10-Q 1 form10q.htm SYNTHENOL INC 10Q 6-30-2008 form10q.htm


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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549

FORM 10-Q

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

For the quarterly period ended:  June 30, 2008

£
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             000-29219              

 
SYNTHENOL INC.
 
 
(Exact name of registrant as specified in its charter)
 


Florida
 
98-0199508
(State or other jurisdiction of incorporation or organization)
 
(IRS Employer Identification No.)


Suite 206 – 388 Drake Street
Vancouver, British Columbia, Canada
 
V6B 6A8
(Address of principal executive offices)
 
(Zip Code)


Issuer’s telephone number
 
(604) 648-2090

     
(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 T
 
No £


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
T
 
-1-

 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes £
 
No T


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 £
 
Not Applicable


APPLICABLE ONLY TO CORPORATE ISSUERS

The number of shares of common stock outstanding as of August 8, 2008 was 731,522.

 
-2-

 


FORM 10-Q

 
 
4
         
ITEM 1.
   
4
 
5
 
6
 
7
 
8
 
12
         
ITEM 2.
   
16
         
ITEM 3.
   
17
         
ITEM 4.
   
18
         
 
18
         
ITEM 1.
   
18
         
ITEM 1A.
   
18
         
ITEM 2.
   
18
         
ITEM 3.
   
19
         
ITEM 4.
   
19
         
ITEM 5.
   
19
         
ITEM 6.
   
19
 

PART I – FINANCIALS INFORMATION

ITEM 1.  FINANCIAL STATEMENTS


SYNTHENOL INC.
 
(A Development Stage Company)
 
CONSOLIDATED FINANCIAL STATEMENTS
 
June 30, 2008
 
Unaudited


 
(A Development Stage Company)
CONSOLIDATED BALANCE SHEETS

   
June 30,
   
December 31,
 
ASSETS
 
2008
   
2007
 
   
Unaudited
       
Current
           
Cash
  $ 818     $ 66,273  
Receivable (Note 6)
    1       -  
                 
    $ 819     $ 66,273  
                 
LIABILITIES AND STOCKHOLDERS’ DEFICIT
               
                 
Current
               
Accounts payable and accrued liabilities (Note 4)
  $ 58,426     $ 133,508  
Notes payable (Notes 3 and 6)
    300,099       309,079  
                 
      358,525       442,587  
                 
                 
                 
Capital stock
               
Preferred stock, $0.01 par value, 5,000,000 shares authorized, no shares issued or outstanding
               
Common stock, $0.01 par value, 100,000,000 shares authorized 731,522 (December 31, 2007: 731,522) shares issued and outstanding
    7,315       7,315  
Treasury stock, at cost, 540 shares (December 31, 2007: 540)
    (270 )     (270 )
Additional paid-in capital
    1,974,187       1,974,187  
Accumulated other comprehensive income
    6,034       5,213  
Deficit
    (1,305,454 )     (1,305,454 )
Deficit accumulated during the development stage
    (1,039,518 )     (1,057,305 )
                 
      (357,706 )     (376,314 )
                 
    $ 819     $ 66,273  

 
Contingencies (Note 2)
Commitments (Note 3)
Subsequent event (Note 7)


SEE ACCOMPANYING NOTES


(A Development Stage Company)
CONSOLIDATED STATEMENTS OF OPERATIONS
Unaudited
   
Three months ended
   
Six months ended
   
January 1, 2004
(Date of Inception
of the Development
Stage) to
 
   
June 30,
         
June 30,
         
June 30,
 
   
2008
   
2007
   
2008
   
2007
   
2008
 
General and administrative expenses
                             
Amortization
  $ -     $ -     $ -     $ -     $ 27,077  
Bad debt
    -       -       -       -       525  
Corporate promotion
    -       -       -       -       13,920  
Finance charges
    12,051       -       16,102       -       27,387  
Insurance
    -       -       -       -       15,901  
Interest on notes payable (Note 3)
    3,079       -       7,986       -       31,414  
Management and consultant fees (Note 4)
    26,625       29,157       50,981       51,914       275,580  
Office supplies and services
    2,628       4,040       3,337       8,255       49,754  
Professional fees
    12,810       576       18,810       14,706       254,017  
Rent
    -       -       -       -       16,311  
Wages
    -       -       -       -       84,258  
 
                                       
Loss before other items
    (57,192 )     (33,773 )     (97,216 )     (74,875 )     (796,144 )
                                         
Other items
                                       
Loss on disposition of equipment
    -       -       -       -       (15,028 )
Write-down of intangible assets
    -       -       -       -       (50,001 )
Write-off of payables
    36,567       -       36,567       -       36,567  
Write-off of notes payable
    -       -       -       -       14,823  
Gain on settlement of lawsuit
    -       -       -       -       44,445  
                                         
Loss from continuing operations
    (20,626 )     (33,773 )     (60,649 )     (74,875 )     (765,338 )
                                         
Loss on sale of discontinued operations (Note 6)
    78,436       -       78,436       -       (274,180 )
                                         
Net income (loss)
  $ 57,810     $ (33,773 )   $ 17,787     $ (74,875 )   $ (1,039,518 )
                                         
Basic and diluted loss per common share
  $ 0.08     $ (0.05 )   $ 0.02     $ (0.10 )        
                                         
Weighted average number of common share outstanding – basic and diluted
    731,522       731,522       731,522       731,522          
                                         
Comprehensive loss
                                       
Net income (loss)
  $ 57,810     $ (33,773 )   $ 17,787     $ (74,875 )   $ (1,039,518 )
Foreign currency translation adjustment
    1,443       (6,660 )     821       (6,673 )     6,034  
Total comprehensive loss
  $ 59,253     $ (40,433 )   $ 18,608     $ (81,548 )   $ (1,033,484 )


SEE ACCOMPANYING NOTES


(A Development Stage Company)
CONSOLIDATED STATEMENTS OF CASH FLOWS
Unaudited
 
               
January 1, 2004
 
               
(Date of Inception
 
               
of the Development
 
   
Six months ended
   
Stage) to
 
   
June 30,
   
June 30,
 
   
2008
   
2007
   
2008
 
Cash flows from operating activities
                 
Net income (loss)
  $ 17,787     $ (74,875 )   $ (1,039,518 )
Adjustments to reconcile net loss to net cash used in operating activities:
                       
Finance charges
    16,102       -       27,387  
Accrued interest on notes payable
    7,986       6,954       31,414  
Amortization
    -       -       27,077  
Foreign exchange effect on notes payable
    (2,798 )     -       5,303  
Issuance of common stock for services
    -       -       1,000  
Stock-based compensation
    -       -       4,460  
Loss on disposition of equipment
    -       -       225,184  
Write-down of intangible assets
    -       -       360,001  
Write-off of payables
    (36,567 )     -       (36,567 )
Write-off of notes payable
    -       -       (18,729 )
Gain on settlement of lawsuit
    -       -       (44,445 )
Gain on sale of subsidiaries
    (78,437 )             (108,121 )
Changes in non-cash working capital items:
                       
Prepaid expenses and deposits
    -       (10,709 )     -  
Accounts payable and accrued liabilities
    10,013       7,844       143,521  
                         
Cash used in continuing operations
    (65,914 )     290       (422,033 )
Discontinued operations
    (362 )     (290 )     (171,213 )
                         
Net cash used in operating activities
    (66,276 )     (70,786 )     (593,246 )
                         
Cash flows from investing activities
                       
Proceeds from sale of subsidiary
    -       1       1  
Proceeds from assets disposition
    -       -       5,458  
Purchase of equipment
    -       -       (5,808 )
Net cash used in investing activities
    -       -       (349 )
                         
Cash flows from financing activities
                       
Proceeds from notes payable
    -       65,000       398,614  
Proceeds from issuance of common stock
    -       -       1,000  
                         
Net cash provided by financing activities
    -       65,000       399,614  
                         
Effect of exchange rate changes on cash
    821       (6,673 )     (14,718 )
                         
Change in cash from continuing operations
    (65,455 )     (12,459 )     (208,699 )
                         
Cash, beginning
    66,273       13,462       209,517  
                         
Cash, ending
  $ 818     $ 1,003     $ 818  
Supplemental cash flow information (Note 5)


SEE ACCOMPANYING NOTES


(A Development Stage Company)
CONSOLIDATED STATEMENT OF STOCKHOLDERS’ DEFICIENCY
Unaudited
                                       
Deficit
       
                           
Accumulated
         
Accumulated
       
               
Additional
         
Other
         
During the
       
   
Common Shares
   
Treasury
   
Paid-in
   
Subscriptions
   
Comprehensive
         
Development
       
   
Number
   
Amount
   
Stock
   
Capital
   
Received
   
Income
   
Deficit
   
Stage
   
Total
 
May 3, 1989 ( Inception) through December 31, 1997
    60,022     $ 600     $ -     $ 9,400     $ -     $ -     $ (10,000 )   $ -     $ -  
Net loss
    -       -       -       -       -       -       (148,931 )     -       (148,931 )
Shares issued for cash
    180,000       1,800       -       148,200       2,000       -       -       -       152,000  
Balance at December 31, 1998
    240,022       2,400       -       157,600       2,000       -       (158,931 )     -       3,069  
Net loss
    -       -       -       -       -       -       (511,587 )     -       (511,587 )
Foreign currency translation adjustment
    -       -       -       -       -       (14,130 )     -       -       (14,130 )
Share issued for services
    15,000       150       -       124,850       -       -       -       -       125,000  
Subscription receivable
    12,000       120       -       99,880       8,000       -       -       -       108,000  
Share issued for intangible assets
    15,000       150       -       124,850       -       -       -       -       125,000  
Balance at December 31, 1999
    282,022       2,820       -       507,180       10,000       (14,130 )     (670,518 )     -       (164,648 )
Net loss
    -       -       -       -       -       -       (339,063 )     -       (339,063 )
Foreign currency translation adjustment
    -       -       -       -       -       18,885       -       -       18,885  
Shares issued for cash
    21,600       216       -       259,784       -       -       -       -       260,000  
Shares issued for settlement of debt
    4,500       45       -       174,955       -       -       -       -       175,000  
Subscription receivable
    600       6       -       9,994       (200 )     -       -       -       9,800  
Subscription received
    30,000       300       -       499,700       (9,350 )     -       -       -       490,650  
Stock option benefit
    -       -       -       14,235       -       -       -       -       14,235  
Balance at December 31, 2000
    338,722       3,387       -       1,465,848       450       4,755       (1,009,581 )     -       464,859  
Net loss
    -       -       -       -       -       -       375,621       -       375,621  
Foreign currency translation adjustment
    -       -       -       -       -       13,629       -       -       13,629  
Shares issued for cash
    300       3       -       2,247       -       -       -       -       2,250  
Subscription received
    -       -       -       -       200       -       -       -       200  
Stock option benefit
    -       -       -       118,920       -       -       -       -       118,920  
Repurchase of common stock for treasury
    -       -       (270 )     (6,611 )     -       -       -       -       (6,881 )
Balance at December 31, 2001
    339,022       3,390       (270 )     1,580,404       650       18,384       (633,960 )     -       968,598  
Net loss
    -       -       -       -       -               (63,864 )     -       (63,864 )
Foreign currency translation adjustment
    -       -       -       -               (1,155 )             -       (1,155 )
Shares issued for cash
    4,500       45       -       33,705       -       -       -       -       33,750  
Balance at December 31, 2002
    343,522     $ 3,435     $ (270 )   $ 1,614,109     $ 650     $ 17,229     $ (697,824 )   $ -     $ 937,329  


SEE ACCOMPANYING NOTES


SYNTHENOL INC.
(A Development Stage Company)
CONSOLIDATED STATEMENT OF STOCKHOLDERS’ DEFICIENCY
Unaudited
                                       
Deficit
       
                           
Accumulated
         
Accumulated
       
               
Additional
         
Other
         
During the
       
   
Common Shares
   
Treasury
   
Paid-in
   
Subscriptions
   
Comprehensive
         
Development
       
   
Number
   
Amount
   
Stock
   
Capital
   
Received
   
Income
   
Deficit
   
Stage
   
Total
 
Balance at December 31, 2002
    343,521       3,435       (270 )     1,614,109       650       17,229       (697,824 )     -       937,329  
Net loss
    -       -       -       -       -       -       (607,630 )     -       (607,630 )
Foreign currency translation adjustment
    -       -       -       -       -       1,752       -       -       1,752  
Stock option benefit
    -       -       -       11,800               -       -       -       11,800  
Cancellation of agreement
    -       -       -               (650 )     -       -       -       (650 )
Share issues for cash on exercise of options
    12,000       120       -       11,880       -       -       -       -       12,000  
Share issues for consulting services
    45,000       450       -       49,675       -       -       -       -       50,125  
Share issues for intangible assets
    60,000       600       -       104,400       -       -       -       -       105,000  
Share issued for software
    60,000       600       -       53,400       -       -       -       -       54,000  
Balance at December 31, 2003
    520,521       5,205       (270 )     1,845,264       -       18,981       (1,305,454 )     -       563,726  
Net loss
    -       -       -       -       -       -       -       (795,364 )     (795,364 )
Foreign currency translation adjustment
    -       -       -       -       -       (238 )     -       -       (238 )
Stock-based compensation
    -       -       -       4,460       -       -       -       -       4,460  
Shares issued for cash on exercise of options
    1,000       10       -       990       -       -       -       -       1,000  
Share issued for debt
    140,000       1,400       -       68,600       -       -       -       -       70,000  
Share issued for consulting services
    2,000       20       -       980       -       -       -       -       1,000  
Balance at December 31, 2004
    663,522       6,635       (270 )     1,920,294       -       18,743       (1,305,454 )     (795,364 )     (155,416 )
Net loss
    -       -       -       -       -       -       -       (54,416 )     (54,416 )
Foreign currency translation adjustment
    -       -       -       -       -       (702 )     -       -       (702 )
Share issues for consulting services
    18,000       180       -       8,820       -       -       -       -       9,000  
Balance at December 31, 2005
    681,522       6,815       (270 )     1,929,114       -       18,041       (1,305,454 )     (849,780 )     (201,534 )
Net loss
    -       -       -       -       -       -       -       (36,575 )     (36,575 )
Foreign currency translation adjustment
    -       -       -       -       -       563       -       -       563  
Share issues for debt
    50,000       500       -       24,500       -       -       -       -       25,000  
Balance at December 31, 2006
    731,522     $ 7,315     $ (270 )   $ 1,953,614     $ -     $ 18,604     $ (1,305,454 )   $ (886,355 )   $ (212,546 )


SEE ACCOMPANYING NOTES


SYNTHENOL INC.
 (A Development Stage Company)
CONSOLIDATED STATEMENT OF STOCKHOLDERS’ DEFICIENCY
Unaudited
                                       
Deficit
       
                           
Accumulated
         
Accumulated
       
               
Additional
         
Other
         
During the
       
   
Common Shares
   
Treasury
   
Paid-in
   
Subscriptions
   
Comprehensive
         
Development
       
   
Number
   
Amount
   
Stock
   
Capital
   
Received
   
Income
   
Deficit
   
Stage
   
Total
 
Balance at December 31, 2006
    731,522     $ 7,315     $ (270 )   $ 1,953,614     $ -     $ 18,604     $ (1,305,454 )   $ (886,355 )   $ (212,546 )
Net loss
    -       -       -       -       -       -       -       (170,950 )     (170,950 )
Discount on notes payable
    -       -       -       20,573       -       -       -       -       20,573  
Foreign currency translation adjustment
    -       -       -       -       -       (13,391 )     -       -       (13,391 )
Balance at December 31, 2007
    731,522       7,315       (270 )     1,974,187       -       5,213       (1,305,454 )     (1,057,305 )     (376,314 )
Net income
    -       -       -       -       -       -       -       17,787       17,787  
Foreign currency translation adjustment
    -       -       -       -       -       821       -       -       821  
Balance at June 30, 2008 (Unaudited)
    731,522     $ 7,315     $ (270 )   $ 1,974,187     $ -     $ 6,034     $ (1,305,454 )   $ (1,039,518 )   $ (357,706 )


SEE ACCOMPANYING NOTES



 
SYNTHENOL  INC.
Schedule 1
(A Development Stage Company)
STATEMENTS OF OPERATIONS FROM DISCONTINUED OPERATIONS
(Unaudited)


               
January 1, 2004
 
               
(Date of
 
               
Inception of the
 
               
Development
 
   
Six months ended
   
Stage) to
 
   
June 30,
   
June 30,
 
   
2008
   
2007
   
2008
 
                   
Amortization
  $ -     $ -     $ 57,051  
Bad debts
    -       -       20,388  
Management and consulting fees
    -       -       57,557  
Professional fees
    -       -       5,606  
Office supplies and services
    362       290       16,193  
Rent
    -       -       17,269  
Royalty, software and advertising
    -       -       69,251  
Wage
    -       -       105,659  
                         
      (362 )     (290 )     (348,974 )
                         
Write-down of intangible assets
    -       -       (155,000 )
Forgiveness of debts
    -       -       359,008  
Loss on disposition of equipment
    -       -       (105,078 )
Incidental revenue
    -       -       33,043  
                         
Operating income (loss) from discontinued operations
    (362 )     (290 )     131,973  
                         
Gain on disposition of subsidiary – Note 6
    78,437       -       108,121  
                         
Net income (loss)
  $ 78,075     $ (290 )   $ (108,880 )
                         


SEE ACCOMPANYING NOTES


(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2008
Unaudited

Note 1
Interim Financial Statements

The foregoing unaudited interim consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q as promulgated by the Securities and Exchange Commission ("SEC"). Accordingly, these financial statements do not include all of the disclosures required by generally accepted accounting principles for complete financial statements. The accompanying unaudited financial statements and related notes should be read in conjunction with the audited consolidated financial statements and the Form 10-KSB of the Company for the year ended December 31, 2007. In the opinion of management, the unaudited interim financial statements furnished herein include all adjustments, all of which are of a normal recurring nature, necessary for a fair statement of the results for the interim period presented.

The results of operations for such periods are not necessarily indicative of the results expected for a full year or for any future period.

Note 2
Nature and Continuance of Operations

Synthenol Inc. (the “Company”) was incorporated under the laws of the State of Florida on May 3, 1989 as Sparta Ventures Corp. and remained inactive until June 27, 1998.  The name was changed to Thermal Ablation Technologies Corporation on October 8, 1998 and then to Poker.com, Inc. on August 10, 1999.  On September 15, 2003, the Company changed its name to LegalPlay Entertainment Inc.  The Company’s business to December 31, 2003 was primarily related to the operations of online gaming.  In 2004, the Company discontinued the online gaming operations and redirected its business strategy to acquisition of new poker software and market the software to on-line gaming sites worldwide. The Company is a development stage company as defined by Statement of Financial Accounting Standards (“SFAS”) No. 7, “Development Stage Enterprises.” On October 31, 2006, the shareholders of the Company ratified the the decision to change the Company’s name to Synthenol Inc. effective December 18, 2006.

These interim financial statements have been prepared in accordance with generally accepted accounting principles applicable to a going concern, which assumes that the Company will be able to meet its obligations and continue its operations for its next fiscal year.  Realization values may be substantially different from carrying values as shown and these financial statements do not give effect to adjustments that would be necessary to the carrying values and classification of assets and liabilities should the Company be unable to continue as a going concern.  At June 30, 2008, the Company had not yet achieved profitable operations, has accumulated losses of $1,039,518 during its development stage and expects to incur further losses in the development of its business, all of which casts substantial doubt about the Company’s ability to continue as a going concern. The Company’s ability to continue as a going concern is dependent upon its ability to generate future profitable operations and/or to obtain the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due.  Management has no formal plan in place to address this concern but considers that the Company will be able to obtain additional funds by equity financing and/or related party advances; however there is no assurance of additional funding being available.


SYNTHENOL INC.
(A Development Stage Company)
Notes to Consolidated Financial Statements
June 30, 2008
Unaudited
 
Note 3
Notes Payable

Notes payable are comprised of the following:

A promissory note of $32,954 (December 31, 2007 - $33,290) (CAD$33,000) payable to Pannell Kerr Forster, Chartered Accountants, is unsecured, bears interest at the Bank of Canada prime rate (6.50% as of June 30, 2008) and due on demand. Interest accrued as of June 30, 2008 is $5,576 (December 31, 2007 - $6,777). On May 12, 2008, the Company entered into an agreement with Pannell Kerr Foster in order to settle outstanding debt of CAD$33,000 for a reduced amount of CAD$6,000. The date of the settlement was originally June 30, 2008. The Company failed to meet this obligation and the settlement date has been extended indefinitely.

The loans totaling $235,000 (December 31, 2007 - $235,000) from Hokley Limited (“Hokley”), an unrelated third party, are as follows:

 
a)
On April 6, 2006, the Company received $10,000 from Hokley. The promissory note is unsecured and bears interest at 5% per annum. The principal and accrued interest is payable by the Company on December 31, 2008.

 
b)
On July 31, 2006, the Company received $25,000 from Hokley. The promissory note is unsecured and bears interest at 5% per annum. The principal and accrued interest is payable by the Company on December 31, 2008.

 
a)
On December 15, 2006, the Company received $15,000 from Hokley. The promissory note is unsecured and bears interest at 5% per annum. The principal and accrued interest is payable by the Company on December 31, 2008.

 
b)
On February 26, 2007, the Company received $35,000 from Hokley. The promissory note is unsecured and bears interest at 5% per annum. The principal and accrued interest is payable by the Company on August 31, 2008.

 
c)
On May 15, 2007, the Company received $30,000 from Hokley. The promissory note is unsecured and bears interest at 5% per annum. The principal and accrued interest is payable by the Company on May 15, 2008. Subsequent to June 30, 2008, the Company entered into an agreement with Hokley to settle the debt. See Note 8.

 
d)
On July 18, 2007, the Company received $30,000 from Hokley. The promissory note is unsecured and bears interest at 5% per annum. The principal and accrued interest is payable by the Company on December 31, 2008.


SYNTHENOL INC.
(A Development Stage Company)
Notes to Consolidated Financial Statements
June 30, 2008
Unaudited
 
Note 3
Notes Payable – cont’d

 
e)
On October 3, 2007, the Company received $30,000 from Hokley. The promissory note is unsecured and bears interest at 10% per annum. The principal and accrued interest is payable by the Company on October 3, 2008.

 
f)
On December 7, 2007, the Company received $60,000 from Hokley. The promissory note is unsecured and bears interest at 10% per annum. The principal and accrued interest is payable by the Company on December 7, 2008.

Pursuant to SFAS No. 157, Fair Value Measurements, management has recognized that the interest rate on the notes payable (“Notes”) from Hokley is below fair market value, and has recorded a discount of $20,573 on the funds received from Hokley during fiscal 2007. This value was recorded as additional paid-in capital and is being deferred and amortized over the term of the Notes. The carrying value of the Notes at June 30, 2008 of $233,814 (December 31, 2007 - $225,712) will be accreted to the face value over the term of the Notes.

Included in the notes payable balance at June 30, 2008 is accrued interest and loan fees of $27,755 (December 31, 2007 - $12,653) relating to the loans owing to Hokley.

During the six months ended June 30, 2008, the Company sold its two wholly-owned subsidiaries, see Note 7.  The sale of these subsidiaries resulted in the write off of the loan to Ubiquity Management Inc. of $25,735, plus accrued interest of $4,966.

Note 4
Related Party Transactions

The Company incurred the following amounts with directors of the Company and a former officer of the Company.

         
January 1, 2004
 
         
(Date of
 
         
Inception of the
 
         
Development
 
   
Six month ended
   
Stage) to
 
   
June 30,
   
June 30,
 
   
2008
   
2007
   
2008
 
                   
Management and consulting fees
  $ 3,000     $ 3,000     $ 97,678  
Wages
    -       -       1,000  
                         
    $ 3,000     $ 3,000     $ 98,678  

At June 30, 2008, included in accounts payable and accrued liabilities is $37,000 (December 31, 2007 -$31,000) owing to directors of the Company. The amounts are unsecured, non-interest bearing and have no set terms of repayment.


SYNTHENOL INC.
(A Development Stage Company)
Notes to Consolidated Financial Statements
June 30, 2008
Unaudited
 
Note 5
Supplemental Cash Flow Information

         
January 1, 2004 (Date
 
         
of Inception of the
 
         
Development
 
   
Six months ended
   
Stage) to
 
   
June 30,
   
June 30,
 
   
2008
   
2007
   
2008
 
                   
Cash paid for:
                 
Interest
  $ -     $ -     $ -  
Income taxes (recovery)
  $ -     $ -     $ (3,934 )
                         
Common shares issued to settle notes payable
  $ -     $ 25,000     $ 25,000  

Note 6
Discontinued Operations

On April 1, 2008, the Company entered into an agreement with an unrelated third party, Ryerson Corporation A.V.V. (“Ryerson”), to sell the issued and outstanding shares of its wholly-owned subsidiaries, 564448 BC Ltd. (“564448”) and Casino Marketing S.A. (“CMSA”) for consideration of $1. All inter-company debts between CMSA, 564448 and the Company will be cancelled. As part of the agreement, Ryerson also assumed all of the liabilities of CMSA and 564448. As such, the Company recognized a gain on the disposition of its subsidiary.

Proceeds
  $ 1  
Liabilities assumed by purchaser of Casino Marketing S.A.
    8,169  
Liabilities assumed by purchaser of 564448 BC Ltd.
    70,267  
         
Gain on sale of subsidiaries
  $ 78,437  

Note 7
Subsequent event

On July 11, 2008, the Company assigned a 6% carried interest in Thermal Ablations Technology Canada to Hokley in exchange for the cancelation of the promissory note of $30,000, which was due and payable on May 15, 2008, and the interest and fees accumulated on the loan of $30,000.


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

In preparing the management’s discussion and analysis, the registrant presumes that you have read or have access to the discussion and analysis for the proceeding fiscal year.

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This document includes "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 (the "Reform Act").   All statements other than statements of historical fact are “forward-looking statements” for purposes of federal and state securities laws, including, but not limited to, any projections of earning, revenue or other financial items; any statements of the plans, strategies and objectives of management for future operations; any statements concerning proposed new services or developments; any statements regarding future economic conditions of performance; and statements of belief; and any statements of assumptions underlying any of the foregoing.  Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of Synthenol Inc. to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such factors include, among others, the following: our ability to raise capital and the terms thereof; ability to gain an adequate player base to generate the expected revenue; competition with established gaming websites; adverse changes in government regulations or polices; and other factors referenced in the Form 10-Q.

The use in this Form 10-Q of such words as "believes", "plans", "anticipates", "expects", "intends", and similar expressions are intended to identify forward-looking statements, but are not the exclusive means of identifying such statements. These forward-looking statements present the Company’s estimates and assumptions only as of the date of this report.  Except for the Company’s ongoing obligation to disclose material information as required by the federal securities laws, the Company does not intend, and undertakes no obligation, to update any forward-looking statements.

Although the Company believes that the expectations reflected in any of the forward-looking statements are reasonable, actual results could differ materially from those projected or assumed or any of the Company’s forward-looking statements.  The Company’s future financial condition and results of operations, as well as any forward-looking statements, are subject to change and inherent risks and uncertainties.

PLAN OF OPERATIONS

The Company has been auditing a software package for an online lottery game and is currently in negotiation to purchase a license.  The online lottery game is an instant win game that is similar to many national lotteries.  The player creates an account on the website and deposits funds into the account using a credit card.  He then chooses 6 numbers and the amount he would like to pay for the ticket. The winnings are calculated as a function of the initial ticket cost.  Once the player chooses to play the ticket, his account is debited for the ticket cost and six numbers are randomly generated.  When at least 3 numbers are matched, the player wins a prize.

The Company intends to design and launch a website for the purpose of marketing the online lottery game to players in the UK and European marketplace.

We are in immediate need of further working capital and are considering options with respect to financing in the form of debt, equity or a combination thereof.


RESULTS OF CONTINUING OPERATIONS

The following discussion of the financial condition and results of operation of the Company should be read in conjunction with the Financial Statements and the related Notes included elsewhere in this report.
 
Six months ended June 30, 2008 compared to Six months ended June 30, 2007

REVENUES. Net sales for the six months ended June 30, 2008 and 2007 were $nil.

EXPENSES.  Operating expenses for the six months ended June 30, 2008 were $97,216 compared to $74,875 for the six months ended June 30, 2007.  The major increase in expense for the six months ended June 30, 2008 was the $16,102  finance charges on notes payable, as compared to $nil for the six months ended June 30, 2007.

FINANCIAL CONDITION AND LIQUIDITY

Our cash position was $818 at June 30, 2008 and was $66,273 at December 31, 2007.

Our working capital deficit at June 30, 2008 was $357,706 as compared to $376,314 at December 31, 2007.

The Company's ability to continue as a going concern and fund operations through the remainder of 2008 is contingent upon its ability to raise funds through equity or debt financing.

The Company has arranged loans from third party lenders in order to fund the on going operations of the business. These loans have been secured by way of Promissory Notes.
 
CRITICAL ACCOUNTING POLICIES AND ESTIMATES

We have adopted various accounting policies that govern the application of accounting principles generally accepted in the United States of America in the preparation of our financial statements which requires us to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes.

Although these estimates are based on our knowledge of current events and actions we may undertake in the future, they may ultimately differ from actual results. Certain accounting policies involve significant judgments and assumptions by us, which have a material impact on our financial condition and results.  Management believes its critical accounting policies reflect its most significant estimates and assumptions used in the presentation of our financial statements.  Our critical accounting policies include debt management and accounting for stock-based compensation.  We do not have off-balance sheet arrangements, financings, or other relationships with unconsolidated entities or other persons, also known as "special purpose entities".
 
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.


ITEM 4.  CONTROLS AND PROCEDURES
 
Disclosure Controls and Procedures
 
There are controls and procedures that are designed to ensure that information required to be disclosed by Synthenol Inc. in the reports it files or submits under the Securities Exchange Act of 1934 (the “Exchange Act”) is recorded, processed, summarized, and reported within the time periods specified by the Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to provide reasonable assurance that information required to be disclosed by Synthenol Inc. in the reports it files or submits under the Exchange Act is accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.
 
Under the supervision and with the participation of management, including the Chief Executive Officer and Chief Financial Officer, Synthenol Inc. has evaluated the effectiveness of its disclosure controls and procedures (as such term is defined in Rule 13a-15(e) and 15d-15(e) under the Exchange Act) as of June 30, 2008, and, based upon this evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that these controls and procedures are effective in providing reasonable assurance of compliance.
 
Changes in Internal Control over Financial Reporting
 
During the six months ended June 30, 2008, management took steps to improve the internal controls over financial reporting by (1) searching for outside directors to establish an effective audit committee, (2) utilizing existing office staff in order to remedy the segregation of duties deficiencies, (3) writing accounting and financial reporting procedures to comply with the requirements of US GAAP and SEC disclosures, and (4) following the newly written accounting and financial reporting procedures in (3) which tightens the control over the period ends.
 
Management and directors will continue to monitor and  evaluate  the  effectiveness  of our  internal controls and procedures and our internal controls over financial reporting on an ongoing  basis and are  committed  to taking  further  action  and  implementing additional enhancements or improvements, as necessary and as funds allow.

 
PART II--OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

None.

ITEM 1A. RISK FACTORS

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under 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

Exhibit Number
 
Description
     2.1*
 
Resolution of the Board of Directors regarding transfer of subsidiaries (8-K on April 7, 2008)
     2.2*
 
Agreement for the sale  of shares in subsidiaries (8-K on April 7, 2008)
     2.3*
 
Assignment agreement for TATC shares
 
Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer
 
Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer
 
Certificate of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350
*   previously filed with SEC

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.

SYNTHENOL INC.
(Registrant)


/s/ Cecil Morris
 
Date: August 14, 2008
Cecil Morris
Director, President
   
     
/s/ John Page
 
Date: August 14, 2008
John Page
Director / Treasurer
   
 
 
  -19-