Note
1: Basis of presentation
The
condensed financial statements presented herein have been prepared by our
Company in accordance with the accounting policies in its Form 10-KSB with
financial statements dated June 30, 2007, and should be read in conjunction with
the notes thereto.
In our
opinion, all adjustments (consisting only of normal recurring adjustments) which
are necessary to provide a fair presentation of operating results for the
interim period presented have been made. The results of operations for the
periods presented are not necessarily indicative of the results to be expected
for the year.
Interim
financial data presented herein are unaudited. The unaudited interim financial
information presented herein has been prepared by the Company in accordance with
the policies in its audited financial statements for the period ended June 30,
2007 and should be read in conjunction with the notes thereto.
The
accompanying statements of operations and cash flows reflect the six-month and
three-month period ended December 31, 2007. The comparative figures for the
three-month and six-month periods ended December 31, 2006 have been included in
the accompanying statements of operations and cash flows for comparison on an
unaudited basis.
Recent Accounting
Pronouncements
In September 2006, FASB issued
Statement 157, Fair Value Measurements (“SFAS 157”). This statement defines fair
value and establishes a framework for measuring fair value in generally accepted
accounting principles (GAAP).
More precisely, this statement sets
forth a standard definition of fair value as it applies to assets or
liabilities, the principal market (or most advantageous market) for determining
fair value (price), the market participants, inputs and the application of the
derived fair value to those assets and liabilities. The effective date of this
pronouncement is for all full fiscal and interim periods beginning after
November 15, 2007. The Company is currently evaluating the impact of
adopting SFAS 157 on its financial statements and related
disclosures.
In February 2007, the FASB issued SFAS
No. 159, The Fair Value Option for Financial Assets and Financial Liabilities
(“SFAS 159”) which permit entities to choose to measure many financial
instruments and certain other items at fair value that are not currently
required to be measured at fair value. SFAS 159 is effective for fiscal years
beginning after November 15, 2007. The Company is currently evaluating the
impact of adopting SFAS 159 on its financial position, cash flows, and results
of operations.
In
July 2006, the FASB issued FASB Interpretation No. 48, Accounting for
Uncertainty in Income Taxes, an Interpretation of FASB Statement No. 109 ,
or FIN No. 48. FIN No. 48 provides guidance on the financial statement
recognition and measurement of a tax position taken or expected to be taken in a
tax return. FIN 48 requires that we recognize in the financial statements the
benefit of a tax position if that position will more likely than not be
sustained on audit, based on the technical merits of the position. FIN 48 also
provides guidance on derecognition, classification, interest and penalties,
accounting in interim periods, disclosures, and transition provisions. FIN
No. 48 is effective for fiscal years beginning after December 15,
2006. Effective January 1, 2007, the Company has adopted FIN
No. 48. This interpretation did not have a significant impact on
the financial statements due to the Company’s significant net operating loss
carryforward.
Reclassification
Certain
prior period amounts have been reclassified to conform to the current period’s
presentation. The
reclassification did not have an effect on total
revenues, total costs and expenses, loss from operations, net loss and net loss
per share.
Note
2: Related Party
During
September, 2007, an affiliate loaned the Company $88,056 in the form of an
unsecured note carrying 8% annual interest which matured on December 15,
2007. It was agreed that if the note is not paid on the due date, the
entire principal and accrued interest shall continue to draw interest at the
rate of 8%. In January 2008, the principal and accrued interests were
paid in full.
During
July, 2007, a director loaned the Company $36,000 in the form of an unsecured
demand note carrying 8% annual interest. In January 2008, the
principal and accrued interests were paid in full.
Note
3: Inventory
Inventory
consists of raw materials and finished inventory, which have been accounted for
at lower of cost or market.