Umbra Companies, Inc. - Quarter Report: 2015 March (Form 10-Q)

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OCEAN ELECTIRC INC.

(formerly known as Gold Holding Corp.)

(A Development Stage Company)

Balance Sheets

(Expressed in U.S. Dollars)

(The Interim Financial Statements have not been reviewed by our Independent Accountant.)

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

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OCEAN ELECTIRC INC.

(formerly known as Gold Holding Corp.)

(A Development Stage Company)

STATEMENTS OF OPERATIONS

(Expressed in U.S. Dollars)

(The Interim Financial Statements have not been reviewed by our Independent Accountant.)

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

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OCEAN ELECTIRC INC.

(formerly known as Gold Holding Corp.)

(A Development Stage Company)

STATEMENTS OF CASH FLOWS

(Expressed in U.S. Dollars)

(The Interim Financial Statements have not been reviewed by our Independent Accountant.)

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

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The Interim Financial Statements have not been reviewed by our Independent Accountant.

OCEAN ELECTRIC INC.

ITEM 1.  NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

1. Nature of Operations and Continuance of Business

Ocean Electric Inc. (the “Company”) was incorporated in the State of Nevada on January 10, 2006. On October 27, 2009, the Company changed its name from Royal Equine Alliance Corp. to Gold Holding Corp., and on January 23, 2012, changed its name from Gold Holding Corp. to Ocean Electric Inc. The Company is a development stage company that plans to focus on alternative energy sources. The Company is a development stage company as defined by Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 915, “Development Stage Entities”.

Going Concern

These financial statements have been prepared on a going concern basis, which implies that the Company will continue to realize its assets and discharge its liabilities in the normal course of business.  As of March 31, 2015, the Company had negative working capital of $520,084 and an accumulated deficit of $7,294,516.  The continuation of the Company as a going concern is dependent upon the continued financial support from its management, its ability to identify potential investors and obtain the necessary debt or equity financing, and its ultimate ability to generate profitable operations from the Company’s future operations.  These factors raise substantial doubt regarding the Company’s ability to continue as a going concern.  These financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

2. Summary of Significant Accounting Policies

a)

Basis of Presentation

The financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) and are expressed in U.S. dollars.  The Company’s fiscal year end is December 31.

b)

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.  The Company regularly evaluates estimates and assumptions related to the deferred income tax asset valuation allowances.  The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources.  The actual results experienced by the Company may differ materially and adversely from the Company’s estimates.  To the extent there are material differences between the estimates and the actual results, future results of operations will be affected.

c)

Cash and Cash Equivalents

The Company considers all highly liquid instruments with a maturity of three months or less at the time of issuance to be cash equivalents.

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The Interim Financial Statements have not been reviewed by our Independent Accountant.

d)

Interim Financial Statements

The interim financial information referred to above has been prepared and presented in conformity with accounting principles generally accepted in the United States applicable to interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X. The interim financial information has been prepared on a basis consistent with prior interim periods and years and includes all disclosures that are necessary and required by applicable laws and regulations.

e)

Basic and Diluted Net Loss Per Share

The Company computes net loss per share in accordance with ASC 260, Earnings per Share.  ASC 260 requires presentation of both basic and diluted earnings per share (“EPS”) on the face of the income statement.  Basic EPS is computed by dividing net loss available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period.  Diluted EPS gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method and convertible preferred stock using the if-converted method.  In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants.  Diluted EPS excludes all dilutive potential shares if their effect is anti-dilutive.

f)

Financial Instruments

Pursuant to ASC 820, Fair Value Measurements and Disclosures, an entity is required to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.  ASC 820 establishes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure fair value.  A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement.  ASC 820 prioritizes the inputs into three levels that may be used to measure fair value:

Level 1

Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities.

Level 2

Level 2 applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data.

Level 3

Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities.

The Company’s financial instruments consist principally of cash, accounts payable, loan payable to related party and long-term debt.  Pursuant to ASC 820, the fair value of our cash is determined based on “Level 1” inputs, which consist of quoted prices in active markets for identical assets.  We believe that the recorded values of all of our other financial instruments approximate their current fair values because of their nature and respective maturity dates or durations.

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The Interim Financial Statements have not been reviewed by our Independent Accountant.

g)

Comprehensive Loss

ASC 220, Comprehensive Income, establishes standards for the reporting and display of comprehensive loss and its components in the financial statements.  For the three months ended March 31, 2015, the Company recorded $265 in other comprehensive income due to mark to market adjustments of cash and liabilities. There was $608 in other comprehensive loss for the same period ending March 31, 2014.  

Net Income (Loss) and Comprehensive Income for the Three Months Ended March 31, 2015:

h)

Stock-Based Compensation

The Company accounts for stock options issued to employees in accordance with the provisions of FASB ASC 718, “Stock Compensation”.  As such, compensation cost is measured on the date of grant as the excess of current market price of the underlying stock over the exercise price.  Such compensation amounts are amortized over the respective vesting periods of the option grant.  The Company adopted the disclosure provisions of FASB ASC 718, “Accounting for Stock-Based Compensation,” and FASB ASC 718, which allows entities to provide pro forma net Income (loss) and pro forma earnings (loss) per share disclosures for employee stock option grants as if the fair-valued based method has been applied.

The Company accounts for stock options or warrants issued to non-employees for goods or services in accordance with the fair value method of FASB ASC 718.  Under this method, the Company records an expense equal to the fair value of the options or warrants issued.  The fair value is computed using an options pricing model.

i)

Prepaid Marketing Expenses

On April 16, 2012, the Company entered into an agreement with a production company, whereby the production company will produce an advertorial video project at a cost of $395,152.  As at March 31, 2013, the Company incurred $296,364 on the project.  As of May 12, 2014, the Company estimates that the project will be finished within six months.  The Company intends to capitalize this project when it is completed, it will depreciate it over two years.

j)

Intangible Assets

Intangible assets are comprised of patents and licenses relating to wave energy and wind energy technology.  The intangible assets are externally acquired and are amortized straight-line over a useful life of fifteen years with zero residual value.

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The Interim Financial Statements have not been reviewed by our Independent Accountant.

k)

Impairment of Long-Lived Assets

In accordance with ASC 360, Property Plant and Equipment, the Company tests long-lived assets or asset groups for recoverability when events or changes in circumstances indicate that their carrying amount may not be recoverable.  Circumstances which could trigger a review include, but are not limited to: significant decreases in the market price of the asset; significant adverse changes in the business climate or legal factors; accumulation of costs significantly in excess of the amount originally expected for the acquisition or construction of the asset; current period cash flow or operating losses combined with a history of losses or a forecast of continuing losses associated with the use of the asset; and current expectation that the asset will more likely than not be sold or disposed significantly before the end of its estimated useful life. Recoverability is assessed based on the carrying amount of the asset and its fair value which is generally determined based on the sum of the undiscounted cash flows expected to result from the use and the eventual disposal of the asset, as well as specific appraisal in certain instances.  An impairment loss is recognized when the carrying amount is not recoverable and exceeds fair value.

l)

Income Taxes

Income taxes are recognized in accordance with ASC 740, “Income Taxes”, whereby deferred Income tax liabilities or assets at the end of each period are determined using the tax rate expected to be in effect when the taxes are actually paid or recovered. A valuation allowance is recognized on deferred tax assets when it is more likely than not that some or all of these deferred tax assets will not be realized.

m)

Recent Accounting Pronouncements

The Company has implemented all new accounting pronouncements that are in effect.  These pronouncements did not have any material impact on the financial statements unless otherwise disclosed, and the Company does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations. 

3. Intangible Assets

On October 3, 2011, the Company acquired all of the rights and patents to a wave energy technology developed by Hidroflot, S.A.  The purchase price was $1,400,000 for the technology, which was payable in thirty-three monthly installments, and has been recorded at the present value of $1,218,238, based on the present value of payments.

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The Interim Financial Statements have not been reviewed by our Independent Accountant.

On December 13, 2011, the Company acquired all of the rights and patents to an off-shore wind energy technology developed by Green & Blue Sustainable Technologies.  The Company issued 25,000,000 common shares as full payment for the acquisition, with a market value of $457,600.

4. Fixed Assets

Fixed Assets as of March 31, 2015 consist of the following:

The depreciation for the twelve months ending December 31, 2014 and 2013 was $469 and $52, respectively.

5. Long-Term Debt

On June 26, 2012, the Company entered into a loan agreement with Zenith Equity Group, Ltd. (“Zenith”) providing for a loan of $450,000.  The loan accrued simple interest of 3.5% on the outstanding principal amount and was to be repaid in full on or before June 27, 2015.  On September 8, 2014, all of the Zenith loan was converted into common stock of the Company.

On November 1, 2013, the Company entered into a loan agreement with Tandem Growth, providing for a loan of $40,000. The loan accrued simple interest of 6% per year on the outstanding principal amount and was to be repaid in full on or before November 1, 2016. On September 8, 2014, the loan was acquired by Zenith and converted into common stock of the Company.

On January 29, 2014, the Company, entered into a Consolidated Loan Agreement (the “Loan Agreement”) with Zenith, to consolidate outstanding loans made by Zenith to the Company in 2012 and 2013 and to extend new loans to the Company.  Zenith is also a shareholder of the Company and owns more than 5% of the issued and outstanding shares of common stock of the Company.

The Loan Agreement consolidated outstanding loans of approximately $450,000 made on June 26, 2012 and $40,000 made on September 18, 2013, and accrued interest of $25,623.83 (collectively, the “Consolidated Debt”).  In addition to the Consolidated Debt, upon signing, Zenith lent $100,000 (the “New Credit Loan”) and made available to the Company a line of credit of an aggregate amount of $300,000 prior to December 31, 2014 (the “Drawdown”, together with the Consolidated Debt and the New Credit Loan, the “Loan”). Under the Drawdown, the Company borrowed $73,000 on March 20, 2014.  The Loan had a maturity date of April 15, 2018. The interest rate on the Loan was 6% per year, simple interest.

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The Interim Financial Statements have not been reviewed by our Independent Accountant.

On September 8, 2014, all of the principal and interest due under the Loan Agreement and other debt held by Zenith was converted into 7,551,310 shares of Common Stock of the Company.

On February 20, 2015, the Company entered into a Convertible Promissory Note Agreement (“Note”) with Azuma Group Ltd (“Azuma”), pursuant to which Azuma lent USD $15,000 to the Company (referred to as the “Azuma Loan”).  The interest rate on the outstanding and unpaid principal amount of the Azuma Loan is 8.0% per year, simple interest, calculated on a basis of 365-day year.  The interest will accrue on the outstanding principal and will be payable in full on February 20, 2016, unless converted or prepaid. The principal and interest may not be prepaid by the Company or converted by Azuma prior to August 20, 2015.  After August 20, 2015, the Company will have the option to prepay the Azuma Loan and Azuma will have the option to convert the Azuma Loan to shares of Common Stock of the Company.

During year 2014, the Company received $144,306 as loans from investors. The terms of these loans were documented on January 31, 2014. These loans will mature in 18 months, and bear a 6% interest rate per year. Interest accrues starting January 2014. During the three months ended on March 31, 2014, $8,141 was returned to investors who decided to cancel their loans before January 31, 2014. By the end of 03/31/2015, $28,952 of those loans matured.  However, due to the company’s negative working capital, these debts will not be retired until the condition of the company is better.  Interest for matured loans will continue to accrue until retired.

As of March 31, 2015 and December 31, 2014, the Company owed $198,270 and $198,270 related to long-term loans from investors.

The Company is required to make the following principal repayments on the long-term debt:

6. Related Party Transactions

a)

On September 8, 2014, the Company entered into a Note Conversion Agreement with Zenith Equity Group Ltd, a shareholder of the Company, to convert outstanding indebtedness of the Company into 7,511,310 shares of common stock of the Company.

b)

As at March 31, 2015 and December 31, 2014, the Company owed $14,405 and $ 14,394 to the former President of the Company.  The amounts were used to fund operations.  The amounts owing are unsecured, non-interest bearing, and due on demand.

c)

As at March 31, 2015 and December 31, 2014, the Company owed $6,268 and $ 6,268 to the President and CEO of the Company. The amounts were used to fund operations. The amounts owing are unsecured, non-interest bearing, and due on demand.

d)

On October 3, 2011, the Company purchased the rights to a wave energy technology from Hidroflot, S.A., a company solely owned by the President of the Company, for $1,400,000 (see notes 3 and 4).

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The Interim Financial Statements have not been reviewed by our Independent Accountant.

e)

On December 13, 2011, the Company purchased the rights to an off-shore wind energy technology from Green & Blue Sustainable Technologies, a company solely owned by the President of the Company, for 25,000,000 common shares with a fair value of $457,600 (see note 3).

f)

On April 27, 2012, the Company issued 20,000,000 shares with a fair value of $6,000,000 to the sole director for serviced provided and to be provided from January 1, 2012 to December 31, 2012.

7. Accounts Payable:

a)

On April 3, 2013, the Company received an unsecured loan from Hidroflot, S.A. of $19,752. There is no interest rate associated with the outstanding principal and a repayment schedule was not established. This loan was cancelled on July 1, 2013, after the Company received a notice from Hidroflot S.A. informing it that Hidroflot, S.A. ceased its operations effective June 30, 2013. As of March 31, 2014 and December 31, 2013 the Company owed $nil to Hidroflot, S.A. Refer to Note 4 concerning Hidroloft long-term liability, which is also a related party transaction.

8. Income Taxes

As of March 31, 2015, the Company had $7,299,372 of net operating losses carried forward to offset taxable income in future years which will start expiring commencing in fiscal 2027.  The income tax benefit differs from the amount computed by applying the U.S. federal income tax rate of 34% is $2,481,787.  As at March 31, 2015 and December 31, 2014, the company had no uncertain tax positions.

The valuation allowance will be evaluated at the end of each year, considering positive and negative evidence about whether the deferred tax asset will be realized.  At that time, the allowance will either be increased or reduced; reduction could result in the complete elimination of the allowance if positive evidence indicates that the value of the deferred tax assets was no longer impaired and the allowance was no longer required.

Should the Company undergo an ownership change as defined in Section 382 of the Internal Revenue Code, the Company’s tax net operating loss carry forwards generated prior to the ownership change will be subjected to an annual limitation, which could reduce or defer the utilization of these losses. The tax years for 2011 to 2015 are still open for inspection by the individual taxing authorities.

9. Share Capital

a)

On February 24, 2012, the Company increased the number of common shares authorized from 75,000,000 common shares to 250,000,000 common shares.

b)

On March 26, 2012, the Company issued 1,400,000 common shares for proceeds of $502,600.

c)

On April 27, 2012, the Company issued 20,000,000 common shares with a fair value of $6,000,000 to the President of the Company for management fees.

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The Interim Financial Statements have not been reviewed by our Independent Accountant.

d)

On April 19, 2013, 285,500 common shares were cancelled and returned to treasury stock and the Company recorded an increase of paid-in-capital for $286.

e)

On November 15, 2013, 731,000 common shares were cancelled and returned to treasury stock and the Company recorded an increase of paid-in-capital for $731.

f)

On September 8, 2014, 7,551,310 common shares were issued to Zenith and indebtedness in the aggregate principal amount of $703,000 and interest amount of $52,131 were cancelled.

g)

On January 30, 2015, the Company issued 5,500,000 shares of common stocks to Arch Capital Ventures Limited as compensation for services under a service agreement. As of March 27, 2015, Arch Capital owned 5,500,000 shares of the Company’s Common Stock, representing approximately 8.1% of the shares of the 67,834,810 shares issued and outstanding.  On April 14, 2015, the service agreement was novated, the service arrangement was cancelled and the 5,500,000 shares of common stock were returned to the status of authorized but unissued capital.

h)

On March 30, 2015, the Company issued 21,680 shares of common stocks for an investor at the price of $0.10 per share in exchange for cash.  This proceed was used for operation.

10. Commitments

On April 16, 2012, the Company entered into an agreement with a production company, whereby the production company will produce an advertorial video project at a cost of $395,152, to be paid according to the following schedule:

50% ($197,576) upon signing of the agreement (paid);

25% ($98,788) prior to commencement of animation (paid); and

25% ($98,788) on delivery of the final video project.

As of May 31, 2015, the Company has paid $296,364 for the video project. The video production was scheduled to be completed in December 2013 but is still unfinished. Management has determined that the video project should not be impaired at this time. Once the project is finished, the Company intends to recognize the marketing expenses in a period of two years.

11. Subsequent Events

On April 20, 2015, the Company entered into a letter agreement (the “StockVest Agreement”) with StockVest (“StockVest”), pursuant to which StockVest agrees to provide advertising, promotional and marketing services for the Company for the period between April 27, 2015 and July 27, 2015, in exchange of the issuance of 650,000 restricted shares of common stock of the Company to StockVest.  The StockVest Agreement also contains an anti-dilution until November 1, 2015, such that the Company will issue StockVest additional shares on November 1, 2015, if necessary, so that StockVest shall own at least 1% of the outstanding shares of the Company as of November 1, 2015.

On April 14, 2015, the Company and Arch Capital entered into a novation of their January 30, 2015 agreement to return their business relationship to the status quo before the date of the agreement in January, and Arch Capital returned the 5,500,000 million consideration shares for cancellation and return to the status of authorized but unissued shares of common stock.

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

Safe Harbor Statement

This report on Form 10-Q contains certain forward-looking statements.  All statements other than statements of historical fact are “forward-looking statements” for purposes of these provisions, including any projections of earnings, revenues, or other financial items; any statements of the plans, strategies, and objectives of management for future operation; any statements concerning proposed new products, services, or developments; any statements regarding future economic conditions or performance; statements of belief; and any statement of assumptions underlying any of the foregoing. Such forward-looking statements are subject to inherent risks and uncertainties, and actual results could differ materially from those anticipated by the forward-looking statements.

These forward-looking statements involve significant risks and uncertainties, including, but not limited to, the following: competition, promotional costs, and risk of declining revenues.  Our actual results could differ materially from those anticipated in such forward-looking statements as a result of a number of factors.  These forward-looking statements are made as of the date of this filing, and we assume no obligation to update such forward-looking statements.  The following discusses our financial condition and results of operations based upon our financial statements which have been prepared in conformity with accounting principles generally accepted in the United States.  It should be read in conjunction with our financial statements and the notes thereto included elsewhere herein.

The following discussion should be read in conjunction with our financial statements, including the notes thereto, appearing elsewhere in this Form 10-Q.  The discussions of results, causes and trends should not be construed to imply any conclusion that these results or trends will necessarily continue into the future.

Overview

We were incorporated pursuant to the laws of the State of Nevada on January 10, 2006.  We are a startup, development stage company and have realized minimal revenues of $4,000.  Our efforts, to date, have focused primarily on the development and implementation of our business plan.

Liquidity and Capital Resources

As of March 31, 2015, we had cash and cash equivalents of $0 and a working capital deficit of $520,084.  As of March 31, 2015 our accumulated deficit was $7,294,516.  For the three months ended March 31, 2015 our net loss was $99,352 compared to net loss of $173,088 during the same period in 2014.  This decrease in net loss was due to the decrease in spending in G&A.

We used net cash of $16,990 operating activities for the three months ended March 31, 2015 compared to used net cash of $145,920 for operating activities for the same period in 2014.  We used net cash of $0 in investing activities for the three months ended March 31, 2015 and $14,992 for the same period in 2014.  We received net cash of $19,927 in financing activities for the three months ended March 31, 2015 compared to using net cash of $190,484 in financing activities for the same period in 2014.

These financial statements have been prepared on the assumption that we are a going concern.  Our continuation as a going concern is dependent upon our ability to attain profitable operations and generate revenues, and/or raise equity capital or borrowings sufficient to meet current and future obligations.  Management plans to raise equity financings over the next twelve months to finance operations.  We are exploring different avenues of financing.  From time to time, we enter into loan arrangements and equity sales with different persons, some of which having been securities holders of the Company through loans and equity holdings and some of which being new investors.  We do not expect that the funds available currently or in our working capital will provide us with all the required working capital for our day to day expenses, including the general administration, overhead and professional services for 2015.  Additionally, for expanded development and implementation of our business plans we will need additional capital, for which we do not have any specific arrangements.  There is no guarantee that we will be able to complete any of these objectives.  We have incurred losses from operations since inception and at March 31, 2015, have a working capital deficiency and an accumulated deficit that creates substantial doubt about our ability to continue as a going concern.

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Results of Operations for the three months ended March 31, 2015 compared to the three months ended March 31, 2014 and from inception to March 31, 2015.

Limited Revenues

Since our inception on January 10, 2006 to March 31, 2015, we have earned limited revenue of $4,000.  As of March 31, 2015, we have an accumulated deficit of $7,294,516 and we did not earn any revenues during the three months ending on March 31, 2015.  At this time, our ability to generate any significant revenues continues to be uncertain.  Our financial statements contain an additional explanatory paragraph in Note 1, which identifies issues that raise substantial doubt about our ability to continue as a going concern.  Our financial statements do not include any adjustment that might result from the outcome of this uncertainty.

Net Loss

We incurred a net loss of $99,352 for the three months ended March 31, 2015, compared to a net loss of $173,088 for the same period in 2014.  This decrease in net loss was due to the decrease in G&A spending.  From inception on January 10, 2006 to March 31, 2015, we have incurred a net loss of $7,294,516.  Our basic and diluted loss per share was $0.00 for the three months ended March 31, 2015, and $0.00 for the same period in 2014.

Expenses

Our total operating expenses decrease from $161,661 to 96,116 for the three months ended March 31, 2015 compared to the same period in 2014.  This decrease in expenses is mostly due to a decrease in G&A expenses.  Since our inception on January 10, 2006 to March 31, 2015, we have incurred total operating expenses of $7,589,593.

Off-Balance Sheet Arrangements

As of March 31, 2015, we had no off-balance sheet transactions that have or are reasonably likely to have a current or future effect on our financial condition, changes in our financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable.

ITEM 4.  CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Disclosure controls and procedures are designed to ensure that information required to be disclosed in the reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported, within the time period specified in the SEC's rules and forms.  Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in the reports filed under the Exchange Act is accumulated and communicated to management, including the Chief Executive Officer. We carried out an evaluation, under the supervision and with the participation of our management, which consists our Chief Executive Officer, who is also our Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of March 31, 2015 (the “Evaluation Date”). Based upon the evaluation of our disclosure controls and procedures as of the Evaluation Date, the Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were not effective because of the identification of a material weakness in our internal control over financial reporting which is identified below, which we view as an integral part of our disclosure controls and procedures.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting during the quarter ended March 31, 2015 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Limitations on the Effectiveness of Controls

Our management, which consists of our Chief Executive Officer, who is also our Chief Financial Officer, does not expect that our disclosure controls and internal controls will prevent all errors and all fraud.  A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met.  Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs.  Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected.  Because our operations and disclosure controls and internal controls are all under the direction of one and the same person, they are not currently effective.

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PART II – OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

As of May 20, 2015, there are no material pending legal proceedings, other than ordinary routine litigation incidental to our business, to which we or any of our subsidiaries are a party or of which any of our properties is the subject.  Also, our management is not aware of any legal proceedings contemplated by any governmental authority against us.

ITEM 1A.  RISK FACTORS

There have been no material changes to the risk factors previously disclosed in the Company's Annual Report on Form 10-K for the year ended December 31, 2014. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results.

ITEM 2.  UNREGISTERED SALES OF EQUITY SECURITIES AND USER OF PROCEEDS SECURITIES

None.

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4.  MINE SAFETY DISCLOSURE

Not Applicable.

ITEM 5.  OTHER INFORMATION

None.

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ITEM 6.  EXHIBITS 

* to be filed with the amendment.

SIGNATURES

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

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