10-Q 1 v132605_10q.htm


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

 
FORM 10-Q
 

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

For the quarterly period ended:
September 30, 2008
 
 o
 TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
 
 ACT OF 1934

For the transition period from: _____________ to _____________
 

 
EXPLORATIONS GROUP, INC.
(Exact name of registrant as specified in its charter)
 

 
Delaware
000-1175445
65-1089222
(State or Other Jurisdiction
(Commission
(I.R.S. Employer
of Incorporation)
File Number)
Identification No.)
 
34 Fifteenth Street, Brooklyn, NY 11215
(Address of Principal Executive Office) (Zip Code)
 
(718) 788-0066
(Registrant’s telephone number, including area code)
 
Not Applicable
(Former name, former address and former fiscal year, if changed since last report)
 

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

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

Large accelerated filer
¨
Accelerated filer
¨
Non-accelerated filer
¨
Smaller reporting company
þ

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

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date. As of November 14, 2008 there were 24,558,136 shares of common stock outstanding.

APPLICABLE ONLY TO REGISTRANTS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. o Yes o No



PART I
 
ITEM 1. FINANCIAL STATEMENTS

EXPLORATIONS GROUP, INC.

BALANCE SHEET

   
September
30,
     
   
2008
(unaudited)
 
December 31,
2007*
 
ASSETS
             
               
Current assets:
             
Cash and cash equivalents
 
$
227
 
$
227
 
Accounts receivable
   
35,448
   
-
 
               
Total current assets
   
35,675
   
227
 
               
Other assets:
             
Due from related parties
   
88,000
   
-
 
Security deposits
   
59,000
   
59,000
 
               
Total assets
 
$
182,675
 
$
59,227
 
               
LIABILITIES AND STOCKHOLDER'S DEFICIT
             
               
Current liabilities:
             
Accounts payable
   
17,830
   
17,830
 
Sales tax payable
   
122,720
   
122,720
 
Accrued expenses and taxes payable
   
702,054
   
688,776
 
               
Total current liabilities
   
842,604
   
829,326
 
               
Long-term liabilities:
             
Due to related parties
   
85,282
   
69,873
 
Convertible bond payable
 
$
25,000
 
$
25,000
 
               
Total liabilities
   
952,886
   
924,199
 
               
Commitments and contingencies
             
               
Stockholders' deficit:
             
Preferred stock - B
   
675
   
675
 
Common stock
   
253,082
   
162,659
 
Additional paid-in capital
   
1,272,182
   
1,226,971
 
Accumulated deficit
   
(2,296,150
)
 
(2,225,279
)
               
Total stockholder's deficit
   
(770,211
)
 
(864,972
)
               
Total liabilities and stockholder's deficit
 
$
182,675
 
$
59,227
 

*derived from audited financial statements

The accompanying notes are an integral part of these financial statements.



Explorations Group, Inc. and Subsidiaries
Consolidated Statements of Operations
(Unaudited)

 
 
For The Three Months Ended
 
For The Nine Months Ended
 
 
 
September 30,
 
September 30,
 
 
 
2008
 
2007
 
2008
 
2007
 
 
 
 
 
 
 
 
 
 
 
Revenues
                         
Parking
 
$
-
 
$
32,445
 
$
35,448
 
$
97,335
 
 
                         
Operating Expenses
                         
Personnel expenses
   
18,750
   
7,500
   
32,028
   
22,500
 
Bad debt expense
   
-
   
32,445
   
-
   
97,335
 
General and administrative
   
9,606
   
5,427
   
11,643
   
8,975
 
Professional fees
   
11,650
   
3,750
   
32,650
   
17,750
 
 
                 
Total Operating Expenses
   
40,006
   
49,122
   
76,321
   
146,560
 
 
                 
Net loss
 
$
(40,006
)
$
(16,677
)
$
(40,873
)
$
(49,225
)

The accompanying notes are an integral part of these financial statements.



Explorations Group, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
(Unaudited)
 
 
 
 For The Nine Months Ended
 
 
 
 September 30,
 
 
 
 2008
 
2007
 
 
 
  
 
 
 
Cash Flows From Operating Activities:
             
Net income (loss) from operations
 
$
(40,873
)
$
(49,225
)
Adjustments to reconcile net income (loss) from operations to net cash (used in) operating activities:
             
 
         
Changes in assets and liabilities:
             
Accounts receivable
   
(35,448
)
 
-
 
Due from related party
   
(88,000
)
 
-
 
Accrued expenses
   
13,278
   
13,501
 
 
         
Net Cash (Used In) Operating Activities
   
(151,043
)
 
(35,724
)
 
             
Cash Flows from Financing Activities:
             
Advances from related parties
   
40,006
   
35,724
 
Payments to related parties
   
(24,597
)
 
-
 
Cancellation of debt for common stock
   
135,634
        
 
         
Net Cash Provided By Financing Activities
   
151,043
   
35,724
 
 
         
Net (Decrease) in Cash
   
-
   
-
 
               
Cash - Beginning of Year
   
227
   
227
 
 
         
Cash - End of Period
 
$
227
 
$
227
 
 
The accompanying notes are an integral part of these financial statements.



EXPLORATIONS GROUP, INC.
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2008

1.
Summary of significant accounting policies:

 
General:

On September 9, 2004, Explorations Group, Inc. (the "Company") acquired all of the issued and outstanding stock of Parking Pro, Inc., a New York corporation (“Parking Pro”).

Parking Pro was formed in the State of New York on May 25, 2004. The Company and its subsidiaries operate and lease public parking garages located in New York City and the surrounding area. On July 20, 2004, the Company issued 3,000 shares of common stock to acquire all of the outstanding shares of three affiliated companies: Big Scherm Corp. (“Big Scherm”), Chiefs Management Corp. (“Chiefs”) and NYC Parking Services Corp. (“NYC”).

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. The Company has a stockholders deficit of $770,211 and a working capital deficit of $806,929 at September 30, 2008. The Company had a loss of $40,873 for the nine months ended September 30, 2008. These conditions raise substantial doubt as to the Company’s ability to continue as a going concern. These financial statements do not include any adjustments that might be necessary if the Company were unable to continue as a going concern. The continued existence of the Company and its subsidiaries is dependent upon the ability to obtain additional capital and/or debt financing needed to repay the current obligations of the Company and its subsidiaries. There is no assurance that the Company will be able to obtain such capital or enough financing to provide the necessary cash flow needed to fund the Company’s operations.
 
Basis of consolidation:

The financial statements are prepared using the accounts of the Company and its wholly owned subsidiaries. All material intercompany transactions and account balances have been eliminated upon consolidation.

Cash and cash equivalents:

Cash and cash equivalents include cash on hand and in the banks. They are carried at cost, which approximates fair market value.

Concentration of credit risk:

The Company maintains its cash in bank deposit accounts at high credit, quality financial institutions. The balances, at times, may exceed federally insured limits. 
 


EXPLORATIONS GROUP, INC.
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2008

1.
Summary of significant accounting policies (continued):

Property and equipment:

Property and equipment are recorded at cost. Expenditures for major additions and improvements are capitalized, while minor replacements, maintenance and repairs are charged to expense as incurred. When property is retired or otherwise disposed of, the cost and accumulated depreciation are removed from the accounts and any resulting gain or loss is reflected in Other Income (Expense).

Depreciation is provided over the estimated useful lives of the assets involved using the straight-line or accelerated methods.

The Company continually evaluates whether events and circumstances have occurred that may warrant revision of the estimated useful life of property and equipment or whether the remaining balance of property and equipment should be evaluated for possible impairment.

Advertising costs:

The Company expenses advertising costs as they are incurred. The Company did not incur any advertising expense for the nine months ended September 30, 2008.
 
Income taxes:   

The Company files a consolidated federal income tax return. The tax return is prepared using the same method of accounting that is used for the preparation of the financial statements.
 
Use of estimates:

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.

Revenue recognition:

Parking revenue from monthly customers is recognized as per the terms of the underlying contracts, usually on a monthly basis. Parking revenue from transient customers is recognized when received.
 


EXPLORATIONS GROUP, INC.
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2008

2.
Reorganization:

On July 29, 2004, Explorations Entertainment and Education, Inc. (the “Company”) executed a reorganization agreement (the “Agreement”) with Explorations Group, Inc. (“Explorations”). Under the terms of the Agreement, the Company’s shareholders shall exchange all of the issued and outstanding shares of common stock of the Company in exchange for 1,500,000 shares of Explorations, $ .01 par value, common stock and 60,000 shares of Class B voting convertible preferred shares. Each Class B share is convertible into 100 shares of Explorations common stock. Of the 7,500,000 shares of common stock that may be received by the Company’s shareholders, 6,000,000 shares shall be designated as “Restricted Shares”. Upon the Company’s acquisition of interests in other parking facilities (a “Facility”) either owned or operated by affiliates of the Company or third parties (a “Facility Acquisition”), for which it acquires leases and/or management contracts, all restriction and cancellation provisions on six (6) restricted shares shall be removed for each one hundred ($ 100) dollars in annualized earnings before interest, taxes, depreciation and amortization (“EBITDA “) acquired by the Company as a result of such Facility Acquisition, which shall be determined by the December 31, 2003 financial statements. There were no changes under the terms of this agreement during the nine months ended September 30, 2008.

3.
Related party transactions:

The Company uses the services of a related entity to perform management services for the subsidiaries. F.B. Acquisitions, Inc., affiliated through common management, processed and collected cash receipts and paid certain expenses as well as providing other services on behalf of the subsidiaries. No formal agreement exists and no additional fee is charged for the other services. For the nine months ended September 30, 2008 the company did not pay any management fees.
 
4.
Management agreement:

On March 13, 2002 and commencing March 15, 2002, a subsidiary entered into a five year agreement with a third party who will manage and maintain the parking facilities that the subsidiary currently leases under an operating lease. Since the expiration of this agreement, the third party has continued to manage and maintain the facilities by the same terms.
 
5.
Property and equipment:
  
Property and equipment consists of the following:     

   
September 30,
2008
 
Furniture and fixtures
 
$
1,586
 
Less: accumulated depreciation
   
(1,586
)
         
Property and equipment, net
 
$
- 0 -
 
 

 
EXPLORATIONS GROUP, INC.
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2008

5.
Income taxes:

Due to a net operating loss carryfoward, there is no current income tax provision for the nine months ended September 30, 2008.

The tax provision for income taxes differs from the “expected” tax expense for the nine months ended September 30, 2008, computed by applying a federal corporation tax rate of 34% as follows:

Computed “expected” tax expense
 
$
- 0 -
 
Valuation allowance
   
- 0 -
 
   
$
- 0 -
 

The tax effects of the temporary differences that give rise to significant portions of deferred tax assets and liabilities are as follows:

Tax benefit of net operating loss carryforward
 
$
700,000
 
Gross deferred tax asset
   
700,000
 
Valuation allowance
   
(700,000
)
Net deferred tax asset
 
$
- 0 -
 

As of September 30, 2008, the Company has a net operating loss carryforward of approximately $2,300,000 for income tax purposes, available to offset future earnings which expire on various dates through 2027. Uses of the net operating losses may be limited based upon the Internal Revenue Code.

In assessing the possibility of being able to use the deferred tax assets, management must consider whether it is more likely than not that the Company will generate taxable income in excess of these losses. Due to the Company’s reorganization and the ceasing of operations, except for consulting activities, it is more likely than not that the benefit of the deferred tax asset will never be realized.

6.
Convertible bond payable:

During 2004, Explorations Group Inc. issued a Class A, Series A Convertible Bond to the Tucker Family Spendthrift Trust (the “Trust”) in exchange for a series of matured and past due promissory notes aggregating $25,000 held by the Trust. The Class A Bond is in the principal amount of $25,000 plus interest accrued and has a term of five years, with interest payable upon maturity at the annualized rate of 2% over the prime rate charged by Citibank, N.A. (New York City). The Bond is secured by all of the Company’s assets and may be subdivided at the Trust’s option, into two or more separate obligations in the principal amount of at least $10,000 each. The Bond matures on December 31, 2009/

The Class A Bond is convertible into shares of the Company’s securities such that, upon complete conversion, the number of shares owned by the Trust shall be equal to 10% of the Company’s outstanding and reserved capital stock, as defined in the bond document. In any event, the number of shares to be issued shall not exceed 4,200,000 shares of common stock. The Bond is subject to anti-dilutive rights for six months thereafter. Conversion may be effected in whole or in part and to this date the Trust has not exercised the option of conversion.


 
EXPLORATIONS GROUP, INC.
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2008

7.
Commitments and contingencies: 

The Internal Revenue Service has a federal tax lien against all of the property and rights to the property of Big Scherm’s, Chiefs and NYC’s former parent, Smart Parking, Inc., for unpaid federal withholding taxes for the years ended December 31, 1999 and 2000. The unpaid balance continues to incur additional charges for interest at the current rate charged by the Internal Revenue Service.

During the nine months ended September 30, 2008 there was $31,250 recorded for the employment agreement.

8.
Common stock:
 
During the quarter ended March 31, 2008, the Company issued 9,042,267 shares of common stock for the satisfaction of debt amounting to $135,634 or $0.015 per share. The Company valued these common shares at the quoted trading price on the date of issuance.



ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND PLAN OF OPERATION

OVERVIEW

As of the beginning of 2004, the Company, through its operating subsidiary Pop Starz, Inc., was engaged in the business of operating high-energy dance training centers, concentrating on the musical genre popularly referred to as "Hip Hop" and "Pop." Pop Starz' ultimate goal was the development and operation of dance and talent development programs (dance, acting, modeling and voice) throughout Florida and nationally, combining the functions of traditional dance and exercise facilities with training in modeling, drama and voice development, and providing participants of all ages with an opportunity to participate in professional entertainment opportunities.

During 2004, the Company decided to pursue a new business direction and on September 9, 2004, the Company acquired all of the issued and outstanding stock of Parking Pro, Inc., a New York corporation ("Parking Pro"). Parking Pro was formed in May, 2004, for the principal purpose of acquiring and managing parking lots and garages in New York City and surrounding areas.

As of September 9, 2004, the business of Parking Pro, which operates operating parking garages in New York City through wholly-owned subsidiaries, became the Company’s sole operating business. As of September 31, 2008, the Company operated one parking garage in New York City.

Critical accounting policies and estimates:

Our financial statements and accompanying notes have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires our management to make estimates, judgments and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses. We continually evaluate the accounting policies and estimates we use to prepare the consolidated financial statements. We base our estimates on historical experiences and assumptions believed to be reasonable under current facts and circumstances. Actual amounts and results could differ from these estimates made by management.

We do not participate in, nor have we created, any off-balance sheet special purpose entities or other off-balance sheet financing.

We have identified the accounting policies below as critical to our business operations and the understanding of our results of operations.

Principles of consolidation - The accompanying consolidated financial statements include the accounts of Explorations Group Inc. and its wholly owned subsidiaries (collectively, the "Company"). All significant inter company transactions have been eliminated.



Functional currency - The currency of the primary economic environment in which we operate are conducted is the U.S. dollar, which is used as the Company's functional and reporting currency.

Cash - We maintain cash in bank accounts which may, at times, exceed federally insured limits. We have not experienced any loss on these accounts.

Accounts receivables - Accounts receivable are reported at their outstanding unpaid principal balances reduced by an allowance for doubtful accounts. We estimate doubtful accounts based on historical bad debts, factors related to specific customers' ability to pay, and current economic trends. We write off accounts receivable against the allowance when a balance is determined to be uncollectible.

Property and equipment - Depreciation of property and equipment is provided for by the straight-line method over the estimated useful lives of the related assets. Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable.

Intangible assets - Intangible assets are carried at cost less accumulated amortization. Amortization is computed on the straight-line method over the ten-year estimated useful life of the assets. We periodically review the carrying value of our intangible assets to determine whether impairment may exist. We consider relevant cash flow and profitability information, including estimated future operating results, trends and other available information, in assessing whether the carrying value of the intangible assets can be recovered. If it is determined that the carrying value of the intangible assets will not be recovered from the undiscounted future cash flows, the carrying value of the assets would be considered impaired. An impairment charge is measured as any deficiency in the amount of estimated fair value of the intangible assets over carrying value.

Revenue Recognition - The Company recognizes revenue in accordance with Staff Accounting Bulletin (“SAB”) No. 104, “Revenue Recognition in Financial Statements”. Under SAB No.104, the Company recognizes revenue when the following criteria have been met: persuasive evidence of an arrangement exists, the fees are fixed and determinable, no significant Company obligations remain and collection of the related receivable is reasonable assured.

Recently Issued Accounting Pronouncements - In December 2004, the Financial Accounting Standards Board issued Statement of Financial Accounting Standard ("SFAS") No. 123R "Share Based Payment". This statement is a revision of SFAS Statement No. 123, "Accounting for Stock-Based Compensation" and supersedes APB Opinion No. 25, "Accounting for Stock Issued to Employees," and its related implementation guidance. SFAS 123R addresses all forms of share based payment ("SBP") awards including shares issued under employee stock purchase plans, stock options, restricted stock and stock appreciation rights. Under SFAS 123R, SBP awards result in a cost that will be measured at fair value on the awards' grant date, based on the estimated number of awards that are expected to vest and will be reflected as compensation expense in the financial statements. This statement is effective for public entities that file as small business issuers - as of the beginning of the first interim or annual reporting period that begins after December 15, 2005, and as adopted by the Company commencing January 1, 2006.

Management does not believe that any recent issued, but not yet effective, accounting standards if currently adopted would have a material affect on the accompanying financial statement



RESULTS OF OPERATIONS

COMPARISON OF THE THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30, 2008 TO THE THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30, 2007


For the three month period ended September 30, 2008, our revenues were $0 as compared to $32,445 for the comparable period in 2007, a decrease of $32,445. For the nine month period ended September 30, 2008, our revenues were a total of $35,448 as compared to $97,335 for the comparable period in 2007, a decrease of $61,887. The decrease in revenues was related the subleasing of the Company’s parking facility for which revenues due were not collected.

Operating Expenses

Our operating expenses are comprised of costs of parking (rent), general and administrative expenses and professional fees.

For the three month period ended September 30, 2008, our operating expenses were $ 40,006 as compared to $49,122 for the comparable period in 2007, a decrease of $9,116. The decrease in operating expenses was primarily the result of a significant decrease in our bad debt expense during the period which was partially offset by an increase in our expense for professional services and personnel.

For the nine month period ended September 30, 2008, our operating expenses were $76,321 as compared to $146,560 for the comparable period in 2007, a decrease of $70,239. The decrease in operating expenses was primarily the result of a significant decrease in our bad debt expense during the period which was partially offset by an increase in our expense for professional services and personnel.

Net Profit

Our net profit or loss is computed as our total revenues less expenses.

For the three month period ended September 30, 2008, our net loss was $40,006 as compared to a net loss of $16,677 in the same period in 2007, an increase of $23,329. The increase in net loss is primarily attributed to our decrease in revenue during the period which was partially offset by the large decrease in bad debt expense.

For the nine month period ended September 30, 2008, our net loss was $40,873 as compared to a net loss of $49,225 in the same period in 2007, a decrease of $8,352. The decrease in net loss is primarily attributed to our decrease in bad debt expense during the period.



LIQUIDITY AND CAPITAL RESOURCES

Our continuation as a going concern, is dependent upon, among other things, our ability to obtain additional financing when and as needed and to generate sufficient cash flow to meet our obligations on a timely basis. No assurance can be given that we will be able to obtain such financing on acceptable terms. Our independent registered public accounting firm, in their reports on our financial statements for the year ended December 31, 2007 expressed substantial doubt about our ability to continue as a going concern. These circumstances could complicate our ability to raise additional capital. Our financial statements do not include any adjustments to the carrying amounts of our assets and liabilities that might result from the outcome of this uncertainty.

In the event that we require additional capital, we may seek to sell additional equity or debt securities or obtain a credit facility. The sale of additional equity or convertible debt securities could result in additional dilution to our stockholders. The incurrence of indebtedness would result in an increase in our fixed obligations and could result in borrowing covenants that would restrict our operations. There can be no assurance that financing will be available in amounts or on terms acceptable to us, if at all. If financing is not available when required or is not available on acceptable terms, we may be unable to develop or enhance our products or services, or, we may potentially not be able to continue business activities. Any of these events could have a material and adverse effect on our business, results of operations and financial condition.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

Not required for Smaller Reporting Companies.

ITEM 4T. CONTROLS AND PROCEDURES

Evaluation of Effectiveness of Disclosure Controls and Procedures

Under the supervision and with the participation of our management, including our Chief Executive Officer, who also acts as our Chief Financial Officer, the Company evaluated the effectiveness of its disclosure controls and procedures, as such term is defined under Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The evaluation considered the procedures designed to provide assurance to ensure that information required to be disclosed by us in the reports filed or submitted by the Company under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and communicated to our management as appropriate to allow timely decisions regarding required disclosure. Our disclosure controls and procedures have been designed to provide reasonable assurance of achieving their objectives. Based on that evaluation, our Chief Executive Officer concluded that our disclosure controls and procedures were effective at that reasonable assurance level, as of September 30, 2008.

Changes in Internal Control over Financial Reporting

There have been no changes in our internal control over financial reporting (as defined in Exchange Act Rule 13a-15(f)) during the three months ended September 30, 2008 that have materially affected, or are reasonably likely to materially affect our internal control over financial reporting.



LIMITATIONS OF EFFECTIVENESS OF INTERNAL CONTROLS

Management does not expect that our disclosure controls and procedures or our internal control over financial reporting will necessarily prevent all fraud and material errors. An internal control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations on all internal control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. The design of any system of internal control is also based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes in circumstances, and/or the degree of compliance with the policies and procedures may deteriorate. Because of the inherent limitations in a cost effective internal control system, financial reporting misstatements due to error or fraud may occur and not be detected on a timely basis.

PART II. OTHER INFORMATION


We are not a party to any material legal proceeding.

ITEM 1A. RISK FACTORS

Not applicable.


Not applicable.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

Not Applicable.


Not Applicable.


Not Applicable.



ITEM 6. EXHIBITS

Exhibits 

31
Certification of Principal Executive Officer and Principal Financial Accounting Officer Pursuant to Section 302(a) of the Sarbanes-Oxley Act of 2002.
 
32
Certification of Principal Executive Officer and Principal Financial Accounting Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

 
In accordance with the requirements of the Exchange Act, the Registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Signature
 
Capacity
Date
       
/s/ Eric Brown
 
Chief Executive Officer, President and
Principal Financial Accounting Officer
November 14, 2008
Eric Brown