Roaming Messenger (fka RMSG)

[grashelm]

Ouch

5. COMMITMENTS AND CONTINGENCIES

Jonathan Lei and Bryan Crane have been indicted by a federal grand jury in February 2006, alleging that they conspired to commit securities, mail and wire fraud in connection with an offer for private funding made to Roaming Messenger Inc. over a year ago, in February 2005, by a fake investment fund formed by the Government. The Company did not obtain any funding from the entity or the management company that were posing as prospective investors. Mr. Crane and Mr. Lei pleaded not guilty to all charges on February 17, 2006 and intend to defend themselves in court. There is no assurance regarding the outcome of these cases. Mr. Lei will continue his duties as chairman and chief executive officer of the company and Mr. Crane will continue as part-time vice president of corporate development. While management does not believe the cases will have a material adverse impact on the business of the Company while they are pending, there is no assurance that they will not ultimately have a material adverse impact. The Company was not named in the indictment.

Prepared without audit.