In connection with a prior note financing, the Company is obligated to pay a royalty of $20.00 for each entertainment device sold through December 31, 2008. During the three and six months ended September 30, 2007 the Company incurred royalties of $18,780 and $47,980, respectively.

Your calculation only accounts for the 47,980 in royalties for the last 3 months (2399 units sold) The prior 3 months royalties, 18,780 represents 939 units sold. Totaling 3338 units for the first 6 months. It would be nice if this improvement could be extrapolated into a trend but at this point we should be pleased that the quarter over quarter improvement is headed in the right direction.

Larry