The Emergence of Lifestyle Media

Consumers are increasingly calling the shots in a converged media world. They use portable music  devices to make their own music playlists. Personal video recorders allow them to customize television line-ups. Satellite radios pump commercial-free music into their cars. These consumers pull stock-market updates, text messages, wallpaper, ringtones, and video into their mobile phones. They come together in online

communities, generate their own content, mix it, and share it on a growing number of social networks. No longer a captive, mass media audience, today’s media consumer is unique, demanding, and engaged.

Broadband or high-speed Internet access and the Internet Protocol (IP) are the technology enablers that have made this new breed of consumer possible. Broadband and IP will be the foundation through which consumers organize their productive, leisure, and social time. The rules are radically changing for all value chain participants now that video content is no longer bound to a specific access network or device.

A new approach that helps consumers maximize their limited time and attention to create a rich, personalized, and social media environment is needed. PricewaterhouseCoopers calls this approach Life-style Media; it is the combination of a personalized media experience with a social context for participation. It bridges the world of unlimited professional and user-created video content with the world of limited consumer time and attention. It explicitly recognizes that consumers increasingly access a two-way communication infrastructure.

To realize this vision of Lifestyle Media, two fundamental components are needed: new content distribution models that put consumers in control and more accurate and scalable data about what they are watching, doing, and creating. The combination of these two crucial elements will create a media marketplace, a platform that connects media providers and media seekers through an organizational and technical infrastructure. It will enable Lifestyle Media to flourish by allowing content owners, advertisers, and consumers to discover, select, configure, distribute, and exchange professionally produced and user-generated video content.

Overview of the Industry and Direction/Challenges

Media businesses have seen the rise and fall of new revenue models and new media empires on a pace and scale uncommon in other industries.  The business changes with each new advancement in telecommunications capability and adoption.  As with previous evolutions driven by cable network distribution, digitization or satellite transmission power, the next set of changes are foreseeable and actionable. Today, improvements in physical network infrastructure, technological innovation, and content rights have, for the first time, all progressed to the levels necessary for the next generation in consumer tele-visual experience.  

Television and the Internet

Physical network infrastructure development has been the most obvious and forceful influence on the media business in the last 35 years.  The deployment of cable networks changed the television business, creating an entirely new scale of television programming and adding subscription revenue sources.  This closed network generation of network development had a powerful affect on the television industry.  Pundits have forecasted for over a decade that today’s generation of open network build out will have an even greater affect on the media industries.  While that affect has been seen in the music industry, it is only now possible to see and capitalize on how these forces will impact television and other video industries.  As evidenced by nascent IPTV deployments at major Telcos and minor ones, the fiber networks of today’s Internet are finally large enough to carry television signals with equivalent or better quality than traditional cable infrastructure. With quality issues overcome, the door is open to the interactivity and new content types that define a next generation television services.

Challenges:  Traditional Web/Internet Video and Television

Routers and fiber aren’t the only technologies needed to make video signals survive in an Internet world. The second, and less known issue is the shared nature of the open network.  Simply because a DSL connection is in place does not mean that a connection will continuously deliver ESPN in HD, even if that connection is fast enough.   The Internet is a shared resources.  Email, web browsing, file sharing, and a host of other applications are all competing for the same bandwidth over the same data lines.  To solve this

problem, traditional IPTV systems carefully control network resources, which is expensive and problematic. Under this model, the distribution of IPTV services is limited to geographies with the right population density, higher ARPU (Average Revenue Per User) potential, and more easily shared network costs.  In the past few years, advancements in application control have demonstrated that it’s possible to provide quality of service without expensive network controls.  These advances have created significant opportunities to distribute next generation television services much more broadly.

The Cornerstone of the LYFE Communication’s Television Opportunity

The ability to watch last night’s episode from any channel is such an obvious and direct user desire; but it has eluded service providers for years.  While copyright law leaves open a viewer’s right to record anything, it specifically precludes the service provider from recording and redistributing without an additional negotiated right.  These are challenging legal problems.  The programming available on television comes from a host of sources, each with its own contracts and cleared rights.  Foreseeing the power of an open Internet to affect their businesses, content owners have taken huge strides to normalize rights and publish some shows on sites like Hulu, Fox.com, and ABC.com.  They have also signaled that much more content can be made available, if the underlying diversity of cleared rights can be managed and honored, and if the advertisements carried within the content can be managed, counted, and replaced as necessary. For industry outsiders, its not always obvious that its not just inefficient to air a commercial for a weekend store sale the following week, it may breach contractual rights as the rights to air that ad may have expired.  These are the critical issues that make the media industry tick.  With control of VoD or network DVRs, television networks can relinquish the rights they have and work to inform us of the rights they do not have.  This opening of rights has not been available before now, and it opens the door for video browsing and episode search necessary to provide next generation television services.

By integrating a new type of consumer interaction, quality of service for individual media streams over the Internet, meta data driven media operations, and multiple communications services with traditional media, LYFE is building the platform for the next generation of communications and entertainment services.  The sharable experience, special interest content, and integrated communications with media create a unique service with natural revenue extensions and partner marketing power.

Sustainable Competitive Advantages Business Plan

Next generation television services are now possible because of the evolution of network, technology and content rights.  In past 5 years, there has been tremendous hype over the bundling of services: the Voice, Data, and TV triple play.  Unfortunately, a triple play is not a next generation of anything.  It is a billing advancement only.  We have seen the cable operators learn to provide the same voice services that the telcos had provided and we have seen the telcos learn to provide the exact same television service that the cable operators had provided.  And we’ve had billing innovation: we get all three services for one price. That’s good, but now its time to advance the services themselves.  Interactive, shared user experiences with hobbies and interests specific to the viewers are now possible.  Some simple examples of next generation capabilities:     

·

Shared viewing is when you take an aerobics class with your best friend without leaving your house.  Shared is when you catch the bowl games with your college buddies in Allentown.  Shared is when your kids play a marathon game of video RISK against their cousins in Albuquerque.

·

Media operations today are appliance based, massively inefficient, and rigidly inflexible.  This makes the cost of assembly and distribution high, limiting the types of content that can be profitable.  Meta data based operations running on general purpose hardware can replace the traditional methods with orders of magnitude cost savings and liberating new flexibility to create new media types.

·

Television EPG navigation is linear, list based, and robotic.  Hypertext Markup Language, the language of the Web, is used everyday to create nonlinear, intuitive, hyper link navigation that can be

Therefore, there can be no assurance that any dividends on the common stock will ever be paid.

Securities Authorized for Issuance under Equity Compensation Plans

2010 Stock Plan

Connected Lyfe has  reserved for issuance an aggregate of 15,000,000 shares of common stock under the company’s 2010 Stock Plan (“the Plan”) that was adopted effective January 1, 2010.  During 2010 the Board of Directors approved, priced and granted 12,276,500 options to purchase 12,276,500shares of the Company’s common Stock.   Subsequent to December 31, 2010, on April 13, 2011 the Board has approved, priced, and granted 5,160,000 options to purchase 5,160,000 shares of the Company’s common stock

For additional information pertaining to the company’s stock option plan, see Note 4 of the company’s notes to the financial statements.

 Equity Compensation Plans Information

We maintain the 2010 Stock Plan to allow the Company to compensate employees, directors, consultants and certain other individuals providing bona fide services to the Company or to compensate officers, directors and employees for accrual of salary through the award of common stock.  .

Options give directors, officers, employees and consultants the opportunity to purchase stock at a fixed price, the “Fair Market Value” for a period of time. To determine the Exercise Price of the options under this plan, the Board has decided to look back to the lowest closing price of the stock during the previous calendar quarter.  The Board will meet during the first two weeks after the start of each quarter. The Board feels this simple mechanic for pricing, performed at regular intervals throughout the year will provide the most equitable pricing for all incoming employees and shield any single employee from the volatility of the Company’s stock.

LYFE Communications shareholders approved the Connected Lyfe Stock Option Plan effective January1, 2010 and adopted under the Merger Agreement.

ITEM 6.  SELECTED FINANCIAL DATA

As a smaller reporting company, we are not required to provide the information required by this Item.

ITEM 7.  MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULT OF OPERATIONS

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and related notes included elsewhere in this annual report. References in the following discussion and throughout this annual report to “we”, “our”, “us”,“LYFE Communications”, “Connected Lyfe”, “Lyfe”, “the Company”, and similar terms refer to LYFE Communications, Inc. unless otherwise expressly stated or the context otherwise requires. This discussion contains forward-looking statements that involve risks and uncertainties. LYFE Communications Inc’s actual results could differ materially from those discussed below. Factors that could cause or contribute to such differences include, but are not limited to, those identified below, and those discussed in the section titled “Risk Factors” included elsewhere in this filing.

Current operational subscribers will be connected via fiber and have a choice of regular broadband or higher speed broadband access.

VOIP Telephony:  The telephone product will provide a dial tone in the home or business from which the customer can place local or long distance calls.  Rates will vary based on the call destination and type of service provided.  

We are developing, deploying and operating the networked platform for the next generation of communications and entertainment services. By leveraging our IP (“Internet Protocol”) technologies, we can provide, we believe, an innovative and compelling media and communication services to consumers and businesses who increasingly want access to their television, Internet and voice services on their terms – from any device, at home, in the office, or on the go.

Results of Operations

For the years ended December 31, 2010, and 2009

Total revenues were $204,516 in 2010 compared to no revenue in 2009.  The company was organized in September of 2009 and didn’t begin revenue generating activities until April of 2010.   Currently the company operates on the UTOPIA fiber network and has approximately 450 subscribers.  We offer high-speed Internet, telephone (VoIP) and television or Video services to our customers.  The bulk of our subscribers were acquired in the first 5 months of operations between April and September.  Due to cash constraints the company was forced suspend its selling efforts and its growth.  Since that time the company has maintained its customer base at approximately 450 subscribers.  Once alternative funding is closed we will begin adding subscribers to our current subscriber base.

Direct costs for the year ended December 31, 2010, was $161,778, generating a gross profit of $42,737 or 21 percent of sales.  The company expects to improve its gross profit as a percentage of sales through economies of scale one quipment and other fixed costs incurred that is sufficient to service a much larger subscriber base in future periods.

Sales and marketing expenses totaled $636,880 for 2010 as compared to sales and marketing expense of $129,757 in 2009.  The increase in sales and marketing was due to the company starting to provide services to customers in 2010 and the development of sales programs.  During 2010 we implemented door-to-door sales efforts which resulted in the customer base on the UTOPIA fiber network. The door-to-door programs require a sales representative to go through a substantial amount of training before he/she is ready to sell. Now that these training courses and programs are developed the company is capable of deploying door-to-door programs in any part of the country.  In addition we have been working with large multiple dwelling units (MDU) which house, in many cases, hundreds of residences.  We expect our MDU efforts to pay considerable dividends in the future.

Customer service expenses totaled $396,390.  These cost are high due to the start-up expenses involved in setting up a call center and staffing customer service 24/7.  A lot of these costs are  fixed in nature allowing the company to grow its subscriber base without additional investment.  The cost of providing customer support to 500 customers is not that much more than the cost of providing customer support to 1,000 customers.   There were no customer service costs incurred in 2009.

Research and development expenses totaled $573,581 in 2010 as compared to $80,580 incurred in 2009.  The increase is due to increases in head count of the development team.  In 2009 there were only two developers on the team.  In 2010 there were 8members or developers were added.  

their early stage of development, particularly companies in new and rapidly evolving markets. Such risks include, but are not limited to, an evolving and unpredictable business model and the management of growth. These factors raise substantial doubt about our ability to continue as a going concern. To address these risks, we must, among other things, increase our customer base, implement and successfully execute our business and marketing strategy, respond to competitive developments, and attract, retain and motivate qualified personnel. There can be no assurance that we will be successful in addressing such risks, and the failure to do so can have a material adverse effect on our business prospects, financial condition and results of operations.

Going Concern

The Company has accumulated losses since inception and has not yet been able to generate profits from operations. Operating capital has been raised through the sale of common stock or through loans from stockholders.  These factors raise substantial doubt about the Company’s ability to continue as a going concern.  

Management plans are to further develop new and innovative products and services that target the telecommunications industry.  If management is unsuccessful in these efforts, discontinuance of operations is possible.  The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Critical Accounting Policies and Estimates

The preparation of our consolidated financial statements in conformity with accounting principles generally accepted in the United States requires us to make estimates and judgments that affect our reported assets, liabilities, revenues, and expenses and the disclosure of contingent assets and liabilities. We believe our assumptions to be reasonable under the circumstances. Future events, however, may differ markedly from our current expectations and assumptions.

Revenue Recognition

The Company recognizes revenue in accordance with Staff Accounting Bulletin No. 104, Revenue Recognition, (SAB 104). The criteria to meet this guideline are: (i) persuasive evidence of a sales arrangement exists, (ii) the sales terms are fixed and determinable, (iii) title and risk of loss have transferred, and (iv) collectability is reasonably assured.  The Company derives its revenue primarily from the sale of Video, Data and Voice over Internet Protocol services and recognizes revenues in the period the related services are provided and the amount of revenue is determinable and collection is reasonably assured.

Stock-Based Compensation

The Company has accounted for stock-based compensation under the provisions of FASB Accounting Standards Codification (ASC) 718-10-55.  This statement requires us to record an expense associated with the fair value of stock-based compensation.  We use the Black-Scholes option valuation model to calculate stock based compensation at the date of grant.  We used a market approach for stock compensation issued to consultants on the merger discussed in Note 8.  Option pricing models require the input of highly subjective assumptions, including the expected price volatility.  Market approach analysis for pricing stock with infrequent trades and transactions require highly subjective assumptions, including restriction discount and blockage discounts.  Changes in these assumptions can materially affect the fair value estimate.

LYFE Communications, Inc.

[A Development Stage Company]

Note to Consolidated Financial Statements

1.  Organization and Nature of Business

On April 12, 2010, LYFE Communications, Inc (formerly Hangman Productions, Inc.) (the “Company” or “LYFE”), and Connected Lyfe, Inc. (“Connected Lyfe”) entered into an Agreement and Plan of Merger (the “Merger Agreement”).  Under the Merger Agreement, LYFE merged with and into Connected Lyfe with Connected Lyfe remaining as the surviving corporation and a wholly-owned subsidiary of the Company (the “Merger”).  Going forward, the Company will be a holding company parent of Connected Lyfe, and the Company’s business operations following the Merger will be those of Connected Lyfe. Further details of the Merger are provided in Note 9 in the footnotes to the consolidated financial statements.   

The Company’s business is to develop, deploy, and operate next media and communications network based services in single-family, multi-family, high-rise, resort and hospitality properties.

The Company is in the development stage as planned principal operations have commenced, but there has been no significant revenue there from.  The primary activities to date have included conducting research and development, developing markets for its products, securing strategic alliances, recruiting personnel and obtaining financing and beginning operations and testing of services.

2.   Significant Accounting Policies

These consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) and reflect the significant accounting polices described below:

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and its subsidiary.  The subsidiary is wholly owned.  All material intercompany accounts and transactions are eliminated in consolidation.

Use of Accounting Estimates

The preparation of the financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.  Generally, matters subject to estimation and judgment include amounts related to asset impairments, useful lives of fixed assets and capitalization of costs for software developed for internal use.  Actual results may differ from estimates provided.

Cash and Cash Equivalents

Cash and cash equivalents consist of bank deposits with a national bank.

Fair Value

All cash and cash equivalents, accounts payable, and accrued liabilities are carried at approximate fair value.

Accounts Receivable

Accounts receivable are reflected at estimated net realizable value, do not bear interest and do not generally require collateral. The Company provides an allowance for doubtful accounts equal to the estimated collection losses based on historical experience coupled with a review of the current status of existing receivables.

Property, Plant and Equipment, Net

Property, plant and equipment are recorded at cost. Depreciation expense is computed using the straight-line method over the estimated useful lives of the assets. Assets recorded under leasehold improvements are amortized using the straight-line method over the lesser of their useful lives or the related lease term. The Company uses the following estimated useful lives:

Upon retirement or other disposition of property, plant and equipment, the cost and related accumulated depreciation are removed from the accounts. The resulting gain or loss is included in the determination of operating income (loss) in the period incurred. Depreciation expense on property, plant and equipment was $90,316, and $3,394, for the years ended December 31, 2010 and 2009 respectively.

Fixed assets and related depreciation for the period are as follows:

Intangible Assets

Intangible assets include internally developed software.  The company accounts for the costs of developing software in accordance with the provisions of FASB ASC Topic 350.  The company records the Company’s internal and external costs to develop software to be used internally for the deployment of the next generation video systems.  The company capitalizes the costs during the application development stage when it is probable that the project will be completed and the software will be used to perform the function intended.  The company capitalized $232,247 and $11,900 of development costs related to the application development of the next generation video systems in 2010 and 2009 respectively.  The company assesses the projects for impairment when it is no longer probable that the project will be competed and placed in service.  The company did not impair any projects in 2010 or 2009.  

Other Assets

Other assets consist of payments made in advance of taking physical possession of rights of entry on Multiple Dwelling Unit (MDU) properties acquired from a service provider and video distribution system and video content rights.  As of December 31, 2010 the payments made for the video distribution and content rights were $350,000 and the payments made for the rights of entry on the MDU properties were $500,000.

Accrued Liabilities

Accrued liabilities consist of costs the company incurred for payroll and vacation amounts due to employees.

Deferred Revenue

The Company’s line item of deferred revenue represents payments by subscribers in advance of the delivery of services.  Subscribers are on a monthly billing cycle and payments are made monthly, with some subscribers paying the monthly bill in the middle of the billing cycle.  The company defers the revenue until the services have been rendered.

Taxes

At December 31, 2010, management had recorded a full valuation allowance against the net deferred tax assets related to temporary differences and operating losses in the current period because there is significant uncertainty as to the realizability of the deferred tax assets. Based on a number of factors, the currently available, objective evidence indicates that it is more-likely-than-not that the net deferred tax assets will not be realized.

The Company elected to classify income tax penalties and interest as general and administrative and interest expenses, respectively.  

The Company has accrued for unremitted payroll taxes, employee withholdings, and sales taxes due to various state and federal agencies along with accrued interest and penalties on the amounts outstanding as of December 31, 2010.

Revenue Recognition

The Company recognizes revenue in accordance with Staff Accounting Bulletin No. 104, Revenue Recognition, (SAB 104). The criteria to meet this guideline are: (i) persuasive evidence of a sales arrangement exists, (ii) the sales terms are fixed and determinable, (iii) title and risk of loss have transferred, and (iv) collectability is reasonably assured.  The Company derives its revenue primarily from the sale of Video, Data and Voice over Internet Protocol services and recognizes revenues in the period the related services are provided and the amount of revenue is determinable and collection is reasonably assured.

Stock-Based Compensation

The Company has accounted for stock-based compensation under the provisions of FASB Accounting Standards Codification (ASC) 718-10-55.  This statement requires us to record an expense associated with the fair value of stock-based compensation.  We use the Black-Scholes option valuation model to calculate stock based compensation at the date of grant.  We used a market approach for stock compensation issued to consultants on the merger discussed in Note 4.  Option pricing models require the input of highly subjective assumptions, including the expected price volatility.  Market approach analysis for pricing stock with infrequent trades and transactions require highly subjective assumptions, including restriction discount and blockage discounts.  Changes in these assumptions can materially affect the fair value estimate.

Advertising

The Company follows the policy of charging the costs of advertising to expense as incurred.  The Company recognized $44,839 and $0 of advertising expense during the years ended December 31, 2010 and 2009, respectively.

Net Loss Per Common Share

Basic (loss) per common share is based on the net loss divided by weighted average number of common shares outstanding.

Diluted earnings per share is computed using the weighted average number of common shares plus dilutive common share equivalents outstanding during the period using the treasury stock method.  As the Company has a loss for the years ended December 31, 2010 and 2009 any the potentially dilutive shares are anti-dilutive and are thus not included into the earnings per share calculation.

As of the years ended December 31, 2010 and 2009 there were 162,338 and 0, respectively, potentially dilutive shares resulting from the issuances of convertible promissory notes.

Recently Enacted Accounting Pronouncements

In October 2009, the FASB issued Accounting Standards Update No. 2009-13 for Revenue Recognition – Multiple Deliverable Revenue Arrangements (Subtopic 605-25) “Subtopic”. This accounting standard update establishes the accounting and reporting guidance for arrangements under which the vendor will perform multiple revenue – generating activities. Vendors often provide multiple products or services to their customers. Those deliverables often are provided at different points in time or over different time periods. Specifically, this Subtopic addresses how to separate deliverables and how to measure and allocate arrangement consideration to one or more units of accounting.  The amendments in this guidance will affect the accounting and reporting for all vendors that enter into multiple-deliverable arrangements with their customers when those arrangements are within the scope of this Subtopic.  This Statement is effective for fiscal years beginning on or after June 15, 2010. Earlier adoption is permitted. If a vendor elects early adoption and the period of adoption is not the beginning of the entity’s fiscal year, the entity will apply the amendments under this Subtopic retrospectively from the beginning of the entity’s fiscal year.  The presentation and disclosure requirements shall be applied retrospectively for all periods presented. Currently, Management believes this Statement will have no impact on the financial statements of the Company once adopted.

In January 2010, the FASB issued ASU 2010-06, Fair Value Measurements and Disclosures (Topic 820): Improving Disclosures about Fair Value Measurements, which will require companies to make new disclosures about recurring or nonrecurring fair value measurements including significant transfers into and out of Level 1 and Level 2 fair value hierarchies and information on purchases, sales, issuance and settlements on a gross basis in the reconciliation of Level 3 fair value measurements. The ASU is effective prospectively for financial statements issued for fiscal years and interim periods beginning after December 15, 2009. The new disclosures about purchases, sales, issuance and settlements on a gross basis in the reconciliation of Level 3 fair value measurements is effective for interim and annual reporting periods beginning after December 15, 2010. The Company expects that the adoption of ASU 2010-06 will not have a material impact on its financial statements.

The Company has reviewed all other recently issued, but not yet adopted, accounting standards in order to determine their effects, if any, on its consolidated results of operation, financial position or cash flows. Based on that review, the Company believes that none of these pronouncements will have a significant effect on its consolidated financial statements.

3.  Going Concern and Liquidity

The Company has accumulated losses from inception through December 31, 2010 of (10,185,247) and has had negative cash flows from operating activities during the period from inception through December 31, 2010. These factors raise substantial doubt about the Company’s ability to continue as a going concern.  

Management plans are to further develop new and innovative products and services that target the telecommunications industry.  If management is unsuccessful in these efforts, discontinuance of

operations is possible.  The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

4. Equity-Based Compensation

On January 1, 2010, the Company’s board of directors approved a stock plan.  The stock plan known as the 2010 Stock Plan (the “Plan”) reserves up to 15,000,000 shares of the Company’s authorized common stock for issuance to officers, directors, employees and consultants under the terms of the Plan.  The Plan permits the board of directors to issue stock options and restricted stock.   

The fair value of each option granted under the Plan is estimated on the date of grant, using the Black-Scholes option pricing model, based on the following weighted average assumptions:

The risk-free interest rate is based upon the U.S. Treasury yield curve at the time of grant for the respective expected life of the option. The expected life (estimated period of time outstanding) of options was estimated using the simplified method for each option under ASC 718-10-S99-1 with the expected term equal to the vesting period.  The Company was unable to rely on historical exercise data due to the early stage of the Company and no historical exercise data.  The simplified method was applied to all options for all periods presented. The expected volatility of the Company’s options was calculated using historical data of comparable companies in the Company’s industry. Expected dividend yield was not considered in the option pricing formula since the Company does not pay dividends and has no plans to do so in the future. If actual periods of time outstanding and rate of forfeitures differs from the expected rates, the Company may be required to make additional adjustments to compensation expense in future periods.

During the year  ended December 31, 2010, 12,276,500 options were issued to employees and 3,015,500 unvested options were forfeit.  A summary of the status of the Company’s outstanding stock options as of December 31, 2010 and changes during the period then ended is presented below:

Option-based compensation expense totaled $236,643 for the twelve months ended December 31, 2010. The total fair value of options vested was $0 for the period ended December 31, 2010.  As of December 31,

2010, the Company had $1,361,587 in unrecognized compensation costs related to non-vested stock options granted under the Plan.

On April 12, 2010 5,262,478 shares of common stock were issued to consultants pursuant to consulting agreements that provided stock compensation on the completion of the merger.  The stock issued pursuant to those agreements had 12 month lock up provisions restricting the trading of the stock.  The value of those shares issued to consultants for services to complete a merger were calculated at $0.94 per share for a total of $4,946,729 of equity based compensation recognized on April 12, 2010.  The per share value calculated was determined through a market-based approach which determined a 5% restriction discount and a 10% blockage discount to the weighted average share price of $1.10 of private placement stock prices issued around April 12, 2010.

5. Composition of Certain Financial Statement Captions

Other Assets

In February 2010, the Company signed a letter of intent to enter into a services and asset acquisition agreement with a network operator.  The agreement provides for a payment of $350,000 which was fully paid in October 2010.  The payments were made in advance of taking possession of the video distribution system and video content rights provided in the agreement. If the network operator does not fulfill remaining conditions of the agreement pertaining to the transfer of rights and licenses, which are subject to content provider approval, the asset may be determined to be impaired.  If the Company does not obtain the necessary financing to operate the system, the asset may be determined to be impaired.

On March 3, 2011 the company received a “notice of exercise of video system reversionary rights.” Currently, there is a dispute between UTOPIA and Connected Lyfe as to who has not performed under the existing contract.  As stated in the notice, UTOPIA is working with Connected Lyfe on a resolution.  However, if a resolution, satisfactory to both companies, cannot be found the situation could escalate to additional legal action.  

On May 14, 2010, the Company entered into a Purchase Agreement with a telecom and cable services provider. Under the terms of the agreement, Connected Lyfe would acquire for specified properties, (i) property rights of entry, (ii) network infrastructure, (iii) subscribers, (iv) certain regional assets, and (v) license to the telecom and cable services provider back office system for use on acquired subscribers and future subscribers of the subsidiary of the Company in exchange for $500,000 in cash, which was received by the telecom and cable services provider on execution of the agreement, and 240,000 shares of the Company’s common stock.  As of December 31, 2010 all conditions related to the purchase have not been completed and LYFE has not taken physical possession of the assets. The remaining condition relating to the transfer of the assets are the ability of LYFE to operate and service the customer base in the specified properties.  If LYFE is unable to obtain the financing or operating structure to service the customers the asset may be determined to be impaired.  If the assets do not provide sufficient revenues to cover expenses associated with the properties, the asset may be determined to be impaired.  If the suppliers do not honor the contracts or provide the necessary services to the customers or network infrastructure, the asset may be determined to be impaired.

6. Operating Leases

The Company leases office space in Utah under an operating lease that expires in May 2013 and an office in Michigan that expires in March 2013. Rental expense under the operating leases is recognized on a straight-line basis based on total expected lease payments over the life of the lease, and was approximately $142,175 for the period from January 1, 2010 to December 31, 2010.  The Utah property owner is a relative of one of the officers of the Company.

Future minimum rental payments required under these non-cancelable operating lease consists of the following at December 31, 2010:

7. Employment Agreements

The Company has employment agreements with certain of its executive officers providing for severance payments in the event of termination of their employment without cause.  If all of these employees were terminated the Company would be required to make payments totaling approximately $4.36 million.

8.  Equity

On January 1, 2010 Acclivity Media LLC was converted into a corporation under the laws of the state of Utah with 100,000,000 common shares authorized with a par value of one mill ($0.001).  After the merger (Note 9) the authorized shares were that of LYFE communications in the amount of 200,000,000 common shares authorized.  The member interest was converted into 50,760,000 common shares on January 1, 2010 when the LLC was converted to a corporation under the laws of the state of Utah.  All members of the LLC had their member interest converted to common shares equal to their member interest.

In 2009, the Company entered into a consulting agreement with Smith Consulting Services, Inc. (“SCS”) to provide business advisory services which including identifying opportunities to merge with a public company. Approximately $400,000 in cash was paid to SCS in exchange for these services.  On the merger with LYFE Communications (Note 9), SCS received common shares which combined with shares owned pre-merger equal to 9 ½ percent of the then issued and outstanding shares of the Company after the merger. 2,980,000 shares were outstanding to LYFE [Hangman] shareholders from the reverse merger.  5,262,478 shares were issued for services related to the merger with a fair value of $4,946,729.

During 2010, the Company issued 3,524,859 shares for cash of $3,345,955.   

As of December 31, 2010, there were 95,833 shares to be issued for proceeds of $115,000 received by the Company.

9.  Merger

Pursuant to an Agreement and Plan of Merger dated April 12, 2010, by and among LYFE Communications, Inc., a Utah Corporation, and Connected Lyfe, Inc., a privately held Utah corporation whose business is providing media and communication service.  Under the terms of the Merger Agreement, LYFE Communications, Inc., was merged with and into Connected Lyfe, as the surviving corporation under the Merger, became the wholly owned subsidiary of LYFE Communications, Inc.  The Merger was closed and effective on April 12, 2010.

Connected Lyfe shareholders exchanged their shares of common stock of Connected Lyfe (an aggregate of 52,199,394 shares) for shares of the Company’s common stock that comprised “restricted securities” under SEC Rule 144, on a one for one basis. These shares are also subject to a lock-up period (the “Lock-Up Period”) of the greater of twelve (12) months or the holding period required under Rule 144, subject, however, to waiver by the Company’s Board of Directors, so long as the holding period of Rule 144 has been previously satisfied, along with other conditions to which any resale of such shares are subject under Rule 144.  The new members of the Company’s Board of Directors have not expressed any present intention of waiving this Lock-Up Period, having negotiated its inclusion in the Merger Agreement, but that could change in the future.  An additional 5,262,478 shares were issued to consultants in conjunction with the merger equal to 8.57% ownership on the date of the merger.  

There was $0 of net assets in LYFE communications assumed by Connected Lyfe on the closing of the merger and the net liabilities were assumed by prior management.  All merger-related costs were paid by the consultants pursuant to the consulting agreement.

10.  Related Party Transactions

On May 28, 2010 LYFE entered into a short-term note payable of $175,000 with Robert Bryson, CEO and Chairman of the Board of LYFE.  The note has a 60 day maturity and 9% interest rate.  As of December 31, 2010 LYFE has accrued $9,397 interest on the note payable to Robert Bryson.  As of April 13, 2010 the note has not been repaid.

On July 1, 2010 LYFE entered into a short-term note payable of $40,000 with Smith Consulting Services (SCS) and affiliates.  SCS and affiliates are shareholders of greater than 10% of voting common stock.  The loan does not have an interest rate or due date.

On July 16, 2010 LYFE received $33,187 from Trivector, Inc, of which Greg Smith, COO, and Director is an owner for 27,656 shares.  On July 23, 2010 LYFE received $103,266 from Greg in exchange for 86,055 shares of stock.

On February 16, 2011 an officer of the company loaned the company $100,000.  There were no terms to the loan.

11.  Notes Payable

During 2010, the Company borrowed $65,000 with a stated interest rate of 18%.  Of which, $15,000 was due on November 5, 2010.  The remaining $50,000 is due on October 1, 2011.

On October 1, 2010, the Company signed a $50,000 convertible promissory note with a third party. The note bears interest at 18% per annum and was due on November 5, 2010.  The note has conversion rights that allow the holder of the note at any time to convert all or any part of the remaining principle balance into the Company’s common stock at a price of $0.70.  

On December 9, 2010, the Company signed a $40,000 convertible promissory note with a third party.  The note bears interest at 8% per annum and is due on September 13, 2011.  The note has conversion rights that allow the holder of the note at any time to convert all or any part of the remaining principle balance into the Company’s common stock at a price equal to 55% of the average of the lowest three trading prices for the Common Stock during the most recent ten day period.  

In accordance with ASC 470, the Company has analyzed the beneficial nature of the conversion terms on the above mentioned notes and determined that a beneficial conversion feature (BCF) exists. The Company calculated the value of the BCF using the intrinsic method as stipulated in ASC 470. The value of the BCF was determined based on the stock price on the day of commitments, the discounts as agreed to in the notes, the number of convertible shares, and the difference between the effective conversion price and the fair value of the common stock.  The value of the BCF of the two

notes has been calculated at $83,702.  The BCF has been recorded as a discount to the note payable and to Additional Paid-in Capital and will be amortized over the life of the note.

12.  Income Taxes

The Company has available net operating losses of $4,013,744 which can be utilized to offset future earnings of the Company. A valuation allowance is provided when it is more likely than not that some portion of the deferred tax asset will not be realized.  The valuation allowance increased by $3,568,153 during the year end December 31, 2010.

The Company has the following carryforwards available at December 31, 2010:

The tax effects of temporary differences that give rise to significant portions of the deferred tax asset at December 31, 2010 are summarized below.  The Company did not have any deferred taxes as of December 31, 2009 because it was organized as a limited liability company and its income and losses were taxed directly to the owners.

The effective tax rate for continuing operations differs from the statutory rate [34%] as follows:

Uncertain Tax Positions

The Company has evaluated for uncertain tax positions and determined that any required adjustments would not have a material impact on the Company’s balance sheet, income statement, or statement of cash flows.

The Company did not recognize any penalties or interest related to uncertain tax positions during the years ended December 31, 2010 and 2009.  No penalties or interest for unrecognized tax benefits had been accrued as of December 31, 2010 and 2009.

The Company has filed income tax returns in the US and other state jurisdictions.   The years ended December 31, 2010 and 2009are open for examination.

13.  Concentrations

The Company’s current only source of revenues relies on the Company’s access to the UTOPIA network.  Should UTOPIA cease to provide network access to the Company, the Company may lose their source of revenues.

14.  Contingency

The Company was served with a lawsuit for the collection of fees from a vendor.  The Company has accrued for these fees in accounts payable.  The Company intends to pay the amount owed when funds are available.

15.  Subsequent Events

On February 2, 2011 the company signed a convertible note with a New York based investment banking firm.  The note allows the holder to convert the amount of the note and any accrued interest to Connected Lyfe common stock at a 45% discount of the average of the three lowest closing pricing in the previous ten trading sessions prior to converting.  The face amount of the note is $40,000 and the annual interest on the note is 8%.  The note matures on October 11, 2011.

On February 16, 2011 an officer of the company loaned the company $100,000.  There were no terms to the loan.

On March 2, 2011 the company received a notice of termination in conjunction with the agreement between Connected Lyfe and UTOPIA entitled Non-Exclusive Network Access and Use Agreement.  According to the notice, Connected Lyfe has until May 2, 2011 to transition its customers to another service provider on the UTOPIA network or cure the breach by working out an arrangement with UTOPIA that is acceptable.  

The notice of termination is due to non-payment of network access fees. The Company plans to work out an arrangement with UTOPIA thereby retaining its customer base on the network.  If the company is unable to reach an agreement with UTOPIA it may be forced to transition its customers on the UTOPIA network to another service provider.

On March 25, 2011 two shareholders loaned the company a combined $7,500.  There were no terms on the loan.

On March 3, 2011 the company received a “notice of exercise of video system reversionary rights.” Currently, there is a dispute between UTOPIA and Connected Lyfe as to who has not performed under the existing contract.  As stated in the notice, UTOPIA is working with Connected Lyfe on a resolution.  However, if a resolution, satisfactory to both companies, cannot be found the situation could escalate to additional legal action.  

On March 31, 2011 Robert Bryson, the Company’s Chief Executive Officer stepped down and assumed the position of Executive Vice President of Business Development.  Gregory Smith the Company’s Chief Operating Officer accepted the position of Chief Executive Officer.

On April 13, 2011 the company’s board of directors, approved, priced and granted 5,160,000 options to purchase 5,160,000 shares of the company’s common stock.  The options were priced at $0.21.

ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

We have had no disagreements with our independent auditors on accounting or financial disclosures.

ITEM 9A. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report.  Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures, as of the end of the period covered by this report were not effective such that the information required to be disclosed by us in reports filed under the Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms and (ii) accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding disclosure.  A controls system cannot provide absolute assurance, however, that the objectives of the controls system are met, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected.

Management’s Annual Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act). Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes of accounting principles generally accepted in the United States.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Therefore, even those systems determined to be effective can provide only reasonable assurance of achieving their control objectives.

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer evaluated the effectiveness of our internal control over financial reporting as of December 31, 2010.  In making this assessment, our management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in Internal Control - Integrated Framework.  Based on this evaluation, our management, with the participation of the President and Secretary/Treasurer, concluded that, as of December 31, 2010, our internal controls over financial reporting were not effective.  

Since the evaluation, our management has made adjustments and improved our internal controls and continues to make adjustments and improve the company’s internal controls and procedures.

This Annual Report does not include an attestation report of our registered public accounting firm regarding internal controls over financial reporting. Management’s report was not subject to attestation by our registered public accounting firm pursuant to the temporary rules

of the Securities and Exchange Commission that permit the Company to provide only management’s report in this Annual Report.

Changes in Internal Control Over Financial Reporting

There have been no changes in internal control over financial reporting during the last fiscal quarter of our fiscal year ended December 31, 2010.

ITEM 9B. OTHER INFORMATION

Not Applicable

PART III

The following sets forth information about our directors and executive officers as of the date of this report:

Robert Bryson, 51, President, Chief Executive Officer and Director:  

Robert Bryson has more than 26 years experience in telecom, technology, and media, business development, sales, and marketing.  Robert co-founded Connected Lyfe to accelerate the delivery of the next generation of television, serving the demands of consumers to view, share, and manage their television from any device at any time and location, fully integrated with their connected lives.  Prior to founding Connected Lyfe, Robert was SVP of sales and business development at Digital Smiths, responsible for corporate development, strategic partnerships, and developing customer relationships. Before joining Digital Smiths, Robert was SVP of sales and business development at Move Networks, where he led all sales and business development as well as the commercial deals and strategic relationships with Disney ABC Television Group, ESPN Media Networks, Fox Interactive Media, My Space, Fox Broadcasting, The CW Network, Warner Brothers, and Televisa.  Previously, he served as SVP of sales and marketing for Knowledge Universe and I-Link, and as SVP of business development for Media Station.  He also held senior management positions with Novell and IBM/Rolm Systems

Gregory Smith, 38, Chief Operating Officer and Director

Greg has more than 15 years of technology and product development experience in digital media. Before co-founding Connected Lyfe, Greg was the Chief Technology Officer at DG FastChannel,

where he directed its product innovation through a new broadcaster distribution network for advertisements and syndication. Prior to that, Greg was the Chief Technology Officer at Move Networks. A digital media technologies and services company, Move created the world’s first adaptive streaming protocol for video. He also served as VP of Technologies and Products and VP of Sales at All Media Guide, a business-to-business provider of descriptive entertainment media technology. Additionally, Greg was the Senior Product Manager and Director of Technologies at Edgix and was also part of the Business Development and Product Teams at PanAmSat and Space Systems/Loral. Greg earned bachelor degrees in Aerospace and Mechanical Engineering at Princeton University and continued studies in Control Theory and Advanced Dynamics at Stanford University.

Garrett Daw, 35 Executive Vice President and Director:

Garrett Daw has more than 12 years in sales, management, and business development.  Prior to co-founding Connected Lyfe, Daw was Vice President of Business Development at Infinidi Media a specialty content IPTV service.  Before Infinidi, he owned and operated his own Dish Network and DirecTV satellite dealership where he recruited, hired, trained and managed several hundred direct sales reps. He was one of Dish Network’s and DirecTV’s Top 50 Dealers in the U.S.  He also served as Vice President of Sales at USDTV where he oversaw all sales activities, and managed distribution relationships with companies such as WalMart and RC Willey.  He was responsible for building and managing a sales force of over 350 associates in 3 states.  Garrett also has extensive experience in real estate development, and residential and commercial construction.  As a Senior Project Manager at Daw Inc., he managed projects from $1,000,000 to $15,000,000 for clients such as Novell, NuSkin, Amoco BP, and the Salt Lake Olympic Committee.  Garrett graduated from the University of Utah where he earned a double major in Economics and Political Science.

Stephen L. Russo Chief Financial Officer:

Connected Lyfe’s Chief Financial Officer, Stephen Russo has more than 23 years of executive management experience in finance and operations. He has served in a variety of senior management roles for several high-tech and telecommunications companies and has a track record of taking companies with little or no revenues and building them into competitive organizations with strong financial results. He is an expert in financial system design and implementation and has extensive experience working with SEC disclosure and compliance. During his career he has negotiated and guided the sale and purchase of several companies and business units.  He also served as secretary to the Board of Directors for private and publically traded companies.

Prior to Connected Lyfe Inc., Russo, and a partner, started Velowave a wireless ISP company that took advantage of unutilized network capacity existing on networks in California and Florida. In just over one year, they grew the company and sold the customer base to a network provider in Florida.

Prior to Velowave, Russo served as Chief Financial Officer for MSTAR the largest service provider on the UTOPIA all fiber network.  As CFO, Russo was instrumental in cutting the company’s monthly burn rate in half in the first year with the company.  Russo also spearheaded improvements in all areas of operations such as customer service, installation and support.  After 15 months with the company new owners purchased MSTAR and Russo was promoted to CEO. As CEO, he was tasked by the board of directors to sell the company.  In less than a year he found a buyer, negotiated and closed the sale of the company to a Denver based telecommunications company.

Prior to joining MSTAR, Russo served as the chief financial officer for Sweet Living – a start-up network marketing company.  In just a year and a half, Russo positioned Sweet Living for acquisition and negotiated the details for the sale of Sweet Living’s direct marketing arm to a Phoenix based network marketing company and Sweet Living’s Intellectual property to a publically traded industry leading world-wide network marketing company.  

Before Sweet Living, Russo served as the Vice President of Operations and CFO for Arkona, a leading supplier of fully integrated business management solutions targeted at the automotive dealership industry.  When he joined Arkona, the company had no revenues and was still developing its product. Russo helped lead the company to record revenues and profitability before leaving and a subsequent sale of the Company to Dealer Track.

Prior to Arkona, Russo served as Vice President of Operations and CFO of Vinca Corporation and was instrumental in helping the company become one of the leading data protection companies in the high availability industry.  In 1999 Vinca Corporation was sold to Legato Corporation for just under $100 million.  After earning his CPA certificate, Russo worked as the controller for Sage Analytics International a consulting firm that used a proprietary technology to identify organizational and strategic problems within large companies and organizations.  While at Sage, Russo guided the company through an Initial Public Offering on the NASDAQ stock exchange.  Before leaving Sage Russo, along with management negotiated the sale to a California consulting company.

Russo earned a bachelor's degree in accounting from Brigham Young University.  

Family Relationships

There are no family relationships among any of our officers or directors.

Election of Directors and Officers

Directors are elected to serve for a 1 year term and until their successors have been elected and qualified. Officers are appointed to serve until the meeting of the Board of Directors following the next annual meeting of stockholders and until their successors have been elected and qualified.

Involvement in Certain Legal Proceedings

To the best of our knowledge, none of our directors or executive officers has, during the past five years:

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), requires executive officers and directors, and persons who beneficially own more than ten percent of an issuer's common stock that has been registered under Section 12 of the Exchange Act, to file initial reports of ownership and reports of changes in ownership with the SEC.

As a company with securities registered under Section 15(d) of the Exchange Act, our executive officers and directors and persons who beneficially own more than ten percent of our common stock are not required to file Section 16(a) reports.

Corporate Governance

We currently do not have standing audit, nominating or compensation committees of the Board of Directors, or committees performing similar functions. Until formal committees are established, our entire Board of Directors, perform the same functions as an audit, nominating and compensation committee.

ITEM 11.  EXECUTIVE COMPENSATION

Overview of Compensation Program

We currently have not appointed members to serve on the Compensation Committee of the Board of Directors. Until a formal committee is established, our entire Board of Directors has responsibility for establishing, implementing and continually monitoring adherence with the Company’s compensation philosophy.  The Board of Directors ensures that the total compensation paid to the executives is fair, reasonable and competitive.

Role of Executive Officers in Compensation Decisions

The Board of Directors makes all compensation decisions for, and approves recommendations regarding equity awards to, the executive officers and Directors of the Company.  Decisions regarding the non-equity compensation of other employees of the Company are made by management.

SUMMARY COMPENSATION TABLE

The table below summarizes the total compensation paid to or earned by our Executive Officers, for the year ended December 31, 2010.

Employment Agreements

Refer to Note 7 to the Financial Statements.

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

The following table sets forth the share holdings of beneficial owners owning in excess of 5% of our outstanding voting securities as of December 31, 2010, based upon 62,527,337 shares of our common stock being outstanding on such date:

Security Ownership of Beneficial Owners

Item 13.  Certain Relationships and related Transactions, and Director Independence.

Transactions with Related Persons

Except as indicated below, there were no material transactions, or series of similar transactions, during our last three fiscal years, or any currently proposed transactions, or series of similar transactions, to which we or any of our subsidiaries was or is to be a party, in which the amount involved exceeded the lesser of $120,000 or 1% of the average of our total assets at year-end for the last three completed fiscal years and in which any director, executive officer or any security holder who is known to us to own of record or beneficially more than five percent of any class of our common stock, or any member of the immediate family of any of the foregoing persons, had an interest.

Item 14.  Principal Accounting Fees and Services.

The following is a summary of the fees billed to us by our principal accountants during the fiscal years ended December 31, 2010, and 2009:

Audit Fees - Consists of fees for professional services rendered by our principal accountants for the audit of our annual financial statements and review of the financial statements included in our Forms 10-Q or services that are normally provided by our principal accountants in connection with statutory and regulatory filings or engagements.

Audit-related Fees - Consists of fees for assurance and related services by our principal accountants that are reasonably related to the performance of the audit or review of our financial statements and are not reported under “Audit fees.”

Tax Fees - Consists of fees for professional services rendered by our principal accountants for tax compliance, tax advice and tax planning.

All Other Fees - Consists of fees for products and services provided by our principal accountants, other than the services reported under “Audit fees,” “Audit-related fees,” and “Tax fees” above.

Policy on Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services of Independent Auditors

We have not adopted an Audit Committee; therefore, there is no Audit Committee policy in this regard. However, we do require approval in advance of the performance of professional services to be provided to us by our principal accountant. Additionally, all services rendered by our principal accountant are performed pursuant to a written engagement letter between us and the principal accountant.

PART IV

Item 15.  Exhibits, Financial Statement Schedules.

(a)(1)(2)    Financial Statements.  See the audited financial statements for the year ended December 31, 2010 contained in Item 8 above which are incorporated herein by this reference.

Description of Exhibits

*

Previously filed with the SEC as Exhibits to our initially filed Form 10, on May 19, 2010.

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.

CONNECTED LYFE INC.

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

LYFE COMMUNICATIONS INC.