Sunrise Solar (SSLR) 10QSB 2007 Q2 Quarterly report (small business)

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-QSB

Quarterly Report of Small Business Issuers under Section 13 or 15(d) of the

Securities Exchange Act of 1934 for the quarterly period ended June 30, 2007

Commission File No. 333-45210

SYSTEMS MANAGEMENT SOLUTIONS, INC.

(Name of Small Business Issuer in Its Charter)

Nevada	88-0460457
(State or other jurisdiction of	(IRS Employer Identification No.)
incorporation)

4703 Shavano Oak, Suite 104	78249
San Antonio, Texas
(Address of Principal Executive Offices)	(Zip Code)

Issuer's telephone number, including area code: (210) 541-9100

The issuer has (1) filed all reports required to be filed by Section 13 or

15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) been subject to such filing requirements for the past 90 days.

Number of shares outstanding of each of the issuer's classes of common equity:

Class	Outstanding as of August 06, 2007
Common stock, $0.0001 par value	20,690,386

The issuer is not using the Transitional Small Business Disclosure format.

TABLE OF CONTENTS

	Page
PART I. FINANCIAL INFORMATION	1
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS	1
ITEM 2. MANAGEMENT'S PLAN OF OPERATIONS	7
ITEM 3. CONTROLS AND PROCEDURES	8
PART II - OTHER INFORMATION	8
ITEM 1. LEGAL PROCEEDINGS	8
ITEM 2. EXHIBITS AND REPORTS ON FORM 8-K	9
SIGNATURES	11

CERTIFICATIONS (attached as exhibits)

EXHIBIT NO, 31.1 - CERTIFICATION PRESIDENT AND CHIEF EXECUTIVE OFFICER

EXHIBIT NO. 31.2 - CERTIFICATION CHIEF FINANCIAL OFFICER

EXHIBIT NO. 32.1 - CERTIFICATION PURSUANT TO SECTION 906 OF SARBANES OXLEY ACT - PRESIDENT

AND CHIEF EXECUTIVE OFFICER

EXHIBIT NO. 32.1 - CERTIFICATION PURSUANT TO SECTION 906 OF SARBANES OXLEY ACT - CHIEF

FINANCIAL OFFICER

PART 1. FINANCIAL INFORMATION
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS
SYSTEMS MANAGEMENT SOLUTIONS, INC.
CONSOLIDATED BALANCE SHEETS
(unaudited)
	June 30,			December 31,
	2007			2006
ASSETS
Current Assets
Cash	$	15,374		$	33,077
Accounts receivable		80,790			78,586
Other		12,376			12,686
Total Current Assets		108,540			124,349
Property and equipment, net of accumulated depreciation of
$210,199 & $448,932		4,816			7,202
Assets held for sale, net of accumulated depreciation of
$74,014 & $74,014		574,619			574,619
Deposits		85,000			255,000
Total Assets	$	772,975		$	961,170
LIABILIITES AND STOCKHOLDERS' DEFICIT
Current Liabilities
Accounts payable	$	411,531		$	438,705
Accounts payable - related parties		117,000			81,000
Accrued interest and expense		212,157			191,635
Accrued interest and expense - related parties		632,210			517,036
Deferred liability		70,000			-
Litigation settlement liability		90,000			90,000
Notes payable - other		610,000			850,000
Notes payable - shareholder		4,529,691			4,058,477
Total Current liabilities		6,672,589			6,226,853
Long-Term Liabilities
Litigation settlement liability		247,500			292,500
Total Liabilities		6,920,089			6,519,353
Commitments and Contigencies
Stockholders' Deficit
Preferred stock, $.0001 par value, 5,000,000 shares authorized, no
shares issued and outstanding		-			-
Series A Cumulative Convertible Preferred Stock, $ .0001
par value, 60,000 shares authorized, no shares issued
and outstanding		-			-
Series B Cumulative Convertible Preferred Stock, $ .0001
par value, 50,000 shares authorized, no shares issued
and outstanding		-			-
Common stock, $.0001 par value, 100,000,000 shares authorized,
20,690,386 shares issued and outstanding		2,069			2,069
Additional paid-in capital		19,701,315			19,602,968
Accumulated deficit		(25,850,498	)		(25,163,220	)
Total Stockholders' Deficit		(6,147,114	)		(5,558,183	)
Total Liabilities and Stockholders' Deficit	$	772,975		$	961,170

Page 1

SYSTEMS MANAGEMENT SOLUTIONS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
Three and Six Months Ended June 30, 2007 and 2006
(unaudited)
	Three Months Ended						Six Months Ended
	2007			2006			2007			2006
Revenue	$	180,327		$	1,968,500		$	342,543		$	2,844,753
Cost of sales		28,468			1,611,254			38,961			2,392,262
Gross margin		151,859			357,246			303,582			452,491
General and administrative		318,861			425,059			715,072			857,851
Depreciation		(13,892	)		15,243			3,728			27,406
Amortization		-			17,750			-			29,583
(Gain)/Loss on disposal of equipment		(2,200	)		7,083			(3,216	)		10,178
Total operating expenses		302,769			465,135			715,584			925,018
Net Operating Loss		(150,910	)		(107,889	)		(412,002	)		(472,527	)
Interest expense		(142,713	)		(112,451	)		(275,276	)		(217,420	)
NET LOSS	$	(293,623	)	$	(220,340	)	$	(687,278	)	$	(689,947	)
Basic and diluted loss per share	$	(0.01	)	$	(0.01	)	$	(0.03	)	$	(0.03	)
Weighted average shares outstanding		20,690,386			20,690,386			20,690,386			20,681,822

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SYSTEMS MANAGEMENT SOLUTIONS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Six Months Ended June 30, 2007 and 2006
(unaudited)
	2007			2006
Cash Flows From Operating Activities
Net loss	$	(687,278	)	$	(689,947	)
Adjustments to reconcile net loss to net cash used in
operating activities:
Imputed Interest		98,347			79,365
Depreciation		3,728			27,406
Amortization		-			29,583
(Gain)/Loss on disposal of equipment		(3,216	)		10,178
Changes in:
Accounts receivable		(2,203	)		(87,984	)
Accounts receivable - related parties		-			(33,389	)
Inventory		-			(111,596	)
Other current assets		310			(280,613	)
Accounts payable		(27,175	)		505,789
Accounts payable - related parties		36,000			(9,000	)
Accrued expenses		20,522			(139,849	)
Accrued expenses - related parties		115,174			124,022
Litigation settlement		(45,000	)		(42,500	)
Net Cash Used in Operating Activities		(490,791	)		(618,535	)
Cash Flows From Investing Activities
Purchase of fixed assets		(1,726	)		(184,267	)
Proceeds from sale of equipment		3,600			19,500
Net Cash Provided by Investing Activities		1,874			(164,767	)

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SYSTEMS MANAGEMENT SOLUTIONS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED
Six Months Ended June 30, 2007 and 2006
(unaudited)
	2007			2006
Cash Flows From Financing Activities
Proceeds from notes payable - shareholder		471,214			309,500
Proceeds from notes payable - other		-			500,000
Net Cash Provided by Financing Activities		471,214			809,500
Net change in cash		(17,703	)		26,198
Cash at beginning of period		33,077			98,468
Cash at end of period	$	15,374		$	124,666
Supplemental disclosures:
Income Tax Paid	$	-		$	-
Interest Paid		31,947			603
Non-cash operating and financing activities:
Transfer of deposit rights for partial release of notes payable		170,000			-
Common Stock issued as loan discount for Note Payable		-			5,500

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SYSTEMS MANAGEMENT SOLUTIONS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

NOTE 1 - BASIS OF PRESENTATION

The accompanying unaudited interim financial statements of Systems Management Solutions, Inc. (“SMS”) have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission ("SEC"), and should be read in conjunction with the audited financial statements and notes thereto contained in SMS's financial statements filed with the SEC on Form 10-KSB for the year ended December 31, 2006. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim periods presented have been reflected herein. The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year. Notes to the financial statements which would substantially duplicate the disclosure contained in the audited financial statements for the most recent fiscal year 2006 as reported in Form 10-KSB have been omitted.

NOTE 2 - GOING CONCERN

SMS incurred a net loss of $293,623 and $687,278 for the three and six months ended June 30, 2007 and has a working capital deficit of $6,564,049 as of June 30, 2007. These conditions create an uncertainty as to SMS’ ability to continue as a going concern. Management is trying to raise additional capital through sales of common stock and assets. The financial statements do not include any adjustments that might be necessary if SMS is unable to continue as a going concern.

NOTE 3 - INVENTORY

In October 2006, SMS Envirofuels, Inc. (“SMSE”) entered into a tolling arrangement in which the customer provides the raw materials and SMSE converts it to Biodiesel. The customer is invoiced only for the act of conversion. This arrangement ceased in December 2006. During the second quarter, the customer took possession of all inventory the customer purchased and was storing at the SMSE facility in Poteet. As of June 30, 2007, SMSE has ownership rights to the inventory located on its premises. However due to its age, SMSE has recorded no inventory value.

NOTE 4 - ASSETS HELD FOR SALE

In an effort to secure additional capital for operations, the Company began actively seeking a purchaser for the assets located at its subsidiary’s, SMSE, production plant located in Poteet, Texas. On October 5, 2006, SMSE received a letter of intent (“LOI”) from Earth Biofuels, Inc. (“EBOF”) for the acquisition of these assets. The terms of the LOI created a tiered consideration payment based on SMSE’s ability to meet two levels of production; the minimum consideration was $2.7 million and the maximum was $4.7 million. EBOF did not meet the terms of the LOI and it expired with no sale transaction occurring. The Company will continue to pursue buyers for these assets.

The assets held for sale have a net book value at June 30, 2007 of $574,619 with no corresponding liabilities. Based on the LOI referenced above and communications with new interested purchasers, the Company believes that the fair value of this facility’s assets exceeds its net book value.

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NOTE 5 - NOTES PAYABLE TO OTHERS

On February 3, 2006, SMS borrowed $500,000 from an independent lender. The security pledged for this note is equipment recently purchased plus the deposit placed on equipment currently being prepared for delivery in the future. The interest is 10% and the note matured on August 1, 2006. The interest rate on the unpaid balance is 18%. The Company is in default on this note. On February 8, 2007, an agreement to transfer deposit rights and partial release of promissory note was signed by the Company and the independent note holder. In the agreement, the Company has transferred the rights to the deposit placed by the Company on 4 pieces of equipment that were to be used by its subsidiary SMSE, a value of $170,000, in exchange for a release and discharge of $240,000 of the promissory note. In addition, the Company has the right to further release of $15,000 for any future transfer to note holder of the rights in the deposits of 2 additional pieces of equipment, a value of $85,000. Interest expense for the six months ended June 30, 2007 and 2006, is $34,967 and $20,274 respectively. Amortization expense for the same periods is $0 and $29,583, respectively. At June 30, 2007, the deferred liability is $70,000 and the principal balance on the note is $260,000 with interest accrued of $100,276.

On October 5, 2006, SMSE received a LOI, from EBOF, for the purchase of assets associated with its production facility in Poteet (See Note 4). The initial terms of the LOI enabled SMSE to sign a promissory note with EBOF for a line of credit not to exceed $788,000. The expiration date of this note was February 2, 2007. SMSE is in default on this note. The terms of the LOI were not met by the purchaser and the LOI expired with no sale. The interest rate on the unpaid balance is 18%. Interest expense for the six months ended June 30, 2007 and 2006, is $26,484 and $0, respectively. At June 30, 2007, the principal balance on the note is $350,000 and interest accrued is $26,484.

NOTE 6 - NOTES PAYABLE TO SHAREHOLDERS

SMS and its subsidiaries have various promissory notes and advance agreements with its majority shareholder. The promissory notes bear a 10% interest rate. The advances bear no interest, however imputed interest at 10% is added as a contribution to capital each period. During the six months ended June 30, 2007, SMS and its subsidiaries received proceeds of $471,214 from the shareholder under these agreements. Interest expense for the six months ended June 30, 2007 and 2006, is $213,521 and $181,849, respectively. At June 30, 2007, the principal balances on the above instruments are $4,529,691 and the accrued interest balances at June 30, 2007 are $632,210.

NOTE 7- EQUITY

On February 1, 2006, SMS issued 50,000 shares of common stock to an independent lender as additional incentive to make the $500,000 loan described in Note 5.

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NOTE 8 - OPERATING SEGMENTS AND RELATED REPORTING

	Software Sales,
	Programming, Data			Alternative
	Capturing & Storage			Fuels			All Other			Total
6 Months Ended June 30, 2007
Revenues from external customers	$	332,343		$	10,200		$	-		$	342,543
Intersegment revenues		-			-			-			-
Profit from Operations		(18,345	)		(148,890	)		(244,767	)		(412,002	)
Identifiable assets		4,816			574,619			-			579,435
Capital Expenditures		1,726			-			-			1,726
Depreciation		3,728			-			-			3,728
6 Months Ended June 30, 2006
Revenues from external customers	$	165,550		$	2,679,203		$	-		$	2,844,753
Intersegment revenues		-			-			-			-
Profit from Operations		(358,387	)		45,222			(159,362	)		(472,527	)
Identifiable assets		9,478			540,265			-			549,743
Capital Expenditures		-			184,267			-			184,267
Depreciation		5,540			21,866			-			27,406

NOTE 9 - RELATED PARTY

In July 2007, Texian Land and Cattle, a related party to the Company, filed for Chapter 11 bankruptcy protection. The Company cannot be certain of any effects this may have on its subsidiary’s SMSE production facility lease agreement with Texian.

NOTE 10 - RECLASSIFICATION

Certain accounts from prior periods have been reclassified to conform to current period presentations.

ITEM 2. MANAGEMENT'S PLAN OF OPERATIONS

The following discussion and analysis should be read in connection with SMS's consolidated financial statements and related notes thereto, included elsewhere in this report.

Overview

SMS is comprised of two wholly owned subsidiaries, Aspect Business Solutions, Inc. (“ASPECT) and SMS Envirofuels, Inc. (“SMSE”).

ASPECT provides custom programming, support and Microsoft systems products to its customers. ASPECT is a Microsoft Certified Partner which enables it to remarket a specific line of software developed by Microsoft Corporation. During the first two quarters, approximately 60% of ASPECT’s revenue was generated from one customer who has contracted with ASPECT to upgrade the Microsoft software. The customer has both domestic and international locations. ASPECT expects this upgrade contract to continue the remainder of this year and carry into 2008. Maintenance and software sales still continue to be strong on all ASPECT’s remaining clients. ASPECT continuously seeks out new industries and customers that would be benefit from the Microsoft software.

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SMS Envirofuels began processing biodiesel in April 2005. Since then, the manufacturing facility has experienced a steady demand for its product and has continued to perfect its process to achieve both consistency and efficiency. During 2006, SMSE was able to maintain its sales prices and levels of production and as a result was able to complete an expansion of its production capabilities. This has attracted potential buyers and in late 2006, the Company placed the assets located at SMSE’s production facility located in Poteet, Texas, up for sale. On October 5, 2006, SMSE, the Company’s subsidiary, received a letter of intent (“LOI”) from Earth Biofuels, Inc. (“EBOF”) for the acquisition of these assets. One of terms of the LOI created a tolling arrangement in which EBOF would provide the soybean oil and methanol in sufficient quantities to operate the plant at the levels stated in the LOI. SMSE relied on this agreement and began production in accordance with the LOI. However, due to the inconsistent and insufficient levels of soybean oil purchased by EBOF for SMSE, the production goal levels, as outlined in the LOI, were not attained. EBOF ceased communication with SMSE in early December 2006 and the plant ceased the production of biodiesel.

Results of Operation

The Company incurred a net loss of $293,623 and $687,278 for the three months and six months ended June 30, 2007, respectively and had a working capital deficit of $6,564,049, as of June 30, 2007. These conditions create an uncertainty as to SMS’s ability to continue as a going concern. SMS has seen improvement in the operating results of ASPECT. However, it is not yet determined when SMS Envirofuels will resume production or be sold.

Cash used by operating and provided by investing activities was $490,791 and $1,874, respectively, for the six month period ending June 30, 2007. The funds to cover these uses of cash were received against the note payable and advance agreement the company maintains from its majority shareholder (see Note 6).

 SMS continues to rely on loans and advances principally from its major stockholder, United Managers Group, Inc., to fund operating shortfalls and does not foresee a change in this situation in the immediate future. There can be no assurance that SMS will continue to have such loans and advances available. SMS will not be able to continue operations without them. SMS is pursuing alternate sources of financing. This is reflected in the Letter of Intent received in October as discussed in Note 4 and Note 5 above. It remains the central focus of SMS to pursue profitable projects and expand its presence in the biodiesel industry.

First and Second Quarter 2007 Compared to First and Second Quarter 2006

Total Revenue and Gross Profit. The comparative statements of operations for the three and six month periods ending June 30, 2007 and 2006, reflects a decrease in revenue and cost of sales due to the lack of production and sales of biodiesel by the Company’s subsidiary,. However, ASPECT increased its revenue by $167,000 or 101% during the six month period ending June 30, 2007, due to securing larger contracts for installations and customizations.

General and Administrative costs. The general and administrative costs have decreased by 26% and 17%, respectively, when comparing 2007 to 2006 for the three and six month period ending June 30. Approximately, 50% of the reduction is attributed to lower plant maintenance due to ceased operations. The remainder is a combination of less dollars spent on sales/marketing and office rent. Aspect has been able to reduce its sales and marketing costs by 100% and rely on the Microsoft network and word of mouth for new customers. Aspect negotiated out of its $22,800 per month office lease and moved out in mid-March 2007. The new space is $2,310 per month resulting in a $20,490 reduction in monthly expenses.

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ITEM 3. CONTROLS AND PROCEDURES

(a)   Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of the design and operation of our disclosure controls and procedures, as such term is defined under Rules 13a-14(c) and 15d-14(c)

promulgated under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), within 90 days of the filing date of this report. Based on that evaluation, our principal executive officer and our principal financial officer concluded that the design and operation of our disclosure controls and procedures were effective as of the end of the period covered by this report in timely alerting them to material information required to be included in SMS's periodic reports and filed with the SEC

under the Securities Exchange Act of 1934, as amended. The design of any system of controls is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions, regardless of how remote.

(b) In addition, there were no significant changes in our internal control over financial reporting identified in

connection with the evaluation that occurred during the last fiscal quarter that have materially affected or that are reasonably likely to materially affect our internal control over financial reporting.

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

In early 2005, the landlord for the offices occupied by YCO Holdings, Inc. and its subsidiaries filed suit in the 295^th District Court of Harris County, Texas Cause No. 2005-04423 captioned WKB Value Partners, LP vs. Systems Management Solutions, Inc., alleging that SMS was obligated on the lease even though no authorized officer of SMS had signed the same. This lawsuit was dismissed in February, 2006 pursuant to a Comprehensive Settlement Agreement which required SMS to make payments to WKB Value Partners, LP in the amount of $470,000. The payment schedule called for $20,000 initial payment, followed by monthly payments of $7,500 for 60 months. The final payment will be due in March 2011. The balance due at June 30, 2007 is $337,500.

In December of 2006, Cargill Incorporated (“Cargill”), a Delaware corporation, filed suit in the Judicial District Court of Bexar County, Texas Cause No. 2006-CI-19096, against subsidiary SMS Envirofuels, Inc., and certain related and unrelated companies and individuals, claiming non payment for amounts due Cargill by SMSE. The SMSE payable to Cargill as of October 5, 2006 is $608,387, which included $528,387 for material received and $80,000 for the hedge loss incurred by cancellation of the open physical contracts. On that same date, SMSE entered into an agreement to sell certain assets located at its production plant in Poteet, Texas. The purchaser, Earth Biofuels, Inc. (“EBOF”), as part of the agreement, expressly agreed to assume this debt to Cargill and provide additional working capital to SMSE. In return, SMSE signed a promissory note to EBOF for a line of credit not to exceed $788,000. Cargill agreed to this arrangement with EBOF but reserved the right to pursue any and all claims against SMSE upon failure of EBOF to adhere to the terms outlined in the agreement between EBOF and Cargill. EBOF subsequently made partial payments totaling $250,000 to Cargill, leaving a balance of $358,387. As of this filing, the purchase of the certain assets by EBOF has not occurred and there is not an expectation that a sale will occur in the future. There have been no other payments on this payable. The liability to Cargill remains at $358,387. EBOF remains liable to Cargill for this, however Cargill has chosen to include SMSE in its lawsuit.

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In June of 2007, Earthbiofuels, Inc (“EBOF”), posted in the Atascosa County Public Deed Records, a Notice of Substitute Trustee’s Foreclosure Sale on the property located at 8275 FM 476 West, Poteet, Texas in effort to collect on the promissory note made by SMS Envirofuels, Inc. (“SMSE”) as part of the agreement entered into in October 2006 (see Note 5). SMSE is currently in default on this promissory note. The promissory note was secured by this property which is owned by Texian Land and Cattle (“Texian”), a related party to the Company, and leased to SMSE. In July of 2007, as previously discussed in (Note 9), Texian filed for Chapter 11 bankruptcy protection.

ITEM 2. EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits

31.1 Rule 13a-14(a)/15d-14(a) Certification of Principal Executive Officer

31.2 Rule 13a-14(a)/15d-14(a) Certification of Principal Financial Officer

32.1 Section 1350 Certification of Principal Executive Officer

32.2 Section 1350 Certification of Principal Financial Officer

(b) Reports on Form 8-K:

1.   On August 20, 2004, SMS filed a Current Report on Form 8-K announcing the change of SMS's name to Systems Management Solutions, Inc.

2.   On February 8, 2005, the Board of Directors of SMS voted to change its fiscal year end from June 30 to December 31. SMS last changed its fiscal year to correspond to the fiscal year of a subsidiary that has since discontinued operations.

3.   On March 22, 2005, the Board of Directors of SMS voted to reduce the number of shares outstanding of SMS’s $0.0001 par value common stock by reverse split to exchange one (1) new share for each two and one half (2 ½) old shares. Any fractional shares created by this reverse split were truncated to the nearest whole share and no cash was paid for any such fractional share.

4.   On April 6, 2005, the Registrant established a wholly owned subsidiary named SMSN Merger Sub, Inc., a Texas corporation which such corporation then entered into an Agreement and Plan of Merger between itself, SMS Envirofuels, Inc., a Texas corporation, and the Registrant. Under the terms of such Plan of Merger, SMS Envirofuels, Inc. was merged into SMSN Merger Sub, Inc., the name of SMSN Merger Sub, Inc. was changed to SMS Envirofuels, Inc., and the shares of SMS Envirofuels, Inc. were exchanged for 1,444,444 shares of the $0.0001 common stock of registrant. SMS Envirofuels, Inc. has developed a plant to produce bio-diesel from soybean oil and markets such bio-diesel to distributors and retailers. The Registrant plans to continue this business with the operating assets of SMS Envirofuels, Inc. and to expand the production and marketing of the bio-diesel product.

5.   On August 19, SMS filed the results of the audit of the Years Ended December 31, 2003 and 2004 and the review of the Quarter Ended March 31, 2005 for SMS Envirofuels, Inc.

6.   On February 20, 2006, SMS filed Item 4.02 Non-Reliance on Previously Issued Financial Statements or a Related Audit Report or Completed Interim Review on Form 8-K, as a result of the restatement of the financial statements for the Year Ending December 31, 2002

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SIGNATURES

In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Dated: August 06, 2007

SYSTEMS MANAGEMENT SOLUTIONS, INC.,

a Nevada corporation

By: /s/ Jim Karlak

James Karlak, President and Chief Executive Officer

By: /s/ Morris Kunofsky

Morris Kunofsky, Chief Financial Officer

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