NewBridge Global Ventures, Inc. - Quarter Report: 2013 March (Form 10-Q)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, DC 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 March 31, 2013

[  ] 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 000-33215

AGRICON GLOBAL CORPORATION

(Exact name of registrant as specified in its charter)

801-592-3000
(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 Securities Exchange Act of 1934 during the preceding 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 þ Noo

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, 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 o No þ

Indicate by check mark whether the registrant is a large accelerated filed, an accelerated filer, a non-accelerated filer or a smaller public 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 o Noþ

As of May 8, 2013, the registrant had 18,374,841 shares of common stock, par value $0.0001, issued and outstanding.

AGRICON GLOBAL CORPORATION AND SUBSIDIARIES

(A Development Stage Company)

FORM 10-Q

TABLE OF CONTENTS

PART I — FINANCIAL INFORMATION

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

See accompanying notes to the condensed consolidated financial statements.

See accompanying notes to the condensed consolidated financial statements.

See accompanying notes to the condensed consolidated financial statements.

AGRICON GLOBAL CORPORATION AND SUBSIDIARIES

(A Development Stage Company)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 1 — THE COMPANY AND BASIS OF PRESENTATION

Principles of Consolidation – The accompanying condensed consolidated financial statements are presented in conformity with accounting principles generally accepted in the United States of America and include operations and balances of Agricon Global Corporation and its wholly-owned subsidiaries Canola Property Ghana Limited (“CPGL”), and Agricon SH Ghana Limited (“ASHG”), both Ghanaian limited liability companies, collectively “Agricon” or the “Company.” CPGL was incorporated under the laws of Ghana, West Africa on July 5, 2011, and ASHG was incorporated under the laws of Ghana, West Africa on November 7, 2012. Intercompany balances and transactions have been eliminated in consolidation.

Nature of Operations – All of the Company’s business is conducted through its two wholly owned subsidiaries CPGL and ASHG. The Company is in the development stage and its business activities to date have been organizing the Company, locating appropriate land that might be leased or purchased for cultivating and harvesting agricultural products. The Company completed its first lease purchase transaction on December 13, 2012 of 8,000 acres in the Shai Hill area near Accra, the largest city in Ghana. We plan to begin clearing and cultivating the land included in the first lease purchase during 2013.

The Company plans to locate and then lease additional undeveloped land in Ghana, West Africa, at attractive prices, that can be cleared and used for agricultural purposes and prepare the land for cultivation and production of primarily rotation crops such as rice, maize (corn), canola, sunflower, and soya. The Company has located and began preliminary negotiations for two additional leases for approximately 20,000 acres of land and we expect to enter into 50 year leases for these parcels of land. Assuming that the Company completes these lease transactions—of which there can be no assurance--we expect to stake, demarcate and survey the land and ready the leases for recording with the Ghana government.

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Interim Financial Information – The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and pursuant to the rules and regulations of the United States Securities and Exchange Commission (“SEC”). Accordingly, they are condensed and do not include all of the information and notes required by accounting principles generally accepted in the United States of America for complete financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation have been included and are of a normal recurring nature. The results of operations for the three and nine months ended March 31, 2013, may not be indicative of the results that may be expected for the year ending June 30, 2013.

These financial statements should be read in conjunction with the financial statements and notes thereto which are included in the Company’s Annual Report on Form 10-K for the year ended June 30, 2012. The accounting policies set forth in those annual financial statements are the same as the accounting policies utilized in the preparation of these financial statements, except as modified for appropriate interim financial statement presentation.

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

Cash – The balance in Cash consisted of cash reserves held in checking accounts.

Notes Receivable – On August 31, 2010, the Company sold its wholly owned subsidiary, Commission River Corporation. As part of the payment for the sale, the Company was issued a secured negotiable promissory note receivable, in the amount of $490,000, with varying interest rates beginning at 6% and required monthly payments of $10,000 until its maturity on September 12, 2014, when the remaining principal balance of the note is due. The note is secured by all of the assets of Commission River Corporation. As of March 31, 2013, the note was current and had a remaining principal balance of $251,375, of which $97,092 is classified as “Notes receivable, current portion” on the balance sheet.

Agricultural Land and Lease Acquisition Costs – The Company expenses all costs relating to land and lease acquisition activities until the actual acquisition or until the lease has been executed. The land purchase price is then capitalized and valuated periodically for any valuation allowance required. Lease payments are capitalized and amortized over the appropriate lease period. Costs of land clearing and preparation are expensed as incurred.

Equipment – Equipment is stated at cost less accumulated depreciation. At the time equipment is disposed of or traded in, the assets and related accumulated depreciation are removed from the accounts, and any resulting gain or loss is charged to operations. Major renewals and betterments that extend the life of the property and equipment are capitalized. Maintenance and repairs are expensed as incurred. The Equipment shown on the Condensed Consolidated Balance Sheets had not been placed into use as of March 31, 2013 and therefore no depreciation has been recognized at March 31, 2013.

Development Stage Company – The Company has not earned any revenue from operations. Accordingly, the Company’s activities have been accounted for as those of a “Development Stage Enterprise” as set forth in ASC Topic 914.  Among the disclosures required by ASC 914 are that the Company’s financial statements be identified as those of a development stage company, and that the statements of operations, cash flows and stockholders’ equity disclose activity since the date of the Company’s inception.

Foreign Currency Translation – The financial statements are presented in United States dollars. In accordance with ASC Topic 830, “Foreign Currency Translation”, foreign denominated monetary assets and liabilities are translated to their United States dollar equivalents using foreign exchange rates which prevailed at the balance sheet date.  Non-monetary assets and liabilities are translated at exchange rates prevailing at the transaction date. Revenue and expenses are translated at average rates of exchange during the periods presented.  Related translation adjustments are reported as a separate component of stockholders’ equity, whereas gains or losses resulting from foreign currency transactions are included in results of operations. All financial activity during the three months and nine months ended March 31, 2013 were denominated in United States dollars, therefore no translation of currency was required and there were no gains or losses on foreign currency transactions during the three months or nine months ended March 31, 2013. All material accounts of cash were being held in US dollar accounts at March 31, 2013.

Share-Based Compensation – The Company recognizes compensation expense for share-based awards expected to vest on a straight-line basis over the requisite service period of the award based on their grant date fair value. The Company estimates the fair value of stock options using a lattice model that values the options based on probability weighted projections of the various potential outcomes. The intrinsic value, stock performance, stock volatility, vesting or exercise factors, and forfeiture variables, are all considerations under this model. During the three months and nine months ended March 31, 2013 the Company recorded share based compensation expense of $8,983 and $27,347 respectively and $0 for each of the same periods in 2012 and $76,269 since inception (July 5, 2011).

There were no new options granted or exercised during the three months ended March 31, 2013. We granted 670,000 options to officers and directors during the three months ended March 31, 2012.

Basic and Diluted Loss Per Share – Basic loss per common share is computed by dividing the net loss attributable to common stockholders for the period by the weighted-average number of common shares outstanding during the period. Diluted net income per common share, where applicable, is computed giving effect to all dilutive common stock equivalents, primarily common stock options and warrants. All potential common shares, totaling 670,000 outstanding exercisable options, which would have an anti-dilutive effect on diluted per share loss amounts, are excluded in determining the diluted loss per common share.

Income Taxes - The Company accounts for income taxes under the asset and liability method of accounting for deferred taxes as prescribed under FASB ASC 740, Accounting for Income Taxes. 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. When applicable, a valuation allowance is established to reduce any deferred tax asset when it is determined that it is more likely than not that some portion of the deferred tax asset will not be realized. ASC 740 also requires reporting of taxes based on tax positions that meet a more-likely-than-not standard and that are measured at the amount that is more-likely-than-not to be realized. Differences between financial and tax reporting which do not meet this threshold are required to be recorded as unrecognized tax benefits. ASC 740 also provides guidance on the presentation of tax matters and the recognition of potential IRS interest and penalties. The Company classifies penalty and interest expense related to income tax liabilities as an income tax expense. There are no significant interest and penalties recognized in the statement of operations or accrued on the balance sheet. See further discussion and disclosures in Note 8.

Recent Accounting Pronouncements

Comprehensive Income – In June 2011, the FASB issued authoritative guidance regarding the presentation of comprehensive income. This guidance provides companies with the option to present the total of comprehensive income, components of net income, and the components of other comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive statements. The objective of the standard is to increase the prominence of items reported in other comprehensive income and to facilitate convergence of U.S. GAAP and International Financial Reporting Standards (IFRS). The standard eliminates the option to present components of other comprehensive income as part of the statement of changes in stockholders’ equity. The guidance is effective for fiscal years and interim periods beginning after December 15, 2011 and should be applied retrospectively. Early adoption is permitted. The adoption of this guidance is not expected to have a material impact on the Company’s consolidated financial statements.

Fair Value Measurements – In May 2011, the FASB issued authoritative guidance regarding fair value measurements. This guidance establishes common requirements for measuring fair value and for disclosing information about fair value measurements in accordance with U.S. GAAP and IFRS. It also clarifies the FASB’s intent on the application of existing fair value measurement requirements. The guidance is effective for fiscal years and interim periods beginning after December 15, 2011 and should be applied prospectively. The adoption of this guidance is not expected to have a material impact on the Company’s consolidated financial statements.

NOTE 3 – GOING CONCERN

The accompanying unaudited condensed consolidated financial statements have been prepared assuming that the Company will continue as a going concern.  As shown in the accompanying condensed consolidated financial statements, the Company incurred a loss from operations of $728,130 for the nine month period ended March 31, 2013 and has an accumulated deficit of $1,351,668 since its inception (July 5, 2011).  The Company also used cash in operating activities of $485,301 during the nine month period ended March 31, 2013, and $1,038,471 since its inception.  At March 31, 2013, the Company had negative working capital of $507,344.  The Company is in default on Notes Payable. These factors raise substantial doubt about the Company’s ability to continue as a going concern.

In order for us to continue as a going concern, we expect to obtain additional debt or equity financing. There can be no assurance that we will be able to secure additional debt or equity financing, that we will be able to acquire cash flow positive operations, or that, if we are successful in any of those actions, those actions will produce adequate cash flow to enable us to meet all our future obligations. If we are unable to obtain additional debt or equity financing, we may be required to significantly reduce or cease operations.

NOTE 4 – RECAPITALIZATION

On March 31, 2012, Agricon, formerly BayHill Capital Corporation, and CPGL, and CPGL’s shareholders, Global Green Capacity Limited and Invest in Ghana Co Limited, entered into a share exchange agreement pursuant to which Agricon agreed to issue an aggregate of 12,000,000 shares of common stock to CPGL stockholders and designees, in return for 100% of the 75,000 issued and outstanding shares of CPGL stock (the “Share Exchange”). As a result, CPGL became a wholly-owned subsidiary of Agricon, and for accounting purposes, Agricon began operations on July 5, 2011 (date of inception of CPGL), as reflected in the Consolidated Financial Statements. The Share Exchange resulted in a change in control of the Company. The former CPGL stockholders, and designees, now own in the aggregate 65% of the outstanding shares of the Company’s common stock. In conjunction with the share exchange the Company changed its name from BayHill Capital Corporation to Agricon Global Corporation.

In accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) section 805, “Business Combinations”, CPGL is considered the accounting acquiror in the Share Exchange. Under current accounting guidance Agricon is not a business for purposes of determining whether a business combination would occur upon the acquisition of the outstanding stock of CPGL. The acquisition was accounted for as the recapitalization of CPGL since, at the closing of the Share Exchange, Agricon was a non-operating public shell corporation with no significant assets and liabilities. Accordingly, the assets and liabilities and the historical operations that are reflected in the Company’s consolidated financial statements are those of CPGL, restated for the effects of the capital restructure.

The accounting transactions required to accomplish the Share Exchange are recognized as follows: (1) the recapitalization of CPGL by recognizing the Agricon common shares issued in exchange for the CPGL shares in a manner equivalent to a 160 for 1 stock split, and (2) the Agricon common shares that remain outstanding are recognized as the issuance of common shares by CPGL—as the acquirer for accounting purposes-for the assets less liabilities of BayHill Capital Corporation, the predecessor to Agricon, are recorded at fair value which approximates the book value.

NOTE 5 – UNSECURED NOTES PAYABLE TO RELATED PARTIES

The unsecured notes payable to present and past affiliates of the Company are related to legal fees, director fees, and unpaid salaries, from previous periods, that were converted into 12% unsecured notes payable with a maturity date of June 30, 2012. The notes were not paid at maturity, therefore the interest rate increased to 15% per annum. No affiliate has demanded payment. These notes consist of the following:

Additional accrued but unpaid director fees and unpaid salaries for the period ending December 31, 2012 were converted into 12% unsecured notes payable, at December 31, 2012. These new notes had a maturity date of March 31, 2013, but were not paid at maturity. These new notes consist of the following:

NOTE 6 – CAPITAL LEASE OBLIGATIONS

In December 2012 the Company acquired approximately 8,000 acres of agricultural land in the Shai Hills area of Ghana, West Africa. The lease requires total payments over nine (9) years of $1,954,840. The company paid the first year payment of $129,032, which included a payment at the acquisition date of $119,000 and a credit for $10,032 of costs and expenses advanced to the lessee by the Company during lease negotiations, which were expensed in prior periods. The lease has been accounted for as a capital lease. On the lease acquisition date, the present value of the minimum lease payments, calculated at a discount rate of 8%, was $1,435,025, which was booked as Land under capital lease at March 31, 2013. The following is a schedule by year of future minimum lease payments under the capital lease, together with the present value of the minimum lease payments as of March 31, 2013:

NOTE 7 – STOCKHOLDERS’ EQUITY (DEFICIT)

The Company's capitalization is 100,000,000 common shares with a par value of $0.0001 per share. As of March 31, 2013, the Company had 18,374,841 common shares outstanding.

Preferred shares of 400,000 with a par value of $0.0001 have been authorized and no shares are issued or outstanding as of March 31, 2013.

During 2012, the Company conducted a private placement offering to a limited number of foreign investors under which the Company issued a total of 2,220,000 shares, of its common stock, at a price of fifty cents ($0.50) per share for a total of $1,110,000. Of the 2,220,000 shares sold by the Company 1,220,000 were sold prior to June 30, 2012. The remaining 1,000,000 were sold during the nine months ended March 31, 2013.

Initially CPGL issued 75,000 shares of its common stock, to two shareholders, for services relating to administrative and organizational costs totaling $50,463. It was these 75,000 shares that were exchanged for the newly issued 12,000,000 shares in the Share Exchange Agreement. See Note 4 – Recapitalization.

NOTE 8 – INCOME TAXES

In evaluating the realizability of the net deferred tax assets, we take into account a number of factors, primarily relating to the ability to generate taxable income. Where it is determined that it is likely that we will be unable to realize deferred tax assets, a valuation allowance is established against the portion of the deferred tax asset. Because it cannot be accurately determined when or if we will become profitable, a valuation allowance was provided against the entire deferred income tax asset balance.

The 2009 through 2012 tax years remain open to examination by the Internal Revenue Service.  These taxing authorities have the authority to examine those tax years until the applicable statute of limitations expire. 

The Company did not recognize any interest or penalties related to income taxes for the three or nine months ended March 31, 2013 and 2012.

NOTE 9 – FAIR VALUE MEASUREMENTS

Generally accepted accounting principles (GAAP) defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants. GAAP also specifies a fair value hierarchy based upon the observability of inputs used in valuation techniques. Observable inputs (highest level) reflect market data obtained from independent sources, while unobservable inputs (lowest level) reflect internally developed market assumptions. Fair value measurements are classified under the following hierarchy:

Level 1: Financial assets and financial liabilities whose values are based on unadjusted quoted prices for identical assets or liabilities in an active market that we can access.

Level 2: Financial assets and financial liabilities whose values are based on the following:

Level 3: Financial assets and financial liabilities whose values are based on prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement. These inputs may reflect our estimates of the assumptions that market participants would use in valuing the financial assets and financial liabilities.

The Company utilizes an internal valuation model to determine the fair value of the land under capital lease.

The following table summarizes Level 1, 2 and 3 financial assets and financial liabilities measured at fair value on a nonrecurring basis by their classification in the consolidated balance sheet at March 31, 2013:

The fair value of the land, included under the capital lease, was compared to a number of other properties, with like characteristics, during the Company’s search for appropriate agricultural land within a large radius. Management believes the value is representative of the other properties within the area of interest, is comparable to the value of the two additional properties under negotiation, and is comparable to other land being offered by other third parties.

Item 2. Management's Discussion and Analysis of Financial Condition and

Results of Operations

The following discussion is intended to assist you in understanding our results of operations and our present financial condition. Our condensed consolidated financial statements and the accompanying notes included in this quarterly report on Form 10-Q contain additional information that should be referred to when reviewing this material.

Forward-Looking Information and Cautionary Statements

This quarterly report contains forward-looking statements as that term is defined in Section 27A of the United States Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These statements relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as “may”, “should”, “expects”, “plans”, “anticipates”, “believes”, “estimates”, “predicts”, “potential” or “continue” or the negative of these terms or other comparable terminology. Such statements are based on currently available financial and competitive information and are subject to various risks and uncertainties that could cause actual results to differ materially from our historical experience and our present expectations. Undue reliance should not be placed on such forward-looking statements as such statements speak only as of the date on which they are made. These statements are only predictions and involve known and unknown risks, uncertainties and other factors that may cause our or our industry’s actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements.

Forward-looking statements are predictions and not guarantees of future performance or events. Forward-looking statements are based on current industry, financial and economic information, which we have assessed but which by its nature, is dynamic and subject to rapid and possibly abrupt changes. Our actual results could differ materially from those stated or implied by such forward-looking statements due to risks and uncertainties associated with our business. We hereby qualify all our forward-looking statements by these cautionary statements. We undertake no obligation to amend this report or revise publicly these forward-looking statements (other than pursuant to reporting obligations imposed on registrants pursuant to the Securities Exchange Act of 1934) to reflect subsequent events or circumstances.

Business Review

The Company is in the development stage and its activities to date have been organizing the Company and locating appropriate land that might be leased for cultivating and harvesting agricultural products and acquiring 8,000 acres through a lease purchase agreement. Assuming the Company can raise adequate capital, we plan to continue to locate and then lease undeveloped land in Ghana, at attractive prices, that can be cleared and used for agricultural purposes and prepare the land for cultivation and production of primarily rotation crops such as rice, maize (corn), canola, sunflower, and soya.

The Company has located and began preliminary negotiations for two additional leases for approximately 20,000 acres of land and we expect to enter into 50 year leases for the land. We expect to stake, demarcate and survey the land and ready the lease for recording with the Ghana government. We plan to begin clearing and cultivating the land included in the first lease purchase during 2013.

In order to execute on this strategy, the Company will need significant capital. There is no assurance that the Company will be successful in raising capital and completing its planned acquisition of leases and farming operations.

Summary of Operations

Three months ended March 31, 2013

The Company generated no revenues from operations during the three months ended March 31, 2013.

During the three months ended March 31, 2013, our activities related to our continued negotiations of leases in Ghana totaling 20,000 acres, and acquiring 8,000 acres on which we plan to begin farming operations.

General and Administrative Expenses

General and administrative expenses were $251,009 and $672,618 for the three months and nine months ended March 31, 2013 respectively, all of which related to our search for land leases and negotiation activities.

Lease acquisition costs were $3,000 and $62,699 for the three months and nine months ended March 31, 2013 respectively. These represent costs and expenses directly relating to surveying and soil testing prospective land for possible acquisition or lease.

Period from Inception (July 5, 2011) through March 31, 2013

The Company generated no revenues from operations during the period from inception (July 5, 2011) through March 31, 2013. The general and administrative expenses of $991,598 related to its activities in the formation of the Company and its search and negotiation efforts to secure a lease to begin farming and agricultural operations in Ghana.

Lease acquisition costs of $371,662 relate to direct costs of surveying activities and soil testing prospective land for possible acquisition or lease.

Liquidity and Capital Resources

As of March 31, 2013 and June 30, 2012, we had cash on hand of $12,333 and $5,221, respectively, and total current liabilities exceeded total current assets by $507,387 and $158,121, respectively.

For the nine months ended March 31, 2013, we used cash in operating activities of $485,301.

The company will need further funding to execute its plans to acquire leases and begin farming operations. It presently plans additional rounds of funding in the near future. If we are not able to raise the anticipated funds, the Company may not be able to continue its operations and continue with its business strategy.

Off-Balance Sheet Financing Arrangements

The Company had no off-balance sheet financing arrangements at March 31, 2013 and June 30, 2012.

Recent Accounting Pronouncements

For details of applicable new accounting standards, please, refer to Note 1 – The Company and Basis of Presentation to our condensed consolidated financial statements.

Critical Accounting Policies and Estimates

The preparation of financial statements in accordance with accounting standards generally accepted in the United States requires management to make estimates and assumptions that affect both the recorded values of assets and liabilities at the date of the financial statements and the revenues recognized and expenses incurred during the reporting period. Our estimates and assumptions affect our recognition of deferred expenses, bad debts, income taxes, the carrying value of our long-lived assets and our provision for certain contingencies. We evaluate the reasonableness of these estimates and assumptions continually based on a combination of historical information and other information that comes to our attention that may vary our outlook for the future. Actual results may differ from these estimates under different assumptions.

We suggest that our Summary of Significant Accounting Policies, as described in Note 1- The Company and Basis of Presentation to our condensed consolidated financial statements in our most recent Annual Report on Form 10-K be read in conjunction with this Management’s Discussion and Analysis of Financial Condition and Results of Operations. We believe the critical accounting policies that most impact our consolidated financial statements are described below.

Fair Value of Financial Instruments

The carrying amounts reported in the accompanying condensed consolidated financial statements for the notes receivable, accounts payable and accrued expenses approximate fair values because of the immediate nature of short-term maturities of these financial instruments. The carrying amount of long-term debt approximates fair value due to the stated interest rates approximating prevailing market rates.

Item 3. Qualitative and Quantitative Disclosures About Market Risk

As a Smaller Reporting Company as defined by Rule 12b-2 of the Exchange Act and in Item 10(f)(1) of Regulation S-K, we are electing scaled disclosure reporting obligations and therefore are not required to provide the information requested by this Item.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Our management, under the supervision and with the participation of our President and Chief Financial Officer, evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) or 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), as of the end of the period covered by this report. Based on this evaluation, our President and Chief Financial Officer concluded that as of the end of the period covered by this report, our disclosure controls and procedures were effective in (1) recording, processing, summarizing and reporting, on a timely basis, information required to be disclosed by us in the reports that we file or submit under the Exchange Act and (2) ensuring that information disclosed by us in such reports is accumulated and communicated to our management, including our President and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting during the three months ended March 31, 2013 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings

The company had no legal proceedings at March 31, 2013.

Item 1A. Risk Factors

During the three months ended March 31, 2013 there were no material changes in the risk factors previously described in Form 10K filed with the SEC on September 21, 2012.

Item 6. Exhibits

Exhibits. The following exhibits are included as part of this report:

SIGNATURES

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