##### Table of Contents



U. S. SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, DC 20549
 FORM 10-QSB
 þ
    
    Quarterly report under Section 13 or 15(d) of the Securities Exchange Act of 1934
 For
the quarterly period ended June 30, 2005
 o
    
    Transition report under Section 13 or 15(d) of the Exchange Act
 For the transition period from ___to ___
 Commission
File Number 0-49659
 XRG,
INC.
  DELAWARE
    
    58-2583457(State or Other Jurisdiction of
    
    (I.R.S. EmployerIncorporation or Organization)
    
    Identification No.)
  
   
   o þ
 o o
   o þ




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XRG, Inc. and Subsidiaries
 Index
 PagePart I  Financial InformationItem 1. Consolidated Financial Statements (Unaudited)Consolidated Balance Sheet  June 30, 2005
    
    
    1Consolidated Statements of Operations  Three ended months June 30, 2005 and 2004.
    
    
    2Consolidated Statements of Cash Flows  Three months ended June 30, 2005 and 2004
    
    
    3Notes to Consolidated Financial Statements
    
    
    6Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    17Item 3. Controls & Procedures
    
    
    27Part II  Other InformationItem 1. Legal Proceedings
    
    
    30Item 2. Change in Securities and Use of Proceeds
    
    
    31Item 3. Defaults Upon Senior Securities
    
    
    32Item 5. Other Information
    
    
    32Item 6. Exhibits and Reports on Form 8-K
    
    
    33Signatures
    
    
    33Ex-31.1 Section 302 CertificationEx-31.2 Section 302 CertificationEx-32.1 Section 906 Certification




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XRG, Inc. and Subsidiaries
 
 Consolidated Balance Sheet
 June 30, 2005
(Unaudited)
 AssetsCurrent assets:Accounts receivable, net of allowance of $300,000
    
    $
    4,261,589Other current assets
    
    
    568,143Total current assets
    
    
    4,829,732Fixed assets, net of accumulated depreciation
    
    
    807,171Other assets:Goodwill
    
    
    675,358Other assets
    
    
    2,946Total other assets
    
    
    678,304$
    6,315,207Liabilities and Stockholders DeficitCurrent liabilities:Current portion of long-term debt
    
    $
    3,598,911Current portion of capital lease obligations
    
    
    5,171Bank overdraft
    
    
    582,194Accounts payable
    
    
    291,815Accrued expenses
    
    
    744,885Accrued purchased transportation
    
    
    689,858Line of credit
    
    
    3,049,257Total current liabilities
    
    
    8,962,091Long-term liabilities:Long-term debt
    
    
    743,405Total long-term liabilities
    
    
    743,405Total liabilities
    
    
    9,705,496Stockholders equity:Common stock; $.001 par value; 25,000,000 shares authorized;
14,901,127 shares issued and outstanding
    
    
    14,902Common stock payable
    
    
    525Additional paid-in capital
    
    
    36,251,464Subscription receivable
    
    
    (378,333
    )Accumulated deficit
    
    
    (38,126,993
    )Prepaid interest
    
    
    (176,854
    )Treasury stock, at cost, 187,500 shares
    
    
    (975,000
    )Total stockholders equity
    
    
    (3,390,289
    )$
    6,315,207
  1




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XRG, Inc. and Subsidiaries
 
 Consolidated Statements of Operations
 (Unaudited)
 Three Months Ended June 30,2005
    
    
    2004Revenues
    
    $
    8,791,401
    
    
    $
    10,366,112Cost of revenues
    
    
    7,150,990
    
    
    
    9,207,265Gross profit
    
    
    1,640,411
    
    
    
    1,158,847Selling, general and administrative expenses
    
    
    3,065,471
    
    
    
    3,739,470Bad debt expense
    
    
    38,192
    
    
    
    Restructuring costs
    
    
    598,146
    
    
    
    3,701,809
    
    
    
    3,739,470Loss from operations
    
    
    (2,061,398
    )
    
    
    (2,580,623
    )Interest expense
    
    
    (409,501
    )
    
    
    (392,562
    )Intrinsic value of convertible debt and debt discount
for value of detachable warrants
    
    
    (271,356
    )
    
    
    (73,725
    )(680,857
    )
    
    
    (466,287
    )Net loss
    
    $
    (2,742,255
    )
    
    $
    (3,046,910
    )Basic and diluted loss per share
    
    $
    (0.18
    )
    
    $
    (0.68
    )Basic and diluted weighted average number of
common shares outstanding
    
    
    14,935,568
    
    
    
    4,463,761
  2
    Table of Contents   XRG, Inc. and Subsidiaries
 
 Consolidated Statements of Cash Flows
 (Unaudited)
 Three Months Ended June 30,2005
    
    
    2004Operating activitiesNet loss
    
    $
    (2,742,255
    )
    
    $
    (3,046,910
    )Adjustments to reconcile net loss to net cash
used by operating activities:Depreciation and amortization
    
    
    111,731
    
    
    
    244,005Bad debt expense
    
    
    38,192
    
    
    
    8,000Common stock, options and warrants issued for services and compensation
    
    
    381,340
    
    
    
    876,000Stock issued in lieu of interest
    
    
    23,700
    
    
    
    66,000Amortization of discount and intrinsic value of convertible notes
    
    
    271,356
    
    
    
    73,725Amortization of deferred financing fees
    
    
    64,720
    
    
    
    20,442Amortization of deferred stock compensation and consulting
    
    
    
    
    
    
    163,689Non-cash restructuring costs
    
    
    289,187
    
    
    
    (Increase) decrease, net of effect of acquisitions:Accounts receivable
    
    
    747,501
    
    
    
    (1,094,095
    )Other assets
    
    
    (41,924
    )
    
    
    (237,714
    )Increase (decrease), net of effect of acquisitions:Accounts payable
    
    
    (55,889
    )
    
    
    409,327Accrued expenses and other liabilities
    
    
    300,461
    
    
    
    965,567Total adjustments
    
    
    2,130,355
    
    
    
    1,494,946Net cash used by operating activities
    
    
    (611,900
    )
    
    
    (1,551,964
    )Investing activitiesPurchase of equipment
    
    
    
    
    
    
    (3,144
    )Acquisition for business, net of cash acquired in acquisition
    
    
    
    
    
    
    (1,960,213
    )Net cash used by investing activities
    
    
    
    
    
    
    (1,963,357
    )Financing activitiesBank overdraft
    
    
    121,789
    
    
    
    (561,842
    )Factoring line of credit, net
    
    
    (1,005,282
    )
    
    
    581,782Net borrowings (payments) on related party advances
    
    
    
    
    
    
    (15,000
    )Proceeds from common stock issued and to be issued and options exercised
    
    
    351,667
    
    
    
    4,087,476Proceeds from issuance of notes payable
    
    
    1,250,000
    
    
    
    29,526Principal payments on notes payable
    
    
    (106,039
    )
    
    
    (351,725
    )Payments for treasury stock
    
    
    
    
    
    
    (45,000
    )Payments on capital lease
    
    
    (235
    )
    
    
    (64,457
    )Net cash provided by financing activities
    
    
    611,900
    
    
    
    3,660,760Net increase in cash
    
    
    0
    
    
    
    145,439Cash at beginning of period
    
    
    
    
    
    
    Cash at end of period
    
    $
    0
    
    
    $
    145,439
  3




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XRG, Inc. and Subsidiaries
 Consolidated Statements of Cash Flows (Continued)
 (Unaudited)
 Three Months EndedJune 30,2005
    
    2004Supplemental disclosures of cash flow
information and noncash investing
and financing activities:Cash paid during the period for interest
    
    $
    385,801
    
    
    $
    244,467
           4




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XRG, Inc. and Subsidiaries
 Consolidated Statements of Cash Flows (Continued)
(Unaudited)
    5




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XRG, Inc. and Subsidiaries
 
 Notes to Consolidated Financial Statements
 Three Months Ended June 30, 2005 and 2004 (Unaudited)
 1. Consolidated Financial Statements
      Revenue Recognition
  6




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XRG, Inc. and Subsidiaries
 Notes to Consolidated Financial Statements
Three Months Ended June 30, 2005 and 2004 (Unaudited)
 Stock Based Employee Compensation
 Accounting
for Stock Issued to Employees
 Accounting for Stock-Based Compensation and SFAS 148 Accounting for Stock-Based
Compensation  transition and disclosure
 (Unaudited)Three months endedJune 30,2005
    
    
    2005Net loss, as reported
    
    $
    (2,742,255
    )
    
    $
    (3,046,910
    )Deduct: Fair value of stock-based employee
compensation costs
    
    
    110,000
    
    
    
    Plus: Intrinsic value of compensation
costs included in net loss
    
    
    110,000
    
    
    
    Pro forma net loss
    
    $
    (2,742,255
    )
    
    $
    (3,046,910
    )Loss per share:Basic and Diluted  as reported
    
    $
    0.18
    
    
    $
    (0.68
    )Basic and Diluted  pro forma
    
    $
    0.18
    
    
    
    (0.68
    )
  Recent Accounting Pronouncements
   7




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XRG, Inc. and Subsidiaries
 Notes to Consolidated Financial Statements
Three Months Ended June 30, 2005 and 2004 (Unaudited)
      2. Per Share Calculations
  8




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XRG, Inc. and Subsidiaries
 Notes to Consolidated Financial Statements
Three Months Ended June 30, 2005 and 2004 (Unaudited)
 3. Fixed assets
  Trailers
    
    $
    309,000Tractors
    
    
    664,750Office equipment and software
    
    
    155,7291,129,479Accumulated depreciation
    
    
    322,308Total Fixed assets, net
    
    $
    807,171
   4. Notes Payable
  XRG, Inc.  Notes payable secured by the assets of the Company: interest
ranging from 6.00% to 17.00%; Monthly payments of
approximately $13,500 on one note maturing during October 2007;
five notes have no principal or interest payments and require a
total balloon principal payment of $3,523,775 which is due by
December 31, 2005 additionally all accrued interest is due by
December 31, 2005; Secured by all assets of the companies.
    
    $
    3,049,852XRG, Inc.  Convertible note payable; interest 10%, interest
only payments payable annually; principal due on November 11,
2005, collateral is senior position in the assets of XRG, Inc.
This note is convertible into the Companys common stock at a
conversion price of $0.42 per share.
    
    
    100,000XRG, Inc.  Convertible notes payable; interest 12.0%; interest
only payments payable quarterly; principal due between April
2005 and June 2005; at maturity, the note holder will be paid
the remaining unpaid principal at an 150% redemption premium
plus accrued interest; one year from the closing of the
Companys first trucking acquisition, the note holder can
convert the unpaid principal and accrued interest at a
conversion price equal to 50% of the average closing bid price
of the Companys Common Stock. These notes are currently
overdue.
    
    
    20,000XRG, Inc.  Convertible unsecured notes payable; interest 15%;
the first 6 months of interest was put into escrow; principal
and remaining interest was due December 31, 2004; these notes
may be converted into the Companys common stock based upon a
$0.15 price per share; Company is obligated to utilize 80% of
the cash proceeds from future issuances of certain equity or
debt securities, exercise of warrants or options to repay the
principal and accrued interest on these notes prior to their
maturity. These notes are currently overdue.
    
    
    155,000XRG, Inc.  Notes payable; interest ranging from 12.0% to 2,500
shares of common stock per month; these notes are overdue.
    
    
    60,000
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XRG, Inc. and Subsidiaries
 Notes to Consolidated Financial Statements
Three Months Ended June 30, 2005 and 2004 (Unaudited)
 Carolina Truck Connection, Inc. (CTC) 
Notes payable; interest ranging from 6.00% to
8.53%; Monthly payments of approximately
$5,100; due at various dates between
September 2005 to October 2006; one note
required a balloon payment of $180,810 due by
November 10, 2004, the lender has extended
the due date to December 31, 2005; Secured by
equipment.
    
    
    234,275Highway Transport, Inc.  Notes payable;
interest at 8.25%; Monthly payments of
approximately $15,800; due September 2009;
Secured by equipment.
    
    
    723,189Total notes payable
    
    $
    4,342,316Less current portion
    
    
    (3,598,911
    )Long-term portion of notes payable
    
    $
    743,405
        10




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XRG, Inc. and Subsidiaries
 Notes to Consolidated Financial Statements
Three Months Ended June 30, 2005 and 2004 (Unaudited)
 5. Other Equity Transactions
        6. Restructuring Agreements
  
    
    J. Bently Companies
   11




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XRG, Inc. and Subsidiaries
 Notes to Consolidated Financial Statements
Three Months Ended June 30, 2005 and 2004 (Unaudited)
  
    
    Formal Settlement Agreement re: EFS
  Material terms of the Settlement Agreement are summarized below:
    
    The mutual termination of the Master Equipment Lease Agreement
(MELA). The MELA required us to pay Express Leasing Systems, Inc.
approximately $55,000 per month for a term of 36 months and contained
a $1,000,000 buyout at lease end. This lease consisted of a pool of
approximately 270 trailers from an entity owned by the prior
shareholders of EFS. This termination provides a provision that all
trailers under the MELA are made available to us for the movement of
our freight.
    
    The mutual termination of the Facility Lease Agreement for the office
building in Chattanooga, Tennessee from the prior shareholders of EFS
and a warehouse facility in California.
    
    Pursuant to the terms of the EFS Merger Agreement $2,000,000 from the
Stock Purchase Agreement was paid to the former shareholders of EFS
that they will retain as purchase consideration. In addition, the
former EFS shareholders were issued 375,000 shares of the Registrants
common stock. 187,500 shares of our common stock will be forfeited and
returned to us as part of the amendment. The additional $1,000,000
payment to the former EFS shareholders was mutually terminated as part
of this amendment.
    
    EFS, as a wholly-owned subsidiary of ours entered into 6 new
employment agreements with the former shareholders and key employees
of EFS. These agreements were mutually terminated by us and the former
EFS shareholders and employees.
    
    Former EFS shareholders personally assumed all overdraft bank
liabilities and bank loans, as well as, all bank loans of Express
Freight Systems, Inc. In addition, former EFS shareholders assumed all
trade payables and accruals prior to March 1, 2004. All bad debts and
charge-backs attributable to receivables outstanding as of April 21,
2004 were assumed by the former EFS Shareholders.
    
    We entered into a Terminal Agreement which entitles the former EFS
shareholders as Agent to receive a commission of 85% of revenues on
shipments that are secured, processed and supervised under our
direction. Under this agreement, we are not responsible for any
expenses incurred for the operation of the Agents terminal.
  12




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XRG, Inc. and Subsidiaries
 Notes to Consolidated Financial Statements
Three Months Ended June 30, 2005 and 2004 (Unaudited)
  
    
    Restructuring of Highway Transport, Inc. Acquisition
      
    
    Carolina Truck Connection, Inc.  Amendment
  13




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XRG, Inc. and Subsidiaries
 Notes to Consolidated Financial Statements
Three Months Ended June 30, 2005 and 2004 (Unaudited)
 8. Related Party Transactions
     9. Legal Proceedings
  
    
    Highbourne Litigation
     14




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XRG, Inc. and Subsidiaries
 Notes to Consolidated Financial Statements
Three Months Ended June 30, 2005 and 2004 (Unaudited)
 
    
    Couture Litigation
      
    
    Noteholder Litigation
   
    
    Former Employee Claims
  15




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XRG, Inc. and Subsidiaries
 Notes to Consolidated Financial Statements
Three Months Ended June 30, 2005 and 2004 (Unaudited)
 
    
    RSV Claims
    10. Subsequent Events
   16




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Item 2 MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 The statements contained in this Report on Form 10-QSB, that are not purely historical, are
forward-looking information and statements within the meaning of Section 27A of the Securities Act
of 1933 and Section 21E of the Securities Exchange Act of 1934. These include statements regarding
the Companys expectations, intentions, or strategies regarding future matters. All
forward-looking statements included in this document are based on information available to the
Company on the date hereof. It is important to note that the Companys actual results could differ
materially from those projected in such forward-looking statements contained in this Form 10-QSB.
The forward-looking statements contained here-in are based on current expectations that involve
numerous risks and uncertainties. Assumptions relating to the foregoing involve judgments
regarding, among other things, the Companys ability to secure financing or investment for capital
expenditures, future economic and competitive market conditions, and future business decisions.
All these matters are difficult or impossible to predict accurately and many of which may be beyond
the control of the Company. Although the Company believes that the assumptions underlying its
forward-looking statements are reasonable, any of the assumptions could be inaccurate and,
therefore, there can be no assurance that the forward-looking statements included in this form
10-QSB will prove to be accurate.
 Overview
       17




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Summary of Restructured Operations
  Headquarters
    
    Carrier
    
    Owner/Operators or OwnedCompany
    
    Location
    
    Type
    
    Tractors
    
    TrailersJ. Bently Companies, Inc.
    
    Sweetwater, TN
    
    Van
    
    8 Owner Operators, 41 Fleet Contracted Tractors
    
    
    170R&R Express Intermodal, Inc.
    
    Pittsburgh, PA
    
    Intermodal
    
    34 Owner Operators
    
    
    Highway Transport Services, Inc.
    
    Evergreen, AL
    
    Flatbed
    
    40 Tractors, 18 Owner Operators
    
    
    54Express Freight Systems, Inc.
    
    Chattanooga, TN
    
    Van
    
    130 Owner Operators
    
    
    289Carolina Truck Connection, Inc.
(CTC)
    
    Fletcher, NC
    
    Van
    
    24 Tractors, 6 Owner Operators
    
    
    60
 
    
    J. Bently Companies
    
    
    Formal Settlement Agreement re: EFS
  18




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Material terms of the Settlement Agreement are summarized below:
    
    The mutual termination of the Master Equipment Lease Agreement
(MELA). The MELA required us to pay Express Leasing Systems, Inc.
approximately $55,000 per month for a term of 36 months and contained
a $1,000,000 buyout at lease end. This lease consisted of a pool of
approximately 270 trailers from an entity owned by the prior
shareholders of EFS. This termination provides a provision that all
trailers under the MELA are made available to us for the movement of
our freight.
    
    The mutual termination of the Facility Lease Agreement for the office
building in Chattanooga, Tennessee from the prior shareholders of EFS
and a warehouse facility in California.
    
    Pursuant to the terms of the EFS Merger Agreement $2,000,000 from the
Stock Purchase Agreement was paid to the former shareholders of EFS
that they will retain as purchase consideration. In addition, the
former EFS shareholders were issued 375,000 shares of the Registrants
common stock. 187,500 shares of our common stock will be forfeited and
returned to us as part of the amendment. The additional $1,000,000
payment to the former EFS shareholders was mutually terminated as part
of this amendment.
    
    EFS, as a wholly-owned subsidiary of ours entered into 6 new
employment agreements with the former shareholders and key employees
of EFS. These agreements were mutually terminated by us and the former
EFS shareholders and employees.
    
    Former EFS shareholders personally assumed all overdraft bank
liabilities and bank loans, as well as, all bank loans of Express
Freight Systems, Inc. In addition, former EFS shareholders assumed all
trade payables and accruals prior to March 1, 2004. All bad debts and
charge-backs attributable to receivables outstanding as of April 21,
2004 were assumed by the former EFS Shareholders.
    
    We entered into a Terminal Agreement which entitles the former EFS
shareholders as Agent to receive a commission of 85% of revenues on
shipments that are secured, processed and supervised under our
direction. Under this agreement, we are not responsible for any
expenses incurred for the operation of the Agents terminal.
   
    
    Restructuring of Highway Transport, Inc. Acquisition
   19




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
    
    Carolina Truck Connection, Inc.  Amendment
  
    
    Termination of Highbourne Asset Acquisition Agreement/AGB Terminal Agreement  Related Litigation
  th
   20




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
    
    Administrative Services Agreement with R&R Express, Inc. and Richard Francis
     GENERAL
 Managements Interim Operating Plan
 The major components of our turn around plan consist of the following:
    
    Reduction of overhead by reducing personnel in our Clearwater, Florida office and eventually
closing our Clearwater, Florida executive offices.
    
    Restructuring of our business model from an asset based carrier to a non-asset based carrier.
    
    We secured a new accounts receivable financing facility with Capco Financial Company. This
financing has improved our cash flow position because of the lower costs of funds and the
elimination of factoring reserves.
    
    Changes in our executive management team. We have entered into settlement agreements with
Kevin Brennan and Don Huggins. We have appointed Richard Francis as our new Chief Executive
Officer. We are in litigation with our former Chief Financial Officer, Stephen Couture. We
are actively searching for a new Chief Financial Officer..
    
    We entered into an Administrative Services Agreement with R&R Express, Inc. and Richard
Francis. Our strategy is to rely upon the infrastructure and expertise of R&R and Mr.
Francis to more efficiently handle certain daily administrative, procedural and regulatory
issues relating to our operations.
    
    Recruiting additional agents and owner operators in new markets and expanding our network in
existing markets. We have entered into a new employment agreement with Larry Berry who has
substantial experience in the trucking and transportation industry to assist us in securing
new business.
    
    We have deferred principal payments on certain of our debt service obligations until
December 31, 2005 with Barron and Mr. Steel. However, we have not been able to settle or
defer payments relating to approximately $235,000 of promissory notes. The holders of
$155,000 of outstanding notes instituted litigation in June, 2005 relating to the collection
of such obligations.
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
    
    We eliminated substantial liquidated damages in connection with the withdrawal of our
previous registration statement. We are required to file a new registration statement by
September 30, 2005 and have this registration statement declared effective by December 31,
2005 in order to avoid additional liquidated damages.
 Current Business Strategy
  
    
    Operating costs vary directly with revenue.Agents and owner-operators
are compensated based on a percentage of revenues. This benefit of
this structure is that short-term fluctuations in operating activity
have less of an impact on our financials that they have on asset based
truck transportation companies that assume all of the fixed cost.
Therefore, our operating costs tend to be in direct proportion to
revenues.
    
    Minimize capital investments and fixed costs.Our non-asset based
structure allows us to limit our investment in tractors and trailers
and allows us to grow our core business with less capital
requirements.
    
    Performance/commission based compensation.Our agents and
owner-operators are compensated based on performance that provides
them with the incentive to seek new revenue opportunities. In
addition, our owner operators seek to increase their equipment
utilization as well as operating their equipment more safely,
efficiently, and reliably because of this performance based
compensation structure.
  Revenue
  Revenue Equipment
   Critical Accounting Policies and Estimates
  22




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23




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Recent Accounting Pronouncements
        24




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RESULTS OF OPERATIONS
 Three months ended June 30, 2005 compared to three months ended June 30, 2004
        LIQUIDITY AND CAPITAL RESOURCES
  
    
    Interim Financing Arrangements with Barron
  25




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Interest
    
    
    
    
    
    Current
    
    ExtendedDate
    
    Amount
    
    Rate
    
    Collateral
    
    Maturity Date
    
    Maturity Date9/10/04
    
    $
    225,809.86
    
    
    
    6
    %
    
    20 Trailers
    
    
    3/31/05
    
    
    
    12/31/0510/1/04
    
    
    166,275.00
    
    
    
    6
    %
    
    15 Tractors
    
    
    3/31/05
    
    
    
    12/31/052/23/05
    
    
    1,180,000.00
    
    
    
    10
    %
    
    All Assets
    
    
    4/23/05
    
    
    
    12/31/053/3/05
    
    
    800,000.00
    
    
    
    10
    %
    
    All Assets
    
    
    5/1/05
    
    
    
    12/31/056/2/05
    
    
    1,250,000.00
    
    
    
    10
    %
    
    All Assets
    
    
    12/31/05
    
    
    
    N/A7/29/05
    
    
    600,000.00
    
    
    
    18
    %
    
    All Assets
    
    
    12/31/05
    
    
    
    N/A
     
    
    Restructured Arrangements with Kenneth A. Steel, Jr.
  26




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
    
    Current Liquidity
    Seasonality
  Inflation
  
 Item 3. Evaluation of Disclosure Controls and Procedures
 Evaluation of disclosure controls and procedures.
 27




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Changes in internal controls over financial reporting.
             
    
    faulty human judgment and simple errors, omissions or mistakes;
    
    collusion of two or more people;
    
    inappropriate management override of procedures; and
    
    risk that enhanced controls and procedures may still not be adequate
to assure timely and reliable financial information.
  28




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29




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PART II  OTHER INFORMATION
 
 Legal Proceedings
  
    
    Highbourne Litigation
     
    
    Couture Litigation
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##### Table of Contents




    
    Noteholder Litigation
   
    
    Former Employee Claims
  
    
    RSV Claims
    
 Change in Securities and Use of Proceeds.
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##### Table of Contents



Defaults Upon Senior Securities.
   
 Other Information
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##### Table of Contents



Exhibits and Reports on Form 8-K
          
 SIGNATURES
  XRG, Inc.Dated: August 30, 2005/s/ Richard FrancisRichard FrancisPresident, Chief Executive Officer, Chief FinancialOfficer and Director/s/ Jay OstrowJay Ostrow
Principal Accounting Officer and Controller
 33