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xbrli:shares
iso4217:USD
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Andover Holdings, Inc./FL
0001126533
10-Q
2011-06-30
false
--12-31
No
No
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Smaller Reporting Company
Q2
2011
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<p style="margin: 0pt"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><b>NOTE 1. – DESCRIPTION OF BUSINESS</b></p>
<p style="font: 11pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0.5pc">The Company was incorporated under the laws of the State
of Florida on June 28, 1999. We filed a Form 10SB with the Securities and Exchange Commission, thereby becoming a publicly
reporting company. On October 29, 2001, the Company changed its name from Xelos, Inc. to Real Logic, Inc. On July 31,
2008, we changed the name from Real Logic, Inc. to Andover Energy Holdings, Inc. Management's intentions were to focus on Wind
Energy Turbines manufacturing. Due to a change in Management, the Company changed the name to Andover Holdings, Inc. on August 24.
2010.</p>
<p style="margin: 0pt"> </p>
<p style="margin: 0"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0.5pc"><b>NOTE 2. - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0.5pc"><b><i>Development Stage Company</i></b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0.5pc">The Company is in its development stage since its formation
in 1999 and has an accumulated deficit of $3,761,403.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0.5pc"><b><i>Use of estimates</i></b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0.5pc">The preparation of financial statements in conformity with
accounting principles generally accepted in the United States of America requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the
financial statements and reported amounts of revenues and expenses during the reporting period. Actual results may differ from
these estimates. Estimates are used when accounting for allowance for bad debts, collect ability of accounts receivable, amounts
due to service providers, depreciation, and litigation contingencies, among others.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0.5pc"><b><i>Principles of consolidation</i></b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0.5pc">The consolidated financial statements will include the accounts
of the Company and its future subsidiaries, in accordance with U.S. generally accepted accounting principles, under the rules and
regulations of the U.S. Securities and Exchange Commission (SEC). All inter-company transactions and balances will be eliminated
in consolidation.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0.5pc"><b><i>Revenue recognition</i></b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0.5pc">Revenue will be recognized when the related service has
been provided, and there is persuasive evidence of an arrangement, the fee is fixed or determinable, and collection is reasonably
assured. Revenue from other professional services, will be recognized in the period the services are to be provided.  Deferred
revenue will consist of amounts that have been prepaid and services which have not yet been rendered.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0.5pc"><b><i>Net loss per common share</i></b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0.5pc">In accordance with FASB ASC 260 basic net loss per common
share is computed using the weighted average number of common shares outstanding during each period presented, excluding unvested
restricted stock awards subject to cancellation. Diluted net loss per common share is computed by using the weighted average number
of common shares and potential common shares outstanding during the period. Potential common shares represent the incremental common
shares issuable for stock options.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0.5pc"><b><i>Cash and cash equivalents</i></b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0.5pc">The Company classifies cash on hand and deposits in the
bank as cash and considers all highly liquid debt instruments with an original maturity of three months or less to be cash equivalents.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0.5pc"><b><i>Concentrations of Risk</i></b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0.5pc">The Company’s revenues will primarily be derived
from Independent Acquisitions Entities which will be structured as Subsidiaries to the Parent Holding Company. </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0.5pc"><b><i>Property and Equipment</i></b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0.5pc">Depreciation is computed on the straight-line method, based
on the estimated useful lives of the asset of five to seven years. Expenditures for maintenance and repairs will be charged to
operations as incurred. Upon retirement or sale, the cost of assets disposed of and related accumulated depreciation are removed
from the accounts and any resulting gain or loss is credited or charged to operations. The Company had a minimal amount $2,885
of office equipment that it disposed of in 2008.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0.5pc"><b><i>Share-Based Compensation</i></b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0.5pc">The Company will record compensation expense for share-based
compensation in accordance with ASC Topic 718. Currently, there are no Share Options issued. For share options to certain officers
and others, in the future, the Company will use the Black-Scholes pricing model to determine the fair value of stock options on
the grant dates for stock option awards issued. The Black-Scholes valuation model requires the Company to make assumptions and
judgments about the variables used in the calculation. These variables and assumptions include the fair value of our common stock,
expected term, the expected volatility, and certain present values.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0.5pc"><b><i>Income taxes</i></b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0.5pc">The Company’s U.S. Federal and state income tax returns
prior to fiscal year December 31, 2008 are filed and management will continually evaluate expiring statutes of limitations,
audits, proposed settlements, changes in tax law and new authoritative rulings. The Company recognizes interest and penalties associated
with tax matters as part of the income tax provision and includes accrued interest and penalties with the related tax liability
in the consolidated balance sheets. Deferred income taxes (benefits) are provided for certain income and expenses which are recognized
in different periods for tax and financial reporting purposes.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0.5pc">The Company had cumulative net operating loss carry-forwards
for income tax purposes at June 30, 2010 of approximately $3,761,403 expiring through December 31, 2023. The Company has established
a 100% valuation allowance against this deferred tax asset, as the Company has no history of profitable operations.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0.5pc"><b><i>Fair Value of Financial Instruments</i></b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0.5pc">The carrying amounts of cash and cash equivalents, accounts
receivable, prepaid expenses, accounts payable and accrued expenses approximate fair value due to the immediate or short-term maturity
of these financial instruments. The fair value of notes and loan payables is determined using current applicable rates which
approximate market rates of such debt.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0.5pc"><b><i>Recently Issued Accounting Standards</i></b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0.5pc"><u>Subsequent Events Disclosures</u></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0.5pc">In February 2010, the FASB issued FASB ASU 2010-09,
“Subsequent Events, Amendments to Certain Recognition and Disclosure Requirements,” which clarifies certain existing
evaluation and disclosure requirements in ASC 855 “Subsequent Events” related to subsequent events. FASB ASU 2010-09
requires SEC filers to evaluate subsequent events through the date in which the financial statements are issued and is effective
immediately. The new guidance does not have an effect on the Company’s consolidated results of operations and financial condition.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0.5pc"><u>Fair Value Measurements</u></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0.5pc">On January 1, 2009, the Company adopted accounting
guidance issued by the Financial Accounting Standards Board ( "FASB") which had previously deferred the effective date
of fair value measurements for all nonfinancial assets and nonfinancial liabilities, except for items that are recognized or disclosed
in financial statements at fair value on a recurring basis ( at least annually). The adoption of this guidance did not have a material
impact on the consolidated financial statements.</p>
<p style="margin: 0"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0.5pc"><b><i>Development Stage Company</i></b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0.5pc">The Company is in its development stage since its formation
in 1999 and has an accumulated deficit of $3,761,403.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0.5pc"><b><i>Use of estimates</i></b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0.5pc">The preparation of financial statements in conformity with
accounting principles generally accepted in the United States of America requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the
financial statements and reported amounts of revenues and expenses during the reporting period. Actual results may differ from
these estimates. Estimates are used when accounting for allowance for bad debts, collect ability of accounts receivable, amounts
due to service providers, depreciation, and litigation contingencies, among others.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0.5pc"><b><i>Principles of consolidation</i></b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0.5pc">The consolidated financial statements will include the accounts
of the Company and its future subsidiaries, in accordance with U.S. generally accepted accounting principles, under the rules and
regulations of the U.S. Securities and Exchange Commission (SEC). All inter-company transactions and balances will be eliminated
in consolidation.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0.5pc"><b><i>Revenue recognition</i></b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0.5pc">Revenue will be recognized when the related service has
been provided, and there is persuasive evidence of an arrangement, the fee is fixed or determinable, and collection is reasonably
assured. Revenue from other professional services, will be recognized in the period the services are to be provided.  Deferred
revenue will consist of amounts that have been prepaid and services which have not yet been rendered.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0.5pc"><b><i>Net loss per common share</i></b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0.5pc">In accordance with FASB ASC 260 basic net loss per common
share is computed using the weighted average number of common shares outstanding during each period presented, excluding unvested
restricted stock awards subject to cancellation. Diluted net loss per common share is computed by using the weighted average number
of common shares and potential common shares outstanding during the period. Potential common shares represent the incremental common
shares issuable for stock options.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0.5pc"><b><i>Cash and cash equivalents</i></b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0.5pc">The Company classifies cash on hand and deposits in the
bank as cash and considers all highly liquid debt instruments with an original maturity of three months or less to be cash equivalents.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0.5pc"><b><i>Concentrations of Risk</i></b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0.5pc">The Company’s revenues will primarily be derived
from Independent Acquisitions Entities which will be structured as Subsidiaries to the Parent Holding Company. </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0.5pc"><b><i>Property and Equipment</i></b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0.5pc">Depreciation is computed on the straight-line method, based
on the estimated useful lives of the asset of five to seven years. Expenditures for maintenance and repairs will be charged to
operations as incurred. Upon retirement or sale, the cost of assets disposed of and related accumulated depreciation are removed
from the accounts and any resulting gain or loss is credited or charged to operations. The Company had a minimal amount $2,885
of office equipment that it disposed of in 2008.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0.5pc"><b><i>Share-Based Compensation</i></b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0.5pc">The Company will record compensation expense for share-based
compensation in accordance with ASC Topic 718. Currently, there are no Share Options issued. For share options to certain officers
and others, in the future, the Company will use the Black-Scholes pricing model to determine the fair value of stock options on
the grant dates for stock option awards issued. The Black-Scholes valuation model requires the Company to make assumptions and
judgments about the variables used in the calculation. These variables and assumptions include the fair value of our common stock,
expected term, the expected volatility, and certain present values.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0.5pc"><b><i>Income taxes</i></b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0.5pc">The Company’s U.S. Federal and state income tax returns
prior to fiscal year December 31, 2008 are filed and management will continually evaluate expiring statutes of limitations,
audits, proposed settlements, changes in tax law and new authoritative rulings. The Company recognizes interest and penalties associated
with tax matters as part of the income tax provision and includes accrued interest and penalties with the related tax liability
in the consolidated balance sheets. Deferred income taxes (benefits) are provided for certain income and expenses which are recognized
in different periods for tax and financial reporting purposes.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0.5pc">The Company had cumulative net operating loss carry-forwards
for income tax purposes at June 30, 2010 of approximately $3,761,403 expiring through December 31, 2023. The Company has established
a 100% valuation allowance against this deferred tax asset, as the Company has no history of profitable operations.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0.5pc"><b><i>Fair Value of Financial Instruments</i></b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0.5pc">The carrying amounts of cash and cash equivalents, accounts
receivable, prepaid expenses, accounts payable and accrued expenses approximate fair value due to the immediate or short-term maturity
of these financial instruments. The fair value of notes and loan payables is determined using current applicable rates which
approximate market rates of such debt.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0.5pc"><b><i>Recently Issued Accounting Standards</i></b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0.5pc"><u>Subsequent Events Disclosures</u></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0.5pc">In February 2010, the FASB issued FASB ASU 2010-09,
“Subsequent Events, Amendments to Certain Recognition and Disclosure Requirements,” which clarifies certain existing
evaluation and disclosure requirements in ASC 855 “Subsequent Events” related to subsequent events. FASB ASU 2010-09
requires SEC filers to evaluate subsequent events through the date in which the financial statements are issued and is effective
immediately. The new guidance does not have an effect on the Company’s consolidated results of operations and financial condition.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0.5pc"><u>Fair Value Measurements</u></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0.5pc">On January 1, 2009, the Company adopted accounting
guidance issued by the Financial Accounting Standards Board ( "FASB") which had previously deferred the effective date
of fair value measurements for all nonfinancial assets and nonfinancial liabilities, except for items that are recognized or disclosed
in financial statements at fair value on a recurring basis ( at least annually). The adoption of this guidance did not have a material
impact on the consolidated financial statements.</p>
<p style="margin: 0"></p>
<p style="font: 10pt/12pt Times New Roman, Times, Serif; margin: 0 0 0.5pc"><b>NOTE 3 - INCOME TAX</b></p>
<p style="font: 10pt/12pt Times New Roman, Times, Serif; margin: 0 0 0.5pc">In February 1992, the Financial Standards Board
issued Statement of Financial Accounting Standards No. 109, “Accounting for Income Taxes.” Under SFAS No. 109,
deferred assets and liabilities are recognized for the estimated future tax consequences between the financial statement carrying
amounts of the existing assets and their respective basis.</p>
<p style="font: 10pt/12pt Times New Roman, Times, Serif; margin: 0 0 0.5pc">Deferred assets and liabilities are measured using
enacted tax rates in effect for the year in which temporary differences are expected to be recovered or settled. Under SFAS No. 109,
the effect on deferred assets and liabilities of a change in tax rates is recognized in the period that includes the enactment
date. For the six months ending June 30, 2011 and for the year ending December 31, 2010 the effective income tax rate
is:</p>
<table align="center" cellspacing="0" cellpadding="0" style="width: 100%; border-collapse: collapse; font-size: 10pt">
<tr>
<td style="width: 63%; font: 0.5pt Times New Roman, Times, Serif; text-autospace: none"> </td>
<td style="width: 2%; font: 0.5pt Times New Roman, Times, Serif; text-autospace: none"> </td>
<td style="width: 17%; font: 0.5pt Times New Roman, Times, Serif; text-autospace: none"> </td>
<td style="width: 1%; font: 0.5pt Times New Roman, Times, Serif; text-autospace: none"> </td>
<td style="width: 17%; font: 0.5pt Times New Roman, Times, Serif; text-autospace: none"> </td></tr>
<tr style="vertical-align: bottom">
<td style="padding-top: 0.25pc; padding-bottom: 0.25pc; font-size: 8pt; font-weight: bold"> </td>
<td style="padding-top: 0.25pc; padding-bottom: 0.25pc; font-size: 8pt; font-weight: bold"> </td>
<td colspan="3" style="border-bottom: windowtext 1pt solid; font-size: 8pt; font-weight: bold; text-align: center">Period ending</td></tr>
<tr style="vertical-align: bottom">
<td style="padding-top: 0.25pc; padding-bottom: 0.25pc; font-size: 8pt; font-weight: bold"> </td>
<td style="padding-top: 0.25pc; padding-bottom: 0.25pc; font-size: 8pt; font-weight: bold"> </td>
<td style="border-bottom: black 1pt solid; font-size: 8pt; font-weight: bold; text-align: center">June 30, <br /> 2011</td>
<td style="border-top: windowtext 1pt solid; padding-top: 0.25pc; padding-bottom: 0.25pc; font-size: 8pt; font-weight: bold"> </td>
<td style="border-top: windowtext 1pt solid; border-bottom: black 1pt solid; font-size: 8pt; font-weight: bold; text-align: center">December 31, <br /> 2010</td></tr>
<tr style="vertical-align: bottom; background-color: #CCFFCC">
<td>Statutory federal income tax rate</td>
<td> </td>
<td style="text-align: center">34%</td>
<td style="padding-top: 3.75pt; padding-bottom: 3.75pt"> </td>
<td style="text-align: center">34%</td></tr>
<tr style="vertical-align: bottom">
<td>Valuation allowance </td>
<td style="padding-top: 3.75pt; padding-bottom: 3.75pt"> </td>
<td style="text-align: center">(34%)</td>
<td style="padding-top: 3.75pt; padding-bottom: 3.75pt"> </td>
<td style="text-align: center">(34%)</td></tr>
<tr style="vertical-align: bottom; background-color: #CCFFCC">
<td>Effective tax rate</td>
<td style="padding-top: 3.75pt; padding-bottom: 3.75pt"> </td>
<td style="text-align: center">––%</td>
<td style="padding-top: 3.75pt; padding-bottom: 3.75pt"> </td>
<td style="text-align: center">––%</td></tr>
</table>
<p style="font: 10pt/12pt Times New Roman, Times, Serif; margin: 0.5pc 0">The Company has a net operating loss carry forward as
of June 30, 2011 of approximately $3,761,403 which is offset by a 100% valuation allowance due to the uncertainty surrounding
the ultimate realization of these assets. The loss carry-forwards expires at various dates through 2027.</p>
<p style="margin: 0"></p>
<p style="margin: 0"></p>
<p style="font: 10pt/12pt Times New Roman, Times, Serif; margin: 0 0 0.5pc"><b>NOTE 4 - RELATED PARTY TRANSACTIONS</b></p>
<p style="font: 10pt/12pt Times New Roman, Times, Serif; margin: 0 0 0.5pc"><b><i>Loan Payable</i></b></p>
<p style="font: 10pt/12pt Times New Roman, Times, Serif; margin: 0 0 0.5pc">The Company’s officers and directors have advanced
funds to the company for working capital. These advances are unsecured, bear interest at 7% per annum and have no scheduled repayment.
For the six months ending June 30, 2011 interest expense of $15,250 has been accrued and the total accrued interest balance
at June 30, 2011 is $140,772.</p>
<p style="font: 10pt/12pt Times New Roman, Times, Serif; margin: 0 0 0.5pc"><b><i>Management Fees</i></b></p>
<p style="font: 10pt/12pt Times New Roman, Times, Serif; margin: 0 0 0.5pc">The Board of Directors approved an Executive Employment
Agreement of $10,000 per month for Barbara Tolley, effective the Second Quarter of Y2010.</p>
<p style="margin: 0"></p>
<p style="margin: 0"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0.5pc"><b>NOTE 6 - NOTES AND LOANS PAYABLE </b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0.5pc">At June 30, 2011 and 2010, total notes and loans payable
consisted of the following: Notes and loans payable to principal stockholders are unsecured and due upon demand, with interest
at between 5% and 7%.</p>
<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<tr style="vertical-align: bottom">
<td style="text-autospace: none; font-size: 8pt; text-align: center"> </td>
<td style="text-autospace: none; font-size: 8pt; text-align: center"> </td>
<td colspan="2" style="border-bottom: windowtext 1pt solid">
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>June 30,</b></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>2011</b></p></td>
<td style="text-autospace: none; font-size: 8pt; text-align: center"> </td>
<td colspan="2" style="border-bottom: windowtext 1pt solid">
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>June 30,</b></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>2010</b></p></td>
<td style="text-autospace: none; font-size: 8pt; text-align: center"> </td></tr>
<tr style="vertical-align: bottom">
<td style="width: 73%; text-autospace: none"> </td>
<td style="width: 2%; text-autospace: none"> </td>
<td style="width: 1%; text-autospace: none"> </td>
<td style="width: 10%; border-top: windowtext 1pt solid; text-autospace: none"> </td>
<td style="width: 2%; text-autospace: none"> </td>
<td style="width: 1%; text-autospace: none"> </td>
<td style="width: 10%; border-top: windowtext 1pt solid; text-autospace: none"> </td>
<td style="width: 1%; text-autospace: none"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCFFCC">
<td style="text-autospace: none">Loans Payable</td>
<td style="text-autospace: none"> </td>
<td style="text-autospace: none">$</td>
<td style="text-autospace: none; text-align: right">300,500</td>
<td style="text-autospace: none"> </td>
<td style="text-autospace: none">$</td>
<td style="text-autospace: none; text-align: right">277,500</td>
<td style="text-autospace: none"> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-autospace: none">Loans Payable Related Parties</td>
<td style="text-autospace: none"> </td>
<td style="text-autospace: none">$</td>
<td style="text-autospace: none; text-align: right">185,869</td>
<td style="text-autospace: none"> </td>
<td style="text-autospace: none">$</td>
<td style="text-autospace: none; text-align: right">185,869</td>
<td style="text-autospace: none"> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0.5pc">Interest expense was $15,250 and $16,035 for the quarters
ended June, 2011 and June, 2010, respectively.</p>
<p style="margin: 0"></p>
<p style="margin: 0pt"></p>
<p style="font: 10pt/12pt Times New Roman, Times, Serif; margin: 0 0 0.5pc"><b>NOTE 5 - CAPITAL TRANSACTIONS</b></p>
<p style="font: 10pt/12pt Times New Roman, Times, Serif; margin: 0 0 0.5pc">There were no capital transactions in the first quarter
of Y2010.</p>
<p style="margin: 0pt"> </p>
<p style="margin: 0pt"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0.5pc"><b>NOTE 7. - EQUITY TRANSACTIONS</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0.5pc">The fair values of the Stock Options issued during March
31, 2008 have been valued at the fair market value of the Common Stock at Date of Issue.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0.5pc">The Company issued a total of 740,000 and 2,670,000, respectively
of shares of common stock for a total value of $89,000 and $1,182,400, which has been recorded as compensation expense during the
years ended December 31, 2008 and 2007.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0.5pc">The Company issued a total of 320,000 and 25,000, respectively
of shares of common stock for a total value of $122,845 and $ 8,000, which satisfied liabilities during the years ended December 31,
2008 and 2007.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0.5pc">The Company sold 3,305,000 and 3,480,000, respectively of
shares of common stock to investors for $348,000 and $142,500 during the years ended December 31, 2008 and 2007.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0.5pc">Effective December 31, 2008, the acting CEO and surviving
relative of the deceased CEO Bradford Tolley, of the Company has authorized the contribution $ 370,222 which represents the balance
of his cumulative unpaid accrued compensation to paid in capital of the Company.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0.5pc">The Company has not issued any additional shares resulting
from subscription agreements for common stock since July 2008 to present.</p>
<p style="margin: 0pt"> </p>
<p style="margin: 0pt"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0.5pc"><b>NOTE 8. - SUBSEQUENT EVENTS</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0.5pc">The Company has evaluated subsequent events through the
filing date of this 10-Q and determined that no subsequent events have occurred that would require recognition in the financial
statements or disclosure in the notes thereto other than as discussed in the accompanying notes.</p>
<p style="margin: 0pt"> </p>