Chun Can Capital (CNCN) 10QSB/A 2005 Q3 Quarterly report (small business) (amended)

Consolidated Balance Sheets

	Restated (note 13)
	2005			2004
ASSETS
Current
Cash and cash equivalents (note 3)	$	143,192		$	258,725
Accounts receivable (net of allowance for doubtful accounts of
$1,013,918; 2003 - $414,133)		684,175			1,330,677
Inventory (note 4)		212,399			250,974
Prepaid and sundry assets		200,035			110,706
Loans receivable		9,635			4,846
Deferred taxes (note 10, 13)		-			118,412
		1,249,436			2,074,340
Deferred taxes (note 10, 13)		-			576,743
Equipment (note 5)		411,860			555,273
Investments		48,204			43,609
	$	1,709,500		$	3,249,965
LIABILITIES
Current
Accounts payable	$	1,217,945		$	1,008,171
Customer deposits		191,800			-
Loans payable - current (note 6)		1,430,542			1,549,820
Shareholder loan (note 7)		179,902			-
		3,020,189			2,557,991
Accrued Severance		63,985			-
Loans Payable (note 6)		509,484			51,439
Convertible Debenture (note 8)		30,000			-
		3,623,658			2,609,430
STOCKHOLDERS' DEFICIENCY
Capital Stock (note 9)		41,833			20,944
Paid in Capital		5,277,110			4,486,600
Treasury Stock		(105,185	)		-
Accumulated Other Comprehensive Income		(25,376	)		6,145
Accumulated Deficit		(7,102,540	)		(3,873,154	)
		(1,914,158	)		640,535
	$	1,709,500		$	3,249,965

Consolidated Statement of Operations

Nine Months Ended September 30, 2005 and 2004

	Restated (note 13)
	2005			2004
Revenue
Merchandise		957,125			798,712
Finished goods	$	264,392		$	535,537
Services		29,396			33,941
	$	1,250,913		$	1,368,190
Cost of Sales
Merchandise		833,462			780,190
Finished goods	$	170,188		$	396,771
		1,003,650			1,176,961
Gross Profit		247,263			191,229
Expenses
Office and general		408,554			167,671
Salaries and employee benefits		378,410			341,072
Professional fees		222,087			168,934
Travel		170,135			35,378
Depreciation		163,521			149,908
Amortization of deferred financing fees		120,000			-
Taxes and dues		52,426			15,058
Research and development		-			230,978
		1,515,133			1,108,999
Operating Loss		(1,267,870	)		(917,770	)
Other
Interest and other income		7,594			12,338
Foreign exchange		-			(1,093	)
Interest expense		(209,541	)		(111,753	)
		(201,947	)		(100,508	)
Loss Before Income Taxes		(1,469,817	)		(1,018,278	)
Deferred income taxes recoverable		-			163,000
Net Loss	$	(1,469,817	)	$	(855,278	)
Basic Loss per Share	$	(0.05	)	$	(0.04	)
Weighted Average Number of Shares (note 9)		32,323,055			20,455,411

Consolidated Statement of Operations

Three Months Ended September 30, 2005 and 2004

	Restated (note 13)
	2005			2004
Revenue
Merchandise		630,499			160,080
Finished goods	$	66,689		$	387,965
Services		7,752			10,650
	$	704,940		$	558,695
Cost of Sales
Merchandise		556,063			150,325
Finished goods	$	93,819		$	232,524
		649,882			382,849
Gross Profit		55,058			175,846
Expenses
Office and general		200,404			55,123
Salaries and employee benefits		93,050			115,456
Travel		17,865			238
Depreciation		50,884			47,304
Amortization of deferred financing fees		30,000			-
Professional fees		26,711			79,625
Taxes and dues		2,831			6,723
Research and development		-			37,829
		421,745			342,298
Operating Loss		(366,687	)		(166,452	)
Other
Interest and other income		1,336			2,073
Interest expense		(42,758	)		(61,735	)
		(41,422	)		(59,662	)
Loss Before Income Taxes		(408,109	)		(226,114	)
Deferred income taxes recoverable		-			47,000
Net Loss	$	(408,109	)	$	(179,114	)
Basic Loss per Share	$	(0.01	)	$	(0.01	)
Weighted Average Number of Shares (note 9)		41,240,272			20,737,634

Consolidated Statement of Stockholders' Equity

Nine Months Ended September 30, 2005 and 2004

	Number of Shares		Capital Stock		Paid in Capital in Excess of Par value		Treasury Stock			Accumulated Other Comprehensive Loss			Accumulated Deficit			Total Stockholders' Equity
Balance, January 1, 2004		20,314,300	$	20,314	$	4,427,330	$	-			(38,627	)	$	(3,017,876	)	$	1,391,141
Common shares issued for consulting
services		630,000		630		59,270		-			-			-			59,900
Foreign exchange on translation		-		-		-		-			44,772			-			44,772
Net loss		-		-		-		-			-			(855,278	)		(855,278	)
Balance, Sep 30, 2004		20,944,300	$	20,944	$	4,486,600	$	-			6,145		$	(3,873,154	)	$	640,535
Balance, January 1, 2005		23,409,800	$	23,409	$	4,573,535	$	-			23,826		$	(4,789,132	)	$	(168,362	)
Adjustment due to restatement
(note 13)		-		-		-		-			(91,166	)		(843,591	)		(934,757	)
		23,409,800		23,409		4,573,535		-			(67,340	)		(5,632,723	)		(1,103,119	)
Common shares issued for consulting
services - March 31, 2005		640,000		640		63,860		-			-			-			64,500
Common shares issued for consulting
services - June 30, 2005		1,350,000		1,350		51,151		-			-			-			52,501
Common shares issued for consulting
services - Sep 30, 2005		500,000		500		14,500		-			-			-			15,000
Common shares issued as repayment
of promissory note		11,987,320		11,987		368,011		-			-			-			379,998
Conversion of convertible debenture
into common stock (note 8)		3,946,982		3,947		206,053		-			-			-			210,000
Repurchase of employees' stocks		-		-		-		(105,185	)		-			-			(105,185	)
Foreign exchange on translation		-		-		-		-			41,964			-			41,964
Net loss		-		-		-		-			-			(1,469,817	)		(1,469,817	)
Balance, June 30, 2005
-restated (note 13)		41,834,102	$	41,833	$	5,277,110	$	(105,185	)		(25,376	)	$	(7,102,540	)	$	(1,914,158	)

Consolidated Statement of Cash Flows

Nine Months Ended September 30, 2005 and 2004

	Restated (note 13)
	2005			2004
Cash Flows from Operating Activities
Net loss	$	(1,469,817	)	$	(855,278	)
Adjustments for working capital and non-cash items:
Depreciation		163,521			149,908
Amortization of financing fees		120,000			-
Common stock issued for consulting services		131,999			59,900
Net Changes in Assets & Liabilities
Accounts receivable		(99,091	)		1,071,040
Inventory		81,325			(96,871	)
Prepaid and sundry assets		85,190			45,339
Deferred taxes		-			(163,000	)
Accounts payable		412,935			(695,097	)
Accrued severance		(58,026	)		-
		(631,964	)		(484,059	)
Cash Flows from Investing Activities
Acquisition of equipment, net		(14,006	)		2,910
Loans receivable		(9,849	)		(4,803	)
		(23,855	)		(1,893	)
Cash Flows from Financing Activities
Payments of deferred financing fees		(240,000	)		-
Proceeds from convertible debenture - net		240,000			-
Repayment of promissory note - net		40,000			-
Repurchase of employees' stocks		(105,185	)		-
Customer deposits		196,064			-
Loans payable		237,691			193,286
Shareholder loan		150,570			-
		519,140			193,286
Foreign Exchange on Cash and Cash Equivalents		(1,516	)		16,824
Net Decrease in Cash and Cash Equivalents		(138,195	)		(275,842	)
Cash and Cash Equivalents - beginning of year		281,387			534,567
Cash and Cash Equivalents - end of year	$	143,192		$	258,725
During the year, the company had cash flows arising
from interest and income taxes paid as follows:
Interest paid	$	209,541		$	107,877
Income taxes paid	$	-		$	-

Cintel Corp., formerly Link2 Technologies, Inc. ("the Company"), was incorporated in the State of Nevada on August 16, 1996 and on April 24, 2001 changed its name from "Great Energy Corporation International" to Link2 Technologies, Inc. On September 30, 2003 the Company changed its name to Cintel Corp.

1.	Operations and Business

On September 30, 2003, the Company entered into a definitive Share Exchange Agreement (the "Agreement") with Cintel Co., Ltd., ("Cintel Korea") a Korean corporation and its shareholders. The Agreement provided for the acquisition by the Company from the shareholders of 100% of the issued and outstanding capital stock of Cintel Korea. In exchange, the shareholders of Cintel Korea received 16,683,300 shares of the Company. As a result, the shareholders of Cintel Korea controlled 82% of the Company. While the Company is the legal parent, as a result of the reverse-takeover, Cintel Korea became the parent company for accounting purposes.

Upon completion of the share exchange, the business operations of Cintel Korea constituted virtually all of the business operations of the Company. Cintel Korea develops network solutions to address technical limitations to the Internet. Cintel Korea has developed what it believes is the first Korean server load balancing technology. Cintel Korea is now focused on the development of advanced solutions for Internet traffic management. The business operations of Cintel Korea are located in Seoul, Korea.

2.	Summary of Significant Accounting Policies

The accounting policies of the Company are in accordance with generally accepted accounting principles of the United States of America, and their basis of application is consistent. Outlined below are those policies considered particularly significant:

Basis of Financial Statement Presentation

These financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America with the assumption that the Company will be able to realize its assets and discharge its liabilities in the normal course of business.

Basis of Consolidation

The merger of the Company and Cintel Korea has been recorded as the recapitalization of the Company, with the net assets of the Company brought forward at their historical basis. The intention of the management of Cintel Korea was to acquire the Company as a shell company listed on NASDAQ. Management does not intend to pursue the business of the Company. As such, accounting for the merger as the recapitalization of the Company is deemed appropriate.

The US Dollar has been used as the unit of measurement in these financial statements.

2.	Summary of Significant Accounting Policies (cont'd)

Unit of Measurement

Use of Estimates

Preparation of financial statements in accordance with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts reported in the financial statements and related notes to financial statements. These estimates are based on management's best knowledge of current events and actions the Company may undertake in the future. Actual results may ultimately differ from estimates, although management does not believe such changes will materially affect the financial statements in any individual year.

Revenue Recognition

The Company recognizes revenues upon delivery of merchandise sold, and when services are rendered for maintenance contracts.

Cash and Cash Equivalents

Cash and highly liquid investment with an initial maturity period of 90 days or less are considered cash equivalents and recorded at cost.

Investments

Investments in available-for-sale securities are being recorded in accordance with FAS-115 "Accounting for Certain Investments in Debt and Equity Securities". Equity securities that are not held principally for the purpose of selling in the near term are reported at fair market value with unrealized holding gains and losses excluded from earnings and reported as a separate component of stockholders' equity.

Inventories

Inventories are stated at the lower of cost or net realizable value. Net realizable value is determined by deducting selling expenses from selling price.

The cost of inventories is determined on the first-in first-out method, except for materials-in-transit for which the specific identification method is used.

Equipment

Equipment is stated at cost. Major renewals and betterments are capitalized and expenditures for repairs and maintenance are charged to expense as incurred. Depreciation is computed using the straight-line method over a period of 5 years.

Government grants are recognized as income over the periods necessary to match them with the related costs that they are intended to compensate.

2.	Summary of Significant Accounting Policies (cont'd)

Government Grants

Currency Translation

The Company's functional currency is Korean won. Adjustments to translate those statements into U.S. dollars at the balance sheet date are recorded in other comprehensive income.

Foreign currency transactions of the Korean operation have been translated to Korean Won at the rate prevailing at the time of the transaction. Realized foreign exchange gains and losses have been charged to income in the year.

Financial Instruments

Fair values of cash equivalents, short-term and long-term investments and short-term debt approximate cost. The estimated fair values of other financial instruments, including debt, equity and risk management instruments, have been determined using market information and valuation methodologies, primarily discounted cash flow analysis. These estimates require considerable judgment in interpreting market data, and changes in assumptions or estimation methods could significantly affect the fair value estimates.

Income Tax

The Company accounts for income taxes pursuant to SFAS No. 109, "Accounting for Income Taxes". Deferred taxes are provided on a liability method whereby deferred tax assets are recognized for deductible temporary differences, and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. 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 effects of changes in tax laws and rates on the date of enactment.

The Company adopted FAS No.128, "Earnings per Share" which requires disclosure on the financial statements of "basic" and "diluted" earnings (loss) per share. Basic earnings (loss) per share is computed by dividing net income (loss) by the weighted average number of common shares outstanding for the year. Diluted earnings (loss) per share is computed by dividing net income (loss) by the weighted average number of common shares outstanding plus common stock equivalents (if dilutive) related to stock options and warrants for each year.

2.	Summary of Significant Accounting Policies (cont'd)

Earnings or Loss per Share

Concentration of Credit Risk

SFAS No. 105, "Disclosure of Information About Financial Instruments with Off-Balance Sheet Risk and Financial Instruments with Concentration of Credit Risk", requires disclosure of any significant off-balance sheet risk and credit risk concentration. The Company does not have significant off-balance sheet risk or credit concentration. The Company maintains cash and cash equivalents with major Korean financial institutions.

The Company's provides credit to its clients in the normal course of its operations. It carries out, on a continuing basis, credit checks on its clients and maintains provisions for contingent credit losses which, once they materialize, are consistent with management's forecasts.

For other debts, the Company determines, on a continuing basis, the probable losses and sets up a provision for losses based on the estimated realizable value.

Concentration of credit risk arises when a group of clients having a similar characteristic such that their ability to meet their obligations is expected to be affected similarly by changes in economic conditions. The Company does not have any significant risk with respect to a single client.

Recent Accounting Pronouncements

In November 2004, the FASB issued SFAS No. 151, "Inventory Costs - an amendment of ARB No. 43, Chapter 4" (Statement 151). This statement amends the guidance in ARB No. 43, Chapter 4, "Inventory Pricing," to clarify the accounting for abnormal amounts of idle facility expense, freight, handling costs, and wasted material (spoilage). As currently worded in ARB 43, Chapter 4, the term "so abnormal" was not defined and its application could lead to unnecessary noncomparability of financial reporting. This Statement eliminates that term and requires that those items be recognized as current-period charges regardless of whether they meet the criterion of "so abnormal." In addition, this Statement requires that allocation of fixed production overhead to the costs of conversion be based on the normal capacity of the production facilities. The adoption of Statement 151 will not have a material impact on the Company's consolidated financial statements.

In December 2004, the FASB issued SFAS No. 153, "Exchanges of Non-monetary Assets - an amendment of APB Opinion No. 29" (Statement 153). This Statement amends Opinion 29 to eliminate the exception for non-monetary exchanges of similar productive assets and replaces it with a general exception for exchanges of non-monetary assets that do not have commercial substance. A non-monetary exchange has commercial substance if the future cash flows of the entity are expected to change significantly as a result of the exchange. The adoption of FAS 153 will not have a material impact on the Company's consolidated financial statements.

2.	Summary of Significant Accounting Policies (cont'd)

In December 2004, the FASB issued a revision to SFAS No. 123, "Share-Based Payment" (Statement 123R). This Statement requires a public entity to measure the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award (with limited exceptions). That cost will be recognized over the period during which the employee is required to provide service in exchange for the award requisite service period (usually the vesting period). No compensation cost is recognized for equity instruments for which employees do not render the requisite service. Employee share purchase plans will not result in recognition of compensation cost if certain conditions are met; those conditions are much the same as the related conditions in Statement 123. This Statement is effective for public entities that do not file as a small business issuers as of the beginning of the first interim or annual reporting period that begins after June 15, 2005. This Statement applies to all awards granted after the required effective date and to awards modified, repurchased, or cancelled after that date. The cumulative effect of initially applying this Statement, if any, is recognized as of the required effective date and is not expected to have a material impact on the Company's consolidated financial statements.

3.	Cash and cash equivalents

Included in cash and cash equivalents is cash restricted for use by the Company of $134,260 (2004 - $121,242). The fund is being held as security for one of the bank loans as described in note 6. The loan will mature on December 11, 2005. As at September 30, 2005, the amount outstanding was $393,190 (2004 - $606 ,211).

4.	Inventory

Inventory includes $5,427 (2004 - $17,846) of merchandise and $206,972 (2004 - $233,128) of raw materials.

The bank loans bear interest at 7.5% to 21% and mature between November and December 2005. The loans are repayable upon maturity.

5.	Equipment

	Cost		2005 Accumulated Depreciation		Cost		2004 Accumulated Depreciation
Furniture and fixtures	$	45,799	$	28,074	$	34,185	$	19,849
Equipment		631,257		547,983		565,651		424,680
Vehicles		14,843		14,841		13,429		12,756
Software		696,737		385,878		622,090		222,797
		1,388,636		976,776		1,235,355		680,082
Net carrying amount			$	411,860			$	555,273

6.	Loans Payable

						2005			2004
	Current		Long-term			Total			Total
Bank loans	$	968,590	$	-		$	968,590		$	1,214,640
Promissory note		39,000		-			39,000			39,000
Government loans (#1, 2 & 3)		61,236		37,826			99,062			89,621
Discount of interest-free
government loans		-		(7,842	)		(7,842	)		(12,780	)
Note payable #1		-		479,500			479,500			-
Notes payable (#2, 3 & 4)		361,716		-			361,716			270,778
	$	1,430,542	$	509,484		$	1,940,026		$	1,601,259

Bank Loans

Promissory Note

The promissory note is non-interest bearing, unsecured, and due on demand

The loan is non-interest bearing, unsecured, and repayable in annual payments of $17,789 and matured on July 2005. The company is in arrears on the 2004 and 2005 payment. Total amount outstanding at September 30, 2005 was $35,580.

6.	Loans Payable (cont'd)

Government Loan #1

Government Loan #2

The loan is non-interest bearing, unsecured, and repayable in annual payments of $12,828 and matured on July 2005. The company is in arrears on the 2004 and 2005 payment. Total amount outstanding at September 30, 2005 was $25,656.

Government Loan #3

The loan is non-interest bearing, unsecured, repayable in annual payments of $9,564 starting 2006 and matures October 2009. The total amount outstanding at September 30, 2005 was $37,826.

Note Payable #1

The note payable is a non-interest bearing loan and is repayable in August 2015.

Note Payable #2

The note payable of $210,980 bears interest at 4% per month, is personally guaranteed by the chief executive officer of the Company, and is due on demand.

Notes Payable #3

The notes payable of $54,836 is non-interest bearing and due on demand.

Notes Payable #4

The notes payable of $95,900 bears interest at 9% per annum and is repayable at maturity in October 2005.

7.	Shareholder Loan

The loan from the chief executive officer, who is also a 11% shareholder of the company, is non-interest bearing, unsecured, and due on demand.

Pursuant to SFAS No. 150, "Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity" the Company accounts for the convertible debenture as a liability at face value and no formal accounting recognition is assigned to the value inherent in the conversion feature.

8.	Convertible Debenture

The convertible debenture has a face value of $240,000 with an annual coupon rate of 5%, and both principal and interest are to be repaid either in cash or common shares by August 4, 2007.

The debenture has been repaid as follows:

Issued - February 2005		240,000
Converted - quarter ended March 2005		(140,000	)
Converted - quarter ended June 2005		(70,000	)
Balance - September 30, 2005	$	30,000

9.	Capital Stock

Authorized

300,000,000 common shares, par value $0.001 per share (2004 - 50,000,000)

		2005			2004
Issued 41,834,102 common shares (2004 - 20,944,300)		$	41,834		$	20,944

On September 30, 2003, the Company cancelled 4,800,000 shares of common stock for no consideration. As well, the Company granted a 2 to 5 reverse stock split. The reverse split has retroactively been taken into consideration in the consolidated financial statements an the calculation of earnings per share. Subsequently, the Company issued 16,683,300 common shares in exchange for 100% of the outstanding shares of Cintel Co., Ltd.

In June 2004, 300,000 common shares were issued for consulting services at the value of $33,000.

In July 2004, 160,000 common shares were issued for consulting services at the value of $12,800.

In March 2005, the Company repurchased 93,830 common shares for $105,185

9.	Capital Stock (cont'd)

In August 2004, 50,000 common shares were issued for consulting services at the value of $4,500.

In September 2004, 120,000 common shares were issued for consulting services at the value of $9,600.

In September 2004, the Company increased its authorized capital from 50,000,000 common shares to 300,000,000 common shares.

In October 2004, 120,000 common shares were issued for consulting services at the value of $14,400.

In November 2004, 170,000 common shares were issued for consulting services at the value of $15,000.

In November 2004, 25,000,000 common shares were held in escrow for future conversion to repay the promissory note as described in note . As at June 30, 2005, 13,458,595 common shares have been issued on repayment as described below. The balance of shares held in escrow at June 30, 2005 was 11,541,405.

In November 2004, the Company issued 412,286 common shares upon the repayment of $20,000 of the promissory note as described in note.

In December 2004, the Company issued 1,763,214 common shares upon the repayment of $40,000 of the promissory note as described in note.

In January 2005, the Company issued 240,000 common shares for consulting service at the value of $20,500.

In January 2005, the Company issued 2,262,424 common shares upon the repayment of $40,000 of the promissory note as described in note.

In February 2005, the Company issued 622,200 common shares upon the repayment of $50,000 of the promissory note as described in note.

In February 2005, 400,000 common shares were issued for consulting services at the value of $44,000.

In March 2005, the Company issued 1,485,120 common shares upon the repayment of $80,000 of the promissory note as described in note.

9.	Capital Stock (cont'd)

In March 2005, 1,905,136 common shares were issued upon the conversion of $140,000 of convertible debenture as described in note 8.

In April 2005, the Company issued 1,311,769 common shares upon the repayment of $40,000 of the promissory note as described in note.

In April 2005, 1,200,000 common shares were issued for consulting services at the value of $48,000.

In April 2005, 712,500 common shares were issued upon the conversion of $20,000 of convertible debenture as described in note 8.

In May 2005, 1,329,346 common shares were issued upon the conversion of $50,000 of convertible debenture as described in note 8.

In May 2005, the Company issued 2,333,551 common shares upon the repayment of $70,000 of the promissory note as described in note.

The Company has accounted for its stock options and warrants in accordance with SFAS 123 "Accounting for Stock - Based Compensation" and SFAS 148 "Accounting for Stock - Based compensation - Transition and Disclosure." Value of options granted has been estimated by the Black Scholes option pricing model. The assumptions are evaluated annually and revised as necessary to reflect market conditions and additional experience. The following assumptions were used:

9.	Capital Stock (cont'd)

In June 2005, 150,000 common shares were issued for consulting services at the value of $4,500.

In June 2005, the Company issued 3,268,031 common shares upon the repayment of $80,000 of the promissory note.

In July 2005, the Company issued 704,225 common shares upon the repayment of $20,000 of the promissory note.

In September 2005, 500,000 common shares were issued for consulting services at the value of $15,000.

Stock Warrants and Options

	2005		2004��
Interest rate	6.5	%	6.5	%
Expected volatility	70	%	70	%
Expected life in years	6		6

In 1999 the Board of Directors of Cintel Korea adopted an option plan to allow employees to purchase ordinary shares of the Cintel Korea.

In August 1999, the share option plan granted 96,000 stock options for the common stock of Cintel Korea having a $0.425 nominal par value each and an exercise price of $0.425. In 2002, 53,000 stock options were cancelled. In 2003, an additional 30,000 stock options were cancelled.

In March 2000, 225,000 stock options were granted having a $0.425 nominal par value each and an exercise price of $0.68. In 2002, 135,000 and in 2003, an additional 47,000 of these stock options were cancelled.

In February 2001, 30,000 stock options were granted having a $0.425 nominal par value each and an exercise price of $0.72. In 2003, all of these stock options were cancelled.

In March 2003, 65,000 stock options were granted having a $0.425 nominal par value each and an exercise price of $0.71. In the same year, 15,000 of these stock options were cancelled.

The options vest gradually over a period of 3 years from the date of grant. The term of each option shall not be more than 8 years from the date of grant. No options have vested in the nine months ended September 30, 2005 and 2004.

9.	Capital Stock (cont'd)

The stock options have not been included in the calculation of the diluted earnings per share as their inclusion would be antidilutive.

The following table summarizes the stock option activity during 2005 and 2004:

	2005		2004
Outstanding, beginning of year		106,000		106,000
Exercised		-		-
Cancelled		-		-
Outstanding, end of year		106,000		106,000

Weighted average fair value of options granted during the year	$	-	$	-

Weighted average exercise price of common stock options, beginning of year	$	0.62	$	0.62

Weighted average exercise price of common stock options granted in the year	$	-	$	-

Weighted average exercise price of common stock options, end of year	$	0.67	$	0.67

Weighted average remaining contractual life of common stock options		2 years		3 years