J.E.M. CAPITAL, INC. - FORM 10-Q

Attached files

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EXCEL - IDEA: XBRL DOCUMENT - J.E.M. CAPITAL, INC.	Financial_Report.xls
EX-32.1 - CERTIFICATION - J.E.M. CAPITAL, INC.	zosn_ex321.htm
EX-31.1 - CERTIFICATION - J.E.M. CAPITAL, INC.	zosn_ex311.htm
EX-31.2 - CERTIFICATION - J.E.M. CAPITAL, INC.	zosn_ex312.htm
EX-32.2 - CERTIFICATION - J.E.M. CAPITAL, INC.	zosn_ex322.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark One)

x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2014

o	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: 333-179130

ZOSANO, INC.

(Exact name of registrant as specified in its charter)

Delaware		46-0525801
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

34790 Ardentech Court Fremont, CA		94555
(Address of principal executive offices)		(Zip Code)

(510) 745-1200

Registrant’s telephone number, including area code

(Former address, if changed since last report)

(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 x No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes o 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	o	Accelerated filer	o
Non-accelerated filer	o	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 x No o

Applicable only to issuers involved in bankruptcy proceedings during the preceding five years:

Indicate by check mark whether the registrant filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes o No o

Applicable only to corporate issuers:

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date. As of April 30, 2014, there were 10,027,000 shares of common stock, $0.0001 par value per share, issued and outstanding.

ZOSANO, INC.

TABLE OF CONTENTS

PART I – FINANCIAL INFORMATION		3

ITEM 1	Financial Statements	3

ITEM 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	5

ITEM 3	Quantitative and Qualitative Disclosures About Market Risk	8

ITEM 4	Controls and Procedures	8

PART II – OTHER INFORMATION		9

ITEM 1	Legal Proceedings	9

ITEM 1A	Risk Factors	9

ITEM 2	Unregistered Sales of Equity Securities and Use of Proceeds	9

ITEM 3	Defaults Upon Senior Securities	9

ITEM 4	Mine Safety Disclosures	9

ITEM 5	Other Information	9

ITEM 6	Exhibits	10

PART I – FINANCIAL INFORMATION

This Quarterly Report on Form 10-Q includes forward-looking statements within the meaning of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These statements are based on management’s beliefs and assumptions, and on information currently available to management. Forward-looking statements include the information concerning our possible or assumed future results of operations set forth under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Forward-looking statements also include statements in which words such as “expect,” “anticipate,” “intend,” “plan,” “believe,” “estimate,” “consider,” or similar expressions are used.

Forward-looking statements are not guarantees of future performance. They involve risks, uncertainties, and assumptions. Our future results and shareholder values may differ materially from those expressed in these forward-looking statements. Readers are cautioned not to put undue reliance on any forward-looking statements.

ITEM 1 Financial Statements

The unaudited consolidated financial statements of registrant for the three months ended March 31, 2014 and 2013 follow. The consolidated financial statements reflect all adjustments which are, in the opinion of management, necessary to a fair statement of the results for the interim periods presented. All such adjustments are of a normal and recurring nature.

ZOSANO, INC.

(A DEVELOPMENT STAGE COMPANY)

INDEX TO CONDENSED FINANCIAL STATEMENTS

MARCH 31, 2014

Condensed Financial Statements

Condensed Balance Sheets as of March 31, 2014 and December 31, 2013			F-1

Condensed Statements of Operations and Comprehensive Loss for the Three Months Ended March 31, 2014 and 2013, and Cumulative from Inception			F-2

Condensed Statements of Cash Flows for the Three Months Ended March 31, 2014 and 2013, and Cumulative from Inception			F-3

Notes to Condensed Financial Statements			F-4

ZOSANO, INC.

(A DEVELOPMENT STAGE COMPANY)

CONDENSED BALANCE SHEETS

AS OF MARCH 31, 2014 AND DECEMBER 31, 2013

	March 31,			December 31,
	2014			2013
	(Unaudited)			(Audited)
ASSETS
Current assets:
Cash and cash equivalents	$	-		$	-
Total current assets		-			-

Total assets	$	-		$	-

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses	$	90		$	2,051
Related parties payable		26,016			2,000
Total current liabilities		26,106			4,051

Stockholders' equity (deficit):
Common stock		1,003			1,003
Additional paid-in capital		58,326			58,326
Deficit accumulated during development stage		(85,435	)		(63,380	)
Total stockholders' deficit		(26,106	)		(4,051	)

Total liabilities and stockholders' equity	$	-		$	-

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

F-1

ZOSANO, INC.

(A DEVELOPMENT STAGE COMPANY)

CONDENSED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

FOR THE THREE MONTHS ENDED MARCH 31, 2014 AND 2013,

AND CUMULATIVE FROM INCEPTION (SEPTEMBER 14, 2011)

THROUGH MARCH 31, 2014

	March 31,						Cumulative From
	2014			2013			Inception
	(Unaudited)			(Unaudited)			(Unaudited)
Operating expense:
General and administrative	$	22,055		$	3,140		$	85,435
Total operating expense		22,055			3,140			85,435
Loss from operations		(22,055	)		(3,140	)		(85,435	)
Net loss	$	(22,055	)	$	(3,140	)	$	(85,435	)

Comprehensive loss	$	(22,055	)	$	(3,140	)	$	(85,435	)

Net loss per common share - basic and diluted	$	(0.00	)	$	(0.31	)*
Weighted average number of common shares outstanding - basic and diluted		10,027,000			10,027	*

* Post reverse stock split.

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

F-2

ZOSANO, INC.

(A DEVELOPMENT STAGE COMPANY)

CONDENSED STATEMENTS OF CASH FLOWS

FOR THE THREE MONTHS ENDED MARCH 31, 2014 AND 2013,

AND CUMULATIVE FROM INCEPTION (SEPTEMBER 14, 2011)

THROUGH MARCH 31, 2014

	March 31,						Cumulative From
	2014			2013			Inception
	(Unaudited)			(Unaudited)			(Unaudited)
Operating activities:
Net loss	$	(22,055	)	$	(3,140	)	$	(85,435	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Accounts payable and accrued liabilities		(1,961	)		3,095			90
Related parties payable		24,016			-			26,016
Net cash used in operating activities		-			(45	)		(59,329	)

Investing activities:
Cash provided by investing activities		-			-			-
Net cash provided by investing activities		-			-			-

Financing activities:
Proceeds from issuance of common stock		-			-			421,592
Dividend paid to investors		-			-			(365,000	)
Additional investment through settlement of obligations		-			-			2,737
Net cash provided by financing activities		-			-			59,329

Net (decrease) increase in cash		-			(45	)		-
Cash - Beginning of period		-			15,367			-
Cash - End of period	$	-		$	15,322		$	-

Supplemental disclosure:
Cash paid during the period for:
Interest	$	-		$	-		$	-
Income taxes	$	-		$	-		$	-

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

F-3

ZOSANO, INC.

(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONDENSED FINANCIAL STATEMENTS

MARCH 31, 2014

1. Organization

Nature of Operations

Zosano, Inc. (the Company) is in the development stage and has limited operations. The Company was incorporated under the laws of the State of Delaware on September 14, 2011.

Acquisition by ZP Holdings

On October 31, 2013, the Company entered into a Stock Purchase Agreement (the Purchase Agreement) with ZP Holdings, Inc., a Delaware corporation (ZP Holdings), pursuant to which the Company issued and sold to ZP Holdings 10,016,973 shares of the Company common stock, $0.0001 par value, for an aggregate cash purchase price of $365,000.

As a result of the issuance and sale of the Company’s common stock to ZP Holdings pursuant to the Purchase Agreement, a change in control of the Company occurred in which ZP Holdings acquired control of the Company. Immediately following the change in control transaction, 10,027,000 shares of the Company’s Common Stock were issued and outstanding. The 10,016,973 shares of common stock issued and sold to ZP Holdings pursuant to the Purchase Agreement represent approximately 99.9% of the Company’s issued and outstanding common stock.

Liquidity and Business Risks

The Company has not established any source of revenues to cover its operating costs, and as such, has incurred an operating loss since inception. Further, as of March 31, 2014, the cash resources of the Company were insufficient to continue to conduct its normal business operations. The Company is dependent on ZP Holdings, its majority stockholder, to continue to fund its operations in order to continue as a going concern. The accompanying financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the possible inability of the Company to continue as a going concern.

2. Summary of Significant Accounting Policies

Basis of Presentation

The accompanying interim condensed financial statements have been prepared in accordance with the accounting principles generally accepted in the United States of America (U.S. GAAP) and with the instructions for Form 10-Q and Regulation S-X. Accordingly, they do not include all of the information and notes required for complete financial statements. These interim condensed financial statements should be read in conjunction with the financial statements and notes thereto contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2013 as filed with the Securities and Exchange Commission (SEC).

F-4

Unaudited Interim Financial Information

The accompanying interim condensed financial statements and related disclosures are unaudited, have been prepared on the same basis as the annual financial statements and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary for a fair statement of the results of operations for the periods presented. The year-end condensed balance sheet data was derived from audited financial statements, but does not contain all disclosures required by U.S. GAAP. The condensed results of operations for any interim period are not necessarily indicative of the results to be expected for the full year or for any other future year or interim period.

Certain amounts in the condensed consolidated financial statements have been reclassified to conform to the current year presentation.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reported period. Actual results could differ materially from those estimates.

Cash and Cash Equivalents

The Company considers all cash on hand, checking account not subject to withdrawal restrictions or penalties, and all highly liquid debt instruments purchased with a maturity of three months or less to be cash and cash equivalents.

Fair Value Measurements

The carrying values of certain financial instruments of the Company, such as cash and cash equivalents, accounts payable and accrued liabilities, and related parties payable approximate fair value due to their relatively short maturities.

Revenue

The Company is in the development stage and has yet to generate revenue from operations.

Net Loss per Common Share

Basic loss per share is computed by dividing the net loss attributable to the common stockholders by the weighted average number of shares of common stock outstanding during the period. Fully diluted loss per share is computed similar to basic loss per 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. There were no dilutive financial instruments issued or outstanding for all periods reported.

F-5

3. General and Administrative Expenses

Since inception, the Company has been engaged in developmental stage activities related to the setup and formation of the company. The following summarizes the type of expenses incurred:

	March 31,				Cumulative From
	2014		2013		Inception
	(Unaudited)		(Unaudited)		(Unaudited)
General and administrative expense:
Professional fees	$	19,800	$	2,300		64,134
Consulting fees		-		-		3,350
Filing fees		965		795		12,447
Franchise tax expense		1,200		-		2,525
Travel		-		-		1,207
Other		90		45		1,772
Total general and administrative expense	$	22,055	$	3,140		85,435

4. Stockholders’ Equity

Preferred Stock

In September 2013, the Company adopted an amended and restated certificate of incorporation by which the Company is authorized to issue 5,000,000 shares of preferred stock with a $0.0001 par value. As of March 31, 2014, there were no shares of preferred stock issued or outstanding.

Common Stock, Stock Split and Dividend

At inception, the Company adopted a certificate of incorporation by which the Company is authorized to issue 150,000,000 shares of common stock with a $0.0001 par value. In September 2011, the Company issued 1,700,000 shares of common stock to its directors of the Company at a price of $0.012 per share, for a $20,400 subscription receivable. Payments of the subscription were fully received in December 2011.

F-6

In January 2012, the Company commenced a capital formation activity by filing a Registration Statement on Form S-1 to register and sell in a self-directed offering 800,000 shares of newly issued common stock at an offering price of $0.15 per share for proceeds of up to $120,000. On May 31, 2012, the Company completed the offering and issued 304,613 shares of common stock pursuant to the Registration Statement on Form S-1 for proceeds of $45,661. Offering costs of $9,500 related to this capital formation activity were charged against the capital raised.

In September 2013, the Company adopted an amended and restated certificate of incorporation by which the Company is authorized to issue 195,000,000 shares of common stock with a $0.0001 par value, which amended and restated certificate of incorporation went effective on October 21, 2013. As of December 31, 2013, 10,027,000 shares of common stock were issued and outstanding.

In anticipation of the acquisition of the Company’s common stock by ZP Holdings and on October 21, 2013, the Company completed a 1-for-200 reverse stock split. As a result, existing stockholders held an aggregate of 10,027 shares on a post-split basis. All share and per share amounts have been retroactively restated for the effect of this split.

On October 31, 2013, the Company issued 10,016,973 shares of common stock to ZP Holdings, Inc. in exchange for an aggregate cash purchase price of $365,000. Concurrently with the receipt of the proceeds from the sale of its common stock to ZP Holdings, Inc., the Company declared a dividend of the purchase price owed by the Company, to its stockholders of record immediately prior to the closing of the purchase transaction.

The Company did not have any dilutive securities, such as stock options, warrants, and rights, issued or outstanding for all periods reported.

5. Related Party Transactions

The Company's director provided rent-free office space to the Company from inception through the completion of the acquisition by ZP Holdings, Inc. on October 31, 2013. From October 31, 2013 through March 31, 2014, the Company operates in the same facility as ZP Holdings, Inc., its parent company.

Since the acquisition by ZP Holdings, Inc., all of the Company’s expenses were paid by Zosano Pharma, Inc., a wholly owned subsidiary of ZP Holdings Inc., in order to continue as a going concern.

F-7

ITEM 2 Management’s Discussion and Analysis of Financial Condition and Results of Operations

Disclaimer Regarding Forward Looking Statements

Our Management’s Discussion and Analysis of Financial Conditions and Results of Operations contains not only statements that are historical facts, but also statements that are forward-looking. Forward-looking statements are, by their very nature, uncertain and risky. These risks and uncertainties include international, national and local general economic and market conditions; demographic changes; our ability to sustain, manage, or forecast growth; our ability to successfully make and integrate acquisitions; raw material costs and availability; new product development and introduction; existing government regulations and changes in, or the failure to comply with, government regulations; adverse publicity; competition; the loss of significant customers or suppliers; fluctuations and difficulty in forecasting operating results; changes in business strategy or development plans; business disruptions; the ability to attract and retain qualified personnel; the ability to protect technology; and other risks that might be detailed from time to time in our filings with the Securities and Exchange Commission.

Although the forward-looking statements in this Quarterly Report on Form 10-Q reflect the good faith judgment of our management, such statements can only be based on facts and factors currently known by them. Consequently, and because forward-looking statements are inherently subject to risks and uncertainties, the actual results and outcomes may differ materially from the results and outcomes discussed in the forward-looking statements. You are urged to carefully review and consider the various disclosures made by us in this Quarterly Report on Form 10-Q and in our other reports as we attempt to advise interested parties of the risks and factors that may affect our business, financial condition, and results of operations and prospects.

Overview

We were incorporated on September 14, 2011 in Delaware as “Eco Planet Corp.” Until October 31, 2013, our business plan was to offer on-line, bundles of products (“kits”) by theme for home and small business owners: Energy-Efficiency, Renewable Energy, Water Conservation, Green Cleaning and Green Office. We had planned for the products comprising the kits, as well as the kits themselves, to be relatively small, inexpensive and simple to install, and to include items such as LED light bulbs, faucet/showerhead aerators, electricity monitors and water tank insulation blankets.

On October 21, 2013, we effected a 1-for-200 reverse stock split of our common stock, $0.0001 par value per share (the “Common Stock”), and changed our name to “Zosano, Inc.” On October 31, 2013, we entered into a Stock Purchase Agreement with ZP Holdings, Inc. pursuant to which we issued and sold 10,016,973 shares of Common Stock (the “Shares”) to ZP Holdings, Inc. As a result of our issuance and sale of the Shares to ZP Holdings, Inc., a change in control of the Company occurred and ZP Holdings, Inc. became the owner of 99.9% of our outstanding Common Stock. However, as a result of the change in control on October 31, 2013, we appointed new officers and directors and have a new business plan. Our current business plan is to seek to identify a privately held operating company desiring to become a publicly held company by merging with us through a reverse merger or acquisition. We are a shell company as defined in Rule 12b-2 promulgated under the Securities Exchange Act of 1934 (the “Exchange Act”) and a development stage company. As a shell company, we have no operations and assets. Although we have no operations and assets, we believe our current reporting status under the Exchange Act, as well as our stockholder base, make us an attractive merger or acquisition candidate to a privately held company seeking to become publicly quoted.

Results of Operations for Three Months Ended March 31, 2014 Compared to Three Months Ended March 31, 2013

Summary of Results of Operations

	Three Months Ended March 31,						Period from September 14, 2011 (Inception) to March 31,
	2014			2013			2014
Revenue	$	-		$	-		$	-

Operating expenses:

General and administrative		22,055			3,140			85,435
Total operating expenses		22,055			3,140			85,435

Operating loss		(22,055	)		(3,140	)		(85,435	)

Net (Loss)	$	(22,055	)	$	(3,140	)	$	(85,435	)

Revenue

For the three months ended March 31, 2014 and 2013, and since our inception, we have not generated any revenues. We do not plan on generating any revenues before we merge with a privately-held operating company desiring to become a publicly-held company. After a successful merger transaction we do not know when, or if, we will generate revenue as that will be in the control of the private company that merges with us.

Operating expenses

During the three months ended March 31, 2014 and March 31, 2013, our operating expenses were $22,055 and $3,140, respectively, with all of our operating expenses being general and administrative expenses, primarily professional fees related to us being a public company. We anticipate our operating expenses will be approximately $25,000-$35,000 per year until such time as we successfully merge with a private company.

Net loss

Net loss for the three months ended March 31, 2014 and March 31, 2013, totaled $22,055 and $3,140, respectively, relating entirely of our operating expenses for both periods. We will continue to operate at a net loss until we merge with a privately-held operating company desiring to become a publicly-held company. After a successful merger transaction we do not know when, or if, we will operate at a net profit as that will be in the control of the private company that merges with us. We anticipate our net loss will primarily consist of our operating expenses until such time as we successfully merge with a private company.

Liquidity and Capital Resources for Three Months Ended March 31, 2014 and 2013

Introduction

During the three months ended March 31, 2014 and 2013, because of our operating losses, we did not generate positive operating cash flows. Our cash on hand as of March 31, 2014 was $0 and our monthly cash flow burn rate is minimal due to our lack of operations. Our current cash needs are being satisfied by ZP Holdings, Inc., our majority shareholder. We do not believe we will be able to satisfy our cash needs internally until we consummate a merger transaction with a private company, and even then there is no assurance we will be able to do so.

Our cash, current assets, total assets, current liabilities, and total liabilities as of March 31, 2014 compared to December 31, 2013, respectively, are as follows:

	March 31, 2014		December 31, 2013		Change

Cash	$	-	$	-	$	-
Total Current Assets		-		-		-
Total Assets		-		-		-
Total Current Liabilities		26,106		4,051		22,055
Total Liabilities	$	26,106	$	4,051	$	22,055

Assets and Liabilities

We had no assets as of March 31, 2014. We had liabilities totaling $26,106 as of March 31, 2014, which consisted of related party payable of $26,016, as a result of advances from ZP Holdings, Inc., our primary shareholder, to pay our expenses, and accounts payable and accrued expenses of $90.

Stockholders’ Deficit

Stockholders’ deficit was ($26,106) as of March 31, 2014. Stockholder’s deficit consisted primarily of shares issued to founders for $20,400, shares issued for fundraising totaling $401,192 and a capital contribution of $2,737, offset primarily by a dividend paid to stockholders in the amount of $365,000 and the deficit accumulated during the development stage of $85,435 at March 31, 2014.

Sources and Uses of Cash

Overall, we had no change in cash flows in the three months ending March 31, 2014, no net cash used in operating activities, investing activities, and financing activities.

Cash Flows from Operating Activities – For the three months ending March 31, 2014, our net cash used in operations was $0 compared to net cash used in operations of $45 for the three months ending March 31, 2013. We do not have any cash. Cash flow from operating activities represented settlement of accounts payable and accrued liabilities by ZP Holdings, Inc., our majority stockholder, on our behalf.

Cash Flows from Investing Activities – We did not have any cash flows from investing activities during the three months ended March 31, 2014 or 2013.

Cash Flows from Financing Activities – We did not have any cash flows from financing activities during the three months ended March 31, 2014 or 2013.

Development Stage Company

We are a development stage company as defined by section 915-10-20 of the FASB Accounting Standards Codification. We are still devoting substantially all of our efforts on establishing the business. All losses accumulated since inception have been considered as part of our development stage activities.

Off Balance Sheet Arrangements

We have no off balance sheet arrangements.

ITEM 3 Quantitative and Qualitative Disclosures About Market Risk

As a smaller reporting company, we are not required to provide the information required by this Item.

ITEM 4 Controls and Procedures

(a) Evaluation of Disclosure Controls Procedures

Disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) are designed to ensure that information required to be disclosed in reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms. Disclosure and control procedures are also designed to ensure that such information is accumulated and communicated to management, including the chief executive officer and principal financial officer, to allow timely decisions regarding required disclosures.

As of March 31, 2014, we carried out an evaluation, under the supervision and with the participation of management, including our chief executive officer and principal financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures. In designing and evaluating the disclosure controls and procedures, management recognizes that there are inherent limitations to the effectiveness of any system of disclosure controls and procedures, including the possibility of human error and the circumvention or overriding of the controls and procedures. Accordingly, even effective disclosure controls and procedures can only provide reasonable assurance of achieving their desired control objectives. Additionally, in evaluating and implementing possible controls and procedures, management is required to apply its reasonable judgment. We also do not have an audit committee. Based on the evaluation described above, and as a result, in part, of not having an audit committee and having one individual serve as our chief executive officer and principal financial officer, we have concluded that, as of the end of the period covered by this Quarterly Report on Form 10-Q, our disclosure controls and procedures were ineffective.

(b) Changes in Internal Controls over Financial Reporting

There was no change in our internal controls over financial reporting that occurred during the period covered by this Quarterly Report on Form 10-Q, which has materially affected, or is reasonably likely to materially affect, our internal controls over financial reporting.

Appearing as an exhibit to this Quarterly Report on Form 10-Q are “Certifications” of our principal executive and financial officer. The Certifications are required pursuant to Sections 302 of the Sarbanes-Oxley Act of 2002 (the “Section 302 Certifications”). This section of the Quarterly Report on Form 10-Q contains information concerning the Controls Evaluation referred to in the Section 302 Certifications. This information should be read in conjunction with the Section 302 Certifications for a more complete understanding of the topics presented.

PART II – OTHER INFORMATION

ITEM 1 Legal Proceedings