U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
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x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period endedMarch 31, 2010
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o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from
Commission File No. 333-140236
ZENTRIC, INC.
(Exact name of small business issuer as specified in its charter)
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Nevada | |
(State or other jurisdiction of Incorporation or organization) | (I.R.S. Employer Identification No.) |
Unit C2, 802 Southdown Road,
Mississauga, Ontario, Canada, L5J 2Y4
(Address of Principal Executive Offices)
(416) 245-8000
(Issuer’s telephone number)
(Former name, address and fiscal year, if changed since last report)
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 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.
Yesx Noo
Check whetherthe registrant has filed all documents and reports required to be filed by Sections 12, 13, or 15 (d) of the Exchange Act subsequent to the distribution of securities under a plan confirmed by a court. Yeso Nox
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 Filero Accelerated Filero Non-Accelerated Filero Smaller Reporting Companyx
State the number of shares outstanding of each of the issuer’s classes of common equity, as of May 10, 2010: 49,178,000 shares of common stock.
Transitional Small Business Disclosure Format Yeso Nox
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).
oYes xNo
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TABLE OF CONTENTS
PART I FINANCIAL INFORMATION
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Item 1. | Financial Statements | 3 |
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 8 |
Item 3 | Quantitative and Qualitative Disclosures About Market Risk | 12 |
Item 4T. | Control and Procedures | 12 |
PART II-- OTHER INFORMATION
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Item 1 | Legal Proceedings | 13 |
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 13 |
Item 3. | Defaults Upon Senior Securities | 13 |
Item 4. | Submission of Matters to a Vote of Security Holders | 13 |
Item 5. | Other Information | 13 |
Item 6. | Exhibits and Reports on Form 8-K | 13 |
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ZENTRIC, INC.
(A Development Stage Company)
BALANCE SHEETS
| | | | | | | |
| | March 31, 2010 (Unaudited) | | | December 31, 2009 (Audited) |
ASSETS | | | | | |
Current Assets | | | | | |
Cash | | $ | 100 | | | $ | - |
Prepaid Expense | | | - | | | | 4,767 |
Total Assets | | $ | 100 | | | $ | 4,767 |
| | | | | | | |
LIABILITIES AND STOCKHOLDERS' DEFICIT | | | | | | | |
Current Liabilities | | | | | | | |
Accounts payable and accrued liabilities | | $ | 9,704 | | | $ | 6,560 |
Advances from shareholder | | | 35,339 | | | | 31,565 |
Note payable, net of discount | | | 113,850 | | | | 88,950 |
| | | | | | | |
Total Liabilities | | | 158,893 | | | | 127,075 |
| | | | | | | |
Stockholders' Deficit | | | | | | | |
Common stock: $0.001 par value, 400,000,000 common shares authorized, 49,178,000 and 49,128,000 common shares outstanding as of December 31, 2009 and March 31, 2010, respectively | | | 49,178 | | | | 49,128 |
Additional paid-in capital | | | (20,548) | | | | (21,263) |
Deficit accumulated during the development stage | | | (187,423 | ) | | | (150,173 |
| | | | | | | |
Total Stockholders' Deficit | | | (158,793) | | | | (122,308 |
| | | | | | | |
Total Liabilities and Stockholders' Deficit | | $ | 100 | | | $ | 4,767 |
The accompanying notes are an integral part to these financial statements.
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ZENTRIC, INC.
(A Development Stage Company)
STATEMENTS OF OPERATIONS
(Unaudited)
| | | | | | | | |
| | Three Months Ended March 31, 2010 | |
Three Months Ended March 31, 2009 | | For The Period From Inception (July 21, 2008) to March 31, 2010 |
REVENUE | | $ | - | | $ - | | $ | - |
EXPENSES | | | | | | | | |
Office and General | | | 6,284 | | - | | | 15,492 |
Professional fees | | | 1,700 | | 13,496 | | | 42,685 |
Interest expense | | | 4,266 | | 780 | | | 12,166 |
Consulting and subcontracting | | | 25,000 | | - | | | 117,000 |
Bank charges | | | - | | - | | | 80 |
| | | 37,250 | | 14,276 | | | 187,423 |
| | | | | | | | |
NET LOSS | | $ | (37,250) | | $ (14,276) | | $ | (187,423) |
| | | | | | | | |
LOSS PER WEIGHTED NUMBER OF SHARES OUTSTANDING - BASIC AND DILUTED | | $ | 0.00 | | $ 0.00 | | | |
| | | | | | | | |
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING - BASIC AND DILUTED | | | 49,132,494 | | 12,179,500 | | | |
The accompanying notes are an integral part to these financial statements.
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ZENTRIC, INC.
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
(Unaudited)
| | | | |
| | | | July 21, 2008 |
| | Three Months | Three Months | (Date of Inception) |
| | Ended | Ended | Through |
| | March 31, | March 31, | March 31, |
| | 2010 | 2009 | 2010 |
| | | | |
Cash Flows from Operating Activities | | | | |
Net loss | $ | (37,250) | $ (14,276) | $ (187,423) |
Adjustments to reconcile net loss to net cash used by | | | | |
Operating activities: | | | | |
Common stock issued for services | | - | - | 17,500 |
Interest payable – related party loans | | 3,069 | - | 7,917 |
Imputed interest on advance from shareholder | | 265 | 780 | 2,235 |
Amortization on note discount | | 400 | - | 950 |
Changes in assets and liabilities | | | | |
Prepaid Expense | | 4,767 | - | 4,767 |
Accounts payable and accrued liabilities | | 75 | - | 1,787 |
| | | | |
Cash flows used in operating activities | | (28,674) | (13,496) | (152,267) |
| | | | |
Cash Flows from Financing Activities | | | | |
Proceeds from issuance of common stock | | - | - | 6,795 |
Advances from related party | | 3,774 | - | 35,339 |
Borrowings on debt | | 25,000 | 10,296 | 115,000 |
| | | | |
Cash flows provided by financing activities | | 28,774 | 10,296 | 157,134 |
| | | | |
Net (Decrease) Increase in Cash | | 100 | (3,200) | 4,867 |
| | | | |
Cash and Cash Equivalents, beginning of year | | - | 3,215 | - |
| | | | |
Cash and Cash Equivalents, end of year | $ | 100 | $ 15 | $ 100 |
| | | | |
Supplemental Cash Flow Information | | | | |
Interest paid | | - | -- | - |
Income taxes paid | | - | -- | - |
The accompanying notes are an integral part to these financial statements.
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ZENTRIC, INC.
(A Development Stage Company)
NOTES TO THE FINANCIAL STATEMENTS
March 31, 2010 (unaudited)
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1. | ORGANIZATION AND NATURE OF BUSINESS |
Zentric, Inc. (the "Company"), was incorporated on July 21, 2008, under the laws of the State of Nevada as Constant Environment, Inc. and changed it’s name to Zentric, Inc. on December 16, 2009. The company is an advanced battery technology company based on a new and revolutionary technology that incorporates high voltages dual electrolytes to produce higher voltages and power. The business of “Constant Environment” remains as a division of Zenrtic. The division is a separate business that provides microclimate systems to specialty markets, who have a need to protect and preserve rare and/or valuable items
The accompanying financial statements have been prepared in accordance 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. The Company has had limited revenues and has an accumulated deficit which raises substantial doubt about the Company's ability to continue as a going concern. The financial statements do not include any adjustments to the amounts and classifications of assets and liabilities that might be necessary should the Company be unable to continue as a going concern.
The Company's ability to continue as a going concern is contingent upon its ability to complete public equity financing and generate profitable operations in the future. Management's plan in this regard is to secure additional funds through equity financing and through loans made by the Company's stockholders.
The financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the inability of the Company to continue as a going concern.
The Company has not earned any revenues from limited principal operations and accordingly, the Company's activities have been accounted for as those of a "Development Stage Enterprise" as set forth in FASB Pronouncements. Among the disclosures required are that the Company's financial statements be identified as those of a development stage company, and that the statements of operation, stockholders' deficit and cash flows disclose activity since the date of the Company's inception.
The interim condensed financial statements included herein, presented in accordance with United States generally accepted accounting principles and stated in US dollars, have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to not make the information presented misleading.
These statements reflect all adjustments, consisting of normal recurring adjustments, which, in the opinion of management, are necessary for fair presentation of the information contained therein. It is suggested that these interim condensed financial statements be read in conjunction with the financial statements of the Company for the year ended December 31, 2009 and notes thereto included in the Company's 10-K annual report. The Company follows the same accounting policies in the preparation of interim reports.
In preparing financial statements, the Company's management makes informed judgments and estimates that affect the reported amounts of assets and liabilities as of the date of the financial statements and affect the reported amounts of revenues and expenses during the reporting period. We review our estimates on an on-going basis, including those related to contingencies and income taxes. Changes in facts and circumstances may result in revised estimates and actual results may differ from these estimates.
Results of operations for the interim periods are not indicative of annual results.
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ZENTRIC, INC.
(A Development Stage Company)
NOTES TO THE FINANCIAL STATEMENTS
March 31, 2010 (unaudited)
4. RELATED PARTY TRANSACTIONS
Related party transactions are in the normal course of operations and are recorded at amounts established and agreed between the related parties. Related party transactions not disclosed elsewhere in these financial statements are as follows:
The Company have received cash advanced of $3,774 and $35,339 for the three months ended March 31, 2010 and from inception to March 31, 2010, respectively from a director and shareholder.
Interest has been imputed at 7% resulting in interest expense of $265 and $2,235 for the three months ended March 31, 2010 and from inception to March 31, 2010 respectively.
5. STOCKHOLDERS’ EQUITY
On July 15, 2009, the Company's board of directors declared a four-for-one forward stock split on the shares of the Company's common stock. Each shareholder of record on August 6, 2009 received four additional shares of common stock for each share of common stock then held. The Company retained the current par value of $0.001 per share for all shares of common stock. All references in the financial statements to the number of shares outstanding, per share amounts, common stock, additional paid-in capital and stock option data of the Company's common stock have been restated retroactively to reflect the effect of the stock split for all periods presented.
On July 27, 2009 we entered into a Loan Agreement with Lucilla Ho wherein she agreed to loan us $20,000 and she received 20,000 shares of our common stock.
On August 7, 2009 we entered into a Loan Agreement with 1456146 Ontario Limited wherein the entity agreed to loan us $50,000 and she received 100,000 shares of our common stock.
On August 15, 2009 the Company entered into a Loan Agreement with Ricky Wu wherein he agreed to loan the Company $20,000 and he will receive 40,000 shares of the Company's common stock.
On March 25, 2010 the Company entered into a Loan Agreement with Lucilla Ho wherein she agreed to loan the Company $25,000 and she will receive 50,000 shares of the Company's common stock as a loan incentive value at $0.01 per share which was the last price that shares was purchased for with cash. The shares issued resulted in a discount which is being amortized straight-line over the term of the note.
Holders of common stock are entitled to one vote for each share held. There are no restrictions that limit the Company's ability to pay dividends on its common stock. The Company has not declared any dividends since incorporation.
6. NOTE PAYABLE
On July 27, 2009 we entered into a Loan Agreement with a shareholder wherein they agreed to loan us $20,000 bearing 15% interest rate and due in one year. As an incentive to providing the loan to the company, 20,000 shares of common stock was issued at a value of $.01 per share, which was the last price per share that shares was purchased with cash, resulting in a discount of $200 which is being amortized using straight-line during the term of the loan.
On August 7, 2009 we entered into a Loan Agreement with a shareholder wherein they agreed to loan us $50,000 bearing 15% interest rate and due in two year. As an incentive to providing the loan to the company, 100,000 shares of common stock was issued at a value of $.01 per share, which was the last price that shares was purchased with cash, resulting in a discount of $1,000 which is being amortized using straight-line during the term of the loan.
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ZENTRIC, INC.
(A Development Stage Company)
NOTES TO THE FINANCIAL STATEMENTS
March 31, 2010 (unaudited)
On August 15, 2009 we entered into a Loan Agreement with a shareholder wherein they agreed to loan us $20,000 bearing 15% interest rate and due in one year. As an incentive to providing the loan to the company, 40,000 shares of common stock was issued at a value of $.01 per share, which was the last price per share that shares was purchased with cash, resulting in a discount of $400 which is being amortized using straight-line during the term of the loan.
On March 25, 2010 we entered into a Loan Agreement with a shareholder wherein they agreed to loan us $25,000 bearing 15% interest rate due in one year. As an incentive in providing the loan to the company, 50,000 shares of common stock was issued at a value of $0.01 per share, which was the last price that shares was purchased with cash, resulting in a discount of $500 which is being amortized using straight-line during the term of the loan.
7. SUBSEQUENT EVENTS
There are no events subsequent to quarter end March 31, 2010 that in the opinion of management warrants further disclosures.
Item 2: Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis should be read in conjunction with our Financial Statements and notes appearing elsewhere in this report. The following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in the forward looking statements. Factors that could cause or contribute to such differences include, but are not limited to those discussed below and elsewhere in this report. Our financial statements are stated in United States Dollars and are prepared in accordance with United States Generally Accepted Accounting Principles.
Zentric, Inc. (the "Company"), was incorporated on July 21, 2008, under the laws of the State of Nevada as Constant Environment, Inc. and changed it’s name to Zentric, Inc. on December 16, 2009. The company is an advanced battery technology company based on a new and revolutionary technology that incorporates high voltages dual electrolytes to produce higher voltages and power.
Business Division
The business of “Constant Environment” remains as a division of Zenrtic. The division is a separate business that provides microclimate systems to specialty markets, who have a need to protect and preserve rare and/or valuable items.
Employees
Presently our two officers are contributing their services without payment and certain consultants have accepted shares for services.
In the future, we plan to hire five full time employees and two part-time employees. From time to time, we may employ additional independent contractors to support our development, marketing, sales, support and administrative organization. We also intend to hire 2 sales/marketing staff, 1 administrative assistant, and 2 microclimate technicians. Competition for qualified personnel in the industry in which we compete is intense. We believe that our future success will depend in part on our continued ability to attract, hire or acquire and retain qualified employees.
RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 2010 AND MARCH 31, 2009.
The Company did not generate any revenues for the three months ended March 31, 2010 and March 31, 2009.
Professional fees include legal and accounting fees and filing fees. Professional fees for the three months ended March 31, 2010 and March 31, 2009 was $1,700 and $13,496 respectively.
Consulting and subcontracting fees for the three months ended March 31, 2010 and March 31, 2009 was $25,000 and nil respectively.
Office and general expense for the three months ended March 31, 2010 and March 31, 2009 was $6,284 and nil respectively.
Interest expense for the three months ended March 31, 2010 and March 31, 2009 was $4,266 and $780 respectively.
Net loss for the three months ended March 31, 2010 and March 31, 2009 was $37,250 and $14,276 respectively. The loss was primarily due to the consulting fees, professional fees and interest expenses.
Loss per share was $0.00 for the three months ended March 31, 2010 and March 31, 2009.
There were no services contributed by shareholder or bank charges expenses for the three months ended March 31, 2010 and March 31, 2009.
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ZENTRIC, INC.
(A Development Stage Company)
NOTES TO THE FINANCIAL STATEMENTS
March 31, 2010 (unaudited)
LIQUIDITY AND CAPITAL RESOURCES
As of March 31, 2010, we had a working capital deficiency of $158,793, which represented a working capital decrease of $36,485 as compared to the working capital deficiency position of $122,308 as of December 31, 2009. The decrease is mainly due to the increase of our accounts payable. We did not raise any cash from issuance of common stock. We did not raise any cash from issuance of common stock.
Cash flows used in operating activities for the three month period ended March 31, 2010 was ($28,674).
Cash flows used in financing activities for the three month period ended March 31, 2010 was $28,774, which was due to loans.
On July 27, 2009 the Company entered into a Loan Agreement with Lucilla Ho wherein she agreed to loan the Company $20,000 and she will receive 5,000 shares of the Company’s common stock.
On August 7, 2009 the Company entered into a Loan Agreement with 1456146 Ontario Limited of which Fred Lai is the principal. The 1456146 Ontario Limited agreed to loan the Company $50,000 and 1456146 Ontario Limited will receive 100,000 shares of the Company’s common stock.
On August 15, 2009 the Company entered into a Loan Agreement with Ricky Wu wherein he agreed to loan the Company $20,000 and he will receive 40,000 shares of the Company's common stock.
On March 21, 2010 the Company entered into a Loan Agreement with Lucilla Ho wherein she agreed to loan the Company $25,000 and she will receive 50,000 shares of the Company’s common stock.
GOING CONCERN
Due to the uncertainty of our ability to meet our current operating and capital expenses, in their report on our audited financial statements for the period ended December 31, 2009, our independent registered public accountants included an explanatory paragraph expressing substantial doubt about our ability to continue as a going concern. Our financial statements contain additional note disclosures describing the circumstances that lead to this disclosure by our independent auditors.
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ZENTRIC, INC.
(A Development Stage Company)
NOTES TO THE FINANCIAL STATEMENTS
March 31, 2010 (unaudited)
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
Our most critical accounting policies, which are those that require significant judgment, include: income taxes and revenue recognition. In-depth descriptions of these can be found in our Annual Report on Form 10-K for the fiscal year ended December 31, 2009. There have been no material changes in our existing accounting policies from the disclosures included in our 2009 Annual Report on Form 10-K.
OFF-BALANCE SHEET ARRANGEMENTS
We do not have any off-balance sheet guarantees, interest rate swap transactions or foreign currency contracts. We do not engage in trading activities involving non-exchange traded contracts.
Item 3. Quantitative and Qualitative Disclosures about Market Risks
We conduct our business in United States dollars. Our market risk is limited to the United States domestic, economic and regulatory factors.
Item 4T. Controls and Procedures
Management's evaluation of disclosure controls and procedures
The management of the company is required to maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), 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 our management, including our Chief Executive Officer and Chief Financial Officer (one individual) as appropriate, to allow timely decisions regarding required disclosure.
In designing and evaluating disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable, not absolute assurance of achieving the desired objectives. Also, 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, have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake. 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 unde r all potential future conditions.
As of the end of the period covered by this report, the Company conducted an evaluation, under the supervision and with the participation of its principal executive officer and principal financial officer, of the Company’s disclosure controls and procedures. Based on their evaluation, the principal executive officer and principal financial officer concluded that the Company’s disclosure controls and procedures need improvement and were not adequately effective as of March 31, 2010 to cause the information required to be disclosed in reports that the Company files or submits under the Exchange Act to be recorded, processed, summarized and reported within the time periods prescribed by the SEC, and that such information is accumulated and communicated to management, including the principal executive officer and principal financial officer, as appropriate, to ensure timely decisions regarding required disclosure. Management is in the process of identifying deficiencies with respe ct to the Company’s disclosure controls and procedures and implementing corrective measures.
Changes in Internal Controls
There was no change in our internal controls over financial reporting identified in connection with the requisite evaluation that occurred during our last fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
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ZENTRIC, INC.
(A Development Stage Company)
NOTES TO THE FINANCIAL STATEMENTS
March 31, 2010 (unaudited)
PART II – OTHER INFORMATION
Item 1. Legal Proceedings.
None
Item 2. Changes in Securities.
None
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 and Reports on Form 8-K
(A) Exhibits
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31.1 | Certification Pursuant to 18 U.S.C Section 1350, As adopted pursuant to Section 302 of the Sabanes-Oxley Act of 2002 |
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32.1 | Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, As adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
(B) Reports on Form 8-K
Form 8-K Filed on January 15, 2010 reporting a name change.
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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, there unto duly authorized.
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| ZENTRIC, INC. |
| Registrant |
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Date: May 12, 2010 | By:/s/ Jeff Mak |
| Jeff Mak |
| President, Chief Executive Officer, Principal Accounting Officer and Director |
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