Attached files
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended April 30, 2011
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from __________ to ______________
Commission File Number 333-157618
AVALON HOLDING GROUP, INC.
(Exact name of registrant as specified in its charter)
Nevada 26-3608086
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
6536 102nd Place NE, Kirland, WA 98033 USA
(Address of principal executive offices)
None
(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. Yes [ ] No [X]
Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of "large accelerated filer," "accelerated filer" and "smaller
reporting company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer [ ] Accelerated filer [ ]
Non-accelerated filer [ ] Smaller reporting company [X]
(Do not check if a smaller reporting company)
Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). Yes [ ] No [X]
APPLICABLE ONLY TO ISSUERS 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 Sections 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. Yes [ ] No [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS:
Number of shares outstanding of the registrant's class of common stock as of May
12, 2011, 121,320,000.
AVALON HOLDING GROUP, INC
(A Development Stage Company)
FINANCIAL STATEMENTS
APRIL 30, 2011
BALANCE SHEET 2
STATEMENTS OF OPERATIONS 3
STATEMENTS OF CASH FLOWS 4
NOTES TO THE FINANCIAL STATEMENTS 5
2
Avalon Holding Group, Inc
(A Development Stage Company)
BALANCE SHEETS
(Unaudited)
--------------------------------------------------------------------------------
April 30, January 31,
2011 2011
-------- --------
(unaudited) (audited)
CURRENT
Cash $ -- $ --
Total Current Assets -- --
-------- --------
TOTAL ASSETS $ -- $ --
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES
Accounts payable $ 18,681 $ 18,003
Advances 9,000 9,000
Advances from director 12,935 12,935
-------- --------
TOTAL LIABILITIES 40,616 39,938
-------- --------
STOCKHOLDERS' (DEFICIT)
Common stock, $0.001 par value, 500,000,000 shares
Authorized;
121,320,000 shares issued and outstanding 121,320 121,320
Additional paid-in-capital (92,820) (92,820)
Deficit accumulated during the development stage (69,116) (68,438)
-------- --------
TOTAL STOCKHOLDERS' (DEFICIT) (40,616) (39,938)
-------- --------
TOTAL LIABILITIES AND STOCKHOLDERS' (DEFICIT) $ -- $ --
======== ========
The accompanying notes are an integral part of these financial statements.
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Avalon Holding Group, Inc
(A Development Stage Company)
STATEMENTS OF OPERATIONS
(Unaudited)
--------------------------------------------------------------------------------
Three Months Three Months From Inception on
Ended Ended July 28, 2008 to
April 30, April 30, April 30,
2011 2010 2011
------------ ------------ ------------
REVENUE
Revenue $ -- $ -- $ 446
------------ ------------ ------------
Total revenue -- -- 446
------------ ------------ ------------
EXPENSES
General and administrative expenses 678 5,270 59,662
Depreciation -- -- 965
------------ ------------ ------------
Total expenses 678 5,270 60,627
------------ ------------ ------------
Loss before other items and taxes (678) (5,270) (60,181)
Loss on disposal of equipment -- -- (8,935)
------------ ------------ ------------
NET LOSS $ (678) $ (5,270) $ (69,116)
============ ============ ============
LOSS PER COMMON SHARE - BASIC AND DILUTED $ Nil $ Nil
------------ ------------
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING-
BASIC AND DILUTED 121,320,000 121,320,000
============ ============
The accompanying notes are an integral part of these financial statements.
4
Avalon Holding Group, Inc
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
(Unaudited)
--------------------------------------------------------------------------------
Three Month Three Month From Inception on
Period Ended Period Ended July 28, 2008 to
April 30, April 30, April 30,
2011 2010 2011
-------- -------- --------
OPERATING ACTIVITIES
Net loss $ (678) $ (5,270) $(69,116)
Depreciation -- -- 965
Loss on disposal of equipment -- -- 8,935
Changes in current assets and liabilities
Accounts payable 678 1,224 18,681
-------- -------- --------
NET CASH USED IN OPERATING ACTIVITIES -- (4,046) (40,535)
-------- -------- --------
INVESTING ACTIVITIES
Purchase of vending equipment -- -- (9,900)
-------- -------- --------
NET CASH USED IN INVESTING ACTIVITIES -- -- (9,900)
-------- -------- --------
FINANCING ACTIVITIES
Advances (Note 7) -- -- 9,000
Advances from director (Note 8) -- 4,046 12,935
Issuance of common stock (Note 5) -- -- 28,500
-------- -------- --------
NET CASH PROVIDED BY FINANCING ACTIVITIES -- 4,046 50,435
-------- -------- --------
Net increase (decrease) in cash and equivalents -- -- --
Cash at beginning of the period -- -- --
-------- -------- --------
Cash at end of the period $ -- $ -- $ --
======== ======== ========
SUPPLEMENTAL CASH FLOW INFORMATION:
CASH PAID FOR:
Interest $ -- $ -- $ --
======== ======== ========
Income taxes $ -- $ -- $ --
======== ======== ========
Non-cash Activities $ -- $ -- $ --
======== ======== ========
The accompanying notes are an integral part of these financial statements.
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Avalon Holding Group, Inc
(A Development Stage Company)
NOTES TO THE FINANCIAL STATEMENTS
April 30, 2011
(Unaudited)
--------------------------------------------------------------------------------
1. ORGANIZATION AND BUSINESS OPERATIONS
a) Organization
AVALON HOLDING GROUP, INC ("the Company") was incorporated under the laws of the
State of Nevada, U.S. on July 28, 2008.
b) Development Stage Activities
The Company is in the development stage as defined under ASC 915 formerly
Statement on Financial Accounting Standards No. 7, Development Stage Enterprises
("SFAS No.7") and commenced operations in the entertainment and amusement
industry by placing and operating amusement gaming machines in public venues
with high traffic flow in Russia. For the period from inception on July 28, 2008
through April 30, 2011, the Company has generated $446 in revenues and has
accumulated losses of $69,116.
Based upon our business plan, we are a development stage enterprise, and we
present our financial statements in conformity with the accounting principles
generally accepted in the United States of America. As a development stage
enterprise, we disclose the deficit accumulated during the development stage and
the cumulative statements of operations and cash flows from our inception to the
current balance sheet date.
2. BASIS OF PRESENTATION - GOING CONCERN
Our accompanying interim financial statements have been prepared in conformity
with GAAP, which contemplates our continuation as a going concern. However, we
have minimal business operations to date. In addition, from the period from
inception on July 28, 2008 through April 30, 2011, we have incurred losses of
$69,116, and have working capital deficit of $40,616. These matters raise
substantial doubt about our ability to continue as going concern. In view of
these matters, realization of certain of the assets in the accompanying balance
sheet is dependent upon our ability to meet our financing requirements, raise
additional capital, and the success of our future operations. There is no
assurance that future capital raising plans will be successful in obtaining
sufficient funds to assure our eventual profitability. While management believes
that actions planned and presently being taken to revise our operating and
financial requirements provide the opportunity for us to continue as a going
concern, there is no assurance the actions will be successful. In addition,
recent events in worldwide capital markets may make it more difficult for us to
raise additional equity or debt capital.
Our financial statements do not include any adjustments that might result from
these uncertainties.
3. SIGNIFICANT ACCOUNTING POLICIES
This summary of significant accounting policies is presented to assist in
understanding our financial statements. Our financial statements and notes are
representations of our management who is responsible for their integrity and
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3. SIGNIFICANT ACCOUNTING POLICIES (CONT'D)
objectivity. These accounting policies conform to generally accepted accounting
principles in the United States of America ("GAAP") and have been consistently
applied in the preparation of the financial statements. The financial statements
are stated in United States of America dollars.
a) Income Taxes
We have adopted the ASC subtopic 740-10 (formerly Statement of Financial
Accounting Standards ("SFAS") No. 109 - "Accounting for Income Taxes"). ASC
740-10 requires the use of the asset and liability method of accounting of
income taxes. Under the asset and liability method of ASC 740-10, deferred tax
assets and liabilities are recognized for the future tax consequences
attributable to temporary differences between the financial statements carrying
amounts of existing assets and liabilities and their respective tax bases.
Deferred tax assets and liabilities are measured using enacted tax rates
expected to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled.
We provide deferred taxes for the estimated future tax effects attributable to
temporary differences and carry forwards when realization is more likely than
not.
b) Property and Equipment
Property and equipment is stated at cost, and is depreciated over estimated
useful lives using primarily the straight line method for financial reporting
purposes. Useful lives range from 3 to 5 years. We evaluate property and
equipment at least annually for impairment. Since inception, all of the
equipment has been sold for a net loss of $8,935. The Company has no property
and equipment of value as of April 30, 2011.
c) Basic and Diluted Loss Per Share
In accordance with ASC subtopic 260-10 (formerly SFAS No. 128 - "Earnings Per
Share"), the basic loss per common share is computed by dividing net loss
available to common stockholders by the weighted average number of common shares
outstanding. Diluted loss per common share is computed similar to basic loss per
common share except that the denominator is increased to include the number of
additional common shares that would have been outstanding if the potential
common shares had been issued and if the additional common shares were dilutive.
At April 30, 2011 and January 31, 2011, we had no stock equivalents that were
anti-dilutive and excluded in the earnings per share computation.
d) Fair Value of Financial Instruments
The carrying value of our financial instruments, consisting of accounts payable,
approximates their fair value due to the short-term maturity of such
instruments. Unless otherwise noted, it is management's opinion that we are not
exposed to significant interest, currency or credit risks arising from these
financial statements.
e) Revenue Recognition
It is our policy that revenues will be recognized in accordance with ASC
subtopic 605-10 (formerly SEC Staff Accounting Bulletin (SAB) No. 104, "Revenue
Recognition."). Under ASC 605-10, product revenues (or service revenues) are
recognized when persuasive evidence of an arrangement exists, delivery has
occurred (or service has been performed), the sales price is fixed and
determinable and collectability is reasonably assured.
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3. SIGNIFICANT ACCOUNTING POLICIES (CONT'D)
f) Use of Estimates
The preparation of financial statements in conformity with GAAP 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 amount of revenues and
expenses during the reporting period. Actual results could differ from those
estimates.
g) Cash and Cash Equivalents
Cash is comprised of cash on hand and demand deposits. Cash equivalents include
short-term highly liquid investments with original maturities of three months or
less that are readily convertible to known amounts of cash and which are subject
to an insignificant risk of change in value.
h) Interim Financial Statements
The interim financial statements presented herein have been prepared pursuant to
the rules and regulations of the SEC. 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. The
interim financial statements should be read in conjunction with the company's
annual report. In the opinion of management, all adjustments which are necessary
to provide a fair presentation of financial position as April 30, 2011 and
related operating results and cash flows for the interim period presented have
been made. All adjustments are of a normal recurring nature. The results of
operations, for the period presented are not necessarily indicative of the
results to be expected for the year ended January 31, 2012.
4. RECENT ACCOUNTING PRONOUNCEMENTS
The Company does not expect the adoption of any recent accounting pronouncements
to have a material impact on its financial statements.
5. COMMON STOCK
The authorized capital of the Company is 500,000,000 common shares with a par
value of $ 0.001 per share.
On November 3, 2008, the Company issued 72,000,000 shares of common stock at a
price of $0.00004 per share for total cash proceeds of $3,000.
In November 20, 2008, the Company issued 28,800,000 shares of common stock at a
price of $0.0002 per share for total cash proceeds of $6,000.
In January 2009, the Company issued 18,600,000 shares of common stock at a price
of $0.00083 per share for total cash proceeds of $15,500.
In January 2009, the Company also issued 1,920,000 shares of common stock at a
price of $0.002 per share for total cash proceeds of $4,000.
On September 29, 2010, a forward split 24:1 was approved and enacted.
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6. INCOME TAXES
As of April 30, 2011, the Company had net operating loss carry forwards of
approximately $69,116 that may be available to reduce future years' taxable
income through 2032. The approximate deferred tax asset of $24,000 has been
fully offset by a valuation allowance, as its realization is determined not
likely to occur. The net operating loss carryforwards will begin to expire in
2028.
7. ADVANCES
Advances from a non-related third party as of April 30, 2011 totaled of $9,000
(January 31, 2011 - $9,000). The amounts due are non-interest bearing, unsecured
and are due upon demand.
8. RELATED PARTY TRANSACTIONS
The Company entered into the following transactions with related party:
Advances from a director as of April 30, 2011 totaled $12,935 (January 31, 2011
- $12,935). The amounts due are non-interest bearing, unsecured and are due upon
demand. The amounts and dates of the advances are as follows:
Date Amount
---- ------
October 28, 2009 $ 4,068
January 31, 2010 2,782
April 30, 2010 4,159
July 31, 2010 400
November 18, 2010 1,526
-------
Total advances payable to a director $12,935
=======
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ITEM 2. MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
GENERAL
We were incorporated on July 28, 2008 under the laws of the State of Nevada. Our
principal offices were located at 3/2 Yahtennaya Street, Suite 158, St.
Petersburg, Russia 197374. In September 2009, we relocated our principal offices
to 6536 102nd Place NE, Kirland, WA 98033 USA. Our telephone number is
206-947-5639. Our fiscal year end is January 31.
During our first year of operations, we intended to commence operations in the
entertainment and amusement industry. We purchased coin operated amusement
machines for the purpose of placing and operating them in public venues with
high traffic flow in Russia. We were initially focused on four amusement games,
"Arm Wrestling Game", "Hammer Game", "Kicking Game" and "Punching Game" and
place them in places such as nightclubs, bars, pubs, cinemas and amusement
complexes. Strength testing amusement games have been around for many years, and
prior management believed that if placed in high traffic location can be high
revenue producers.
Since our inception, we have purchased three such machines from our supplier,
"Punchline Europe". Our business strategy was to continue acquiring and placing
additional amusement machines in as many places in different cities of Russia as
possible.
We do not believe that we will be able to generate significant revenues from
sales during the next twelve months in the area of coin operated amusement
machines. At this time in the financial markets there has been a major reduction
in investor and lender willingness to provide capital to new businesses
throughout the world. Our efforts to seek additional funding this year have
encountered high levels of resistance to its inquiries for new sources of cash
flows. During the period ended October 31, 2009, due to the high cost of
maintaining the operations of the company in Russia, we took a loss for the
historical value of our vending machines and wrote them off on our balance
sheet. We have abandoned the machines and are looking for new business ventures
to be engaged in. Currently, we do not have any operations or assets.
RESULTS OF OPERATION
Our financial statements have been prepared assuming that we will continue as a
going concern and, accordingly, do not include adjustments relating to the
recoverability and realization of assets and classification of liabilities that
might be necessary should we be unable to continue in operation.
We expect we will require additional capital to meet our long term operating
requirements. We expect to raise additional capital through, among other things,
the sale of equity or debt securities.
THREE MONTH PERIOD ENDED APRIL 30, 2011
Our net loss for the three month period ended April 30, 2011 was $678, compared
to a loss of $5,270 during the same period from the prior fiscal year. During
the three month period ended April 30, 2011, we did not generate any revenue and
incurred general and administrative expenses of $678, compared to $5,270 in
2010. The decrease in our general and administrative expenses for the three
month period ended April 30, 2011, compared to the same period from the prior
fiscal year was due to decreased legal and accounting expenses.
10
The weighted average number of shares outstanding was 121,320,000 for the three
month period ended April 30, 2011.
LIQUIDITY AND CAPITAL RESOURCES
THREE MONTH PERIOD ENDED APRIL 30, 2011
As at April 30, 2011, and 2010, we had no assets. As at April 30, 2011, our
total liabilities were $40,616, which resulted in a working capital deficit of
$40,616, compared to total liabilities of $39,938 and a working capital deficit
of $39,938 as of January 31, 2010. The increase in our working capital deficit
was due to an increase in accounts payable of $678 incurred during the three
month period ended April 30, 2011.
Stockholders deficit increased from $39,938 for the year ended January 31, 2010
to $40,616 for the three month period ended April 30, 2011.
CASH FLOWS FROM OPERATING ACTIVITIES
We have not generated positive cash flows from operating activities. For the
three month period ended April 30, 2011, net cash flows used in operating
activities was $678 consisting primarily of a net loss of $678 and changes in
accounts payable of $678. Net cash flows used in operating activities was
$40,535 for the period from inception July 28, 2008 to April 30, 2011.
CASH FLOWS FROM INVESTING ACTIVITIES
For the three month period ended April 30, 2011, we did not generate net cash
flows from investing activities. For the period from inception July 28, 2008 to
April 30, 2011, net cash used in investing activities was $9,900 used to
purchase vending equipment.
CASH FLOWS FROM FINANCING ACTIVITIES
We have financed our operations primarily from either advances or the issuance
of equity and debt instruments. For the period from inception July 28, 2008 to
April 30, 2011, net cash provided by financing activities was $50,435. During
the three month period ended April 30, 2011, there was no financing activities.
PLAN OF OPERATION AND FUNDING
The following discussion of the plan of operation, financial condition, results
of operations, cash flows and changes in financial position should be read in
conjunction with our most recent financial statements and notes appearing in our
Form 10-K for the year ended January 31, 2011.
Our survival is dependent upon the identification and successful completion of
additional long-term or permanent equity financing, the support of creditors and
shareholders, and, ultimately, the acquisition and/or implementation of
profitable operations. There can be no assurances that we will be successful,
which would in turn significantly affect our ability to survive as a going
concern. If not, we will be required to dissolve. We will continue to seek means
of financing in order to acquire an ongoing business or assets or to implement a
new business strategy.
We do not anticipate making any major purchases of capital assets, or conducting
any research and development in the next twelve (12) months. Other than our
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current sole executive officer, we have no employees at the present time. We do
not expect to hire any employees within the next twelve (12) months.
We currently do not any have cash. However, our current officers and directors
have personally committed to provide up to an aggregate amount of $20,000 in
funds to meet our operational needs. We believe that with this commitment we
have sufficient cash resources to satisfy our needs through the middle of June
2011. Our ability to satisfy cash requirements thereafter and the need for
additional funding is dependent on our ability to acquire new business and
generate revenue from such new business in sufficient quantity and on a
profitable basis. To the extent that we require additional funds, we may attempt
to sell additional equity shares or issue debt. Any sale of additional equity
securities will result in dilution to our stockholders. Should we require
additional cash in the future, there can be no assurance that we will be
successful in raising additional debt or equity financing on terms acceptable to
us, if at all.
The recent and continuing downturn in the U.S. economy has had an effect on our
ability to generate revenues and to attract long-term financing for our
operations. The downturn in the U.S. economy has also made it more difficult to
find investors that either have capital to invest or are willing to put capital
at risk by investing in our company. We anticipate that both effects of the
current economic rescission will continue to hinder our abilities to become a
profitable company and to grow our operations.
PURCHASE OF SIGNIFICANT EQUIPMENT
We do not intend to purchase any significant equipment during the next twelve
months.
OFF-BALANCE SHEET ARRANGEMENTS
As of the date of this Quarterly Report, we do not have any off-balance sheet
arrangements that have or are reasonably likely to have a current or future
effect on our financial condition, changes in financial condition, revenues or
expenses, results of operations, liquidity, capital expenditures or capital
resources that are material to investors.
GOING CONCERN
The independent auditors' report accompanying our April 30, 2011 financial
statements contained an explanatory paragraph expressing substantial doubt about
our ability to continue as a going concern. The financial statements have been
prepared "assuming that we will continue as a going concern," which contemplates
that we will realize our assets and satisfy our liabilities and commitments in
the ordinary course of business.
ITEM 3. QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable
ITEM 4. CONTROLS AND PROCEDURES
DISCLOSURE CONTROLS AND PROCEDURES
As of the end of the period covered by this report, we conducted an evaluation,
under the supervision and with the participation of our chief executive officer
and chief financial officer of our disclosure controls and procedures (as
defined in Rule 13a-15(e) of the Securities Exchange Act of 1934 (the "Exchange
Act")). Based upon this evaluation, our chief executive officer and chief
financial officer concluded that our disclosure controls and procedures are
effective to ensure that information required to be disclosed by us in the
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reports that we file or submit under the Exchange Act is recorded, processed,
summarized and reported, within the time periods specified in the Securities and
Exchange Commission's rules and forms.
INTERNAL CONTROL OVER FINANCIAL REPORTING
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 PROCEEDINGS
None.
ITEM 1A. RISK FACTORS
As a smaller reporting company, we are not required to provide the information
required by this Item.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS
(a) Pursuant to Rule 601 of Regulation S-B, the following exhibits are included
herein or incorporated by reference.
Exhibit
Number Description
------ -----------
31.1 Section 302 Certification - Chief Executive Officer
32.1 Certification Pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 - Chief
Executive Officer.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized, on this June 20, 2011.
AVALON HOLDING GROUP, INC.
By: /s/ Phillip Jennings
-----------------------------------
Name: Phillip Jennings
Title: President (Principal Executive
Officer) Treasurer (Principal
Financial Officer and Principal
Accounting Officer)
14