SECURITIES AND EXCHANGE COMMISSION


Washington, D.C. 20549




FORM 10-Q




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


SECURITIES EXCHANGE ACT OF 1934






For the 3 month period ended

June 30,2009






Commission file number

000-26235






LION CAPITAL HOLDINGS, INC.(Name of Small Business Issuer in Its Charter)






Delaware

52-2191043(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification No.)






8140 North Mopac, Bldg 1, Ste 125 Austin, Texas

78759(Address of principal executive office)

(Zip Code)






Issuer's telephone number, including area code

(512) 615-2453






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




At June 30, 2009, a total of 14,851,079 shares of registrant's Common Stock were outstanding.

















TABLE OF CONTENTS




Page NumberPARTI

FINANCIAL INFORMATION

3Item1.

Financial Statements

3Item2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

9Item3.

Disclosure Controls and Procedures

18PARTII

OTHER INFORMATION

19Item6.

Exhibits, Lists, and Reports on Form 8-K

19Signatures



20










2


PartI - FINANCIAL INFORMATION




Item1. Financial Statements.


The following unaudited Financial Statements for the period ended June 30, 2009, have been prepared by LCHI, Inc..





LION CAPITAL HOLDINGS, INC.Consolidated Balance SheetsASSETSJune 30,


December 31,2009


2008(Unaudited)CURRENT ASSETSCash

$
4,138


$
3,215Total Current Assets


4,138



3,215PROPERTY AND EQUIPMENT, net


3,998



4,324TOTAL ASSETS

$
8,136


$
7,539LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)CURRENT LIABILITIESAccounts payable

$
8,500


$
4,281Due to shareholders and related companies


85,548



85,548Convertible notes payable - related companies


180,500



127,500Accrued interest on convertible notes payable - related


11,600



4,978Net liabilities of discontinued operations


1,700,134



1,696,850Total Current Liabilities


1,986,282



1,919,157TOTAL LIABILITIES


1,986,282



1,919,157STOCKHOLDERS' EQUITY (DEFICIT)Common stock, 150,000,000 shares authorized of $0.001par value, 14,851,079 shares issued and outstanding


Additional paid-in capital


Accumulated deficit


Total Stockholders' Equity (Deficit)


TOTAL LIABILITIES AND STOCKHOLDERS'EQUITY (DEFICIT)











The accompanying notes are an integral part of these financial statements.
 3





LION CAPITAL HOLDINGS, INC.Consolidated Statements of Operations(Unaudited)For the


For theThree Months Ended


Six Months EndedJune 30,


June 30,2009


2008


2009


2008REVENUES

$
-


$
-


$
-


$
-OPERATING EXPENSESGeneral and administrative


41,968



40,257



56,296



63,398Depreciation


163



-



326



-Total Operating Expenses


42,131



40,257



56,622



63,398LOSS FROM OPERATIONS


(42,131
)


(40,257
)


(56,622
)


(63,398
)OTHER EXPENSESInterest expense, including interest expense on beneficial conversion


(37,261
)


(35,000
)


(59,622
)


(55,000
)LOSS FROM CONTINUING OPERATIONS


(79,392
)


(75,257
)


(116,244
)


(118,398
)LOSS FROM DISCONTINUED OPERATIONS


(1,642
)


(2,954
)


(3,284
)


(4,596
)NET LOSS

$
(81,034
)

$
(78,211
)

$
(119,528
)

$
(122,994
)BASIC LOSS PER SHARE

$
(0.01
)

$
(0.01
)

$
(0.01
)

$
(0.01
)WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING


14,851,079



14,851,079



14,851,079



14,851,079





The accompanying notes are an integral part of these financial statements.
 4





LION CAPITAL HOLDINGS, INC.Consolidated Statements of Cash Flows(Unaudited)For the Six Months EndedJune 30,2009


2008CASH FLOWS FROM OPERATING ACTIVITIES:Net loss

$
(119,528
)

$
(122,994
)Adjustments to reconcile net loss to net cash used by operating activities:Interest expense accretion


53,000



55,000Depreciation


326



-Changes in operating assets and liabilities:Accounts payable and accrued interest


10,841



(24,230
)Net Cash Used in Operating Activities


(55,361
)


(92,224
)CASH FLOWS FROM INVESTING ACTIVITIES:


-



-CASH FLOWS FROM FINANCING ACTIVITIES:Proceeds from related party loans


-



10,000Proceeds from convertible notes


53,000



55,000Net Cash Provided by Financing Activities


53,000



65,000Net Cash Used in Continuing Operations


(2,361
)


(27,224
)Net Cash Provided by Discontinued Operations


3,284



3,284NET INCREASE (DECREASE) IN CASH


923



(23,940
)CASH AT BEGINNING OF PERIOD


3,215



25,669CASH AT END OF PERIOD

$
4,138


$
1,729SUPPLEMENTAL DISCLOSURESInterest paid

$
-


$
-Taxes paid

$
-


$
-





The accompanying notes are an integral part of these financial statements.
 5
 LION CAPITAL HOLDINGS, INC.
Notes to the Consolidated Financial Statements
June 30, 2009 and December 31, 2008







The accompanying unaudited condensed consolidated financial statements have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission.  Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted in accordance with such rules and regulations.  The information furnished in the interim condensed consolidated financial statements includes normal recurring adjustments and reflects all adjustments, which, in the opinion of management, are necessary for a fair presentation of such consolidated financial statements.  Although management believes the disclosures and information presented are adequate to make the information not
misleading, it is suggested that these interim condensed consolidated financial statements be read in conjunction with the Company's audited consolidated financial statements and notes thereto included in its December 31, 2008 Annual Report on Form 10-KSB.  Operating results for the nine months ended June 30, 2009 are not necessarily indicative of the results that may be expected for the year ending December 31, 2009.




NOTE 2 -      LOSS PER SHARE




Following is a reconciliation of the loss per share for the three months ended June 30, 2009 and 2008:




For the Three Months EndedJune 30,2009


2008Net (loss) available to common shareholders

$
(81,034
)

$
(78,211
)Weighted average shares


14,851,079



14,851,079Basic loss per share (based on weighted average shares)

$
(0.01
)

$
(0.01
)







For the Six Months EndedJune 30,2009


2008Net (loss) available to common shareholders

$
(119,528
)

$
(122,994
)Weighted average shares


14,851,079



14,851,079Basic loss per share (based on weighted average shares)

$
(0.01
)

$
(0.01
)


6
 LION CAPITAL HOLDINGS, INC.
 Notes to the Consolidated Financial Statements
 June 30, 2009 and December 31, 2008


NOTE 3 -      GOING CONCERN




As shown in the accompanying unaudited consolidated financial statements, the Company incurred a net loss of $119,528 during the six month period ended June 30, 2009 and, as of that date, the Company’s current and total liabilities exceeded its current
assets by $1,982,144. These factors, as well as the uncertain conditions that the Company faces relative to capital raising activities, create an uncertainty as to the Company’s ability to continue as a going concern. The Company is seeking to raise additional capital through public and/or private placement offerings, targeting strategic partners in an effort to increase revenues, and expanding revenues through strategic acquisitions.  The ability of the Company to continue as a going concern
is dependent upon the success of capital offerings or alternative financing arrangements and expansion of its operations. The unaudited consolidated financial statements do not include any adjustments that might be necessary should the Company be unable to continue as a going concern. As of June 30, 2009, the Company had cash and cash equivalents of $4,138. The Company will require additional funding during the next twelve months to finance the growth of its current operations and achieve its strategic objectives.  Management
is actively pursuing additional sources of financing sufficient to generate enough cash flow to fund its operations through 2009 and 2010. However management cannot make any assurances that such financing will be secured.






NOTE 4 -       CONVERTIBLE NOTE PAYABLE – RELATED PARTY




During the six months ended June 30, 2009, the Company executed seven separate “Promissory Convertible Notes” (“Convertible Notes”), for a total
of $53,000 with certain related companies and individuals.  The notes bear interest at 9.0% per annum.  Accrued interest on these notes payable at June 30, 2009 totaled $932.




The note holders have the right to convert the balance owed on these convertible notes, including interest, into shares of common stock of the Company. The rates of conversion provided for in the notes range from $0.01 to $0.10 per share.  The convertible notes have been accounted for pursuant to EITF Issue
No. 98-5, Accounting for Convertible Securities with Beneficial Conversion Features or Contingently Adjustable Conversion Ratios, and EITF Issue No. 00-27, Application of EITF Issue No. 98-5 to Certain Convertible Instruments.  Accordingly, a beneficial conversion feature (recorded as interest expense)
of $53,000 was recorded for the six months ended June 30, 2009.






NOTE 5 -       SUBSEQUENT EVENTS – PROPOSED ACQUISITIONS




On July 10, 2009, Lion Capital Holdings, Inc. (the "Company") entered into an agreement and plan of merger (the "Merger Agreement") with DeFi Mobile, Ltd., a Delaware corporation ("DeFi"), and Jeff Rice and David Thomas in their capacity as Joint Representatives.




Under the Merger Agreement, the Company and DeFi have agreed, subject to the satisfaction or waiver of the closing conditions set forth in the Merger Agreement, to engage in a merger whereby DeFi will merge with and into the Company, and the Company will
be the surviving corporation in the merger.  As part of the merger, DeFi's stock will be exchanged for stock of the Company at a ratio of one share of the Company's common stock for each one share held in DeFi immediately prior to the merger closing, and warrants to purchase the Company's common stock will be issued as part of the closing to certain DeFi shareholders.  As part of the merger, the Company will change its name to "DeFi Mobile, Ltd."  The DeFi shareholders have agreed
to an eighteen-month lock-up of the Company shares to be received in the merger.


7
 LION CAPITAL HOLDINGS, INC.
 Notes to the Consolidated Financial Statements
 June 30, 2009 and December 31, 2008


The parties have until July 31, 2009 to close the proposed merger, at which time either party may terminate the Merger Agreement unless such party's failure to fulfill its obligations under the Merger Agreement caused the closing delay.  The Merger Agreement may also be terminated if greater than 5% of the
outstanding DeFi voting stock dissents from the merger. As of the date of this filing, the Merger Agreement had not yet been finalized.




Effective July 15, 2009, the Company entered into a letter of intent (the "Pub X LOI") with Publisher X, LLC ("Pub X").  The Pub X LOI gives the Company the irrevocable right to acquire Pub X on or before August 31, 2009 subject to entry into a definitive purchase agreement containing customary representations,
warranties, covenants and indemnities.  The Company will acquire all of the assets, liabilities and issued and outstanding membership interests of Pub X in exchange for the Company issuing 14 million shares of its common stock to the members of Pub X.  The Company has also agreed to provide Pub X with bridge financing of $285,000, with at least $200,000 to be provided within three weeks of the execution of the Pub X LOI.  The Company will also enter into consulting agreements with
Flashman Studios and Reverb Communications as part of the acquisition.  The closing of the acquisition will be subject to satisfaction of customary closing conditions for transactions of this type.




Effective July 17, 2009, the Company entered into a letter of intent (the "FF LOI") with FunFinder, Inc., a Delaware corporation ("FunFinder").  The FF LOI gives the Company the irrevocable right to acquire all of the issued and outstanding capital stock of FunFinder on or before August 30, 2009 subject
to entry into a definitive purchase agreement containing customary representations, warranties, covenants and indemnities.  The Company will acquire all of the issued and outstanding capital stock of FunFinder, including any derivative securities outstanding, in exchange for the Company issuing $6 million worth of its common stock (at a price based on the market price of the Company's common stock but in no event less than $0.50 per share).  Issuance of the Company's stock will occur as follows
– 4 million shares to be issued at the closing (subject to FunFinder having entered into a contract with Royal Caribbean Cruise Lines), and the remainder issuable upon completion of further milestones by FunFinder. The closing of the acquisition will be subject to satisfaction of customary closing conditions for transactions of this type.


8






Item2. Management's Discussion and Analysis or Plan of Operation.




The following is management's discussion and analysis of certain significant factors that have affected the Company's financial position and operating results during the periods included in the accompanying consolidated financial statements. The accompanying unaudited financial statements include all adjustments which
in the opinion of management are necessary for a fair presentation and in order to make the financial statements not misleading.






Risk Factors and Cautionary Statements




Forward-looking statements in this report are made pursuant to the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. The Company wishes to advise readers that actual results may differ substantially from such forward-looking statements. Forward-looking statements involve risks and uncertainties
that could cause actual results to differ materially from those expressed in or implied by the statements, including, but not limited to, the following: the ability of the Company to continue as a viable concern ,uncertainties and assumptions relating to our operations, results of operations, competitive factors, shifts in market demand and other risks and uncertainties, the ability of the Company to obtain financing in order to implement its business plan and other risks detailed in the Company's periodic report
filings with the Securities and Exchange Commission.






For this purpose, any statements that are not statements of historical fact maybe deemed to be forward-looking statements, including the statements under Management's Discussion and Analysis of Financial Condition and Results of Operations regarding our strategy, future operations, future expectations or future estimates,
financial position and objectives of management. Those statements in this Form 10-Q/A containing the words believes, anticipates, plans, expects and similar expressions constitute forward-looking statements, although not all forward-looking statements contain such identifying words. These forward-looking statements are based on our current expectations and are subject to a number of risks, uncertainties and assumptions relating to our operations, results of operations, competitive factors, shifts in market demand
and other risks and uncertainties.






Although we believe that the assumptions underlying our forward-looking statements are reasonable, any of the assumptions could be inaccurate and actual results may differ from those indicated by the forward-looking statements included in this Form 10-Q/A. In light of the significant uncertainties inherent in the forward-looking
statements included in this Form 10-Q/A, you should not consider the inclusion of such information as a representation by us or anyone else that we will achieve such results. Moreover, we assume no obligation to update these forward-looking statements to reflect actual results, changes in assumptions or changes in other factors affecting such forward-looking statements.










9




Overview and Plan of Operation






You should read the following discussion in conjunction with the consolidated financial statements and footnotes thereto included in the Company's Quarterly Report on Form 10-Q/A for the quarter ended June 30, 2009. The consolidated financial statements and related footnotes included herein include the financial statements
of Lion Capital Holdings, Inc. Lion Capital Holdings, Inc. (the Issuer or Company or LCHI) was organized under the laws of the State of Delaware in 1999. LCHI has one subsidiary, Capita lCable and Wire, Inc., dba Austin Cable and Wire, which was incorporated in 1997as a Texas corporation.






Austin Cable was acquired by LCHI in 1999 through the sale of a controlling block of its stock, thus making Austin Cable a wholly-owned subsidiary of LCHI. Austin Cable is in the business of assembling copper and fiber optic specialty cables for distribution in the United States.






The Company produced specialty custom cable assemblies and harnesses for various industries. A specialty custom cable or harness assembly is a copper or fiber optic cable with connectors terminated at one or both ends. The specialty custom cable assembly industry is one that services and supplies a variety of other industries,
which need wire harnesses and cable assemblies for their products.






In 1999, LCHI also acquired all but one share of TIC Cables Electronica y Suministros, S.A. de C.V., incorporated in Mexico in 1989, thus making TIC a99.99%-owned subsidiary of LCHI. As TIC is engaged in the design and integration of systems for data and LCHIunications in Mexico, LCHI management believed the acquisition
would provide strategic competitive advantages, which proved true throughout most of 2000. However, in 2001, due to a lack of control over operations at TIC, the difficulty in the Mexican economy and excessive losses at TIC's facilities in Mexico, LCHI's Board of Directors, in a meeting held September 6, 2001, voted to abandon TIC operations. LCHI has divested itself of its interest in TIC and is in the process of returning all TIC shares to its president, Jesus Aguirre. We have not legally transferred our ownership
interest in TIC to Mr. Aguirre, and based on consultation with legal counsel, LCHI does not have any continuing or contingent liabilities related to TIC.






From its inception through mid 2003, the Company was engaged in the business of manufacturing both copper and fiber optic specialty custom cabling for the data and telecommunications industries. In addition to its one subsidiary, Capital Cable & Wire, Inc., the company had aggressively sought acquisitions to further
increase its sales in this industry. The Company had not, however, been successful in closing any acquisitions. As such, management, together with the company's board of directors, decided to forgo all such acquisition activities and has corporately decided to shift its core business focus. The Company will no longer be principally engaged in the business of manufacturing copper and fiber optic cables. Capital Cable, dba Austin Wire & Cable, will continue to operate as a subsidiary of Lion Capital Holdings,
Inc., and will heretofore account for 100% of the Company's interests in the custom cable industry.








10






Lion Capital is now seeking a reverse merger candidate.






Lion Capital was in discussions with Sun Motor, a reverse merger candidate, based in China, but the discussions broke down due to certain frivolous legal actions brought against Lion Capital by Elaine Selan vs Andrew Stack et al. As of this filing, the trial judge has entered an order dismissing with prejudice the claims
of the plaintiff, Elaine Selan, but the litigation continues as to Lion Capital’s counterclaim and an attempt by a third party, SIAD, US, Inc to intervene. Lion Capital filed a form 8-K/A dated May 19, 2005 to this effect. Although the transaction with Sun Motor has collapsed, Lion Capital continues to seek prospective merger candidates, but, at the time of this report, has been unsuccessful in finding a suitable candidate.






In July 2006, Lion Capital was again involved in another frivolous law suit brought against Lion Capital by 3Dicon, Inc vs Andrew Stack et al. As of this filing the case is still open and has not reached trial. Lion Capital was not part of this transaction involving Andrew Stack and 3Dicon and is cooperating with the plaintiffs
in order to resolve any issues and be dismissed from the case. If Lion Capital is not dismissed from this case, then there is a possibility that Lion Capital will have to seek bankruptcy since it does not have the funds to adequately defend itself.




On March 27, 2009, Lion Capital entered into an irrevocable letter of intent to acquire 100% of DeFi Mobile Ltd,,a privately held telecommunications company. The acquisition is subject to the entry into a material definitive agreement regarding the transaction, shareholder approvals, if applicable, and the satisfaction
or waiver of certain conditions customary to transactions of this type.  The Company intends to complete the transaction on or before May 30, 2009. The timing and completion of the acquisition is subject to shareholder approval of DeFi Mobile Ltd., applicable securities laws and other factors. There can be no assurance that this transaction will be completed in a timely manner if at all.




SUBSEQUENT EVENTS – PROPOSED ACQUISITIONS




On July 10, 2009, Lion Capital Holdings, Inc. (the "Company") entered into an agreement and plan of merger (the "Merger Agreement") with DeFi Mobile, Ltd., a Delaware corporation ("DeFi"), and Jeff Rice and David Thomas in their capacity as Joint Representatives.




Under the Merger Agreement, the Company and DeFi have agreed, subject to the satisfaction or waiver of the closing conditions set forth in the Merger Agreement, to engage in a merger whereby DeFi will merge with and into the Company, and the Company will be the surviving corporation in the merger.  As part
of the merger, DeFi's stock will be exchanged for stock of the Company at a ratio of one share of the Company's common stock for each one share held in DeFi immediately prior to the merger closing, and warrants to purchase the Company's common stock will be issued as part of the closing to certain DeFi shareholders.  As part of the merger, the Company will change its name to "DeFi Mobile, Ltd."  The DeFi shareholders have agreed to an eighteen-month lock-up of the Company shares to be received
in the merger.




The parties have until July 31, 2009 to close the proposed merger, at which time either party may terminate the Merger Agreement unless such party's failure to fulfill its obligations under the Merger Agreement caused the closing delay.  The Merger Agreement may also be terminated if greater than 5% of the
outstanding DeFi voting stock dissents from the merger. As of the date of this filing, the Merger Agreement had not yet been finalized.




Effective July 15, 2009, the Company entered into a letter of intent (the "Pub X LOI") with Publisher X, LLC ("Pub X").  The Pub X LOI gives the Company the irrevocable right to acquire Pub X on or before August 31, 2009 subject to entry into a definitive purchase agreement containing customary representations,
warranties, covenants and indemnities.  The Company will acquire all of the assets, liabilities and issued and outstanding membership interests of Pub X in exchange for the Company issuing 14 million shares of its common stock to the members of Pub X.  The Company has also agreed to provide Pub X with bridge financing of $285,000, with at least $200,000 to be provided within three weeks of the execution of the Pub X LOI.  The Company will also enter into consulting agreements with
Flashman Studios and Reverb Communications as part of the acquisition.  The closing of the acquisition will be subject to satisfaction of customary closing conditions for transactions of this type.


11




Effective July 17, 2009, the Company entered into a letter of intent (the "FF LOI") with FunFinder, Inc., a Delaware corporation ("FunFinder").  The FF LOI gives the Company the irrevocable right to acquire all of the issued and outstanding capital stock of FunFinder on or before August 30, 2009 subject
to entry into a definitive purchase agreement containing customary representations, warranties, covenants and indemnities.  The Company will acquire all of the issued and outstanding capital stock of FunFinder, including any derivative securities outstanding, in exchange for the Company issuing $6 million worth of its common stock (at a price based on the market price of the Company's common stock but in no event less than $0.50 per share).  Issuance of the Company's stock will occur as follows
– 4 million shares to be issued at the closing (subject to FunFinder having entered into a contract with Royal Caribbean Cruise Lines), and the remainder issuable upon completion of further milestones by FunFinder. The closing of the acquisition will be subject to satisfaction of customary closing conditions for transactions of this type.






GOING CONCERN










As shown in the accompanying unaudited consolidated financial statements, the Company incurred a net loss of $119,528 during the six month period ended June 30, 2009 and, as of that date, the Company’s current and total liabilities exceeded its current assets by $1,982,144. These factors, as well as the uncertain
conditions that the Company faces relative to capital raising activities, create an uncertainty as to the Company’s ability to continue as a going concern. The Company is seeking to raise additional capital through public and/or private placement offerings, targeting strategic partners in an effort to increase revenues, and expanding revenues through strategic acquisitions.  The ability of the Company to continue as a going concern is dependent upon the success of capital offerings or alternative
financing arrangements and expansion of its operations. The unaudited consolidated financial statements do not include any adjustments that might be necessary should the Company be unable to continue as a going concern. As of June 30, 2009, the Company had cash and cash equivalents of $4,138. The Company will require additional funding during the next twelve months to finance the growth of its current operations and achieve its strategic objectives.  Management is actively pursuing additional sources
of financing sufficient to generate enough cash flow to fund its operations through 2009 and 2010. However management cannot make any assurances that such financing will be secured.


12


RESULTS OF OPERATIONS






Revenues for the three months period ended June 30, 2009 were $0, compared to revenues of $0 for the same period ended June 30, 2008.  Revenues for the six months period ended June 30, 2009 were $0, as compared to $0 for the six months period ended June 30, 2008. Revenues are generally earned during the second
half of the year.





General and administrative costs for the three months period ended June 30, 2009 were $41,968 compared to $40,257 for the same period ended June 30, 2008. General and administrative costs for the six months period ended June 30, 2009 were $56,296 compared to $63,398 for the same period ended June 30, 2008. General and
administrative costs were slightly lower due to efforts made by management to reduce costs and limit expenditure due the slowdown in the economy.




Depreciation for the three months ended June 30, 2009 was $163, compared to $0 for the same period ended June 30, 2008. Depreciation for the six months ended June 30, 2009 was $326, compared to $0 for the same period ended June 30, 2008.





Net Losses for the three months ended June 30, 2009 were $81,034 compared to net losses of $78,211 for the same period ended June 30, 2008. Net losses for the six months period ended June 30, 2009 were $119,528, as compared to $122,994 for the six months period ended June 30, 2008. The net losses are primarily attributable
to general and administrative expenses as well as interest expenses totaling $37,261. General and administrative expenses include financing costs, accounting costs, consulting fees, leases, employment costs, professional fees, and costs associated with the preparation of disclosure documentation.




The Company expects to continue to incur losses through the fiscal year ended 2009 and, due to the lack of business opportunities, we cannot determine whether we will generate future revenues from operations.




Income Tax Expense (Benefit)




The Company has a prospective income tax benefit resulting from a net operating loss carryforward and start up costs that could offset any future operating profit.




Impact of Inflation




The Company believes that inflation has had a negligible effect on operations over the past three years.




Capital Expenditures




The Company expended $0 on capital equipment for the three months to June 30, 2009.




Liquidity and Capital Resources




The Company, since inception, has experienced significant changes in liquidity, capital resources, and stockholders’ equity.




As of June 30, 2009, the Company had current assets totaling $4,138 and a working capital deficit of $1,982,144. Our assets consisted of cash on hand of $4,138 and property and equipment of $3,998, totaling $8,136. Current liabilities totaled $1,986,282, which consisted of accounts payable of $8,500, amounts due to shareholders
and related parties of $85,548, convertible notes payable to related parties of $180,500, accrued interest on convertible notes of $11,600 and net liabilities of discontinued operations of $1,700,134. Net stockholders’ deficit in the Company was $1,978,146 at June 30, 2009.




Cash flow used in operating activities for the six months period ended June 30, 2009 was $55,361 as compared to $92,224 in cash flow used in operating activities for the six months period ended June 30, 2008. The cash flow used in operating activities in the current three months period was due primarily to net losses.




Cash flow used in investing activities for the six months period ended June 30, 2009 was $0 as compared to $0 for the six months period ended June 30, 2008.




Cash flow provided by financing activities for the six months period ended June 30, 2009 was $53,000 as compared to $65,000 for the six months period ended June 30, 2008. Cash flow provided by financing activities in the current three months period was due to proceeds from convertible loans of $33,000.






13




The Company’s current assets are insufficient to conduct its intended plan of operation over the next twelve (12) months and it will have to realize debt or equity financing to fund its operations. We have no current commitments or arrangements with respect to funding or immediate sources of funding. Further, no
assurances can be given that funding would be available or available to us on acceptable terms. Therefore, our stockholders would be the most likely source of new funding in the form of loans or equity placements though none have made any commitment for future investment and we have no agreement formal or otherwise. Our inability to obtain fundingwould have a material adverse affect on our plan of operation.




The Company had no formal long term lines or credit or other bank financing arrangements as of June 30, 2009.




The Company does not expect to pay cash dividends in the foreseeable future.




The Company has no defined benefit plan or contractual commitment with any of its officers or directors.




The Company has no current plans for any significant purchase or sale of any plant or equipment.




The Company has no current plans to make any changes in the number of employees.




Off Balance Sheet Arrangements




As of June 30, 2009, we have no significant off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures, or capital resources that is material
to stockholders.




Critical Accounting Policies




In the notes to the audited financial statements for the year ended December 31, 2008, included in the Company’s Form 10-KSB, the Company discusses those accounting policies that are considered to be significant in determining the results of operations and our financial position. The Company believes that the accounting
principles utilized by us conform to accounting principles generally accepted in the United States of America.




The preparation of financial statements requires management to make significant estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses. By their nature, these judgments are subject to an inherent degree of uncertainty. On an on-going basis, the Company evaluates our estimates,
including those related to bad debts, inventories, intangible assets, warranty obligations, product liability, revenue, and income taxes. We base our estimates on historical experience and other facts and circumstances that are believed to be reasonable, and the results form the basis for making judgments about the carrying value of assets and liabilities. The actual results may differ from these estimates under different assumptions or conditions.




Stock-Based Compensation




The Company has adopted SFAS No. 123 (revised 2004) (SFAS No. 123R), Share-Based Payment, which addresses the accounting for stock-based payment transactions in which an enterprise receives employee services in exchange for (a) equity instruments of the enterprise or (b) liabilities that are based on the fair value of
the enterprise’s equity instruments or that may be settled by the issuance of such equity instruments. In January 2005, the Securities and Exchange Commission (SEC) issued Staff Accounting Bulletin (SAB) No. 107, which provides supplemental implementation guidance for SFAS No. 123R. SFAS No. 123R eliminates the ability to account for stock-based compensation transactions using the intrinsic value method under Accounting Principles Board (APB) Opinion No. 25, Accounting for Stock Issued to Employees, and
instead generally requires that such transactions be accounted for using a fair-value-based method. We use the Black-Scholes-Merton (“BSM”) option-pricing model to determine the fair-value of stock-based awards under SFAS No. 123R, consistent with that used for pro forma disclosures under SFAS No. 123, Accounting for Stock-Based Compensation. We have elected the modified prospective transition method as permitted by SFAS No. 123R and accordingly prior periods have not been restated to reflect the
impact of SFAS No. 123R. The modified prospective transition method requires that stock-based compensation expense be recorded for all new and unvested stock options, restricted stock, restricted stock units, and employee stock purchase plan shares that are ultimately expected to vest as the requisite service is rendered beginning on September 1, 2005, the first day of our fiscal year 2006. Stock-based compensation expense for awards granted prior to September 1, 2005 is based on the grant date fair-value as
determined under the pro forma provisions of SFAS No. 123. Prior to the adoption of SFAS No. 123R, we measured compensation expense for our employee stock-based compensation plans using the intrinsic value method prescribed by APB Opinion No. 25.






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We applied the disclosure provisions of SFAS No. 123 as amended by SFAS No. 148, Accounting for Stock-Based Compensation – Transition and Disclosure, as if the fair-value-based method had been applied in measuring compensation expense. Under APB Opinion No. 25, when the exercise price of the Company’s employee stock options was equal to the market price of
the underlying stock on the date of the grant, no compensation expense was recognized. We account for equity instruments issued in exchange for the receipt of goods or services from other than employees in accordance with SFAS No. 123 and the conclusions reached by the Emerging Issues Task Force (“EITF”) in Issue No. 96-18.
Costs are measured at the estimated fair market value of the consideration received or the estimated fair value of the equity instruments issued, whichever is more reliably measurable. The value of equity instruments issued for consideration other than employee services is determined on the earliest of a performance commitment or completion of performance by the provider of goods or services as defined by EITF 96-18




Recent Accounting Pronouncements




In March 2008, the FASB issued SFAS 161 which amends and expands the disclosure requirements of SFAS 133 to provide an enhanced understanding of an entity’s use of derivative instruments, how they are accounted for under SFAS 133 and their effect on the entity’s financial position, financial performance and
cash flows. The provisions of SFAS 161 are effective for the period beginning after November 15, 2008. We are currently reviewing the effect, if any, that the adoption of this statement will have on our financial statements.




In May 2008, the FASB issued SFAS 162 which identifies the sources of accounting principles and the framework for selecting the principles to be used in the preparation of financial statements of nongovernmental entities that are presented in conformity with generally accepted accounting principles (GAAP) in the United
States (the GAAP hierarchy). We are currently reviewing the effect, if any, that the adoption of this statement will have on our financial statements. In May 2008, the FASB issued SFAS 163 which clarifies how SFAS 60 applies to financial guarantee insurance contracts, including the recognition and measurement to be used to account
for premium revenue and claim liabilities. We are currently reviewing the effect, if any, that the adoption of this statement will have on our financial statements.




In May 2009, the FASB issued Statement of Financial Accounting Standards No. 165, “Subsequent Events” (“FAS 165”). FAS 165 establishes the general standards of accounting for and disclosure of events that occur after the balance sheet date but before financial statements are issued or available
to be issued.  FAS 165 is effective for interim and fiscal periods ending after June 15, 2009.




In June 2009, the FASB issued SFAS No. 166, “Accounting for Transfers of Financial Assets - an amendment of FASB Statement No. 140” (“SFAS 166”). SFAS 166 revises SFAS No. 140 and will require entities to provide more information about sales of securitized financial assets and similar transactions,
particularly if the seller retains some risk with respect to the assets. SFAS 166 is effective for fiscal years beginning after November 15, 2009.   The Company is  currently evaluating the impact that the adoption of SFAS 166 will have on its consolidated financial statements.






In June 2009, the FASB issued SFAS No. 167, “Amendments to FASB Interpretation No. 46(R)” (“SFAS 167”). SFAS 167 amends certain requirements of FASB Interpretation No. 46(R) to improve financial reporting by companies involved with variable interest entities and to provide more relevant and reliable
information to users of financial statements. SFAS 167 is effective for fiscal years beginning after November 15, 2009. The Company is currently evaluating the impact that the adoption of SFAS 167 will have on its consolidated financial statements.


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In June 2009, the FASB issued Statement of Financial Accounting Standards No. 168, “The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles” (“FAS 168”). FAS 168 replaces FAS 162, “The Hierarchy of Generally Accepted Accounting Principles.”
FAS 168 identifies the sources of accounting principles and the framework for selecting the principles used in the preparation of financial statements. FAS 168 is effective for interim and fiscal periods ending after September 15, 2009.






Forward Looking Statements and Factors That May Affect Future Results and Financial Condition




The statements contained in the section titled “ Management ’ s Plan of Operations, ” with the exception of historical facts, are forward looking statements. Forward looking statements reflect our current expectations and beliefs regarding our
future results of operations, performance, and achievements. These statements are subject to risks and uncertainties and are based upon assumptions and beliefs that may or may not materialize. These statements include, but are not limited to, statements concerning:






•
our anticipated financial performance and business plan;


•
the sufficiency of existing capital resources;


•
our ability to raise additional capital to fund cash requirements for future operations;


•
uncertainties related to the Company's future business prospectus;


•
our ability to generate revenues from future operations;


•
the volatility of the stock market; and,


•
general economic conditions.




We wish to caution readers that our operating results are subject to various risks and uncertainties that could cause our actual results to differ materially from those discussed or anticipated, including the factors set forth in the section entitled “ Risk Factors, ” below. We also wish to advise readers not
to place any undue reliance on the forward looking statements contained in this report, which reflect our beliefs and expectations only as of the date of this report. We assume no obligation to update or revise these forward looking statements to reflect new events or circumstances or any changes in our beliefs or expectations, other than is required by law.






Risks Factors




Our future operating results are highly uncertain. Before deciding to invest in us or to maintain or increase your investment, you should carefully consider the risks described below, in addition to the other information contained in our annual report. If any
of these risks actually occur, our business, financial condition or results of operations could be seriously harmed. In that event, the market price for our common stock could decline and you may lose all or part of your investment.






We have a history of significant operating losses and such losses may continue in the future.




Since our inception in 1999, our operation has resulted in continuing losses and an accumulated deficit of $4,949.235 at December 31, 2008, which increased to $5,068,763 at June 30, 2009. We expect to incur losses as long as we continue to generate revenues that
are insufficient to cover our expenses. Our only expectation of overcoming future losses is dependent on our ability to acquire or develop new business, which eventuality can in no way be assured.




The Company’s limited financial resources cast severe doubt on our ability to acquire or develop a revenue producing business.




Our future operation is dependent on our ability to generate new revenue sources. However, the prospect of such sources is doubtful due to the Company’s limited financial resources which limitation may act as a deterrent in future revenues. Should we be unable to improve our financial condition through debt or equity
offerings our ability to generate new revenue will be severely limited to the extent that the Company will, in all likelihood, be forced to cease operations.




The Company remains dependent on financing arrangements to continue operations.


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Our continued operation is dependent on funding provided through private debt or equity placements or by major shareholders in the form of loans. We expect that the Company’s dependence on funding to maintain operations will continue until such future time when a new revenue producing business can sustain its operating
requirements. Despite this dependence, the Company has no commitments in place for additional funding.




The market for our stock is limited and our stock price may be volatile.




The market for our common stock has been limited due to low trading volume and the small number of brokerage firms acting as market makers. Because of the limitations of our market and volatility of the market price of our stock, investors may face difficulties in selling shares at attractive prices when they want to.
The average daily trading volume for our stock has varied significantly from week to week and from month to month, and the trading volume often varies widely from day to day.




We may incur significant expenses as a result of being quoted on the Over the Counter Bulletin Board, which may negatively impact our financial performance.




We may incur significant legal, accounting and other expenses as a result of being listed on the Over the Counter Bulletin Board. The Sarbanes-Oxley Act of 2002, as well as related rules implemented by the Commission has required changes in corporate governance practices of public companies. We expect that compliance with
these laws, rules and regulations, including compliance with Section 404 of the Sarbanes-Oxley Act of 2002 as discussed in the following risk factor, may substantially increase our expenses, including our legal and accounting costs, and make some activities more time-consuming and costly. As a result, there may be a substantial increase in legal, accounting and certain other expenses in the future, which would negatively impact our financial performance and could have a material adverse effect on our results
of operations and financial condition.




Our internal controls over financial reporting may   be considered ineffective, which could result in a loss of investor confidence in our financial reports and in turn have an adverse effect on our stock price.




Pursuant to Section 404 of the Sarbanes-Oxley Act of 2002 we are required to furnish a report by our management on our internal controls over financial reporting. Such report must contain, among other matters, an assessment of the effectiveness of our internal controls over financial reporting as of the end of the year,
including a statement as to whetheror not our internal controls over financial reporting are effective. This assessment must include disclosure of any material weaknesses in our internal controls over financial reporting identified by management. If we are unable to assert that our internal controls are effective, our investors could lose confidence in the accuracy and completeness of our financial reports, which in turn
could cause our stock price to decline.






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The Company’s shareholders may face significant restrictions on their stock.




The Company’s stock differs from many stocks in that it is a “penny stock.” The Commission has adopted a number of rules to regulate “penny stocks” including, but not limited to, those rules from the Securities Act as follows:






3a51-1      which defines penny stock as, generally speaking, those securities which are not listed on either NASDAQ or a national securities exchange and are priced under $5, excluding securities of issuers
that have net tangible assets greater than $2 million if they have been in operation at least three years, greater than $5 million if in operation less than three years, or average revenue of at least $6
million for the last three years;


15g-1        which outlines transactions by broker/dealers which are exempt from 15g-2 through 15g-6 as those whose commissions from traders are lower than 5% total commissions;


15g-2        which details that brokers must disclose risks of penny stock on Schedule 15G;


15g-3        which details that broker/dealers must disclose quotes and other information relating to the penny stock market;


15g-4        which explains that compensation of broker/dealers must be disclosed;


15g-5        which explains that compensation of persons associated in connection with penny stock sales must be disclosed;


15g-6        which outlines that broker/dealers must send out monthly account statements; and


15g-9        which defines sales practice requirements.






Since the Company’s securities constitute a “penny stock” within the meaning of the rules, the rules would apply to us and our securities. Because these rules provide regulatory burdens upon broker-dealers, they may affect the ability of shareholders to sell their securities in any market that may develop;
the rules themselves may limit the market for penny stocks. Additionally, the market among dealers may not be active. Investors in penny stock often are unable to sell stock back to the dealer that sold them the stock. The mark-ups or commissions charged by the broker-dealers may be greater than any profit a seller may make. Because of large dealer spreads, investors may be unable to sell the stock immediately back to the dealer at the same price the dealer sold the stock to the investor. In some cases, the stock
may fall quickly in value. Investors may be unable to reap any profit from any sale of the stock, if they can sell it at all.




Shareholders should be aware that, according to Commission Release No. 34-29093 dated April 17, 1991, the market for penny stocks has suffered from patterns of fraud and abuse. These patterns include:




- control of the market for the security by one or a few broker-dealers that are often related to the promotor or issuer;
- manipulation of prices through prearranged matching of purchases
- "boiler room" practices involving high pressure sales tactics and unrealistic price projections by inexperienced sales persons;
- excessive and undisclosed bid-ask diffentials and markups by selling broker-dealers; and
- the wholesale dumping of the same securities by promotors and broker-dealers after prices have been manipulated to a desired level, consequent investors losses.



Item 3. Disclosure Controls and Procedures




Evaluation of Disclosure Controls and Procedures




In connection with the preparation of this report on Form 10-QSB, an evaluation was carried out by the Company’s management, with the participation of the chief executive officer and the chief financial officer, of the effectiveness of the Company’s
disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (“Exchange Act”)). Disclosure controls and procedures are designed to ensure that information required to be disclosed in reports filed or submitted under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the Commission’s rules and forms and that such information is accumulated and communicated to management, including
the chief executive officer and the chief financial officer, to allow timely decisions regarding required disclosures.




Based on that evaluation, the Company’s management concluded, as of the end of the period covered by this report, that the Company’s disclosure controls and
procedures were effective in recording, processing, summarizing, and reporting information required to be disclosed, within the time periods specified in the Commission’s rules and forms.






Changes in Internal Control over Financial Reporting




There have been no changes in internal control over financial reporting (as defined in Rule 13a-15(f) of the Exchange Act) during the period ended June 30, 2009, that materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.




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PART II. OTHER INFORMATION




ITEM 1.     LEGAL PROCEEDINGS




None.




ITEM 2.     UNREGISTERED SALES OF EQUITY SECURITIES




None.




ITEM 3.     DEFAULTS ON SENIOR SECURITIES




None.




ITEM 4.     MATTERS SUBMITTED TO A VOTE OF SECURITY HOLDERS




None.




ITEM 5.     OTHER INFORMATION




None.




Item6. Exhibits and Reports on Form 8-K




Exhibits required to be attached by Item 601 of Regulation S-B are listed in the Index to Exhibits on page 19 of this Form 10-QSB, and are incorporated herein by this reference.




(a) Exhibits.






Exhibit No.

Exhibit31.1

Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 200232.1

Certification of Chief Executive Officer Pusuant to Section 906 of the Sarbanes-Oxley Act of 2002






(b) Reports on Form 8-K.




None.








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Signatures




The undersigned officers certify that this Quarterly Report on Form 10-Q complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, and the information contained in such report fairly represents, in all material respects, the financial condition and results of operations of the Company.


LION CAPITAL HOLDINGS, INC.Date: August 17, 2009

/s/ Tim PageTim Page, President and Chief Executive Officer


















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