**U. S. SECURITIES AND EXCHANGE COMMISSION****Washington, D. C. 20549**

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**FORM 10-KSB**

**x****                             ****ANNUAL REPORT UNDER SECTION 13OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934**

**For the fiscal year ended December 31, 2003**

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

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Commission File Number:**000-25261**

**BANCORP INTERNATIONAL GROUP, INC.(formerly March Indy International, Inc.)**(Name of small business issuer in its Charter)
| **NEVADA**  (State or other jurisdiction of  incorporation or organization) | **88-0339817**  (I.R.S. Employer Identification No.) |
|-----------------------------------------------------------------------------|------------------------------------------------------|

 

**3126 South Boulevard,Suite 264**

**Edmond, Oklahoma 73013**

(Address of principalexecutive offices)

**(405) 235-8318**

(Issuer’s telephonenumber)

 

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Securities registeredunder Section 12(b) of the Exchange Act:

 

Securities registeredunder Section 12(g) of the Exchange Act:

**CommonStock, $0.0001 Par Value**

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

Check if there is nodisclosure of delinquent filers in response to Item 405 of Regulation S-B isnot contained in this form, and no disclosure will be contained, to the best ofregistrant’s knowledge, in definitive proxy or information statementsincorporated by reference in Part III of this Form 10-KSB orany amendment to this Form 10-KSB. x

Indicate by check markwhether the registrant is a shell company (as defined in Rule 12b-2of the Exchange Act).   Yes x   No o

The issuer did notgenerate any revenue for the year ended December 31, 2003.

The aggregate market value of the issuer’s common stock, $.0001 parvalue, held by non-affiliates of the issuer as of June 15, 2006, was$24,763 based on the last reported sale price on February 22, 2006 of$0.0001 as reported by the Electronic Quotation and Trading System forover-the-counter securities. As of June 15, 2006,  500,010,229 shares of the issuer’s commonstock, $.0001 par value, were outstanding.

 

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**BANCORP INTERNATIONAL GROUP, INC.(formerly March Indy International, Inc.)FORM 10-KSBFor the Fiscal Year Ended December 31, 2003**

**TABLE OF CONTENTS**
| Part I.   |                                                                                                                        |   |
|----------------|-----------------------------------------------------------------------------------------------------------------------------|--------|
| Item 1.        | Description  of Business                                                                                                    |   |
| Item 2.        | Description of Property                                                                                                     |   |
| Item 3.        | Legal  Proceedings                                                                                                          |   |
| Item 4.        | Submission  of Matters to a Vote of Security Holders                                                                        |   |
|           |                                                                                                                        |   |
| Part II.  |                                                                                                                        |   |
| Item 5.        | Market  for Common Equity and Related Stockholder Matters                                                                   |   |
| Item 6.        | Management’s  Discussion and Analysis or Plan of Operation                                                             |   |
| Item 7.        | Financial Statements                                                                                                        |   |
| Item 8.        | Changes In and  Disagreements With Accountants on Accounting and Financial Disclosure                                       |   |
| Item 8A.       | Controls and  Procedures                                                                                                    |   |
| Item 8B.       | Other Information                                                                                                           |   |
|           |                                                                                                                        |   |
| Part III. |                                                                                                                        |   |
| Item 9.        | Directors,  Executive Officers, Promoters and Control Persons; Compliance With  Section 16(a) of the Exchange Act |   |
| Item 10.       | Executive  Compensation                                                                                                     |   |
| Item 11.       | Security  Ownership of Certain Beneficial Owners and Management and Related Shareholder  Matters                            |   |
| Item 12.       | Certain  Relationships and Related Transactions                                                                             |   |
| Item 13.       | Exhibits                                                                                                                    |   |
| Item 14.       | Principal  Accountant Fees and Services                                                                                     |   |
|           |                                                                                                                        |   |
| SIGNATURES     |                                                                                                                        |

 

**CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION**

 Certain statements in this report constitute “forward-lookingstatements” within the meaning of Section 27A of the Securities Act of1933, as amended, and Section 21E of the Securities Exchange Act of 1934,as amended. Certain, but not necessarily all, of such forward-lookingstatements can be identified by the use of forward-looking terminology such as “anticipates,”“believes,” “expects,” “may,” “will,” or “should” or other variations thereon,or by discussions of strategies that involve risks and uncertainties. Theactual results or industry results may be materially different from any futureresults expressed or implied by such forward-looking statements.

Throughoutthis report the first personal plural pronoun in the nominative case form “we”and its objective case form “us”, its possessive and the intensive case forms “our”and “ourselves” and its reflexive form “ourselves” refer collectively toBancorp International Group, Inc., its subsidiaries and executive officersand directors.

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**PART I**

**Item 1. Descriptionof Business**

**Overview**

                N.E.C.Properties, Inc. (“NEC”) was incorporated on September 16, 1995,under the laws in the State of Nevada. NEC was organized with no operations orplan of business and was a blank check company. On September 30, 1995 NEChad 25,000 shares at no par value authorized and 18,600 shares issued andoutstanding for $1,860 in cash. On November 19, 1998 the amended andrestated Articles of Incorporation were filed with the Secretary of State ofNevada that increased NEC’s authorized common shares from 25,000 to 25,000,000,and established a par value of $.001 per share. In November 1998 the NECstockholders approved two forward stock splits. The first was a 100 for 1 splitincreasing the number of the outstanding common shares to 1,860,000 and thesecond was a 1.77 for 1 stock split resulting in 3,292,200 common sharesoutstanding.

                OnNovember 10, 1999, NEC acquired all of the outstanding stock of March IndyInternational, Inc. (“March”), in exchange for 7,706,575 shares of NEC(the “Share Exchange”). March was incorporated in Delaware on November 24,1998 (“inception”). For accounting purposes, the transaction was accounted foras a reverse acquisition under the purchase method for business combinations,and accordingly the transaction was treated as a recapitalization of March,with March having acquired NEC.

                OnJune 17, 2000, we declared a one-for-three reverse stock split, effective September 26,2000. This reverse stock split reduced the number of our outstanding commonstock shares from 12,090,234 to 4,030,078.

                Weare a development stage enterprise. From inception through September 30,2000, we were in the preliminary stages of engaging in the business ofdesigning, building and racing cars for Formula One, Cart and Indy competitionboth in the United States and abroad. We also planned to develop an internetwebsite to offer and sell merchandise products related to our racing efforts.In October 2000, because of our inability to successfully organize an Indycar race team and our failure to compete in the Indianapolis 500, wediscontinued our racing and related promotional activities.

                Duringthe calendar quarter ended September 30, 2001, we changed our name toBancorp International Group, Inc..

                OnAugust 19, 2005, our Board of Directors approved and adopted theCertificate of Designation Preferences and Right of Preferred Stock (“Certificateof Designation”). The Certificate of Designation sets forth the preferences andrights of the Company’s 15,000,000 authorized shares of preferred stock, $.0001par value, to be designated as the Series A Convertible Preferred Stock (“Series APreferred Stock”).

                OnAugust 19, 2005, our stockholders voted to amend our Articles ofIncorporation to increase the number of authorized shares of common stock from25,000,000 at a par value of $.001 to 500,000,000 at a par value of $0.0001. Ina second amendment on August 19, 2005, effective January 6 2006, ourstockholders approved another amended to our Articles of Incorporation thatincreased the number of our authorized shares of common stock from 500,000,000at $.0001 par value to 2,000,000,000 at $.0001 par value.

Wehave failed to timely file our reports with the U.S. Securities and ExchangeCommission in accordance with our obligations under Section 12(g) ofthe Securities Exchange Act of 1934, as amended (the “Exchange Act”). We are inthe process of preparing reports with the intent of becoming current in ourreporting obligations under the Exchange Act.

**Employees**

Asof the date of this report, we have one full-time employee, Thomas Megas, ourchief executive officer, who does not receive any form of compensation orremuneration.

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** **

**ADDITIONALFACTORS THAT MAY AFFECT OUR FUTURE RESULTS**

Thefollowing factors and the matters discussed below and elsewhere in this reportshould be considered when evaluating our business operations and strategies.Additionally, there may be other risks and uncertainties that we are not awareof or that we currently deem immaterial, which may become material factorsaffecting our operations and business success. Many of the factors are not withinour control. We provide no assurance that one or more of these factors will notadversely affect us or:

·                                      the marketprice of our common stock;

·                                      any businessactivities undertaken in the future;

·                                      outsidemarket factors that affect our financial condition;

·                                      futuremerger partner; and

·                                      sales of additionalstock or other equity securities on terms that are highly dilutive to our shareholders.

**We are a “blank check company” and are not conducting anybusiness activities and do not have any plan of operation to undertake abusiness activity and have substantial accumulated losses.**

Duringthe quarter ended September 30, 2000, we discontinued our auto racingactivities. As of December 31, 2005 we have not formulated a plan toundertake another business activity. However, we are examining businessopportunities within the energy sector, although no definitive agreements havebeen executed.

Wehave not realized any revenue from our operations and have incurred substantiallosses resulting in an accumulated deficit at December 31, 2003, of$4,376,681. In addition, we will continue to incur losses attributable to theadministrative costs associated with a “blank check, publicly-held shellcompany.” See “Item 6. Management’s Discussion and Analysis or Plan of Operation.”

**There is no assurance that we will obtain capital resourcesto fund any business activities undertaken.**

Todate, we have not pursued additional sources of capital resources; however, ourability to fund future business enterprise is directly related to our abilityto obtain capital resources through the sale or syndication of some or all ofour interests through a public offering or mergers with other viable businessentities. If we are unsuccessful and capital resources do not become availableon terms acceptable to us, we may not be able to undertake the businessenterprise or, if undertaken, continue the business enterprise. This lack ofcapital resource may ultimately result in the loss of investment in our commonstock.

**We may undertake startup business activities pursuant tosharing arrangements that do not result in the anticipated benefits****.**

Inconnection with a business enterprise we undertake, we may enter into variouscost and revenue sharing arrangements, including joint ventures and partnerships,intended to complement or expand the business activities. We may not realizethe anticipated benefits offered by these arrangements. The costs of obtainingthese sharing arrangements may increase our invested cost in the businessactivities without providing a correlating increase in the revenues; thus,adversely affecting the financial potential of the business activities.

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**Any business activities or enterprise undertaken outside ofthe United States will involve inherently greater risks.**

Wemay engage in a business enterprise or activity outside the United States. Aswith any business operation and activities outside of the United States, thereare a number of inherent risks, many of which are beyond our control,including:

·                   changes inlocal regulatory requirements;

·                   changes inthe laws and policies affecting trade, investment and

·                   taxes(including laws and policies relating to the repatriation of funds andwithholding taxes);

·                   differingdegrees of protection of property rights;

·                   instability offoreign currencies, economies and governments;

·                   culturalbarriers; and

·                   wars andacts of terrorism.

Anyof these factors could have a material adverse effect on our ability tocommence and continue the business enterprise undertaken, which may adverselyaffect the financial potential and success of the undertaken businessenterprise.

**When a market develops for our common stock, themarket price of our common stock may be highly volatile in the market place.**

Althougha market for our common stock shares previously existed, the trading volume hasalways been very low. Furthermore, we have been delinquent in our reportingobligations under Exchange Act. If a market redevelops, the market price of ourcommon stock may be subject to certain fluctuations in response to

·                   variationsin quarterly operating results of the enterprise,

·                   changes inearnings estimates by analysts,

·                   developmentof competition within the industry, and

·                   generalstock market conditions.

**Our common stock trades in the Over-the-Counter market andthat market is highly volatile and affected by competitive forces outside ofour control.**

Uponbringing the Company filings current, the common stock should be initiallytraded on the over-the-counter exchange. The over-the-counter market’s volatilityis characterized as follows:

·                   the over-the-counter securities aresubject to substantial and sudden price increases and decreases,

·                   at times the price (bid and ask) informationfor the securities may not be available,

·                   if there is an insufficent number ofmarket makers, there is a risk that the dealers or group of dealers may controlthe market in our common stock and set prices that are not based on competitiveforces, and

·                   the available offered price may besubstantially below the quoted bid price.

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**Our common stock is subject to the penny stocktrading rules which may adversely affect the ability to resell the stock.**

Ourcommon stock is subject to the “penny stock” rules. A “penny stock” isgenerally a stock that

·                                         is only listedin “pink sheets” or on the NASD OTC Bulletin Board,

·                                         the high bidprice for the common stock is less than $5.00, and less than two market makersare currently displaying bid and ask quotations at specified prices, or

·                                         is issued bya company with net tangible assets of less than $5 million (or after havingbeen in existence for more than three years, less than $2 million) or

·                                         has averagerevenues during the previous three years of less than $6 million.

Thepenny stock trading rules impose additional duties and responsibilitiesupon broker-dealers and salespersons recommending the purchase a penny stock orthe sale of a penny stock. Required compliance with these rules willmaterially limit or restrict

·                                         the abilityto resell our common stock, and

·                                         theliquidity typically associated with other publicly traded stocks may not exist.

**We have a large number of authorized and unissuedshares of our common stock; the issuance and terms of issuance are within ourdiscretion and not subject to stockholder approval.**

Wemay issue additional common stock and preferred stock at prices and on termsdetermined by our board of directors, without stockholder consent or approval,that upon issuance may result in substantial dilution of our stockholders’interests as well as the market price and value of our common stock.

Wehave 2,000,000,000 shares of common stock and 15,000,000 shares of Series APreferred Stock (each convertible into 100 shares of our common stock)authorized for issuance. We have the right to offer these shares at offeringprices to be determined at the sole discretion of our board of directors. Thesale of these shares may result in substantial dilution to our shareholders.These stock issuances may adversely affect the market price or value of ourcommon stock.

**Our chief executive officer has voting control and mayexercise this control in the election of our directors and their continuedservice on our Board.**

Onmatters that our stockholders are entitled to vote, our chief executive officerand one of the members of our board of directors, Thomas Megas, holds votingcontrol through his ownership of common stock and preferred stock. Although Mr. Megasin his capacity as a director and our chief executive officer has a fiduciaryduty to our stockholders, Mr. Megas may exercise his voting control in amanner personally beneficial to him and to the detriment or disadvantage of ourother stockholders.

**Item 2. Descriptionof Property**

**Facilities**

Ourcorporate office is located at 3126 South Blvd. Suite 264, Edmond,Oklahoma 73013. If, and when, we undertake a business development enterprise,we will relocate our office to facilities that will then serve our needs, bothin location and facility size.

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**Item 3. LegalProceedings**

Weare currently involved in pursuing additional legal action filed in the stateof Oklahoma against Pamela Thompson CPA, The Grace Trust and Charles Weller,esq. This case is related to the filing described below and represents theunsettled portion of case.

InAugust 2005, our management became aware of the unauthorized fraudulentissuance of approximately 243,842,000 shares of our common stock (the “WrongfullyIssued Shares”) to various entities and individuals for services and gifts,whereupon these entities and individuals attempted to sell the WrongfullyIssued Shares in the open market. Our officers and directors had norelationship with the entities and individuals that issued the WrongfullyIssued Shares.

InSeptember 2005, we a civil action in the District Court of OklahomaCounty, Oklahoma, styled *BancorpInternational Group, Inc. v.Mario A. Pino, an individual, Sam Deeb, anindividual, Jean Carlos Medina, an individual, Charles Weller, an individual,Barkev Kibarian, an individual, Felica Morales, an individual, Clearstock, Inc.,a Texas corporation, DealFlo, L.L.C., a New York Limited Liability Company, TheGrace Trust, a foreign trust, Global Consulting Group, a Maryland corporation,Intelligent Message Distributors, a Nevada corporation, and Wall Street Group,L.L.C., a Arizona limited liability company* (the “Defendants”), CaseNo. CJ-2005-7459 (the “Civil Litigation”), seeking the returnof the Wrongfully Issued Shares and the Defendants’ receipt of proceeds fromthe sale of those shares.

Inthe Civil Litigation we that Mr. Pino individually and through variousaffiliated entities and co-conspirators, including the Wall Street Group,L.L.C., prepared or possessed 20 or more common stock certificates purportedlyrepresenting 235,000,000 shares of our common stock, the previously referred toWrongfully Issued Shares, that were distributed to various individuals andentities, including the other Defendants. The number of shares in question waswhat we could identify but could not determine if, in addition to the235,000,000 shares, any additional shares issued to the market. Capital GrowthFinancial, L.L.C. and JH Darbie & Co. intervened in the CivilLitigation (the “Intervenors”) and alleged that the Company negligently hiredthe Defendants and negligently supervised their actions and activities, andasserted Oklahoma and federal securities fraud and failure-to-register claimsagainst the Defendants and us.

Inconjunction with the Civil Litigation, we reached an agreement with JH Darbie &Co., under which we delivered 25,025,000 common stock shares to JH Darbie &Co. to be held pending settlement or conclusion of the Civil Litigation. Theseshares were delivered to JH Darbie & Co. to satisfy the requirementsof Depository Trust Company (“DTC”) until common stock shares eligible to beresold without restriction could be delivered by JH Darbie & Co. tocover its short position in our common stock. Furthermore, JH Darbie &Co. placed in trust $72,500 to be used to pay the costs incurred regarding thelitigation.

OnJanuary 11, 2006, the Court entered an Order Approving SettlementAgreement (the “Order”). As a result of issuance of the Order, a settlementagreement (the “Settlement Agreement”) became binding upon the Company and theDefendants Mario Pino, Barkev Kibarian, Juan Carlos Medina, Wall Street Group,L.L.C., Clearstock, Inc., Sam Deeb, Global Consulting Group., DealFlo,L.L.C., and Intelligent Message Distributors (the “Settling Defendants”) andthe Intervenors with an effective date of December 8, 2005.

Inaccordance with the Settlement Agreement, our claims against the SettlingDefendants and the claims of the Settling Defendants against us were resolvedby the exchange of releases of claims, a release of the Wrongfully IssuedShares and payments to us in the aggregate sum of $171,546 from funds held atCapital Growth Financial, L.L.C. and the further agreement to pay an additional$277,093 by Capital Growth. Furthermore, the claims of the Intervenors againstus were released for the issuance of 25,025,000 shares of our common stock toJH Darbie & Co. and 219,723,000 shares of our common stock to CapitalGrowth Financial, L.L.C. for an aggregate sum of 244,748,000 common stockshares (the “Newly Issued Shares”). These shares were required to be depositedwith DTC by JH Darbie & Co. and Capital Growth Financial, L.L.C. insatisfaction of their short positions with companies through which securitiespurchase and sale transactions are cleared on behalf of JH Darbie &Co. and Capital Growth Financial, L.L.C. The Newly Issued Shares were issued inaccordance with the registration exemption afforded under Section 3(a)(10) ofthe Securities Act.

 

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Inaddition, Defendants Pino, Medina, Kibarian, Global Consulting Group,Intelligent Message Distributors and Wall Street Group, L.L.C. agreed toindemnify and hold harmless the Company against all actions, suits,proceedings, demands, and assessments brought by any past, present or futureholder of the shares of common stock of the Company in connection with theSettlement Agreement and the various claims of the Company settled in theSettlement Agreement and any associated judgments, attorney’s fees, costs andexpenses.

TheDefendants, Grace Trust, Charles Weller, and Felica Morales (“Non-SettlingDefendants”), did not execute the settlement agreement and accordingly did notsettle the claims asserted against them in the Civil Litigation. We receivedjudgments against the Non-Settling Defendants, other than The Grace Trust, andare currently pursuing collection of these judgments.

**Item 4. Submissionof Matters to a Vote of Security Holders**

Otherthan those matters submitted at the shareholders meeting held on August 19,2005, no matters were submitted to vote of our security holders during 2000,2001, 2002, 2003, 2004 and 2005.

Because of theunauthorized issuance of our common stock shares as discussed in Part I -Item 3. Legal Proceedings, at a special shareholders meeting held on August 19,2005, the holders of our common stock approved the following:

 
| ** **                                                                                                                                               | ** ** | **Number of Votes Cast** | ** ** |
|----------------------------------------------------------------------------------------------------------------------------------------------------------|------------|-----------------------------------------|------------|
| ** **                                                                                                                                               | ** ** | **For**                                 | ** ** | **Against** | ** ** | **Abstained** | ** ** | **Broker  Non-Votes** | ** ** |
| Amendment of our  Articles of Incorporation to increase the number of authorized common stock  shares from 25,000,000, to 500,000,000, $0.0001 par value |       | 3,659,311                               |       | — |   | — |   | — |   |
| Amendment of our  Articles of Incorporation to authorize 15,000,000 shares of preferred stock ,  $0.001 par value                                        |       | 3,659,311                               |       | — |   | — |   | — |   |
| Amendment of our Articles of Incorporation to  increase the number of authorized common stock shares to 2,000,000,000,  $0.0001 par value                |       | 3,659,311                               |       | — |   | — |   | — |   |

 

**PART II**

**Item 5. Market for Common Equity and RelatedStockholder Matters and Small Business Issuers Purchases of Equity Securities**

**Lack of Market**

Priorto our common stock qualifying for quotation on the Over-the-Counter BulletinBoard (the “OTCBB”) under the symbol “INDQ” in November 1999, the commonstock only minimally traded. In 2000 our common stock was removed from theOTCBB and all trading activity was quoted in the “pink sheets” and currently isreported under the symbol “BCIT.”

Thefollowing table presents the range of high and low bid prices per common stockshare for the quarterly periods presented. The bid prices reflect inter-dealerprices, without mark-ups, mark-downs or commissions and may not present theactual price paid for the shares.
| ** **              | ** ** | **Common Stock Bid Prices** | ** ** |
|-------------------------|------------|--------------------------------------------|------------|
| **Quarter Ended:** | ** ** | **Low**                                    | ** ** | **High** | ** ** |
| March 31,  2006    |       | $                                          | 0.0001     |   | $ | 0.0030 |   |
|                    |       |                                       |       |   |   |
| December 31, 2005  |       | $                                          | 0.0010     |   | $ | 0.0200 |   |

 

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| ** **               | ** ** | **Common Stock Bid Prices** | ** ** |
|--------------------------|------------|--------------------------------------------|------------|
| **Quarter Ended:**  | ** ** | **Low**                                    | ** ** | **High** | ** ** |
| September 30,  2005 |       | $                                          | 0.0010     |   | $ | 0.0390 |   |
| June 30,  2005      |       | $                                          | 0.0025     |   | $ | 0.0813 |   |
| March 31,  2005     |       | $                                          | 0.0400     |   | $ | 0.0800 |   |
|                     |       |                                       |       |   |   |
| December 31,  2004  |       | $                                          | 0.0200     |   | $ | 0.0500 |   |
| September 30,  2004 |       | $                                          | 0.0300     |   | $ | 0.0300 |   |
| June 30,  2004      |       | $                                          | 0.0300     |   | $ | 0.0300 |   |
| March 31,  2004     |       | $                                          | 0.0300     |   | $ | 0.0300 |   |
|                     |       |                                       |       |   |   |
| December 31,  2003  |       | $                                          | 0.0300     |   | $ | 0.0500 |   |
| September 30,  2003 |       | $                                          | 0.0500     |   | $ | 0.0600 |   |
| June 30,  2003      |       | $                                          | 0.0600     |   | $ | 0.0600 |   |
| March 31,  2003     |       | $                                          | 0.0600     |   | $ | 0.0600 |   |
|                     |       |                                       |       |   |   |
| December 31,  2002  |       | $                                          | 0.0600     |   | $ | 0.0600 |   |
| September 30,  2002 |       | $                                          | 0.0510     |   | $ | 0.0600 |   |
| June 30,  2002      |       | $                                          | 0.0500     |   | $ | 0.1000 |   |
| March 31,  2002     |       | $                                          | 0.1000     |   | $ | 0.3000 |   |
|                     |       |                                       |       |   |   |
| December 31,  2001  |       | $                                          | 0.2600     |   | $ | 1.0100 |   |
| September 30,  2001 |       | $                                          | 0.1000     |   | $ | 2.0000 |   |
| June 30,  2001      |       | $                                          | 0.0100     |   | $ | 0.1500 |   |
| March 31, 2001      |       | $                                          | 0.0200     |   | $ | 0.1500 |   |

 

**Dividend Policy**

Ourpolicy is to retain future earnings to support future business undertakings. Ifpolicy was to change, any future cash dividends will depend on factors deemedrelevant by our board of directors. These factors will generally include futureearnings, capital requirements and our financial condition. Furthermore, in theevent preferred stock shares were issued, no dividends will be paid onoutstanding common stock shares until all dividends then due on outstandingpreferred stock have been paid.

**Holders of EquitySecurities**

Asof June 15, 2006, there were 406 owners of our common stock.

**Repurchase ofEquity Securities**

Wedid not repurchase any of our common stock shares during 2003.

**SecuritiesAuthorized for Issuance under Equity Compensation Plans**

The followingtable sets forth as of December 31, 2005, 2004, 2003, and 2002 informationrelated to each category of equity compensation plan, including individualcompensation arrangements with our non-employee directors. We do not have anyequity compensation plans approved by our shareholders. All stock options andrights to acquire our equity securities are exercisable for or represent theright to purchase our common stock.

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| **Plan category**                                          | ** ** | **Number of   Securities to be  issued upon  exercise of  outstanding  options, warrants  and rights** | ** ** | **Weighted-average  xercise price of   outstanding options,  warrants and rights** | ** ** | **Number of  securities  remaining available  for future issuance  under equity  compensation plans** | ** ** |
|-----------------------------------------------------------------|------------|------------------------------------------------------------------------------------------------------------------------------------------------|------------|------------------------------------------------------------------------------------------------------------------|------------|-------------------------------------------------------------------------------------------------------------------------------------|------------|
| *Equity compensation plans  approved by security holders: None* |       |                                                                                                                                           |       |                                                                                                             |       |                                                                                                                                |       |
|                                                            |       |                                                                                                                                           |       |                                                                                                             |       |                                                                                                                                |       |
| *Equity compensation plans not  approved by security holders:*  |       |                                                                                                                                           |       |                                                                                                             |       |                                                                                                                                |       |
| Employment Agreement with Thomas Megas(1)                       |       | 400,000                                                                                                                                        |       | $                                                                                                                | 1.00       |                                                                                                                                | —     |   |
|                                                            |       |                                                                                                                                           |       |                                                                                                             |       |                                                                                                                                |       |
| Total                                                           |       | 400,000                                                                                                                                        |       |                                                                                                             |       | —                                                                                                                              |       |
|                                                                 |            |                                                                                                                                                |            |                                                                                                                  |            |                                                                                                                                     |            |  |

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(1)                          OnFebruary 23, 2006, Mr. Megas released all of his contractual rightsunder his Employment agreement with us, including the stock options exercisablefor the purchase of 400,000 shares of our common stock for $1.00.

**Securities SoldPursuant to Private Placement Offering**

Wedid not sell any securities during 2003.

**Item 6. Management’sDiscussion and Analysis or Plan of Operation.**

**DiscontinuedOperations**

Sinceinception, we have not realized any revenue from operations. We discontinuedour motor racing business activities in the third quarter of 2000 and have notundertaken any business activities since. Accordingly, all of these activities arereflected as discontinued operations in 2000 and a loss of $4,488,503. Becausewe do not have any assets and do not conduct any business activities, we areclassified as a “shell company.” As of the date of this report, we have notdeveloped a plan of operation.

**Operations**

Our operations for theyears ended December 31, 2002 and 2003 were primarily of a corporatenature including legal, accounting and general corporate administrative matters.We did not conduct any business enterprise activities during 2002 and 2003.

**Going Concern**

As indicated in the notesto the financial statements included elsewhere in this report, the financialstatements have been prepared assuming that we will continue as a goingconcern. In the year ended December 31, 2003, we incurred a net loss ofapproximately $95,317. In addition, at December 31, 2003 and 2002, we hadno assets and working capital deficiencies of approximately $230,000 and$218,000, respectively. These conditions raise substantial doubt about ourability to continue as a going concern. Our plans with respect to these mattersinclude restructuring our existing obligations, raising additional capitalthrough issuances of stock or debentures, and to complete a businessacquisition for future operations. The accompanying financial statements do notinclude any adjustments that might be necessary in the event we are unable tocontinue as a going concern.

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**12-Month Overhead Budget**

         Our budgeted overhead expenses for the12 months ending June 30, 2007 are as follows:

 

| Expenditures:                      | ** ** | **Per  Month** | ** ** | **12  Months** | ** ** |
|------------------------------------|------------|----------------|------------|----------------|------------|
| Travel expenses                    |       | $              | 8,750      |           | $          | 105,000 |   |
| Hotel accommodations               |       | 2,500          |       | 30,000         |       |
| Rent and office expenses           |       | 1,000          |       | 12,000         |       |
| Employee compensation              |       | 2,667          |       | 32,000         |       |
| Accounting expenses                |       | 7,500          |       | 90,000         |       |
| Utilities and telephone            |       | 3,000          |       | 36,000         |       |
| Transfer agent                     |       | 625            |       | 7,500          |       |
| Office supplies and equipment      |       | 1,042          |       | 12,500         |       |
| Miscellaneous expenses             |       | 833            |       | 10,000         |       |
| Total  Administrative Expenditures |       | $              | 27,917     |           | $          | 335,000 |   |

 

                ***Additional Financial Commitments*.** Other than our commitments discussed above, wedo not have any capital  commitments. Weneither have any plans to raise additional funds during the next 12 months.

**CautionaryStatement Relating to Forward Looking Information**

     We have included some forward-looking  statements in this section and otherplaces  in  this report  regarding  our expectations.  These  forward-looking statements  involve known and unknown  risks,  uncertainties and other factors which  may  cause our  actual  results, levels  of  activity, performance  or achievements,  or industry results,  to be materially  different from any future results, levels ofactivity, performance or achievements expressed or implied by theseforward-looking  statements. Some ofthese forward-looking statements can be identified by the use offorward-looking terminology including  “believes,” “expects,”  “may,” “will,”  “should” or “anticipates” or the negativethereof or other  variations  thereon or  comparable  terminology, or by  discussions  of strategies that involve risks anduncertainties. You should read statements that contain these words carefullybecause they:

·              discuss ourfuture expectations;

·              contain  projections of our  future  operating results  or of our  future financial condition; or

·              state other “forward-looking”information.

         We believe it is important to discussour expectations; however, it must be recognized that events may occur in thefuture over which we have no control and which we are not accurately able topredict. Readers are cautioned to consider the specific business risk factorsdescribed in the report and not to place undue reliance on the forward-lookingstatements contained herein, which speak only as of the date hereof. Weundertake no obligation to publicly revise forward-looking statements toreflect events or circumstances that may arise after the date of this report.

**Item 7. FinancialStatements**

         Our financial statements which areprepared in accordance with Regulation S-B are set forth in this reportbeginning on page F-1.

**Item 8. Changes inand Disagreements with Accountants and Financial Disclosure**

         There have been no disagreementsconcerning matters of accounting principle or financial statement disclosurebetween us and our independent accountants.

11

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**Item 8A. Controlsand Procedures.**

                ThomasMegas, our Chief Executive Officer and Acting Chief Financial Officer, isresponsible primarily for establishing and maintaining disclosure controls andprocedures designed to ensure that information required to be disclosed in ourreports filed or submitted under the Securities Exchange Act of 1934, asamended (the “Exchange Act”) is recorded, processed, summarized and reportedwithin the time periods specified in the rules and forms of the U.S.Securities and Exchange Commission. These controls and procedures are designedto ensure that information required to be disclosed in our reports filed orsubmitted under the Exchange Act is accumulated and communicated to ourmanagement, including our principal executive and principal financial officers,or persons performing similar functions, as appropriate to allow timely decisionsregarding required disclosure.

         Furthermore, Mr. Megas, our ChiefExecutive Officer and Acting Chief Financial Officer, is responsible for thedesign and supervision of our internal controls over financial reporting thatare then effected by and through our board of directors, management and otherpersonnel, to provide reasonable assurance regarding the reliability of ourfinancial reporting and the preparation of financial statements for externalpurposes in accordance with generally accepted accounting principles. Thesepolicies and procedures

·                                          pertain tothe maintenance of records that, in reasonable detail, accurately and fairlyreflect the transactions and dispositions of our assets;

·                                          providereasonable assurance that transactions are recorded as necessary to permitpreparation of financial statements in accordance with generally acceptedaccounting principles,  and that ourreceipts and expenditures are being made only in accordance with authorizationsof our management and directors; and

·                                          providereasonable  assurance  regarding prevention or timely detection of unauthorized acquisition,  use or disposition of our assets that couldhave a material effect on our financial statements.

         Our Chief Executive Officer and ActingChief Financial Officer, based upon his evaluation of the effectiveness of ourdisclosure controls and procedures and the internal controls over financialreporting as of the last day of the period covered by this report, concludedthat our disclosure controls and procedures and internal controls overfinancial reporting were fully ineffective as of the last day of the periodcovered by this report and reported to our auditors and board of directors thatthere are no controls and procedures and internal control over financialreporting during the period covered by this report and that all of whichmaterially affect or is reasonably likely to materially affect our disclosurecontrols and procedures or internal control over financial reporting. Inconducting their evaluation of our disclosure controls and procedures andinternal controls over financial reporting, these executive officers did notdiscover any fraud that involved management or other employees who have asignificant role in our disclosure controls and procedures and internalcontrols over financial reporting. Furthermore, although the disclosurecontrols and procedures and internal controls over financial reporting weredeficient and absent, there were no changes made in our disclosure controls andprocedures, internal controls over financial reporting, or other factors thatwould eliminate the deficiencies in our disclosure controls and procedures orinternal controls over financial reporting subsequent to the date of theirevaluation. Although significant deficiencies or material weaknesses existed,no corrective actions were taken to correct significant deficiencies andmaterial weaknesses in our internal controls and disclosure controls andprocedures because of the lack of required financial resources to correct suchdeficiencies and weaknesses.

**Item 8B. OtherInformation**

                Allreports on Form 8-K required to be filed during the three monthsended December 31, 2003, 2004 and 2005 has been previously reported on Form 8-K.

12

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**PART III**

**Item 9. Directors, Executive Officers, Promoters andControlled Persons; Compliance with Section 16(a) of the Exchange Act**

         Set forth below is certain informationwith respect to our executive officer and directors. Directors are generallyelected at the annual shareholders’ meeting and hold office until the nextannual shareholders’ meeting and until their successors are elected andqualify. Executive officers are elected by the Board of Directors and serve atits discretion. Our Bylaws provide that the Board of Directors shall consist ofsuch number of members as the Board of Directors may from time to timedetermine by resolution or re-election, but not less than two. Our Board ofDirectors currently consists of two individuals.

** **
| **Name**     | ** ** | **Age**    | ** ** | **Position**                                                                                                  | ** ** |
|--------------|------------|------------|------------|---------------------------------------------------------------------------------------------------------------|------------|
| ** **   | ** ** | ** ** | ** ** | ** **                                                                                                    | ** ** |
| Thomas Megas |       | 61         |       | Chairman  of the Board of Directors,  Chief Executive Officer, President, and  Acting Chief Financial Officer |       |
|         |       |       |       |                                                                                                          |       |
| Martin Duffy |       | 60         |       | Director                                                                                                      |       |

 

              The following is a briefdescription of the business background of our executive officers and directors:

         Thomas Megas is one of our foundersand has served as President, Chief Executive Officer and a member of the Boardof Directors since inception, and also serves as Chairman of the Board ofDirectors (since June 5, 2001) and our Acting Chief Financial Officer.From 1992 to 1998, Mr. Megas served as Director of March Europe andas consultant to companies in the design and development of acing cars inFormula One and other Formula One competitors. Mr. Megas has previouslybeen involved in hotel ownership and commercial real estate development inEurope from 1991 to 1999. Mr. Megas earned his B.A. from London Universityin 1962 in Banking and Finance and his M.B.A. from the Wharton School of theUniversity of Pennsylvania in 1969.

         Martin Duffy has served as one of ourDirections since November 1999. He has been involved in auto racingchassis design and construction since 1992 when he became a Director of March,Europe. Mr. Duffy is a banker by profession and from 1990 to 1995 was aDirector of RA Coleman International, an investment-banking group in the U.K.From 1961 to 1981, Mr. Duffy served as Bank Manager and FinancialConsultant for National Westminster Bank PLC. Mr. Duffy completed hiseducation in Banking with National Westminster Bank in 1960.

**Director Compensation**

         We do not compensate Directors forserving on our Board of Directors or attending meetings of the Board or anycommittee of the Board. Directors who are also our employees receive no additionalcompensation for serving as directors. We reimburse our directors for traveland out-of-pocket expenses in connection with their attendance at meetings ofour board.

**Compliancewith Section 16(a) of the Securities Exchange Act of 1934**

                Section 16(a) ofthe Securities Exchange Act of 1934, as amended, requires our directors,officers, and persons who own more than 10% of our common stock or otherregistered class of our equity securities to file reports of ownership andchanges in ownership with the Securities and Exchange Commission. Officers,directors and greater than 10% shareholders are required to furnish us withcopies of all Section 16(a) forms they file.

                Webelieve that each person who, at any time during 2003 through 2005, was adirector, executive officer, or beneficial owner of more than 10% of our commonstock failed to comply with the filing requirements of Section 16(a).

13

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**Item 10. ExecutiveCompensation**

The following table sets forth the total cashcompensation, paid or accrued, to our chief executive officer during the yearsended December 31, 2005, 2004, 2003, and 2002 who received compensation inexcess of $100,000 during each of those years.

**Summary Compensation Table**
|                                                               | ** ** | ** ** | ** ** | **Annual Compensation(1)** | ** ** |
|---------------------------------------------------------------|------------|------------|------------|----------------------------|------------|
| **Name and Principal Position**                               | ** ** | **Year**   | ** ** | **Salary(2)**              | ** ** | **Bonus(3)** | ** ** |
| Thomas Megas(4)                                               |       | 2005       |       | $831,875                   |       | $— |   |
| Chairman of the Board of  Directors, Chief Executive Officer, |       | 2004       |       | 756,250                    |       | $— |   |
| President and Acting Chief  Financial Officer                 |       | 2003       |       | 687,500                    |       | $— |   |
|                                                               |       | 2002       |       | 625,000                    |       | $— |   |
|                                                               |       | 2001       |       | 468,750                    |       | $— |   |
|                                                               |       | 2000       |       | 145,833                    |       | $— |   |

----

(1)                                  Messrs. Megasand Herd did not receive any additional non-cash compensation, perquisites andother personal benefits that during each of 2005, 2004, 2003, 2002, 2001, and2000.

(2)                                  Dollarvalue of base salary (both cash and non-cash) earned during the year.

(3)                                  Dollarvalue of bonus (both cash and non-cash) earned during the year.

(4)                                  OnFebruary 23, 2006, Mr. Megas released us from our obligations under Mr. Megas’Employment Agreement without payment of the accrued salary set forth in thistable.

**EmploymentArrangements**

In1999, we entered into long-term employment agreement with Thomas Megas, asummary of the material terms is set forth below.

Theagreement with Mr. Megas had an initial term of three years that wasextendable by agreement for an additional two-year term and then additionalone-year terms thereafter. The agreement provided for compensation to begin June 1,2000 at a rate of $250,000 to be increased by $125,000 after the first year, byan additional $225,000 after the second year and after the third year by tenpercent (10%) per year increases thereafter. Pursuant to the agreement, Mr. Megaswas granted stock options exercisable for the purchase of 400,000 shares of ourcommon stock for $1.00 per share. These options were exercisable for thepurchase of 100,000 shares on June 1, 2000, 50,000 shares on November 30,2000, 50,000 shares on May 31, 2000, 50,000 shares on November 30,2001 and 150,000 shares on May 31, 2002.  On February 23, 2006, Mr. Megasreleased us from all obligations under his employment agreement, including thestock options described above and his accrued unpaid salary.

**Loss of Key Personnel**

Our success depends to a significant degree upon theefforts, contributions and abilities of our management. The loss of theservices of Thomas Megas could have a material adverse effect on our ability toengage in future business activities. We do not maintain any insurance coveringthe disability or life of our executive officers and directors.

**Equity Compensation Plans**

Other than the grant of stock options pursuant tothe employment agreement with Thomas Megas, we have not established or enteredinto any equity compensation plans. For information related to ourcommon stock authorized for issuance under equity compensation plans, see Item5. Market for Common Equity and Related Stockholder Matters.

14

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**DirectorLiability and Indemnification**

                Aspermitted by the provisions of the Nevada Revised Statues, our Articles ofIncorporation (the “Articles”) eliminates in certain circumstances the monetaryliability of our directors for a breach of their fiduciary duty as directors.These provisions do not eliminate the liability of a director (i) for abreach of the director’s duty of loyalty to us or our shareholders; (ii) foracts or omissions by a director not in good faith or which involve intentionalmisconduct or a knowing violation of law; (iii) for liability arisingunder the Section 78.300 of the Nevada Revised Statues (relating to thedeclaration of dividends and purchase or redemption of shares in violation ofthe Nevada private corporation laws); or (iv) for any transaction fromwhich the director derived an improper personal benefit. In addition, theseprovisions do not eliminate liability of a director for violations of federalsecurities laws, nor do they limit our rights or the rights of ourshareholders, in appropriate circumstances, to seek equitable remedies such asinjunctive or other forms of on-monetary relief. Such remedies may not beeffective in all cases.

                OurArticles of Incorporation and Bylaws provide that we will indemnify ourdirectors and officers. Under such provisions, any director or officer, who inhis or her capacity as an officer or director, is made or threatened to bemade, a party to any suit or proceeding, may be indemnified if the director orofficer acted in good faith and in a manner he or she reasonably believed to bein or not opposed to our best interest. The Bylaws further provide that thisindemnification is not exclusive of any other rights that an officer ordirector may be entitled. Insofar as indemnification for liabilities arisingunder the Bylaws or otherwise may be permitted to our directors and officers,we have been advised that in the opinion of the Securities and ExchangeCommission indemnification is against public policy and is, therefore,unenforceable.

**Item 11. SecurityOwnership of Certain Beneficial Owners and Management and Related StockholderMatters**

**Securities Authorized for Issuance under Equity CompensationPlans**

                Forinformation related to our common stock authorized for issuance under equitycompensation plans, see Item 5. Market for Common Equity and RelatedStockholder Matters, above.

**Security Ownership of Certain Beneficial Owners andManagement**

The followingtable presents certain information regarding the beneficial ownership of ourcommon stock as March 15, 2006, and as adjusted to give effect to thisoffering and exercise of the warrants, stock options and conversion rightsunder our Preferred Stock, of (i) the only persons known by us to ownbeneficially more than 5% of our common stock, (ii) each of our directorsand executive officers (including those executive officers named in the SummaryCompensation Table, see “Item 10. Executive Compensation — Director andExecutive Officer Compensation”) and (iii) all of our current executiveofficers and directors as a group, together with their percentage holdings ofthe beneficially owned shares. All persons listed have sole voting andinvestment power with respect to their shares unless otherwise indicated, andthere is no family relationship among our executive officers and directors. Forpurposes of the following table, the number of shares and percent of ownershipof outstanding common stock that the named person beneficially owns includescommon stock shares that the named person has the right to acquire within 60days of the date of this report (pursuant to exercise of stock options andwarrants) and are deemed to be outstanding, but are not deemed to beoutstanding for the purposes of computing the number of shares beneficiallyowned and percent of outstanding common stock of any other named person.

 
| **Name and Address of Beneficial Owner**                   | ** ** | **Shares  Beneficially  Owned(1)** | ** ** | **Ownership  Percent(2)** | ** ** |
|-------------------------------------------------------------------------------------|------------|------------------------------------|------------|---------------------------|------------|
|                                                                                |       |                               |       |                      |       |
| Thomas Megas(3)  15 Onslow Gardens, Flat Seven  London, England SW7 3AW             |       | 1,001,964,571                      |       | 80.16                     |       |
|                                                                                |       |                               |       |                      |       |
| Stewart Sytner(4) 1800 Rockway Avenue, Suite 100  Hewlett, New York 11557 |       | 750,415,027                        |       | 60.00                     |       |
|                                                                                |       |                               |       |                      |       |
| Martin Duffy(5)                                                                     |       | 33,334                             |       | .01                       |       |
|                                                                                |       |                               |       |                      |       |

 

15

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| Executive Officers and Directors as a group (two individuals)(6) |   | 1,001,997,905 |   | 80.16 |   |
|------------------------------------------------------------------|--------|---------------|--------|-------|--------|

----

(1)                                  Sharesnot outstanding but deemed beneficially owned by virtue of the right of aperson or members of a group to acquire them within 60 days are treated asoutstanding for determining the amount and percentage of common stock owned bysuch person. To the our knowledge, each named person has sole voting and soleinvestment power with respect to the shares shown except as noted, subject tocommunity property laws, where applicable.

(2)                                  Roundedto the nearest one-hundredth of one percent, based upon 500,010,229 shares ofcommon stock outstanding.

(3)                                  Mr. Megasis our Chief Executive Officer, President, Acting Chief Financial Officer andone of our Directors. The number of shares and the percentage include750,000,000 common stock shares into which the 7,500,000 shares of preferred stockowned by Mr. Megas are convertible.

(4)                                  Thenumber of shares and the percentage include 750,000,000 common stock sharesinto which the 7,500,000 shares of preferred stock owned by Mr. Sytner areconvertible.

(5)                                Mr. Duffyis one of our Directors.

(6)                                The number of shares andthe percentage include 750,000,000 common stock shares into which the 7,500,000shares of preferred stock owned by Mr. Megas are convertible.

**Item 12. CertainRelationships and Related Transactions**

Set forth is a description of transactionswe entered into with our officers, directors and shareholders that beneficiallyown more than 5% of our common stock during the four years ending December 31,2005. These transactions will continue in effect and may result in conflicts ofinterest between these individuals and us. Although our officers and directorshave fiduciary duties to our shareholders and us, there can be no assurancethat conflicts of interest will always be resolved in our favor or in favor ofour stockholders.

On January 6, 2006 we issued251,231,084 common stock shares to Abraham International Holdings, SA, acompany controlled by Thomas Megas, in reimbursement of $36,925 of costsincurred by Mr. Megas on our behalf in his capacity as our Chairman andChief Executive Officer. The shares represented payment in full and had amarket value of $25,123, the difference between market value and the totaladvances was recorded as paid in capital.

On January 6, 2006 we issued7,500,000 shares of our Series  A Preferred  Stock  to  Mr. Megas  as settlement of our $223,247 indebtednessowed to Mr. Megas that was incurred during 2000 through 2005. The sharesof the Series A Preferred Stock issued to Mr. Megas were recorded ata value of 1,500,000 based upon the market value of the 750,000,000 shares ofcommon stock into which the Series A Preferred Stock shares areconvertible.

On January 6, 2006, we issued7,500,000 shares of our Series A Preferred Stock to Stewart Sytner inreimbursement of $232,272 of costs and expenses incurred by Mr. Sytner onour behalf during the 2000 through 2005. The shares of the Series APreferred Stock issued to Mr. Sytner were recorded at a value of 1,500,000based upon the market value of the 750,000,000 shares of common stock intowhich the Series A Preferred Stock shares are convertible.

                Webelieve that the transactions described above were on terms no less favorableto us than could have been obtained with unrelated third parties.

**Item 13. Exhibits**

| Exhibit No. | ** ** | **Description**                                                                                                                                                                                                               |
|------------------|------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 3.1              |       | Registrant’s Articles of Incorporation, incorporated  by reference to Exhibit 3.1 of Registrant’s Annual Report on  Form 10-KSB for the year ended 2001 filed with the Commission on  April 5, 2006. |

 

16

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| 3.2  |   | Registrant’s Bylaws, incorporated by reference to  Exhibit 3.2 of Registrant’s Registration Statement on Form 10-SB  filed with the Commission on January 14, 1999.                                                                                                                                                 |
|------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 4.1  |   | Form of  Certificate of Common Stock of Registrant, incorporated by reference to Exhibit 4.1  of Registrant’s Annual Report on Form 10-KSB for the year ended  2001 filed with the Commission on April 5, 2006                                                                                                      |
| 10.1 |   | Settlement Agreement  among Registrant, Mario A. Pino, Jean Carlos Medina, Barkev Kibarian,  Clearstock, Inc., Global Consulting Group, and Wall Street Group,  L.L.C., with effective date of January 6, 2006, incorporated by  reference to Exhibit 10.1 of Form 8-K filed with the  Commission on March 3, 2006. |
| 31.1 |   | Certification of Thomas  Megas, Chief Executive Officer and Acting Chief financial Officer of  Registrant.                                                                                                                                                                                                                                   |
| 32.1 |   | Certification Pursuant  to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of  Sarbanes-Oxley Act of 2002 of Thomas Megas, Chief Executive Officer and  Acting Chief Financial Officer of Registrant.                                                                                                                   |

** **

**Item 14. PrincipalAccountant Fees and Services**

**Fees for Independent Auditors**

In December 2005, Sherb & Co., LLPwas engaged as our independent auditors to provide professional services theaudit of our annual financial statements for the years ended December 31,2000 and 2001 and review of the unaudited financial statements included in ourQuarterly Reports on Form 10-QSB commencing with the three monthsended September 30, 2000. On June 8, 2006, we dismissed Sherb &Co., LLP and engaged Lieberman and Associates PA as our independent auditorsfor the years ended December 31, 2002 through 2005. Sherb & Co.,LLP issued its reports on our consolidated financial statements for the yearsended December 31, 2002 and 2001 and reviewed our unaudited consolidatedfinancial statements for the three months ended September 30, 2000, March 31,2001, June 30, 2001, and September 30, 2001.

No audit fees, tax fees and all other fees werebilled during 2003 and 2002 by Sherb & Co. LLP and Lieberman andAssociates PA. The audit fees, tax fees and all other service fees related toaudited of our 2001 through 2005 financial statements, tax services and otheraccounting service are or will be billed by Sherb & Co., LLP andLieberman and Associates PA in 2006.

         ***Audit Fees.  ***Totalaudit fees for our 2002 financial statements have not been determined, but areestimated to total $5,000.

         ***Tax Fees.  ***Thefees billed for tax services for the year ended December 31, 2002 wasapproxitmatly $1,000.

         ***All Other Fees.  ***Wedo not anticipate engaging Lieberman and Associates PA for any other servicesother than those related to the audit of our financial statements and providingof pre-approved tax services.

         Audit Committee Pre-ApprovalProcedures. - Rules and regulations of the Securities and ExchangeCommission implemented in accordance with the requirements of Sarbanes-OxleyAct of 2002 require audit committees of companies reporting under and pursuantto the Securities Exchange Act of 1934 to pre-approve audit and non-auditservices. Our Board of Directors has not established an Audit Committee; theentire Board of Directors performs the functions of an Audit Committee. Actingin the capacity of an audit committee our Board of Directors follows procedurespursuant to which audit, audit-related and tax services, and all permissiblenon-audit services, are pre-approved by category of service. Circumstances mayarise that require engagement of the independent public accountants foradditional services not contemplated in the original pre-approval. In thoseinstances, we will obtain the specific pre-approval of our Board of Directorsacting in the capacity as an audit committee before engaging our independentpublic accountants. The procedures require our Board of Directors be informedof each service, and the 

17

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proceduresdo not include any delegation of our Board of Directors responsibilities tomanagement. Our Board of Directors acting in the capacity of an audit committeemay delegate pre-approval authority to one or more of its members. The memberto whom this authority is delegated will report any pre-approval decisions toour Board of Directors at its next scheduled meeting.

All of the audit-related fees, tax fees and all otherfees of Sherb & Co. LLP and Lieberman and Associates PA werepre-approved by our board of directors.

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** **

**SIGNATURES**

Inaccordance with Section 13 or 15(d) of the Exchange Act, theRegistrant caused this amended report to be signed on its behalf by theundersigned, thereunto duly authorized.
|                     | BANCORP  INTERNATIONAL, INC.   |
|--------------------------|--------------------------------|
|                     | (Registrant)

            |
|                     | By:                            | /S/THOMAS MEGAS |
|                     | Thomas Megas                   |
|                     | Chief Executive Officer        |
|                     | President                      |
|                     | Acting Chief Financial Officer |
| Date: June 20, 2006 |                           |

 

Inaccordance with the Exchange Act, this report has been signed below by thefollowing persons on behalf of the Registrant and in the capacities and on thedates indicated.
| Signature               | ** ** | **Title**                       | ** ** | **Date**                   |
|-------------------------|------------|---------------------------------|------------|----------------------------|
|  

/S/THOMAS MEGAS |       |  

Chief Executive Officer |       |  

June 20, 2006 |
| Thomas Megas            |       | President                       |       |                       |
|                    |       | Acting Chief Financial Officer  |       |                       |
|                    |       | Chairman of Board of Directors  |       |                       |
|                    |       |                            |       |                       |
| S/MARTIN DUFFY          |       | Director                        |       | June 20, 2006         |
| Martin Duffy            |       |                            |       |                       |

 

19

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Index to Consolidated FinancialStatements
| Report of Independent  Registered Public Accounting Firm - for the Years Ended December 31,  2004 and 2003 |
|-----------------------------------------------------------------------------------------------------------------|
| Balance  Sheets                                                                                                 |
| Statements of  Operations                                                                                       |
| Statements of Shareholders’ Equity  (Deficit)                                                              |
| Statements  of Cash Flows                                                                                       |
| Notes to Financial  Statements                                                                                  |

 

F-i

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REPORT OF INDEPENDENTREGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directorsand Stockholders Bancorp International Group, Inc.

Wehave audited the accompanying balance sheets of Bancorp International Group, Inc.as of December 31, 2003 and December 31, 2002, and the relatedstatements of operations, shareholders’ equity (deficit) and cash flows for theyears then ended. These financial statements are the responsibility of theCompany’s management. Our responsibility is to express an opinion on thesefinancial statements based on our audit.

Weconducted our audit in accordance with the standards of the Public Company AccountingOversight Board (United States). Those standards require that we plan andperform the audit to obtain reasonable assurance about whether the financial statementsare free of material misstatement. An audit includes examining, on a testbasis, evidence supporting the amounts and disclosures in the financial statements.An audit also includes assessing the accounting principles used and significantestimates made by management, as well as evaluating the overall financialstatement presentation. We believe that our audit provides a reasonable basisfor our opinion.

Inour opinion, the financial statements referred to above present fairly, in allmaterial respects, the financial position of Bancorp International Group,  Inc. at December 31, 2003 and December 31,2002 and the results of its operations and its cash flows for the year thenended in conformity with accounting principles generally accepted in the UnitedStates.

Theaccompanying financial statements have been prepared assuming that the Companywill continue as a going concern. As discussed in Note 2 to the financialstatements, the Company has suffered recurring losses from operations  and has a net capital deficiency that raisessubstantial doubt about its ability to continue as a going concern. Management’splans in regard to these matters are also described in Note 2. The financialstatements do not include any adjustments that might result from the outcome ofthis uncertainty.
|   | /s/ Lieberman & Associates PA |
|--------|----------------------------------------|
|   | Lieberman & Associates PA     |
|   | Certified Public Accountants           |

 

June 16, 2006 Ft. Lauderdale, Florida

F-1

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**Bancorp International Group, Inc.Statement of Financial PositionAs of December 31,**
| ** **                                                                                                                                                       | ** ** | **2003**     | ** ** | **2002**     | ** ** |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|--------------|------------|--------------|------------|
| **Assets**                                                                                                                                                       | ** ** | ** **   | ** ** | ** **   | ** ** |
| **Total Assets**                                                                                                                                                 | ** ** | **$**        | **—** |         | $          | — |   |
| **Liabilities  and Stockholders’ Equity**                                                                                                                   | ** ** | ** **   | ** ** | ** **   | ** ** |
| Accounts Payable  and Accrued Expenses                                                                                                                           |       | 230,247      |       | 218,227      |       |
| Current portion  of Long Term Debt                                                                                                                               |       | 353,717      |       | 170,150      |       |
| **Total  Liabilities**                                                                                                                                           | ** ** | **583,964**  | ** ** | **388,377**  | ** ** |
| **Stockholders’  Equity**                                                                                                                                   | ** ** | ** **   | ** ** | ** **   | ** ** |
| Common Stock,  $.0001 par value, 2,000,000,000 shares authorized, 4,030,078 shares issued  and outstanding at December 31, 2002 and December 31, 2001. |       | 403          |       | 403          |       |
| Additional Paid  in Capital                                                                                                                                      |       | 3,792,314    |       | 3,792,314    |       |
| Accumulated  Deficit                                                                                                                                             |       | (4,376,681   | )          | (4,181,094   | )          |
| **Total  Stockholders’ Equity**                                                                                                                             | ** ** | **(583,964** | **)**      | **(388,377** | **)**      |
| **Total  Liabilities and Stockholders’ Equity**                                                                                                             | ** ** | **$**        | **—** | ** **   | **$**      | **—** | ** ** |

 

The accompanying notes are an integralpart of these financial statements

F-2

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**Bancorp International Group, Inc.Statement of OperationsFor the Year Ended December 31,**
| ** **               | ** ** | **2003**   | ** **  | **2002**   | ** ** |
|--------------------------|------------|------------|-------------|------------|------------|
| **REVENUES**             | ** ** | **$**      | **—**  |       | —     |   |
| **COST OF GOOD SOLD**    |       | —     |        | —     |       |
| **GROSS PROFIT**         | ** ** | **—** |        | —     |       |
| **EXPENSES:**            | ** ** | ** ** | ** **  | ** ** | ** ** |
| Accounting Fees          |       | —     |        | 36,935     |       |
| Inerest Expense          |       | 10,559     |        | 8,267      |       |
| Lodging and  Travel      |       | 59,076     |        | —     |       |
| Office Expense           |       | 25,682     |        | —     |       |
| **Total  Expenses**      | ** ** | **95,317** | ** **  | **45,202** | ** ** |
| **NET INCOME/(LOSS)**    | ** ** | **$**      | **(95,317** | **)**      | **$**      | **(45,202** | **)** |
| **Earnings  per Share:** |       |       |        |       |       |
| **Basic**                | ** ** | **$**      | **(0.02**   | **)**      | **$**      | **(0.01** | **)** |
| ***Fully  Diluted**      | ** ** | **$**      | **—**  | ** ** | **$**      | **—** | ** ** |

 

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*** The FullyDiluted Earnings Per Share for the years ended December 31, 2003 and December 31,2002 is antidlutive and therefore not reflected in the financial statements.**

 

The accompanying notes are an integralpart of these financial statements

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**Bancorp International Group, Inc.Statement of Changes in Cash FlowFor the Year Ended December 31,**
| ** **                                                                   | ** ** | **2003**    | ** ** | **2002**    | ** ** |
|------------------------------------------------------------------------------|------------|-------------|------------|-------------|------------|
| **Cash flow from operating  activities:**                                    |       |        |       |        |       |
| Net Income / (Loss)                                                          |       | $           | (95,317    | )           | $          | (45,202 | ) |
| Non Cash  Adjustments:                                                       |       |        |       |        |       |
| Prior Year adjustment for interest                                           |       | —      |       | 590,638     |       |
| Adjustments to  reconcile net loss to net cash used in operating activities: |       |        |       |        |       |
| Increase in Accounts Payable                                                 |       | 10,559      |       | (6,408      | )          |
| **Net cash flow provided from  operating activities:**                       | ** ** | **(84,758** | **)**      | **539,028** | ** ** |
| **Cash  flow from investing activities:**                                    |       |        |       |        |       |
| Stockholder Loans                                                            |       | 84,758      | ** ** | **204,784** | ** ** |
| **Net cash flow used in investing  activities:**                             | ** ** | **84,758**  | ** ** | **204,784** | ** ** |
| **Cash  flow from financing activities:**                                    |       |        |       |        |       |
| Proceeds from conversion of Stockholder debt to  common stock                |       | —      |       | (743,811    | )          |
| **Net cash flow from financing  activities:**                                | ** ** | **—**  |       | (743,811    | )          |
| Net increase in cash flow                                                    |       | —      |       | —      |       |
| Beginning Cash                                                               |       | —      |       | —      |       |
| **Ending Cash**                                                              | ** ** | **$**       | **—** |        | $          | — |   |
| Supplemental  disclosures by financing activiites                            |       | $           | —     |        | $          | — |   |

 

The accompanying notes are an integralpart of these financial statements

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**Bancorp International Group, Inc. Statement of Stockholders’ Equity**

 
| ** **                                                                                  | ** ** | **Shares**    | ** ** | **Par**    | ** ** | **PIC**       | ** ** | **Accumulated  Deficit** | ** ** | **Total**    | ** **     |
|---------------------------------------------------------------------------------------------|------------|---------------|------------|------------|------------|---------------|------------|--------------------------|------------|--------------|----------------|
| **Balance December 31, 2000**                                                          | ** ** | **4,030,078** | ** ** | **403**    | ** ** | **4,714,937** | ** ** | **(5,158,268**           | **)**      | **(442,928** | **)**          |
| December 3,  2001 Net Loss                                                             |       |          |       |       |       |          |       | (13,421                  | )          | (13,421      | )              |
| **Balance  December 31, 2001**                                                         | ** ** | **4,030,078** | ** ** | **403**    | ** ** | **4,714,937** | ** ** | **(5,171,689**           | **)**      | **(456,349** | **)**          |
| Prior Year  Adjustments for reversal of expenses deemed to be unrelated to the company      |       | **—**    |       | **—** |       | **—**    |       | 12,904                   |       | 12,904       |           |
| Prior Period adjustment  for compensation claimed in FY 2000 in excess of fair market value |       | —        |       | —     |       | (922,623      | )          | 922,623                  |       | —       |           |
| december 31, 2002 Net  Loss                                                                 |       |          |       |       |       |          |       | (45,202                  | )          | (45,202      | )              |
| **Balance December 31, 2002**                                                          | ** ** | **4,030,078** | ** ** | **403**    | ** ** | **3,792,314** | ** ** | **(4,281,364**           | **)**      | **(488,647** | **)**          |
| December 31, 2003  Net Losss                                                           |       |          |       |       |       |          |       | (95,317                  | )          | (95,317      | )              |
| **Balance December 31, 2003**                                                          | ** ** | **4,030,078** | ** ** | **$**      | **403**    | ** **    | **$**      | **3,792,314**            | ** ** | **$**        | **(4,376,681** | **)** | **$** | **(583,964** | **)** |
|                                                                                             |            |               |            |            |            |               |            |                          |            |              |                |  |  |  |  |

 

The accompanying notesare an integral part of these financial statements

 

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BANCORP INTERNATIONAL GROUP,INC. NOTES TO FINANCIAL STATEMENTS Years Ended December 31, 2002

1.                                                                       THE COMPANY

N.E.C. Properties, Inc. (“NEC”) wasincorporated on September 16, 1995, under the laws in the State of Nevada.NEC was organized with no operations or plan of business. On September 30,1995 the Company issued 18,600 shares of its then no par value and 25,000authorized common stock, for $1,860 in cash. On November 19, 1998 theState of Nevada approved NEC’s restated Articles of Incorporation, whichincreased their authorized common shares from 25,000 to 25,000,000, andestablished a par value of $.001 per share of common stock. In addition, in November 1998NEC approved a forward stock split of 100:1, thus increasing the number of thenoutstanding common shares to 1,860,000. In addition, at that time the Companyalso authorized a 1.77 for 1 forward stock split in anticipation of mergertransaction with March Indy International, Inc. (“March” or “March Indy”).The previously issued 1,860,000 common shares were now 3,613,249 common shares.

On November 10, 1999,NEC acquired all the outstanding stock of March for 7,706,575 shares ofNEC. March was incorporated in Delaware on November 24, 1998 (“inception”).For accounting purposes, the transaction has been accounted for as a reverseacquisition under the purchase method for business combinations, andaccordingly the transaction has been treated as a recapitalization of March,with March as the acquirer. The shares issued in the Transaction weretreated as being issued for cash and have been shown as outstanding for allperiods presented in the same manner as for a stock split.

On June 17, 2000 theCompany declared a one for three (1:3) reverse stock split, effective June 26,2000. The financial statements herein give retroactive effect to this, and allthe above, related equity transactions transaction.

March had intended to engage in thebusiness of designing, building and racing motor cars for Formula One, Cart andIndy competition both in the United States and abroad. March has alsoplanned to develop an Internet website in order to merchandise products relatedto its racing efforts. From the time of its inception March had been adevelopment stage enterprise through September 30, 2000. Subsequent to September 30,2000, the management of March determined that due to the inability tosuccessfully organize an Indy car race team and to compete in the Indianapolis500 in the second quarter of the year ended December 31, 2000, that theCompany’s operations, as intended, would cease to operate. Due to the cessationof operations, management has determined that they are no longer a developmentstage enterprise commencing from the third quarter ended September 30,2000.

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During the quarter ended September 30,2001, March changed its nameto Bancorp International Group, Inc. (“Bancorp”)in an attempt toeffect a merger with a financial service oriented business.Bancorp has not merged with any financial service business. Henceforth NEC,March orBancorp are to be referred to as the “Company”, unlessreference is made to therespective company for reference to events surrounding their acquisition by theCompany.

The Company is subject tothe reporting obligations under Section12(g)of the Securities Exchange Act of1934. The Company has notcomplied with the reporting obligations since December 31,2001. TheCompany is in the process of preparing all required quarterlyandannual reports on Form 10-QSB and Form 10-KSB forfiling to become current.

2.                                                                       GOING CONCERN

The accompanying financialstatements have been prepared assuming that the Company will continue as agoing concern. The Company has incurred net losses of approximately $43,741 forthe year ended December 31, 2002. Additionally, the Company has no assetsand hasworking capital deficiencies of approximately $500,090 atDecember 30,2002. These conditions raise substantial doubt aboutthe Company’s ability tocontinue as a going concern. Management’splans with respect to these mattersinclude restructuring itsexisting obligations, raising additional capital throughfutureissuances of stock and or debentures, and to complete abusinessacquisition for future operations. The accompanyingfinancial statements do notinclude any adjustments that might benecessary should the Company be unable tocontinue as a going concern.

3.                                                                       SIGNIFICANT ACCOUNTING POLICIES

(a)                 Use of Estimates - The preparation of financial statements inconformity with accounting principles generally accepted in the United Statesof America requires management to make estimates and assumptions that affectthe reported amounts of assets and liabilities and disclosure of contingentassets and liabilities at the date of the financial statements and the reportedamounts of revenue and expenses during the reporting period. Critical estimatesinclude management’s judgments associated with: other asset valuations andaccrued expenses. Actual results could differ from those estimates.

(b)                Loss Per Share - Basic earnings (loss) per share (“EPS”) isdetermined by dividing net loss for the period by the weighted average numberof common shares outstanding during the same period. Diluted EPS reflects thepotential dilution that could occur if securities or other contracts to issuecommon stock were exercised or converted into common stock or resulted in theissuance of common stock, which would then share in the earnings of theCompany. For the year ended December 31, 2002

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the Company had nopotentially dilutive instruments outstandingthat could potentially be exercisedor converted into commonstock.

(c)                 Impairment of Long-Lived Assets - The Company reviewslong-lived assets for impairment whenever circumstances and situations changesuch that there is an indication that the carrying amounts may not berecovered. The recoverability of assets held and used in operations is measuredby a comparison of the carrying amount of the assets to the future net cashflows expected to be generated by the assets. If such assets are considered tobe impaired, the impairment to be recognized is measured by the amount by whichthe carrying amount of the assets exceeds the fair value of the assets.

                                 As of December 31, 2000 all Long-Lived assets have beendeemed impaired and written down to -0-. This expense wasincludedin discontinued operations for the year ended December 31, 2000.

(d)                Fair Value of Financial Instruments - The Company’s financialinstruments consists of accounts payable and accrued expenses. The carryingamount of the financial instruments reported in the consolidated balance sheetapproximates fair value based on the short-term maturity of these instruments.

(e)                 Income Taxes -The Company accounts for income taxes inaccordance with Financial Accounting Standards Board (“FASB”) Statement ofFinancial Accounting Standards (“SFAS”) No. 109, “Accounting for IncomeTaxes.” The Company recognizes deferred tax assets and liabilities based on thedifference between the financial statement carrying amounts and the tax basesof the assets and liabilities, using the effective tax rates in the years inwhich the differences are expected to reverse. A valuation allowance related tothe deferred tax asset is also recorded when it is probable that some or all ofthe deferred tax asset will not be realized. Income tax expense consists of thetax payable for the period and the change during the period in deferred taxassets and liabilities.

                                 The following is a reconciliation of incometax expense computed using the statutory Federal rate for the years ended December 31:

|                                                | ** ** | **2003**   | ** ** | **2002**   | ** ** |
|------------------------------------------------|------------|------------|------------|------------|------------|
| Income tax  benefit computed at statutory rate |       | $          | 4,376,681  |       | $          | 4,281,364 |   |
| Changes in  valuation allowance                |       | (4,376,681 | )          | (4,281,364 | )          |
| Provision for income  tax                      |       | —     |       | —     |       |
|                                                |            |            |            |            |            |  |  |

 

The Company has not recordeda deferred tax asset as of December 31,2003 or December 31, 2002 dueto not having filed theirrequired corporate tax returns. Had such returns beenfiled aresultant deferred tax asset would have been recorded, withtheestablishment of a corresponding valuation allowance due tothe probability thatsome, or all, of the deferred tax asset will

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not be realized. Inaddition, due to this non-compliance, the Company is unaware if it has NetOperating Losses that itmay use to off-set future income if they shouldcomplete anacquisition in the future and achieve profitability.

(h)                Recent Accounting Pronouncements:

(i)                           SFAS No. 150 - In May 2003, theFASB issued SFAS No. 150, “Accounting for Certain Financial Instrumentswith Characteristics of both Liabilities and Equity.” SFAS No. 150establishes standards for classification and measurement in the statement offinancial position of certain financial instruments with characteristics ofboth liabilities and equity. It requires classification of a financialinstrument that is within its scope as a liability (or an asset in somecircumstances). SFAS No. 150 is effective for financial instrumentsentered into or modified after May 31, 2003, and otherwise is effective atthe beginning of the first interim period beginning after June 15, 2003.The adoption of SFAS No. 150 is not expected to have a material impact onthe Company’s consolidated financial position, results of operations or cashflows.

(iii)                     FIN 46 - In January 2003, as revised December 2003,the FASB issued FASB Interpretation No. 46, “Consolidation of VariableInterest Entities, an Interpretation of ARB No. 51.” FIN 46 requirescertain variable interest entities to be consolidated by the primarybeneficiary of the entity if the equity investors in the entity do not have thecharacteristics of a controlling financial interest or do not have sufficientequity at the risk for the entity to finance its activities without additionalfinancial support from other parties. FIN 46 is effective for the periodsending after December 15, 2003 for certain types of entities and after December 15,2004 for other types of entities. The Company is still evaluating the effectsthe adoption of FIN 46 will have on its consolidated financial position,results of operations or cash flows.

(iv)                    In December 2004, the FASB issued SFAS No. 153, “Exchangesof Nonmonetary Assets - an amendment for APB Opinion No. 29”. Thisstatement amends APB Opinion No. 29 to eliminate the exception forNonmonetary exchanges of similar productive assets and replaces it with ageneral exception for exchanges of Nonmonetary assets that do not havecommercial substance. A Nonmonetary exchange has commercial substance if futurecash flows of the entity are expected to change significantly as a result ofthe exchange. The provisions of SFAS No. 153 are effective for the Company’syear ended December 31, 2006. Management is currently evaluating theimpact of the adoption of SFAS No. 153 on the Company’s consolidatedfinancial position, liquidity, or results of operations.

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(vi)                    In June 2005, the FASB issued SFAS No. 154 “AccountingChanges and Error Corrections,” (“SFAS 154”), a replacement of APB Opinion No. 20,“Accounting Changes”, and SFAS No. 3

“Reporting AccountingChanges in Interim Financial Statements.” SFAS 154 applies to voluntary changesin accounting principle and changes the requirements for accounting for andreporting of a change in accounting principle. SFAS 154 requires retrospectiveapplication to prior periods’ financial statement of a voluntary change inaccounting principle unless it is impracticable. SFAS 154 is effective foraccounting changes and corrections of errors made in fiscal years beginningafter December 15, 2005. Earlier application is permitted for accountingchanges and corrections of errors made occurring in fiscal years beginningafter June 1, 2005. The company will adopt SFAS 154 effective December 15,2005. SFAS 154 is not expected to have a significant impact on the companiesconsolidated financial statements.

(vii)          In March 2006, the FASB issued FASB Statement No. 156, thisamends FASB Statement No. 140. This Statement establishes, among otherthings, the accounting for all separately recognized servicing assets andservicing liabilities. This Statement amends Statement 140 to require that allseparately recognized servicing assets and servicing liabilities be initiallymeasured at fair value, if practicable. This Statement permits, but does notrequire, the subsequent measurement of separately recognized servicing assetsand servicing liabilities at fair value. An entity that uses derivativeinstruments to mitigate the risks inherent in servicing assets and servicingliabilities is required to account for those derivative instruments at fairvalue. Under this Statement, an entity can elect subsequent fair valuemeasurement to account for its separately recognized servicing assets andservicing liabilities. By electing that option, an entity may simplify it’saccounting because this Statement permits income statement recognition of thepotential offsetting changes in fair value of those servicing assets andservicing liabilities and derivative instruments in the same accounting period.This Statement is effective for financial statements for fiscal years beginningafter September 15, 2006. Earlier adoption of this Statement is permittedas of the beginning of an entity’s fiscal year, provided the entity has not yetissued any financial statements for that fiscal year. Management believes thisStatement will have no impact on the financial statements of the Company onceadopted.

4.                                                                       SUBSEQUENT EVENTS

(a)                 In August 2005, the Company became aware of theunauthorized issuance of approximately 243,842,000 shares of the Company’scommon stock (the “Wrongfully Issued Shares”) to various entities andindividuals for services and gifts, whereupon these entities and individualsattempted to sell the Wrongfully Issued Shares on

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the open market. As permembers of management of the Company, they are not aware of, nor do they haveany related activities with these entities and individuals.

In September 2005, theCompany filed a claim in the District Court of Oklahoma County, Oklahoma, (the “CivilLitigation”) against twelve defendants (the “Defendants”) seeking the return ofall the Wrongfully Issued Shares and the Defendants’ receipt of proceeds fromthe sale of those shares.

In the Civil Litigation the Company alleged that one of the Defendantsindividually and through various affiliated entities and co-conspirators,including another Defendant, prepared or possessed 20 or more common stockcertificates purportedly representing 235,000,000 common stock shares of theCompany, the previously referred to Wrongfully Issued Shares, which weredistributed to various individuals and entities, including other Defendants.Two financial service firms intervened in the Civil Litigation (the “Interveners”)and alleged that the Company negligently hired the Defendants and negligentlysupervised their actions and activities, and asserted Oklahoma and federalsecurities fraud and failure- to-register claims against the Defendants and theCompany. 

In conjunctionwith the Civil Litigation, the Company reached an agreement with one of theInterveners, whereby the Company delivered 25,075,000 common stock shares toone of the Interveners to be held pending settlement or conclusion of the CivilLitigation. These shares were delivered to the Intervener to satisfy therequirements of Depository Trust Company (“DTC”) until common stock shareseligible to be resold without restriction could be delivered by the Intervenerto cover its short position in the Company’s common stock. Furthermore, theIntervener placed in trust $72,500 to be used to pay the costs of registeringthe 25,075,000 common stock shares under the Securities Act of 1933, as amended(the “Securities Act”), and the applicable state securities laws in the eventthat registration was required.

On January 11,2006, the presiding Judge in the Civil Litigation entered an Order ApprovingSettlement Agreement (the “Order”). As a result of issuance of the Order, asettlement agreement (the

“Settlement Agreement”) became binding uponthe Company and some of Defendants (the “Settling Defendants”) and theInterveners with an effective date of December 8, 2005.

In accordancewith the Settlement Agreement, the Company’s claims against the SettlingDefendants and the claims of the Settling Defendants against the Company wereresolved by the exchange of release of claims, a release of the WrongfullyIssued Shares and payments to the Company in the aggregate sum of $171,546 fromfunds held by one of the Interveners and the further agreement to

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 pay an additional $277,093. Furthermore, theclaims of the Interveners against the Company were exchanged for the issuanceof 25,025,000 shares of the Company’s common stock to one of the Intervenersand 219,723,000 shares of the Company’s common stock to the Intervener for anaggregate sum of 244,748,000 common stock shares (the “Newly Issued Shares”).The Newly Issued Shares are required to be deposited with DTC by theInterveners in satisfaction of their short positions with vendors through whichsecurities purchase and sale transactions are cleared on behalf of theInterveners. The Newly Issued Shares were issued in accordance with theregistration exemption afforded under Section 3(a)(10) of theSecurities Act of 1933.

In addition,some of the Settling Defendants agreed to indemnify and hold harmless theCompany against all actions, suits, proceedings, demands, and assessmentsbrought by any past, present or future holder of the shares of common stock ofthe Company in connection with the Settlement Agreement and the various claimsof the Company settled in the Settlement Agreement and any associatedjudgments, attorney’s fees, costs and expenses.

Two of the Defendants,did not execute or participate in the Settlement Agreement and accordingly didnot settle the claims asserted against them in the Civil Litigation (“Non-SettlingDefendants”). The Company was granted judgments against the Non-SettlingDefendants and the Company is negotiating settlements of the judgments with theNon-Settling Defendants, the outcome of which is uncertain as of the date ofthis report.

(b)                In regard to theabove situation, of the unauthorized issuance of common shares, the Companyauthorized the following:

-                              On August 19,2005, the Company’s Board of Directors approved and adopted Certificate ofDesignation Preferences and Right of Preferred Stock (the “Certificate ofDesignation”). The Certificate of Designation sets forth the preferences andrights of the Company’s 15,000,000 authorized shares of preferred stock, $.0001par value, to be designated as the Series A Convertible Preferred Stock(the “Series A Preferred Stock”).

The holders ofshares of the Series A Preferred Stock have the right, at their option, toconvert the Series A Preferred Stock into shares of the Company’s commonstock at a ratio of 1 share of Series A Preferred for 100 shares of commonstock. The Series A Preferred are entitled to receive dividends of everykind declared and paid to holders of the Company’s common stock, at a rateequal to the set conversion rate of 1:100. In addition, the Preferred A have aright to have their shares adjusted in the event of future issuances of commonshares that would have a dilutive effect on the Preferred A. The Preferred Ahave voting rights equal to the number of shares of common stock that thePreferred A

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 are convertible into, whether or notconverted. In the event of the Company’s liquidation or dissolution or windingup, voluntary or involuntary, the holders of the outstanding Series APreferred Stock will be entitled to receive liquidation benefits identical tothose received by holders of common stock, provided that each share of the Series APreferred Stock will be treated as if equal to 100 shares of common stock.

-                              OnAugust 21, 2005, the Company amended their Articles of Incorporation. Thisamendment increased the number of our authorized shares of common stock from25,000,000 to 500,000,000 and reduced the par value to $0.0001, and authorized15,000,000 shares of preferred stock, par value of $0.0001. The holders of90.8% of the outstanding common stock shares approved this amendment at ashareholders meeting held on August 19, 2005.

-                              OnJanuary 6, 2006, the Company amended their Articles of Incorporation. Thisamendment increased the number of authorized shares of common stock, par valueof $.0001, from 500,000,000 to 2,000,000,000. The holders of 90.8% of theoutstanding common stock shares approved this amendment at a shareholdersmeeting held on August 19, 2005.

(c)                 On January 4,2006, the Company’s Board of Directors authorized the following:

·             251,231,084common stock shares to Thomas Megas in reimbursement of $36,925 of costsincurred by Mr. Megas on our behalf in his capacity as our Chairman andChief Executive Officer. These costs consisted of $33,000 paid to consultantsfor professional services includingaccounting and legal services and $3,925 fortravel expenses. The shares represented payment in full for the above expensesand had a market value of $25,123, the difference between market value and thetotal advance was recorded as paid in capital to the Company.

·             7,500,000shares of Series A Preferred Stock to Mr. Megas as settlement ofoutstanding debt incurred by the Company to Mr. Megas, between the periodsof January 1, 2000 and December 31, 2005. The converted debt had anoutstandingvalue of $223,247.

·             7,500,000shares of Series A Preferred Stock to a major investor as settlement ofoutstanding debt incurred by the Company to the investor, between the periodsof January 1, 2000 and December 31, 2005. The converted debt had anoutstanding value of $225,000.

(d)                  The Company has been informed by the US Securitiesand exchange Commission (the “Commission”) that the Commissions intends to instituteproceedings against the Company pursuant to Section

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12(j) ofthe Securities Act of 1934 (the “Exchange Act”). The Commission is allegingviolations of Section 13(a) of the Exchange Act and Rules 13a-1and 13a-13 there under, to determine whether the Exchange Actregistration of the Company’s common stock should be suspended or revoked.

The Company iscurrently in the process of curing the above violations. The Company has notdetermined what effect to the Company, or its shareholders, will result if theCompany is unable to cure these violations.

(e)                 During the yearended December 2005, the management of the Company has pursued businessopportunities in the energy sector. As of December 31, 2005 no definitiveagreements have been reached with regard to potential acquisitions.

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