----

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| UTAH                                                                | 87-0397815                             |
|---------------------------------------------------------------------|----------------------------------------|
| (State      or other jurisdiction of incorporation or organization) | (IRS      Employer Identification No.) |

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| ASSETS                                                                                |   |          |   |   |              |   |
|---------------------------------------------------------------------------------------|--------|---------------|--------|--------|-------------------|--------|
|                                                                                  |   | As      of    |   |   | As      of        |   |
|                                                                                  |   | June      30, |   |   | December      31, |   |
|                                                                                  |   | 2008          |   |   | 2007              |   |
|                                                                                  |   | (Unaudited)   |   |   | (audited)         |   |
|                                                                                  |   |          |   |   |              |   |
| CURRENT      ASSETS:                                                                  |   |          |   |   |              |   |
|      Cash      & cash equivalents                        |   | $             | 5,075  |   |              | $      | 2,706 |   |
|      Prepaid      expenses and other                         |   |          | 200    |   |              |   | 200 |   |
|           Total      current assets |   |          | 5,275  |   |              |   | 2,906 |   |
|                                                                                  |   |          |   |   |              |   |   |   |
| EQUIPMENT      AND FURNITURE, at cost,                                                |   |          |   |   |              |   |   |   |
|   less      accumulated depreciation of                                     |   |          |   |   |              |   |   |   |
|   $255,039 and $254,856      respectively                              |   |          | 183    |   |              |   | 365 |   |
|                                                                                  |   |          |   |   |              |   |   |   |
|           Total      assets         |   | $             | 5,458  |   |              | $      | 3,271 |   |

----

| LIABILITIES AND STOCKHOLDERS'      EQUITY                                                                        |   |          |       |   |              |   |
|------------------------------------------------------------------------------------------------------------------|--------|---------------|------------|--------|-------------------|--------|
|                                                                                                             |   | As      of    |       |   | As      of        |   |
|                                                                                                             |   | June      30, |       |   | December      31, |   |
|                                                                                                             |   | 2008          |       |   | 2007              |   |
|                                                                                                             |   | (Unaudited)   |       |   | (Unaudited)       |   |
|                                                                                                             |   |          |       |   |              |   |
| CURRENT      LIABILITIES:                                                                                        |   |          |       |   |              |   |
|      Related      party consulting fees payable                                         |   | $             | 90,000     |   |              | $      | 78,000 |   |
|      Accounts      payable                                                              |   |          | 35,975     |   |              |   | 5,503 |   |
|           Accrued      payroll                                                               |   |          | 24,000     |   |              |   | - |   |
|      Accrued      interest                                                              |   |          | 25,009     |   |              |   | 16,495 |   |
|      Related      party royalty payable                                                 |   |          | 93,333     |   |              |   | 73,333 |   |
|      Preferred      stock dividend payable                                              |   |          | 52,960     |   |              |   | 49,177 |   |
|      Current      portion of long term debt                                             |   |          | 140,000    |   |              |   | 60,617 |   |
|                                                                                                             |   |          |       |   |              |   |   |   |
|           Total      current liabilities                       |   |          | 461,277    |   |              |   | 283,125 |   |
|                                                                                                             |   |          |       |   |              |   |   |   |
| LONG      TERM LIABILITIES                                                                                       |   |          |       |   |              |   |   |   |
|      Long      term convertible promissory note                                         |   |          | 87,633     |   |              |   | 140,000 |   |
|                                                                                                             |   |          |       |   |              |   |   |   |
|           TOTAL      LIABILITIES                               |   |          | 548,910    |   |              |   | 423,125 |   |
|                                                                                                             |   |          |       |   |              |   |   |   |
| MINORITY      INTEREST                                                                                           |   |          | (243,645   | )      |              |   | (191,668 | ) |
|                                                                                                             |   |          |       |   |              |   |   |   |
| STOCKHOLDERS'      EQUITY:                                                                                       |   |          |       |   |              |   |   |   |
|      Preferred      stock, 10,000,000                                                   |   |          |       |   |              |   |   |   |
|        shares      authorized;  Series A                            |   |          |       |   |              |   |   |   |
|        preferred      stock, cumulative and                                   |   |          |       |   |              |   |   |   |
|        convertible,      $4.50 par value,                                     |   |          |       |   |              |   |   |   |
|        1,000,000      shares designated,                                      |   |          |       |   |              |   |   |   |
|        21,016      shares issued and                                          |   |          |       |   |              |   |   |   |
|        Outstanding                                                            |   |          | 94,573     |   |              |   | 94,573 |   |
|      Common      stock, $.001 par value;                                                |   |          |       |   |              |   |   |   |
|        40,000,000      shares authorized,                                     |   |          |       |   |              |   |   |   |
|        18,629,493      issued and outstanding                                 |   |          | 18,629     |   |              |   | 18,629 |   |
|        Additional      paid-in capital                                        |   |          | 8,426,839  |   |              |   | 8,426,839 |   |
|        Accumulated      deficit                                               |   |          | (8,839,848 | )      |              |   | (8,768,227 | ) |
|                                                                                                             |   |          |       |   |              |   |   |   |
|           Total      stockholders equity                       |   |          | (299,807   | )      |              |   | (228,186 | ) |
|                                                                                                             |   |          |       |   |              |   |   |   |
|           Total      liabilities and stockholders'      equity |   | $             | 5,458      |   |              | $      | 3,271 |   |

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|                                                          |   | For      the Three |       |   | For      the Six  |   |
|---------------------------------------------------------------|--------|--------------------|------------|--------|-------------------|--------|
|                                                          |   | Months      Ended  |       |   | Months      Ended |   |
|                                                          |   | June 30,           |       |   | June 30,          |   |
|                                                          |   | 2008               |       |   | 2007              |   |   | 2008 |   |   | 2007 |   |
|                                                          |   | (Unaudited)        |       |   | (Unaudited)       |   |
|                                                          |   |               |       |   |              |   |   |   |   |   |   |   |
| TOTAL      ROYALTY REVENUES                                   |   | $                  | -          |   |              | $      | - |   |   | $ | - |   |   | $ | - |   |
|                                                          |   |               |       |   |              |   |   |   |   |   |   |   |   |   |   |   |
| OPERATING      EXPENSES:                                      |   |               |       |   |              |   |   |   |   |   |   |   |   |   |   |   |
|   General      and administrative                   |   |               | 52,330     |   |              |   | 34,481 |   |   |   | 111,303 |   |   |   | 87,368 |   |
|   Research      and development                     |   |               | -          |   |              |   | - |   |   |   | - |   |   |   | -  |   |
|                                                          |   |               |       |   |              |   |   |   |   |   |   |   |   |   |   |   |
|   Total      operating expenses                     |   |               | 52,330     |   |              |   | 34,481 |   |   |   | 111,303 |   |   |   | 87,368 |   |
|                                                          |   |               |       |   |              |   |   |   |   |   |   |   |   |   |   |   |
|                                                          |   |               |       |   |              |   |   |   |   |   |   |   |   |   |   |   |
| LOSS      FROM OPERATIONS                                     |   |               | (52,330    | )      |              |   | (34,481 | ) |   |   | (111,303 | ) |   |   | (87,368 | ) |
|                                                          |   |               |       |   |              |   |   |   |   |   |   |   |   |   |   |   |
| OTHER      EXPENSE:                                           |   |               |       |   |              |   |   |   |   |   |   |   |   |   |   |   |
|   other      expense, net                           |   |               | (4,647     | )      |              |   | (3,159 | ) |   |   | (8,514 | ) |   |   | (5,873 | ) |
|                                                          |   |               |       |   |              |   |   |   |   |   |   |   |   |   |   |   |
|   Total      other expense, net                     |   |               | (4,647     | )      |              |   | (3,159 | ) |   |   | (8,514 | ) |   |   | (5,873 | ) |
|                                                          |   |               |       |   |              |   |   |   |   |   |   |   |   |   |   |   |
|                                                          |   |               |       |   |              |   |   |   |   |   |   |   |   |   |   |   |
| LOSS      BEFORE MINORITY INTEREST                            |   |               | (56,977    | )      |              |   | (37,640 | ) |   |   | (119,817 | ) |   |   | (93,241 | ) |
|                                                          |   |               |       |   |              |   |   |   |   |   |   |   |   |   |   |   |
| MINORITY      INTEREST                                        |   |               | 26,476     |   |              |   | 25,073 |   |   |   | 51,034 |   |   |   | 48,921 |   |
|                                                          |   |               |       |   |              |   |   |   |   |   |   |   |   |   |   |   |
| NET      LOSS                                                 |   |               | (30,501    | )      |              |   | (12,567 | ) |   |   | (68,783 | ) |   |   | (44,320 | ) |
|                                                          |   |               |       |   |              |   |   |   |   |   |   |   |   |   |   |   |
| PREFERRED      STOCK DIVIDENDS                                |   |               | (1,891     | )      |              |   | (1,891 | ) |   |   | (3,783 | ) |   |   | (3,783 | ) |
|                                                          |   |               |       |   |              |   |   |   |   |   |   |   |   |   |   |   |
| NET      LOSS APPLICABLE TO COMMON STOCKHOLDERS               |   |               | (32,392    | )      |              |   | (14,458 | ) |   |   | (72,566 | ) |   |   | (48,103 | ) |
|                                                          |   |               |       |   |              |   |   |   |   |   |   |   |   |   |   |   |
| NET      LOSS PER COMMON SHARE (BASIC AND DILUTED)            |   | $                  | -          |   |              | $      | - |   |   | $ | - |   |   | $ | - |   |
|                                                          |   |               |       |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Weighed      average number of common shares outstanding |   |               | 18,629,493 |   |              |   | 18,629,493 |   |   |   | 18,629,493 |   |   |   | 18,629,493 |   |
|                                                          |   |               |       |   |              |   |   |   |   |   |   |   |   |   |   |   |

----

|                                                                                                                                           |   | For      the Six  |    |
|------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------|---------|
|                                                                                                                                           |   | Months      Ended |    |
|                                                                                                                                           |   | June      30,     |    |
|                                                                                                                                           |   | 2008              |    |   | 2007 |   |
|                                                                                                                                           |   | (Unaudited)       |    |
|      CASH      FLOWS FROM OPERATING ACTIVITIES:                                                                       |   |              |    |   |   |   |
|                                                                                                                                           |   |              |    |   |   |   |
|        Net      loss                                                                                        |   | $                 | (68,783 | ) |   | $ | (      44,320 | ) |
|        Adjustments      to reconcile net loss to                                                            |   |              |    |   |   |   |   |   |
|         net      cash used in operating activities-                                                    |   |              |    |   |   |   |   |   |
|            Depreciation      and amortization                                           |   |              | 182     |   |   |   | 246 |   |
|            Minority      interest in losses                                             |   |              | (51,034 | ) |   |   | (48,921 | ) |
|            Change      in assets and liabilities                                        |   |              |    |   |   |   |   |   |
|              Account      receivable                                          |   |              | -0-     |   |   |   | (90 | ) |
|              Consulting      fee payable to related party                     |   |              | 12,000  |   |   |   | 12,000 |   |
|              Royalty      payable to Related party                            |   |              | 20,000  |   |   |   | 20,000 |   |
|              Accounts      payable                                            |   |              | 30,474  |   |   |   | -0- |   |
|              Accrued      interest payable                                    |   |              | 8,514   |   |   |   | 5,873 |   |
|              Accrued      payroll and related taxes                           |   |              | 24,000  |   |   |   | -0- |   |
|                                                                                                                                           |   |              |    |   |   |   |   |   |
|                 Net      cash used in operating activities     |   |              | (24,647 | ) |   |   | (55,212 | ) |
|                                                                                                                                           |   |              |    |   |   |   |   |   |
|      CASH      FLOWS FROM INVESTING ACTIVITIES:                                                                       |   |              |    |   |   |   |   |   |
|        Proceeds      from note receivable                                                                   |   |              | -0-     |   |   |   | -0- |   |
|                                                                                                                                           |   |              |    |   |   |   |   |   |
|                 Net      cash provided by investing activities |   |              | -0-     |   |   |   | -0- |   |
|                                                                                                                                           |   |              |    |   |   |   |   |   |
|      CASH      FLOWS FROM FINANCING ACTIVITIES:                                                                       |   |              |    |   |   |   |   |   |
|        Proceeds      from notes payable                                                                     |   |              | 27,016  |   |   |   | 26,498 |   |
|        Payments      on notes payable                                                                       |   |              | -0-     |   |   |   | -0- |   |
|                                                                                                                                           |   |              |    |   |   |   |   |   |
|                 Net      cash provided by financing activities |   |              | 27,016  |   |   |   | 26,498 |   |

----

|                                                   |   | For      the Six  |   |
|--------------------------------------------------------|--------|-------------------|--------|
|                                                   |   | Months      Ended |   |
|                                                   |   | June      30,     |   |
|                                                   |   | 2008              |   |   | 2007 |   |
|                                                   |   | (Unaudited)       |   |
|                                                   |   |              |   |   |   |   |
|    NET      INCREASE (DECREASE) IN CASH |   |              | 2,369  |   |   |   | (28,714 | ) |
|                                                   |   |              |   |   |   |   |   |   |
|    CASH      AT BEGINNING OF PERIOD     |   |              | 2,706  |   |   |   | 34,079 |   |
|                                                   |   |              |   |   |   |   |   |   |
|    CASH      AT END OF PERIOD           |   | $                 | 5,075  |   |   | $ | 5,365 |   |

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| 1. | Basis      of Presentation |
|----|----------------------------|

| 2. | Summary      of Significant Accounting Policies |
|----|-------------------------------------------------|

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| (31.1) | Sarbanes-Oxley      Section 302 Certification – Ralph Henson |
|--------|--------------------------------------------------------------------|
| (31.2) | Sarbanes-      Oxley Section 302 Certification- Richad Bruggeman   |
| (32.1) | Sarbanes-Oxley      Section 906 Certification                      |

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----

| EXHIBIT      NUMBER | DESCRIPTION                                          |
|---------------------|------------------------------------------------------|
|                |                                                 |
| 31.1                | Section      302 Certifications of Ralph Henson      |
| 31.2                | Section      302 Certifications of Richard Bruggeman |
| 32.2                | Sarbanes-Oxley      Section 906 Certification        |

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