UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
|X| QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the quarterly period ended
June 30, 2006
or
|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 0-28955
SYNDICATION, INC.
(Exact name of registrant as specified in its charter)
Delaware 57-2218873
-------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1250 24th Street, NW
Suite 300
Washington, D.C. 20037
(Address of principal executive offices (zip code))
(202) 467-2788
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the last 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days.
Yes |X| No |_|
Indicate the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date.
Indicate by check mark whether the registrant is a shell company (as defined by
Rule 12-b2 of the Exchange Act).
Yes |_| No |X|
At August 11, 2006, there were 99,993,946 shares of common stock, $0.0001 par
value per share, issued and outstanding.
PART I -- FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
SYNDICATION, INC. AND SUBSIDIARY
(A Development Stage Company)
CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2006 and December 31, 2005
SYNDICATION, INC. AND SUBSIDIARY
(A Development Stage Company)
Consolidated Balance Sheets
ASSETS
June 30, December 31,
2006 2005
------------ ------------
(Unaudited)
CURRENT ASSETS
Cash $ 325,265 $ 255,684
Accounts Receivable 1,850 12,300
Prepaid Expenses 1,400 0
------------ ------------
Total Current Assets 328,515 267,984
------------ ------------
OTHER ASSETS
Debt Offering Costs 165,521 60,000
Amortization Accumulated (21,322) 0
------------ ------------
Total Other Assets 144,199 60,000
------------ ------------
TOTAL ASSETS $ 472,714 $ 327,984
============ ============
The accompanying notes are an integral part of these consolidated financial
statements.
2
SYNDICATION, INC. AND SUBSIDIARY
(A Development Stage Company)
Consolidated Balance Sheets (Continued)
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
June 30, December 31,
2006 2005
------------ ------------
(Unaudited)
CURRENT LIABILITIES
Accounts payable $ 38,248 $ 103,715
Accounts payable - related party 33,711 18,419
Note payable - related party 368,937 368,937
Interest payable - related party 106,365 84,104
Note payable 138,011 301,761
Interest payable 30,733 37,043
Interest payable - convertible debenture 52,800 1,318
Derivative Liability 2,760,753 1,668,627
------------ ------------
Total Current Liabilities 3,529,558 2,583,926
------------ ------------
LONG TERM LIABILITIES
Convertible Debenture -- 168,038
------------ ------------
Total Long Term Liabilities -- 168,038
------------ ------------
STOCKHOLDERS' EQUITY (DEFICIT)
Preferred stock: 20,000,000 shares authorized of
$0.0001 par value, no shares issued and outstanding -- --
Common stock: 3,000,000,000 shares authorized of $0.0001
par value, 99,993,946 shares issued and
outstanding respectively 9,999 9,994
Additional paid-in capital 4,406,267 4,406,272
Deficit accumulated prior to the development stage (2,231,519) (2,231,519)
Deficit accumulated during the development stage (5,241,591) (4,608,727)
------------ ------------
Total Stockholders' Equity (Deficit) (2,693,188) (2,423,980)
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
(DEFICIT) $ 472,714 $ 327,984
============ ============
The accompanying notes are an integral part of these consolidated financial
statements.
3
SYNDICATION, INC. AND SUBSIDIARY
(A Development Stage Company)
Consolidated Statements of Operations
(Unaudited)
From
Inception
For the Three Months Ended For the Six Months Ended Of the
30th June 30th June Development
----------------------------------------------------------------------- Stage on
2006 2005 2006 2005 01/01/04
Thru
06/30/06
-------------- -------------- -------------- -------------- --------------
$ $ $ $ $
REVENUE 0 $ 0 8,675 0 75,100
OPERATING EXPENSES
General and administrative 103,670 62,555 147,155 186,726 1,056,043
Bad debt expense 6,750 11,895 56,314 48,831 415,253
Consulting 22,880 13,115 68,805 140,615 1,658,672
------------------------------------------------------------------------------------------
Total Operating Expenses 133,300 87,565 272,274 376,172 3,129,968
------------------------------------------------------------------------------------------
OPERATING LOSS (133,300) (87,565) (263,599) (376,172) (3,054,868)
------------------------------------------------------------------------------------------
OTHER INCOME (EXPENSES)
Interest Income 711 0 711 0 711
Other income (expenses) 50,780 7,000 42,932
Gain (Loss) on Investments (52,273) (20,000) (52,273) (70,000) (336,742)
Gain (Loss) on Derivative Liability (393,580) (242,126) (1,610,753)
Interest Expense (66,035) (26,070) (82,577) (49,244) (282,871)
------------------------------------------------------------------------------------------
Total Other Income (Expenses) (460,397) (46,070) (369,265) (119,244) (2,186,723)
------------------------------------------------------------------------------------------
INCOME (LOSS) BEFORE INCOME TAXES (593,697) (133,635) (632,864) (495,415) (5,241,591)
------------------------------------------------------------------------------------------
INCOME TAX EXPENSE 0 0 0 0 0
------------------------------------------------------------------------------------------
NET INCOME (LOSS) $ (230,041) $ (133,635) $ (632,864) $ (495,415) $ (4,877,935)
==========================================================================================
BASIC AND DILUTED INCOME (LOSS)
PER SHARE $ (0.01) $ (0.01) $ (0.01) $ (0.03)
=======================================================================
WEIGHTED AVERAGE NUMBER OF
SHARES OUTSTANDING 99,993,946 15,384,077 99,993,946 15,374,635
=======================================================================
4
SYNDICATION, INC. AND SUBSIDIARY
(A Development Stage Company)
Consolidated Statements of Cash Flows
(Unaudited)
From Inception
of the
Development
For the Six Months Ended Stage on
June 30, January 1, 2004
----------------------------- Through
2006 2005 June 30, 2006
------------ ------------ -------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net Loss $ (632,864) $ (495,416) $ (4,877,935)
Adjustments to reconcile net loss to net cash
provided (used) in operating activities:
Common stock issued for services 1,417,732
Amortization expense 21,322 82,500 427,322
Bad debt expense 48,831 278,187
Loss on investment value 70,000 276,431
Gain on accounts payable write off 0 0 (39,932)
Unearned compensation 0 0 190,000
Increase in allowance for bad debts 0 0 80,752
Increase in directors fee accrued 0 0 (44,000)
Increase in accrued expenses related party 0 0 32,000
Increase in debt offering costs 0 0 165,521
Changes in operating assets and liabilities:
Increase in Accounts Receivable 10,450 (1,850)
(Increase) Decrease in Prepaid expenses (1,400) (1,400)
Increase (decrease) in accounts payable (65,467) 29,425 (17,758)
Increase in accounts payable - related party 15,292 (2,000) 32,711
(Increase) in interest payable - related party 22,259 21,828 73,398
(Increase) in interest payable - others 45,172 35,186
Increase in accrued expenses 53,319 38,641
Net Cash Provided (Used) in Operating 0
----------------------------------------------
Activities (690,757) (191,513) (2,216,036)
----------------------------------------------
5
SYNDICATION, INC. AND SUBSIDIARY
(A Development Stage Company)
Consolidated Statements of Cash Flows
(Unaudited) (continued)
From Inception
of the
Development
For the Six Months Ended Stage on
June 30, January 1, 2004
----------------------------- Through
2006 2005 June 30, 2006
------------ ------------ -------------
CASH FLOWS FROM INVESTING ACTIVITIES
Increase in notes receivable - related 0 (48,831) (358,939)
Increase in investments - related 0 (70,000) (276,431)
Increase in Project Texas real estate (1,038) 0
0
0 0 0
----------------------------------------------
Net Cash Used in Investing Activities 0 (119,869) (635,370)
----------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Stock issued for cash 50,000
Increase in notes payable 0 500,000 207,500
Proceeds from notes payable 500,000
Payments on notes payable (163,750) (23,750) (265,739)
Increase in notes payable - related party 280,097
Payments on notes payable - related party (24,260)
Increase in convertible debenture 681,962 1,181,962
Increase in Debt discount (850,000) (1,150,000)
Increase (decrease) in Derivative Liability 1,092,126 2,540,313
0 0 0
----------------------------------------------
Net Cash Provided by Financing Activities 760,338 476,250 3,540,313
----------------------------------------------
NET INCREASE (DECREASE) IN CASH 69,581 164,868 325,251
CASH, BEGINNING OF PERIOD 255,684 14,041 14
CASH, END OF PERIOD $ 325,265 $ 178,909 $ 325,265
The accompanying notes are an integral part of these consolidated financial
statements.
6
SYNDICATION, INC. AND SUBSIDIARY
(A Development Stage Company)
Consolidated Statements of Cash Flows (Continued)
(Unaudited)
From Inception
of the
Development
For the Six Months Ended Stage on
June 30, January 1, 2004
----------------------------- Through
2006 2005 June 30, 2006
------------ ------------ -------------
SUPPLEMENTAL CASH FLOW INFORMATION
Cash Payments For:
Income taxes $ -- $ --
Interest $ -- $ -- $ 11,370
Non-Cash Financing Activities
Common stock issued for deferred fees $ -- $ -- $ 304,000
Common stock issued for converting N/P $ -- $ 20,000 $ 65,000
Common stock issued for converting debt $ -- $ 10,000 $ 10,000
Common stock issued for services $ -- $ 1,182,750
The accompanying notes are an integral part of these consolidated financial
statements.
7
SYNDICATION, INC. AND SUBSIDIARY
(A Development Stage Company)
Notes to the Consolidated Financial Statements
June 30, 2006 and December 31, 2005
NOTE 1 - BASIS OF FINANCIAL STATEMENT PRESENTATION
The accompanying unaudited consolidated financial statements have been
prepared by the Company pursuant to the rules and regulations of the
Securities and Exchange Commission. Certain information and footnote
disclosures normally included in consolidated financial statements
prepared in accordance with accounting principles generally accepted in
the United States of America have been or omitted in accordance with such
rules and regulations. The information furnished in the consolidated
interim financial statements include normal recurring adjustments and
reflects all adjustments, which, in the opinion of management, are
necessary for a fair presentation of such consolidated financial
statements. Although management believes the disclosures and information
presented are adequate to make the information not misleading, it is
suggested that these consolidated interim financial statements be read in
conjunction with the Company's most recent audited consolidated financial
statements and notes thereto included in its December 31, 2005 Annual
Report on Form 10-KSB. Operating results for the six months ended June 30,
2006 are not necessarily indicative of the results that may be expected
for the year ending December 31, 2006.
NOTE 2 - GOING CONCERN
The Company's consolidated financial statements are prepared using
accounting principals generally accepted in the Unites States of America
applicable to a going concern which contemplates the realization of assets
and liquidation of liabilities in the normal course of business. The
consolidated financial statements do not reflect any adjustments that
might result from the outcome of this uncertainty. It is management's
intent to seek growth by way of a merger or acquisition. It is the belief
that over the next 12 months that Company will acquire at least one or
more of acquisition candidates. The acquisition process should provide
capital, revenue and incomes as a result. There is no assurance that the
Company will be successful in its acquisition efforts or in raising the
needed capital. At the 2nd Quarter close, the Company had cash resources
of $325,265 and the recent establishment of initial stage sources of
revenue to cover its operating costs and to allow it to continue as a
going concern.
NOTE 3 - DEBENTURE
On December 30th 2005, Syndication, Inc. (the "Company"), in order to
obtain alternative funding for its ongoing operations of the Company,
entered into a Termination Agreement with Cornell Capital Partners, LP
(the "Investor") pursuant to which the Standby Equity Distribution
Agreement entered between the Company and the Investor dated June 2004 was
terminated. To that end, on December 30th 2005, the company then executed
a Securities Purchase Agreement (the "Agreement") for the sale of (i)
$1,150,000 in secured convertible debentures (the "Debentures") and (ii)
stock purchase warrants (the "Warrants") to buy 120,000,000 shares of our
common stock. In accordance with EITF-00-19 and SFAS 150, since there is
no explicit limit on the number of shares that are to be delivered upon
exercise of the conversion feature, the Company is not able to assert that
it will have sufficient authorized and unissued shares to settle the
conversion option. As a result, the conversion feature should be accounted
for as a derivative liability, with the fair value recorded in earnings
each period. On June 8th 2006 the company issued an additional $150,000 of
the $1,150,000 debenture.
NOTE 4 - SIGNIFICANT EVENTS
Debenture footnote
"SYNDICATION, INC" Name changes
In the First Quarter of 2006 the company took steps to stream line its
name branding and changed the name of its subsidiary to "SYNDICATED
PROPERTIES" from HTRG & associates as well as the parent company's banner
to "SYNDICATION, INC" from syndication net. com inc. The company plans to
move Syndicated Properties into real estate development away from the
appraisal focus.
8
SYNDICATION, INC. AND SUBSIDIARY
(A Development Stage Company)
Notes to the Consolidated Financial Statements
June 30, 2006 and December 31, 2005
NOTE 4 - SIGNIFICANT EVENTS, continued
Tri-State Metro Territories LLC
During the quarter ended June 30, 2006, the Company increased its
investment in Tri State Metro Territories, LLC (TSMT) by $35,101, which
equals an increase in the ownership of TSMT by approximately 1.69%, up
from 13.75% to 15.44%. This investment has been written-down to $0 due to
possible incollectibility. Also, the Company loaned an additional $6,750
to TSMT. Mr. Sorrentino a greater than 10% shareholder of the Company
resigned as the managing member of TSMT in March of 2005.
9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
FORWARD-LOOKING STATEMENTS
The information in this registration statement contains forward-looking
statements within the meaning of the Private Securities Litigation Reform Act of
1995. This Act provides a "safe harbor" for forward-looking statements to
encourage companies to provide prospective information about themselves so long
as they identify these statements as forward looking and provide meaningful
cautionary statements identifying important factors that could cause actual
results to differ from the projected results. All statements other than
statements of historical fact made in this registration statement are forward
looking. In particular, the statements herein regarding industry prospects and
future results of operations or financial position are forward-looking
statements. Forward-looking statements reflect management's current expectations
and are inherently uncertain. Our actual results may differ significantly from
management's expectations.
The following discussion and analysis should be read in conjunction with our
financial statements and summary of selected financial data, included herewith.
This discussion should not be construed to imply that the results discussed
herein will necessarily continue into the future, or that any conclusion reached
herein will necessarily be indicative of actual operating results in the future.
Such discussion represents only the best present assessment of our management.
GENERAL
We are a consulting company formed to acquire controlling interests in or to
participate in the creation of, and to provide financial, management and
technical support to, development stage businesses. Our strategy is to integrate
affiliated companies into a network and to actively develop the business
strategies, operations and management teams of the affiliated entities.
It is the intent of our board of directors to develop and exploit all business
opportunities to increase efficiencies between companies with which we may
invest in or consult. In addition, we may acquire companies to be held as wholly
owned subsidiaries.
We had one wholly owned subsidiary, Kemper Pressure Treated Forest Products,
Inc. Kemper was engaged in the retail brokerage business of preservative treated
lumber such as utility poles, bridge pilings, timber and guardrail posts. Kemper
had one customer and as a result of limited revenue we elected to wind down
Kemper's operations during the fourth quarter of 2003. We have changed our focus
and growth efforts towards our consulting business and/or the acquisition of an
operating development company.
In September 2005, we launched Syndicated Properties LLC (f/k/a SP &
Associates LLC) ("SP") as a wholly owned subsidiary that will specialize in the
real estate development business. Through SP, we intend to leverage our
activities from the real estate appraisal business into real estate development.
On November 10, 2003, we entered into a Letter of Intent with Tri State
Metro-Territories, LLC (Tri-State) to acquire substantially all of the assets of
Tri-State. Brian Sorrentino, a major shareholder, director and an executive
officer of our company, is a 10% shareholder in Tri State. Mark Solomon, who
serves as a member of our Board of Directors and is a shareholder of our company
also is a member of Tri-State. Dale Hill, is a shareholder of our company and is
also a member of Tri-State. Tri State is in the business of selling franchised
hair coloring salon units under the name of "HCX the haircolorxperts. The assets
being negotiated by us include the exclusive right to the interest in the
prototype HCX Salons located in Columbia Maryland and Washington, DC. On March
18, 2004, we entered into privately negotiated exchange agreements to exchange
355,000 restricted shares of its common stock for 8% of membership interests of
Tri-State. In addition, from September 2004 through February 2005, we entered
into two purchase agreements whereby the Company purchased 3% of membership
interests of Tri-State for $115,000. During the quarter ended June 30, 2006, the
Company increased its investment in Tri State by $35,101, which equals an
increase in the ownership of Tri State by approximately 1.69%, up from 13.75% to
15.44%.
Although it is our intent to acquire all the assets of Tri-State, the
specific terms and the evaluations of the potential transaction have not yet
been finalized and the pending audited financial statements of Tri-State are a
requirement for completion of that transaction. The transaction is also subject
to customary closing conditions, including but not limited to the receipt of all
definitive documents, valuations, consents, and approvals. There can be no
assurance as to whether or when the transaction will close.
THREE MONTHS ENDED JUNE 30, 2006 COMPARED TO THREE MONTHS ENDED JUNE 30, 2005
For the three months ended June 30, 2006 and June 30, 2005 we did not have
any revenue. The lack of revenue is primarily attributed to the decreasing of
consulting activity.
The operating expenses for the three months ended June 30, 2006 increased
by $45,735 to $133,300 for the three months ended June 30, 2006 from $87,565 for
the three months ended June 30, 2005. Our operating expenses consist of general
and administrative expenses and consulting fees. The reason for the increase
relates to an increase in the payment of fees related to the evaluation of
acquisition opportunities of which we have no definitive plans at this time.
10
The net loss for the three months ended June 30, 2006 was $593,697
compared to net loss of $133,635 for the three months ended June 30, 2005. The
primary reasons for the increase in net loss was an increase in expenses.
Liquidity and Capital Resources
Total current liabilities at June 30, 2006 were $3,529,558.
We have historically incurred losses. For the three months ended June 30,
2006, we had a operating loss of $593,697.
On December 30, 2005, the Company, in order to obtain alternative funding
for its ongoing operations of the Company, entered into a Termination Agreement
with Cornell Capital Partners, LP (the "Investor") pursuant to which the Standby
Equity Distribution Agreement entered between the Company and the Investor dated
June 2004 was terminated. To that end, on December 30th 2005, the company then
executed a Securities Purchase Agreement (the "Agreement") for the sale of (i)
$1,150,000 in secured convertible debentures (the "Debentures") and (ii) stock
purchase warrants (the "Warrants") to buy 120,000,000 shares of our common
stock. On December 30, 2005, the company issued $300,000 of the $1,150,000
debenture.
The debentures bears interest at 12 percent, mature three years from the
date of issuance, and are convertible into the Company's common stock, at a
conversion price equal to the lower of (i) $0.0132 or (ii) 85% of the lowest
weighted average price during the 30 trading days immediately preceding the
conversion date.
In accordance with EITF-00-19 and SFAS 150, and because there is no
explicit limit on the number of shares that are to be delivered upon exercise of
the conversion feature, the Company is not able to assert that it will have
sufficient authorized and unissued shares to settle the conversion option. As a
result, the conversion feature will be accounted for as a derivative liability,
with the fair value recorded in earnings each period. On February 6, 2006 the
Company issued an additional $700,000 of the $1,150,000 debenture and on June 8,
2006 the Company issued the final $150,000 of the $1,150,000 debentures.
Our future revenues and profits, if any, will depend upon various factors,
including the following:
Whether we will be able to effectively evaluate the overall quality and
industry expertise of potential acquisition candidates; whether we will have the
funds to provide seed capital and mezzanine financing to brick-and-mortar,
e-commerce and Internet-related companies; and whether we can develop and
implement business models that will enable growth companies to develop.
We may not be able to effect any acquisitions of or investments in
development stage companies if we are unable to secure sufficient funds to
finance our proposed acquisitions costs. We expect that our current cash and
cash equivalents will allow us to continue our current operation for six months.
If we are unable to generate additional revenues or secure financings, we may be
forced to cease or curtail operations.
We intend for our management team to identify companies that are
positioned to succeed and to assist those companies with financial, managerial
and technical support. Over the next 12 months, we intend to increase revenue
and gross profit margin by focusing and expanding its consulting services and
seeking acquisition candidates. It is management's belief that potential
acquisition targets can be better identified and assessed for risk if we first
become involved with these candidates on a consulting capacity. Our strategy is
to integrate affiliated companies into a network and to actively develop the
business strategies, operations and management teams of the affiliated entities.
We do not foresee any significant changes in the number of our employees
over the next twelve months except in the event we finalize an acquisition. We
have not paid dividends on our common stock, and intend to reinvest our earnings
to support our working capital and expansion requirements. We intend to continue
to utilize our earnings in the development and expansion of the business and do
not expect to pay cash dividends in the foreseeable future. It is the belief of
management that as we move toward an active trading status the ability to raise
capital by stock issuance to effect our business plan is enhanced.
We do not expect to sell any manufacturing facilities or significant
equipment over the next twelve months except within the demands of potential
acquisitions that we may pursue.
Off-Balance Sheet Arrangements
We have no off-balance sheet arrangements that have or are reasonably
likely to have a current or future material effect on us.
ITEM 3. CONTROLS AND PROCEDURES
As of the end of the period covered by this report, we conducted an
evaluation, under the supervision and with the participation of our chief
executive officer and chief financial officer of our disclosure controls and
procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) of the Exchange
Act). Based upon this evaluation, our chief executive officer and chief
financial officer concluded that our disclosure controls and procedures are
effective to ensure that information required to be disclosed by us in the
reports that we file or submit under the Exchange Act is recorded, processed,
summarized and reported, within the time periods specified in the Commission's
rules and forms. There was no change in our internal controls or in other
factors that could affect these controls during our last fiscal quarter that has
materially affected, or is reasonably likely to materially affect, our internal
control over financial reporting.
11
PART 2 - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
We are not a party to any material litigation and management has no
knowledge of any threatened or pending litigation against it.
ITEM 2. CHANGES IN SECURITIES
We have not issued securities for the period ended June 30, 2006.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES:
Not Applicable
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not Applicable
ITEM 5. OTHER INFORMATION
Not Applicable
ITEM 6. EXHIBITS
31.1 Certification by the Chief Executive Officer Pursuant to Section 302
of the Sarbanes-Oxley Act of 2002.
31.2 Certification by the Chief Financial Officer Pursuant to Section 302
of the Sarbanes-Oxley Act of 2002.
32.1 Certification by the Chief Executive Officer Pursuant to 18 U.S.C.
Section 1350, as Adopted Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
32.2 Certification by the Chief Financial Officer Pursuant to 18 U.S.C.
Section 1350, as Adopted Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
SYNDICATION, INC.
By: /s/Brian Sorrentino
---------------------------------------
Brian Sorrentino
CEO and Principal Executive Officer
Dated: August 14, 2006
By: /s/Mrutyunjaya S. Chittavajhula.
---------------------------------------
Mrutyunjaya S. Chittavajhula.
CFO and Principal Accounting Officer
Dated: August 14, 2006
12