**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

**Washington, D.C. 20549**

**FORM 10-QSB**

(Mark One)
| x   | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
|---------------|-----------------------------------------------------------------------------------------|
|          | For the period ended  **February 28, 2007**                                   |  
[  

]

TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 
 

For the transition period from [  

] to [  

]

 
Commission file number  **000-51306**

**SOUTHRIDGE ENTERPRISES INC.**

(Name of small business issuer in its charter)

 

**Nevada**

 

**98-0435537**

(State or other jurisdiction of incorporation or organization)

 

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

 

**3625 N. Hall Suite 900.****Dallas, Texas**

 

**75219-5106**

(Address of principal executive offices)

 

(Zip Code)

Issuer's telephone number (888) 862-2192 Ext 4

Securities registered pursuant to Section 12(b) of the Act:

Title of each class**Nil**

 

Name of each exchange on which registered**Nil**

Securities registered pursuant to Section 12(g) of the Act:

**Common Shares, par value $0.001**

(Title of class)

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 [   ]

State issuer's revenues for its most recent fiscal year.   Nil

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

**(APPLICABLE ONLY TO CORPORATE REGISTRANTS)**

As of March 31, 2007, there were 51,675,000 shares of the issuer’s common stock outstanding, par value $0.001

Transitional Small Disclosure Format (Check one):  

Yes [  

]  

No x.

 

 

 

 

 

INDEX

 

PART 1.

FINANCIAL INFORMATION

 

Item 1.

Financial Statements

 

 

Consolidated Balance Sheets as of February 28, 2007 and August 31, 2006.

 

 

Consolidated Statements of  Operations for the three months and six months ended February 28, 2007 and 2006, and, for the period May 4, 2004 (Date of inception) to February 28, 2007.

 

 

Consolidated Statements of Cash Flows for the six months ended February 28, 2007 and 2006, and, for the period May 4, 2004 (Date of inception) to February 28, 2007.

 

 

Notes to Consolidated Financial Statements

 

Item 2

Management Discussion and Analysis or Plan of Operation

 

Item 3

Controls and Procedures

PART II.

OTHER INFORMATION

 

Item 1

Legal Proceedings

 

Item 2

Changes in Securities

 

Item 3

Defaults Upon Senior Securities

 

Item 4

Submission of Matters to a Vote of Security Holders

 

Item 5

Other Information

 

Item 6

Exhibits and Reports on Form 8K

 

SIGNATURES

 

CERTIFICATIONS

                

 

 

 

 

 

 

**SOUTHRIDGE ENTERPRISES INC.**

**(A Development Stage Company)**

 

Unaudited Financial Statements

 

 

 

Index

Page Number

Consolidated Balance Sheets

F-1

Consolidated Statements of Operations 

F-2

Consolidated Statements of Cash Flows

F-3

Notes to Consolidated Financial Statements

F-4-9

 

 

 

 

SOUTHRIDGE ENTERPRISES, INC.

(A Development Stage Company)

Consolidated Balance Sheets

 

 

(Unaudited)

 

 

 

February 28,

 

August 31,

 

2007

 

2006

 

 

 

 

ASSETS

 

 

 

Current Assets

 

 

 

Cash and cash equivalents

$               309

 

$         7,548

 

 

 

 

Land

375,000

 

-

 

 

 

 

Total Assets

$       375,309

 

$         7,548

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

Current Liabilities

 

 

 

Account Payable

$       25,050

 

$      25,144

Demand loans – related party

88,573

 

-

Interest Payable

21,690

 

-

Total Current Liabilities

135,313

 

25,144

 

 

 

 

Non-current Liabilities

 

 

 

Line of Credit

812,717

 

-

Total Liabilities

948,030

 

 

 

 

 

 

Stockholders’ Equity

 

 

 

Preferred stock, $0.001 par value, authorized 100,000,000

 

 

 

shares, -0- issued

 

 

 

Common stock, $0.001 par value, authorized 100,000,000

 

 

 

shares, 51,675,000 issued at February 28, 2007 and 

 

 

 

August 31, 2006

51,675

 

51,675

Additional paid-in Capital

41,038

 

41,038

Deficit accumulated during development stage

(665,434)

 

(110,309)

Total stockholders’ equity (deficiency)

(572,721)

 

(17,596)

 

 

 

 

Total Liabilities and Stockholders’ Equity

$      375,309

 

$        7,548

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

1

 

 

 

SOUTHRIDGE ENTERPRISES, INC.

(A Development Stage Company)

Consolidated Statements of Operations

(Unaudited)

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

Since

 

 

 

 

 

May 4, 2004

 

For the Three Months Ended

 

For the Six Months Ended

 

Inception of

 

February 28,

 

February 28,

 

Development

 

2007

 

2006

 

2007

 

2006

 

Stage

 

 

 

 

 

 

 

 

 

 

Revenues

$               -

 

$               -

 

$               -

 

$               -

 

$               -

 

 

 

 

 

 

 

 

 

 

Expenses

 

 

 

 

 

 

 

 

 

Consulting fees

75,000

 

-

 

345,800

 

-

 

345,800

General and Administrative

31,687

 

119

 

111,977

 

1,180

 

213,986

Investor Relations

42,440

 

-

 

75,630

 

-

 

75,630

Mineral Property costs

-

 

-

 

-

 

-

 

8,300

 

 

 

 

 

 

 

 

 

 

Total Expenses

149,127

 

119

 

533,407

 

1,180

 

643,716

 

 

 

 

 

 

 

 

 

 

Other Income (Expense)

 

 

 

 

 

 

 

 

 

Interest Expense

(14,943)

 

-

 

(21,718)

 

-

 

(21,718)

 

 

 

 

 

 

 

 

 

 

Net Income (Loss)

$   (164,070)

 

$         (119)

 

$ (555,125)

 

$     (1,180)

 

$   (665,434)

 

 

 

 

 

 

 

 

 

 

Weighted Average Shares

51,675,000

 

51,675,000

 

51,675,000

 

51,675,000

 

 

Loss Per Common Share

$               -

 

$               -

 

$      (0.01)

 

$               -

 

 

 

 

 

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

 

2

 

 

 

SOUTHRIDGE ENTERPRISES, INC.

(A Development Stage Company)

Consolidated Statements of Cash Flows

(Unaudited)

 

 

 

 

 

 

 

 

Deficit

 

 

 

 

 

Accumulated

 

 

 

 

 

Since

 

 

 

May 4, 2004

 

For the Six Months Ended

 

Inception of

 

February 28,

 

Development

 

2007

 

2006

 

Stage

 

 

 

 

 

 

CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

 

 

 

 

 

 

 

 

 

Net Loss

$   (555,125)

 

$       (1,180)

 

$   (665,434)

Change in non-cash working capital items:

 

 

 

 

 

Increase (decrease) in accounts payable

(94)

 

(25,520)

 

25,050

Increase (decrease) in demand loans – related party

88,573

 

-

 

88,573

Increase (decrease) in interest payable

21,690

 

-

 

21,690

Net cash used in operating activities

(444,956)

 

(26,700)

 

(530,121)

 

 

 

 

 

 

CASH FLOWS FROM INVESTING ACTIVITES:

 

 

 

 

 

 

 

 

 

 

 

Purchase of property

(375,000)

 

-

 

(375,000)

Net cash used in investing activities

(375,000)

 

-

 

(375,000)

 

 

 

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

 

 

 

 

 

 

 

 

 

Issuance of common stock

-

 

-

 

92,713

Proceeds from Line of Credit

812,717

 

-

 

812,717

Net cash provided by financing activities

812,717

 

-

 

905,430

 

 

 

 

 

 

Net increase (Decrease) in Cash and Cash Equivalents

(7,239)

 

(26,700)

 

309

 

 

 

 

 

 

Cash and Cash Equivalents at the Beginning of Period

7,548

 

36,938

 

-

 

 

 

 

 

 

Cash and Cash Equivalents at the End of the Period

$           309

 

$       10,238

 

$              309

 

 

 

 

 

 

SUPPLEMENTAL CASH FLOW INFORMATION:

 

 

 

 

 

Interest

$               -

 

$                 -

 

$                 -

Income Taxes 

$               -

 

$                 -

 

$                 -

 

 

 

 

 

 

 

 

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

 

3

 

 

 

SOUTHRIDGE ENTERPRISES, INC.

(A Development Stage Company)

Notes to Consolidated Financial Statements

 

 

**1.**

**Organization and Continuance of Operations**

This summary of accounting policies for Southridge Enterprises Inc. is presented to assist in understanding the Company's consolidated financial statements. The accounting policies conform to generally accepted accounting principles and have been consistently applied in the preparation of the consolidated financial statements.

 

Southridge Enterprises Inc. (the “Company”) was incorporated in the State of Nevada on May 4, 2004. The Company was originally organized to explore mineral properties in British Columbia, Canada. The Company’s fiscal year end is August 31.  The Company conducted its exploration activities in British Columbia through Southridge Exploration Inc., a wholly-owned British Columbia corporation incorporated on July 19, 2004). Based on a review of the mineralization data of its claims, the Company abandoned these mineral property claims.

 

These consolidated financial statements are presented on the basis that the Company is a going concern, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business over a reasonable length of time. As of February 28, 2007, the Company had $309 in cash, working capital deficiency of ($947,721) stockholders’ deficiency of ($572,721) and accumulated net losses of $665,434 since inception. The consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. Its continuation as a going concern is dependent upon its ability to generate sufficient cash flow to meet its obligations on a timely basis, to obtain additional financing orrefinancing as may be required, to develop a commercially viable ethanol production facility, and ultimately to establish profitable operations.

 

Management’s plans for the continuation of the Company as a going concern include financing the Company’s operations through issuance of its common stock. If the Company is unable to complete its financing requirements or achieve revenue as projected, it will then modify its expenditures and plan of operations to coincide with the actual financing completed and actual operating revenues. There are no assurances, however, with respect to the future success of these plans.

 

Unless otherwise indicated, amounts provided in these notes to the consolidated financial statements pertain to continuing operations. 

 

The Company is not currently earning any revenues. 

Basis of Presentation  

The unaudited consolidated financial information furnished herein reflects all adjustments which, in the opinion of management, are necessary to fairly state the Company’s financial position and the results of its operations of Cignus Ventures Inc. (the “Company”) for the periods presented.  These unaudited consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and notes thereto included in the Company’s Form 10-KSB for the fiscal year ended August 31, 2006.  The Company assumes that the users of the interim consolidated financial information herein have read, or have access to, the audited consolidated financial statements for the preceding fiscal year, and that the adequacy of additional disclosure needed for a fair presentation may be determined in that context.  Accordingly,footnote disclosure, which would substantially duplicate the disclosure contained in the Company’s Form 10-KSB for the fiscal year ended August 31, 2006, has been omitted.  The results of operations for the six month period ended February 28, 2007 are not necessarily indicative of results for the entire year ending August 31, 2007.

 

4

 

 

 

SOUTHRIDGE ENTERPRISES, INC.

(A Development Stage Company)

Notes to Consolidated Financial Statements

 

 

**2.**

**Summary of Significant Accounting Policies**

 

 

**a)**

**Consolidation**

 

The consolidated financial statements include the accounts of Southridge Enterprises Inc. and its wholly owned subsidiaries, Southridge Ethanol Inc., and, Southridge Environmental Inc.

 

All significant inter-company transactions and balances have been eliminated.

 

**(b)**

**Use of Estimates and Assumptions**

The preparation of consolidated financial statements in conformity with generally accepted accounting principles required management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

 

 

**(c)**

**Cash**

Cash consists of cash on deposit with high quality major financial institutions, and to date the Company has not experienced losses on any of its balances. The carrying amounts approximated fair market value due to the liquidity of these deposits. For purposes of the consolidated balance sheets and consolidated statements of cash flows, the Company considers all highly liquid debt instruments purchased with maturity of three months or less to be cash equivalents. At February 28, 2007, the Company had no cash equivalents.

 

**(d)**

**Concentration of Credit Risk**

The Company has no significant off-balance-sheet concentrations of credit risk such as foreign exchange contracts, options contracts or other foreign hedging arrangements.  The Company maintains the majority of its cash balances with one financial institution, in the form of demand deposits.

 

**(e)**

**Long-Lived Assets**

The Company accounts for long-lived assets under the FASB Statements of Financial Accounting Standards Nos. 142 and 144 “Accounting for Goodwill and Other Intangible Assets” and “Accounting for Impairment or Disposal of Long-Lived Assets” (“SFAS No. 142 and 144”).  In accordance with SFAS No. 142 and 144, long-lived assets, goodwill and certain identifiable intangible assets held and used by the Company are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.  For purposes of evaluating the recoverability of long-lived assets, goodwill and intangible assets, the recoverability test is performed using undiscounted net cash flows related to the long-lived assets.

 

 

5

 

 

 

SOUTHRIDGE ENTERPRISES, INC.

(A Development Stage Company)

Notes to Consolidated Financial Statements

 

**(f)**

**Income Taxes**

The Company accounts for income taxes under the FASB Statement of Financial Accounting Standards No. 109, “Accounting for Income Taxes” (“SFAS No. 109”).  Under Statement 109, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases.  Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.  Under Statement 109, the effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.  

 

**(g)**

**Loss per Share**

 

FASB Statement of Financial Accounting Standards No. 128 (“SFAS No.128”), “Earnings per Share”, requires dual presentation of basic earnings per share (“EPS”) and diluted EPS on the face of all income and loss statements, for all entities with complex capital structures. Basic EPS is computed as net income divided by the weighted average number of common shares outstanding for the period. Diluted EPS reflects the potential dilution that could occur from common shares issuable through stock options, warrants and other convertible securities. At February 28, 2007 and 2006, the Company had no outstanding stock options, warrants and other convertible securities.

 

 

**(h)**

**Fair Values of Financial Instruments**

 

Financial instruments include cash, and accounts payable and accrued expenses. Management of the Company does not believe that the Company is subject to significant interest, currency or credit risks arising from these financial instruments. The respective carrying values of financial instruments approximate their fair values. Fair values were assumed to approximate carrying values since they are short-term in nature or they are receivable or payable on demand.

 

**(i)**

**Accounting for Derivative Instruments and Hedging Activities**

 

The Company has adopted FASB Statement of Financial Accounting Standards No. 133 (“SFAS No. 133”), “Accounting for Derivative Instruments and Hedging Activities”, which requires companies to recognize all derivatives contracts as either assets or liabilities in the balance sheet and to measure them at fair value. If certain conditions are met, a derivative may be specifically designated as a hedge, the objective of which is to match the timing of gain or loss recognition on the hedging derivative with the recognition of (i) the changes in the fair value of the hedged asset or liability that are attributable to the hedged risk, or (ii) the earnings effect of the hedged forecasted transaction. For a derivative not designated as a hedging instrument, the gain or loss is recognized in income in the period of change.

 

 

**(j)**

**Accounting for Derivative Instruments and Hedging Activities (continued)**

 

The Company has not entered into derivative contracts either to hedge existing risks or for speculative purposes.

 

 

**(k)**

**Stock-based Compensation**

 

The Company adopted the fair value method of accounting for stock-based compensation recommended by FASB Statement of Financial Accounting Standards No. 123(R) (“SFAS No. 123(R)”), “Accounting for Stock-based Compensation”. The Company does not have a stock option plan nor has it granted any stock options since inception.

 

6

 

 

 

SOUTHRIDGE ENTERPRISES, INC.

(A Development Stage Company)

Notes to Consolidated Financial Statements

 

 

 

**(l)**

**Comprehensive Income**

 

The Company has adopted FASB Statement of Financial Accounting Standards No. 130 (“SFAS No. 130”), “Reporting Comprehensive Income”, which establishes standards for reporting and display of comprehensive income, its components and accumulated balances. When applicable, the Company would disclose this information on its consolidated Statement of Stockholders’ Equity (Deficiency). Comprehensive income comprises equity except those resulting from investments by owners and distributions to owners. The Company has no elements of “other comprehensive income” for the periods ended February 28, 2007.

 

 

**(m)**

**Intangible Assets**

 

The Company has adopted FASB Statement of Financial Accounting Standards No. 142 (“SFAS No. 142”), “Goodwill and Other Intangible Assets”, which requires that goodwill and intangible assets with indefinite life are not amortized but rather tested at least annually for impairment. Intangible assets with a definite life are required to be amortized over their useful life. The Company does not have any goodwill nor intangible assets with indefinite or definite life since inception.

 

**(n)**

**Environmental Costs**

 

Environmental expenditures that relate to current operations are charged to operations or capitalized as appropriate. Expenditures that relate to an existing condition caused by past operations, and which do not contribute to current or future revenue generation, are charged to operations. Liabilities are recorded when environmental assessments and/or remedial efforts are probable, and the cost can be reasonably estimated. Generally, the timing of these accruals coincides with the earlier of completion of a feasibility study or the Company’s commitments to plan of action based on the then known facts.

 

**3.**

**Common Stock**

On October 3, 2006, the Company split its common shares on the basis of 5 for 1. As a result, its articles of incorporation were amended to increase its authorized common stock from 100,000,000 shares to 500,000,000 shares. The par value of the Company’s common stock remained $0.001 per share.****The Company’s authorized preferred stock was also amended from 100,000,000 shares to 500,000,000 shares.  Prior to the stock split, there were 10,335,000 shares of common stock outstanding. After the stock split there were 51,675,000 shares of common stock outstanding. The record date for the split was September 21, 2006 and became effective October 3, 2006. The consolidated financial statements and notes have been changed at February 28, 2007 to reflect the retroactive effect of the 5 to 1 forward stock split. The Company’s tradingsymbol was changed from “SDGE” to “SORD” in connection with the forward stock split.

**4.**

**Land**

On September 28, 2006 the Company formed a wholly owned subsidiary Southridge Environmental Inc., incorporated in the state of Mississippi, which acquired land located in Quitman County, Mississippi, for the purchase price of $375,000, that closed on October 5, 2006. The Land is situated on 37 acres located in the northwest region of the state, which is in the lower portion of the Mid-West corn belt.  The industrial plant facility plant on the land is a warehouse with no value. This warehouse facility is a 76,000 sq. ft industrial structure that will be converted to house equipment for ethanol production. 

 

 

7

 

 

 

SOUTHRIDGE ENTERPRISES, INC.

(A Development Stage Company)

Notes to Consolidated Financial Statements

 

 

**5.**

**Commitments and Contractual Obligations**

The Company’s office is maintained at a cost of approximately $3,000 per month as of August 1, 2006. This is currently month-to-month. The Company believes that its office space and facilities are sufficient to meet its present needs and does not anticipate any difficulty securing alternative or additional space, as needed, on terms acceptable to the Company.

On October 27, 2006 as announced on December 19, 2006 the Company signed a soft offer Letter of Intent to purchase ethanol from PLS Sopucoes Ltda. Under the terms of the agreement being discussed approximately 50,000,000 gallons of ethanol can be purchased for resale in the U.S., based on a contractual commitment of 4.5 million gallons per month at $1.44 USD per gallon. 

 

**6.**

**Option Agreement Deposit**

On September 13, 2006 the Company entered into an option to purchase agreement (the “Agreement”) with Boss Group of Companies Inc., to acquire an ethanol plant in Saskatchewan, Canada for the sum of $632,500. On September 28, 2006 the Company formed a wholly owned subsidiary Southridge Ethanol Inc., incorporated in the state of Mississippi, that is intended for the closing of this agreement with the purchase subject to due diligence by December 11, 2006. A $20,000 non refundable option deposit was made and was expensed as no definitive purchase agreement could be reached.

 

**7.**

**Line of Credit**

On September 29, 2006 the Company also entered into an 8% per annum, Line Of Credit (“LOC”) due September 29, 2011 with Uniform Ventures Ltd. (“the Lender”) for up to $10,000,000. The unpaid principal of LOC bears simple interest at the rate of eight percent (8%) per annum. Interest is calculated based on principal balance as may be adjusted from time to time to reflect additional advances made. Interest on the unpaid balance shall accrue monthly but shall be paid quarterly. The LOC is secured by an unregistered charge over all current and future assets owned by the Company.  As of February 28, 2007, $812,717 has been drawn down with an additional $21,690 in accrued interest payable. Additionally, at its discretion the Company may issue treasury stock to the Lender in lieu of payment 

 

**8.**

**Related Party Loans**

                

**Short term loan**

 

 

 

**February 28, 2007**

**Non interest bearing and unsecured**

 

 

 

 

Alex Smid

 

 

$

88,573

0757140 BC Ltd. (Glen Harder)

 

 

 

-

**Total**

 

 

$

88,573

 

 

Related party short term loans are non interest bearing, unsecured and due on demand.

 

 

 

 

8

 

 

 

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

FORWARD-LOOKING STATEMENTS

 

This quarterly report contains forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995. These statements relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as “may”, “should”, “expects”, “plans”, “anticipates”, “believes”, “estimates”, “predicts”, “potential” or “continue” or the negative of these terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties and other factors, including the risks in the section entitled “Risk Factors” that may cause our or our industry’s actual results, levels of activity, performance or achievements to be materially different from any future results, levelsof activity, performance or achievements expressed or implied by these forward-looking statements.

 

Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results.

 

Our consolidated financial statements are stated in United States dollars and are prepared in accordance with United States generally accepted accounting principles. The following discussion should be read in conjunction with our consolidated financial statements and the related notes that appear elsewhere in this quarterly report.

 

In this quarterly report, unless otherwise specified, all references to “common shares” refer to the common shares in our capital stock and the terms “we”, “us” and “our” mean Southridge Enterprises Inc.

Overview

We are a renewable energy company with a mission to become an ethanol producer in the southeastern region of the United States. To date, we have not derived any income from any of our operations.

Our plan of operation is to focus in an area which offers abundant supplies of corn, superior transportation infrastructure and expedited permitting processes.

On September 28, 2006 we formed a wholly owned subsidiary Southridge Environmental Inc., a Mississippi corporation, which acquired an industrial plant facility located in Quitman County, Mississippi, for the purchase price of $375,000.  The acquisition closed on October 5, 2006.  This Quitman plant is situated on 37 acres located in the northwest region of the state, which is in the lower portion of the Mid-West corn belt. The facility has a 76,000 sq. ft industrial structure that will be converted to house equipment for ethanol production. 

 

Total annual gasoline consumption in the United States is approximately 140 billion gallons and total annual ethanol consumption currently represents less than 4% of this amount, or approximately 5 billion gallons of ethanol. We believe that the ethanol industry has substantial potential for growth to reach what we estimate is an achievable level of at least 10% of the total annual gasoline consumption in the United States, or approximately 14 billion gallons of ethanol. In California alone, an increase in the consumption of ethanol from California’s current level of 5.7%, or approximately 950 million gallons of ethanol per year, to at least 10%, of total annual gasoline consumption would result in consumption of approximately 700 million additional gallons of ethanol, representing an increase in annual ethanol consumption in California alone of approximately 75% and an increase in annual ethanolconsumption in the entire United States of approximately 18%. 

Competition

We operate in the highly-competitive ethanol marketing industry and plan to establish ethanol production facilities to begin producing our own ethanol. The largest ethanol producer in the United States is Archer-Daniels-Midland Company, or ADM, with wet and dry mill plants in the Midwest and a total production capacity of about 1.2 billion gallons per year, or about 30% of total United States ethanol production. According to the Renewable Fuels 

 

9

 

 

Association's ETHANOL INDUSTRY OUTLOOK 2006, there are approximately 95 ethanol plants currently operating with a combined annual production capacity of approximately 5.0 billion gallons. In addition, 29 ethanol plants and 9 expansions were under construction with a combined annual capacity of approximately 1.5 billion gallons. We believe that most of the growth in ethanol production over the last ten years has been by farmer-owned cooperatives that have commenced or expanded ethanol production as a strategy for enhancing demand for corn and adding value through processing. We believe that many smaller ethanol plants rely on marketing groups such as Ethanol Products, Aventine Renewable Energy, Inc. and Renewable Products Marketing Group to move their product to market. 

 

Plan of Operations and Cash Requirements

Our primary goal is to become a producer and marketer of ethanol and other renewable fuels in the Eastern United States. Our business strategy to achieve this goal includes the following elements:

 

 

1.

Completion of our Ethanol Production   Facilities

 

We are currently developing our first ethanol production facility located in Quitman County, Mississippi to produce ethanol and its co-products, specifically, WDG and CO(2), for sale in the U.S.  We believe that, following the completion of construction of our planned facility, if it occurs, we will be a significant producer of ethanol in the Mid-West and that our proximity to the geographic market in which we plan to sell our ethanol may provide us with competitive advantages over other ethanol producers.

 

 

2.

Make Strategic Acquisitions of Existing or Pending Ethanol Production Facilities

 

We plan to explore opportunities to make strategic acquisitions of existing or pending ethanol production facilities. In circumstances where, in our judgment, the acquisition of existing or pending ethanol production facilities represents an opportunity to more quickly or successfully meet our business goals, we intend to undertake to consummate these acquisitions.

 

 

3.

Identify and Exploit New Renewable Fuels and Technologies

 

We plan to identify and exploit new renewable fuels and technologies. We are currently examining new technologies enabling the conversion of cellulose, which is generated predominantly from wood waste, paper waste and agricultural waste, into ethanol and we are also researching opportunities to produce bio-diesel to serve East Coast markets.

Personnel Plan

As of February 28, 2007, we had no employees other than our directors and officers.  On September 26, 2006, we appointed Alex Smid and Daniel Jackson to our Board of Directors.  

We also engage directors and contractors from time to time to supply work on specific corporate business and development programs.

Consultants are retained on the basis of ability and experience.  Except as set forth above, there is no preliminary agreement or understanding existing or under contemplation by us (or any person acting on our behalf) concerning any aspect of our operations pursuant to which any person would be hired, compensated or paid a finder’s fee.

Off-Balance Sheet Arrangements

There are no 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 investors.

**Financial Condition, Liquidity and Capital Resources**

Our principal capital resources have been through the issuance of common stock, our Line of Credit and related party loans, or borrowing in the future. 

 

10

 

 

 

At February 28, 2007, we had a working capital deficiency of $947,721, compared to a working deficit of $17,596 as at August 31, 2006.

At February 28, 2007, our total assets were $375,309 which consisted of cash and $375,000 of our property in Mississippi, compared to total assets of $7,548 as at August 31, 2006.

At February 28, 2007, our total liabilities were $948,030. This is primarily comprised of draw downs from our line of credit , which totaled $812,717 during the period. This compares to total liabilities of $25,144 as at August 31, 2006.

For the three and six month periods ended February 28, 2007, we posted losses of $164,070 and $555,125, respectively. This compares to losses of $119 and $1,180, respectively for the three and six months ended February 28, 2006.  We have had total losses of $665,434 since inception.

At February 28, 2007, we had cash on hand of $309 compared to $7,548 as at August 31, 2006.

*Cash Requirements*

We will require additional funds to implement our growth strategy for ethanol production.  These funds may be raised through equity financing, debt financing, or other sources, which may result in further dilution in the equity ownership of our shares.  There is still no assurance that we will be able to maintain operations at a level sufficient for an investor to obtain a return on his investment in our common stock.  Further, we may continue to be unprofitable.

*Going Concern*

Due to our being an development stage company and not having generated revenues, in their Notes to our financial statements for the year ended August 31, 2006, our independent auditors included an explanatory paragraph regarding concerns about our ability to continue as a going concern.

We have historically incurred losses, and through February 28, 2007 have incurred losses of $665,434 from our inception. Because of these historical losses, we will require additional working capital to develop our business operations. We intend to raise additional working capital through private placements, public offerings, bank financing and/or advances from related parties or shareholder loans.

The continuation of our business is dependent upon obtaining further financing and achieving a break even or profitable level of operations. The issuance of additional equity securities by us could result in a significant dilution in the equity interests of our current or future stockholders. Obtaining commercial loans, assuming those loans would be available, will increase our liabilities and future cash commitments. 

There are no assurances that we will be able to either (1) achieve a level of revenues adequate to generate sufficient cash flow from operations; or (2) obtain additional financing through either private placements, public offerings and/or bank financing necessary to support our working capital requirements. To the extent that funds generated from operations and any private placements, public offerings and/or bank financing are insufficient, we will have to raise additional working capital. No assurance can be given that additional financing will be available, or if available, will be on terms acceptable to us. If adequate working capital is not available we may not increase our operations. 

These conditions raise substantial doubt about our ability to continue as a going concern. The financial statements do not include any adjustments relating to the recoverability and classification of asset carrying amounts or the amount and classification of liabilities that might be necessary should we be unable to continue as a going concern. 

APPLICATION OF CRITICAL ACCOUNTING POLICIES  

Our financial statements and accompanying notes are prepared in accordance with generally accepted accounting principles in the United States.  Preparing financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, and expenses. These estimates and assumptions are affected by management’s application of accounting policies.  We believe that understanding the basis and nature of the estimates and assumptions involved with the following aspects of our financial statements is critical to an understanding 

 

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of our financials.

In preparing financial statements in conformity with generally accepted accounting principles, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and revenues and expenses during the reported period.  Actual results could differ from those estimates.

General and Administration Expenses

General and Administration expenses are written off to operations when incurred.

APPLICATION OF CRITICAL ACCOUNTING POLICIES

Our financial statements and accompanying notes are prepared in accordance with generally accepted accounting principles in the United States.  Preparing financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, and expenses. These estimates and assumptions are affected by management's application of accounting policies.  We believe that understanding the basis and nature of the estimates and assumptions involved with the following aspects of our financial statements is critical to an understanding of our financials

**Risks Associated With Our Business**

We have no operating history and as a result there is no assurance we can operate on a profitable basis*.*

We have no operating history and must be considered in the development stage. Our company's operations will be subject to all the risks inherent in the establishment of a development stage enterprise and the uncertainties arising from the absence of a significant operating history.  Potential investors should be aware of the difficulties normally encountered by development stage companies and the high rate of failure of such enterprises.  We expect to incur losses for the foreseeable future and at least until after the completion of our first ethanol production facility in Quitman County, Mississippi. We estimate that the earliest completion date of this facility and, as a result, our earliest date of ethanol production will not occur until the second quarter of 2007. We expect to rely on cash from borrowings and financings to fund all of the cash requirements of our business. If our net losses continue,we will experience negative cash flow, which may hamper current operations and may prevent us from expanding our business. We may be unable to attain, sustain or increase profitability on a quarterly or annual basis in the future. If we do not achieve, sustain or increase profitability our stock price may decline.

 

Governmental Regulations or the Repeal or Modification of Various Tax Incentives Favoring the use of Ethanol could reduce the demand for Ethanol 

Our business is subject to extensive regulation by federal, state and local governmental agencies. We cannot predict in what manner or to what extent governmental regulations will harm our business or the ethanol production and marketing industry in general. For example the energy bill signed into law by President Bush in August 2005 includes a national renewable fuels standard that requires refiners to blend a percentage of renewable fuels into gasoline. 

 

The fuel ethanol business benefits significantly from tax incentive policies and environmental regulations that favor the use of ethanol in motor fuel blends in the United States. Currently, a gasoline marketer that sells gasoline without ethanol must pay a federal tax of $0.18 per gallon compared to $0.13 per gallon for gasoline that is blended with 10% ethanol. Smaller credits are available for gasoline blended with lesser percentages of ethanol. The repeal or substantial modification of the federal excise tax exemption for ethanol-blended gasoline or, to a lesser extent, other federal or state policies and regulations that encourage the use of ethanol could have a detrimental effect on the ethanol production and marketing industry and materially and adversely affect any sales and profitability.

 

If we do not obtain additional financing, our business will fail and our investors could lose their investment. 

We had cash in the amount of $309 and a working capital deficit of $947,721 as of our period ended February 28, 2007. 

 

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We currently do not generate revenues from our operations. Our business plan calls for substantial investment and cost in connection with the acquisition and exploration of our properties. Any direct acquisition is subject to our ability to obtain the financing necessary for us to fund and carry out exploration programs on the properties. The requirements are substantial. We presently have approximately $9,000,000 remaining on a line of credit facility granted by Uniform Ventures Ltd.   Obtaining additional financing would be subject to a number of factors, including market prices for resources, investor acceptance of our properties, and investor sentiment. These factors may make the timing, amount, terms or conditions of additional financing unavailable to us. The most likely source of future funds presently available to us is through the sale of equity capital and loans. Any new sales of share capitalwill result in dilution to existing shareholders. 

 

Violations of Environmental Regulations could subject us to severe penalties and materially and aversely affect potential sales.

The production and sale of ethanol is subject to regulation by agencies of the federal government, including, but not limited to, the EPA, as well as other agencies in each jurisdiction in which ethanol is produced, sold, stored or transported. Environmental laws and regulations that affect our operations, and that are expected to affect our planned operations, are extensive and have become progressively more stringent. Applicable laws and regulations are subject to change, which could be made retroactively. Violations of environmental laws and regulations or permit conditions can result in substantial penalties, injunctive orders compelling installation of additional controls, civil and criminal sanctions, permit revocations and/or facility shutdowns. If significant unforeseen liabilities arise for corrective action or other compliance, our potential sales and profitability could be materially and adversely affected.

 

Our Failure to Manage our Growth effectively could Prevent us from achieving our Goals*.*

Our strategy envisions a period of rapid growth that may impose a significant burden on our administrative and operational resources. The growth of our business, and in particular, the completion of construction of our planned ethanol production facilities, will require significant investments of capital and management's close attention. Our ability to effectively manage our growth will require us to substantially expand the capabilities of our administrative and operational resources and to attract, train, manage and retain qualified management, technicians and other personnel. We may be unable to do so. In addition, our failure to successfully manage our growth could result in our potential sales not increasing commensurately with our capital investments. If we are unable to successfully manage our growth, we may be unable to achieve our goals.

 

The Market Price of Ethanol is Volatile and subject to significant fluctuations, which may cause our potential profitability to fluctuate significantly 

The market price of ethanol is dependent on many factors, including on the price of gasoline, which is in turn dependent on the price of petroleum. Petroleum prices are highly volatile and difficult to forecast due to frequent changes in global politics and the world economy. The distribution of petroleum throughout the world is affected by incidents in unstable political environments, such as Iraq, Iran, Kuwait, Saudi Arabia, the former U.S.S.R. and other countries and regions. The industrialized world depends critically on oil from these areas, and any disruption or other reduction in oil supply can cause significant fluctuations in the prices of oil and gasoline. We cannot predict the future price of oil or gasoline and may establish unprofitable prices for the sale of ethanol due to significant fluctuations in market prices. For example, the price of ethanol declined by approximately 25% from its 2004average price per gallon in only five months from January 2005 through May 2005. In recent years, the prices of gasoline, petroleum and ethanol have all reached historically unprecedented high levels. If the prices of gasoline and petroleum decline, we believe that the demand for and price of ethanol may be adversely affected. Fluctuations in the market price of ethanol may cause our profitability to fluctuate significantly.

 

We believe that the production of ethanol is expanding rapidly. We expect existing ethanol plants to expand by increasing production capacity and actual production. Increases in the demand for ethanol may not be commensurate with increasing supplies of ethanol. Thus, increased production of ethanol may lead to lower ethanol prices. The increased production of ethanol could also have other adverse effects. For example, increased ethanol production could lead to increased supplies of co-products from the production of ethanol, such as wet distiller’s grain, or WDG. Those increased supplies could lead to lower prices for those co-products. Also, the increased production of ethanol could result in increased demand for corn. This could result in higher prices for corn and cause higher ethanol production 

 

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costs. We cannot predict the future price of ethanol, WDG or corn. Any material decline in the price of ethanol or WDG, or any material increase in the price of corn, will adversely affect our sales and profitability.

 

The construction and operation of our planned Ethanol Production Facilities may be adversely affected by Environmental Regulations and Permit Requirements

The production of ethanol involves the emission of various airborne pollutants, including particulate matter, carbon monoxide, oxides of nitrogen and volatile organic compounds. We may be required to obtain various water-related permits, such as a water discharge permit and a storm-water discharge permit, a water withdrawal permit and a public water supply permit. If for any reason we are unable to obtain any of the required permits, construction costs for our planned ethanol production facilities are likely to increase; in addition, the facilities may not be fully constructed at all. It is also likely that operations at the facilities will be governed by the federal regulations of the Occupational Safety and Health Administration, or OSHA, and other regulations. Compliance with OSHA and other regulations may be time-consuming and expensive and may delay or even prevent sales of ethanol.

 

The raw materials and energy necessary to produce Ethanol may be unavailable or may increase in price, adversely affecting our potential profitability.

The production of ethanol requires a significant amount of raw materials and energy, primarily corn, water, electricity and natural gas. In particular, we estimate that our Quitman County, Mississippi ethanol production facility will require a significant amount of corn each year, and significant and uninterrupted supplies of water, electricity and natural gas. The prices of corn, electricity and natural gas have fluctuated significantly in the past and may fluctuate significantly in the future. In addition, droughts, severe winter weather in the Midwest, where we expect to source corn, and other problems may cause delays or interruptions of various durations in the delivery of corn or reduce corn supplies and increase corn prices. Local water, electricity and gas utilities may not be able to reliably supply the water, electricity and natural gas that our Quitman County, Mississippi facility will need ormay not be able to supply such resources on acceptable terms. In addition, if there is an interruption in the supply of water or energy for any reason, we may be required to halt ethanol production. We may not be able to successfully anticipate or mitigate fluctuations in the prices of raw materials and energy through the implementation of hedging and contracting techniques. Higher raw materials and energy prices will generally cause lower profit margins and may even result in losses. Accordingly, our sales and profitability may be significantly and adversely affected by the prices and supplies of raw materials and energy.

Our independent certified public accounting firm, in their Notes to the audited financial statements for the year ended August 31, 2006 states that there is a substantial doubt that we will be able to continue as a going concern. 

Our independent certified public accounting firm, *Telford Sadovnick, P.L.L.C.*, state in their notes to the audited financial statements for the year ended August 31, 2006, that we have experienced significant losses since inception.  Failure to arrange adequate financing on acceptable terms and to achieve profitability would have an adverse effect on our financial position, results of operations, cash flows and prospects, there is a substantial doubt that we will be able to continue as a going concern. 

**Risks Associated with Our Common Stock**

Trading on the OTC Bulletin Board may be volatile and sporadic, which could depress the market price of our common stock and make it difficult for our stockholders to resell their shares.

Our common stock is quoted on the OTC Bulletin Board service of the National Association of Securities Dealers.  Trading in stock quoted on the OTC Bulletin Board is often thin and characterized by wide fluctuations in trading prices, due to many factors that may have little to do with our operations or business prospects.  This volatility could depress the market price of our common stock for reasons unrelated to operating performance.  Moreover, the OTC Bulletin Board is not a stock exchange, and trading of securities on the OTC Bulletin Board is often more sporadic than the trading of securities listed on a quotation system like Nasdaq or a stock exchange like Amex.  Accordingly, shareholders may have difficulty reselling any of the shares.

 

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Our stock is a penny stock.  Trading of our stock may be restricted by the SEC’s penny stock regulations and the NASD’s sales practice requirements, which may limit a stockholder’s ability to buy and sell our stock.

Our stock is a penny stock.  The Securities and Exchange Commission has adopted Rule 15g-9 which generally defines “penny stock” to be any equity security that has a market price (as defined) less than $5.00 per share or an exercise price of less than $5.00 per share, subject to certain exceptions.  Our securities are covered by the penny stock rules, which impose additional sales practice requirements on broker-dealers who sell to persons other than established customers and “accredited investors”.  The term “accredited investor” refers generally to institutions with assets in excess of $5,000,000 or individuals with a net worth in excess of $1,000,000 or annual income exceeding $200,000 or $300,000 jointly with their spouse.  The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardizedrisk disclosure document in a form prepared by the SEC which provides information about penny stocks and the nature and level of risks in the penny stock market.  The broker-dealer also must provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson in the transaction and monthly account statements showing the market value of each penny stock held in the customer’s account.  The bid and offer quotations, and the broker-dealer and salesperson compensation information, must be given to the customer orally or in writing prior to effecting the transaction and must be given to the customer in writing before or with the customer’s confirmation.  In addition, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from these rules; the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receivethe purchaser’s written agreement to the transaction.  These disclosure requirements may have the effect of reducing the level of trading activity in the secondary market for the stock that is subject to these penny stock rules.  Consequently, these penny stock rules may affect the ability of broker-dealers to trade our securities.  We believe that the penny stock rules discourage investor interest in and limit the marketability of our common stock.

In addition to the “penny stock” rules promulgated by the Securities and Exchange Commission, the NASD has adopted rules that require that in recommending an investment to a customer, a broker-dealer must have reasonable grounds for believing that the investment is suitable for that customer.  Prior to recommending speculative low priced securities to their non-institutional customers, broker-dealers must make reasonable efforts to obtain information about the customer’s financial status, tax status, investment objectives and other information.  Under interpretations of these rules, the NASD believes that there is a high probability that speculative low priced securities will not be suitable for at least some customers.  The NASD requirements make it more difficult for broker-dealers to recommend that their customers buy our common stock, which may limit your ability to buy and sell our stock. 

**Other Risks**

Because some of our officers and directors are located in non-U.S. jurisdictions, you may have no effective recourse against the non U.S. officers and directors for misconduct and may not be able to enforce judgment and civil liabilities against such parties.

Some of our directors and officers are nationals and/or residents of countries other than the United States, and all or a substantial portion of such persons’ assets are located outside the United States. As a result, it may be difficult for investors to enforce within the United States any judgments obtained against our officers or directors, including judgments predicated upon the civil liability provisions of the securities laws of the United States or any state thereof.

Trends, Risks and Uncertainties 

We have sought to identify what we believe to be the most significant risks to our business, but we cannot predict whether, or to what extent, any of such risks may be realized nor can we guarantee that we have identified all possible risks that might arise. Investors should carefully consider all of such risk factors before making an investment decision with respect to our common stock. 

**Item 3.**

**Disclosure Controls and Procedures**

As required by Rule 13a-15 under the Exchange Act, we have carried out an evaluation of the effectiveness of the design and operation of our company’s disclosure controls and procedures as of the end of the period covered by this quarterly report, February 28, 2007. This evaluation was carried out under the supervision and with the participation of 

 

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our company’s management, including our company’s president and chief executive officer. Based upon that evaluation, our company’s president and chief executive officer concluded that our company’s disclosure controls and procedures are effective as at the end of the period covered by this report. There have been no significant changes in our company’s internal controls or in other factors, which could significantly affect internal controls subsequent to the date we carried out our evaluation.

Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our company’s reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our company’s reports filed under the Exchange Act is accumulated and communicated to management, including our company’s president and chief executive officer as appropriate, to allow timely decisions regarding required disclosure

**PART II - OTHER INFORMATION**

**Item 1.**

**Legal Proceedings.**

We know of no material, active or pending legal proceedings against our company, nor are we involved as a plaintiff in any material proceeding or pending litigation.  There are no proceedings in which any of our directors, officers or affiliates, or any registered or beneficial shareholder, is an adverse party or has a material interest adverse to our interest.

**Item 2.**

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

None

**Item 3.**

**Defaults Upon Senior Securities.**

None.

**Item 4.**

**Submission of Matters to a Vote of Security Holders.**

None.

**Item 5.**

**Other Information.**

None.

 

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**Item 6.**

**Exhibits.**

 

 

 

 

Exhibit Number

Description

**(3)**

**(i) Articles of Incorporation; and (ii) Bylaws**

3.1

Articles of Incorporation (incorporated by reference from our Form SB-2 Registration Statement, filed on October 13, 2004, as amended).

3.2

Bylaws (incorporated by reference from our Form SB-2 Registration Statement, filed on October 13, 2004, as amended).

**(4)**

**Form of Share Certificate**

4.1

Form of Share Certificate (incorporated by reference from our Form SB-2 Registration Statement, filed on October 13, 2004, as amended).

**(10)**

**Material Contracts**

10.1

Work Statement filed March 18, 2005. (incorporated by reference from our Form SB-2 Registration Statement, filed on October 13, 2004, as amended).

10.2

Option to Purchase Agreement – Boss Group of Companies (incorporated by reference from our Current Report on Form 8-K, filed on October 11, 2006).

10.3

Line of Credit with Uniform Ventures Ltd. (incorporated by reference from our Current Report on Form 8-K, filed on October 11, 2006).

10.4

Purchase agreement for industrial plant facility in Quitman County, Mississippi (incorporated by reference from our Current Report on Form 8-K, filed on October 11, 2006).

**(14)**

 

14.1

Code of Ethics (Filed with the SEC as an exhibit to our Annual Report on Form 10-KSB filed on December 2, 2005).

**(21)**

 

21.1

Southridge Ethanol Inc. (a Mississippi corporation).

Southridge Environmental Inc. (a Mississippi corporation).

**(31)**

**302 Certification**

31.1*

Section 302 Certification under Sarbanes-Oxley Act of 2002 of Alex Smid.

**(32)**

**906 Certification**

32.1*

Section 906 Certification under Sarbanes-Oxley Act of 2002 of Alex Smid. 

*Filed herewith

 

 

 

**SIGNATURES**

In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

SOUTHRIDGE ENTERPRISES INC.

 

By:        /s/ Alex Smid    

Alex Smid

President and Director

(Chief Executive Officer, Chief Financial Officer

President, Secretary and Treasurer 

(Principal Executive Officer and Principal 

Accounting Officer)

 

Date: April 12, 2007

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. 

By:        /s/ Alex Smid    

Alex Smid

President and Director

(Principal Executive Officer, Principal Financial

Officer and Principal Accounting Officer)

Date: April 12, 2007

 

By:        /s/ Daniel Jackson          

Daniel Jackson

Director

Date: April 12, 2007

 

 

 

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