Alternative Investment Corp - Quarter Report: 2014 June (Form 10-Q)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

_______________

FORM 10-Q

_______________

x     QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2014

OR

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

For the transition period from ______ to ______.

Commission File Number: 001-34858

___________________________________________________

PARADIGM RESOURCE MANAGEMENT CORPORATION

 (Exact name of registrant as specified in its charter)

___________________________________________________

(650) 577-5933

(Registrant’s telephone number, including area code)

_____________________________________________________

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

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes  x  No  o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company.  See the definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company" in Rule 12b-2 of the Exchange Act:

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

As of August 18, 2014 the registrant had 323,202,300 shares of its Common Stock, $0.001 par value, outstanding.

PARADIGM RESOURCE MANAGEMENT CORPORATION

FORM 10-Q

JUNE 30, 2014

INDEX

PART I – FINANCIAL INFORMATION

Item 1.     Financial Statements

PARADIGM RESOURCE MANAGEMENT CORPORATION

Balance Sheets

See accompanying notes to financial statements.

PARADIGM RESOURCE MANAGEMENT CORPORATION

Statements of Operations

(unaudited)

See accompanying notes to financial statements.

PARADIGM RESOURCE MANAGEMENT CORPORATION

Statements of Cash Flows

(unaudited)

See accompanying notes to financial statements.

PARADIGM RESOURCE MANAGEMENT CORPORATION

Notes to Financial Statements
June 30, 2014

(unaudited)

Note 1 – Nature of Business, Presentation and Going Concern

Organization

Paradigm Resource Management Corporation (the "Company") was incorporated in Nevada on March 26, 2007 under the name of China Digital Ventures Corporation.  The principal business of the Company was its web based telecom and IPTV businesses, both of which were disposed of during the year ended September 30, 2010. As of the date hereof, the Company has no operations.

On July 23, 2010, the Company experienced a change in control.  Canton Investments Ltd (“CIL”) acquired a majority of the issued and outstanding common stock of the Company in accordance with stock purchase agreements by and between CIL and Wireless One International Limited (“Wireless One”), Bing HE and Ning HE, the Company’s former directors, and other various shareholders.  On the closing date, July 23, 2010, pursuant to the terms of the Stock Purchase Agreement, CIL purchased from Wireless One and Bing HE and Ning HE 11,500,000 shares of the Company’s outstanding common stock for $205,750. Also on July 23, 2010, CIL purchased 2,440,000 shares of the Company’s outstanding common stock for $36,600 from various shareholders. As a result of the change in control, CIL owns a total of 13,940,000 shares of the Company’s common stock representing 91.54%.

On May 10, 2012, the Company filed an amendment to its Articles of Incorporation in the State of Nevada to change its name to Paradigm Resource Management Corporation.

On July 24, 2013, the Company entered into an agreement with AMSA Development Technology Co Ltd (“AMSA”) to acquire 402,300 shares of TOSS Plasma Technologies Ltd. (“TPT”) previously held by AMSA in exchange for 35,866,667 shares of its common stock. The 402,300 shares of TPT represent 10.1% of TPT’s outstanding common stock. The agreement also provides AMSA an option to acquire an additional 44,833,333 shares of the Company’s common stock and provides the Company an option to acquire an additional 402,300 shares of TPT common stock from AMSA.

On December 4, 2013, the Company and AMSA entered into an Amendment to the Agreement dated July 24, 2013. Under the terms of the amendment, the Company has the option to acquire up to a total of 3,432,000 shares of TPT from AMSA and AMSA has the option to acquire up to a total of 229,866,667 shares of common stock of the Company. The options expire June 2, 2014.

The Company continues to explore new investment opportunities with a focus in technology, mining and applied materials. Management is also currently assessing and evaluating new strategic partnership opportunities for TPT to develop its customer base.

Stock Split

On June 1, 2012, the Company's Board of Directors declared a one hundred-to-one forward stock split of all outstanding shares of common stock. The effect of the stock split increased the number of shares of common stock outstanding from 15,228,000 to 1,522,800,000. All common share and per common share data in these financial statements and related notes hereto have been retroactively adjusted to account for the effect of the stock split for all periods presented prior to June 1, 2012. The total number of authorized common shares and the par value thereof was not changed by the split. On September 10, 2012, the principal shareholder of the Company contributed 1,200,000,000 shares of common stock to the Company’s treasury.  The Company immediately retired and canceled these shares which were recorded as a credit to paid-in capital (deficiency).

Basis of Presentation

The accompanying unaudited financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) for interim financial statement presentation and in accordance with Form 10-Q. Accordingly, they do not include all of the information and footnotes required in annual financial statements. In the opinion of management, the unaudited financial statements contain all adjustments (consisting only of normal recurring accruals) necessary to present fairly the financial position and results of operations and cash flows. The results of operations presented are not necessarily indicative of the results to be expected for any other interim period or for the entire year.

These unaudited financial statements should be read in conjunction with our 2013 annual financial statements included in our Form 10-K, filed with the U.S. Securities and Exchange Commission (“SEC”) on January 14, 2014.

PARADIGM RESOURCE MANAGEMENT CORPORATION

Notes to Financial Statements
June 30, 2014

(unaudited)

Note 1 – Nature of Business, Presentation and Going Concern (Continued)

Going Concern

The accompanying unaudited financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company has incurred a net loss of $88,624 for the nine months ended June 30, 2014 and has incurred cumulative losses since inception of $441,098. The Company has a stockholders’ deficit of $344,375 at June 30, 2014.  These conditions raise substantial doubt about the ability of the Company to continue as a going concern.

The ability of the Company to continue as a going concern is dependent upon its abilities to generate revenues, to continue to raise investment capital, and develop and implement its business plan.  No assurance can be given that the Company will be successful in these efforts.

The unaudited financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. Management believes that actions presently being taken to obtain additional funding and implement its strategic plans provide the opportunity for the Company to continue as a going concern. No assurance can be given that the Company will be successful in these efforts.

Development Stage Enterprise

On June 10, 2014 the FASB issued authoritative guidance which eliminates the concept of a development stage entity. The incremental reporting requirements for presenting the development stage operations and cash flows since inception will no longer apply to development stage entities. The amendments related to the elimination of inception-to-date information and the other remaining disclosure requirements of Topic 915 are to be applied retrospectively and are effective for fiscal years beginning after December 15, 2014. The Company previously had been considered a development state entity as its operations had not begun and has elected early adoption of this guidance effective with the filing of this quarterly report.

Note 2 – Related Party Transactions

In connection with the change in control which occurred on July 23, 2010, Canton assumed an outstanding loan from the former shareholders of the Company of $19,103. During the year ended September 30, 2011, Canton paid an additional $37,879 of expenses in connection with the Company’s operations, as well as the $180 liability due to a director, resulting in an amount due to Canton of $57,162 at September 30, 2011.   During the year ended September 30, 2012, Canton paid $379 of accounts payable and $12,000 of accrued expenses at September 30, 2011 plus $62,767 of expenses in connection with the Company’s operations, resulting in an At September 30, 2012, the Company owed CIL $132,308. During the year ended September 30, 2013, Canton paid $20,699 of accounts payable and $19,750 of accrued expenses at September 30, 2012 plus $59,128 of expenses in connection with the Company’s operations, resulting in an amount due to Canton of $231,885 at September 30, 2013.

During the nine months ended June 30, 2014, Canton paid $26,030 of accounts payable at September 30, 2013 plus an additional $24,835 of expenses in connection with the Company’s operations, resulting in an amount due to Canton of $282,639 at June 30, 2014.   The loan is unsecured, non-interest bearing and there is no repayment date.

As of January 1, 2012, the Company agreed to compensate Mr. David Price, the Company’s Secretary and son of its former Chief Executive Officer and Director, $5,000 per month for his services. Effective October 1, 2013, the amount was changed to $2,500 per month. At June 30, 2014 and September 30, 2013, $15,000 and $20,000, respectively, were due to Mr. Price and included in accounts payable. $22,500 and $45,000 are included in general and administrative expenses for the nine month periods ended June 30, 2014 and 2013, respectively.

Note 3 – Investment in TOSS Plasma Technologies Ltd.

On July 24, 2013, the Company entered into an agreement with AMSA Development Technology Co Ltd (“AMSA”) to acquire 402,300 shares of TOSS Plasma Technologies Ltd. (“TPT”) previously held by AMSA in exchange for 35,866,667 restricted shares of its common stock. The 402,300 shares of TPT represent 10.1% of TPT’s outstanding common stock. The agreement also provided AMSA an option to acquire an additional 44,833,333 shares of the Company’s common stock and provides the Company an option to acquire an additional 402,300 shares of TPT common stock from AMSA.

PARADIGM RESOURCE MANAGEMENT CORPORATION

Notes to Financial Statements
June 30, 2014

(unaudited)

Note 3 – Investment in TOSS Plasma Technologies Ltd. (Continued)

The value of the investment of $7,173, or 35,866,667 shares of the Company’s common stock at a fair value of $0.0002 per share, was based on the price of shares previously sold to investors.

On December 4, 2013, the Company and AMSA entered into an Amendment to the Agreement dated July 24, 2013. Under the terms of the amendment, the Company has the option to acquire up to a total of 3,432,000 shares of TPT from AMSA and AMSA has the option to acquire up to a total of 229,866,667 shares of common stock of the Company. The options expired on June 2, 2014.

Note 4 – Note Payable

On May 1, 2014, the Company issued a convertible promissory note to Antonio Treminio in the amount of $19,961. The note is due May 1, 2015, bears interest at 15% per annum, and is convertible into common shares of the Company at a 20% discount to the average VWAP of the last 30 days trading prior to the date of conversion. As of June 30, 2014, the note has been discounted for its unamortized beneficial conversion feature of $4,170. Accretion of the beneficial conversion feature totaled $820 for the nine months ended June 30, 2014 and is included in interest expense. At June 30, 2014, $399 of interest has been expensed and is included in accrued interest.

Note 5 – Stockholders’ Deficit

The Company has authorized 1,600,000,000 shares of Common Stock, $0.001 par value.  As of June 30, 2014 and September 30, 2013, the Company had 323,202,300 and 322,800,000 shares of Common Stock issued and outstanding, respectively.  

Pursuant to the Agreement dated July 24, 2013, the Company is obligated to issue 35,866,667 restricted shares of its common stock to AMSA in exchange for 402,300 shares of TPT (see Note 3 – Investment in TOSS Plasma Technologies Ltd.). The value of the shares of $7,173, or $0.0002 per share, was based on the price of shares previously sold to investors and is included in common stock issuable in the balance sheet at September 30, 2013. During the nine months ended June 30, 2014, 402,300 of the shares due to AMSA were issued, reducing the amount of common stock issuable to $7,093 at June 30, 2014.

Note 6 – Subsequent Events

The Company has evaluated subsequent events through the date the financial statements were issued and filed with the Securities and Exchange Commission. The Company has determined that there are no such events that warrant disclosure or recognition in the financial statements.

Item 2.     Management’s Discussion and Analysis of Financial Condition and Results of Operations.

SPECIAL NOTE CONCERNING FORWARD-LOOKING STATEMENTS

Certain statements made in this Form 10-Q are "forward-looking statements" (within the meaning of the Private Securities Litigation Reform Act of 1995) regarding the plans and objectives of management for future operations. Such statements involve known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. The forward-looking statements included herein are based on current expectations that involve numerous risks and uncertainties. The Company's plans and objectives are based, in part, on assumptions involving the continued expansion of business. Assumptions relating to the foregoing involve judgments with respect to, among other things, future economic, competitive and market conditions and future business decisions, all of which are difficult or impossible to predict accurately and many of which are beyond the control of the Company. Although the Company believes its assumptions underlying the forward-looking statements are reasonable, any of the assumptions could prove to be inaccurate and, therefore, there can be no assurance the forward-looking statements included in this report will prove to be accurate. In light of the significant uncertainties inherent in the forward-looking statements included herein, the inclusion of such information should not be regarded as a representation by the Company or any other person that the objectives and plans of the Company will be achieved.

The forward-looking statements included in this Form 10-Q and referred to elsewhere are related to future events or our strategies or future financial performance. In some cases, you can identify forward-looking statements by terminology such as "may," "should," "believe," "anticipate," "future," "potential," "estimate," "encourage," "opportunity," "growth," "leader," "expect," "intend," "plan," "expand," "focus," "through," "strategy," "provide," "offer," "allow," commitment," "implement," "result," "increase," "establish," "perform," "make," "continue," "can," "ongoing," "include" or the negative of such terms or comparable terminology. All forward-looking statements included in this Form 10-Q are based on information available to us as of the filing date of this report, and the Company assumes no obligation to update any such forward-looking statements, except as required by law. Our actual results could differ materially from the forward-looking statements.

Important factors that might cause our actual results to differ materially from the results contemplated by the forward-looking statements are contained in the “Risk Factors” section of and elsewhere in our Annual Report on Form 10-K for the fiscal year ended September 30, 2013 and in our subsequent filings with the Securities and Exchange Commission.  The following discussion of our results of operations should be read together with our financial statements and related notes included elsewhere in this report.

Company Overview

Paradigm Resource Management Corporation (the "Company", “PRDM”, “we”, “us” or “our”) was incorporated in Nevada on March 26, 2007 under the name of China Digital Ventures Corporation (“CDVC”) and was in the web based telecom services business in China. The Company's mission was to acquire, own and manage a portfolio of "technology", "media" and "telecommunication" assets in China. During the periods presented all revenue was derived from the telecom business sector.

In July 2009, the Company acquired a 76.8% interest in China Integrated Media Corporation Limited ("CIMC"), a public company in Australia.

In February 2010, the Company decided to divest from its investment in CIMC due to its inability to raise the capital necessary to pursue this investment on a timely manner and concerns on its internal liquidity. On April 30, 2010 the Company disposed of CIMC for $50,000 and realized a gain on the disposal of $92,975. The proceeds from the disposal were used to pay debts of the Company.

On June 20, 2010, the Company disposed of its subsidiary company, Lead Concept Limited, which operated its web based VOIP business as the Company was no longer competitive in this market segment. After the disposal, the Company had no operations.

On July 23, 2010, the Company experienced a change in control.  Canton Investments Ltd (“CIL”) acquired a majority of the issued and outstanding common stock of the Company in accordance with stock purchase agreements by and between CIL and Wireless One International Limited (“Wireless One”), Bing HE and Ning HE, the Company’s former directors, and other various shareholders.  On the closing date, July 23, 2010, pursuant to the terms of the Stock Purchase Agreement, CIL purchased from Wireless One and Bing HE and Ning HE 1,150,000,000 shares of the Company’s outstanding common stock for $205,750.  Also on July 23, 2010, CIL purchased 244,000,000 shares of the Company’s outstanding common stock for $36,600 from various shareholders.  As a result of the change in control, CIL owned a total of 1,394,000,000 shares of the Company’s common stock representing 91.54%.

In accordance with the change in control Mr. Bing HE resigned as the Company's President, CEO, and any other positions held by him on July 23, 2010. The resignation was not the result of any disagreement with the Company or any matter relating to the Company's operations, policies or practices. The same date Mr. Robert M. Price was named as the new Director, Chief Executive Officer and Chief Financial Officer.

On May 10, 2012, the Company filed an amendment to its Articles of Incorporation in the State of Nevada to change its name to Paradigm Resource Management Corporation. The Company is currently contemplating acquisitions of certain gold, copper and uranium mineral property rights.

On September 10, 2012, CIL contributed 1,200,000,000 shares of common stock to the Company’s treasury.  The Company immediately retired and canceled these shares. As a result of the contribution of shares, CIL owns a total of 194,000,000 shares of the Company’s common stock representing 60.1%.

On July 24, 2013, the Company entered into an agreement with AMSA Development Technology Co Ltd (“AMSA”) to acquire 402,300 shares of TOSS Plasma Technologies Ltd. (“TPT”) previously held by AMSA in exchange for 35,866,667 restricted shares of its common stock. The 402,300 shares of TPT represent 10.1% of TPT’s outstanding common stock. The agreement also provided AMSA an option to acquire an additional 44,833,333 restricted shares of the Company’s common stock and provides the Company an option to acquire an additional 402,300 shares of TPT common stock from AMSA.

On December 4, 2013, the Company and AMSA entered into an Amendment to the Agreement dated July 24, 2013. Under the terms of the amendment, the Company has the option to acquire up to a total of 3,432,000 shares of TPT from AMSA and AMSA has the option to acquire up to a total of 229,866,667 shares of common stock of the Company. The options expire June 2, 2014.

Plan of Operation

TPT has developed a breakthrough technology and processing system for extraction of latent precious metals from certain types of complex ores. A significant percentage of mineral ores including those that contain the platinum group, gold and silver encapsulate their metals making extraction far more difficult. A prime example of the difficulty presented by these complex ores occurs with the cyanidization of gold where copper, lead, and other minerals absorb most of the cyanide making it unavailable for the extraction process. By applying TPT’s proprietary technology using Radio Frequency Plasma ("RF Plasma") torch at ultrahigh temperature of between 8,000 to 12,000 degrees Celsius, ore structure disintegrates and encapsulated gold, iron etc. are freed up and condensed for collection.

The primary reason to apply RF plasma to mineral ore processing is to gain higher recoveries than what can be otherwise achieved from conventional hydrometallurgy or pyrometallurgy. TPT has performed laboratory investigations and pilot plant demonstrations of their proprietary RF Plasma technology on both platinum group metal recoveries and gold extraction. The results as shown in independent lab assay tests have been convincingly positive. The goal is to pave the way for mining companies and mine operators to tap into hidden or undervalued assets in complex ore mines that may or may not have been excavated.

Management continues to explore new investment opportunities with a focus in technology, mining and applied materials. Management is also currently assessing and evaluating new strategic partnership opportunities for TPT to develop its customer base.

Results of Operations

For the Nine Months Ended June 30, 2014 and 2013

Revenues

The Company had no revenue for the Nine Months ended June 30, 2014 and 2013.

Operating Expenses

For the nine months ended June 30, 2014 total operating expenses were $87,305 compared to $76,020 for the nine months ended June 30, 2013 resulting in an increase of $11,285. The increase in operating expenses primarily relates to increases in consulting fees, rent, and costs associated with regulatory reporting.

Liquidity and Capital Resources

Overview

As of June 30, 2014, the Company had no cash and a deficit in working capital of $352,409. Historically, our operating expenses have been funded and paid by CIL and by the issuance of a note payable.

We do not have sufficient resources to effectuate our business. As of June 30, 2014, we had no cash. We expect to incur a minimum of $175,000 in expenses during the next twelve months of operations. We estimate that this will be comprised of the following expenses: $25,000 for business planning and development, and $150,000 for general overhead expenses such as legal and accounting fees, office overhead and general expenses.

Liquidity and Capital Resources during the Nine Months Ended June 30, 2014 compared to the Nine Months ended June 30, 2013

We used cash for operating activities of $44,685 and $46,988 for the nine months ended June 30, 2014, and 2013, respectively. The elements of cash flow used in operations for the nine months ended June 30, 2014 included a net loss of $88,624 and an increase in lease deposits of $861,offset by interest accrued on a note payable of $399, accretion of beneficial conversion feature of $820 and increases in accounts payable of $43,481. The elements of cash flow used in operations for the nine months ended June 30, 2013 included a net loss of $76,020, offset by increases in accounts payable of $19,032 and accrued expenses of $10,000.

We used no cash in investing activities during the nine months ended June 30, 2014 and 2013.

Cash generated in our financing activities was $44,685 for the nine months ended June 30, 2014, compared to cash generated of $46,988 during the comparable period in 2013. The financing activities for the nine months ended June 30, 2014 consist of $19,961 of proceeds from a note payable and $24,724 of amounts received as a loan from our principal shareholder while the cash provided by financing activities for the nine months ended June 30, 2013 are attributed to amounts due to our principal shareholder for expenses paid on our behalf by the shareholder.

We will have to raise funds to pay for our expenses. We may have to borrow money from shareholders or issue debt or equity or enter into a strategic arrangement with a third party. There can be no assurance that additional capital will be available to us. We currently have no arrangements or understandings with any person to obtain funds through bank loans, lines of credit or any other sources. Since we have no such arrangements or plans currently in effect, our inability to raise funds for our operations will have a severe negative impact on our ability to remain a viable company.

Going Concern

Due to the uncertainty of our ability to meet our current operating and capital expenses, our independent auditors included an explanatory paragraph in their report on the audited financial statements for the year ended September 30, 2013 regarding concerns about our ability to continue as a going concern. Our financial statements contain additional note disclosures describing the circumstances that lead to this disclosure by our independent auditors.

Our unaudited financial statements have been prepared on a going concern basis, which assumes the realization of assets and settlement of liabilities in the normal course of business. Our ability to continue as a going concern is dependent upon our ability to generate profitable operations in the future and/or to obtain the necessary financing to meet our obligations and repay our liabilities arising from normal business operations when they become due. The outcome of these matters cannot be predicted with any certainty at this time and raise substantial doubt that we will be able to continue as a going concern. Our unaudited financial statements do not include any adjustments to the amount and classification of assets and liabilities that may be necessary should we be unable to continue as a going concern.

There is no assurance that our operations will be profitable. Our continued existence and plans for future growth depend on our ability to obtain the additional capital necessary to operate either through the generation of revenue or the issuance of additional debt or equity.

Off-Balance Sheet Arrangements

We currently have no off-balance sheet arrangements that have or are reasonably likely to have a current or future material effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

Critical Accounting Policies

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires us to make a number of 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. Such estimates and assumptions affect the reported amounts of revenues and expenses during the reporting period. We base our estimates on historical experiences and on various other assumptions that we believe to be reasonable under the circumstances. Actual results may differ materially from these estimates under different assumptions and conditions. We continue to monitor significant estimates made during the preparation of our financial statements. On an ongoing basis, we evaluate estimates and assumptions based upon historical experience and various other factors and circumstances. We believe our estimates and assumptions are reasonable in the circumstances; however, actual results may differ from these estimates under different future conditions.

See Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and Note 2, “Summary of Significant Accounting Policies” in our audited consolidated financial statements for the year ended September 30, 2013, included in our Annual Report on Form 10-K as filed on January 14, 2014, for a discussion of our critical accounting policies and estimates.

Item 3.     Quantitative and Qualitative Disclosures About Market Risk.

The disclosure required under this item is not required to be reported by smaller reporting companies; as such term is defined by Item 503(e) of Regulation S-K.

Item 4.     Controls and Procedures.

In connection with the preparation of this Quarterly Report on Form 10-Q, an evaluation was carried out by the Company's management, with the participation of the principal executive officer and the principal financial officer, of the effectiveness of the Company's disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 ("Exchange Act")) as of June 30, 2014. Disclosure controls and procedures are designed to ensure that information required to be disclosed in reports filed or submitted under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the Securities and Exchange Commission's rules and forms, and that such information is accumulated and communicated to management, including the chief executive officer and the chief financial officer, to allow timely decisions regarding required disclosures.

Based on that evaluation, the Company's management concluded, as of the end of the period covered by this report, that the Company's disclosure controls and procedures were not effective in recording, processing, summarizing, and reporting information required to be disclosed, within the time periods specified in the Commission's rules and forms, and that such information was accumulated and communicated to management, including the principal executive officer and the principal financial officer, to allow timely decisions regarding required disclosures.

There were no changes in our internal control over financial reporting that occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II – OTHER INFORMATION

Item 1.     Legal Proceedings

We are currently not involved in any litigation that we believe could have a material adverse effect on our financial condition or results of operations.  There is no action, suit, proceeding, inquiry or investigation before or by any court, public board, government agency, self-regulatory organization or body pending or, to the knowledge of the executive officers of our company, threatened against or affecting our company or our common stock in which an adverse decision could have a material adverse effect.

Item 1A.     Risk Factors

The disclosure required under this item is not required to be reported by smaller reporting companies; as such term is defined by Item 503(e) of Regulation S-K.

Item 2.     Unregistered Sales of Equity Securities and Use of Proceeds.

There were no unregistered sales of equity securities during the quarter ended June 30, 2014.

Item 3.  Defaults Upon Senior Securities.

None.

Item 4.     Mine Safety Disclosures

Not applicable.

Item 5.     Other Information.

None.

Item 6.     Exhibits

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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.