** **

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

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**FORM 10-KSB**

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

**For the fiscal year ended December 31,2002**

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

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**Commission File Number: 000-25261**

**BANCORPINTERNATIONAL GROUP, INC.**(formerly March IndyInternational, Inc.)(Name of smallbusiness issuer in its Charter)

** **

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

 

**3126South Boulevard, Suite 264****Edmond, Oklahoma 73013**(Address of principal executive offices)

**(405) 235-8318**(Issuer’s telephone number)

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

Securitiesregistered under Section 12(g) of the Exchange Act: Common Stock, $0.0001 Par Value

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Checkwhether the issuer (1) filed all reports required to be filed by Section 13or 15(d) of the Exchange Act during the past 12 months (or for suchshorter period that the registrant was required to file such reports), and (2) hassubject to such filing requirements for the past 90 days.   Yes o   No x

Checkif there is no disclosure of delinquent filers in response to Item 405 ofRegulation S-B is not contained in this form, and no disclosure will becontained, to the best of registrant’s knowledge, in definitive proxy orinformation statements incorporated by reference in Part III of this Form 10-KSBor any amendment to this Form 10-KSB. x

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

Theissuer did not generate any revenue for the year ended December 31, 2002.

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.

 

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**BANCORP INTERNATIONAL GROUP, INC.****(formerly March Indy International, Inc.)****FORM 10-KSB****For the Fiscal Year Ended December 31,2002**

**TABLE OF CONTENTS**

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

 

**CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION**

         Certain statements in this reportconstitute “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 of forward-lookingterminology such as “anticipates,” “believes,” “expects,” “may,” “will,” or “should”or other variations thereon, or by discussions of strategies that involve risksand uncertainties. The actual results or industry results may be materiallydifferent from any future results expressed or implied by such forward-lookingstatements.

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

2

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**PART I**

**Item 1.Description of Business**

**Overview**

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

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

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

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

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

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

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

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

**Employees**

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

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**ADDITIONALFACTORS THAT MAY AFFECT OUR FUTURE RESULTS**

Thefollowing factors and the matters discussed below and elsewhere in this reportshould be considered when evaluating our business operations and strategies.Additionally, there may be other risks and uncertainties that we are not awareof or that we currently deem immaterial, which may become material factorsaffecting our operations and business success. Many of the factors are notwithin our control. We provide no assurance that one or more of these factorswill 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 of additionalstock or other equity securities on terms that are highly dilutive to our shareholders.

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

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

Wehave not realized any revenue from our operations and have incurred substantiallosses resulting in an accumulated deficit at December 31, 2002, of$4,181,094. In addition, we will continue to incur losses attributable to theadministrative costs associated with a “blank check, publicly-held shellcompany.” See “Item 6. Management’s Discussion and Analysis or Plan ofOperation.”

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

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

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

Inconnection with a business enterprise we undertake, we may enter into variouscost and revenue sharing arrangements, including joint ventures andpartnerships, intended to complement or expand the business activities. We maynot realize the anticipated benefits offered by these arrangements. The costsof obtaining these sharing arrangements may increase our invested cost in thebusiness activities without providing a correlating increase in the revenues;thus, adversely affecting the financial potential of the business activities.

4

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

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

·                                      changes inlocal regulatory requirements;

·                                      changes inthe laws and policies affecting trade, investment and taxes (including laws 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.

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

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

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

·                                      variationsin quarterly operating results of the enterprise,

·                                      changes inearnings estimates by analysts,

·                                      developmentof competition within the industry, and

·                                      generalstock market conditions.

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

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

·                                      theover-the-counter securities are subject to substantial and sudden priceincreases and 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

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**Our common****stock****is subject to the penny stock trading rules whichmay adversely affect the ability to resell the stock.**

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

·                                      is onlylisted in “pink sheets” or on the NASD OTC Bulletin Board,

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

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

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

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

·                                      the abilityto resell our common stock, and

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

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

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

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

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

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

**Item 2. Description of Property**

**Facilities**

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

6

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**Item 3. Legal Proceedings**

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

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

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

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

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

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

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

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

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

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

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

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

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

 

**PART II**

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

**Lack of Market**

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

Thefollowing table presents the range of high and low bid prices per common stockshare for the quarterly periods presented. The bid prices reflect inter-dealerprices, without mark-ups, mark-downs or commissions and may not present theactual price paid for the shares.

 
| **Quarter Ended:** | ** ** | **Common Stock Bid   Prices** | ** ** |
|-------------------------|------------|-----------------------------------------|------------|
| ** **              | ** ** | **Low**                                 | ** ** | **High** | ** ** |
| March 31,  2006    |       | $                                       | 0.0001     |   | $ | 0.0030 |   |
|                    |       |                                    |       |   |   |
| December 31,  2005 |       | $                                       | 0.0010     |   | $ | 0.0200 |   |

 

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

 

**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 ownersof our common stock.

**Repurchase of Equity Securities**

We did not repurchase any of our commonstock shares during 2002.

**SecuritiesAuthorized for Issuance under Equity Compensation Plans**

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

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| **Plan category**                                           | ** ** | **Number of  Securities to be**

**issued upon  exercise of  outstanding  options, warrants  and rights** | ** ** | **Weighted-average  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                                                                                                                                      |       |                                                                                                        |       | —                                                                                                                              |       |
|                                                                  |            |                                                                                                                                              |            |                                                                                                             |            |                                                                                                                                     |            |  |

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

**SecuritiesSold Pursuant to Private Placement Offering**

During2002, we did not sell any securities pursuant to private placement.

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

**Discontinued Operations**

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

**Operations**

Ouroperations for the years ended December 31, 2001 and 2002 were primarilyof a corporate nature including legal, accounting and general corporateadministrative matters. We did not conduct any business enterprise activitiesduring 2001 and 2002.

**Going Concern**

Asindicated in the notes to the financial statements included elsewhere in thisreport, the financial statements have been prepared assuming that we willcontinue as a going concern. In the year ended December 31, 2002 weincurred a net loss of approximately $45,202. In addition, at December 31,2002 and 2001, we had no assets and working capital deficiencies ofapproximately $218,000 and $277,000, respectively. These conditions raisesubstantial doubt about our ability to continue as a going concern. Our planswith respect to these matters include restructuring our existing obligations,raising additional capital through issuances of stock or debentures, and tocomplete a business acquisition for future operations. The accompanyingfinancial statements do not include any adjustments that might be necessary inthe event we are unable to continue as a going concern.

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**12-Month Overhead Budget**

Our budgeted overhead expenses for the 12 monthsending 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 not have any capital commitments.We neither have any plans to raise additional funds during the next 12 months.

**CautionaryStatement Relating to Forward Looking Information**

Wehave included some forward-looking statements in this section and other places inthis report regarding our expectations. These forward-looking statements involveknown and unknown risks, uncertainties and other factors which may cause our actualresults, levels of activity, performance or achievements, or industry results, tobe materially different from any future results, levels of activity,performance or achievements expressed or implied by these forward-looking statements.Some of these forward-looking statements can be identified by the use offorward-looking terminology including “believes,” “expects,” “may,” “will,” “should”or “anticipates” or the negative thereof or other variations thereon or comparableterminology, or by discussions of strategies that involve risks anduncertainties. You should read statements that contain these words carefullybecause they:

·                                      discuss ourfuture expectations;

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

·                                      state other “forward-looking”information.

Webelieve it is important to discuss our expectations; however, it must berecognized that events may occur in the future over which we have no controland which we are not accurately able to predict. Readers are cautioned toconsider the specific business risk factors described in the report and not toplace undue reliance on the forward-looking statements contained herein, whichspeak only as of the date hereof. We undertake no obligation to publicly reviseforward-looking statements to reflect events or circumstances that may ariseafter the date of this report.

**Item 7. Financial Statements**

Ourfinancial statements which are prepared in accordance with Regulation S-B areset forth in this report beginning on page F-1.

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

Therehave been no disagreements concerning matters of accounting principle orfinancial statement disclosure between us and our independent accountants.

11

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

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

Furthermore,Mr. Megas, our Chief Executive Officer and Acting Chief Financial Officer,is responsible for the design and supervision of our internal controls overfinancial reporting that are then effected by and through our board ofdirectors, management and other personnel, to provide reasonable assuranceregarding the reliability of our financial reporting and the preparation offinancial statements for external purposes in accordance with generallyaccepted accounting 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 acceptedaccounting principles, and that our receipts and expenditures are being madeonly in accordance 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.

OurChief Executive Officer and Acting Chief Financial Officer, based upon hisevaluation of the effectiveness of our disclosure controls and procedures andthe internal controls over financial reporting as of the last day of the periodcovered by this report, concluded that our disclosure controls and proceduresand internal controls over financial reporting were fully ineffective as of thelast day of the period covered by this report and reported to our auditors andboard of directors that there are no controls and procedures and internalcontrol over financial reporting during the period covered by this report andthat all of which materially affect or is reasonably likely to materiallyaffect our disclosure controls and procedures or internal control overfinancial reporting. In conducting their evaluation of our disclosure controlsand procedures and internal controls over financial reporting, these executiveofficers did not discover any fraud that involved management or other employeeswho have a significant role in our disclosure controls and procedures andinternal controls over financial reporting. Furthermore, although thedisclosure controls and procedures and internal controls over financialreporting were deficient and absent, there were no changes made in ourdisclosure controls and procedures, internal controls over financial reporting,or other factors that would eliminate the deficiencies in our disclosurecontrols and procedures or internal controls over financial reportingsubsequent to the date of their evaluation. Although significant deficienciesor material weaknesses existed, no corrective actions were taken to correctsignificant deficiencies and material weaknesses in our internal controls anddisclosure controls and procedures because of the lack of required financialresources to correct such deficiencies and weaknesses.

**Item 8B. Other Information**

Allreports on Form 8-K required to be filed during the three monthsended December 31, 2002,2003, 2004 and 2005 has been previously reportedon Form 8-K.

12

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**PART III**

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

Setforth below is certain information with respect to our executive officer anddirectors. Directors are generally elected at the annual shareholders’ meetingand hold office until the next annual shareholders’ meeting and until theirsuccessors are elected and qualify. Executive officers are elected by the Boardof Directors 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                                                                                                      |

 

Thefollowing is a brief description of the business background of our executiveofficers and directors:

ThomasMegas is one of our founders and has served as President, Chief ExecutiveOfficer and a member of the Board of Directors since inception, and also servesas Chairman of the Board of Directors (since June 5, 2001) and our ActingChief Financial Officer. From 1992 to 1998, Mr. Megas served as Directorof March Europe and as consultant to companies in the design anddevelopment of racing cars in Formula One and other Formula One competitors. Mr. Megashas previously been involved in hotel ownership and commercial real estatedevelopment in Europe from 1991 to 1999. Mr. Megas earned his B.A. fromLondon University in 1962 in Banking and Finance and his M.B.A. from theWharton School of the University of Pennsylvania in 1969.

MartinDuffy has served as one of our Directors since November 1999. He has beeninvolved in auto racing chassis design and construction since 1992 when hebecame a Director of March, Europe. Mr. Duffy is a banker by professionand from 1990 to 1995 was a Director of RA Coleman International, aninvestment-banking group in the U.K. From 1961 to 1981, Mr. Duffy servedas Bank Manager and Financial Consultant for National Westminster Bank PLC. Mr. Duffycompleted his education in Banking with National Westminster Bank in 1960.

**Director Compensation**

Wedo not compensate Directors for serving on our Board of Directors or attendingmeetings of the Board or any committee of the Board. Directors who are also ouremployees receive no additional compensation for serving as directors. Wereimburse our directors for travel and out-of-pocket expenses in connectionwith their attendance 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, directorsand greater than 10% shareholders are required to furnish us with copies of allSection 16(a) forms they file.

Webelieve that each person who, at any time during 2002 through 2005, was adirector, executive officer, or beneficial owner of more than 10% of our commonstock failed to comply with the filing requirements of Section 16(a).

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**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**

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

The agreement with Mr. Megas had an initialterm of three years that was extendable by agreement for an additional two-yearterm and then additional one-year terms thereafter. The agreement provided forcompensation to begin June 1, 2000 at a rate of $250,000 to be increasedby $125,000 after the first year, by an additional $225,000 after the secondyear and after the third year by ten percent (10%) per year increasesthereafter. Pursuant to the agreement, Mr. Megas was granted stock optionsexercisable for the purchase of 400,000 shares of our common stock for $1.00 per share. These options wereexercisable for the purchase of 100,000 shares on June 1, 2000, 50,000shares on November 30, 2000, 50,000 shares on May 31, 2000, 50,000shares 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**

Oursuccess depends to a significant degree upon the efforts, contributions andabilities of our management. The loss of the services of Thomas Megas couldhave a material adverse effect on our ability to engage in future businessactivities. We do not maintain any insurance covering the disability or life ofour executive officers and directors.

**Equity Compensation Plans**

Other than the grant of stock options pursuant to the employment agreementwith Thomas Megas, we have not established or entered into any equitycompensation plans. For information related to our common stockauthorized for issuance under equity compensation plans, see Item 5. Market forCommon Equity and Related Stockholder Matters.

14

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**DirectorLiability and Indemnification**

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

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

**Item 11.Security Ownership of Certain Beneficial Owners and Management and RelatedStockholder Matters**

**Securities Authorized for Issuance under Equity CompensationPlans**

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

**Security Ownership of Certain Beneficial Owners andManagement**

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

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

15

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| ** **                                                        | ** ** | **Shares**                 | ** ** | ** **                | ** ** |
|-------------------------------------------------------------------|------------|----------------------------|------------|---------------------------|------------|
| **Name and Address of Beneficial Owner** | ** ** | **Beneficially  Owned(1)** | ** ** | **Ownership  Percent(2)** | ** ** |
| Executive Officers and Directors as a group (two individuals)(6)  |       | 1,001,997,905              |       | 80.16                     |       |

----

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

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

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

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

(5)                                Mr. Duffyis one of our Directors.

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

**Item 12.Certain Relationships and Related Transactions**

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

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

On January 6, 2006 we issued 7,500,000shares of our Series  A Preferred  Stock  to  Mr. Megas  as settlement of our $223,247 indebtednessowed to Mr. Megas that was incurred during 2000 through 2005. The sharesof the Series A Preferred Stock issued to Mr. Megas were recorded ata value of 1,500,000 based upon the market value of the 750,000,000 shares ofcommon stock into which the Series A Preferred Stock shares areconvertible.

On January 6, 2006, we issued7,500,000 shares of our Series A Preferred Stock to Stewart Sytner in reimbursementof $232,272 of costs and expenses incurred by Mr. Sytner on our behalfduring the 2000 through 2005. The shares of the Series A Preferred Stockissued to Mr. Sytner were recorded at a value of 1,500,000 based upon themarket value of the 750,000,000 shares of common stock into which the Series APreferred Stock shares are convertible.

We believe that the transactionsdescribed above were on terms no less favorable to us than could have beenobtained with unrelated third parties.

**Item 13.Exhibits**

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

16

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

** **

**Item 14. Principal Accountant Feesand Services**

**Fees for Independent Auditors**

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

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

Audit Fees. — Total audit fees for 2002 have notbeen determined, but are estimated to total $5,000.

Tax Fees. — The fees billed for tax services forthe year ended December 31, 2002 was approxitmatly $1,000.

All Other Fees. — We do not anticipate engagingLieberman and Associates PA for any other services other than those related tothe audit of our financial statements and providing of pre-approved taxservices.

Audit Committee Pre-Approval Procedures. — Rules andregulations of the Securities and Exchange Commission implemented in accordancewith the requirements of Sarbanes-Oxley Act of 2002 require audit committees ofcompanies reporting under and pursuant to the Securities Exchange Act of 1934to pre-approve audit and non-audit services. Our Board of Directors has notestablished an Audit Committee; the entire Board of Directors performs thefunctions of an Audit Committee. Acting in the capacity of an audit committeeour Board of Directors follows procedures pursuant to which audit,audit-related and tax services, and all permissible non-audit services, arepre-approved by category of service. Circumstances may arise that requireengagement of the independent public accountants for additional services notcontemplated in the original pre-approval. In those instances, we will obtainthe specific pre-approval of our Board of Directors acting in the capacity asan audit committee before engaging our independent public accountants. Theprocedures require our Board of Directors be informed of each service, and theprocedures do not include any delegation of our Board of Directorsresponsibilities to management. Our Board of

17

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Directorsacting in the capacity of an audit committee may delegate pre-approvalauthority to one or more of its members. The member to whom this authority isdelegated will report any pre-approval decisions to our Board of Directors atits next scheduled meeting.

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

18

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**SIGNATURES**

Inaccordance with Section 13 or 15(d) of the Exchange Act, theRegistrant caused this amended report to be signed on its behalf by theundersigned, thereunto duly authorized.
|        |   | BANCORP INTERNATIONAL, INC.    |
|--------|--------|--------------------------------|
|   |   | (Registrant)                   |
|   |   |                           |
|   |   | By:                            |   | /S/ THOMAS MEGAS |
|   |   | Thomas Megas                   |
|   |   | Chief Executive Officer        |
|   |   | President                      |
|   |   | Acting Chief Financial Officer |

 

Date: June 20,2006

Inaccordance with the Exchange Act, this report has been signed below by thefollowing persons on behalf of the Registrant and in the capacities and on thedates indicated.
| Signature        | ** ** | **Title**                       | ** ** | **Date**           |
|------------------|------------|---------------------------------|------------|--------------------|
|             |       |                            |       |               |
| /S/ THOMAS MEGAS |       | Chief Executive Officer         |       | June 20, 2006 |
| Thomas Megas     |       | President                       |       |               |
|             |       | Acting Chief Financial  Officer |       |               |
|             |       | Chairman of Board of  Directors |       |               |
|             |       |                            |       |               |
| /S/ MARTIN DUFFY |       | Director                        |       | June 20, 2006 |
| Martin Duffy     |       |                            |       |               |

 

 

19

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**Index toConsolidated Financial Statements**
| Report of Independent  Registered Public Accounting Firm - for the Year Ended December 31, 2002 |
|------------------------------------------------------------------------------------------------------|
|                                                                                                 |
| Balance Sheets                                                                                       |
|                                                                                                 |
| Statements of  Operations                                                                            |
|                                                                                                 |
| Statements of Shareholders’ Equity (Deficit)                                                    |
|                                                                                                 |
| Statements of Cash Flows                                                                             |
|                                                                                                 |
| Notes to Financial Statements                                                                        |

 

F-i

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**REPORT OFINDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**

TheBoard of Directors and StockholdersBancorp International Group, Inc.

Wehave audited the accompanying balance sheet of Bancorp International Group, Inc.as of December 31, 2002, and the related statements of operations,shareholders’ equity (deficit) and cash flows for the year then ended. Thesefinancial statements are the responsibility of the Company’s management. Ourresponsibility is to express an opinion on these financial statements based onour 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, evidencesupporting the amounts and disclosures in the financial statements. An auditalso includes assessing the accounting principles used and significant estimatesmade by management, as well as evaluating the overall financial statementpresentation. We believe that our audit provides a reasonable basis for ouropinion.

Inour opinion, the financial statements referred to above present fairly, in allmaterial respects, the financial position of Bancorp International Group, Inc.at December 31, 2001 and the results of its operations and its cash flowsfor the year then ended in conformity with accounting principles generallyaccepted 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 15,2006Ft. Lauderdale, Florida

F-1

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

 

The accompanyingnotes are an integral part of these financial statements

** **

F-2

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** **

**Bancorp International Group, Inc.Statement of OperationsFor the Year Ended December 31, 2002**

 
| **REVENUES**                         | ** ** | **$**      | **—**  | ** ** |
|--------------------------------------|------------|------------|-------------|------------|
| **COST OF GOOD SOLD**                | ** ** | **—** | ** **  |
| **GROSS PROFIT**                     | ** ** | **—** | ** **  |
| **EXPENSES:**                        |       |       |        |
| Accounting Fees                      |       | 36,935     |        |
| Inerest Expense                      |       | 8,267      |        |
| General and  Administrative Expenses |       | —     |        |
| **Total  Expenses**                  | ** ** | **45,202** | ** **  |
| **NET INCOME/(LOSS)**                | ** ** | **$**      | **(45,202** | **)**      |
| **Earnings  per Share:**             |       |       |        |
| **Basic**                            | ** ** | **$**      | **(0.01**   | **)**      |
| ***Fully  Diluted**                  | ** ** | **$**      | **—**  | ** ** |

** **

----

*** The FullyDiluted Earnings Per Share for the year ended December 31, 2002 isantidlutive and therefore not reflected in the financial statements.**

 

The accompanyingnotes are an integral part of these financial statements

 

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

 

The accompanying notes are an integralpart of these financial statements

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**BancorpInternational Group, Inc.Statement of Stockholders’ Equity**
| ** **                                                                                  | ** ** | **Shares**    | ** ** | **Par** | ** ** | **PIC**       | ** ** | **Retained  Earnings** | ** ** | **Total**     | ** **     |
|---------------------------------------------------------------------------------------------|------------|---------------|------------|---------|------------|---------------|------------|------------------------|------------|---------------|----------------|
| September 30,  1995                                                                    |       | 1,097,400     |       | $       | 110        |          | $          | 1,750                  |       |          |           | $ | 1,860 |   |
| **Balance December 31, 1998**                                                          | ** ** | **1,097,400** | ** ** | **110** | ** ** | **1,750**     | ** ** | **—**             | ** ** | **1,860**     | ** **     |
| Novmber 10, 1999 - Stock Merger with March Indy  Int’l                            |       | 2,568,858     |       | 257     |       | 3,121,611     |       |                   |       | 3,121,868     |           |
| Return of stock in exchage for release of Super Bike  Plans                                 |       | (53,009       | )          | (5      | )          | (65,773       | )          |                   |       | (65,778       | )              |
| December 31, 1999                                                                      |       |          |       |    |       |          |       | (157,000               | )          | —        |           |
| **Balance December 31, 1999**                                                          | ** ** | **3,613,249** | ** ** | **361** | ** ** | **3,057,589** | ** ** | **(157,000**           | **)**      | **2,900,950** | ** **     |
| Issue stock for services rendered by major  stockholders                                    |       | 277,940       |       | 28      |       | 344,862       |       | (344,890               | )          | —        |           |
| June 17, 2000 Convertion of Stockholder Debt                                           |       | 138,889       |       | 14      |       | 1,312,486     |       |                   |       | 1,312,500     |           |
| December 31, 2000                                                                      |       |          |       |    |       |          |       | (4,656,378             | )          | (4,656,378    | )              |
| **Balance December 31, 2000**                                                          | ** ** | **4,030,078** | ** ** | **403** | ** ** | **4,714,937** | ** ** | **(5,158,268**         | **)**      | **(442,928**  | **)**          |
| December 31, 2001                                                                      |       |          |       |    |       |          |       | (13,421                | )          | (13,421       | )              |
| **Balance December 31, 2001**                                                          | ** ** | **4,030,078** | ** ** | **403** | ** ** | **4,714,937** | ** ** | **(5,171,689**         | **)**      | **(456,349**  | **)**          |
| Prior Year Adjustments for reversal of expenses  deemed to be unrelated to the company.     |       |          |       |    |       |          |       | 12,904                 |       |          |           |
| Prior Period adjustment for compensation claimed in  FY 2000 in excess of fair market value |       |          |       |    |       | (922,623      | )          | 922,623                |       | —        |           |
| December 31, 2002                                                                      |       |          |       |    |       |          |       | (45,202                | )          | (45,202       | )              |
| **Balance  December 31, 2002**                                                         | ** ** | **4,030,078** | ** ** | **$**   | **403**    | ** **    | **$**      | **3,792,314**          | ** ** | **$**         | **(4,281,364** | **)** | **$** | **(501,551** | **)** |
|                                                                                             |            |               |            |         |            |               |            |                        |            |               |                |  |  |  |  |

 

The accompanyingnotes are an integral part of these financial statements

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BANCORP INTERNATIONALGROUP, INC.NOTES TO FINANCIAL STATEMENTSYears Ended December 31, 2002

1.                                                                THE COMPANY

                                                                         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. On September30, 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 the Company 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 hadintended to engage in the business of designing, building and racing motor carsfor Formula One, Cart and Indy competition both in the United States andabroad. March has also planned to develop an Internet website in order to merchandiseproducts related to its racing efforts. From the time of its inception March hadbeen a development stage enterprise through September 30, 2000. Subsequentto September 30, 2000, the management of March determined that due tothe inability to successfully organize an Indy car race team and to compete inthe Indianapolis 500 in the second quarter of the year ended December 31,2000, that the Company’s operations, as intended, would cease to operate. Dueto the cessation of operations, management has determined that they are nolonger a development stage enterprise commencing from the third quarter ended September 30,2000.

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During the quarter endedSeptember 30, 2001, March changed its name to Bancorp InternationalGroup, Inc. (“Bancorp”) in an attempt to effect a merger with a financialservice oriented business. Bancorp has not merged with any financial service business.Henceforth NEC, March or Bancorp are to be referred to as the “Company”, unlessreference is made to the respective company for reference to events surroundingtheir acquisition by the Company.

The Company is subjectto the 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

                                                                         Theaccompanying financial statements have been prepared assuming that the Companywill continue as a going concern. The Company has incurred net losses ofapproximately $43,741 for the year ended December 31, 2002. Additionally, theCompany has no assets and has working capital deficiencies of approximately $500,090at December 30, 2002. These conditions raise substantial doubt about theCompany’s ability to continue as a going concern. Management’s plans with respectto 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)             Use ofEstimates - 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)            Loss Per Share- Basic earnings (loss) per share (“EPS”) is determined by dividing net lossfor the period by the weighted average number of common shares outstanding duringthe 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

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                           the Companyhad no potentially dilutive instruments outstanding that could potentially beexercised 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 December31, 2000 all 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)            Fair Valueof Financial Instruments - The Company’s financial instruments consists ofaccounts 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)             Income Taxes— 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.

                           Thefollowing is a reconciliation of income tax expense computed using thestatutory Federal rate for the years ended December 31, 2002:

| Income tax benefit computed  at statutory rate |   | $          | 4,181,094 |   |
|------------------------------------------------|--------|------------|-----------|--------|
| Changes in  valuation allowance                |   | (4,181,094 | )         |
| Provision for income  tax                      |   | —     |      |

 

The Company has not recordeda deferred tax asset as of December 31,2002 due to not having filed theirrequired corporate tax returns. Had such returns been filed a resultantdeferred tax asset would have been recorded, with the establishment of acorresponding valuation allowance due to the probability that some, or all, ofthe deferred tax asset will not be realized. In

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addition, due to thisnon-compliance, the Company is unaware if it has Net Operating Losses that itmay use to off-set future income if they should complete an acquisition in thefuture and achieve profitability.

(h)            RecentAccounting Pronouncements:

(i)                SFAS No. 150- In May 2003, the FASB issued SFAS No. 150, “Accounting for Certain FinancialInstruments with Characteristics of both Liabilities and Equity.” SFAS No. 150establishes standards for classification and measurement in the statement offinancial position of certain financial instruments with characteristics ofboth liabilities and equity. It requires classification of a financialinstrument that is within its scope as a liability (or an asset in some circumstances).SFAS No. 150 is effective for financial instruments entered into ormodified after May 31, 2003, and otherwise is effective at the beginningof the first interim period beginning after June 15, 2003. The adoption ofSFAS No. 150 is not expected to have a material impact on the Company’s consolidatedfinancial position, results of operations or cash flows. 

(iii)          FIN 46 - In January 2003,as revised December 2003, the FASB issued FASB Interpretation No. 46, “Consolidationof Variable Interest Entities, an Interpretation of ARB No. 51.” FIN 46requires certain variable interest entities to be consolidated by the primary beneficiaryof the entity if the equity investors in the entity do not have the characteristicsof a controlling financial interest or do not have sufficient equity at therisk for the entity to finance its activities without additional financialsupport from other parties. FIN 46 is effective for the periods ending after December 15,2003 for certain types of entities and after December 15, 2004 for othertypes of entities. The Company is still evaluating the effects the adoption ofFIN 46 will have on its consolidated financial position, results of operationsor cash flows. 

(iv)         In December 2004,the FASB issued SFAS No. 153, “Exchanges of Nonmonetary Assets - an amendmentfor APB Opinion No. 29”. This statement amends APB Opinion No. 29 toeliminate the exception for Nonmonetary exchanges of similar productive assetsand replaces it with a general exception for exchanges of Nonmonetary assets thatdo not have commercial substance. A Nonmonetary exchange has commercial substanceif future cash flows of the entity are expected to change significantly as a resultof the exchange. The provisions of SFAS No. 153 are effective for theCompany’s year ended December 31, 2006. Management is currently evaluating theimpact of the adoption of SFAS No. 153 on the Company’s consolidated financialposition, liquidity, or results of operations.

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(vi)         In June 2005,the FASB issued SFAS No. 154 “Accounting Changes and Error Corrections,” (“SFAS154”), a replacement of APB Opinion No. 20, “Accounting Changes”, and SFASNo. 3 “Reporting Accounting Changes in Interim Financial Statements.” SFAS154 applies to voluntary changes in accounting principle and changes the requirementsfor accounting for and reporting of a change in accounting principle. SFAS 154requires retrospective application to prior periods’ financial statement of avoluntary change in accounting principle unless it is impracticable. SFAS 154is effective for accounting changes and corrections of errors made in fiscal yearsbeginning after December 15, 2005. Earlier application is permitted foraccounting changes and corrections of errors made occurring in fiscal years beginningafter June 1, 2005. The company will adopt SFAS 154 effective December 15,2005. SFAS 154 is not expected to have a significant impact on the companies consolidatedfinancial statements. 

(vii)      In March 2006, the FASB issued FASB StatementNo. 156, this amends FASB Statement No. 140. This Statement establishes,among other things, the accounting for all separately recognized servicing assetsand servicing liabilities. This Statement amends Statement 140 to require that allseparately recognized servicing assets and servicing liabilities be initially measuredat fair value, if practicable. This Statement permits, but does not require,the subsequent measurement of separately recognized servicing assets andservicing liabilities at fair value. An entity that uses derivative instrumentsto mitigate the risks inherent in servicing assets and servicing liabilities isrequired to account for those derivative instruments at fair value. Under this Statement,an entity can elect subsequent fair value measurement to account for its separatelyrecognized servicing assets and servicing liabilities. By electing that option,an entity may simplify it’s accounting because this Statement permits income statementrecognition of the potential offsetting changes in fair value of those servicingassets and servicing liabilities and derivative instruments in the same accountingperiod. This Statement is effective for financial statements for fiscal years beginningafter September 15, 2006. Earlier adoption of this Statement is permittedas of the beginning of an entity’s fiscal year, provided the entity has not yetissued any financial statements for that fiscal year. Management believes thisStatement will have no impact on the financial statements of the Company once adopted.

4.                                                                COMMON STOCK

On June 17, 2000the Company declared a one for three (1:3) reverse stock split, effective June 26,2000. The financial statements herein give retroactive effect to thistransaction.

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During the quarter endedMarch 31, 2000 the Company rescinded the issuance of 53,009 shares ofcommon stock (accounted for post 1:3 reverse stock split), resulting from anover allotment of shares to certain shareholders in connection with the reverseacquisition of March Indy in November 1999.

5.                                                                SUBSEQUENTEVENTS

(a)             In August 2005,the Company became aware of the unauthorized issuance of approximately 243,842,000shares of the Company’s common stock (the “Wrongfully Issued Shares”) tovarious 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”) until common stock shares eligible to be resoldwithout restriction could be delivered by the Intervener to cover its shortposition in the Company’s common stock. Furthermore, the Intervener placed intrust $72,500 to be used to pay the costs of registering the 25,075,000 common stockshares under the Securities Act of 1933, as amended (the “Securities Act”), andthe applicable state securities laws in the event that registration wasrequired.

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

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“Settlement Agreement”)became binding upon the Company and some of Defendants (the “Settling Defendants”)and the Interveners with an 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 the Intervenersand the further agreement to pay an additional $277,093. Furthermore, the claimsof the Interveners against the Company were exchanged for the issuance of25,025,000 shares of the Company’s common stock to one of the Interveners and219,723,000 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. 

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

—              On August 19,2005, the Company’s Board of Directors approved and adopted Certificate ofDesignation Preferences and Right of Preferred Stock (the “Certificate of Designation”).The Certificate 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 (the “Series APreferred 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

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a ratio of 1 share of Series APreferred for 100 shares of common stock. The Series A Preferred areentitled to receive dividends of every kind declared and paid to holders of theCompany’s common stock, at a rate equal to the set conversion rate of 1:100. Inaddition, the Preferred A have a right to have their shares adjusted in theevent of future issuances of common shares that would have a dilutive effect onthe Preferred A. The Preferred A have voting rights equal to the number ofshares of common stock that the Preferred A are convertible into, whether ornot converted. In the event of the Company’s liquidation or dissolution orwinding up, voluntary or involuntary, the holders of the outstanding Series A PreferredStock will be entitled to receive liquidation benefits identical to thosereceived by holders of common stock, provided that each share of the Series APreferred Stock will be treated as if equal to 100 shares of common stock. 

—              On August 21,2005, the Company amended their Articles of Incorporation. This amendment increasedthe number of our authorized shares of common stock from 25,000,000 to 500,000,000and reduced the par value to $0.0001, and authorized 15,000,000 shares of preferredstock, par value of $0.0001. The holders of 90.8% of the outstanding common stockshares approved this amendment at a shareholders meeting held on August 19,2005. 

—              On January 6,2006, the Company amended their Articles of Incorporation. This amendment increasedthe number of authorized shares of common stock, par value of $.0001, from 500,000,000to 2,000,000,000. The holders of 90.8% of the outstanding common stock sharesapproved this amendment at a shareholders meeting held on August 19, 2005.

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

·           251,231,084common stock shares to Thomas Megas in reimbursement of $36,925 of costsincurred by Mr. Megas on our behalf in his capacity as our Chairman andChief Executive Officer. These costs consisted of $33,000 paid to consultantsfor professional services 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.

·           7,500,000 sharesof Series A Preferred Stock to Mr. Megas as settlement of outstanding debtincurred by the Company to Mr. Megas, between the periods of January 1,2000 and December 31, 2005. The converted debt had an outstanding value of$223,247.

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

(d)            The Companyhas 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 iscurrently in the process of curing the above violations. The Company has not determinedwhat effect to the Company, or its shareholders, will result if the Company is unableto cure these violations.

(e)             During theyear ended December 2005, the management of the Company has pursued business opportunitiesin the energy sector. As of December 31, 2005 no definitive agreements have beenreached with regard to potential acquisitions.

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