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**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

**Washington, D.C. 20549**

**______________________**

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**FORM 10-Q**

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**[ X ] Quarterly Report Pursuant to Section 13 or 15(d) of theSecurities Exchange Act of 1934**

 

For the quarterly period ended June 30, 2013

 

OR

 

**[ ] Transition Report Pursuant to Section 13 or 15(d) of theSecurities Exchange Act of 1934**

 

For the transition period from ________ to ___________

 

Commission file number: 000-54793

 

**JPX GLOBAL, INC.**

(Name of Small Business Issuer in Its Charter)

 

 

 

 

 

 

 

Indicate by check mark whether the registrant(1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 12months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filingrequirements for the past 90 days. Yes [X] No [ ]

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Indicate by check markwhether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File requiredto be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months(or for such shorter period that the registrant was required to submit and post such files). Yes [X] No [ ]

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Indicate by check mark whether the registrantis a large accelerated filer, an accelerated filer, non-accelerated filer, or a smaller reporting company. See definition of “largeaccelerated filer,”“accelerated filer,” and “smaller reporting company in Rule 12b-2 of the Exchange Act.(Check one):

 

Large Accelerated Filer [ ]	Accelerated Filer[ ]	Non-Accelerated Filer [ ]

Smaller reporting company [X]

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Indicate by check mark whether the registrantis a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [X]

 

**APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY**

**PROCEEDINGS DURING THE PRECEDING FIVE YEARS**

 

Check whether the registrant has filed all documentsand reports required to be filed by Sections 12, 13, or 15(d) of the Exchange Act of 1934 after the distribution of securitiesunder a plan confirmed by a court. Yes [ ] No [ ]

 

**APPLICABLE ONLY TO CORPORATE ISSUERS**

 

State the number of shares outstanding of eachof the issuer’s classes of common equity, as of the latest practicable date. As of August16, 2013, the Company had outstanding31,975,000 shares of common stock, par value $0.001 per share.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

**JPX GLOBAL, INC.**

**QUARTERLY PERIOD ENDED JUNE 30, 2013**

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**Index to Report on Form 10-Q**

 

 

 

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**JPX Global, Inc.**

**(Formerly Jasper Explorations Inc.)**

(A Development Stage Company)

Notes to Financial Statements

June 30, 2013

Unaudited

 

1. ORGANIZATION

The company was incorporated under the laws of the state of Nevadaon December 18, 2008, with 75,000,000 authorized common shares with a par value of $0.001. On January 3, 2013, the Company approvedthe action to amend and restate the Articles of Incorporation of the Company and increase the authorized common shares to 500,000,000and create and authorize 40,000,000 shares of Preferred Stock which was approved by written consent of the holders representingapproximately 67% of the outstanding voting securities of the Company. Series A Preferred Stock was created and designated withsuper-voting rights of 100 votes per share of Series A Preferred Stock held, and is convertible into 10 shares of common stockfor every share of preferred stock held.

 

The Company was initially organized for the purpose of acquiringand exploring mineral claims. The company acquired a mineral claim with unknown reserves. We intend to continue to hold the miningclaims, but will not be developing these assets during 2013.  For this reason, we are no longer classifying the Company asan exploration stage company.  The Company has entered the sand and gravel extraction business with its joint venture in thestate of Washington and expects to receive revenue from the joint venture during the 2013 fiscal year.  The future goal ofthe Company will be to develop a waste services division  The Company has modified its business plan to include the developmentof waste management services including the storage, recycling, and disposal of waste.  The Company does not presently haveany waste management operations and is considered to be in the development stage, but due to our joint venture we expect to haverevenues and adjust our classification as a development stage company to an operational stage company as sales are made.

 

2. GOING CONCERN

 

The accompanying financial statements have been prepared assumingthat the company will continue as a going concern. The company does not have sufficient working capital for its planned activity,and to service its debt, which raises substantial doubt about its ability to continue as a going concern. The Company has incurredaccumulated losses of $2,407,487 since inception (December 18, 2008) through June 30, 2013.

 

Continuation of the company as a going concern is dependent uponobtaining additional working capital and the management of the company has developed a strategy which it believes will accomplishthis objective through short term loans from an officer-director, and additional equity investments, which will enable the companyto continue operations for the coming year. These financial statements do not include any adjustments relating to the recoverabilityand classification of recorded asset amounts, or amounts and classification of liabilities that might result from this uncertainty.

 

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Basis of Preparation

 

Pursuant to the rules and regulations of the Securities and ExchangeCommission for Form 10-Q, the financial statements, footnote disclosures and other information normally included in financial statementsprepared in accordance with generally accepted accounting principles have been condensed or omitted. The financial statements containedin this report are unaudited but, in the opinion of management, reflect all adjustments, consisting of only normal recurring adjustments,necessary for a fair presentation of the interim financial statements. The results of operations for any interim period are notnecessarily indicative of results for the full year. The balance sheet as at December 31, 2012 has been derived from audited financialstatements at that date but does not include all of the information and footnotes required by accounting principles generally acceptedin the United States of America for complete financial statements.

**JPX Global, Inc.**

**(Formerly Jasper Explorations Inc.)**

(A Development Stage Company)

Notes to Financial Statements

June 30, 2013

Unaudited

 

The preparation of financial statements in conformity with accountingprinciples generally accepted in the United States requires management to make estimates and assumptions that affect the reportedamounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, andthe reported amounts of revenues and expenses during the reporting period. Management reviews these estimates and assumptions onan ongoing basis using currently available information. Actual results could differ from those estimates. 

 

Income Tax

 

The company utilizes the liability method of accounting for incometaxes. Under the liability method deferred tax assets and liabilities are determined based on the differences between financialreporting and the tax bases of the assets and liabilities and are measured using the enacted tax rates and laws that will be ineffect, when the differences are expected to be reverse. An allowance against deferred tax assets is recorded, when it is morelikely than not that such tax benefits will not be realized.

 

Since inception through June 30, 2013, the company had a net operatingloss available for carry forward of $2,407,487.

 

Earnings Per Share

 

The Company follows ASC Topic 260 toaccount for earnings per share. Basic earnings per common share (“EPS”) calculations are determined by dividingnet income by the weighted average number of shares of common stock outstanding during the year. Diluted earnings per commonshare calculations are determined by dividing net income by the weighted average number of common shares and dilutive commonshare equivalents outstanding. During periods when common stock equivalents, if any, are anti-dilutive they are notconsidered in the computation. Because the Company does not have any potentially dilutive securities, the accompanyingpresentation is only of basic loss per common share.

 

Cash & Cash Equivalents

 

The Company considers all highly liquid investments with an originalmaturity of three months or less to be cash equivalents.

 

Impairment of Long-Lived Assets

 

The Company reviews and evaluates long-lived assets for impairmentwhen events or changes in circumstances indicate that the related carrying amounts may not be recoverable. The assets are subjectto impairment consideration under FASB ASC 360-10-35-17 if events or circumstances indicate that their carrying amount might notbe recoverable. When the Company determines that an impairment analysis should be done, the analysis will be performed using therules of FASB ASC 930-360-35, Asset Impairment, and 360-10 through 15-5, Impairment or Disposal of Long-Lived Assets.

 

Environmental Requirements

 

At the report date, environmental requirements related to a formallyheld mineral claim are unknown and therefore any estimate of future costs cannot be made.

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Mineral Property Acquisitions Costs

 

**JPX Global, Inc.**

**(Formerly Jasper Explorations Inc.)**

(A Development Stage Company)

Notes to Financial Statements

June 30, 2013

Unaudited

 

Costs of acquisition and option costs of mineral rights are capitalizedupon acquisition. Mine development costs incurred to develop new ore deposits, to expand the capacity of mines, or to develop mineareas substantially in advance of current production are also capitalized once proven and probable reserves exist and the propertyis a commercially mineable property.

 

Costs incurred to maintain current production or tomaintain assets on a standby basis are charged to operations. If the Company does not continue with exploration after thecompletion of the feasibility study, the mineral rights will be expensed at that time. Costs of abandoned projects arecharged to mining costs including related property and equipment costs. To determine if these costs are in excess of theirrecoverable amount periodic evaluation of carrying value of capitalized costs and any related property and equipment costsare based upon expected future cash flows and/or estimated salvage value in accordance with FASB Accounting StandardsCodification (ASC) 360-10-35-15, Impairment or Disposal of Long-Lived Assets.

 

Various factors could impact our ability to achieve forecastedproduction schedules. Additionally, commodity prices, capital expenditure requirements and reclamation costs could differfrom the assumptions the Company may use in cash flow models from exploration stage mineral interests. This, however,involves further risks in addition to those factors applicable to mineral interests where proven and probable reserves havebeen identified, due to the lower level of confidence that the identified mineralized material can ultimately be minedeconomically.

 

Estimates and Assumptions

 

Management uses estimates and assumptions in preparing financialstatements in accordance with generally accepted accounting principles. Those estimates and assumptions affect the reported amountsof the assets and liabilities, the disclosure of contingent assets and liabilities, and the reported revenues and expenses. Actualresults could vary from the estimates that were assumed in preparing these financial statements.

 

Stock-based compensation

 

The Company records stock based compensation to employees in accordancewith the guidance in ASC Topic 718 which requires the Company to recognize expenses related to the fair value of its employee stockoption awards. This eliminates accounting for share-based compensation transactions using the intrinsic value and requires insteadthat such transactions be accounted for using a fair-value-based method. The Company recognizes the cost of all share-based awardson a graded vesting basis over the vesting period of the award.

 

The Company accounts for equity instruments issued in exchangefor the receipt of goods or services from other than employees in accordance with FASB ASC 505-50 and the conclusions reachedby the FASB ASC 505-50. Costs are measured at the estimated fair market value of the consideration received or the estimatedfair value of the equity instruments issued, whichever is more reliably measurable. The value of equity instruments issuedfor consideration other than employee services is determined on the earliest of a performance commitment or completion ofperformance by the provider of goods or services as defined by FASB ASC 505-50.

 

Fair value of financial instruments

 

Fair value estimates discussed herein are based upon certain marketassumptions and pertinent information available to management as of June 30, 2013 and December 31, 2012. The respective carryingvalue of certain on-balance-sheet financial instruments approximated their fair values. These financial instruments

**JPX Global, Inc.**

**(Formerly Jasper Explorations Inc.)**

(A Development Stage Company)

Notes to Financial Statements

June 30, 2013

Unaudited

 

include cash, accounts payable and accrued liabilities and advancesfrom related party. Fair values were assumed to approximate carrying values for cash, payables and advances from related partybecause they are short term in nature and their carrying amounts approximate fair values or they are payable on demand.

 

Level 1: The preferred inputs to valuation efforts are "quotedprices in active markets for identical assets or liabilities," with the caveat that the reporting entity must have accessto that market. Information at this level is based on direct observations of transactions involving the same assets and liabilities,not assumptions, and thus offers superior reliability. However, relatively few items, especially physical assets, actually tradein active markets.

 

Level 2: FASB acknowledged that active markets for identicalassets and liabilities are relatively uncommon and, even when they do exist, they may be too thin to provide reliableinformation. To deal with this shortage of direct data, the board provided a second level of inputs that can be applied inthree situations.

 

Level 3: If inputs from levels 1 and 2 are not available, FASB acknowledgesthat fair value measures of many assets and liabilities are less precise. The board describes Level 3 inputs as "unobservable,"and limits their use by saying they "shall be used to measure fair value to the extent that observable inputs are not available."This category allows "for situations in which there is little, if any, market activity for the asset or liability at the measurementdate".Earlier in the standard, FASB explains that "observable inputs" are gathered from sources other than the reportingcompany and that they are expected to reflect assumptions made by market participants.

 

Recent Accounting Pronouncements

 

The Company has evaluated the recent accounting pronouncements andbelieves that none of them will have a material effect on the company's financial statements.

 

4. JOINT VENTURE

 

On June 17, 2013, the Company entered into a *Processing Leaseand Option To Purchase Agreement*, thereby effecting the *Joint Venture Agreement*, dated May 30, 2013, (collectively,the “Agreements”) with CGrowth Capital, Inc., a Delaware corporation ("CGrowth"). Pursuant to the Agreements,CGrowth is obligated to provide operational, on-site, and sales support in respect to the Chewelah Community Pit, a 15 acre sandand gravel pit in Colville,Washington. A copy of the approved Bureau of Land Management (“BLM”) *Contract For TheSale Of Mineral Materials* and all the Agreements were attached to our report on Form 8-K dated June 19, 2013. According tothe terms of the Agreements, the Company is obligated to make an initial payment of $50,000, followed by a payment of $300,000in 30 days or less. As of June 30, 2013, $59,617 has been paid by the company and is recorded as Mineral Rights on the BalanceSheet. These Mineral Rights are part of the Joint Venture. To date, $175,000 has been paid by the Company which was financed byrelated party advances. Also, the Company shall be entitled to 51% of the net revenue, and CGrowth shall be entitled to 49% ofthe net revenue respectively. A separate DBA was created to operate the Joint Venture and all transactions have been recorded underJPX Global. The Joint Venture Agreement expires on June 1, 2014, but will automatically extend for an additional year, in anticipationof a 5-year BLM extension. The copies of the Agreements are provided as exhibits to our Form 8-K dated June19, 2013.

 

5. ACQUISITION OF A MINERAL CLAIM

 

During 2010 the company acquired mineral claims for $15,000known as the Red Streak Jasper Property, located about three (3) kilometers southwest of the town of Westwold, BritishColumbia, Canada consisting of two (2) claim units consisting of a total of 12 cells located about three (3) kilometerssouthwest of the town of Westwold, British Columbia, Canada. The total claim area is 247.45 hectares.We intend to 

 

**JPX Global, Inc.**

**(Formerly Jasper Explorations Inc.)**

(A Development Stage Company)

Notes to Financial Statements

June 30, 2013

Unaudited

 

continue to hold the mining claims, but will not be developing theseassets during 2013. For this reason, we are no longer classifying the Company as an exploration stage company. The primary goalof the Company will be to develop into a waste services business and classify the Company as a development stage company.

 

The acquisitions costs have been impaired and expensed during 2010because there had been no exploration activities nor had there been any reserves established and we could not project any futurecash flows or salvage value and the acquisition costs were not recoverable. Consequently, we have recorded an impairment loss forthe full amount of $15,091 during the year ended December 31, 2010.

 

On June 7, 2013, the Company acquired mineral rights to theChewelah Community Pit, a 15 acre sand and gravel pit in Colville, Washington through its joint venture with CGrowth Capital,Inc. A copy of the approved Bureau of Land Management (“BLM”) *Contract For The Sale Of Mineral Materials*and all the Agreements were attached to our report on form 8-K dated June 19, 2013.

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6. CONVERTIBLE NOTE

 

On December 18, 2008, the company entered into a Promissory Noteagreement with the then CEO of the Company. The note was for a sum of $1,500 non interest bearing, due and payable on December31, 2010. If note is not paid on December 31, 2010, the note can be converted to common stock of the Company for $.001 per share.At the time the note was issued, the Company did not have a fair value for the stock therefore no beneficial conversion featureexists. At this time, the Company and the debt holder have not converted the loan into shares of the Company, and the Company doesnot currently plan to. The Company and the note holder have verbally agreed that the Company will pay the loan off as it is ableto without penalty. As of June 30, 2013 and December 31, 2012, the balance in note payable account is $1,500.

 

7. CAPITAL STOCK

 

On August 31, 2010, the company issued 30,000,000 private placementcommon shares to its founder for cash of $30,000.

 

On August 17, 2011 the Company issued 100,000 common shares at parvalue to its transfer agent for services rendered.

 

On February 15, 2013, the Company entered into an agreement to acquireall of the outstanding shares of Scorpex, Inc., a Nevada corporation (hereafter, “Scorpex”), in exchange for 103,250,000shares of Common Stock and 5,000,000 shares of Series A Preferred Stock of the Company (such transaction is hereafter referredto as the “Acquisition”). A material condition of the Acquisition, production of audited financial statements, hasnot been provided by Scorpex and therefore the Acquisition was terminated in accordance with its terms. All stock issuances havebeen rescinded associated with the Acquisition and the total issued and outstanding stock of the Company is 30,100,000 shares ofcommon stock and 0 shares of preferred stock. No termination penalties have been incurred by the Company.

 

On June 19, 2013 the Company issued 1,875,000 common sharesvalued at $2,343,750 for services rendered to Southbay Holdings and its affiliates. These consultants received their sharesfor organizing the joint venture with CGrowth and with the preparation for other acquisition, merger, and joint venturepartners.

 

**JPX Global, Inc.**

**(Formerly Jasper Explorations Inc.)**

(A Development Stage Company)

Notes to Financial Statements

June 30, 2013

Unaudited

 

8. RELATED PARTY TRANSACTIONS

 

During the six months ended June 30, 2013, a related partyadvanced the Company $69,365 for development, professional fees, and expenses including $59,617 paid toward the mineralrights and joint venture as described in Note 4. The total balance due to related party as on June 30, 2013 and December 31,2012 is $119,343 and $49,978 respectively.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

**ITEM 2.	MANAGEMENT'S DISCUSSIONAND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS**

 

The following discussion of the financialcondition and results of operations of JPX Global, Inc. (hereafter, “JPEX”, the “Company,”“we,” “our,” or “us”) should be read in conjunction with the Unaudited FinancialStatements and related Notes thereto included herein. This discussion may contain forward-looking statements within themeaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, including,without limitation, statements regarding the Company’s expectations, beliefs, intentions, or future strategies that aresignified by the words "expects," "anticipates," "intends," "believes," or similarlanguage. Actual results could differ materially from those projected in the forward looking statements. Prospectiveinvestors should carefully consider the information set forth herein, and the Company cautions investors that itsbusiness and financial performance is subject to substantial risks and uncertainties.

 

**Overview**

 

As a result of the agreement to acquire allof the assets of Scorpex, Inc., a Nevada corporation (“Scorpex”), on February 15, 2013, the Company changed its businessmodel to capitalize on the opportunities available in the integrated waste, and waste management services sector primarily in Mexico.Due to a condition in the agreement requiring audited financials, the asset purchase has not been effected. The Company intendsto consummate the agreement with Scorpex in the future upon completion of its audits and intends to further capitalize on opportunitiesin its integrated waste, and waste management service operations, including the receiving, storage, transfer and disposal in anenvironmental manner. In providing these services, we intend to actively pursue projects and initiatives that we believe make apositive difference for our environment which will be focused on gasification of waste in an environmental manner. It is expectedthat our customer base will include commercial, industrial, municipal and residential customers, other waste management companies,electric utilities, and governmental entity properties. We are a development stage company and we have not realized any revenuesto date. We do not have sufficient capital to enable us to commence and complete our exploration program. We will require additionalfinancing in order to conduct the exploration program described herein." Our auditors have issued a going concern opinion,raising substantial doubt about the Company's financial prospects, and the Company’s ability to continue as a going concern.As a waste management and sand and gravel extraction company, our principal sources of revenue will result from sand and gravelsales and waste management contracts, but will also include revenue from ancillary services related to the handling and conversionof waste. Expenses which comprise the costs of goods sold include the operational and staffing costs of the trucks and other vehiclesused for transporting and special licensing where required. General and administrative expenses have been comprised of administrativewages and benefits; occupancy and office expenses; outside legal, accounting and other professional fees; travel and other miscellaneousoffice and administrative expenses. Selling and marketing expenses include selling/marketing wages and benefits, advertising andpromotional expenses, as well as travel and other miscellaneous related expenses.

 

The Company has entered the sand and gravelextraction business with its joint venture in the state of Washington and expects to receive revenue from the joint venture duringthe 2013 fiscal year.  The future goal of the Company will be to develop a waste services division  The Company has modifiedits business plan to include the development of waste management services including the storage, recycling, and disposal of waste. Due to our joint venture we expect to have revenues and adjust our classification as a development stage company to an operationalstage company as sales are made.

 

Our ability to generate revenues during theyear 2013 and beyond depends substantially upon the Company’s resources available in order to develop and grow the sand andgravel joint venture and the integrated waste and waste management businesses. Such efforts require significant systems development,marketing and personnel costs, which, in turn, require substantial funding. If we are unable to obtain such funding, its abilityto generate revenues will be significantly impaired and we may be unable to continue operations.

 

 

Because the Company has incurred losses, incometax expenses are immaterial. No tax benefits have been booked related to operating loss carryforwards, given the uncertainty ofthe Company being able to utilize such loss carryforwards in future years. We anticipate incurring additional losses during thecoming year.

 

**Results of Operations**

 

Following is management’s discussion ofthe relevant items affecting results of operations for the three and six month periods ended June 30, 2013 and 2012.

 

**Revenues.**For the three and sixmonths ended June 30, 2013 and 2012, net revenues were $-0-.In the future, the Company’s sole source of revenue is expectedto be related sand and gravel excavation and waste management.

 

**Cost of Sales.**Cost of Sales forthe three and six months ended June 30, 2013 and 2012 were $-0-. Future costs of sales are expected to consist of thenecessary permits, processing and management of sand and gravel excavation as well as operational and staffing costs withrespect thereto.

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**Consulting Fees.**Consultingfees for the three and six months ended June 30, 2013 were $2,343,750 compared to $-0- during the three and six months endedJune 30, 2012. During the quarter ended June 30, 2013, the Company issued 1,875,000 shares of common stock for servicesrendered to the Company. The shares were valued at $1.25 per share as per ASC Topic 505-50-25-7 for financial statementpurposes.

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**Professional Fees.**Professionalfees for the three months ended June 30, 2013 were $3,612 compared to $8,950 for the three months ended June 30, 2012. Duringthe three months ended June 30, 2012, the Company incurred more legal and accounting fees associated with getting currentwith its filings with the Securities and Exchange Commission. For the six months ended June 30, 2013, professional fees were$10,056 compared to $9,557 for the six months ended June 30, 2012. Professional fees consist mainly of the fees for thereview of the Company’s financial statements of the prior quarter as well as the filings with the SEC. The Companyanticipates that professional fees will increase commensurate with an increase in our operations.

 

**Other General andAdministrative Expenses.**Other general and administrative expenses for the three months ended June 30, 2013 were $1,866compared to $-0- for the three months ended June 30, 2012. For the six months ended June 30, 2013, other general andadministrative expenses were $2,103 compared to $-0- for the six months ended June 30, 2012. We expect that salaries andconsulting expenses, that are cash- instead of share-based, will increase as we add personnel to build our waste managementbusiness.

 

**Other Income (Expense)**. The Companyhad net other expenses of $-0- for the three and six months ended June 30, 2013 and 2012.

 

**Liquidity and Capital Resources**

 

As of June 30, 2013, our primary source of liquidityconsisted of $30,190 in cash and cash equivalents. We hold most of our cash reserves in trust account maintained by our attorney.Since inception, we have financed our operations through a combination of short term loans from related parties and through theprivate placement of our common stock.

 

We have sustained significant net losseswhich have resulted in an accumulated deficit as at June 30, 2013 of $2,407,487 and are currently experiencing a substantialshortfall in operating capital which raises doubt about our ability to continue as a going concern. Historically, we havefunded operating expenses and our acquisition of mineral claim through advances from related parties. We anticipate a netloss for the year ended December 31, 2013 and with the expected cash requirements for the coming

 

months, without additional cash inflows from an increase in revenuescombined with continued cost-cutting or a receipt of cash from capital investment, there is substantial doubt as to the Company’sability to continue operations.

 

There is presently no agreement in place withany source of financing for the Company and we cannot assure you that the Company will be able to raise any additional funds, orthat such funds will be available on acceptable terms. Funds raised through future equity financing will likely be substantiallydilutive to current shareholders. Lack of additional funds will materially affect the Company and its business, and may cause usto cease operations. Consequently, shareholders could incur a loss of their entire investment in the Company.

 

**ITEM 3.	QUANTITATIVE ANDQUALITATIVE DISCLOSURES ABOUT MARKET RISK**

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As a smaller reporting company we are not requiredto provide this information.

 

**ITEM 4.	CONTROLS AND PROCEDURES**

 

**Management’s Report on Disclosure Controls and Procedures**

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We maintain disclosure controls and proceduresthat are designed to ensure that information required to be disclosed in our reports filed under the *Securities Exchange Actof 1934*, as amended, is recorded, processed, summarized and reported within the time periods specified in the Securities andExchange Commission's rules and forms, and that such information is accumulated and communicated to our management, to allow fortimely decisions regarding required disclosure.

 

As of June 30, 2013, the end of our secondquarter covered by this report, we carried out an evaluation, under the supervision of our Chief Executive Officer andController, of the effectiveness of the design and operation of our disclosure controls and procedures. Based on theforegoing, we concluded that our disclosure controls and procedures were ineffective as of the end of the period covered bythis quarterly report because there was no segregation of the duties with only a sole member in our management team. Ourboard of directors has only one member. We do not have a formal audit committee.

 

**Management’s Report on Internal Control over FinancialReporting**

 

Our management is responsible forestablishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) under theSecurities Exchange Act, as amended). In fulfilling this responsibility, estimates and judgments by management are requiredto assess the expected benefits and related costs of control procedures. The objectives of internal control include providingmanagement with reasonable, but not absolute, assurance that assets are safeguarded against loss from unauthorized use ordisposition, and that transactions are executed in accordance with management’s authorization and recorded properly topermit the preparation of financial statements in conformity with accounting principles generally accepted in the UnitedStates. Our management assessed the effectiveness of our internal control over financial reporting as of June 30, 2013. Inmaking this assessment, our management used the criteria set forth by the Committee of Sponsoring Organizations of theTreadway Commission (“COSO”) in *Internal Control-Integrated Framework*. Our management has concluded that,as of June 30, 2013, our internal control over financial reporting is ineffective in providing reasonable assurance regardingthe reliability of financial reporting and the preparation of financial statements for external purposes in accordance withUS generally accepted accounting principles. This quarterly report does not include an attestation report of theCompany’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 totemporary rules of the Securities and Exchange Commission that permit the Company to provide only management’s reportin this quarterly report.

 

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**Inherent limitations on effectiveness of controls**

 

Internal control over financial reportinghas inherent limitations which include but is not limited to the use of independent professionals for advice and guidance,interpretation of existing and/or changing rules and principles, segregation of management duties, scale of organization, andpersonnel factors. Internal control over financial reporting is a process which involves human diligence and compliance andis subject to lapses in judgment and breakdowns resulting from human failures. Internal control over financial reporting alsocan be circumvented by collusion or improper management override. Because of its inherent limitations, internal control overfinancial reporting may not prevent or detect misstatements on a timely basis, however these inherent limitations are knownfeatures of the financial reporting process and it is possible to design into the process safeguards to reduce, though noteliminate, this risk. Therefore, even those systems determined to be effective can provide only reasonable assurance withrespect to financial statement preparation and presentation. Projections of any evaluation of effectiveness to future periodsare subject to the risk that controls may become inadequate because of changes in conditions, or that the degree ofcompliance with the policies or procedures may deteriorate.

 

**Changes in Internal Control over Financial Reporting**

 

There have been no significant changes in ourinternal controls over financial reporting that occurred during the quarter ended June 30, 2013 that have materially or are reasonablylikely to materially affect, our internal controls over financial reporting.

 

**PART II**

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**OTHER INFORMATION**

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**ITEM 1.	LEGAL PROCEEDINGS**

 

We are not a party to any material legal proceedingsand to our knowledge; no such proceedings are threatened or contemplated.

 

**ITEM 1A.	RISK FACTORS**

 

As a smaller reporting company, we are not requiredto provide the information required by this item.

 

**ITEM 2.	UNREGISTERED SALESOF EQUITY SECURITIES AND USE OF PROCEEDS**

 

None

**ITEM 3.	DEFAULTS UPON SENIOR SECURITIES**

 

None.

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**ITEM 4.	MINE SAFETY DISCLOSURES**

 

Not applicable.

 

**ITEM 5.	OTHER INFORMATION**

 

Not applicable.

 

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**ITEM 6.	EXHIBITS**	

 

The following documents are filedas exhibits to this Form 10-Q:

 

**INDEX TO EXHIBITS**

 

 

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**SIGNATURES**

 

Pursuant to the requirements of the SecuritiesExchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.