c52390_10qsb.htm -- Converted by SEC Publisher, created by BCL Technologies Inc., for SEC Filing

10QSB 1 c52390_10qsb.htm c52390_10qsb.htm -- Converted by SEC Publisher, created by BCL Technologies Inc., for SEC Filing

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-QSB

QUARTERLY REPORT PURSUANT TO SECTION 13 OF 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended December 31, 2007

FEARLESS INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)

NEVADA	000-52159	20-3155365

(State or other jurisdiction of	(Commission File Number)	(IRS Employer Identification No.)
incorporation)

927 Lincoln Road, Suite 200, Miami, Florida 33139
(Address of principal executive offices, including zip code)

(305) 674-1211
(Registrant's telephone number, including area code)

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:

Yes x No o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act):

Yes o No x

As of December 31, 2007, Fearless International, Inc. had 67,664,197 shares of common stock outstanding.

Transitional Small Business Disclosure Format: Yes o No x

	TABLE OF CONTENTS
Part I. Financial Information		Page
		No.
Item 1.	Financial Statements (Unaudited)

	Consolidated Balance Sheet - As of December 31, 2007	3
	Consolidated Statements of Income - for the three months and nine months ended December	4
	31, 2007 and 2006

	Consolidated Statements of Cash Flows - for the three months and nine months ended	5
	December 31, 2007 and 2006

	Notes to Consolidated Financial Statements	6

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	10

Item 3.	Controls and Procedures	12

Part II. Other Information
Item 1.	Legal Proceedings	13

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	13

Item 3.	Defaults upon Senior Securities	13

Item 4.	Submission of Matters to a Vote of Security Holders	13

Item 5.	Other Information

Item 6.	Exhibits	13
Signatures		14

FEARLESS INTERNATIONAL, INC.
(A Development Stage Company)
Consolidated Balance Sheet
As of December 31, 2007
(unaudited)

ASSETS
Current Assets
Cash	$	21,484
Accounts Receivable		282,245
Other Current Assets		4,000
Total Current Assets		307,729

Fixed Assets (net of accumulated depreciation of $283,515		4,367,872

TOTAL ASSETS	$	4,675,601

LIABILITIES & EQUITY
Liabilities
Current Liabilities
Accounts Payable	$	1,058,163
Accrued Expenses		800,251
Customer Progress Payments		170,875
Short Term Loan, Mellon Bank (Note 4)		1,987,001
Short Term Loans (Note 4)		1,043,424
Discount on Short Term Loans (Note 5)		(52,500	)
Bridge Loans (Note 3)		1,572,926
Total Current Liabilities		6,580,140

Total Liabilities		6,580,140

Shareholders' Deficiency
Common Stock: $0.001 Par Value, 840,000,000
Shares Authorized; 67,664,197 Shares
Outstanding (Note 6)		67,664
Additional Paid in Capital		4,786,260
Retained Earnings		(3,574,443	)
Deficit Accumulated During the Development Stage		(3,184,020	)
Total Shareholders' Deficiency		(1,904,539	)

TOTAL LIABILITIES & SHAREHOLDERS' DEFICIENCY	$	4,675,601

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

FEARLESS INTERNATIONAL, INC
(A Development State Company)
Consolidated Statement of Operations
For the Three Months and Nine Months Ended December 31, 2007 and 2006 and
February 23, 2004 (Inception) to December 31, 2007
(unaudited)

														February 23, 2004
		Three Months Ended December 31,						Nine Months Ended December 31,						(Inception) to
		2007			2006			2007			2006			December 31, 2007
Revenue
Sales 28'	$	751,910		$	-		$	1,761,485		$	-		$	1,761,485

Cost of Sales		559,008			0			1,235,652			0			1,235,652
Gross Profit		192,902			0			525,833			0			525,833

Operating Expenses
Marketing		62,841			149,996			250,040			228,746			635,243
Advertising		9,333			85,728			47,060			86,231			170,035
Promotions/Boat Shows		140,586			80,228			300,976			103,142			795,927
Professional and Legal Fees		225,605			157,186			543,801			263,731			993,977
Travel Expenses		59,857			38,483			217,299			66,487			385,535
Depreciation		91,280			6,017			252,909			6,016			283,516
Payroll Expenses		167,358			131,607			500,112			200,878			839,275
Stock Compensation		517,300			0			729,300			0			729,300
Organizational Expenses		9,154			0			58,362			25			69,650
Insurance		7,039			0			51,547			0			80,922
Rent Expense		12,000			12,000			32,000			12,000			60,000
Charity		0			0			11,800			0			11,800
Legal Settlement		0			0			0			0			1,175,000
Warranty Expense		0			0			19,200			0			19,200
Other General and Administrative Expenses		12,843			13,250			53,388			14,925			76,267
Total Operating Expenses		1,315,196			674,495			3,067,794			982,181			6,325,647

Loss From Operations		(1,122,294	)		(674,495	)		(2,541,961	)		(982,181	)		(5,799,814	)

Other Expense
Interest Expense		306,147			69,117			616,870			100,124			792,474
Other		13,170			(35,000	)		25,189			90,986			166,175
Total Other Expense		319,317			34,117			642,059			191,110			958,649

Net (Loss) Before Tax Provision		(1,441,611	)		(708,612	)		(3,184,020	)		(1,173,291	)		(6,758,463	)

Tax (Benefit) Provision		0			0			0			0			0

Net (Loss)	$	(1,441,611	)	$	(708,612	)	$	(3,184,020	)	$	(1,173,291	)	$	(6,758,463	)

Basic and Diluted (Loss) Per Share	$	(0.02	)	$	(0.01	)	$	(0.05	)	$	(0.02	)

Weighted Average Shares Outstanding		63,079,379			57,100,000			62,158,983			57,100,000

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

FEARLESS INTERNATIONAL, INC.
(A Development Stage Company)
Consolidated Statement of Cash Flows
For the Nine Months Ended December 31, 2007 and 2006 and
February 23, 2004 (Inception) to Date
(unaudited)

							February 23, 2004
	Nine Months Ended December 31,						(Inception) to
	2007			2006			December 31, 2007
Cash Flows from Operating Activities
Deficit Accumulated During the Development Stage	$	(3,184,020	)		(1,173,292	)	$	(6,758,463	)
Adjustments to Reconcile Net Income
to Net Cash Provided by Operations:
Depreciation		252,909			6,017			283,515
Stock Issued for Settlement		-			-			1,175,000
Stock Compensation		729,300			-			729,300
Amortization of Discount on Short Term Loan		7,500			-			7,500
Fees on Issuance of Short Term Loan		130,000			-			130,000
Changes in Assets and Liabilities:
Deposits		-			(4,000	)		(4,000	)
Accounts Payable		223,110			290,047			1,057,829
Customer Progress Payments		(5,025	)		-			170,875
Accrued Expenses		493,669			179,843			800,252
Payroll Liabilities		(4,210	)		14,358			335
Receivables		(280,745	)		300			(282,245	)
Net Cash Provided (Used) by Operating Activities		(1,637,512	)		(686,727	)		(2,690,102	)

Cash Flows From Investing Activities
Purchase of Fixed Assets		(2,288,274	)		(1,173,800	)		(4,651,388	)
Net Cash Used From Investing Activities		(2,288,274	)		(1,173,800	)		(4,651,388	)

Cash Flows from Financing Activities
Capital Contribution								900,924
Proceeds from Sale of Stock		1,478,965			-			2,048,700
Short Term Loan Proceeds		2,780,606			775,000			3,035,030
Repayment of Short Term Loan		(194,606	)					(194,606	)
Notes Payable to Member		-			(914,203	)		-
Member Notes Payable to Equity		-			890,924			-
Bridge Loan Proceeds (Payment)		(125,000	)		994,817			1,572,926
Net Cash Provided by Financing Activities		3,939,965			1,746,538			7,362,974

Net Cash Increase for Period		14,179			(113,989	)		21,484
Cash at Beginning of Period		7,305			200,380			-
Cash at End of Period	$	21,484		$	86,391		$	21,484

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

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1. BUSINESS AND OPERATION

Fearless International, Inc., a Nevada corporation (the “Company”) is engaged in the design and marketing of luxury performance powerboats and yachts. The Company is a development stage company.

PBC, LLC, a Missouri company, was formed February 23, 2004 to design and develop luxury performance boats and yachts. This entity was dissolved and all assets and liabilities were transferred to PB Holdings, LLC, a Florida limited liability company formed on September 7, 2005.

Due to changes in ownership, PB Holdings, LLC was dissolved and Fearless Yachts, LLC, a privately held Missouri limited liability company (“Fearless Yachts”), was formed February 14, 2006.

On December 8, 2006, the Company (then known as New Era Marketing, Inc.), and Joseph MacKenzie, its then majority stockholder and president, entered into a Contribution Agreement (the “Acquisition Agreement”) with Fearless Yachts and its individual members. In connection with the closing of the Acquisition Agreement on December 11, 2006 (the “Acquisition”), Fearless Yachts became a wholly-owned subsidiary of the Company and the members of Fearless Yachts received an aggregate of 27,000,000 shares of the Company’s common stock in exchange for all issued and outstanding membership interests in Fearless Yachts. As a result, at the closing of the Acquisition, the members of Fearless Yachts contributed 100% of their membership interests therein in return for a number of shares of common stock of the Company representing approximately 47% of the 57,100,000 shares of common stock issued and outstanding following the Acquisition, as the Company concurrently redeemed and canceled approximately 8,900,000 shares of its common stock.

Accounting Treatment; Change of Control

The Acquisition was accounted for as a “recapitalization,” as the former members of Fearless Yachts owned nearly a majority of the outstanding shares of the Company’s common stock immediately following the Acquisition. Consequently, upon completion of the transaction, the financial statements became those of Fearless Yachts with adjustments to reflect the changes in the equity structure of the public shell. No goodwill or intangible assets were recorded as part of the transaction.

Going Concern

These financial statements are prepared in accordance with accounting principles applicable to a going concern. The Company is in the development stage and just begun commercial production. At present, management devotes significant time to raise sufficient funds to fund its development operations. The ability of the Company to continue as a going concern with respect to its planned principal business activity is dependent upon its successful efforts to raise additional financing.

NOTE 2. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

These Condensed Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and the instructions to Form 10-QSB and Item 310 of Regulation S-B. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (which include normal recurring adjustments) considered necessary to present fairly the financial position, results of operations and cash flows at December 31, 2007 and for all periods presented have been made. Operating results for the nine months ended December 31, 2007 are not necessarily indicative of the results that may be expected for the year ending March 31, 2008.

These financial statements should be read in conjunction with the Company’s Annual Report on Form 10-KSB for the period ending March 31, 2007.

Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires the Company's 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.

Fixed Assets

Fixed assets are recorded at cost. They will be depreciated using the straight-line method over the estimated useful lives of the related assets of 3-7 years, when they are put into service.

Revenue Recognition

Revenue is recognized in accordance with SEC Staff Accounting Bulletin (“SAB”) No. 101, “Revenue Recognition in Financial Statements.” The Company recognizes revenue when ownership has been transferred to the customer pursuant to applicable laws and regulations, including factors such as when there has been evidence of a sales arrangement, delivery has occurred, the price to the buyer is fixed or determinable, and collectability is reasonably assured.

Advertising Costs

The Company expenses marketing, promotion, and advertising costs as incurred.

Earnings Per Share

SFAS No. 128, “Earnings Per Share,” requires dual presentation of earnings per share – “basic” and “diluted.” Basic earnings per share is computed by dividing income available to common stockholders (the numerator) by the weighted average number of common shares (the denominator) for the period. The computation of diluted earnings per share is similar to basic earnings per share, except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potentially dilutive common shares had been issued.

Recent Accounting Pronouncements

In February 2007, the FASB issued Statement of Financial Accounting Standards No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities-Including an amendment of FASB Statement No. 115, (“SFAS No. 159”). SFAS No. 159 permits entities to choose to measure many financial instruments and certain other items at fair value. Most of the provisions of this Statement apply only to entities that elect the fair value option. However, the amendment to FASB Statement No. 115, “Accounting for Certain Investments in Debt and Equity Securities,” (“SFAS No. 115”), applies to all entities with available-for-sale and trading securities. SFAS No. 159 is effective for the Company’s consolidated financial statements for the annual reporting period beginning after November 15, 2007. The Company is currently evaluating the impact of this new pronouncement on its consolidated financial statements. The adoption of this statement is not expected to have a material effect on the Company’s consolidated financial statements.

NOTE 3. BRIDGE LOANS PAYABLES AND WARRANTS

The bridge loans payable were originally issued as 10% Senior Secured Promissory Notes, with outstanding principal due and payable on the earlier to occur of July 27, 2006 or upon closing of a financing of $5,000,000. In connection with the closing of the Acquisition, Fearless Yachts and the Company agreed to permit the lenders to surrender the notes for cancellation in exchange for new secured promissory notes issued by the Company (the “Notes”) having substantially similar terms as the notes originally issued by Fearless Yachts. The Notes carry an interest rate equal to 18% and have a maturity date of April 1, 2007. The Company expects lenders holding a considerable majority, if not all, of the dollar amount under the notes originally issued by Fearless to surrender these notes for the Notes to be issued by the Company. As of December 31, 2007, the total amount owed by the Company to the lenders under the Notes was $1,572,926 and total accrued interest at December 31, 2007 was $378,970 based upon the 18% rate. The bridge loan fees of 13% and agency fees of $75,000 have been expensed as additional interest.

The warrants have a Registration Rights Agreement which requires the Company to use commercially reasonable efforts to effect the registration of the registrable securities sold. There is no provision for liquidated damages in the event the securities are not registered.

When the exercise price of the warrant is fixed, the Company will be able to determine the amount of debt discount to be associated with the warrants to be recorded as additional interest expense. Additionally, at that time, the Company will determine the proper accounting for the warrants, as either equity or debt with reference to APB14, EITF’s 00-19 and 00-27 and FSP EITF 00-19-2.

NOTE 4. SHORT TERM LOANS

The short term loans as of December 31, 2007 total $1,043,423. Loans totaling $323,423 do not accrue any interest. An aggregate of $298,423 of the loans were made by related parties to the Company. See Note 9 below. There is a promissory note for $720,000 due March 14, 2008. See Note 5 below.

The Company established a Line of Credit of $2,080,000 with Mellon United Nation Bank (“Mellon”) on April 24, 2007. The interest rate on the note is subject to change from time to time based on changes in an index which is the rate announced from time to time by Mellon as its Prime Rate The interest rate for the period ended December 31, 2007 was 7.25% . The note matures April 8, 2008. This line of credit was used to establish a letter of credit facility on April 26, 2007 for $2,080,000 with Mellon United National Bank. Donzi Marine, LLC will draw down on this letter of credit for all production material costs. As of December 31, 2007, the beneficiary, Donzi Marine, LLC has made drawings of $2,181,607 and the outstanding Standby Letter of Credit balance is $92,999 which includes reimbursements by the Company of $194,606. Interest for this loan for the three and nine months ending December 31, 2007 was $19,810 and $34,530.

There is an off-balance sheet pledge agreement that the Company entered into on April 13, 2007 whereby Kevin F. Flynn pledged $2,080,000 in a letter of credit to Mellon. The Company agreed to pay Kevin F. Flynn interest at a per annum rate equal to 15% of the face amount of the agreement. For the quarter and nine months ending December 31, 2007, the Company recorded interest expense of $78,641 and $223,956.

NOTE 5. SHORT TERM PROMISSORY NOTE WITH DISCOUNT ON NOTE

The Company entered into agreement on November 15, 2007 in which we issued two Secured Promissory Notes in the total amount of $600,000. The net proceeds from this transaction was $530,000. There was a discount on the note of $60,000 which is being amortized over length of the note. The remaining $10,000 was charged as legal fees. The amount to be repaid was subsequently increased to $720,000 after December 15, 2007. This additional fee was charged as interest in the current period. As of December 31, 2007, the unamortized discount on the note is $52,500. There was also an aggregate of 3,200,000 shares of stock issued to the holders of the notes. The notes are due upon the earlier of 1) the date that the Company raises net proceeds in a financing of at least $600,000 and 2) March 15, 2008 or such later date as is agreed to in writing by the Payee.

NOTE 6. EARNINGS (LOSS) PER SHARE

Statement of financial Accounting Standard (“SFAS”) 128, “Earnings per Share”, requires a basic per share and diluted earnings per share presentation. The computations of basic earnings (loss) per share and diluted earnings per share amounts are based upon the weighted average number of outstanding common shares during the period.

NOTE 7. COMMON STOCK

There are currently 840,000,000 shares of common stock authorized with a par value of $.001 per share. At December 31, 2007, there were 67,664,197 such shares issued and outstanding, of which 47,064,197 are restricted.

NOTE 8. COMMON STOCK SUBSCRIBED, SUBSCRIPTION RECEIVABLE

During the three months ended September 30, 2007, common stock, which had been subscribed through Bellador Advisory Services (see Note 9), was issued to the subscriber. Subsequent to the stock being issued, the subscriber cancelled their subscription and never forwarded the appropriate funds. The 260,700 shares issued has not been included in the Company’s total shares outstanding, but have been accounted for as common stock subscribed. The stock certificates have subsequently been cancelled.

For the period ended December 31, 2007, there were no shares of common stock subscribed.

NOTE 9. REG S STOCK

On April 17, 2007 the Company entered into a stock placement agreement with Bellador Advisory Services (“BAS”) whereby the Company receives no less than 50% of the sales price of common stock sold by BAS based upon the closing bid price on the OTCBB on the date of sale. As of December 31, 2007, the Company has received aggregate net proceeds of $313,415 from the sale of 2,816,321 shares of common stock for $626,830. Between October 1, 2007 and December 31, 2007, the Company received net proceeds of $172,203 from the sale of 2,167,021 shares of common stock for $346,935

Effective November 23, 2007, the stock placement agreement with Bellador Advisory Services was cancelled.

NOTE 10. COMMITMENTS AND CONTINGENCES

On March 14, 2006, the Company entered into an agreement with Porsche Design Studio. Under the terms of the agreement, Porsche Design Studio has agreed to design, on an exclusive basis, high-speed motorboats and yachts up to 150' in length. Under the terms, the Company agrees to pay Porsche Design Studio a set fee to be determined on a project-by-project basis for such design services. Fees paid under this agreement were $440,000.

On May 9, 2006, the Company entered into an agreement with American Marine Holdings, LLC (AMH). Under the terms of the agreement, AMH has agreed to assist the Company in the development of the mold for its high-speed 28' motorboat and to construct it at a fixed price to the Company.

On October 1, 2006, the Company entered into an agreement with Harrison & Shriftman, LLC, to provide public relations services, brand consultation and strategic partnership outreach.

On December 27, 2006, the Company entered into a financial advisory engagement letter whereas Forvest Trust SA (“Forvest”) will act as it non-exclusive advisor in connection with the raising funds, refinancing of debt and mergers and acquisitions for certain said fees and warrants.

On December 27, 2006, the Company entered into a Securities Purchase Agreement with Forvest under which the Company agreed to sell its 18% Secured Promissory Notes in the aggregate principal amount of up to $750,000.

On January 4, 2007, the Company entered into an agreement with ZA Consulting Inc. (“ZA”), as its investor relations consultant with respect to matters concerning the financial and investment communities.

On March 1, 2007, the Company entered into a one year agreement with Pro Access, Inc, as its marketing company to generate creative marketing programs and campaigns to garner brand awareness and sales for Fearless’ related businesses.

On April 17, 2007, the Company entered into a stock placement agreement with Bellador Advisory Services (“Bellador”) under which Bellador agreed to recommend the Company stock to Bellador’s clients outside the United States only as an investment. Bellador agreed to arrange for up to $3,000,000 (U.S.) of net funding to the Company.

On June 19, 2007, the Company entered into an agreement with AB Yachts, srl. Under the terms of the agreement, AB Yachts agreed to construct 68’ and 125’ motor yachts at a fixed price to the Company. The Company commits to purchase ten (10) vessels of 68’ and one (1) 125’ motor yacht over a five year period ending February 1, 2012. If this commitment is not met by the end of the term, the Company will pay 180,000 Euros for each vessel not ordered.

On June 25, 2007, the Company entered into an agreement with Porsche Design Studio. Under the terms of the agreement, Porsche Design Studio has agreed to design the exterior superstructure for a 125’ yacht. The Company agreed to pay Porsche Design Studio at a fixed price.

NOTE 11. SUBSEQUENT EVENTS

On February 1, 2008, the Company entered into an Extension of Letter of Credit Agreement with Kevin F. Flynn. This agreement renews the Letter of Credit for an additional one year term commencing April 13, 2008, and ending

April 12, 2009. In addition, the original warrants of 2,1000,000 previously issued to Kevin F. Flynn at an exercise price of $0.50 per share has been amended to $0.25 per share. Furthermore, as additional consideration for the extension, Kevin Flynn shall be granted an additional 2,100,000 warrants to purchase shares of common stock at a purchase price of $0.25 per share. Fearless has agreed to pay $25,000 for payment of the Letter of Credit Fee and $25,000 for legal expenses, payable to Kevin Flynn upon closing of the Fearless Financing Transaction.

On February 1, 2008, the Company has entered into an agreement with Jet Trading and Leasing LLC. Under the terms of the agreement, Fearless received $150,000 less $9,000 held in escrow by Fearless’ Attorney for necessary obligations as they arise. A Fearless 28’ boat has been secured by the lender as collateral. Management of the Company expects to have repaid the $155,000 within 30 days.

Item 2: Management's Discussion and Analysis or Plan of Operations

This quarterly report on Form 10-QSB contains a number of “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Specifically, all statements other than statements of historical facts included in this quarterly report regarding our financial position, business strategy and plans and objectives of management for future operations are forward-looking statements. These forward-looking statements are based on the beliefs of management, as well as assumptions made by and information currently available to management. When used in this quarterly report, the words “anticipate,” “believe,” “estimate,” “expect,” “may,” “will,” “continue” and “intend,” and words or phrases of similar import, as they relate to our financial position, business strategy and plans, or objectives of management, are intended to identify forward-looking statements. These statements reflect our current view with respect to future events and are subject to risks, uncertainties and assumptions related to various factors.

You should understand that the following important factors, in addition to those discussed below the heading “Overview” and in our periodic reports and in other filings that we make with the Securities and Exchange Commission (the “SEC”) under the Securities Act and the Exchange Act, could affect our future results and could cause those results to differ materially from those expressed in such forward-looking statements:

general economic conditions;
limited operating history;
results of additional development of our business;
intense competition in our industry;
our future capital needs and our ability to obtain financing, and
other risks and uncertainties as may be detailed from time to time in our public announcements and filings with the SEC.

Although we believe that our expectations are reasonable, we cannot assure you that our expectations will prove to be correct. Should any one or more of these risks or uncertainties materialize, or should any underlying assumptions prove incorrect, actual results may vary materially from those described in this Quarterly Report as anticipated, believed, estimated, expected or intended.

We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or any other reason. All subsequent forward-looking statements attributable to the Company or any person acting on our behalf are expressly qualified in their entirety by the cautionary statements contained or referred to herein. In light of these risks, uncertainties and assumptions, the forward-looking events discussed in this report may not occur.

The following discussion reflects management's analysis of the operating history of our company and its predecessor entity, Fearless Yachts. As such, the discussion only represents management's current assessment of the operations of the business. There can be no implication that the results discussed herein will necessarily continue into the future, or that any of the conclusions expressed below will necessarily be indicative of actual operating results in the future. This discussion should be read in conjunction with the audited financial statements of March 31, 2007, and

the related statements of expenses, changes in members’ equity (deficit) and cash flows for the twelve-month period ended on March 31, 2007.

Overview.

The Company is engaged in the design and marketing of luxury performance powerboats and yachts. PBC, LLC, a Missouri company, was formed February 23, 2004 to design and develop luxury performance boats and yachts. This entity was dissolved and all assets and liabilities were transferred to PB Holdings, LLC, a Florida limited liability company formed on September 7, 2005. PB Holdings was managed by Gary Fears as majority equity owner. Due to changes in ownership, PB Holdings, LLC was dissolved and Fearless was formed February 14, 2006.

On December 11, 2006, in accordance with the Acquisition Agreement, Fearless became a wholly-owned subsidiary of the Company, which subsequently changed its name from New Era Marketing, Inc. to Fearless International, Inc.

These financial statements are prepared in accordance with accounting principles applicable to a going concern. The Company is in the development stage and has not, as yet, achieved commercial production. At present, management devotes significant time to raise sufficient funds to fund its development operations. The ability of the Company to continue as a going concern with respect to its planned principal business activity is dependent upon its successful efforts to raise additional financing.

Critical Accounting Policies

Accounting for warrant fair value

Due to the contingencies inherent in the fixing of the exercise price of the warrants and the nature of the Company’s operations at this time, the fair value attributable to these warrants upon their issuance is zero. The provision for the warrant exercise price being reset if the company raises money at a lower price than the exercise price may create a situation that will require the fair value of the modification (fair value immediately before the reset vs. the fair value upon reset) to be charged to the income statement.

Use of Estimates

Fixed Assets

Fixed assets are recorded at cost. They will be depreciated using the straight-line method over the estimated useful lives of the related assets of 3-7 years, when they are put into service.

Advertising Costs

The Company expenses marketing, promotion, and advertising costs as incurred.

Recent Accounting Pronouncements

Off-Balance Sheet Arrangements.

per annum rate equal to 15% of the face amount of the agreement. For the quarter and nine months ending December 31, 2007, the Company recorded interest expense of $78,641 and $223,956.

Liquidity and Capital Resources. The Company has funded its operations and met its capital expenditures requirements primarily though cash generated from contributions from its members, shareholders and borrowings.

As of December 31, 2007, the Company had negative working capital in the amount of $6,272,411 compared to a negative working capital of $2,413,971 as of December 31, 2006. Cash used by operating activities was $1,637,512 for the nine months ended December 31, 2007. These compare to cash used by operating activities for the nine months ended December 31, 2006 of $686,727.

The factors that predominantly impact working capital and therefore cash flows from operations are operating expenses.

Net cash used by investing activities for the nine months ended December 31, 2007 was $2,288,274, as compared to $1,173,800 for the nine months ended December 31, 2006. The net cash used by investing activities was predominantly due to the purchase of certain fixed assets.

Net cash provided from financing activities was $3,939,965 for the nine months ended December 31, 2007. Net cash provided from financing activities was $1,746,538 for the nine months ended December 31, 2006. The cash flow provided from financing activities was primarily derived from the net cash received from the sale of the Company's securities and borrowings.

Management expects to continue to invest in the Company's expansion and this may have a negative impact on cash flows. Management believes that expansion in the areas of sales and operations are essential in attaining growth and profitability in the future. Cash on hand on the date hereof and cash generated by operations in conjunction with our working capital will not be sufficient to continue our business for the next twelve months. Management continually reviews the Company’s overall capital and funding needs, taking into account current business needs, as well as future goals and requirements. Based on the Company’s business strategy, management believes the Company will need to secure additional financing and that the best way to do this is through the sale of additional securities or debt instruments as described above. For more information on cash flows, please see the statement of cash flows included in our financial statements appearing elsewhere herein.

Should the Company’s costs and expenses prove to be greater than it currently anticipates, or should the Company change its current business plan in a manner that will increase or accelerate its anticipated costs and expenses, the depletion of its working capital would be accelerated.

Item 3: Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our Securities Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our chief executive and financial officer, to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, as ours are designed to do, and management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

As of December 31, 2007, an evaluation was performed under the supervision and with the participation of our management, including our chief executive officer and chief financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures. Based upon that evaluation, our chief executive officer and chief financial officer concluded that our disclosure controls and procedures are effective to ensure that required material information is included in this report. There has been no change in our internal control over financial reporting during the current quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Part II. Other Information

Item 1: Legal Proceeding

There were no legal proceedings during the quarter ending December 31, 2007.

Item 2: Unregistered Sales of Equity Securities and Use of Proceeds

During the period covered by this report, the Company entered into Subscription Agreements with each of several purchasers for the sale of its shares of common stock. Under these agreements, the Company sold 2,417,021 shares of its common stock to certain purchasers and received net proceeds therefrom in the amount of $247,203. The shares were sold pursuant to the exemption from registration provided by Regulation S of the Securities Act of 1933, as amended. The Company used the proceeds from the sale of the shares to acquire certain fixed assets and general operating expenses necessary to furthering the Company’s business.

Item 3: Defaults Upon Senior Securities

None

Item 4: Submission of Matters to a Vote of Security Holders

Not applicable.

Item 5: Other Information

Not applicable.

Item 6: Exhibits

See Exhibit Index.

SIGNATURES

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.

	FEARLESS INTERNATIONAL, INC.

Date: February 15, 2008

	By:	/s/ Jeffrey I. Binder
		Jeffrey Binder
		Chairman and Chief Executive Officer (Principal Executive Officer)

	By:	/s/ Carol Stephan
		Carol Stephan
		Chief Financial Officer (Principal Accounting and Financial Officer)

Exhibit Index

Exhibit No.	Description of Exhibits
31.1	Certification of Chief Executive Officer, pursuant to Rule 13a-14(a) of the Exchange Act, as enacted by Section 302 of the Sarbanes-Oxley Act of 2002. (1)

31.2	Certification of Chief Financial Officer, pursuant to Rule 13a-14(a) of the Exchange Act, as enacted by Section 302 of the Sarbanes-Oxley Act of 2002. (1)

32.1	Certification of Chief Executive Officer pursuant to 18 United States Code Section 1350, as enacted by Section 906 of the Sarbanes-Oxley Act of 2002. (1)

32.2	Certification of Chief Financial Officer pursuant to 18 United States Code Section 1350, as enacted by Section 906 of the Sarbanes-Oxley Act of 2002. (1)

(1) Filed herewith