UNITED STATES SECURITIES AND EXCHANGE COMMISSION

                              WASHINGTON, DC 20549

                                    FORM 10-Q

             Quarterly Report Pursuant to Section 13 or 15(d) of the
                         Securities Exchange Act of 1934

                    For Quarterly Period Ended: June 30, 2006

                        Commission File Number: 814-00716

                           INTERIM CAPITAL CORPORATION
                -------------------------------------------------
             (Exact name of registrant as specified in its charter)

            Nevada                                               02-0638350
           ---------                                            -------------
(State or Other Jurisdiction of                                 (IRS Employer
Incorporation or Organization)                               Identification No.)

         3960 Howard Hughes Parkway, Suite 500, Las Vegas, Nevada 89109
--------------------------------------------------------------------------------
               (Address of principal executive office) (zip code)

       Registrant's telephone number, including area code - (972) 745-3020

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such shorter  periods that the  registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days. Yes [X] No [ ]

Indicate  by check mark  whether  the  registrant  is an  accelerated  filer (as
defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [X]

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

The number of shares  outstanding of registrant's  common stock, par value $.001
per share, as of June 30, 2006 was 10,505,000 shares.



<PAGE>

                           Interim Capital Corporation

                                      INDEX
                                                                           Page
                                                                            No.
                                                                          ------

Part I     Financial Information (unaudited)

  Item 1.  Condensed Financial Statements

           Statements of Net Assets as of June 30, 2006 and
           December 31, 2005                                                   3
           Statements of Operations - For the Three Months Ended June 30,
           2006 and 2005                                                       4
           Statements of Operations - For the Six Months Ended June 30,
           2006 and 2005                                                       5
           Statements of Cash Flows - For the Six Months Ended June 30,
           2006 and 2005                                                       6
           Statements of Changes in Net Assets - For the Six Months Ended
           June 30, 2006 and 2005                                              7
           Schedule of Investments as of June 30, 2006                         8
           Financial Highlights                                                9
           Notes to Financial Statements                                      10

  Item 2.  Managements Discussion and Analysis of Financial Condition
           and Results of Operations                                          15
  Item 3.  Quantitative and Qualitative Disclosure about Market Risk          25
  Item 4.  Controls and Procedures                                            25

Part II    Other Information

  Item 1.  Legal Proceedings                                                  26
  Item 1A. Risk Factors                                                       26
  Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds        47
  Item 3.  Defaults Upon Senior Securities                                    47
  Item 4.  Submission of Matters to a Vote of Security Holders                47
  Item 5.  Other Information                                                  47
  Item 6.  Exhibits                                                           48

  Signatures
  Exhibits






                                       2
<PAGE>
<TABLE>
<CAPTION>

PART 1: FINANCIAL INFORMATION
ITEM 1: FINANCIAL STATEMENTS

                           Interim Capital Corporation
                       Condensed Statements of Net Assets
                       June 30, 2006 and December 31, 2005

                                                                      2006            2005
                                                                  ------------    ------------
                                                                   (Unaudited)
<S>                                                               <C>             <C>
ASSETS
Investments in unaffiliated portfolio companies (cost $67,112
  at June 30, 2006 and $66,112 at December 31, 2005)              $     64,950    $     66,112
Cash and cash equivalents                                                4,151          60,379
Advance to related party                                                 4,234            --
Federal income taxes receivable                                          1,910            --
Deferred income taxes                                                    4,385            --
Prepaid expenses and other assets                                         --             4,707
                                                                  ------------    ------------
  TOTAL ASSETS                                                          79,630         131,198
                                                                  ------------    ------------

LIABILITIES
  Accounts payable                                                        --              --
  Federal income taxes payable                                            --            11,353
                                                                  ------------    ------------
  TOTAL LIABILITIES                                                       --            11,353
                                                                  ------------    ------------
NET ASSETS                                                        $     79,630    $    119,845
                                                                  ============    ============

Commitments and contingencies

Composition of net assets:
  Common stock, $.001 par value, authorized 200,000,000 shares;
    10,505,000 shares issued and outstanding at
     June 30, 2006 and December 31, 2005                          $     10,505    $     10,505
  Additional paid in capital                                            51,175          51,175
  Accumulated earnings:
    Accumulated net operating earnings                                  19,377          58,165
    Net realized gain (loss) on investments, net of tax                   --              --
    Net unrealized appreciation (depreciation) of investments,
          net of deferred tax                                           (1,427)           --
                                                                  ------------    ------------
Net assets                                                        $     79,630    $    119,845
                                                                  ============    ============
Net asset value per share                                         $     0.0076    $     0.0114
                                                                  ============    ============
</TABLE>



See accompanying notes to condensed financial statements.


                                       3
<PAGE>
<TABLE>
<CAPTION>

                     Interim Capital Corporation
                  Condensed Statements of Operations
              Three Months Ended June 30, 2006 and 2005
                             (Unaudited)

                                                                             Prior to
                                                                            becoming a
                                                                             Business
                                                                           Development
                                                                             Company
                                                               2006            2005
                                                           ------------    ------------
<S>                                                        <C>             <C>
Revenue from operations:
  Consulting income                                        $       --      $    159,500
                                                           ------------    ------------
                                                                   --           159,500
Expenses and other income:
  Compensation and benefits                                        --             8,108
  Consulting expense                                               --            69,833
  Other general and administrative expense                        5,992           6,558
  Professional fees                                               4,226           3,801
  Travel and entertainment                                        8,681           2,703
  Gain on sale of investment                                       --            (8,100)
                                                           ------------    ------------
                                                                 18,899          82,903
                                                           ------------    ------------
Earnings (loss) before income taxes                             (18,899)         76,597
Income tax provision (benefit)                                   (3,095)         11,743
                                                           ------------    ------------
          Net earnings (loss) from operations                   (15,804)         64,854
                                                           ------------    ------------

Net unrealized gains on investments:
  Change in unrealized appreciation of investments
     net of deferred tax expense benefit of $735 in 2006         31,935            --
                                                           ------------    ------------
       Net realized and unrealized gains                         31,935            --
                                                           ------------    ------------
          Net increase in net assets from operations       $     16,131    $     64,854
                                                           ============    ============

Net increase in net assets from operations per share:
  Basic                                                    $     0.0015    $     0.0060
                                                           ============    ============
  Diluted                                                  $     0.0012    $     0.0046
                                                           ============    ============
Weighted average shares outstanding
  Basic                                                      10,505,000      10,826,000
                                                           ============    ============
  Diluted                                                    13,882,250      14,203,250
                                                           ============    ============
</TABLE>




See accompanying notes to condensed financial statements.


                                       4
<PAGE>
<TABLE>
<CAPTION>

                           Interim Capital Corporation
                       Condensed Statements of Operations
                     Six Months Ended June 30, 2006 and 2005
                                   (Unaudited)

                                                                        Prior to becoming a
                                                                        Business Development
                                                                              Company
                                                                   ------------------------------
                                                   February 15,    January 1, to
                                                   to June 30,      February 14,
                                                       2006             2006             2005
                                                  -------------    -------------    -------------
<S>                                               <C>              <C>              <C>

Revenue from operations:
  Consulting income                               $        --      $      40,000    $     187,700
                                                  -------------    -------------    -------------

                                                           --             40,000          187,700
Expenses and other income:
  Advertising                                              --              1,625              750
  Compensation and benefits                                --             20,424           17,090
  Consulting expense                                       --               --             90,500
  Other general and administrative expense                7,902            5,693           14,410
  Professional fees                                       6,203            4,663           13,451
  Travel and entertainment                               11,724           13,971           14,629
  Gain on sale of investment                               --               --             (8,100)
                                                  -------------    -------------    -------------

                                                         25,829           46,376          142,730
                                                  -------------    -------------    -------------
Earnings (loss) before income taxes
                                                        (25,829)          (6,376)          44,970
Income tax expense (benefit)
                                                         (3,957)          10,540            7,460
                                                  -------------    -------------    -------------
          Net earnings (loss) from operations
                                                        (21,872)         (16,916)          37,510
                                                  -------------    -------------    -------------

Net unrealized losses:
  Change in unrealized depreciation
      of investments net of deferred tax
      benefit of $735 in 2006
                                                         (1,427)            --               --
                                                  -------------    -------------    -------------
     Net unrealized losses
                                                         (1,427)            --               --
                                                  -------------    -------------    -------------
          Net increase (decrease) in net assets
               from operations                    $     (23,299)   $     (16,916)   $      37,510
                                                  =============    =============    =============

Net increase (decrease) in net assets from
  operations per share:
     Basic                                        $     (0.0022)   $     (0.0016)   $      0.0035
                                                  =============    =============    =============
     Diluted                                      $     (0.0022)   $     (0.0016)   $      0.0026
                                                  =============    =============    =============
Weighted average shares outstanding:
     Basic
                                                     10,505,000       10,505,000       10,826,000
                                                  =============    =============    =============
     Diluted
                                                     10,505,000       10,505,000       14,203,250
                                                  =============    =============    =============
</TABLE>

See accompanying notes to condensed financial statements.


                                       5
<PAGE>
<TABLE>
<CAPTION>

                           Interim Capital Corporation
                       Condensed Statements of Cash Flows
                     Six Months Ended June 30, 2006 and 2005
                                   (Unaudited)

                                                                               Prior to becoming a
                                                                               Business Development
                                                                                     Company
                                                                          ------------------------------
                                                          February 15,    January 1, to
                                                           to June 30,     February 14,
                                                              2006              2006            2005
                                                         -------------    -------------    -------------
<S>                                                      <C>              <C>              <C>
Cash flows from operating activities:
 Net increase (decrease) in net assets from operations   $     (23,299)   $     (16,916)   $      37,510
 Adjustments to reconcile net increase (decrease)
      in net assets from operations to net cash used
      in operating activities:
      Change in unrealized (appreciation) depreciation
        of investments in portfolio companies                    2,162             --               --
      Deferred income taxes                                     (4,835)            --               --
      Gain on sale of investments                                 --               --             (8,100)
      Changes in operating assets and liabilities:
        Accounts receivable                                     25,000          (25,000)            --
        Federal income taxes receivable                         (1,910)            --               --
        Deferred revenue                                          --               --            (80,000)
        Prepaid expenses and other assets                          473             --               (319)
        Accounts payable                                        (4,509)           4,509             --
        Federal income taxes payable                           (21,958)          10,605            2,991
                                                         -------------    -------------    -------------
          Net cash used in operating activities                (28,876)         (26,802)         (47,918)
                                                         -------------    -------------    -------------
Cash flows from investing activities:
  Investments in and advances to portfolio
     investment companies                                       (1,000)            --               --
  Collection of stock subscription receivable                     --               --             40,000
  Proceeds from sale of investment                                --               --             15,600
  Collection of note receivable                                   --               --             11,000
                                                         -------------    -------------    -------------
          Net cash used in investing activities                 (1,000)            --             66,600
                                                         -------------    -------------    -------------
Cash flows from financing activities:
          Net cash provided by financing activities               --               --               --
                                                         -------------    -------------    -------------
Net decrease in cash and cash equivalents                      (29,876)         (26,802)          18,682
Cash and cash equivalents, beginning of period                  33,577           60,379           33,531
                                                         -------------    -------------    -------------
Cash and cash equivalents, end of period                 $       3,701    $      33,577    $      52,213
                                                         =============    =============    =============

Supplemental Cash Flow Information:
     Income taxes paid                                   $      21,958    $        --      $        --
</TABLE>




See accompanying notes to condensed financial statements.


                                       6
<PAGE>
<TABLE>
<CAPTION>

                           Interim Capital Corporation
                  Condensed Statements of Changes in Net Assets
                     Six Months Ended June 30, 2006 and 2005
                                   (Unaudited)


                                                                               Prior to becoming a
                                                                               Business Development
                                                                                     Company
                                                                          ------------------------------
                                                          February 15,    January 1, to
                                                          to June 30,      February 14,
                                                              2006             2006             2005
                                                         -------------    -------------    -------------
<S>                                                      <C>              <C>              <C>
Changes in net assets from operations:
  Net earnings (loss) from operations                    $     (21,872)   $     (16,916)   $      37,510
  Net realized gain (loss) on sale of investments,
     net of related income taxes                                  --               --               --
  Change in net unrealized appreciation (depreciation)
     of investments, net of related deferred taxes              (1,427)            --               --
                                                         -------------    -------------    -------------
          Net increase (decrease) in net assets
               from operations                                 (23,299)         (16,916)          37,510
                                                         -------------    -------------    -------------

Capital stock transactions:
  Collection of stock subscription receivable                     --               --             40,000
                                                         -------------    -------------    -------------
    Net increase in net assets from stock transactions            --               --             40,000
                                                         -------------    -------------    -------------
Net increase (decrease) in net assets                          (23,299)         (16,916)          77,510
Net assets, beginning of period                                102,929          119,845           33,693
                                                         -------------    -------------    -------------
Net assets, end of period                                $      79,630    $     102,929    $     111,203
                                                         =============    =============    =============
</TABLE>



















See accompanying notes to condensed financial statements.

                                       7
<PAGE>
<TABLE>
<CAPTION>

                           Interim Capital Corporation
                             Schedule of Investments
                                  June 30, 2006
                                   (Unaudited)


                                                                                                    % of
              Date of                                                     Original     Fair          Net
 Shares     Acquisition                                                     Cost      Value        Assets
--------    -----------                                                   --------   --------     --------
<S>         <C>                                                           <C>        <C>          <C>

                COMMON STOCK IN UNAFFILIATED PORTFOLIO COMPANIES

112,500       Jul-04   Brinkman Outdoors, Inc. - sporting and
                       athletic goods                                     $    112   $  2,250            3%
  1,000       Dec-05   Chanticleer Holdings, Inc. - business
                       development company                                   1,000      1,250            2%

 65,000       Sep-04   Saguaro Holdings Corp - oil and gas
                       remediation and treatment                            65,000     60,450           76%

  1,000       Mar-06   Elitegroup Ventures Nevada, Inc. - real estate        1,000      1,000            1%
                                                                          --------   --------     --------
                       Total investments at June 30, 2006                 $ 67,112     64,950           82%
                                                                          ========
                       Cash and other assets, less liabilities                         14,680           18%
                                                                                     --------     --------
                       Net assets at June 30, 2006                                   $ 79,630          100%
                                                                                     ========     ========
</TABLE>















See accompanying notes to condensed financial statements

                                       8
<PAGE>
<TABLE>
<CAPTION>

                           Interim Capital Corporation
                              Financial Highlights
                     Six Months Ended June 30, 2006 and 2005
                                   (Unaudited)

                                                           2006            2005
                                                       -----------     -----------
<S>                                                    <C>             <C>
PER SHARE INFORMATION
 Net asset value, beginning of period                  $    0.0114     $    0.0032
 Net increase (decrease) from operations               $   (0.0038)    $    0.0034
 Net change in realized losses and unrealized
  depreciation of investments, net                     $   (0.0001)    $      --
 Net increase from stock transactions                  $    0.0001     $    0.0037
                                                       -----------     -----------
     Net asset value, end of period                    $     0.0076    $    0.0103
                                                       ===========     ===========

RATIOS/SUPPLEMENTAL DATA
 Net assets, end of period                             $    79,630     $   111,203

 Average net assets                                         99,738          72,448

 Ratio of expenses to average net assets                      25.9%          197.0%

 Ratio of net earnings (loss) to average net assets          -21.9%           51.8%
 Shares outstanding at end of period                    10,505,000      10,826,000
 Weighted average shares outstanding during period      10,505,000      10,826,000
</TABLE>





















See accompanying notes to condensed financial statements.

                                       9
<PAGE>

                           Interim Capital Corporation
                     Notes to Condensed Financial Statements
                                   (Unaudited)



NOTE 1:  DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION

BUSINESS AND OPERATIONS
Interim Capital  Corporation (the "Company") was incorporated  under the laws of
the state of Nevada on  November  12,  2002.  The  Company  was formed to assist
emerging companies in capital formation.

On February 14, 2006,  the Company  filed a  notification  on Form N54a with the
U.S. Securities and Exchange  Commission ("SEC"),  indicating its election to be
regulated as a business  development company under the Investment Company Act of
1940, as amended. Under this election, the Company has been organized to provide
investors with the opportunity to  participate,  with a modest amount in venture
capital,  in investments that are generally not available to the public and that
typically require substantially larger financial  commitments.  In addition, the
Company will  provide  professional  management  and  administration  that might
otherwise be unavailable to investors if they were to engage directly in venture
capital investing.

UNAUDITED CONDENSED INTERIM FINANCIAL STATEMENTS
Although  the nature of the  Company's  operations  and its  reported  financial
position,  results  of  operations,  and its cash flows are  dissimilar  for the
periods  prior to and  subsequent  to its becoming an  investment  company,  its
financial  position  for the six  months  ended  June 30,  2006  and year  ended
December 31, 2005, its operating results for the three and six months ended June
30,  2006 and 2005,  and its cash  flows and  changes  in net assets for the six
months ended June 30, 2006 and 2005, are presented in the accompanying condensed
financial  statements pursuant to Article 6 of Regulation S-X. In addition,  the
accompanying  footnotes,  although  different  in  nature  as  to  the  required
disclosures and information  reported therein, are also presented as they relate
to each of the above referenced periods.

Interim  financial   statements  are  prepared  in  accordance  with  accounting
principles  generally accepted in the United States (GAAP) for interim financial
information  and  pursuant to the  requirements  for  reporting on Form 10-Q and
Article 10 of Regulation  S-X.  Accordingly,  certain  disclosures  accompanying
annual financial statements prepared in accordance with GAAP are omitted. In the
opinion of management,  all adjustments,  consisting  solely of normal recurring
accruals,  necessary for the fair  presentation of financial  statements for the
interim periods have been included.  The current  period's results of operations
are not  necessarily  indicative of results that  ultimately may be achieved for
the year. The interim unaudited condensed financial statements and notes thereto
should be read in  conjunction  with the financial  statements and notes thereto
included in the  Company's  Form 10-KSB for the fiscal year ended  December  31,
2005, as filed with the Securities and Exchange Commission.





                                       10
<PAGE>

NOTE 2:  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

CONVERSION TO A BUSINESS DEVELOPMENT COMPANY
The operating  results for the three months ended June 30, 2006,  and the period
from February 15, 2006,  through June 30, 2006, reflect the Company's results as
a business  development  company  under the  Investment  Company Act of 1940, as
amended,  whereas the operating  results for the three and six months ended June
30, 2005, and the period from January 1, 2006 through February 14, 2006, reflect
the Company's results prior to operating as a business development company under
the Investment  Company Act of 1940, as amended.  Accounting  principles used in
the preparation of the financial statements for these two periods are different,
and  therefore,  the results of  operations  are not  directly  comparable.  The
primary  differences  in accounting  principles  relate to the carrying value of
investments - see corresponding sections below for further discussions.

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

NET INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS PER SHARE
The basic earnings  (loss) per share is calculated by dividing the Company's net
income (loss) available to common shareholders by the weighted average number of
common  shares  during  the  year.  The  diluted  earnings  (loss)  per share is
calculated  by dividing  the  Company's  net income  (loss)  available to common
shareholders by the diluted weighted average number of shares outstanding during
the year. The diluted weighted average number of shares outstanding is the basic
weighted number of shares adjusted each period for any potentially dilutive debt
or equity.

The Company has outstanding  options to acquire  3,555,000  shares of its common
stock at $.001 per  share,  which are used in  computing  diluted  earnings  per
share.

INCOME TAXES
The  Company  has  not  elected  to  be a  regulated  investment  company  under
Subchapter M of the Internal Revenue Code of 1986, as amended.  Accordingly, the
Company will be subject to U.S. federal income taxes on sales of investments for
which the fair values are in excess of their tax basis.

Income  taxes  are  accounted  for  using an asset and  liability  approach  for
financial reporting.  The Company recognizes deferred tax liabilities and assets
for the expected future tax  consequences of temporary  differences  between the
financial  statement carrying amount and the tax basis of assets and liabilities
and net operating loss and tax credit carry forwards.  Valuation  allowances are
established when necessary to reduce deferred tax assets to the amounts expected
to be realized.



                                       11
<PAGE>

CASH AND CASH EQUIVALENTS
For purposes of the statements of cash flows,  the Company  considers all highly
liquid  investments  purchased with an original maturity date of three months or
less to be cash equivalents. None of the Company's cash is restricted.

VALUATION OF INVESTMENTS (AS A BUSINESS DEVELOPMENT COMPANY)
As a business  development company under the Investment Company Act of 1940, all
of the  Company's  investments  must be carried at market value or fair value as
determined by management for investments which do not have readily  determinable
market  values.  Prior to this  conversion,  only  marketable  debt  and  equity
securities  and certain  derivative  securities  were  required to be carried at
market value.

Beginning  January  1,  2006,  portfolio  assets  for which  market  prices  are
available  are  valued  at  those  prices.  Securities  that are  traded  in the
over-the-counter  market or on a stock exchange  generally will be valued at the
prevailing  bid  price  on  the  valuation  date.   However,   potential  future
investments  by  the  Company  may  be  acquired  through  privately  negotiated
transactions and,  therefore,  have no readily  determinable market values, thus
these  securities would be carried at fair value as determined by management and
outside professionals as necessary under the Company's valuation policy.

Currently,  the  valuation  policy  provides  for  management's  review  of  the
management  team,  financial  conditions,  and  products  and  services  of  the
portfolio company. In situations that warrant such an evaluation, an independent
business valuation may be obtained.

Value,  as defined in Section  2(a)(41) of 1940 Act, is (i) the market price for
those securities for which a market quotation is readily  available and (ii) for
all other  securities  and assets,  fair value is as determined in good faith by
management.  There is no single  standard  for  determining  fair  value in good
faith. As a result,  determining fair value requires that judgment be applied to
the specific facts and circumstances of each portfolio  investment.  The Company
must  determine  the fair value of each  individual  investment  on a  quarterly
basis.  The Company will record  unrealized  depreciation on investments when it
believes that an investment has become impaired,  including where realization of
an equity security is doubtful.  Conversely,  the Company will record unrealized
appreciation if the Company believes that the underlying  portfolio  company has
appreciated in value and,  therefore,  its  investment  has also  appreciated in
value, where appropriate.

As a business  development  company,  the Company invests  primarily in illiquid
securities  including equity securities of private  companies.  The structure of
each equity security is specifically negotiated to enable the Company to protect
its investment  and maximize its returns.  The Company  generally  includes many
terms  governing  ownership   parameters,   dilution   parameters,   liquidation
preferences,  voting rights, and put or call rights.  The Company's  investments
are  generally  subject to some  restrictions  on resale and  generally  have no
established trading market.  Because of the type of investments that the Company
makes and the nature of its business,  the Company's  valuation process requires
an analysis of various factors.  The Company's fair value  methodology  includes
the examination of, among other things, the underlying  investment  performance,
financial condition and market changing events that impact valuation.



                                       12
<PAGE>

REVENUE RECOGNITION (PRIOR TO BECOMING A BUSINESS DEVELOPMENT COMPANY)
Revenue  for  consulting  is  recorded  when  earned.  Revenue  from  investment
securities sold was recognized when the securities were sold.

COMPREHENSIVE INCOME
SFAS  No.  130,  Reporting  Comprehensive  Income,   establishes  standards  for
reporting  and display of  comprehensive  income and its  components  (revenues,
expenses,  gains,  and  losses)  in a  full  set  of  general-purpose  financial
statements.  It requires that all items that are required to be recognized under
accounting  standards as  components  of  comprehensive  income be reported in a
financial  statement  that is  displayed  with  the  same  prominence  as  other
financial  statements.  SFAS No. 130 requires  that an  enterprise  (a) classify
items of other comprehensive  income by their nature in financial statements and
(b) display the accumulated balance of other comprehensive  income separately in
the equity section of the balance sheet for all periods presented. The Company's
comprehensive income (loss) does not differ from its reported net income (loss).

As a business  development  company, the Company must report changes in the fair
value of its  investments  outside of its  operating  income on its statement of
operations and reflect the accumulated  appreciation or depreciation in the fair
value of its investments as a separate  component of its  stockholders'  equity.
This treatment is similar to the treatment required by SFAS No. 130.

RECLASSIFICATIONS
Certain  reclassifications  have been made to the 2005  balances to conform with
the 2006 financial statement presentation.


NOTE 3:  INVESTMENTS

The Company's investments,  all of which are unaffiliated,  as of June 30, 2006,
are included in the Schedule of Investments.

Prior to  January  1, 2006 and  becoming a  business  development  company,  the
Company carried its investments in equity  securities at cost. These shares were
purchased,  for  cash,  in  private  transactions  believed  to be  exempt  from
registration  of the 1933 Act under  Section 4 (1) or Section 4 (2).  Due to the
limited  marketability  and  extremely  volatile  prices of theses thinly traded
securities,  the Company  felt a  reasonable  fair market  value was not readily
available.  However,  the  Company  disclosed  in the  notes  to  the  financial
statements the potential  unrealized gain or loss based on fair market value, as
determined  by the most recent close price as quoted on the balance  sheet date,
if available, otherwise valued at cost.




                                       13
<PAGE>

NOTE 4:  RELATED PARTY TRANSACTIONS

The  officers  and  directors  of the  Company are  involved  in other  business
activities  and  may,  in  the  future,   become   involved  in  other  business
opportunities  as they become  available.  The officers and directors may face a
conflict in selecting  between the Company and their other  business  interests.
The Company has not formulated a policy for the resolution of such conflicts.

NOTE 5:  COMMITMENTS AND CONTINGENCIES

From  time-to-time,  some  of the  Company's  portfolio  companies  may  receive
correspondence  or other  notices of alleged  breach of a license  agreement  or
other contract. Some of these notifications provide a period of time in which to
cure an  alleged  breach or  default.  The  failure of the  Company's  portfolio
companies  to cure an  alleged  breach or default  may have a  material  adverse
impact on the Company's results of operations and financial position.























                                       14
<PAGE>

ITEM 2: MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

This  information  statement  contains  forward-looking   statements.  For  this
purpose,  any statements  contained herein that are not statements of historical
fact may be deemed to be forward-looking statements.  These statements relate to
future  events or our  future  financial  performance.  In some  cases,  you can
identify  forward-looking  statements  by  terminology  such as  "may",  "will",
"should",   "expects",   "plans",   "anticipates",    "believes",   "estimates",
"predicts",  "potential",  "continue"  or the  negative  of such  terms or other
comparable terminology. These statements are only predictions.  Actual events or
results may differ  materially.  There are a number of factors  that could cause
our  actual  results  to  differ   materially   from  those  indicated  by  such
forward-looking statements.

Although  we believe  that the  expectations  reflected  in the  forward-looking
statements  are  reasonable,  we  cannot  guarantee  future  results,  levels of
activity, performance or achievements. Moreover, we do not assume responsibility
for the accuracy and  completeness of such  forward-looking  statements.  We are
under no duty to update any of the forward-looking  statements after the date of
this  information  statement  to  conform  such  statements  to actual  results.
Management's  discussion  and analysis  should be read in  conjunction  with our
financial statements and the notes herein.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES
------------------------------------------

Management's  Discussion  and  Analysis of  Financial  Condition  and Results of
Operations section discusses our condensed financial statements, which have been
prepared in accordance  with  accounting  principles  generally  accepted in the
United  States  of  America.   The  preparation  of  these  condensed  financial
statements  requires  us to make  estimates  and  assumptions  that  affect  the
reported  amounts  of  assets  and  liabilities  at the  date  of the  condensed
financial  statements and the reported  amounts of revenues and expenses  during
the reporting periods.  On an on-going basis, we will evaluate our estimates and
judgments,  including  those  related  to  revenue  recognition,   valuation  of
investments in portfolio  companies,  accrued  expenses,  financing  operations,
contingencies  and  litigation.  We will base our  estimates  and  judgments  on
historical  experience  and on various  other  factors  that are  believed to be
reasonable  under the  circumstances,  the  results  of which form the basis for
making judgments about the carrying value of assets and liabilities that are not
readily  apparent  from other  sources.  Actual  results  may differ  from these
estimates  under  different  assumptions  or  conditions.  The most  significant
accounting  estimates  inherent in the  preparation of our financial  statements
include  estimates as to the  appropriate  carrying  value of certain assets and
liabilities  which are not  readily  apparent  from other  sources,  such as the
investments in portfolio companies.







                                       15
<PAGE>

RESULTS OF OPERATIONS
---------------------

Three  months ended June 30, 2006 as compared to the three months ended June 30,
2005 -

During the three  months  ended June 30,  2006,  we operated as a BDC;  whereas,
during  the  three  months  ended  June 30,  2005,  we  operated  as a  business
consulting company.

We are in the infancy stage of operating as a BDC and have not  established  any
revenue from our investments in portfolio companies. In 2005, we had $159,500 in
revenue from our consulting business.

During 2005, we had $77,941 in  compensation,  benefits and consulting  expense,
and had none in  2006.  Our  officers  have  discontinued  any  salary  while we
establish our business as a BDC.

Professional   fees  and  other   general  and   administrative   expenses  were
approximately  the same in both 2006 and 2005.  Travel and  entertainment  costs
increased in 2006 by $5,978 (221%) primarily due to increased travel  associated
with potential new portfolio investments.

We sold  investments  in 2005 for $15,600 and recognized a gain of $8,100 before
we became a business development company.

The above activity resulted in a net loss from operations of $15,804 in 2006 and
net earnings from operations of $64,854 in 2005.

We recorded unrealized  appreciation of $31,200 and a related income tax benefit
of $725 during the three months ended June 30, 2006. We had no unrealized  gains
or losses during 2005 since our accounting method was different before we became
a BDC.

Six months ended June 30, 2006 as compared to the six months ended June 30, 2005
-

As noted above,  we filed a  notification  on Form N54a with the SEC to elect to
become a BDC on February 14, 2006.  Prior to that time we operated as a business
consulting company.

As of June 30 we have  not  established  any  revenue  from our  investments  in
portfolio companies. We realized $40,000 in consulting revenue in 2006 before we
began  operating  as a BDC.  We had  $187,700 in  consulting  income for our six
months of  operations  in 2005.  The decline in revenue is primarily  due to our
change in business.

During 2006, we had total  expenses of $25,829 after  becoming a BDC and $46,376
before  becoming a BDC, a total of $72,205  during the 2006 period.  In 2005, we
had net  expenses  of  $142,730  or $70,525  more than in 2006.  The  decline in
expenses is primarily the result of eliminating the $90,500  consulting  expense
for 2005. The other  differences are the increase in travel and entertainment in
2006 of $11,066 and the gain on sale of investment of $8,100 recognized in 2005.



                                       16
<PAGE>

Income  tax  expense  attributed  to  operations  amounted  to $6,583 in 2006 as
compared to $7,460 in 2005. The 2006 tax expense  included an  under-accrual  of
$10,605 from 2005 relating to change in the effective  rate which  resulted from
our being a member of a controlled group for Federal income tax purposes.

We recognized  unrealized  depreciation of $2,162 less a related deferred income
tax benefit of $735 from our investments in portfolio companies in 2006. We used
a different accounting method in 2005.

LIQUIDITY AND CAPITAL RESOURCES
-------------------------------

At June 30,  2006,  we had net assets of $79,630  as  compared  to net assets of
$119,845  at  December  31,  2005.  During  the first six  months of 2006,  cash
decreased  $56,228 to $4,151,  which  represents  the majority of the decline in
assets of $51,568.

Liabilities have decreased  $11,353 during 2006 from $11,353 at year-end 2005 to
$0 as of June 30,  2006;  this  change is the result of our  paying the  federal
income taxes payable balance at December 31, 2005.

As of June 30,  2006,  we had net assets of $79,630 as compared to net assets of
$119,845 at December  31, 2005.  The decrease in net assets is primarily  due to
operating losses of $38,788 during the six months ended June 30, 2006.

NET ASSET VALUE
---------------

As a Business Development Company, certain of our activities and disclosures are
made in reference to Net Asset Value which is the value of our portfolio  assets
less debt and preferred stock.  This may be viewed,  simply and generalized,  as
the  value  of our  assets  to our  common  shareholders.  As of the date of the
financial  information  in this  report,  the value of our  portfolio  of assets
including  investments  in equity  securities and cash is $79,630 and from this,
are  subtracted  liabilities  and debts of $0.  There are no shares of preferred
stock outstanding but the rights of preferred  stockholders would be included if
there were.  The Net Asset Value is therefore  $79,630.  The Net Asset Value per
Share is $.0076.

OUR PLAN OF OPERATION FOR THE NEXT TWELVE MONTHS
------------------------------------------------

MANAGEMENT'S ANALYSIS OF BUSINESS

OUR ABILITY TO DEVELOP OUR BUSINESS PLAN IS CONTINGENT UPON OUR ABILITY TO RAISE
SUFFICIENT  FUNDS TO INVEST IN PORTFOLIO  COMPANIES  AND TO COVER OUR  OPERATING
OVERHEAD REQUIREMENTS.




                                       17
<PAGE>

We will have significant  relative  flexibility in selecting and structuring our
investments.  We will not be subject to many of the regulatory  limitations that
govern traditional lending institutions such as banks. We will seek to structure
our  investments  so as to take  into  account  the  uncertain  and  potentially
variable financial  performance of our portfolio  companies.  This should enable
our  portfolio  companies  to retain  access to  committed  capital at different
stages in their  development and eliminate some of the  uncertainty  surrounding
their  capital  allocation  decisions.  We will  calculate  rates of  return  on
invested capital based on a combination of up-front commitment fees, current and
deferred  interest rates and residual values,  which may take the form of common
stock,  warrants,  equity  appreciation  rights or future contract payments.  We
believe that this flexible  approach to structuring  investments will facilitate
positive,  long-term relationships with our portfolio companies and enable us to
become a  preferred  source of capital to them.  We also  believe  our  approach
should enable debt financing to develop into a viable alternative capital source
for  funding  the  growth of target  companies  that wish to avoid the  dilutive
effects of equity financings for existing equity holders.

Longer  Investment  Horizon - We will not be subject to periodic  capital return
requirements. These requirements, which are standard for most private equity and
venture  capital funds,  typically  require that these funds return to investors
the initial  capital  investment  after a  pre-agreed  time,  together  with any
capital  gains on such capital  investment.  These  provisions  often force such
funds to seek the return of their  investments  in portfolio  companies  through
mergers,  public equity  offerings or other  liquidity  events more quickly than
they  otherwise  might,  which can result in a lower overall return to investors
and adversely affect the ultimate viability of the affected portfolio companies.

Because we may invest in the same  portfolio  companies as these  funds,  we are
subject to these risks if these funds  demand a return on their  investments  in
the portfolio  companies.  We believe that our flexibility to take a longer-term
view should  help us to maximize  returns on our  invested  capital  while still
meeting the needs of our portfolio companies.

Established Deal Sourcing Network - We believe that,  through our management and
directors,  we have solid contacts and sources from which to generate investment
opportunities. These contacts and sources include:

         o        public and private companies,
         o        investment bankers,
         o        attorneys,
         o        accountants,
         o        consultants, and
         o        commercial bankers.

However,  we  cannot  assure  you  that  such  relationships  will  lead  to the
origination of debt or other investments.

INVESTMENT CRITERIA

As a matter of policy,  we will not purchase or sell real estate or interests in
real estate or real estate investment trusts except that we may:



                                       18
<PAGE>

         o        purchase  and sell real estate or  interests in real estate in
                  connection with the orderly liquidation of investments,  or in
                  connection with foreclosure on collateral;
         o        own the  securities  of companies  that are in the business of
                  buying, selling or developing real estate; or
         o        finance  the   purchase  of  real  estate  by  our   portfolio
                  companies.

We will limit our  investments in more  traditional  securities  (stock and debt
instruments) and will not, as a matter of policy:

         o        sell securities short except with regard to managing the risks
                  associated  with  publicly-traded  securities  issued  by  our
                  portfolio companies;
         o        purchase  securities  on margin  (except to the extent that we
                  may purchase securities with borrowed money); or
         o        engage in the  purchase or sale of  commodities  or  commodity
                  contracts,  including futures contracts except where necessary
                  in  working  out  distressed  loans;  or in  those  investment
                  situations  where hedging the risks  associated  with interest
                  rate  fluctuations  is appropriate,  and, in such cases,  only
                  after  all  necessary   registrations   or   exemptions   from
                  registration  with the Commodity  Futures  Trading  Commission
                  have been obtained.

Prospective  Portfolio  Company  Characteristics  - We have  identified  several
criteria  that we  believe  will  prove  important  in  seeking  our  investment
objective with respect to target companies.  These criteria will provide general
guidelines for our investment  decisions;  however,  we caution readers that not
all of these criteria will be met by each prospective portfolio company in which
we choose to invest.

Experienced  Management - We will generally require that our portfolio companies
have an  experienced  president  or  management  team.  We will also require the
portfolio  companies to have in place proper  incentives to induce management to
succeed and to act in concert with our interests as investors,  including having
significant  equity  interests.  We intend to  provide  assistance  in this area
either  supervising   management  or  providing  management  for  our  portfolio
companies.

Products or Services - We will seek  companies  that are involved in products or
services  that  do  not  require  significant  additional  capital  or  research
expenditures. In general, we will seek target companies that make innovative use
of proven technologies or methods.

Proprietary  Advantage - We expect to favor companies that can demonstrate  some
kind of proprietary  sustainable  advantage  with respect to their  competition.
Proprietary advantages include, but are not limited to:

         o        patents   or  trade   secrets   with   respect  to  owning  or
                  manufacturing its products, and
         o        a demonstrable  and sustainable  marketing  advantage over its
                  competition.

Marketing  strategies  impose unusual  burdens on management to be  continuously
ahead of its competition, either through some kind of technological advantage or
by being continuously more creative than its competition.



                                       19
<PAGE>

Profitable or Nearly Profitable  Operations Based on Cash Flow from Operations -
We will focus on target companies that are profitable or nearly profitable on an
operating cash flow basis.  Typically, we would not expect to invest in start-up
companies unless there is a clear exit strategy in place.

Potential  for Future  Growth - We will  generally  require  that a  prospective
target  company,  in addition to  generating  sufficient  cash flow to cover its
operating  costs and service its debt,  demonstrate  an ability to increase  its
revenues and operating  cash flow over time.  The  anticipated  growth rate of a
prospective target company will be a key factor in determining the value that we
ascribe  to any  warrants  or other  equity  securities  that we may  acquire in
connection with an investment in debt securities.

Exit Strategy - Prior to making an investment  in a portfolio  company,  we will
analyze the  potential  for that company to increase the liquidity of its common
equity through a future event that would enable us to realize  appreciation,  if
any, in the value of our equity interest. Liquidity events may include:

         o        an initial public offering,
         o        a private sale of our equity interest to a third party,
         o        a merger or an acquisition of the portfolio company, or
         o        a purchase of our equity position by the portfolio  company or
                  one of its stockholders.

We may  acquire  warrants  to  purchase  equity  securities  and/or  convertible
preferred stock of the eligible portfolio companies in connection with providing
financing.  The terms of the warrants,  including the expiration date,  exercise
price and terms of the equity  security for which the warrant may be  exercised,
will be negotiated  individually with each eligible portfolio company,  and will
likely be affected by the price and terms of  securities  issued by the eligible
portfolio company to other venture  capitalists and other holders. We anticipate
that most  warrants  will be for a term of five to ten  years,  and will have an
exercise price based upon the price at which the eligible portfolio company most
recently issued its equity  securities or, if a new equity offering is imminent,
the price at which  such new  equity  securities  will be  offered.  The  equity
securities  for which the warrant  will be  exercised  generally  will be common
stock of which there may be one or more classes or convertible  preferred stock.
Substantially  all  the  warrants  and  underlying  equity  securities  will  be
restricted  securities  under the 1933 Act at the time of the issuance.  We will
generally negotiate for registration rights with the issuer that may provide:

         o        "piggyback"  registration  rights,  which will permit us under
                  certain   circumstances,   to  include  some  or  all  of  the
                  securities  owned by us in a registration  statement  filed by
                  the eligible portfolio company, or
         o        in circumstances,  "demand"  registration rights permitting us
                  under certain circumstances, to require the eligible portfolio
                  company to register the securities under the 1933 Act, in some
                  cases at our expense. We will generally negotiate net issuance
                  provisions  in the  warrants,  which  will allow us to receive



                                       20
<PAGE>

                  upon exercise of the warrant without payment of any cash a net
                  amount of shares  determined  by the  increase in the value of
                  the  issuer's  stock above the  exercise  price  stated in the
                  warrant.

Liquidation  Value of  Assets -  Although  we do not  intend  to  operate  as an
asset-based  lender,  the prospective  liquidation  value of the assets, if any,
collateralizing  any debt securities that we hold will be an important factor in
our credit analysis. We will emphasize both tangible assets, such as:

         o        accounts receivable,
         o        inventory, and
         o        equipment,

and intangible assets, such as:

         o        intellectual property,
         o        customer lists,
         o        networks, and
         o        databases.

INVESTMENT PROCESS

Due  Diligence  -  If a  target  company  generally  meets  the  characteristics
described above, we will perform initial due diligence, including:

         o        company and technology assessments,
         o        evaluation of existing management team,
         o        market analysis,
         o        competitive analysis,
         o        evaluation of management, risk analysis and transaction size,
         o        pricing, and
         o        structure analysis.

Much of this  work will be done by  management  and  professionals  who are well
known by management.  The criteria  delineated above provide general  parameters
for our  investment  decisions.  We intend to pursue an  investment  strategy by
further  imposing  such  criteria and reviews that best insures the value of our
investments.  As unique circumstances may arise or be uncovered, not all of such
criteria will be followed in each instance but the process  provides a guideline
by  which  investments  can be  prudently  made  and  managed.  Upon  successful
completion of the  preliminary  evaluation,  we will decide whether to deliver a
non-binding  letter of intent  and move  forward  towards  the  completion  of a
transaction.

In our review of the management team, we look at the following:

         o        Interviews  with  management  and  significant   shareholders,
                  including any financial or strategic sponsor;
         o        Review of financing history;



                                       21
<PAGE>

         o        Review of management's track record with respect to:
                  o        product development and marketing,
                  o        mergers and acquisitions,
                  o        alliances,
                  o        collaborations,
                  o        research  and   development   outsourcing  and  other
                           strategic activities;
         o        Assessment of competition; and
         o        Review of exit strategies.

In our review of the financial conditions, we look at the following:

         o        Evaluation of future financing needs and plans;
         o        Detailed analysis of financial performance;
         o        Development of pro forma financial projections; and
         o        Review  of  assets  and  liabilities,   including   contingent
                  liabilities, if any, and legal and regulatory risks.

In our review of the products and services of the portfolio company,  we look at
the following:

         o        Evaluation of intellectual property position;
         o        Review  of  existing   customer  or  similar   agreements  and
                  arrangements;
         o        Analysis of core technology;
         o        Assessment of collaborations;
         o        Review of sales and marketing procedures; and
         o        Assessment of market and growth potential.

Upon  completion  of these  analyses,  we will conduct  on-site  visits with the
target company's management team. Also, in cases in which a target company is at
a mature  stage  of  development  and if  other  matters  that  warrant  such an
evaluation, we will obtain an independent appraisal of the target company.

ONGOING RELATIONSHIPS WITH PORTFOLIO COMPANIES

Monitoring - We will  continuously  monitor our portfolio  companies in order to
determine  whether they are meeting our financing  criteria and their respective
business  plans.  We may decline to make  additional  investments  in  portfolio
companies that do not continue to meet our financing  criteria.  However, we may
choose to make additional  investments in portfolio companies that do not do so,
but we believe that they will nevertheless perform well in the future.

We will monitor the  financial  trends of each  portfolio  company to assess the
appropriate  course of action for each company and to evaluate overall portfolio
quality. Our management team and consulting professionals, who are well known by
our management  team,  will closely  monitor the status and  performance of each
individual company on at least a quarterly and, in some cases, a monthly basis.



                                       22
<PAGE>

We will use several  methods of evaluating and monitoring  the  performance  and
fair value of our debt and equity  positions,  including  but not limited to the
following:

         o        Assessment of business development success,  including product
                  development,   financings,  profitability  and  the  portfolio
                  company's overall adherence to its business plan;
         o        Periodic and regular contact with portfolio company management
                  to    discuss    financial    position,    requirements    and
                  accomplishments;
         o        Periodic and regular formal update  interviews  with portfolio
                  company  management  and, if  appropriate,  the  financial  or
                  strategic sponsor;
         o        Attendance at and participation in board meetings;
         o        Review of  monthly  and  quarterly  financial  statements  and
                  financial projections for portfolio companies.

Managerial Assistance - As a business development company, we will offer, and in
many cases may  provide,  significant  managerial  assistance  to our  portfolio
companies. This assistance will typically involve:

         o        monitoring the operations of our portfolio companies,
         o        participating in their board and management meetings,
         o        consulting with and advising their officers, and
         o        providing other organizational and financial guidance.

INVESTMENT AMOUNTS

The  amount  of  funds  committed  to a  portfolio  company  and  the  ownership
percentage  received  will  vary  depending  on the  maturity  of the  portfolio
company,  the quality and  completeness  of the portfolio  company's  management
team,  the perceived  business  opportunity,  the capital  required  compared to
existing capital,  and the potential return.  Although  investment  amounts will
vary considerably,  we expect that the average  investment,  including follow-on
investments, will be between $25,000 and $1,000,000.

COMPETITION

Our primary  competitors to provide  financing to target  companies will include
private  equity and venture  capital funds,  other equity and  non-equity  based
investment funds and investment banks and other sources of financing,  including
traditional  financial services companies such as commercial banks and specialty
finance companies.  Many of these entities have substantially  greater financial
and  managerial  resources  than we will have.  We believe that our  competitive
advantage  with  regard to quality  target  companies  relates to our ability to
negotiate  flexible  terms and to complete our review process on a timely basis.
We cannot assure you that we will be successful in implementing our strategies.




                                       23
<PAGE>

OFF BALANCE SHEET ARRANGEMENTS
--------------------------------------------------------

         o        None.


CONTRACTUAL OBLIGATIONS
-------------------------------------------

         o        None.





















                                       24

<PAGE>

ITEM 3:  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market risk is the risk of loss arising from adverse changes in market rates and
prices. We are primarily exposed to equity price risk.

Equity price risk arises from exposure to securities that represent an ownership
interest in our portfolio companies.  The value of our equity securities and our
other  investments  are based on quoted market prices or our Board of Directors'
good faith determination of their fair value (which is based, in part, on quoted
market  prices).  Market prices of common  equity  securities,  in general,  are
subject to  fluctuations,  which could cause the amount to be realized upon sale
or exercise of the instruments to differ significantly from the current reported
value.  The  fluctuations  may result from  perceived  changes in the underlying
economic  characteristics  of our  portfolio  companies,  the relative  price of
alternative  investments,  general  market  conditions  and  supply  and  demand
imbalances for a particular security.


ITEM 4:  CONTROLS AND PROCEDURES

                      Evaluation of Controls and Procedures

Our board of directors and  management,  including the Chief  Executive  Officer
("CEO") and Chief Financial Officer ("CFO"),  evaluated the effectiveness of the
design and operation of our disclosure  controls and  procedures,  as defined in
Rule   13(a)-15(e)  and  15(d)-15(e)  of  the  Exchange  Act.  Based  upon  that
evaluation,  our board of directors and  management,  including the CEO and CFO,
concluded that, as of June 30, 2006, our disclosure controls and procedures were
effective in alerting management on a timely basis to material  information that
would be required to be included in our periodic  filings with the SEC. Based on
their most recent evaluation as of the Evaluation Date, the CEO and the CFO have
also  concluded  that the other  controls and  procedures,  that are designed to
ensure that  information  required to be disclosed in our periodic  filings with
the SEC, are adequate.

                           Changes in Internal Control

At the time of its election as a business  development  company,  we updated our
internal  controls;  the  controls  were  adopted by our board of  directors  on
February 13, 2006. No failures or shortcomings  were discovered and the updating
related to insuring that safeguards  appropriate for an investment  company were
included in our internal controls. There were no significant changes made in our
internal controls over financial  reporting since that time that have materially
affected,  or  are  reasonably  likely  to  materially  affect,  these  internal
controls.  Thus, no corrective actions, with regard to significant  deficiencies
or material weaknesses, were necessary.



                                       25
<PAGE>

PART II - OTHER INFORMATION


ITEM 1:  LEGAL PROCEEDINGS

There is no current or pending litigation,  claims or counter claims in which we
are involved as a Defendant.

While  acting as General  Partner  to Shocker  100  Index,  LP  ("Shocker"),  we
initiated litigation against Robert Taccia, Alex Tandy, Vincenzo Arcobelli,  and
Tony Cammarano  ("Taccia  Group").  Shocker's claim is that the Taccia Group did
not perform contractual  obligations.  Shocker is asking for return of 1,200,000
shares of Mircotrakgps  common stock,  return of $50,000 cash loaned to American
Beauty College of Ft. Worth,  Texas,  and attorney's fees. The lawsuit was filed
in 2005 and no outcome can be estimated.  No counterclaim  has been made against
the Company in this action and we do not believe  that there exists any claim or
counterclaim which might be made against us. In the 4th Quarter of 2005, we sold
our interest in Shocker to another entity owned by the President.

ITEM 1A: RISK FACTORS

On  February  14,  2006,  we filed a  notification  on Form  N54a  with the U.S.
Securities  and  Exchange  Commission  ("SEC"),  indicating  our  election to be
regulated as a business  development company under the Investment Company Act of
1940,  as  amended.  Following  are the  risk  factors  associated  with our new
business.

In the normal course of business in an effort to keep our  shareholders  and the
public informed about our operations and portfolio of  investments,  we may from
time-to-time issue certain statements, either in writing or orally, that contain
or may contain forward-looking  information.  Generally, these statements relate
to our  business  plans or  strategies  or  portfolio  companies,  projected  or
anticipated  benefits or consequences of such plans or strategies,  projected or
anticipated  benefits of new or follow-on  investments  made by or to be made by
us, or  projections  involving  anticipated  purchases or sales of securities or
other  aspects of our  operating  results.  Forward-looking  statements  are not
guarantees of future performance and are subject to risks and uncertainties that
could cause  actual  results to differ  materially.  As noted  elsewhere in this
report,  our operations and portfolio of investments  are subject to a number of
uncertainties,  risks,  and  other  influences,  many of which are  outside  our
control,  and any one of which,  or a  combination  of which,  could  materially
affect the results of our operations, or our NAV, the market price of our common
stock, and whether any forward-looking statements made by us ultimately prove to
be accurate.

Investing in us involves a number of significant  risks relating to our business
and investment  objective.  As a result,  there can be no assurance that we will
achieve our investment  objective.  In addition,  the following risk factors are
applicable to an investment in our common stock.


                                       26
<PAGE>

GENERAL RISK FACTORS

Investments in the Company by new shareholders will be diluted immediately.

Some of our present  shareholders  have acquired an interest in our common stock
at a total cost substantially less than the total cost that newer investors will
likely pay for their shares.  Therefore, the newer investors will bear a greater
proportion of the risk of loss (measured by the cost of shares).  As of June 30,
2006,  there were  200,000,000  shares of common stock authorized and 10,505,000
common shares outstanding.

We may sell additional equity in the future that may further dilute the value of
your investment.

Reductions  in the  price of our stock  resulting  from the  performance  of our
portfolio  or other  market  conditions  might result in stock being sold to new
investors,  including management,  at prices below the price paid by you. Senior
management  may be  granted  the right,  and  others  may have the right,  under
certain  circumstances,  to acquire  additional  shares of our common stock at a
price equal to the market price as it exists at a point in the future. If such a
grant of a right  occurred  at a time when the  price of the  stock  has  fallen
relative  to the  current  market  value and falls  below the price paid by you,
management  might be given the right to  purchase  stock at a price  below  your
cost. In either of these cases,  the value of your  investment  would be further
diluted.

Limitation of liability and indemnification of management.

While limitations of liability and  indemnification  are themselves  limited, we
have instituted provisions in our bylaws indemnifying,  to the extent permitted,
against and not making management liable for, any loss or liability  incurred in
connection  with our affairs,  so long as such loss or liability arose from acts
performed in good faith and not involving any fraud, gross negligence or willful
misconduct.   Therefore,  to  the  extent  that  these  provisions  provide  any
protection to management,  that  protection may limit the right of a shareholder
to collect damages from members of management.  Management is accountable to the
shareholder as a fiduciary and, consequently, members of management are required
to exercise good faith and integrity in handling our affairs.

Our business may become subject to extensive regulation at the federal and state
levels.  The value of securities we own may be adversely  impacted by subsequent
regulatory changes.

Our operations are and will be affected by current and future legislation and by
the  policies  established  from  time to  time by  various  federal  and  state
regulatory authorities. It is not possible to predict what changes, if any, will
be made to existing federal and state  legislation and regulations or the effect
that such changes may have on our future  business and earnings  prospects.  Our
current investment strategy includes purchase of unregistered securities in both
private companies as well as private placements offered by public companies.  We
are able to purchase  securities  pursuant  to  exemptions  to the  registration
requirements of United States Federal  securities laws.  Changes in such laws or


                                       27
<PAGE>

their   interpretation  could  adversely  impact  our  ability  to  resell  such
securities which would have a negative effect on the value of such securities as
well  as  impact  our  overall  investment  strategy  and the  liquidity  of our
investments.  In such  an  event,  we may  need to  reformulate  our  investment
strategy or we may choose to liquidate.

We cannot guarantee paying dividends to our stockholders.

We are allowed by our articles of incorporation  and/or by-laws to pay dividends
to our stockholders.  However, there can be no guarantee we will have sufficient
revenues to pay dividends  during any period.  We currently intend to retain our
capital for use in growing our business and not make dividend distributions.  We
cannot  assure you that we will  achieve  investment  results or  maintain a tax
status that will allow or require any specified level of cash distributions.  In
addition,  due  to  the  asset  coverage  test  applicable  to us as a  business
development  company,  we may be limited in our  ability to make  distributions.
Investors in need of liquidity  through the payment of dividends  should refrain
from common stock which does not have a dividend requirement.

Investing in our shares may involve a high degree of risk.

The investments we make in accordance  with our investment  objective may result
in a higher amount of risk than alternative investment options and volatility or
loss of principal. Our investments in portfolio companies may be speculative and
aggressive,  and therefore,  an investment in our shares may not be suitable for
someone with low risk tolerance.

There is no current public market for our common stock,  if and/or when a public
market  were to develop,  the market  price for our common  stock may  fluctuate
significantly.

The market price and  liquidity of the market for shares of our common stock may
be  significantly  affected  by numerous  factors,  some of which are beyond our
control  and may not be directly  related to our  operating  performance.  These
factors, may adversely affect our ability to raise capital through future equity
financings. These factors include:

         o        significant  volatility in the market price and trading volume
                  of  securities  of  business  development  companies  or other
                  companies   in  the   investment   industry,   which  are  not
                  necessarily  related  to the  operating  performance  of these
                  companies;

         o        changes in regulatory policies or tax guidelines, particularly
                  with respect to RICs or business development companies;

         o        our common  stock is  unlikely  to be  followed  by any market
                  analysts,  and there may be few institutions  acting as market
                  makers for the common  stock  which can  adversely  affect its
                  price;

         o        loss of or inability to qualify for RIC status or BDC status;

         o        changes in earnings or variations in operating results;


                                       28
<PAGE>

         o        changes in the value of our portfolio of investments;

         o        any  shortfall  in revenue or net  income or any  increase  in
                  losses  from  levels   expected  by  investors  or  securities
                  analysts;

         o        departure of one or more of our key personnel;

         o        operating performance of companies comparable to us;

         o        potential legal and regulatory matters;

         o        changes in prevailing interest rates;

         o        general economic trends and other external factors; and

         o        loss of a major funding source.

Sales of  substantial  amounts of our common stock may have an adverse effect on
the market price of our common stock.

We currently  have  10,505,000  shares of common stock  outstanding.  We plan to
raise  funds  in the  future  through  sales of our  common  stock  pursuant  to
Regulation  E, which  provides in part for  issuance of freely  trading  shares.
Sales of  substantial  amounts of our common stock or the  availability  of such
shares  for sale could  adversely  affect the  prevailing  market  price for our
common stock. If this occurs and continues, it could impair our ability to raise
additional  capital through the sale of equity securities should we desire to do
so.

Our  board  of  directors  also has  authority,  without  action  or vote of the
shareholders,  to issue all or part of our authorized but unissued  shares.  Any
such  issuance will dilute the  percentage  ownership of  shareholders  and may,
subject to the regulations pertaining to the minimum prices for which shares may
be sold,  further dilute the book value of the common stock. These issuances may
also serve to enhance existing  management's  ability to maintain control of the
Company.

We have the right, but do not intend to issue senior securities, including debt.
If we were to reverse  that  decision  and offer for sale  and/or  issue  senior
securities, you will be exposed to additional risks, including the typical risks
associated with leverage.

You  will  be  exposed  to  increased  risk of  loss  if we  incur  debt to make
investments.  If we do incur debt,  a decrease  in the value of our  investments
would have a greater negative impact on the value of our common stock than if we
did not use debt.

         o        Our ability to pay dividends  would be restricted if our asset
                  coverage  ratio were not at least 200% and any amounts that we
                  use to service our  indebtedness  would not be  available  for
                  dividends to our common stockholders.


                                       29
<PAGE>

         o        It is likely  that any debt we incur  will be  governed  by an
                  indenture or other instrument containing covenants restricting
                  our operating flexibility.

         o        We and you as  shareholders  will bear the cost of issuing and
                  servicing our senior securities.

         o        Any  convertible or  exchangeable  securities that we issue in
                  the future may have rights,  preferences  and privileges  more
                  favorable than those of our common stock.

Our investments may require us to raise additional capital on different terms.

We will require additional  capital in the future. For additional  requirements,
we may raise capital by issuing equity or convertible debt securities,  and when
we do, the percentage ownership of our existing stockholders will be diluted. In
addition,  any new  securities  we issue  could  have  rights,  preferences  and
privileges senior to our existing equity (although we do not intend to sell debt
or preferred equity interests).

Our ability to raise capital as a BDC is limited by the requirement  that we not
sell shares below the NAV/S without approval of a majority of our  shareholders.
While we do not  anticipate  that the NAV/S  calculation  will ever  result in a
negative number or a nominally  positive  number,  the Company would be severely
limited in its ability to sell  shares if such a negative  number or a nominally
positive number were to be the result of a NAV/S calculation.

Increases in market  interest  rates may both reduce the value of our  portfolio
investments and increase our cost of capital.

We expect that we may offer loans to our  portfolio  companies  with interest at
fixed rates and the value of these investments  could be negatively  affected by
increases in market interest  rates. In addition,  an increase in interest rates
would  make it more  expensive  to use debt to  finance  our  investments.  As a
result,  a significant  increase in market  interest rates could both reduce the
value of our portfolio investments and increase our cost of capital, which would
reduce our net investment income.

The lack of liquidity in our investments may adversely affect our business.

We will generally make investments in private  companies.  Substantially  all of
these  securities  will be subject to legal and other  restrictions on resale or
will otherwise be less liquid than publicly traded  securities.  The illiquidity
of our investments may make it difficult for us to sell such  investments if the
need arises.  In addition,  if we are required to liquidate  all or a portion of
our portfolio  quickly,  due to changes in capital  needs or  otherwise,  we may
realize  significantly less than the value at which we have previously  recorded
our investments.  In addition,  we may face other restrictions on our ability to
liquidate  an  investment  in a  portfolio  company to the extent that we or our
investment adviser has material non-public  information regarding such portfolio
company.


                                       30
<PAGE>

We may experience fluctuations in our quarterly and annual results.

We could experience  fluctuations in our quarterly and annual operating  results
due to a number of factors,  including the interest or dividend rates payable on
the debt or equity  securities we acquire,  performance  and/or  default rate on
securities we acquire,  the level of our expenses,  variations in and the timing
of the  recognition  of realized and unrealized  gains or losses,  the degree to
which  we  encounter  competition  in our  markets,  changes  in the  investment
industry, and general economic conditions. As a result of these factors, results
for any period should not be relied upon as being  indicative of  performance in
future periods.

We may not realize gains or income from our investments.

We seek to generate both current income and capital  appreciation.  However, the
securities,  in which we invest, may not appreciate and, in fact, may decline in
value,  and the issuers of debt securities,  in which we invest,  may default on
interest and/or principal payments.  Accordingly,  we may not be able to realize
gains  from  our  investments,  and  any  gains  that we do  realize  may not be
sufficient to offset any losses we experience.

Your influence in matters requiring  shareholder action will be limited due to a
significant position held by a single shareholder.

There  is a single  shareholder  with a  controlling  interest  and this  single
shareholder  would likely  exercise  voting control over all matters that may be
submitted for approval by our shareholders.  This shareholder has a material and
significant  position of control.  The Company's  officers or directors own less
than 1% of the issued and  outstanding  shares of our voting  securities but, to
the extent that this single controlling shareholder votes to affirm decisions of
management, notwithstanding the fact that the number of shares controlled by the
officers  and  directors is less than a majority,  their  position of control is
also material and significant.

Pursuant  to our  articles  of  incorporation,  our Board of  Directors  has the
authority  to issue  shares of stock  without any further  vote or action by the
stockholders.  The issuance of stock under certain  circumstances could have the
effect of delaying or preventing a change in control of the Company or may deter
takeover attempts.

Our articles of  incorporation  contain  provisions  that may have the effect of
discouraging,  delaying  or  making  more  difficult  a change  in  control  and
preventing the removal of incumbent directors. The existence of these provisions
may reduce any premiums over market price that a potential  acquirer would offer
to  shareholders  for their  shares of our  common  stock.  Furthermore,  we are
subject to provisions of the Nevada Revised  Statutes that may make it difficult
for a potential  acquirer to exert  control over our Board of Directors  and may
discourage  attempts  to gain  control  without  the  consent  of the  Board  of
Directors.


GENERAL RISKS ASSOCIATED WITH BUSINESS DEVELOPMENT COMPANIES


                                       31
<PAGE>

BDCs generally require  substantial amounts of time to realize the benefits from
investments.

Venture  capital  investments  typically  take from four to eight years from the
date of initial investment to reach a state of maturity at which liquidation can
be considered practical.  We have not completed funding of some of our portfolio
companies  and we  anticipate  that  there may be an  additional  period of time
ranging from three to six months before we have  obtained  funding and completed
investing that funding in our portfolio  companies for our first round of equity
investments.  In light of the  foregoing,  it is unlikely  that any  significant
distributions of the proceeds from the liquidation of equity investments will be
made for several years after inception, if at all.

Our present senior  management team has limited  experience  managing a business
development company under the Investment Company Act of 1940.

The  1940  Act  imposes  numerous  constraints  on the  operations  of  business
development companies. For example,  business development companies are required
to  invest  at least  70% of their  total  assets  primarily  in  securities  of
privately held or thinly traded U.S. public  companies,  cash, cash equivalents,
U.S.  government  securities and other high quality debt investments that mature
in one year or less.  The lack of  experience of our senior  management  team in
managing a portfolio of assets under such  constraints  may hinder their ability
to take  advantage  of  attractive  investment  opportunities  and, as a result,
achieve our investment  objective.  Within the BDC format, the information about
deals and deal flow generated by our senior  management in connection with their
investment and portfolio management activities will have a significant impact on
our  future  success  as a  BDC.  The  senior  management  team  will  evaluate,
structure,  negotiate  terms and close  investments on those terms,  monitor and
service our  investments  and their  abilities  to perform  these  functions  as
members of a BDC will also have a significant  impact on our future success as a
BDC.

We  will be  wholly  dependent  for  the  selection,  structuring,  closing  and
monitoring  of  all  of  our  investments  on the  diligence  and  skill  of our
management,  acting under the  supervision  of our Board of  Directors.  None of
these individuals has substantial  experience,  within or under a BDC investment
and management format, in acquiring and investing in growth stage companies, the
negotiation  of the  terms  of  such  investments  and  the  monitoring  of such
investments after they are made. In addition, we will engage outside consultants
and  professionals  known to management to assist in evaluating  and  monitoring
portfolio companies and maintaining regulatory compliance.

While we believe that our  management  possesses  certain  fundamental  business
skills that will increase our  likelihood to succeed,  our  management  team has
never  operated a BDC and must be considered as  inexperienced  when it comes to
the both the day to day  operations of an investment  company and the management
of  investments.  We intend to rely on the general skills and business acumen of
our management team as well as engaging other professionals and consultants from
time to time to insure that it gains the expertise to manage a BDC.


                                       32
<PAGE>

We may change our investment policies without further shareholder approval.

Although we are limited by the 1940 Act with  respect to the  percentage  of our
assets  that must be  invested  in  qualified  portfolio  companies,  we are not
limited with respect to the minimum  standard that any  investment  company must
meet, nor the industries in which those  investment  companies must operate.  We
may make  investments  without  shareholder  approval and such  investments  may
deviate significantly from our historic operations. Any change in our investment
policy or  selection  of  investments  could  adversely  affect our stock price,
liquidity, and the ability of our shareholders to sell their stock.

We may allocate the net proceeds from stock sales in ways with which you may not
agree.

We will have significant  flexibility in investing the net proceeds of our stock
sales.  We may use the net  proceeds in ways with which you may not agree or for
investments other than those contemplated at the time we sell the stock,  unless
such  change in the use of  proceeds  is subject to  stockholders'  approval  or
prohibited by law.

We will have broad discretion in using the proceeds from any offering

Our management has broad discretion with respect to the specific  application of
the net proceeds of any funding that we obtain.  While our corporate  governance
resolutions require the Board of Directors and Investment Committee to adhere to
certain standards, even acting in compliance with those guidelines, our Board of
Directors and Investment  Committee have discretion.  We do not permit the Board
of Directors and Investment  Committee to use proceeds in a manner  inconsistent
with the operation of a BDC. Although substantially all of the net proceeds from
any  offering is intended to be applied for  investments  in eligible  portfolio
companies  which  satisfy  our  investment  criteria,  we may invest some of the
proceeds in the  provision of services to our  portfolio  companies  rather than
invest directly.  Therefore, we can not accurately predict costs associated with
such professionals and consultants. For that reason, the use of proceeds can not
be  determined  with absolute  certainty.  You will not have an  opportunity  to
evaluate the basis for our decisions on the use of the proceeds, and will not be
able to participate in such decisions.

Our investments may not generate sufficient income to cover our operations.

While we intend to make  investments  into those  qualified  companies that will
provide the greatest  overall return on our investment,  we are required to make
investments  into those  companies  which,  whether due to lack of experience or
financial  instability  (including  insolvency),  may present the greatest risk.
This is in conformity with the Small Business  Investment  Incentive Act of 1980
which amended the 1940 Act and permitted the creation of BDC's. However, certain
of those  investments  may fail, in which case we will not receive any return on
our investment.  In addition, our investments may not generate income, either in
the immediate  future,  or at all. As a result,  we may have to sell  additional
stock,  or borrow  money,  to cover our operating  expenses.  The effect of such
actions  could cause our stock price to decline or, if we are not  successful in
raising additional  capital,  we could cease to continue as a going concern.  It
should be noted that our operational  costs are higher as a result of our having


                                       33
<PAGE>

elected to be governed as a BDC.

Shares in a BDC will likely trade at a discount.

Shares of many closed-end  investment  companies and most BDC's frequently trade
at a discount to their net asset  value.  This  characteristic  is separate  and
distinct  from the risk that our net asset value  could  decrease as a result of
investment  activities.  This likely discount in share pricing in the market may
pose a greater risk to investors  expecting to sell their shares in a relatively
short period after purchase.  We cannot predict whether our shares will trade at
prices above, at or below our net asset value.

Regulations governing our operation as a business development company affect our
ability to raise, and the way in which we raise, additional capital.

We have the right to issue debt  securities  or preferred  stock  and/or  borrow
money from banks or other financial institutions, which we refer to collectively
as "senior securities," only in amounts such that our asset coverage, as defined
in the 1940 Act, equals at least 200% after each issuance of senior  securities,
the  maximum  amount  permitted  by the 1940  Act.  If the  value of our  assets
declines,  we may be unable to satisfy  this test.  If that  happens,  we may be
required  to sell a portion  of our  investments  or sell  additional  shares of
common stock and, depending on the nature of our leverage, to repay a portion of
our indebtedness at a time when such sales may be disadvantageous.  In addition,
any future  issuance of  additional  shares of our common stock could dilute the
percentage ownership of our current stockholders in us.

As a business development company regulated under provisions of the 1940 Act, we
are not  generally  able to issue and sell our common stock at a price below net
asset value per share.  We may,  however,  sell our common  stock,  or warrants,
options or rights to acquire our common stock,  at a price below the current net
asset value of our common  stock (1) if our Board of Directors  determines  that
such  sale is in the  best  interests  of us and our  stockholders,  and (2) our
stockholders  approve  such  sale.  In any such  case,  the  price at which  our
securities are to be issued and sold may not be less than a price which,  in the
determination of our Board of Directors,  closely  approximates the market value
of such securities (less any sales load).

In  addition,  we may in the future  seek to  securitize  or  hypothecate  loans
previously  made  by us  to  generate  cash  for  funding  new  investments.  To
securitize or hypothecate these loans, we may contribute a pool of such loans to
a  wholly-owned  subsidiary.  This could  include the sale of  interests  in the
subsidiary  on a  non-recourse  basis to  purchasers  who we would  expect to be
willing to accept a lower interest rate to invest in investment grade loan pools
although  we would  expect to retain a portion of the equity in the  securitized
pool of loans. An inability to  successfully  securitize and sell all or part of
such a loan  portfolio  could  limit our  ability  to grow our  business,  fully
execute our business strategy and could decrease our earnings, if any. Moreover,
the successful  securitization  of our loan portfolio  might expose us to losses
because the  residual  loans in which we do not sell  interests  will tend to be
those that are riskier and more likely to generate losses.

Our election to be governed as a BDC will require us to comply with  significant


                                       34
<PAGE>

regulatory requirements.

We elected to be regulated as a Business  Development Company under the 1940 Act
and be  subject  to  Sections  54  through  65 of said Act.  As a result of this
election,  the Company is subject to the provisions of 1940 Act as it applies to
BDCs as of the  date of  such  election.  Being  subject  to the BDC  provisions
requires  us  to  meet   significant   numbers  of   regulatory   and  financial
requirements.  Compliance  with these  regulations  is expensive  and may create
financial problems for us in the future. These laws and regulations,  as well as
their interpretation,  may be changed from time to time. Accordingly, any change
in these  laws or  regulations  could  have a  material  adverse  effect  on our
business.

Specifically,  it must be noted that there are increased  costs  associated with
compliance  with the 1940 Act as a result of our election to become a BDC. These
costs  include  costs  associated  with  the  increased  demand  for  compliance
including  oversight by our Chief Compliance  Officer and counsel to the Company
as well as increased costs due to accounting  methodology  and valuations  which
increase the time and work required of both our accounting service providers and
independent  auditors.  These costs  require us to expend  capital and resources
that might  otherwise  be used to meet the needs or  opportunities  relating  to
investments and/or our portfolio companies or other income-producing assets.

If we do not remain a business  development  company,  we might  continue  to be
regulated as a closed-end  investment  company  under the 1940 Act,  which would
decrease  our  operating  flexibility.   We  cannot  assure  you  that  we  will
successfully retain our BDC status.

If our primary investments are deemed not to be qualifying assets, we could lose
our status as a business  development  company or be  precluded  from  investing
according to our current business plan.

Under the 1940 Act,  in order to maintain  our status as a business  development
company,  we must not acquire any assets other than "qualifying  assets" unless,
at the time of and after giving effect to such acquisition,  at least 70% of our
total  assets  are  qualifying   assets.   If  we  acquire  mezzanine  loans  or
dividend-paying equity securities from an issuer that has outstanding marginable
securities at the time we make an investment,  these  acquired  assets cannot be
treated  as  qualifying  assets  since the  issuer  might not be  considered  an
"eligible portfolio company" under the 1940 Act. "Marginable securities" include
any  non-equity  security,  pursuant to certain 1998  amendments to Regulation T
under the Securities Exchange Act of 1934, as amended, which raises the question
as to whether a private  company  that has  outstanding  debt  securities  would
qualify as an eligible portfolio company.

We operate in a highly competitive market for investment opportunities.

A large number of entities will compete with us to make the types of investments
that we plan to make in target portfolio  companies.  We will compete with other
business  development  companies,  public  and  private  funds,  commercial  and
investment banks and commercial financing companies. Many of our competitors are
substantially  larger and have  considerably  greater  financial,  technical and
marketing  resources than we do. For example,  some competitors may have a lower


                                       35
<PAGE>

cost of funds and access to funding  sources  that are not  available  to us. In
addition,  some of our  competitors may have higher risk tolerances or different
risk  assessments,  which  could  allow  them to  consider  a wider  variety  of
investments and establish more relationships than us.  Furthermore,  many of our
competitors  are not subject to the  regulatory  restrictions  that the 1940 Act
imposes on us as a business  development  company. We cannot assure you that the
competitive  pressures  we face will not have a material  adverse  effect on our
business,  financial  condition and results of operations.  Also, as a result of
this competition,  we may not be able to take advantage of attractive investment
opportunities  from time to time,  and we can offer no assurance that we will be
able to identify and make  investments  that are consistent  with our investment
objective.

We may never be able to qualify for the income tax benefits offered to RICs.

We will be classified  as a  non-diversified  investment  company under the 1940
Act.  Until we  achieve a  threshold  level of  diversification,  we will not be
subject to the applicable  provisions for RICs under the Internal  Revenue Code.
Therefore,  we  will  not  receive  favorable  pass  through  tax  treatment  on
distributions  to our  shareholders.  This  means  that we will be  taxed  as an
ordinary corporation on our taxable income even if that income is distributed to
shareholders,  and all  distributions  out of our  earnings  and profits will be
taxable to  shareholders  as dividends.  Thus,  this income will be subject to a
double layer of taxation.

RISKS ASSOCIATED WITH INVESTMENTS AND PORTFOLIO COMPANIES

There are costs associated with the purchase and sale of securities.

While the general approach of a BDC may suggest a long-term  holding position of
the  securities of its portfolio  companies,  some of our strategies may include
purchases of different  classes of  securities  or frequent  trading to maximize
profits  and, as a  consequence,  risks  related to  turnover  and costs such as
brokerage  commissions  may be greater than for an investment in a single entity
for a single class of security held for a longer  period of time.  Our operating
expenses,  including,  but not limited to, fees paid to accountants,  attorneys,
fees to  execute  trades,  manage  investments  and fees paid to any  investment
advisor  may, in the  aggregate,  constitute a high  percentage  relative to the
expenses and fees than for an  investment  in a single entity for a single class
of security held for a longer period of time.

There are numerous risks arising from investing in securities.

The  securities  industry is  generally  competitive  and methods of  investment
strategy involve a degree of risk. We will compete with firms, including many of
the larger  securities and investment  banking firms,  which have  substantially
greater financial resources and research staffs. Where we purchase securities in
portfolio companies for appreciation,  our profitability  substantially  depends
upon our ability to correctly assess the future price movements of stocks. There
can be no assurance that we will be able to accurately  predict price  movements
of securities purchased.

Security investments generally involve a high degree of risk. The performance of
securities  in which we may invest are  subject to  numerous  factors  which are


                                       36
<PAGE>

neither within the control of nor  predictable by us. Such factors can include a
wide range of economic,  political,  competitive and other  conditions which may
affect  investments  in general or specific  industries or companies.  In recent
years,  the  securities  markets  have  become  increasingly  volatile  and this
volatility has increased the degree of risk.

Our  investments in prospective  portfolio  companies may be risky and you could
lose all or part of your investment.

We will invest primarily in private or thinly-traded  public companies,  most of
which have relatively short or no operating  histories.  These companies will be
subject to all of the business risk and  uncertainties  associated  with any new
business enterprise, including the risk that these companies may not reach their
investment  objective  and the  value  of our  investment  in them  may  decline
substantially  or fall to zero.  Most of the portfolio  companies  into which we
intend to invest will be considered "growth stage" companies.

Investments in growth stage  companies  offer the  opportunity  for  significant
gains. However, each investment involves a high degree of business and financial
risk that can result in substantial losses. Among these are the risks associated
with:

         o        these companies may have limited  financial  resources and may
                  be unable to meet their  obligations  under  their  securities
                  that we hold,  which may be accompanied by a deterioration  in
                  the value of their equity securities or of any collateral with
                  respect to debt  securities  and a reduction in the likelihood
                  of us  realizing  on any  guarantees  we may have  obtained in
                  connection with our investment;

         o        they may have shorter  operating  histories,  narrower product
                  lines and smaller market shares than larger businesses,  which
                  tend to render them more  vulnerable to  competitors'  actions
                  and market conditions, as well as general economic downturns;

         o        because many of these  companies are privately held companies,
                  public  information  is generally  not  available  about these
                  companies.  As a result,  we will depend on the ability of our
                  investment   committee  to  obtain  adequate   information  to
                  evaluate these companies in making  investment  decisions.  If
                  our  investment  committee  is unable to uncover all  material
                  information  about  these  companies,  it may not make a fully
                  informed  investment  decision,  and we may lose  money on our
                  investments;

         o        they are more likely to depend on the  management  talents and
                  efforts of a small  group of  persons;  therefore,  the death,
                  disability, resignation or termination of one or more of these
                  persons could have a material  adverse impact on our portfolio
                  company and, in turn, on us;

         o        companies  operating at a loss or with substantial  variations
                  in operating results from period to period, with the need for,
                  but  generally  limited  ability  to provide  for  internally,
                  substantial  additional  capital  to support  expansion  or to
                  achieve or maintain a competitive position;


                                       37
<PAGE>

         o        these  companies  may  face  intense  competition,   including
                  competition from companies with greater  financial  resources,
                  more  extensive  development,  manufacturing,  marketing,  and
                  service   capabilities,   and  larger   number  of   qualified
                  managerial and technical personnel; and

         o        they may have less  predictable  operating  results,  may from
                  time to time be  parties  to  litigation,  may be  engaged  in
                  changing  businesses  with  products  subject  to  a  risk  of
                  obsolescence and may require substantial additional capital to
                  support their operations,  finance expansion or maintain their
                  competitive  position.  In addition,  our executive  officers,
                  directors and our investment  adviser  could,  in the ordinary
                  course  of  business,  be named as  defendants  in  litigation
                  arising from our investments in the portfolio companies.

Economic  recessions or downturns could impair our portfolio  companies and harm
our operating results.

Our portfolio companies will generally be affected by the conditions and overall
strength of the national, regional and local economies,  including interest rate
fluctuations,  changes in  markets  and  changes in the prices of their  primary
commodities and products. These factors could adversely impact the customer base
of our portfolio companies.  As a result, many of our portfolio companies may be
susceptible to economic slowdowns or recessions and may be unable to repay loans
or meet other obligations  during these periods.  Therefore,  our non-performing
assets  are  likely to  increase,  and the value of our  portfolio  is likely to
decrease,  during these periods.  Adverse economic  conditions also may decrease
the value of  collateral  securing some of our loans and the value of our equity
investments.  Economic slowdowns or recessions could lead to financial losses in
our  portfolio  and a decrease in revenues,  net income and assets.  Unfavorable
economic  conditions also could increase our funding costs,  limit our access to
the capital  markets or result in a decision by lenders not to extend  credit to
us. These  events  could  prevent us from  increasing  investments  and harm our
operating results.

A  portfolio  company's  failure to satisfy  financial  or  operating  covenants
imposed  by us or  other  investors  or  lenders  could  lead to  defaults  and,
potentially, termination of loans and foreclosure on secured assets, which could
trigger  cross-defaults  under other  agreements  and  jeopardize  our portfolio
company's  ability to meet its obligations  under the debt or equity  securities
that we hold.  We may incur  expenses to the extent  necessary to seek  recovery
upon default or to negotiate new terms,  which may include the waiver of certain
financial covenants, with a defaulting portfolio company. In addition, if one of
our portfolio companies were to go bankrupt,  even though we may have structured
our  interest as senior debt or  preferred  equity,  depending  on the facts and
circumstances,  including  the extent to which we actually  provided  managerial
assistance to that portfolio company,  a bankruptcy court might  re-characterize
our debt or equity  holding  and  subordinate  all or a portion  of our claim to
those of other creditors.

Our  portfolio  companies  may incur debt or issue equity  securities  that rank
equally with, or senior to, our investments in such companies.


                                       38
<PAGE>

We intend to invest  primarily  in  mezzanine  debt and  dividend-paying  equity
securities issued by our portfolio  companies.  Our portfolio  companies usually
will have,  or may be  permitted  to incur,  other debt,  or issue other  equity
securities,  that rank equally  with,  or senior to, the  securities in which we
invest.  By their  terms,  such  instruments  may  provide  that the holders are
entitled to receive payment of dividends, interest or principal on or before the
dates on which we are entitled to receive  payments in respect of the securities
in which we invest. Also, in the event of insolvency, liquidation,  dissolution,
reorganization  or  bankruptcy  of a portfolio  company,  holders of  securities
ranking senior to our investment in that  portfolio  company would  typically be
entitled  to receive  payment  in full  before we receive  any  distribution  in
respect of our  investment.  After  repaying the senior  security  holders,  the
portfolio  company may not have any  remaining  assets to use for  repaying  its
obligation to us. In the case of securities  ranking  equally with securities in
which we invest, we would have to share on an equal basis any distributions with
other security holders in the event of an insolvency, liquidation,  dissolution,
reorganization or bankruptcy of the relevant portfolio company. In addition,  we
may not be in a position to control any portfolio company in which we invest. As
a result, we are subject to the risk that a portfolio company in which we invest
may make business  decisions  with which we disagree and the  management of such
company,  as  representatives  of the holders of their common  equity,  may take
risks or  otherwise  act in ways  that do not  serve  our  interests  as debt or
preferred equity investors.

We may not be able to fully  realize the value of any  collateral  securing  any
debt investments made into portfolio companies.

Although we expect that a  substantial  amount of our debt  investments  will be
protected  by  holding  security  interests  in  the  assets  of  the  portfolio
companies,  we may not be able to fully  realize  the  value  of the  collateral
securing any such investments due to one or more of the following factors:

         o        since these debt  investments  will be  primarily  made in the
                  form of unsecured or wrap-loans,  the liens on the collateral,
                  if any, will be  subordinated  to those of the senior  secured
                  debt of the portfolio  companies,  if any. As a result, we may
                  not  be  able  to  control   remedies   with  respect  to  the
                  collateral;

         o        the  collateral  may not be valuable  enough to satisfy all of
                  the  obligations  under our secured loan,  particularly  after
                  giving  effect  to  the  repayment  of  secured  debt  of  the
                  portfolio company that ranks senior to our loan;

         o        bankruptcy  laws may limit our  ability to realize  value from
                  the collateral and may delay the realization process;

         o        our rights in the collateral may be adversely  affected by the
                  failure to perfect security interests in the collateral;

         o        how  effectively  the  collateral  would be liquidated and the
                  value  received  could be  impaired  or impeded by the need to
                  obtain regulatory and contractual consents; and


                                       39
<PAGE>

         o        by its nature,  some or all of the  collateral may be illiquid
                  and may  have  no  readily  ascertainable  market  value.  The
                  liquidity and value of the  collateral  could be impaired as a
                  result of changing economic conditions, competition, and other
                  factors, including the availability of suitable buyers.

Our success  will depend upon the  success of the  portfolio  companies  and, in
great part, upon the abilities of their management.

Although our management  expects to provide portfolio  companies with assistance
(particularly with regard to capital formation,  major personnel decisions,  and
strategic  planning),  the  day-to-day  operations  will  be  controlled  by the
management of the portfolio  companies.  As the portfolio companies have not all
been  identified,  investors must rely upon our  management to select  portfolio
companies that have, or can obtain, the necessary management resources.  We will
depend on the  diligence,  skill and network of business  contacts of the senior
management  of each of the  portfolio  companies  in  which  we  invest  and the
professionals chosen by them, subject to the oversight of our senior management,
and  the  information  and  interaction  between  management  of  the  portfolio
companies and our  management.  Our future  success will depend to a significant
extent on the continued  service of the senior management team of each portfolio
company,  the departure of any of whom could have a material  adverse  effect on
our ability to achieve our investment objective. Problems may arise at portfolio
companies that local management do not recognize or cannot resolve. In addition,
the management of portfolio companies may conceal the existence of problems from
us.

Many of our portfolio  investments  will be recorded at fair value as determined
in good  faith  by our  board of  directors  and,  as a  result,  there  will be
uncertainty as to the value of our portfolio investments.

A large  percentage of our portfolio  investments  will consist of securities of
privately  held or  thinly  traded  public  companies.  The fair  value of these
securities  may not be  readily  determinable.  We will value  these  securities
quarterly  at fair value as  determined  in good faith by our Board of Directors
based on input  from our audit  committee  with or  without  the  benefit  of an
opinion from a third party  independent  valuation firm. We may also be required
to value any publicly  traded  securities  at fair value as  determined  in good
faith by our Board of Directors to the extent  necessary to reflect  significant
events affecting the value of those  securities.  Our Board of Directors may, to
the extent  circumstances  warrant it,  utilize the  services of an  independent
valuation firm to aid it in determining  the fair value of any  securities.  The
types of factors that may be considered in fair value pricing of our investments
include  the  nature  and  realizable  value of any  collateral,  the  portfolio
company's  ability to make payments and its  earnings,  the markets in which the
portfolio  company  does  business,  comparison  to publicly  traded  companies,
discounted cash flow and other relevant  factors.  Because such valuations,  and
particularly  valuations  of  private  securities  and  private  companies,  are
inherently  uncertain,  valuations  may fluctuate over short periods of time and
may be based on  estimates,  the  determinations  of fair  value by our Board of
Directors may differ  materially  from the values that would have been used if a
ready  market  for  these  securities  existed.  Our net  asset  value  could be
adversely  affected  if the  determinations  regarding  the  fair  value  of our
investments  were materially  higher than the values that we ultimately  realize
upon the disposal of such securities.


                                       40
<PAGE>

Limitations on  availability  of investment  capital may adversely  affect other
investments.

We may be reliant on the  availability of capital to generate  profits under our
investment  strategy and such  availability will depend, in part, on our ability
to  timely  liquidate  existing  positions  in order to  reinvest  the  proceeds
thereof.  To the extent that we own securities  which are not subject to a valid
registration  statement  or otherwise  available  for trading  under  applicable
securities laws, our ability to liquidate our position in such securities may be
limited.  We intend to require some of our portfolio companies to use their best
efforts to cause a registration  statement covering the resale of the securities
purchased  by us to be  filed  and  declared  effective  by the  SEC  or  become
otherwise freely tradeable.  However,  there can be no guarantee that the SEC or
other  regulating body will declare such a registration  statement  effective or
permit  such  security to become  free of  restrictions  within such period and,
until such securities become freely tradable, we will likely be unable to freely
liquidate  such  interests  in  restricted  securities  in the manner and at the
prices  desired.  This resulting  lack of liquidity  could impair our ability to
generate  the cash flow from these  positions to timely pay our  liabilities  or
obtain  funds for the  purpose of  reinvestment.  Although we intend to maintain
adequate liquidity to achieve our future investment objectives,  there can be no
assurance this can be accomplished in all circumstances.

Portfolio companies are likely to need additional funding.

We expect that many  portfolio  companies will require  additional  financing to
satisfy their working capital  requirements.  The amount of additional financing
needed will depend upon the maturity and objectives of the  particular  company.
Each round of venture financing, whether from us or other investors is typically
intended to provide a portfolio  company  with enough  capital to reach the next
major valuation milestone. If the funds provided are not sufficient, a portfolio
company may have to raise  additional  capital at a price  unfavorable to us and
the other  existing  investors.  The  availability  of  capital is  generally  a
function of capital market conditions that are beyond our control or the control
of any  portfolio  company.  We cannot  assure  you that our  management  or the
managements of portfolio companies will be able to predict accurately the future
capital  requirements  necessary  for success or that  additional  funds will be
available to portfolio  companies from any source.  If funding is not available,
some portfolio companies may be forced to cease operations.

BDC investments are generally illiquid.

We  anticipate  that  most  of our  holdings  in  portfolio  companies  will  be
securities  that are subject to restrictions  on resale.  Generally,  unless the
securities are  subsequently  registered under the 1933 Act, we will not be able
to sell these  securities  unless we meet all of the  conditions  of Rule 144 or
another  rule under the 1933 Act that  permits  limited  sales  under  specified
conditions.  When restricted securities are sold to the public, we may be deemed
an underwriter,  or possibly a controlling  person, with respect thereto for the
purpose of the  Securities Act and may be subject to liability as such under the
1933 Act. These restrictions could require us to hold securities or refrain from
sale and be unable to liquidate a position even at a loss.

Even if we meet all of the  conditions  of the 1933 Act,  there may be no market
for the  securities  that we hold.  These  limitations  on  liquidity of a BDC's


                                       41
<PAGE>

investments  could  prevent a successful  sale  thereof,  result in delay of any
sale, or  substantially  reduce the amount of proceeds  that might  otherwise be
realized.  It is possible  that one or more of the  portfolio  companies may not
qualify to rely on such exemptions or to use a registration  statement.  In such
event, we would end up owning  "restricted"  securities  subject to resale under
Rule 144

There are risks which  result from the  inherent  concentration  of  investments
prior to diversification.

While we intend to allocate our investments among different portfolio companies,
it is possible  that,  prior to our  achieving  diversification,  a  significant
amount of or all of our investments  and, hence, our NAV could, at any one time,
be invested in the  securities  of just a few  portfolio  companies.  Thus,  our
success  and NAV  would be  dependent  on the  success  of just a few  portfolio
companies  and all of the risks  associated  with  ownership  of such  portfolio
companies including success dependent on management, success dependent on market
conditions  within the industry or field of such  portfolio  companies,  success
dependent on achieving the business  objectives of such portfolio  companies and
success  dependent on economic  conditions and other conditions  relative to the
operation of such portfolio companies, would become risks borne by us.

There  are  risks   associated   with   investments   in  companies  with  small
capitalization.

The portfolio  companies that we expect to invest in are thinly  capitalized and
generally will have a market  capitalization  below $100 million (and frequently
substantially  less). These companies  generally do not have experience,  market
awareness,  tracking by analysts,  institutional investors and other benefits of
larger  companies  that result in more  marketability  and more stability in the
pricing of their securities.  This impacts the liquidity of securities issued by
those  portfolio  companies.  It is expected that the securities of most, if not
all, of the  portfolio  companies  will be thinly  traded.  This could present a
problem when we determine to liquidate our position.  We may not be able to sell
the securities in the time frame and at the price we would like. Furthermore, in
certain  situations,  as a result of a security  being thinly  traded,  we could
experience a  significant  loss in value  should we be forced to  liquidate  our
investment as a result of rapidly changing market conditions or other factors.

There are risks  associated  with  investments in companies with securities that
are not readily marketable.

We may  invest in  securities  that are  initially,  or that later  become,  not
readily  marketable.  For example,  we may acquire  restricted  securities of an
issuer in a private  placement  pursuant  to an  arrangement  whereby the issuer
agrees  to  register  the  resale  of those  securities,  or,  in the case of an
investment in convertible or exchangeable securities,  the securities underlying
such  securities,  within a certain period of time. Such  registration  requires
compliance with United States Federal and state securities laws and the approval
of the SEC.  Unless and until such  registration  or compliance  with applicable
regulation  occurs,  there  is  likely  to  be  no  market  for  the  restricted
securities.  No  assurance  can be given  that  issuers  will not  breach  their
obligation to obtain or meet such  registration or other compliance  obligation.
Similarly,  securities that are at one time  marketable may become  unmarketable


                                       42
<PAGE>

(or more difficult to market) for a number of reasons.  For example,  securities
traded on a securities  exchange or quotation system may become  unmarketable if
delisted from such exchange or quotation system for among other reasons, failing
to satisfy the  requirements  for continued  listing,  which may include minimum
price requirements. In addition, we may acquire restricted securities, for which
no market exists, which are convertible or exchangeable into common stock of the
issuer.  No  assurances  can be given that a portfolio  company which has sold a
convertible  security  requiring  exchange  or  conversion,  will not breach its
obligation to convert or exchange such securities upon demand, in which case our
liquidity may be adversely affected.  In general, the stability and liquidity of
the   securities   in  which  we  invest  will  depend  in  large  part  on  the
creditworthiness of the issuers.  Issuers' creditworthiness will be monitored on
an  ongoing  basis by us.  If  there is a  default  by the  issuer,  we may have
contractual  remedies  under  the  applicable  transaction  documents.  However,
exercising  such  contractual  rights  may  involve  delays in  liquidating  our
position and the incurrence of additional costs.

Portfolio  companies  in which  investments  are  made may have  publicly-traded
securities  but those  companies  or their  securities  may  become  subject  to
restrictions  due to  non-compliance.  Our ability to generate  profits from our
investment  activities  may be  adversely  affected  by a failure  of  portfolio
companies to comply with registration, conversion, exchange or other obligations
under the agreements pursuant to which such securities have been sold to us. The
failure of an issuer to  register  the resale of its  securities  sold to us may
decrease  the  amount  of  available  capital  with  which we may  pursue  other
investment  opportunities  or  meet  current  liabilities.   We  may  invest  in
securities  that are convertible  into or  exchangeable  for common stock of the
issuer,  the  resale  of which by us is (or is to be)  registered.  If an issuer
refuses,  is unable to, or delays in timely  honoring  its  obligation  to issue
conversion or exchange securities, our ability to liquidate our position will be
adversely affected, and our profits may be adversely affected.

We have not yet identified all of the potential investments for our portfolio.

We have not yet identified all of the potential  investments  for our portfolio,
and,  thus,  you will not be able to evaluate all of our  potential  investments
prior to purchasing  shares of our common  stock.  This factor will increase the
uncertainty, and thus the risk, of investing in our shares.

We may sustain losses from fraud within our portfolio companies.

The risk of fraud losses on our assets  varies  with,  among other  things,  the
effectiveness of security procedures utilized. Management anticipates that fraud
losses,  if any, will be unlikely as controls and other  security  measures will
have been adopted by each portfolio  company as a condition to our investment to
protect against fraudulent  misappropriation of cash and other assets.  However,
although our  management  believes  that any loss due to fraud will be unlikely,
there can be no assurance that fraud loss experience will not become material in
amount.  Fraud at the BDC level is far less likely as BDC's are required to have
and to have tested controls to limit this possibility. It must be noted that, in
addition to basic controls as to financial  data,  BDC's are required to have in
place certain  safeguards which may render risks to investment assets from fraud
to be nominal  but these  risks do exist and even  requirements  such as holding


                                       43
<PAGE>

physical  certificates of shares in portfolio companies in a safe do not, in and
of themselves, eliminate the possibility of fraud.


RISKS OF THE COMPANY AT ITS PRESENT STAGE

Although  we have  been in  existence  for a number  of  years,  we may still be
considered to have a limited operating history as a BDC. We are a relatively new
business development company with limited resources and sources of revenues.

We were  incorporated  on November 12, 2002,  and we have  commenced  investment
operations but the extent of our investment activities will characterize us as a
newer investment  company.  We made our election to become a BDC on February 14,
2006,  and, while we have owned some portfolio  companies,  we have not realized
any  significant  revenues from the sale or other  liquidity event involving our
past or present  portfolio  companies.  As we have made investments only in four
portfolio companies,  we have limited experience relating to the identification,
evaluation and acquisition of target businesses and, accordingly,  there is only
a limited  basis upon which to evaluate our prospects for achieving our intended
business  objectives.  We have  limited  resources  and  have  realized  limited
revenues to date. In addition,  we will not achieve any revenues  until,  at the
earliest,  we are able to obtain funding, make investments and sell our position
of securities in an underlying portfolio company for a profit. We will be wholly
dependent for the selection,  structuring,  closing and monitoring of all of our
investments  on the  diligence  and skill of our  management,  acting  under the
supervision of our Board of Directors. None of these individuals has substantial
experience, within the BDC business format, in acquiring and investing in growth
stage  companies,  the  negotiation  of the  terms of such  investments  and the
monitoring of such investments after they are made. We cannot assure you that we
will attain our investment objective.

We are subject to all of the business risks and  uncertainties  associated  with
any new  business  enterprise,  including  the risk that we will not achieve our
investment  objective and that the value of your  investment in us could decline
substantially or fall to zero.

We will be confronted by competition from entities having substantially  greater
resources and experience.

Other entities and individuals compete for investments similar to those proposed
to be made by us,  many of whom  will  have  greater  financial  and  management
resources than we do.  Furthermore,  we must comply with  provisions of the 1940
Act  pertaining to BDCs and, if we qualify as a RIC,  provisions of the Internal
Revenue Code  pertaining to RICs might restrict our flexibility as compared with
our competitors.  The need to compete for investment  opportunities  may make it
necessary for us to offer portfolio companies more attractive  transaction terms
than  otherwise  might be the  case.  These  factors  may  prevent  us from ever
becoming profitable.

Distributions  to  shareholders  may never  equal  the  amount  invested  by the
shareholders.

We cannot assure you that any  distributions to shareholders  will be made by us
or that aggregate distributions,  if any, will equal or exceed the shareholders'


                                       44
<PAGE>

investment  in us. Sales of  portfolio  company  securities  will be a principal
source  of  distributable  cash to  shareholders.  The  Board of  Directors  has
absolute  discretion in the timing of distributions to shareholders.  Securities
acquired by us through equity investments will be held by us and will be sold or
distributed at the sole discretion of the Board of Directors.

There are significant  potential  conflicts of interest,  which could impact our
investment returns.

Our  executive  officer(s)  and  Director(s)  serve or may serve as officers and
directors  of entities who operate in the same or related line of business as we
do. Accordingly,  they may have obligations to investors in those entities,  the
fulfillment  of  which  might  not  be in  the  best  interests  of  us  or  our
stockholders.  It is  possible  that new  investment  opportunities  that  would
otherwise meet our  investment  objective may come to the attention of one these
entities,  and, if so, such opportunity might not be offered,  or otherwise made
available,  to us.  However,  our executive  officer(s) and  Director(s) do have
fiduciary  obligations  to  act  in our  best  interests  and  must,  in  such a
circumstance or conflict,  endeavor to allocate  investment  opportunities  in a
fair and  equitable  manner  over  time so as not to  discriminate  one  company
against another,  where equal fiduciary obligations are owed. In addition,  they
may not be available to us if there are time conflicts involving other entities.

Our  common  stock is  subject  to the  "Penny  Stock"  rules of the SEC and the
trading market in our  securities is limited,  which makes  transactions  in our
stock cumbersome and may reduce the value of an investment in our stock.

The Securities and Exchange  Commission has adopted Rule 15g-9 which establishes
the  definition  of a "penny  stock,"  for the  purposes  relevant to us, as any
equity  security  that has a market price of less than $5.00 per share or option
to acquire any equity  security  with an  exercise  price of less than $5.00 per
share,  subject to certain  exceptions.  For any  transaction  involving a penny
stock, unless exempt, the rules require:

         o        that a  broker  or  dealer  approve  a  person's  account  for
                  transactions in penny stocks; and

         o        the  broker  or dealer  receive  from the  investor  a written
                  agreement to the  transaction,  setting forth the identity and
                  quantity of the penny stock to be purchased.

In order to approve a person's  account for  transactions  in penny stocks,  the
broker or dealer must:

         o        obtain   financial   information  and  investment   experience
                  objectives of the person; and

         o        make a reasonable determination that the transactions in penny
                  stocks  are  suitable  for  that  person  and the  person  has
                  sufficient knowledge and experience in financial matters to be
                  capable  of  evaluating  the  risks of  transactions  in penny
                  stocks.

The broker or dealer  must also  deliver,  prior to any  transaction  in a penny
stock, a disclosure  schedule prescribed by the Commission relating to the penny


                                       45
<PAGE>

stock market, which, in highlight form:

         o        sets  forth the basis on which the  broker or dealer  made the
                  suitability determination; and

         o        that the broker or dealer received a signed, written agreement
                  from the investor prior to the transaction.

Generally,  brokers may be less willing to execute  transactions  in  securities
subject  to the  "penny  stock"  rules.  This  may  make it more  difficult  for
investors to dispose of our common stock and cause a decline in the market value
of our stock.

Disclosure  also has to be made about the risks of  investing in penny stocks in
both public offerings and in secondary trading and about the commissions payable
to both the broker-dealer and the registered representative,  current quotations
for the securities and the rights and remedies available to an investor in cases
of fraud in penny stock  transactions.  Finally,  monthly  statements have to be
sent disclosing recent price information for the penny stock held in the account
and information on the limited market in penny stocks.

We have limited operating history upon which to base your investment decision.

While we started  operations on November 12, 2002,  we have a limited  operating
history available to evaluate the likelihood of the success of our business.  We
became a BDC on February 14, 2006.  Our prospects  should be considered in light
of the risks,  expenses and uncertainties that may be encountered by development
stage companies. Among other things, we must build our customer base, respond to
competitive  developments,  attract, retain and motivate qualified employees and
establish and maintain our  technologies,  products,  and services on an ongoing
basis.  There can be no assurance that we will be successful in addressing  such
risks and implementing our business strategy.

As a result of our lack of  operating  history,  and the other  risks  described
herein,  we are unable to accurately  forecast our revenues.  Our future expense
levels are based  predominately  on our operating  plans and estimates of future
revenues,  and to a large extent are fixed.  We may be unable to adjust spending
in a  timely  manner  to  compensate  for  revenues  that  do  not  materialize.
Accordingly,  any  significant  shortfall  in revenues or lack of revenue  would
likely have an immediate  material  adverse  effect on our  business,  operating
results and financial condition.

Our ability to generate  revenues  will  depend  upon many  factors.  We will be
required  to build our  business by  implementing  operational  systems,  hiring
additional employees, developing and implementing a marketing and sales strategy
and implementing our technology applications. Our expenses will initially exceed
our revenues and no  assurances  can be made that we will become  profitable  or
provide positive cash flows.

We cannot assure you that we will be successful in selling the common shares or,
if sold, at what price.  We have limited assets without the sale of these common
shares and we cannot assure you that we will attain our investment objective.


                                       46
<PAGE>

As of the date of filing of our Form 10-Q,  we have minimal cash or other assets
and net worth from which to invest in successful  portfolio  companies to insure
our success.  Our success will depend, in part, upon raising the necessary funds
to fund investments.

Restrictions  imposed  upon the resale of our  capital  stock may require you to
hold your stock for an indefinite period of time.

None of the  securities  to be issued based upon future sales will be registered
under the  Securities  Act. The common stock to be sold is intended to be exempt
from  registration  pursuant  to  Regulation  E  which  permits,  in  conformity
therewith,  issuance of shares without restriction on further transfer. While we
do not anticipate such an adverse  decision or  determination on the part of the
Securities and Exchange Commission, the SEC has the right, even after permitting
the offering to become effective,  to enjoin the sale of securities or determine
that such  sales are not  exempt  under  Regulation  E. While we will make every
effort to insure our compliance with the requirements  under Regulation E, there
can be no  assurance  of such  exemption;  as the SEC does  not,  as a matter of
policy,  affirmatively  indicate the  effectiveness  of the  notification  under
Regulation E.


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

None.

ITEM 3:  DEFAULTS UPON SENIOR SECURITIES

Not applicable.

ITEM 4:  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None.

ITEM 5:  OTHER INFORMATION

None.












                                       47
<PAGE>

ITEM 6:  EXHIBITS

The following exhibits are filed with this report on Form 10-Q.

         Exhibit 31        Certifications  pursuant  to 18 U.S.C.  Section  1350
                           Section 302 of the Sarbanes-Oxley Act of 2002

         Exhibit 32        Certifications  pursuant  to 18 U.S.C.  Section  1350
                           Section 906 of the Sarbanes-Oxley Act of 2002


                                    SIGNATURE
                                    ---------

Pursuant  to the  requirements  of the  Securities  Exchange  Act of  1934,  the
Registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned thereunto duly authorized.

                           INTERIM CAPITAL CORPORATION


Date:    July 24, 2006                               By: /s/ Mark Lindberg
                                                        ------------------------
                                                        Mark Lindberg,
                                                        Chief Executive Officer












                                       48