IMPERALIS HOLDING CORP. - Quarter Report: 2008 June (Form 10-Q)

form10-qcoloured.htm

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

for the quarterly period ended June 30, 2008

[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

for the transition period from _____to _____

Commission File Number: 000-52152

COLOURED (US) INC.

(Name of issuer as specified in its charter)

NEVADA	N/A
(State or other jurisdiction of incorporation or	(IRS Employer Identification No.)
organization)

Suite 3.19, 130 Shaftesbury Avenue, London, England WID 5EU

(Address of principal executive offices)

+44 (0) 20 7031 1189

Issuer's telephone number

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 past 12 months (or for such shorter period 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 Noo

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,” “non-accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer o	Accelerated filer o
Non-accelerated filer o	Smaller reporting company x
(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes x Noo

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. 38,648,660 shares of common stock as of August 14, 2008.

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FORWARD-LOOKING STATEMENTS

This quarterly report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements involve risks and uncertainties, including statements regarding our capital needs, business plans and expectations. Such forward-looking statements involve risk and uncertainty regarding our ability to achieve commercial levels of sales of our Coloured Mobile Games, our ability to successfully market our Coloured Mobile Games, our ability to continue development and upgrades to the Coloured Mobile Games and our mobile games technology, availability of funds, government regulations, common share prices, operating costs, capital costs and other factors. Forward-looking statements are made, without limitation, in relation to our operating plans, our liquidity and financial condition, availability of funds, operating costs and the market in which we compete. Any statements contained herein that are not statements of historical facts may be deemed to be forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as "may", "will", "should", "expect", "plan", "intend", "anticipate", "believe", "estimate", "predict", "potential" or "continue", the negative of such terms or other comparable terminology. Actual events or results may differ materially. In evaluating these statements, you should consider various factors, including the risks outlined below, and, from time to time, in other reports we file with the SEC. These factors may cause our actual results to differ materially from any forward-looking statement. We disclaim any obligation to publicly update these statements, or disclose any difference between our actual results and those reflected in these statements. The information constitutes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Given these uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements.

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COLOURED (US) INC.

Quarterly Report On Form 10-Q

For The Quarterly Period Ended

June 30, 2008

INDEX

PART I – FINANCIAL INFORMATION		Page

Item 1.	Financial Statements	4
Item 2.	Management’s Discussion and Analysis	14
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	19
Item 4.	Controls and Procedures	19
PART II – OTHER INFORMATION

Item 1.	Legal Proceedings	21
Item 1A.	Risk Factors	21
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	21
Item 3.	Defaults Upon Senior Securities	21
Item 4.	Submission of Matters to a Vote of Securities Holders	21
Item 5.	Other Information	21
Item 6.	Exhibits	22

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PART I – FINANCIAL INFORMATION

Item 1.

Financial Statements

The following unaudited consolidated financial statements of Coloured (US) Inc. (the “Company”) are included in this Quarterly Report on Form 10-Q:

	Page

Consolidated Balance Sheets as at June 30, 2008 (unaudited) and September 30, 2007 (audited)	F-2

Consolidated Statements of Operations for the three and six month periods ended June 30, 2008 and 2007 and for the period from incorporation (May 2, 2003) to June 30, 2008	F-3

Consolidated Statements of Cash Flows during the three and six month periods ended June 30, 2008 and 2007 and for the period from incorporation (May 2, 2003) to June 30, 2008	F-5

Notes to Consolidated Financial Statements	F-6

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Coloured (US) Inc.

(A Development Stage Company)

Consolidated Balance Sheets

(Unaudited)

	As of			As of
	June 30, 2008			September 30, 2007
ASSETS

Current Assets
Cash	$	38,811		$	6,311
VAT Receivable					403
Prepaid Expenses					2624
Total Current Assets		38,811			9,338

Fixed Assets
Rights and Technology, net	$	0		$	5,463
Total Fixed Assets
TOTAL ASSETS		38,811			14,801

LIABILITIES
Current Liabilities
Accounts payable	$	15,487		$	130,245
Accrued liabilities		18,682			40,658
VAT payable		2,805			-
Due to related parties		301,592			202,344
Total Current Liabilities		338,566			373,247

Long Term Liabilities
Loans Payable		62,425			32,425
Total Long Term Liabilites		62,425			32,425

STOCKHOLDERS’ DEFICIENCY
Capital Stock
Preferred Stock
Authorized: 5,000,000 shares with $0.001 par value. Issued: Nil		-			-
Common Stock
Authorized: 100,000,000 common shares with $0.001 par value
Issued: 38,648,660 (June 30, 2008)		38,649			30,649
30,648,660 (September 30, 2007)
Additional paid-in capital		3,663,710			3,471,710
Accumulated Comprehensive Loss		(19,063	)		(20,812	)
Deficit - Accumulated during the development stage		(4,045,476	)		(3,872,418	)
		(362,180	)		(390,871	)
	$	38,811		$	14,801

The accompanying notes are an integral part of these consolidated financials statements.

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Coloured (US) Inc.

(A Development Stage Company)

Consolidated Statements of Operations

(Unaudited)

													Cumulative
													From
													Incorporation
	For the Three			For the Three			For the Nine			For the Nine			May 02, 2003
	Months Ended			Months Ended			Months Ended			Months Ended			to
	June 30, 2008			June 30, 2007			June 30, 2008			June 30, 2007			June 30, 2008

General and Administrative Expenses
Accounting and auditing		15,225			13,165			47,047			57,330			339,395
Advertising														1,890
Amortization and Depreciation					2,646			3,364			7,805			28,403
Consulting fees		29,931			31,461			90,591			97,971			315,353
Filing fees, net of recovery		375			562			3,355			(2,000	)		12,943
Information technology		176			895			436			3,383			23,784
Intellectual properties		-			-			-			-			3,000,000
Investor relations		-			-			-			18,250			18,250
Legal		3,484			6,781			32,049			11,615			130,023
Office and miscellaneous		337			-			337			-			5,472
Rent		2,993			2,978			9,029			8,783			53,610
Salaries and wages		-			-			-			-			104,196
Transfer agent fees		2,050			155			2,407			390			4,812
Travel		-			-			113			-			6,361
Total General and Administrative Expenses		54,571			58,643			188,728			203,527			4,044,492
		(54,571	)		(58,643	)		(188,728	)		(203,527	)		(4,044,492	)
Loss from Operations
Other Income (Expense)
Gain on settlement of debt		-			-			20,144			-			20,144
Interest expense		(517	)		(80	)		(3,878	)		(610	)		(11,358	)
Foreign exchange gain (loss)		(511	)		(3,491	)		(679	)		(3,493	)		(10,067	)
Miscellaneous income		83			-			83			-			297
Loss for the period	$	(55,516	)	$	(62,214	)	$	(173,058	)	$	(207,630	)	$	(4,045,476	)
Loss per Share – Basic and Diluted	$	0.00		$	(0.00	)	$	(0.00	)	$	(0.01	)

Weighted Average Shares Outstanding		38,648,660			30,643,214			34,648,660			30,630,162


Comprehensive Loss
Net Loss		(55,516	)		(62,214	)		(173,058	)		(207,630	)		(4,045,476	)
Foreign currency translation adjustment		7,106			(2,081	)		(1,749	)		(5,416	)		(19,063	)
Total Comprehensive Loss		(48,410	)		(64,295	)		(174,807	)		(213,046	)		(4,064,539	)

The accompanying notes are an integral part of these consolidated financial statements.

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Coloured (US) Inc.

(A Development Stage Company)

Consolidated Statements of Cash Flow

(Unaudited)

	For the Nine Months Ending June 30, 2008			For the Nine Months Ending June 30, 2007			Cumulative from Incorporation May 2, 2003 to June 30, 2008
Operating
Net Loss	$	(173,058	)	$	(207,630	)	$	(4,045,476	)
Items not involving cash:
Amortization and depreciation		5463			7805			30,502
Gain on settlement of debt		(20,144	)		-			(20,144	)
Interest accrued on promissory notes		1,529			-			3,958
Shares for consulting services		-			6,250			13,066
Shares for intellectual properties		-			-			3,000,000
Changes in non-cash working capital items:
Accounts receivable		-			509			-
VAT payable (receivable)		3,208			2,113			2,805
Prepaid expenses		2,624			(2,968	)		-
Accounts payable		(94,614	)		82,116			35,631
Accrued liabilities		(23,505	)		(12,999	)		4,518
Net cash flows provided by (used in) operations		(298,497	)		(124,804	)		(975,140	)

Investing
Acquisition of rights and technology		-			-			(30,502	)
Cash acquired in purchase of Emcor Holdings Inc.		-						127,705
Net cash flows from investing activities		0			0			97,203

Financing
Loan from related parties		99,248			101,217			508,314
Loan proceeds		30,000			28,425			62,425
Convertible promissory note		-			-			1,000
Share issuances for cash		200,000			-			364,072
Net cash flows from financing activities		329,248			129,642			935,811

Effect of exchange rate changes		1,749			(6,257	)		(19,063	)

Change in Cash		32,500			(1,419	)		38,811
Cash - Beginning		6,311			6,695			-
Cash - Ending	$	38,811		$	5,276		$	38,811

Supplemental Cash Flow Information
Cash paid for:
Income Taxes	$	-		$	-		$	-
Interest Paid	$	-		$	112		$	-

The accompanying notes are an integral part of these consolidated financial statements.

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Coloured (US) Inc.

(Formerly Emcor Holdings Inc.)

(A Development Stage Company)

Notes to Consolidated Financial Statements

June 30, 2008

US Funds

1. Basis of Presentation

Organization

Coloured (US) Inc. (the “Company” or "Emcor") was incorporated on April 5, 2005 under the laws of the State of Nevada, under the name of Emcor Holdings Inc. Effective September 30, 2005, the Company completed a Share Exchange Agreement (“Agreement”) with Coloured Industry Limited (“Coloured”). Coloured, a technology and marketing company headquartered in London, England, was incorporated on May 2, 2003. Pursuant to the Agreement, the Company agreed to issue to the shareholders of Coloured 12,000,000 common shares in exchange for 100% of the issued and outstanding shares of Coloured. On September 30, 2005, Coloured complete the reverse acquisition under a Stock Exchange Agreement (“RTO”) with Emcor. Immediately before the date of the RTO, Emcor had 100,000,000 shares authorized and 5,667,660 shares of common stock issued and outstanding. Pursuant to the RTO, all of the 2,087,000 issued and outstanding shares of common stock of Coloured were exchanged for 12,000,000 shares of Emcor, on an approximately 5.75 to 1 basis. The transaction was accounted for as a recapitalization of the Company. On December 8, 2005, the Company changed its name to Coloured (US) Inc. The accompanying financial statements are the historical financial statements of Coloured.

Unaudited Interim Consolidated Financial Statements

The accompanying unaudited interim consolidated financial statements have been prepared in accordance with United States generally accepted accounting principles for interim financial information and with the instructions to Form 10-QSB of Regulation S-B. They do not include all information and footnotes required by generally accepted accounting principles for complete financial statements. However, except as disclosed herein, there have been no material changes in the information disclosed in the notes to the consolidated financial statements for the year ended September 30, 2007 included in the Company’s 10-KSB filed with the Securities and Exchange Commission. The unaudited interim consolidated financial statements should be read in conjunction with those consolidated financial statements included in the 10-KSB. In the opinion of management, all adjustments considered necessary for a fair presentation, consisting solely of normal recurring adjustments, have been made. Operating results for the nine months ended June 30, 2008 are not necessarily indicative of the results that may be expected for the year ending September 30, 2008

2. Significant Accounting Policies

The following is a summary of significant accounting policies used in the preparation of these financial statements.

a) Basis of Consolidation

These consolidated financial statements include the accounts of Coloured Industry Limited since its incorporation on May 3, 2003 and the Company since the reverse acquisition on September 30, 2005. All intercompany balances and transactions have been eliminated.

b) Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make certain estimates and assumptions that affect the reported amounts and timing of revenues and expenses, the reported amounts and classification of assets and liabilities, and disclosure of contingent assets and liabilities. These estimates and assumptions are based on the Company’s historical results as well as management’s future expectations. The Company’s actual results could vary materially from management’s estimates and assumptions.

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c) Development Stage Company

The Company is a development stage company as defined by SFAS No. 7. The Company is devoting substantially all of its present efforts to establish a new business. All losses accumulated since inception have been considered as part of the Company’s development stage activities.

d) Foreign Currency Translations

The Company’s functional currency is GBP. The Company’s reporting currency is the U.S. dollar. All transactions initiated in other currencies are re-measured into the functional currency as follows:

i) Monetary assets and liabilities at the rate of exchange in effect at the balance sheet date,

ii) Non-monetary assets and liabilities, and equity at historical rates, and

iii) Revenue and expense items at the prevailing rate on the date of the transaction.

Gains and losses on re-measurement are included in determining net income for the period.

Translation of balances from the functional currency into the reporting currency is conducted as follows:

i) Assets and liabilities at the rate of exchange in effect at the balance sheet date,

ii) Equity at historical rates, and

iii) Revenue and expense items at the prevailing on the date of the transaction.

Translation adjustments resulting from translation of balances from functional to reporting currency are accumulated as a separate component of shareholders’ equity as a component of comprehensive income or loss. Upon sale or liquidation of the net investment in the foreign entity the amount deferred will be recognized in income.

e) Income Taxes

Income taxes are accounted for using the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance is provided for deferred tax assets when it is more likely than not that such assets will not be recovered.

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f) Fair Value of Financial Instruments

The Company’s financial instruments consist of cash, accounts receivable, accounts payable, accrued liabilities and amounts due to related parties. Unless otherwise noted, it is management’s opinion that this Company is not exposed to significant interest or credit risks arising from these financial instruments. The fair value of these financial instruments approximate their carrying values, unless otherwise noted.

g) Segment Reporting

SFAS No. 131, "Disclosures about Segments of an Enterprise and Related Information,” changed the way public companies report information about segments of their business in their quarterly reports issued to stockholders. It also requires entity-wide disclosures about the products and services an entity provides, the material countries in which it holds assets and reports revenues and its major customers. The Company currently operates in two segments, Western Europe and United States.

h) Stock-Based Compensation

Effective January 1, 2006, the Company adopted the provisions of Statement of Financial Accounting Standards (“SFAS”) No. 123(R), “Share-Based Payment”, which establishes accounting for equity instruments exchanged for employee services. Under the provisions of SFAS 123(R), stock-based compensation cost is measured at the grant date, based on the calculated fair value of the award, and is recognized as an expense over the employees’ requisite service period (generally the vesting period of the equity grant). Before January 1, 2006, the Company accounted for stock-based compensation to employees in accordance with Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees,” and complied with the disclosure requirements of SFAS No. 123, “Accounting for Stock-Based Compensation”.

The Company adopted FAS 123(R) using the modified prospective method, which requires the Company to record compensation expense over the vesting period for all awards granted after the date of adoption, and for the unvested portion of previously granted awards that remain outstanding at the date of adoption. As the Company had no invested stock options outstanding on the adoption date the financial statements for the periods prior to January 1, 2006 have not been restated to reflect the fair value method of expensing share-based compensation. Adoption of SFAS No. 123(R) does not change the way the Company accounts for share-based payments to non-employees, with guidance provided by SFAS 123 (as originally issued) and Emerging Issues Task Force Issue No. 96-18, “Accounting for Equity Instruments That Are Issued to Other Than Employees for Acquiring, or in Conjunction with Selling, Goods or Services”.

i) Comprehensive Income

SFAS No. 130, "Reporting Comprehensive Income," establishes standards for reporting and display of comprehensive income and its components in a full set of general-purpose financial statements. At June 30, 2008, comprehensive loss consisted of the net loss for the period and foreign currency translation adjustments.

j) Loss per Share

The Company computes net loss per share in accordance with SFAS No. 128, “Earnings per Share”, which requires presentation of both basic and diluted loss per share (“LPS”) on the face of the statement of operations. Basic LPS is computed by dividing the net loss available to common shareholders by the weighted average number of outstanding common shares during the period. Diluted LPS gives effect to all potentially dilutive common shares outstanding including convertible debt, stock options and share purchase warrants, using the treasury stock method. The computation of diluted LPS does not assume conversion, exercise or contingent exercise of securities that would have an anti-dilutive effect on LPS. The diluted LPS equals the basic LPS since the potentially dilutive securities are anti-dilutive.

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k) Recently Adopted Accounting Standards

In February 2007, the Financial Accounting Standards Board (the “FASB”) issued Statement of Financial Accounting Standards (“SFAS”) 159, “The Fair Value Option for Financial Assets and Financial Liabilities” (“SFAS 159”). SFAS 159 allows the Company to choose to measure many financial assets and financial liabilities at fair value. Unrealized gains and losses on items for which the fair value option has been elected are reported in earnings. SFAS 159 is effective for fiscal years beginning after November 15, 2007. The adoption of SFAS 158 is not expected to have a material impact on the Company’s financial position, results of operation or cash flows.

In December 2007, the FASB issued SFAS No. 160, “Non-controlling Interests in Consolidated Financial Statements”. This Statement amends ARB 51 to establish accounting and reporting standards for the non-controlling (minority) interest in a subsidiary and for the deconsolidation of a subsidiary. It clarifies that a non-controlling interest in a subsidiary is an ownership interest in the consolidated entity that should be reported as equity in the consolidated financial statements. The Company has not yet determined the impact, if any, that SFAS No. 160 will have on its consolidated financial statements. SFAS No. 160 is effective for the Company’s fiscal year beginning October 1, 2009.

In December 2007, the FASB issued SFAS 141R, Business Combinations. SFAS 141R replaces SFAS 141. The statement retains the purchase method of accounting for acquisitions, but requires a number of changes, including changes in the way assets and liabilities are recognized in the purchase accounting. It changes the recognition of assets acquired and liabilities assumed arising from contingencies, requires the capitalization of in-process research and development at fair value, and requires the expensing of acquisition-related costs as incurred. The statement will apply prospectively to business combinations occurring in the Company’s fiscal year beginning October 1, 2009. We are evaluating the impact adopting SFAS 141R will have on our financial statements.

3. Rights and Technology

The Company has a software license for the mobile platform known as ARTE. The Company amortizes the software on a straight-line basis over the estimated useful life of three years. At June 30, 2008, the software was fully amortized

4. Related Party Balances and Transactions

a) The amounts due to related parties of $301,592 for the nine months ended June 30, 2008 are non-interest bearing and due on demand. Included in amounts due to related parties are amounts owing to the Managing Director, a corporate shareholder, two separate companies with directors in common with a corporate shareholder of the Company, and a company with an officer in common with a corporate shareholder of the Company.

b) By employment agreement dated August 15, 2003 and amended July 20, 2004, the Company agreed to pay to the Managing Director $38,450 (GBP24,000) per annum plus 234,785 shares every three months to a maximum of 1,408,720 common shares. When the Company accepted a take-over offer, the balance of the 1,408,720 shares were issued. During the nine months ended June 30, 2008, $Nil was paid to the Managing Director in cash. The Managing Director waived his annual salary for the nine months ended June 30, 2008

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c) During the nine months ended June 30, 2008, the Company accrued $9,029 for rent to a company with a director in common with a corporate shareholder of the Company

d) By agreement dated August 1, 2006, the Company entered into a one-year Consulting Agreement with a related company that has an officer in common with a corporate shareholder of the Company. The monthly payments for general consulting services is GBP 5,000 for a minimum of one year beginning on August 1, 2006. At June 30, 2008, $198,929 was accrued . This agreement will automatically renew on a month-to-month basis with the same terms and conditions. Either party may terminate this agreement with one month’s advance written notice.

The above transactions, occurring in the normal course of operations, are measured at the exchange amount, which is the amount of consideration established, and agreed to by the related parties.

6. Loans Payable

a) On July 1, 2007, the Company entered into a formal loan agreement with Karada Ltd., an unrelated third party, for debt financing. The loan is a draw down facility which is unsecured and available in minimum traunches of $5,000 up to a maximum of $250,000 bearing interest at a rate of 5% per annum calculated monthly, for a period of five years ending July 1, 2012. The loan is due on demand after the maturity date. In the event of a default, the interest rate increases to 10% per annum calculated monthly. In addition, a lending fee of $1,000 will be applied to the balance owing and due on the maturity date.

As at June 3, 2008, the loan balance was $32,425.

b) On April 15, 200, the Company entered into a formal loan agreement with Green Shoe Investments Ltd., an unrelated third party, for debt financing. The loan was for $ 30,000 bearing interest at a rate of 5% per annum calculated monthly, for a period of one year ending April 15, 2009. The loan is due on demand after the maturity date.

As at June 30, 2008, interest in the amount of $313 was accrued.

7. Capital Stock

The Company’s capitalization is 100,000,000 common shares with a par value of $0.001 per share and 5,000,000 preferred shares with a par value of $0.001.

a) All share information presented in these financial statements relating to share transactions taking place prior to September 30, 2005 has been, restated to reflect the approximately 5.75 to 1 ratio based upon the 12,000,000 shares issued on September 30, 2005 to acquire the shares of Coloured (Note 1).

b) During the year ended September 30, 2004, the Company split its stock on a 100 new for 1 old basis.

c) On November 7, 2007, the Company received $200,000 as total cash consideration for the purchase of 4,000,000 units, each unit consisting of one common share and a warrant to acquire one additional common share for $0.05 per share by November 7, 2009. On December 17, 2007, the Company amended the terms of the above offering to increase the number of units to 8,000,000 and reduce the price to $0.025. The new expiry date of the warrants is December 17, 2009. On February 14, 2008, these shares were issued.

There were 8,000,000 warrants and no stock options outstanding as at June 30, 2008.

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8. Going Concern

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates, among other things, the realization of assets and satisfaction of liabilities in the normal course of business. As at June 30, 2008, the Company has an accumulated deficit of $4,045,476 and has incurred an accumulated operating cash flow deficit of $975,140 since incorporation. The Company intends to continue funding operations through equity financing arrangements, which may be insufficient to fund its capital expenditures, working capital and other cash requirements for the next fiscal year.

Thereafter, the Company will be required to seek additional funds, either through equity financing, to finance its long-term operations. The successful outcome of future activities cannot be determined at this time, and there is no assurance that, if achieved, the Company will have sufficient funds to execute its intended business plan or generate positive operating results. In response to these conditions, management intends to raise additional funds through future private placement offerings.

These factors, among others, raise substantial doubt about the Company's ability to continue as a going concern. The accompanying consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

9. Subsequent Event

There were no subsequent events expected to have a material effect on the presentation of these financial statements.

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Item 2.

Management’s Discussion and Analysis

The following discussion of our financial condition, changes in financial condition and results of operations for the six month period ended June 30, 2008 should be read in conjunction with our unaudited consolidated interim financial statements and related notes for the six month period ended June 30, 2008.

Overview of Our Business

We were incorporated on April 5, 2005 under the laws of the State of Nevada. We carry out our business operations through our wholly owned subsidiary, Coloured Industry Limited ("Coloured UK"), located in the United Kingdom. Our principal executive office is located at Suite 3.19, 130 Shaftesbury Avenue, London, England, W1D 5EU. Our telephone number is +44(0)20 7031 1189 and our fax number is +44(0)20 7031 1199.

We are the owner of six mobile games designed to be played on GSM-network mobile phones using the Short Message Service (“SMS”) features of these phones. The SMS short message service refers to an industry adopted standard for sending and receiving text messages to and from mobile telephones and other mobile devices. Our games are played entirely via regular text messages sent back and forth between players via the servers on which our games are stored. Text messages are relatively short and easily translated into virtually any language.

All of our games are multi-player games which allow players to interact with and play against others located in the player’s vicinity. And all of our games support optional value-added features such as location-based services (LBS) where the actual location of each player has an effect of the outcome, and Multimedia Messaging Services (MMS) which facilitates the inclusion of graphics in each text message. Players send their commands to our server by way of text message. Our server receives the messages, integrates the commands within the context of the game being played, and automatically sends responses by text message to each player. Three of our games will utilize support from our website, where players may check their individual playing statistics, view high scores and get tips and strategies on improving their skills. Our mobile games may also be played without the LBS feature for networks which do not support it.

The primary target market for our games are teenage and young adult mobile phone users. Our games have been designed with the objective that they are quick to learn, enjoyable to play and may be played in a relatively short period of time over many sessions. Text messages are relatively short and easily translated into a variety of languages for distribution into major foreign language markets. Each of our games has been fully developed and is ready for commercial deployment. We plan further developments to these games as our future resources permit. Specifically, we plan to develop software, which players may choose to download onto mobile phones which support the technology, that will enable our games to integrate more advanced graphics and video into our games in a way that will further increase their playability.

We intend to market and distribute our games through a number of different “gateway owners”, or companies that sell mobile phone products and services to the general public. Gateway owners include wireless network providers (such as Vodafone, Orange, T-Mobile, Sprint), Internet portals (MSN and Lycos) and media companies that publish or distribute products in which mobile services are generally advertised (Bertelsmann and Bonnier). To assist us in marketing our games to these gateway owners, we have established and intend to build relationships with various agents and resellers located in Europe, America and Asia whom we intend to partner with to distribute our games worldwide. We intend to expand our dealings to include gateway owners in North America and eventually South America and Australia. Each of these regions has shown growth in the use of text-messaging among mobile phone users in recent years.

We have not earned revenues to date. Our plan of operations is, as described below, to partner with gateway owners, either directly or indirectly through third party resellers, in the marketing and distribution of our mobile games.

We are presently inactive in our business operations due to a lack of financing. We are presently seeking financing that would enable us to continue our plan of operations or target the acquisition of a new business or properties. There is no assurance that we will be able to achieve the necessary financing to enable us to continue our plan of operations or complete any acquisition.

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Plan of Operations

If we raise financing to pursue our current business, our plan of operations would be to exploit our mobile games in their present form. While our strategy in each geographic market will vary according to a number of factors including the maturity of the local mobile gaming market and the telecom infrastructure available, our overall objective is to establish greater awareness of our mobile games in each marketplace in order to generate initial revenues. We plan to achieve this objective by undertaking sales and marketing campaigns in each market directed at local gateway owners. We will also continue creating relationships with strategic partners/resellers in different markets where we have few direct contacts. We also anticipate proceeding with the continued enhancement of our mobile games with a view to increasing their features and functionality.

Our plan of operations for the next twelve months is to complete the following objectives within the time periods and within the budgets specified, subject to our achieving the necessary financing:

1.	We plan to carry out our sales and marketing efforts for our applications and games with the objective of securing sales to gateway owners and entering into further agreements with resellers. We anticipate that marketing activities will be carried throughout the course of the next twelve months. We anticipate that we will spend approximately $7,000 per month on sales and marketing activities during the next twelve months, for a total anticipated expenditure of $84,000.

2.	We anticipate spending approximately $20,000 over the next twelve months on the development of new features for our mobile games.

3.	We anticipate spending approximately $2,000 in ongoing general and administrative expenses per month for the next twelve months, for a total anticipated expenditure of $24,000 over the next twelve months. The general and administrative expenses for the year will consist primarily of rent and office services, technical support and hosting services and general office expenses.

4.	We anticipate spending approximately $40,000 in complying with our obligations as a reporting company under the Securities Exchange Act of 1934. These expenses will consist primarily of professional fees relating to the preparation of our financial statements and completing our annual report, quarterly report, current report and proxy statement filings with the SEC.

We had cash of $38,811 and working capital deficit of $299,755 as at June 30, 2008. Our planned expenditures over the next twelve months in the amount of $150,000 will exceed our current cash reserves and working capital. As a result, we anticipate that we will require financing in the amount of approximately $450,000 in order to carry out our plan of operations for the next twelve months and to cover our working capital deficit.

During the twelve month period following the date of this quarterly report, we anticipate that we will not generate revenues that exceed our operating costs. We anticipate based on our current cash and working capital and our planned expenses that we will be able to continue our plan of operations for three more months without additional financing. We believe that we will require substantial additional financing in order to commercialize our mobile games in order to earn revenues that exceed our operating expenses. We believe that debt financing from third parties will not be an alternative for funding of our planned activities as we do not have tangible assets to secure any debt financing. We anticipate that additional funding will be in the form of equity financing from the sale of our common stock or sales of convertible promissory notes that are convertible into shares of our common stock. If we do not obtain the necessary additional financing, we will be forced to abandon our plan of operations and our business activities.

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Presentation of Financial Information

Effective September 30, 2005, we acquired 100% of the issued and outstanding shares of Coloured UK by issuing 12,000,000 shares of our common stock. Notwithstanding its legal form, our acquisition of Coloured UK has been accounted for as a reverse acquisition, since the acquisition resulted in the former shareholders of Coloured UK owning the majority of our issued and outstanding shares. Because Emcor Holdings Inc. (now Coloured (US) Inc.) was a newly incorporated company with nominal net non-monetary assets, the acquisition has been accounted for as an issuance of stock by Coloured UK accompanied by a recapitalization. Under the rules governing reverse acquisition accounting, the results of operations of Coloured (US) Inc. are included in our consolidated financial statements effective September 30, 2005. Our date of inception is the date of inception of Coloured UK, being May 2, 2003, and our financial statements are presented with reference to the date of inception of Coloured UK. Financial information relating to periods prior to September 30, 2005 is that of Coloured UK.

Critical Accounting Policies

Development Stage Company

We are a development stage company as defined by Financial Accounting Standards No. 7. We are presently devoting all of our present efforts to establishing a new business. All losses accumulated since inception have been considered as part of our development stage activities.

Revenue Recognition

We recognize revenue when all of the following criteria have been met: persuasive evidence for an arrangement exists; delivery has occurred; the fee is fixed or determinable and collection is reasonably assured. Upfront contract payments received from the sale of services not yet earned are initially recorded as deferred revenue on the balance sheet. The amount is recognized as income over the term of the contract.

Revenue from time and material service contracts is recognized as the services are provided. Revenue from fixed price, long-term service or development contracts is recognized over the contract term based on the percentage of services that are provided during the period compared with the total estimated services to be provided over the entire contract. Losses on fixed price contracts are recognized during the period in which the loss first becomes apparent. Payment terms vary by contract.

Foreign Currency Translations

Our functional currency is pounds sterling (“₤”). Our reporting currency is the U.S. dollar. All transactions initiated in other currencies are translated into U.S. dollars as follows:

(i)	assets and liabilities at the rate of exchange in effect at the balance sheet date;

(ii)	equity at historical rates; and

(iii)

revenue and expense items at the average rate of exchange prevailing during the period.

Unrealized exchange gains and losses arising from such translations are deferred until realization and are included as a separate component of shareholder’s equity as a component of comprehensive income or loss. Upon realization, the amount deferred is recognized as income in the period when it is realized.

Results Of Operations – Six month period ended June 30, 2008 and 2007

References to the discussion below to fiscal 2008 are to our current fiscal year which will end on September 30, 2008. References to fiscal 2007 and fiscal 2006 are to our fiscal years ended September 30, 2007 and 2006, respectively.

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														Cumulative
														From
		For Three			For Three			For Nine			For Nine			Incorporation
		Months			Months			Months			Months			May 2, 2003
		Ended			Ended			Ended			Ended			To
		June 30,			June 30,			June 30,			June 30,			June 30,
		2008			2007			2008			2007			2008
General and
Administrative Expenses
Accounting and auditing	$	15,225		$	13,165		$	47,047		$	57,330		$	339,395
Advertising														1,890
Amortization					2,646			3,364			7,805			28,403
Consulting fees		29,931			31,461			90,591			97,971			315,353
Filing fees net of recovery		375			562			3,355			(2,000	)		12,943
Information technology		176			895			436			3,383			23,784
Intellectual properties		-			-			-			-			3,000,000
Investor relations		-			-			-			18,250			18,250
Legal		3,484			6,781			32,049			11,615			130,023
Office and miscellaneous		337			-			337			-			5,472
Rent		2,993			2,978			9,029			8,783			53,610
Salaries and wages		-			-			-			-			104,196
Transfer agent fees		2,050			155			2,407			390			4,812
Travel net of recovery		-			-			113			-			6,361
Total General and
Administrative Expenses		54,571			58,643			188,728			203,527			4,044,492

Loss from Operations		(54,571	)		(58,643	)		(188,728	)		(203,527	)		(4,044,492

Other Income (Expense)
Gain on settlement of debt		-			-			20,144			-			20,144
Interest expense		(517	)		(80	)		(3,878	)		(610	)		(11,358)
Foreign exchange gain (loss)		(511	)		(3,491	)		(697	)		(3,493	)		(10,067)
Miscellaneous income		83			-			83			-			297
Loss for the Period	$	(55,516	)	$	(62,214	)	$	(173,058	)	$	(207,630	)	$	(4,045,476

Loss per Share – Basic
and Diluted	$	0.00		$	0.00		$	0.00		$	(0.00	)

Weighted Average Shares
Outstanding		38,648,660			30,643,214			34,648,660			30,630,162

Comprehensive Loss:
Net loss	$	(56,516	)	$	(62,214	)	$	(173,058	)	$	(207,630	)	$	(4,045,476
Foreign currency
translation adjustment		7,106			(2,081	)		(1,749	)		(5,416)			(19,063

Total Comprehensive Loss	$	(48,410	)	$	(64,295	)	$	(174,807	)	$	(213,046	)	$	(4,064,539

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Revenue

We have not generated revenues from sales of our Coloured mobile games to date.

Accounting and Auditing

Accounting and auditing expenses are attributable to the preparation and audit of our financial statements and to our compliance with the reporting obligations under the Securities Exchange Act of 1934.

Accounting and auditing expenses decreased during the first half of fiscal 2008 compared to the first half of fiscal 2007 due to less activity during 2008.

Consulting Fees

Consulting Fees are primarily comprised of consulting fees that we pay to Debondo Capital Limited on account of consulting services pursuant to a consulting agreement between the Company and Debondo Capital Limited dated August 1, 2006.

Information Technology

We did not incur any information and technology expenses during the first half of fiscal 2008 nor during the first half of fiscal 2007.

Intellectual Property

We did not incur any expenses on any intellectual property during the first half of fiscal 2008 nor during fiscal 2007. We had determined that the cost of the intellectual property purchased during our fiscal 2006 does not meet the criteria for capitalization as set out in SFAS No. 86.

Legal

Legal expenses are attributable to legal fees paid to our legal counsel in connection with the Company’s statutory obligations as a reporting company under the Securities Exchange Act of 1934 including the preparations and filings of our quarterly reports with the SEC. Legal expenses increased during the first quarter of 2008 due to the financing completed during this period.

Rent

Our rent expense is attributable to amounts paid to Azuracle on account of our rent of share office premises in London, England. Our rent expenses increased slightly during the first half of fiscal 2008 compared to the first half of fiscal 2007 due to increase in the foreign exchange rate of the U.S. dollar in terms of the Great Britain pound.

Salaries and Wages

Salaries and wages were primarily comprised of salary paid to Lars Brannvall, our sole executive officer and employee. We did not incur any salaries and wages expenses during the first half of fiscal 2008 nor during fiscal 2007. Mr. Brannvall ceased to draw a salary from us since October 1, 2006.

Loss for the Period

Our loss for the first half of fiscal 2008 and the second quarter of 2008 decreased compared to the first half and second quarter of fiscal 2007 due to decreased general and administrative expenses.

Liquidity And Capital Resources

We had cash of $38,811 and working capital deficit of $299,755 as at June 30, 2008. We had cash of $6,311 and working capital deficit of $363,909 as at September 30, 2007.

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Plan of Operations

We estimate that our total expenditures over the next twelve months will be approximately $168,000, as outlined above under the heading “Plan of Operations”. We anticipate that our cash and working capital will not be sufficient to enable us to undertake our plan of operations over the next twelve months without our obtaining additional financing. We presently require immediate financing in order that we have the cash necessary for us to continue our operations. We anticipate that we will require additional financing in the approximate amount of $450,000 in order to enable us to sustain our operations for the next twelve months.

We borrowed $30,000 from an investor in April 2008 in order to provide us with working capital to funds our operations.

Cash used in Operating Activities

We used cash of $298,497 in operating activities during the first nine months of fiscal 2008 compared to cash generated of $124,804 from operating activities during the first half of fiscal 2007.

We have applied cash generated from financing activities to fund cash used in operating activities.

Cash from Investing Activities

We did not use any cash in investing activities during the first half of fiscal 2008 nor during the first half of fiscal 2007.

Cash from Financing Activities

We generated cash of $329,248 from financing activities during the first half of fiscal 2008 compared to cash of $129,642 during the first half of fiscal 2007. This amount was attributable to share subscriptions.

Going Concern

We have not attained profitable operations and are dependent upon obtaining financing to pursue any extensive business activities. For these reasons our auditors stated in their report that they have substantial doubt we will be able to continue as a going concern.

Future Financings

We anticipate continuing to rely on equity sales of our common shares in order to continue to fund our business operations. Issuances of additional shares will result in dilution to our existing stockholders. There is no assurance that we will achieve any additional sales of our equity securities or arrange for debt or other financing to fund our planned activities.

Off-Balance Sheet Arrangements

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

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

Not applicable.

Item 4.

Controls and Procedures

As required by Rule 13a-15 under the Securities Exchange Act of 1934 (the “Exchange Act”), we carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of June 30, 2008, being the date of our most recently completed quarter. This evaluation was carried out under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, Mr. Lars Brannvall. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures are effective to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified by the rules and forms of the Securities and Exchange Commission (the “SEC”).

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Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed under the Exchange Act is accumulated and communicated to management, including our Chief Executive Officer and our Chief Financial Officer, to allow timely decisions regarding required disclosure.

During the fiscal quarter ended June 30, 2008, there were no changes in our internal control over financial reporting that have materially affected, or are reasonably likely to affect, our internal control over financial reporting during the quarter ended June 30, 2008.

The term “internal control over financial reporting” is defined as a process designed by, or under the supervision of, the registrant’s principal executive and principal financial officers, or persons performing similar functions, and effected by the registrant’s board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that:

(a)	Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the registrant;

(b)	Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the registrant are being made only in accordance with authorizations of management and directors of the registrant; and

(c)	Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the registrant’s assets that could have a material effect on the financial statements.

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PART II – OTHER INFORMATION

Item 1.

Legal Proceedings

We currently are not a party to any material legal proceedings and to our knowledge, no such proceedings are threatened or contemplated.

Item 1A.

Risk Factors

Not required as we are a “smaller reporting company”, within the meaning of the Securities Exchange Act of 1934.

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

We did not complete any sales of securities without registration under the Securities Act of 1933 during the three months ended June 30, 2008.

Item 3.

Defaults Upon Senior Securities

None.

Item 4.

Submission of Matters to a Vote of Securities Holders

No matters were submitted to our security holders for a vote during the six month period ended June 30, 2008.

Item 5.

Other Information

None.

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Item 6.

Exhibits

The following exhibits are included with this Quarterly Report on Form 10-Q:

Exhibit
Number	Description of Exhibit
3.1(1)	Articles of Incorporation
3.2(1)	Certificate of Amendment to Articles of Incorporation
3.3(1)	By-Laws
10.1(1)	Agency Exploitation Agreement dated June 30, 2003, between The Mobile Warrior Technology Partnership LLP and LDC Network Limited
10.2(1)	Letter Agreement dated effective April 2, 2004, between LDC Network Limited and Coloured UK
10.3(1)	Agency Exploitation Agreement dated August 6, 2003, between The Coloured Industry Technology Partnership and Coloured UK
10.4(1)	Employment Agreement between Coloured UK and Lars Brannvall dated August 6, 2003

Exhibit
Number	Description of Exhibit
10.5(1)	Loan Agreement dated October 8, 2003, between Coloured UK and CII
10.6(1)	Debt Settlement Agreement dated April 26, 2005, between Coloured UK and CII
10.7(1)	Share Exchange Agreement dated May 23, 2005, as amended, among Emcor Holdings Inc., Coloured UK and the stockholders of Coloured UK
10.8(1)	Asset Purchase Agreement dated January 31, 2006, between Coloured (US) Inc. and CII (Coloured Mobile Games)
10.9(1)	Asset Purchase Agreement dated January 31, 2006, between Coloured (US) Inc. and ABS Capital (Mobile Warrior Game)
10.10(1)	Debt Conversion Agreement dated February 28, 2006, between Emcor Holdings Inc. and CISA Holdings APS
10.11(1)	Debt Conversion Agreement dated February 28, 2006, between Emcor Holdings Inc. and Dan Simmons
10.12(1)	Termination and Release Agreement dated February 28, 2006, among Coloured UK and the Coloured Industry Technology Partnership LLP
10.13(1)	Termination and Release Agreement dated February 28, 2006, among Coloured UK and The Mobile Warrior Technology Partnership LLP
10.14(1)	Debenture Agreement dated October 8, 2003 between Coloured UK and CII evidencing The indebtedness of Coloured UK under the Loan Agreement
10.15(1)	Service Agreement dated August 4, 2004, between Coloured UK and Outlander Management
10.16(1)	Reseller Agreement dated February 19, 2004, between Coloured UK and Mtertainment Korea covering the territory of Asia, with exclusivity in Singapore
10.17(1)	Reseller Agreement dated February 20, 2004, between Coloured UK and Tele- Publishing UK Ltd. (also known as G8wave) covering the territory of the United Kingdom
10.18(1)	Worldwide Reseller Agreement dated February 20, 2004, between Coloured UK and Mocondi Ltd.
10.19(1)	Reseller Agreement dated March 13, 2004, between Coloured UK and Mobiletones Asia Pte Ltd. covering the territory of Asia, excluding Singapore
10.20(1)	Reseller Agreement dated March 10, 2005, between Coloured UK and Net People International Inc. covering the territory of Latin America (South & Central America), Mexico and the Caribbean
10.21(1)	Reseller Agreement dated April 19, 2004, between Coloured UK and Mobilkraft covering the territory of Sweden
10.22(1)	Reseller Agreement dated September 27, 2004, between Coloured UK and Nostromo ICT covering the territory of the Czech Republic
10.23(1)	Reseller Agreement dated November 25, 2004, between Coloured UK and Voicelock Ltd. (also known as Trust5) covering the territory of the United Kingdom and Ireland
10.24(1)	Worldwide Reseller Agreement dated December 12, 2004, between Coloured UK and Tracebit Ltd

Exhibit
Number	Description of Exhibit
10.25(1)	Reseller Agreement dated December 22, 2004, between Coloured UK and Mobile Minds covering the territory of Hungary, Slovakia, Czech Republic and Pakistan
10.26(1)	Reseller Agreement dated February 3, 2005, between Coloured UK and iTech Solutions India PVT Ltd covering the territory of India and the Indian Subcontinent
10.27(1)	Subscription agreement between the Company and Sharon Cocker dated April 8, 2005 relating to the Company’s private offering of 500,000 shares
10.28(1)	Form of subscription agreement relating to the Company's May 31, 2005 private offering of 4,500,000 common shares at $0.01 per share
10.29(1)	Administration Agreement dated July 1, 2005 between Coloured UK and Azuracle Limited
10.30(1)	Closing Agreement dated September 30, 2005 amongst Emcor Holdings Inc., and the shareholders of Coloured UK
10.31(1)	Form of subscription agreement and amendment agreement relating to the Company’s September 30, 2005 private offering of 677,660 common shares at $0.05 per share
10.32(1)	Form of subscription agreement relating to the Company’s March 13, 2006 private offering of 202,000 common shares at $0.25 per share
10.33(2)	Consulting agreement dated August 1, 2006 between the Company and DeBondo Capital Limited
10.34(3)	Form of Regulation S subscription agreement entered into between the Company with certain Investors on December 17, 2007.
31.1(4)	Rule 13a-14(a)/15d-14(a) Certification (CEO)
31.2(4)	Rule 13a-14(a)/15d-14(a) Certification (CFO)
32.1(4)	Section 1350 Certification (CEO) and (CFO)

(1)	Filed as an exhibit to the original registration statement on Form SB-2 filed with the Securities and Exchange Commission on April 24, 2006.
(2)	Filed as an exhibit to our annual report on Form 10-KSB filed with the Securities and Exchange Commission on January 4, 2007.
(3)	Filed as an exhibit to our amendment no. 1 current report on Form 8-K filed with the Securities and Exchange Commission on February 15, 2008.
(4)	Filed as an exhibit to this quarterly report on Form 10-Q.

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SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


	COLOURED (US) INC.



	By:	/s/ Lars Brannvall
		Lars Brannvall
		Chief Executive Officer and Chief Financial Officer
		Date: August 14, 2008

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