UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934.
For the quarterly period ended September 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 814-00717
UNITED ECOENERGY CORP.
(Exact Name of Registrant as Specified in Its Charter)
NEVADA 84-1517723
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
409 Brevard Avenue, Cocoa, FL 32922
(Address of Principal Executive Offices) (Zip Code)
(321)-433-1136
(Registrants Telephone Number, Including Area Code)
Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 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 by check mark whether the Registrant is an accelerated filer
(as defined by Rule 12b-2 of the Act). Yes [ ] No [X ]
Indicate by check mark whether the registrant is a shell company (as
defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [X ]
The number of shares of the Registrants Common Stock, $0.001 par
value, outstanding as of November 1, 2006, was 28,781,639 shares.
TABLE OF CONTENTS
PAGE NO.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Balance Sheets as of September 30, 2006 and December 31, 2005 F-1
Schedule of Investments as of September 30, 2006 F-2
Statements of Operations for the three-month and nine-month
periods ended September 30, 2006 and 2005 F-3
Statements of Cash Flows for the nine-month periods ended
September 30, 2006 and 2005 F-4
Notes to Financial Statements F-5
Item 2. Management Discussion and Analysis of Financial Condition
and Results of Operations 3
Item 3. Quantitative and Qualitative Disclosures about Market Risk 9
Item 4. Controls and Procedures 9
PART II. OTHER INFORMATION 10
Item 1. Legal Proceedings 10
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 10
Item 3. Defaults Upon Senior Securities 11
Item 4. Submission of Matters to a Vote of Security Holders 11
Item 5. Other Information 11
Item 6. Exhibits and Reports on Form 8-K 12
Signatures 12
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
UNITED ECOENERGY CORP.
BALANCE SHEETS
September 30, December 31,
2006 2005
(unaudited)
--------------- -----------------
Assets:
Cash and cash equivalents $ 40,097 $ -
Due from affiliate 10,900 -
Rent deposit 972 -
------------ ------------
Total Current Assets 51,969 -
Other Assets:
Investments in Portfolio Companies - -
------------ ------------
Total Assets $ 51,969 -
============ ============
Liabilities and Stockholders
Equity (Deficit)
Due to affiliate $ 67,500 $ -
Due to officer/stockholder - 21,880
------------ ------------
Total Short term Liabilities 67,500 21,880
Long term Liabilities: - -
------------ -------------
Total Liabilities 67,500 21,880
------------ -------------
Commitments and contingencies
Stockholders Equity (Deficit):
Common stock, par value $0.001
authorized 150,000,000 shares,
issued 28,781,639 shares at
September 30, 2006 and 28,468,900 at
December 31, 2005 28,782 285
Convertible preferred stock, par value
$0.001, authorized 5,000,000 shares,
issued 1,000,000 shares and 0 shares at
September 30, 2006 and December 31, 2005,
respectively 1,000 -
Additional paid-in capital 126,742 3,924
Accumulated deficit (172,055) (26,089)
------------ ------------
Total Stockholders Equity (Deficit): (15,531) (21,880)
------------ ------------
Total Liabilities and
Stockholders Equity (Deficit): $ 51,969 $ -
============ ============
Net Asset value per common share $ (0.00005) $ (0.00077)
The accompanying notes are an integral part of these financial statements.
F-1
UNITED ECOENERGY CORP.
SCHEDULE OF INVESTMENTS (unaudited)
September 30, 2006
Portfolio Industry Amount Cost Fair % of
Investments or Number Value Net assets
------------------- --------- ----------- -------- --------- -----------
-- -- -- $ - $ - -
-------- --------- -----------
Total $ - $ - -
======== ========= ===========
The accompanying notes are an integral part of these financial statements.
F-2
UNITED ECOENERGY CORP.
STATEMENTS OF OPERATIONS
For the three and nine months ended
September 30, 2006 September 30, 2005
(unaudited) (unaudited)
3 months 9 months 3 months 9 months
---------- ---------- ---------- ----------
Investment income:
Interest income $ - $ - $ - $ -
Dividend income - - - -
Other income - - - -
---------- ---------- ---------- ----------
Total income - - - -
Operating expenses:
Investment advisory fees
Base fee - - - -
Incentive fee - - - -
Capital gains fee - - - -
---------- ---------- ---------- ----------
Total investment
advisory fees - - - -
General & administrative:
Consulting expenses 52,500 130,620 - 1,146
Rent expense 2,700 4,950 - -
Professional fees 2,334 3,834 - -
Other expenses 4,178 6,562 5,062 7,000
---------- ---------- ---------- ----------
Total operating costs 61,712 145,966 5 062 8,146
---------- ---------- ---------- ----------
Net investment loss (61,712) (145,966) (5,062) (8,146)
---------- ---------- ---------- ----------
Net realized income from
disposal of investments - - - -
Net unrealized appreciation
in investments - - - -
---------- ---------- ---------- ----------
Net decrease in stockholders?
equity resulting from
operations $ (61,712) $(145,966) $ (5,062) $ (8,146)
========== =========== ========== =========
Basic and diluted net decrease
in stockholders equity per
common share resulting from
operations $ (0.0021) $ (0.0051) $ (0.0001) $ (0.0013)
========== =========== =========== =========
Weighted number of common shares
outstanding-basic 28,721,488 28,555,463 50,893,000 60,055,900
========== =========== =========== =========
Weighted number of common shares
outstanding-diluted 43,721,881 41,027,991 50,893,000 60,055,900
========== =========== =========== =========
The accompanying notes are an integral part of these financial statements.
F-3
UNITED ECO ENERGY CORP.
STATEMENT OF CASH FLOWS
FOR THE NINE MONTHS ENDED
SEPTEMBER 30, 2006 and 2005
(unaudited)
For the nine months ended
September 30, 2006 September 30, 2005
Unaudited) (unaudited)
----------------- ----------------
Cash flows from operating activities:
Net decrease in stockholders? equity
from operations $ (145,966) $ (8,166)
Adjustments to reconcile net decrease
in stockholders? equity from
operations to net cash provided
(used) in operating activities:
Decrease in amounts due
to officer/stockholder (21,880) -
Decrease in deposits (972) -
Increase in amounts due to affiliate 67,500 8,872
Decrease) in amounts due
from affiliate (10,900) -
------------ -----------
Net cash provided (used)
in operating activities (112,218) 726
Cash flow from financing activities:
Net proceeds from issuance of preferred
stock 60,000 -
Net proceeds from issuance of common
stock 92,315 -
Repurchase of common stock - (726)
------------ -----------
Net cash provided (used) by financing
activities 152,315 (726)
------------ -----------
Net increase in cash 40,097 -
Cash, beginning of period - -
------------ -----------
Cash, end of period $ 40,097 $ -
============ ===========
The accompanying notes are an integral part of these financial statements.
F-4
UNITED ECOENERGY CORP.
NOTES TO FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2006
(unaudited)
Note 1. Organization and Interim Financial Statements
United EcoEnergy Corp. (United EcoEnergy or the Company), a Nevada corporation,
was organized on February 28, 1997 and is a closed-end investment company that
filed an election to be treated as a business development company (BDC) under
the Investment Company Act of 1940, (the 1940 Act) in February 2006. Prior to
the election to be treated as a BDC, the Company ad been a development stage
company and had not engaged in any operating business activity. As a result of
the election to be treated as a BDC under the 1940 Act and the commencement of
its operations as a BDC, the Company is no longer a shell company and filed the
necessary information regarding the change of its status in its Form 10-K
report for the year ended December 31, 2005.
As a BDC, the company is subject to the filing requirements of the Securities
Exchange Act of 1934 and has elected to be subject to Sections 55 to 65 of
the 1940 Act, which apply only to BDCs. The Company is not a registered
investment company under the 1940 Act, however, and is not required to file
the semi-annual and annual reports required to be filed by registered
investment companies under Section 30 of the 1940 Act. As a BDC, the
Company also is not eligible to file its periodic reports under the 1934 Act
as a small business issuer, and therefore files its periodic reports on
applicable Forms 10-Q and 10-K, rather than Forms 10-KSB or 10-QSB. As a BDC,
the Company also is subject to the normal financial reporting
requirements of Regulation S-X issued by the SEC, but is not subject
to Section 6 of Regulation S-X, which provides specific rules for financial
reporting of registered investment companies.
The Company intends to focus primarily on investments in
alternative energy companies, including bio-fuel companies, and
expects to invest, under normal circumstances, at least 80 percent of its
net assets (including the amount of any borrowings for investment purposes)
in these companies. At September 30, 2006, the Company had no net assets
invested in alternative energy companies but has signed letters of intent to
acquire portfolio investments, subject to funding. The Company expects to
concentrate on making investments in alternative energy companies having
annual revenues of less than $250.0 million and in transaction sizes of
less than $55.0 million. In most cases, these companies will be privately
held or have thinly traded public equity.
The accompanying financial statements are un-audited and have been prepared in
accordance with accounting principles generally accepted in the United States
of America for interim financial information and the instructions to Form
10-Q, including Regulation S-X. Accordingly, certain information and footnote
disclosures normally included in audited financial statements prepared in
accordance with accounting principles generally accepted in the United States
of America have been omitted pursuant to such rules and regulations. These
financial statements should be read in conjunction with the audited financial
statements that were included in the Form 10-K filed by the Company for the
year ended December 31, 2005. As a BDC, and therefore as a non-registered
investment company, the Company is subject to the normal financial reporting
F-5
UNITED ECOENERGY CORP.
NOTES TO FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2006
(unaudited)
Note 1. Organization and Interim Financial Statements (continued)
rules of Regulation S-X, as adopted by the SEC, in accordance with Regulation
S-X 5.01. It is specifically not subject to Section 6 of Regulation S-X,
governing the financial reporting of registered investment companies. The
accompanying financial reports have been prepared in accordance with the
requirements of Regulation S-X, as explained and interpreted in the Audit and
Accounting Guide for Investment Companies of the American Institute of
Certified Public Accountants (May 1, 2006)(the Audit Guide).
Operating results for the interim periods presented are not necessarily
indicative of the results to be expected for a full year. Information
presented for the periods ended September 30, 2005 has been restated to
conform to the reporting requirements for a business development company for
comparison purposes, although the Company did not elect business development
company status until March, 2006. Management considers this restatement to be
a change in classification and not a change in accounting. Retrospective
application has been given to prior periods in accordance with SFAS No. 154..
In March, 2006, the Company implemented a 100 for 1 forward split of its
common shares. The stock split was given retroactive treatment in the
accompanying financial statements.
On June 30, 2006, the Company accepted subscriptions for 177,600
common shares under a Regulation E, 1-E exemption offering, for a
total of $44,400. Of the total amount subscribed, $34,650 was
received on June 30, 2006 and the balance of $9,750 was reported
as a subscription receivable at June 30, 2006. This balance was
collected during July, 2006. On August 13, 2006, the Company accepted
additional subscriptions for 40,600 common shares under the 1-E
offering, for a total of $10,150, all of which was received by check or wire
transfer for the subscribers. On August 22, 2006, the Company
accepted subscriptions for 94,539 common shares under the 1-E offering, for
a total of $37,815, which was received by wire transfer. As a result,
28,781,639 common shares were outstanding as of September 30, 2006.
Note 2. Significant Accounting Policies
The preparation of financial statements in conformity with Generally
Accepted Accounting Principles (GAAP) requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities at
the date of the financial statements and the reported amounts of income and
expenses during the reported period. Changes in the economic environment,
financial markets and any other parameters used in determining these
estimates could cause actual results to differ.
The following are significant accounting policies consistently applied by the
Company and are based on Chapter 7 of the Audit Guide, as modified by
Appendix A:
F-6
UNITED ECOENERGY CORP.
NOTES TO FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2006
(unaudited)
Note 2. Significant Accounting Policies (continued)
Investments:
(a) Security transactions are recorded on a trade-date basis.
Investments:
(a) Security transactions are recorded on a trade-date basis.
(b) Valuation:
(1) Investments for which market quotations are readily available are valued at
such market quotations.
(2) Short-term investments which mature in 60 days or less, such as U.S.
Treasury bills, are valued at amortized cost, which approximates market value.
The amortized cost method involves valuing a security at its cost on the date
of purchase and thereafter assuming a constant amortization to maturity of the
difference between the principal amount due at maturity and cost. Short-term
securities which mature in more than 60 days are valued at current market
quotations by an independent pricing service or at the mean between the bid and
ask prices obtained from at least two brokers or dealers (if available, or
otherwise by a principal market maker or a primary market dealer). Investments
in money market mutual funds are valued at their net asset value as of the
close of business on the day of valuation.
(3) It is expected that most of the investments in the Company?s portfolio
will not have readily available market values. Debt and equity securities
whose market prices are not readily available are valued at fair value, with
the assistance of an independent valuation service, using a valuation policy
and a consistently applied valuation process which is under the
direction of our board of directors.
The factors that may be taken into account in fairly valuing investments
include, as relevant, the portfolio company ability to make payments, its
estimated earnings and projected discounted cash flows, the nature and
realizable value of any collateral, the financial environment in which the
portfolio company operates, comparisons to securities of similar publicly
traded companies and other relevant factors. Due to the inherent uncertainty
of determining the fair value of investments that do not have a readily
available market value, the fair value of these investments may differ
significantly from the values that would have been used had a ready market
existed for such investments, and any such differences could be material.
As part of the fair valuation process, the Audit Committee of the Company
will review the preliminary evaluations prepared by the Investment Advisor
engaged by the Board of Directors, as well as managements valuation
recommendations and the recommendations of the Investment Committee.
F-7
UNITED ECOENERGY CORP.
NOTES TO FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2006
(unaudited)
Note 2. Significant Accounting Policies (continued)
Management and the Investment Advisor will respond to the preliminary
evaluation to reflect comments provided by the Audit Committee. The Audit
Committee will review the final valuation report and managements valuation
recommendations and make a recommendation to the Board of Directors based
on its analysis of the methodologies employed and the various valuation
factors as well as factors that the Investment Advisor and management may
not have included in their evaluation processes. The Board of Directors
then will evaluate the Audit Committee recommendations and undertake a
similar analysis to determine the fair value of each investment in
the portfolio in good faith.
(c) Realized gains or losses on the sale of investments are calculated using
the specific identification method.
(d) Interest income, adjusted for amortization of premium and accretion of
discount, is recorded on an accrual basis.
(e) Dividend income is recorded on the ex-dividend date.
(f) Loan origination, facility, commitment, consent and other advance fees
received by us on loan agreements or other investments are accreted into
income over the term of the loan.
Federal and State Income Taxes:
The Company has not elected to be treated as, and is not, a regulated
investment company and does not presently intend to comply with the
requirements of the Internal Revenue Code of 1986 (the Code), applicable
to regulated investment companies. A regulated investment company is
required to distribute at least 90% of its investment company taxable
income to shareholders, which the Company does not expect to do for the
foreseeable future. Therefore, the Company must make appropriate provision
for income taxes in accordance with SFAS 109, Accounting for Income Taxes,
using the liability method, which requires the recognition of deferred assets
and liabilities for the expected future tax consequences of temporary
differences between carry amounts and tax basis of assets and
liabilities. At September 30, 2006, the Company has approximately $175,055
of net operating loss carry-forwards available to affect future taxable
income and has established a valuation allowance equal to the tax benefit of
the net operating loss carry-forwards as realization of the asset is not
assured. The net operating loss carry-forwards may be limited under the
change of control provisions of the Internal revenue Code, Section 382.
Dividends and Distributions:
Dividends and distributions to common stockholders will be recorded on the
ex-dividend date. The amount, if any, to be paid as a dividend will be
F-8
AMERICAN DEVELOPMENT & INVESTMENT FUND, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30 2006
(unaudited)
Note 2. Significant Accounting Policies (continued)
approved by the board of directors each quarter and will be generally based
upon managements estimates of our earnings for the quarter and our investment
needs. Net realized capital gains, if any, will be reviewed at least
annually as part of any distribution determination.
Consolidation:
As an investment company, the Company will only consolidate subsidiaries which
are also investment companies. At September 30, 2006, the Company did not have
any consolidated subsidiaries.
Recent Accounting Pronouncements
In July, 2006, the Financial Accounting Standards Board issued FASB
Interpretation (FIN) No. 48, Accounting for Uncertainty in Income Taxes-
An Interpretation of FASB Statement No, 109. (FIN 48). Fin 48 clarifies
the accounting for uncertainty in income taxes recognized in an
enterprise?s financial statements in accordance with FASB Statement No.
109-Accounting for Income Taxes. FIN 48 also prescribes a recognition
threshold and measurement attribute for the financial statement
recognition and measurement of a tax position taken or expected to be taken
in a tax return. FIN 48 also provides guidance on de-recognition,
classification, interest and penalties, accounting in interim periods,
disclosure and transition. The provisions of FIN 48 are effective for fiscal
years beginning after December 15, 2006. We will adopt FIN 48 in the first
quarter of 2007. We do not believe the effect of adopting FIN 48 will have a
material impact on our financial statements.
Note 3. Portfolio Investments
As required by the 1940 Act, we will classify our investments by level of
control. As defined in the 1940 Act, control investments are those where there
is the ability or power to exercise a controlling influence over the management
or policies of a company. Control is generally viewed to exist when a
company or individual owns 25% or more of the voting securities of an investee
company. Affiliated investments and affiliated companies are defined by a
lesser degree of influence and are deemed to exist through ownership of an
amount greater than 5% but less than 25% of the voting securities of the
investee company. The Company currently has no controlled or affiliated
investments.
Note 4. Related Party Agreements and Transaction
Investment Advisory Agreement
The Company has entered into an Investment Advisory Agreement
with United EcoEnergy Advisors, LLC (the Investment Advisor)
under which the Investment Advisor, subject to the overall
F-9
UNITED ECOENERGY CORP.
NOTES TO FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30 2006
(unaudited)
Note 4. Related Party Agreements and Transactions (Continued)
supervision of the board of directors of the Company, will manage
the day-to-day operations of, and provide investment advisory
services to, the Company. United EcoEnergy Advisors, LLC is
owned equally by William K. Mackey, Patrick Donelan and Adam
Mayblum. Mr. Mayblum and Mr. Donelan are also the equal owners
of Enterprise Partners, LLC, our majority Common Stockholder and
the holder of our Series A Convertible Preferred shares at the end of the
quarter. Mr. Mayblum also serves as a director of the Company and Mr.
Mackey is a director and our Chief Executive Officer.
For providing these services the Investment Advisor will receive
a fee from the Company, consisting of two components--a base
management fee and an incentive fee. The base management fee
will be calculated at an annual rate of 2.00% on the gross
assets of the Company (including amounts borrowed). The base management
fee is payable quarterly in arrears based on the average value
of the Companys gross assets at the end of the two most
recently completed calendar quarters and appropriately adjusted
for any share issuances or repurchases during the current
calendar quarter. Base management fees for any partial month or
quarter will be appropriately pro rated.
Under the terms of the original Agreement, the Base Management Fee would
not be lower than $25,000 per month for the first two years of
the term of the Agreement; however, the Investment Advisor agreed with
the Company to eliminate the minimum fee, and the Company amended the
Agreement accordingly. The Amended Investment Advisory Agreement was
submitted to The shareholders of the Company for approval at the Annual
Meeting of shareholders held on September 30, 2006. The common shareholders,
other than Enterprise Partners which abstained, unanimously approved the
Amended Investment Advisory Agreement and the appointment of United
EcoEnergy Advisers, LLC as the investment adviser for the Company at the
Annual Meeting
No investment advisory fees have been accrued for the quarter
ended September 30, 2006.
On April 1, 2006, the Company entered into a Consulting Agreement with
William Mackey, the President and CEO, to cover his services until such
time as the Company completes its first portfolio investment in the
alternative energy and appoints a permanent CEO. Under the terms of the
Consulting Agreement, Mr. Mackey is entitled to an initial signing amount of
$22,500 and thereafter to a monthly consulting fee of $7,500, payable on the
15th of each month. These amounts are accrued as Amounts Due to
Officer. On April 10, 2006, Enterprise Partners advanced the $22,500 for the
sign-on Bonus to Mr. Mackey, and that amount has been reflected as an Amount
Due to Affiliate of $22,500 on the accompanying financial statements. As of
September 30, 2006, Enterprise Partners paid the additional accrued amounts
F-10
UNITED ECOENERGY CORP.
NOTES TO FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2006
(unaudited)
due to Mr. Mackey and the total accrued balance at September 30, 2006 of
$ 67,500 are reflected as accrued amounts Due to affiliate. The amounts due
are non-interest bearing and payable on demand. Amounts due from affiliate
totaling $10,900 at September 30, 2006 represent short-term, non-interest
bearing advances made to a company with common ownership and management.
Managerial Assistance
As a business development company, we will offer, and provide upon request,
managerial assistance to certain of our portfolio companies. This assistance
could involve monitoring the operations of our portfolio companies,
participating in board and management meetings, consulting with and advising
officers of portfolio companies and providing other organizational and
financial guidance. The Company expects to receive fee income for providing
these services.
Note 5. Stockholders Equity.
The following table reflects the changes in the stockholders equity
(deficit) of the Company from December 31, 2005 to September 30, 2006:
Additional
Shares Par Value Paid-in Accumulated
Common Preferred Common Preferred Capital Deficit Total
--------- --------- --------- --------- -------- -------- --------
Balance at
December 31, 2005 284,689 - $ 285 $ - $ 3,924 $(26,089) $(21,880)
=========== ========= ========= ========= ======== ========= ========
Stock split
(100 for 1) 28,468,900 - 28,184 - (28,184) - -
Issuance of
convertible
preferred stock - 1,000,000 - 1,000 59,000 - 60,000
Issuance of common 177,600 - 178 - 44,222 - 44,400
Issuance of common 40,600 - 41 - 10,059 - 10,100
Issuance of common 94,539 - 94 - 37,721 - 37,815
Net loss - - - - - (145,966) (145,966)
----------- --------- --------- --------- -------- --------- ---------
Balance at
September 30 2006 28,781,639 1,000,000 $ 28,782 $ 1,000 $126,742 $(172,055) $(15,531)
The Company completed an exempt offering of common shares under Regulation
E, using Form 1-E, for a total of 218,200 common shares and $54,550, at a price
of $0.25 per share. A total of 177,600 shares were subscribed for and accepted
as of June 30, 2006, the common shares were issued as of that date, and all
but $9,750 of the total subscription was received as of June 30, 2006. The
remaining $9,750 was received by the Company in July, 2006. Subsequently, the
Company accepted subscriptions for 40,600 common shares on July 13,2006 and
received subscription proceeds of $10,150, all of which was received. In
August, 2006, the Company undertook a second offering of common shares under
the 1-E Notice, receiving subscriptions for 94,539 common shares at $0.40 per
share, for a total of $37,815.
As a result of these offerings, there were 28,781,639 common shares issued as
of September 30, 2006. F-11
UNITED ECOENERGY CORP.
NOTES TO FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2006
(unaudited)
Note 5. Stockholders? Equity (continued)
The Series A Convertible Preferred Stock is $0.001 par value stock, and may be
converted into common stock based on a formula under which conversion is equal
to 1 divided by the 30 day trailing average stock price of the common shares at
the time of the conversion election, but not more than 15 common shares for
each preferred share converted, or a maximum of 15 million common shares. No
conversion may occur until after one year from the date of issue. The Company
may redeem the Series A Convertible Preferred Stock in whole or in part
beginning 181 days after issue at $0.75 per share, and after 365 days from
issue at $0.95 per share. The Series A Convertible Preferred Stock
automatically converts into common stock following the second anniversary of
issue, at the formula price if not redeemed prior to that date.
In August, 2006, Enterprise Partners, LLC, our majority common shareholder and
the sole holder of our Series A Convertible Preferred Stock, transferred
25,370,600 of the common shares held by it, and also conveyed 731,519 of the
Series A Convertible Preferred shares held by it to its debenture holders (23
Persons) As a result of these transactions, Enterprise Partners, LLC holds
1,567,700 shares of our common stock, representing approximately 5.47 percent
Of our undiluted common stock outstanding, and 268,481 shares of our Series A
Convertible Preferred Stock, representing 26.8 percent of the 1,000,000 shares
outstanding, and convertible into a maximum of 4,020,000 shares of our common
stock. Therefore, Enterprise Partners, LLC now holds a total of approximately
12.8 percent of our common stock on a fully diluted basis, giving effect to the
maximum conversion of the Series A Convertible Preferred Stock held by it.
Note 6 FINANCIAL HIGHLIGHTS
Financial Highlights
The following is a schedule of financial highlights for the nine months ended
September 30, 2006 and for the twelve months ended December 31, 2005:
CHANGES IN NET ASSET VALUE
For the For the
nine months twelve months
ended ended
September 30, 2006 December 31, 2005
---------------- -----------------
Net asset value at
beginning of period (1) $ (0.00077) $ (0.00021)
Proceeds from preferred stock 0.00209 -
Proceeds from common stock 0.00321 -
Net investment income (0.00506) (0.00056)
Net unrealized appreciation - -
------------- --------------
Net asset value, end of period (2) $ (0.00053) $ (0.00077)
F-12
UNITED ECOENERGY CORP.
NOTES TO FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2006
(unaudited)
(1) Financial highlights as of September 30, 2006 and December 31, 2005 are
based on 28,781,639 and 28,469,900 common shares outstanding, respectively,
giving effect to the 100 for 1 forward split. On a fully diluted basis, there
would be 43,781,639 shares outstanding as of September 30, 2006, based on
conversion of the Series A Convertible Preferred Stock into 15 million common
shares, the maximum conversion possible under the terms of the Series A
Preferred Stock, and treating those shares as outstanding as of the date of
their issuance at the end of February, 2006.
(2) Total return based on net asset value is based upon the change in net
asset value per share between the opening and ending net asset values per
share in each period. The total return is not annualized.
F-13
Item 2. Management Discussion and Analysis of Financial Condition and Results
of Operations.
This quarterly report on Form 10-Q contains forward-looking statements that
involve risks and uncertainties, as well as assumptions that, if they never
materialize or prove incorrect, could cause the results of the Company to
differ materially from those expressed or implied by such forward-looking
statements. All statements other than statements of historical fact are
statements that could be deemed forward-looking statements, including any
projections of revenue, expenses, earnings or losses from operations or
investments, or other financial items; any statements of the plans, strategies
and objectives of management for future operations; any statements of
expectation or belief; and any statements of assumptions underlying any of
the foregoing. The risks, uncertainties and assumptions referred to above
include risks that are described from time to time in our Securities and
Exchange Commission, or the SEC, reports filed before this report.
The forward-looking statements included in this quarterly report
represent our estimates as of the date of this quarterly report. We
specifically disclaim any obligation to update these forward-looking
statements in the future. Some of the statements in this quarterly report
constitute forward-looking statements, which relate to future events or our
future performance or financial condition. Such forward-looking statements
contained in this quarterly report involve risks and uncertainties.
We use words such as anticipates, believes, expects, future, intends and
similar expressions to identify forward-looking statements. Our actual results
could differ materially from those projected in the forward-looking statements
for any reason. We caution you that forward-looking statements of this type
are subject to uncertainties and risks, many of which cannot be predicted or
quantified.
The following analysis of our financial condition and results of operations
should be read in conjunction with our financial statements and the related
notes thereto contained elsewhere in this Form 10-Q, as well as the risk
factors included in our Form 10-K filed for the year ended December 31, 2005.
Overview
The Company was incorporated under the Nevada General Corporation Law in
February 1997 as MNS Eagle Equity Group III, Inc., and was a development stage
company through the end of 2005, and until the Company changed its business
model with the election to be treated as a business development company on
February 28, 2006. On February 21, 2006, the Company changed its corporate
name to United EcoEnergy Corp., to reflect its new business model and plan.
On February 21, 2006, our then sole shareholder sold 284,689 pre-split common
shares, representing 100 percent of the pre-split outstanding stock of the
Company at the time, resulting in a change of control of the Company. Of these
shares, 269,689 common shares, representing 94.7 percent of the outstanding
shares, were purchased by Enterprise Partners, LLC, 11,000 shares were
purchased by Peachtree Consultants, LLC, and 4,000 shares were purchased by
Fairmont East Finance, Ltd. As a result of this change of control, our then
sole director and president, Stephen Siedow, resigned effective February 22,
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2006 after appointing William K. Mackey, William L. Sklar, Adam Mayblum, Alec
Hoke and John Paul DeVito as the directors of the Company, to serve until the
next annual meeting of shareholders of the Company. The name of the Company
was changed from MNS Eagle Equity Group III, Inc. to United EcoEnergy Corp.
by the filing of an amendment to the Articles of Incorporation with the
State of Nevada on February 21, 2006.
On February 27, 2006, the Company filed a Certificate of Designations for
Series A Convertible Preferred Stock with the Nevada Secretary of State and the
Board of Directors authorized the issuance of 1 million shares of Series A
Convertible Preferred Stock to Enterprise Partners, LLC, our majority
shareholder, in exchange for the cancellation of $60,000 in loans for funds
advanced to the Company by Enterprise Partners LLC to pay off debts of the
Company and for initial working capital. The Series A Convertible Preferred
Stock is $0.001 par value stock, and may be converted into common stock based
on a formula under which conversion is equal to 1 divided by the 30 day
trailing average stock price of the common shares at the time of the
conversion election, but not more than 15 common shares for each preferred
share converted, or a maximum of 15 million common shares. No conversion may
occur until after one year from the date of issue. The Company may redeem the
Series A Convertible Preferred Stock in whole or in part beginning 181 days
after issue at $0.75 per share, and after 365 days from issue at $0.95 per
share. The Series A Convertible Preferred Stock automatically converts into
common stock following the second anniversary of issue, at the formula price
if not redeemed prior to that date. The conversion of the Series A
Convertible Preferred into Common stock of the Company is illustrated by the
following table:
Series A Convertible
Preferred Shares
Per Share Number of Maximum Shares
Common Stock Conversion ratio Common Shares Converted Value of
Price (1/per share price) on conversion of Common Stock Preferred
------------------ ---------------- --------------- --------------- ---------
------
0.0001 10,000.00 10,000,000,000 15,000,000 $ 1,500
0.0003 3,333.33 3,333,333,333 15,000,000 4,500
0.0007 1,428.57 1,428,571,429 15,000,000 10,500
0.0014 714.29 714,285,714 15,000,000 21,000
0.0021 476.19 476,190,476 15,000,000 31,500
0.0042 238.10 238,095,238 15,000,000 63,000
0.0050 200.00 200,000,000 15,000,000 75,000
0.0075 133.33 133,333,333 15,000,000 112,500
0.0100 100.00 100,000,000 15,000,000 150,000
0.1000 10.00 10,000,000 10,000,000 1,000,000
0.5000 2.00 2,000,000 2,000,000 1,000,000
0.7500 1.33 1,333,333 1,333,333 1,000,000
1.0000 1.00 1,000,000 1,000,000 1,000,000
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Currently, the Common shares of the Company do not trade on an over-the-counter
market or exchange; however, based on the total acquisition price of the Common
shares purchased from our former sole shareholder in February, 2006, the shares
were purchased for the equivalent of $0.0006 per share in an arms length
transaction. This amount was in excess of the undiluted net asset value of the
Common shares at the time. In order for a holder of the Series A Preferred
Stock to realize a conversion value in Common stock equal to the $60,000 paid
for the preferred shares, the market value of the Common stock must increase by
approximately 7 times, to $0.0042 per share, either as a result of acquisitions
or operations of the Company, or from a subsequent offering of shares by the
Company.
The Company has amended the Certificate of Designations for the Series A
Convertible Preferred Stock, as filed with the Secretary of State of Nevada,
with the consent of the original holder of the shares, Enterprise Partners,
LLC. The amendments were designed to insure that the Series A Convertible
Preferred Stock meets the requirements of a senior security, as defined in
Section 18(g) of the 1940 Act. The Amended Certificate of designations of
Series A Convertible Preferred Stock was filed as an exhibit to the Proxy
Statement filed with the SEC on Form 14A on June 2006, and both the
Amendments and the prior issuance of the Series A Convertible Preferred Stock
to Enterprise Partners, LLC was approved unanimously by our public Shareholders
at our Annual Meeting held on June 30, 2006.
Effective February 27, 2006, the Company implemented a 100 for 1 forward split
of our outstanding common shares. As a result of the forward split, there
were 28,468,900 common shares outstanding. This forward split has been
reflected retroactively on our financial statements
We have elected to be treated as a business development company under the 1940
Act. Accordingly, we are required to comply with certain regulatory
requirements. For instance, we generally have to invest at least 70% of our
total assets in qualifying assets, including securities of private or thinly
traded public U.S. companies, cash, cash equivalents, U.S. government
securities and high-quality debt investments that mature in one year or less.
We will typically invest under normal circumstances, at least 80% of net
assets in alternative energy companies.
We intend to invest in companies in the alternative energy industry, including
bio-fuel companies, most of which have relatively short or no operating
histories. These companies are and will be subject to all of the business risks
and uncertainties associated with any new business enterprise, including the
risk that these companies may not reach their investment objective and the
value of our investment in them may decline substantially or fall to zero.
As of September 30, 2006, we had not yet made any portfolio or other
investments. However, we have signed several letters of intent for such
acquisitions, subject to our obtaining funding, and we have also entered into
an investment banking arrangement with Lempert Brothers US, in New York.
Operating Activities
During the quarter ended September 30, 2006, the Company continued with the
considerable efforts it has expended in the first half of the year to carry
out its business plan as a Business Development Company. These efforts
included both business development and financing activities.
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William K. Mackey, our CEO, traveled extensively during the Quarter in
pursuit of these objectives, meeting with numerous potential venture partners
and portfolio investment companies. Mr. Mackey met with the principals of
investment partners as well as potential portfolio companies in New
York, Texas, Tennessee, Alabama, Georgia and parts of Florida during the
Quarter. These efforts resulted in either mutual understandings, non-binding
letters of intent or proposed joint ventures. Also, management explored
several potential technologies in both alternative energy and renewable
fuels arena as possible investments.
On the finance side, the Company submitted several proposals to its investment
banker, Lempert Brothers International USA. The Company also was introduced to
George O. Miles Inc. for debt side financing of potential acquisitions. The
Company initiated discussions with Access Energy for the purpose of financing
various wind projects. These talks have progressed and will continue into
the Fourth Quarter.
The Company has reviewed numerous alternative energy technologies, including
proprietary technologies of Woodland Chemical Systems, Pure Energy, Inc. and
CTI Biofuels. The Company has signed non-disclosure agreements with all of
these firms and with Emissions Technologies, Inc., in order to further explore
the technologies and consider an investment.
United has entered into a joint venture with Alternative Fuels LLC to explore
converting biomass into ethanol. The Company also has exchanged non binding
letters of intent with SafeFuels, Inc. of Houston, Texas, Imperial Recovery of
Houston, Texas, and Novis Energy of Atlanta, Georgia, with the goal of
entering into definitive investment agreements with each of these companies
during the Fourth Quarter.
Further, management continued to explore potential relationships or investments
in ethanol, bio-diesel, biomass and wind opportunities from Venezuela (Mandioca
Project), Minnesota (Gamasa Project), and Arkansas (Arkansas and Helens
Projects).
The Companys management meets with the Companys Investment Advisor each
Monday, Wednesday and Friday to review the current activities of the Company.
Management believes that recent conversations matching business development
opportunities and potential financings are moving toward several potential
investment scenarios in the Fourth Quarter.
Besides exploring traditional sources of financings with its investment banker,
management also has met with CRT LLC, Ardour Capital, Giordano Securities and
others. The Company has attended conferences such as Value Rich and obtained
various memberships in web news letters advising the Company on industry
developments. Examples of these sites would be HedgeFund.net, Renewable Energy
Weekly and North American Wind Power.
Through the end of the Third Quarter, the Company has expended over $145,000
in connection with its Business Development Company operations, and has entered
into many financing agreements, investment banking agreements and letters of
intent for acquisitions of portfolio companies.
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Critical Accounting Policies
In determining the fair value of our investments, the Audit Committee will
consider valuations from an independent valuation firm, from our Investment
Committee and from management
Results of Operations
A comparison of the current quarter results to the quarter ended September 30,
2005 is not meaningful, as we had not then made the election to be treated as a
business development company and our business model in 2005 was to locate and
merge with an operating business.
Financial Highlights
Financial highlights of the Company for the period ending September 30, 2006
are included in Footnote 6 to our Financial Statements.
Investment Activity
We have engaged Lempert Brothers US in New York to assist us in raising not
less than $10 million to enable us to continue with several pending letters
of intent and we are currently engaged in due diligence in that regard.
Long-Term Portfolio Investments
There were no portfolio investments made during the three months ended
September 30, 2006.
Investment Income
We expect to generate revenue in the form of interest income on the debt
securities that we own, dividend income on any common or preferred stock that
we own, and capital gains or losses on any debt or equity securities that we
acquire in portfolio companies and subsequently sell. Our investments, if in
the form of debt securities, will typically have a term of one to ten years
and bear interest at a fixed or floating rate. To the extent achievable, we
will seek to collateralize our investments by obtaining security interests in
our portfolio companies assets. We also may acquire minority or majority equity
interests in our portfolio companies, which may pay cash or in-kind dividends
on a recurring or otherwise negotiated basis. In addition, we may generate
revenue in other forms including commitment, origination, structuring or due
diligence fees, and possibly consultation fees. Any such fees generated in
connection with our investments will be recognized as earned. We earned no
investment income during the quarter ended September 30, 2006.
Operating Expenses
Operating expenses are broken down as follows:
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Consulting expenses $ 52,500
Rent 2,700
Audit fees 2,334
Other expenses:
Bank fees $ 55
Filing fees 350
Office supplies 188
Postage and delivery 134
Registered agent 160
Transfer agent 3,291
---------
4,178
--------
Total operating expense 61,712
The consulting expenses were paid or due to CF Consulting, LLC, pursuant to a
Consulting Agreement under which Robert Hipple serves as our CFO and Chief
Compliance Officer for a monthly fee of $5,000 ($15,000), to William Mackey,
our CEO, under his Consulting Agreement ($22,500), to Lempert Brothers
International ($10,000) and the balance to unaffiliated consultants. The rent
expense represents rent paid or due to CF Consulting, LLC for sub-leasing
office space, telephone, office equipment and related office services at the
rate of $450 per month under the same Consulting Agreement. The remaining
expenses were paid or due to non-affiliated parties, including $2,334 in
professional fees to our independent audit firm for audit services.
Net Investment Income, Net Unrealized Appreciation and Net Increase in
Stockholders Equity Resulting from Operations
Our net investment income totaled $0 for the quarter ended September 30, 2006
compared to $0 for the quarter ended September 30, 2005 and $0 for the year
ended December 31, 2005. Net unrealized appreciation totaled $0 for the quarter
ended September 30, 2006 compared to $0 for the quarter ended September 30,
2005 and $0 for the year ended December 31, 2005.
Financial Condition, Liquidity and Capital Resources
Our liquidity and capital resources were generated primarily from an advance
of $60,000 by our major shareholder, Enterprise Partners, LLC, which was later
converted into 1 million shares of Series A Convertible Preferred Stock. We
generated no cash flows from operations. We also undertook an exempt offering
of our common shares pursuant to a Form 1-E Application and Notice filed with
the SEC on September 19, 2006, and accepted subscriptions for a total of
233,000 common shares, representing $58,250 in additional working capital. In
the future, we may fund a portion of our investments through borrowings from
banks, issuances of senior securities or secondary offerings of equity,
including further exempt offerings. We may also securitize a portion of our
investments in mezzanine or senior secured loans or other assets. Our primary
use of funds will be investments in portfolio companies.
Risk Factors
In addition to the other information set forth in this report, you should
carefully consider the factors discussed in Part I, Item 1A. Risk Factors in
our Annual Report on Form 10-K for the year ended December 31, 2005, which
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could materially affect our business, financial condition or future results.
The risks described in our Annual Report on Form 10-K are not the only
risks facing our Company. Additional risks and uncertainties not currently
known to us or that we currently deem to be immaterial also may materially
adversely affect our business, financial condition and/or operating results.
Item 3. Quantitative and Qualitative Disclosures about Market Risk.
We are subject to financial market risks, including changes in interest rates,
equity price risk and some of the loans in our portfolio may have floating
rates in the future. We may hedge against interest rate fluctuations by using
standard hedging instruments such as futures, options and forward contracts
subject to the requirements of the 1940 Act. While hedging activities may
insulate us against adverse changes in interest rates, they may also limit our
ability to participate in the benefits of higher interest rates with respect
to our portfolio of investments. During the three and nine months ended
September 30, 2006 and the twelve months ended December 31, 2005, we did
not engage in any hedging activities.
Item 4. Controls and Procedures.
As of the end of the period covered by this report, the Company carried out an
evaluation, under the supervision and with the participation of our management,
including our Chief Executive Officer and Chief Financial Officer, of the
effectiveness of the design and operation of our disclosure controls and
procedures (as defined in Rule 13a-15 of the Securities Exchange Act of 1934).
Based on that evaluation, as of September 30, 2006, the Chief Executive Officer
and the Chief Financial Officer have concluded that our current disclosure
controls and procedures are effective in timely alerting them to material
information relating to the Company that is required to be disclosed by the
Company in the reports it files or submits under the Securities Exchange Act of
1934.
Internal Control Over Financial Reporting
Our management, under the supervision and with the participation of our Chief
Executive Officer and Chief Financial Officer, is responsible for establishing
and maintaining adequate internal control over financial reporting, as such
responsibility is defined in Rule 13a-15(f) of the Securities Exchange Act of
1934, and for performing an assessment of the effectiveness of internal control
of financial reporting. Internal control over financial reporting is a process
designed to provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles. Our internal control
over financial reporting includes those policies and procedures that (i)
pertain to the maintenance of records that, in reasonable detail, accurately
and fairly reflect the transactions and dispositions of the assets of the
Company; (ii) provide reasonable assurance that transactions are recorded as
necessary to permit preparation of financial statements in accordance with
generally accepted accounting principles, and that receipts and expenditures of
the company are being made only in accordance with authorizations of management
and directors of the company; and (iii) provide reasonable assurance regarding
prevention or timely detection of unauthorized acquisition, use, or disposition
of assets that could have a material effect on the financial statements.
Internal control over financial reporting cannot provide absolute assurance of
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achieving financial reporting objectives because of its inherent limitations.
Internal control over financial reporting is a process that involves human
diligence and compliance and is subject to lapses in judgment and breakdowns
resulting from human failures. Internal control over financial reporting also
can be circumvented by collusion or improper management override. Because of
such limitations, there is a risk that material misstatements may not be
prevented or detected on a timely basis by internal control over financial
reporting. However, these inherent limitations are known features of the
financial reporting process. Therefore, it is possible to design into the
process safeguards to reduce, though not eliminate, this risk.
There have been no changes in our internal controls over financial reporting
that occurred during the three months ended September 30, 2006 that have
materially affected, or are reasonably likely to materially affect, our
internal control over financial reporting.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.
The Company is not a defendant in any legal action arising out of its
activities. We are not aware of any other material pending legal proceeding,
and no such material proceedings are known to be contemplated, to which we are
a party or of which any of our property is subject.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
The Company completed an exempt offering of common shares under Regulation
E, using Form 1-E, for a total of 218,200 common shares and $54,550, at a price
of $0.25 per share. A total of 177,600 shares were subscribed for and accepted
as of June 30, 2006, the common shares were issued as of that date, and all
but $9,750 of the total subscription was received as of June 30, 2006. The
remaining $9,750 was received by the Company in July, 2006. Subsequently, the
Company accepted subscriptions for 40,600 common shares on July 13,2006 and
received subscription proceeds of $10,150, all of which was received. In
August, 2006, the Company undertook a second offering of common shares under
the 1-E Notice, receiving subscriptions for 94,539 common shares at $0.40 per
share, for a total of $37,815.
As a result of these offerings, there were 28,781,639 common shares issued as
of September 30, 2006.
The Series A Convertible Preferred Stock is $0.001 par value stock, and may be
converted into common stock based on a formula under which conversion is equal
to 1 divided by the 30 day trailing average stock price of the common shares at
the time of the conversion election, but not more than 15 common shares for
each preferred share converted, or a maximum of 15 million common shares. No
conversion may occur until after one year from the date of issue. The Company
may redeem the Series A Convertible Preferred Stock in whole or in part
beginning 181 days after issue at $0.75 per share, and after 365 days from
issue at $0.95 per share. The Series A Convertible Preferred Stock
automatically converts into common stock following the second anniversary of
issue, at the formula price if not redeemed prior to that date.
In August, 2006, Enterprise Partners, LLC, our majority common shareholder and
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the sole holder of our Series A Convertible Preferred Stock, transferred
25,370,600 of the common shares held by it, and also conveyed 731,519 of the
Series A Convertible Preferred shares held by it to its debenture holders (23
Persons) As a result of these transactions, Enterprise Partners, LLC holds
1,567,700 shares of our common stock, representing approximately 5.47 percent
Of our undiluted common stock outstanding, and 268,481 shares of our Series A
Convertible Preferred Stock, representing 26.8 percent of the 1,000,000 shares
outstanding, and convertible into a maximum of 4,020,000 shares of our common
stock. Therefore, Enterprise Partners, LLC now holds a total of approximately
12.8 percent of our common stock on a fully diluted basis, giving effect to the
maximum conversion of the Series A Convertible Preferred Stock held by it.
Item 3. Defaults Upon Senior Securities.
Not Applicable.
Item 4. Submission of Matters to a Vote of Security Holders.
On September 30, 2006, the Company held its Annual Meeting of Shareholders
pursuant to written notice and a Proxy Statement filed with the SEC on
September 19, 2006. All of the common shareholders of the Company were
Present at the meeting or submitted signed proxies prior to the meeting.
The following matters were approved by the shareholders at the Annual
Meeting:
1. Election of the following as directors of the Company until the
next Annual Meeting and until their successors are duly elected and qualified:
Adam Mayblum
William K. Mackey
Alec Hoke
John Paul DeVito
William Sklar
2. Approval of an amendment to the Articles of Incorporation to
increase the number of authorized shares of the Company par vale $0.001 common
stock from 50 million shares to 150 million shares, which amendment was then
filed with the Secretary of State for Nevada.
3. Ratification of the decision of the Audit Committee to appoint
Berman Hopkins Wright & Laham, CPAs, LLP as the independent auditors of the
Company for the fiscal year beginning January 1, 2006.
4. Ratification of the appointment of United EcoEnergy Advisors,
LLC as investment advisors to the Company and approval of the Amended
Investment Advisory Agreement.
5. Approval of the Amended Statement of Designation for the Series A
Convertible Stock of the Company, which was then filed with the Secretary of
State for the State of Nevada.
Item 5. Other Information.
Stock Option Plans
The Company presently has an approved stock option plan and an approved stock
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compensation plan, which were approved by the shareholders of the Company in
1997. No options, warrants or rights have been issued under those plans as of
the date of this report. AS a BDC with an investment advisory contract in
force which authorizes compensation based in part of capital gains of
portfolio investments, the Company is prohibited from issuing any options
under these plans to officers, directors or executives under Section 61 of
the Investment Company Act of 1940. The Company has no plans to authorize
the grant of any options under either plan and will not grant any options
under either plan in full compliance with Section 61 so long as the current
investment advisory agreement is in place.
Item 6. Exhibits
Exhibit Description of Exhibit
31.1 Certification of Chief Executive Officer Pursuant to
Rule 13a-14(a)/15d-14(a)
31.2 Certification of Chief Financial Officer Pursuant to
Rule 13a-14(a)/l5d-14(a)
32.1 Certification of Chief Executive Officer Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002, 18
U.S.C. 1350
32.2 Certification of Chief Financial Officer Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002, 18
U.S.C. 1350
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.
_/s/__William K. Mackey____ November 14, 2006
William K. Mackey
Chief Executive Officer
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