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(Former
name, former address and former fiscal year, if changed since last
report)
Check
whether the issuer (1) 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 issuer was required to file such reports),
and
(2) has been subject to such filing requirements for the past 90 days [X] Yes
[
] No
Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act). [X] Yes [ ] No
State
the
number of shares outstanding of each of the issuer’s classes of common stock, as
of the latest practicable date: 12,057,713 common shares as of June 30,2006
Transitional
Small Business Disclosure Format (check one): Yes [ ] No
[X]
Our
unaudited financial statements included in this Form 10-QSB are as
follows:
F-1
Condensed
Balance Sheet as of June 30, 2006 (Unaudited);
F-2
Condensed
Statements of Operations for the Nine and Three months ended June30, 2006
and 2005 (Unaudited);
F-3
Condensed
Statements of Cash Flows for the Nine months ended June 30, 2006
and 2005
(Unaudited); and
F-4
Notes
to Condensed Financial Statements
(Unaudited)
These
unaudited financial statements have been prepared in accordance with accounting
principles generally accepted in the United States of America for interim
financial information and the SEC instructions to Form 10-QSB. In the opinion
of
management, all adjustments considered necessary for a fair presentation have
been included. Operating results for the interim period ended June 30, 2006
are
not necessarily indicative of the results that can be expected for the full
year.
The
condensed unaudited interim financial statements included herein have been
prepared, without audit, pursuant to the rules and regulations of the Securities
and Exchange Commission. The condensed financial statements and notes are
presented as permitted on Form 10-QSB and do not contain information included
in
the Company’s annual statements and notes. Certain information and footnote
disclosures normally included in financial statements prepared in accordance
with accounting principles generally accepted in the United States of America
have been condensed or omitted pursuant to such rules and regulations, although
the Company believes that the disclosures are adequate to make the information
presented not misleading. It is suggested that these condensed financial
statements be read in conjunction with the September 30, 2005 audited financial
statements and the accompanying notes thereto. While management believes
the
procedures followed in preparing these condensed financial statements are
reasonable, the accuracy of the amounts are in some respects dependent upon
the
facts that will exist, and procedures that will be accomplished by the Company
later in the year.
These
condensed unaudited financial statements reflect all adjustments, including
normal recurring adjustments which, in the opinion of management, are necessary
to present fairly the operations and cash flows for the periods
presented.
The
Company was incorporated on May 10, 1998, under the laws of the State of
Delaware. The business purpose of the Company was originally to engage in
environmental monitoring and testing. However, on December 31, 2001, the
Company
liquidated its operating assets. The Company has adopted a fiscal year ending
September 30.
NOTE
2
-
SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES
Revenue
and Cost Recognition
Revenue
is recognized under the accrual method of accounting when the services are
rendered and the customer has been billed, rather than when cash is collected
for the services provided. Specifically, the terms of the contracts call
for a
fixed set fees based on an hourly rate per individual.
Cost
is
recorded on the accrual basis as well, when the services are incurred rather
than paid for.
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 disclosures of contingent assets and liabilities at the date
of
the financial statements and the reported amounts
NOTE
2
-
SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
Use
of Estimates
(Continued)
of
revenues and expenses during the reporting period. Actual results could differ
from those estimates.
Cash
and Cash Equivalents
For
financial statement presentation purposes, the Company considers short-term,
highly liquid investments with an original maturity of three months or less
to
be cash and cash equivalents. There were no cash equivalents at June 30,2006.
The
Company maintains cash and cash equivalent balances at financial institutions
that are insured by the Federal Deposit Insurance Corporation up to $100,000.
At
June 30, 2006the Company had $144,770 in excess of the insured
limits.
Fixed
Assets
Fixed
assets are stated at cost. Depreciation is computed using the straight-line
method over the estimated useful life of the assets.
Furniture
and
fixtures
7 Years
Office
equipment
5 Year
Income
Taxes
The
income tax benefit is computed on the pretax loss based on the current tax
law.
Deferred income taxes are recognized for the tax consequences in future years
of
differences between the tax basis of assets and liabilities and their financial
reporting amounts at each year-end based on enacted tax laws and statutory
tax
rates. The Company has not established a provision due to the losses
sustained.
(Loss)
Per Share of Common Stock
Historical
net (loss) per common share is computed using the weighted average number
of
common shares outstanding. Diluted earnings per share (EPS) include additional
dilution from common stock equivalents, such as stock issuable pursuant to
the
exercise of stock options and warrants. Common stock equivalents were not
included in the computation of diluted earnings per share when the Company
reported a loss because to do so would be antidilutive for periods
presented.
Weighted-average
common shares outstanding (basic)
7,346,328
473,147
Weighted-average
common stock equivalents:
Stock options
-
-
Warrants
-
-
Weighted-average
common shares outstanding (diluted)
7,346,328
473,147
Options
and warrants outstanding to purchase stock were not included in the computation
of diluted EPS because inclusion would have been antidilutive.
There
are
warrants outstanding to purchase 844,088 shares of common stock at June 30,2006.
Recent
Accounting Pronouncements
In
December 2004, the FASB issued Financial Accounting Standards No. 123 (revised
2004) (FAS 123R), “Share-Based Payment, “ FAS 123R replaces FAS No. 123,
“Accounting for Stock-Based Compensation”, and supersedes APB Opinion No. 25,
“Accounting for Stock Issued to Employees.” FAS 123R requires compensation
expense, measured as the fair value at the grant date, related to share-based
payment transactions to be recognized in the financial statements over the
period that an employee provides service in exchange for the award. The Company
intends to adopt FAS 123R using the “modified prospective” transition method as
defined in FAS 123R. The
adoption of FAS
123R
did not
have a material impact on the Company’s financial position or results of
operations.
On
December 16, 2004, FASB issued Financial Accounting Standards No. 153, Exchanges
of Non-monetary Assets, an amendment of APB Opinion No. 29, Accounting for
Non-monetary Transactions ("FAS 153"). This statement amends APB Opinion
29 to
eliminate the exception for non-monetary exchanges of similar productive
assets
and replaces it with a general exception for exchanges of non-monetary assets
that do not have commercial substance. Under FAS 153, if a non-monetary exchange
of similar productive assets meets a commercial-substance criterion and fair
value is determinable, the transaction must be accounted for at fair value
resulting in recognition of any gain or loss. FAS 153 is effective for
non-monetary transactions in fiscal periods that begin after June 15, 2005.
The
adoption of FAS
153
did not
have a material impact on the Company’s financial position or results of
operations.
NOTE
2
- SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Recent
Accounting Pronouncements
(Continued)
In
May 2005, the FASB issued SFAS No. 154, “Accounting Changes and Error
Corrections.” SFAS No. 154 replaces Accounting Principles Board (“APB”)
Opinion No. 20, “Accounting Changes” and SFAS No. 3, “Reporting
Accounting Changes in Interim Financial Statements.” SFAS No. 154 requires
retrospective application to prior periods’ financial statements of a voluntary
change in accounting principle unless it is impracticable. APB No. 20
previously required that most voluntary changes in accounting principle be
recognized by including the cumulative effect of changing to the new accounting
principle in net income in the period of the change. SFAS No. 154 is
effective for accounting changes and corrections of errors made in fiscal
years
beginning after December 15, 2005. The adoption of SFAS No. 154 did
not have a material impact on the Company’s financial position or results of
operations.
In
February 2006, the FASB issued SFAS No. 155, “Accounting for Certain
Hybrid Financial Instruments, an amendment of FASB Statements No. 133 and
140.” SFAS No. 155 resolves issues addressed in SFAS No. 133
Implementation Issue No. D1, “Application of Statement 133 to Beneficial
Interests in Securitized Financial Assets,” and permits fair value remeasurement
for any hybrid financial instrument that contains an embedded derivative
that
otherwise would require bifurcation, clarifies which interest-only strips
and
principal-only strips are not subject to the requirements of SFAS No. 133,
establishes a requirement to evaluate interests in securitized financial
assets
to identify interests that are freestanding derivatives or that are hybrid
financial instruments that contain an embedded derivative requiring bifurcation,
clarifies that concentrations of credit risk in the form of subordination
are
not embedded derivatives and amends SFAS No. 140 to eliminate the
prohibition on a qualifying special-purpose entity from holding a derivative
financial instrument that pertains to a beneficial interest other than another
derivative financial instrument. SFAS No. 155 is effective for all
financial instruments acquired or issued after the beginning of the first
fiscal
year that begins after September 15, 2006. The adoption of FAS
155
is not
anticipated to have a material impact on the Company’s financial position or
results of operations.
In
March 2006, the FASB issued SFAS No. 156, “Accounting for Servicing of
Financial Assets, an amendment of FASB Statement No. 140.” SFAS
No. 156 requires an entity to recognize a servicing asset or liability each
time it undertakes an obligation to service a financial asset by entering
into a
servicing contract under a transfer of the servicer’s financial assets that
meets the requirements for sale accounting, a transfer of the servicer’s
financial assets to a qualified special-purpose entity in a guaranteed mortgage
securitization in which the transferor retains all of the resulting securities
and classifies them as either available-for-sale or trading securities in
accordance with SFAS No. 115, “Accounting for Certain Investments in Debt
and Equity Securities” and an acquisition or assumption of an obligation to
service a financial asset that does not relate to financial assets of the
servicer or its consolidated affiliates.
Additionally,
SFAS No. 156 requires all separately recognized servicing assets and
servicing liabilities to be initially measured at fair value, permits an
entity
to choose either the use of an amortization or fair value method for subsequent
measurements, permits at initial adoption a one-time reclassification of
available-for-sale securities to trading securities by entities with
NOTE
2
-
SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Recent
Accounting Pronouncements
(Continued)
recognized
servicing rights and requires separate presentation of servicing assets and
liabilities subsequently measured at fair value and additional disclosures
for
all separately recognized servicing assets and liabilities. SFAS No. 156 is
effective for transactions entered into after the beginning of the first
fiscal
year that begins after September 15, 2006. The adoption of FAS
156
is not
anticipated to have a material impact on the Company’s financial position or
results of operations.
NOTE
3
-
STOCKHOLDERS’
EQUITY
On
December 3, 2004, the Company increased the authorized number of shares of
common stock from 30,000,000 shares to 90,000,000 shares and also changed
the
par value from $0.01 to $0.001.
On
January 6, 2006, the Company approved the issuance of 75,000 shares to fulfill
a
commitment to former directors, the issuance of 3,450,000 shares in exchange
for
$259,750 of current debt, and 80,000,000 shares as a right to
acquire rights to telecomm software.
On
January 31, 2006, the Company effectuated a reverse split of 1 for 8 shares
of
its common stock. The 89,709,000 shares issued became 11,213,625 issued with
10,913,772 shares outstanding.
The
Company sold 844,088 shares of its common stock at $.80 per share for a total
of
$675,270 as of June 30, 2006. Each share sold was accompanied by a warrant
to
purchase one additional share for $1.00.
Preferred
Stock
On
December 3, 2004the Company changed the number of Preferred Stock from one
class of stock consisting of 10,000,000 shares with a par value of $0.01
to
three separate series of preferred stock and changed the par value to $0.001.
They are as follows:
Preferred
Stock Series A
990,000
shares with a par value of $0.001 per share, participating, voting and
convertible with a liquidation value of $1,000 each.
Preferred
Stock Series B
9,000,000
shares with a par value of $0.001 per share, participating; voting and
convertible with a liquidation value of $3 each.
10,000
shares with a par value of $0.001 per share, with a liquidation value of
$10
each.
All
preferred stock series A, B and C are convertible to 4,000 common shares
as well
as 4,000 votes for each share held. In addition, in all cases, the holders
of
the Preferred Stock C will vote cumulatively at least fifty one percent (51%)
of
all votes cast regardless of the amount of series C shares issued, at any
meeting of shareholders or any major issue put before the Company for voting
of
shareholders.
NOTE
4
-
PROVISION
FOR INCOME TAXES
Deferred
income taxes will be determined using the liability method for the temporary
differences between the financial reporting basis and income tax basis of
the
Company’s assets and liabilities. Deferred income taxes will be measured based
on the tax rates expected to be in effect when the temporary differences
are
included in the Company’s tax return. Deferred tax assets and liabilities are
recognized based on anticipated future tax consequences attributable to
differences between financial statement carrying amounts of assets and
liabilities and their respective tax bases.
At
June30, 2006 and 2005, deferred tax assets approximated the
following:
2006
2005
Deferred
tax asset
$
1,070,000
$
704,000
Less:
valuation allowance
(1,070,000
)
(704,000
)
Net
deferred tax asset
$
-
$
-
At
June30, 2006 and 2005, the Company had accumulated deficits of approximately
$3,147,000 and $2,071,000, respectively, available to offset future taxable
income through 2026. The Company established valuation allowances equal to
the
full amount of the deferred tax assets due to the uncertainty of the utilization
of the operating losses in future periods.
NOTE
5
-
RELATED
PARTY TRANSACTIONS
Certain
stockholders provided consulting services to the Company. The total of such
services was $338,700 for the nine months ended June 30, 2006.
Certain
stockholders provide leased space to the Company for office and computer
operations. The total rent charged to the Company was $6,840 for the nine
months
ended June 30, 2006.
An
affiliated company of which a stockholder is a principal has contracted with
the
Company to provide programming services and technical communications support
for
its operations. The total charged to the Company was $19,815 for the nine
months
ended June 30, 2006.
NOTE
6
-
DUE
TO STOCKHOLDERS
Due
to
stockholders represents advances for the Company’s working capital needs. They
are non-interest bearing and are due on demand.
NOTE
7
-
EQUIPMENT
At
June30, 2006, equipment consisted the following:
Equipment
$
2,337
Less:
accumulated depreciation
(92
)
Equipment,
net
$
2,245
Depreciation
expense for the nine months ended June 30, 2006 and 2005 was $92 and $ -0-,
respectively.
NOTE
10 -
GOING
CONCERN
As
shown
in the accompanying condensed financial statements, the Company incurred
net
losses for the three and nine months ended June 30, 2006 and 2005. As of
June30, 2006 and 2005the Company had accumulated deficits of approximately
$3,147,000 and $2,071,000, respectively. This raises substantial doubt about
the
Company’s ability to continue as a going concern.
The
Company’s future success is dependent upon its ability to achieve profitable
operations and generate cash from operating activities, and upon additional
financing. Management believes they can raise the appropriate funds needed
to
support their business plan and generate profitable operations. There is
no
guarantee that the Company will be able to generate enough revenue or raise
enough capital to support its operations.
The
condensed financial statements do not include any adjustments relating to
the
recoverability or classification of recorded assets and liabilities that
might
result should the Company be unable to continue as a going concern.
Historical
results and trends should not be taken as indicative of future operations.
Management’s statements contained in this report that are not historical facts
are forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the Securities and
Exchange Act of 1934 (the “Exchange Act”), as amended. Actual results may differ
materially from those included in the forward-looking statements. The Company
intends such forward-looking statements to be covered by the safe-harbor
provisions for forward-looking statements contained in the Private Securities
Litigation Reform Act of 1995, and is including this statement for purposes
of
complying with those safe-harbor provisions. Forward-looking statements, which
are based on certain assumptions and describe future plans, strategies and
expectations of the Company, are generally identifiable by use of the
words “believe,”“expect,”“intend,”“anticipate,”“estimate,”“project,”“prospects,” or similar expressions. The Company’s ability to predict results or
the actual effect of future plans or strategies is inherently uncertain. Factors
which could have a material adverse affect on the operations and future
prospects of the Company on a condensed basis include, but are not limited
to:
changes in economic conditions, legislative/regulatory changes, availability
of
capital, interest rates, competition, and generally accepted accounting
principles. These risks and uncertainties should be considered in evaluating
forward-looking statements and undue reliance should not be placed on such
statements. Further information concerning the Company and its business,
including additional factors that could materially affect the Company’s
financial results, is included herein and in the Company’s other filings with
the SEC.
Overview
We
were
incorporated as a Delaware corporation on May 10, 1998 under the name
Environmental Monitoring and Testing Corporation. Since our incorporation,
we
provided electronic filing services to companies that are required to
electronically file disclosure information with the Securities and Exchange
Commission "SEC."
The
Company filed a Form 8-K with the Securities and Exchange Commission and changed
its name to Netchoice, Inc., effective February 3, 2005.
The
Company its name to Xstream Mobile, Inc., effective December 19,2005.
We
are
currently in the communications business specializing in entertainment, safety
and security.
We
currently have forecasted the expenditure of approximately $20,000 during the
next twelve months in order to remain in compliance with the Securities Exchange
Act of 1934, retain a consultant, and to develop our communications business
and/or technology. We can provide no assurance that we will be successful in
developing our technology due to our limited working capital. We anticipate
that
if we are successfully able to develop our technology, we will require
additional financing in order for us to complete. We can provide no assurance
that we will receive additional financing if sought.
We
do not
anticipate purchasing any real property or significant equipment in the next
twelve months.
At
the
present time, we have no employees other than our officers and directors, Mr.
Mike See, Joe Johns and Cynthia See. We do not anticipate hiring any employees
until such time as we are able to develop our business and/or
technology.
Assets
As
of
June 30, 2006, we have assets of $255,911 cash at hand and $2,245 of fixed
assets.
Liabilities
and Stockholders’ Equity
Our
total
liabilities as of June 30, 2006 were $30,040. On June 30, 2006 our liabilities
consisted of accounts payable, accrued expenses and notes due to stockholders
in
the amount of $30,040.
As
of
June 30, 2006, there was a Stockholders’ equity of $228,116.
Results
of Operations for the Nine months ended June 30, 2006 and
2005
Revenues
during the nine and three months ended June 30, 2006 was $5,850. There were
no
revenues during the nine and three months ended June 30, 2005.
We
incurred operating expenses in the amount of $455,368 for the nine months ended
June 30, 2006, compared to operating expenses of $11,250 for the nine months
ended June 30, 2005. Our operating expenses for the six months ended June 30,2006 were primarily attributable to consulting fees.
We
have
incurred a net loss of $449,518 for the nine month period ended June 30, 2006,
compared to $11,250 for the nine month period ended June 30, 2005. Our losses
for the six months ended June 30, 2006 and 2005 were primarily attributable
to consulting fees.
Liquidity
and Capital Resources
As
of
June 30, 2006, we had $258,156 cash and assets. We had working capital of
$225,871 on June 30, 2006. As a result, we have insufficient capital to complete
our business plan.
We
anticipate that we will require additional financing to enable us to complete
our business plan. However, we can provide no assurance that if we pursue
additional financing we will receive any financing.
We
can
provide no assurance that we will receive any additional financing. For these
reasons, our auditors have stated in their report that they have substantial
doubt about our ability to continue as a going concern.
Our
independent auditors have stated in their Auditor’s Report included in our
annual report on Form 10-KSB that we have incurred operating losses, accumulated
deficit, and negative cash flow from operations. From our inception to June30,2006, we incurred cumulative losses of approximately $3,147,422. Our ability
to
raise capital through future issuances of common stock is unknown. Our future
is
dependent on our ability to obtain financing and develop our new business
opportunities into profitable operations.
These
factors, among others, raise substantial doubt about our ability to continue
as
a going concern. Our
condensed financial statements do not include any adjustments that may result
from the outcome of these aforementioned uncertainties.
Off
Balance Sheet Arrangements
As
of
June 30, 2006, there were no off balance sheet arrangements.
Critical
Accounting Policies
In
December 2001, the SEC requested that all registrants list their most “critical
accounting polices” in the Management Discussion and Analysis. The SEC indicated
that a “critical accounting policy” is one which is both important to the
portrayal of a company's financial condition and results, and requires
management's most difficult, subjective or complex judgments, often as a result
of the need to make estimates about the effect of matters that are inherently
uncertain. We believe that the following accounting policies fit this
definition.
Impairment
of Long−Lived Assets.
In
the
event facts and circumstances indicate the carrying value of a long-lived asset,
including associated intangibles, may be impaired, an evaluation of
recoverability is performed by comparing the estimated future undiscounted
cash
flows associated with the asset to the asset's carrying amount to determine
if a
write-down to market value or discounted cash flow is required. Based upon
management's evaluation, impairment write-downs of some of our assets was deemed
necessary for the years ended September 30, 2005 and 2004. We account for
impairment in accordance with FASB 142, “Goodwill and Other Intangible Assets.”
We test for impairment on an annual basis, unless the situation dictates
otherwise.
Recently
Issued Accounting Pronouncements
In
February 2006, the FASB issued SFAS No. 155, “Accounting for Certain
Hybrid Financial Instruments, an amendment of FASB Statements No. 133 and
140.” SFAS No. 155 resolves issues addressed in SFAS No. 133
Implementation Issue No. D1, “Application of Statement 133 to Beneficial
Interests in Securitized Financial Assets,” and permits fair value remeasurement
for any hybrid financial instrument that contains an embedded derivative
that
otherwise would require bifurcation, clarifies which interest-only strips
and
principal-only strips are not subject to the requirements of SFAS No. 133,
establishes a requirement to evaluate interests in securitized financial
assets
to identify interests that are freestanding derivatives or that are hybrid
financial instruments that contain an embedded derivative requiring bifurcation,
clarifies that concentrations of credit risk in the form of subordination
are
not embedded derivatives and amends SFAS No. 140 to eliminate the
prohibition on a qualifying special-purpose entity from holding a derivative
financial instrument that pertains to a beneficial interest other than another
derivative financial instrument. SFAS No. 155 is effective for all
financial instruments acquired or issued after the beginning of the first
fiscal
year that begins after September 15, 2006. The adoption of FAS
155
is not
anticipated to have a material impact on the Company’s financial position or
results of operations.
In
March 2006, the FASB issued SFAS No. 156, “Accounting for Servicing of
Financial Assets, an amendment of FASB Statement No. 140.” SFAS
No. 156 requires an entity to recognize a servicing asset or liability each
time it undertakes an obligation to service a financial asset by entering
into a
servicing contract under a transfer of the servicer’s financial assets that
meets the requirements for sale accounting, a transfer of the servicer’s
financial assets to a qualified special-purpose entity in a guaranteed mortgage
securitization in which the transferor retains all of the resulting securities
and classifies them as either available-for-sale or trading securities in
accordance with SFAS No. 115, “Accounting for Certain Investments in Debt
and Equity Securities” and an acquisition or assumption of an obligation to
service a financial asset that does not relate to financial assets of the
servicer or its consolidated affiliates.
Additionally,
SFAS No. 156 requires all separately recognized servicing assets and
servicing liabilities to be initially measured at fair value, permits an
entity
to choose either the use of an amortization or fair value method for subsequent
measurements, permits at initial adoption a one-time reclassification of
available-for-sale securities to trading securities by entities with recognized
servicing rights and requires separate presentation of servicing assets and
liabilities subsequently measured at fair value and additional disclosures
for
all separately recognized servicing assets and liabilities. SFAS No. 156 is
effective for transactions entered into after the beginning of the first
fiscal
year that begins after September 15, 2006. The adoption of FAS
156
is not
anticipated to have a material impact on the Company’s financial position or
results of operations.
We
maintain a set of disclosure controls and procedures designed to ensure that
information required to be disclosed by us in our reports filed under the
Securities Exchange Act, is recorded, processed, summarized and reported
within
the time periods specified by the SEC’s rules and forms. Disclosure controls are
also designed with the objective of ensuring that this information is
accumulated and communicated to our management, including our chief executive
officer and chief financial officer, as appropriate, to allow timely decisions
regarding required disclosure.
Based
upon their evaluation as of the end of the period covered by this report,
our
chief executive officer and chief financial officer concluded that our
disclosure controls and procedures are not effective to ensure that information
required to be included in our periodic SEC filings is recorded, processed,
summarized, and reported within the time periods specified in the SEC rules
and
forms.
Our
board
of directors was advised by Bagell, Josephs, Levine & Company, L.L.C., our
independent registered public accounting firm, that during this quarter
Bagell, Josephs, Levine & Company, L.L.C. identified a material weakness as
defined in Public Company Accounting Oversight Board Standard No. 2 in
our
internal control over financial reporting.
This
deficiency consisted primarily of inadequate staffing and supervision that
could
lead to the untimely identification and resolution of accounting and disclosure
matters and failure to perform timely and effective reviews. However, our
resources and size prevent us from being able to employ sufficient resources
to
enable us to have adequate segregation of duties within our internal control
system. Management is required to apply its judgment in evaluating the
cost-benefit relationship of possible controls and procedures.
Item
2. Unregistered Sales of Equity
Securities and Use of Proceeds
The
Company sold 844,088 shares of its common stock at $.80 per share for a total
of
$675,270 as of June 30, 2006. Each share sold was accompanied by a warrant
to
purchase one additional share for $1.00.
In
accordance with the requirements of the Securities and Exchange Act of 1934,
the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
