UNITED STATES
 SECURITIES AND EXCHANGE COMMISSION
 Washington, DC 20549










FORM 10-Q







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





For the quarterly period ended July 31, 2009





Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12 b - 2 of the Exchange Act)   Yes oNox





Commission File Number 000-50560







UPSNAP, INC.


(Exact name of Registrant as specified in its charter)







Nevada
20-0118697(State or other jurisdiction of incorporation or organization)
(IRS Employer Identification No.)





c/o Duratech Group Inc.


2920 9th Avenue North


Lethbridge, Alberta, Canada T1H 5E4


(Address of principal executive offices)





(403) 320-1778


(Registrant's telephone number)










Check whether the registrant (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities 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.    Yesx 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 definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act:





Large Accelerated Filer o   Accelerated Filer o   Non-accelerated Filer o   Smaller Reporting Company x





Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act):    Yes o   No x





State the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date: July 31, 2009, 78,379,167 shares.















UPSNAP, INC.
  Form 10-Q for the period ended July 31, 2009
  TABLE OF CONTENTS
  PagePART I - FINANCIAL INFORMATIONITEM 1 - FINANCIAL STATEMENTSConsolidated Balance Sheets as of July 31, 2009 (Unaudited) and January 31, 2009 (Audited)
3Consolidated Statement of Operations for the three-months ended July 31, 2009 and 2008 (Unaudited)
4Consolidated Statement of Operations for the six-months ended July 31, 2009 and 2008 (Unaudited)
5Notes to Financial Statements
6-17ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
18ITEM 3 - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
21ITEM 4 (A) - CONTROLS AND PROCEDURES
21ITEM 4 (A)T – INTERNAL CONTROL OVER FINANCIAL REPORTING
22PART II - OTHER INFORMATIONITEM 1 - LEGAL PROCEEDINGS
22ITEM 2 - UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
22ITEM 3 - DEFAULTS UPON SENIOR SECURITIES
23ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
23ITEM 5 - OTHER INFORMATION
23ITEM 6 - EXHIBITS
24SIGNATURES
25




2
 Table of Contents




PART I – FINANCIAL INFORMATION





ITEM 1.  FINANCIAL STATEMENTS








UpSnap, Inc. F/K/A Duratech Group Inc.Consolidated Balance SheetAs of


As ofJuly 31, 2009


January 31, 2009ASSETSCURRENT ASSETSCash and Cash Equivalents

$
-


$
-Accounts Receivable


970,326



812,355Other Receivables (Deposits/Holdback)


114,905



117,973Inventory


2,236,958



1,947,581TOTAL CURRENT ASSETS


3,322,189



3,542,131OTHER ASSETS


388,221



365,934PROPERTY, PLANT, AND EQUIPMENT, NET


2,315,286



638,305TOTAL ASSETS

$
6,025,696


$
3,882,148LIABILITIES AND STOCKHOLDERS' EQUITY/(DEFICIT)LIABILITIESCURRENT LIABILITIES:Bank Overdraft

$
263,426


$
319,263Notes Payable, current


2,086,317



2,136,664Shareholder Notes Payable, current


129,364



70,308Accounts Payable and Accrued Liabilities


1,042,636



961,195Customer Deposits


1,663,574



273,289TOTAL LIABILITIES


5,185,317



3,760,719STOCKHOLDERS' EQUITY/(DEFICIT)Common Stock ($.001 par value, 97,500,000 authorized;
78,379,167 issued and outstanding)


78,379



75,225Paid in Capital


3,317,842



1,403,688Retained Earnings/(Accumulated Deficit)


(2,555,842
)


(1,357,484
)TOTAL STOCKHOLDERS' EQUITY/(DEFICIT)


840,379



121,429TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY/(DEFICIT)

$
6,025,696


$
3,882,148





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




3
 Table of Contents




UpSnap, Inc. F/K/A Duratech Group Inc.Consolidated Statement of OperationsFor the three months
ended July 31,2009


2008SALES AND COST OF SALESSales

$
1,030,429


$
661,050Cost of Sales


739,176



508,437Gross Profit


291,253



152,613EXPENSESSelling, general and administrative


276,029



222,439Payroll Expense


252,534



509,386Bad Debt Expense


-



-Depreciation


43,907



-TOTAL EXPENSES


572,470



731,825Net Income/(Loss) from Operations


(281,217
)


(579,212
)OTHER INCOME/(EXPENSE)Other Income


491



998Interest Expense


(104,395
)


(49,082
)Interest Income


-



-NET OTHER INCOME/(EXPENSE)


(103,904
)


(48,084
)NET INCOME/(LOSS) FROM CONTINUED OPERATIONS


(385,121
)


(627,296
)OTHER COMPREHENSIVE INCOME (LOSS)Foreign Currency Translation Gain/(Loss)


(19,307
)


5,852COMPREHENSIVE INCOME (LOSS)


(404,428
)


(621,444
)





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




4
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UpSnap, Inc. F/K/A Duratech Group Inc.Consolidated Statement of OperationsFor the six months
ended July 31,2009


2008SALES AND COST OF SALESSales

$
1,859,144


$
2,176,567Cost of Sales


1,567,068



1,592,225Gross Profit


292,076



584,342EXPENSESSelling, general and administrative


490,836



387,155Payroll Expense


501,645



720,614Bad Debt Expense


-



-Depreciation


73,058



-TOTAL EXPENSES


1,065,539



1,107,769Net Income/(Loss) from Operations


(773,463
)


(523,427
)OTHER INCOME/(EXPENSE)Other Income


484



999Interest Expense


(192,655
)


(88,951
)Interest Income


-



-NET OTHER INCOME/(EXPENSE)


(192,171
)


(87,952
)NET INCOME/(LOSS) FROM CONTINUED OPERATIONS


(965,634
)


(611,379
)OTHER COMPREHENSIVE INCOME (LOSS)Foreign Currency Translation Gain/(Loss)


(39,818
)


5,887COMPREHENSIVE INCOME (LOSS)


(1,005,452
)


(605,492
)





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




5
 Table of Contents





UPSNAP, INC. F/K/A Duratech Group Inc.


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


FOR THE THREE AND SIX MONTHS ENDED JULY 31, 2009 AND 2008


(Unaudited)







NOTE A—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES





Organization and Nature of Business—UpSnap, Inc. (“UpSnap” or “the Company”) was incorporated on July 24, 2003 under the laws of the State of Nevada.  The Company was a Development Stage Company, as defined by the
Statement of Financial Accounting Standard (“SFAS”) No. 7 “Accounting and Reporting by Development Stage Enterprises”.





On August 29, 2008, UpSnap Inc. (the “Company”) entered into a Share Exchange Agreement (the “Share Exchange Agreement”) by and among the Company; Tony Philipp, an officer, director and shareholder of the Company (“Philipp”); Duratech Group Inc., an Alberta, Canada corporation (“Duratech”)
and the shareholders of Duratech (“Duratech Shareholders”), including Peter van Hierden, a citizen of Alberta, Canada and owner directly or indirectly of approximately 96% of the share capital of Duratech (“van Hierden”).





Upon closing of the share exchange transaction (the “Share Exchange”) on September 17, 2008, the Duratech Shareholders transferred all of their shares of common stock in Duratech to the Company in exchange for an agreement to issue to them an aggregate of 50,349,342 shares of Common Stock of the Company, resulting in Duratech
becoming a majority owned subsidiary of the Company.





After the consummation of the transactions contemplated by the Share Exchange Agreement, the Company, on the day after the Closing Date, consummated the sale of its assets related to its mobile information search services, subject to assumption and payment of all of the Company’s liabilities related to periods prior to the closing,
to UpSnap Services, LLC, a North Carolina limited liability corporation (“UpSnap Services”), which is owned by Philipp, pursuant to an Asset Purchase Agreement dated as of August 29, 2008 (the “Asset Purchase Agreement”). As part of the reverse merger, the Company will cease engaging in the mobile information search services business.





UpSnap, Inc.’s principal operations following the reverse-merger are conducted through Duratech Group Inc. (previously named Duratech Contracting Inc.)  Duratech commenced operations on December 18, 2002 as a small homebuilding company constructing about 5 homes a year until Peter van Hierden (“van Hierden”)
bought out the majority partners and took control of the operations in July, 2007.  Shortly thereafter, Mr. van Hierden identified a synergistic opportunity to acquire a modular oil camp factory which was also in distress and acquired the company in July, 2007.  Since that time management has been able to turn both these operations around and now seeks to grow the company organically and through additional acquisitions.





Duratech’s principle operations are building manufactured and stick-built homes and modular oil camps in Alberta and Saskatchewan, Canada which have historically experienced very rapid growth primarily because of commodities such as oil, uranium and diverse mining.





Duratech manufactures and builds homes and modular sites for its marketplace, principally Alberta and Saskatchewan.  The Company has three principal products that it offers: First, the company builds on-site conventional homes; Second, the company builds ready-to-move (RTM) homes in factories and brings them on foundations to
sell to end users; and Third, the company builds modular camp sites for the oil mining industry.





On July 1, 2007, Duratech Contracting Inc. acquired Duratech Structures Inc. (Previously known as Jobsite Structures). On July 28, 2008, Duratech Contracting Inc. changed its name to become Duratech Group Inc.





Cash and Cash Equivalents—For purposes of the Consolidated Statement of Cash Flows, the Company considers liquid investments with an original maturity of three months or less to be cash equivalents.





Management’s Use of Estimates—The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of consolidated financial statements and the reported amounts of revenues and expenses during the reporting period.  Actual results could differ from those estimates.





Presentation and Foreign Currency Translation—These consolidated financial statement have been prepared in accordance with US generally accepted accounting principles (GAAP) and translated into U.S dollars. The prevailing exchange rate used to translate
the Canadian dollars to U.S dollars at July 31, 2009 and January 31, 2009 was 0.9269 and .0.81248, respectively. The average for the quarter ending July 31, 2009 and 2008 was 0.88265 and 0.9862, respectively.




6
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UPSNAP, INC. F/K/A Duratech Group Inc.


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


FOR THE THREE AND SIX MONTHS ENDED JULY 31, 2009 AND 2008


(Unaudited)







NOTE A—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)





Assets and liabilities denominated in respective functional currencies are translated into United States Dollars at the exchange rate as of the balance sheet date.  The share capital and retained earnings are translated at exchange rates prevailing at the time of the transactions.  Revenues, costs, and expenses denominated
in respective functional currencies are translated into United States Dollars at the weighted average exchange rate for the period.  The effects of foreign currencies translation adjustments are included as a separate component of accumulated other comprehensive income.





Revenue Recognition— Revenues from long-term construction contracts (over one year) of the Duratech Contracting division are recognized using the percentage-of-completion method. Revenues from short-term contracts of the Duratech Structures division
are recognized as the work is performed and related costs are incurred. Contract costs include all direct materials and labor costs and those indirect costs related to contract performance, such as indirect labor, supplies, tools, and repair costs. General and administrative costs are charged to expense as incurred.





As a result of the global economic environment and decrease in natural resource prices, demand for on-site conventional homes (long-term construction contracts) have slowed slightly and prices have decreased up to 10% in some markets.  In regards to short-term contracts, the Company has found continued demand for ready-to-move (RTM)
homes and a moderation of demand for modular camp sites for the oil mining industry.  The Company expects demand for modular camp sites to accelerate with any increase in natural resource prices, principally oil and natural gas.





Revenue and all related costs and expenses from house and land sales are recognized at the time that closing has occurred, when title and possession of the property and the risks and rewards of ownership transfer to the buyer, and we do not have a substantial continuing involvement in accordance with SFAS No. 66, “Accounting
for Sales of Real Estate”(“SFAS 66”). In order to properly match revenues with expenses, we estimate construction and land development costs incurred and to be incurred, but not paid at the time of closing. Estimated costs to complete are determined for each closed home and land sale based upon historical data with respect to similar product types and geographical areas and allocated to closings along with actual costs incurred based on a relative sales value approach. We monitor the
accuracy of estimates by comparing actual costs incurred subsequent to closing to the estimate made at the time of closing and make modifications to the estimates based on these comparisons.





Revenue is recognized for long-term construction contract sales on the percentage-of-completion method when the land sale takes place prior to all contracted work being completed. Pursuant to the requirements of SFAS 66, if the seller has some continuing involvement with the property and does not transfer substantially all of the risks
and rewards of ownership, profit shall be recognized by a method determined by the nature and extent of the seller’s continuing involvement. In the case of our land sales, this involvement typically consists of final development activities. We recognize revenue and related costs as work progresses using the percentage-of-completion method, which relies on estimates of total expected costs to complete required work. Revenue is recognized in proportion to the percentage of total costs incurred in relation
to estimated total costs at the time of sale. Actual revenues and costs to complete construction in the future could differ from our current estimates. If our estimates of development costs remaining to be completed and relative sales values are significantly different from actual amounts, then our revenues, related cumulative profits and costs of sales may be revised in the period that estimates change.





Comprehensive Income (Loss)—The Company adopted Financial Accounting Standards Board Statement of Financial Accounting Standards (SFAS) No. 130, “Reporting Comprehensive Income”,
which establishes standards for the reporting and display of comprehensive income and its components in the consolidated financial statements.  There were no items of comprehensive income (loss) applicable to the Company during the periods covered in the consolidated financial statements.





Cash and Bank Overdraft—Cash consists of cash, cash equivalents and checks issued in excess of cash on deposit. Cash is put in the Bank account which has a negative balance. For the purpose of the cash flow statement, Bank overdrafts are also classified
as cash.





Advertising Costs—Advertising costs are expensed as incurred.  For the quarter ended July 31, 2009 and 2008, the company incurred $8,933 and $22,857 respectively.  For year to date ended July 31, 2009 and 2008, the company incurred
$17,393 and 22,857, respectively.





Net Loss per Common Share—Statement of Financial Accounting Standard (SFAS) No. 128 requires dual presentation of basic and diluted earnings per share (EPS) with a reconciliation of the numerator and denominator of the EPS computations.  Basic
earnings per share amounts are based on the weighted average shares of common stock outstanding.  If applicable, diluted earnings per share would assume the conversion, exercise or issuance of all potential common stock instruments such as options, warrants and convertible securities, unless the effect is to reduce a loss or increase earnings per share.  Accordingly, this presentation has been adopted for the period presented.  There were no adjustments required to net loss for the
period presented in the computation of diluted earnings per share.




7
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UPSNAP, INC. F/K/A Duratech Group Inc.


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


FOR THE THREE AND SIX MONTHS ENDED JULY 31, 2009 AND 2008


(Unaudited)







NOTE A—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)





Income Taxes—Income taxes are provided in accordance with Statement of Financial Accounting Standards (SFAS) No. 109, “Accounting for Income Taxes.”A deferred tax asset
or liability is recorded for all temporary differences between financial and tax reporting and net operating loss-carryforwards.





Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that, and some portion or the entire deferred tax asset will not be realized.  Deferred tax assets and liabilities are adjusted for the effect of changes in tax
laws and rates on the date of enactment.





Fair Value of Financial Instruments—The carrying amounts reported in the consolidated balance sheet for cash, accounts receivable and payable approximate fair value based on the short-term maturity of these instruments.





Accounts Receivable— Accounts deemed uncollectible are written off in the year they become uncollectible. For the quarters ended July 31, 2009 and 2008, no amounts were deemed uncollectible as of July 31, 2009.  Outstanding Accounts Receivable
as of July 31, 2009 was $1,046,850.  Typical payment terms for short-term contracts are 30% down, 60% upon completion and 10% holdback to be released once the structure is on-site and attached.  Typical payment terms for stick-built homes (long-term construction contracts) are four draws from bank upon completion of backfill, lockup, ready-to-paint and at completion and a 10% holdback is held for 45 days to allow for builder liens by lawyer.  Accounts receivable are considered current as long
as there is reasonable expectation that payments will be made as agreed upon or otherwise negotiated, but in no event longer than 12 months.  The Company evaluates collectability based on receiving payments as agreed upon or as otherwise negotiated.





Impairment of Long-Lived Assets— Using the guidance of Statement of Financial Accounting Standards (SFAS) No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets”,
the Company reviews the carrying value of property, plant, and equipment for impairment whenever events and circumstances indicate that the carrying value of an asset may not be recoverable from the estimated future cash flows expected to result from its use and eventual disposition. In cases where undiscounted expected future cash flows are less than the carrying value, an impairment loss is recognized equal to an amount by which the carrying value exceeds the fair value of assets. The factors considered by
management in performing this assessment include current operating results, trends and prospects, the manner in which the property is used, and the effects of obsolescence, demand, competition, and other economic factors.





Inventory—Inventory is stated at the lower of accumulated cost or fair value, as determined in accordance with Statement of Financial Accounting Standards No. 144, “Accounting for the Impairment or Disposal of Long Lived Assets” (“SFAS
144”). Accumulated cost includes costs associated with land acquisition, land development, and home construction costs, including certain direct and indirect overhead costs related to development and construction. Land acquisition and development costs are allocated to individual lots using actual lot cost determined based on the total expected land acquisition and development costs and the total expected home closings for the project. The specific identification method is used to accumulate home construction
costs.





Cost of sales includes the construction cost of the home, the actual lot cost for the home or project, and commissions and closing costs applicable to the home. The construction cost of the home includes amounts paid through the closing date of the home.  Any costs incurred but not yet paid are expensed as incurred and are typically
very nominal in nature because the construction projects have been completed before recorded as sales.  The construction cycles for the long-term construction projects (stick-built homes) are approximately one year and for the short-term construction projects (modular and ready-to-move homes) are approximately two to three months.





For those projects for which construction and development activities have been idled for an extended period of time, longer than three months, an impairment analysis will be performed to determine if an adjustment may be necessary.  If the fair market value of a home (based on comparable units in the market) is less than its cost,
this would suggest impairment and an appropriate adjustment would be made.  Recent market activity has shown that such fair market value estimates are not very sensitive or subjective.  These analyses are performed on a regular basis and confirmed before filing documents with the Commission.





Property and Equipment—Property and equipment is stated at cost.  Depreciation is provided by the straight-line method over the estimated economic life of the property and equipment.  The following table shows the estimated useful
life used for each class of fixed asset:




8
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UPSNAP, INC. F/K/A Duratech Group Inc.


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


FOR THE THREE AND SIX MONTHS ENDED JULY 31, 2009 AND 2008


(Unaudited)







NOTE A—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)





Asset
Estimated Useful LifeBuildings
25
yearsShed
10
yearsTools and Equipment
5
yearsSmall tools and equipment
4
yearsComputer and Office Equipment
3
yearsAutomobiles
3
yearsLeasehold Improvements
5
yearsComputer Hardware
2.5
years





The estimated annual depreciation expense is $124,397 per year.  Total depreciation expense for the years ended January 31, 2009 and 2008 were $124,397 and $21,598 respectively.





Customer Deposits—The cash deposit received from customers when project in progress are shown in the balance sheet as current liabilities and apply against the revenue expected from customers when the project is terminated and the customers are billed.
The deposit is without interest.





Recent Accounting Pronouncements—In February 2007, the FASB issued Statement of Financial Accounting Standards No. 159, “The Fair Value for Financial Assets and Financial Liabilities—including an amendment of FASB Statement No. 115”.  This
statement permits entities to choose to measure many financial instruments and certain other items at value.  The objective is to improve financial reporting by providing entities with the opportunity to mitigate volatility in reported earnings caused by measuring related assets and liabilities differently without having to apply complex hedge accounting provisions.  This Statement is expected to expand the use of fair value measurement, which is consistent with the Board’s long-term
measurement objectives for accounting for financial instruments.  Effective as of the beginning of an entity’s first fiscal year that begins after November 15, 2007. Early adoption is permitted as of the beginning of a fiscal year that begins on or before November 15, 2007, provided the entity also elects to apply the provisions of FASB Statement No. 157, Fair Value Measurements. No entity is permitted to apply the Statement retrospectively
to fiscal years preceding the effective date unless the entity chooses early adoption. Adoption of this standard is not expected to have a material effect on the Company’s results of operations or its financial position.





In December 2007, the FASB issued SFAS 141(revised 2007), Business Combinations (“SFAS 141R”). SFAS 141R will significantly change the accounting for business combinations in a number of areas including the treatment of contingent consideration, contingencies, acquisition costs, IPR&D and restructuring costs.
In addition, under SFAS 141R, changes in deferred tax asset valuation allowances and acquired income tax uncertainties in a business combination after the measurement period will impact income tax expense. SFAS 141R is effective for fiscal years beginning after December 15, 2008.   Adoption of this standard is not expected to have a material effect on the Company’s results of operations or its financial position.





In December 2007, the FASB issued SFAS 160, Noncontrolling Interests in Consolidated Financial Statements, an amendment of ARB No. 51 (“SFAS 160”). SFAS 160 will change the accounting and reporting for minority interests, which will be recharacterized as noncontrolling interests (NCI) and classified as a
component of equity. This new consolidation method will significantly change the account with minority interest holders. SFAS 160 is effective for fiscal years beginning after December 15, 2008. Adoption of this standard is not expected to have a material effect on the Company’s results of operations or its financial position.





In March 2008, the FASB issued SFAS No. 161, “Disclosures about Derivative Instruments and Hedging Activities — an amendment to FASB Statement No. 133.” SFAS No. 161 is intended to improve financial standards for derivative instruments and hedging activities by requiring enhanced disclosures to enable
investors to better understand their effects on an entity’s financial position, financial performance, and cash flows. Entities are required to provide enhanced disclosures about: (a) how and why an entity uses derivative instruments; (b) how derivative instruments and related hedged items are accounted for under Statement 133 and its related interpretations; and (c) how derivative instruments and related hedged items affect an entity’s financial position, financial performance, and
cash flows. It is effective for financial statements issued for fiscal years beginning after November 15, 2008, with early adoption encouraged. The adoption of this statement, which is expected to occur in the first quarter of 2009, is not expected to have a material effect on the Company’s financial statements.




9
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UPSNAP, INC. F/K/A Duratech Group Inc.


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


FOR THE THREE AND SIX MONTHS ENDED JULY 31, 2009 AND 2008


(Unaudited)







NOTE A—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)





In May 2008, the FASB issued SFAS No. 162, “The Hierarchy of Generally Accepted Accounting Principles.” SFAS No. 162 identifies the sources of accounting principles and the framework for selecting the principles to be used in the preparation of financial statements of nongovernmental entities that are presented in conformity
with generally accepted accounting principles in the United States. It is effective 60 days following the SEC’s approval of the Public Company Accounting Oversight Board amendments to AU Section 411, “The Meaning of Present Fairly in Conformity With Generally Accepted Accounting Principles.” The adoption of this statement is not expected to have a material effect on the Company’s financial statements.





In May 2008, the FASB issued SFAS No. 163, “Accounting for Financial Guarantee Insurance Contracts — An interpretation of FASB Statement No. 60.” SFAS No. 163 requires that an insurance enterprise recognize a claim liability prior to an event of default when there is evidence that credit deterioration
has occurred in an insured financial obligation. It also clarifies how Statement No. 60 applies to financial guarantee insurance contracts, including the recognition and measurement to be used to account for premium revenue and claim liabilities, and requires expanded disclosures about financial guarantee insurance contracts. It is effective for financial statements issued for fiscal years beginning after December 15, 2008, except for some disclosures about the insurance enterprise’s risk-management
activities. SFAS No. 163 requires that disclosures about the risk-management activities of the insurance enterprise be effective for the first period beginning after issuance. Except for those disclosures, earlier application is not permitted.





The adoption of this statement is not expected to have a material effect on the Company’s financial statements.





NOTE B—SUPPLEMENTAL CASH FLOW INFORMATION





Supplemental disclosures of cash flow information for the quarter ended July 31, 2009 and year ended January 31, 2009 is summarized as follows:





Cash paid during the years for interest and income taxes:





July 31,
2009


Jan, 31
2009Interest

$
192,655


$
277,653Income Taxes

$
-


$
-





NOTE C—PROPERTY AND EQUIPMENT





Property and equipment consisted of the following as of January 31, 2009:





Asset

Cost


Accumulated Depreciation


Net Book ValueLand

$
32,855


$
-


$
32,855Buildings


69,088



6,660



62,428Tools and Equipment


457,908



72,045



385,863Small Tools and Equipment


19,294



9,878



9,416Computer and Office Equipment


47,002



22,473



24,529Automobiles


97,485



55,486



41,999Leasehold Improvements


99,752



18,537



81,215$
823,384


$
185,079


$
638,305





One half of the depreciation is used in the year of acquisition.




10
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UPSNAP, INC. F/K/A Duratech Group Inc.


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


FOR THE THREE AND SIX MONTHS ENDED JULY 31, 2009 AND 2008


(Unaudited)







NOTE D—INCOME TAXES





Due to the prior years’ operating losses and the inability to recognize an income tax benefit therefrom, there is no provision for current or deferred federal or state income taxes or Canadian taxes for the year ended January 31, 2009.  Deferred income taxes reflect the net tax effects of temporary differences between the
carrying amounts of assets and liabilities for financial reporting purposes and the amount used for federal and state income tax purposes.





For the twelve month periods ended September 30, 2008 and 2007, prior to the reverse-merger with Duratech, the Company incurred net operation losses and accordingly, no provision for income taxes has been recorded.  In addition, no benefit for income taxes has been recorded due to the uncertainty of the realization of any tax
assets.  For the period ending September 30, 2008, the Company had additional net operating loss carry-forward for its operations through September 17 prior to the completion of its share exchange agreement with Duratech.  The figures here reflect an estimate of those net operating loss carry-forward (see the Company’s 10-QSB for the period ending June 30, 2008 filed on August 13, 2008 for additional information).  Thus, at September 30, 2008, the Company had approximately
$8,881,662 of accumulated net operating losses.  The net operating loss carry-forwards, if not utilized, will begin to expire in 2022.





The components of the Company’s deferred tax asset are as follows:





Twelve Month Period
Ended September 30


Twelve Month Period
Ended September 302008


2007Federal and state income tax benefit

$
5,909,622


$
1,040,214Change in valuation allowance on deferred tax assets


(5,909,622
)


(1,040,214
)Net deferred tax assets

$
-


$
-





A reconciliation between the amounts of income tax benefit determined by applying the applicable U.S. and State statutory income tax rate to pre-tax loss is as follows:





Twelve Month Period
Ended September 30


Twelve Month Period
Ended September 302008


2007Federal and state statutory rate

$
5,909,622


$
1,040,214Change in valuation allowance on deferred tax assets


(5,909,622
)


(1,040,214
)$
-


$
-





The reconciliation of income taxes computed at the federal statutory income tax rate to total income taxes for the year ended September 30, 2008 is as follows:





2008


2007Income tax computed at the federal statutory rate


34
%


34
%State income tax, net of federal tax benefit


0
%


0
%Total


34
%


34
%Valuation allowance


-34
%


-34
%Total deferred tax asset


0
%


0
%





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UPSNAP, INC. F/K/A Duratech Group Inc.


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


FOR THE THREE AND SIX MONTHS ENDED JULY 31, 2009 AND 2008


(Unaudited)







NOTE D—INCOME TAXES (CONTINUED)





The Company’s principle subsidiary (Duratech Group Inc.) is subject to income taxes on income arising in or derived from the tax jurisdiction in which it is domiciled and operates (Canada).  However, because of the Company’s lack of earnings history, the deferred tax asset has been fully offset by a valuation allowance.  The
valuation allowance increased (decreased) by $1,050,993 and $98,867 for the year ended January 31, 2009 and 2008 respectively.





The components of Company’s estimated deferred tax asset, calculated using federal and state effective tax rates, as of January 31, 2009 and 2008 are as follows:





Twelve Month Period
Ended
January 31


Twelve Month Period
Ended January 312009


2008Federal and state income tax benefit

$
1,050,993


$
98,867Change in valuation allowance on deferred tax assets


(1,050,993
)


(98,867
)Net deferred tax assets

$
-


$
-





As of January 31, 2009, the Company had Canadian net operating loss carryforwards of approximately $1,372,058 which will expire at various times through the year 2028.




NOTE E—NOTES PAYABLE
 
 Description
Rate

BalanceNote due September 30, 2017
prime rate plus 1.5%

$
103,270Note due June 30, 2009
prime rate plus 2%

$
146,110Demand Note
Various

$
376,867Demand Note
Various

$
1,200,538Residential Line of Credit a
Various

$
259,532$
2,086,317a This is a residential loan line of credit. Progress loans are available upon satisfactory inspection
 
 There are no covenants associated with the above debt arrangements.




NOTE F—FINISHED GOODS AND WORK IN PROGRESS INVENTORY





Land (finished goods) and residential spec home inventory is valued at the lower of cost and net realizable value with the cost being determined on an actual cost basis. Presold residential homes in work in Progress are recorded at the actual expenses incurred to date.





Raw materials inventory is stated at the lowest cost, on first-in, first-out basis, and net realizable value. Periodic inventory method is used for it evaluation.





Inventories are as follows:Raw Materials

$
54,010Work in Progress

$
1,674,117Finished Goods

$
508,831$
2,236,958





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UPSNAP, INC. F/K/A Duratech Group Inc.


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


FOR THE THREE AND SIX MONTHS ENDED JULY 31, 2009 AND 2008


(Unaudited)







NOTE G—SEGMENT REPORTING
 
 The Company has two reportable segments—Duratech Structures, Inc. and Duratech Contracting, Inc.
 
 The Net Sales and Profit/(Loss) by Segment for the six-months ended July 31, 2009 are as follows:
 
 Net Sales by Segment

For the six-months ended July 31, 2009Duratech Structures, Inc.


Duratech Contracting, Inc.


TotalsSales, net

$
472,112


$
1,387,032


$
1,859,144Cost of Sales


524,604



1,042,464



1,567,068Gross Profit

$
(52,492
)

$
344,568


$
292,076Profit/(Loss) by Segment

For the six-months ended July 31, 2009Duratech Structures, Inc.


Duratech Contracting, Inc.


TotalsNet Operating Profit/(Loss)

$
(373,867
)

$
(591,767
)

$
(965,634
)
 
 The Net Sales and Profit/(Loss) by Segment for the six-months ended July 31, 2008 are as follows:
 
 Net Sales by Segment

For the six-months ended July 31, 2008Duratech Structures, Inc.


Duratech Contracting, Inc.


TotalsSales, net

$
671,496


$
1,505,071


$
2,176,567Cost of Sales


496,375



1,095,850



1,592,225Gross Profit

$
175,121


$
409,221


$
584,342Profit/(Loss) by Segment

For the six-months ended July 31, 2008Duratech Structures, Inc.


Duratech Contracting, Inc.


TotalsNet Operating Profit/(Loss)

$
(224,886
)

$
(386,493)


$
(611,379)
 
 Total Assets by Segment as of July 31, 2009 and January 31, 2009 are as follows:
 
 Total Assets by Segment

For the period ended July 31, 2009Duratech Structures, Inc.


Duratech Contracting, Inc.


TotalsTotal Assets

$
2,122,135


$
2,415,030


$
4,537,165
 
 Total Assets by Segment

For the year ended January 31, 2009Duratech Structures, Inc.


Duratech Contracting, Inc.


TotalsTotal Assets

$
2,779,085


$
3,246,611


$
6,025,696
 
 The accounting policies used for segment reporting are the same as those described in Note A “Summary of Significant Accounting Policies”;





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UPSNAP, INC. F/K/A Duratech Group Inc.


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


FOR THE THREE AND SIX MONTHS ENDED JULY 31, 2009 AND 2008


(Unaudited)







NOTE H—EQUITY





OUTSTANDING SHARE DATA





The outstanding share data as at July 31, 2009 and January 31, 2009 is as follows:





Number of
shares
outstanding2009Common shares


78,379,167Options to purchase common shares


20,380,702Warrants to purchase common shares


2,360,000Debentures convertible to common shares


-Accrued interest convertible to common shares


-





Shares Issued from Share Exchange Agreement





The following common shares were issued to Duratech Shareholders following the closing of the Share Exchange Agreement on September 17, 2008:





Janet van Hierden


6,387,729Jason van Hierden


580,703Peter van Hierden


41,255,711Brendon van Hierden


116,141George Sawatzky


2,009,058Total


50,349,342





Stock Plan





On November 2, 2006 the Board of Directors of UpSNAP, Inc. approved a 2006 Omnibus Stock and Incentive Plan. The Plan made four million (4,000,000) shares, either unissued or reacquired by the Company, available for awards of either options, stock appreciation rights, restricted stocks, other stock grants, or any combination thereof. Eligible
recipients include employees, officers, consultants, advisors and directors. Options granted generally have a ten-year term and vest over four years from the date of grant. Certain of the stock options granted under the Plan have been granted pursuant to various stock option agreements. Each stock option agreement contains specific terms. The Board of Directors increased the size of the Plan to seven and one half million (7,500,000) total shares on August 8, 2007, which was ratified by stockholders in September
2007.





Stock-Based Compensation





Under the fair value recognition provisions of SFAS No. 123(R), stock-based compensation cost is estimated at the grant date based on the fair value of the award and is recognized as expense over the requisite service period of the award. The Company has awarded stock-based compensation both as restricted stock and stock options.





We use the Black-Scholes option valuation model to value option awards under SFAS No. 123(R). The Company currently has awards outstanding with only service conditions and graded-vesting features. We recognize compensation cost on a straight-line basis over the requisite service period.





Time-Based Stock Awards





The fair value of each time-based award is estimated on the date of grant using the Black-Scholes option valuation model, which uses the assumptions described below. Our weighted-average assumptions used in the Black-Scholes valuation model for equity awards with time-based vesting provisions granted during the quarter ended July 31, 2009
are shown in the following table:





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 Table of Contents





UPSNAP, INC. F/K/A Duratech Group Inc.


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


FOR THE THREE AND SIX MONTHS ENDED JULY 31, 2009 AND 2008


(Unaudited)







NOTE H—EQUITY (CONTINUED)





Expected volatility
70.0%Expected dividends
0%Expected terms
6.0-6.25 yearsPre-vesting forfeiture rate
50%Risk-free interest rate
4.45%-4.76%





The expected volatility rate was estimated based on historical volatility of the Company’s common stock over approximately the seventeen month period since the reverse merger and comparison to the volatility of similar size companies in the similar industry. The expected term was estimated based on a simplified method, as allowed
under SEC Staff Accounting Bulletin No. 107, averaging the vesting term and original contractual term. The risk-free interest rate for periods within the contractual life of the option is based on U.S. Treasury securities. The pre-vesting forfeiture rate was based upon plan to date experience. As required under SFAS No. 123(R), we will adjust the estimated forfeiture rate to our actual experience. Management will continue to assess the assumptions and methodologies used to calculate estimated fair value
of share-based compensation. Circumstances may change and additional data may become available over time, which could result in changes to these assumptions and methodologies, and thereby materially impact our fair value determination.





A summary of the time-based stock awards as of July 31, 2009, and changes during the quarter ended July 31, 2009, is as follows:


Shares


Weighted
Average
Exercise PriceOutstanding at June 30, 2008


2,570,000


$
0.10Granted (part of Share Exchange Agreement)


17,810,702


$
0.05Forfeited or expired


-


$
-Outstanding July 31, 2009


20,380,702


$
0.056Exercisable at July 31, 2009


2,570,000


$
0.10





The following tables summarize information about fixed stock options outstanding and exercisable at July 31, 2009:





Stock Options OutstandingRange of Exercise Prices

Number of
Shares
Outstanding

Weighted
Average
Contractual Life
in Years$0.10

700,000

7.75$0.10

170,000

8.84$0.10

1,700,000

8.92$0.10

17,810,702

9.1720,380,702

9.10Stock Options ExercisableRange of Exercise Prices

Number of
Shares
Exercisable

Weighted
Average
Exercise Price$0.10

2,570,000

$0.10$0.016 – 0.125

17,810,702

$0.0520,380,702





15
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UPSNAP, INC. F/K/A Duratech Group Inc.


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


FOR THE THREE AND SIX MONTHS ENDED JULY 31, 2009 AND 2008


(Unaudited)







NOTE H—EQUITY (CONTINUED)





The exercise price of stock options granted during the period ended July 31, 2009 was equal to the market price of the underlying common stock on the grant date.





There was no aggregate intrinsic value as of July 31, 2009. Intrinsic value represents the pretax value (the period’s closing market price, less the exercise price, times the number of in-the-money options) that would have been received by all option holders had they exercised their options at the end of the period.





Warrants





The Company has recorded the warrant instruments as equity in accordance with SFAS No. 133, Accounting for Derivative Instruments and Hedging Activity, paragraph 11(a), and EITF 00-19, Accounting for Derivative Financial Instruments Indexed to, and Potentially Settled in, a Company's Own Stock.





A summary of warrant activity for the period ended July 31, 2009 is as follows:





Series BNumber of
Warrants


Weighted-
Average
Exercise
Price


Warrants
Exercisable


Weighted-
Average
Exercise
PriceOutstanding, January 31, 2009


1,800,000


$
1.10



1,800,000


$
1.10Granted


-Expired


-Exercised


-



-







-Outstanding, July 31, 2009


1,800,000


$
1.10



1,800,000


$
1.10





Number of
Warrants


Weighted-
Average
Exercise
Price


Warrants
Exercisable


Weighted-
Average
Exercise
PriceOutstanding, January 31, 2009


560,000


$
0.90



560,000


$
0.90Granted


-Exercised


-Outstanding, July 31, 2009


560,000


$
0.90



560,000


$
0.90





At July 31, 2009, the range of warrant prices for shares under warrants and the weighted-average remaining contractual life is as follows:





Warrants Outstanding


Warrants ExercisableRange of
Warrant
Exercise Price


Number of
Warrants


Weighted-
Average
Exercise
Price


Weighted-
Average
Remaining
Contractual
Life


Number
Of
Warrants


Weighted-
Average
Exercise Price$
1.10



1,800,000


$
1.10



2.28



1,800,000


$
1.10$
0.90



560,000


$
0.90



2.37



560,000


$
0.902,360,000











2,360,000





16
 Table of Contents




UPSNAP, INC. F/K/A Duratech Group Inc.


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


FOR THE THREE AND SIX MONTHS ENDED JULY 31, 2009 AND 2008


(Unaudited)







NOTE H—EQUITY (CONTINUED)





The Company may from time to time reduce the exercise price for any of the warrants either permanently or for a limited period or extend their expiration date.





NOTE I—COMMITMENTS/LEASES





As of July 31, 2009, the company had commitments for the acquisition of residential lots and land. The company had paid non-refundable deposits $24,374. This deposit is included in Other Receivable.





NOTE J—RELATED PARTIES





The Company has an outstanding amount Due to a shareholder in the amount of $129,364.  This outstanding amount is due upon demand, is unsecured and does not bear an interest rate.





NOTE K—GOING CONCERN





As shown in the accompanying financial statements, the Company had a loss for the period ended July 31, 2009.  During the years ended January 31, 2009 and 2008, the Company had a net loss of $935,916 and $104,735 respectively.  The Company has a net deficiency of $2,555,842.





Management believes that actions presently being taken to win more contracts, raise equity capital, seek strategic relationships and alliances, and build its marketing efforts to generate positive cash flow provide the means for the Company to continue as a going concern.  The financial statements do not include any adjustments
that might result from the outcome of this uncertainty.





17
 Table of Contents





ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS





PRELIMINARY NOTE REGARDING FORWARD-LOOKING STATEMENTS





This discussion contains forward-looking statements. The reader should understand that several factors govern whether any forward-looking statement contained herein will be or can be achieved. Any one of those factors could cause actual results to differ materially from those projected herein. These forward-looking statements include plans
and objectives of management for future operations, including plans and objectives relating to the products and the future economic performance of the company. Assumptions relating to the foregoing involve judgments with respect to, among other things, future economic, competitive and market conditions, future business decisions, and the time and money required to successfully complete development projects, all of which are difficult or impossible to predict accurately and many of which are beyond the control
of the company. Although the company believes that the assumptions underlying the forward-looking statements contained herein are reasonable, any of those assumptions could prove inaccurate and, therefore, there can be no assurance that the results contemplated in any of the forward-looking statements contained herein will be realized. Based on actual experience and business development, the company may alter its marketing, capital expenditure plans or other budgets, which may in turn affect the company's results
of operations. In light of the significant uncertainties inherent in the forward-looking statements included therein, the inclusion of any such statement should not be regarded as a representation by the company or any other person that the objectives or plans of the company will be achieved.





OVERVIEW





On September 17, 2008, the Company consummated a reverse merger with Duratech Group Inc., a corporation organized and existing under the laws of the province of Alberta (“Duratech”). As a result, Duratech became a majority owned subsidiary of the Company, and the existing businesses of the Company were disposed of. one
day after the closing. From and after September 18, 2008, the Company has and will engage only in Duratech’s businesses, and any other businesses that it may acquire.





Duratech manufactures and builds homes and modular sites for its marketplace, principally Alberta and Saskatchewan. The Company has three principal products that it offers: first, the company builds on-site conventional homes through its Duratech Contracting division; second, the company builds ready-to-move (RTM) homes in factories
and brings them on foundations to sell to end users; and, third, the company builds modular camp sites for the oil mining industry through its Duratech Structures division.





Duratech had $1,030,429 and $1,859,144 in revenues for the three and six months ended July 31, 2009 compared to $661,050 and $2,176,567 for the three and six months ended July 31, 2008.  Gross profit was $291,253 and $292,076 for the three and six months ended July 31, 2009 compared to $152,613 and $584,342 for the corresponding
period in 2008.  Including reorganization, acquisition costs and foreign currency translation gains and losses, the net loss for the three and six months ended July 31, 2009 was $404,428 and $1,005,452 compared to net loss of $621,444 and $605,492 for the same period in 2008. Duratech has two principal strategies for growth: 1) build construction for its existing marketplace and 2) expand through strategic acquisitions both in its existing market and the United States.





RESULTS OF OPERATIONS





The following discussion should be read in conjunction with the unaudited consolidated Financial Statements of the Company for the three-month period ended July 31, 2009 and 2008 and related notes thereto.





THREE MONTHS ENDED JULY 30, 2009 COMPARED TO THREE MONTHS ENDED JULY 30, 2008




Operating Revenues. Revenues for the three months ended July 31, 2009 were $1,030,429, compared to revenues for the three months ended July 31, 2008 of $661,050. The increase in revenues of $369,379 is principally attributable to the acquisition of Duratech Strcutures in July, 2008
thus resulting in an increase in housing sales due to the combined operations versus the same period in 2008 when the company had just started to incorporate Duratech Structures into its operations.  Sales for the Duratech Contracting division increase to $788,526 for the three months ended July 31, 2009 from $601,821 for period ended July 31, 2008 due to a slight increase in new home sales. The Duratech Structures division went from $59,230 for the quarter ended July 31, 2008 to $251,904
in sales for the quarter ended July 31, 2009 due to a increase in sales of modular structures.





Gross Profit. Gross profit for the three months ended July 31, 2009 was $291,253 compared to gross profit for the same period in 2008 of $152,613.  The increase in gross profit is attributable to a increase in sales of the company as described above. The gross profit
for Duratech Contracting division increased from $187,578 for the period ended July 31, 2008 to $286,333 for the period ended July 31, 2009 principally due to an increase in new home sales. The gross profit for Duratech Structures division increased from a loss $34,963 to a gross profit $4,921 for the three months ended July 31, 2008 and 2009, respectively, reflecting a increase in sales of modular structures.  The company has started to see an increase in new orders as reflected
by the increase in Customer Deposits and Accounts Receivable.




18
 Table of Contents




Selling, General and Administrative Expenses. Selling, general and administrative expenses for the period ended July 31, 2009 were $276,029, compared to selling, general and administrative expenses of $222,439 for the corresponding period in 2008, a slight increase of about $53,590
principally due to transition costs associated with turning-around, expanding its core business and additional overhead expenses associated with taking the company public offset by reduction in expenses in response to the decrease in sales from the global economic recession.




Payroll Expense. Payroll expense for the three months ended July 31, 2009 fiscal year were $252,534, compared to payroll expense for the same period in 2008 of $509,386 principally due to a reduction in expenses in 2009 in response to the global economic recession compared to higher
business operations in 2008 at Duratech Contracting division and Duratech Structures division in anticipation of greater growth that did not materialize because of global economic conditions.





Other Expenses. Bad debt expense for the period ended July 31, 2009 and 2008 was $0; interest expense for the three months ended July 31, 2009 was $104,395 compared to $49,082 for the corresponding period in 2008 due to larger borrowings associated with more houses under construction;
and depreciation and amortization expense for the quarter ended July 31, 2009 was $43,907 compared to $0 for the same quarter in 2008 due to greater property plant and equipment associated with larger operations and purchase of Truss Equipment which is expected to save the company money in the future.





Net Other Income. Net other income for the three months ended July 31, 2009 and 2008 was $491 and $998, respectively.





Net Income. Net loss for the quarter ended July 31, 2009 was $385,121 compared to a net loss for the same quarter in 2008 of $627,296.  The decrease in net loss is principally attributable to the increase in housing sales (although at a lower rate than the 1st quarter)
during the second quarter compared to the same period in 2008 and a reduction in payroll expenses in response to the global economic recession in the three month period ended July 31, 2009.  The net loss for the period ended July 31, 2008 was $289,232 for Duratech Contracting division and a loss of $338,063 for Duratech Structures division which reflects growth of the respective divisions prior to the company’s reverse merger.  The net loss for the period ended July 31, 2009 was $230,424
for Duratech Contracting division which included overhead expenses for the Company and $154,697 for Duratech Structures division principally as a result of a decline in sales due to the global economic recession.





Foreign Currency Gains/Losses. Because the Company operates in Alberta and Saskatchewan, Canada, the company does incur foreign currency gains/losses for US GAAP reporting purposes. The Company incurred a loss on currency conversion of $19,307 for the three months ended July 31, 2009
compared to a gain of $5,852 for the same period in 2008. The prevailing exchange rate used to translate the Canadian dollars to U.S dollars at July 31, 2009 and January 31, 2009 was 0.9269 and .0.81248, respectively. The average for the quarter ending July 31, 2009 and 2008 was 0.88265 and 0.9862, respectively.




SIX MONTHS ENDED JULY 30, 2009 COMPARED TO SIX MONTHS ENDED JULY 30, 2008
 
 Operating Revenues. Revenues for the six months ended July 31, 2009 were $1,859,144, compared to revenues for the six months ended July 31, 2008 of $2,176,567. The decrease in revenues of $317,423 is principally attributable to a decline in housing sales as a result of the global
recession and its impact on the Canadian economy since late 2008 compared to a very rapidly growing economy during the prior year period when oil prices were substantially higher.  Sales for the Duratech Contracting division decreased to $1,387,032 for the six months ended July 31, 2009 from $1,505,071 for the same period ended July 31, 2008 because the increase in new home sales in the second quarter was more than offset by a decrease in new home sales in the first quarter.  Sales for the
Duratech Structures division decreased to $472,112 for the six months ended July 31, 2009 from $671,496 in sales for the six months ended July 31, 2008 because the increase in modular home sales in the second quarter was more than offset by the decrease in sales of modular structures in the first quarter as a result of the global economic recession and decrease in oil prices from the prior year.
 
 Gross Profit. Gross profit for the six months ended July 31, 2009 was $292,076 compared to gross profit for the same period in 2008 of $584,342.  The decrease in gross profit is attributable to a decrease in sales of the company as described above. The gross profit
for Duratech Contracting division decreased from $409,221 for the six months ended July 31, 2008 to $344,568 for the six months ended July 31, 2009 principally due to a decrease in new home sales in the first quarter offset by an increase in the second quarter. The gross profit for Duratech Structures division decreased from $175,121 to a loss of $52,490 for the six months ended July 31, 2008 and 2009, respectively, reflecting a decrease in sales of modular structures and sale of some structures
at a loss in the first quarter offset by an increase in the second quarter.  The company has started to see an increase in new orders as reflected by the increase in Customer Deposits and Accounts Receivable.


19
 Table of Contents
  Selling, General and Administrative Expenses. Selling, general and administrative expenses for the six months ended July 31, 2009 were $490,836, compared to selling, general and administrative expenses of $387,155 for the corresponding period in 2008, an increase of about $103,681
principally due to transition costs associated with turning-around, expanding its core business and additional overhead expenses associated with taking the company public offset by reduction in expenses in response to the decrease in sales from the global economic recession.
 
 Payroll Expense. Payroll expense for the six months ended July 31, 2009 fiscal year were $501,645, compared to payroll expense for the same period in 2008 of $720,614 principally due to an increase in business operations at Duratech Contracting division and Duratech Structures division
in anticipation of greater growth that did not materialize because of global economic conditions offset by reduction in expenses as a result of same.
 
 Other Expenses. Bad debt expense for the six months ended July 31, 2009 and 2008 was $0; interest expense for the six months ended July 31, 2009 was $192,655 compared to $88,951 for the corresponding period in 2008 due to larger borrowings associated with more houses under construction;
and depreciation and amortization expense for the six months ended July 31, 2009 was $73,058 compared to $0 for the period in 2008 due to greater property plant and equipment associated with larger operations and purchase of Truss Equipment which is expected to save the company money in the future.
 
 Net Other Income. Net other income for the six months ended July 31, 2009 and 2008 was $484 and 999, respectively.
 
 Net Income. Net loss for the six months ended July 31, 2009 was $965,634 compared to a net loss for the period in 2008 of $611,379.  The increase in net loss is principally attributable to the decrease home and modular sales during the first quarter as a result of the global
economic recession and increase in selling, general and administrative expenses in the six month period ended July 31, 2009, including turn-around costs and acquisition expenses related to reverse merger, offset by a decrease in payroll expenses in 2009 in response to the global economic recession.    The net loss for the six months ended July 31, 2009 was $591,767 for Duratech Contracting division which included overhead expenses for the Company and $373,867 for Duratech Structures division
principally as a result of a decline in sales in the first quarter due to the global economic recession. The net loss for the six months ended July 31, 2008 was $224,886 for Duratech Contracting division and a loss of $386,493 for Duratech Structures division which reflects a decline in the company’s operation before being acquired by Duratech Group.
 
 Foreign Currency Gains/Losses. Because the Company operates in Alberta and Saskatchewan, Canada, the company does incur foreign currency gains/losses for US GAAP reporting purposes. The Company incurred a loss on currency conversion of $39,818 for the six months ended July 31, 2009
compared to a gain of $5,887 for the same period in 2008. The prevailing exchange rate used to translate the Canadian dollars to U.S dollars at July 31, 2009 and January 31, 2009 was 0.9269 and .0.81248, respectively. The average for the quarter ending July 31, 2009 and 2008 was 0.88265 and 0.9862, respectively.
 
 Liquidity and Capital Resources
  As of July 31, 2009, cash and cash equivalents totaled $0.  The net cash used by operations for the six-months ended July 31, 2009 of $226,748 decreased from the net cash used in fiscal year end January 31, 2009 of $589,559 principally due to an increase in customer deposits offset by an increase in inventories and net loss from
operations. The net cash used in investing activities of $1,699,268 for the period was mainly due to acquisition of three parcels of land described below compared to $447,336 for the fiscal year end January 31, 2009 which included the acquisition of Truss Equipment. The increase in financing activities of $1,926,016 for six-months ended July 31, 2009 compared to $1,036,895 generated for the prior fiscal year end was mainly due to the conversion of debt to equity from debt holders and the issuance of stock
as part of the acquisition of the three parcels of land described herein.
  The working capital at July 31, 2009 was $(1,863,128), comprised of accounts receivable, net of $970,326, other receivables of $114,905 and inventory of $2,236,958 less payables and accrued liabilities of $1,042,636, customer deposits of $1,663,574, short term loans of $263,426; current portion of notes payable of $2,086,317 and current
portion of shareholder notes payable of $129,364.
 
 The Company is currently experiencing the effects of a worldwide recession and decreased demand for its products. The western provinces of Canada such as Alberta and Saskatchewan, which had seen a shift in Canada’s economic power to those areas because of oil revenues, have been keenly affected because of the decline in oil prices
that began in the last quarter of 2008. The slump in oil prices has caused oil companies in the region to curtail investment spending, which has resulted in, among other things, increased unemployment, lower wages, a slowdown in housing construction and a weakening housing market. In addition, construction of modular campsites for oil production facilities has declined as a result of the slower growth in the oil industry.
 
 If economic conditions were to worsen and the Company’s products became unsellable, the Company would not be able to recover the full cost of its inventory. As a result, operations could deteriorate and our liquidity would be further diminished. This risk, however, is principally related to the Company’s Duratech Contracting
division which builds stick-built homes and has approximately $519,912 in inventory which is substantially lower than it has been in prior periods. The Company does not expect that this inventory would be unsellable altogether, but may well have to be sold at a lower profit then in the past. The Company does not expect at this time that it would have to sell such inventory below its cost. The Company’s Duratech Structures division builds modular homes and other structures on a contractual
basis and is paid as work is done so there is little risk that the Company’s inventory for these lines of business would be impacted; in fact almost all of the customer deposits on the company’s balance sheet reflect deposits for Duratech Structures.


20
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  Going forward we will rely substantially on revenue from existing contracts, new business development efforts, acquisitions (including the planned purchase of soil remediation company, Nature Zone, described herein) and friendly investors that have indicated a willingness to support the Company. Actual sales will be recorded upon completion
of each project while sales and service revenue will be recorded as earned. To date, the Company has had investors willing to contribute equity, convert debt to equity or offer private loans to finance on-going operations. In addition, the Company does have some relationships with lending institutions to provide financing on inventory and/or completed homes.  The company has wound down its joint venture relationships with P&R Gateway Development Inc. and 1371009 Alberta Ltd. and will no
longer be securing financing through these entities until the economic conditions improve.
 
 However, private parties are under no legal obligation to provide us with future capital infusions and the global economic environment could impact banks willingness to continue to lend on real estate. Furthermore, the economic conditions within Canada, particularly as a result of natural resources markets, could impact future interest
in housing and modular buildings. Overall, we have funded our cash needs from inception through July 31, 2009 with a series of private loan, debt and equity transactions.
 
 Demand for our products will be dependent upon, among other things, market acceptance of our products, the real estate market in general, and global economic conditions. Inasmuch as a major portion of our activities is the receipt of revenues from the sales of new home services, our business operations may be adversely affected by
our competitors and prolonged recessionary periods. The Company does believe that the Alberta and Saskatchewan regions, where its principle operations are located, will continue to be attractive Canadian markets, and that these areas will be less impacted by overall economic conditions, but there is no guarantee this will remain so going forward.


CRITICAL ACCOUNTING POLICIES





The preparation of financial statements in conformity with accounting principles generally accepted in the U.S., or GAAP, requires the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. In recording transactions and balances resulting from business operations, the Company uses estimates based on the best information available for such items as depreciable lives. The Company revises the recorded estimates when better information is available, facts change or actual amounts can be determined. These revisions can affect operating results.





The critical accounting policies and use of estimates are discussed in and should be read in conjunction with the annual consolidated financial statements and notes included in the latest 10-K, as filed with the SEC, which includes audited consolidated financial statements for the two fiscal years ended January 31, 2009.





ITEM 3 - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK





Exchange Rate Risk





The Company cannot guarantee that the current exchange rate will remain steady; therefore there is a possibility that the Company could post the same amount of profit for two comparable periods and because of the fluctuating exchange rate actually post higher or lower profit depending on exchange rate of Canadian$ converted to US$ on that
date. The exchange rate could fluctuate depending on changes in economic environments without notice.





Inflation





Inflationary factors, such as increases in the cost of raw materials and overhead costs, could impair our operating results. Although we do not believe that inflation has had a material impact on our financial position or results of operations to date, a high rate of inflation in the future may have an adverse effect on our ability to maintain
current levels of gross margin and selling, general and administrative expenses as a percentage of sales revenue if the selling prices of our products do not increase with these increased costs.





ITEM 4(A) - CONTROLS AND PROCEDURES





The Chief Executive Officer and Chief Financial Officer (the principal executive officer and principal financial officer, respectively) of the Company have concluded, based on their evaluation as of July 31, 2009, that the design and operation of the Company's "disclosure controls and procedures" (as defined in Rule 13a-15(e) under the
Securities Exchange Act of 1934, as amended ("Exchange Act")) are effective to ensure that information required to be disclosed in the reports filed or submitted by the Company under the Exchange Act is accumulated, recorded, processed, summarized and reported to the management, including the Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding whether or not disclosure is required.




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ITEM 4(A)T – INTERNAL CONTROL OVER FINANCIAL REPORTING





(a) The Company’s management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934, as amended). Management conducted an evaluation of the effectiveness of the Company’s internal control over financial reporting
based on the criteria set forth in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on this evaluation, management has concluded that the Company’s internal control over financial reporting was effective as of July 31, 2009.





(b) This quarterly report does not include an attestation report of the company’s registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the company’s registered public accounting firm pursuant to temporary rules of the Securities and
Exchange Commission that permit the company to provide only management’s report in this quarterly report.





(c) There were no changes in the Company's internal controls over financial reporting, known to the chief executive officer or the chief financial officer that occurred during the period covered by this report that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting.





PART II - OTHER INFORMATION





ITEM 1 - LEGAL PROCEEDINGS





In regards to Registrant’s Purchase Agreement dated as of June 8, 2009 as described under Item 5 – Other Information: On July 21, 2009, Entech Energy Group (International) Inc. (“Entech” or “Plaintiff”) filed a complaint against Alan Kirby (“Kirby”), 1152645 Alberta Ltd.(“1152645”)
and Duratech Group Inc. (“Duratech”) (collectively “Defendants”) in the Court of Queen’s Bench of Alberta, Judicial Centre of Calgary (Solicitor’s File No. 09-1567/BHH), in which it alleges among other claims that Entech and Kirby had entered into a prior agreement on March 1, 2009 in which Plaintiff agreed to purchase all of the intellectual property and reclamation technology used on the soil reclamation business (“Intellectual Property”) and all shares in 1152645
owned by Kirby and would thus be in breach of contract which would preclude Duratech from proceeding with its purchase of 100% of Kirby’s ownership interest in 1152645.  In regards to Duratech, Plaintiff alleges that Duratech unduly interfered with the contractual relations of the Plaintiff and Kirby and 1152645 and induced a breach of agreement between the parties.  In regards to Duratech, Plaintiff requests a declaration that the Intellectual Property and shares of Kirby be held in
trust for Plaintiff, that a order for transfer of such intellectual property and shares to the Plaintiff, that damages in an amount to be proven at trial and punitive damages of $1,000,000.  Duratech vehemently denies the allegations of Plaintiff and believe that its claims are without merit.  The Company has engaged Stringham Denecky Law Office, counsel admitted to practice law in the Court of Queen’s Bench of Alberta, and intends to vigorously defend its rights and position to the
fullest extent of the law.  These matters have yet to be determined by a court of law.





ITEM 2 - UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS





The following debt for equity transactions were agreed upon for the quarter ending July 31, 2009; the noted transactions are in Canadian Dollars unless otherwise noted and each of these transactions was based on the same terms as the Duratech Group Inc. shareholders which means the parties converting their debt obligation with the
Company will receive additional shares pro-rata with the Duratech Group Inc. preferred shareholders upon completion of their Preferred Stock Exchange Agreement dated January 8, 2009 between UpSnap Inc. and Duratech Group Inc.




Indenbosch Auction agreed to convert $220,132.59 in loans it had with the Company into 220,132 shares of common stock of the Company.  Jaclyn Van Hierden agreed to convert $5,592.19 that the Company owed to her into 5,592 shares of common stock of the Company. John Doerksen agreed to convert $50,000 that he was owed by the company
into 50,000 shares of common stock of the Company.  Carlarene Van Hierden agreed to use $5,038 that she was owed by the Company to exercise her option to purchase 273,919 shares of common stock of the Company.  Amanda Van Hierden agreed to use $10,077 that she was owed by the Company to exercise her option to purchase 547,837 shares of common stock of the Company.  1199575 Alberta Ltd. agreed to convert $6,073.20 that it was owed by the company into 6,073 shares of common stock of
the Company.  Pacific Maduco agreed to convert $4,592.74 that it was owed by the company into 3,062 shares of common stock of the Company.
 
 Larry and Margaret Kyllo agreed to convert their $75,000 loan to the Company into 250,000 shares of common stock of the Company based on a previously agreed upon $0.30 price per share.  In addition, they agreed to use $17,309.90 of their remaining $75,000 loan to the Company to exercise their option to purchase 317,876 shares of
common stock of the Company based on an exercise price of $0.30 per share.  The remaining $57,690.10 will be converted to a private loan which will be paid over a 5-year period of time.




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The following land for equity transactions were agreed upon and completed during the quarter ending July 31, 2009; the noted transactions are in Canadian Dollars unless otherwise noted:





On May 1, 2009, Bert Van Hierden and Paragon Livestock Exchange Inc., an Alberta, Canada company that Bert Van Hierden owns agreed to sell the Company lands consisting of East Ptn of SE 1/4 Section 27-9-22-4, West of the 4th Meridian, Northeast of Coalhurst
County of Lethbridge, Alberta with a estimated value of $796,000 for 500,000 shares of common stock of the Company and the assumption by the Company of a mortgage on the property in the amount of $296,000.  This transaction was based on the same terms as the Duratech Group Inc. shareholders which mean the seller will receive additional shares pro-rata with the Duratech Group Inc. preferred shareholders upon completion of their Preferred Stock Exchange Agreement dated January 8, 2009 between UpSnap Inc.
and Duratech Group Inc.





On May 1, 2009,  David DenHollander and 647497 BC Ltd., a British Columbia, Canada company that David DenHollander owns and Brad and Linda Osborne agreed to sell the Company that portion of Recline Ridge Estates—Phase 4 consisting of Lot Numbers 9, 11, 12 and 13 with an estimated net market value of $740,000 in exchange
for 740,000 shares of common stock in the Company and the same terms as the Duratech Group Inc. shareholders which mean the sellers will receive additional shares pro-rata with the Duratech Group Inc. preferred shareholders upon completion of their Preferred Stock Exchange Agreement dated January 8, 2009 between UpSnap Inc. and Duratech Group Inc.





On July 31, 2009, Jerry Froese and 1199575 Alberta Ltd., a Alberta, Canada company that Jerry Froese owns, agreed to sell the company land with a market value of $240,000 in exchange of 240,000 shares of common stock in the Company and a loan of $30,000 payable over a 5-year period of time. This transaction was based on the same terms
as the Duratech Group Inc. shareholders which mean the seller will receive additional shares pro-rata with the Duratech Group Inc. preferred shareholders upon completion of their Preferred Stock Exchange Agreement dated January 8, 2009 between UpSnap Inc. and Duratech Group Inc.





ITEM 3 - DEFAULTS UPON SENIOR SECURITIES





None.





ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS





None.





ITEM 5 - OTHER INFORMATION





As previously reported on Form 8-K filed with the SEC on August 31, 2009: On June 18, 2009, the Registrant through its principal subsidiary, Duratech Group Inc. (“Duratech”) and all of the contracting parties executed a Purchase Agreement dated as of June 8, 2009 (the “Agreement”), between and among Duratech,
1152645 Alberta Ltd., an Alberta numbered corporation (“Alberta Company”), and Al Kirby, a citizen of Alberta, Canada (“Kirby”) and the principal owner of Alberta Company, pursuant to which Duratech had a right to acquire, subject to the satisfaction prior to closing of certain conditions precedent and after closing certain conditions subsequent, 100% of Al Kirby’s ownership interest in Alberta Company, which reflected 100% of the common voting shares and approximately 76% of the
overall ownership of the Alberta Company for consideration consisting of cash having an aggregate market value of approximately $1 million (Canadian Dollars), approximately $924,000 U.S. Dollars based on foreign currency rates on the date of the Agreement.  On June 18, 2009, the parties also entered into a Purchase Agreement and Assignment where Al Kirby agreed to sell and assign all intellectual property rights associated with the Water purification and Waste Water Systems and the Salinating systems
to Duratech and all rights to manufacture Soil Remediation units as per the contract.  On June 18, 2009, Al Kirby and Duratech also entered into an Assignment where Al Kirby assigned all intellectual property rights associated with Soil Remediation Process (Nature zone) to Alberta Company.





Pursuant to the Agreement, Duratech will initially pay $500,000 (CAD) cash to Kirby on July 15, 2009 (“initial payment”) plus 1% per month late payment fees if funds are late and $500,000 (CAD) payable over 50 months at rate of $10,000 (CAD) per month (without interest) beginning August 15, 2009 and the 15th of
the following months until paid in full.





The consummation of the acquisition is contingent on Duratech completing an acquisition financing that will provide the required $1,000,000 (CAD) in cash, although this contingency has not been expressly made a condition precedent to Duratech’s obligations under the Agreement.  In addition, the Agreement has certain
conditions precedent to the obligation of Duratech to consummate the acquisition, such as confirmation that Alberta Company has $900,000 (CAD) in Accounts Receivable and $150,000 (CAD) to $250,000 (CAD) in inventory, approximately $150,000 (CAD) in Assets and $367,000 (CAD) in Liabilities; and validation of Environment Certificate (giving right to operate in Canada).  In addition, the Agreement has certain guarantees by Kirby that survive the closing of the transaction, namely that there are no other
liabilities that are not otherwise disclosed, that Kirby has the right to sell his interests in the Alberta Company and the intellectual property, that Kirby has the exclusive rights to manufacture the remediation units and assigns those rights to Duratech.




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There would be no shares issued as part of this transaction. At closing, Duratech shall take active control of the Company and daily operations.  As conditions subsequent, Kirby shall sign over his ownership interests (stock certificates) after the first $500,000 (CAD) has been paid, a final accountant prepared financial
statement prepared for the cutoff date no later than July 10th and a statement must be given prior to June 30th or prior to the initial payment; and in case of default by Duratech to be able to make payments within 90 days of due date, any ownership which has not been paid for will revert back to Kirby pro rate to the amount which is unpaid.  As
of the date of this filing, Duratech has not yet fulfilled the payment of the initial $500,000 (CAD) to Kirby. The Company expects to fulfill this condition subsequent in the 3rd quarter, 2009, but will not record this transaction until this condition subsequent has been fulfilled.





The Board of Directors of the Registrant authorized the management of the Registrant and Duratech to enter into the Agreement at a meeting held on June 19, 2009.  The Agreement is a binding agreement between the parties thereto with conditions subsequent, and it embodies all of the material terms and conditions that are necessary
to enforce the rights and obligations set forth therein with respect to the subject matter of the Agreement.








ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K





(a) Reports on Form 8-K





Subsequent to April 30, 2009, the Company filed the following Current Reports on Forms 8-K with the SEC as follows:





Dated (filing date)                                                     Items
Reported





August 31, 2009 (June 18, 2009                                  Form 8-K Material Agreement








(b) Exhibits





Exhibits for HouseRaising and its subsidiaries are listed below.





INDEX TO EXHIBITS





The exhibits designated by an asterisk (*) are filed herein. The exhibits not so designated are incorporated by reference to the indicated filing.










Exhibit No.
Descriptions2.1
Share Exchange Agreement, dated August 29, 2008 (incorporated by reference to Exhibit 2.1 from Form 8-K/A filed on May 27, 2009)2.2
Asset Purchase Agreement, dated August 29, 2009 (incorporated by reference to Exhibit 2.2 from Form 8-K/A filed on May 27, 2009)2.3
Preferred Stock Exchange Agreement, dated January 8, 2009 (incorporated by reference to Exhibit 2.1 from Form 8-K filed on January 20, 2009)3.1
Articles of Incorporation of UpSnap, Inc. (incorporated by reference to Exhibit 3.1 from Form SB-2 filed on September 18, 2003)3.2
By-laws of UpSnap, Inc. (incorporated by reference to Exhibit 3.2 from Form SB-2 filed on September 18, 2003)3.3
Certificate of Amendment to Articles of Incorporation changing name of corporation and authorizing 3:1forward split (incorporated by reference to Exhibit 3.1 from Form 8-K filed on November 17, 2005)31.1
Certification of the Chief Executive Officer Pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934*31.2
Certification of the Chief Financial Officer Pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934*32
Certification of the Company's Chief Executive Officer and Chief Financial Officer Pursuant to 18 U.S.C. SS. 1350 Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002*





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SIGNATURES





Pursuant to 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.








UPSNAP, INC.Date: September 21, 2009
By:
/s/ Peter van HierdenPeter van HierdenChief Executive OfficerDate: September 21, 2009
By:
/s/Richard von GnechtenRichard von GnechtenChief Financial Officer







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