10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(MARK ONE)                                                                                                                           

x           QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2014

o           TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

For the transition period from                    to

Commission file number 333-170054

REO PLUS, INC.
(Exact Name of Registrant as Specified in Its Charter)
Texas	27-0788438
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

3014 McCulloch Circle, Houston, Texas 77056

(Address of principal executive offices)

713-478-3832

(Registrant’s telephone number)

Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 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  x    No o

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 (Check one).

Large accelerated filer ¨	Accelerated filer ¨
Non-accelerated filer  ¨	Smaller reporting company ý
(Do not check if 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 ¨ No ý

State the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date: 1,869,000 common shares as of November 12, 2014

 PART I - FINANCIAL INFORMATION

Item 1. Financial Statements.

REO Plus, Inc.

(A Texas Corporation)

Unaudited Financial Statements

For the Nine Months Ended September 30, 2014

REO Plus, Inc.

(A Texas Corporation)

Balance Sheets
Unaudited
ASSETS
	September 30,			December 31,
	2014			2013
Current Assets:
Cash	$	347		$	27,812
Prepaid expense		-			3,000
Total Current Assets		347			30,812
Investment in unconsolidated affiliate		47,786			63,068
Total Assets	$	48,133		$	93,880
LIABILITIES AND STOCKHOLDERS’ (DEFICIT) EQUITY
Current Liabilities:
Accounts payable and accrued expenses	$	8,292		$	6,500
Notes payable, stockholder		490,960			470,960
Accrued interest, stockholders		16,071			17,021
Total Current Liabilities		515,323			494,481
Stockholders’ (Deficit) Equity:
Preferred stock, $.001 par value, 10,000,000 shares
authorized and 0 shares issued and outstanding		-			-
Common stock, $.001 par value, 500,000,000 shares
authorized, 1,869,000 shares issued and outstanding		1,870			1,870
Additional paid-in capital		53,130			53,130
Accumulated deficit		(522,190	)		(455,601	)
Total Stockholders’ (Deficit) Equity		(467,190	)		(400,601	)
Total Liabilities and Stockholders’ (Deficit) Equity	$	48,133		$	93,880

See accompanying notes to the unaudited financial statements.

REO Plus, Inc.

(A Texas Corporation)

Statements of Operations
Unaudited
	For the Three Months Ended						For the Nine Months Ended
	September 30,						September 30,
	2014			2013			2014			2013
Revenues:
Consulting fees	$	11,583		$	9,773		$	23,549		$	9,773
Costs and Expenses:
Professional fees		14,892			10,270			53,978			59,840
General and administrative		-			143			-			143
Net (Loss) Income  from Operations		(3,309	)		(640	)		(30,429	)		(50,210	)
Other Income (Expense):
Equity in (loss) income of
unconsolidated affiliate		(4,626	)		(4,183	)		(15,282	)		(185	)
Interest		(7,118	)		(6,754	)		(20,878	)		(19,126	)
Net  (Loss) Income before
Income Tax		(15,053	)		(11,577	)		(66,589	)		(69,521	)
Income Tax (Provision) Benefit		-			-			-			-
Net (Loss) Income	$	(15,053	)	$	(11,577	)	$	(66,589	)	$	(69,521	)
Basic Net (Loss) Income per Share	$	(0.01	)	$	(0.01	)	$	(0.04	)	$	(0.04	)
Diluted (Loss) Income  per Share	$	(0.01	)	$	(0.01	)	$	(0.04	)	$	(0.04	)
Basic and Diluted Weighted Average
Shares Outstanding		1,869,000			1,869,000			1,869,000			1,869,000

See accompanying notes to the unaudited financial statements.

REO Plus, Inc.

(A Texas Corporation)

Statements of Cash Flows
Unaudited
	For the Nine Months Ended
	September 30,
	2014			2013
Cash Flows from Operating Activities:
Net (Loss) Income	$	(66,589	)	$	(69,521	)
Adjustments to reconcile net (loss) income to cash
used by operating activities:
Equity in (income) loss of unconsolidated affiliate		15,282			185
Decrease (Increase) in trade receivables		-			(9,773	)
Decrease (Increase) in prepaid expenses		3,000			2,375
Increase (Decrease) in accounts payable and accrued expenses		1,792			(10,125	)
(Decrease) Increase in accrued interest, stockholders		(950	)		2,157
Net Cash (Used) Provided by Operating Activities		(47,465	)		(84,702	)
Cash Flows from Financing Activities:
Proceeds from notes payable to stockholders		40,000			90,000
Payments of notes payable to stockholders		(20,000	)		-
Net Cash Provided by Financing Activities		20,000			90,000
Net Increase (Decrease) in Cash		(27,465	)		5,298
Cash, Beginning of Period		27,812			6,315
Cash, End of Period	$	347		$	11,613
Interest Paid	$	21,828		$	16,969
Income Taxes Paid	$	-		$	-

See accompanying notes to the unaudited financial statements.

REO Plus, Inc.

(A Texas Corporation)

NOTE 1.                      ORGANIZATION AND BACKGROUND

REO Plus, Inc. (“the Company”) was organized on August 11, 2009 for the purpose of investing in real estate.  The Company has had no operations other than its acquisition of 40% of Ananda Investments, LLC, (“Ananda.”)

During September 2013, the Company began providing business consulting services.  Such services are rendered to a related party by the Company’s Chief Executive Officer.  Revenues from consulting services are attributable to one client.

The accompanying unaudited interim financial statements of REO Plus, Inc. have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission, and should be read in conjunction with the audited financial statements and notes thereto for the years ended December 31, 2013 and 2012 contained in the Company’s Form 10-K filed with the Securities and Exchange Commission on March 31, 2014.  In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim periods presented have been reflected herein.  The results of operations for the interim periods are not necessarily indicative of the results to be expected for the full year.  Notes to the interim financial statements which would substantially duplicate the disclosure contained in the audited financial statements for years ended December 31, 2013 and 2012 as reported in the Company’s Form 10-K have been omitted.

NOTE 2.                      GOING CONCERN

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern.  As shown in the accompanying financial statements, the Company has an accumulated deficit of $522,190 since its inception and has not yet produced earnings from operations.  These factors raise substantial doubt about the Company’s ability to continue as a going concern.

The financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts and classification of liabilities that might be necessary in the event that the Company cannot continue as a going concern.  Management anticipates that it will be able to raise additional working capital through the issuance of stock through a private equity offering.

The ability of the Company to continue as a going concern is dependent upon the Company’s ability to attain a satisfactory level of profitability and obtain suitable and adequate financing.  There can be no assurance that management’s plan will be successful.

REO Plus, Inc.

(A Texas Corporation)

Notes to Unaudited Financial Statements

For the Nine Months Ended September 30, 2014

NOTE 3.                      INVESTMENT IN AFFILIATE

On January 2, 2010 the Company acquired a 40% interest in Ananda, a Texas limited liability company, which owns a commercial real estate rental property in Houston, Texas.  This acquisition was accomplished by the issuance of 934,500 shares of the Company’s common stock valued at $27,500 and the issuance of a promissory note in the amount of $190,000. The investment was acquired from a controlling shareholder and recorded at the controlling shareholder’s cost basis with a resulting “deemed” dividend.  The transaction was treated as a transfer between entities under common control as follows:

Issuance of common stock	$	27,500
Issuance of promissory note		190,000
		217,500
Deemed dividend		(176,700	)
Purchase price of investment in affiliate	$	40,800

Summary financial results of Ananda for the three months and nine months ended September 30, 2014 and 2013 are as follows:

Operations
	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2014			2013			2014			2013
Rental income	$	11,700		$	6,653		$	24,900		$	56,135
Operating expenses		(17,810	)		(11,458	)		(46,677	)		(38,090	)
Other income (expense)		(5,455	)		(5,653	)		(16,428	)		(18,508	)
Net (loss) income	$	(11,565	)	$	(10,458	)	$	(38,205	)	$	(463	)
Equity in (loss) income  of
unconsolidated affiliate	$	(4,626	)	$	(4,183	)	$	(15,282	)	$	(185	)

NOTE 3.                      INVESTMENT IN AFFILIATE (Continued)

Summary financial position for Ananda as of September 30, 2014 and December 31, 2013 follows:
Financial Position
	September 30,			December 31,
	2014			2013
Cash	$	71,438		$	96,009
Other current assets		3,349			1,644
Land, buildings and improvements		447,931			467,355
Other assets		7,646			8,063
Total Assets	$	530,364		$	573,071
Deposits, accrued expenses, and deferred income	$	23,436		$	14,149
Mortgage payable		387,464			401,253
Total Liabilities		410,900			415,402
Members' equity		277,845			277,845
Accumulated deficit		(158,381	)		(120,176	)
Total Equity		119,464			157,669
Total Liabilities and Equity	$	530,364		$	573,071
Investment in unconsolidated affiliate	$	47,786		$	63,068

NOTE 4.                      NOTES PAYABLE, STOCKHOLDERS

At September 30, 2014, notes payable stockholders consist of the following:
Note payable to an individual, bearing interest at 5% per annum;
unsecured, interest due annually and principal due February 9, 2017	$	290,960
Note payable to an individual bearing interest at 5% per annum;
unsecured, interest due annually and principal due April 6, 2017		10,000
Note payable to an individual, bearing interest at 7% per annum:
unsecured, interest due quarterly and principal due January 1, 2020.		190,000
	$	490,960

NOTE 4.                      NOTES PAYABLE, STOCKHOLDERS(Continued)

In connection with the Company’s acquisition of its investment in Ananda, the Company executed a note payable to a majority stockholder in the amount of $190,000 with interest accruing at 7% per annum commencing on the first day of the fourth month after Ananda obtained an occupancy permit for the property it owns in Houston, Texas.

The permit was obtained on April 1, 2010, therefore the note of $190,000 began accruing interest on July 1, 2010.

Such stockholder owns a 95% interest in the Company through his 50% ownership of REO and 90% ownership of the other 50% corporate stockholder of REO.

On February 10, 2014, the Company received $30,000 in proceeds from a note due to its majority shareholder.  On the same date, the majority shareholder consolidated all of the notes payable to him into one promissory note.  The principal balance due to the majority shareholder upon consolidation is $290,960.  The note bears interest at 5% per annum and is due February 9, 2017.  Accrued interest on the notes of $5,541 was paid at the time of consolidation.

Ananda Investments, LLC

(A Texas Limited Liability Company)

Unaudited Financial Statements

For the Nine Months Ended September 30, 2014

Ananda Investments, LLC

(A Texas Limited Liability Company)

Balance Sheets
Unaudited
	September 30,			December 31,
	2014			2013
ASSETS
Current Assets:
Cash	$	71,438		$	96,009
Prepaid insurance		3,349			1,644
Total Current Assets		74,787			97,653
Property and Equipment:
Land		100,000			100,000
Building and improvements		517,981			517,981
Total Property and Equipment		617,981			617,981
Accumulated depreciation		(170,050	)		(150,626	)
Property and Equipment, net		447,931			467,355
Other Assets:
Deferred loan costs		7,646			8,063
Total Assets	$	530,364		$	573,071
LIABILITIES AND MEMBERS' EQUITY
Current Liabilities:
Accrued expenses	$	8,136		$	10,849
Deferred income		5,700			-
Current portion of long-term debt		19,877			18,842
Total Current Liabilities		33,713			29,691
Lease deposit		9,600			3,300
Long-term debt		367,587			382,411
Total Liabilities		410,900			415,402
Members' Equity		119,464			157,669
Total Liabilities and Members' Equity	$	530,364		$	573,071

See accompanying notes to the unaudited financial statements.

Ananda Investments, LLC

(A Texas Limited Liability Company)

Statements of Operations and Members' Equity
Unaudited
	For the Three Months Ended						For the Nine Months Ended
	September 30,						September 30,
	2014			2013			2014			2013
Revenues:	$	11,700		$	6,653		$	24,900		$	56,135
Commissions		(3,900	)		-			(3,900	)		-
Net Revenues		7,800			6,653			21,000			56,135
Costs and Expenses:
Depreciation and amortization		6,613			6,614			19,841			23,267
Property taxes		2,662			2,348			8,136			7,044
Insurance		1,926			1,867			5,738			5,566
Repairs and maintenance		1,822			-			7,262			1,584
Utilities		360			-			889			-
General and administrative		527			629			911			629
Total Costs and Expenses		13,910			11,458			42,777			38,090
Net (Loss) Income from Operations		(6,110	)		(4,805	)		(21,777	)		18,045
Other Income (Expense):
Interest income		23			38			83			108
Interest expense		(5,478	)		(5,691	)		(16,511	)		(18,616	)
Net (Loss) Income		(11,565	)		(10,458	)		(38,205	)		(463	)
Members' Equity, Beginning of Period		131,029			177,300			157,669			167,305
Members' Equity, End of Period	$	119,464		$	166,842		$	119,464		$	166,842

See accompanying notes to the unaudited financial statements.

Ananda Investments, LLC

(A Texas Limited Liability Company)

Statements of Cash Flows
Unaudited
	For the Nine Months Ended
	September 30,
	2014			2013
Cash Flows from Operating Activities:
Net (loss) income	$	(38,205	)	$	(463	)
Adjustments to reconcile net (loss) income to cash (used)
provided by operating activities:
Depreciation and amortization		19,841			23,267
(Increase) in prepaid insurance		(1,705	)		(1,900	)
(Decrease) in accrued expenses		(2,713	)		(2,469	)
Increase in deferred income		5,700			-
Increase in lease deposit		6,300			-
Net Cash (Used) Provided by Operating Activities		(10,782	)		18,435
Cash Flows from Financing Activities:
Payments on long-term debt		(13,789	)		(16,542	)
Net Cash (Used) by Financing Activities		(13,789	)		(16,542	)
Net (Decrease) Increase  in Cash		(24,571	)		1,893
Cash, Beginning of Period		96,009			95,515
Cash, End of Period	$	71,438		$	97,408
Interest Paid	$	16,511		$	18,616
Income Taxes Paid	$	-		$	-

See accompanying notes to the unaudited financial statements.

Ananda Investments, LLC

(A Texas Limited Liability Company)

Notes to Unaudited Financial Statements

For the Nine Months Ended September 30, 2014

NOTE 1.                      ORGANIZATION AND BACKGROUND

Ananda Investments, LLC (“the Company”) was organized in Texas on March 26, 2004 for the purpose of investing in real estate.  The Company owns and operates a building located in Houston, Texas.

The accompanying unaudited interim financial statements of Ananda Investments, LLC have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission, and should be read in conjunction with the audited financial statements and notes thereto for the years ended December 31, 2013 and 2012 contained in the Company’s Form 10-K filed with the Securities and Exchange Commission on March 31, 2014.  In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim periods presented have been reflected herein.  The results of operations for the interim periods are not necessarily indicative of the results to be expected for the full year.  Notes to the interim financial statements which would substantially duplicate the disclosure contained in the audited financial statements for years ended December 31, 2013 and 2012 as reported in the Company’s Form 10-K have been omitted.

NOTE 2.                      LONG-TERM DEBT

As of September 30, 2014 long-term debt consists of an installment note payable to a bank, bearing interest at 5.49% per annum, secured by a first lien deed of trust on the land and building located in Houston, Texas and assignment of rents and leases related thereto.  The note is payable in monthly installments of $3,367 and matures during June 2028.

On September 30, 2014, long-term debt is as follows:
Note payable	$	387,464
Less current portion		(19,877	)
Long-term debt	$	367,587

Maturities of long-term debt are as follows:
2015	$	19,877
2016		20,738
2017		21,905
2018		23,138
2019		24,441
Thereafter		277,365
	$	387,464

Total interest for the nine months ended September 30, 2014 and 2013 was $16,511 and $18,616, respectively.

Item 2. Management’s Discussion and Analysis.

CAUTIONARY STATEMENT FOR FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended.  We have based these forward-looking statements on our current expectations and projections about future events.  These forward-looking statements are subject to known and unknown risks, uncertainties and assumptions about us that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements.  In some cases, you can identify forward-looking statements by terminology such as “may,” “should,” “could,” “would,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “continue,” or the negative of such terms or other similar expressions.  Factors that might cause or contribute to such a discrepancy include, but are not limited to, those described in our other Securities and Exchange Commission filings.  The following discussion should be read in conjunction with our Financial Statements and related Notes thereto included elsewhere in this report.

General

REO Plus, Inc. (the "Company") was incorporated on August 10, 2009 under the laws of the State of Texas.  The address of the Company is 3014 McCulloch Circle, Houston, Texas 77056, and its telephone number is 713/599-1910.

The Company was formed by a Delaware corporation then known as “Akashic Ventures, Inc.” but now known as “Humanity Biotech, Inc.” (“Akashic”), for purposes of acquiring financially attractive real estate properties.  Akashic is a publicly held corporation that once filed reports with the Commission.  Akashic has been dormant from a business perspective since about the summer of 1997.  Richard J. Church acquired control of Akashic on May 18, 2008.  He is now the sole director and officer of Akashic.  Mr. Church is the sole promoter of the Company, and he is serving and expects to continue to serve for the foreseeable future as the Company's sole director, and the Company’s President, Treasurer and Secretary.

When the Company was formed in August 2009, Akashic contributed $27,500 to the Company’s capital, and in consideration thereof the Company issued to Akashic 934,500 shares of Company common stock, thereby making Akashic the Company’s initial shareholder.  Until early 2010, Mr. Church was a 40% owner of Ananda Investments, LLC (“Ananda”), a Texas limited liability company that owns a particular real estate property near and west of downtown Houston, Texas.  This 40% ownership is comprised of 400 units of limited liability company member interest.  In early 2010, Mr. Church transferred his 40% ownership in Ananda to the Company.  The Company issued to Mr. Church some of its shares of common stock as part of the purchase price for the Ananda interest.  As a result of the Ananda transfer, the Company became the largest owner of Ananda by a wide margin.   Because Ananda is member-managed, the Company exerts the greatest control over Ananda.

During the third quarter of 2013, the Company began providing real estate and business consulting services as a means to generate revenue.  Currently, such services are provided solely by Mr. Church solely to one client, his family’s company, Southwestern Manufacturing Co., Inc. (“SWC”), founded in 1954 in which Mr. Church owns approximately 14% of the outstanding equity interests and acts as a director. SWC is currently conducting a major renovation of its Houston property located on the Southwest Freeway (I-69) at Chimney Rock.   The ultimate scope of the Company’s consulting services cannot now be determined, but any consulting performed by Mr. Church as a representative of the Company would be within the limitations set forth by the Real Estate License Act 1101.002.

The Company became a publicly held corporation in November 2012 when Akashic distributed to certain of its shareholders a total of 930,493 shares of Company common stock held by it.

Plan of Operation

The Company generally expects to seek well-located properties in need of capital infusion, or total redevelopment, as properties requiring more extensive real estate skills and effort allow for the greatest appreciation on invested capital.  The properties and assets to be acquired by the Company will most likely include commercial, retail, residential and mixed-use properties.  Such properties and assets will less likely include office properties, and will almost certainly not include industrial properties. Thus far, the Company has acquired only an interest in one property. For a description of this sole property interest, see the section captioned “Item 2. Properties” in the Company’s 2013 Annual Report on Form 10-K filed on March 31, 2014 with the U.S. Securities and Exchange Commission.

The Company will not limit itself geographically, except that the Company is targeting initial acquisitions located in the Houston, Texas area and eventually other parts of Texas.  However, as opportunities present themselves, the Company may focus its efforts on secondary and tertiary geographic markets throughout the United States, particularly in areas that have had significant declines in property values and thus possibly offer opportunities for significant appreciation.  The Company believes that distressed markets offer opportunities for the Company to acquire under-performing properties that it believes it has the capability of turning around and repositioning, thereby increasing cash flow, profitability and asset value. The Company believes it can successfully identify such potential target acquisitions based upon the depth and the breadth of the industry experience, contacts and industry knowledge of the Company’s current management.   While since its inception the Company has identified certain acquisitions that it would have like to have completed, the Company’s lack of funds has precluded the completion of such acquisitions.  The Company believes that its fairly new status as a public SEC reporting company will ease the Company’s ability to raise funds, and make the completion of acquisitions to be identified in the future more likely.  The Company is also considering other real estate properties whose values could be enhanced if held in a public entity.  However, the Company has no assurances that any financing, acquisitions or merger will occur.  Richard J. Church, the Company’s current sole executive officer and director, has the responsibility for identifying acquisitions or selecting acquisitions identified by other sources.  Mr. Church has extensive experience in the real estate industry through his various real estate enterprises.

The Company is now receiving target acquisitions from a number of brokers and other real estate professionals and dealmakers with whom the Company’s current management has business relationships.  Moreover, potential acquisitions may be brought to the Company’s attention by sources as a result of being solicited by the Company through calls or mailings.  In no event will any of the Company’s existing or future officers, directors or shareholders or any entity with which they are affiliated be paid any finder’s fee, consulting fee or other compensation prior to, or for any services they render in order to effectuate, the consummation of an acquisition.

The Company does not have any specific property acquisition under consideration for which written offers have been made.  The Company has been approached by entities offering their properties for sale and other entities contemplating the merger of the Company with their non-public corporation, but these discussions have not evolved to the point where the Company has entered into any agreements in principle, much less any definitive agreements.  The Company will continue to identify and evaluate prospective property acquisition, performing business due diligence on prospective property acquisitions, traveling to and from the property and asset locations that represent prospective acquisitions, reviewing corporate, title, environmental, and financial documents and material agreements regarding prospective property acquisitions, selecting properties to acquire and striving to structure, negotiate and consummate acquisitions.  The Company will have certain burdens and costs with respect to these activities and certain additional risks associated with the subsequent integration of additional assets or properties into the Company’s operations.

The Company does not presently intend to invest in real estate mortgages, securities of or interests in persons primarily engaged in real estate activities (other than the Company’s current interest in Ananda), or investments in other securities such as bonds, preferred stocks or common stocks.  However, the Company's Board of Directors may elect to make these investments in the future without a vote of shareholders.

For a description of the Company’s acquisition criterion and policies, see the sections captioned “Item 1. Business - Acquisition Selection” and “Item 1. Business - Policies with Respect to Certain Activities” in pre-effective Amendment No. 8 the Company’s 2013 Annual Report on Form 10-K filed on March 31, 2014 with the U.S. Securities and Exchange Commission.

Results of Operations - General

The Company was incorporated on August 10, 2009 for purposes of acquiring financially attractive real estate properties.  The Company made its first and heretofore only property acquisition in early January 2010.  This acquisition consisted of a 40% ownership interest in Ananda Investments, LLC (“Ananda”), a Texas limited liability company that owns a particular real estate property near and west of downtown Houston, Texas. Because it has owned only this single asset since 2010, the Company has limited financial results to report.

The Jumpstart Our Business Startups Act, or the JOBS Act, was signed into law on April 5, 2012.  As permitted under Section 102(b)(1) of this Act, the Company has elected to use the extended transition period for complying with new or revised accounting standards.  This election allows the Company to delay the adoption of new or revised accounting standards that have different effective dates for public and private companies until those standards apply to private companies.  As a result of this election, the Company's financial statements may not be comparable to those of companies that comply with public company effective dates.

Results of Operations – REO Plus, Inc.

Three Months Ended September 30, 2014 Compared to Three Months Ended September 30, 2013

Revenues.  During the third quarter of 2014, the Company had revenues in the amount of $11,583 from fee income compared to $9,773 from fee income during the third quarter of 2013.

Expenses.  During the third quarter of 2014, the Company had expenses in the amount of $14,892, all from professional fees.  These expenses represent an increase of $4,479 from expenses in the amount of $10,413 (nearly all from professional fees) during the third quarter of 2013.  

Net Loss from Operations.  As a result of the increase in expenses (offset to some extent by an increase in revenues) during the third quarter of 2014, the Company’s net loss from operations increased to $3,309 during the third quarter of 2014 compared to a net loss from operations of $640 during the third quarter of 2013.

Other Income (Expense).   During the third quarter of 2014, the Company had equity in loss of its unconsolidated affiliate, Ananda Investments, LLC (“Ananda”), in the amount of $4,626.  This equity in loss of unconsolidated affiliate represents a slight increase from the equity in loss of its unconsolidated affiliate in the amount of $4,183 during the third quarter of 2013.   During the third quarter of 2014, the Company had interest expense in the amount of $7,118.  Most of this interest was due to Richard J. Church, our sole director and officer, for working capital loans and the loan to purchase the ownership interest in Ananda.   The Company had interest expense in the amount of $6,754 during the third quarter of 2013.  

Net loss.  In view of the increase in net loss from operation and the increase in the equity in loss of unconsolidated affiliate and interest expense, the Company had a net loss in the amount of $15,053 during the third quarter of 2014, or a per-share loss of $0.01, compared to net loss in the amount of $11,577 during the third quarter of 2013, or a per-share loss of $0.01.

Nine Months Ended September 30, 2014 Compared to Nine Months Ended September 30, 2013

Revenues.  During the first nine months of 2014, the Company had revenues in the amount of $ 23,549 from fee income resulting from consulting services.  The Company had revenues in the amount of $9,773 from fee income resulting from consulting services during the first nine months of 2013, as the Company commenced providing such services only during the third quarter of 2013.

 Expenses.  During the first nine months of 2014, the Company had expenses in the amount of $53,978, all from professional fees.  These expenses represent a decrease of $6,005 from expenses in the amount of $59,983 (nearly all from professional fees) during the first nine months of 2013.

Net Loss from Operations.  As a result of the increase in revenues and decrease in expenses during the first nine months of 2014, the Company’s net loss from operations decreased to $30,429 during the first nine months of 2014 compared to $50,210 during the third quarter of 2013.

Other Income (Expense).   During the first nine months of 2014, the Company had equity in loss of unconsolidated affiliate in the amount of $15,282.  This equity in loss of unconsolidated affiliate represents an increase of $15,097 from equity in income of unconsolidated affiliate in the amount of $185 during the first nine months of 2013.  This decrease resulted from the loss of Ananda’s primary tenant during the third quarter of 2013.  During the first nine months of 2014, the Company had interest expense in the amount of $20,878.  Most of this interest was due to Richard J. Church, our sole director and officer, for working capital loans and the loan to purchase the ownership interest in Ananda.   The Company had interest expense in the amount of $19,126 during the first nine months of 2013.  

Net loss.  In view of the increase in revenues from fee income and lower expenses (offset to a large extent by an increase in equity in loss of unconsolidated affiliate), the Company had a net loss in the amount of $66,589 during the first nine months of 2014, or a per-share loss of $0.04, compared to net loss in the amount of $69,521 during the first nine months of 2013, or a per-share loss of $0.04.

Results of Operations – Ananda Investments, LLC

Three Months Ended September 30, 2014 Compared to Three Months Ended September 30, 2013

Revenues.  During the third quarter of 2014, Ananda had revenues in the amount of $11,700.  These revenues represent an increase of $5,047 from revenues in the amount of $6,653 during the third quarter of 2013.  This increase resulted from the Ananda’s procurement of a primary tenant during the third quarter of 2014.

Expenses.  During the third quarter of 2014, Ananda had expenses in the amount of $17,810, which represents an increase of $6,352 from expenses in the amount of $11,458 during the third quarter of 2013, as Ananda had expenses relating to repairs and maintenance, and leasing commissions during the third quarter of 2014 that it did not have during the third quarter of 2013.

Net Loss from Operations.  In view of the increase in expense offset to some extent by an increase in revenues, Ananda had a net loss from operations in the amount of $6,110 during the third quarter of 2014 compared to net loss from operations in the amount of $4,805 during the third quarter of 2013.

Other Income (Expense).  During the third quarter of 2014, Ananda had interest expense in the amount of $5,478, which represents a small decrease from interest expense in the amount of $5,691 during the third quarter of 2013.   During the third quarter of 2014, Ananda had interest income in the amount of $23 compared to interest income in the amount of $38 during the third quarter of 2013.

Net Income.  In view of the increase in expense offset to some extent by an increase in revenues, Ananda had a net loss in the amount of $11,565 during the third quarter of 2014 compared to a net loss in the amount of $10,458 during the third quarter of 2013.

Nine Months Ended September 30, 2014 Compared to Nine Months Ended September 30, 2013

Revenues.  During the first nine months of 2014, Ananda had revenues in the amount of $24,900.  These revenues represent a decrease of $31,235 from revenues in the amount of $56,135 during the first nine months of 2013.  This decrease resulted from the loss of Ananda’s primary tenant during the third quarter of 2013.

Expenses.  During the first nine months of 2014, Ananda had expenses in the amount of $46,677, which represents an increase of $8,587 from expenses in the amount of $38,090 during the first nine months of 2013.  Generally, the Company experienced slight increases in nearly all of its expense categories during the first nine months of 2014 compared to the same period in 2013, except that it had a significantly larger expense for repairs and maintenance during the third quarter of 2014 compared to the third quarter of 2013, and it had leasing commissions during the third quarter of 2014 that it did not have during the third quarter of 2013.  Depreciation and amortization declined appreciably during the third quarter of 2014 compared to the third quarter of 2013.

Net Income from Operations.  In view of the significant decrease in revenues and a significant increase in expenses, Ananda had a net loss from operations in the amount of $21,777 during the first nine months of 2014 compared to net income from operations in the amount of $18,045 during the first nine months of 2013.

Other Income (Expense).  During the first nine months of 2014, Ananda had interest expense in the amount of $16,511, which represents a decrease in the amount of $2,105 from interest expense in the amount of $18,616 during the first nine months of 2013.   During the first nine months of 2014, Ananda had interest income in the amount of $83, while it had interest income in the amount of $108 during the first nine months of 2013.

Net Income.  In view of the significant decrease in revenues and a significant increase in expenses, Ananda had a net loss in the amount of $38,205 during the first nine months of 2014 compared to a net loss in the amount of $463 during the first nine months of 2013.

Liquidity and Capital Requirements

The Company began its pursuit of real estate acquisitions in 2010.  Currently, the Company has only one real estate interest.  The Company cannot assure anyone that it will be able to acquire any additional real estate properties due to the Company’s limited financial resources at the present.  The Company expects to finance any future acquisition with a combination of a cash down payment (probably 10% to 25% or more of the purchase price) and seller or third party financing (for the remaining approximately 75% to 90% of the purchase price), although the Company may in limited circumstances be able to satisfy a portion of the purchase price for a property with the Company’s equity securities.  The Company will need to procure cash to fund future down payments from a future private equity offering.  Moreover, the Company expects that its largest shareholder may be required to guarantee personally the Company’s seller or third party financing.

The Company is currently trying to determine the scope of the acquisitions that it wishes to pursue.  The amount of capital that the Company will need will depend on the scope of the acquisitions that the Company ultimately decides to pursue, which is uncertain at this time.  However, for the Company to acquire any additional real estate properties, the Company would be required to undertake certain financing activities.  The sources for financing would most likely be private equity sources, such as institutional investors or wealthy individuals.  The Company currently does not have any binding commitments for, or readily available sources of, additional financing.  The Company cannot assure anyone that additional financing will be available to it when needed or, if available, that such financing can be obtained on commercially reasonably terms.  If the Company does not obtain additional financing, it will not be able to acquire any additional real estate properties, and perhaps will not even be able to stay in business for that matter.  If the Company does not obtain necessary additional financing, it may be constrained to attempt to sell the sole interest that it has heretofore acquired or additional interests that it may hereafter acquire.  However, the Company cannot assure anyone that it will be able to find interested buyers or that the funds received from any such sale would be adequate to fund the Company’s activities.  Under certain circumstances, the Company could be forced to cease its operations and liquidate its remaining assets, if any.  The Company cannot assure anyone that it will be successful in obtaining necessary capital and in its acquisition activities, although the Company believes that the procurement of additional financing and the completion of additional acquisitions will be easier in view of its fairly new status as a public SEC reporting company.

The Company has incurred losses since inception.  These losses have been financed by loans to the Company by Richard J. Church, the controlling stockholder of the Company, and an entity controlled by him.  The aggregate amount of the loans by Mr. Church to the Company now totals $300,960.  Of this amount, $170,960 was borrowed through fiscal 2012, $90,000 during fiscal 2013, and $40,000 during fiscal 2014 through November 11, 2014.  Further information about this outstanding amount can be found in “Item 13.  Certain Relationships and Related Transactions, and Director Independence – Related Transactions” in the Company’s 2013 Annual Report on Form 10-K filed on March 31, 2014 with the U.S. Securities and Exchange Commission.  Mr. Church has indicated that he intends to continue to loan funds to the Company for expenses in excess of revenues for the next 12 months, but he is under no legal obligation to do so.

Accordingly, he could stop making such loans at any time, and the Company would be constrained to find alternative sources of funds.  The Company has no assurance that it will be able to find such alternative sources.  Moreover, if Mr. Church decides to stop financing the Company’s expenses, he may also decide to sell all or some portion of his stock in the Company to one or more persons who may elect to discontinue the Company’s historical business and change the Company’s business focus.

Known Trends

Because of the steady improvement in domestic real estate markets across the board and specifically in Houston and the growth of the oil and gas business in Texas, discerning definite trends through 2014 seems reasonable.   Property values and property taxes are increasing in targeted markets, and the continuation of this trend seems likely, at least through 2014.  Rents and occupancy have been increasing slightly in targeted markets, but they could begin to decline if the domestic economy softens.  Management believes that most industry participants have assumed a definitely more aggressive approach in land, property acquisition and development.  The Company is evaluating opportunities on a property-by-property basis while anticipating perceived trends to continue at least through 2014, and it expects the business to support development to remain steady through 2016, although there can no assurances that the business climate will remain attractive during this period.  Another positive factor in today's market is the continued historical lower interest rates that may be fixed for a number of years (as the loan received by Ananda for a fifteen (15) year amortization) and that significantly reduce the expense of capital, and acquisition/refinancing loans are less difficult to obtain in today's market as there are more lenders with firming financial positions and loosened requirements for real estate than were available less than two (2) years ago.

Seasonal Effects and Effects of Inflation

Management believes that the real estate interest that it currently owns is not, and the ones that it will seek to acquire in the future will not be, subject to seasonal variations.  Management further believes that inflation will not affect the Company for the foreseeable future since the Company's financing is fixed through September 2014, although inflation may have greater effects in future years with increased interest rates, and in ways that cannot now be determined.

Off-balance Sheet Arrangements

The Company has no off-balance sheet arrangements.

Item 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we have evaluated the effectiveness of the design and operation of its disclosure controls and procedures pursuant to Exchange Act Rule 13a-15(e) and Rule 15d-15(e) as of the end of the period covered by this quarterly report.  Based on that evaluation, the principal executive officer and principal financial officer have identified that the lack of segregation of accounting duties as a result of limited personnel resources is a material weakness of its financial procedures.  Other than for this exception, the principal executive officer and principal financial officer believe the disclosure controls and procedures are effective to ensure that information required to be disclosed by us in the reports we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the Securities and Exchange Commission's rules and forms and that our disclosure and controls are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our principal executive officer and principal financial officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. There were no significant changes in our internal controls or in other factors that could significantly affect internal controls subsequent to the date of their evaluation and there were no corrective actions with regard to significant deficiencies and material weaknesses.

Limitations on Effectiveness of Controls and Procedures

Our management, including our principal executive officer and principal financial officer, does not expect that our disclosure controls and procedures or our internal controls will prevent all error and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within our company have been detected. These inherent limitations include, but are not limited to, the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the control. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, control may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate.

Changes in Internal Controls over Financial Reporting

There have not been any changes in our internal control over financial reporting, as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act, during the period of this report that have materially affected, or are reasonably likely to materially affect our internal control over financial reporting.

PART II - OTHER INFORMATION

Item 6.  Exhibits.

(a)           The following exhibits are filed with this Quarterly Report or are incorporated herein by reference:

Exhibit Number	Description
31.01	Certification pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934.
31.02	Certification pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934.
32.01	Certification Pursuant to 18 U.S.C. Section 1350, as pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.02	Certification Pursuant to 18 U.S.C. Section 1350, as pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS*	XBRL Instance Document
101.SCH*	XBRL Taxonomy Extension Schema
101.CAL*	XBRL Taxonomy Extension Calculation Linkbase
101.DEF*	XBRL Taxonomy Extension Definition Linkbase
101.LAB*	XBRL Taxonomy Extension Labels Linkbase
101.PRE*	XBRL Taxonomy Extension Presentation Linkbase

SIGNATURES

In accordance with the requirements of the Exchange Act, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.

REO PLUS, INC.
(Registrant)
By:	/s/ Richard J. Church
	Richard J. Church,
	President and Treasurer (Principal Executive Officer, Principal Financial Officer and Principal Accounting Officer)

November 12, 2014

EX-31.01

Exhibit 31.01

CERTIFICATIONS

I, Richard J. Church, certify that:

1. I have reviewed this quarterly report on Form 10-Q of REO Plus, Inc. (the "Company");

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Company as of, and for, the periods presented in this report;

4. The Company’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Company and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the Company's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the Company's internal controls over financial reporting that occurred during the Company's most recent fiscal quarter (the Company's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Company's internal controls over financial reporting; and

5. The Company's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal controls over financial reporting, to the Company's auditors and the audit committee of the Company's Board of Directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the Company's ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the Company's internal controls over financial reporting.

Date: November 12,  2014

/s/ Richard J. Church

-----------------------------------------

Richard J. Church, President

(Principal Executive Officer)

EX-31.02

Exhibit 31.02

CERTIFICATIONS

I, Richard J. Church, certify that:

1. I have reviewed this quarterly report on Form 10-Q of REO Plus, Inc. (the "Company");

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Company as of, and for, the periods presented in this report;

4. The Company’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Company and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the Company's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the Company's internal controls over financial reporting that occurred during the Company's most recent fiscal quarter (the Company's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Company's internal controls over financial reporting; and

5. The Company's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal controls over financial reporting, to the Company's auditors and the audit committee of the Company's Board of Directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the Company's ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the Company's internal controls over financial reporting.

Date: November 12, 2014

/s/ Richard J. Church

-------------------------------------

Richard J. Church, Treasurer

(Principal Financial Officer)

EX-32.01

Exhibit 32.01

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of REO Plus, Inc. (the "Company") on Form 10-Q for the quarter ended September 30, 2014 as filed with the Securities and Exchange Commission on or about the date hereof ("Report"), the undersigned, in the capacities and on the dates indicated below, hereby certifies pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to his knowledge:

1.           The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2.           The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: November 12, 2014                                                                                                           

/s/ Richard J. Church

Richard J. Church, President

(Principal Executive Officer)

EX-32.02

Exhibit 32.02

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of REO Plus, Inc. (the "Company") on Form 10-Q for the quarter ended September 30, 2014 as filed with the Securities and Exchange Commission on or about the date hereof ("Report"), the undersigned, in the capacities and on the dates indicated below, hereby certifies pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to his knowledge:

1.           The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2.           The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: November 12, 2014                                                                                                           

/s/ Richard J. Church

Richard J. Church, Treasurer

(Principal Financial Officer)

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Note 4. Notes Payable, Stockholders (Details) (USD $)	3 Months Ended		9 Months Ended					9 Months Ended			9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013	Dec. 31, 2013	Sep. 30, 2014 Investor		Sep. 30, 2014 Note Payable 3	Jul. 01, 2010 Note Payable 3	Feb. 10, 2014 Note Payable 1a	Sep. 30, 2014 Note Payable 1
Debt Instrument, Face Amount									$ 190,000	$ 30,000
Debt Instrument, Interest Rate, Stated Percentage								7.00%			5.00%
Debt Instrument, Issuance Date								Jul. 01, 2010
Equity Method Investment, Ownership Percentage						95.00%	[1]
Notes payable, stockholders	490,960		490,960		470,960			190,000			290,960
Interest	$ 7,118	$ 6,754	$ 20,878	$ 19,126							$ 5,541

[1] owns 95% interest in the Company through his 50% ownership of REO and 90% ownership of the other 50% corporate stockholder of REO

XML

Note 1. Organization and Background

9 Months Ended

Sep. 30, 2014

Notes

Note 1. Organization and Background

NOTE 1.                      ORGANIZATION AND BACKGROUND

REO Plus, Inc. (“the Company”) was organized on August 11, 2009 for the purpose of investing in real estate.  The Company has had no operations other than its acquisition of 40% of Ananda Investments, LLC, (“Ananda.”)

During September 2013, the Company began providing business consulting services.  Such services are rendered to a related party by the Company’s Chief Executive Officer.  Revenues from consulting services are attributable to one client.

The accompanying unaudited interim financial statements of REO Plus, Inc. have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission, and should be read in conjunction with the audited financial statements and notes thereto for the years ended December 31, 2013 and 2012 contained in the Company’s Form 10-K filed with the Securities and Exchange Commission on March 31, 2014.  In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim periods presented have been reflected herein.  The results of operations for the interim periods are not necessarily indicative of the results to be expected for the full year.  Notes to the interim financial statements which would substantially duplicate the disclosure contained in the audited financial statements for years ended December 31, 2013 and 2012 as reported in the Company’s Form 10-K have been omitted.

XML

Note 2. Long-term Debt (Ananda): Schedule of Maturities of Long-term Debt (Details) (Reportable Segment (Ananda), USD $)	Sep. 30, 2014	Dec. 31, 2013
Reportable Segment (Ananda)
Mortgage payable	$ 387,464	$ 401,253
Current portion of long-term debt	(19,877)	(18,842)
Long-term debt	367,587	382,411
2015	19,877
2016	20,738
2017	21,905
2018	23,138
2019	24,441
Thereafter	277,365
Long-term Debt, Total	$ 387,464

XML

Statements of Cash Flows (Ananda) (USD $)	9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013
Cash Flows from Operating Activities:
Net (Loss) Income	$ (66,589)	$ (69,521)
Adjustments to reconcile net (loss) income to cash (used) provided by operating activities:
Net Cash (Used) Provided by Operating Activities	(47,465)	(84,702)
Cash Flows from Financing Activities:
Net Cash (Used) by Financing Activities	20,000	90,000
Net (Decrease) Increase in Cash	(27,465)	5,298
Cash, Beginning of Period	27,812	6,315
Cash, End of Period	347	11,613
Interest Paid	21,828	16,969
Income Taxes Paid
Reportable Segment (Ananda)
Cash Flows from Operating Activities:
Net (Loss) Income	(38,205)	(463)
Adjustments to reconcile net (loss) income to cash (used) provided by operating activities:
Depreciation and amortization	19,841	23,267
(Increase) in prepaid insurance	(1,705)	(1,900)
(Decrease) in accrued expenses	(2,713)	(2,469)
Increase in deferred income	5,700	0
Increase in lease deposit	6,300	0
Net Cash (Used) Provided by Operating Activities	(10,782)	18,435
Cash Flows from Financing Activities:
Payments on long-term debt	(13,789)	(16,542)
Net Cash (Used) by Financing Activities	(13,789)	(16,542)
Net (Decrease) Increase in Cash	(24,571)	1,893
Cash, Beginning of Period	96,009	95,515
Cash, End of Period	71,438	97,408
Interest Paid	16,511	18,616
Income Taxes Paid	$ 0	$ 0

XML

Balance Sheets (Unaudited) (USD $)	Sep. 30, 2014	Dec. 31, 2013
Current Assets:
Cash	$ 347	$ 27,812
Prepaid expense	0	3,000
Total Current Assets	347	30,812
Investment in unconsolidated affiliate	47,786	63,068
Total Assets	48,133	93,880
Current Liabilities:
Accounts payable and accrued expenses	8,292	6,500
Notes payable, stockholders	490,960	470,960
Accrued interest, stockholders	16,071	17,021
Total Current Liabilities	515,323	494,481
Stockholders' (Deficit) Equity:
Preferred stock, $.001 par value, 10,000,000 shares authorized and 0 shares issued and outstanding
Common stock, $.001 par value, 500,000,000 shares authorized, 1,869,000 shares issued and outstanding	1,870	1,870
Additional paid-in capital	53,130	53,130
Accumulated deficit	(522,190)	(455,601)
Total Stockholders' (Deficit) Equity	(467,190)	(400,601)
Total Liabilities and Stockholders' (Deficit) Equity	$ 48,133	$ 93,880

XML

Balance Sheets (Ananda) (USD $)	Sep. 30, 2014	Dec. 31, 2013
Current Assets:
Cash	$ 347	$ 27,812
Total Current Assets	347	30,812
Other Assets:
Total Assets	48,133	93,880
Current Liabilities:
Total Current Liabilities	515,323	494,481
Total Liabilities and Members' Equity	48,133	93,880
Reportable Segment (Ananda)
Current Assets:
Cash	71,438	96,009
Prepaid insurance	3,349	1,644
Total Current Assets	74,787	97,653
Property and Equipment:
Land	100,000	100,000
Building and improvements	517,981	517,981
Total Property and Equipment	617,981	617,981
Accumulated depreciation	(170,050)	(150,626)
Property and Equipment, net	447,931	467,355
Other Assets:
Deferred loan costs	7,646	8,063
Total Assets	530,364	573,071
Current Liabilities:
Accrued expenses	8,136	10,849
Deferred income	5,700
Current portion of long-term debt	19,877	18,842
Total Current Liabilities	33,713	29,691
Lease deposit	9,600	3,300
Long-term debt	367,587	382,411
Total Liabilities	410,900	415,402
Members' Equity	119,464	157,669
Total Liabilities and Members' Equity	$ 530,364	$ 573,071

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Note 3. Investment in Affiliate: Schedule of Investments in and Advances to Affiliates, Schedule of Investments (Details) (USD $)	0 Months Ended
	Jan. 02, 2010	Sep. 30, 2014	Dec. 31, 2013	Jan. 02, 2010
Details
Issuance of common stock				$ 27,500
Issuance of promissory note	190,000
Consideration Transferred	217,500
Deemed dividend	(176,700)
Purchase price of investment in affiliate		$ 47,786	$ 63,068	$ 40,800

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Note 4. Notes Payable, Stockholders: Schedule of Notes Payable, Stockholders (Details) (USD $)			9 Months Ended
	Sep. 30, 2014	Dec. 31, 2013	Sep. 30, 2014 Note Payable 1	Sep. 30, 2014 Note Payable 2	Sep. 30, 2014 Note Payable 3
Debt Instrument, Interest Rate, Stated Percentage			5.00%	5.00%	7.00%
Debt Instrument, Maturity Date			Feb. 09, 2017	Apr. 06, 2017	Jan. 01, 2020
Notes payable, stockholders	$ 490,960	$ 470,960	$ 290,960	$ 10,000	$ 190,000

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Statements of Operations (Ananda) (USD $)	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Costs and Expenses:
General and administrative	$ 0	$ 143	$ 0	$ 143
Net (Loss) Income from Operations	(3,309)	(640)	(30,429)	(50,210)
Other Income (Expense):
Net (Loss) Income	(15,053)	(11,577)	(66,589)	(69,521)
Reportable Segment (Ananda)
Revenues:	11,700	6,653	24,900	56,135
Commissions	(3,900)	0	(3,900)	0
Net Revenues	7,800	6,653	21,000	56,135
Costs and Expenses:
Depreciation and amortization	6,613	6,614	19,841	23,267
Property taxes	2,662	2,348	8,136	7,044
Insurance	1,926	1,867	5,738	5,566
Repairs and maintenance	1,822	0	7,262	1,584
Utilities	360	0	889	0
General and administrative	527	629	911	629
Total Costs and Expenses	13,910	11,458	42,777	38,090
Net (Loss) Income from Operations	(6,110)	(4,805)	(21,777)	18,045
Other Income (Expense):
Interest income	23	38	83	108
Interest expense	(5,478)	(5,691)	(16,511)	(18,616)
Net (Loss) Income	(11,565)	(10,458)	(38,205)	(463)
Members' Equity, Beginning of Period	131,029	177,300	157,669	167,305
Members' Equity, End of Period	$ 119,464	$ 166,842	$ 119,464	$ 166,842

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Balance Sheets (Parenthetical) (USD $)	Sep. 30, 2014	Dec. 31, 2013
Statement of Financial Position
Common Stock, par or stated value	$ 0.001	$ 0.001
Common Stock, shares authorized	500,000,000	500,000,000
Common Stock, shares issued	1,869,000	1,869,000
Common Stock, shares outstanding	1,869,000	1,869,000
Preferred Stock, par or stated value	$ 0.001	$ 0.001
Preferred Stock, shares authorized	10,000,000	10,000,000
Preferred Stock, shares issued	0	0
Preferred Stock, shares outstanding	0	0

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Note 4. Notes Payable, Stockholders: Schedule of Notes Payable, Stockholders (Tables)

9 Months Ended

Sep. 30, 2014

Tables/Schedules

Schedule of Notes Payable, Stockholders

At September 30, 2014, notes payable stockholders consist of the following:
Note payable to an individual, bearing interest at 5% per annum;
unsecured, interest due annually and principal due February 9, 2017	$290,960
Note payable to an individual bearing interest at 5% per annum;
unsecured, interest due annually and principal due April 6, 2017	10,000
Note payable to an individual, bearing interest at 7% per annum:
unsecured, interest due quarterly and principal due January 1, 2020.	190,000
	$490,960

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Document and Entity Information	9 Months Ended
	Sep. 30, 2014	Nov. 12, 2014
Document and Entity Information:
Entity Registrant Name	REO PLUS, INC.
Document Type	10-Q
Document Period End Date	Sep. 30, 2014
Amendment Flag	false
Entity Central Index Key	0001494582
Current Fiscal Year End Date	--12-31
Entity Common Stock, Shares Outstanding		1,869,000
Entity Filer Category	Smaller Reporting Company
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Well-known Seasoned Issuer	No
Document Fiscal Year Focus	2014
Document Fiscal Period Focus	Q3

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Note 2. Long-term Debt (Ananda): Schedule of Maturities of Long-term Debt (Tables)

9 Months Ended

Sep. 30, 2014

Tables/Schedules

Schedule of Maturities of Long-term Debt

On September 30, 2014, long-term debt is as follows:
Note payable	$387,464
Less current portion	(19,877)
Long-term debt	$367,587

Maturities of long-term debt are as follows:
2015	$19,877
2016	20,738
2017	21,905
2018	23,138
2019	24,441
Thereafter	277,365
	$387,464

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Statements of Operations (Unaudited) (USD $)	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Revenues:
Consulting fees	$ 11,583	$ 9,773	$ 23,549	$ 9,773
Costs and Expenses:
Professional fees	14,892	10,270	53,978	59,840
General and administrative	0	143	0	143
Net (Loss) Income from Operations	(3,309)	(640)	(30,429)	(50,210)
Other Income (Expense):
Equity in (loss) income of unconsolidated affiliate	(4,626)	(4,183)	(15,282)	(185)
Interest	(7,118)	(6,754)	(20,878)	(19,126)
Net (Loss) Income before Income Tax	(15,053)	(11,577)	(66,589)	(69,521)
Income Tax (Provision) Benefit
Net (Loss) Income	$ (15,053)	$ (11,577)	$ (66,589)	$ (69,521)
Basic Net (Loss) Income per Share	$ (0.01)	$ (0.01)	$ (0.04)	$ (0.04)
Diluted (Loss) Income per Share	$ (0.01)	$ (0.01)	$ (0.04)	$ (0.04)
Basic and Diluted Weighted Average Shares Outstanding	1,869,000	1,869,000	1,869,000	1,869,000

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Note 4. Notes Payable, Stockholders

9 Months Ended

Sep. 30, 2014

Notes

Note 4. Notes Payable, Stockholders

NOTE 4.                      NOTES PAYABLE, STOCKHOLDERS

At September 30, 2014, notes payable stockholders consist of the following:
Note payable to an individual, bearing interest at 5% per annum;
unsecured, interest due annually and principal due February 9, 2017	$290,960
Note payable to an individual bearing interest at 5% per annum;
unsecured, interest due annually and principal due April 6, 2017	10,000
Note payable to an individual, bearing interest at 7% per annum:
unsecured, interest due quarterly and principal due January 1, 2020.	190,000
	$490,960

In connection with the Company’s acquisition of its investment in Ananda, the Company executed a note payable to a majority stockholder in the amount of $190,000 with interest accruing at 7% per annum commencing on the first day of the fourth month after Ananda obtained an occupancy permit for the property it owns in Houston, Texas.

The permit was obtained on April 1, 2010, therefore the note of $190,000 began accruing interest on July 1, 2010.

Such stockholder owns a 95% interest in the Company through his 50% ownership of REO and 90% ownership of the other 50% corporate stockholder of REO.

On February 10, 2014, the Company received $30,000 in proceeds from a note due to its majority shareholder.  On the same date, the majority shareholder consolidated all of the notes payable to him into one promissory note.  The principal balance due to the majority shareholder upon consolidation is $290,960.  The note bears interest at 5% per annum and is due February 9, 2017.  Accrued interest on the notes of $5,541 was paid at the time of consolidation.

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Note 3. Investment in Affiliate

9 Months Ended

Sep. 30, 2014

Notes

Note 3. Investment in Affiliate

NOTE 3.                      INVESTMENT IN AFFILIATE

On January 2, 2010 the Company acquired a 40% interest in Ananda, a Texas limited liability company, which owns a commercial real estate rental property in Houston, Texas.  This acquisition was accomplished by the issuance of 934,500 shares of the Company’s common stock valued at $27,500 and the issuance of a promissory note in the amount of $190,000. The investment was acquired from a controlling shareholder and recorded at the controlling shareholder’s cost basis with a resulting “deemed” dividend.  The transaction was treated as a transfer between entities under common control as follows:

Issuance of common stock	$27,500
Issuance of promissory note	190,000
	217,500
Deemed dividend	(176,700)
Purchase price of investment in affiliate	$40,800

Summary financial results of Ananda for the three months and nine months ended September 30, 2014 and 2013 are as follows:

Operations
	Three Months Ended		Nine Months Ended
	September 30,		September 30,
	2014	2013	2014	2013
Rental income	$11,700	$6,653	$24,900	$56,135
Operating expenses	(17,810)	(11,458)	(46,677)	(38,090)
Other income (expense)	(5,455)	(5,653)	(16,428)	(18,508)
Net (loss) income	$(11,565)	$(10,458)	$(38,205)	$(463)
Equity in (loss) income  of
unconsolidated affiliate	$(4,626)	$(4,183)	$(15,282)	$(185)

Summary financial position for Ananda as of September 30, 2014 and December 31, 2013 follows:
Financial Position
	September 30,	December 31,
	2014	2013
Cash	$71,438	$96,009
Other current assets	3,349	1,644
Land, buildings and improvements	447,931	467,355
Other assets	7,646	8,063
Total Assets	$530,364	$573,071
Deposits, accrued expenses, and deferred income	$23,436	$14,149
Mortgage payable	387,464	401,253
Total Liabilities	410,900	415,402
Members' equity	277,845	277,845
Accumulated deficit	(158,381)	(120,176)
Total Equity	119,464	157,669
Total Liabilities and Equity	$530,364	$573,071
Investment in unconsolidated affiliate	$47,786	$63,068

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Note 3. Investment in Affiliate: Schedule of Segment Reporting Information, by Segment (Details) (USD $)	3 Months Ended		9 Months Ended					3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013	Dec. 31, 2013	Dec. 31, 2012	Jan. 02, 2010	Sep. 30, 2014 Reportable Segment (Ananda)	Sep. 30, 2013 Reportable Segment (Ananda)	Sep. 30, 2014 Reportable Segment (Ananda)	Sep. 30, 2013 Reportable Segment (Ananda)	Jun. 30, 2014 Reportable Segment (Ananda)	Dec. 31, 2013 Reportable Segment (Ananda)	Jun. 30, 2013 Reportable Segment (Ananda)	Dec. 31, 2012 Reportable Segment (Ananda)
Rental income								$ 11,700	$ 6,653	$ 24,900	$ 56,135
Operating expenses								(17,810)	(11,458)	(46,677)	(38,090)
Other income (expense)								(5,455)	(5,653)	(16,428)	(18,508)
Net (loss) income	(15,053)	(11,577)	(66,589)	(69,521)				(11,565)	(10,458)	(38,205)	(463)
Equity in (loss) income of unconsolidated affiliate	(4,626)	(4,183)	(15,282)	(185)				(4,626)	(4,183)	(15,282)	(185)
Cash	347	11,613	347	11,613	27,812	6,315		71,438		71,438			96,009
Other current assets								3,349		3,349			1,644
Land, buildings and improvements								447,931		447,931			467,355
Other assets								7,646		7,646			8,063
Total Assets	48,133		48,133		93,880			530,364		530,364			573,071
Deposits, accrued expenses, and deferred income								23,436		23,436			14,149
Mortgage payable								387,464		387,464			401,253
Total Liabilities								410,900		410,900			415,402
Members' equity								277,845		277,845			277,845
Accumulated deficit	(522,190)		(522,190)		(455,601)			(158,381)		(158,381)			(120,176)
Total Equity								119,464	166,842	119,464	166,842	131,029	157,669	177,300	167,305
Total Liabilities and Equity	48,133		48,133		93,880			530,364		530,364			573,071
Investment in unconsolidated affiliate	$ 47,786		$ 47,786		$ 63,068		$ 40,800	$ 47,786		$ 47,786			$ 63,068

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Note 1. Organization and Background (Details) (Reportable Segment (Ananda))	Jan. 02, 2010
Reportable Segment (Ananda)
Business Acquisition, Percentage of Voting Interests Acquired	40.00%

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Note 3. Investment in Affiliate: Schedule of Investments in and Advances to Affiliates, Schedule of Investments (Tables)

9 Months Ended

Sep. 30, 2014

Tables/Schedules

Schedule of Investments in and Advances to Affiliates, Schedule of Investments

Issuance of common stock	$27,500
Issuance of promissory note	190,000
	217,500
Deemed dividend	(176,700)
Purchase price of investment in affiliate	$40,800

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Note 1. Organization and Background (Ananda)

9 Months Ended

Sep. 30, 2014

Notes

Note 1. Organization and Background (Ananda)

NOTE 1.                      ORGANIZATION AND BACKGROUND

Ananda Investments, LLC (“the Company”) was organized in Texas on March 26, 2004 for the purpose of investing in real estate.  The Company owns and operates a building located in Houston, Texas.

The accompanying unaudited interim financial statements of Ananda Investments, LLC have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission, and should be read in conjunction with the audited financial statements and notes thereto for the years ended December 31, 2013 and 2012 contained in the Company’s Form 10-K filed with the Securities and Exchange Commission on March 31, 2014.  In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim periods presented have been reflected herein.  The results of operations for the interim periods are not necessarily indicative of the results to be expected for the full year.  Notes to the interim financial statements which would substantially duplicate the disclosure contained in the audited financial statements for years ended December 31, 2013 and 2012 as reported in the Company’s Form 10-K have been omitted.

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Note 2. Long-term Debt (Ananda)

9 Months Ended

Sep. 30, 2014

Notes

Note 2. Long-term Debt (Ananda)

NOTE 2.                      LONG-TERM DEBT

As of September 30, 2014 long-term debt consists of an installment note payable to a bank, bearing interest at 5.49% per annum, secured by a first lien deed of trust on the land and building located in Houston, Texas and assignment of rents and leases related thereto.  The note is payable in monthly installments of $3,367 and matures during June 2028.

On September 30, 2014, long-term debt is as follows:
Note payable	$387,464
Less current portion	(19,877)
Long-term debt	$367,587

Maturities of long-term debt are as follows:
2015	$19,877
2016	20,738
2017	21,905
2018	23,138
2019	24,441
Thereafter	277,365
	$387,464

Total interest for the nine months ended September 30, 2014 and 2013 was $16,511 and $18,616, respectively.

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Note 3. Investment in Affiliate: Schedule of Segment Reporting Information, by Segment (Tables)

9 Months Ended

Sep. 30, 2014

Tables/Schedules

Schedule of Segment Reporting Information, by Segment

Summary financial results of Ananda for the three months and nine months ended September 30, 2014 and 2013 are as follows:

Operations
	Three Months Ended		Nine Months Ended
	September 30,		September 30,
	2014	2013	2014	2013
Rental income	$11,700	$6,653	$24,900	$56,135
Operating expenses	(17,810)	(11,458)	(46,677)	(38,090)
Other income (expense)	(5,455)	(5,653)	(16,428)	(18,508)
Net (loss) income	$(11,565)	$(10,458)	$(38,205)	$(463)
Equity in (loss) income  of
unconsolidated affiliate	$(4,626)	$(4,183)	$(15,282)	$(185)

Summary financial position for Ananda as of September 30, 2014 and December 31, 2013 follows:
Financial Position
	September 30,	December 31,
	2014	2013
Cash	$71,438	$96,009
Other current assets	3,349	1,644
Land, buildings and improvements	447,931	467,355
Other assets	7,646	8,063
Total Assets	$530,364	$573,071
Deposits, accrued expenses, and deferred income	$23,436	$14,149
Mortgage payable	387,464	401,253
Total Liabilities	410,900	415,402
Members' equity	277,845	277,845
Accumulated deficit	(158,381)	(120,176)
Total Equity	119,464	157,669
Total Liabilities and Equity	$530,364	$573,071
Investment in unconsolidated affiliate	$47,786	$63,068

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Note 3. Investment in Affiliate (Details) (USD $)		3 Months Ended
	Jan. 02, 2010	Mar. 31, 2010 Common Stock	Jan. 02, 2010 Reportable Segment (Ananda)
Business Acquisition, Percentage of Voting Interests Acquired			40.00%
Business Acquisition, Equity Interest Issued, Number of Shares		934,500
Issuance of common stock	$ 27,500
Long-term Debt, Gross	$ 190,000

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Note 1. Organization and Background (Ananda) (Details) (Ananda Investments, LLC)	9 Months Ended
	Sep. 30, 2014
Ananda Investments, LLC
Entity Incorporation, Date of Incorporation	Mar. 26, 2004

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Statements of Cash Flows (Unaudited) (USD $)	9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013
Cash Flows from Operating Activities:
Net (Loss) Income	$ (66,589)	$ (69,521)
Adjustments to reconcile net (loss) income to cash used by operating activities:
Equity in (income) loss of unconsolidated affiliate	15,282	185
Decrease (Increase) in trade receivables	0	(9,773)
Decrease (Increase) in prepaid expenses	3,000	2,375
Increase (Decrease) in accounts payable and accrued expenses	1,792	(10,125)
(Decrease) Increase in accrued interest, stockholders	(950)	2,157
Net Cash (Used) Provided by Operating Activities	(47,465)	(84,702)
Cash Flows from Financing Activities:
Proceeds from notes payable to stockholders	40,000	90,000
Payments of notes payable to stockholders	(20,000)	0
Net Cash Provided by Financing Activities	20,000	90,000
Net Increase (Decrease) in Cash	(27,465)	5,298
Cash, Beginning of Period	27,812	6,315
Cash, End of Period	347	11,613
Interest Paid	21,828	16,969
Income Taxes Paid

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Note 2. Going Concern

9 Months Ended

Sep. 30, 2014

Notes

Note 2. Going Concern

NOTE 2.                      GOING CONCERN

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern.  As shown in the accompanying financial statements, the Company has an accumulated deficit of $522,190 since its inception and has not yet produced earnings from operations.  These factors raise substantial doubt about the Company’s ability to continue as a going concern.

The financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts and classification of liabilities that might be necessary in the event that the Company cannot continue as a going concern.  Management anticipates that it will be able to raise additional working capital through the issuance of stock through a private equity offering.

The ability of the Company to continue as a going concern is dependent upon the Company’s ability to attain a satisfactory level of profitability and obtain suitable and adequate financing.  There can be no assurance that management’s plan will be successful.

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Note 2. Long-term Debt (Ananda) (Details) (Reportable Segment (Ananda), USD $)	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Interest expense	$ 5,478	$ 5,691	$ 16,511	$ 18,616
Notes Payable to Banks
Debt Instrument, Interest Rate, Stated Percentage	5.49%		5.49%
Debt Instrument, Periodic Payment			$ 3,367

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Note 2. Going Concern (Details) (USD $)	Sep. 30, 2014	Dec. 31, 2013
Details
Accumulated deficit	$ (522,190)	$ (455,601)