**U. S. SECURITIES AND EXCHANGE COMMISSION**

**Washington,D. C. 20549**

----

**FORM 10-KSB**

**x**                              ANNUALREPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF1934

**Forthe fiscal year ended December 31, 2004**

**o**                                 TRANSITIONREPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF1934

----

**CommissionFile Number: 000-25261**

**BANCORP INTERNATIONAL GROUP, INC.**

**(formerly March IndyInternational, Inc.)**

(Name of small businessissuer in its Charter)

| **NEVADA**                                                       |   | **88-0339817**                        |
|------------------------------------------------------------------|--------|---------------------------------------|
| (State or other  jurisdiction of  incorporation or organization) |   | (I.R.S. Employer  Identification No.) |

 

**3126 South Boulevard,Suite 264Edmond, Oklahoma 73013**

(Address of principalexecutive offices)

**(405) 235-8318**

(Issuer’s telephonenumber)

----

Securitiesregistered under Section 12(b) of the Exchange Act:

Securities registered under Section 12(g) ofthe Exchange Act:

**CommonStock, $0.0001 Par Value**

----

Check whether the issuer (1) filed all reportsrequired to be filed by Section 13 or 15(d) of the Exchange Actduring the past 12 months (or for such shorter period that the registrant wasrequired to file such reports), and (2) has subject to such filingrequirements for the past 90 days. Yes o   No x

Check if there is no disclosure of delinquent filersin response to Item 405 of Regulation S-B is not contained in this form, and nodisclosure will be contained, to the best of registrant’s knowledge, indefinitive proxy or information statements incorporated by reference in Part IIIof this Form 10-KSB or any amendment to this Form 10-KSB. x

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

The issuer did not generate any revenue for the yearended December 31, 2004.

Theaggregate market value of the issuer’s common stock, $.0001 par value, held bynon-affiliates of the issuer as of June 15, 2006, was $24,763 based on thelast reported sale price on February 22, 2006 of $0.0001 as reported bythe Electronic Quotation and Trading System for over-the-counter securities. Asof June 15, 2006,  500,010,229shares of the issuer’s common stock, $.0001 par value, were outstanding.

 

----

 

**BANCORP INTERNATIONAL GROUP, INC.(formerly March Indy International, Inc.)FORM 10-KSBFor the Fiscal Year Ended December 31, 2004**

**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 inthis report constitute “forward-looking statements” within the meaning of Section 27Aof the Securities Act of 1933, as amended, and Section 21E of theSecurities Exchange Act of 1934, as amended. Certain, but not necessarily all,of such forward-looking statements can be identified by the use offorward-looking terminology such as “anticipates,” “believes,” “expects,” “may,”“will,” or “should” or other variations thereon, or by discussions ofstrategies that involve risks and uncertainties. The actual results or industryresults may be materially different from any future results expressed orimplied by such forward-looking statements.

Throughout this report the first personal pluralpronoun in the nominative case form “we” and its objective case form “us”, itspossessive and the intensive case forms “our” and “ourselves” and its reflexiveform “ourselves” refer collectively to Bancorp International Group, Inc.,its subsidiaries and executive officers and directors.

2

----

 

**PART I**

**Item 1.Description of Business**

**Overview**

N.E.C. Properties, Inc.(“NEC”) was incorporated on September 16, 1995, under the laws in theState of Nevada. NEC was organized with no operations or plan of business andwas a blank check company. On September 30, 1995 NEC had 25,000 shares atno par value authorized and 18,600 shares issued and outstanding for $1,860 incash. On November 19, 1998 the amended and restated Articles ofIncorporation were filed with the Secretary of State of Nevada that increasedNEC’s authorized common shares from 25,000 to 25,000,000, and established a parvalue of $.001 per share. In November 1998 the NEC stockholders approvedtwo forward stock splits. The first was a 100 for 1 split increasing the numberof the outstanding common shares to 1,860,000 and the second was a 1.77 for 1stock split resulting in 3,292,200 common shares outstanding.

On November 10,1999, NEC acquired all of the outstanding stock of March Indy International, Inc.(“March”), in exchange for 7,706,575 shares of NEC (the “Share Exchange”). March wasincorporated in Delaware on November 24, 1998 (“inception”). Foraccounting purposes, the transaction was accounted for as a reverse acquisitionunder the purchase method for business combinations, and accordingly thetransaction was treated as a recapitalization of March, with March havingacquired NEC.

On June 17, 2000, wedeclared 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.

We are a developmentstage enterprise. From inception through September 30, 2000, we were inthe preliminary stages of engaging in the business of designing, building andracing cars for Formula One, Cart and Indy competition both in the UnitedStates and abroad. We also planned to develop an internet website to offer andsell merchandise products related to our racing efforts. In October 2000,because of our inability to successfully organize an Indy car race team and ourfailure to compete in the Indianapolis 500, we discontinued our racing andrelated promotional activities.

During the calendarquarter ended September 30, 2001, we changed our name to BancorpInternational Group, Inc..

On August 19, 2005,our Board of Directors approved and adopted the Certificate of DesignationPreferences and Right of Preferred Stock (“Certificate of Designation”). TheCertificate of Designation sets forth the preferences and rights of the Company’s15,000,000 authorized shares of preferred stock, $.0001 par value, to bedesignated as the Series A Convertible Preferred Stock (“Series APreferred Stock”).

On August 19, 2005,our stockholders voted to amend our Articles of Incorporation to increase thenumber of authorized shares of common stock from 25,000,000 at a par value of$.001 to 500,000,000 at a par value of $0.0001. In a second amendment on August 19,2005, effective January 6 2006, our stockholders approved another amendedto our Articles of Incorporation that increased the number of our authorizedshares of common stock from 500,000,000 at $.0001 par value to 2,000,000,000 at$.0001 par value.

We have failed to timelyfile our reports with the U.S. Securities and Exchange Commission in accordancewith our obligations under Section 12(g) of the Securities ExchangeAct of 1934, as amended (the “Exchange Act”). We are in the process ofpreparing reports with the intent of becoming current in our reportingobligations under the Exchange Act.

**Employees**

As of the date of thisreport, we have one full-time employee, Thomas Megas, our chief executiveofficer, who does not receive any form of compensation or remuneration.

3

----

 

**ADDITIONALFACTORS THAT MAY AFFECT OUR FUTURE RESULTS**

The following factors andthe matters discussed below and elsewhere in this report should be consideredwhen evaluating our business operations and strategies. Additionally, there maybe other risks and uncertainties that we are not aware of or that we currentlydeem immaterial, which may become material factors affecting our operations andbusiness success. Many of the factors are not within our control. We provide noassurance that one or more of these factors will not adversely 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 ofadditional stock or other equity securities on terms that are highly dilutiveto our shareholders.

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

During the quarter ended September 30,2000, we discontinued our auto racing activities. As of December 31, 2005we have not formulated a plan to undertake another business activity. However,we are examining business opportunities within the energy sector, although nodefinitive agreements have been executed.

We have not realized anyrevenue from our operations and have incurred substantial losses resulting inan accumulated deficit at December 31, 2004, of $4,477,348. In addition,we will continue to incur losses attributable to the administrative costsassociated with a “blank check, publicly-held shell company.” See “Item 6.Management’s Discussion and Analysis or Plan of Operation.”

**There isno assurance that we will obtain capital resources to fund any businessactivities undertaken.**

To date, we have notpursued additional sources of capital resources; however, our ability to fundfuture business enterprise is directly related to our ability to obtain capitalresources through the sale or syndication of some or all of our interests througha public offering or mergers with other viable business entities. If we areunsuccessful and capital resources do not become available on terms acceptableto us, we may not be able to undertake the business enterprise or, ifundertaken, continue the business enterprise. This lack of capital resource mayultimately result in the loss of investment in our common stock.

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

In connection with abusiness enterprise we undertake, we may enter into various cost and revenuesharing arrangements, including joint ventures and partnerships, intended tocomplement or expand the business activities. We may not realize theanticipated 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.

4

----

 

**Any business activities or enterprise undertakenoutside of the United States will involve inherently greater risks.**

We may engage in abusiness enterprise or activity outside the United States. As with any businessoperation and activities outside of the United States, there are a number ofinherent 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 andpolicies relating to the repatriation of funds and withholding taxes);

·                                      differingdegrees of protection of property rights;

·                                      instabilityof foreign currencies, economies and governments;

·                                      culturalbarriers; and

·                                      wars andacts of terrorism.

Any of these factorscould have a material adverse effect on our ability to commence and continuethe business enterprise undertaken, which may adversely affect the financialpotential and success of the undertaken business enterprise.

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

Although a market for ourcommon stock shares previously existed, the trading volume has always been verylow. Furthermore, we have been delinquent in our reporting obligations underExchange Act. If a market redevelops, the market price of our common stock maybe 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 marketand that market is highly volatile and affected by competitive forces outsideof our control.**

Upon bringing the Companyfilings current, the common stock should be initially traded on theover-the-counter exchange. The over-the-counter market’s volatility ischaracterized as follows:

·                                      theover-the-counter securities are subject to substantial and sudden price increasesand decreases,

·                                      at times theprice (bid and ask) information for the securities may not be available,

·                                      if there isan insufficent number of market makers, there is a risk that the dealers orgroup of dealers may control the market in our common stock and set prices thatare not based on competitive forces, and

·                                      theavailable offered price may be substantially below the quoted bid price.

5

----

 

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

Our common stock issubject to the “penny stock” rules. A “penny stock” is generally 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.

The penny stock trading rules imposeadditional duties and responsibilities upon broker-dealers and salespersonsrecommending the purchase a penny stock or the sale of a penny stock. Requiredcompliance with these rules will materially limit or restrict

·                                      the abilityto resell our common stock, and

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

**We have a largenumber of authorized and unissued shares of our common stock; the issuance andterms of issuance are within our discretion and not subject to stockholderapproval.**

We may issue additional common stock and preferredstock at prices and on terms determined by our board of directors, without stockholderconsent or approval, that upon issuance may result in substantial dilution ofour stockholders’ interests as well as the market price and value of our commonstock.

We have 2,000,000,000 shares of common stock and15,000,000 shares of Series A Preferred Stock (each convertible into 100shares of our common stock) authorized for issuance. We have the right to offerthese shares at offering prices to be determined at the sole discretion of ourboard of directors. The sale of these shares may result in substantial dilutionto our shareholders. These stock issuances may adversely affect the marketprice or value of our common stock.

**Our chiefexecutive officer has voting control and may exercise this control in theelection of our directors and their continued service on our Board.**

On matters that our stockholders are entitled to vote,our chief executive officer and one of the members of our board of directors,Thomas Megas, holds voting control through his ownership of common stock andpreferred stock. Although Mr. Megas in his capacity as a director and ourchief executive officer has a fiduciary duty to our stockholders, Mr. Megasmay exercise his voting control in a manner personally beneficial to him and tothe detriment or disadvantage of our other stockholders.

**Item 2. Description of Property**

**Facilities**

Our corporate office islocated at 3126 South Blvd. Suite 264, Edmond, Oklahoma 73013. If, andwhen, we undertake a business development enterprise, we will relocate ouroffice to facilities that will then serve our needs, both in location andfacility size.

6

----

 

**Item 3. Legal Proceedings**

We are currently involvedin pursuing additional legal action filed in the state of Oklahoma againstPamela Thompson CPA, The Grace Trust and Charles Weller, esq. This case isrelated to the filing described below and represents the unsettled portion ofcase.

In August 2005, ourmanagement became aware of the unauthorized fraudulent issuance ofapproximately 243,842,000 shares of our common stock (the “Wrongfully IssuedShares”) to various entities and individuals for services and gifts, whereuponthese entities and individuals attempted to sell the Wrongfully Issued Sharesin the open market. Our officers and directors had no relationship with theentities and individuals that issued the Wrongfully Issued Shares.

In September 2005,we a civil action in the District Court of Oklahoma County, Oklahoma, styled *Bancorp International Group, Inc. v.Mario A. Pino, an individual,Sam Deeb, an individual, Jean Carlos Medina, an individual, Charles Weller, anindividual, Barkev Kibarian, an individual, Felica Morales, an individual,Clearstock, Inc., a Texas corporation, DealFlo, L.L.C., a New York LimitedLiability Company, The Grace Trust, a foreign trust, Global Consulting Group, aMaryland corporation, Intelligent Message Distributors, a Nevada corporation,and Wall Street Group, L.L.C., a Arizona limited liability company*(the “Defendants”), Case No. CJ-2005-7459 (the “CivilLitigation”), seeking the return of the Wrongfully Issued Shares and theDefendants’ receipt of proceeds from the sale of those shares.

In the Civil Litigationwe that Mr. Pino individually and through various affiliated entities andco-conspirators, including the Wall Street Group, L.L.C., prepared or possessed20 or more common stock certificates purportedly representing 235,000,000shares of our common stock, the previously referred to Wrongfully IssuedShares, that were distributed to various individuals and entities, includingthe other Defendants. The number of shares in question was what we couldidentify but could not determine if, in addition to the 235,000,000 shares, anyadditional shares issued to the market. Capital Growth Financial, L.L.C. and JHDarbie & Co. intervened in the Civil Litigation (the “Intervenors”)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 us.

In conjunction with theCivil Litigation, we reached an agreement with JH Darbie & Co., underwhich 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.

On January 11, 2006,the Court entered an Order Approving Settlement Agreement (the “Order”). As aresult of issuance of the Order, a settlement agreement (the “SettlementAgreement”) became binding upon the Company and the Defendants 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 MessageDistributors (the “Settling Defendants”) and the Intervenors with an effectivedate of December 8, 2005.

In accordance with theSettlement Agreement, our claims against the Settling Defendants and the claimsof the Settling Defendants against us were resolved by the exchange of releasesof claims, a release of the Wrongfully Issued Shares and payments to us in theaggregate sum of $171,546 from funds held at Capital Growth Financial, L.L.C.and the further agreement to pay an additional $277,093 by Capital Growth. Furthermore,the claims of the Intervenors against us were released for the issuance of25,025,000 shares of our common stock to JH Darbie & Co. and219,723,000 shares of our common stock to Capital Growth Financial, L.L.C. foran aggregate sum of 244,748,000 common stock shares (the “Newly Issued Shares”).These shares were required to be deposited with DTC by JH Darbie & Co.and Capital Growth Financial, L.L.C. in satisfaction of their short positionswith companies through which securities purchase and sale transactions arecleared on behalf of JH Darbie & Co. and Capital Growth Financial,L.L.C. The Newly Issued Shares were issued in accordance with the registrationexemption afforded under Section 3(a)(10) of the Securities Act.

7

----

 

In addition, Defendants Pino,Medina, Kibarian, Global Consulting Group, Intelligent Message Distributors andWall Street Group, L.L.C. agreed to indemnify and hold harmless the Companyagainst all actions, suits, proceedings, demands, and assessments brought byany past, present or future holder of the shares of common stock of the Companyin connection with the Settlement Agreement and the various claims of theCompany settled in the Settlement Agreement and any associated judgments,attorney’s fees, costs and expenses.

The Defendants, GraceTrust, Charles Weller, and Felica Morales (“Non-Settling Defendants”), did notexecute the settlement agreement and accordingly did not settle the claimsasserted against them in the Civil Litigation. We received judgments againstthe Non-Settling Defendants, other than The Grace Trust, and are currentlypursuing collection of these judgments.

**Item 4. Submission of Matters to a Vote ofSecurity Holders**

Other than those matterssubmitted at the shareholders meeting held on August 19, 2005, no matterswere 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**

Prior to our common stockqualifying for quotation on the Over-the-Counter Bulletin Board (the “OTCBB”)under the symbol “INDQ” in November 1999, the common stock only minimallytraded. In 2000 our common stock was removed from the OTCBB and all tradingactivity was quoted in the “pink sheets” and currently is reported under thesymbol “BCIT.”

The following tablepresents the range of high and low bid prices per common stock share for thequarterly periods presented. The bid prices reflect inter-dealer prices,without mark-ups, mark-downs or commissions and may not present the actualprice paid for the shares.
| **Quarter Ended:** | ** ** | **Common Stock Bid  Prices** | ** ** |
|-------------------------|------------|----------------------------------------|------------|
| ** **              | ** ** | **Low**                                | ** ** | **High** | ** ** |
| March 31,  2006    |       | $                                      | 0.0001     |   | $ | 0.0030 |   |
|                    |       |                                   |       |   |   |
| December 31,  2005 |       | $                                      | 0.0010     |   | $ | 0.0200 |   |

 

8

----

 
| 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 |   |

 

**DividendPolicy**

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 Equity Securities**

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

**Repurchase of Equity Securities**

We did not repurchase anyof our common stock shares during 2004.

**SecuritiesAuthorized for Issuance under Equity Compensation Plans**

The following table setsforth as of December 31, 2005, 2004, 2003, and 2002 information related toeach category of equity compensation plan, including individual compensationarrangements with our non-employee directors. We do not have any equitycompensation plans approved by our shareholders. All stock options and rightsto acquire our equity securities are exercisable for or represent the right topurchase our common stock.

9

----

 
| **Plan category**                                          | ** ** | **Number of  Securities to be  issued upon  exercise of  outstanding  options, warrants  and rights** | ** ** | **Weighted-average  exercise 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                                                                                                                                  |       |                                                                                                        |       | —                                                                                                                              |       |
|                                                                 |            |                                                                                                                                          |            |                                                                                                             |            |                                                                                                                                     |            |  |

----

(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.

**SecuritiesSold Pursuant to Private Placement Offering**

We did not sell anysecurities during 2004.

**Item 6. Management’s Discussion and Analysis or Plan ofOperation.**

**Discontinued Operations**

Since inception, we havenot realized any revenue from operations. We discontinued our motor racingbusiness activities in the third quarter of 2000 and have not undertaken anybusiness activities since. Accordingly, all of these activities are reflectedas discontinued operations in 2000 and a loss of $4,488,503. Because we do nothave any assets and do not conduct any business activities, we are classifiedas a “shell company.” As of the date of this report, we have not developed aplan of operation.

**Operations**

Our operations for the years ended December 31,2003 and 2004 were primarily of a corporate nature including legal, accountingand general corporate administrative matters. We did not conduct any businessenterprise activities during 2003 and 2004.

**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, 2004, we incurred a net loss ofapproximately $100,667. In addition, at December 31, 2004 and 2003, we hadno assets and working capital deficiencies of approximately $243,000 and$230,000, 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.

10

----

 

**12-Month Overhead Budget**

Our budgeted overheadexpenses for the 12 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, we do nothave any capital commitments. We neither have any plans to raise additionalfunds during the next 12 months.

**CautionaryStatement Relating to Forward Looking Information**

We have included someforward-looking statements in this section and other places in this report regardingour 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 differentfrom any future results, levels of activity, performance or achievementsexpressed or implied by these forward-looking statements. Some of theseforward-looking statements can be identified by the use of forward-lookingterminology including “believes,” “expects,” “may,” “will,” “should” or “anticipates”or the negative thereof or other variations thereon or comparable terminology, orby discussions of strategies that involve risks and uncertainties. You shouldread statements that contain these words carefully because they:

·                                      discuss ourfuture expectations;

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

·                                      state other “forward-looking”information.

We believe it isimportant to discuss our expectations; however, it must be recognized thatevents may occur in the future over which we have no control and which we arenot accurately able to predict. Readers are cautioned to consider the specificbusiness risk factors described in the report and not to place undue relianceon the forward-looking statements contained herein, which speak only as of thedate hereof. We undertake no obligation to publicly revise forward-lookingstatements to reflect events or circumstances that may arise after the date ofthis report.

**Item 7. Financial Statements**

Our financial statementswhich are prepared in accordance with Regulation S-B are set forth in thisreport beginning on page F-1.

**Item 8. Changes in and Disagreements with Accountants andFinancial Disclosure**

There have been nodisagreements concerning matters of accounting principle or financial statementdisclosure between us and our independent accountants.

11

----

 

**Item 8A. Controls and Procedures.**

Thomas Megas, our ChiefExecutive Officer and Acting Chief Financial Officer, is responsible primarilyfor establishing and maintaining disclosure controls and procedures designed toensure that information required to be disclosed in our reports filed orsubmitted under the Securities Exchange Act of 1934, as amended (the “ExchangeAct”) is recorded, processed, summarized and reported within the time periodsspecified in the rules and forms of the U.S. Securities and ExchangeCommission. These controls and procedures are designed to ensure thatinformation required to be disclosed in our reports filed or submitted underthe Exchange Act is accumulated and communicated to our management, includingour principal executive and principal financial officers, or persons performingsimilar functions, as appropriate to allow timely decisions regarding requireddisclosure.

Furthermore, Mr. Megas,our Chief Executive Officer and Acting Chief Financial Officer, is responsiblefor the design and supervision of our internal controls over financialreporting that are then effected by and through our board of directors,management and other personnel, to provide reasonable assurance regarding thereliability of our financial reporting and the preparation of financialstatements for external purposes in accordance with generally acceptedaccounting principles. These policies 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 accepted accountingprinciples, and that our receipts and expenditures are being made only inaccordance with authorizations of our management and directors; and

·                                      providereasonable assurance regarding prevention or timely detection of unauthorizedacquisition, use or disposition of our assets that could have a material effecton our financial statements.

Our Chief ExecutiveOfficer and Acting Chief Financial Officer, based upon his evaluation of theeffectiveness of our disclosure controls and procedures and the internalcontrols over financial reporting as of the last day of the period covered bythis report, concluded that our disclosure controls and procedures and internalcontrols over financial reporting were fully ineffective as of the last day ofthe period covered by this report and reported to our auditors and board ofdirectors that there are no controls and procedures and internal control overfinancial reporting during the period covered by this report and that all ofwhich materially affect or is reasonably likely to materially affect ourdisclosure controls and procedures or internal control over financialreporting. In conducting their evaluation of our disclosure controls andprocedures and internal controls over financial reporting, these executive officersdid not discover any fraud that involved management or other employees who havea significant 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. Other Information**

All reports on Form 8-Krequired to be filed during the three months ended December 31, 2003, 2004and 2005 has been previously reported on Form 8-K.

12

----

 

**PART III**

**Item 9. Directors, ExecutiveOfficers, Promoters and Controlled Persons; Compliance with Section 16(a) ofthe Exchange Act**

Set forth below iscertain information with respect to our executive officer and directors.Directors are generally elected at the annual shareholders’ meeting and holdoffice until the next annual shareholders’ meeting and until their successorsare elected and qualify. Executive officers are elected by the Board ofDirectors and serve at its discretion. Our Bylaws provide that the Board ofDirectors shall consist of such number of members as the Board of Directors mayfrom time to time determine by resolution or re-election, but not less thantwo. Our Board of Directors 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 ofour founders and has served as President, Chief Executive Officer and a memberof the Board of Directors since inception, and also serves as Chairman of theBoard of Directors (since June 5, 2001) and our Acting Chief FinancialOfficer. From 1992 to 1998, Mr. Megas served as Director of March Europeand as 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 servedas one of our Directions since November 1999. He has been involved in autoracing chassis design and construction since 1992 when he became a Director ofMarch, Europe. Mr. Duffy is a banker by profession and from 1990 to 1995was a Director of RA Coleman International, an investment-banking group in theU.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 compensateDirectors for serving on our Board of Directors or attending meetings of theBoard or any committee of the Board. Directors who are also our employeesreceive no additional compensation for serving as directors. We reimburse ourdirectors for travel and out-of-pocket expenses in connection with theirattendance at meetings of our 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.

We believe that eachperson who, at any time during 2004 through 2005, was a director, executiveofficer, or beneficial owner of more than 10% of our common stock failed tocomply with the filing requirements of Section 16(a).

13

----

 

**Item 10. Executive Compensation**

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**

In 1999, we entered intolong-term employment agreement with Thomas Megas, a summary of the material termsis set forth below.

The agreement with Mr. Megashad an initial term of three years that was extendable by agreement for anadditional two-year term and then additional one-year terms thereafter. Theagreement provided for compensation to begin June 1, 2000 at a rate of$250,000 to be increased by $125,000 after the first year, by an additional$225,000 after the second year and after the third year by ten percent (10%)per year increases thereafter. Pursuant to the agreement, Mr. Megas wasgranted 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 asignificant degree upon the efforts, contributions and abilities of ourmanagement. The loss of the services of Thomas Megas could have a materialadverse effect on our ability to engage in future business activities. We donot maintain any insurance covering the disability or life of our executiveofficers and directors.

**Equity Compensation Plans**

Other than the grant ofstock options pursuant to the employment agreement with Thomas Megas, we havenot established or entered into any equity compensation plans. For informationrelated to our common stock authorized for issuance under equity compensationplans, see Item 5. Market for Common Equity and Related Stockholder Matters.

14

----

 

**DirectorLiability and Indemnification**

As permitted by theprovisions of the Nevada Revised Statues, our Articles of Incorporation (the “Articles”)eliminates in certain circumstances the monetary liability of our directors fora breach of their fiduciary duty as directors. These provisions do noteliminate the liability of a director (i) for a breach of the director’sduty of loyalty to us or our shareholders; (ii) for acts or omissions by adirector not in good faith or which involve intentional misconduct or a knowingviolation of law; (iii) for liability arising under the Section 78.300of the Nevada Revised Statues (relating to the declaration of dividends andpurchase or redemption of shares in violation of the Nevada private corporationlaws); or (iv) for any transaction from which the director derived animproper personal benefit. In addition, these provisions do not eliminateliability of a director for violations of federal securities laws, nor do theylimit our rights or the rights of our shareholders, in appropriatecircumstances, to seek equitable remedies such as injunctive or other forms ofon-monetary relief. Such remedies may not be effective in all cases.

Our Articles ofIncorporation and Bylaws provide that we will indemnify our directors andofficers. Under such provisions, any director or officer, who in his or hercapacity as an officer or director, is made or threatened to be made, a partyto any suit or proceeding, may be indemnified if the director or officer actedin good faith and in a manner he or she reasonably believed to be in or notopposed 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.

**Item11. Security Ownership of Certain Beneficial Owners and Management and RelatedStockholder Matters**

**Securities Authorized for Issuance under Equity CompensationPlans**

For information relatedto our common stock authorized for issuance under equity compensation plans,see Item 5. Market for Common Equity and Related Stockholder Matters, above.

**Security Ownership of Certain Beneficial Owners andManagement**

The following tablepresents certain information regarding the beneficial ownership of our commonstock as March 15, 2006, and as adjusted to give effect to this offering andexercise of the warrants, stock options and conversion rights under ourPreferred Stock, of (i) the only persons known by us to own beneficially morethan 5% of our common stock, (ii) each of our directors and executive officers(including those executive officers named in the Summary Compensation Table,see “Item 10. Executive Compensation — Director and Executive OfficerCompensation”) and (iii) all of our current executive officers and directors asa group, together with their percentage holdings of the beneficially ownedshares. All persons listed have sole voting and investment power with respectto their shares unless otherwise indicated, and there is no family relationshipamong our executive officers and directors. For purposes of the followingtable, the number of shares and percent of ownership of outstanding commonstock that the named person beneficially owns includes common stock shares thatthe named person has the right to acquire within 60 days of the date of thisreport (pursuant to exercise of stock options and warrants) and are deemed tobe outstanding, but are not deemed to be outstanding for the purposes ofcomputing the number of shares beneficially owned and percent of outstandingcommon stock of any other named person.
|                                                                   | ** ** | ** **                         | ** ** | ** **                | ** ** |
|-------------------------------------------------------------------|------------|------------------------------------|------------|---------------------------|------------|
| **Name and Address of Beneficial Owner** | ** ** | **Shares  Beneficially  Owned(1)** | ** ** | **Ownership  Percent(2)** | ** ** |
| Thomas Megas(3)                                                   |       | 1,001,964,571                      |       | 80.16                     |       |
| 15 Onslow Gardens, Flat  Seven London, England SW7 3AW            |       |                               |       |                      |       |
|                                                              |       |                               |       |                      |       |
| Stewart Sytner(4)                                                 |       | 750,415,027                        |       | 60.00                     |       |
| 1800 Rockway Avenue,  Suite 100 Hewlett, New York 11557      |       |                               |       |                      |       |
|                                                              |       |                               |       |                      |       |
| Martin Duffy(5)                                                   |       | 33,334                             |       | .01                       |       |
|                                                              |       |                               |       |                      |       |
| Executive Officers and  Directors as a group (two individuals)(6) |       | 1,001,997,905                      |       | 80.16                     |       |

 

15

----

 

----

(1)             Shares notoutstanding but deemed beneficially owned by virtue of the right of a person ormembers of a group to acquire them within 60 days are treated as outstandingfor determining the amount and percentage of common stock owned by such person.To the our knowledge, each named person has sole voting and sole investmentpower with respect to the shares shown except as noted, subject to communityproperty laws, where applicable.

(2)             Rounded to thenearest one-hundredth of one percent, based upon 500,010,229 shares of commonstock outstanding.

(3)             Mr. Megas is ourChief Executive Officer, President, Acting Chief Financial Officer and one ofour Directors. The number of shares and the percentage include 750,000,000common stock shares into which the 7,500,000 shares of preferred stock owned byMr. Megas are convertible.

(4)             The number of sharesand the percentage include 750,000,000 common stock shares into which the7,500,000 shares of preferred stock owned by Mr. Sytner are convertible.

(5)             Mr. Duffy is oneof our Directors.

(6)             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. Megas areconvertible.

**Item12. Certain Relationships and Related Transactions**

Set forth is adescription of transactions we entered into with our officers, directors andshareholders that beneficially own more than 5% of our common stock during thefour years ending December 31, 2005. These transactions will continue ineffect and may result in conflicts of interest between these individuals andus. Although our officers and directors have fiduciary duties to ourshareholders and us, there can be no assurance that conflicts of interest willalways be resolved in our favor or in favor of our stockholders.

On January 6, 2006we issued 251,231,084 common stock shares to Abraham International Holdings,SA, a company 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 total advanceswas recorded as paid in capital.

On January 6, 2006we issued 7,500,000 shares of our Series A Preferred Stock to Mr. Megasas settlement of our $223,247 indebtedness owed to Mr. Megas that wasincurred during 2000 through 2005. The shares of the Series A PreferredStock issued to Mr. Megas were recorded at a value of 1,500,000 based uponthe market value of the 750,000,000 shares of common stock into which the Series APreferred Stock shares are convertible.

On January 6, 2006,we issued 7,500,000 shares of our Series A Preferred Stock to StewartSytner in reimbursement of $232,272 of costs and expenses incurred by Mr. Sytneron our 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.

We believe that thetransactions described above were on terms no less favorable to us than couldhave been obtained with unrelated third parties.

**Item13. 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

----

 
|  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. Principal AccountantFees and Services**

**Fees for Independent Auditors**

In December 2005,Sherb & Co., LLP was engaged as our independent auditors to provideprofessional services the audit of our annual financial statements for theyears ended December 31, 2000 and 2001 and review of the unauditedfinancial statements included in our Quarterly Reports on Form 10-QSBcommencing with the three months ended September 30, 2000. On June 8,2006, we dismissed Sherb & Co., LLP and engaged Lieberman andAssociates PA as our independent auditors for the years ended December 31,2002 through 2005. Sherb & Co., LLP issued its reports on ourconsolidated financial statements for the years ended December 31, 2002and 2001 and reviewed our unaudited consolidated financial statements for thethree months ended September 30, 2000, March 31, 2001, June 30,2001, and September 30, 2001.

No audit fees, tax feesand all other fees were billed during 2004 and 2003 by Sherb & Co. LLPand Lieberman and Associates PA. The audit fees, tax fees and all other servicefees related to audited of our 2001 through 2005 financial statements, taxservices and other accounting service are or will be billed by Sherb &Co., LLP and Lieberman 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.***   The feesbilled 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 CommitteePre-Approval Procedures. - Rules and regulations of the Securities andExchange Commission implemented in accordance with the requirements ofSarbanes-Oxley Act of 2002 require audit committees of companies reportingunder and pursuant to the Securities Exchange Act of 1934 to pre-approve auditand non-audit services. Our Board of Directors has not established an AuditCommittee; the entire Board of Directors performs the functions of an AuditCommittee. Acting in the capacity of an audit committee our Board of Directorsfollows procedures pursuant to which audit, audit-related and tax services, andall permissible non-audit services, are pre-approved by category of service.Circumstances may arise that require engagement of the independent publicaccountants for additional services not contemplated in the originalpre-approval. In those instances, we will obtain the specific pre-approval ofour Board of Directors acting in the capacity as an audit committee beforeengaging our independent public accountants. The procedures require our Boardof Directors be informed of each service, and the 

17

----

 

procedures do not includeany delegation of our Board of Directors responsibilities to management. OurBoard of Directors acting in the capacity of an audit committee may delegatepre-approval authority to one or more of its members. The member to whom thisauthority is delegated will report any pre-approval decisions to our Board ofDirectors at its next scheduled meeting.

All of the audit-relatedfees, tax fees and all other fees of Sherb & Co. LLP and Lieberman andAssociates PA were pre-approved by our board of directors.

18

----

 

**SIGNATURES**

In accordance with Section 13or 15(d) of the Exchange Act, the Registrant caused this amended report tobe signed on its behalf by the undersigned, 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 |                                                                |

 

In accordance with theExchange Act, this report has been signed below by the following persons onbehalf of the Registrant and in the capacities and on the dates 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

----

 

Indexto Consolidated Financial Statements
| Report of Independent  Registered Public Accounting Firm - for the Years Ended December 31,  2003 and 2002 |   |   |   |
|-----------------------------------------------------------------------------------------------------------------|--------|--------|--------|
|                                                                                                            |   |   |   |
| Balance Sheets                                                                                                  |   |   |   |
|                                                                                                            |   |   |   |
| Statements of Operations                                                                                        |   |   |   |
|                                                                                                            |   |   |   |
| Statements of Shareholders’ Equity (Deficit)                                                               |   |   |   |
|                                                                                                            |   |   |   |
| Statements of Cash Flows                                                                                        |   |   |   |
|                                                                                                            |   |   |   |
| Notes to Financial Statements                                                                                   |   |   |   |

 

F-i

----

 

REPORT OF INDEPENDENTREGISTERED PUBLIC ACCOUNTING FIRM

TheBoard of Directors and StockholdersBancorp International Group, Inc.

Wehave audited the accompanying balance sheets of Bancorp International Group, Inc.as of December 31, 2004 and December 31, 2003, 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 these financialstatements based on our audit.

Weconducted our audit in accordance with the standards of the Public CompanyAccounting Oversight Board (United States). Those standards require that weplan and perform the audit to obtain reasonable assurance about whether thefinancial statements are free of material misstatement. An audit includesexamining, on a test basis, evidence supporting the amounts and disclosures inthe financial statements. An audit also includes assessing the accountingprinciples used and significant estimates made by management, as well asevaluating the overall financial statement presentation. We believe that ouraudit provides a reasonable basis for 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, 2004 and December 31, 2003 and the results of itsoperations and its cash flows for the year then ended in conformity withaccounting principles generally accepted in the United States.

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 anet capital deficiency that raises substantial doubt about its ability tocontinue as a going concern. Management’s plans in regard to these matters arealso described in Note 2. The financial statements do not include anyadjustments that might result from the outcome of this uncertainty.
|                    | /s/    | Lieberman & Associates PA |
|-------------------------|--------|------------------------------------|
|                    |   | Lieberman & Associates PA |
|                    |   | Certified Public Accountants       |
|                    |   |
| June 16, 2006      |   |
| Ft. Lauderdale, Florida |   |

 

F-1

----

 

**Bancorp International Group, Inc.Statement of Financial PositionAs of December 31,**
| ** **                                                                                                                                                      | ** ** | **2004**     | ** ** | **2003**     | ** ** |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|--------------|------------|--------------|------------|
| **Assets**                                                                                                                                                      | ** ** | ** **   | ** ** | ** **   | ** ** |
| ** **                                                                                                                                                      |       |         | ** ** | ** **   | ** ** |
| **Total  Assets**                                                                                                                                               |       | $            | —     | ** **   | **$**      | **—** | ** ** |
| ** **                                                                                                                                                      | ** ** | ** **   | ** ** | ** **   | ** ** |
| **Liabilities and Stockholders’  Equity**                                                                                                                  | ** ** | ** **   | ** ** | ** **   | ** ** |
|                                                                                                                                                            |       |         |       |         |       |
| Accounts Payable  and Accrued Expenses                                                                                                                          |       | 243,697      |       | 230,247      |       |
| Current portion  of Long Term Debt                                                                                                                              |       | 440,934      |       | 353,717      |       |
| **Total  Liabilities**                                                                                                                                          | ** ** | **684,631**  | ** ** | **583,964**  | ** ** |
| ** **                                                                                                                                                      | ** ** | ** **   | ** ** | ** **   | ** ** |
| **Stockholders’ Equity**                                                                                                                                   | ** ** | ** **   | ** ** | ** **   | ** ** |
| Common Stock,  $.0001 par value, 2,000,000,000 shares authorized, 4,030,078 shares issued  and outstanding at December 31, 2002 and December 31, 2001 |       | 403          |       | 403          |       |
| Additional Paid  in Capital                                                                                                                                     |       | 3,792,314    |       | 3,792,314    |       |
| Accumulated  Deficit                                                                                                                                            |       | (4,477,348   | )          | (4,376,681   | )          |
| **Total  Stockholders’ Equity**                                                                                                                            | ** ** | **(684,631** | **)**      | **(583,964** | **)**      |
| ** **                                                                                                                                                      | ** ** | ** **   | ** ** | ** **   | ** ** |
| **Total  Liabilities and Stockholders’ Equity**                                                                                                            | ** ** | **$**        | **—** | ** **   | **$**      | **—** | ** ** |

 

The accompanying notes are an integral partof these financial statements

F-2

----

 

**Bancorp International Group, Inc.Statement of OperationsFor the Year Ended December 31,**
| ** **              | ** ** | **2004**    | ** **   | **2003**   | ** ** |
|-------------------------|------------|-------------|--------------|------------|------------|
| **REVENUES**            |       | $           | —       |       | $          | — |   |
| ** **              |       |        |         |       |       |
| **COST OF  GOOD SOLD**  |       | —      |         | —     |       |
| ** **              |       |        |         |       |       |
| **GROSS  PROFIT**       |       | —      |         | —     |       |
| ** **              | ** ** | ** **  | ** **   | ** ** | ** ** |
| **EXPENSES:**           | ** ** | ** **  | ** **   | ** ** | ** ** |
| Accounting Fees         |       | 1,495       |         | —     |       |
| Interest Expense        |       | 13,450      |         | 10,559     |       |
| Lodging and  Travel     |       | 47,492      |         | 59,076     |       |
| Office Expense          |       | 38,230      |         | 25,682     |       |
| **Total  Expenses**     | ** ** | **100,667** | ** **   | **95,317** | ** ** |
| ** **              | ** ** | ** **  |         | ** ** | ** ** |
| **NET  INCOME/(LOSS)**  | ** ** | **$**       | **(100,667** | **)**      | **$**      | **(95,317** | **)** |
| ** **              |       |        |         |       |       |
|                    |       |        |         |       |       |
| **Earnings per Share:** |       |        |         |       |       |
| ** **              | ** ** | ** **  | ** **   | ** ** | ** ** |
| **Basic**               | ** ** | **$**       | **(0.02**    | **)**      | **$**      | **(0.02** | **)** |
|                    |       |        |         |       |       |
| ***Fully Diluted**      | ** ** | **$**       | **—**   | ** ** | **$**      | **—** | ** ** |

----

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

Theaccompanying notes are an integral part of these financial statements

F-3

----

 

**Bancorp International Group, Inc.Statement of Changes in Cash FlowFor the Year Ended December 31,**
| ** **                                                                   | ** ** | **2004**    | ** ** | **2003**    | ** ** |
|------------------------------------------------------------------------------|------------|-------------|------------|-------------|------------|
| **Cash flow from operating  activities:**                                    |       |        |       |        |       |
|                                                                         |       |        |       |        |       |
| Net Income / (Loss)                                                          |       | $           | (100,667   | )           | $          | (95,317 | ) |
|                                                                         |       |        |       |        |       |
| Non Cash Adjustments:                                                        |       |        |       |        |       |
| Prior Year adjustment for interest                                           |       | —      |       | —      |       |
| Adjustments to  reconcile net loss to net cash used in operating activities: |       |        |       |        |       |
| Increase in Accounts Payable                                                 |       | 13,450      |       | 10,559      |       |
| **Net cash flow provided from  operating activities:**                       | ** ** | **(87,217** | **)**      | **(84,758** | **)**      |
| ** **                                                                   |       |        |       |        |       |
| **Cash flow from investing  activities:**                                    |       |        |       |        |       |
| Stockholder Loans                                                            |       | 87,217      | ** ** | **84,758**  | ** ** |
| **Net cash flow used in investing  activities:**                             | ** ** | **87,217**  | ** ** | **84,758**  | ** ** |
| ** **                                                                   |       |        |       |        |       |
| **Cash flow from financing  activities:**                                    |       |        |       |        |       |
| Proceeds from conversion of Stockholder debt to  common stock                |       | —      |       | —      |       |
| **Net cash flow from financing  activities:**                                |       | —      |       | —      |       |
|                                                                         |       |        |       |        |       |
| Net increase in  cash flow                                                   |       | —      |       | —      |       |
| Beginning Cash                                                               |       | —      |       | —      |       |
| **Ending  Cash**                                                             |       | $           | —     |        | —     |   |
|                                                                         |       |        |       |        |       |
| Supplemental  disclosures by financing activiites                            |       | $           | —     |        | —     |   |
|                                                                              |            |             |            |             |            |  |  |

 

The accompanying notes are an integralpart of these financial statements

F-4

----

 

**Bancorp International Group, Inc.Statement of Stockholders’ Equity**
| ** **                                                                                  | ** ** | **Shares**    | ** ** | **Par** | ** ** | **PIC**       | ** ** | **Accumulated  Deficit** | ** ** | **Total**    | ** **     |
|---------------------------------------------------------------------------------------------|------------|---------------|------------|---------|------------|---------------|------------|--------------------------|------------|--------------|----------------|
| **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 Loss                                                            |       |          |       |    |       |          |       | (95,317                  | )          | (95,317      | )              |
| **Balance  December 31, 2003**                                                         | ** ** | **4,030,078** | ** ** | **403** | ** ** | **3,792,314** | ** ** | **(4,376,681**           | **)**      | **(583,964** | **)**          |
| December 31,  2004 Net Loss                                                            |       |          |       |    |       |          |       | (100,667                 | )          | **(100,667** | **)**          |
| **Balance December 31, 2004**                                                          | ** ** | **4,030,078** | ** ** | **$**   | **403**    | ** **    | **$**      | **3,792,314**            | ** ** | **$**        | **(4,477,348** | **)** | **$** | **(684,631** | **)** |
|                                                                                             |            |               |            |         |            |               |            |                          |            |              |                |  |  |  |  |

 

The accompanying notes are an integralpart of these financial statements

F-5

----

 

BANCORP INTERNATIONALGROUP, INC.NOTES TO FINANCIAL STATEMENTSYears Ended December 31, 2004 and December 31, 2003

1.                                                                                       THECOMPANY

N.E.C. Properties, Inc. (“NEC”)was incorporated on September 16, 1995, under the laws in the State ofNevada. 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 25,000 authorizedcommon stock, for $1,860 in cash. On November 19, 1998 the State of Nevadaapproved NEC’s restated Articles of Incorporation, which increased their authorizedcommon shares from 25,000 to 25,000,000, and established a par value of $.001per share of common stock. In addition, in November 1998 NEC approved a forwardstock split of 100:1, thus increasing the number of then outstanding commonshares to 1,860,000. In addition, at that time the Company also authorized a 1.77for 1 forward stock split in anticipation of merger transaction with March IndyInternational, Inc. (“March” or “March Indy”). The previously issued 1,860,000common 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 reverse acquisitionunder the purchase method for business combinations, and accordingly the transactionhas been treated as a recapitalization of March, with March as the acquirer.The shares issued in the Transaction were treated as being issued for cash andhave been shown as outstanding for all periods presented in the same manner asfor 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 intendedto engage in the business of designing, building and racing motor cars forFormula One, Cart and Indy competition both in the United States and abroad. March hasalso planned to develop an Internet website in order to merchandise products relatedto its racing efforts. From the time of its inception March had been a developmentstage enterprise through September 30, 2000. Subsequent to September 30,2000, the management of March determined that due to the inability to successfullyorganize an Indy car race team and to compete in the Indianapolis 500 in the secondquarter of the year ended December 31, 2000, that the Company’s operations,as intended, would cease to operate. Due to the cessation of operations,management has determined that they are no longer a development stageenterprise commencing from the third quarter ended September 30, 2000.

F-6

----

 

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

The Company is subject tothe reporting obligations under Section 12(g)of the Securities ExchangeAct of 1934. The Company has not complied with the reporting obligations since December 31,2001. The Company is in the process of preparing all required quarterly andannual reports on Form 10-QSB and Form 10-KSB for filingto become current.

2.                                                                                       GOINGCONCERN

The accompanyingfinancial statements have been prepared assuming that the Company will continueas a going concern. The Company has incurred net losses of approximately$101,000 for the year ended December 31, 2004 and $95,000 for the yearended December 31, 2003. Additionally, the Company has no assets and hasworking capital deficiencies of approximately $685,000 and $584,000 at December 30,2004 and December 31, 2003 respectively. These conditions raise substantialdoubt about the Company’s ability to continue as a going concern. Management’s planswith respect to these matters include restructuring its existing obligations, raisingadditional capital through future issuances of stock and or debentures, and to completea business acquisition for future operations. The accompanying financialstatements do not include any adjustments that might be necessary should theCompany be unable to continue as a going concern.

3.                                                                                       SIGNIFICANTACCOUNTING POLICIES

(a)                                  Useof Estimates - The preparation of financial statements in conformity withaccounting principles generally accepted in the United States of America requiresmanagement to make estimates and assumptions that affect the reported amountsof assets and liabilities and disclosure of contingent assets and liabilities atthe date of the financial statements and the reported amounts of revenue andexpenses during the reporting period. Critical estimates include management’s judgmentsassociated with: other asset valuations and accrued expenses. Actual results coulddiffer from those estimates.

(b)                                 LossPer Share - Basic earnings (loss) per share (“EPS”) is determined by dividing netloss for the period by the weighted average number of common shares outstandingduring the same period. Diluted EPS reflects the potential dilution that could occurif securities or other contracts to issue common stock were exercised or convertedinto common stock or resulted in the issuance of common stock, which would thenshare in the earnings of the Company. For the year ended December 31, 2002

F-7

----

 

the Company had no potentially dilutive instruments outstanding thatcould potentially be exercised or converted into common stock.

(c)                                  Impairmentof Long-Lived Assets - The Company reviews long-lived assets for impairment whenevercircumstances and situations change such that there is an indication that thecarrying amounts may not be recovered. The recoverability of assets held andused in operations is measured by a comparison of the carrying amount of the assetsto the future net cash flows expected to be generated by the assets. If suchassets are considered to be impaired, the impairment to be recognized ismeasured by the amount by which the carrying amount of the assets exceeds the fairvalue of the assets.

As of December 31, 2000all Long-Lived assets have been deemed impaired and written down to -0-.This expense was included in discontinued operations for the year ended December 31,2000.

(d)                                 FairValue of Financial Instruments — The Company’s financial instruments consistsof accounts payable and accrued expenses. The carrying amount of the financial instrumentsreported in the consolidated balance sheet approximates fair value based on theshort-term maturity of these instruments.

(e)                                  IncomeTaxes — The Company accounts for income taxes in accordance with Financial AccountingStandards Board (“FASB”) Statement of Financial Accounting Standards (“SFAS”) No. 109,“Accounting for Income Taxes.” The Company recognizes deferred tax assets and liabilitiesbased on the difference between the financial statement carrying amounts andthe tax bases of the assets and liabilities, using the effective tax rates inthe years in which the differences are expected to reverse. A valuation allowancerelated to the deferred tax asset is also recorded when it is probable thatsome or all of the deferred tax asset will not be realized. Income tax expense consistsof the tax payable for the period and the change during the period in deferredtax assets and liabilities.

The following is areconciliation of income tax expense computed using the statutory Federal ratefor the years ended December 31:

|                                                | ** ** | **2004**   | ** ** | **2003**   | ** ** |
|------------------------------------------------|------------|------------|------------|------------|------------|
| Income tax  benefit computed at statutory rate |       | $          | 4,477,348  |       | $          | 4,376,681 |   |
| Changes in  valuation allowance                |       | (4,477,348 | )          | (4,376,681 | )          |
| Provision for income  tax                      |       | —     |       | —     |       |
|                                                |            |            |            |            |            |  |  |

 

The Company has notrecorded a deferred tax asset as of December 31, 2004 or December 31,2003 due to not having filed their required corporate tax returns. Had suchreturns been filed a resultant deferred tax asset would have been recorded,with the establishment of a corresponding valuation allowance 

F-8

----

 

due to the probabilitythat some, or all, of the deferred tax asset will not be realized. In addition,due to this non-compliance, the Company is unaware if it has Net Operating Lossesthat it may use to off-set future income if they should complete an acquisitionin the future and achieve profitability.

(h)                                 RecentAccounting Pronouncements:

(i)                                     InDecember 2004, the FASB issued SFAS No. 153, “Exchanges of NonmonetaryAssets - an amendment for APB Opinion No. 29”. This statement amends APBOpinion No. 29 to eliminate the exception for Nonmonetary exchanges of similarproductive assets and replaces it with a general exception for exchanges of Nonmonetaryassets that do not have commercial substance. A Nonmonetary exchange hascommercial substance if future cash flows of the entity are expected to change significantlyas a result of the exchange. The provisions of SFAS No. 153 are effectivefor the Company’s year ended December 31, 2006. Management is currently evaluatingthe impact of the adoption of SFAS No. 153 on the Company’s consolidated financialposition, liquidity, or results of operations.

(ii)                                  InJune 2005, the FASB issued SFAS No. 154 “Accounting Changes and ErrorCorrections,” (“SFAS 154”), a replacement of APB Opinion No. 20, “AccountingChanges”, and SFAS No. 3 “Reporting Accounting Changes in Interim FinancialStatements.” SFAS 154 applies to voluntary changes in accounting principle and changesthe requirements for accounting for and reporting of a change in accounting principle.SFAS 154 requires retrospective application to prior periods’ financial statementof a voluntary change in accounting principle unless it is impracticable. SFAS154 is effective for accounting changes and corrections of errors made infiscal years beginning after December 15, 2005. Earlier application ispermitted for accounting changes and corrections of errors made occurring in fiscalyears beginning after June 1, 2005. The company will adopt SFAS 154effective December 15, 2005. SFAS 154 is not expected to have a significantimpact on the companies consolidated financial statements.

(iii)                               InMarch 2006, the FASB issued FASB Statement No. 156, this amends FASB StatementNo. 140. This Statement establishes, among other things, the accounting forall separately recognized servicing assets and servicing liabilities. ThisStatement amends Statement 140 to require that all separately recognized servicingassets and servicing liabilities be initially measured at fair value, if practicable.This Statement permits, but does not require, the subsequent measurement ofseparately recognized servicing assets and servicing liabilities at fair value.An entity that uses derivative instruments to mitigate the risks inherent inservicing assets and servicing liabilities 

F-9

----

 

is required to account for those derivative instruments at fair value. Underthis Statement, an entity can elect subsequent fair value measurement to accountfor its separately recognized servicing assets and servicing liabilities. Byelecting that option, an entity may simplify it’s accounting because this Statementpermits income statement recognition of the potential offsetting changes in fairvalue of those servicing assets and servicing liabilities and derivative instrumentsin the same accounting period. This Statement is effective for financial statementsfor fiscal years beginning after September 15, 2006. Earlier adoption ofthis Statement is permitted as of the beginning of an entity’s fiscal year, providedthe entity has not yet issued any financial statements for that fiscal year.Management believes this Statement will have no impact on the financial statementsof the Company once adopted.

4.                                       SUBSEQUENTEVENTS

(a)                                  InAugust 2005, the Company became aware of the unauthorized issuance of approximately243,842,000 shares of the Company’s common stock (the “Wrongfully Issued Shares”)to various entities and individuals for services and gifts, whereupon theseentities and individuals attempted to sell the Wrongfully Issued Shares on theopen market. As per members of management of the Company, they are not awareof, nor do they have any related activities with these entities andindividuals.

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 theCompany alleged that one of the Defendants individually and through variousaffiliated entities and co-conspirators, including another Defendant, preparedor possessed 20 or more common stock certificates purportedly representing 235,000,000common stock shares of the Company, the previously referred to Wrongfully IssuedShares, which were distributed to various individuals and entities, includingother Defendants. Two financial service firms intervened in the Civil Litigation(the “Interveners”) and alleged that the Company negligently hired theDefendants and negligently supervised their actions and activities, and assertedOklahoma and federal securities fraud and failure-to-register claims against theDefendants and the Company.

In conjunction with theCivil Litigation, the Company reached an agreement with one of the Interveners,whereby the Company delivered 25,075,000 common stock shares to one of the Intervenersto be held pending settlement or conclusion of the Civil Litigation. Theseshares were delivered to the Intervener to satisfy the requirements ofDepository Trust Company (“DTC”) 

F-10

----

 

until common stock shareseligible to be resold without restriction could be delivered by the Intervener tocover its short position in the Company’s common stock. Furthermore, the Intervenerplaced in trust $72,500 to be used to pay the costs of registering the 25,075,000common stock shares under the Securities Act of 1933, as amended (the “SecuritiesAct”), and the applicable state securities laws in the event that registrationwas 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 upon theCompany and some of Defendants (the “Settling Defendants”) and the Interveners withan effective date of December 8, 2005.

In accordance with theSettlement Agreement, the Company’s claims against the Settling Defendants andthe claims of the Settling Defendants against the Company were resolved by theexchange of release of claims, a release of the Wrongfully Issued Shares and paymentsto the Company in the aggregate sum of $171,546 from funds held by one of theInterveners and the further agreement to pay an additional $277,093. Furthermore,the claims of the Interveners against the Company were exchanged for theissuance of 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 the Intervenersin satisfaction of their short positions with vendors through which securities purchaseand sale transactions are cleared on behalf of the Interveners. The Newly IssuedShares were issued in accordance with the registration exemption afforded underSection 3(a)(10) of the Securities Act of 1933.

In addition, some of theSettling Defendants agreed to indemnify and hold harmless the Company against allactions, suits, proceedings, demands, and assessments brought by any past, presentor future holder of the shares of common stock of the Company in connection withthe Settlement Agreement and the various claims of the Company settled in theSettlement Agreement and any associated judgments, attorney’s fees, costs and expenses.

Two of the Defendants, didnot execute or participate in the Settlement Agreement and accordingly did notsettle the claims asserted against them in the Civil Litigation (“Non-Settling Defendants”).The Company was granted judgments against the Non-Settling Defendants and the Companyis negotiating settlements of the judgments with the Non-Settling Defendants, theoutcome of which is uncertain as of the date of this report.

F-11

----

 

(b)                                 Inregard to the above situation, of the unauthorized issuance of common shares,the Company authorized the following:

·                                          OnAugust 19, 2005, the Company’s Board of Directors approved and adoptedCertificate of Designation Preferences and Right of Preferred Stock (the “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 (the“Series A Preferred Stock”).

The holders of shares ofthe Series A Preferred Stock have the right, at their option, to convert theSeries A Preferred Stock into shares of the Company’s common stock at a ratioof 1 share of Series A Preferred for 100 shares of common stock. The Series APreferred are entitled to receive dividends of every kind declared and paid toholders of the Company’s common stock, at a rate equal to the set conversionrate of 1:100. In addition, the Preferred A have a right to have their sharesadjusted in the event of future issuances of common shares that would have adilutive effect on the Preferred A. The Preferred A have voting rights equal tothe number of shares of common stock that the Preferred A are convertible into,whether or not converted. In the event of the Company’s liquidation ordissolution or winding up, voluntary or involuntary, the holders of the outstandingSeries A Preferred Stock will be entitled to receive liquidation benefitsidentical to those received by holders of common stock, provided that eachshare of the Series A Preferred Stock will be treated as if equal to 100shares of common stock.

·                                          OnAugust 21, 2005, the Company amended their Articles of Incorporation. Thisamendment increased the number of our authorized shares of common stock from 25,000,000to 500,000,000 and reduced the par value to $0.0001, and authorized 15,000,000 sharesof preferred stock, par value of $0.0001. The holders of 90.8% of theoutstanding common stock shares approved this amendment at a shareholders meetingheld 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 the outstandingcommon stock shares approved this amendment at a shareholders meeting held on August 19,2005.

(c)                                  OnJanuary 4, 2006, the Company’s Board of Directors authorized thefollowing:

·                                          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 

F-12

----

 

Executive Officer. These costs consisted of $33,000 paid to consultantsfor professional services including accounting and legal services and $3,925for travel expenses. The shares represented payment in full for the aboveexpenses and had a market value of $25,123, the difference between market valueand the total 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 anoutstanding value 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)                                 TheCompany has been informed by the US Securities and exchange Commission (the “Commission”)that the Commissions intends to institute proceedings against the Company pursuantto Section 12(j) of the Securities Act of 1934 (the “Exchange Act”). The Commissionis alleging violations of Section 13(a) of the Exchange Act and Rules 13a-1and 13a-13 there under, to determine whether the Exchange Act registrationof the Company’s common stock should be suspended or revoked.

The Company is currently inthe process of curing the above violations. The Company has not determined whateffect to the Company, or its shareholders, will result if the Company is unableto cure these violations.

(e)                                  Duringthe year ended December 2005, the management of the Company has pursuedbusiness opportunities in the energy sector. As of December 31, 2005 no definitiveagreements have been reached with regard to potential acquisitions.

F-13

----