Rogue One, Inc. - Quarter Report: 2009 March (Form 10-Q)

mody_10q-033109.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

_______________

FORM 10-Q

_______________

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

For the quarterly period ended March 31, 2009

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

MOD HOSPITALITY, INC.

(Exact name of registrant as specified in Charter)

NEVADA		000-24723		88-0393257
(State or other jurisdiction of incorporation or organization)		(Commission File No.)		(IRS Employee Identification No.)

11710 Old Georgetown Road, Suite 808

North Bethesda, MD 20852

(Address of Principal Executive Offices)

(301) 230-9674

(Issuer Telephone number)

Check whether the issuer (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for such shorter period that the issuer was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes x No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes o No x

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

Large Accelerated Filer o Accelerated Filer o Non-Accelerated Filer o Smaller Reporting Company x

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

Yes o No x

State the number of shares outstanding of each of the issuer’s classes of common equity, as of May 20, 2009: 11,054,829 shares of Common Stock.

MOD HOSPITALITY, INC.

FORM 10-Q

March 31, 2009

INDEX

PART I -- FINANCIAL INFORMATION

Item 1.	Financial Statements	F-1
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2
Item 3	Quantitative and Qualitative Disclosures About Market Risk	6
Item 4T.	Controls and Procedures	6

PART II -- OTHER INFORMATION

Item 1	Legal Proceedings	7
Item 1A	Risk Factors	7
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	7
Item 3.	Defaults Upon Senior Securities	7
Item 4.	Submission of Matters to a Vote of Security Holders	7
Item 5.	Other Information	7
Item 6.	Exhibits	7

SIGNATURE		8

Part I – Financial Information

Item 1. Financial Statements.


Consolidated Balance Sheets	F-2 and F-3

Consolidated Statements of Operations	F-4

Consolidated Statements of Cash Flows	F-5

Notes to the Consolidated Financial Statements	F-6

F-1

MOD HOSPITALITY, INC. F/K/A PSPP HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS


Assets
	March 31, 2009		December 31, 2008
	Unaudited		Audited

Current assets
Cash and cash equivalents	$	692,346	$	728,349
Accounts receivable		139,860		157,791
Inventory		8,469		-
Prepaid Expenses		103,838		183,223
Total current assets		944,512		1,069,363

Property and equipment
Furniture, fixtures and equipment, net of depreciation		4,467,187		2,742,877
Total property and equipment		4,467,187		2,742,877

Other assets
Franchise fees, net of amortization		144,500		144,500
Construction in- progress		-		1,139,531
Investments, net		58,000		58,000
Deposits		41,103		41,103
Total other assets		243,603		1,383,134

Total assets	$	5,655,302	$	5,195,374


The financial information presented herein has been prepared by management without audit by independent certified public accountants
See accompanying notes to consolidated financial statements, which are an integral part of the financial statements

F-2

MOD HOSPITALITY, INC. F/K/A PSPP HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS


Liabilities and Stockholders' Equity
	March 31, 2009			December 31, 2008
	Unaudited			Audited
Current liabilities
Accounts payable and accrued expenses	$	1,751,822		$	1,423,596
Escrow reserves		204,234			908,605
Accrued salaries and wages		97,200			107,692
Management fees payable		21,589			20,857
Taxes payable, rooms and other		162,894			387,689
Due to related party		650,887			368,565
Notes payable		1,728,544			1,116,699
Total current liabilities		4,617,170			4,333,701

Total liabilities		4,617,170			4,333,701

Commitments and contingencies		-			-


Stockholders' Equity
Preferred stock, $.001 par value, 10,000,000 shares authorized
1,000,000 shares outstanding		10,000			10,000
Common stock, $.001 par value, 175,000,000 shares authorized
10,804,829 shares outstanding as of March 31, 2009 and 6,941,168 shares
outstanding as of December 31, 2008		10,805			6,941
Additional paid-in capital		4,634,837			3,529,837
Accumulated deficit		(3,617,510	)		(2,685,106	)
Total stockholders' equity		1,038,132			861,672

Total liabilities and stockholders' equity	$	5,655,302		$	5,195,374


The financial information presented herein has been prepared by management without audit by independent certified public accountants
See accompanying notes to consolidated financial statements, which are an integral part of the financial statements

F-3

MOD HOSPITALITY, INC. F/K/A PSPP HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS

	For the three			For the three
	months ended			months ended
	March 31, 2009			March 31, 2008
	Unaudited			Unaudited

Revenue
Rooms	$	1,943,636		$	2,934,200
Food and beverage		65,710			37,251
Other income		198,372			231,243
Total operating revenue		2,207,718			3,202,694

Operating expenses
Rooms		681,599			680,243
Food and beverage		76,713			14,211
Rent		1,035,988			1,238,983
Management and franchise fees		126,194			305,145
General and administrative		755,000			264,199
Depreciation and amortization		286,549			186,046
Other expenses		140,748			706,366
Total operating expenses		3,102,792			3,395,193

Loss from operations		(895,074	)		(192,499	)

Other income (expenses)
Interest income		226			662
Interest expense		(37,556	)		(4,774	)
Total other income (expenses)		(37,330	)		(4,112	)

Income before provision for income taxes		(932,404	)		(196,611	)

Provision for income taxes		-			-

Net loss	$	(932,404	)	$	(196,611	)

Net loss per common share
Basic	$	(0.11	)	$	(3.54	)
Diluted	$	(0.11	)	$	(3.54	)

Weighted average of common shares outstanding
Basic - split adjusted		8,228,726			55,499
Diluted - split adjusted		8,228,726			55,499

Dividends declared per common share	$	-		$	-


The financial information presented herein has been prepared by management without audit by independent certified public accountants
See accompanying notes to consolidated financial statements, which are an integral part of the financial statements

F-4

MOD HOSPITALITY, INC. F/K/A PSPP HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS

	For the three			For the three
	months ended			months ended
	March 31, 2009			March 31, 2008
Cash flows from operating activities:	Unaudited			Unaudited
Net loss	$	(932,404	)	$	(196,611	)
Adjustments to reconcile net loss from operations to
net cash used in operating activities:
Stock issued for services		3,864
Depreciation and amortization		286,549			186,046
(Increase) decrease in:
Prepaid expenses		79,384			(30,618	)
Accounts receivable		17,931			115,383
Inventory		(8,469	)		-
Deposits		-			(22,941	)
Increase (decrease) in:
Accounts payable and accrued expenses		328,226			391,332
Escrow reserves		(704,371	)		123,230
Accrued Salaries		(10,492	)		5,930
Management Fees		732			5,873
Taxes payable, rooms and other		(224,795	)		(47,206	)
Net cash provided by (used in) operating activities		(1,163,844	)		530,417

Cash flows from investing activities:
Purchase of furniture, fixtures and equipment		(871,328	)		-
Net cash (used in) investing activities		(871,328	)		-

Cash flows from financing activities:
Proceeds from capital contribution		1,105,000			-
Proceeds from notes payable		611,845			-
Due to related party, net		282,324			(263,645	)
Net cash provided by (used in) financing activities		1,999,169			(263,645	)

Net increase (decrease) in cash and cash equivalents		(36,003	)		266,772

Cash and cash equivalents , beginning of year		728,349			806,806

Cash and cash equivalents, end of year	$	692,346		$	1,073,578

Supplemental disclosure of cash flow information:
Interest paid	$	-		$	-
Taxes paid	$	-		$	-

The financial information presented herein has been prepared by management without audit by independent certified public accountants
See accompanying notes to consolidated financial statements, which are an integral part of the financial statements

F-5

MOD HOSPITALITY, INC.

f/k/a PSPP HOLDINGS, INC. AND SUBSIDIARIES

Notes to Consolidated Interim Financial Statements

March 31, 2009

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUTING POLICIES AND BASIS OF PRESENTATION

Nature of Business

Mod Hospitality, Inc. f/k/a PSPP Holdings, Inc. (“the Company”) was incorporated in the State of Delaware in 1993. In 1997, the Company changed its Corporate Charter to the State of Nevada. As of March 31, 2009, the Company maintained its Corporate Charter in the State of Nevada.

On September 22, 2008, the Company changed its name to Mod Hospitality, Inc.

On February 12, 2008, East Coast Realty Ventures, LLC (ECRV, LLC) purchased from Airport Road Associates One, LLC ("Airport LLC"), the then controlling shareholder of the issuer, 900,000 shares of Preferred Stock and 25,865,000 shares of Common Stock in a privately negotiated transaction. ECRV, LLC paid $153,750 for the Preferred and Common Stock.

As of February 12, 2008, ECRV, LLC may be deemed to have sole voting power over 132,873,855 shares of Common Stock (which includes the 107,008,855 votes from the Series A Shares) and dispositive power over 81,553,282 shares of Common Stock (which includes shares of Common Stock issuable upon the conversion of the Series A Shares). Airport LLC may be deemed to have shared voting and dispositive power over no shares of Common Stock.

As of February 12, 2008, Frederic Richardson may be deemed to have sole voting and dispositive power over no shares of Common Stock and may be deemed to have shared voting power over 132,873,855 shares of Common Stock (which includes the 107,008,855 votes from the Series A Shares held by Airport LLC) and shared dispositive power over 81,553,282 shares of Common Stock (which includes shares of Common Stock issuable upon the conversion of the Series A Shares held by Airport LLC).

On March 26, 2008, ECV Holdings, Inc. (“ECV”) is a corporation formed under the laws of Delaware. On April 4, 2008, ECV entered into a stock for membership interest agreement with East Coast Realty Ventures, LLC (“ ECRV ”) which owned all of the issued and outstanding capital (the “ Membership Interest ”) of ECRV Hanover LeaseCo, LLC (the “ Hanover ”), ECRV Clinton LeaseCo, LLC (the “ Clinton ”), and ECRV FM LeaseCo, LLC (the “ Absecon ”). Hanover, Clinton, and Absecon are limited liability companies organized under the law of the State of Delaware. As a result of the stock for membership interest transaction, ECV acquired 100% of the membership interest in Hanover, Clinton and Absecon by issuing Frederic Richardson 100,000 shares of its common stock.

Effective May 8, 2008, ECV entered into a share exchange agreement with Frederic Richardson, and FLNU, a non-reporting small public company listed on the Pink Sheets Grey Market, whereby, Frederic Richardson transferred to FLNU 100% of the issued and outstanding common stock of ECV, in exchange for 28,000,000 shares of common stock of FLNU, which represents 80% of FLNU’s outstanding common stock. As a result of the share exchange transaction, Hanover, Clinton and Absecon became the wholly owned subsidiaries of FLNU.

F-6

On October 21, 2008 (“the Closing Date”), the Company acquired all of the issued and outstanding common stock of ECV Holdings, Inc., (“ECV”) a Delaware corporation, in accordance with the Share Exchange Agreement. On the Closing Date, pursuant to the terms of the Securities Exchange Transaction, the Company acquired all of the outstanding common stock of ECV from Flora Nutrients, Inc. (“FLNU”). In exchange, the Company issued FLNU 50,000,000 common stock, or approximately 99.912% of the Company’s common stock outstanding.

The Company conducts its business operations through ECRV Hanover LeaseCo, LLC (“Hanover”), ECRV Clinton LeaseCo, LLC (“Clinton”), and ECRV FM LeaseCo, LCC (“Absecon”).

Hanover was organized as a limited liability company under the laws of the State of Delaware on June 16, 2006. Clinton was organized as a limited liability company under the laws of the State of Delaware on March 08, 2007. Absecon was organized as a limited liability company under the laws of the State of Delaware on May 10, 2007.

Basis of Presentation

The accompanying consolidated interim unaudited financial statements of the Company as of March 31, 2009, and the three months ended March 31, 2009 and 2008 have been prepared in accordance with accounting principles generally accepted for interim unaudited financial statement presentation and in accordance with the instructions to Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statement presentation. In the opinion of management, all adjustments for a fair statement of the results of operations and financial position for the interim period presented have been included.

All such adjustments are of a normal recurring nature. This interim financial information should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Form 10-K as of December 31, 2008.

The summary of significant accounting policies is presented to assist in the understanding of the financial statements. The financial statements and notes are the representation of management. These policies conform to accounting principles generally accepted in the United States of America and have been consistently applied.

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 the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported revenues and expenses during the reporting periods. Because of the use of estimates inherent in the financial reporting process, actual results may differ significantly from those estimates.

Cash and cash Equivalents

The Company maintains cash balances in non-interest bearing accounts that currently do exceed federally insured limits. For the purpose of the statements of cash flows, all highly liquid investments with a maturity of three months or less are considered to be cash equivalents. There were no cash equivalents as of March 31, 2009 and December 31, 2008. Historically, the Company has not incurred any losses due the accounts that exceed federally insured limits.

Fair Value of Financial Instruments

The Company measures their financial assets and liabilities in accordance with accounting principles generally accepted in the United States. For certain of the Company’s financial instruments, including cash, accounts payable and accrued expenses, the carrying amounts approximate fair value due to their short maturities.

F-7

FASB Interpretation No. (FIN) 46, “Consolidation of Variable Interest Entities”

As of March 31, 2009 and December 31, 2008, the Company considered the provisions of FASB Interpretation No. (FIN) 46, “Consolidation of Variable Interest Entities” specifically as it relates to the entities controlled by the majority shareholder of the Company. As of March 31, 2009 and December 31, 2008, the accompanying financial statements only include the accounts of the Company.

Net Loss per Share Calculation

In February 1997, the FASB issued SFAS No. 128, “Earnings per Share.” Basic net loss per common share ("EPS") is computed by dividing income available to common stockholders by the weighted-average number of common shares outstanding for the period. Diluted earnings per shares is computed by dividing net income by the weighted average shares outstanding, assuming all dilutive potential common shares were issued.

Revenue and Expense Recognition

The Company recognizes income from the management of the properties in accordance with the accrual basis of accounting, that is, when the services and products are provided for hotel guests and there is no uncertainty as to cash collections; i.e. upon receipt of cash/check payment or credit card from the hotel guests. The Company recognizes expenses related to the management of the properties in accordance with the accrual basis of accounting, that is, when the expense is incurred.

Advertising, Sales and Marketing Expenses

The Company incurs sales and marketing expenses in conjunction with the production of promotional materials, and related travel costs. In accordance with the AICPA’s Statement of Position No. 93-7 “Reporting on Advertising Costs”, the Companies expense advertising and marketing costs as incurred or as the advertising takes place.

Income Taxes

Income taxes are provided for using the liability method of accounting in accordance with SFAS No. 109 "Accounting for Income Taxes," and clarified by FIN 48, "Accounting for Uncertainty in Income Taxes an interpretation of FASB Statement No. 109." A deferred tax asset or liability is recorded for all temporary differences between financial and tax reporting. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax basis. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effect of changes in tax laws and rates on the date of enactment.

Investments

The Company accounts for investments, where the Company holds from 20% up to 50%, in the common stock, or membership interest, of an entity, using the equity method. The investment is initially recorded at cost and the carrying amount is adjusted to recognize the Company’s proportionate share of the earnings or losses of the investee after the date of acquisition. The amount of the adjustment is included in the determination of net income or loss of the Company in the period of the adjustment. Any dividends received from the investee reduce the carrying value of the investment.

As of March 31, 2009, Dream Apartments TV continued to pursue its planned operations, therefore, current management made the decision to reflect the $58,000 as the fair value of this investment.

F-8

Accounting Pronouncements

In March 2008, the FASB issued Statement of Financial Accounting Standards ("SFAS") No. 161, Disclosures about Derivative Instruments and Hedging Activities (SFAS 161). SFAS 161 amends and expands the disclosure requirements of SFAS 133, Accounting for Derivative Instruments and Hedging Activities. It requires qualitative disclosures about objectives and strategies for using derivatives, quantitative disclosures about fair value amounts of gains and losses on derivative instruments, and disclosures about credit-risk-related contingent features in derivative agreements. This statement is effective for financial statements issued for fiscal years beginning after November 15, 2008.

In December 2007, the FASB issued SFAS No. 141 (revised 2007), Business Combinations (SFAS 141R). SFAS 141R significantly changes the accounting for business combinations in a number of areas including the treatment of contingent consideration, pre-acquisition contingencies, transaction costs, in-process research and development, and restructuring costs. In addition, under SFAS 141R, changes in an acquired entity's deferred tax assets and uncertain tax positions after the measurement period will impact income tax expense. SFAS 141R is effective for fiscal years beginning after December 15, 2008.

The Emerging Issues Task Force (EITF) reached consensuses on EITF Issue No. 06-04, Accounting for Deferred Compensation and Postretirement Benefit Aspects of Endorsement Split-Dollar Life Insurance Arrangements (EITF 06-04) and EITF Issue No. 06-10, Accounting for Deferred Compensation and Postretirement Benefit Aspects of Collateral Assignment Split-Dollar Life Insurance Arrangements (EITF 06-10), which require that a company recognize a liability for the postretirement benefits associated with endorsement and collateral assignment split-dollar life insurance arrangements. The Company does not expect that the provisions of this pronouncement to have an impact on its consolidated financial statements.

In September 2006, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 157 (“FAS 157”), Fair Value Measurements, which defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles (“GAAP”), and expands disclosures about fair value measurements. FAS 157 applies under other accounting pronouncements that require or permit fair value measurements. Prior to FAS 157, there were different definitions of fair value and limited guidance for applying those definitions in GAAP. Moreover, that guidance was dispersed among the many accounting pronouncements that require fair value measurements. Differences in that guidance created inconsistencies that added to the complexity in applying GAAP. The changes to current practice resulting from the application of FAS 157 relate to the definition of fair value, the methods used to measure fair value, and the expanded disclosures about fair value measurements. FAS 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years. The Company does not expect the adoption of FAS 157 to have an effect on its financial statements.

In June 2006, the Financial Accounting Standards Board (FASB) issued FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes - an Interpretation of FASB Statement No. 109 (FIN 48). FIN 48 prescribes a comprehensive model of how a company should recognize, measure, present, and disclose in its financial statements uncertain tax positions that the company has taken or expects to take on a tax return. The Company expects to comply with the provisions of FIN 48. As of December 31, 2008, the Company did not have any uncertain tax positions that the Company has taken or expects to take on a tax return. ECV Holdings, Inc. and its subsidiaries (Clinton, Hanover and Absecon) expect to file their first federal and state tax returns for the year ended December 31, 2008. Clinton, Hanover and Absecon are single-member limited liability companies that are disregarded entities for federal tax purposes.

F-9

NOTE 2 FURNITURE, FIXTURES AND EQUIPMENT

Furniture and fixtures are recorded at cost. Depreciation is computed using the straight-line method; i.e., original cost divided by the estimated useful lives of the related assets, which is 5 years. When assets are retired or otherwise disposed of, the cost and related accumulated depreciation are removed from the accounting records, and any resulting gain or loss is reflected in the Statement of Operations for the period. The cost of maintenance and repairs are charged to income as incurred. Renewals and betterments are capitalized and depreciated over their estimated useful lives.

For the three months ended March 31, 2009 and 2008, the depreciation expense was $286,549 and $186,046, respectively.

NOTE 3 MANAGEMENT AGREEMENTS

Hanover leases the Holiday Inn Express flag for a hotel located in Hanover, Maryland. Absecon leases the Marriott’s Fairfield Inn flag for a hotel located in Absecon, New Jersey. The Clinton is a private hotel located in South Beach, Miami, Florida with no franchise or licensing agreements.

Under each management agreement, PPHG received a 3.5% management fee based on gross income, and an incentive fee based on gross operating profit. In addition, under Absecon’s agreement, additional fees for managing property improvements (the PIP) equal to a fixed incentive fee of 10% to 15% of these costs.

In September 2008, Company terminated PPHG’s management agreement for the Clinton Hotel in South Beach, Miami, Florida. In February 2009, the Company terminated PPHG’s management agreement for the Holiday Inn Express in Hanover, Maryland. The Company retained the management services of Mid-Atlantic Realty Group for both of these hotel properties under the same terms as PPHG’s. Mid-Atlantic Realty Group is an entity controlled by the Company’s majority shareholder and CEO, Mr. Richardson.

NOTE 4 PROPERTY IMPROVEMENT PLAN

A Property Improvement Plan (PIP) for the property located in Absecon, New Jersey in the amount of $1,105,000 was reserved at the closing of the transaction in 2007 and is owned by Absecon. The funds were being held by the lender to cover the deferred maintenance obligations required by the Marriott Corporation to maintain the Fairfield flag.

The total amount of the PIP as of March 31, 2009 increased from the initial $1,105,000 to $1,609,768. The amounts needed to fund the PIP over the amount escrowed of $504,768 at closing in 2007 were funded by the property owner. See note 7.

As of March 31, 2009, the management company for Absecon had yet to have a cost segregation study performed on the PIP.

As of March 31, 2009, management of the Company has estimated the depreciation expense for the three months ended March 31, 2009 to be $80,448 subject to further adjustments pending the final cost allocations to leasehold improvements and furniture, fixtures and equipment.

NOTE 5 FRANCHISE FEES

As of March 31, 2009, Hanover paid $64,500 in franchise fees for the use of the Holiday Inn Express Flag, and Absecon paid $80,000 in franchise fees for the use of Marriott’s Fairfield Inn flag. Clinton did not incur any franchise fees when it was acquired in 2007. As of March 31, 2009, management of the Company has determined that the franchise fees have an indefinite useful life. Therefore, pursuant to SFAS no. 142, the franchise fees are not being subject to amortization rather they are subject to an impairment test by management. Management has conducted an impairment test and has determined that as of March 31, 2009, the franchise fees are not subject to any impairment adjustment; therefore, the carrying value of the franchise fees at their original cost of $144,500.

F-10

NOTE 6 BASE RENT AND ADDITIONAL RENT

There exists a triple net master lease between each of the Company’s subsidiaries, the master lessee and the tenant in common investors who own the buildings, in accordance with the master lease agreements. The master leases have a term of 15 years, but shall terminate upon the sale of the properties by the investors.

The tenants in common investors acquired the property subject to the master lease and became parties to the master lease. Except for certain reserves and escrows that are required under the terms of the loan, the master lessee is responsible for all costs of operating, managing, leasing, and maintaining the property during the term, excluding the payment of all capital expenses, which have been defined in the master lease.

The accompanying consolidated financial statements reflect the base rent expense to comply with the provisions of SFAS no. 13 paragraph 15. The base rent payments are not being made on straight-line basis over the life of the leases; however, the base rent expense is being recognized on a straight-line basis over the life of the leases.

For the period ended March 31, 2009 and the year ended December 31, 2008, the rent payable included in the current liabilities is $729,630 and $460,404 , respectively.

Base Rent: Hanover

Hanover pays base rent in equal monthly installments derived from the following annual yields on net cash equity investment:

Year	Annual Yield	Year	Annual Yield
Year 1	8.00%	Year 6	10.50%
Year 2	8.50%	year 7	10.50%
Year 3	9.00%	Year 8	10.50%
Year 4	9.25%	Year 9	10.50%
Year 5	10.50%	Year 10 - 15	10.50%

Base rent is paid, monthly, in arrears as follows:

Year	Total Base	Year	Total Base
Year 1	$ 756,000	Year 6	$ 992,250
Year 2	803,250	Year 7	992,250
Year 3	850,500	Year 8	992,250
Year 4	874,125	Year 9	992,250
Year 5	992,250	Year 10 - 15	992,250

Additional rent due under the lease is a combination of the principal, interest, reserves, tax, and insurance escrows due under the loan. Any funds remaining in any of the reserves or escrows are the property of Hanover.

For the three months ended March 31, 2009 and 2008 the base rent expense was $230,934 and $230,934, respectively.

F-11

Base Rent: Clinton

Clinton pays the base rent in equal monthly installments derived from the following annual yields on net cash equity investment:

Year	Annual Yield	Year	Annual Yield
Year 1	8.00%	Year 6	9.00%
Year 2	8.25%	Year 7	9.00%
Year 3	8.50%	Year 8	9.00%
Year 4	8.75%	Year 9	9.00%
Year 5	9.00%	Year 10 - 15	9.00%

Base rent is paid, monthly, in arrears as follows:

Year	Total Base	Year	Total Base
Year 1	$ 405,157	Year 6	$ 540,209
Year 2	438,020	Year 7	540,209
Year 3	450,625	Year 8	540,209
Year 4	463,229	Year 9	540,209
Year 5	534,807	Year 10 - 15	540,209

For the three months ended March 31, 2009 and 2008 the base rent expense was $128,232 and $128,232, respectively.

Base Rent: Absecon

Rental payments shall be equivalent to a cumulative and compounding annualized return of 10% on the $2,150,000 purchase price plus $150,000, at risk, interest rate reserve required by Prudential ($230,000).

The additional rent payments are equal to the mortgage, principle plus interest and the tax, insurance, and reserves, less the furniture, fixtures & equipment (“FF&E”) reserve. The FF&E reserve is paid by Absecon as part of the additional rent payment, but the control of the reserve belongs to Absecon. The reserve will be used exclusively to pay for the direct FF&E needs of the hotel operation as determined by the Company and Park Place Hospitality Group. Excess funds, over and above the current needs of the Base Rent Escrow Account and the FF&E escrow reserve are deemed “excess” and distributed periodically to the investor and Absecon as follows: 75% to investor as a rent extension payment and 25% to Absecon for services. This distribution sharing is subject to investor receiving full repayment of all invested funds and any accrued base rent through either refinancing or the excess distributable cash flow.

For the three months ended March 31, 2009 and 2008, the base rent expense was $57,500 and $57,500, respectively.

F-12

NOTE 7 LOANS PAYABLE

As of March 31, 2009 and December 31, 2008, the Company had notes payable with principal balances of $1,728,544 and $1,116,699, respectively.

These notes payable are demand notes payable with an interest rate of 10%. As of March 31, 2009 $1,485,070 of the notes payable are advances from the property owner at Absecon to cover the additional funds necessary to fulfill the $504,768 in the PIP and for operating cash flows. All of these funds were used for the Absecon property. The other notes payable with a principal balance of $243,474 were acquired in the revere merger in October 2008.

For the three months ended March 31, 2009 and 2008, the interest expense was $37,556 and $4,774, respectively.

As of March 31, 2009, these amounts are being accrued; no payments of interest and/or principal have been made.

NOTE 8 DUE TO RELATED PARTY

As of March 31, 2009 and December 31, 2008 the Company owed East Coast Realty Ventures, LLC, the former managing member of Hanover, Clinton and Absecon, an entity controlled by Frederic Richardson, the Company’s Chairman and CEO, $650,887 and $368,565, respectively under a demand note with no formal repayment requirements.

NOTE 9 COMMON AND PREFERRED STOCK

As of March 31, 2009, the Company has 175,000,000 shares of common stock authorized and 10,804,829 issued and outstanding.

During the three months ended March 31, 2009, the Company issued 3,863,661 shares of its common stock at its par value of $.001. The amount of $3,864 is being reflected as general and administrative expenses.

During the year ended December 31, 2008, 6,876,469 shares of common stock were issued at par value of $.001 for a total of $6,876 to certain individuals and entities for past consideration. The amount of $6,876 is included in general and administrative expenses.

As of March 31, 2009, the Company has 10,000,000 shares of preferred stock authorized and 1,000,000 issued and outstanding.

NOTE 10 REVERSE SPLIT AND SYMBOL CHANGE

On April 29, 2008, the Company increased our authorized common stock from 80,000,000 shares to 175,000,000 shares by filing a Certificate of Change pursuant to NRS 78.209.

Effective June 21, 2008, in order to meet a requirement of the Stock Purchase Agreement, as amended, between Airport Road Associates One, LLC (“Airport, LLC”) and East Coast Realty Ventures, LLC (“ECRV, LLC”), as previously reported on Form 8-K filed March 20, 2008, the Board of Directors of the Company has declared a 100 to 1 round lot reverse split of the Company’s Common Stock. In accordance with the reverse split, each shareholder will receive one (1) share of Common Stock for each one hundred (100) shares currently held. No fractional shares shall be issued; all fractional shares shall be rounded up to the next whole share. Any shareholder that should own less than one hundred (100) shares after completion of the reverse split shall be issued a sufficient number of additional shares so that each such shareholder shall own a minimum of one hundred (100) shares. The reverse split was effective as of the opening of trading on June 2, 2008. Additionally, also effective June 2, 2008, the Company’s trading symbol was changed to “PSPN” in conjunction with the reverse split of the Company’s common stock.

On August 11, 2008, the Company changed its name to Cynosure Holdings, Inc. by filing a Certificate of Amendment to Articles of Incorporation.

On August 11, 2008, the members of our Board of Directors were increased to six (6), and Mark T. Johnson and Marc D. Manoff, Esq. were appointed to the Board of Directors pursuant to the increase.

F-13

On August 21, 2008, the Company changed its name to Hybid Hospitality, Inc. by filing a Certificate of Amendment to the Articles of Incorporation.

On August 27, 2008, the Company changed its name to Mod Hospitality, Inc. by filing a Certificate of Amendment to the Articles of Incorporation.

Effective September 22, 2008, the Company completed a 1 for 10 reserve split of its common stock and changed its name to Mod Hospitality, Inc. with a new symbol “MODY.”

NOTE 11 INCOME TAXES AND CHANGE IN CONTROL

The Company has approximately $1,260,286 in gross deferred tax assets as of March 31, 2009, resulting from net operating loss carry forwards. A valuation allowance has been recorded to fully offset these deferred tax assets because the future realization of the related income tax benefits is uncertain. Accordingly, the net provision for income taxes is zero as of March 31, 2009.

As of March 31, 2009, the Company has federal net operating loss carry forwards of approximately $3,150,716 available to offset future taxable income through 2029 subject to the annual limitations imposed by Section 382 under the Internal Revenue Code due to the change in control. In February 2008, there was a change in control of the Company wherein Section 382 will apply to the net operating loss carryforward starting with the year ended December 31, 2008.

As of March 31, 2009, the difference between the tax provision at the statutory federal income tax rate and the tax provision attributable to loss before income taxes is as follows (in percentages):

Statutory federal income tax rate	-34%
State taxes - net of federal benefits	-5%
Valuation allowance	39%

Income tax rate – net	0%

For the three months ended March 31, 2009, the valuation allowance adjustment was $372,962.

NOTE 12 REVERSE MERGER

On October 21, 2008, we underwent a reverse merger with ECV Holdings, Inc. (“ECV”), a Delaware corporation, pursuant to a share exchange agreement (the “Share Exchange Agreement”) with ECV and Flora Nutrients, Inc., a Nevada corporation and the sole shareholder of ECV (“FLNU”). The closing of the transaction took place on October 21, 2008 (the “Share Exchange Transaction”) and resulted in the acquisition of ECV. Pursuant to the terms of the Share Exchange Agreement, we acquired all of the outstanding common stock of ECV by issuing FLNU an aggregate of 50,000,000 shares representing 99.912% of our common stock outstanding. Since FLNU, the sole shareholder of ECV, will own 99.912% of the shares of our outstanding common stock upon the completion of the Share Exchange Transaction, ECV is the legal acquiree but the accounting acquirer in the reverse merger. Upon the completion of the Share Exchange Transaction, ECV (accounting acquirer, legal acquiree) will succeed to the business that we previously carried on, and will become the registrant. As a result, the historical financial statements presented going forward will be those of ECV (accounting acquirer, legal acquiree).

The Share Exchange Agreement contains customary terms and conditions for a transaction of this type, including representations, warranties and covenants, as well as provisions describing the consideration for the Acquisition, the process of exchanging the consideration and the effect of the acquisition.

As described above, on October 21, 2008, we acquired all of the issued and outstanding common stock of ECV, a Delaware corporation, in accordance with the Share Exchange Agreement. The closing of the transaction took place on October 21, 2008 (the “Closing Date”). On the Closing Date, pursuant to the terms of the Securities Exchange Transaction, we acquired all of the outstanding common stock of ECV from FLNU. In exchange, we issued FLNU 50,000,000 shares, or approximately 99.912% of our common stock outstanding. Since FLNU will own 99.912% of the shares of our outstanding common stock upon the completion of the Share Exchange Transaction, ECV is the legal acquiree but the accounting acquirer in the reverse merger. Upon the completion of the Share Exchange Transaction, ECV (accounting acquirer, legal acquiree) will succeed to the business that we previously carried on, and will become the registrant. As a result, the historical financial statements presented going forward will be those of ECV (accounting acquirer, legal acquiree).

F-14

ECV is a corporation formed on March 26, 2008 under the laws of Delaware. On April 4, 2008, ECV entered into a stock for membership interest agreement with East Coast Realty Ventures, LLC (“ECRV”) which owned all of the issued and outstanding capital (the “Membership Interest”) of ECRV Hanover LeaseCo, LLC (the “Hanover”), ECRV Clinton LeaseCo, LLC (the “Clinton”), and ECRV FM LeaseCo, LCC (the “Absecon”). Hanover, Clinton, and Absecon are limited liability companies organized under the law of the State of Delaware. As a result of the stock for membership interest transaction, ECV acquired 100% of the membership interest in Hanover, Clinton and Absecon by issuing Frederic Richardson 100,000 shares of its common stock.

NOTE 13 COMMITEMENTS AND CONTINGENCIES

Legal Proceedings

Beachview Restaurants, LLC as Plaintiff vs. ECRV Clinton Leaseco, LLC as Defendant, in the Circuit Court in and for Miami-Dade County, Florida Case NO. 07 29326 CA 22 which involves a dispute concerning a former lessee which had been evicted for non-payment of rent in 2007, claiming breach of lease and fraudulent inducement. It is unlikely that there will be an unfavorable outcome in this matter inasmuch as the Plaintiff has yet to state a cause of action regarding any breach of lease or inducement to sign the lease. There are sound defenses. The amount in controversy has been stated as merely in excess of $15,000.

Miami-Dade County, as Plaintiff vs. Clinton as Defendant, in the Circuit Court in and for Miami-Dade County, Florida, Case No. 07-32742 CA 22 which involves a dispute over a previously undisclosed water and sewer fee imposed by Miami-Dade County, Florida claiming non-payment of the bill. It is unlikely that there will be an unfavorable outcome in this matter in that it appears that the suit was filed beyond the applicable statute of limitations. The amount in controversy is claimed to be slightly in excess of $42,000.

Rafael Barrera vs. Clinton Hotel Investors, LLC and East Coast Realty Ventures, LLC, Miami-Dade County Circuit Court Case No. 08-67650 CA 24. Plaintiff, Barrera filed an eight (8) count Complaint; counts II, IV and VI apply exclusively to Clinton Hotel and counts I, III, V, VII, and VIII apply exclusively to East Coast Realty Ventures, LLC. Count II is for an alleged breach of the employment contract between Plaintiff and Clinton Hotel resulting from an alleged failure to pay four (4) months of base salary beginning on the date of Plaintiff’s termination. Count IV requests an accounting of vacation and bonus payments for the period beginning August 10, 2001 and ending on August 16, 2007. Count IV is for unjust enrichment based on an alleged failure to properly compensate Plaintiff. Clinton Hotel filed a Motion to Dismiss the Complaint which remains pending and is set for hearing on April 3, 2009. Plaintiff claims damages against Clinton Hotel in the approximate amount of $115,000, all of which is being denied by Clinton Hotel and which Clinton Hotel intends to vigorously defend.

As of March 31, 2009, management of the Company has determined that the amount of $172,000, which represents the approximate amount of the above lawsuits do not warrant an expense to be recorded in accompanying unaudited consolidated financial statements as of March 31, 2009.

In 2005, the Company retained the legal services of Weed & Co, LLP. On December 3, 2007, Weed & Co, LLP filed a complaint in Superior Court of the State of California in dispute over payment of legal fees against the Company and other defendants. On March 11, 2008, the other defendants entered into a settlement agreement where Weed & Co, LLP was to be paid $87,500. Weed & Co., LP has the right to re-file the complaint should the other defendants not satisfy this agreement. There is no liability reflected in the accompanying consolidated financial statements for this uncertainty.

NOTE 14 SUBSEQUENT EVENTS

On May 5, 2009, the Company issued 250,000 shares of its common stock at par value of $.001. These issuances of common stock increase the outstanding shares of common stock to 11,054,829.

F-15

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

The information contained in Item 2 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. Actual results may materially differ from those projected in the forward-looking statements as a result of certain risks and uncertainties set forth in this report. Although management believes that the assumptions made and expectations reflected in the forward-looking statements are reasonable, there is no assurance that the underlying assumptions will, in fact, prove to be correct or that actual results will not be different from expectations expressed in this report.

Forward-Looking Statements

We make forward-looking statements in Management’s Discussion and Analysis of Financial Condition and Results of Operations and elsewhere in this report based on the beliefs and assumptions of our management and on information currently available to us. Forward-looking statements include information about our possible or assumed future results of operations which follow under the headings “Business and Overview,” “Liquidity and Capital Resources,” and other statements throughout this report preceded by, followed by or that include the words “believes,” “expects,” “anticipates,” “intends,” “plans,” “estimates” or similar expressions.

Forward-looking statements are subject to a number of risks and uncertainties that could cause actual results to differ materially from those expressed in these forward-looking statements, including the risks and uncertainties described below and other factors we describe from time to time in our periodic filings with the U.S. Securities and Exchange Commission (the “SEC”). We therefore caution you not to rely unduly on any forward-looking statements. The forward-looking statements in this report speak only as of the date of this report, and we undertake no obligation to update or revise any forward-looking statement, whether as a result of new information, future developments or otherwise.

Company Overview

We were originally organized in the State of Delaware in February 1993 under the name PLR, Inc. Our business operations are primarily conducted through our three (3) indirect subsidiaries, ECRV Hanover LeaseCo, LLC (“Hanover”), ECRV Clinton LeaseCo, LLC (“Clinton”), and ECRV FM LeaseCo, LLC (“Absecon”), limited liabilities companies incorporated under the laws of the State of Delaware.

In November 1997, PLR, Inc. changed its name to Integrated Carbonics Corp. and moved its domicile to the State of Nevada. On July 23, 1999, Integrated Carbonics Corp. changed its name to Urbana.ca, Inc. (“URBA”). On April 11, 2003, URBA changed its name to PSPP Holdings, Inc. On August 11, 2008, PSPP Holdings, Inc. changed its name to Cynosure Holdings, Inc. by filing a Certificate of Amendment to Articles of Incorporation with the State of Nevada. Effective September 22, 2008, PSPP Holdings, Inc. changed its company name to Mod Hospitality, Inc. (hereinafter referred to as “Mod Hospitality,” “we,” “us” or the “Company”).

On March 26, 2008, ECV Holdings, Inc. (“ECV’) was formed under the laws of Delaware. On April 4, 2008, ECV entered into a stock for membership interest agreement with East Coast Realty Ventures, LLC (“ECRV”) which owned all of the membership interest of Hanover, Clinton, and Absecon. As a result of the stock for membership interest transaction, ECV acquired 100% of the membership interest in Hanover, Clinton and Absecon by issuing Frederic Richardson, the sole member of ECRV, 100,000 shares of its common stock.

Effective May 8, 2008, ECV entered into a share exchange agreement with Frederic Richardson and FLNU, a non-reporting small public company listed on the Pink Sheets Grey Market, whereby, Frederic Richardson transferred to FLNU 100% of the issued and outstanding common stock of ECV, in exchange for 28,000,000 shares of common stock of FLNU, which represents 80% of FLNU’s outstanding common stock. As a result of the share exchange transaction, Hanover, Clinton and Absecon became the wholly-owned subsidiaries of FLNU.

On October 21, 2008 (the “Closing Date”), we entered into a share exchange agreement (the “Share Exchange Agreement”) with ECV and FLNU. On the Closing Date of the share exchange transaction, we issued FLNU 50,000,000 common stock, or approximately 99.12% of our common stock outstanding, in exchange for all of the outstanding common stock of ECV from FLNU.

We are committed to finding unique and profitable hotel operations throughout the world. We exploit the changing real estate market with new financing structures and finds quality assets to which we can bring superior cost management and revenue generation skills. We currently own the operation of a boutique hotel in the Art Deco District of Miami, South Beach, Florida and branded hotel operations in the North East.

Hanover, Clinton and Absecon do not have ownership of the hotel buildings’ financing nor responsibility for capital items, real estate taxes, or building insurance, but they perform management of these items, which give the real estate investors a low-maintenance real estate investment.

Under separate management agreements, Hanover, Clinton and Absecon engaged the services of Park Place Hospitality, Inc (“PPHG”) with its base of operations located in Charlotte, North Carolina, to run the operations of the hotels. In September 2008, we terminated PPHG’s management arrangement for the Clinton Hotel in South Beach, Miami, Florida, and in February 2009, we terminated PPHG’s management agreement for the Holiday Inn Express in Hanover, Maryland. We have retained the management services of Mid-Atlantic Realty Group, an entity controlled by Frederic Richardson, our Chairman and CEO, for both these hotels under the same terms as with PPHG, with formal agreements pending to be executed.

Plan of Operations

In this slower demand environment, we are working aggressively to enhance property-level house profit margins by reviewing room amenities and adjusting room rates. We continue to implement new technology, develop new sales promotions, and improve our properties to increase property-level revenue, rather than simply discounting room rates.

Our plan of operation includes for the next twelve months fee generation from management agreements on three hotels. The operations will include selling equity participation on future hotel acquisitions. We plan to raise additional capital through a formal registration of equity contributions from its principal shareholder. Currently there are no planned acquisitions. We do not plan to sell any of its assets or operations at this time.

We believe that despite recent economic downturns the market for hotel lodging is stable in the markets in which we maintain the operations of the hotels. The American Hotel & Lodging Association stated that 2007 was the best year ever for the U.S. lodging industry. Spurred on by the weak U.S. dollar that has induced foreign travelers to the United States and consumers within the United States to travel within its borders. Additionally, peak construction of new hotels in markets where we maintain properties such as Miami have slowed significantly since the fourth quarter of 2007 which has led to a potential supply and demand imbalance. However, areas such as Baltimore have shown decreases in demand as they are not "trendy" vacation areas and occupancy rates are projected to decline in 2009. However, average daily room rates have increased and are projected to do so through 2009. Gaming revenues have increased in areas such as Atlantic City and lodging in such places has not been affected by the current economic instability.

Results of Operations

The following table sets forth the key components of our result of operations for the periods indicated, in U.S. Dollars.

	For the quarter ended
	March 31, 2009			March 31, 2008
Revenue	$	2,207,718		$	3,202,694
Operating expenses		3,102,792			3,395,193
Loss from operations		(895,074	)		(192,499	)
Other income (expenses)		(37,330	)		(4,112	)
Income before provision for income taxes		(932,404	)		(196,611	)
Provision for income taxes		-			-
Net loss	$	(932,404	)	$	(196,611	)

Comparison of Quarters Ended March 31, 2009 and 2008

General: We have conducted operations through March 31, 2009. This includes the operations from three hotels: Hanover, Clinton, and Absecon.

Revenue: Net revenue decreased by $994,976 or 31%, from $3,202,694 in the quarter ended March 31, 2008 to $2,207,718 in the quarter ended March 31, 2009. Revenues are comprised of the revenues from rooms, food and beverage, rental, telephone, movies, and suite shop, generated as a result of the operations of the three hotels. Our revenue decreased because of the global financial crisis that began in December 2008, which affected business and personal travel, and the travel patterns of both domestic and international travel. We reduced our room rates significantly to attract guests.

Operating Expenses: Operating expenses, arising from rooms, food and beverage, rent, management and franchise fees, general and administrative, and depreciation, were $3,395,193 in the quarter ended March 31, 2008, compared to $3,102,792 in the quarter ended March 31, 2009. This represents a decrease of $292,401, or 8.6%. This decrease was primarily due to a decrease in the rental expense that we experienced in 2008.

Other Income (Expenses). Our other income (expenses) consists of interest income, interest expense, gain on sale of assets. We had total other expenses of $37,330 for the quarter ended March 31, 2009 as compared to $4,112 for the quarter ended March 31, 2008, an increase of $33,218. The decrease in total other expenses was primarily due to an increase in the interest expense from the notes we assumed in the amount of $243,000 in connection with the reverse merger completed in October 2008 by and among Mod Hospitality, Absecon, Hanover and Clinton, and a construction loan, with a principal amount of $1,485,000 incurred by Absecon for the renovations of the hotel, which were not covered by the PIP reserve.

Net Loss: Our net loss was $196,611 in the quarter ended March 31, 2008 and $932,404 in the quarter ended March 31, 2009. The increase in net loss of $735,793, or 350%, was primarily the result of the significant decrease in revenues.

Capital Liquidity and Resources

As of March 31, 2009 and 2008, we had total assets equal to $5,655,302 and $5,195,374, respectively. As of March 31, 2009, we had cash and cash equivalents of $692,346. The following table provides the key information about our net cash flow for all financial statement periods presented in this Form 10-Q:

	For the quarter ended
	March 31, 2009			March 31, 2008
Net cash provided by/used in operating activities	$	(1,163,844)		$	530,417
Net cash used in investing activities		(871,328	)		-
Net cash provided by financing activities		1,999,169			(263,645)
Net increase (decrease) in cash and cash equivalents		(36,003	)		266,772
Cash and cash equivalents, end of year	$	692,346		$	1,073,578

Comparison of Quarters Ended March 31, 2009 and 2008

Net Cash Provided By/Used In Operating Activities. Our net cash used by operating activities totaled $(1,163,844) for the quarter ended March 31, 2009 as compared to the net cash provided by operating activities of $530,417 for the quarter ended March 31, 2008. The increase in cash used by operating activities was primarily due to the decrease in the escrow reserves from the extensive renovations of Absecon required by the franchisor.

Net Cash Used In Investing Activities. Net cash used in investing activities was $871,328 for the quarter ended March 31, 2009 and $0 for the quarter ended March 31, 2008. The reason for the decrease in net cash was paying for the construction in progress for the Property Improvement Plan mandated by the franchisor.

Net Cash Provided By Financing Activities. Net cash provided by financing activities totaled $1,999,169 for the quarter ended March 31, 2009 as compared to net cash used by financing activities of $(263,645) for the quarter ended March 31, 2008. The reason for increase in cash provided by financing activities was due to an increase of capital contributions, notes payable, and, related party debt.

Cash. As of March 31, 2009, we had cash of $692,346, as compared to $1,073,578as of March 31, 2008. This decrease was primarily due to the decrease in our revenues and cost arising from the renovations of Absecon.

Critical Accounting Policy

Basis of Presentation

The accompanying consolidated interim unaudited financial statements as of March 31, 2009, and the three months ended March 31, 2009 and 2008 have been prepared in accordance with accounting principles generally accepted for interim unaudited financial statement presentation and in accordance with the instructions to Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statement presentation. In the opinion of management, all adjustments for a fair statement of the results of operations and financial position for the interim period presented have been included.

Revenue and Expense Recognition: We recognize income from the management of the properties in accordance with the accrual basis of accounting, that is, when the services and products are provided for hotel guests and there is no uncertainty as to cash collections; i.e. upon receipt of cash/check payment or credit card from the hotel guests. We recognize expenses related to the management of the properties in accordance with the accrual basis of accounting, that is, when the expense is incurred.

Advertising, Sales and Marketing Expense: We incur sales and marketing expenses in conjunction with the production of promotional materials, and related travel costs. In accordance with the AICPA’s Statement of Position No. 93-7 “Reporting on Advertising Costs”, companies expense advertising and marketing costs as incurred or as the advertising takes place.

Income Taxes: Income taxes are provided for using the liability method of accounting in accordance with SFAS No. 109 "Accounting for Income Taxes," and clarified by FIN 48, "Accounting for Uncertainty in Income Taxes an interpretation of FASB Statement No. 109." A deferred tax asset or liability is recorded for all temporary differences between financial and tax reporting. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax basis. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effect of changes in tax laws and rates on the date of enactment.

Investment: We account for investments, where we hold from 20% up to 50%, in the common stock, or membership interest, of an entity, using the equity method. The investment is initially recorded at cost and the carrying amount is adjusted to recognize our proportionate share of the earnings or losses of the investee after the date of acquisition. The amount of the adjustment is included in the determination of our net income or loss in the period of the adjustment. Any dividends received from the investee reduce the carrying value of the investment.

As of March 31, 2009, Dream Apartments TV continued to pursue its planned operations, therefore, current management made the decision to reflect the $58,000 as the fair value of this investment.

Recent Accounting Pronouncements

Off Balance Sheet Transactions

We do not have any off-balance sheet arrangements, financings, or other relationships with unconsolidated entities or other persons, also known as “special purpose entities” (SPEs).

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Not applicable because we are a smaller reporting company.

Item 4T. Controls and Procedures

Management's report on internal control over financial reporting

Our Management is responsible for establishing and maintaining adequate internal control over financial reporting under the supervision of the President and Chief Executive Officer and the Chief Financial Officer. Internal control over financial reporting is a process designed 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.

Management evaluated the design and operation of our internal control over financial reporting as of March 31, 2009, based on the framework and criteria established in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), and has concluded that such internal control over financial reporting is effective. There are no material weaknesses that have been identified by management.

An evaluation was performed, under the supervision of, and with the participation of, our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-(e) to the Securities and Exchange Act of 1934). Based on that evaluation, our management, including our Chief Executive Officer and Chief Financial Officer, concluded that our disclosure controls and procedures were adequate and effective, as of March 31, 2009, to ensure that information required to be disclosed by us in the reports that it files or submits under the Securities Exchange Act of 1934, is recorded, processed, summarized, and reported within the time periods specified in the Commission’s rules and forms, and that such information is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

We do not expect that our disclosure controls and procedures or internal control over financial reporting will prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable assurance that the objectives of the system are met and cannot detect all deviations. Because of the inherent limitations in all control systems, no evaluation of control can provide absolute assurance that all control issues and instances of fraud or deviations, if any, within the Company have been detected.

This report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management's report was not subject to attestation by our registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit the company to provide only management's report in this report.

Changes in internal control over financial reporting

There were no significant changes in our internal controls over financial reporting that occurred subsequent to our evaluation of our internal control over financial reporting for the three months ended March 31, 2009 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings.

There have been no material developments in this quarter in regard to any litigation pending or threatened by or against us or any of our subsidiaries as detailed in Form 10-K filed on April 15, 2009.

Item 1A. Risk Factors

Not applicable because we are a smaller reporting company.

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

On May 5, 2009, we issued 250,000 shares of our common stock to Richard Weed in settlement of prior litigation at $0.001 per share in reliance upon the exemption provided by Section 4(2) of the Securities Act of 1933, as amended.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Submission of Matters to a Vote of Security Holders.

None.

Item 5. Other Information.

None

Item 6. Exhibits.

31.1 Rule 13a-14(a)/ 15d-14(a) Certification of Chief Executive Officer and Chief Financial Officer

32.1 Section 1350 Certification of Chief Executive Officer and Chief Financial Officer

SIGNATURES

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

Dated: May 20, 2009

	Mod Hospitality, Inc.
By:	/s/ Frederic Richardson
	Name: Frederic Richardson Title: Chief Executive Officer Principal Executive Officer

By:	/s/ Sarah Jackson
	Name: Sarah Jackson , CPA Title: Chief Financial Officer Principal Financial Officer