At May 31, 2012, the Company had a net operating loss carryforward
for Federal income tax purposes of $1,765 that may be offset against future taxable income that will start phasing out in 2031 No
tax benefit has been reported with respect to these net operating loss carry-forwards in the accompanying financial statements
because the Company believes that the realization of the Companys net deferred tax assets of $600, calculated at an effective
tax rate of 34%, was not considered more likely than not and accordingly, the potential tax benefits of the net loss carry-forwards
are fully offset by a valuation allowance of $600.
Deferred tax assets consist primarily of the tax effect
of NOL carry-forwards. The Company has provided a full valuation allowance on the deferred tax assets because of the
uncertainty regarding its realizability.