**UNITED STATESSECURITIES AND EXCHANGE COMMISSION**

**WASHINGTON, D.C. 20549**

**FORM 10-QSB**

**x** QUARTERLY REPORT UNDER SECTION 13 OR15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

**For the quarterly period ended September 30, 2006**

**o TRANSITON REPORT UNDERSECTION 13 OR 15(d) OF THE EXCHANGE ACT**

**For the transition period from                       to                      **

**Commission file number 000-25261**

**BANCORP INTERNATIONAL GROUP, INC.**

**(formerly March Indy International, Inc.)**(Name of small business issuer in its Charter)

| **NEVADA**                       |   | **88-0339817**       |
|----------------------------------|--------|----------------------|
| (State or other  jurisdiction of |   | (I.R.S. Employer     |
| incorporation or  organization)  |   | Identification  No.) |

 

# **3126 South Boulevard, Suite 264**

**Edmond, Oklahoma 73013**

(Address ofprincipal executive offices)

**(405) 235-8318**

(Issuer’stelephone number)

**))))))))))))))))))))))))**(Former name, former address and former fiscal year, ifchanged since last report)

Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports),  and (2) has been subject to such filing requirements for the past 90 days.  YES o No x

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

 

APPLICABLE ONLY TO CORPORATE ISSUERS

State the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date:

| **CLASS**                   | ** ** | **OUTSTANDING  AS OF** |
|-----------------------------|------------|------------------------|
| Common Stock                |       | September 9,  2006     |
| Par value $0.001  per share |       | 500,010,229  Shares    |

 

Transitional Small Business Disclosure Format: Yes o No x

 

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**PART 1 - FINANCIAL INFORMATION**

**Item 1.  Financial Statements.**

Our financialstatements presented in this report were prepared and included in this reportin accordance with Regulation S-X and Regulation S-B and appear in this reportbeginning on page F-1.

**Item 2.  Management’s Discussion and Analysis or Plan of Operation.**

The following discussion should be read in conjunction with our financial statements and notes thereto appearing elsewhere in this report.

Throughoutthis report the first personal plural pronoun in the nominative case form “we”and its objective case form “us”, its possessive and the intensive case forms “our”and “ourselves” and its reflexive form “ourselves” refer collectively toBancorp International Group, Inc., its subsidiaries and executive officers anddirectors.

**CautionaryStatement Relating to Forward Looking Information**

Wehave included some forward-looking statements in this section and other placesin this report regarding our expectations.  These forward-looking statements involve known and unknown risks,uncertainties and other factors which may cause our actual results, levels ofactivity, performance or achievements, or industry results, to be materiallydifferent from any future results, levels of activity, performance or achievementsexpressed or implied by these forward-looking statements.  Some of these forward-looking statements canbe identified by the use of forward-looking terminology including “believes,” “expects,”  “may,” “will,”  “should” or “anticipates” or the negativethereof or other variations thereon or comparable terminology, or bydiscussions of strategies that involve risks and uncertainties. You should readstatements that contain these words carefully because they discuss our futureexpectations, contain projections of our future operating results or of ourfuture financial condition, or state other “forward-looking” information.

We believe it is important to discuss ourexpectations; however, it must be recognized that events may occur in thefuture over which we have no control and which we are not accurately able topredict.  Readers are cautioned toconsider the specific business risk factors described under the caption “AdditionalFactors that May Affect Our Future Results” appearing under “Item 1. Descriptionof Business” of our Annual Report on Form 10-KSB filed with the United StatesSecurities and Exchange Commission on June 21, 2006, and not to place unduereliance on the forward-looking statements contained herein, which speak onlyas of the date of this report.  Weundertake no obligation to publicly revise forward-looking statements toreflect events or circumstances that may arise after the date of this report.

**Overview**

We are a “blank check company” that has not conducted any business activities since 2000 and a “shell company.”  Furthermore, since our inception we have not generated any revenue from operations and, accordingly, are a development stage enterprise.

We were initially incorporated as N.E.C. Properties,Inc. (“NEC”) on September 16, 1995, under the laws in the State of Nevada. Wewere organized as a blank check company with no operations or plan of business.On September 30, 1995 we had 25,000 shares at no par value authorized and18,600 shares issued and outstanding for $1,860 in cash. On November 19, 1998we amended and restated Articles of Incorporation to increase our authorizedcommon shares from 25,000 to 25,000,000, and established a par value of $.001per share. In November 1998 our stockholders approved two forward stock splits.The first was a 100-for-1 split increasing our outstanding common shares to1,860,000 and the second was a 1.77-for-1 stock split that increased ouroutstanding common stock shares to 3,292,200.

On November 10, 1999, we exchange for 7,706,575 sharesof our common stock for the outstanding capital stock of March IndyInternational, Inc. (“March”) (the “Share Exchange”). March was incorporated inDelaware on November 24, 1998 (“inception”). For accounting purposes, our acquisition of March was accounted for as areverse acquisition under the purchase method for business combinations, andaccordingly the transaction was treated as a recapitalization of March, withMarch having acquired us.

On June 17, 2000, we declared a one-for-three reversestock split, effective September 26, 2000. This reverse stock split reduced thenumber of our outstanding common stock shares from 12,090,234 to 4,030,078.

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We are a development stage enterprise.  From inception through September 30, 2000, wewere in the preliminary stages of engaging in the business of designing,building and racing cars for Formula One, Cart and Indy competition both in theUnited States and abroad. We also planned to develop an Internet website tooffer and sell merchandise products related to our racing activities andenterprise. In October 2000, because of our inability to successfully organizean Indy car race team and our failure to compete in the 2000 Indianapolis 500race, we discontinued our racing and related promotional activities.

During the calendar quarter ended September 30, 2001,we changed our name to Bancorp International Group, Inc.

On August 19, 2005, our Board of Directors approvedand adopted the Certificate of Designation Preferences and Right of PreferredStock (“Certificate of Designation”). The Certificate of Designation sets forththe preferences and rights of the Company’s 15,000,000 authorized shares ofpreferred stock, $.0001 par value, to be designated as the Series A ConvertiblePreferred Stock (“Series A Preferred Stock”).

On August 19, 2005, our stockholders voted to amendour Articles of Incorporation to increase the number of authorized shares ofcommon stock from 25,000,000 at a par value of $.001 to 500,000,000 at a parvalue of $0.0001. In a second amendment on August 19, 2005, effective January 62006, our stockholders approved another amended to our Articles ofIncorporation that increased the number of our authorized shares of commonstock from 500,000,000 at $.0001 par value to 2,000,000,000 at $.0001 parvalue.

Duringthe past 12 months we have not timely filed our reports with the U.S.Securities and Exchange Commission in accordance with our obligations underSection 12(g) of the Securities Exchange Act of 1934, as amended (the “ExchangeAct”). We are in the process of becoming current in our reporting obligationsunder the Exchange Act.

**Operations**

Sinceour inception, we have not realized any revenue from operations. Wediscontinued our motor racing business activities in the third quarter of 2000and have not undertaken any business activities since.  Accordingly, all of these activities werereflected as discontinued operations in 2000 and a loss of $4,488,503.

InSeptember 2005 we entered into a non-binding joint venture agreement with ESCOil Export, Ltd.  Under the terms of thisjoint venture arrangement, we will obtain the rights to sell and market the oiland natural gas production from the petroleum reserves of Papua NewGuinea.  This joint venture agreement issubject to the approval and acceptance by the government of Papua New Guinea ofcertain related natural gas and supply contracts.  Until the governmental approval andacceptance are obtained, our joint venture agreement with ESC Oil Export, Ltd.will not be binding or effective. Because we are only in the preliminary stages of this joint venture withESC Oil Export, Ltd., we have not completed a definitive plan ofoperation.  As of the date of thisreport, other than the non-binding joint venture agreement with ESC Oil Export,Ltd., we are not considering any other plan of operation.

Ouroperations for the three months and nine months ended September 30, 2006 and2005 were primarily of a corporate nature including legal, accounting andgeneral corporate administrative matters. We did not conduct any business enterprise activities during the threeand nine months ended September 30, 2006 and 2005.

**Going Concern**

Asindicated in the notes to the financial statements included elsewhere in thisreport, the financial statements have been prepared assuming that we willcontinue as a going concern.  During thenine months ended September 30, 2006, we incurred a net loss of $363,562 and atSeptember 30, 2006 we had a cumulative deficit of $4,949,874.  In addition, at September 30, 2006, we had aworking capital deficit of $223,841. These conditions raise substantial doubtabout our ability to continue as a going concern. Our plans with respect tothese matters include restructuring our existing obligations, raisingadditional capital through issuances of stock or debentures, and to complete abusiness acquisition for future operations. The accompanying financialstatements do not include any adjustments that might be necessary in the eventwe are unable to continue as a going concern.

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**12-Month Overhead Budget**

Although our joint venture agreement with ESCOil Export, Ltd. is contingent upon obtaining approval and acceptance of theproposed terms of certain natural gas and supply contracts by the government ofPapua New Guinea, we have prepared a budget for the 12 months ending September30, 2007 based upon obtaining this governmental approval.  Accordingly, our budgeted overhead expensesfor the 12 months ending June 30, 2007 are as follows:
|                                    | ** ** | **Per  Month** | ** ** | **12  Months** | ** ** |
|------------------------------------|------------|----------------|------------|----------------|------------|
| **Expenditures:**                  |       |           |       |           |       |
| Travel expenses                    |       | $              | 8,750      |           | $          | 105,000 |   |
| Hotel accommodations               |       | 2,500          |       | 30,000         |       |
| Rent and office expenses           |       | 1,000          |       | 12,000         |       |
| Employee compensation              |       | 2,667          |       | 32,000         |       |
| Accounting expenses                |       | 7,500          |       | 90,000         |       |
| Utilities and telephone            |       | 3,000          |       | 36,000         |       |
| Transfer agent                     |       | 625            |       | 7,500          |       |
| Office supplies and equipment      |       | 1,042          |       | 12,500         |       |
| Miscellaneous expenses             |       | 833            |       | 10,000         |       |
| Total  Administrative Expenditures |       | $              | 27,917     |           | $          | 335,000 |   |

 

***Additional Financial Commitments.***  Other than our commitments discussed above, we do not have any capitalcommitments.  Because we do not have anyassets, additional capital resources and funding will be required in the eventwe obtain the Papua New Guinea governmental approval of our proposed naturalgas and supply contracts and proceed with our joint venture arrangements withESC Oil Export, Ltd.  We have notformalized any plans for obtaining the necessary additional capital resourcesand funding, and have not obtained any related commitments related.  We anticipate however that, on a short-termbasis, Thomas Megas (our controlling shareholder and Chief Executive Officerand one of our directors) will provide the necessary capital resources andfunding through loans until alternative funding arrangements arecompleted.  These funding arrangementsmay include either or a combination of sales of common stock shares or lendingarrangements; however, there is no assurance that these sales or arrangementswill become available or will be on terms acceptable to us.  Unless the necessary capital resources areobtained, we may unable to proceed with our joint venture arrangement with ESCOil Export, Ltd. even though governmental approval may have been obtained.

**Item 3.  Controls and Procedures.**

Our Chief Executive Officer and Acting Chief Financial Officer are responsible primarily for establishing and maintaining disclosure controls and procedures designed to ensure that information required to be disclosed in our reports filed or submitted under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the U.S. Securities and Exchange Commission.  These controls and procedures are designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is accumulated and communicated to our management, including our principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

Furthermore, our Chief Executive Officer and Acting Chief Financial Officer are responsible for the design and supervision of our internal controls over financial reporting that are then effected by and through our board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of our financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.  These policies and procedures (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on our financial statements.

Thomas Megas, our Chief Executive Officer and Acting Chief Financial Officer, based upon his evaluation of the effectiveness of our disclosure controls and procedures and the internal controls over financial reporting as of the last day of the period covered by this report, concluded that our disclosure controls and procedures and internal controls over financial reporting were fully ineffective as of the last day of the period covered by this report and reported to our auditors 

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and board of directors that there are no controls and procedures and internal control over financial reporting during the period covered by this report and that all of which materially affect or is reasonably likely to materially affect our disclosure controls and procedures or internal control over financial reporting.  In conducting the evaluation of our disclosure controls and procedures and internal controls over financial reporting, Mr. Megas did not discover any fraud that involved management or other employees who have a significant role in our disclosure controls and procedures and internal controls over financial reporting.  Furthermore, although the disclosure controls and procedures and internal controls over financial reporting were deficient and absent, there were no changes made in our disclosure controls and procedures, internal controls over financial reporting, or other factors that would eliminate the deficiencies in our disclosure controls and procedures or internal controls over financial reporting subsequent to the date of their evaluation.  Although significant deficiencies or material weaknesses existed, no corrective actions were taken to correct significant deficiencies and material weaknesses in our internal controls and disclosure controls and procedures because of the lack of required financial resources to correct such deficiencies and weaknesses.

**PART II - OTHER INFORMATION**

**Item 1.  Legal Proceedings.**

Weare currently involved in pursuing additional legal action filed in the stateof Oklahoma against Pamela Thompson CPA, The Grace Trust and Charles Weller,esq. This case is related to the filing described below and represents theunsettled portion of case.

InAugust 2005, our management became aware of the unauthorized fraudulentissuance of approximately 243,842,000 shares of our common stock (the “WrongfullyIssued Shares”) to various entities and individuals for services and gifts,whereupon these entities and individuals attempted to sell the WrongfullyIssued Shares in the open market. Our officers and directors had norelationship with the entities and individuals that issued the WrongfullyIssued Shares.

InSeptember 2005, we a civil action in the District Court of Oklahoma County,Oklahoma, styled *Bancorp InternationalGroup, Inc. v.Mario A. Pino, an individual, Sam Deeb, an individual, JeanCarlos Medina, an individual, Charles Weller, an individual, Barkev Kibarian,an individual, Felica Morales, an individual, Clearstock, Inc., a Texascorporation, DealFlo, L.L.C., a New York Limited Liability Company, The GraceTrust, a foreign trust, Global Consulting Group, a Maryland corporation, IntelligentMessage Distributors, a Nevada corporation, and Wall Street Group, L.L.C., aArizona limited liability company* (the “Defendants”), Case No.CJ-2005-7459 (the “Civil Litigation”), seeking the return of the WrongfullyIssued Shares and the Defendants’ receipt of proceeds from the sale of thoseshares.

In the Civil Litigation we that Mr. Pino individuallyand through various affiliated entities and co-conspirators, including the WallStreet Group, L.L.C., prepared or possessed 20 or more common stockcertificates purportedly representing 235,000,000 shares of our common stock,the previously referred to Wrongfully Issued Shares, that were distributed tovarious individuals and entities, including the other Defendants. The number ofshares in question was what we could identify but could not determine if, inaddition to the 235,000,000 shares, any additional shares issued to the market.Capital Growth Financial, L.L.C. and JH Darbie & Co. intervened in theCivil Litigation (the “Intervenors”) and alleged that the Company negligentlyhired the Defendants and negligently supervised their actions and activities,and asserted Oklahoma and federal securities fraud and failure-to-registerclaims against the Defendants and us.

Inconjunction with the Civil Litigation, we reached an agreement with JH Darbie& Co., under which we delivered 25,025,000 common stock shares to JH Darbie& Co. to be held pending settlement or conclusion of the Civil Litigation.These shares were delivered to JH Darbie & Co. to satisfy the requirementsof Depository Trust Company (“DTC”) until common stock shares eligible to beresold without restriction could be delivered by JH Darbie & Co. to coverits short position in our common stock. Furthermore, JH Darbie & Co. placedin trust $72,500 to be used to pay the costs incurred regarding the litigation.

OnJanuary 11, 2006, the Court entered an Order Approving Settlement Agreement(the “Order”). As a result of issuance of the Order, a settlement agreement(the “Settlement Agreement”) became binding upon the Company and the DefendantsMario Pino, Barkev Kibarian, Juan Carlos Medina, Wall Street Group, L.L.C.,Clearstock, Inc., Sam Deeb, Global Consulting Group., DealFlo, L.L.C., andIntelligent Message Distributors (the “Settling Defendants”) and theIntervenors with an effective date of December 8, 2005.

In accordance with the Settlement Agreement, ourclaims against the Settling Defendants and the claims of the SettlingDefendants against us were resolved by the exchange of releases of claims, arelease of the Wrongfully Issued 

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Shares and payments to usin the aggregate sum of $171,546 from funds held at Capital Growth Financial,L.L.C. and the further agreement to pay an additional $277,093 by CapitalGrowth. Furthermore, the claims of the Intervenors against us were released forthe issuance of 25,025,000 shares of our common stock to JH Darbie & Co.and 219,723,000 shares of our common stock to Capital Growth Financial, L.L.C.for an aggregate sum of 244,748,000 common stock shares (the “Newly IssuedShares”). These shares were required to be deposited with DTC by JH Darbie& Co. and Capital Growth Financial, L.L.C. in satisfaction of their shortpositions with companies through which securities purchase and saletransactions are cleared on behalf of JH Darbie & Co. and Capital GrowthFinancial, L.L.C. The Newly Issued Shares were issued in accordance with theregistration exemption afforded under Section 3(a)(10) of the Securities Act.

Inaddition, Defendants Pino, Medina, Kibarian, Global Consulting Group,Intelligent Message Distributors and Wall Street Group, L.L.C. agreed toindemnify and hold harmless the Company against all actions, suits,proceedings, demands, and assessments brought by any past, present or futureholder of the shares of common stock of the Company in connection with theSettlement Agreement and the various claims of the Company settled in theSettlement Agreement and any associated judgments, attorney’s fees, costs andexpenses.

The Defendants, The Grace Trust, Charles Weller, and Felica Morales (“Non-Settling Defendants”), did not execute the settlement agreement and accordingly did not settle the claims asserted against them in the Civil Litigation. We received judgments against the Non-Settling Defendants, other than The Grace Trust, and are currently pursuing collection of these judgments.

**Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds**.

During the threemonths ended September 30, 2006, we did not sell any unregistered shares of ourcommon stock.

**Item 3.  Defaults Upon Senior Securities.**

We are not in default on any senior securities.

**Item 4.  Submission of Matters to a Vote of Securities Holders.**

During the three months ended September 30, 2006, no matters were submitted to the holder of our common stock shares, through the solicitation of proxies or otherwise.

**Item 5.  Other Information.**

We do not have any information required to be disclosed in a repot on Form 8-K during the three months ended September 30, 2006 that has not been previous reported on Form 8-K.

**Item 6.  Exhibits.**
|        | **Exhibit** | ** ** | **Description**                                                                                                                                                                            |
|--------|-------------|------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | 31          |       | Rule 13a - 14(a)/15d - 14(a) Certification, as  adopted pursuant to Section 302 of the Sarbanes Oxley Act of 2002                                                                          |
|   |        |       |                                                                                                                                                                                       |
|   | 32          |       | Certification of the Chief Executive Officer and  Acting Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted  pursuant to Section 906 of the Sarbanes Oxley Act of 2002 |

 

**SIGNATURES**

Pursuantto the requirements of the Securities Exchange Act of 1934, the Registrant hasduly caused this report to be signed on its behalf by the undersigned hereuntoduly authorized.
|                         | BANCORP INTERNATIONAL GROUP, INC. |
|-------------------------|-----------------------------------|
|                    |                              |
| DATE: November  9, 2006 | /s/ THOMAS MEGAS                  |   |
|                    | Thomas Megas                      |
|                    | Chief Executive Officer           |
|                    | Acting Chief Financial Officer    |

 

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Index to Consolidated FinancialStatements
| Report of Independent Registered Public  Accounting Firm |   |
|----------------------------------------------------------|--------|
| for the Years Ended September 30, 2006                   |   |
|                                                     |   |
| Balance  Sheets                                          |   |
|                                                     |   |
| Statements  of Operations                                |   |
|                                                     |   |
| Statements  of Shareholders’ Equity (Deficit)       |   |
|                                                     |   |
| Statements  of Cash Flows                                |   |
|                                                     |   |
| Notes  to Financial Statements                           |   |

 

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TheBoard of DirectorsBancorp International Group, Inc.3126 South Blvd.Suite 264Edmond, OK 73013Dear Board of Directors,

We have reviewed the accompanying Balance Sheet ofBancorp International Group, Inc. as of September 30, 2006, and the related statementsof income, stockholders’ equity and comprehensive income and cash flows for thesix months then ended. These financial statements are the responsibility of thecompany’s management.

We conducted our review in accordance with thestandards of the Public Company Accounting Oversight Board (United States). Areview of interim financial information consists principally of applyinganalytical procedures and making inquires of persons responsible for thefinancial and accounting matters. It is substantially less in scope than anaudit conducted in accordance with standards of the Public Company AccountingOversight Board (United States), the objective of which is the expression of anopinion regarding the financial statements taken as a whole. Accordingly, we donot express such an opinion.

Based on our review, we are not aware ofany material modifications that should be made to the accompanying interimfinancial statements for them to be in conformity with accounting principlesgenerally accepted in the United States of America.

 
| /s/ Lieberman & Associates  |   |
|---------------------------------|--------|
|                            |
| Lieberman & Associates P.A. |
| Ft. Lauderdale, Florida         |
| October 31, 2006                |

 

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**Bancorp International Group, Inc.Statement of Financial Position**

 
| ** **                                                                                                                                                                                     | ** ** | **September 30,** | ** **  | **December 31,** | ** ** |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|------------------------|-------------|-----------------------|------------|
| ** **                                                                                                                                                                                     | ** ** | **2006**               | ** **  | **2005**              | ** ** |
| ** **                                                                                                                                                                                     | ** ** | **(Unaudited)**        | ** **  | ** **            | ** ** |
| **Assets**                                                                                                                                                                                     |       |                   |        |                  |       |
|                                                                                                                                                                                           |       |                   |        |                  |       |
| Cash                                                                                                                                                                                           |       | $                      | 495         |                  | $          | — |   |
| Subscription Receivable                                                                                                                                                                        |       | 267,549                |        | —                |       |
| **Total  Assets**                                                                                                                                                                              | ** ** | **$**                  | **268,044** |                  | $          | — |   |
|                                                                                                                                                                                           |       |                   |        |                  |       |
| **Liabilities and Stockholders’  Deficit**                                                                                                                                                |       |                   |        |                  |       |
|                                                                                                                                                                                           |       |                   |        |                  |       |
| Accounts Payable and  Accrued Expenses                                                                                                                                                         |       | $                      | 287,574     |                  | $          | 267,076 |   |
| Current portion of Long  Term Debt                                                                                                                                                             |       | 203,816                |        | 526,519               |       |
|                                                                                                                                                                                           |       |                   |        |                  |       |
| **Total  Liabilities**                                                                                                                                                                         | ** ** | **491,390**            |        | **793,595**           | ** ** |
|                                                                                                                                                                                           |       |                   |        |                  |       |
| **Stockholders’ Deficit**                                                                                                                                                                 |       |                   |        |                  |       |
| Common Stock, $.0001  par value, 2,000,000,000 shares authorized, 500,009,162 shares issued and  outstanding at September 30, 2006 and 4,030,078 issued and outstanding at  December 31, 2005. |       | 50,001                 |        | 403                   |       |
|                                                                                                                                                                                           |       |                   |        |                  |       |
| Preferred Stock Series  A $.0001 par value, 15,000,000 share authorized, issued and outstanding at  September 30, 2006 and no shares issued or outstanding at December 31, 2005.               |       | 1,500                  |        | —                |       |
| Additional Paid in  Capital                                                                                                                                                                    |       | 4,675,027              |        | 3,792,314             |       |
| Accumulated Deficit                                                                                                                                                                            |       | (4,949,874             | )           | (4,586,312            | )          |
|                                                                                                                                                                                           |       |                   |        |                  |       |
| **Total  Stockholders’ Equity**                                                                                                                                                           | ** ** | **(223,346**           | **)**       | **(793,595**          | **)**      |
|                                                                                                                                                                                           |       |                   |        |                  |       |
| **Total Liabilities and  Stockholders’ Deficit**                                                                                                                                          | ** ** | **$**                  | **268,044** | ** **            | $          | — | ** ** |

 

Theattached notes are an integral part of these financial statements

F-2

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**Bancorp International Group, Inc.Statement of OperationsFor the Nine Months Ended September 30,(Unaudited)**

 
| ** **                     | ** ** | **Quarter to date** | ** ** | **Year to date** | ** ** |
|--------------------------------|------------|-------------------------------|------------|----------------------------|------------|
| ** **                     | ** ** | **2006**                      | ** ** | **2005**                   | ** ** | **2006** | ** ** | **2005** | ** ** |
|                           |       |                          |       |                       |       |   |   |   |   |
| **Gross Revenues**             | ** ** | **$**                         | **—** | ** **                 | **$**      | **—** | ** ** | **$** | **—** | ** ** | **$** | **—** | ** ** |
| ** **                     | ** ** | ** **                    | ** ** | ** **                 | ** ** | ** ** | ** ** | ** ** | ** ** |
| **Development Expemse**        |       |                          |       |                       |       |   |   |   |   |
| Accounting Fees                |       | —                        |       | —                     |       | 113,000 |   | — |   |
| Legal Fees                     |       | —                        |       | —                     |       | 65,374 |   | — |   |
| Consulting Fees                |       | —                        |       | —                     |       | 70,389 |   | — |   |
| Transfer Agent  Fees           |       | —                        |       | —                     |       | 4,000 |   | — |   |
| Interest Expense               |       | 1,686                         |       | 3,504                      |       | 5,125 |   | 7,009 |   |
| Lodging and  Travel            |       | —                        |       | 27,911                     |       | 52,656 |   | 44,757 |   |
| Office Expense                 |       | —                        |       | —                     |       | 53,019 |   | — |   |
| **Total Development Expenses** | ** ** | **1,686**                     | ** ** | **31,416**                 | ** ** | **363,562** | ** ** | **51,765** | ** ** |
|                           |       |                          |       |                       |       |   |   |   |   |
| **Net (Loss)**                 | ** ** | **$**                         | **(1,686** | **)**                      | **$**      | **(31,416** | **)** | **$** | **(363,562** | **)** | **$** | **(51,765** | **)** |
|                           |       |                          |       |                       |       |   |   |   |   |
| **Earnings per Share:**        |       |                          |       |                       |       |   |   |   |   |
|                           |       |                          |       |                       |       |   |   |   |   |
| **Basic**                      | ** ** | **$**                         | **—** | ** **                 | **$**      | **—** | ** ** | **$** | **—** | ** ** | **$** | **—** | ** ** |
|                           |       |                          |       |                       |       |   |   |   |   |
| **Fully Diluted**              | ** ** | **$**                         | **—** | ** **                 | **$**      | **—** | ** ** | **$** | **—** | ** ** | **$** | **—** | ** ** |

 

Theattached notes are an integral part of these financial statements

F-3

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**Bancorp International Group, Inc.Statement of Changes in Cash Flow(Unaudited)**

 
| ** **                                                                               | ** ** | **Nine Months Ended September 30,** | ** ** |
|------------------------------------------------------------------------------------------|------------|---------------------------------------------------------|------------|
| ** **                                                                               | ** ** | **2006**                                                | ** ** | **2005** | ** ** |
|                                                                                     |       |                                                    |       |   |   |
| **Development stage activities:**                                                        | ** ** | ** **                                              | ** ** | ** ** | ** ** |
| Net Income /  (Loss)                                                                     |       | $                                                       | (363,562   | ) | $ | (51,765 | ) |
| **Adjustments to reconcile net  loss to net cash used in development stage activities:** | ** ** | ** **                                              | ** ** | ** ** | ** ** |
| Prior Year  adjustment for interest                                                      |       | —                                                  |       | (32,275 | ) |
| **Changes in operating assets and  liabilities**                                         | ** ** | ** **                                              | ** ** | ** ** | ** ** |
| Increase in  Subscription Receivable                                                     |       | (267,549                                                | )          | **—** | ** ** |
| Increase in  Accounts Payable and Accrued Expenses                                       |       | 20,498                                                  |       | 7,009 |   |
| **Net cash flow provided from  development stage activities:**                           | ** ** | **(610,614**                                            | **)**      | **(77,032** | **)** |
|                                                                                     |       |                                                    |       |   |   |
| **Investing activities:**                                                                | ** ** | ** **                                              | ** ** | ** ** | ** ** |
| Increase in  Investments                                                                 |       |                                                    |       |   |   |
| Stockholder  Loans                                                                       |       | (322,703                                                | )          | 77,032 |   |
| **Net cash flow used in investing  activities:**                                         | ** ** | **(322,703**                                            | **)**      | **77,032** | ** ** |
|                                                                                     |       |                                                    |       |   |   |
| **Financing activities:**                                                                | ** ** | ** **                                              | ** ** | ** ** | ** ** |
| Proceeds from  sale of common stock                                                      |       | 933,811                                                 |       | **—** |   |
| **Net cash flow from financing  activities:**                                            | ** ** | **933,811**                                             | ** ** | **—** | ** ** |
|                                                                                     |       |                                                    |       |   |   |
| Net increase in cash  flow                                                               |       | 494                                                     |       | **—** |   |
| Beginning Cash                                                                           |       | **—**                                              |       | **—** |   |
| **Ending Cash**                                                                          | ** ** | **$**                                                   | **494**    | ** ** | **$** | **—** | ** ** |
| ** **                                                                               | ** ** | ** **                                              | ** ** | ** ** | ** ** |
| Supplemental  disclosures by financing activites                                         |       |                                                    |       |   |   |
| Interest Expense                                                                         |       | $                                                       | 1,686      |   | $ | 7,009 |   |

 

Theattached notes are an integral part of these financial statements

F-4

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**BancorpInternational Group, Inc.Statement of Stockholders’ Deficit**

 
| ** **                                            | ** ** | **Common Stock** | ** ** | **Preferred Stock Series A** | ** ** | **Paid in** | ** **     | **Accumulated** | ** ** | ** **  | ** ** |
|-------------------------------------------------------|------------|-----------------------|------------|---------------------------------------------|------------|------------------|----------------|-----------------|------------|-------------|------------|
| ** **                                            | ** ** | **Shares**            | ** ** | **Par**                                     | ** ** | **Shares**       | ** **     | **Par**         | ** ** | **Capital** | ** ** | **Deficit** | ** ** | **Total** | ** ** |
|                                                  |       |                  |       |                                        |       |             |           |            |       |        |       |   |   |   |   |
| **Balance December 31, 2005**                         | ** ** | **4,030,078**         | ** ** | **$**                                       | **403**    | ** **       | —         | ** **      | **$**      | **—**  | ** ** | **$** | **3,792,314** | ** ** | **$** | **(4,586,312** | **)** | **$** | **(793,595** | **)** |
| Expenses paid by  Stockholders in exchange for equity |       | 251,231,084           |       | 25,123                                      |       | —           |           | —          |       | 11,802      |       | — |   | 36,925 |   |
| Conversion of debt  payable to Stockholders           |       | —                |       | —                                      |       | 15,000,000       |           | 1,500           |       | 446,747     |       | — |   | 448,247 |   |
| Settlement of lawsuit -  January 15, 2006             |       | 244,748,000           |       | 24,475                                      |       | —           |           |            |       | 424,164     |       | — |   | 448,639 |   |
| Net Loss - September 30,  2006                        |       | —                |       | —                                      |       | —           |           | —          |       | —      |       | (363,562 | ) | (363,562 | ) |
| **September 30, 2006 (unaudited)**                    | ** ** | **500,009,162**       | ** ** | **$**                                       | **50,001** | ** **       | **15,000,000** | ** **      | **$**      | **1,500**   | ** ** | **$** | **4,675,027** | ** ** | **$** | **(4,949,874** | **)** | **$** | **(223,346** | **)** |

 

Theattached notes are an integral part of these financial statements

F-5

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BANCORP INTERNATIONAL GROUP, INC.NOTES TO FINANCIAL STATEMENTSFor the Nine Months Ended September 30, 2006

1.             THECOMPANY

N.E.C.  Properties, Inc.  (“NEC”) was incorporated on September 16,1995, under the laws in the State of Nevada. NEC was organized with nooperations or plan of business.  OnSeptember 30, 1995 the Company issued 18,600 shares of its then no par value and 25,000  authorized common stock, for $1,860 incash.  On November 19, 1998 the State ofNevada approved NEC’s restated Articles of Incorporation, which increased theirauthorized common shares from 25,000 to 25,000,000, and established a par valueof $.001 per share of common stock.  Inaddition, in November 1998 NEC approved a forward stock split of 100:1, thusincreasing the number of then outstanding common shares to 1,860,000.  In addition, at that time the Company alsoauthorized a 1.77-for-1 forward stock split in anticipation of mergertransaction with March Indy International, Inc. (“March” or “March Indy”).  Thepreviously issued 1,860,000  commonshares were now 3,613,249 common shares.

On November 10,1999, NEC acquired all the outstanding stock of March for 7,706,575  shares of NEC.  March was incorporated in Delaware onNovember 24, 1998  (“inception”). Foraccounting purposes, the transaction has been accounted for as a reverseacquisition under the purchase method for business combinations, andaccordingly the transaction has been treated as a recapitalization of March,with March as the acquirer.  The sharesissued in the Transaction were treated as being issued for cash and have beenshown as outstanding for all periods presented in the same manner as for astock split.

On June 17,2000 the Company declared a one-for-three (1:3) reverse stock split, effective June 26, 2000. The financial statementsherein give retroactive effect to this, and all the above, related equitytransactions transaction. March had intended to engage in the business ofdesigning, building and racing motor cars for Formula One, Cart and Indycompetition both in the United States and abroad.  March has also planned to develop an Internetwebsite in order to merchandise products related to its racing efforts.  From the time of its inception March had beena development stage enterprise through September 30, 2000. Subsequent to September30, 2000, the management of March determined that due to its inability tosuccessfully organize an Indy car race team and to compete in the 2000Indianapolis 500 race in the second quarter of the year ended December 31,2000, that the Company’s operations, as intended, would cease to operate. Dueto the cessation of operations, management has determined that they are nolonger a development stage enterprise commencing from the third quarter endedSeptember 30, 2000.

During thequarter ended September 30, 2001, March changed its name to BancorpInternational Group, Inc. (“Bancorp”) in an attempt to effect a merger with afinancial service oriented business. Bancorp has not merged with any financial service business.  Henceforth NEC, March or Bancorp are to bereferred to as the “Company”, unless reference is made to the respectivecompany for reference to events surrounding their acquisition by the Company.

The Company issubject to the reporting obligations under Section 12(g) of the SecuritiesExchange Act of 1934. The Company has not complied with the reportingobligations since December 31, 2001. The Company is in the process of becomecurrent.

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2.             SIGNIFICANTACCOUNTING POLICIES

(a)  Use of Estimates - The preparation offinancial statements in conformity with accounting principles generallyaccepted in the United States of America requires management to make estimatesand assumptions that affect the reported amounts of assets and liabilities anddisclosure of contingent assets and liabilities at the date of the financialstatements and the reported amounts of revenue and expenses during thereporting period.  Critical estimatesinclude management’s judgments associated with other asset valuations andaccrued expenses.  Actual results coulddiffer from those estimates.

(b)  Cash and Cash Equivalents – The Companyconsiders cash in banks, commercial paper and other highly liquid investmentswith insignificant interest rate risk and maturities if three months or less atthe time of acquisition to be cash and cash equivalents. The Company’s Cash andCash Equivalents balance as of June 30, 2006 includes $495.00 held by acommercial bank in Spain.

(c)  Loss Per Share - Basic earnings (loss)  per share (“EPS”)  is determined by dividing net loss for theperiod by the weighted average number of common shares outstanding during thesame period.  Diluted EPS reflects thepotential dilution that could occur if securities or other contracts to issuecommon stock were exercised or converted into common stock or resulted in theissuance of common stock, which would then share in the earnings of theCompany. As of December 31, 2005 there were no potentially dilutive outstandingthat could be exercised or converted into common stock. In January 2006 theCompany issued 15,000,000 share of convertible preferred stock. The potentialdilutive effect has not been disclosed because the impact on earnings per sharewould be anti-dilutive.

(d)  Impairment of Long-Lived Assets - The Companyreviews long-lived assets for impairment whenever circumstances and situationschange such that there is an indication that the carrying amounts may not berecovered.  The recoverability of assetsheld and used in operations is measured by a comparison of the carrying amountof the assets to the future net cash flows expected to be generated by theassets.  If such assets are considered tobe impaired, the impairment to be recognized is measured by the amount by whichthe carrying amount of the assets exceeds the fair value of the assets.  As of June 30, 2006 and December 31, 2005 allLong-Lived assets have been deemed impaired and written down to -0-.

(e)  Fair Value of Financial Instruments - TheCompany’s financial instruments consists of accounts payable and accruedexpenses. The carrying amount of the financial instruments reported in theconsolidated balance sheet approximates fair value based on the short-termmaturity of these instruments.

(f)  Income Taxes -  The Company accounts for income taxes inaccordance with Financial Accounting Standards Board (“FASB”) Statement of FinancialAccounting Standards (“SFAS”) No. 109, “Accounting for Income Taxes.” TheCompany recognizes deferred tax assets and liabilities based on the differencebetween the financial statement carrying amounts and the tax bases of theassets and liabilities, using the effective tax rates in the years in which thedifferences are expected to reverse.  Avaluation allowance related to the deferred tax asset is also recorded when itis probable that some or all of the deferred tax asset will not berealized.  Income tax expense consists ofthe tax payable for the period and the change during the period in deferred taxassets and liabilities.

The following is a reconciliation ofincome tax expense computed using the statutory Federal rate:
|                                                | ** ** | **September 30,** | ** ** | **December 31,** | ** ** |
|------------------------------------------------|------------|------------------------|------------|-----------------------|------------|
| ** **                                     | ** ** | **2006**               | ** ** | **2005**              | ** ** |
| ** **                                     | ** ** | ** **             | ** ** | ** **            | ** ** |
| Income tax  benefit computed at statutory rate |       | $                      | 4,949,874  |                  | $          | 4,586,312 |   |
| Changes in  valuation allowance                |       | (4,949,874             | )          | (4,586,312            | )          |
| Deferred tax Assets                            |       | —                 |       | —                |       |
|                                                |            |                        |            |                       |            |  |  |

 

F-7

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|                                               | ** ** | **    September 30,    ** | ** ** | **    December 31,    ** | ** ** |
|-----------------------------------------------|------------|------------------------------------------------------------------------|------------|-----------------------------------------------------------------------|------------|
| ** **                                    | ** ** | **2006**                                                               | ** ** | **2005**                                                              | ** ** |
| Net Loss as of                                |       | $                                                                      | 4,949,874  |                                                                  | $          | 4,586,312 |   |
| Tax benefit at  federal statutory rate of 15% |       | 742,481                                                                |       | 687,947                                                               |       |
| Increases in  valuation allowance             |       | (742,481                                                               | )          | (687,947                                                              | )          |
| Deferred Taxes                                |       | $                                                                      | 0          |                                                                  | $          | -0- |   |

 

3.             LEGALACTONS

(a) On January 11, 2006, the presiding Judge in aCivil Litigation regarding fraudulent sales of common stock of the Company byunauthorized agents entered an Order Approving a binding Settlement Agreement(the “Order”). As a result of issuance of the Order the Company and someDefendants (the “Settling Defendants”) and the parties bringing suit were boundto the agreement with an effective date of December 8, 2005.

In accordancewith the Settlement Agreement, the Company’s claims against the SettlingDefendants and the claims of the Settling Defendants against the Company wereresolved by the exchange of release of claims, a release of the wrongfullyissued shares and payments to the Company in the aggregate sum of $171,546  from funds held by one of the Interveners andthe further agreement to pay an additional $277,093.  Furthermore, the claims of the Intervenersagainst the Company were exchanged for the issuance of 25,025,000  shares of the Company’s common stock to oneof the Interveners and 219,723,000 shares of the Company’s common stock to the other Intervener for anaggregate sum of 244,748,000  commonstock shares (the “Newly Issued Shares”). The Newly Issued Shares are requiredto be deposited with DTC by the Interveners in satisfaction of their shortpositions with vendors through which securities purchase and sale transactionsare cleared on behalf of the Interveners. The Newly Issued Shares were issued in accordance with the registrationexemption afforded under Section 3(a)(10) of the Securities Act of 1933.

In addition, some of the Settling Defendants agreed toindemnify and hold harmless the Company against all actions, suits,proceedings, demands, and assessments brought by any past, present or futureholder of the shares of common stock of the Company in connection with theSettlement Agreement and the various claims of the Company settled in theSettlement Agreement and any associated judgments, attorney’s fees, costs andexpenses.

Two of theDefendants did not execute or participate in the Settlement Agreement andaccordingly did not settle the claims asserted against them in the CivilLitigation (“Non-Settling Defendants”). The Company was granted judgments against the Non-Settling Defendantsand the Company is negotiating settlements of the judgments with theNon-Settling Defendants, the outcome of which is uncertain as of the date ofthis report.

(b) The Companyhas been informed by the US Securities and Exchange Commission (the “Commission”)  that the Commission intends to instituteproceedings against the Company pursuant to Section 12(j) of the Securities Actof 1934 (the “Exchange Act”).  TheCommission is alleging violations of Section 13(a) of the Exchange Act andRules 13a-1 and 13a-13 the consequence of which could result in the suspensionor revocation of the Company’s ability to trade.

The Company is currently in the processof curing the above referenced violations.

F-8

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4.             STOCKHOLDER’SEQUITY

On August 19,2005, the Company’s Board of Directors approved and adopted Certificate ofDesignation Preferences and Right of Preferred Stock (the “Certificate ofDesignation”). The Certificate of Designation sets forth the preferences andrights of the Company’s 15,000,000 authorized shares of preferred stock, $.0001par value, to be designated as the Series A Convertible Preferred Stock (the “SeriesA Preferred Stock”).

The holders ofshares of the Series A Preferred Stock have the right, at their option, toconvert the Series A Preferred Stock into shares of the Company’s common stock ata ratio of 1 share of Series A Preferred for 100 shares of common stock. TheSeries A Preferred are entitled to receive dividends of every kind declared andpaid to holders of the Company’s common stock, at a rate equal to the setconversion rate of 1:100. In addition, the Preferred A have a right to havetheir shares adjusted in the event of future issuances of common shares thatwould have a dilutive effect on the Preferred A. The holder’s of the PreferredSeries A have voting rights equal to the number of shares of common stock thatthe Preferred A are convertible into, whether or not converted. In the event ofthe Company’s liquidation or dissolution or winding up, voluntary orinvoluntary, the holders of the outstanding Series A Preferred Stock will beentitled to receive liquidation benefits identical to those received by holdersof common stock, provided that each share of the Series A Preferred Stock willbe treated as if equal to 100 shares of common stock.

On August 21,2005, the Company amended their Articles of Incorporation.  This amendment increased the number of ourauthorized shares of common stock from 25,000,000  to 500,000,000 and reduced the par value to$0.0001, and authorized 15,000,000 shares of preferred stock, par value of $0.0001.  The holders of 90.8% of the outstandingcommon stock shares approved this amendment at a shareholders meeting held onAugust 19, 2005.

On January 6,2006, the Company amended their Articles of Incorporation. This amendmentincreased the number of authorized shares of common stock, par value of $.0001,from 500,000,000 to 2,000,000,000.  Theholders of 90.8% of the outstanding common stock shares approved this amendmentat a shareholders meeting held on August 19, 2005.

On January 4,2006, the Company’s Board of Directors authorized the following:

·                  251,231,084common stock shares to Thomas Megas in reimbursement of $36,925 of costsincurred by Mr. Megas on our behalf in his capacity as our Chairman and ChiefExecutive Officer.  These costs consistedof $33,000 paid to consultants for professional services including accountingand legal services and $3,925 for travel expenses.  The shares represented payment in full forthe above expenses and had a market value of $25,123, the difference betweenmarket value and the total advance was recorded as paid in capital to theCompany.

·                  7,500,000  shares of Series A Preferred Stock to Mr.Megas as settlement of outstanding debt incurred by the Company to Mr. Megas,between the periods of January 1, 2000 and December 31, 2005. The converteddebt had an outstanding value of $223,247.

·                  7,500,000  shares of Series A Preferred Stock to a majorinvestor as settlement of outstanding debt incurred by the Company to theinvestor, between the periods of January 1, 2000 and December 31, 2005. Theconverted debt had an outstanding value of $225,000.

F-9

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