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

4

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

5

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

6

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

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RIVAL TECHNOLGIES, INC. AND SUBSIDIARY

(A Development Stage Company)

Notes to the Consolidated Financial Statements

March 31, 2010

NOTE 1 -

BASIS OF FINANCIAL STATEMENT PRESENTATION

The accompanying unaudited condensed consolidated financial statements have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission.  Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted in accordance with such rules and regulations.  The information furnished in the interim condensed consolidated financial statements include normal recurring adjustments and reflects all adjustments, which, in the opinion of management, are necessary for a fair presentation of such consolidated financial statements.  Although management believes the disclosures and information presented are adequate to make the information not misleading, it is suggested that these interim condensed consolidated financial statements be read in conjunction with the Company's audited consolidated financial statements and notes thereto included in its December 31, 2009 Annual Report on Form 10-K.  Operating results for the three months ended March 31, 2010 are not necessarily indicative of the results that may be expected for the year ending December 31, 2010.

NOTE 2 -

GOING CONCERN

As shown in the accompanying unaudited consolidated financial statements, the Company incurred a net loss of $77,459 during the three month period ended March 31, 2010.  In addition, the Company’s current liabilities exceeded its current assets by $949,701 at March 31, 2010.  These factors, as well as the uncertain conditions that the Company faces relative to capital raising activities, create an uncertainty as to the Company’s ability to continue as a going concern.  The Company is seeking to raise additional capital through public and/or private offerings, targeting strategic partners in an effort to increase revenues, and expanding revenues through strategic acquisitions. The ability of the Company to continue as a going concern is dependent upon the success of capital offerings or alternative financing arrangements and expansion of its operations. The unaudited consolidated financial statements do not include any adjustments that might be necessary should the Company be unable to continue as a going concern.  As of March 31, 2010, the Company had cash and cash equivalents of $1,790.  

The Company will require additional funding during the next twelve months to finance the growth of its current operations and achieve its strategic objectives.  Management is actively pursuing additional sources of financing sufficient to generate enough cash flow to fund its operations through 2010 and 2011.  However management cannot make any assurances that such financing will be secured.  

NOTE 3 -

INTANGIBLE PROPERTY

On September 20, 2005, the Company executed an agreement with the new director and president of TRU Oiltech and two other individuals.  Under the terms of the agreement, the director and president along with the two other individuals agreed to sell the TRU technology to the Company in exchange for 4,000,000 shares of TRU Oiltech valued at $0.001 per share.  Fair value of the shares was determined to be par value as no shares or assets exist prior to this date.  TRU Oiltech issued 4,000,000 shares.  Fair value of the TRU Technology was negotiated in an arms-length transaction by the parties to be $3,743. As of the year ended December 31, 2007, the Company determined that the intangible property was fully impaired, and recorded an impairment expense of $3,743.

The Company hired a law firm to file patent and trademark applications in Canada and the United States for TRU Oiltech’s technology, the subsidiary of the Company. The related costs are capitalized as intangible assets and subject to an amortization period of five years, which management has determined is the economic life of the assets. As of March 31, 2010 and December 31, 2009, the capitalized intangible assets totaled $11,797. No amortization and impairment are recorded as of March 31, 2010 and 2009 due to the pending status of the intangible assets.

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RIVAL TECHNOLOGIES, INC. AND SUBSIDIARIES

(A Development Stage Company)

Notes to the Consolidated Financial Statements

March 31, 2010

NOTE 3 -

INTANGIBLE PROPERTY (Continued)

Patents and trademarks consisted of the following at March 31, 2010 and December 31, 2009:

NOTE 4-

CONVERTIBLE NOTE PAYABLE

During August 2007, the Company received $500,000 from a company, Epsom Investment Services NV, a Nevis corporation (“Epsom”), a non related party, pursuant to a convertible note payable.  The note bears interest at 7% per annum, and is due on July 30, 2008.  As of December 31, 2007, accrued interest on the note totaled $14,595. Until July 30, 2008, the note holder has the right, at the holder’s option, to convert the principal and accrued interest on the note, in whole or in part, into shares of the Company’s common stock at the closing market value of the common stock on the last trading day prior to the date upon which the note holder provides written notice. The Company adopted FASB ASC 470-20,” Debt with Conversion and Other Options”. The Company incurred debt whereby the convertible feature of the debt provides for a rate of conversion based upon the closing market value of the common stock on the last trading day prior to the date upon which the note holder provides written notice. This would result in a conversion price greater than or equal to the stock price, resulting in no beneficial conversion feature. Therefore, no beneficial conversion features have been recognized in the financial statements of the Company. This note was extended twice during 2008. On December 9, 2009, the note holder extended the convertible note payable again and changed the interest from 7% to 10%. As of March 31, 2010 and December 31, 2009, accrued interest on the note totaled $97,999 and $84,595, respectively. For the period ended March 31, 2010 and December 31, 2009, the principal and the accrued interest were convertible into 4,983,325 and 2,922,975 shares of the Company’s common stock, respectively.

In July, 2009, the Company entered into an additional convertible promissory note with Epsom in the amount of $100,000 bearing interest of 10% per annum. The promissory note and interest are due and will be paid on demand. Under the agreement when demand for payment is presented to the Company,

Epsom has the option to convert the principal and interest outstanding at the end of the term into Rival’s common stock. The conversion price will be closing market value of the common stock on the last trading day prior to the date Epsom provides Rival with notice. As of March 31, 2010, the Company has received $100,000 in full, pursuant to this note. As of March 31, 2010 and December 31 2010, the interest accrued on this loan is $5,740 and $2,459 and the principal and accrued interest due was convertible into 881,167 and 387,295 shares of the Company’s common stock, respectively.  

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RIVAL TECHNOLGIES, INC. AND SUBSIDIARIES

(A Development Stage Company)

Notes to the Consolidated Financial Statements

March 31, 2010

NOTE 4-

CONVERTIBLE NOTE PAYABLE (Continued)

On December 9, 2009, the Company entered into an agreement with Epsom to renew and extend the convertible notes (noted above).  The convertible note is in the principal amount of $649,442, with 10% interest per annum. The convertible note represents the principal and interest Rival owes Epsom under a promissory note in the original principal sum of $500,000, dated August 1, 2007, and a promissory note in the original principal amount of $100,000, dated June 30, 2009 (disclosed above). The convertible note is secured by Rival’s personal property. Rival may redeem and prepay the convertible note at any time without penalty. The convertible note is payable upon demand and the conversion rate shall be determined by dividing the principal owed by the closing sale price of Rival’s common stock on the trading day prior to the notice conversion.  This would result in a conversion price greater than or equal to the stock price, resulting in no beneficial conversion feature.  The renewal and extension of the note payable is not substantial when all of the terms remain the same except the interest rate. Therefore, this renewal is not considered as debt extinguishment and no gain or loss is recognized.

NOTE 5-

STOCK OPTIONS AND WARRANTS

On February 15, 2008, the Company granted to an individual options to purchase up to 18,000 shares of the Company’s common stock for consulting services. The options vested upon their issuance.  The options have an exercise price equal to the closing price of the common stock, the day prior to the signing or renewal of the corresponding consulting agreement.  The options expire at the close of business on August 15, 2013.  

The Company estimates the fair value of each stock option at the grant date by using the Black-Scholes option pricing model pursuant to FASB ASC718, “Share Based Payment” and the following assumptions: expected term of 5 ½  years, a risk free interest rate of 2.76%, a dividend yield of 0% and volatility of 142%.  Under the provisions of SFAS ASC718 additional consulting expense of $9,037 was recorded for the year ended December 31, 2008 and $0 for three month periods ended March 31, 2010 and 2009, pursuant to the Black-Scholes option pricing model for these options.

On April 24, 2009, the Company granted a total of 4,400,000 stock options under its stock option plan to senior management at the exercise price of $0.13 per share. The options vest upon satisfaction of

certain performance markers.

The option is cumulatively exercisable in installments in accordance with the following schedule:(a) 10% of the options vest  when  the first continuous feed pilot plant agreement  is in place for TRU Technology, including full financing commitment and receipt by the Company of the first advance on financing; (b) 40% of the options vest  upon the completion of first continuous feed pilot plant and receipt of positive data and engineering reports recommending next phase of the Company’s TRU technology development plan; (c) 50%  of the options vest when  the first commercial production using TRU Technology is reached. However, this option will terminate before the end of the term if (a) above is not completed on or before December 31, 2009 or (b) above is not completed on or before December 31, 2011. At December 31, 2009, the term for performance marker (a) was extended to December 31, 2010.

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RIVAL TECHNOLOGIES, INC. AND SUBSIDIARIES

(A Development Stage Company)

Notes to the Consolidated Financial Statements

March 31, 2010

NOTE 5-

STOCK OPTIONS AND WARRANTS (Continued)

The options expire on April 14, 2014.  The fair value of options will be vested when the completion of a satisfactory pilot project is used in commercial application under the stock option plan. The Company estimated the fair value of each stock option at the grant date by using the Black-Scholes option pricing model and the following assumptions: expected term of 5 years, a risk free interest rate of 1.96%, a dividend yield of 0% and volatility of 149%. No expense has been recorded for the period ending March 31, 2010 related to these options, as they have not vested.

The following table summarizes the changes in options outstanding:

Stock options outstanding and exercisable at March 31, 2010 and 2009 are as follows:

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RIVAL TECHNOLOGIES, INC. AND SUBSIDIARIES

(A Development Stage Company)

Notes to the Consolidated Financial Statements

March 31, 2010

NOTE 5-

STOCK OPTIONS AND WARRANTS (Continued)

The aggregate intrinsic value of stock options outstanding and exercisable at March 31, 2010 and December 31, 2009 totaled $0 and $308,000; $0 and $0 respectively. The weighted average grant date fair value of options granted during the periods ended March 31, 2010 and December 31, 2009 is $0.17 and $0.17, respectively. The fair value of options vested during the periods ended March 31, 2010 and December 31, 2009 totaled $0 and $0, respectively.

NOTE 6- RELATED PARTY TRANSACTIONS

Related party transactions are in the normal course of operations, occurring on terms and conditions that are similar to those of transactions with unrelated parties and, therefore, are measured at the exchange amount.

During the periods ended March 31, 2010 and 2009, the Company was charged $24,000 management fees by a Company owned by the President and CEO of the Company, respectively. These amounts are reflected in the Company’s statements of operations.

During the periods ended March 31, 2010 and 2009, the Company also received $0 and $4,036 operating expense advances from the President and CEO of the Company, respectively. The Company paid the amount of $0 and $4,036 as of March 31, 2010 and 2009, respectively.

The amounts of $94,150 and $82,157 due to this related party as of March 31, 2010 and December 31, 2009, respectively, are non-interest bearing and have no specific terms of repayment.

NOTE 7-SUBSEQUENT EVENT

On April 2, 2010, the Company signed an additional convertible promissory note agreement with Epsom Investment Services NV (“Epsom”) in the amount of $50,000 bearing interest of 10% per annum. The promissory note and interest are due and will be paid on demand. Under the agreement when demand for payment is presented to the Company, Epsom has the option to convert the principal and interest outstanding at the end of the term into Rival’s common stock. The conversion price will be closing market value of the common stock on the last trading day prior to the date Epsom provides Rival with notice. On April 4, 2010, the Company has received $50,000 pursuant to this note.

On April 19, 2010, the Company entered into a financial consultant’s agreement with Moody Capital Solutions Inc., (“MC”), a Georgia corporation. In connection with the services to be provided, as outlined in the agreement with the plan to assist the Company in its outreach to US investors, the Company shall pay to MC, fees with the amount of 200,000 restricted shares of common stock of the Company upon engagement.  The initial terms of this engagement shall be for eight (8) months and be effective on the date of signing.

  Rival Technologies Inc. has evaluated subsequent events for the period March 31, 2010 through the date the financial statements were issued, and concluded there were no other events or transactions occurring during this period that required recognition or disclosure in its consolidated financial statements.

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In this report references to “Rival,” “Rival Technologies,” the “Company” “we,” “us,” and “our” refer to Rival Technologies, Inc.

FORWARD LOOKING STATEMENTS

The Securities and Exchange Commission (“SEC”) encourages companies to disclose forward-looking information so that investors can better understand future prospects and make informed investment decisions.  This report contains these types of statements.  Words such as “may,” “expect,” “believe,” “anticipate,” “intend,” “estimate,” “project,” or “continue” or comparable terminology used in connection with any discussion of future operating results or financial performance identify forward-looking statements.  You are cautioned not to place undue reliance on the forward-looking statements, which speak only as of the date of this report.  All forward-looking statements reflect our present expectation of future events and are subject to a number of important factors and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements.

ITEM 2.  MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

We are a holding company operating on a consolidated basis with, our majority-owned subsidiary, TRU Oiltech, Inc and CWI Technology, Inc., our wholly-owned subsidiary.  TRU Oiltech, Inc. is developing the TRU ^™ process, which is a mild, thermal reagent, primary upgrading process designed for heavy crude and oil sands bitumen which improves viscosity for acceptance by pipeline transportation systems.  CWI Technology, Inc. is developing the Continuous Water Injection technology (“CWI Technology”), which is designed to reduce harmful nitrogen oxide and ksmoke emissions, improve fuel efficiency and provide cleaner operations of diesel engines.  CWI had limited operations during 2009 and 2008.  Both subsidiaries are development stage companies in the licensing and marketing stage for their technologies.  

On December 8, 2009, Rival signed a financing agreement with Bridge Gap Konsult that we expect will provide project financing in three stages for the engineering, fabrication and operation of a continuous one Bpd feed pilot plant.  Management intends to immediately begin to explore options available to us for securing a farm-in or strategic industry partner for a minimum fifteen Bpd facility.  As of the date of this filing, we have not received any advances provided for under this financing agreement.

Our challenge for the next twelve months will be to obtain financing to assist the development of our subsidiaries’ technologies to a commercially viable application and then market them to customers.  However, our subsidiaries may be unable to develop each technology to a point where it satisfies the needs of the market.  In that case, our subsidiaries may have to research and develop other applications or we may need to abandon our business plans.

Liquidity and Capital Resources

We have not received, nor recorded, consolidated revenues from ongoing operations for the past two years and have relied on equity transactions and loans to fund development of our business plan.  During the quarter ended March 31, 2010 (“2010 first quarter”) we did not receive revenues and relied on proceeds of $25,000 from the Epsom note discussed below. As a result of equity financing and loans our consolidated cash position at March 31, 2010 was $1,790.  We incurred a net loss of $77,459 for the three month period ended March 31, 2010 and our current liabilities exceeded our current assets by $949,701 at March 31, 2010.  These factors, as well as the uncertain conditions that the Company faces relative to capital raising activities, create an uncertainty as to our ability to continue as a going concern.  We continue to seek additional capital through public and/or private offerings, intend to target strategic partners in an effort to increase revenues and intend to expand our revenues through strategic acquisitions.

Our challenge for the next twelve months will be to obtain financing to assist the development of our subsidiaries’ technologies to a commercially viable application and then market them to customers.  However, our subsidiaries may be unable to develop each technology to a point where it satisfies the needs of the market.  In that case, our subsidiaries may have to research and develop other applications or we may need to abandon our business plans.

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Commitments and Contingent Liabilities

Moody Capital Agreement:   On April 19, 2010, the Company entered into a financial consultant’s agreement with Moody Capital Solutions Inc., (“Moody Capital”), a Company located in Alpharetta Georgia, USA. In connection with the services to be provided, as outlined in the agreement with the plan to assist the Company in its outreach to U.S. investors, the Company agreed to pay Moody Capital the sum of 200,000 restricted shares of common stock of the Company upon engagement. The initial terms of this engagement shall be for eight (8) months and is effective on the date of signing.

Epsom Notes:   On December 28, 2009, the Company entered into a Senior Secured Convertible Note and a Security Agreement dated December 9, 2009, with Epsom Investment Services NV (“Epsom”).  The convertible note has a principal amount of $649,441.62, with 10% interest per annum. The convertible note represents the principal and interest Rival owes Epsom under a promissory note in the original principal sum of $500,000, with 7% interest, dated August 1, 2007 and a promissory note in the original principal amount of $100,000, with 10% interest, dated June 30, 2009.  Rival received $75,000 under these notes in 2009.  The convertible note is secured by Rival’s personal property.  Rival may redeem and prepay the convertible note at any time without penalty.  The convertible note is payable upon demand and the conversion rate shall be determined by dividing the principal owned by the closing sale price of Rival’s common stock on the trading day prior to the notice conversion.  Fractional shares shall be rounded up to a full share and the common stock issued in the conversion shall be restricted shares. Rival must reserve authorized shares of common stock equal to 175% of the conversion rate so long as the convertible note is outstanding.

The Epsom senior convertible note restricts Rival’s authority to change management, recapitalize or restructure without the prior consent of Epsom.   Epsom must consent to any change in Rival’s capital structure or revision of its articles of incorporation or bylaws.  Rival must obtain Epsom’s consent to issue or sell shares of common stock or grant options or convertible securities.  In the event Rival issues common stock or sells any options, convertible securities or rights to purchase stock, warrants or property, then Epsom shall be granted the same purchase rights in an amount equal to the shares that could be acquired upon complete conversion of the convertible note at that time.  In addition, if any shares issued or sold or other purchase rights have a price less than the conversion price of the convertible note, then the conversion price for the convertible note shall be reduced accordingly.  The convertible note also provides anti-dilution provisions for reverse or forward stock splits.

The senior convertible note provides that Epsom must approve any written agreements related to a merger, consolidation or sale of assets by Rival.  Any surviving entity must assume the obligation of the convertible note and maintain its senior ranking to all other debts or Epsom may demand redemption of the convertible note.  The convertible note provides a right of redemption to Epsom in the event of a change of control.  Rival must notify Epsom of any change in control and Epsom may require Rival to convert a portion of the convertible note into cash or, until the cash payment is paid in full, by conversion into shares; the amount to be based upon the formula as outlined in the convertible note.

In connection with the Epsom senior convertible note, Rival granted Epsom a security interest in Rival’s personal property currently existing or acquired at a later date.  The collateral includes all cash, bank accounts, goods, equipment, fixtures, intangibles, proceeds, chattel paper, inventory, accounts, patents, licenses and intellectual property.  Rival has agreed to perfect and protect the security interest held by Epsom and allows Epsom to take any necessary steps to protect its security interest.

On February 2, 2010, the Company received $25,000 pursuant to the Epsom convertible note.  As of March 31, 2010 the total principal of convertible note was $600,000 and the interest accrued on this loan is $97,999 and the principal and interest due was convertible into 4,983,325 shares of the Company’s common stock.  

On April 2, 2010, the Company signed an additional convertible promissory note agreement with Epsom Investment Services NV (“Epsom”) in the amount of $50,000 bearing interest of 10% per annum. The promissory note and interest are due and will be paid on demand.  Under the agreement when demand for payment is presented to the Company, Epsom has the option to convert the principal and interest outstanding at the end of the term into Rival’s common stock.  The conversion price will be closing market value of the common stock on the last trading day prior to the date Epsom provides Rival with notice. On April 4, 2010, the Company has received $50,000, pursuant to this note  

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Results of Operations

We did not record revenues in either the 2010 or 2009 first quarter.  Our operating expenses increased from $51,221 to $60,697 for the 2010 first quarter compared to the same period in 2009. These expenses represented increases of $9,476 primarily attributable to increased research and development expense in the 2010 first quarter.  As a result of the increase, we recorded a larger net loss for the 2010 first quarter as compared to the 2009 first quarter.

Working capital, which is current assets less current liabilities, was a deficit of $949,701 at March 31, 2010 compared to a deficit of $869,978 at December 31, 2009.  The increase in the Company’s cash flow used by operating activities from $16,819 to $28,651 was due to the increase in accounts payable and accrued liabilities. The increase in the Company’s cash flow used by financing activities from $0 to $25,000 was due to the proceeds from issuance of convertible notes payable in the 2010 first quarter compared to no financing in the 2009 first quarter.

Off-balance Sheet Arrangements

 We have not entered into 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 and would be considered material to investors.

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable to smaller reporting companies.

ITEM 4T.  CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our filings under the Exchange Act is recorded, processed, summarized and reported within the periods specified in the rules and forms of the SEC.  This information is accumulated and communicated to our executive officer to allow timely decisions regarding required disclosure.  Our Chief Executive Officer, who also is our principal financial officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) of the Exchange Act) as of the end of the period covered by this report.  Based on that evaluation, our Chief Executive Officer concluded that, as of March 31, 2010, our disclosure controls and procedures were ineffective and we intend to remedy these deficiencies as described below.

Management’s Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act).  Management conducted an evaluation of the effectiveness of our internal control over financial reporting and determined that our internal control over financial reporting was ineffective as of March 31, 2010 due to material weaknesses.  A material weakness in internal control over financial reporting is defined by the Public Company Accounting Oversight Board’s Audit Standard No. 5 as a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company's annual or interim financial statements will not be prevented or detected on a timely basis.  A significant deficiency is a deficiency, or a combination of deficiencies, in internal control over financial reporting that is less severe than a material weakness, yet important enough to merit attention by those responsible for oversight of our financial reporting.

Management’s assessment identified the following material weaknesses in internal control over financial reporting:

·

The Company’s failure to properly identify and account for costs associated with patent and trademark applications.  The errors were identified during the audit of the Company’s financial statements for the year ended December 31, 2009 and were material to the financial statements.

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·

During the course of the audit certain internal control deficiencies were identified by the auditor that constituted a material adjustment.

In light of the material weaknesses described above for the 2010 first quarter we performed additional analysis and other post-closing procedures to ensure our financial statements were prepared in accordance with generally accepted accounting principles.  Accordingly, we believe that the financial statements included in this report fairly present, in all material respects, our financial condition, results of operations and cash flows for the periods presented.

Management intends to mitigate the risk of the material weaknesses going forward by utilizing external financial consulting services, in a more effective manner, prior to the review by our principal independent accounting firm to ensure that all information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported accurately and within the time periods specified in the Commission’s rule and forms.

Our management determined that there were no other changes made in our internal controls over financial reporting during the first quarter of 2010 that have materially affected, or are reasonably likely to materially affect our internal control over financial reporting.

PART II – OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

On January 8, 2010 The Video Agency, a California corporation, filed a complaint against Rival Technologies, Inc.  and Abernathy, Mendelson & Associates LTD (“Abernathy”) in the Superior Court for the State of California County of Los Angeles, Central District.  The Video Agency alleges that Abernathy breached a written contract and failed to pay for the services performed under the contract.  The Video Agency alleges that Rival is the alter ego and under control of Abernathy and that the companies are one and the same.  Rival Technologies, Inc. has never had a contractual agreement with The Video Agency and, therefore, believes the claims are without merit and will vigorously defend against them.  As of March 31, 2010, no contingent liability has been recorded, as the Company believes that a successful outcome for The Video Agency is unlikely.

ITEM 1A.  RISK FACTORS

We have a history of losses and may never become profitable.

We are unable to fund the development of our subsidiaries’ business plans and the lack of revenues for continued growth may cause us to delay our business development.  At March 31, 2010 we had negative cash flows from operating activities and we will require additional financing to fund our long-term cash needs.  We may be required to rely on debt financing, loans from related parties, and private placements of our common stock for that additional funding. Such funding sources may not be available, or the terms of such funding sources may not be acceptable to the Company.  If the Company is unable to find such funding it could have a material adverse effect on our ability to continue as a going concern.

Failure to achieve and maintain effective internal controls in accordance with Section 404 of the Sarbanes-Oxley Act could lead to loss of investor confidence in our reported financial information.

If we fail to achieve and maintain the adequacy of our internal control over financial reporting, as such standards are modified, supplemented or amended from time to time, we may not be able to ensure that we can conclude on an ongoing basis that we have effective internal controls over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act (ASection 404").   Effective internal controls, particularly those related to revenue recognition, are necessary for us to produce reliable financial reports and are important to helping prevent financial fraud.  If we cannot provide reliable financial reports or prevent fraud, then our business and operating results could be harmed, investors could lose confidence in our reported financial information, and the trading price of our stock could drop significantly.  

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In our annual report for the year ended December 31, 2010 we will be required to provide an attestation from our independent registered public accounting firm as to the effectiveness of our internal control over financial reporting.  We cannot assure you as to our independent registered public accounting firm’s conclusions at December 31, 2010 with respect to the effectiveness of our internal control over financial reporting and there is a risk that our independent registered public accounting firm will not be able to conclude at December 31, 2010 that our internal controls over financial reporting are effective as required by Section 404.

ITEM 2.  UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

On April 19, 2010, the Company issued 200,000 shares of restricted common stock to Moody Capital Solutions, Inc.  The shares were issued for services pursuant to a Financial Consultant’s Agreement, valued at $­­­­­­­­24,000. The Company relied on an exemption from the registration requirements provided by Section 4(2) of the Securities Act of 1933 for a private transaction not involving a public distribution.

 ITEM 6.  EXHIBITS

Part I Exhibits

Part II Exhibits

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SIGNATURES

Pursuant to the requirements 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.

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