----

|   | ý                                             QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

| Texas                                     | 88-0225318                           |
|-------------------------------------------|--------------------------------------|
| (State of Incorporation)                  | (I.R.S. Employer Identification No.) |
|                                      |                                 |
| 601 Cien Street, Suite 235 Kemah, TX | 77565-3077                           |
| (Address of Principal Executive Offices)  | (ZIP Code)                           |

| Large accelerated filer  ̈     | Accelerated filer  ̈         |
|------------------------------------|----------------------------------|
| Non-accelerated filer  ̈  | Smaller reporting company x |

----

| Item                           |   | Description                                                                           |   | Page   |
|--------------------------------|--------|---------------------------------------------------------------------------------------|--------|--------|
| PART I - FINANCIAL INFORMATION |
|                           |   |                                                                                  |   |   |
| ITEM 1.                        |   | FINANCIAL STATEMENTS                                                                  |   | 3      |
| ITEM 2.                        |   | MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |   | 14     |
| ITEM 3.                        |   | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                            |   | 17     |
| ITEM 4T.                       |   | CONTROLS AND PROCEDURES                                                               |   | 17     |
|                           |   |                                                                                  |   |   |
| PART II - OTHER INFORMATION    |
|                           |   |                                                                                  |   |   |
| ITEM 1.                        |   | LEGAL PROCEEDINGS                                                                     |   | 17     |
| ITEM 1A.                       |   | RISK FACTORS                                                                          |   | 17     |
| ITEM 2.                        |   | UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS                           |   | 17     |
| ITEM 3.                        |   | DEFAULTS UPON SENIOR SECURITIES                                                       |   | 17     |
| ITEM 4.                        |   | [REMOVED AND RESERVED]                                                                |   | 17     |
| ITEM 5.                        |   | OTHER INFORMATION                                                                     |   | 17     |
| ITEM 6.                        |   | EXHIBITS                                                                              |   | 17     |

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ITEM 1. FINANCIAL STATEMENTS 

| Financial Statements                                                                                               |   |
|--------------------------------------------------------------------------------------------------------------------|--------|
| Unaudited Consolidated Balance Sheets - June 30, 2011 and December 31, 2010                                   | 4      |
| Unaudited Consolidated Statements of Operations - Three and Six Months Ended June 30, 2011 and 2010 | 5      |
| Unaudited Consolidated Statements of Cash Flows - Six Months Ended June 30, 2011 and 2010                | 6      |
| Notes to Unaudited Consolidated Financial Statements                                                               | 7      |

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| DELTA SEABOARD INTERNATIONAL, INC.     |
|----------------------------------------|
| Consolidated Balance Sheets(Unaudited) |

|                                                                                                          |   |
|---------------------------------------------------------------------------------------------------------------|--------|
|                                                                                                          |   | June 30, 2011 |   |   | December 31, 2010 |   |
| Assets                                                                                                        |   |   |   |   |   |   |
| Current assets:                                                                                               |   |   |   |   |   |   |
|    Cash and cash equivalents                                                                        |   | $ | 30,943 |   |   | $ | 24,672 |   |
|    Certificate of deposit                                                                      |   |   | 250,000 |   |   |   | 250,000 |   |
|    Trading securities                                                                               |   |   | 252 |   |   |   | 6,772 |   |
|    Accounts receivable, less allowance for doubtful accounts                                        |   |   |   |   |   |   |   |   |
|      of $55,087                                                                           |   |   | 1,588,291 |   |   |   | 1,547,434 |   |
|    Inventories                                                                                      |   |   | 2,459,541 |   |   |   | 2,443,720 |   |
|    Prepaid expenses and other current assets                                                        |   |   | 289,169 |   |   |   | 202,012 |   |
|      Total current assets                                                                 |   |   | 4,618,196 |   |   |   | 4,474,610 |   |
|                                                                                                     |   |   |   |   |   |   |   |   |
| Property and equipment, net of accumulated depreciation                                                  |   |   | 1,649,671 |   |   |   | 1,588,303 |   |
| Other assets                                                                                                  |   |   | 6,500 |   |   |   | 50,025 |   |
|        Total assets                                                             |   | $ | 6,274,367 |   |   | $ | 6,112,938 |   |
| Liabilities and Stockholders' Equity                                                                          |   |   |   |   |   |   |   |   |
| Current liabilities:                                                                                          |   |   |   |   |   |   |   |   |
|    Accounts payable and accrued expenses                                                            |   | $ | 690,616 |   |   | $ | 803,897 |   |
|    Bank overdrafts                                                                                  |   |   | 155,109 |   |   |   | - |   |
|    Dividends payable                                                                                |   |   | 915,000 |   |   |   | 795,000 |   |
|    Short-term notes payable                                                                         |   |   | 222,700 |   |   |   | 91,183 |   |
|    Current installments of long-term debt                                                           |   |   | 1,924,785 |   |   |   | 1,955,840 |   |
|      Total current liabilities                                                            |   |   | 3,908,210 |   |   |   | 3,645,920 |   |
|                                                                                                          |   |   |   |   |   |   |   |   |
| Long-term debt, less current installments                                                                     |   |   | 279,049 |   |   |   | 396,938 |   |
|      Total liabilities                                                                    |   |   | 4,187,259 |   |   |   | 4,042,858 |   |
|                                                                                                          |   |   |   |   |   |   |   |   |
| Commitments and contingencies                                                                            |   |   | - |   |   |   |  - |   |
|                                                                                                          |   |   |   |   |   |   |   |   |
| Stockholders' equity:                                                                                         |   |   |   |   |   |   |   |   |
|    Preferred stock, $0.0001 par value, authorized 5,000,000 shares;                                 |   |   |   |   |   |   |   |   |
|      3,769,626 shares issued and outstanding                                              |   |   | 377 |   |   |   | 377 |   |
|    Common stock, $0.0001 par value, authorized 195,000,000 shares;                             |   |   |   |   |   |   |   |   |
|      70,892,250 and 68,342,250 shares issued and outstanding, respectively           |   |   | 7,089 |   |   |   | 6,834 |   |
|    Additional paid-in capital                                                                  |   |   | 4,277,438 |   |   |   | 4,150,193 |   |
|    Accumulated deficit                                                                              |   |   | (2,197,796 | )  |   |   |  (2,087,324 | )  |
|      Total stockholders' equity                                                           |   |   | 2,087,108 |   |   |   | 2,070,080 |   |
|      Total liabilities and stockholders' equity                                           |   | $ | 6,274,367 |   |   |  $ | 6,112,938 |   |
|  The accompanying notes are an integral part of these unaudited consolidated financial statements.  |

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| DELTA SEABOARD INTERNATIONAL, INC.               |
|--------------------------------------------------|
| Consolidated Statements of Operations(Unaudited) |

|                                                                                                         |   | Three Months Ended June 30, |         |    | Six Months Ended June 30, |   |
|--------------------------------------------------------------------------------------------------------------|--------|-----------------------------|--------------|---------|---------------------------|--------|
|                                                                                                    |   | 2011                        |         |    | 2010                      |   |   | 2011 |   |   | 2010 |   |
|                                                                                                         |   |                        |         |    |                      |   |   |   |   |   |   |   |   |   |
| Revenues                                                                                                     |   | $                           | 2,586,998    |    |                      | $      | 2,045,082 |   |   | $ | 5,209,697 |   |   | $ | 4,283,740 |   |
|                                                                                                         |   |                        |         |    |                      |   |   |   |   |   |   |   |   |   |   |   |
| Costs and expenses:                                                                                          |   |                        |         |    |                      |   |   |   |   |   |   |   |   |   |   |   |
|    Cost of sales                                                                                   |   |                        | 1,236,257    |    |                      |   | 1,038,808 |   |   |   | 2,302,768 |   |   |   | 2,406,385 |   |
|    Selling, general and administrative                                                             |   |                        | 1,352,043    |    |                      |   | 1,166,827 |   |   |   | 2,860,492 |   |   |   | 3,382,539 |   |
|      Total operating expenses                                                       |   |                        | 2,588,300    |    |                      |   | 2,205,635 |   |   |   | 5,163,260 |   |   |   | 5,788,924 |   |
|                                                                                                         |   |                        |         |    |                      |   |   |   |   |   |   |   |   |   |   |   |
| Operating income (loss)                                                                                 |   |                        | (1,302       | )  |                      |   | (160,553 | )  |   |   | 46,437 |   |   |   | (1,505,184 | )  |
|                                                                                                    |   |                        |         |    |                      |   |   |   |   |   |   |   |   |   |   |   |
| Other income (expenses):                                                                                     |   |                        |         |    |                      |   |   |   |   |   |   |   |   |   |   |   |
|    Lawsuit settlement                                                                              |   |                        |         |    |                      |   | - |   |   |   | - |   |   |   | 700,000 |   |
|    Bankruptcy settlement                                                                           |   |                        | -            |    |                      |   |  76,710 |   |   |   |   |   |   |   | 76,710 |   |
|    Unrealized gains (losses) on trading securities                                                 |   |                        | 58           |    |                      |   | (5,398 | )  |   |   | (35 | )  |   |   | (6,017 | )  |
|    Realized losses on trading securities                                                           |   |                        | -            |    |                      |   | - |   |   |   | (2,247 | )  |   |   | - |   |
|    Interest expense                                                                                |   |                        | (35,699      | )  |                      |   | (44,899 | ) |   |   | (75,534 | )  |   |   | (85,265 | )  |
|    Other income                                                                                    |   |                        |  34,632 |    |                      |   | 4,450 |   |   |   | 52,144 |   |   |   | 27,742 |   |
|      Total other income (expense)                                                        |   |                        | (1,009       | )  |                      |   | 30,863 |   |   |   |  (25,672 | )  |   |   | 713,170 |   |
|                                                                                                    |   |                        |         |    |                      |   |   |   |   |   |   |   |   |   |   |   |
|      Income (loss) before income tax                                                     |   |                        | (2,311       | )  |                      |   | (129,690 | )  |   |   | 20,765 |   |   |   | (792,014 | )  |
|      Income tax expense                                                             |   |                        |  4,861  |    |                      |   | 4,878 |   |   |   | 11,237 |   |   |   | 10,276 |   |
|      Net income (loss)                                                                   |   | $                           | (7,172       | )  |                      | $      | (134,568 | )  |   | $ | 9,528 |   |   | $ |   (802,290 | )  |
| Preferred dividends:                                                                                    |   |                        |         |    |                      |   |   |   |   |   |   |   |   |   |   |   |
|      Regular dividends                                                                   |   |                        | (60,000      | )  |                      |   | (60,000 | ) |   |   | (120,000 | )  |   |   | (120,000 | )  |
|      Net loss applicable to common shareholders                                          |   | $                           | (67,172      | )  |                      | $      | (194,568 | )  |   | $ | (110,472 | )  |   | $  |  (922,290 | )  |
|                                                                                                         |   |                        |         |    |                      |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                         |   |                        |         |    |                      |   |   |   |   |   |   |   |   |   |   |   |
| Net income (loss) per common share - basic and diluted                                                       |   | $                           | (0.00        | )  |                      | $      | (0.00 | ) |   | $ | (0.00 | )  |   | $  | (0.01 | )  |
|                                                                                                         |   |                        |         |    |                      |   |   |   |   |   |   |   |   |   |   |   |
| Weighted average common shares - basic and diluted                                                           |   |                        | 70,892,250   |    |                      |   | 68,342,250 |   |   |   | 70,849,985 |   |   |   | 63,614,450 |   |
|  The accompanying notes are an integral part of these unaudited consolidated financial statements. |

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| DELTA SEABOARD INTERNATIONAL, INC.                                                                                 |
|--------------------------------------------------------------------------------------------------------------------|
| Consolidated Statements of Cash Flows                                                                              |
| (Unaudited)                                                                                                        |
|                                                                                                               |   | Six Months Ended June 30, |   |
|                                                                                                               |   | 2011 |   |   | 2010 |   |
| Cash flows from operating activities:                                                                              |   |   |   |   |   |   |   |   |
|    Net income (loss)                                                                                     |   | $ | 9,528 |   |   | $ | (802,290 | ) |
|    Adjustments to reconcile net income (loss) to net cash provided by operating activities:         |   |   |   |   |   |   |   |   |
|        Depreciation                                                                  |   |   | 204,385 |   |   |   | 200,311 |   |
|        Share-based compensation                                                 |   |   | 127,500 |   |   |   | 858,750 |   |
|        Realized losses on trading securities                                         |   |   | 2,247 |   |   |   | - |   |
|        Unrealized losses on trading securities                                       |   |   | 35 |   |   |   | 6,017 |   |
|        Changes in operating assets and liabilities:                             |   |   |   |   |   |   |   |   |
|           Accounts receivable                                         |   |   | (40,857 | ) |   |   | (61,638 | )  |
|           Inventories                                                 |   |   | (15,821 | )  |   |   | 593,835 |   |
|           Prepaid expenses and other current assets                   |   |   | 157,813 |   |   |   | 133,679 |   |
|           Other assets                                                |   |   | (4,484 | )  |   |   | - |   |
|           Accounts payable and accrued expenses                       |   |   | (113,280 | )  |   |   | (43,774 | ) |
|              Net cash provided by operating activities |   |   | 327,066 |   |   |   | 884,890 |   |
|                                                                                                               |   |   |   |   |   |   |   |   |
| Cash flows from investing activities:                                                                              |   |   |   |   |   |   |   |   |
|    Proceeds from sale of trading securities                                                              |   |   | 4,238 |   |   |   | - |   |
|    Purchase of trading securities                                                                        |   |   | - |   |   |   | (389 | )  |
|    Investment in certificate of deposit                                                                  |   |   | - |   |   |   | (500,000 | )  |
|    Purchase of property and equipment                                                                    |   |   | (217,744 | ) |   |   | (93,182 | ) |
|             Net cash used in investing activities           |   |   | (213,506 | )  |   |   | (593,571 | ) |
|                                                                                                          |   |   |   |   |   |   |   |   |
| Cash flows from financing activities:                                                                              |   |   |   |   |   |   |   |   |
|    Advances repaid to officer                                                                            |   |   | - |   |   |   | (120,000 | )  |
|    Bank overdrafts                                                                                       |   |   | 155,109 |   |   |   | - |   |
|    Net borrowings (repayments) under lines of credit agreements and short-term notes                     |   |   | (25,000 | ) |   |   | 119,199 |   |
|    Principal payments on debt                                                                       |   |   | (237,398 | ) |   |   | (263,455 | ) |
|             Net cash used in financing activities      |   |   | (107,289 | ) |   |   | (264,256 | )  |
|                                                                                                               |   |   |   |   |   |   |   |   |
| Net increase in cash and cash equivalents                                                                     |   |   | 6,271 |   |   |   | 27,063 |   |
| Cash and cash equivalents at beginning of period                                                                   |   |   | 24,672 |   |   |   | 27,086 |   |
| Cash and cash equivalents at end of period                                                                         |   |  $ | 30,943 |   |   |  $ | 54,149 |   |
| Supplemental schedule of cash flow information:                                                                    |   |   |   |   |   |   |   |   |
|    Interest paid                                                                                    |   |  $ | 75,534 |   |   |  $ | 85,265 |   |
|    Taxes paid                                                                                            |   |  $ | 36,000 |   |   |  $ |  - |   |
| Non-cash investing and financing transactions:                                                                |   |   |   |   |   |   |   |   |
|    Dividends declared and unpaid                                                                         |   |  $ | 120,000 |   |   |  $ | 120,000 |   |
|    Financing of prepaid insurance                                                                        |   |  $ | 244,970 |   |   |  $ | 250,753 |   |
|    Fixed assets placed in service reclassified from other assets                                    |   |  $ | 48,009 |   |   |  $ | - |   |
|    Issuance of common stock to convert promissory note due to American International Industries, Inc.    |   |  $ | - |   |   |  $ | 872,352 |   |
|    Forgiveness of accounts payable to shareholder as contribution of capital                        |   |  $ | - |   |   |  $ | 42,131 |   |
|    Accounts payable and dividends payable assumed in reverse merger transaction                          |   |  $ | - |   |   |  $ | 709,552 |   |
|    Short-term debt assumed in reverse merger transaction                                                 |   |  $ | - |   |   |  $ | 802,063 |   |
|  The accompanying notes are an integral part of these unaudited consolidated financial statements.            |

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| Level 1 |   | Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.                                                                                                                                                                                                                                                             |
|--------------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|         |   |                                                                                                                                                                                                                                                                                                                                                                         |
| Level 2 |   | Inputs reflect quoted prices for identical assets or liabilities in markets that are not active; quoted prices for similar assets or liabilities in active markets; inputs other than quoted prices that are observable for the asset or the liability; or inputs that are derived principally from or corroborated by observable market data by correlation or other means. |
|         |   |                                                                                                                                                                                                                                                                                                                                                                         |
| Level 3 |   | Unobservable inputs reflecting Delta's own assumptions incorporated in valuation techniques used to determine fair value. These assumptions are required to be consistent with market participant assumptions that are reasonably available.                                                                                                                                 |

|                           |   | As of June 30, 2011 |   |
|--------------------------------|--------|--------------------------|--------|
|                           |   |                     |   |   |   |   |   |  Fair Value Measurements Using: |   |
|                           |   | CarryingAmount           |   |   | TotalFair Value |   |   | Quoted Pricesin Active Markets(Level 1) |   |   | Significant OtherObservable Inputs(Level 2) |   |   | SignificantUnobservable Inputs(Level 3) |   |
| Financial Assets:              |   |                     |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Trading Securities |   | $                        | 252    |   |   | $ | 252 |   |   | $ | - |   |   | $ | - |   |   | $ | - |   |

----

|           |   | June 30, 2011 |      |   | December 31, 2010 |   |
|----------------|--------|---------------|-----------|--------|-------------------|--------|
| Finished goods |   | $             | 2,459,541 |   |              | $      | 2,443,720 |   |
| Less reserve   |   |          | -         |   |              |   | - |   |
|           |   | $             | 2,459,541 |   |              | $      | 2,443,720 |   |

|                           | Years  |   | June 30, 2011 |       |    | December 31, 2010 |   |
|--------------------------------|--------|--------|---------------|------------|---------|-------------------|--------|
| Building and improvements      | 20     |   | $             | 52,823     |    |              | $      | 44,558 |   |
| Machinery and equipment        | 7-15   |   |          | 3,593,735  |    |              |   | 3,336,247 |   |
| Office equipment and furniture | 7      |   |          | 137,696    |    |              |   | 137,696 |   |
| Automobiles                    | 5      |   |          | 724,013    |    |              |   | 724,013 |   |
|                           |   |   |          | 4,508,267  |    |              |   | 4,242,514 |   |
| Less accumulated depreciation  |   |   |          | (2,858,596 | )  |              |   | (2,654,211 | )  |
| Net property and equipment     |   |   | $             | 1,649,671  |    |              | $      | 1,588,303 |   |

|                                                                                                                         |   | June 30, 2011 |    |   | December 31, 2010 |   |
|------------------------------------------------------------------------------------------------------------------------------|--------|---------------|---------|--------|-------------------|--------|
| Insurance note payable with interest at 4.99%, principal and interest due in monthly payments of $22,796 through May 1, 2011 |   | $        | -       |   |              | $      | 91,183 |   |
| Insurance note payable with interest at 4.79%, principal and interest due in monthly payments of $22,270 through May 1, 2012 |   |          | 222,700 |   |              |   | - |   |
|                                                                                                                         |   | $             | 222,700 |   |              | $      | 91,183 |   |

|                                                                                                                                                                                                                                      |   | June 30, 2011 |       |    | December 31, 2010 |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------|------------|---------|-------------------|--------|
| Note payable to a bank, which allows Delta to borrow up to $2,700,000, due in monthly payments of interest only, with interest at prime floating rate, with the principal balance due April 30, 2012, secured by assets of Delta (a) |   | $             | 1,633,527  |    |              | $      | 1,658,527 |   |
| Note payable due in monthly payments of $19,373, including interest at 6%, through March 2013, secured by assets of Delta                                                                                                                 |   |          | 476,894    |    |              |   | 571,013 |   |
| Note payable to a bank, due in monthly payments of $6,120, including interest at 8.25%, through August 9, 2012, secured by assets of Delta                                                                                      |   |          | 86,571     |    |              |   | 108,442 |   |
| Other secured notes with various terms                                                                                                                                                                                                    |   |          | 6,842      |    |              |   | 14,796 |   |
|                                                                                                                                                                                                                                      |   |          | 2,203,834  |    |              |   | 2,352,778 |   |
| Less current portion                                                                                                                                                                                                                      |   |          | (1,924,785 | )  |              |   | (1,955,840 | )  |
|                                                                                                                                                                                                                                      |   | $             | 279,049    |    |              | $      | 396,938 |   |

----

| 2011  | $      | 149,521   |   |
|-------|--------|-----------|--------|
| 2012  |   | 1,896,568 |   |
| 2013  |   | 157,745   |   |
| Total | $      | 2,203,834 |   |

|                       |   | Three Months ended June 30, |   |   | Six Months ended June 30, |   |
|----------------------------|--------|-----------------------------|--------|--------|---------------------------|--------|
|                       |   | 2011                        |   |   | 2010                      |   |   | 2011 |   |   | 2010 |   |
| Current:                   |   |                        |   |   |                      |   |   |   |   |   |   |   |   |   |   |   |
|   Federal             |   | $                           | -      |   |                      | $      | - |   |   | $ | - |   |   | $ | - |   |
|   State               |   |                        | 4,861  |   |                      |   | 4,878 |   |   |   | 11,237 |   |   |   | 10,276 |   |
| Total current              |   |                        | 4,861  |   |                      |   | 4,878 |   |   |   | 11,237 |   |   |   | 10,276 |   |
|                       |   |                        |   |   |                      |   |   |   |   |   |   |   |   |   |   |   |
| Deferred:                  |   |                        |   |   |                      |   |   |   |   |   |   |   |   |   |   |   |
|   Federal             |   |                        | -      |   |                      |   | - |   |   |   | - |   |   |   | - |   |
|   State               |   |                        | -      |   |                      |   | - |   |   |   | - |   |   |   | - |   |
| Total deferred             |   |                        | -      |   |                      |   | - |   |   |   | - |   |   |   |  - |   |
|                       |   |                        |   |   |                      |   |   |   |   |   |   |   |   |   |   |   |
| Total income tax provision |   | $                           | 4,861  |   |                      | $      | 4,878 |   |   | $ | 11,237 |   |   | $ | 10,276 |   |

|                                                    |   | Three Months ended June 30, |   |    | Six Months ended June 30, |   |
|---------------------------------------------------------|--------|-----------------------------|--------|---------|---------------------------|--------|
|                                                    |   | 2011                        |   |    | 2010                      |   |   |   | 2011 |   |   |   | 2010 |   |
| Income tax expense (benefit) computed at statutory rate |   | $                           | (786   | )  |                      | $      | (44,095 | )  |   | $ | 7,060 |   |   | $ | (269,285 | ) |
| Share-based compensation                                |   |                        | -      |    |                      |   | 3,740 |   |   |   | 43,350 |   |   |   | 291,975 |   |
| Meals and entertainment                                 |   |                        | 1,837  |    |                      |   | 7,895 |   |   |   | 5,092 |   |   |   | 9,572 |   |
| Other                                                   |   |                        | -      |    |                      |   | 210 |   |   |   | - |   |   |   | 227 |   |
| Change in valuation allowance                           |   |                        | (1,051 | )  |                      |   | 32,250 |   |   |   | (55,502 | )  |   |   | (32,489 | )  |
| Texas Margin Tax                                        |   |                        | 4,861  |    |                      |   | 4,878 |   |   |   | 11,237 |   |   |   | 10,276 |   |
|                                               |   | $                           | 4,861  |    |                      | $      | 4,878 |   |   | $ | 11,237 |   |   | $ | 10,276 |   |

----

|                                          |   | June 30, 2011 |     | December 31, 2010 |   |
|-----------------------------------------------|--------|---------------|----------|-------------------|--------|
| Deferred Tax Assets:                          |   |          |     |              |   |   |   |
|   Net operating loss carryforward        |   | $        | 403,337  |              | $      | 478,916 |   |
|   Book depreciation in excess of tax     |   |          | 12,915   |              |   | 25,830 |   |
|   Other                                  |   |          | 2,465    |              |   | 4,832 |   |
| Total deferred tax assets                     |   |          | 418,717  |              |   | 509,578 |   |
|                                          |   |          |     |              |   |   |   |
| Deferred Tax Liabilities:                     |   |          |     |              |   |   |   |
|   Unrealized gains on trading securities |   |          | -        |              |   | - |   |
| Total deferred tax liabilities                |   |          | -        |              |   | - |   |
|                                          |   |          |     |              |   |   |   |
| Valuation allowance                           |   |          | (418,717 | )                 |   | (509,578 | ) |
| Net deferred tax asset                        |   | $        | -        |              | $      | - |   |

| Operating Losses |
|------------------|
| Amount           |   | Expires |
| $                | 1,186,286 |   | 2029 |
|             | 59,048 |   |  2030  |
| $                | 1,245,334 |   |   |

|                   |   | Amount |    |
|------------------------|--------|--------|---------|
| Year December 31, 2011 |   | $      | 114,813 |   |
| Year December 31, 2012 |   |   | 174,125 |   |
|                   |   | $      | 288,938 |   |

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 

ITEM 4T. CONTROLS AND PROCEDURES 

ITEM 1. LEGAL PROCEEDINGS 

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

ITEM 3. DEFAULTS UPON SENIOR SECURITIES 

ITEM 5. OTHER INFORMATION 

| Exhibit No. | Description                                                                                                   |
|-------------|---------------------------------------------------------------------------------------------------------------|
| 31.1        | Certification of CEO Pursuant to 18 U.S.C. Section 1350 as adopted pursuant to the Sarbanes-Oxley Act of 2002 |
| 31.2        | Certification of CFO Pursuant to 18 U.S.C. Section 1350 as adopted pursuant to the Sarbanes-Oxley Act of 2002 |
| 32.1        | Certification of CEO Pursuant to Section 906 of Sarbanes-Oxley Act of 2002                                    |
| 32.2        | Certification of CFO Pursuant to Section 906 of Sarbanes-Oxley Act of 2002                                    |
| 101.INS     | XBRL Instance Document                                                                                        |
| 101.SCH     | XBRL Taxonomy Extension Schema                                                                                |
| 101.CAL     | XBRL Taxonomy Extension Calculation Linkbase                                                                  |
| 101.LAB     | XBRL Taxonomy Extension Label Linkbase                                                                        |
| 101.PRE     | XBRL Taxonomy Extension Presentation Linkbase                                                                 |

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