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QUARTERLY
REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
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TRANSITION
REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE
ACT
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Washington
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91-2079472
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(State
or other jurisdiction of incorporation or organization)
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(IRS
Employer Identification Number)
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PART
I
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Page
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Item
1. Financial Statements (unaudited)
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||||
Management
Statement
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Page
3
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Balance
Sheet at March 31, 2006
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Page
4
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Statements
of Operations for the three month periods
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||||
ended
March 31, 2006 and 2005
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Page
5
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Statements
of Cash Flows for the three month periods
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||||
ended
March 31, 2006 and 2005
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Page
6
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Notes
to Financial Statements
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Page
7
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Item
2. Management’s Discussion and Analysis or Plan of
Operations
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Page
10
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Item
3. Controls and Procedures
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Page
13
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Part
II
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||||
Item
6. Exhibits and Reports on Form 8-K
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Page
13
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Signatures
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Page
14
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Certifications
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Restated
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March
31, 2006
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Assets
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||||
CURRENT
ASSETS:
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||||
Cash
and cash equivalents
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$
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469,020
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Accounts
receivable - affiliates
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433,873
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|||
Accounts
receivable - trade, net of allowance for bad debts of
$37,000
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325,121
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Prepaid
expenses, deposits, and other
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270,507
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Notes
receivable
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183,688
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|||
Total
current assets
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1,682,209
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PROPERTY
AND EQUIPMENT, NET
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1,599,257
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OTHER
ASSETS:
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||||
Notes
receivable, non-current
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57,212
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|||
Goodwill
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1,543,572
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|||
Total
other assets
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1,600,784
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$
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4,882,250
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Liabilities
and Stockholders' Equity
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CURRENT
LIABILITIES:
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Accounts
payable
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611,594
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|||
Accrued
expenses
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140,302
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Total
liabilities
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751,896
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LONG-TERM
LIABILITIES
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1,125,000
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STOCKHOLDERS'
EQUITY:
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Common
stock - 100,000,000 shares, $0.001 par value, authorized;
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10,066,013
shares issued and outstanding
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10,066
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Preferred
stock - 5,000,000 shares, $0.001 par value, authorized;
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1,250
shares issued and outstanding
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1
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Additional
paid-in capital
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3,450,495
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Accumulated
deficit
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(455,208
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)
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Total
stockholders' equity
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3,005,354
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$
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4,882,250
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Restated
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|||||||
Three
Months Ended March 31,
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2006
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2005
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REVENUE:
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Franchise
fee revenues
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$
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413,349
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Other
income
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14,676
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$
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11,588
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428,025
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11,588
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COST
OF SERVICES
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6,547
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-
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|||||
GROSS
PROFIT
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421,478
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11,588
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OPERATING
EXPENSES:
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Compensation
and related taxes
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351,849
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Selling
and marketing expenses
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138,514
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Professional
expenses
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59,554
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Depreciation
and amortization
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29,314
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||||||
Rent
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82,019
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||||||
Other
expenses
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460,029
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18,349
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|||||
1,121,279
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18,349
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||||||
LOSS
FROM OPERATIONS
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(699,801
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)
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(6,761
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)
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OTHER
INCOME
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|||||||
Interest
and dividend income
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27,498
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-
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NET
LOSS
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$
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(672,303
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)
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$
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(6,761
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)
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BASIC
LOSS PER SHARE
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$
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(0.07
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)
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$
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(0.01
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)
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WEIGHTED
AVERAGE COMMON SHARES OUTSTANDING
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10,066,013
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702,280
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Restated
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Three
Months Ended March 31,
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Increase
(Decrease) in Cash
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2006
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2005
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CASH
FLOWS FROM OPERATING ACTIVITIES:
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Net
loss
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$
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(672,303
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)
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$
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(6,761
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)
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Adjustments
to reconcile net loss to net cash
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|||||||
used
by operating activities:
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Depreciation
and amortization
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29,314
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-
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Amortization
of note receivable discount
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5,043
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-
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Changes
in assets and liabilities
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-
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||||||
Accounts
receivable - trade
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31,246
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-
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Accounts
receivable affiliates
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242,228
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-
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Prepaid
expenses
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(223,293
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)
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(7,778
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)
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Accounts
payable
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124,393
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-
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|||||
Accrued
expenses
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35,302
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134
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|||||
Total
adjustments
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244,233
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(7,644
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)
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Net
cash used by operating activities
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(428,070
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)
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(14,405
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)
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CASH
FLOWS FROM INVESTING ACTIVITIES:
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Purchases
of property and equipment
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(39,319
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)
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-
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Payments
on note receivable
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37,565
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-
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Purchase
of investments
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-
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(505,000
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)
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Sale
of investments
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404,000
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Net
cash used by investing activities
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402,246
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(505,000
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)
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CASH
FLOWS FROM FINANCING ACTIVITIES:
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Sale
of preferred stock for cash
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125,000
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-
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Net
cash provided by financing activities
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125,000
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-
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NET
INCREASE (DECREASE) IN CASH
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99,176
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(519,405
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)
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CASH,
BEGINNING OF PERIOD
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369,844
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1,653,276
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CASH,
END OF PERIOD
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$
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469,020
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$
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1,133,871
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As
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||||||||||
Originally
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As
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|||||||||
March
31, 2006
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Filed
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Restated
|
Change
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|||||||
Financial
position
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||||||||||
Goodwill
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$
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-
|
$
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1,543,572
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$
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1,543,572
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||||
Total
assets
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$
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2,213,678
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$
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4,882,250
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$
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2,668,572
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Finance
obligation
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$
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-
|
$
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1,125,000
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$
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1,125,000
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Total
stockholders’ equity
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$
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1,461,782
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$
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3,005,354
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$
|
1,543,572
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/s/
Glenn Welstad
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President
and CEO
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Glenn
Welstad
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August
13, 2007
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Signature
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Title
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Printed
Name
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Date
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CFO,
Principal Financial Officer
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Brad
E. Herr
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August
13, 2007
|
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Signature
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Title
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Printed
Name
|
Date
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