and profit.. If a consumer fails to make at least one purchase during each twelve month period, or if that such consumer who has accrued points and fails to apply the accrued points for redemption, the consumer's accrued points will be forfeited and the case reserved for such points will revert to the Company. The Company's Membership Rewards loyalty program allows members to earn points that can be redeemed for a broad range of travel and retail merchandise. Merchandise or travel which is redeemed by the member is offset against the members points account. The Company establishes reserves to cover the cost of future reward redemptions. The provision for the cost of member rewards is based upon points awarded that are ultimately expected to be redeemed by members and the current weighted-average cost per point of redemption. The ultimate points to be redeemed are estimated based on many factors, including a review of past behavior of members segmented by product, year of enrollment in the program, spend level and duration in the program. Past behavior is used to predict when current enrollees will attrite and to predict their ultimate redemption rate. In addition, the cumulative balance sheet liability for unredeemed points is adjusted over time based on actual redemption and cost experience with respect to redemptions. Because the liability is based on many different factors as described above, any change in the mix of those factors would have an effect on the liability for unredeemed points. Since inception of the program, the company has not made any adjustments to the basis of its method for accounting for unredeemed points. 5 A member can redeem earned points to purchase desired goods or services listed in the Company's catalog of available products and services. The Company subsidiary, Easy Shopper Direct, maintains a catalog of available goods and services which a member can obtain though a redemption of points. In addition, because one of the company's merchant members is a travel agency, Travel Easy, the consumer members can redeem their points for airline tickets or travel packages booked by the travel agent. Points may be redeemed on hotel accommodation, car hire, cruises, travel packages and even travel insurance. There are no blackout periods on air travel and availability of seats is the true availability. There are no artificial program restrictions such as those imposed by the airlines to protect their yield-per-seat figures. Maximum Awards also allows part-payment of redemption flights and travel products with cash. Points can be redeemed on a wide range of household products and virtually any travel product available in the market place, not just frequent flyer seats. Members may redeem those points on a range of household goods, certain services and on travel products available in the market. Points do not expire so long as the member remains active in the program, and points may also be transferred to other members with written authorization. To remain active, a consumer member must make at least one purchase of goods or services of points within a one-year period. If no purchase is made in that time frame, points are forfeited and funds accumulated for the monetary value of the points are transferred from the escrow to the Company. The Company intends to attract participating merchants by offering such merchants access to the Company's base of member consumers. While the Maximum Awards system is Internet-based, the Company also operates a call centre out of its offices in Brisbane. The call centre staff answers member questions and facilitates member points purchases. The Company uses commercial systems that have technological support available. Maximum Awards' operational system is based in a Sun Microsystems Solaris unit, run on UNIX. The website code is written in the PHP format and servers are PC-based, as are firewalls and back-up systems. Accounting and management work stations are Hewlett-Packard pavilion computers. The Company's call centre computers are IBM PCs while the telephone system is NEC PABX. Four full-time staff operate the call centre. The Company's web address is www.maximumawards.com which links to Global Business's web site, www.easyshopperdirect.com, where members are able to purchase goods. The awards website is myskymiles.com. 6 The benefit of the Company's program to consumer members is the reward of points for being loyal to merchant members. The benefit to merchant members is an increased usage of products and services by consumer members. The Company earns a profit on its program by adding a margin of profit to the dollar value of points for which merchant members are invoiced. B) Travel Agency Travel Easy Holidays Pty Ltd is a wholly-owned subsidiary of the Company. Travel Easy is a travel agency which provides travel agency services to its clients, most of which are located in Australia. The travel agency has entered into contract with both The Commonwealth Bank of Australia and HSBC as a preferred supplier of travel services to the Banks credit card holders. Travel Easy Holidays also provides travel redemption to cardholders of HSBC. Travel Easy Holidays does not operate as a store front travel agency, but instead derives its customer base from promotions made to bank cardholders, usually under special arrangements with airlines, tour groups, hotels chains and car rental groups. Travel Easy does not do any direct advertising or marketing, but instead relies on its bank customers to do the marketing for it. This is done by way of flyers and special promotions mailed out at the banks expense to cardholders by the bank. Travel Easy has a website which it uses to promote the company, and also makes use of the Company's rewards program, Myskymiles, as well as the online shopper website www.easyshopperdirect.com to create customer loyalty. C) Online Shopper. Global Business Group is a wholly-owned subsidiary of the Company and trades as Easy Shopper, an internet-based supplier of consumer goods. Members of the public can purchase consumers goods from Easy Shopper and, if they are members of Myskymiles, they can earn points for every dollar spent on goods purchased from Easy Shopper Direct. 7 Easy Shopper has entered into contract with the HSBC Bank in Australia as a preferred supplier of product to the Banks credit card holders. It is also an approved rewards redemption supplier for HSBC. The company does not do any direct advertising or marketing, but instead rely's on its bank customers to do the marketing for it. This is done by way of flyers and special promotions mailed out, at the banks expense, to cardholders by the bank. 2. Distribution methods of the products or services A) Rewards. Due to the intangible nature of the points earned that are the product of the Company, there is no distribution of the product. The description for redemption of points is described above under "Principal products or services and their markets." B) Travel Due to the intangible nature of the travel products sold to customers of the Company, there is no distribution of the product. Confirmation of the services delivered is completed through the issuance of a ticket or confirmation voucher which is presented by the client to the service provider. C) Online Shopper. Products sold to customers through the online shopping company are delivered by the company through the services of a national courier service. These products are normally shipped by the Company from its in-house stock on a next day basis. Larger goods such as appliances and TV units are normally shipped direct from the manufacturer to the customer using a national delivery service contracted by the Company 3. Status of any publicly announced new product or service None. 4. Competitive business conditions and the small business issuer's competitive position in the industry and methods of competition The Company faces substantial competition from the loyalty programs offered by retailers, credit card companies, hotel groups and airlines. Retailers in Australia offer loyalty programs to their customers. One such retailer is Coles Myer which operates its "FlyBuys" point program. Under that program every time one of its participating customers shows the customer's FlyBuys card and spends a minimum of $5.00 at any participating FlyBuys business, the customer earns FlyBuys points. Once the customer has earned enough points, the customer can redeem or exchange those points for a FlyBuys awards. Many credit card companies also offer point programs for cardholders. For years airlines have offered frequent flyer type programs to passengers. Such programs are run by corporations with substantially greater resources and experience than the company possesses. 8 The Company markets its reward product to both merchants/suppliers as well as consumers. Presently, the Company's marketing is limited to word of mouth from consumer member and advertising via the company's website. In the future the Company intends to utilize many different approaches, including point of sale materials, joint mailouts using merchants' data-bases, merchant awareness, news bulletins to members, media and radio advertising and graphically targeted letterbox drops and mailouts. Marketing to corporate users of the product will be done through selective mailouts and cold calls to corporate executives. The Company's travel and on-line shopper business is marketed through associations with the Commonwealth Bank of Australia and HSBC Bank Australia. The relationships with these banks allow the company to offer its products to the banks customers and cardholders through advertisements and special promotions listed in those banks monthly news letters and at the banks electronic teller and bank cash dispensing machines. 5. Sources and availability of raw materials and the names of principal suppliers None. 6. Dependence on one or a few major customers The Company loyalty business currently is dependent on five merchant members who pay the Company for points which consumer members accumulate. Two of these merchant members are wholly-owned subsidiaries of the Company which remit funds to the Company per transaction on the same general terms as third party merchants. All of the Company revenue comes from these five merchant members. Though the Company intends to expand is base of merchant members and differentiate sources of revenues, there can be no assurance that the Company will be successful in such expansion. The failure of the Company to expand its base of merchant members likely will result in the failure of the Company as a going concern. The Company's travel and online shopper businesses are both dependent on the preferred merchant status with the Commonwealth Bank of Australia and the HSBC bank of Australia. Both of these banks provide the Company with access to their monthly promotional activities. In addition, the Company relies on the goodwill generated through the members of its loyalty program. 9 7. Patents, trademarks, licenses, franchises, concessions, royalty agreements or labor contracts, including duration The Company has no patents, trademarks, franchises, concessions, royalty agreements or labor contracts. The only licenses the Company has obtained are those normally associated with computer software. 8. Government Approval The Company's loyalty program and online shopping business does not require any governmental approval. The Travel Agency requires licensing by government. 9. Effect of existing or probable governmental regulations on the business Generally, the Company's business is subject to no more governmental regulation than any other business might be. That is, the Company is required to obtain business licenses from the city government in which the Company operates in Australia and must file annual lists of its officers and directors with the state of Nevada, the Company's state of incorporation. The Company's wholly-owned travel agent subsidiary, Travel Easy, is required to register as a travel agency with the state government in which the Company operates in Australia. Such registration is valid for a period of three years and then must be renewed. Renewal involves the filing of a renewal application and the payment of applicable fees, none of which are of substantial expense to the Company. The Company is unaware of any probable governmental regulation which could impact on the Company's business. It is possible that regulation unforeseen by the Company could be promulgated which could unfavorably impact the Company's business. For example, the Company believes that any governmental regulation concerning the taxation of benefits accumulated in loyalty programs could have a serious negative impact on the Company's business. The probability of any such tax related regulation is unknown by the Company and the Company cannot predict such probability with any degree of reliability or certainty. 10 10. Estimate of the amount spent during each of the last two fiscal years on research and development activities, and if applicable the extent to which the cost of such activities are borne directly by customers The Company incurred research and development costs through December 31, 2006 amounting to $100,691. Such expenses included internet development, salaries, advertising and travel. Such expenses are passed on to the Company's merchant members. Such members pay for such expenses when the Company adds a margin of profit to the dollar value of points for which merchant members are invoiced. 11. Costs and effects of compliance with environmental laws (federal, state and local) None. 12. Number of total employees and number of full time employees The Company and its subsidiaries employs a total of six individuals as part of its operations. Two individuals form management and four individuals serve as sales and call centre staff in the Company's Brisbane operations. Management does not anticipate changes in the number of employees over the next approximately six (6) months. ITEM 2. DESCRIPTION OF PROPERTY A. LOCATION, CONDITION OF PROPERTY, LIMITATIONS ON OWNERSHIP The Company's operational offices are located at 326 Old Cleveland Road, Coorparoo Queensland 4151, Australia. The office is fully equipped as a call centre and the phone system can be simultaneously used by up to 32 operators. The Company does not anticipate expanding it facilities for the remainder of 2006. Business, management and creative functions will be performed in the Company's Brisbane facility. Printing, mailing, warehousing, fulfillment and some design is outsourced. The Company is not currently paying rent for the premises which are owned by a former director of the Company. The Company is planning to move its premises to a store front location so that it can attract passing traffic to increase its revenue. B. INVESTMENT POLICIES Management of the Company does not currently have policies regarding the acquisition or sale of assets primarily for possible capital gain or primarily for income. The Company does not presently hold any investments or interests in real estate, investments in real estate mortgages or securities of or interests in persons primarily ged in real estate activities. C. DESCRIPTION OF REAL ESTATE AND OPERATING DATA Refer to Item 2. A. of this Part I. for a description of the property leased to the small business issuer. There Company is planning to relocate its premises to a store front location so that it can attract passing sales revenue. The property is covered by insurance. 11 ITEM 3. LEGAL PROCEEDINGS The Company is not currently involved in any legal proceedings, nor does it have knowledge of any threatened litigation. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS The Company received written shareholder approval on 21 October 2006 to reverse split the Company's common shares by a ratio of 15:1. The Company's authorized share capital remains unchanged. The reverse split has not yet become effective. PART II ------- ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS A. MARKET INFORMATION 1. The common stock of the Company is currently trading on the OTC Bulletin Board. The Company's stock first traded on The OTC Bulletin Board on Nov 2, 2006. Trades of the Company's stock over the previous quarters are as follows: Quarter High Trade Low Trade ------- ---------- --------- December 2006 $0.51 $0.32 March 2007 2.50 0.08 There is a limited market for the company's stock. 2. (i) There is currently no Common Stock that is subject to outstanding options or warrants to purchase or securities convertible into, the company's common stock. (ii) On May 10, 2007 there were 36,832,000 shares of the company's stock issued and outstanding, of which 19,157,900 shares are free trading or could be sold under Rule 144 under the Securities Act of 1933 as amended or that the registrant has agreed to register for sale by security holders. Rule 144 provides an exemption and permits the public resale of restricted or control securities if a number of conditions are met, including how long the securities are held, the way in which they are sold, and the amount that can be sold at any one time. A shareholder who wants to sell restricted or control securities to the public, must follow the conditions set forth in Rule 144. The rule is not the exclusive means for selling restricted or control securities, but provides a "safe harbor" exemption to sellers. The rule's five conditions are summarized as follows: 12 1) Holding Period. Before a shareholder may sell restricted securities in the marketplace, the shareholders must hold them for at least one year. The one-year period holding period begins when the securities were bought and fully paid for. The holding period only applies to restricted securities. Because securities acquired in the public market are not restricted, there is no holding period for an affiliate who purchases securities of the issuer in the marketplace. But an affiliate's resale is subject to the other conditions of the rule. Additional securities purchased from the issuer do not affect the holding period of previously purchased securities of the same class. If a shareholder purchased restricted securities from another non-affiliate, the shareholder can tack on that non-affiliate's holding period to the shareholder's holding period. For gifts made by an affiliate, the holding period begins when the affiliate acquired the securities and not on the date of the gift. In the case of a stock option, such as one an employee receives, the holding period always begins as of the date the option is exercised and not the date it is granted. 2) Adequate Current Information. There must be adequate current information about the issuer of the securities before the sale can be made. This generally means the issuer has complied with the periodic reporting requirements of the Securities Exchange Act of 1934. 3) Trading Volume Formula. After the one-year holding period, the number of shares a shareholder may sell during any three-month period can't exceed the greater of 1% of the outstanding shares of the same class being sold, or if the class is listed on a stock exchange or quoted on Nasdaq, the greater of 1% or the average reported weekly trading volume during the four weeks preceding the filing a notice of the sale on Form 144. Over-the-counter stocks, including those quoted on the OTC Bulletin Board and the Pink Sheets, can only be sold using the 1% measurement. 4) Ordinary Brokerage Transactions. The sales must be handled in all respects as routine trading transactions, and brokers may not receive more than a normal commission. Neither the seller nor the broker can solicit orders to buy the securities. 5) Filing Notice With the SEC. At the time a shareholder places the shareholder's order, the shareholder must file a notice with the SEC on Form 144 if the sale involves more than 500 shares or the aggregate dollar amount is greater than $10,000 in any three-month period. The sale must take place within three months of filing the Form and, if the securities have not been sold, you must file an amended notice. 13 If a shareholder is not an affiliate of the issuer and has held restricted securities for two years, the shareholder can sell them without regard to the above conditions. B. HOLDERS As of May 10, 2007, the company had approximately 175 stockholders of record. C. DIVIDENDS The company has not paid any dividends to date. In addition, it does not anticipate paying dividends in the foreseeable future. The Board of Directors of the company will review its dividend policy from time to time to determine the desirability and feasibility of paying dividends after giving consideration to the company's earnings, financial condition, capital requirements and such other factors as the Board may deem relevant. D. SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS None. E. RECENT SALES OF UNREGISTERED SECURITIES, USE OF PROCEEDS FROM REGISTERED SECURITIES On June 21, 2005, the Company issued 5,000 shares of its common stock to L Sullivan in consideration for $0.50 per share paid in cash. Such shares were issued in reliance on the exemption from registration contained in Section 4(2) of the Securities Act of 1933, as amended. On October 10, 2005, the Company issued 1,000,000 shares of its common stock to Laddcap Value Advisors and 500,000 shares of its common stock to Shadow Creek Capital LP. All stock was issued in consideration for $0.10 per share paid in cash. Such shares were issued in reliance on the exemption from registration contained in Section 4(2) of the Securities Act of 1933, as amended. On November 1, 2005, the Company issued 250,000 shares of its common stock to D Sommerfield, 250,000 shares of its common stock to W Spiegal, 2,000,000 shares of its common stock to W Pollack, 250,000 shares of its common stock to S Distefano, 250,000 shares of its common stock to D Allen all issued in consideration for $0.10 per share paid in cash. In addition, the Company issued 500,000 shares of its common stock to P C Consulting as compensation for services rendered in raising capital for the Company. Such shares were issued in reliance on the exemption from registration contained in Section 4(2) of the Securities Act of 1933, as amended. 14 On November 21, 2005, the Company issued 150,000 shares of its common stock to M Douglas, 75,000 shares of its common stock to J Calverley, 100,000 shares of its common stock to B Aelicks, and 250,000 shares of its common stock to Axino All stock was issued in consideration for $0.10 per share paid in cash. Such shares were issued in reliance on the exemption from registration contained in Section 4(2) of the Securities Act of 1933, as amended. On November 30, 2005, the Company issued 20,000 shares of its common stock to CreativEyedentity, 75,000 shares of its common stock to F Giarraputo and 250,000 shares of its common stock to M Winborn. All stock was issued in consideration for $0.10 per share paid in cash. Such shares were issued in reliance on the exemption from registration contained in Section 4(2) of the Securities Act of 1933, as amended. On December 12, 2005, the Company issued 500,000 shares of its common stock to Michael Sullivan, a director of the Company and 50,000 shares of its common stock to R Tartagalia in consideration for $0.10 per share paid in cash. Such shares were issued in reliance on the exemption from registration contained in Section 4(2) of the Securities Act of 1933, as amended. On December 21, 2005 the Company issued 50,000 shares of its common stock to Gladjay Pty Ltd and 50,000 of its common shares to R Tartagalia in consideration for $0.10 per share paid in cash. Such shares were issued in reliance on the exemption from registration contained in Section 4(2) of the Securities Act of 1933, as amended. On January 19, 2006, the Company issued 100,000 shares of its common stock to D Mosher, and 200,000 shares of its common stock to J Briner. All stock was issued in consideration for $0.10 per share paid in cash. Such shares were issued in reliance on the exemption from registration contained in Section 4(2) of the Securities Act of 1933, as amended. On February 16, 2006, the Company issued 100,000 shares of its common stock to C Podrick in consideration for $0.50 per share paid in cash. Such shares were issued in reliance on the exemption from registration contained in Section 4(2) of the Securities Act of 1933, as amended. On December 15, 2006, the Company issued 225,000 shares of its common stock to John Briner in consideration for legal services valued at $22,500.00 provided to the Company. Such shares were issued in reliance on the exemption from registration contained in Section 4(2) of the Securities Act of 1933, as amended. On March 21, 2007, the Company issued 4,105,100 Common shares to The Winterman Group Limited for the conversion by Winterman Group Limited of its loan in the Company. Such shares were issued in reliance on the exemption from registration contained in Section 4(2) of the Securities Act of 1933, as amended. On March 21, 2007, the Company accepted the return of 1 million preferred shares back to treasury. On March 28, 2007, the Company issued 60,000 Common shares to The Winterman Group Limited in consideration for $11,500 received in cash. Such shares were issued in reliance on the exemption from registration contained in Section 4(2) of the Securities Act of 1933, as amended. On May 14, 2007, the Company agreed to acquire 100% of the issued and outstanding share capital of Plays On The Net Plc through the issue of 12 million common shares, (post reverse split) of the Company's common stock. The Company expects to complete the transaction before May 31, 2007. 15 ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION A. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION The following discussion and analysis should be read in conjunction with our Consolidated Financial Statements and the Notes to Consolidated Financial Statements contained in this Annual Report. OVERVIEW 1. Relevant Industry-Wide Factors Management believes that the industry in which the Company competes is impacted by economic factors such as fluctuations in prevailing interest rates. In this regard, increasing interest rates may negatively impact consumer spending. Decreased consumer spending would adversely impact the Company by reducing the accumulation of points by the Company's consumer members. The Company notes that increases in the prime lending rate could adversely impact the Company's ability to generate revenue. It is important to note that management cannot predict with any degree of accuracy how interest rates in the United States or Australia will vary in the future. Management notes that approximately half of the point redemptions its consumer members make are for travel. In addition, the Company's main source of revenue during 2006 was from travel commissions. A consumer's willingness to purchase travel products is impacted by not only general economic factors, but also impossible-to-predict factors such as terrorism and outbreaks of disease. For example, international terrorism in 2001 and the outbreak of SARS in 2003 decreased the demand for air travel. While a reduction in point redemption would not have a negative impact on the Company, decreased travel could impact a consumer member's accumulation of points in travel programs offered by merchant members. Such reductions could have a negative impact on the company's revenue. Such factors are impossible to predict and represent an unknowable threat to the Company's business. 2. How the company Generates Revenue A) Rewards Program. The Company generates revenue by charging merchant members a dollar value per point for every point a consumer member earns with a merchant. The Company adds a margin to that amount and that margin constitutes the Company's revenue on each such transaction. Such margin is negotiated separately with each merchant and its size will generally reflect the anticipated dollar and transaction with such merchant where the Company merger will be reduced in higher volume relationship. 16 B) Travel The Company generates revenue from travel operations through commissions paid by travel service providers. These commissions vary between 2% for some domestic airlines to as high as 20% for some tour vacations. In some instances, the Company also receives a booking fee from the customer. C) Online Shopper Revenue for the online shopper operation is derived through the sale of product to members and the general product. The Company receives a markup margin of between 5% and 25% on the cost of the goods sold. 3. Going Concern Assumption The Company has sustained operating losses since inception. In addition, the working capital of the Company is not sufficient to meet its planned business objectives and the Company's continuation as a going concern is uncertain and dependent upon successfully bringing its services to market, achieving future profitable operations and obtaining additional sources of financing to sustain its operations, the outcome of which cannot be predicted at this time. In the event the Company cannot obtain the necessary funds, it will be necessary to delay, curtail or cancel the further development of its products and services. Although the business plan indicates profitable operation in the coming year, these profits are contingent upon completing and fulfilling contracts with various providers of goods and services throughout the world to provide the Company with a cashflow to sustain operations. The Company intends to address these concerns by: o Raising sufficient working capital via private placements of its shares of common stock. In 2006, the Company raised approximately $80,000 via private placement of its common stock and through the issue of convertible debt.; o Increasing its base of consumer rewards members via advertising paid for out of revenues and funds raised from the sale of capital stock; o Increasing its base of merchant members via advertising paid for out of revenues and funds raised from the sale of capital stock; o Increasing consumer member utilization of the company's program by making special product offers provided by merchant members. o Developing new bank channels whereby sale of points will be based on spending volume of the bank's credit and debit card customers. o Increasing travel and online shopper sales through strategic partnerships with banks. 17 There can be no assurance that the Company's efforts in this regard will be successful. If the Company is unsuccessful in such efforts, it is likely the Company's business will fail and the Company will cease operations. 4. Challenges, Risks and Uncertainties The Company's business is subject to several challenges, risks and uncertainties, including, but not limited to, the following: a. The Company has limited operating history, revenue and only minimal assets. The Company only has operated its awards program since October of 2002. The Company's revenues and earnings from operations are limited and the Company has no significant assets or financial resources. The Company has operated at a loss and the Company may generate additional net operating losses. There can be no assurance that the Company will be successful. b. The Company's business plan is speculative. The Company's business plan is based on management's belief that the Company can operate successfully in its chosen industry. This belief is speculative and is based on management's experience alone. The Company has not employed economic experts to analyze the Company's position in the market or to analyze the effect of market conditions on the Company's performance. The lack of such information leaves the Company dependent upon management's subjective beliefs of the Company's ability to succeed. c. While the Company currently trades on the NASDAQ bulletin board, there is no guarantee that the Company will remain listed on the NASDAQ bulletin board. If the Company does not have the resources to maintain required filings, it will loose its listing on the NASDAQ bulletin board and delist to the Pink Sheets. d. The Company may be unable to raise additional capital to meet capital expenditure needs if its operations do not generate sufficient funds to do so. The Company's business is expected to have continuing capital expenditure needs. While management anticipates that the Company's operations will generate sufficient funds to meet its capital expenditure needs for the foreseeable future, the Company's ability to gain access to additional capital, if needed, cannot be assured, particularly in view of competitive factors and industry conditions. Any additional capital raised through the sale of equity may dilute the ownership percentage of holders of the Company's common stock. e. If the Company is unable to retain current management, its business operations could be adversely affected. The Company's success and future prospects depend upon the continued contributions of its current management. There can be no assurances that the company would be able to find qualified replacements for these individuals if their services were no longer available. The loss of services of one or more members of current management could have a material adverse effect on the company's business. 18 RESULTS OF OPERATIONS Results for the year ended December 31, 2006. Revenues for the year ended December 31, 2006 increased by $164,946 from $329,927for the year ended December 31, 2005 to $494,873 for the year ended December 31, 2006. The increase was due to an increase in Travel sales of consumer rewards revenue of $115,234, an increase in Global Business online shopping income of $51,881 and a decrease in Rewards income of $2,169. The increase in Travel and Global Business revenue was the result of preferred status contracts achieved with HSBC and The Commonwealth Bank. The reduction in Rewards revenue was due to the Company focusing on its Bank contracts and ignoring the inhouse rewards program. Cost of sales for the year ended December 31, 2006 amounted to $239,250, resulting in gross profit of $255,623.. This compares to cost of sales for the year ended December 31, 2005 of $114,871, and a gross profit of $215,056. The cost of sales margin increased during the year from 34.8% for 2005 against 48.3% for 2006. The increase is mainly due to the increase in travel commission income which has limited cost of sales expense. Overhead costs for the year increased by $176,171 from $914,007 for the year ended December 31, 2005 to $1,090,178 for the year ended December 31, 2006. The increase in overhead costs was due to an increase in salaries and personnel costs of $123,193, an increase in advertising costs of $38,642, an increase general admin costs of $119,778 and an increase in interest expense of $27593 offset by a reduction in legal expense of $58,989, premises of $21,721 and Travel of 24,732. The increase in salaries is mainly due to the employment of a CFO and COO in Australia, offset by a reduction ($50,000) in directors salaries. The increase in advertising costs was due to promotions undertaken through our bank partners. The increase in general admin is mainly due to costs associated with running a merchant account for credit cards which was previously undertaken by our travel suppliers. The decrease in legal costs was due to the Company not having to incur registration statement expenses, while the reduction in premises costs was due to the Company not having to pay rent over the last four months of the year as it was using premises provided by a former director of the Company.. Travel reduced due to less travel incurred in setting up European operations. We incurred a net loss of $869,485 or $(0.40) per share based on 2,158,734 weighted average shares outstanding for the year needed December 31, 2006 compared to a loss of $704,117 or $(0.40) per share based on 1,771,585 weighted average shares outstanding for the year ended December 31, 2005. The earnings per share calculation is calculated after the reverse split. 19 LIQUIDITY AND CAPITAL RESERVES The Company has operated its loyalty and rewards program in Australia since October 2002 and intends to expand its business by developing online programs where it can sell its products using the internet. The company anticipates that this expansion will be funded principally through the issuance of equity or debt securities or by entering into other financial arrangements, including relationships with corporate and other partners, in order to raise additional capital. Depending upon market conditions, the company may not be successful in raising sufficient additional capital for it to achieve its business objectives. In such event, the business, prospects, financial condition, and results of operations could be materially adversely affected. Initial expenses for the company will include further developing the online shopping sites and leasing suitable facilities in Europe and North America; purchasing or leasing sufficient operating equipment, primarily computers and phone systems; hiring sufficient staff for the company's operations; and, producing sufficient promotional materials. There is no guarantee that the company will be successful in expanding its operations to non-Australian markets or that if it does that its marketing and sales endeavors outside Australia will be successful. The company's operation in Brisbane, Queensland, Australia currently employs approximately 6 people. The company does not expect to expand its Australian operations. If the company is successful in raising capital, the company plans to spend an additional $1,000,000 during the next 12 months in expanding its operations in North America and Europe, through the expansion of its customer base, establishing new merchants and expanding its product base. Specifically, such spending shall include advertising in media, both print and electronic, direct mail marketing and consumer member promotions. In order to meet its cash requirements for the next twelve months, the Company plans to raise capital through private placements and through working capital generated from operations. There is no guarantee that the Company will be successful in its attempt to raise capital sufficient to meet its cash requirements for the next twelve months. If the company is not successful in its effort to raise sufficient capital to meet its cash requirements, the business will fail and the company will cease to do business. Significant Components of Operating Expense & Budgeted Expenses The Company's significant components of operation expense and their amounts during the year ended are: (1) costs associated with its marketing materials, (2) advertising costs, (3) lease expenses (4) costs of staff. The company has incurred expenses to produce and print its marketing materials send as information leaflets, letter box brochure and magazine inserts. Advertising cost will be incurred in the future and will be for print media advertising of the Company's program. The Company's lease expenses are comprised of its lease on its computer equipment and the lease on its office facilities. Costs of staff include salaries for the company's Call Centre staff and salary for the Company's Chief Executive Officer, Chief Operating officer for Australia and Office Manager. 20 CRITIAL ACCOUNTING POLICIES 1. Nature of Revenue Generating Activities The Company generates revenue by charging merchant members a dollar value per point for every point a consumer member earns with a merchant. The Company adds a margin to that amount and that margin constitutes the company's revenue on each such transaction. Revenue is recognized when the Company actually receives payment from merchant members and not when the merchant member is invoiced for such points. The Company generates revenue from travel operations through commissions paid by travel service providers. These commissions vary between 2% for some domestic airlines to as high as 20% for some tour vacations. In some instances, the Company also receives a booking fee from the customer. Online Shopper Revenue for the online shopper operation is derived through the sale of product to members and the general public. The Company receives a markup margin of between 5% and 25% on the cost of the goods sold 2. Identification of Customers The Company has two types of members: 1) merchant members; and 2) consumer members. Merchant members are providers of goods and/or services and participate in the Company's program by awarding customers points in the program for purchases of goods and/or services from the merchant member. Consumer members earn points in the Company's program by purchasing goods and services from merchant members. Members are recognized by the company when they register with the company. Travel and on-line shoppers customers could be customers from CBA and HSBC banks, consumers members of Myskymiles or members of the public. 3. Channels of Membership Both merchant members and consumer members register with the Company by calling the Company's call centre. B. OFF-BALANCE SHEET ARRANGEMENTS The Company has no off-balance sheet arrangement. 21 ITEM 7. FINANCIAL STATEMENTS Attached hereto and filed as a part of this Annual Report on Form 10-KSB are our Consolidated Financial Statements, beginning on page F-1. ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE During the most recent two (2) fiscal years, and any subsequent interim period, there have not been any disagreements with the company's former accountant on any matter of accounting principles or practices, financial statements disclosure, or auditing scope or procedure, which disagreements, if not resolved to the satisfaction of the former accountant, would have caused it to make a reference to the subject matter of the disagreements in connection with its report. ITEM 8A. CONTROLS AND PROCEDURES A. DISCLOSURE CONTROLS AND PROCEDURES As of the date of the filing of this report, the Company evaluated the effectiveness of the design and operation of its disclosure controls and procedures. The Company's disclosure controls and procedures are the controls and other procedures that it designed to ensure that it records, processes, summarizes and reports in a timely manner the information it must disclose in reports that it files with or submits to the Securities and Exchange Commission. Maxwell Thomas, the Company's Chief Executive Officer and Enzo Taddei, a director of the Company, supervised and participated in this evaluation. Based on this evaluation, Messrs. Thomas and Taddei concluded that, as of the date of their evaluation, the Company's disclosure controls and procedures were effective. B. CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING Since the date of the evaluation described above, there have not been any significant changes in the Company's internal accounting controls or in other factors that could significantly affect those controls. Maxwell Thomas, the Company's Chief Executive Officer and Chief Financial Officer of the Company, supervised and participated in this evaluation. Based on this evaluation, Mr.Thomas concluded that, as of the date of the evaluation, the Company's disclosure controls and procedures were effective. ITEM 8B. OTHER INFORMATION None. 22 PART III -------- ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT A. DIRECTORS AND EXECUTIVE OFFICERS The names, ages and positions of the company's Directors and Executive Officers are as follows: Maxwell Thomas Age: 45 CEO, CFO and Director Served in both capacities since December 2003. Term as a director: until resignation or replacement Enzo Taddei Age: 32 Director Served as a director since March 2007. Term as a director: until resignation or replacement 1. Work Experience Maxwell A. Thomas, Age 45 (Chief Executive Officer and Chief Financial Officer). Mr. Thomas has been involved in the European and Australian travel industries for more than 20 years. Having worked in the travel industry in Europe for 20 years, Mr. Thomas returned to Australia in 1998 when he established a consultancy business. Over the last 5 years he has advised Australian travel companies entering international markets. Specifically, Mr. Thomas worked for Flight Centre LTD ASX FTL from 1998 to 1999 as a Special Projects Manager. From 1999 to 2000, Mr. Thomas worked as the Director of Marketing for Pangaea Corporation. From 2000 until 2002 he has developed the loyalty program which is the basis of the Company's program. From 2002 to present, he has actively worked at and promoted the Company's business. Enzo Taddei holds degrees in economics from the University of Malaga, Spain, a degree in Business Administration from the University of Wales, UK, and a Master Degree in Taxation and fiscal related subjects from the University of E.A.D.E in Malaga, Spain. He was previously the sole shareholder and director of a private accountancy firm, Adesso Res Asesores in Spain, which he operated for eight years between 1999 and 2006. Prior to setting up his own accountancy company, Enzo worked for a firm of chartered accountants based in Marbella, Malaga whilst completing his BBA degree. He is fluent in English, Spanish and Italian. 23 C. FAMILY RELATIONSHIPS None. D. INVOLVEMENT ON CERTAIN MATERIAL LEGAL PROCEEDINGS DURING THE LAST FIVE YEARS 1. No bankruptcy petition has been filed by or against any business of which a director, person nominated to become a director, executive officer, promoter or control person of the Company was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time. 2. No director, officer, significant employee or consultant has been convicted in a criminal proceeding, exclusive of traffic violations. 3. No director, officer or significant employee has been permanently or temporarily enjoined, barred, suspended or otherwise limited from involvement in any type of business, securities or banking activities. 4. No director, officer or significant employee has been convicted of violating a federal or state securities or commodities law. E. COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT (a) Section 15(a) Beneficial Ownership Reporting Compliance: Maxwell Thomas, as officers and director of the Company, as well as trustee of the Vieles Geld Trust, was required to file an Initial Statement of Beneficial Ownership of Securities on Form 3 at the time of the registration of the Company's securities under Section 12(g) of the Exchange Act. These Forms 3 were not timely filed. Mr Taddei does not hold any stock in the Company. G. CODE OF ETHICS The Company has adopted a Company Code of Ethics which is attached as an exhibit hereto. 24

ITEM 10. EXECUTIVE COMPENSATION A. ALL COMPENSATION COVERED AND PERSONS COVERED Name of Individual or Capacities in Which Annual Identity of Group Remuneration was Recorded Compensation --------------------- ------------------------- ------------ Maxwell A. Thomas Chief Executive Officer $150,000 Enzo Taddei Director $ - Mr. Thomas devotes his full time to the business of the Company and his annual compensation reflects that time commitment. There were no arrangements pursuant to which any officer or director of the Company was compensated for the period prior to January 1, 2004 for any service provided as an Officer or Director. The Company has no arrangement to compensate directors for their services as directors. B. Remuneration of Executive Officers Summary Compensation Table ---------------------------------------------------------------- -------------------------------------------------- Annual Compensation Long Term compensation ---------------------------------------------------------------- -------------------------------------------------- (a) (b) (c) (d) (e) (f) (g) (h) (i) Name and Principal Fiscal Salary Bonus Other Restricted Securities LTIP All Other Position year Annual Stock Underlying Payouts Compensation Compensation Awards Options --------------------- -------- ---------- ------- -------------- ------------ ------------ --------- -------------- Maxwell Thomas, CEO 2006 $150,000 0 0 0 0 0 0 and CFO 2005 $200,000 0 0 0 0 0 0 2004 $0 0 0 0 0 0 0 --------------------- -------- ---------- ------- -------------- ------------ ------------ --------- -------------- Michael Sullivan, 2006 $0 0 0 0 0 0 0 Employee (and former 2005 $10,000 0 0 0 0 0 0 Director) 2004 $0 0 0 0 0 0 0 --------------------- -------- ---------- ------- -------------- ------------ ------------ --------- --------------

25 C. OPTION/SAR GRANTS TABLE Option/SAR Grants in Last Fiscal Year Individual Grants Number of Securities % of Total Underlying Options/SARs Options/ Granted to SARs Employees in Exercise or Name Granted (#) Fiscal Year Base Price ($/Sh) Expiration Date ---- ----------- ------------ ----------------- --------------- N/A N/A N/A N/A N/A D. AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION/SAR VALUES Value of Number of Securities Unexercised Shares Underlying Unexercised In-the-Money Acquired on Value Options/SARs at Options/SARs Name Exercise Realized ($) Year-End (#) at Year-End ($) ---- -------- ------------ ------------ --------------- N/A N/A N/A N/A N/A E. LONG-TERM INCENTIVE PLANS-AWARDS IN LAST FISCAL YEAR Long-Term Incentive Plan ("LTIP") Awards Table Estimated Future Pyout under Non-Stock Price-Based Plans ------------------------------- Performance or Other (b) Number of Period Until Shares, Unite or Maturation Threshold Target Maximum (a) Name Other Rights (#) or Payout ($ or #) ($ or #) ($ or #) -------- ---------------- --------- --------- -------- -------- N/A N/A N/A N/A N/A N/A F. COMPENSATION OF DIRECTORS The Company does not and has no arrangement to compensate directors for their services as directors. G. EMPLOYMENT AGREEMENTS The Company currently has employment agreements with its executive officers, however, only the agreement between the Company and its chief executive officer, Maxwell Thomas, is in writing. All executive officers of the Company prior to January 1, 2005 have not drawn a formal salary from the company. Over the next twelve (12) months, however, each Executive Officer is expected to draw the following annual compensation during 2007. The Company does not currently have an employee stock option plan. 26 Effective January 1, 2006, the Company has entered into an employment agreement with Mr. Thomas. Under the terms of this agreement the Company has agreed to employ Mr. Thomas as the chief executive officer of the Company until such time as either the Company or Mr. Thomas terminates such employment. Mr. Thomas' base salary under the agreement is $150,000 per year, an amount which is subject to review after each year the agreement is in effect. The Company also has agreed to pay Mr. Thomas' business related expenses, provide health and dental insurance to Mr. Thomas and pay Mr. Thomas for vacation time as the board of directors and Mr. Thomas agree. ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS The Company does not have any equity compensation plan. A. Security Ownership of Management and Certain Beneficial Owners The following table sets forth information as of the date of this Registration Statement with respect to the beneficial ownership of both the common and preferred shares of stock of the company concerning stock ownership by (i) each Director, (ii) each Executive Officer, (iii) the Directors and Officers of the company as a group and (iv) each person known by the company to own beneficially more than five percent (5%) of the Common Stock. Unless otherwise indicated, the owners have sole voting and investment power with respect to their respective shares. Title of Name and Address of Amount of shares Percent Voting Class Beneficial Owner of Shares held by Owner of Class Power ----- -------------------------- ------------- -------- ------ Common Cutan Trust 3,480,000 9.4% 9.4% 16 Moorgate Street Macgregor Queensland 4109 QLD Australia Common Michael Sullivan 500,000 1.3% 1.3% 16 Moorgate Street Macgregor Queensland 4109 QLD Australia Common Vieles Geld Trust 9,539,000 25.9% 25.9% 16 Estasis Street The Gap Queensland 4061 Australia Common Lorraine Krueger 1,740,000 4.7% 4.7% and Klaus Krueger, JTTEN Level 1 164 Wharf St. Brisbane 4000 QLD Australia 27 Common Maxjam Pty Ltd 2,609,000 7.1% 7.1% 38 Edgewood David Ave. Waitara 2077 NSW Australia Common Winterman Group 4,105,100 11.1% 11.1% 82 Avenue Road Toronto Ontario, Canada Total 21,973,100 59.5% 59.5% SECURITY OWNERSHIP OF MANAGEMENT Title of Name and Address of Amount of shares Percent Voting Class Beneficial Owner of Shares held by Owner of Class Power ----- -------------------------- ------------- -------- ------ Common Maxwell A. Thomas 9,539,000 (1) 25.9% 25.9% CEO, Director 16 Extasis Street The Gap Queensland 4061 QLD Australia Common Officers, Directors 9,539,000 25.9% 25.9% as a group ----------------- (1) Mr. Thomas is the trustee of the Vieles Geld Trust and the 9,539,000 shares reported by his name under the Security Ownership of Management section are the same 9,539,000 shares owned by The Vieles Geld Trust and reported in the 5% Shareholders section. (2) Mr. Sullivan is the trustee of the Cutan Trust and the 3,995,000 shares reported by his name under the Security Ownership of Management section comprise 3,480,000 shares owned by the Cutan Trust, 500,000 common shares held in the name of Michael Sullivan and 15,000 common shares of the Company held by Poste Haste Pty Ltd a corporation controlled by Mr Sullivan. Maxjam Pty Ltd is owned and operated by Tony Gerrard of Sydney, Australia. Mr. Gerrard is not otherwise related to the company. 28 ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS. a. Related Transactions 1. The December 9, 2003 Maximum Awards Pty Ltd transaction On December 9, 2003, the Company entered into an Exchange Agreement with Maximum Awards Pty Ltd, an Australian company. At that time, Maximum Awards Pty Ltd was owned by thirty three shareholders of the Company, including persons who are directors or officers of the Company, security holders owning 5% or more of the Company's common stock, security holders owning 5% or more of the Company's preferred shares of stock or are member of the immediate family of such persons. As a result of this Agreement, the Company acquired 100% of the issued and outstanding ownership of Maximum Awards Pty Ltd., in exchange for 22,000,000 shares of common stock and 1,000,000 Class A preferred of Maximum Awards Inc. The property acquired consists of cash, a long-term lease for the Company's facility in Brisbane and all personal and intellectual property associated with the operations of the Maximum Awards program. The 22,000,000 shares of stock were registered in the names of the shareholders of Maximum Awards Pty Ltd in proportion to their respective ownership interest in Maximum Awards Pty Ltd. As part of this transaction, the following shares were issued to security holders owning 5% or more of the Company's preferred shares of stock including persons who are member of the immediate family of such persons including persons who are directors or officers of the Company, security holders owning 5% or more of the Company's common stock,: Number of Shares Number of Shares Name of Common Stock of Preferred Stock ---- ---------------- ------------------ Max Thomas 1,000,000 Lorraine & 1,740,000 Klaus Krueger Vieles Geld Trust 9,393,000 Maxjam Pty Ltd 2,609,000 Raymond Gerrard 1,200,000 Cutan Trust 3,480,000 Post Haste Pty Ltd 15,000 Lorraine Krueger is the sister of Maxwell Thomas, the Company's chief executive officer. Klaus Krueger is the brother-in-law of Maxwell Thomas, the Company's chief executive officer. Maxwell Thomas, the Company's chief executive officer, is the trustee of the Vieles Geld Trust. Maxjam Pty Ltd owns 5% or more of the Company's issued and outstanding shares of common stock. Maxjam Pty Ltd is owned and operated by Tony Gerrard of Sydney, Australia. Mr. Gerrard is not otherwise related to the Company. The Company's chief executive officer, Maxwell Thomas, has no relationship with, or ownership or control of, Maxjam Pty Ltd. Any similarity in the names is purely coincidence. Raymond Gerrard is the father-in-law of Maxwell Thomas, the Company's chief executive officer. Raymond Gerrard is not related to Tony Gerrard, though they have the same last name. Michael Sullivan, a director of the Company, is the trustee of the Cutan Trust, and controls Post Haste Pty Ltd as director and owner of 100% of the shares of Post Haste Pty Ltd. The preferred shares were returned to Treasury on March 21, 2007. 2. Employment Agreement with, and shares issued to, Maxwell Thomas 29 Effective January 1, 2006, the Company entered into an employment agreement with Maxwell Thomas, the Company's chief executive officer. Under the terms of this agreement the Company agrees to employ Mr. Thomas as the chief executive officer of the Company until such time as either the Company or Mr. Thomas terminate such employment. Mr. Thomas' base salary under the agreement is $150,000 per year, an amount which is subject to review after each year the agreement is in effect. The Company also has agreed to pay Mr. Thomas' business related expenses, provide health and dental insurance to Mr. Thomas and pay Mr. Thomas for vacation time as the board of directors and Mr. Thomas agree. As part of the company's acquisition of Maximum Awards Pty Ltd, 9,539,000 share of the Company's common stock were issued to the Vieles Geld Trust and 1,000,000 of the Company's Class A preferred stock were issued to Maxwell Thomas. The preferred stock was returned to treasury in March 2007. 3. Shares issued to, Michael Sullivan As part of the company's acquisition of Maximum Awards Pty Ltd, 3,480,000 share of the company's common stock were issued to the Cutan Trust and 15,000 of the Company's common shares were issued to Poste Haste Pty Ltd.. Mr. Sullivan is the trustee for the Cutan Trust and the sole shareholder of Poste Haste Pty Ltd and therefore controls the voting of such shares. In December 2005, the The Company issued 500,000 common shares to Mr Sullivan for a cash consideration of $50,000. Mr Sullivan resigned as a director of the Company on 21 March 2007. 4. The June 1, 2004 Travel Easy and Global Business Transactions On June 1, 2004, the Company acquired 100% of the issued and outstanding shares of Travel Easy Holidays Pty Ltd and Global Business Group Pty Ltd. These corporations are involved in the travel industry and mail order industries, respectively, and were acquired to add to the Company's rewards program operations by providing an in-house travel agency and consumer products retailer. Travel Easy is an Australian proprietary limited corporation. Travel Easy was organized under the law of the Province of Queensland, Australia on July 19, 2002. Travel Easy is engaged in the business of providing travel agent services and its operations are located in the Company's offices in Brisbane, Queensland, Australia. Prior June 1, 2004, Travel Easy was owned by Maxwell Thomas, the Company's chief executive officer and Michael Sullivan, a director of the Company. Under terms of the acquisition agreement between the Company and Mr. Thomas and Mr. Sullivan, the Company acquired Travel Easy for $1.00 Australian. Travel Easy now is a wholly-owned subsidiary of the Company. 30 Global Business is also an Australian proprietary limited Corporation. Global Business was organized under the law of the Province of Queensland, Australia in June 2003. Global Business does business under the name Easy Shopper Direct and is engaged in the business of selling consumer goods on-line and through published catalogs and its operations are located in the Company's offices in Brisbane, Queensland, Australia. Prior to the Company's acquisition of Global Business in June 2004, Global Business was owned by Maxwell Thomas, the Company's chief executive officer and Michael Sullivan, a director of the Company. Under terms of the acquisition agreement between the Company and Mr. Thomas and Mr. Sullivan, the Company acquired Global Business for $1.00 Australian. Mr. Thomas and Mr. Sullivan acquired their ownership of Global Business in June of 2003 from a corporation, Aussie Watchdog Pty Ltd, which had operated that business since 2000. Mr. Thomas and Mr. Sullivan were the only owners of Aussie Watchdog, having started what eventually became the operations of Global Business in Aussie Watchdog in 2000. Global Business now is a wholly-owned subsidiary of the Company. As part of this transaction, the company assumed debts which Travel Easy and Global Business owed. Such debt were debts Travel Easy and Global Business owed the Company for operating expenses. 5. Plays on The Net On May 14, 2007, the Company agreed to acquire 100 % of the issued and outstanding share capital of Plays on the Net Plc through the issue of 12,000,000 common shares of the Company common stock. Plays on the Net is a United Kingdom corporation which provides a comprehensive online guide to theatre, and services the online download market for plays and spoken word entertainment. Plays on the Net has a licence to sell audio book titles from the archives of BBC Audio books, and has developed into a online store and theatre information site, with more than 500,000 books and audio book titles available for download. The company also sells audio titles and books from other leading publishers including Time Warner, Harper Collins and Random House, Naxos and Little Brown. The Company's target is to become a one-stop site for information, tickets, reviews and news relating to theatre, and hopes to become the ultimate social networking site for drama enthusiasts. The website includes a forum (Playtalk) which is building a community of writers and actors who are able to post their personal profiles, reviews and resumes and provide unique profile page. Plays On The Net is a development stage company that does not yet have any significant sales. The Company expects to close the transaction before the end of May 2007. 31 ITEM 13. EXHIBITS AND INDEX OF EXHIBITS . (a) Exhibits required by Item 601 of Regulation S-K. The Exhibits below are required by Item 601 of Regulation SB. Exhibit No. Description (a) EXHIBITS REQUIRED BY ITEM 601 OF REGULATION S-K. The Exhibits below are required by Item 601 of Regulation SB. Exhibit No. Description 2.1 Exchange Agreement between Maximum Awards, Inc. and Maximum Awards Pty Ltd., dated December 9, 2003 incorporated by reference as Exhibit 2 to the Form 10SB12G filed with the SEC on July 6, 2004 3.1 Articles of Incorporation of Rising Fortune Incorporated, dated March 7, 1995 incorporated by reference as Exhibit 3 to the Form 10SB12G filed with the SEC on July 6, 2004 3.3 Certificate of Amendment to the Articles of Incorporation of Rising Fortune Incorporated, dated December 5, 2003 incorporated by reference as Exhibit 3.1 to the Form 10SB12G filed with the SEC on July 6, 2004 3.4 By-Laws of Rising Fortune Incorporated incorporated by reference as Exhibit 3.2 to the Form 10SB12G filed with the SEC on July 6, 2004 3.5 Certificate of Registration for Maximum Awards Pty, Ltd., dated October 8, 2002 incorporated by reference as Exhibit 3.4 to the Form 10SB12G/A filed with the SEC on November 8, 2004 3.6 Certificate of Registration of Global Business Group Pty, Ltd., dated June 17, 2003 incorporated by reference as Exhibit 3.5 to the Form 10SB12G/A filed with the SEC on November 8, 2004 10.1 Consulting Agreement between Maximum Awards, Inc. and Kevin Murray, dated December 4, 2003 incorporated by reference as Exhibit 10.1 to the Form 10SB12G/A filed with the SEC on November 8, 2004 32 10.2 Employment Agreement between Maximum Awards, Inc. and Maxwell Thomas, dated January 1, 2004 incorporated by reference as Exhibit 10.2 to the Form 10SB12G/A filed with the SEC on November 8, 2004 10.3 Share Purchase Agreement between Maxwell Thomas and Michael Sullivan (Global Business Group Pty, Ltd.) and Maximum Awards, Inc., dated June 1, 2004 incorporated by reference as Exhibit 10.3 to the Form 10SB12G/A filed with the SEC on November 8, 2004 10.4 Share Purchase Agreement between Maxwell Thomas and Michael Sullivan (Travel EasY Pty, Ltd.) and Maximum Awards, Inc., dated June 1, 2004 incorporated by reference as Exhibit 10.4 to the Form 10SB12G/A filed with the SEC on November 8, 2004 14 Code of Ethics of Maximum Awards, Inc., dated October 12, 2005 31 Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 32 Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 ITEM 14: PRINCIPAL ACCOUNTANT FEES AND SERVICES 2006 2005 ---- ---- SUMMARY: Audit fees 44,624 40,400 Audit related fees 7,226 3,000 Tax fees -- -- Other fees -- -- ------- ------- 51,850 43,400 33 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. MAXIMUM AWARDS, INC. By: /s/ Maxwell Thomas ------------------------------- Chief Executive Officer Dated: May 14, 2007 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the following persons on behalf of the registrant and in the capacities and on the dates indicated. Signature Title Date --------- ----- ---- /s/ Maxwell Thomas Chief Executive Officer May 14, 2007 -------------------------- and Chief Financial Officer Maxwell Thomas /s/ Enzo Taddei Director May 14, 2007 -------------------------- Enzo Taddei 34 MAXIMUM AWARDS, INC. AND SUBSIDIARIES CONSOLIDATED FINANCIAL STATEMENTS YEARS ENDED DECEMBER 31, 2006 AND 2005 CONTENTS Report of Independent Registered Public Accounting Firm F-1 Consolidated Balance Sheets F-2 Consolidated Statements of Operations F-3 Consolidated Statements of Stockholders' Deficit F-4 Consolidated Statements of Cash Flows F-5 Notes to Consolidated Financial Statements F-6 - F-25 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Stockholders of Maximum Awards, Inc. and Subsidiaries: We have audited the accompanying consolidated balance sheets of Maximum Awards, Inc. and Subsidiaries, as of December 31, 2006 and 2005, and the consolidated statements of operations, stockholders' deficit, and cash flows for each of the two years in the periods ended December 31, 2006 and 2005. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe our audits provide a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Maximum Awards, Inc. and Subsidiaries, as of December 31, 2006 and 2005, and the results of their operations and comprehensive loss and their cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America. The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in note 2 to the consolidated financial statements, the Company has experienced operating losses since inception, has raised minimal capital and has no long-term contracts related to its business plans. These factors raise substantial doubt about the Company's ability to continue as a going concern. Management's plans regarding these matters are also described in note 2. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. "SF PARTNERSHIP, LLP" Toronto, Canada CHARTERED ACCOUNTANTS April 30, 2007 F-1

MAXIMUM AWARDS, INC. AND SUBSIDIARIES Consolidated Balance Sheets December 31, 2006 and 2005 2006 2005 ---- ---- ASSETS Current Cash $ 56,974 $ 42,206 Accounts receivable (net of allowance $2,200; 2005-$nil) 69,766 43,766 Inventory 10,872 10,662 ----------- ----------- Total Current Assets 137,612 96,634 Equipment, net (note 4) 22,312 21,285 ----------- ----------- Total Assets $ 159,924 $ 117,919 =========== =========== LIABILITIES Current Accounts payable $ 344,720 $ 156,048 Accrued charges 42,788 25,000 Liability for unredeemed points (note 5) 15,579 15,744 Due to related party (note 6) 116,000 39,000 Convertible debenture (note 7 and 15) 388,705 -- Advances from directors (note 8) 239,881 82,362 ----------- ----------- Total Current Liabilities 1,147,673 318,154 ----------- ----------- Total Liabilities 1,147,673 318,154 =========== =========== STOCKHOLDERS' DEFICIT Capital Stock (note 9) 33,677 33,052 Additional Paid-In Capital 1,208,725 1,106,850 Accumulated Comprehensive Loss (47,559) (27,030) Accumulated Deficit (2,182,592) (1,313,107) ----------- ----------- Total Stockholders' Deficit (987,749) (200,235) ----------- ----------- Total Liabilities and Stockholders' Deficit $ 159,924 $ 117,919 =========== ===========

The accompanying notes are an integral part of these consolidated financial statements. F-2 MAXIMUM AWARDS, INC. AND SUBSIDIARIES Consolidated Statements of Operations Years Ended December 31, 2006 and 2005 2006 2005 ---- ---- Revenues (note 11) $ 494,873 $ 329,927 Cost of Sales 239,250 114,871 ----------- ----------- Gross Profit 255,623 215,056 Expenses General and administrative 874,083 557,954 Legal and professional fees 60,294 91,956 Salary to related parties (note 10) 150,000 258,400 Depreciation 5,801 5,697 ----------- ----------- 1,090,178 914,007 ----------- ----------- Loss from Operations (834,555) (698,951) ----------- ----------- Other Expense Interest expense (28,877) (1,485) ----------- ----------- Loss Before Income Taxes (863,432) (700,436) Provision for income taxes (note 12) (6,053) (3,681) ----------- ----------- Net Loss $ (869,485) $ (704,117) ----------- ----------- Basic and Diluted Loss per Share $ (0.40) $ (0.40) ----------- ----------- Basic and Diluted Weighted Average Number of Shares Outstanding During the Year Adjusted for the Reverse Stock Split (note 15) 2,158,734 1,771,585 ----------- ----------- The accompanying notes are an integral part of these consolidated financial statements. F-3

MAXIMUM AWARDS, INC. AND SUBSIDIARIES Consolidated Statements of Stockholders' Deficit Years Ended December 31, 2006 and 2005 Preferred Shares "Series A" Common Shares ------------------ -------------------- Additional Accumulated Total Number Par Number Par Paid-In Comprehensive Accumulated Stockholders' of Shares Value of Shares Value Capital Loss Deficit Deficit --------- ------ ---------- ------- ---------- ------------- ----------- ------------- Balance, January 1, 2005 1,000,000 $1,000 25,526,900 $25,527 $ 508,876 $ (55,745) $ (608,990) $ (129,332) Shares issued for cash -- -- 6,525,000 6,525 597,974 -- -- 604,499 Foreign exchange on translation -- -- -- -- -- 28,715 -- 28,715 Net loss -- -- -- -- -- -- (704,117) (704,117) --------- ------ ---------- ------- ---------- ------------- ----------- ------------- Balance, December 31, 2005 1,000,000 1,000 32,051,900 32,052 1,106,850 (27,030) (1,313,107) (200,235) Shares issued for cash -- -- 400,000 400 79,600 -- -- 80,000 Shares issued for services -- -- 225,000 225 22,275 -- -- 22,500 Foreign exchange on translation -- -- -- -- -- (20,529) -- (20,529) Net loss -- -- -- -- -- -- (869,485) (869,485) --------- ------ ---------- ------- ---------- ------------- ----------- ------------- Balance, December 31, 2006 1,000,000 $1,000 32,676,900 $32,677 $1,208,725 $ (47,559) $(2,182,592) $ (987,749) --------- ------ ---------- ------- ---------- ------------- ----------- -------------

The accompanying notes are an integral part of these consolidated financial statements. F-4 MAXIMUM AWARDS, INC. AND SUBSIDIARIES Consolidated Statements of Cash Flows Years Ended December 31, 2006 and 2005 2006 2005 ---- ---- Cash Flows from Operating Activities Net loss $(869,485) $(704,117) Adjustments for non-cash items: Depreciation 5,801 5,697 Stock issued for services 22,500 -- --------- --------- (841,184) (698,420) Changes in non-cash working capital: Accounts receivable (26,000) 53,003 Inventory (210) (5,470) Prepaid expenses -- 2,542 Accounts payable 188,672 (46,109) Accrued charges 17,788 -- Liability for unredeemed points (165) 14,015 --------- --------- Net Cash Used In Operating Activities (661,099) (680,439) --------- --------- Cash Flows from Investing Activities Purchase of equipment (6,828) (16,096) --------- --------- Net Cash Used In Investing Activities (6,828) (16,096) --------- --------- Cash Flows from Financing Activities Advances from directors 157,519 56,213 Decrease in notes payable -- (5,575) Increase in convertible debenture 388,705 -- Proceeds from issuance of capital stock 80,000 604,499 Due to related party 77,000 39,000 --------- --------- Net Cash Provided By Financing Activities 703,224 694,137 --------- --------- Net Increase (Decrease) in Cash 35,297 (2,398) Foreign Exchange on Translation (20,529) 28,715 Cash - Beginning of Year 42,206 15,889 --------- --------- Cash - End of Year $ 56,974 $ 42,206 ========= ========= The accompanying notes are an integral part of these consolidated financial statements. F-5 MAXIMUM AWARDS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements December 31, 2006 and 2005 1. Operations and Business Maximum Awards, Inc. ("Maximum"), and Subsidiaries (the "Company"), formerly known as Rising Fortune Incorporated, was incorporated in the State of Nevada on March 7, 1995. The Company was inactive between fiscal 1996 and fiscal 2003. On November 19, 2003, the Company amended its Articles of Incorporation to change its name to Maximum Awards, Inc. On December 9, 2003, Maximum entered into a definitive Share Exchange Agreement (the "Agreement") with Maximum Awards (Pty) Ltd., ("Maximum Awards") an Australian corporation operating a consumer rewards program, whereby Maximum acquired all of the issued and outstanding shares of the Maximum Awards in exchange for 22,000,000 common shares and 1,000,000 preferred shares Series "A" of Maximum in a reverse merger transaction. The preferred shares Series "A" are non-participating, but each share is entitled to 50 votes in a general meeting. In addition, Maximum issued 2,200,000 common shares as a finder's fee for assistance in the acquisition of Maximum Awards. As a result of the Agreement, the principal shareholder of Maximum Awards controls 96% of Maximum. While Maximum is the legal parent, as a result of the reverse takeover, Maximum Awards became the parent company for accounting purposes. On June 1, 2004, Maximum Awards acquired 100% of the issued and outstanding share capital of both Global Business Group Australia Pty Ltd. ("Global Business") and Travel Easy Holidays Pty Ltd. ("Travel Easy") from the shareholders of the respective companies for $1.00 each. At the time of the transaction Maximum Awards, Global Business, Travel Easy and Maximum were companies under common control. As such, this transfer of equity interests between common controlled entities is accounted for as a recapitalization of Maximum Awards with the net assets of Global Business and Travel Easy brought forward at their historical basis. F-6 MAXIMUM AWARDS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements December 31, 2006 and 2005 1. Operations and Business (cont'd.) The Company operates a consumer rewards points program known as Maximum Awards ("Maximum Awards Program"). Under this program, consumers earn points by purchasing products and services from a range offered by Global Business, Travel Easy, or program partners. Accumulated points then can be redeemed to acquire additional desired products or services from the same list of such items offered by Global Business or Travel Easy. Global Business, maintains a catalog of available goods and services which a member can purchase, or acquire through the redemption of points. Travel Easy is a licensed travel agency which services the public and also allows members to purchase travel services or redeem points for airline tickets or travel packages. 2. Going Concern The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America, with the assumption that the Company will be able to realize its assets and discharge its liabilities in the normal course of business. The Company has sustained operating losses since inception, has raised minimal capital and has no long-term contracts related to its business plans. The Company's continuation as a going concern is uncertain and dependant on successfully bringing its services to market, achieving future profitable operations and obtaining additional sources of financing to sustain its operations. In the event the Company cannot obtain the necessary funds, it will be necessary to delay, curtail or cancel the further development of its products and services. Though the business plan indicates profitable operation in the coming year, these profits are contingent on completing and fulfillment of contracts with various providers of goods and services throughout the world to provide the Company with a cash flow to sustain operations. F-7 MAXIMUM AWARDS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements December 31, 2006 and 2005 2. Going Concern (cont'd.) The consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the possible inability of the Company to continue as a going concern. 3. Summary of Significant Accounting Policies a) Basis of Financial Statement Presentation These consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, under the accrual method of accounting, with the assumption that the Company will be able to realize its assets and discharge its liabilities in the normal course of business. b) Basis of Consolidation The merger of Maximum and Maximum Awards has been recorded as the recapitalization of Maximum, with the net assets of Maximum Awards brought forward at their historical basis. The intention of the management of the Maximum Awards was to acquire Maximum as a shell company to be listed on the Over The Counter Bulletin Board. Management has not pursued the business of Maximum as such, accounting for the merger as the recapitalization of Maximum is deemed appropriate. As mentioned in Note 1, these consolidated financial statements include the financial position and results of operations of Maximum, Maximum Awards, Global Business and Travel Easy. c) Unit of Measurement United States of America currency is being used as the unit of measurement in these financial statements. F-8 MAXIMUM AWARDS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements December 31, 2006 and 2005 3. Summary of Significant Accounting Policies (cont'd.) d) Use of Estimates In preparing the Company's consolidated financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosures of contingent assets and liabilities at the dates of the financial statements, and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. e) Inventory Inventory consists of goods purchased for resale. Inventory is valued at the lower of cost or net realizable value. Cost is determined on a first-in, first-out basis. The Company records their inventory reserves for estimated obsolescence or unmarketable inventory, which are equal to the difference between the cost of inventory and the estimated market value based upon assumptions about future demand and market conditions. f) Revenue Recognition Consumer Reward Points Program ------------------------------ The Company does not charge a membership fee for joining the Maximum Awards Program. The Company recognizes commission income from their customers, the participating vendors in the program, when points have been requested to be redeemed by the participating vendor's customers and collectibility is reasonably assured. Travel Agency ------------- The Company earns commission revenues from ticket sales and reports this revenue in accordance with Emerging Issues Task Force ("EITF") Issue No.99-19, "Reporting Revenue Gross as a Principal versus Net as an Agent." The Company is an agent and not the primary obligor, and accordingly the amounts earned are determined using a fixed percentage, a fixed-payment schedule, or a combination of the two. F-9 MAXIMUM AWARDS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements December 31, 2006 and 2005 3. Summary of Significant Accounting Policies (cont'd.) f) Revenue Recognition (cont'd.) Online Shopping The Company recognizes revenue from product sales when the following four revenue recognition criteria are met: persuasive evidence of an arrangement exists, delivery has occurred or services have been rendered, the selling price is fixed or determinable, and collectibility is reasonably assured. Additionally, revenue arrangements with multiple deliverables are divided into separate units of accounting if the deliverables in the arrangement meets the following criteria: (1) The delivered item has value to the customer on a standalone basis; (2) There is objective and reliable evidence of the fair value of undelivered items; and (3) Delivery of any undelivered item is probable. Product sales, net of promotional discounts, rebates, and return allowances, are recorded when the products are shipped and title passes to customers. Retail items sold to customers are made pursuant to a sales contract that provides for transfer of both title and risk of loss upon the Company's delivery to the carrier. The return policy allows customers to exchange product within 7 days. The Company periodically provides incentive offers to its customers to encourage purchases. Such offers include current discount offers, such as percentage discounts off current purchases, inducement offers, such as offers for future discounts subject to a minimum current purchase, and other similar offers. Current discount offers, when accepted by the customers, are treated as a reduction to the purchase price of the related transaction, while inducement offers, when accepted by the customers, are treated as a reduction to the purchase price based on estimated future redemption rates. Redemption rates are estimated using the Company's historical experience for similar inducement offers. Current discount offers and inducement offers are presented as a net amount in revenue. F-10 MAXIMUM AWARDS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements December 31, 2006 and 2005 3. Summary of Significant Accounting Policies (cont'd.) g) Foreign Currency Translation The Company accounts for foreign currency translation pursuant to Statement of Financial Accounting Standards ("SFAS") No. 52, "Foreign Currency Translation." The Company's functional currency is the Australian dollar. All assets and liabilities are translated into U.S. dollars using the exchange rate at year-end. Revenues and expenses are translated using the average exchange rates prevailing throughout the year. Translation adjustments are included in comprehensive income (loss) for the period. h) Fair Value of Financial Instruments The estimated fair value of financial instruments has been determined by the Company using available market information and valuation methodologies. Considerable judgment is required in estimating fair value, accordingly, the estimates may not be indicative of the amounts the Company could realize in a current market exchange. At December 31, 2006 and 2005, the carrying amounts of cash, accounts receivable, accounts payable, accrued charges, liability for unredeemed points, due to related party and advances from directors approximate their fair values due to the short-term maturities of these instruments. i) Interest Rate Risk The Company is not exposed to interest rate risk. j) Equipment, net Equipment is stated at cost. Depreciation, based on the estimated useful lives of the assets, is provided using the under noted annual rates and methods: Furniture and equipment 20% Declining balance Computer software 20% Declining balance F-11 MAXIMUM AWARDS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements December 31, 2006 and 2005 3. Summary of Significant Accounting Policies (cont'd.) k) Impairment of Long-Lived Assets In accordance with SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets", long-lived assets to be held and used are analyzed for impairment whenever events or changes in circumstances indicate that the related carrying amounts may not be recoverable. The Company evaluates at each balance sheet date whether events and circumstances have occurred that indicate possible impairment. If there are indications of impairment, the Company uses future undiscounted cash flows of the related asset or asset grouping over the remaining life in measuring whether the assets are recoverable. In the event such cash flows are not expected to be sufficient to recover the recorded asset values, the assets are written down to their estimated fair value. Long-lived assets to be disposed of are reported at the lower of carrying amount or fair value of asset less cost to sell. As described in Note 2, the long-lived assets have been valued on a going concern basis. However, substantial doubt exists as to the ability of the Company to continue as a going concern. If the Company ceases operations, the asset values may be materially impaired. l) Income Taxes The Company accounts for income taxes pursuant to SFAS No. 109, "Accounting for Income Taxes ("SFAS No. 109")." Deferred tax assets and liabilities are recorded for differences between the financial statement and tax basis of the assets and liabilities that will result in taxable or deductible amounts in the future based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. Income tax expense is recorded for the amount of income tax payable or refundable for the period increased or decreased by the change in deferred tax assets and liabilities during the period. F-12 MAXIMUM AWARDS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements December 31, 2006 and 2005 3. Summary of Significant Accounting Policies (cont'd.) m) Share-Based Payments In accordance with SFAS No. 123(R) "Share-Based Payment" ("SFAS No. 123R"), the Company enters into transactions in which goods or services are the consideration received for the issuance of equity instruments. The value of these transactions are measured and accounted for, based on the fair value of the equity instrument issued or the value of the services, whichever is more reliably measurable. The services are expensed in the periods during which the services are rendered. n) Earnings (Loss) per Common Share The Company calculates net earnings (loss) per share based on SFAS No. 128, "Earnings per Share." Basic earnings (loss) per share is computed by dividing the net earnings (loss) attributable to the common stockholders by the weighted average number of common shares outstanding. Diluted earnings (loss) per share is computed similar to basic earnings (loss) per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive. o) Comprehensive Income (Loss) The Company adopted SFAS No. 130, "Reporting Comprehensive Income ("SFAS No. 130")." SFAS No. 130 establishes standards for reporting and presentation of comprehensive income (loss) and its components in a full set of financial statements. Comprehensive income (loss) is presented in the statements of stockholders' (deficit) equity, and consists of net earnings (loss) and foreign currency translation adjustments. SFAS No. 130 requires only additional disclosures in the financial statements and does not affect the Company's financial position or results of operations. F-13 MAXIMUM AWARDS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements December 31, 2006 and 2005 3. Summary of Significant Accounting Policies (cont'd.) p) Concentration of Credit Risk SFAS No. 105, "Disclosure of Information about Financial Instruments with Off-Balance-Sheet Risk and Financial Instruments with Concentration of Credit Risk", requires disclosure of any significant off-balance-sheet risk and credit risk concentration. The Company does not have significant off-balance-sheet risk or credit concentration. The Company maintains cash with major Australian financial institutions. The Company provides credit to its clients in the normal course of its operations. It carries out, on a continuing basis, credit checks on its clients and maintains provisions for contingent credit losses which, once they materialize, are consistent with management's forecasts. For other receivables, the Company determines, on a continuing basis, the probable losses and sets up a provision for losses based on the estimated realizable value. Concentration of credit risk arises when a group of clients having a similar characteristic such that their ability to meet their obligations is expected to be affected similarly by changes in economic conditions. The Company does not have any significant risk with respect to a single client. q) Segment Reporting SFAS No. 131 "Disclosures about Segments of an Enterprise and Related Information" establishes standards for the manner in which public enterprises report segment information about operating segments. The Company has determined that its operations primarily involve three reportable segments based on the companies being consolidated: Maximum Awards - a consumer rewards program; Travel Easy - a travel agency; and Global Business - an online shopping business. F-14 MAXIMUM AWARDS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements December 31, 2006 and 2005 3. Summary of Significant Accounting Policies (cont'd.) r) Recent Accounting Pronouncements In February 2006, the Financial Accounting Standards Board ("FASB") issued SFAS No. 155, "Accounting for Certain Hybrid Financial Instruments--an amendment of FASB Statements No. 133 and 140 ("SFAS No. 155")." This statement permits fair value remeasurement for any hybrid financial instrument that contains an embedded derivative that otherwise would require bifurcation; clarifies which interest-only strips and principal-only strips are not subject to the requirements of SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities"; establishes a requirement to evaluate interests in securitized financial assets to identify interests that are freestanding derivatives or that are hybrid financial instruments that contain an embedded derivative requiring bifurcation; clarifies that concentrations of credit risk in the form of subordination are not embedded derivatives; and amended SFAS No. 140, "Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities", to eliminate the prohibition on a qualifying special-purpose entity from holding a derivative financial instrument that pertains to a beneficial interest other than another derivative financial instrument. SFAS No. 155 is effective for all financial instruments acquired, issued, or subject to a remeasurement (new basis) event occurring after the beginning of an entity's first fiscal year that begins after September 15, 2006. The Company is currently reviewing the effect, if any, SFAS No. 155 will have on its financial position. In March 2006, FASB issued SFAS No. 156, "Accounting for Servicing of Financial Assets, an amendment of FASB Statement No. 140 ("SFAS No. 156")." In a significant change to current guidance, SFAS No. 156 permits an entity to choose either of the following subsequent measurement methods for each class of separately recognized servicing assets and servicing liabilities: (1) amortization method or (2) fair value measurement method. SFAS No. 156 is effective as of the beginning of an entity's first fiscal year that begins after September 15, 2006. The Company is currently reviewing the effect, if any, SFAS No. 156 will have on its financial position. F-15 MAXIMUM AWARDS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements December 31, 2006 and 2005 3. Summary of Significant Accounting Policies (cont'd.) r) Recent Accounting Pronouncements (cont'd.) In June 2006, the FASB issued Financial Accounting Standards Interpretation No. 48, "Accounting for Uncertainty in Income Taxes ("FIN 48")." FIN 48 clarifies the accounting for uncertainty in income taxes recognized in an enterprise's financial statements in accordance with SFAS No. 109. FIN 48 prescribes a recognition threshold and measurement attributable for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. FIN 48 also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosures and transitions. FIN 48 is effective for fiscal years beginning after December 15, 2006. The Company does not expect the adoption of FIN 48 to have a material effect on its financial statements. In September 2006, FASB issued SFAS No. 157, "Fair Value Measurements ("SFAS No. 157")". SFAS No. 157 provides enhanced guidance for using fair value to measure assets and liabilities. SFAS No. 157 applies whenever other standards require (or permit) assets or liabilities to be measured at fair value. SFAS No. 157 does not expand the use of fair value in any new circumstances. SFAS No. 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years. Earlier application is encouraged, provided that the reporting entity has not yet issued financial statements for that fiscal year, including financial statements for an interim period within that fiscal year. The Company will adopt SFAS No. 157 effective for periods beginning January 1, 2008. The Company is currently evaluating the impact, if any, adoption of SFAS No. 157 will have on it's financial statements. F-16 MAXIMUM AWARDS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements December 31, 2006 and 2005 3. Summary of Significant Accounting Policies (cont'd.) r) Recent Accounting Pronouncements (cont'd.) In February 2007, the FASB issued SFAS No. 159, "The Fair Value Option for Financial Assets and Financial Liabilities" ("SFAS No. 159"), which permits entities to measure many financial instruments and certain other items at fair value that are not currently required to be measured at fair value. An entity would report unrealized gains and losses on items for which the fair value option has been elected in earnings at each subsequent reporting date. The objective is to improve financial reporting by providing entities with the opportunity to mitigate volatility in reported earnings caused by measuring related assets and liabilities differently without having to apply complex hedge accounting provisions. The decision about whether to elect the fair value option is applied instrument by instrument, with a few exceptions; the decision is irrevocable; and it is applied only to entire instruments and not to portions of instruments. SFAS No. 159 requires disclosures that facilitate comparisons (a) between entities that choose different measurement attributes for similar assets and liabilities and (b) between assets and liabilities in the financial statements of an entity that selects different measurement attributes for similar assets and liabilities. SFAS No. 159 is effective for financial statements issued for fiscal years beginning after November 15, 2007. Early adoption is permitted as of the beginning of a fiscal year provided the entity also elects to apply the provisions of SFAS No. 157. Upon implementation, an entity shall report the effect of the first remeasurement to fair value as a cumulative-effect adjustment to the opening balance of retained earnings. Since the provisions of SFAS No. 159 are applied prospectively, any potential impact will depend on the instruments selected for fair value measurement at the time of implementation. The Company is currently evaluating the impact, if any, adoption of SFAS No. 159 will have on its financial statements. F-17

MAXIMUM AWARDS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements December 31, 2006 and 2005 4. Equipment, net 2006 2005 Accumulated Accumulated Cost Depreciation Cost Depreciation ------------ ------------ ------------ ------------ Furniture and equipment $ 30,358 $ 12,332 $ 23,147 $ 6,521 Computer software 5,560 1,274 5,177 518 ------------ ------------ ------------ ------------ $ 35,918 $ 13,606 $ 28,324 $ 7,039 ------------ ------------ ------------ ------------ Net carrying amount $ 22,312 $ 21,285 ------------ ------------

5. Consumer Reward Points Program The Company operates a consumer reward program, as described in Note 1, whereby, consumers earn points by purchasing goods and services with various vendors, whom are registered with the program. When a consumer purchases a good or service, the vendor remits a cash amount for the amount of points earned by the consumer to the Company. The Company does not maintain a separate escrow account for unredeemed points. The liability for unredeemed points is determined based on management's knowledge of the industry, historical trends and competitor's valuations in similar industries. 6. Due to Related Party The amount due to related party is owed to a shareholder of the Company for consulting services provided. The amount is non-interest bearing, unsecured and due on demand. F-18 MAXIMUM AWARDS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements December 31, 2006 and 2005 7. Convertible Debenture During the year the Company sold convertible debentures to The Winterman Group totaling $388,705. These debentures are secured by the assets of the Company as per a general security agreement, bear interest at 10% per annum and are payable on demand after January 31, 2007. The investor may convert the debenture into common stock at the lower of $0.10 per share or market price of the stock at the time of election. The Company determined that no value shall be assigned to the conversion feature of these debentures as the stated interest rate of the debenture is equal to the prevailing market interest rate. 8. Advances from Directors 2006 2005 ---- ---- Maxwell Thomas $ 89,184 $ 42,336 Michael Sullivan 150,697 40,026 ---------- ---------- $ 239,881 $ 82,362 ---------- ---------- The advances are non-interest bearing, unsecured and due on demand. F-19

MAXIMUM AWARDS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements December 31, 2006 and 2005 9. Capital Stock Authorized 9,000,000 Preferred shares, rights to be granted at the discretion of the Board of Directors 1,000,000 Preferred shares, Series "A", par value of $0.001 per share, non- participating, voting rights of 50 votes per share, redeemable 100,000,000 Common shares, par value of $0.001 per share 2006 2005 ---- ---- Issued 1,000,000 Preferred shares, Series "A" (2005 - 1,000,000) $ 1,000 $ 1,000 32,676,900 Common shares (2005 - 32,051,900) 32,677 32,052 ------------ ------------ $ 33,677 $ 33,052 ============ ============

The following transactions occurred during 2005 and 2006: a) On June 21, 2005 the Company issued 5,000 common shares for a cash consideration of $2,500. b) On October 10, 2005 the Company issued 1,500,000 common shares for a cash consideration of $150,000. c) On November 1, 2005 the Company issued 3,500,000 common shares for a cash consideration of $300,000. d) On November 21, 2005 the Company issued 575,000 common shares for a cash consideration of $57,500. e) On November 30, 2005 the Company issued 345,000 common shares for a cash consideration of $34,500. F-20 MAXIMUM AWARDS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements December 31, 2006 and 2005 9. Capital Stock (cont'd.) f) On December 12, 2005 the Company issued 550,000 common shares for a cash consideration of $55,000. g) On December 21, 2005 the Company issued 50,000 common shares for a cash consideration of $5,000. h) On March 14, 2006 the Company issued 300,000 common shares for a cash consideration of $30,000. I) On March 14, 2006 the Company issued 100,000 common shares for a cash consideration of $50,000. j) On December 15, 2006 the Company issued 225,000 common shares for services rendered, valued at $22,500. 10. Related Party Transactions During the year, the Company paid salaries to a director in the amount of $150,000 (2005 - $177,635). During the year, the Company also paid consulting fees to a director in the amount of $nil (2005 - $10,000) and consulting fees to a shareholder in the amount of $77,000 (2005 - $39,000), both of which have been included in general and administrative expenses. Included in accounts receivable is $5,567 (2005 - $nil) due to a company controlled by a director. These transactions were in the normal course of business and recorded at an exchange value established and agreed upon by the related parties. F-21

MAXIMUM AWARDS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements December 31, 2006 and 2005 11. Segmented Information 2006 2005 ---- ---- Revenues by Segment: Maximum Awards - consumer rewards points program $ 10,871 13,040 Travel Easy - travel agency 269,388 154,154 Global Business - online shopping 214,614 162,733 ----------- ----------- Consolidated Revenues $ 494,873 $ 329,927 =========== =========== Operating (Loss) Income by Segment: Maximum Awards - consumer rewards points program $ (890,037) $ (569,734) Travel Easy - travel agency 77,962 (130,902) Global Business - online shopping (22,480) 1,685 Consolidated Operating Loss $ (834,555) $ (698,951) =========== =========== Assets by Segment: Maximum Awards - consumer rewards points program $ 18,725 $ 18,165 Travel Easy - travel agency 107,202 44,956 Global Business - online shopping 33,997 54,798 ----------- ----------- Consolidated Gross Assets $ 159,924 $ 117,919 =========== =========== Liabilities by Segment: Maximum Awards - consumer rewards points program $ 836,350 $ 242,459 Travel Easy - travel agency 284,495 41,800 Global Business - online shopping 26,828 33,895 ----------- ----------- Consolidated Total Liabilities $ 1,147,673 $ 318,154 =========== ===========

Geographical information is not presented as the Company's consolidated operations are conducted in Australia. The Company does not earn any significant revenues from a single customer. F-22

MAXIMUM AWARDS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements December 31, 2006 and 2005 12. Income Taxes The Company accounts for income taxes pursuant to SFAS No. 109. This standard prescribes the use of the liability method whereby deferred tax asset and liability account balances are determined based on differences between financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates. Under SFAS No. 109 income taxes are recognized for the following: a) amount of tax payable for the current year, and b) deferred tax liabilities and assets for future tax consequences of events that have been recognized differently in the financial statements than for tax purposes. The Company's current income taxes are as follows: 2006 2005 ---- ---- Expected income tax recovery at the statutory rate of 34% (2005 - 34%) $(295,625) $(255,148) Australian income taxes 6,053 3,681 Valuation allowance 295,625 255,148 --------- --------- Current income taxes $ 6,053 $ 3,681 ========= ========= The Company has deferred income tax assets as follows: 2006 2005 ---- ---- Deferred income tax assets $ 731,000 $ 443,000 Valuation allowance (731,000) (443,000) --------- --------- $ -- $ -- ========= =========

F-23 MAXIMUM AWARDS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements December 31, 2006 and 2005 12. Income Taxes (cont'd.) As of December 31, 2006, the Company had net operating loss carry forwards for income tax reporting purposes of approximately $2,182,000 (2005 - $1,302,000) that may be offset against future taxable income indefinitely. Current tax laws limit the amount of loss available to be offset against future taxable income when a substantial change in ownership occurs or a change in the nature of the business, therefore, the amount available to offset future taxable income may be limited. Management determined that the deferred tax assets do not satisfy the recognition criteria of SFAS No. 109 and, it is more likely than not that the losses will not be utilized, accordingly, a full valuation allowance has been recorded for this amount. 13. Commitments and Contingencies The Company's lease on their premises expired during 2006, subsequently the Company moved to a location owned by a related party that does not charge the Company rent for its use. The Company entered into a consulting agreement with a consultant, who is also the spouse of a shareholder of the company holding the convertible debenture referred to in note 7, for a period of six months beginning August 1, 2006. The Company will pay a monthly fee of $15,000. The consultant may opt, in lieu of cash, to receive payment for services rendered in stock at a price of $0.10 per share or market price, whichever is lower at the time of payment. The Company has determined that the conversion feature of this contract is not material and therefore has not been valued. 14. Supplemental Disclosure of Cash Flow Information The Company had cash flows from interest paid or income taxes paid for the years ended December 31, 2006 and 2005 as follows: 2006 2005 ---- ---- Interest paid $ 5,310 $ 1,485 Income taxes paid $ 3,681 $ 861 F-24 MAXIMUM AWARDS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements December 31, 2006 and 2005 15. Subsequent Events On March 21, 2007, the convertible debenture was converted to common stock by The Winterman Group and as a result the Company issued 4,101,500 common stock (pre reverse split) to The Winterman Group. The stock was converted at a rate of $0.10 per common stock. On March 21, 2007, a director of the Company returned 1,000,000 preferred shares, Series "A" for no consideration and the Company returned the preferred shares to treasury. On March 21, 2007, the Company agreed to undertake the reverse split of its authorized common stock at a ratio of fifteen to one. The issued and outstanding common stock was reduced from 36,728,400 to 2,448,560, with an amended par value of $0.015 per common stock. On March 21, 2007, the Company entered into heads of agreement with Plays On The Net Plc ("POTN") for the purchase of 100% of the common stock of POTN and its subsidiary through the issuance of 12,000,000 common shares (post reverse split). The acquisition is subject to the completion of due diligence by both the Company and POTN, the completion of a formal agreement between both parties and regulatory approval. On March 28, 2007, the Company issued 60,000 common shares (post reverse split) for cash consideration of $11,500. 16. Comparative Information Certain prior year balances have been reclassified to conform with the current year's financial statement presentation F-25