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<DIV style="width:624px"><P style="line-height:13pt; margin:0px; font-size:11pt" align=center><B>UNITED STATES</B></P>
<P style="line-height:13pt; margin:0px; font-size:11pt" align=center><B>SECURITIES AND EXCHANGE COMMISSION</B></P>
<P style="line-height:13pt; margin:0px; font-size:11pt" align=center><B>Washington, D.C. 20549</B></P>
<P style="margin:0px" align=center><BR></P>
<P style="line-height:16pt; margin:0px; font-size:14pt" align=center><B>FORM 10-Q</B></P>
<P style="line-height:13pt; margin:0px; font-size:11pt">(Mark One)</P>
<P style="margin:0px"><BR></P>
<P style="line-height:13pt; margin-top:0px; margin-bottom:-17.333px; padding-left:48px; text-indent:-48px; font-size:11pt">[X] </P>
<P style="line-height:13pt; margin:0px; padding-left:48px; font-size:11pt">QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934</P>
<P style="margin:0px"><BR></P>
<P style="line-height:13pt; margin:0px; font-size:11pt" align=center><B>For the quarterly period ended June 30, 2010</B></P>
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<P style="line-height:13pt; margin-top:0px; margin-bottom:-17.333px; font-size:11pt">[ &nbsp;]</P>
<P style="line-height:13pt; margin:0px; text-indent:48px; font-size:11pt">TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT</P>
<P style="margin:0px"><BR></P>
<P style="line-height:13pt; margin:0px; font-size:11pt" align=center>For the transition period from ________________ to _______________</P>
<P style="margin:0px"><BR></P>
<P style="line-height:13pt; margin:0px; font-size:11pt" align=center><B>000-24835</B></P>
<P style="line-height:13pt; margin:0px; font-size:11pt" align=center>(Commission file number)</P>
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<P style="margin:0px" align=center>CEPHAS HOLDING CORP.</P>
<P style="line-height:13pt; margin:0px; font-size:11pt" align=center>&nbsp;(Exact name of small business issuer as specified in its charter)</P>
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<P style="line-height:13pt; margin-top:0px; margin-bottom:-17.333px; text-indent:163.867px; font-size:11pt"><B>Delaware</B></P>
<P style="line-height:13pt; margin:0px; text-indent:444.6px; font-size:11pt"><B>38-3399098</B></P>
<P style="line-height:13pt; margin-top:0px; margin-bottom:-17.333px; text-indent:114.867px; font-size:11pt">(State or other jurisdiction</P>
<P style="line-height:13pt; margin:0px; text-indent:435.467px; font-size:11pt">(IRS Employer</P>
<P style="line-height:13pt; margin-top:0px; margin-bottom:-17.333px; text-indent:95.733px; font-size:11pt">of incorporation or organization)</P>
<P style="line-height:13pt; margin:0px; text-indent:425.467px; font-size:11pt">Identification No.)</P>
<P style="margin:0px"><BR></P>
<P style="margin:0px" align=center><U>2942 North 24<SUP>th</SUP> Street Ste. 114-508 Phoenix, AZ 85016</U></P>
<P style="line-height:13pt; margin:0px; font-size:11pt" align=center>&nbsp;(Address of principal executive offices)</P>
<P style="margin:0px"><BR></P>
<P style="margin:0px; font-family:Arial" align=center>623-850-1356</P>
<P style="line-height:13pt; margin:0px; font-size:11pt" align=center>&nbsp;(Issuer's telephone number)</P>
<P style="margin:0px"><BR></P>
<P style="line-height:13pt; margin:0px; font-size:11pt" align=center><B>N/A</B></P>
<P style="line-height:13pt; margin:0px; font-size:11pt" align=center>(Former name, former address and former fiscal year, if changed since last report)</P>
<P style="margin:0px" align=center><BR></P>
<P style="line-height:13pt; margin:0px; font-size:11pt" align=justify>Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 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. &nbsp;Yes [X] &nbsp;&nbsp;No [ ]</P>
<P style="margin:0px"><BR></P>
<P style="line-height:13pt; margin:0px; font-size:11pt">Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). &nbsp;Yes [ &nbsp;&nbsp;] &nbsp;&nbsp;No [X]</P>
<P style="margin:0px"><BR></P>
<P style="line-height:normal; margin:0px; font-size:11pt">State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date: As of October 14, 2010 &nbsp;&#150;<FONT style="font-size:10pt">119,983,617 </FONT><FONT style="font-size:10pt"><B>&nbsp;&nbsp;&nbsp;</B></FONT>shares of common stock</P>
<P style="margin:0px"><BR></P>
<P style="line-height:13pt; margin:0px; font-size:11pt">Transitional Small Business Disclosure Format (check one): &nbsp;Yes [ &nbsp;&nbsp;] &nbsp;&nbsp;No [X]</P>
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<P style="line-height:13pt; margin:0px; font-size:11pt" align=center><B>CEPHAS HOLDING CORP.</B></P>
<P style="line-height:13pt; margin:0px; font-size:11pt" align=center><B>Index</B></P>
<P style="margin:0px"><BR></P>
<P style="line-height:13pt; margin:0px; text-indent:513.733px; font-size:11pt">Page</P>
<P style="line-height:13pt; margin:0px; text-indent:504px; font-size:11pt"><U>Number</U></P>
<P style="margin:0px"><BR></P>
<P style="line-height:13pt; margin-top:0px; margin-bottom:-17.333px; font-size:11pt">PART I.</P>
<P style="line-height:13pt; margin-top:0px; margin-bottom:-17.333px; text-indent:60px; font-size:11pt">FINANCIAL INFORMATION</P>
<P style="line-height:13pt; margin:0px; text-indent:524.333px; font-size:11pt">2</P>
<P style="margin:0px"><BR></P>
<P style="line-height:13pt; margin-top:0px; margin-bottom:-17.333px; font-size:11pt">Item 1.</P>
<P style="line-height:13pt; margin-top:0px; margin-bottom:-17.333px; text-indent:60px; font-size:11pt">Financial Statements</P>
<P style="line-height:13pt; margin:0px; text-indent:524.333px; font-size:11pt">2</P>
<P style="margin:0px"><BR></P>
<P style="line-height:13pt; margin:0px; text-indent:60px; font-size:11pt">Consolidated Balance Sheet as of June 30, 2010 (unaudited) and </P>
<P style="line-height:13pt; margin-top:0px; margin-bottom:-17.333px; font-size:11pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;December 31, 2009</P>
<P style="line-height:13pt; margin:0px; text-indent:524.333px; font-size:11pt">3</P>
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<P style="line-height:13pt; margin:0px; text-indent:60px; font-size:11pt">Consolidated Statements of Operations for the</P>
<P style="line-height:13pt; margin-top:0px; margin-bottom:-17.333px; text-indent:60px; font-size:11pt">six months ended June 30, 2010 &nbsp;and 2009 (unaudited)</P>
<P style="line-height:13pt; margin:0px; text-indent:524.333px; font-size:11pt">4</P>
<P style="margin:0px"><BR></P>
<P style="line-height:13pt; margin:0px; text-indent:60px; font-size:11pt">Consolidated Statements of Cash Flows for the</P>
<P style="line-height:13pt; margin-top:0px; margin-bottom:-17.333px; text-indent:60px; font-size:11pt">Six months June 30, 2010 and 2009 (unaudited)</P>
<P style="line-height:13pt; margin:0px; text-indent:524.333px; font-size:11pt">5</P>
<P style="margin:0px"><BR></P>
<P style="line-height:13pt; margin-top:0px; margin-bottom:-17.333px; text-indent:60px; font-size:11pt">Notes to Consolidated Interim Financial Statements (unaudited)</P>
<P style="line-height:13pt; margin:0px; text-indent:524.333px; font-size:11pt">6</P>
<P style="margin:0px"><BR></P>
<P style="line-height:13pt; margin-top:0px; margin-bottom:-17.333px; font-size:11pt">Item 2. </P>
<P style="line-height:13pt; margin-top:0px; margin-bottom:-17.333px; text-indent:60px; font-size:11pt">Management's Discussion and Analysis or Plan of Operation</P>
<P style="line-height:13pt; margin:0px; text-indent:520.667px; font-size:11pt">14</P>
<P style="margin:0px"><BR></P>
<P style="line-height:13pt; margin-top:0px; margin-bottom:-17.333px; font-size:11pt">Item 3. </P>
<P style="line-height:13pt; margin-top:0px; margin-bottom:-17.333px; text-indent:60px; font-size:11pt">Controls and Procedures</P>
<P style="line-height:13pt; margin:0px; text-indent:520.667px; font-size:11pt">17</P>
<P style="margin:0px"><BR></P>
<P style="line-height:13pt; margin-top:0px; margin-bottom:-17.333px; font-size:11pt">PART II.</P>
<P style="line-height:13pt; margin-top:0px; margin-bottom:-17.333px; text-indent:60px; font-size:11pt">OTHER INFORMATION</P>
<P style="line-height:13pt; margin:0px; text-indent:520.667px; font-size:11pt">17</P>
<P style="margin:0px"><BR></P>
<P style="line-height:13pt; margin-top:0px; margin-bottom:-17.333px; font-size:11pt">Item 1.</P>
<P style="line-height:13pt; margin-top:0px; margin-bottom:-17.333px; text-indent:60px; font-size:11pt">Legal Proceedings</P>
<P style="line-height:13pt; margin:0px; text-indent:520.667px; font-size:11pt">17</P>
<P style="margin:0px"><BR></P>
<P style="line-height:13pt; margin-top:0px; margin-bottom:-17.333px; font-size:11pt">Item 2.</P>
<P style="line-height:13pt; margin-top:0px; margin-bottom:-17.333px; text-indent:60px; font-size:11pt">Unregistered Sales of Equity Securities and Use of Proceeds</P>
<P style="line-height:13pt; margin:0px; text-indent:520.667px; font-size:11pt">18</P>
<P style="margin:0px"><BR></P>
<P style="line-height:13pt; margin-top:0px; margin-bottom:-17.333px; font-size:11pt">Item 3.</P>
<P style="line-height:13pt; margin-top:0px; margin-bottom:-17.333px; text-indent:60px; font-size:11pt">Defaults Upon Senior Securities</P>
<P style="line-height:13pt; margin:0px; text-indent:520.667px; font-size:11pt">18</P>
<P style="margin:0px"><BR></P>
<P style="line-height:13pt; margin-top:0px; margin-bottom:-17.333px; font-size:11pt">Item 4.</P>
<P style="line-height:13pt; margin-top:0px; margin-bottom:-17.333px; text-indent:60px; font-size:11pt">Submission of Matters to a Vote of Security Holders</P>
<P style="line-height:13pt; margin:0px; text-indent:520.667px; font-size:11pt">18</P>
<P style="margin:0px"><BR></P>
<P style="line-height:13pt; margin-top:0px; margin-bottom:-17.333px; font-size:11pt">Item 5.</P>
<P style="line-height:13pt; margin-top:0px; margin-bottom:-17.333px; text-indent:60px; font-size:11pt">Other Information</P>
<P style="line-height:13pt; margin:0px; text-indent:520.667px; font-size:11pt">18</P>
<P style="margin:0px"><BR></P>
<P style="line-height:13pt; margin-top:0px; margin-bottom:-17.333px; font-size:11pt">Item 6.</P>
<P style="line-height:13pt; margin-top:0px; margin-bottom:-17.333px; text-indent:60px; font-size:11pt">Exhibits</P>
<P style="line-height:13pt; margin:0px; text-indent:520.667px; font-size:11pt">18</P>
<P style="margin:0px"><BR></P>
<P style="line-height:13pt; margin-top:0px; margin-bottom:-17.333px; font-size:11pt">SIGNATURES</P>
<P style="line-height:13pt; margin:0px; text-indent:520.667px; font-size:11pt">18</P>
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</DIV><DIV style="width:576px"><P style="line-height:13pt; margin-top:0px; margin-bottom:-17.333px; font-size:11pt; page-break-before:always"><B>Item 1.</B></P>
<P style="line-height:13pt; margin:0px; text-indent:61.067px; font-size:11pt"><B>Financial Statements</B></P>
<P style="margin:0px"><BR></P>
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<P style="margin:0px" align=center><B>CEPHAS HOLDING CORP &amp; SUBSIDIARIES</B></P>
<P style="margin:0px" align=center><BR></P>
<P style="margin:0px" align=center><BR></P>
<P style="margin:0px" align=center><B>UNAUDITED FINANCIAL STATEMENTS</B></P>
<P style="margin:0px" align=center><BR></P>
<P style="margin:0px" align=center><BR></P>
<P style="margin:0px" align=center><B>JUNE 30, 2010</B></P>
<P style="margin:0px" align=center><BR></P>
<P style="margin:0px"><BR>
<BR></P>
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<TABLE style="font-size:10pt" cellspacing=0><TR height=0 style="font-size:0"><TD width=369.067></TD><TD width=18.6></TD><TD width=18.6></TD><TD width=18.6></TD><TD width=18.533></TD><TD width=18.533></TD><TD width=114.6></TD><TD width=122.933></TD></TR>
<TR><TD valign=bottom width=369.067><P style="margin:0px"><B>CEPHAS HOLDING CORP. AND SUBSIDIARIES</B></P>
</TD><TD valign=bottom width=18.6><P>&nbsp;</P></TD><TD valign=bottom width=18.6><P>&nbsp;</P></TD><TD valign=bottom width=18.6><P>&nbsp;</P></TD><TD valign=bottom width=18.533><P>&nbsp;</P></TD><TD valign=bottom width=18.533><P>&nbsp;</P></TD><TD valign=bottom width=114.6><P>&nbsp;</P></TD><TD valign=bottom width=122.933><P>&nbsp;</P></TD></TR>
<TR><TD valign=bottom width=369.067><P style="margin:0px"><B>CONSOLIDATED BALANCE SHEETS</B></P>
</TD><TD valign=bottom width=18.6><P>&nbsp;</P></TD><TD valign=bottom width=18.6><P>&nbsp;</P></TD><TD valign=bottom width=18.6><P>&nbsp;</P></TD><TD valign=bottom width=18.533><P>&nbsp;</P></TD><TD valign=bottom width=18.533><P>&nbsp;</P></TD><TD valign=bottom width=114.6><P>&nbsp;</P></TD><TD valign=bottom width=122.933><P>&nbsp;</P></TD></TR>
<TR><TD valign=bottom width=369.067><P>&nbsp;</P></TD><TD valign=bottom width=18.6><P>&nbsp;</P></TD><TD valign=bottom width=18.6><P>&nbsp;</P></TD><TD valign=bottom width=18.6><P>&nbsp;</P></TD><TD valign=bottom width=18.533><P>&nbsp;</P></TD><TD valign=bottom width=18.533><P>&nbsp;</P></TD><TD valign=bottom width=114.6><P style="line-height:10pt; margin:0px; font-size:8pt" align=center><B>JUNE</B></P>
</TD><TD valign=bottom width=122.933><P style="line-height:10pt; margin:0px; font-size:8pt" align=center><B>DECEMBER</B></P>
</TD></TR>
<TR><TD valign=bottom width=369.067><P>&nbsp;</P></TD><TD valign=bottom width=18.6><P>&nbsp;</P></TD><TD valign=bottom width=18.6><P>&nbsp;</P></TD><TD valign=bottom width=18.6><P>&nbsp;</P></TD><TD valign=bottom width=18.533><P>&nbsp;</P></TD><TD valign=bottom width=18.533><P>&nbsp;</P></TD><TD valign=bottom width=114.6><P style="line-height:10pt; margin:0px; font-size:8pt" align=center><B>30, 2010</B></P>
</TD><TD valign=bottom width=122.933><P style="line-height:10pt; margin:0px; font-size:8pt" align=center><B>31, 2009</B></P>
</TD></TR>
<TR><TD valign=bottom width=369.067><P>&nbsp;</P></TD><TD valign=bottom width=18.6><P>&nbsp;</P></TD><TD valign=bottom width=18.6><P>&nbsp;</P></TD><TD valign=bottom width=18.6><P>&nbsp;</P></TD><TD valign=bottom width=18.533><P>&nbsp;</P></TD><TD valign=bottom width=18.533><P>&nbsp;</P></TD><TD valign=bottom width=114.6><P style="line-height:10pt; margin:0px; font-size:8pt"><B>(UNAUDITED)</B></P>
</TD><TD valign=bottom width=122.933><P style="line-height:10pt; margin:0px; font-size:8pt" align=center><B>(AUDITED)</B></P>
</TD></TR>
<TR><TD valign=bottom width=369.067><P style="margin:0px"><B>CURRENT ASSETS:</B></P>
</TD><TD valign=bottom width=18.6><P>&nbsp;</P></TD><TD valign=bottom width=18.6><P>&nbsp;</P></TD><TD valign=bottom width=18.6><P>&nbsp;</P></TD><TD valign=bottom width=18.533><P>&nbsp;</P></TD><TD valign=bottom width=18.533><P>&nbsp;</P></TD><TD valign=bottom width=114.6><P>&nbsp;</P></TD><TD valign=bottom width=122.933><P>&nbsp;</P></TD></TR>
<TR><TD valign=bottom width=369.067><P style="margin:0px">Cash</P>
</TD><TD valign=bottom width=18.6><P>&nbsp;</P></TD><TD valign=bottom width=18.6><P>&nbsp;</P></TD><TD valign=bottom width=18.6><P>&nbsp;</P></TD><TD valign=bottom width=18.533><P>&nbsp;</P></TD><TD valign=bottom width=18.533><P>&nbsp;</P></TD><TD valign=bottom width=114.6><P style="margin:0px">&nbsp;$ &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;259 </P>
</TD><TD valign=bottom width=122.933><P style="margin:0px">&nbsp;$ &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;176 </P>
</TD></TR>
<TR><TD valign=bottom width=369.067><P style="margin:0px">Prepaid expenses</P>
</TD><TD valign=bottom width=18.6><P>&nbsp;</P></TD><TD valign=bottom width=18.6><P>&nbsp;</P></TD><TD valign=bottom width=18.6><P>&nbsp;</P></TD><TD valign=bottom width=18.533><P>&nbsp;</P></TD><TD valign=bottom width=18.533><P>&nbsp;</P></TD><TD valign=bottom width=114.6><P style="margin:0px">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;36,000 </P>
</TD><TD valign=bottom width=122.933><P style="margin:0px">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;36,000 </P>
</TD></TR>
<TR><TD valign=bottom width=369.067><P style="margin:0px">Loan receivable</P>
</TD><TD valign=bottom width=18.6><P>&nbsp;</P></TD><TD valign=bottom width=18.6><P>&nbsp;</P></TD><TD valign=bottom width=18.6><P>&nbsp;</P></TD><TD valign=bottom width=18.533><P>&nbsp;</P></TD><TD valign=bottom width=18.533><P>&nbsp;</P></TD><TD valign=bottom width=114.6><P style="margin:0px">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;90 </P>
</TD><TD valign=bottom width=122.933><P style="margin:0px">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;- &nbsp;&nbsp;</P>
</TD></TR>
<TR><TD style="border-bottom:1.333px solid #000000" valign=bottom width=369.067><P style="margin:0px">Investments</P>
</TD><TD style="border-bottom:1.333px solid #000000" valign=bottom width=18.6><P style="margin:0px; font-family:Arial">&nbsp;</P>
</TD><TD style="border-bottom:1.333px solid #000000" valign=bottom width=18.6><P style="margin:0px">&nbsp;</P>
</TD><TD style="border-bottom:1.333px solid #000000" valign=bottom width=18.6><P style="margin:0px">&nbsp;</P>
</TD><TD style="border-bottom:1.333px solid #000000" valign=bottom width=18.533><P style="margin:0px">&nbsp;</P>
</TD><TD style="border-bottom:1.333px solid #000000" valign=bottom width=18.533><P style="margin:0px">&nbsp;</P>
</TD><TD style="border-bottom:1.333px solid #000000" valign=bottom width=114.6><P style="margin:0px">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;62,000 </P>
</TD><TD style="border-bottom:1.333px solid #000000" valign=bottom width=122.933><P style="margin:0px">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;- &nbsp;&nbsp;</P>
</TD></TR>
<TR><TD valign=bottom width=369.067><P>&nbsp;</P></TD><TD valign=bottom width=18.6><P>&nbsp;</P></TD><TD valign=bottom width=18.6><P>&nbsp;</P></TD><TD valign=bottom width=18.6><P>&nbsp;</P></TD><TD valign=bottom width=18.533><P>&nbsp;</P></TD><TD valign=bottom width=18.533><P>&nbsp;</P></TD><TD valign=bottom width=114.6><P style="margin:0px">&nbsp;</P>
</TD><TD valign=bottom width=122.933><P style="margin:0px">&nbsp;</P>
</TD></TR>
<TR><TD style="border-bottom:1.333px solid #000000" valign=bottom width=369.067><P style="margin:0px"><B>TOTAL CURRENT ASSETS</B></P>
</TD><TD style="border-bottom:1.333px solid #000000" valign=bottom width=18.6><P style="margin:0px">&nbsp;</P>
</TD><TD style="border-bottom:1.333px solid #000000" valign=bottom width=18.6><P style="margin:0px">&nbsp;</P>
</TD><TD style="border-bottom:1.333px solid #000000" valign=bottom width=18.6><P style="margin:0px">&nbsp;</P>
</TD><TD style="border-bottom:1.333px solid #000000" valign=bottom width=18.533><P style="margin:0px">&nbsp;</P>
</TD><TD style="border-bottom:1.333px solid #000000" valign=bottom width=18.533><P style="margin:0px">&nbsp;</P>
</TD><TD style="border-bottom:1.333px solid #000000" valign=bottom width=114.6><P style="margin:0px">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;98,349 </P>
</TD><TD style="border-bottom:1.333px solid #000000" valign=bottom width=122.933><P style="margin:0px">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;36,176 </P>
</TD></TR>
<TR><TD valign=bottom width=369.067><P>&nbsp;</P></TD><TD valign=bottom width=18.6><P>&nbsp;</P></TD><TD valign=bottom width=18.6><P>&nbsp;</P></TD><TD valign=bottom width=18.6><P>&nbsp;</P></TD><TD valign=bottom width=18.533><P>&nbsp;</P></TD><TD valign=bottom width=18.533><P>&nbsp;</P></TD><TD valign=bottom width=114.6><P>&nbsp;</P></TD><TD valign=bottom width=122.933><P>&nbsp;</P></TD></TR>
<TR><TD valign=bottom width=369.067><P style="margin:0px"><B>FIXED ASSETS - at cost</B></P>
</TD><TD valign=bottom width=18.6><P>&nbsp;</P></TD><TD valign=bottom width=18.6><P>&nbsp;</P></TD><TD valign=bottom width=18.6><P>&nbsp;</P></TD><TD valign=bottom width=18.533><P>&nbsp;</P></TD><TD valign=bottom width=18.533><P>&nbsp;</P></TD><TD valign=bottom width=114.6><P>&nbsp;</P></TD><TD valign=bottom width=122.933><P>&nbsp;</P></TD></TR>
<TR><TD valign=bottom width=369.067><P style="margin:0px">Computer and office equipment</P>
</TD><TD valign=bottom width=18.6><P>&nbsp;</P></TD><TD valign=bottom width=18.6><P>&nbsp;</P></TD><TD valign=bottom width=18.6><P>&nbsp;</P></TD><TD valign=bottom width=18.533><P>&nbsp;</P></TD><TD valign=bottom width=18.533><P>&nbsp;</P></TD><TD valign=bottom width=114.6><P style="margin:0px">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;52,930 </P>
</TD><TD valign=bottom width=122.933><P style="margin:0px">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;52,930 </P>
</TD></TR>
<TR><TD style="border-bottom:1.333px solid #000000" valign=bottom width=369.067><P style="margin:0px">Less: Accumulated depreciation</P>
</TD><TD style="border-bottom:1.333px solid #000000" valign=bottom width=18.6><P style="margin:0px; font-family:Arial">&nbsp;</P>
</TD><TD style="border-bottom:1.333px solid #000000" valign=bottom width=18.6><P style="margin:0px">&nbsp;</P>
</TD><TD style="border-bottom:1.333px solid #000000" valign=bottom width=18.6><P style="margin:0px">&nbsp;</P>
</TD><TD style="border-bottom:1.333px solid #000000" valign=bottom width=18.533><P style="margin:0px">&nbsp;</P>
</TD><TD style="border-bottom:1.333px solid #000000" valign=bottom width=18.533><P style="margin:0px">&nbsp;</P>
</TD><TD style="border-bottom:1.333px solid #000000" valign=bottom width=114.6><P style="margin:0px">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(52,930)</P>
</TD><TD style="border-bottom:1.333px solid #000000" valign=bottom width=122.933><P style="margin:0px">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(52,930)</P>
</TD></TR>
<TR><TD valign=bottom width=369.067><P>&nbsp;</P></TD><TD valign=bottom width=18.6><P>&nbsp;</P></TD><TD valign=bottom width=18.6><P>&nbsp;</P></TD><TD valign=bottom width=18.6><P>&nbsp;</P></TD><TD valign=bottom width=18.533><P>&nbsp;</P></TD><TD valign=bottom width=18.533><P>&nbsp;</P></TD><TD valign=bottom width=114.6><P>&nbsp;</P></TD><TD valign=bottom width=122.933><P>&nbsp;</P></TD></TR>
<TR><TD style="border-bottom:1.333px solid #000000" valign=bottom width=369.067><P style="margin:0px"><B>NET FIXED ASSETS</B></P>
</TD><TD style="border-bottom:1.333px solid #000000" valign=bottom width=18.6><P style="margin:0px">&nbsp;</P>
</TD><TD style="border-bottom:1.333px solid #000000" valign=bottom width=18.6><P style="margin:0px">&nbsp;</P>
</TD><TD style="border-bottom:1.333px solid #000000" valign=bottom width=18.6><P style="margin:0px">&nbsp;</P>
</TD><TD style="border-bottom:1.333px solid #000000" valign=bottom width=18.533><P style="margin:0px">&nbsp;</P>
</TD><TD style="border-bottom:1.333px solid #000000" valign=bottom width=18.533><P style="margin:0px">&nbsp;</P>
</TD><TD style="border-bottom:1.333px solid #000000" valign=bottom width=114.6><P style="margin:0px">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;- &nbsp;&nbsp;</P>
</TD><TD style="border-bottom:1.333px solid #000000" valign=bottom width=122.933><P style="margin:0px">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;- &nbsp;&nbsp;</P>
</TD></TR>
<TR><TD valign=bottom width=369.067><P>&nbsp;</P></TD><TD valign=bottom width=18.6><P>&nbsp;</P></TD><TD valign=bottom width=18.6><P>&nbsp;</P></TD><TD valign=bottom width=18.6><P>&nbsp;</P></TD><TD valign=bottom width=18.533><P>&nbsp;</P></TD><TD valign=bottom width=18.533><P>&nbsp;</P></TD><TD valign=bottom width=114.6><P>&nbsp;</P></TD><TD valign=bottom width=122.933><P>&nbsp;</P></TD></TR>
<TR><TD style="border-bottom:1.333px solid #000000" valign=bottom width=369.067><P style="margin:0px"><B>TOTAL ASSETS</B></P>
</TD><TD style="border-bottom:1.333px solid #000000" valign=bottom width=18.6><P style="margin:0px">&nbsp;</P>
</TD><TD style="border-bottom:1.333px solid #000000" valign=bottom width=18.6><P style="margin:0px">&nbsp;</P>
</TD><TD style="border-bottom:1.333px solid #000000" valign=bottom width=18.6><P style="margin:0px">&nbsp;</P>
</TD><TD style="border-bottom:1.333px solid #000000" valign=bottom width=18.533><P style="margin:0px">&nbsp;</P>
</TD><TD style="border-bottom:1.333px solid #000000" valign=bottom width=18.533><P style="margin:0px">&nbsp;</P>
</TD><TD style="border-bottom:1.333px solid #000000" valign=bottom width=114.6><P style="margin:0px">&nbsp;$ &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;98,349 </P>
</TD><TD style="border-bottom:1.333px solid #000000" valign=bottom width=122.933><P style="margin:0px">&nbsp;$ &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;36,176 </P>
</TD></TR>
<TR><TD valign=bottom width=369.067><P>&nbsp;</P></TD><TD valign=bottom width=18.6><P>&nbsp;</P></TD><TD valign=bottom width=18.6><P>&nbsp;</P></TD><TD valign=bottom width=18.6><P>&nbsp;</P></TD><TD valign=bottom width=18.533><P>&nbsp;</P></TD><TD valign=bottom width=18.533><P>&nbsp;</P></TD><TD valign=bottom width=114.6><P>&nbsp;</P></TD><TD valign=bottom width=122.933><P>&nbsp;</P></TD></TR>
<TR><TD valign=bottom width=369.067><P style="margin:0px"><B>LIABILITIES AND STOCKHOLDERS' DEFICIT</B></P>
</TD><TD valign=bottom width=18.6><P>&nbsp;</P></TD><TD valign=bottom width=18.6><P>&nbsp;</P></TD><TD valign=bottom width=18.6><P>&nbsp;</P></TD><TD valign=bottom width=18.533><P>&nbsp;</P></TD><TD valign=bottom width=18.533><P>&nbsp;</P></TD><TD valign=bottom width=114.6><P>&nbsp;</P></TD><TD valign=bottom width=122.933><P>&nbsp;</P></TD></TR>
<TR><TD valign=bottom width=369.067><P style="margin:0px"><B>CURRENT LIABILITIES:</B></P>
</TD><TD valign=bottom width=18.6><P>&nbsp;</P></TD><TD valign=bottom width=18.6><P>&nbsp;</P></TD><TD valign=bottom width=18.6><P>&nbsp;</P></TD><TD valign=bottom width=18.533><P>&nbsp;</P></TD><TD valign=bottom width=18.533><P>&nbsp;</P></TD><TD valign=bottom width=114.6><P>&nbsp;</P></TD><TD valign=bottom width=122.933><P>&nbsp;</P></TD></TR>
<TR><TD valign=bottom width=369.067><P style="margin:0px">Accounts payable</P>
</TD><TD valign=bottom width=18.6><P>&nbsp;</P></TD><TD valign=bottom width=18.6><P>&nbsp;</P></TD><TD valign=bottom width=18.6><P>&nbsp;</P></TD><TD valign=bottom width=18.533><P>&nbsp;</P></TD><TD valign=bottom width=18.533><P>&nbsp;</P></TD><TD valign=bottom width=114.6><P style="margin:0px">&nbsp;$ &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;229,307 </P>
</TD><TD valign=bottom width=122.933><P style="margin:0px">&nbsp;$ &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;229,307 </P>
</TD></TR>
<TR><TD valign=bottom width=369.067><P style="margin:0px">Accrued expenses</P>
</TD><TD valign=bottom width=18.6><P>&nbsp;</P></TD><TD valign=bottom width=18.6><P>&nbsp;</P></TD><TD valign=bottom width=18.6><P>&nbsp;</P></TD><TD valign=bottom width=18.533><P>&nbsp;</P></TD><TD valign=bottom width=18.533><P>&nbsp;</P></TD><TD valign=bottom width=114.6><P style="margin:0px">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;953,000 </P>
</TD><TD valign=bottom width=122.933><P style="margin:0px">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;865,500 </P>
</TD></TR>
<TR><TD valign=bottom width=369.067><P style="margin:0px">Accrued interest</P>
</TD><TD valign=bottom width=18.6><P>&nbsp;</P></TD><TD valign=bottom width=18.6><P>&nbsp;</P></TD><TD valign=bottom width=18.6><P>&nbsp;</P></TD><TD valign=bottom width=18.533><P>&nbsp;</P></TD><TD valign=bottom width=18.533><P>&nbsp;</P></TD><TD valign=bottom width=114.6><P style="margin:0px">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1,981,057 </P>
</TD><TD valign=bottom width=122.933><P style="margin:0px">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1,813,132 </P>
</TD></TR>
<TR><TD valign=bottom width=369.067><P style="margin:0px">Accrued derivative liability</P>
</TD><TD valign=bottom width=18.6><P>&nbsp;</P></TD><TD valign=bottom width=18.6><P>&nbsp;</P></TD><TD valign=bottom width=18.6><P>&nbsp;</P></TD><TD valign=bottom width=18.533><P>&nbsp;</P></TD><TD valign=bottom width=18.533><P>&nbsp;</P></TD><TD valign=bottom width=114.6><P style="margin:0px">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;230,695 </P>
</TD><TD valign=bottom width=122.933><P style="margin:0px">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;230,695 </P>
</TD></TR>
<TR><TD valign=bottom width=369.067><P style="margin:0px">License fees payable</P>
</TD><TD valign=bottom width=18.6><P>&nbsp;</P></TD><TD valign=bottom width=18.6><P>&nbsp;</P></TD><TD valign=bottom width=18.6><P>&nbsp;</P></TD><TD valign=bottom width=18.533><P>&nbsp;</P></TD><TD valign=bottom width=18.533><P>&nbsp;</P></TD><TD valign=bottom width=114.6><P style="margin:0px">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;200,000 </P>
</TD><TD valign=bottom width=122.933><P style="margin:0px">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;200,000 </P>
</TD></TR>
<TR><TD valign=bottom width=369.067><P style="margin:0px">Advances from an officer</P>
</TD><TD valign=bottom width=18.6><P>&nbsp;</P></TD><TD valign=bottom width=18.6><P>&nbsp;</P></TD><TD valign=bottom width=18.6><P>&nbsp;</P></TD><TD valign=bottom width=18.533><P>&nbsp;</P></TD><TD valign=bottom width=18.533><P>&nbsp;</P></TD><TD valign=bottom width=114.6><P style="margin:0px">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;81,643 </P>
</TD><TD valign=bottom width=122.933><P style="margin:0px">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;97,466 </P>
</TD></TR>
<TR><TD valign=bottom width=369.067><P style="margin:0px">Due to related parties</P>
</TD><TD valign=bottom width=18.6><P>&nbsp;</P></TD><TD valign=bottom width=18.6><P>&nbsp;</P></TD><TD valign=bottom width=18.6><P>&nbsp;</P></TD><TD valign=bottom width=18.533><P>&nbsp;</P></TD><TD valign=bottom width=18.533><P>&nbsp;</P></TD><TD valign=bottom width=114.6><P style="margin:0px">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;64,038 </P>
</TD><TD valign=bottom width=122.933><P style="margin:0px">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;64,038 </P>
</TD></TR>
<TR><TD valign=bottom width=369.067><P style="margin:0px">Notes payable - related party</P>
</TD><TD valign=bottom width=18.6><P>&nbsp;</P></TD><TD valign=bottom width=18.6><P>&nbsp;</P></TD><TD valign=bottom width=18.6><P>&nbsp;</P></TD><TD valign=bottom width=18.533><P>&nbsp;</P></TD><TD valign=bottom width=18.533><P>&nbsp;</P></TD><TD valign=bottom width=114.6><P style="margin:0px">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;95,000 </P>
</TD><TD valign=bottom width=122.933><P style="margin:0px">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;97,500 </P>
</TD></TR>
<TR><TD valign=bottom width=369.067><P style="margin:0px">Notes payable</P>
</TD><TD valign=bottom width=18.6><P>&nbsp;</P></TD><TD valign=bottom width=18.6><P>&nbsp;</P></TD><TD valign=bottom width=18.6><P>&nbsp;</P></TD><TD valign=bottom width=18.533><P>&nbsp;</P></TD><TD valign=bottom width=18.533><P>&nbsp;</P></TD><TD valign=bottom width=114.6><P style="margin:0px">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;610,250 </P>
</TD><TD valign=bottom width=122.933><P style="margin:0px">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;538,250 </P>
</TD></TR>
<TR><TD style="border-bottom:1.333px solid #000000" valign=bottom width=369.067><P style="margin:0px">Note payable - officer</P>
</TD><TD style="border-bottom:1.333px solid #000000" valign=bottom width=18.6><P style="margin:0px; font-family:Arial">&nbsp;</P>
</TD><TD style="border-bottom:1.333px solid #000000" valign=bottom width=18.6><P style="margin:0px">&nbsp;</P>
</TD><TD style="border-bottom:1.333px solid #000000" valign=bottom width=18.6><P style="margin:0px">&nbsp;</P>
</TD><TD style="border-bottom:1.333px solid #000000" valign=bottom width=18.533><P style="margin:0px">&nbsp;</P>
</TD><TD style="border-bottom:1.333px solid #000000" valign=bottom width=18.533><P style="margin:0px">&nbsp;</P>
</TD><TD style="border-bottom:1.333px solid #000000" valign=bottom width=114.6><P style="margin:0px">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1,217,149 </P>
</TD><TD style="border-bottom:1.333px solid #000000" valign=bottom width=122.933><P style="margin:0px">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1,217,149 </P>
</TD></TR>
<TR><TD valign=bottom width=369.067><P>&nbsp;</P></TD><TD valign=bottom width=18.6><P>&nbsp;</P></TD><TD valign=bottom width=18.6><P>&nbsp;</P></TD><TD valign=bottom width=18.6><P>&nbsp;</P></TD><TD valign=bottom width=18.533><P>&nbsp;</P></TD><TD valign=bottom width=18.533><P>&nbsp;</P></TD><TD valign=bottom width=114.6><P>&nbsp;</P></TD><TD valign=bottom width=122.933><P>&nbsp;</P></TD></TR>
<TR><TD style="border-bottom:1.333px solid #000000" valign=bottom width=369.067><P style="margin:0px"><B>TOTAL CURRENT LIABILITIES</B></P>
</TD><TD style="border-bottom:1.333px solid #000000" valign=bottom width=18.6><P style="margin:0px">&nbsp;</P>
</TD><TD style="border-bottom:1.333px solid #000000" valign=bottom width=18.6><P style="margin:0px">&nbsp;</P>
</TD><TD style="border-bottom:1.333px solid #000000" valign=bottom width=18.6><P style="margin:0px">&nbsp;</P>
</TD><TD style="border-bottom:1.333px solid #000000" valign=bottom width=18.533><P style="margin:0px">&nbsp;</P>
</TD><TD style="border-bottom:1.333px solid #000000" valign=bottom width=18.533><P style="margin:0px">&nbsp;</P>
</TD><TD style="border-bottom:1.333px solid #000000" valign=bottom width=114.6><P style="margin:0px">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5,662,139 </P>
</TD><TD style="border-bottom:1.333px solid #000000" valign=bottom width=122.933><P style="margin:0px">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5,353,037 </P>
</TD></TR>
<TR><TD valign=bottom width=369.067><P>&nbsp;</P></TD><TD valign=bottom width=18.6><P>&nbsp;</P></TD><TD valign=bottom width=18.6><P>&nbsp;</P></TD><TD valign=bottom width=18.6><P>&nbsp;</P></TD><TD valign=bottom width=18.533><P>&nbsp;</P></TD><TD valign=bottom width=18.533><P>&nbsp;</P></TD><TD valign=bottom width=114.6><P>&nbsp;</P></TD><TD valign=bottom width=122.933><P>&nbsp;</P></TD></TR>
<TR><TD valign=bottom width=369.067><P style="margin:0px"><B>COMMITMENTS AND CONTINGENCIES</B></P>
</TD><TD valign=bottom width=18.6><P>&nbsp;</P></TD><TD valign=bottom width=18.6><P>&nbsp;</P></TD><TD valign=bottom width=18.6><P>&nbsp;</P></TD><TD valign=bottom width=18.533><P>&nbsp;</P></TD><TD valign=bottom width=18.533><P>&nbsp;</P></TD><TD valign=bottom width=114.6><P style="margin:0px">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;- &nbsp;&nbsp;</P>
</TD><TD valign=bottom width=122.933><P style="margin:0px">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;- &nbsp;&nbsp;</P>
</TD></TR>
<TR><TD valign=bottom width=369.067><P style="margin:0px"><B>STOCKHOLDERS' DEFICIT</B></P>
</TD><TD valign=bottom width=18.6><P>&nbsp;</P></TD><TD valign=bottom width=18.6><P>&nbsp;</P></TD><TD valign=bottom width=18.6><P>&nbsp;</P></TD><TD valign=bottom width=18.533><P>&nbsp;</P></TD><TD valign=bottom width=18.533><P>&nbsp;</P></TD><TD valign=bottom width=114.6><P>&nbsp;</P></TD><TD valign=bottom width=122.933><P>&nbsp;</P></TD></TR>
<TR><TD valign=bottom width=369.067><P style="margin:0px">Series A Preferred Stock, $0.001 par value, 1,000,000 shares</P>
</TD><TD valign=bottom width=18.6><P>&nbsp;</P></TD><TD valign=bottom width=18.6><P>&nbsp;</P></TD><TD valign=bottom width=18.6><P>&nbsp;</P></TD><TD valign=bottom width=18.533><P>&nbsp;</P></TD><TD valign=bottom width=18.533><P>&nbsp;</P></TD><TD valign=bottom width=114.6><P>&nbsp;</P></TD><TD valign=bottom width=122.933><P>&nbsp;</P></TD></TR>
<TR><TD valign=bottom width=369.067><P style="margin:0px">authorized; 2,225 shares issued and outstanding</P>
</TD><TD valign=bottom width=18.6><P>&nbsp;</P></TD><TD valign=bottom width=18.6><P>&nbsp;</P></TD><TD valign=bottom width=18.6><P>&nbsp;</P></TD><TD valign=bottom width=18.533><P>&nbsp;</P></TD><TD valign=bottom width=18.533><P>&nbsp;</P></TD><TD valign=bottom width=114.6><P style="margin:0px">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;22 </P>
</TD><TD valign=bottom width=122.933><P style="margin:0px">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;22 </P>
</TD></TR>
<TR><TD valign=bottom width=369.067><P style="margin:0px">Series B Convertible Preferred Stock, $0.01 par value; 850,000</P>
</TD><TD valign=bottom width=18.6><P>&nbsp;</P></TD><TD valign=bottom width=18.6><P>&nbsp;</P></TD><TD valign=bottom width=18.6><P>&nbsp;</P></TD><TD valign=bottom width=18.533><P>&nbsp;</P></TD><TD valign=bottom width=18.533><P>&nbsp;</P></TD><TD valign=bottom width=114.6><P>&nbsp;</P></TD><TD valign=bottom width=122.933><P>&nbsp;</P></TD></TR>
<TR><TD valign=bottom width=369.067><P style="margin:0px">shares authorized; 850,000 shares issued and outstanding</P>
</TD><TD valign=bottom width=18.6><P>&nbsp;</P></TD><TD valign=bottom width=18.6><P>&nbsp;</P></TD><TD valign=bottom width=18.6><P>&nbsp;</P></TD><TD valign=bottom width=18.533><P>&nbsp;</P></TD><TD valign=bottom width=18.533><P>&nbsp;</P></TD><TD valign=bottom width=114.6><P>&nbsp;</P></TD><TD valign=bottom width=122.933><P>&nbsp;</P></TD></TR>
<TR><TD valign=bottom width=369.067><P style="margin:0px">authorized; 1,000,000 Class A shares issued and outstanding</P>
</TD><TD valign=bottom width=18.6><P>&nbsp;</P></TD><TD valign=bottom width=18.6><P>&nbsp;</P></TD><TD valign=bottom width=18.6><P>&nbsp;</P></TD><TD valign=bottom width=18.533><P>&nbsp;</P></TD><TD valign=bottom width=18.533><P>&nbsp;</P></TD><TD valign=bottom width=114.6><P style="margin:0px">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8,500 </P>
</TD><TD valign=bottom width=122.933><P style="margin:0px">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8,500 </P>
</TD></TR>
<TR><TD valign=bottom width=369.067><P style="margin:0px">Series C Convertible Preferred Stock, $0.01 par value; 147,775</P>
</TD><TD valign=bottom width=18.6><P>&nbsp;</P></TD><TD valign=bottom width=18.6><P>&nbsp;</P></TD><TD valign=bottom width=18.6><P>&nbsp;</P></TD><TD valign=bottom width=18.533><P>&nbsp;</P></TD><TD valign=bottom width=18.533><P>&nbsp;</P></TD><TD valign=bottom width=114.6><P>&nbsp;</P></TD><TD valign=bottom width=122.933><P>&nbsp;</P></TD></TR>
<TR><TD valign=bottom width=369.067><P style="margin:0px">shares authorized; 147,775 shares issued and outstanding</P>
</TD><TD valign=bottom width=18.6><P>&nbsp;</P></TD><TD valign=bottom width=18.6><P>&nbsp;</P></TD><TD valign=bottom width=18.6><P>&nbsp;</P></TD><TD valign=bottom width=18.533><P>&nbsp;</P></TD><TD valign=bottom width=18.533><P>&nbsp;</P></TD><TD valign=bottom width=114.6><P style="margin:0px">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1,478 </P>
</TD><TD valign=bottom width=122.933><P style="margin:0px">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1,478 </P>
</TD></TR>
<TR><TD valign=bottom width=369.067><P style="margin:0px">Common stock; $0.001 par value; 150,000,000 shares</P>
</TD><TD valign=bottom width=18.6><P>&nbsp;</P></TD><TD valign=bottom width=18.6><P>&nbsp;</P></TD><TD valign=bottom width=18.6><P>&nbsp;</P></TD><TD valign=bottom width=18.533><P>&nbsp;</P></TD><TD valign=bottom width=18.533><P>&nbsp;</P></TD><TD valign=bottom width=114.6><P>&nbsp;</P></TD><TD valign=bottom width=122.933><P>&nbsp;</P></TD></TR>
<TR><TD valign=bottom width=424.867 colspan=4><P style="margin:0px">authorized; 97,983,679(December 31, 2009-94,883,679) issued and outstanding</P>
</TD><TD valign=bottom width=18.533><P>&nbsp;</P></TD><TD valign=bottom width=18.533><P>&nbsp;</P></TD><TD valign=bottom width=114.6><P style="margin:0px">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;97,984 </P>
</TD><TD valign=bottom width=122.933><P style="margin:0px">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;94,884 </P>
</TD></TR>
<TR><TD valign=bottom width=369.067><P style="margin:0px">Additional paid-in capital</P>
</TD><TD valign=bottom width=18.6><P>&nbsp;</P></TD><TD valign=bottom width=18.6><P>&nbsp;</P></TD><TD valign=bottom width=18.6><P>&nbsp;</P></TD><TD valign=bottom width=18.533><P>&nbsp;</P></TD><TD valign=bottom width=18.533><P>&nbsp;</P></TD><TD valign=bottom width=114.6><P style="margin:0px">&nbsp;&nbsp;&nbsp;&nbsp;16,418,425 </P>
</TD><TD valign=bottom width=122.933><P style="margin:0px">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;16,406,025 </P>
</TD></TR>
</TABLE>
<P style="margin:0px"><BR>
<BR></P>
</DIV><DIV style="width:624px"><P style="margin:0px"><BR></P>
<P style="margin:0px"><BR></P>
<P style="margin:0px" align=center><BR></P>
<P style="margin:0px"><BR></P>
<P style="margin:0px"><BR></P>
</DIV><DIV style="width:576px"><P style="margin:0px; page-break-before:always"><BR>
<BR>
<BR></P>
<TABLE style="font-size:10pt" cellspacing=0><TR height=0 style="font-size:0"><TD width=369.067></TD><TD width=18.6></TD><TD width=18.6></TD><TD width=18.6></TD><TD width=18.533></TD><TD width=18.533></TD><TD width=114.6></TD><TD width=122.933></TD></TR>
<TR><TD valign=bottom width=369.067><P style="margin:0px">Stock subscription receivable</P>
</TD><TD valign=bottom width=18.6><P>&nbsp;</P></TD><TD valign=bottom width=18.6><P>&nbsp;</P></TD><TD valign=bottom width=18.6><P>&nbsp;</P></TD><TD valign=bottom width=18.533><P>&nbsp;</P></TD><TD valign=bottom width=18.533><P>&nbsp;</P></TD><TD valign=bottom width=114.6><P style="margin:0px">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(156,300)</P>
</TD><TD valign=bottom width=122.933><P style="margin:0px">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(156,300)</P>
</TD></TR>
<TR><TD valign=bottom width=369.067><P style="margin:0px">Non-controlling interest</P>
</TD><TD valign=bottom width=18.6><P>&nbsp;</P></TD><TD valign=bottom width=18.6><P>&nbsp;</P></TD><TD valign=bottom width=18.6><P>&nbsp;</P></TD><TD valign=bottom width=18.533><P>&nbsp;</P></TD><TD valign=bottom width=18.533><P>&nbsp;</P></TD><TD valign=bottom width=114.6><P style="margin:0px">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(10,395)</P>
</TD><TD valign=bottom width=122.933><P style="margin:0px">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(9,168)</P>
</TD></TR>
<TR><TD style="border-bottom:1.333px solid #000000" valign=bottom width=369.067><P style="margin:0px">Accumulated deficit</P>
</TD><TD style="border-bottom:1.333px solid #000000" valign=bottom width=18.6><P style="margin:0px; font-family:Arial">&nbsp;</P>
</TD><TD style="border-bottom:1.333px solid #000000" valign=bottom width=18.6><P style="margin:0px">&nbsp;</P>
</TD><TD style="border-bottom:1.333px solid #000000" valign=bottom width=18.6><P style="margin:0px">&nbsp;</P>
</TD><TD style="border-bottom:1.333px solid #000000" valign=bottom width=18.533><P style="margin:0px">&nbsp;</P>
</TD><TD style="border-bottom:1.333px solid #000000" valign=bottom width=18.533><P style="margin:0px">&nbsp;</P>
</TD><TD style="border-bottom:1.333px solid #000000" valign=bottom width=114.6><P style="margin:0px">&nbsp;&nbsp;(21,923,504)</P>
</TD><TD style="border-bottom:1.333px solid #000000" valign=bottom width=122.933><P style="margin:0px">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(21,662,302)</P>
</TD></TR>
<TR><TD style="border-bottom:1.333px solid #000000" valign=bottom width=369.067><P style="margin:0px"><B>TOTAL STOCKHOLDERS' DEFICIT</B></P>
</TD><TD style="border-bottom:1.333px solid #000000" valign=bottom width=18.6><P style="margin:0px">&nbsp;</P>
</TD><TD style="border-bottom:1.333px solid #000000" valign=bottom width=18.6><P style="margin:0px">&nbsp;</P>
</TD><TD style="border-bottom:1.333px solid #000000" valign=bottom width=18.6><P style="margin:0px">&nbsp;</P>
</TD><TD style="border-bottom:1.333px solid #000000" valign=bottom width=18.533><P style="margin:0px">&nbsp;</P>
</TD><TD style="border-bottom:1.333px solid #000000" valign=bottom width=18.533><P style="margin:0px">&nbsp;</P>
</TD><TD style="border-bottom:1.333px solid #000000" valign=bottom width=114.6><P style="margin:0px">&nbsp;&nbsp;&nbsp;&nbsp;(5,563,790)</P>
</TD><TD style="border-bottom:1.333px solid #000000" valign=bottom width=122.933><P style="margin:0px">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(5,316,861)</P>
</TD></TR>
<TR><TD valign=bottom width=369.067><P>&nbsp;</P></TD><TD valign=bottom width=18.6><P>&nbsp;</P></TD><TD valign=bottom width=18.6><P>&nbsp;</P></TD><TD valign=bottom width=18.6><P>&nbsp;</P></TD><TD valign=bottom width=18.533><P>&nbsp;</P></TD><TD valign=bottom width=18.533><P>&nbsp;</P></TD><TD valign=bottom width=114.6><P>&nbsp;</P></TD><TD valign=bottom width=122.933><P>&nbsp;</P></TD></TR>
<TR><TD style="border-bottom:1.333px solid #000000" valign=bottom width=369.067><P style="margin:0px"><B>TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT</B></P>
</TD><TD style="border-bottom:1.333px solid #000000" valign=bottom width=18.6><P style="margin:0px">&nbsp;</P>
</TD><TD style="border-bottom:1.333px solid #000000" valign=bottom width=18.6><P style="margin:0px">&nbsp;</P>
</TD><TD style="border-bottom:1.333px solid #000000" valign=bottom width=18.6><P style="margin:0px">&nbsp;</P>
</TD><TD style="border-bottom:1.333px solid #000000" valign=bottom width=18.533><P style="margin:0px">&nbsp;</P>
</TD><TD style="border-bottom:1.333px solid #000000" valign=bottom width=18.533><P style="margin:0px">&nbsp;</P>
</TD><TD style="border-bottom:1.333px solid #000000" valign=bottom width=114.6><P style="margin:0px">&nbsp;$ &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;98,349 </P>
</TD><TD style="border-bottom:1.333px solid #000000" valign=bottom width=122.933><P style="margin:0px">&nbsp;$ &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;36,176 </P>
</TD></TR>
</TABLE>
<P style="margin:0px"><BR></P>
<P style="margin:0px"><BR></P>
<P style="margin:0px"><BR></P>
<P style="margin:0px"><BR></P>
<P style="margin:0px"><BR></P>
<P style="margin:0px"><BR></P>
<P style="margin:0px"><BR></P>
<P style="margin:0px"><BR></P>
<P style="margin:0px"><BR></P>
<P style="margin:0px"><BR></P>
<P style="margin:0px"><BR></P>
<P style="margin:0px"><BR></P>
<P style="margin:0px"><BR></P>
<P style="margin:0px"><BR></P>
<P style="margin:0px"><BR></P>
<P style="margin:0px"><BR></P>
<P style="margin:0px"><BR></P>
<P style="margin:0px"><BR></P>
<P style="margin:0px"><BR></P>
<P style="margin:0px"><BR></P>
<P style="margin:0px"><BR></P>
<P style="margin:0px"><BR></P>
<P style="margin:0px"><BR></P>
<P style="margin:0px"><BR></P>
<P style="margin:0px"><BR></P>
<P style="margin:0px"><BR></P>
<P style="margin:0px"><BR></P>
<P style="margin:0px"><BR></P>
<P style="margin:0px"><BR></P>
<P style="margin:0px"><BR></P>
<P style="margin:0px"><BR></P>
<P style="margin:0px"><BR></P>
<P style="margin:0px"><BR></P>
<P style="margin:0px"><BR></P>
<P style="margin:0px"><BR></P>
<P style="margin:0px"><BR></P>
<P style="margin:0px"><BR></P>
<P style="margin:0px"><BR></P>
<P style="margin:0px"><BR></P>
<P style="margin:0px"><BR></P>
<P style="margin:0px"><BR></P>
<P style="margin:0px"><B>The accompanying notes are an integral part of these financial statements.</B></P>
<P style="margin:0px"><BR>
<BR></P>
</DIV><DIV style="width:624px"><P style="margin:0px"><BR></P>
<P style="margin:0px"><BR></P>
<P style="margin:0px" align=center><BR></P>
<P style="margin:0px"><BR></P>
<P style="margin:0px"><BR></P>
</DIV><DIV style="width:576px"><P style="margin:0px; page-break-before:always"><BR></P>
<TABLE style="font-size:10pt" cellspacing=0><TR height=0 style="font-size:0"><TD width=212.733></TD><TD width=90.8></TD><TD width=113.467></TD><TD width=85.067></TD><TD width=92.6></TD><TD width=49.133></TD><TD width=81.6></TD><TD width=104.6></TD><TD width=59.133></TD><TD width=15.8></TD></TR>
<TR><TD valign=bottom width=725.4 colspan=7><P style="margin:0px"><B>CEPHAS HOLDING CORP. AND SUBSIDIARIES</B></P>
</TD><TD valign=bottom width=104.6><P>&nbsp;</P></TD><TD valign=bottom width=59.133><P>&nbsp;</P></TD><TD valign=bottom width=15.8><P>&nbsp;</P></TD></TR>
<TR><TD valign=bottom width=725.4 colspan=7><P style="line-height:10pt; margin:0px; font-size:8pt"><B>CONSOLIDATED INTERIM STATEMENT OF OPERATIONS</B></P>
</TD><TD valign=bottom width=104.6><P>&nbsp;</P></TD><TD valign=bottom width=59.133><P>&nbsp;</P></TD><TD valign=bottom width=15.8><P>&nbsp;</P></TD></TR>
<TR><TD valign=bottom width=212.733><P style="line-height:10pt; margin:0px; font-size:8pt"><B>(UNAUDITED)</B></P>
</TD><TD valign=bottom width=90.8><P>&nbsp;</P></TD><TD valign=bottom width=113.467><P>&nbsp;</P></TD><TD valign=bottom width=85.067><P>&nbsp;</P></TD><TD valign=bottom width=92.6><P>&nbsp;</P></TD><TD width=49.133><P>&nbsp;</P></TD><TD width=81.6><P>&nbsp;</P></TD><TD width=104.6><P>&nbsp;</P></TD><TD width=59.133><P>&nbsp;</P></TD><TD width=15.8><P>&nbsp;</P></TD></TR>
<TR><TD valign=bottom width=212.733><P>&nbsp;</P></TD><TD valign=bottom width=90.8><P>&nbsp;</P></TD><TD valign=bottom width=113.467><P>&nbsp;</P></TD><TD valign=bottom width=85.067><P>&nbsp;</P></TD><TD valign=bottom width=92.6><P>&nbsp;</P></TD><TD width=49.133><P>&nbsp;</P></TD><TD width=81.6><P>&nbsp;</P></TD><TD width=104.6><P>&nbsp;</P></TD><TD width=59.133><P>&nbsp;</P></TD><TD width=15.8><P>&nbsp;</P></TD></TR>
<TR><TD valign=bottom width=212.733><P>&nbsp;</P></TD><TD valign=bottom width=204.267 colspan=2><P style="line-height:10pt; margin:0px; font-size:8pt"><B>&nbsp;&nbsp;&nbsp;&nbsp;THREE MONTHS ENDED</B></P>
</TD><TD valign=bottom width=177.667 colspan=2><P style="line-height:10pt; margin:0px; padding-right:-22.267px; font-size:8pt"><B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;SIX MONTHS ENDED</B></P>
</TD><TD width=49.133><P>&nbsp;</P></TD><TD width=81.6><P>&nbsp;</P></TD><TD width=104.6><P>&nbsp;</P></TD><TD width=59.133><P>&nbsp;</P></TD><TD width=15.8><P>&nbsp;</P></TD></TR>
<TR><TD valign=bottom width=212.733><P>&nbsp;</P></TD><TD valign=bottom width=204.267 colspan=2><P style="line-height:10pt; margin:0px; font-size:8pt"><B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;JUNE 30,</B></P>
</TD><TD valign=bottom width=177.667 colspan=2><P style="line-height:10pt; margin:0px; font-size:8pt"><B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;JUNE 30,</B></P>
</TD><TD width=49.133><P>&nbsp;</P></TD><TD width=81.6><P>&nbsp;</P></TD><TD width=104.6><P>&nbsp;</P></TD><TD width=59.133><P>&nbsp;</P></TD><TD width=15.8><P>&nbsp;</P></TD></TR>
<TR><TD valign=bottom width=212.733><P>&nbsp;</P></TD><TD style="border-bottom:1px solid #000000" valign=bottom width=90.8><P style="line-height:10pt; margin:0px; font-size:8pt" align=center><B>2010</B></P>
</TD><TD style="border-bottom:1px solid #000000" valign=bottom width=113.467><P style="line-height:10pt; margin:0px; font-size:8pt" align=center><B>2009</B></P>
</TD><TD style="border-bottom:1px solid #000000" valign=bottom width=85.067><P style="line-height:10pt; margin:0px; font-size:8pt" align=center><B>2010</B></P>
</TD><TD style="border-bottom:1px solid #000000" valign=bottom width=92.6><P style="line-height:10pt; margin:0px; font-size:8pt" align=center><B>2009</B></P>
</TD><TD width=49.133><P>&nbsp;</P></TD><TD width=81.6><P>&nbsp;</P></TD><TD width=104.6><P>&nbsp;</P></TD><TD width=59.133><P>&nbsp;</P></TD><TD width=15.8><P>&nbsp;</P></TD></TR>
<TR><TD valign=bottom width=212.733><P>&nbsp;</P></TD><TD valign=bottom width=90.8><P>&nbsp;</P></TD><TD valign=bottom width=113.467><P>&nbsp;</P></TD><TD valign=bottom width=85.067><P>&nbsp;</P></TD><TD valign=bottom width=92.6><P>&nbsp;</P></TD><TD width=49.133><P>&nbsp;</P></TD><TD width=81.6><P>&nbsp;</P></TD><TD width=104.6><P>&nbsp;</P></TD><TD width=59.133><P>&nbsp;</P></TD><TD width=15.8><P>&nbsp;</P></TD></TR>
<TR><TD valign=bottom width=212.733><P>&nbsp;</P></TD><TD valign=bottom width=90.8><P>&nbsp;</P></TD><TD valign=bottom width=113.467><P>&nbsp;</P></TD><TD valign=bottom width=85.067><P>&nbsp;</P></TD><TD valign=bottom width=92.6><P>&nbsp;</P></TD><TD width=49.133><P>&nbsp;</P></TD><TD width=81.6><P>&nbsp;</P></TD><TD width=104.6><P>&nbsp;</P></TD><TD width=59.133><P>&nbsp;</P></TD><TD width=15.8><P>&nbsp;</P></TD></TR>
<TR><TD valign=bottom width=212.733><P style="line-height:10pt; margin:0px; font-size:8pt"><B>REVENUE</B></P>
</TD><TD valign=bottom width=90.8><P style="line-height:10pt; margin:0px; font-size:8pt">&nbsp;$ &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;- &nbsp;&nbsp;</P>
</TD><TD valign=bottom width=113.467><P style="line-height:10pt; margin:0px; font-size:8pt">&nbsp;$ &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;- &nbsp;&nbsp;</P>
</TD><TD valign=bottom width=85.067><P style="line-height:10pt; margin:0px; font-size:8pt">&nbsp;$ &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;172 </P>
</TD><TD valign=bottom width=92.6><P style="line-height:10pt; margin:0px; font-size:8pt">&nbsp;$ &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;- &nbsp;&nbsp;</P>
</TD><TD width=49.133><P>&nbsp;</P></TD><TD width=81.6><P>&nbsp;</P></TD><TD width=104.6><P>&nbsp;</P></TD><TD width=59.133><P>&nbsp;</P></TD><TD width=15.8><P>&nbsp;</P></TD></TR>
<TR><TD valign=bottom width=212.733><P>&nbsp;</P></TD><TD valign=bottom width=90.8><P>&nbsp;</P></TD><TD valign=bottom width=113.467><P>&nbsp;</P></TD><TD valign=bottom width=85.067><P>&nbsp;</P></TD><TD valign=bottom width=92.6><P>&nbsp;</P></TD><TD width=49.133><P>&nbsp;</P></TD><TD width=81.6><P>&nbsp;</P></TD><TD width=104.6><P>&nbsp;</P></TD><TD width=59.133><P>&nbsp;</P></TD><TD width=15.8><P>&nbsp;</P></TD></TR>
<TR><TD style="border-bottom:1.333px solid #000000" valign=bottom width=212.733><P style="line-height:10pt; margin:0px; font-size:8pt"><B>COST OF REVENUE</B></P>
</TD><TD style="border-bottom:1.333px solid #000000" valign=bottom width=90.8><P style="line-height:10pt; margin:0px; font-size:8pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;- &nbsp;&nbsp;</P>
</TD><TD style="border-bottom:1.333px solid #000000" valign=bottom width=113.467><P style="line-height:10pt; margin:0px; font-size:8pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;- &nbsp;&nbsp;</P>
</TD><TD style="border-bottom:1.333px solid #000000" valign=bottom width=85.067><P style="line-height:10pt; margin:0px; font-size:8pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;- &nbsp;&nbsp;</P>
</TD><TD style="border-bottom:1.333px solid #000000" valign=bottom width=92.6><P style="line-height:10pt; margin:0px; font-size:8pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;- &nbsp;&nbsp;</P>
</TD><TD width=49.133><P>&nbsp;</P></TD><TD width=81.6><P>&nbsp;</P></TD><TD width=104.6><P>&nbsp;</P></TD><TD width=59.133><P>&nbsp;</P></TD><TD width=15.8><P>&nbsp;</P></TD></TR>
<TR><TD valign=bottom width=212.733><P>&nbsp;</P></TD><TD valign=bottom width=90.8><P>&nbsp;</P></TD><TD valign=bottom width=113.467><P>&nbsp;</P></TD><TD valign=bottom width=85.067><P>&nbsp;</P></TD><TD valign=bottom width=92.6><P>&nbsp;</P></TD><TD width=49.133><P>&nbsp;</P></TD><TD width=81.6><P>&nbsp;</P></TD><TD width=104.6><P>&nbsp;</P></TD><TD width=59.133><P>&nbsp;</P></TD><TD width=15.8><P>&nbsp;</P></TD></TR>
<TR><TD style="border-bottom:1.333px solid #000000" valign=bottom width=212.733><P style="line-height:10pt; margin:0px; font-size:8pt"><B>GROSS PROFIT</B></P>
</TD><TD style="border-bottom:1.333px solid #000000" valign=bottom width=90.8><P style="line-height:10pt; margin:0px; font-size:8pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;- &nbsp;&nbsp;</P>
</TD><TD style="border-bottom:1.333px solid #000000" valign=bottom width=113.467><P style="line-height:10pt; margin:0px; font-size:8pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;- &nbsp;&nbsp;</P>
</TD><TD style="border-bottom:1.333px solid #000000" valign=bottom width=85.067><P style="line-height:10pt; margin:0px; font-size:8pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;172 </P>
</TD><TD style="border-bottom:1.333px solid #000000" valign=bottom width=92.6><P style="line-height:10pt; margin:0px; font-size:8pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;- &nbsp;&nbsp;</P>
</TD><TD width=49.133><P>&nbsp;</P></TD><TD width=81.6><P>&nbsp;</P></TD><TD width=104.6><P>&nbsp;</P></TD><TD width=59.133><P>&nbsp;</P></TD><TD width=15.8><P>&nbsp;</P></TD></TR>
<TR><TD valign=bottom width=212.733><P>&nbsp;</P></TD><TD valign=bottom width=90.8><P>&nbsp;</P></TD><TD valign=bottom width=113.467><P>&nbsp;</P></TD><TD valign=bottom width=85.067><P>&nbsp;</P></TD><TD valign=bottom width=92.6><P>&nbsp;</P></TD><TD width=49.133><P>&nbsp;</P></TD><TD width=81.6><P>&nbsp;</P></TD><TD width=104.6><P>&nbsp;</P></TD><TD width=59.133><P>&nbsp;</P></TD><TD width=15.8><P>&nbsp;</P></TD></TR>
<TR><TD valign=bottom width=212.733><P style="line-height:10pt; margin:0px; font-size:8pt"><B>EXPENSES:</B></P>
</TD><TD valign=bottom width=90.8><P>&nbsp;</P></TD><TD valign=bottom width=113.467><P>&nbsp;</P></TD><TD valign=bottom width=85.067><P>&nbsp;</P></TD><TD valign=bottom width=92.6><P>&nbsp;</P></TD><TD width=49.133><P>&nbsp;</P></TD><TD width=81.6><P>&nbsp;</P></TD><TD width=104.6><P>&nbsp;</P></TD><TD width=59.133><P>&nbsp;</P></TD><TD width=15.8><P>&nbsp;</P></TD></TR>
<TR><TD style="border-bottom:1.333px solid #000000" valign=bottom width=212.733><P style="line-height:10pt; margin:0px; font-size:8pt">Selling, general and administrative</P>
</TD><TD style="border-bottom:1.333px solid #000000" valign=bottom width=90.8><P style="line-height:10pt; margin:0px; font-size:8pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;48,534 </P>
</TD><TD style="border-bottom:1.333px solid #000000" valign=bottom width=113.467><P style="line-height:10pt; margin:0px; font-size:8pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;46,836 </P>
</TD><TD style="border-bottom:1.333px solid #000000" valign=bottom width=85.067><P style="line-height:10pt; margin:0px; font-size:8pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;94,676 </P>
</TD><TD style="border-bottom:1.333px solid #000000" valign=bottom width=92.6><P style="line-height:10pt; margin:0px; font-size:8pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;91,095 </P>
</TD><TD width=49.133><P>&nbsp;</P></TD><TD width=81.6><P>&nbsp;</P></TD><TD width=104.6><P>&nbsp;</P></TD><TD width=59.133><P>&nbsp;</P></TD><TD width=15.8><P>&nbsp;</P></TD></TR>
<TR><TD valign=bottom width=212.733><P>&nbsp;</P></TD><TD valign=bottom width=90.8><P>&nbsp;</P></TD><TD valign=bottom width=113.467><P>&nbsp;</P></TD><TD valign=bottom width=85.067><P>&nbsp;</P></TD><TD valign=bottom width=92.6><P>&nbsp;</P></TD><TD width=49.133><P>&nbsp;</P></TD><TD width=81.6><P>&nbsp;</P></TD><TD width=104.6><P>&nbsp;</P></TD><TD width=59.133><P>&nbsp;</P></TD><TD width=15.8><P>&nbsp;</P></TD></TR>
<TR><TD style="border-bottom:1.333px solid #000000" valign=bottom width=212.733><P style="line-height:10pt; margin:0px; font-size:8pt"><B>TOTAL EXPENSES</B></P>
</TD><TD style="border-bottom:1.333px solid #000000" valign=bottom width=90.8><P style="line-height:10pt; margin:0px; font-size:8pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;48,534 </P>
</TD><TD style="border-bottom:1.333px solid #000000" valign=bottom width=113.467><P style="line-height:10pt; margin:0px; font-size:8pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;46,836 </P>
</TD><TD style="border-bottom:1.333px solid #000000" valign=bottom width=85.067><P style="line-height:10pt; margin:0px; font-size:8pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;94,676 </P>
</TD><TD style="border-bottom:1.333px solid #000000" valign=bottom width=92.6><P style="line-height:10pt; margin:0px; font-size:8pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;91,095 </P>
</TD><TD width=49.133><P>&nbsp;</P></TD><TD width=81.6><P>&nbsp;</P></TD><TD width=104.6><P>&nbsp;</P></TD><TD width=59.133><P>&nbsp;</P></TD><TD width=15.8><P>&nbsp;</P></TD></TR>
<TR><TD valign=bottom width=212.733><P>&nbsp;</P></TD><TD valign=bottom width=90.8><P>&nbsp;</P></TD><TD valign=bottom width=113.467><P>&nbsp;</P></TD><TD valign=bottom width=85.067><P>&nbsp;</P></TD><TD valign=bottom width=92.6><P>&nbsp;</P></TD><TD width=49.133><P>&nbsp;</P></TD><TD width=81.6><P>&nbsp;</P></TD><TD width=104.6><P>&nbsp;</P></TD><TD width=59.133><P>&nbsp;</P></TD><TD width=15.8><P>&nbsp;</P></TD></TR>
<TR><TD style="border-bottom:1.333px solid #000000" valign=bottom width=212.733><P style="line-height:10pt; margin:0px; font-size:8pt"><B>LOSS FROM OPERATIONS</B></P>
</TD><TD style="border-bottom:1.333px solid #000000" valign=bottom width=90.8><P style="line-height:10pt; margin:0px; font-size:8pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(48,534)</P>
</TD><TD style="border-bottom:1.333px solid #000000" valign=bottom width=113.467><P style="line-height:10pt; margin:0px; font-size:8pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(46,836)</P>
</TD><TD style="border-bottom:1.333px solid #000000" valign=bottom width=85.067><P style="line-height:10pt; margin:0px; font-size:8pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(94,504)</P>
</TD><TD style="border-bottom:1.333px solid #000000" valign=bottom width=92.6><P style="line-height:10pt; margin:0px; font-size:8pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(91,095)</P>
</TD><TD width=49.133><P>&nbsp;</P></TD><TD width=81.6><P>&nbsp;</P></TD><TD width=104.6><P>&nbsp;</P></TD><TD width=59.133><P>&nbsp;</P></TD><TD width=15.8><P>&nbsp;</P></TD></TR>
<TR><TD valign=bottom width=212.733><P>&nbsp;</P></TD><TD valign=bottom width=90.8><P>&nbsp;</P></TD><TD valign=bottom width=113.467><P>&nbsp;</P></TD><TD valign=bottom width=85.067><P>&nbsp;</P></TD><TD valign=bottom width=92.6><P>&nbsp;</P></TD><TD width=49.133><P>&nbsp;</P></TD><TD width=81.6><P>&nbsp;</P></TD><TD width=104.6><P>&nbsp;</P></TD><TD width=59.133><P>&nbsp;</P></TD><TD width=15.8><P>&nbsp;</P></TD></TR>
<TR><TD valign=bottom width=212.733><P style="line-height:10pt; margin:0px; font-size:8pt"><B>OTHER INCOME (EXPENSE):</B></P>
</TD><TD valign=bottom width=90.8><P>&nbsp;</P></TD><TD valign=bottom width=113.467><P>&nbsp;</P></TD><TD valign=bottom width=85.067><P>&nbsp;</P></TD><TD valign=bottom width=92.6><P>&nbsp;</P></TD><TD width=49.133><P>&nbsp;</P></TD><TD width=81.6><P>&nbsp;</P></TD><TD width=104.6><P>&nbsp;</P></TD><TD width=59.133><P>&nbsp;</P></TD><TD width=15.8><P>&nbsp;</P></TD></TR>
<TR><TD style="border-bottom:1.333px solid #000000" valign=bottom width=212.733><P style="line-height:10pt; margin:0px; font-size:8pt">Interest expense and financing costs</P>
</TD><TD style="border-bottom:1.333px solid #000000" valign=bottom width=90.8><P style="line-height:10pt; margin:0px; font-size:8pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(84,431)</P>
</TD><TD style="border-bottom:1.333px solid #000000" valign=bottom width=113.467><P style="line-height:10pt; margin:0px; font-size:8pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(83,439)</P>
</TD><TD style="border-bottom:1.333px solid #000000" valign=bottom width=85.067><P style="line-height:10pt; margin:0px; font-size:8pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(167,925)</P>
</TD><TD style="border-bottom:1.333px solid #000000" valign=bottom width=92.6><P style="line-height:10pt; margin:0px; font-size:8pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(166,878)</P>
</TD><TD width=49.133><P>&nbsp;</P></TD><TD width=81.6><P>&nbsp;</P></TD><TD width=104.6><P>&nbsp;</P></TD><TD width=59.133><P>&nbsp;</P></TD><TD width=15.8><P>&nbsp;</P></TD></TR>
<TR><TD valign=bottom width=212.733><P>&nbsp;</P></TD><TD valign=bottom width=90.8><P>&nbsp;</P></TD><TD valign=bottom width=113.467><P>&nbsp;</P></TD><TD valign=bottom width=85.067><P>&nbsp;</P></TD><TD valign=bottom width=92.6><P>&nbsp;</P></TD><TD width=49.133><P>&nbsp;</P></TD><TD width=81.6><P>&nbsp;</P></TD><TD width=104.6><P>&nbsp;</P></TD><TD width=59.133><P>&nbsp;</P></TD><TD width=15.8><P>&nbsp;</P></TD></TR>
<TR><TD style="border-bottom:1.333px solid #000000" valign=bottom width=212.733><P style="line-height:10pt; margin:0px; font-size:8pt"><B>TOTAL OTHER INCOME (EXPENSE)</B></P>
</TD><TD style="border-bottom:1.333px solid #000000" valign=bottom width=90.8><P style="line-height:10pt; margin:0px; font-size:8pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(84,431)</P>
</TD><TD style="border-bottom:1.333px solid #000000" valign=bottom width=113.467><P style="line-height:10pt; margin:0px; font-size:8pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(83,439)</P>
</TD><TD style="border-bottom:1.333px solid #000000" valign=bottom width=85.067><P style="line-height:10pt; margin:0px; font-size:8pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(167,925)</P>
</TD><TD style="border-bottom:1.333px solid #000000" valign=bottom width=92.6><P style="line-height:10pt; margin:0px; font-size:8pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(166,878)</P>
</TD><TD width=49.133><P>&nbsp;</P></TD><TD width=81.6><P>&nbsp;</P></TD><TD width=104.6><P>&nbsp;</P></TD><TD width=59.133><P>&nbsp;</P></TD><TD width=15.8><P>&nbsp;</P></TD></TR>
<TR><TD valign=bottom width=212.733><P>&nbsp;</P></TD><TD valign=bottom width=90.8><P>&nbsp;</P></TD><TD valign=bottom width=113.467><P>&nbsp;</P></TD><TD valign=bottom width=85.067><P>&nbsp;</P></TD><TD valign=bottom width=92.6><P>&nbsp;</P></TD><TD width=49.133><P>&nbsp;</P></TD><TD width=81.6><P>&nbsp;</P></TD><TD width=104.6><P>&nbsp;</P></TD><TD width=59.133><P>&nbsp;</P></TD><TD width=15.8><P>&nbsp;</P></TD></TR>
<TR><TD valign=bottom width=212.733><P style="line-height:10pt; margin:0px; font-size:8pt"><B>LOSS BEFORE PROVISION FOR INCOME TAXES</B></P>
</TD><TD valign=bottom width=90.8><P style="line-height:10pt; margin:0px; font-size:8pt">&nbsp;$ &nbsp;&nbsp;&nbsp;(132,965)</P>
</TD><TD valign=bottom width=113.467><P style="line-height:10pt; margin:0px; font-size:8pt">&nbsp;$ &nbsp;&nbsp;&nbsp;(130,275)</P>
</TD><TD valign=bottom width=85.067><P style="line-height:10pt; margin:0px; font-size:8pt">&nbsp;$ &nbsp;(262,429)</P>
</TD><TD valign=bottom width=92.6><P style="line-height:10pt; margin:0px; font-size:8pt">&nbsp;$ &nbsp;&nbsp;&nbsp;(257,973)</P>
</TD><TD width=49.133><P>&nbsp;</P></TD><TD width=81.6><P>&nbsp;</P></TD><TD width=104.6><P>&nbsp;</P></TD><TD width=59.133><P>&nbsp;</P></TD><TD width=15.8><P>&nbsp;</P></TD></TR>
<TR><TD valign=bottom width=212.733><P>&nbsp;</P></TD><TD valign=bottom width=90.8><P>&nbsp;</P></TD><TD valign=bottom width=113.467><P>&nbsp;</P></TD><TD valign=bottom width=85.067><P>&nbsp;</P></TD><TD valign=bottom width=92.6><P>&nbsp;</P></TD><TD width=49.133><P>&nbsp;</P></TD><TD width=81.6><P>&nbsp;</P></TD><TD width=104.6><P>&nbsp;</P></TD><TD width=59.133><P>&nbsp;</P></TD><TD width=15.8><P>&nbsp;</P></TD></TR>
<TR><TD style="border-bottom:1.333px solid #000000" valign=bottom width=212.733><P style="line-height:10pt; margin:0px; font-size:8pt"><B>PROVISION FOR INCOME TAXES</B></P>
</TD><TD style="border-bottom:1.333px solid #000000" valign=bottom width=90.8><P style="line-height:10pt; margin:0px; font-size:8pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;- &nbsp;&nbsp;</P>
</TD><TD style="border-bottom:1.333px solid #000000" valign=bottom width=113.467><P style="line-height:10pt; margin:0px; font-size:8pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;- &nbsp;&nbsp;</P>
</TD><TD style="border-bottom:1.333px solid #000000" valign=bottom width=85.067><P style="line-height:10pt; margin:0px; font-size:8pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;- &nbsp;&nbsp;</P>
</TD><TD style="border-bottom:1.333px solid #000000" valign=bottom width=92.6><P style="line-height:10pt; margin:0px; font-size:8pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;- &nbsp;&nbsp;</P>
</TD><TD width=49.133><P>&nbsp;</P></TD><TD width=81.6><P>&nbsp;</P></TD><TD width=104.6><P>&nbsp;</P></TD><TD width=59.133><P>&nbsp;</P></TD><TD width=15.8><P>&nbsp;</P></TD></TR>
<TR><TD valign=bottom width=212.733><P>&nbsp;</P></TD><TD valign=bottom width=90.8><P>&nbsp;</P></TD><TD valign=bottom width=113.467><P>&nbsp;</P></TD><TD valign=bottom width=85.067><P>&nbsp;</P></TD><TD valign=bottom width=92.6><P>&nbsp;</P></TD><TD width=49.133><P>&nbsp;</P></TD><TD width=81.6><P>&nbsp;</P></TD><TD width=104.6><P>&nbsp;</P></TD><TD width=59.133><P>&nbsp;</P></TD><TD width=15.8><P>&nbsp;</P></TD></TR>
<TR><TD style="border-bottom:1.333px solid #000000" valign=bottom width=212.733><P style="line-height:10pt; margin:0px; font-size:8pt"><B>NET LOSS</B></P>
</TD><TD style="border-bottom:1.333px solid #000000" valign=bottom width=90.8><P style="line-height:10pt; margin:0px; font-size:8pt">&nbsp;$ &nbsp;&nbsp;&nbsp;(132,965)</P>
</TD><TD style="border-bottom:1.333px solid #000000" valign=bottom width=113.467><P style="line-height:10pt; margin:0px; font-size:8pt">&nbsp;$ &nbsp;&nbsp;&nbsp;(130,275)</P>
</TD><TD style="border-bottom:1.333px solid #000000" valign=bottom width=85.067><P style="line-height:10pt; margin:0px; font-size:8pt">&nbsp;$ &nbsp;(262,429)</P>
</TD><TD style="border-bottom:1.333px solid #000000" valign=bottom width=92.6><P style="line-height:10pt; margin:0px; font-size:8pt">&nbsp;$ &nbsp;&nbsp;&nbsp;(257,973)</P>
</TD><TD width=49.133><P>&nbsp;</P></TD><TD width=81.6><P>&nbsp;</P></TD><TD width=104.6><P>&nbsp;</P></TD><TD width=59.133><P>&nbsp;</P></TD><TD width=15.8><P>&nbsp;</P></TD></TR>
<TR><TD valign=bottom width=212.733><P>&nbsp;</P></TD><TD valign=bottom width=90.8><P>&nbsp;</P></TD><TD valign=bottom width=113.467><P>&nbsp;</P></TD><TD valign=bottom width=85.067><P>&nbsp;</P></TD><TD valign=bottom width=92.6><P>&nbsp;</P></TD><TD width=49.133><P>&nbsp;</P></TD><TD width=81.6><P>&nbsp;</P></TD><TD width=104.6><P>&nbsp;</P></TD><TD width=59.133><P>&nbsp;</P></TD><TD width=15.8><P>&nbsp;</P></TD></TR>
<TR><TD valign=bottom width=212.733><P style="line-height:10pt; margin:0px; font-size:8pt"><B>BASIC AND DILUTED LOSS PER</B></P>
</TD><TD valign=bottom width=90.8><P>&nbsp;</P></TD><TD valign=bottom width=113.467><P>&nbsp;</P></TD><TD valign=bottom width=85.067><P>&nbsp;</P></TD><TD valign=bottom width=92.6><P>&nbsp;</P></TD><TD width=49.133><P>&nbsp;</P></TD><TD width=81.6><P>&nbsp;</P></TD><TD width=104.6><P>&nbsp;</P></TD><TD width=59.133><P>&nbsp;</P></TD><TD width=15.8><P>&nbsp;</P></TD></TR>
<TR><TD valign=bottom width=212.733><P style="line-height:10pt; margin:0px; font-size:8pt"><B>&nbsp;&nbsp;COMMON SHARE</B></P>
</TD><TD style="border-bottom:3px double #000000" valign=bottom width=90.8><P style="line-height:10pt; margin:0px; font-size:8pt">&nbsp;$ &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(0.001)</P>
</TD><TD style="border-bottom:3px double #000000" valign=bottom width=113.467><P style="line-height:10pt; margin:0px; font-size:8pt">&nbsp;$ &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(0.002)</P>
</TD><TD style="border-bottom:3px double #000000" valign=bottom width=85.067><P style="line-height:10pt; margin:0px; font-size:8pt">&nbsp;$ &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(0.003)</P>
</TD><TD style="border-bottom:3px double #000000" valign=bottom width=92.6><P style="line-height:10pt; margin:0px; font-size:8pt">&nbsp;$ &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(0.003)</P>
</TD><TD width=49.133><P>&nbsp;</P></TD><TD width=81.6><P>&nbsp;</P></TD><TD width=104.6><P>&nbsp;</P></TD><TD width=59.133><P>&nbsp;</P></TD><TD width=15.8><P>&nbsp;</P></TD></TR>
<TR><TD valign=bottom width=212.733><P>&nbsp;</P></TD><TD valign=bottom width=90.8><P>&nbsp;</P></TD><TD valign=bottom width=113.467><P>&nbsp;</P></TD><TD valign=bottom width=85.067><P>&nbsp;</P></TD><TD valign=bottom width=92.6><P>&nbsp;</P></TD><TD width=49.133><P>&nbsp;</P></TD><TD width=81.6><P>&nbsp;</P></TD><TD width=104.6><P>&nbsp;</P></TD><TD width=59.133><P>&nbsp;</P></TD><TD width=15.8><P>&nbsp;</P></TD></TR>
<TR><TD valign=bottom width=212.733><P style="line-height:10pt; margin:0px; font-size:8pt"><B>WEIGHTED AVERAGE NUMBER OF</B></P>
</TD><TD valign=bottom width=90.8><P>&nbsp;</P></TD><TD valign=bottom width=113.467><P>&nbsp;</P></TD><TD valign=bottom width=85.067><P>&nbsp;</P></TD><TD valign=bottom width=92.6><P>&nbsp;</P></TD><TD width=49.133><P>&nbsp;</P></TD><TD width=81.6><P>&nbsp;</P></TD><TD width=104.6><P>&nbsp;</P></TD><TD width=59.133><P>&nbsp;</P></TD><TD width=15.8><P>&nbsp;</P></TD></TR>
<TR><TD valign=bottom width=212.733><P style="line-height:10pt; margin:0px; font-size:8pt"><B>&nbsp;&nbsp;COMMON SHARES OUTSTANDING - </B></P>
</TD><TD valign=bottom width=90.8><P>&nbsp;</P></TD><TD valign=bottom width=113.467><P>&nbsp;</P></TD><TD valign=bottom width=85.067><P>&nbsp;</P></TD><TD valign=bottom width=92.6><P>&nbsp;</P></TD><TD width=49.133><P>&nbsp;</P></TD><TD width=81.6><P>&nbsp;</P></TD><TD width=104.6><P>&nbsp;</P></TD><TD width=59.133><P>&nbsp;</P></TD><TD width=15.8><P>&nbsp;</P></TD></TR>
<TR><TD valign=bottom width=212.733><P style="line-height:10pt; margin:0px; font-size:8pt"><B>&nbsp;&nbsp;BASIC AND DILUTED</B></P>
</TD><TD style="border-bottom:3px double #000000" valign=bottom width=90.8><P style="line-height:10pt; margin:0px; font-size:8pt">&nbsp;&nbsp;&nbsp;&nbsp;97,983,679 </P>
</TD><TD style="border-bottom:3px double #000000" valign=bottom width=113.467><P style="line-height:10pt; margin:0px; font-size:8pt">&nbsp;&nbsp;&nbsp;&nbsp;74,651,021 </P>
</TD><TD style="border-bottom:3px double #000000" valign=bottom width=85.067><P style="line-height:10pt; margin:0px; font-size:8pt">&nbsp;&nbsp;97,983,679 </P>
</TD><TD style="border-bottom:3px double #000000" valign=bottom width=92.6><P style="line-height:10pt; margin:0px; font-size:8pt">&nbsp;&nbsp;&nbsp;74,651,021 </P>
</TD><TD width=49.133><P>&nbsp;</P></TD><TD width=81.6><P>&nbsp;</P></TD><TD width=104.6><P>&nbsp;</P></TD><TD width=59.133><P>&nbsp;</P></TD><TD width=15.8><P>&nbsp;</P></TD></TR>
<TR><TD valign=bottom width=212.733><P>&nbsp;</P></TD><TD valign=bottom width=90.8><P>&nbsp;</P></TD><TD valign=bottom width=113.467><P>&nbsp;</P></TD><TD valign=bottom width=85.067><P>&nbsp;</P></TD><TD valign=bottom width=92.6><P>&nbsp;</P></TD><TD width=49.133><P>&nbsp;</P></TD><TD width=81.6><P>&nbsp;</P></TD><TD width=104.6><P>&nbsp;</P></TD><TD width=59.133><P>&nbsp;</P></TD><TD width=15.8><P>&nbsp;</P></TD></TR>
</TABLE>
<P style="margin:0px"><BR></P>
<P style="margin:0px"><BR></P>
<P style="margin:0px"><BR></P>
<P style="margin:0px"><B>The accompanying notes are an integral part of these financial statements.</B></P>
<P style="margin:0px"><BR></P>
<P style="margin:0px"><BR>
<BR></P>
</DIV><DIV style="width:624px"><P style="margin:0px"><BR></P>
<P style="margin:0px"><BR></P>
<P style="margin:0px" align=center><BR></P>
<P style="margin:0px"><BR></P>
<P style="margin:0px"><BR></P>
</DIV><DIV style="width:576px"><P style="margin:0px; page-break-before:always"><BR></P>
<TABLE style="font-size:10pt" cellspacing=0><TR height=0 style="font-size:0"><TD width=398.667></TD><TD width=112.8></TD><TD width=109.733></TD></TR>
<TR><TD valign=bottom width=398.667><P style="margin:0px"><B>CEPHAS HOLDING CORP. AND SUBSIDIARIES</B></P>
</TD><TD valign=bottom width=112.8><P>&nbsp;</P></TD><TD valign=bottom width=109.733><P>&nbsp;</P></TD></TR>
<TR><TD valign=bottom width=398.667><P style="line-height:10pt; margin:0px; font-size:8pt"><B>CONSOLIDATED INTERIM STATEMENT OF CASH FLOWS</B></P>
</TD><TD valign=bottom width=112.8><P>&nbsp;</P></TD><TD valign=bottom width=109.733><P>&nbsp;</P></TD></TR>
<TR><TD valign=bottom width=398.667><P style="line-height:10pt; margin:0px; font-size:8pt"><B>(UNAUDITED)</B></P>
</TD><TD valign=bottom width=112.8><P>&nbsp;</P></TD><TD valign=bottom width=109.733><P>&nbsp;</P></TD></TR>
<TR><TD valign=bottom width=398.667><P>&nbsp;</P></TD><TD valign=bottom width=112.8><P>&nbsp;</P></TD><TD valign=bottom width=109.733><P>&nbsp;</P></TD></TR>
<TR><TD valign=bottom width=398.667><P>&nbsp;</P></TD><TD valign=bottom width=222.533 colspan=2><P style="line-height:10pt; margin:0px; font-size:8pt"><B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;SIX MONTHS ENDED</B></P>
</TD></TR>
<TR><TD valign=bottom width=398.667><P>&nbsp;</P></TD><TD valign=bottom width=222.533 colspan=2><P style="line-height:10pt; margin:0px; font-size:8pt"><B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;JUNE 30,</B></P>
</TD></TR>
<TR><TD style="border-bottom:1.333px solid #000000" valign=bottom width=398.667><P style="margin:0px; font-size:9pt">&nbsp;</P>
</TD><TD style="border-bottom:2px solid #000000" valign=bottom width=112.8><P style="line-height:10pt; margin:0px; font-size:8pt" align=center><B>2010</B></P>
</TD><TD style="border-bottom:2px solid #000000" valign=bottom width=109.733><P style="line-height:10pt; margin:0px; font-size:8pt" align=center><B>2009</B></P>
</TD></TR>
<TR><TD valign=bottom width=398.667><P style="line-height:11pt; margin:0px; font-size:9pt"><B>CASH FLOWS FROM OPERATING ACTIVITIES:</B></P>
</TD><TD valign=bottom width=112.8><P>&nbsp;</P></TD><TD valign=bottom width=109.733><P>&nbsp;</P></TD></TR>
<TR><TD valign=bottom width=398.667><P style="line-height:11pt; margin:0px; font-size:9pt">Net loss</P>
</TD><TD valign=bottom width=112.8><P style="line-height:11pt; margin:0px; font-size:9pt">&nbsp;$ &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(262,429)</P>
</TD><TD valign=bottom width=109.733><P style="line-height:11pt; margin:0px; font-size:9pt">&nbsp;$ &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(257,973)</P>
</TD></TR>
<TR><TD valign=bottom width=398.667><P style="line-height:11pt; margin:0px; font-size:9pt">Adjustment to reconcile net loss to net cash used in operating activities</P>
</TD><TD valign=bottom width=112.8><P>&nbsp;</P></TD><TD valign=bottom width=109.733><P>&nbsp;</P></TD></TR>
<TR><TD valign=bottom width=398.667><P style="line-height:11pt; margin:0px; font-size:9pt">&nbsp;Stock issued for services rendered</P>
</TD><TD valign=bottom width=112.8><P style="line-height:11pt; margin:0px; font-size:9pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;- &nbsp;&nbsp;</P>
</TD><TD valign=bottom width=109.733><P style="line-height:11pt; margin:0px; font-size:9pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;375 </P>
</TD></TR>
<TR><TD valign=bottom width=398.667><P style="line-height:11pt; margin:0px; font-size:9pt">&nbsp;Depreciation</P>
</TD><TD valign=bottom width=112.8><P style="line-height:11pt; margin:0px; font-size:9pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;- &nbsp;&nbsp;</P>
</TD><TD valign=bottom width=109.733><P style="line-height:11pt; margin:0px; font-size:9pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;163 </P>
</TD></TR>
<TR><TD valign=bottom width=398.667><P style="line-height:11pt; margin:0px; font-size:9pt">Changes in operating assets and liabilities:</P>
</TD><TD valign=bottom width=112.8><P>&nbsp;</P></TD><TD valign=bottom width=109.733><P>&nbsp;</P></TD></TR>
<TR><TD valign=bottom width=398.667><P style="line-height:11pt; margin:0px; font-size:9pt">&nbsp;Prepaid expenses</P>
</TD><TD valign=bottom width=112.8><P style="line-height:11pt; margin:0px; font-size:9pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;- &nbsp;&nbsp;</P>
</TD><TD valign=bottom width=109.733><P style="line-height:11pt; margin:0px; font-size:9pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;- &nbsp;&nbsp;</P>
</TD></TR>
<TR><TD valign=bottom width=398.667><P style="line-height:11pt; margin:0px; font-size:9pt">&nbsp;Accounts payable</P>
</TD><TD valign=bottom width=112.8><P style="line-height:11pt; margin:0px; font-size:9pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;87,500 </P>
</TD><TD valign=bottom width=109.733><P style="line-height:11pt; margin:0px; font-size:9pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;87,500 </P>
</TD></TR>
<TR><TD style="border-bottom:1.333px solid #000000" valign=bottom width=398.667><P style="line-height:11pt; margin:0px; font-size:9pt">&nbsp;Accrued interest</P>
</TD><TD style="border-bottom:1.333px solid #000000" valign=bottom width=112.8><P style="line-height:11pt; margin:0px; font-size:9pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;167,925 </P>
</TD><TD style="border-bottom:1.333px solid #000000" valign=bottom width=109.733><P style="line-height:11pt; margin:0px; font-size:9pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;166,878 </P>
</TD></TR>
<TR><TD valign=bottom width=398.667><P>&nbsp;</P></TD><TD valign=bottom width=112.8><P>&nbsp;</P></TD><TD valign=bottom width=109.733><P>&nbsp;</P></TD></TR>
<TR><TD style="border-bottom:1.333px solid #000000" valign=bottom width=398.667><P style="line-height:11pt; margin:0px; font-size:9pt"><B>Net cash used in operating activities</B></P>
</TD><TD style="border-bottom:1.333px solid #000000" valign=bottom width=112.8><P style="line-height:11pt; margin:0px; font-size:9pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(7,004)</P>
</TD><TD style="border-bottom:1.333px solid #000000" valign=bottom width=109.733><P style="line-height:11pt; margin:0px; font-size:9pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3,057)</P>
</TD></TR>
<TR><TD valign=bottom width=398.667><P>&nbsp;</P></TD><TD valign=bottom width=112.8><P>&nbsp;</P></TD><TD valign=bottom width=109.733><P>&nbsp;</P></TD></TR>
<TR><TD valign=bottom width=398.667><P style="line-height:11pt; margin:0px; font-size:9pt"><B>CASH FLOWS FROM INVESTING ACTIVITIES:</B></P>
</TD><TD valign=bottom width=112.8><P>&nbsp;</P></TD><TD valign=bottom width=109.733><P>&nbsp;</P></TD></TR>
<TR><TD valign=bottom width=398.667><P style="line-height:11pt; margin:0px; font-size:9pt">Loan receivable</P>
</TD><TD valign=bottom width=112.8><P style="line-height:11pt; margin:0px; font-size:9pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(90)</P>
</TD><TD valign=bottom width=109.733><P style="line-height:11pt; margin:0px; font-size:9pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;- &nbsp;&nbsp;</P>
</TD></TR>
<TR><TD style="border-bottom:1.333px solid #000000" valign=bottom width=398.667><P style="line-height:11pt; margin:0px; font-size:9pt">Investment in Network Talent, LLC</P>
</TD><TD style="border-bottom:1.333px solid #000000" valign=bottom width=112.8><P style="line-height:11pt; margin:0px; font-size:9pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(62,000)</P>
</TD><TD style="border-bottom:1.333px solid #000000" valign=bottom width=109.733><P style="line-height:11pt; margin:0px; font-size:9pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;- &nbsp;&nbsp;</P>
</TD></TR>
<TR><TD valign=bottom width=398.667><P>&nbsp;</P></TD><TD valign=bottom width=112.8><P>&nbsp;</P></TD><TD valign=bottom width=109.733><P>&nbsp;</P></TD></TR>
<TR><TD style="border-bottom:1.333px solid #000000" valign=bottom width=398.667><P style="line-height:11pt; margin:0px; font-size:9pt"><B>Net cash used in investing activities</B></P>
</TD><TD style="border-bottom:1.333px solid #000000" valign=bottom width=112.8><P style="line-height:11pt; margin:0px; font-size:9pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(62,090)</P>
</TD><TD style="border-bottom:1.333px solid #000000" valign=bottom width=109.733><P style="line-height:11pt; margin:0px; font-size:9pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;- &nbsp;&nbsp;</P>
</TD></TR>
<TR><TD valign=bottom width=398.667><P>&nbsp;</P></TD><TD valign=bottom width=112.8><P>&nbsp;</P></TD><TD valign=bottom width=109.733><P>&nbsp;</P></TD></TR>
<TR><TD valign=bottom width=398.667><P>&nbsp;</P></TD><TD valign=bottom width=112.8><P>&nbsp;</P></TD><TD valign=bottom width=109.733><P>&nbsp;</P></TD></TR>
<TR><TD valign=bottom width=398.667><P>&nbsp;</P></TD><TD valign=bottom width=112.8><P>&nbsp;</P></TD><TD valign=bottom width=109.733><P>&nbsp;</P></TD></TR>
<TR><TD valign=bottom width=398.667><P style="line-height:11pt; margin:0px; font-size:9pt"><B>CASH FLOWS FROM FINANCING ACTIVITIES:</B></P>
</TD><TD valign=bottom width=112.8><P>&nbsp;</P></TD><TD valign=bottom width=109.733><P>&nbsp;</P></TD></TR>
<TR><TD valign=bottom width=398.667><P style="line-height:11pt; margin:0px; font-size:9pt">Advances to an officer, net</P>
</TD><TD valign=bottom width=112.8><P style="line-height:11pt; margin:0px; font-size:9pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(15,823)</P>
</TD><TD valign=bottom width=109.733><P style="line-height:11pt; margin:0px; font-size:9pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;- &nbsp;&nbsp;</P>
</TD></TR>
<TR><TD valign=bottom width=398.667><P style="line-height:11pt; margin:0px; font-size:9pt">Notes payable - net</P>
</TD><TD valign=bottom width=112.8><P style="line-height:11pt; margin:0px; font-size:9pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;85,000 </P>
</TD><TD valign=bottom width=109.733><P>&nbsp;</P></TD></TR>
<TR><TD style="border-bottom:1.333px solid #000000" valign=bottom width=398.667><P style="line-height:11pt; margin:0px; font-size:9pt">Advances from related parties, net</P>
</TD><TD style="border-bottom:1.333px solid #000000" valign=bottom width=112.8><P style="line-height:11pt; margin:0px; font-size:9pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;- &nbsp;&nbsp;</P>
</TD><TD style="border-bottom:1.333px solid #000000" valign=bottom width=109.733><P style="line-height:11pt; margin:0px; font-size:9pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3,600 </P>
</TD></TR>
<TR><TD valign=bottom width=398.667><P>&nbsp;</P></TD><TD valign=bottom width=112.8><P>&nbsp;</P></TD><TD valign=bottom width=109.733><P>&nbsp;</P></TD></TR>
<TR><TD style="border-bottom:1.333px solid #000000" valign=bottom width=398.667><P style="line-height:11pt; margin:0px; font-size:9pt"><B>Net cash provided by financing activities</B></P>
</TD><TD style="border-bottom:1.333px solid #000000" valign=bottom width=112.8><P style="line-height:11pt; margin:0px; font-size:9pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;69,177 </P>
</TD><TD style="border-bottom:1.333px solid #000000" valign=bottom width=109.733><P style="line-height:11pt; margin:0px; font-size:9pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3,600 </P>
</TD></TR>
<TR><TD valign=bottom width=398.667><P>&nbsp;</P></TD><TD valign=bottom width=112.8><P>&nbsp;</P></TD><TD valign=bottom width=109.733><P>&nbsp;</P></TD></TR>
<TR><TD valign=bottom width=398.667><P style="line-height:11pt; margin:0px; font-size:9pt"><B>INCREASE (DECREASE) IN CASH</B></P>
</TD><TD valign=bottom width=112.8><P style="line-height:11pt; margin:0px; font-size:9pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;83 </P>
</TD><TD valign=bottom width=109.733><P style="line-height:11pt; margin:0px; font-size:9pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;543 </P>
</TD></TR>
<TR><TD valign=bottom width=398.667><P>&nbsp;</P></TD><TD valign=bottom width=112.8><P>&nbsp;</P></TD><TD valign=bottom width=109.733><P>&nbsp;</P></TD></TR>
<TR><TD style="border-bottom:1.333px solid #000000" valign=bottom width=398.667><P style="line-height:11pt; margin:0px; font-size:9pt"><B>CASH, Beginning of period</B></P>
</TD><TD style="border-bottom:1.333px solid #000000" valign=bottom width=112.8><P style="line-height:11pt; margin:0px; font-size:9pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;176 </P>
</TD><TD style="border-bottom:1.333px solid #000000" valign=bottom width=109.733><P style="line-height:11pt; margin:0px; font-size:9pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;64 </P>
</TD></TR>
<TR><TD valign=bottom width=398.667><P>&nbsp;</P></TD><TD valign=bottom width=112.8><P>&nbsp;</P></TD><TD valign=bottom width=109.733><P>&nbsp;</P></TD></TR>
<TR><TD style="border-bottom:1.333px solid #000000" valign=bottom width=398.667><P style="line-height:11pt; margin:0px; font-size:9pt"><B>CASH, End of period</B></P>
</TD><TD style="border-bottom:1.333px solid #000000" valign=bottom width=112.8><P style="line-height:11pt; margin:0px; font-size:9pt">&nbsp;$ &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;259 </P>
</TD><TD style="border-bottom:1.333px solid #000000" valign=bottom width=109.733><P style="line-height:11pt; margin:0px; font-size:9pt">&nbsp;$ &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;607 </P>
</TD></TR>
<TR><TD valign=bottom width=398.667><P>&nbsp;</P></TD><TD valign=bottom width=112.8><P>&nbsp;</P></TD><TD valign=bottom width=109.733><P>&nbsp;</P></TD></TR>
<TR><TD valign=bottom width=398.667><P style="line-height:11pt; margin:0px; font-size:9pt"><B>SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:</B></P>
</TD><TD valign=bottom width=112.8><P>&nbsp;</P></TD><TD valign=bottom width=109.733><P>&nbsp;</P></TD></TR>
<TR><TD valign=bottom width=398.667><P style="line-height:11pt; margin:0px; font-size:9pt">Interest Accrued</P>
</TD><TD style="border-bottom:3px double #000000" valign=bottom width=112.8><P style="line-height:11pt; margin:0px; font-size:9pt">&nbsp;$ &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;- &nbsp;&nbsp;</P>
</TD><TD style="border-bottom:3px double #000000" valign=bottom width=109.733><P style="line-height:11pt; margin:0px; font-size:9pt">&nbsp;$ &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;- &nbsp;&nbsp;</P>
</TD></TR>
<TR><TD valign=bottom width=398.667><P style="line-height:11pt; margin:0px; font-size:9pt">Income taxes paid</P>
</TD><TD style="border-bottom:3px double #000000" valign=bottom width=112.8><P style="line-height:11pt; margin:0px; font-size:9pt">&nbsp;$ &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;- &nbsp;&nbsp;</P>
</TD><TD style="border-bottom:3px double #000000" valign=bottom width=109.733><P style="line-height:11pt; margin:0px; font-size:9pt">&nbsp;$ &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;- &nbsp;&nbsp;</P>
</TD></TR>
</TABLE>
<P style="margin:0px"><BR></P>
<P style="margin:0px"><BR></P>
<P style="margin:0px"><B>The accompanying notes are an integral part of these financial statements.</B></P>
<P style="margin:0px" align=center><BR>
<BR></P>
</DIV><DIV style="width:624px"><P style="margin:0px"><BR></P>
<P style="margin:0px"><BR></P>
<P style="margin:0px" align=center><BR></P>
<P style="margin:0px"><BR></P>
<P style="margin:0px"><BR></P>
</DIV><DIV style="width:576px"><P style="line-height:13pt; margin:0px; font-size:11pt; page-break-before:always" align=center><B>CEPHAS HOLDING CORP. AND SUBSIDIARIES</B></P>
<P style="line-height:13pt; margin:0px; font-size:11pt" align=center><B>CONSOLIDATED NOTES TO INTERIM FINANCIAL STATEMENTS</B></P>
<P style="line-height:13pt; margin:0px; font-size:11pt" align=center><B>JUNE 30, 2010</B></P>
<P style="line-height:13pt; margin:0px; font-size:11pt" align=center><B>(UNAUDITED)</B></P>
<P style="line-height:13pt; margin:0px; font-size:11pt" align=justify><B>Note 1 - <U>Organization and Significant Accounting Policies</U></B></P>
<P style="margin:0px" align=justify><BR></P>
<P style="line-height:13pt; margin:0px; font-size:11pt" align=justify><U>Organization and Lines of Business</U></P>
<P style="line-height:13pt; margin:0px; font-size:11pt" align=justify>Cephus Holding Corp formerly Legend Mobile, Inc., (the &quot;Company&quot;), was incorporated in Delaware on January 13, 1998 and is the successor to Interactive Entertainment Studio, Inc. (IES). IES was incorporated in the State of Nevada on May 27, 1997 and was merged into the Company in March 1998 for the sole purpose of changing the domicile of the Company to Delaware.&nbsp;On June 27, 2002, the Company filed a Certificate of Amendment to its Certificate of Incorporation to amend the Company's Certificate of Incorporation name from PTN Media, Inc. to Legend Mobile, Inc. In October 2008, the Company amended its articles to change the name to Cephus Holding Corp.</P>
<P style="line-height:13pt; margin:0px; font-size:11pt" align=justify>&nbsp;&nbsp;</P>
<P style="line-height:13pt; margin:0px; font-size:11pt" align=justify>The Company is a developer&nbsp;and&nbsp;marketer of branded&nbsp;mobile phone applications for the iPhone platform. The Company is an approved developer by Apple Computer to distribute its products on their iTunes store. The Company currently sells the &#147;Iron Sheik Soundboard&#148; and it distributes free of charge &#147;MMA Underboss&#148; -a newswire dedicated to mixed martial arts news. &nbsp;The Company also has a license from Mixed Martial Arts Champion, Fedor Emelianeko to produce iPhone applications under his brand and is currently developing that application. </P>
<P style="line-height:13pt; margin:0px; font-size:11pt" align=justify>&nbsp;&nbsp;</P>
<P style="line-height:13pt; margin:0px; font-size:11pt" align=justify>In February 2001, the Company formed Legend Credit as a wholly owned subsidiary.&nbsp; On April 1, 2003, Mr. Peter Klamka, CEO of the Company, contributed the rights to an affinity credit card business valued at $37,000 to Legend Credit. Mr. Klamka's contribution has been determined pursuant to Accounting Principles Board Opinion No. 29, &quot;Non monetary Transactions,&quot; using his cost basis in the investment, which is the most readily determinable cost.&nbsp; In exchange for this contribution, Legend Credit issued to Mr.&nbsp; Peter Klamka 60% of the issued and outstanding shares of Legend Credit common stock and the Company issued to Mr. Klamka 850,000 shares of Series B convertible preferred stock. These issuances were valued at $22,200 and $14,800, respectively.&nbsp; The Company retains a 40% minority interest in Legend Credit which is accounted for using the equity method.&nbsp; Effective October 1, 2004, Mr. Klamka contributed an additional 10% interest in Legend Credit to the Company that was valued at $3,700 (10% of $37,000,&nbsp;the original value of the affinity credit card business). The Company now owns 50% of Legend Credit and accounts for the subsidiary using the acquisition method. The subsidiary currently has no business operations. </P>
<P style="line-height:13pt; margin:0px; font-size:11pt" align=justify>&nbsp;&nbsp;</P>
<P style="line-height:13pt; margin:0px; font-size:11pt" align=justify>In July 1999, the Company formed&nbsp;Legend Studios,&nbsp;Inc. (formerly <FONT style="color:#0000FF"><U>FragranceDirect.com</U></FONT>, Inc.)&nbsp; (&quot;Legend&nbsp;Studios&quot;),&nbsp;a majority owned subsidiary.&nbsp; &nbsp;As of June 30, 2010, Legend Studios did not have any operations. </P>
<P style="margin:0px" align=justify><BR></P>
<P style="line-height:13pt; margin:0px; font-size:11pt" align=justify><U>Basis of Presentation and Going Concern</U></P>
<P style="line-height:13pt; margin:0px; font-size:11pt" align=justify>The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which contemplate continuation of the Company as a going concern. &nbsp;The Company incurred a net loss for the six months ended June 30, 2010 of &nbsp;$262,429 &nbsp;and at &nbsp;June 30, 2010, &nbsp;had an accumulated &nbsp;deficit of $21,923,504 and a working &nbsp;capital &nbsp;deficit of $5,563,790. In addition, the Company generates minimal revenue from its operations and is in default on the payment of notes payable and license fee payable obligations. These conditions raise substantial doubt as to the Company's &nbsp;&nbsp;ability to continue as a going concern. &nbsp;&nbsp;These consolidated financial statements do not include any </P>
<P style="margin:0px" align=justify><BR>
<BR></P>
</DIV><DIV style="width:624px"><P style="margin:0px"><BR></P>
<P style="margin:0px"><BR></P>
<P style="margin:0px" align=center><BR></P>
<P style="margin:0px"><BR></P>
<P style="margin:0px"><BR></P>
</DIV><DIV style="width:576px"><P style="line-height:13pt; margin:0px; font-size:11pt; page-break-before:always" align=center><B>CEPHAS HOLDING CORP. AND SUBSIDIARIES</B></P>
<P style="line-height:13pt; margin:0px; font-size:11pt" align=center><B>CONSOLIDATED NOTES TO INTERIM FINANCIAL STATEMENTS</B></P>
<P style="line-height:13pt; margin:0px; font-size:11pt" align=center><B>JUNE 30, 2010</B></P>
<P style="line-height:13pt; margin:0px; font-size:11pt" align=center><B>(UNAUDITED)</B></P>
<P style="line-height:13pt; margin:0px; font-size:11pt" align=justify><B>Note 1 - <U>Organization and Significant Accounting Policies (continued)</U></B></P>
<P style="margin:0px" align=justify><BR></P>
<P style="line-height:13pt; margin:0px; font-size:11pt" align=justify><U>Basis of Presentation and Going Concern(continued)</U></P>
<P style="margin:0px" align=justify><BR></P>
<P style="line-height:13pt; margin:0px; font-size:11pt" align=justify>adjustments that might result from the outcome of this uncertainty. These consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts, or amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. &nbsp;These interim financial statements however, do include all necessary adjustments to not make them misleading</P>
<P style="margin:0px" align=justify><BR></P>
<P style="line-height:13pt; margin:0px; font-size:11pt" align=justify>The Company plans to take the following steps that it believes will be sufficient to provide the Company with the ability to continue in existence.&nbsp; The Company is seeking additional equity or debt capital to expand its mobile application business.&nbsp;</P>
<P style="margin:0px" align=justify><BR></P>
<P style="line-height:13pt; margin:0px; font-size:11pt" align=justify><U>Principles of Consolidation</U></P>
<P style="line-height:13pt; margin:0px; font-size:11pt" align=justify>The accompanying consolidated financial statements include the accounts of the Company and its 91%-owned subsidiary, Legend Studios, and its 50% owned subsidiary, Legend Credit. Significant intercompany accounts and transactions have been eliminated.</P>
<P style="margin:0px" align=justify><BR></P>
<P style="line-height:13pt; margin:0px; font-size:11pt" align=justify><U>Cash and Cash Equivalents</U></P>
<P style="line-height:13pt; margin:0px; font-size:11pt" align=justify>For purposes of the statements of cash flows, the Company defines cash equivalents as all highly liquid debt instruments purchased with a maturity of three months or less, plus all certificates of deposit.</P>
<P style="margin:0px" align=justify><BR></P>
<P style="line-height:13pt; margin:0px; font-size:11pt" align=justify><U>Use of Estimates</U></P>
<P style="line-height:13pt; margin:0px; font-size:11pt" align=justify>The preparation of consolidated financial statements in conformity with accounting &nbsp;principles &nbsp;generally accepted in the &nbsp;United States of America requires management to make &nbsp;estimates and &nbsp;assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the consolidated financial &nbsp;statements and the reported &nbsp;amounts of revenue and expenses during the reporting periods. As of December 31, 2009, the Company used estimates in determining the value of common stock issued to consultants for services. Actual results could differ from these estimates.</P>
<P style="margin:0px" align=justify><BR></P>
<P style="line-height:13pt; margin:0px; font-size:11pt" align=justify><U>Concentration of Credit Risk</U></P>
<P style="line-height:13pt; margin:0px; font-size:11pt" align=justify>Financial instruments, which potentially subject the Company to concentrations of credit risk, consist of cash. The Company places its cash with high quality financial institutions and at times may exceed the FDIC $250,000 insurance limit. The Company extends credit based on an evaluation of the customer's financial condition, generally without collateral. &nbsp;Exposure to losses on receivables is principally dependent on each customer's financial condition. The Company monitors its exposure for credit losses and maintains allowances for anticipated losses, as required.</P>
<P style="margin:0px" align=justify><BR></P>
<P style="line-height:13pt; margin:0px; font-size:11pt"><U>Comprehensive Income</U></P>
<P style="line-height:13pt; margin:0px; font-size:11pt" align=justify>The Company has adopted SFAS No. 130 (ASC220-10), &quot;Reporting Comprehensive Income.&quot; This statement establishes standards for reporting comprehensive income and its components in a financial statement. Comprehensive income as defined includes all changes in equity (net assets) during a period from non-owner sources. Examples of items to be included in comprehensive </P>
<P style="margin:0px" align=justify><BR>
<BR></P>
</DIV><DIV style="width:624px"><P style="margin:0px"><BR></P>
<P style="margin:0px"><BR></P>
<P style="margin:0px" align=center><BR></P>
<P style="margin:0px"><BR></P>
<P style="margin:0px"><BR></P>
</DIV><DIV style="width:576px"><P style="line-height:13pt; margin:0px; font-size:11pt; page-break-before:always" align=center><B>CEPHAS HOLDING CORP. AND SUBSIDIARIES</B></P>
<P style="line-height:13pt; margin:0px; font-size:11pt" align=center><B>CONSOLIDATED NOTES TO INTERIM FINANCIAL STATEMENTS</B></P>
<P style="line-height:13pt; margin:0px; font-size:11pt" align=center><B>JUNE 30, 2010</B></P>
<P style="line-height:13pt; margin:0px; font-size:11pt" align=center><B>(UNAUDITED)</B></P>
<P style="line-height:13pt; margin:0px; font-size:11pt" align=justify><B>Note 1 - <U>Organization and Significant Accounting Policies (continued)</U></B></P>
<P style="margin:0px" align=justify><BR></P>
<P style="line-height:13pt; margin:0px; font-size:11pt"><U>Comprehensive Income(continued)</U></P>
<P style="margin:0px" align=justify><BR></P>
<P style="line-height:13pt; margin:0px; font-size:11pt" align=justify>income, which are excluded from net income, include foreign currency translation adjustments and unrealized gains and losses on available-for-sale securities. Comprehensive income (loss) is not presented in the Company's financial statements since there is no difference between net loss and comprehensive loss in any period presented.</P>
<P style="margin:0px" align=justify><BR></P>
<P style="line-height:13pt; margin:0px; font-size:11pt" align=justify><U>Stock Based Compensation</U></P>
<P style="line-height:13pt; margin:0px; font-size:11pt" align=justify>Stock-based compensation is accounted for at fair value in accordance with SFAS No. 123 and 123 (R) (ASC 718). &nbsp;During the six months ended June 30, 2010, the Company has not adopted a stock option plan and has not granted any stock options.</P>
<P style="margin:0px" align=justify><BR></P>
<P style="line-height:13pt; margin:0px; font-size:11pt" align=justify>Stock-based compensation represents the cost related to common stock and options to purchase common stock granted to employees and related parties of&nbsp;the Company.&nbsp;The Company&nbsp;determines the cost of common stock grants at the date the common stock was issued, based on the quoted market price of&nbsp;the Company&#146;s common stock and recognizes the cost as expense over the requisite service period.&nbsp;The Company&nbsp;estimates the fair value of all warrants and options issued during the period using the Black-Scholes option-pricing model with the assumptions appropriate to the circumstances of&nbsp;the Company&nbsp;at the time of the transaction. There were no options or warrants issued during the six months ended June 30, 2010.</P>
<P style="margin:0px" align=justify><BR></P>
<P style="line-height:13pt; margin:0px; font-size:11pt" align=justify>The Company&nbsp;records deferred tax assets for awards that result in deductions on&nbsp;the Company&#146;s income tax returns, based on the amount of compensation cost recognized and the Company&#146;s statutory tax rate in the jurisdiction in which it will receive a deduction. Differences between the deferred tax assets recognized for financial reporting purposes and the actual tax deduction reported on&nbsp;the Company&#146;s income tax return are recorded in Additional Paid-In Capital.</P>
<P style="margin:0px" align=center><BR></P>
<P style="line-height:13pt; margin:0px; font-size:11pt" align=justify><U>Fair Value of Financial Instruments</U></P>
<P style="line-height:13pt; margin:0px; font-size:11pt" align=justify>For certain of the Company's &nbsp;financial &nbsp;instruments, &nbsp;including &nbsp;cash, accounts &nbsp;payable, &nbsp;accrued &nbsp;expenses, &nbsp;accrued &nbsp;interest, &nbsp;license fee payable, due to related parties, and advances from an officer, &nbsp;the carrying &nbsp;amounts &nbsp;approximate fair value due to their short &nbsp;maturities. &nbsp;The amounts shown for notes payable also approximate fair value because current interest rates and terms offered to the Company for similar debt are substantially the same.</P>
<P style="margin:0px" align=justify><BR></P>
<P style="line-height:13pt; margin:0px; font-size:11pt" align=justify><U>Property and equipment</U></P>
<P style="line-height:13pt; margin:0px; font-size:11pt" align=justify>Property and equipment is recorded at cost. Depreciation is provided on a straight-line basis over estimated useful lives of the assets.</P>
<P style="margin:0px" align=justify><BR></P>
<P style="line-height:13pt; margin:0px; font-size:11pt" align=justify>Expenditures for maintenance and repairs are charged to operations as incurred while renewals and betterments are capitalized. &nbsp;Gains and losses on disposals are included in the results of operations.</P>
<P style="margin:0px" align=center><BR>
<BR></P>
</DIV><DIV style="width:624px"><P style="margin:0px"><BR></P>
<P style="margin:0px"><BR></P>
<P style="margin:0px" align=center><BR></P>
<P style="margin:0px"><BR></P>
<P style="margin:0px"><BR></P>
</DIV><DIV style="width:576px"><P style="line-height:13pt; margin:0px; font-size:11pt; page-break-before:always" align=center><B>CEPHAS HOLDING CORP. AND SUBSIDIARIES</B></P>
<P style="line-height:13pt; margin:0px; font-size:11pt" align=center><B>CONSOLIDATED NOTES TO INTERIM FINANCIAL STATEMENTS</B></P>
<P style="line-height:13pt; margin:0px; font-size:11pt" align=center><B>JUNE 30, 2010</B></P>
<P style="line-height:13pt; margin:0px; font-size:11pt" align=center><B>(UNAUDITED)</B></P>
<P style="line-height:13pt; margin:0px; font-size:11pt" align=justify><B>Note 1 - <U>Organization and Significant Accounting Policies (continued)</U></B></P>
<P style="margin:0px" align=justify><BR></P>
<P style="line-height:13pt; margin:0px; font-size:11pt" align=justify><U>Revenue Recognition</U></P>
<P style="line-height:13pt; margin:0px; font-size:11pt" align=justify>The Company generates revenue from the sale of products on its web sites and through other channels, the sale of advertisements on radio stations it operated and service fees from the sale of debit cards. The Company recognizes revenue for these product sales when the product is shipped to the customer. &nbsp;The Company recognizes revenue from the radio stations it operated when advertisements were aired. &nbsp;The Company recognizes service fee revenue from the sale of debit cards at the time the customer is sent the debit card. &nbsp;Shipping and handling costs are recorded as revenue and related costs are charged to cost of sales.</P>
<P style="margin:0px" align=justify><BR></P>
<P style="line-height:13pt; margin:0px; font-size:11pt" align=justify><U>Income Taxes</U></P>
<P style="line-height:13pt; margin:0px; font-size:11pt" align=justify>Income taxes are computed using the asset and liability method. &nbsp;Under the asset and liability method, deferred income tax assets and liabilities are determined based on the differences between the financial reporting and tax bases of assets and liabilities and are measured using the currently enacted tax rates and laws. &nbsp;A valuation allowance is provided for the amount of deferred tax assets that, based on available evidence, are not expected to be realized.</P>
<P style="margin:0px" align=justify><BR></P>
<P style="line-height:13pt; margin:0px; font-size:11pt" align=justify><U>Reclassifications</U></P>
<P style="line-height:13pt; margin:0px; font-size:11pt" align=justify>Certain accounts and financial statement captions in the prior periods have been reclassified to conform to the current period financial statement presentation.</P>
<P style="margin:0px" align=center><BR></P>
<P style="line-height:13pt; margin:0px; font-size:11pt" align=justify><U>Impairment of Long-Lived Assets</U></P>
<P style="line-height:13pt; margin:0px; font-size:11pt" align=justify>In October 2001, the FASB issued SFAS No. 144 (ASC 360), &quot;Accounting for Impairment or Disposal of Long-Lived Assets&quot;. &nbsp;This statement also amends ARB No. 51 (ASC 810), &quot;Consolidated Financial Statements&quot;, to eliminate the exception to consolidation for a subsidiary for which control is likely to be impaired. SFAS No. 144 (ASC 360) requires that long-lived assets &nbsp;to be &nbsp;disposed &nbsp;of by sale, &nbsp;including &nbsp;those of &nbsp;discontinued operations, &nbsp;be measured at the lower of carrying &nbsp;amount or fair value less cost to sell, &nbsp;whether &nbsp;reported in &nbsp;continuing &nbsp;operations &nbsp;or in discontinued &nbsp;operations. &nbsp;SFAS No. 144 (ASC 360) &nbsp;broadens &nbsp;the &nbsp;reporting &nbsp;of discontinued &nbsp;operations &nbsp;to include all &nbsp;components &nbsp;of an entity with operations &nbsp;that can be &nbsp;distinguished &nbsp;from the rest of the entity and that will be eliminated from the ongoing &nbsp;operations of the entity in a disposal &nbsp;transaction. &nbsp;SFAS No. 144 (ASC 360) also establishes a &quot;primary-asset&quot; approach to determine the cash flow estimation period for a group of assets and liabilities that represents the unit of accounting for a long-lived asset to be held and used. The Company's adoption effective January 1, 2002 did not have a material impact to the Company's financial position or results of operations.</P>
<P style="margin:0px" align=center><BR>
<BR></P>
</DIV><DIV style="width:624px"><P style="margin:0px"><BR></P>
<P style="margin:0px"><BR></P>
<P style="margin:0px" align=center><BR></P>
<P style="margin:0px"><BR></P>
<P style="margin:0px"><BR></P>
</DIV><DIV style="width:576px"><P style="line-height:13pt; margin:0px; font-size:11pt; page-break-before:always" align=center><B>CEPHAS HOLDING CORP. AND SUBSIDIARIES</B></P>
<P style="line-height:13pt; margin:0px; font-size:11pt" align=center><B>CONSOLIDATED NOTES TO INTERIM FINANCIAL STATEMENTS</B></P>
<P style="line-height:13pt; margin:0px; font-size:11pt" align=center><B>JUNE 30, 2010</B></P>
<P style="line-height:13pt; margin:0px; font-size:11pt" align=center><B>(UNAUDITED)</B></P>
<P style="line-height:13pt; margin:0px; font-size:11pt" align=justify><B>Note 1 - <U>Organization and Significant Accounting Policies (continued)</U></B></P>
<P style="margin:0px"><BR></P>
<P style="line-height:13pt; margin:0px; font-size:11pt" align=justify><U>Earnings (Loss) Per Share</U></P>
<P style="line-height:13pt; margin:0px; font-size:11pt" align=justify>The Company reports earnings (loss) per share in accordance with SFAS No. 128 (ASC 260), &quot;Earnings per Share.&quot; &nbsp;Basic earnings (loss) per share is computed by dividing income (loss) available to common shareholders by the weighted average number of common shares available. &nbsp;Diluted earnings (loss) per share is computed similar to basic earnings (loss) per share &nbsp;except &nbsp;that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive. &nbsp;Diluted earnings (loss) per share has not been presented since the effect of the assumed conversion of options and warrants to purchase common shares would have an anti-dilutive effect. &nbsp;The following potential common shares have been excluded from the computation of diluted net loss per share for the six months ended June 30, 2010 and 2009 respectively because the effect would have been anti-dilutive:</P>
<P style="margin:0px" align=justify><BR></P>
<TABLE style="font-size:10pt" cellspacing=0><TR height=0 style="font-size:0"><TD width=251.067></TD><TD width=86.533></TD><TD width=86.533></TD></TR>
<TR><TD valign=bottom width=251.067><P>&nbsp;</P></TD><TD style="border-bottom:1px solid #000000" valign=bottom width=86.533><P style="line-height:13pt; margin:0px; font-size:11pt" align=center><B>2010</B></P>
</TD><TD style="border-bottom:1px solid #000000" valign=bottom width=86.533><P style="line-height:13pt; margin:0px; font-size:11pt" align=center><B>2009</B></P>
</TD></TR>
<TR><TD valign=bottom width=251.067><P style="line-height:13pt; margin:0px; font-size:11pt">Conversion of Series A preferred stock</P>
</TD><TD valign=bottom width=86.533><P style="line-height:13pt; margin:0px; font-size:11pt" align=right>&nbsp;44,500</P>
</TD><TD valign=bottom width=86.533><P style="line-height:13pt; margin:0px; font-size:11pt" align=right>44,500</P>
</TD></TR>
<TR><TD valign=bottom width=251.067><P style="line-height:13pt; margin:0px; font-size:11pt">Conversion of Series B preferred stock</P>
</TD><TD valign=bottom width=86.533><P style="line-height:13pt; margin:0px; font-size:11pt" align=right>8,500,000</P>
</TD><TD valign=bottom width=86.533><P style="line-height:13pt; margin:0px; font-size:11pt" align=right>8,500,000</P>
</TD></TR>
<TR><TD valign=bottom width=251.067><P style="line-height:13pt; margin:0px; font-size:11pt">Conversion of Series C preferred stock</P>
</TD><TD style="border-bottom:1px solid #000000" valign=bottom width=86.533><P style="line-height:13pt; margin:0px; font-size:11pt" align=right>14,777,500</P>
</TD><TD style="border-bottom:1px solid #000000" valign=bottom width=86.533><P style="line-height:13pt; margin:0px; font-size:11pt" align=right>14,777,500</P>
</TD></TR>
<TR><TD valign=bottom width=251.067><P style="line-height:13pt; margin:0px; font-size:11pt">Total</P>
</TD><TD style="border-bottom:3px double #000000" valign=bottom width=86.533><P style="line-height:13pt; margin:0px; font-size:11pt" align=right>23,322,000</P>
</TD><TD style="border-bottom:3px double #000000" valign=bottom width=86.533><P style="line-height:13pt; margin:0px; font-size:11pt" align=right>23,322,000</P>
</TD></TR>
</TABLE>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px" align=center><BR></P>
<P style="margin:0px" align=center><BR></P>
<P style="margin:0px" align=center><BR></P>
<P style="margin:0px" align=justify><BR></P>
<P style="line-height:13pt; margin:0px; font-size:11pt" align=justify>All warrants and stock options were cancelled during the year ended December 31, 2007.</P>
<P style="margin:0px" align=justify><BR></P>
<P style="line-height:13pt; margin:0px; font-size:11pt" align=justify><U>Non-Controlling Interest</U></P>
<P style="line-height:13pt; margin:0px; font-size:11pt" align=justify>In December 2007, the FASB issued SFAS No. 160 (ASC 810), &#147;Non-controlling Interests in Consolidated Financial Statements, an amendment of ARB No. 51 (ASC 810)&#148;, which addresses the accounting and reporting framework for minority interests by a parent company. SFAS 160 (ASC 810) also addresses disclosure requirements to distinguish between interests of the parent and interests of the non-controlling owners of a subsidiary. SFAS 160 (ASC 810) became effective beginning with our first quarter of 2009. We will be reporting minority interest as a component of equity in our Consolidated Balance Sheets and below income tax expense in our Consolidated Statement of Operations. As minority interest will be recorded below income tax expense, it will have an impact to our total effective tax rate, but our total taxes will not change. For comparability, we will be retrospectively applying the presentation of our prior year balances in our Consolidated Financial Statements.</P>
<P style="margin:0px" align=center><BR></P>
<P style="line-height:13pt; margin:0px; font-size:11pt" align=justify><U>Recently Issued Accounting Pronouncements</U></P>
<P style="line-height:13pt; margin:0px; font-size:11pt" align=justify>Effective January&nbsp;1, 2010, the Company adopted an accounting standard update regarding accounting for transfers of financial assets. As codified under Accounting Standards Codification, or ASC, 860, this update prescribes the information that a reporting entity must provide in its financial reports about a transfer of financial assets; the effects of a transfer on its financial position, financial performance, and cash flows; and a transferor&#146;s continuing involvement in transferred financial assets. Specifically, among other aspects, the update amends Statement of Financial Accounting Standards No.&nbsp;140, <I>Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities</I>, or SFAS 140, by removing the concept of a qualifying special-purpose entity from SFAS 140 and removes the exception from applying FASB Interpretation No.&nbsp;46, <I>Consolidation of Variable Interest Entities (revised)</I>, to variable interest </P>
<P style="margin:0px" align=justify><BR>
<BR></P>
</DIV><DIV style="width:624px"><P style="margin:0px"><BR></P>
<P style="margin:0px"><BR></P>
<P style="margin:0px" align=center><BR></P>
<P style="margin:0px"><BR></P>
<P style="margin:0px"><BR></P>
</DIV><DIV style="width:576px"><P style="line-height:13pt; margin:0px; font-size:11pt; page-break-before:always" align=center><B>CEPHAS HOLDING CORP. AND SUBSIDIARIES</B></P>
<P style="line-height:13pt; margin:0px; font-size:11pt" align=center><B>CONSOLIDATED NOTES TO INTERIM FINANCIAL STATEMENTS</B></P>
<P style="line-height:13pt; margin:0px; font-size:11pt" align=center><B>JUNE 30, 2010</B></P>
<P style="line-height:13pt; margin:0px; font-size:11pt" align=center><B>(UNAUDITED)</B></P>
<P style="line-height:13pt; margin:0px; font-size:11pt" align=justify><B>Note 1 - <U>Organization and Significant Accounting Policies (continued)</U></B></P>
<P style="line-height:13pt; margin:0px; font-size:11pt" align=justify><U>Recently Issued Accounting Pronouncements (continued)</U></P>
<P style="margin:0px" align=justify><BR></P>
<P style="line-height:13pt; margin:0px; font-size:11pt" align=justify>entities that are qualifying special-purpose entities. It also modifies the financial-components approach used in SFAS 140. Since the update is effective for transfer of financial assets occurring on or after January&nbsp;1, 2010 and the Company has not had any such transactions subsequent to January&nbsp;1, 2010 to date, the adoption of this update did not have an impact on the Company&#146;s condensed consolidated financial statements. </P>
<P style="margin:0px" align=justify><BR></P>
<P style="line-height:13pt; margin:0px; font-size:11pt" align=justify>Effective January&nbsp;1, 2010, the Company adopted an accounting standard update regarding fair value measures. As codified under ASC 820, this update requires additional disclosures about fair value measurements including transfers in and out of Levels 1 and 2 and a higher level of disaggregation for the different types of financial instruments. For the reconciliation of Level 3 fair value measurements, information about purchases, sales, issuances and settlements should be presented separately. Since this update addresses disclosure requirements, the adoption of this update did not impact the Company&#146;s financial position, results of operations or cash flows. </P>
<P style="margin:0px"><BR></P>
<P style="line-height:13pt; margin:0px; font-size:11pt" align=justify>In February 2010, FASB issued ASU 2010-9 Subsequent Events (Topic 855) Amendments to Certain Recognition and Disclosure Requirements&#148;. ASU 2010-9 amends disclosure requirements within Subtopic 855-10. An entity that is an SEC filer is not required to disclose the date through which subsequent events have been evaluated. This change alleviates potential conflicts between Subtopic 855-10 and the SEC's requirements. ASU 2010-9 is effective for interim and annual periods ending after June&nbsp;15, 2010. The Company expects the adoption of ASU 2010-06 will not have a material impact on the Company&#146;s results of operations or financial position. </P>
<P style="margin:0px"><BR></P>
<P style="line-height:13pt; margin:0px; font-size:11pt" align=justify><B>Note 2 &#150; <U>Property and Equipment</U></B></P>
<P style="line-height:13pt; margin:0px; font-size:11pt" align=justify>Property and equipment as at June 30, 2010 and December 31, 2009 consisted of the following:</P>
<P style="margin:0px" align=justify><BR></P>
<TABLE style="font-size:10pt" cellspacing=0><TR height=0 style="font-size:0"><TD width=251.067></TD><TD width=86.533></TD><TD width=86.533></TD></TR>
<TR><TD valign=bottom width=251.067><P>&nbsp;</P></TD><TD style="border-bottom:1px solid #000000" valign=bottom width=86.533><P style="line-height:13pt; margin:0px; font-size:11pt" align=center><B>2010</B></P>
</TD><TD style="border-bottom:1px solid #000000" valign=bottom width=86.533><P style="line-height:13pt; margin:0px; font-size:11pt" align=center><B>2009</B></P>
</TD></TR>
<TR><TD valign=bottom width=251.067><P style="line-height:13pt; margin:0px; font-size:11pt">Computer equipment</P>
</TD><TD valign=bottom width=86.533><P style="line-height:13pt; margin:0px; font-size:11pt" align=right>$ &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11,376</P>
</TD><TD valign=bottom width=86.533><P style="line-height:13pt; margin:0px; font-size:11pt" align=right>$ &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11,376</P>
</TD></TR>
<TR><TD valign=bottom width=251.067><P style="line-height:13pt; margin:0px; font-size:11pt">Less: Accumulated depreciation</P>
</TD><TD style="border-bottom:1px solid #000000" valign=bottom width=86.533><P style="line-height:13pt; margin:0px; font-size:11pt" align=right>(11,376)</P>
</TD><TD style="border-bottom:1px solid #000000" valign=bottom width=86.533><P style="line-height:13pt; margin:0px; font-size:11pt" align=right>(11,376)</P>
</TD></TR>
<TR><TD valign=bottom width=251.067><P style="line-height:13pt; margin:0px; font-size:11pt">Net Fixed Assets</P>
</TD><TD style="border-bottom:3px double #000000" valign=bottom width=86.533><P style="line-height:13pt; margin:0px; font-size:11pt" align=right>$ &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;0</P>
</TD><TD style="border-bottom:3px double #000000" valign=bottom width=86.533><P style="line-height:13pt; margin:0px; font-size:11pt" align=right>$ &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;0</P>
</TD></TR>
</TABLE>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px" align=justify><BR></P>
<P style="line-height:13pt; margin:0px; font-size:11pt" align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</P>
<P style="line-height:13pt; margin:0px; font-size:11pt" align=justify>Depreciation expense for the six months ended June 30, 2010 and 2009 was $0 and $163, respectively.</P>
<P style="margin:0px" align=justify><BR></P>
<P style="line-height:13pt; margin:0px; font-size:11pt" align=justify><B>Note 3 - <U>Accrued Expenses</U></B></P>
<P style="margin:0px" align=justify><BR></P>
<P style="line-height:13pt; margin:0px; font-size:11pt" align=justify>Accrued expenses at June 30, 2010 and December 31, 2009 consisted of the following:</P>
<P style="margin:0px" align=justify><BR></P>
<TABLE style="font-size:10pt" cellspacing=0><TR height=0 style="font-size:0"><TD width=176.533></TD><TD width=86.533></TD><TD width=86.533></TD></TR>
<TR><TD valign=bottom width=176.533><P>&nbsp;</P></TD><TD style="border-bottom:1px solid #000000" valign=bottom width=86.533><P style="line-height:13pt; margin:0px; font-size:11pt" align=center><B>2010</B></P>
</TD><TD style="border-bottom:1px solid #000000" valign=bottom width=86.533><P style="line-height:13pt; margin:0px; font-size:11pt" align=center><B>2009</B></P>
</TD></TR>
<TR><TD valign=bottom width=176.533><P style="line-height:13pt; margin:0px; font-size:11pt">Michael Jordan settlement</P>
</TD><TD valign=bottom width=86.533><P style="line-height:13pt; margin:0px; font-size:11pt" align=right>$ &nbsp;&nbsp;&nbsp;468,750</P>
</TD><TD valign=bottom width=86.533><P style="line-height:13pt; margin:0px; font-size:11pt" align=right>$ &nbsp;&nbsp;&nbsp;468,750</P>
</TD></TR>
<TR><TD valign=bottom width=176.533><P style="line-height:13pt; margin:0px; font-size:11pt">Management salary</P>
</TD><TD valign=bottom width=86.533><P style="line-height:13pt; margin:0px; font-size:11pt" align=right>481,250</P>
</TD><TD valign=bottom width=86.533><P style="line-height:13pt; margin:0px; font-size:11pt" align=right>393,750</P>
</TD></TR>
<TR><TD valign=bottom width=176.533><P style="line-height:13pt; margin:0px; font-size:11pt">Professional fees</P>
</TD><TD style="border-bottom:1px solid #000000" valign=bottom width=86.533><P style="line-height:13pt; margin:0px; font-size:11pt" align=right>3,000</P>
</TD><TD style="border-bottom:1px solid #000000" valign=bottom width=86.533><P style="line-height:13pt; margin:0px; font-size:11pt" align=right>3,000</P>
</TD></TR>
<TR><TD valign=bottom width=176.533><P style="line-height:13pt; margin:0px; font-size:11pt">Total Accrued Expenses</P>
</TD><TD style="border-bottom:3px double #000000" valign=bottom width=86.533><P style="line-height:13pt; margin:0px; font-size:11pt" align=right>$ &nbsp;&nbsp;&nbsp;953,000</P>
</TD><TD style="border-bottom:3px double #000000" valign=bottom width=86.533><P style="line-height:13pt; margin:0px; font-size:11pt" align=right>$ &nbsp;&nbsp;&nbsp;865,500</P>
</TD></TR>
</TABLE>
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</DIV><DIV style="width:576px"><P style="line-height:13pt; margin:0px; font-size:11pt; page-break-before:always" align=justify>The amount owing to Michael Jordan bears interest at 12% per annum and is currently in default. &nbsp;Accrued interest on that settlement to date amounts to $431,767.</P>
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</DIV><DIV style="width:576px"><P style="line-height:13pt; margin:0px; font-size:11pt; page-break-before:always" align=center><B>CEPHAS HOLDING CORP. AND SUBSIDIARIES</B></P>
<P style="line-height:13pt; margin:0px; font-size:11pt" align=center><B>CONSOLIDATED NOTES TO INTERIM FINANCIAL STATEMENTS</B></P>
<P style="line-height:13pt; margin:0px; font-size:11pt" align=center><B>JUNE 30, 2010</B></P>
<P style="line-height:13pt; margin:0px; font-size:11pt" align=center><B>(UNAUDITED)</B></P>
<P style="line-height:13pt; margin:0px; font-size:11pt" align=justify><B>Note 4 - <U>Notes Payable - Officer</U></B></P>
<P style="margin:0px" align=justify><BR></P>
<P style="line-height:13pt; margin:0px; font-size:11pt" align=justify>As of September 30, 2004, the Company converted $291,000 of advances from its CEO, Mr. Klamka, into a note payable that bears interest at 21% per annum and is payable upon demand. &nbsp;As of March 31, 2010, the balance on this note is $263,496 with accrued interest related to this note amounted to $311,560.</P>
<P style="margin:0px" align=justify><BR></P>
<P style="line-height:13pt; margin:0px; font-size:11pt" align=justify>During the year ended December 2006 the Company converted certain of the accrued amounts owing to the CEO and for salaries payable to the CEO into a note totaling $758,920. &nbsp;This note is unsecured and bears interest at the rate of 21% per annum. &nbsp;Accrued interest to date is $602,898.</P>
<P style="margin:0px" align=justify><BR></P>
<P style="line-height:13pt; margin:0px; font-size:11pt" align=justify>Additional notes were issued during 2007 to Peter Klamka for unpaid salaries of $175,000 bearing interest at the rate of 8% per annum. Interest accrued to date is $36,750. Additionally, a note for expenses paid by Mr. Klamka on behalf of the Company totaling $29,733 was issued and bears interest at 10% per annum. &nbsp;Interest accrued to date is $7,182.</P>
<P style="margin:0px" align=justify><BR></P>
<P style="line-height:13pt; margin:0px; font-size:11pt" align=justify>The total amount due for notes payable &#150; officer is $1,217,149 as of June 30, 2010.</P>
<P style="margin:0px" align=center><BR></P>
<P style="line-height:13pt; margin:0px; font-size:11pt" align=justify><B>Note 5 - <U>Notes Payable</U></B></P>
<P style="margin:0px" align=justify><BR></P>
<P style="line-height:13pt; margin:0px; font-size:11pt" align=justify>In July and August 1997, the Company received $56,250 through the issuance of 8% promissory notes and common stock purchase warrants to acquire Company stock. &nbsp;In 1999, one of the note holders converted $25,000 of principal and $5,500 of accrued interest into 6,100 shares of the Company's common stock. The remainder of the notes, which amounts to $31,250, continues to be outstanding notwithstanding the fact that payments owed by the Company there under are now past due. &nbsp;Interest accrued to date is $29,125.</P>
<P style="margin:0px" align=justify><BR></P>
<P style="line-height:13pt; margin:0px; font-size:11pt" align=justify>In July and August of 1999, the Company's Subsidiaries, Legend Studios issued 10% promissory notes aggregating to $160,000. &nbsp;The notes are due the earlier of one year or the completion of an initial public offering of Legend Studios common stock. In addition, Legend Studios issued to the note &nbsp;holders &nbsp;an &nbsp;aggregate &nbsp;of &nbsp;96,000 &nbsp;two-year &nbsp;stock &nbsp;purchase warrants to purchase &nbsp;Legend &nbsp;Studios &nbsp;common stock at $3.50 per share. During the year ended &nbsp;December &nbsp;31, 2002, &nbsp;two note holders &nbsp;converted principal &nbsp;and accrued &nbsp;interest &nbsp;of $35,000 &nbsp;and &nbsp;$13,358 &nbsp;into 48,358 shares of the Company's common stock. As of June 30, 2010, $125,000 of these notes and accrued interest of $133,334 are still outstanding. These notes were in default as of December 31, 2006.</P>
<P style="margin:0px" align=center><BR></P>
<P style="line-height:13pt; margin:0px; font-size:11pt" align=justify>In August &nbsp;2001, &nbsp;the Company &nbsp;issued &nbsp;notes &nbsp;payable for &nbsp;$100,000 and $300,000 &nbsp;which &nbsp;were &nbsp;due in 60 days &nbsp;and 14 &nbsp;days, &nbsp;respectively. The balance of those loans as of June 30, 2010 was $100,000 and $282,000, respectively.</P>
<P style="margin:0px" align=center><BR></P>
<P style="line-height:13pt; margin:0px; font-size:11pt" align=justify>In October 2003, the Company issued a note payable in the amount of $20,000. &nbsp;The note was due 45 days after issuance. &nbsp;The note was forgiven in 2009 and written off as other income.</P>
<P style="margin:0px" align=justify><BR></P>
<P style="line-height:13pt; margin:0px; font-size:11pt" align=justify>During the six months ended June 30, 2010, the Company converted $15,500 of certain notes payable into 3,500,000 shares of the company&#146;s common stock. &nbsp;</P>
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</DIV><DIV style="width:576px"><P style="line-height:13pt; margin:0px; font-size:11pt; page-break-before:always" align=center><B>CEPHAS HOLDING CORP. AND SUBSIDIARIES</B></P>
<P style="line-height:13pt; margin:0px; font-size:11pt" align=center><B>CONSOLIDATED NOTES TO INTERIM FINANCIAL STATEMENTS</B></P>
<P style="line-height:13pt; margin:0px; font-size:11pt" align=center><B>JUNE 30, 2010</B></P>
<P style="line-height:13pt; margin:0px; font-size:11pt" align=center><B>(UNAUDITED)</B></P>
<P style="margin:0px" align=justify><BR></P>
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<P style="line-height:13pt; margin:0px; font-size:11pt" align=justify><B>Note 5 - <U>Notes Payable(continued)</U></B></P>
<P style="margin:0px" align=justify><BR></P>
<P style="line-height:13pt; margin:0px; font-size:11pt" align=justify>During the six months ended June 30, 2010, an outside party loaned the Company a total $85,000. &nbsp;These loans aggregated bear and are payable interest only at the rate of 7% per annum with no fixed terms of repayment and may be converted into common stock at $.005 per share.</P>
<P style="margin:0px" align=justify><BR></P>
<P style="line-height:13pt; margin:0px; font-size:11pt" align=justify>The total amount due for notes payable is $610,250 as of June 30, 2010.</P>
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<P style="line-height:13pt; margin:0px; font-size:11pt" align=justify><B>Note 6 &#150; <U>Notes Payable &#150; Related Party</U></B></P>
<P style="margin:0px" align=justify><BR></P>
<P style="line-height:13pt; margin:0px; font-size:11pt" align=justify>The Company issued a note to Eric Joffe for unpaid salaries for 2006 for $100,000 of which $5,000 was repaid. The remaining balance of $95,000 bears interest at 7% per annum and accrued interest to date is $19,501.</P>
<P style="margin:0px" align=justify><BR></P>
<P style="line-height:13pt; margin:0px; font-size:11pt" align=justify><B>Note 7 - <U>Stockholders' Deficit</U></B></P>
<P style="margin:0px" align=justify><BR></P>
<P style="line-height:13pt; margin:0px; font-size:11pt" align=justify><B><U>Series A Preferred Stock</U></B></P>
<P style="line-height:13pt; margin:0px; font-size:11pt" align=justify>The Company has 1,000,000 shares of $0.001 par value Series A Preferred Stock (&quot;Series A&quot;) authorized of which 2,225 shares are issued and outstanding at March 31, 2010. Each share of Series A can be converted into 20 shares of common stock.</P>
<P style="margin:0px" align=justify><BR></P>
<P style="line-height:13pt; margin:0px; font-size:11pt" align=justify><B><U>Series B Convertible Preferred Stock</U></B></P>
<P style="line-height:13pt; margin:0px; font-size:11pt" align=justify>The Company has 850,000 shares of $0.01 par value Series B Convertible Preferred Stock (&#145;Series B&#148;) authorized of which 850,000 shares are issued and outstanding at March 31, 2010.</P>
<P style="margin:0px" align=justify><BR></P>
<P style="line-height:13pt; margin:0px; font-size:11pt" align=justify>In the event of a voluntary or involuntary liquidation, &nbsp;dissolution or winding &nbsp;up of the &nbsp;Company, &nbsp;prior to the time &nbsp;the &nbsp;Series B &nbsp;becomes convertible &nbsp;into &nbsp;common &nbsp;shares, &nbsp;the &nbsp;holders &nbsp;of &nbsp;Series B shall be entitled to $0.01 per share. In the event of a voluntary or involuntary liquidation, &nbsp;dissolution &nbsp;or winding up of the Company &nbsp;after the time the Series B becomes &nbsp;convertible &nbsp;into common &nbsp;shares, &nbsp;the holders of Series B shall be entitled &nbsp;to share with the &nbsp;holders of common &nbsp;stock pari &nbsp;passu in the assets of the &nbsp;Company, &nbsp;on an as &nbsp;converted &nbsp;basis, whether such assets are capital or surplus of any nature. The Series B shall be convertible upon the earlier to occur of: (i) the date the Company generates net profits in any two consecutive fiscal quarters or (ii) April 1, 2006.</P>
<P style="margin:0px" align=center><BR></P>
<P style="line-height:13pt; margin:0px; font-size:11pt" align=justify>The &nbsp;conversion &nbsp;of &nbsp;Series B shall be on the &nbsp;basis of ten &nbsp;shares &nbsp;of common &nbsp;stock for one Series B share, &nbsp;as may be adjusted &nbsp;from time to time. Upon conversion, the holder of the Series B will be required to pay to the Company a conversion price for each share of common stock equal to $0.10.</P>
<P style="margin:0px" align=justify><BR></P>
<P style="line-height:13pt; margin:0px; font-size:11pt" align=justify>The holders of the Series B shall vote on all matters with the holders of the common stock (and not as a separate class) on a ten votes per share basis. &nbsp;The holders of the Series B shall be entitled to receive all notices relating to voting as are required to be given to the holders of the common stock.</P>
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</DIV><DIV style="width:576px"><P style="line-height:13pt; margin:0px; font-size:11pt; page-break-before:always" align=center><B>CEPHAS HOLDING CORP. AND SUBSIDIARIES</B></P>
<P style="line-height:13pt; margin:0px; font-size:11pt" align=center><B>CONSOLIDATED NOTES TO INTERIM FINANCIAL STATEMENTS</B></P>
<P style="line-height:13pt; margin:0px; font-size:11pt" align=center><B>JUNE 30, 2010</B></P>
<P style="line-height:13pt; margin:0px; font-size:11pt" align=center><B>(UNAUDITED)</B></P>
<P style="margin:0px" align=justify><BR></P>
<P style="line-height:13pt; margin:0px; font-size:11pt" align=justify><B><U>Series B Convertible Preferred Stock(continued)</U></B></P>
<P style="margin:0px" align=justify><BR></P>
<P style="line-height:13pt; margin:0px; font-size:11pt" align=justify>During 2003, the Company issued to Mr. Peter Klamka, the Company's CEO, 850,000 shares of Series B as consideration for the contribution of an affinity credit card business to Legend Credit.</P>
<P style="margin:0px" align=center><BR></P>
<P style="line-height:13pt; margin:0px; font-size:11pt" align=justify><B><U>Series C Convertible Preferred Stock</U></B></P>
<P style="line-height:13pt; margin:0px; font-size:11pt" align=justify>The Company has 147,775 shares of $0.01 par value Series C Convertible Preferred Stock (&#147;Series C&#148;) authorized of which 147,775 shares are issued and outstanding at June 30, 2010.</P>
<P style="margin:0px" align=justify><BR></P>
<P style="line-height:13pt; margin:0px; font-size:11pt" align=justify>In the event of a voluntary or involuntary liquidation, &nbsp;dissolution or winding &nbsp;up of the &nbsp;Company &nbsp;prior &nbsp;to the time &nbsp;the &nbsp;Series C &nbsp;becomes convertible &nbsp;into &nbsp;common &nbsp;shares, &nbsp;the &nbsp;holders &nbsp;of &nbsp;Series C shall be entitled to $0.01 per share. In the event of a voluntary or involuntary liquidation, &nbsp;dissolution &nbsp;or winding up of the Company &nbsp;after the time the Series C becomes &nbsp;convertible &nbsp;into common &nbsp;shares, &nbsp;the holders of Series C shall be &nbsp;entitled &nbsp;to share with the holders of &nbsp;shares of common stock and Series B convertible preferred stock pari passu in the assets of the Company, on an as converted &nbsp;basis, whether such assets are capital or surplus of any nature. &nbsp;&nbsp;The Series C shall be convertible upon the earlier to occur of: &nbsp;(i) the date the Company generates net profits in any two consecutive fiscal quarters; (ii) April 1, 2006; or (iii) any date that the market price per share of common stock equals or exceeds $0.50.</P>
<P style="margin:0px" align=center><BR></P>
<P style="line-height:13pt; margin:0px; font-size:11pt" align=justify><B>Note 7 - <U>Stockholders' Deficit (continued)</U></B></P>
<P style="margin:0px" align=center><BR></P>
<P style="line-height:13pt; margin:0px; font-size:11pt" align=justify><B><U>Series C Convertible Preferred Stock (continued)</U></B></P>
<P style="margin:0px" align=justify><BR></P>
<P style="line-height:13pt; margin:0px; font-size:11pt" align=justify>The &nbsp;conversion of Series C shall be on the &nbsp;basis of one hundred shares of common stock for one Series C share, &nbsp;as may be adjusted &nbsp;from time to time. Upon conversion, the holder of the Series C will be required to pay to the Company a conversion price for each share of common stock equal to $0.10.</P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px" align=justify><BR></P>
<P style="line-height:13pt; margin:0px; font-size:11pt" align=justify>The holders of the Series C shall vote on all matters with the holders of the common stock (and not as a separate class) on a ten votes per share basis. &nbsp;The holders of the Series C shall be entitled to receive all notices relating to voting as are required to be given to the holders of the common stock.</P>
<P style="margin:0px" align=center><BR></P>
<P style="line-height:13pt; margin:0px; font-size:11pt" align=justify>During 2004, the Company issued to Mr. Peter Klamka, the Company's CEO, 147,775 shares of Series C as consideration for the contribution of an additional 10% ownership in Legend Credit. (See Note 3)</P>
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<P style="line-height:13pt; margin:0px; font-size:11pt" align=justify><B><U>Common Stock</U></B></P>
<P style="line-height:13pt; margin:0px; font-size:11pt" align=justify>During the three months ended March 31, 2010 the Company issued a total of 3,100,000 common shares to convert notes payable for a total consideration of $15,500.</P>
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</DIV><DIV style="width:576px"><P style="line-height:13pt; margin:0px; font-size:11pt; page-break-before:always" align=center><B>CEPHAS HOLDING CORP. AND SUBSIDIARIES</B></P>
<P style="line-height:13pt; margin:0px; font-size:11pt" align=center><B>CONSOLIDATED NOTES TO INTERIM FINANCIAL STATEMENTS</B></P>
<P style="line-height:13pt; margin:0px; font-size:11pt" align=center><B>JUNE 30, 2010</B></P>
<P style="line-height:13pt; margin:0px; font-size:11pt" align=center><B>(UNAUDITED)</B></P>
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<P style="line-height:13pt; margin:0px; font-size:11pt" align=justify><B>Note 8 - <U>Commitments and Contingencies</U></B></P>
<P style="margin:0px" align=justify><BR></P>
<P style="line-height:13pt; margin:0px; font-size:11pt" align=justify><U>Litigation</U></P>
<P style="line-height:13pt; margin:0px; font-size:11pt" align=justify>Legend Studios, Inc. vs. Quorum Radio Partners, Inc., Quorum Radio Partners of Virginia, Inc. and Quorum Communications, Inc.</P>
<P style="margin:0px" align=justify><BR></P>
<P style="line-height:13pt; margin:0px; font-size:11pt" align=justify>Legend Studios lawsuit arises from defendants' breach of the parties' Asset Purchase Agreement and Time Brokerage Agreement that govern the sale, programming, operations and revenues of certain radio stations (KELE-AM, KELE-FM, WIQO, WKEY and WKCI). Legend Studios seeks specific performance of the agreements, as well as in excess of $1.5 million in damages. &nbsp;Defendants have been served with the complaint, but have not filed answers and may be subject to entry of default. &nbsp;Quorum Radio Partners of Virginia, Inc., however, filed a bankruptcy petition after being served with the complaint, which stays Legend Studios&#146; proceedings solely against that entity.</P>
<P style="margin:0px" align=justify><BR></P>
<P style="line-height:13pt; margin:0px; font-size:11pt" align=justify>In the ordinary course of business, the Company is generally subject to claims, complaints, and legal actions. At June 30, 2010, management believes that the Company is not a party to any action which would have a material impact on its financial condition, operations, or cash flows.</P>
<P style="margin:0px" align=justify><BR></P>
<P style="line-height:13pt; margin:0px; font-size:11pt" align=justify><U>Commitments</U></P>
<P style="line-height:13pt; margin:0px; font-size:11pt" align=justify>In September, 2007, Legend Credit, Inc. entered into an agreement with UCE, Inc. in which the Company agreed to contribute $500,000 toward production, marketing and promotion costs for a weekly mixed martial arts event scheduled and produced by UCE, Inc. &nbsp;The Company contributed $29,562 toward the agreed-upon. &nbsp;The investment of $29,562 was fully impaired during the year ended December 31, 2008.</P>
<P style="margin:0px" align=center><BR></P>
<P style="line-height:13pt; margin:0px; font-size:11pt" align=justify>During the six months ended June 30, 2010 the Company invested a total of $62,000 worth of units in Network Talent, LLC.</P>
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</DIV><DIV style="width:576px"><P style="margin-top:0px; margin-bottom:-16px; page-break-before:always">Item 2.</P>
<P style="margin:0px; text-indent:61.067px">Management's Discussion and Analysis or Plan of Operation</P>
<P style="line-height:13pt; margin:0px; font-size:11pt">&nbsp;</P>
<P style="line-height:13pt; margin:0px; font-size:11pt" align=justify><U>Forward looking statements </U></P>
<P style="margin:0px"><BR></P>
<P style="margin:0px" align=justify>This report contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Shareholders are cautioned that all forward-looking statements involve risks and uncertainty, including without limitation, our ability to fully establish our proposed websites and our ability to conduct business with Palm, Inc. and be successful in selling products. Although we believe the assumptions underlying the forward-looking statements contained herein are reasonable, any of the assumptions could be inaccurate, and therefore, there can be no assurance that the forward-looking statements contained in the report will prove to be accurate. </P>
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<P style="margin:0px"><B>GENERAL </B></P>
<P style="margin:0px"><BR></P>
<P style="margin:0px" align=justify>The following discussion and analysis should be read in conjunction with our consolidated financial statements and related footnotes for the year ended December 31, 2009 included in our Annual Report on Form 10-K. &nbsp;The discussion of results, causes and trends should not be construed to imply any conclusion that such results or trends will necessarily continue in the future.</P>
<P style="margin:0px"><BR></P>
<P style="margin:0px">We were incorporated in Delaware on January 13, 1998 and are the successor to Interactive Entertainment Studio, Inc. (IES). IES was incorporated in the State of Nevada on May 27, 1997 and was merged into us in March 1998 for the sole purpose of changing the domicile of the company to Delaware. This merger was retroactively reflected in the December 31, 1997 financial statements. On June 27, 2002 we changed our name to Legend Mobile, Inc. In October 2008, the Company amended its articles to change the name to Cephas Holding Corp.</P>
<P style="margin:0px" align=justify>.</P>
<P style="margin:0px">We are a developer and marketer of &nbsp;mobile phone applications for the iPhone platform. We currently have three apps available to consumers. Our three apps our &#147;Iron Sheik Soundboard&#148;, &#147;MMAUnderboss&#148; and &#147;Metal News&#148;.</P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px">We have a contract with undisputed, mixed martial arts heavyweight champion, Fedor Emelinenko, granting us the right to develop iPhone applications. </P>
<P style="margin:0px"><BR></P>
<P style="margin:0px">We are currently developing applications under the license granted from Mr. Emelinenko. </P>
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<P style="margin:0px"><BR></P>
<P style="margin:0px">We are currently negotiating with several other celebrity personalities outside of combat sports for iPhone applications. There can be no assurance we will succeed in securing any of these brands or if we do successfully bringing a product to market. </P>
<P style="margin:0px" align=justify><BR></P>
<P style="line-height:14pt; margin:0px; font-size:12pt" align=justify>Since our inception, we have incurred significant losses and at June 30, 2010 our current liabilities exceeded current assets. In addition, we are delinquent in certain payments due for license fees and notes payable. In an effort to preserve our cash, we are currently using shares of our common stock to pay down debt. </P>
<P style="margin:0px" align=justify><BR></P>
<P style="line-height:14pt; margin:0px; font-size:12pt" align=justify>We may be unable to continue in existence unless we are able to arrange additional financing and achieve profitable operations. We plan to raise additional capital </P>
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<P style="line-height:13pt; margin:0px; font-size:11pt"><B><U>Significant Accounting Policies and Estimates </U></B></P>
<P style="margin:0px"><BR></P>
<P style="line-height:13pt; margin:0px; font-size:11pt" align=justify>Management's Discussion and Analysis of Financial Condition and Results of Operations </P>
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<P style="margin:0px"><BR></P>
<P style="margin:0px"><BR></P>
</DIV><DIV style="width:576px"><P style="line-height:13pt; margin:0px; font-size:11pt; page-break-before:always" align=justify>discusses the Company's consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements 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 revenues and expenses during the reporting period. Management bases its estimates and judgments on historical experiences and on various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. The most significant accounting estimates inherent in the preparation of the Company's financial statements relate to the allowance for doubtful accounts. These accounting policies are described at relevant sections in this discussion and analysis and in the notes to the consolidated financial statements included in this Annual Report on Form l0-KSB for the year ended December 31, 2009. </P>
<P style="margin:0px" align=justify><BR></P>
<P style="line-height:13pt; margin:0px; font-size:11pt" align=justify><U>Results of Operations</U></P>
<P style="margin:0px" align=justify><BR></P>
<P style="line-height:13pt; margin:0px; font-size:11pt" align=justify><I>Six &nbsp;months ended &nbsp;June 30, 2010 &nbsp;vs. June 30, 2009</I></P>
<P style="margin:0px" align=justify><BR></P>
<P style="line-height:13pt; margin:0px; font-size:11pt" align=justify>Revenue for the six months ended June 30, 2010 was $172 compared to $0 for the three months ended June 30, 2009 </P>
<P style="margin:0px" align=justify><BR></P>
<P style="line-height:13pt; margin:0px; font-size:11pt" align=justify>The cost of revenue for the six months ended June 30, 2010 was $0 &nbsp;as compared to &nbsp;$0 for the period ended June 30, 2009 </P>
<P style="margin:0px" align=justify><BR></P>
<P style="line-height:13pt; margin:0px; font-size:11pt" align=justify>Selling, general and administrative expenses for the <FONT style="font-family:Courier New">six</FONT> months ended June 30, 2010 was $94,676 &nbsp;as compared to $91,095 for the six months ended June 30, 2009. &nbsp;</P>
<P style="margin:0px" align=justify><BR></P>
<P style="line-height:13pt; margin:0px; font-size:11pt" align=justify>Interest expense and financing costs for the six &nbsp;months ended June 30, 2010 was $167,925 as compared to $ 166,878 for the nine months ended June 30 , 2009. </P>
<P style="margin:0px" align=justify><BR></P>
<P style="line-height:13pt; margin:0px; font-size:11pt" align=justify><B>Liquidity and Capital Resources</B></P>
<P style="margin:0px" align=justify><BR></P>
<P style="line-height:normal; margin:0px; font-size:11pt" align=justify>We have incurred an accumulated deficit since our inception of $<FONT style="font-size:10pt"> 21,923,504</FONT>. In order for us to continue in existence, we will have to raise additional capital through the sale of equity or debt or generate sufficient profits from operations, or a combination of both.<I> &nbsp;</I></P>
<P style="margin:0px"><BR></P>
<P style="line-height:13pt; margin:0px; font-size:11pt" align=justify><B>Off-balance sheet arrangements</B></P>
<P style="margin:0px" align=justify><BR></P>
<P style="line-height:13pt; margin:0px; font-size:11pt" align=justify>There are no off balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors.</P>
<P style="margin:0px" align=justify><BR></P>
<P style="line-height:13pt; margin-top:0px; margin-bottom:-17.333px; font-size:11pt"><B>Item 3.</B></P>
<P style="line-height:13pt; margin:0px; text-indent:60px; font-size:11pt"><B>Controls and Procedures</B></P>
<P style="margin:0px"><BR></P>
<P style="line-height:13pt; margin:0px; font-size:11pt" align=justify>As required by SEC rules, we have evaluated the effectiveness of the design and operation of our disclosure controls and procedures at the end of the period covered by this report. This evaluation was carried out under the supervision and with the participation of our management, including our principal executive officer and principal financial officer. Based on this evaluation, these officers have concluded that the design and operation of our disclosure controls and procedures </P>
<P style="margin:0px" align=justify><BR>
<BR></P>
</DIV><DIV style="width:624px"><P style="margin:0px"><BR></P>
<P style="margin:0px"><BR></P>
<P style="margin:0px" align=center><BR></P>
<P style="margin:0px"><BR></P>
<P style="margin:0px"><BR></P>
</DIV><DIV style="width:576px"><P style="line-height:13pt; margin:0px; font-size:11pt; page-break-before:always" align=justify>are effective except in regard weakness in our controls related to the issuance of shares for the year ending December 31, 2009. There were no changes in our internal control over financial reporting or in other factors that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. </P>
<P style="margin:0px"><BR></P>
<P style="line-height:13pt; margin:0px; font-size:11pt" align=justify>Disclosure controls and procedures are our controls and other procedures that are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Securities &amp; Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC&#146;s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in the reports that we file under the Exchange Act is accumulated and communicated to our management, including principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure. </P>
<P style="margin:0px"><BR></P>
<P style="margin:0px"><BR></P>
<P style="line-height:13pt; margin-top:0px; margin-bottom:-17.333px; font-size:11pt"><B>Part II.</B></P>
<P style="line-height:13pt; margin:0px; text-indent:60px; font-size:11pt"><B>OTHER INFORMATION</B></P>
<P style="margin:0px"><BR></P>
<P style="line-height:13pt; margin-top:0px; margin-bottom:-17.333px; font-size:11pt"><B>Item 1.</B></P>
<P style="line-height:13pt; margin:0px; text-indent:60px; font-size:11pt"><B>Legal Proceedings</B></P>
<P style="margin:0px"><BR></P>
<P style="margin:0px">The company is party to legal proceedings from time to time. None of the legal proceedings in management&#146;s opinion would have an adverse material impact on the company. </P>
<P style="margin:0px"><BR></P>
<P style="margin:0px">On September 26, 2008, Mr. Denner filed a suit against the Company and Mr. Klamka in the Iowa District Court for Polk County alleging, among other things, that the Company&#146;s and Mr. Klamka&#146;s failure to pay a loan made by Mr. Denner to the Company constituted a breach of contract. &nbsp;Mr. Denner is seeking compensatory damages plus interest and costs. The loan was made by Mr. Denner in 2001 in the principal amount of $100,000 and bears interest only upon default at a rate of 24% per annum. &nbsp;As Of July 31, 2010 case against Cephas Holdings f/k/a Legend Mobile and Peter Klamka,, individually, was dismissed.</P>
<P style="margin:0px"><BR></P>
<P style="margin:0px">There are several judgments against our company that could effect our operations</P>
<P style="margin:0px"><BR></P>
<P style="line-height:13pt; margin-top:0px; margin-bottom:-17.333px; font-size:11pt"><B>Item 2.</B></P>
<P style="line-height:13pt; margin:0px; text-indent:60px; font-size:11pt"><B>Unregistered Sales of Equity Securities and Use of Proceeds </B></P>
<P style="margin:0px"><BR></P>
<P style="line-height:13pt; margin:0px; font-size:11pt" align=justify>During the quarter ended June 30, 2010 the Company issued 13,250,000for a total of consideration of $46,250.</P>
<P style="margin:0px" align=justify><BR></P>
<P style="line-height:13pt; margin-top:0px; margin-bottom:-17.333px; font-size:11pt"><B>Item 3.</B></P>
<P style="line-height:13pt; margin:0px; text-indent:60px; font-size:11pt"><B>Defaults Upon Senior Securities</B></P>
<P style="margin:0px"><BR></P>
<P style="line-height:13pt; margin:0px; font-size:11pt" align=justify>None</P>
<P style="margin:0px"><BR></P>
<P style="line-height:13pt; margin-top:0px; margin-bottom:-17.333px; font-size:11pt"><B>Item 4.</B></P>
<P style="line-height:13pt; margin:0px; text-indent:60px; font-size:11pt"><B>Submission of Matters to a Vote of Security Holders</B></P>
<P style="margin:0px"><BR></P>
<P style="line-height:13pt; margin:0px; font-size:11pt" align=justify>None</P>
<P style="margin:0px"><BR></P>
<P style="line-height:13pt; margin-top:0px; margin-bottom:-17.333px; font-size:11pt"><B>Item 5.</B></P>
<P style="line-height:13pt; margin:0px; text-indent:60px; font-size:11pt"><B>Other Information</B></P>
<P style="margin:0px"><BR></P>
<P style="line-height:13pt; margin:0px; font-size:11pt">None</P>
<P style="margin:0px"><BR></P>
<P style="line-height:13pt; margin-top:0px; margin-bottom:-17.333px; font-size:11pt"><B>Item 6.</B></P>
<P style="line-height:13pt; margin:0px; text-indent:60px; font-size:11pt"><B>Exhibits</B></P>
<P style="margin:0px"><BR></P>
<P style="margin:0px"><BR>
<BR></P>
</DIV><DIV style="width:624px"><P style="margin:0px"><BR></P>
<P style="margin:0px"><BR></P>
<P style="margin:0px" align=center><BR></P>
<P style="margin:0px"><BR></P>
<P style="margin:0px"><BR></P>
</DIV><DIV style="width:576px"><P style="line-height:13pt; margin-top:0px; margin-bottom:-17.333px; padding-left:54px; text-indent:-54px; font-size:11pt; page-break-before:always" align=justify>31.1</P>
<P style="line-height:13pt; margin:0px; padding-left:54px; font-size:11pt" align=justify>Certification of the Chief Executive Officer and Principal Accounting Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 </P>
<P style="margin:0px" align=justify><BR></P>
<P style="line-height:13pt; margin-top:0px; margin-bottom:-17.333px; padding-left:54px; text-indent:-54px; font-size:11pt" align=justify>32.1</P>
<P style="line-height:13pt; margin:0px; padding-left:54px; font-size:11pt" align=justify>Certification of the Chief Executive Officer and Principal Accounting Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 </P>
<P style="margin:0px" align=justify><BR></P>
<P style="margin:0px"><BR></P>
<P style="line-height:13pt; margin:0px; font-size:11pt" align=center><B>SIGNATURES</B></P>
<P style="margin:0px"><BR></P>
<P style="line-height:13pt; margin:0px; font-size:11pt" align=justify>In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.</P>
<P style="margin:0px"><BR></P>
<P style="line-height:13pt; margin:0px; text-indent:288px; font-size:11pt">Cephas Holding ,Corp.</P>
<P style="margin:0px"><BR></P>
<P style="line-height:13pt; margin:0px; font-size:11pt">Dated: October 27, 2010</P>
<P style="margin:0px"><BR></P>
<P style="line-height:13pt; margin-top:0px; margin-bottom:-17.333px; text-indent:288px; font-size:11pt">By:</P>
<P style="line-height:13pt; margin:0px; text-indent:336px; font-size:11pt"><U>/s/ Peter Klamka</U></P>
<P style="line-height:13pt; margin:0px; padding-left:288px; font-size:11pt">Peter Klamka, Principal &nbsp;Executive Officer &nbsp;and</P>
<P style="line-height:13pt; margin:0px; text-indent:336px; font-size:11pt">&nbsp;&nbsp;Principal Financial &nbsp;Officer</P>
<P style="margin:0px"><BR></P>
<P style="margin:0px"><BR></P>
<P style="margin:0px"><BR>
<BR></P>
</DIV><DIV style="width:624px"><P style="margin:0px"><BR></P>
<P style="margin:0px"><BR></P>
<P style="margin:0px" align=center><BR></P>
<P style="margin:0px"><BR></P>
<P style="margin:0px"><BR></P>
</DIV><DIV style="width:576px"><P style="margin:0px; page-break-before:always"><B>EXHIBIT 31.1</B></P>
<P style="margin:0px"><BR></P>
<P style="margin:0px" align=center><B>CERTIFICATION OF CHIEF EXECUTIVE OFFICER</B></P>
<P style="margin:0px" align=center><B>AND PRINCIPAL EXECUTIVE OFFICER</B></P>
<P style="margin:0px" align=center><B>PURSUANT TO 18 U.S.C. SECTION 1350,</B></P>
<P style="margin:0px" align=center><B>AS ADOPTED PURSUANT TO SECTION 302 OF</B></P>
<P style="margin:0px" align=center><B>THE SARBANES-OXLEY ACT OF 2002</B></P>
<P style="margin:0px"><BR></P>
<P style="margin:0px">I, Peter Klamka, certify that:</P>
<P style="margin:0px"><BR></P>
<P style="margin:0px">1. I have reviewed this quarterly report on Form 10-Q of Cephas Holding Corp.;</P>
<P style="margin:0px"><BR></P>
<P style="margin:0px">2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;</P>
<P style="margin:0px"><BR></P>
<P style="margin:0px">3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the small business issuer as of, and for, the periods present in this report;</P>
<P style="margin:0px"><BR></P>
<P style="margin:0px">4. The small business issuer&#146;s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13-a-15(f) and 15d-15(f)) for the small business issuer and have:</P>
<P style="margin:0px"><BR></P>
<P style="margin:0px">a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the small business issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;</P>
<P style="margin:0px"><BR></P>
<P style="margin:0px">b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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 principals;</P>
<P style="margin:0px"><BR></P>
<P style="margin:0px">c) Evaluated the effectiveness of the small business issuer&#146;s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and</P>
<P style="margin:0px"><BR></P>
<P style="margin:0px">d) Disclosed in this report any change in the small business issuer&#146;s internal control over financing reporting that occurred during the small business issuer&#146;s most recent fiscal quarter (the small business issuer&#146;s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the small business issuer&#146;s internal control over financial reporting; and</P>
<P style="margin:0px"><BR></P>
<P style="margin:0px">5. The small business issuer&#146;s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the small business issuer&#146;s auditors and the audit committee of the small business issuer&#146;s board of directors (or persons performing the equivalent functions):</P>
<P style="margin:0px"><BR></P>
<P style="margin:0px">a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the small business issuer&#146;s ability to record, process, summarize and report financial information; and</P>
<P style="margin:0px"><BR></P>
<P style="margin:0px">b) Any fraud, whether or not material, that involved management or other employees who have a significant role in the small business issuer&#146;s internal control over financial reporting.</P>
<P style="margin:0px"><BR></P>
<P style="margin:0px"><BR>
<BR></P>
</DIV><DIV style="width:624px"><P style="margin:0px"><BR></P>
<P style="margin:0px"><BR></P>
<P style="margin:0px" align=center><BR></P>
<P style="margin:0px"><BR></P>
<P style="margin:0px"><BR></P>
</DIV><DIV style="width:576px"><P style="margin:0px; page-break-before:always">Dated: &nbsp;October 27, 2010</P>
<P style="margin:0px"><BR></P>
<P style="margin:0px"><I><U>/s/ Peter Klamka&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U></I></P>
<P style="margin:0px">Peter Klamka </P>
<P style="margin:0px">Chief Executive Officer</P>
<P style="margin:0px">(Principal Executive Officer)</P>
<P style="margin:0px"><BR></P>
<P style="margin:0px"><BR></P>
<P style="margin:0px"><BR>
<BR></P>
</DIV><DIV style="width:624px"><P style="margin:0px"><BR></P>
<P style="margin:0px"><BR></P>
<P style="margin:0px" align=center><BR></P>
<P style="margin:0px"><BR></P>
<P style="margin:0px"><BR></P>
</DIV><DIV style="width:576px"><P style="margin:0px; page-break-before:always"><BR></P>
<P style="margin:0px"><BR></P>
<P style="margin:0px"><BR></P>
<P style="margin:0px"><B>EXHIBIT 32.1</B></P>
<P style="margin:0px"><BR></P>
<P style="margin:0px" align=center><B>CERTIFICATION PURSUANT TO</B></P>
<P style="margin:0px" align=center><B>18 U.S.C. SECTION 1350,</B></P>
<P style="margin:0px" align=center><B>AS ADOPTED PURSUANT TO</B></P>
<P style="margin:0px" align=center><B>SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002</B></P>
<P style="margin:0px"><BR></P>
<P style="margin:0px">In connection with the Quarterly Report of Cephas Holding Corp. (the &quot;Registrant&quot;) on Form 10-Q for the period ending June 30, 2010 as filed with the Securities and Exchange Commission on the date hereof (the &quot;Report&quot;), I, Peter Klamka, certify, pursuant to 18 U.S.C. ss. 1350, as adopted pursuant to Section. 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:</P>
<P style="margin:0px"><BR></P>
<P style="margin:0px">(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and</P>
<P style="margin:0px"><BR></P>
<P style="margin:0px">(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant.</P>
<P style="margin:0px"><BR></P>
<P style="margin:0px">Dated: &nbsp;October 27 2010</P>
<P style="margin:0px"><BR></P>
<P style="margin:0px"><I><U>/s/ Peter Klamka&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U></I></P>
<P style="margin:0px">Peter Klamka</P>
<P style="margin:0px">Chief Executive Officer</P>
<P style="margin:0px">(Principal Executive Officer)</P>
<P style="margin:0px"><BR></P>
<P style="margin:0px"><BR></P>
<P style="margin:0px"><BR>
<BR></P>
</DIV><DIV style="width:624px"><P style="margin:0px"><BR></P>
<P style="margin:0px"><BR></P>
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</DIV></BODY>
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{"company-data": {"conformed-name": "CEPHAS HOLDING CORP.", "cik": "0001061169", "assigned-sic": "3669", "irs-number": "383399098", "state-of-incorporation": "DE", "fiscal-year-end": "1231"}, "filing-values": {"form-type": "10-Q", "act": "34", "file-number": "000-24835", "film-number": "101145575"}, "business-address": {"street1": "2942 NORTH 42ND STREET", "street2": "STE 114-508", "city": "PHOENIX", "state": "AZ", "zip": "85016", "phone": "623-850-1356"}, "mail-address": {"street1": "2942 NORTH 42ND STREET", "street2": "STE 114-508", "city": "PHOENIX", "state": "AZ", "zip": "85016"}, "former-company": [{"former-conformed-name": "CEPHUS HOLDING CORP.", "date-changed": "20090330"}, {"former-conformed-name": "LEGEND MOBILE INC", "date-changed": "20030515"}, {"former-conformed-name": "PTN MEDIA INC", "date-changed": "19980505"}]}
UNITED STATES
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(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, 2010
[  ]
TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from ________________ to _______________
000-24835
(Commission file number)
CEPHAS HOLDING CORP.
(Exact name of small business issuer as specified in its charter)
Delaware
38-3399098
(State or other jurisdiction
(IRS Employer
of incorporation or organization)
Identification No.)
2942 North 24
th
Street Ste. 114-508 Phoenix, AZ 85016
(Address of principal executive offices)
623-850-1356
(Issuer's telephone number)
N/A
(Former name, former address and former fiscal year, if changed since last report)
Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 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 a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes [   ]   No [X]
State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date: As of October 14, 2010  –
119,983,617
shares of common stock
Transitional Small Business Disclosure Format (check one):  Yes [   ]   No [X]
CEPHAS HOLDING CORP.
Index
Page
Number
PART I.
FINANCIAL INFORMATION
2
Item 1.
Financial Statements
2
Consolidated Balance Sheet as of June 30, 2010 (unaudited) and
December 31, 2009
3
Consolidated Statements of Operations for the
six months ended June 30, 2010  and 2009 (unaudited)
4
Consolidated Statements of Cash Flows for the
Six months June 30, 2010 and 2009 (unaudited)
5
Notes to Consolidated Interim Financial Statements (unaudited)
6
Item 2.
Management's Discussion and Analysis or Plan of Operation
14
Item 3.
Controls and Procedures
17
PART II.
OTHER INFORMATION
17
Item 1.
Legal Proceedings
17
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds
18
Item 3.
Defaults Upon Senior Securities
18
Item 4.
Submission of Matters to a Vote of Security Holders
18
Item 5.
Other Information
18
Item 6.
Exhibits
18
SIGNATURES
18
Item 1.
Financial Statements
CEPHAS HOLDING CORP & SUBSIDIARIES
UNAUDITED FINANCIAL STATEMENTS
JUNE 30, 2010
CEPHAS HOLDING CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
JUNE
DECEMBER
30, 2010
31, 2009
(UNAUDITED)
(AUDITED)
CURRENT ASSETS:
Cash
$             259
$               176
Prepaid expenses
36,000
36,000
Loan receivable
90
-
Investments
62,000
-
TOTAL CURRENT ASSETS
98,349
36,176
FIXED ASSETS - at cost
Computer and office equipment
52,930
52,930
Less: Accumulated depreciation
(52,930)
(52,930)
NET FIXED ASSETS
-
-
TOTAL ASSETS
$        98,349
$          36,176
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES:
Accounts payable
$      229,307
$        229,307
Accrued expenses
953,000
865,500
Accrued interest
1,981,057
1,813,132
Accrued derivative liability
230,695
230,695
License fees payable
200,000
200,000
Advances from an officer
81,643
97,466
Due to related parties
64,038
64,038
Notes payable - related party
95,000
97,500
Notes payable
610,250
538,250
Note payable - officer
1,217,149
1,217,149
TOTAL CURRENT LIABILITIES
5,662,139
5,353,037
COMMITMENTS AND CONTINGENCIES
-
-
STOCKHOLDERS' DEFICIT
Series A Preferred Stock, $0.001 par value, 1,000,000 shares
authorized; 2,225 shares issued and outstanding
22
22
Series B Convertible Preferred Stock, $0.01 par value; 850,000
shares authorized; 850,000 shares issued and outstanding
authorized; 1,000,000 Class A shares issued and outstanding
8,500
8,500
Series C Convertible Preferred Stock, $0.01 par value; 147,775
shares authorized; 147,775 shares issued and outstanding
1,478
1,478
Common stock; $0.001 par value; 150,000,000 shares
authorized; 97,983,679(December 31, 2009-94,883,679) issued and outstanding
97,984
94,884
Additional paid-in capital
16,418,425
16,406,025
Stock subscription receivable
(156,300)
(156,300)
Non-controlling interest
(10,395)
(9,168)
Accumulated deficit
(21,923,504)
(21,662,302)
TOTAL STOCKHOLDERS' DEFICIT
(5,563,790)
(5,316,861)
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT
$        98,349
$          36,176
The accompanying notes are an integral part of these financial statements.
CEPHAS HOLDING CORP. AND SUBSIDIARIES
CONSOLIDATED INTERIM STATEMENT OF OPERATIONS
(UNAUDITED)
THREE MONTHS ENDED
SIX MONTHS ENDED
JUNE 30,
JUNE 30,
2010
2009
2010
2009
REVENUE
$                -
$                -
$           172
$               -
COST OF REVENUE
-
-
-
-
GROSS PROFIT
-
-
172
-
EXPENSES:
Selling, general and administrative
48,534
46,836
94,676
91,095
TOTAL EXPENSES
48,534
46,836
94,676
91,095
LOSS FROM OPERATIONS
(48,534)
(46,836)
(94,504)
(91,095)
OTHER INCOME (EXPENSE):
Interest expense and financing costs
(84,431)
(83,439)
(167,925)
(166,878)
TOTAL OTHER INCOME (EXPENSE)
(84,431)
(83,439)
(167,925)
(166,878)
LOSS BEFORE PROVISION FOR INCOME TAXES
$    (132,965)
$    (130,275)
$  (262,429)
$    (257,973)
PROVISION FOR INCOME TAXES
-
-
-
-
NET LOSS
$    (132,965)
$    (130,275)
$  (262,429)
$    (257,973)
BASIC AND DILUTED LOSS PER
COMMON SHARE
$        (0.001)
$        (0.002)
$      (0.003)
$        (0.003)
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING -
BASIC AND DILUTED
97,983,679
74,651,021
97,983,679
74,651,021
The accompanying notes are an integral part of these financial statements.
CEPHAS HOLDING CORP. AND SUBSIDIARIES
CONSOLIDATED INTERIM STATEMENT OF CASH FLOWS
(UNAUDITED)
SIX MONTHS ENDED
JUNE 30,
2010
2009
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss
$      (262,429)
$         (257,973)
Adjustment to reconcile net loss to net cash used in operating activities
Stock issued for services rendered
-
375
Depreciation
-
163
Changes in operating assets and liabilities:
Prepaid expenses
-
-
Accounts payable
87,500
87,500
Accrued interest
167,925
166,878
Net cash used in operating activities
(7,004)
(3,057)
CASH FLOWS FROM INVESTING ACTIVITIES:
Loan receivable
(90)
-
Investment in Network Talent, LLC
(62,000)
-
Net cash used in investing activities
(62,090)
-
CASH FLOWS FROM FINANCING ACTIVITIES:
Advances to an officer, net
(15,823)
-
Notes payable - net
85,000
Advances from related parties, net
-
3,600
Net cash provided by financing activities
69,177
3,600
INCREASE (DECREASE) IN CASH
83
543
CASH, Beginning of period
176
64
CASH, End of period
$              259
$                 607
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Interest Accrued
$                 -
$                    -
Income taxes paid
$                 -
$                    -
The accompanying notes are an integral part of these financial statements.
CEPHAS HOLDING CORP. AND SUBSIDIARIES
CONSOLIDATED NOTES TO INTERIM FINANCIAL STATEMENTS
JUNE 30, 2010
(UNAUDITED)
Note 1 -
Organization and Significant Accounting Policies
Organization and Lines of Business
Cephus Holding Corp formerly Legend Mobile, Inc., (the "Company"), was incorporated in Delaware on January 13, 1998 and is the successor to Interactive Entertainment Studio, Inc. (IES). IES was incorporated in the State of Nevada on May 27, 1997 and was merged into the Company in March 1998 for the sole purpose of changing the domicile of the Company to Delaware. On June 27, 2002, the Company filed a Certificate of Amendment to its Certificate of Incorporation to amend the Company's Certificate of Incorporation name from PTN Media, Inc. to Legend Mobile, Inc. In October 2008, the Company amended its articles to change the name to Cephus Holding Corp.
The Company is a developer and marketer of branded mobile phone applications for the iPhone platform. The Company is an approved developer by Apple Computer to distribute its products on their iTunes store. The Company currently sells the "Iron Sheik Soundboard" and it distributes free of charge "MMA Underboss" -a newswire dedicated to mixed martial arts news.  The Company also has a license from Mixed Martial Arts Champion, Fedor Emelianeko to produce iPhone applications under his brand and is currently developing that application.
In February 2001, the Company formed Legend Credit as a wholly owned subsidiary.  On April 1, 2003, Mr. Peter Klamka, CEO of the Company, contributed the rights to an affinity credit card business valued at $37,000 to Legend Credit. Mr. Klamka's contribution has been determined pursuant to Accounting Principles Board Opinion No. 29, "Non monetary Transactions," using his cost basis in the investment, which is the most readily determinable cost.  In exchange for this contribution, Legend Credit issued to Mr.  Peter Klamka 60% of the issued and outstanding shares of Legend Credit common stock and the Company issued to Mr. Klamka 850,000 shares of Series B convertible preferred stock. These issuances were valued at $22,200 and $14,800, respectively.  The Company retains a 40% minority interest in Legend Credit which is accounted for using the equity method.  Effective October 1, 2004, Mr. Klamka contributed an additional 10% interest in Legend Credit to the Company that was valued at $3,700 (10% of $37,000, the original value of the affinity credit card business). The Company now owns 50% of Legend Credit and accounts for the subsidiary using the acquisition method. The subsidiary currently has no business operations.
In July 1999, the Company formed Legend Studios, Inc. (formerly
FragranceDirect.com
, Inc.)  ("Legend Studios"), a majority owned subsidiary.   As of June 30, 2010, Legend Studios did not have any operations.
Basis of Presentation and Going Concern
The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which contemplate continuation of the Company as a going concern.  The Company incurred a net loss for the six months ended June 30, 2010 of  $262,429  and at  June 30, 2010,  had an accumulated  deficit of $21,923,504 and a working  capital  deficit of $5,563,790. In addition, the Company generates minimal revenue from its operations and is in default on the payment of notes payable and license fee payable obligations. These conditions raise substantial doubt as to the Company's   ability to continue as a going concern.   These consolidated financial statements do not include any
CEPHAS HOLDING CORP. AND SUBSIDIARIES
CONSOLIDATED NOTES TO INTERIM FINANCIAL STATEMENTS
JUNE 30, 2010
(UNAUDITED)
Note 1 -
Organization and Significant Accounting Policies (continued)
Basis of Presentation and Going Concern(continued)
adjustments that might result from the outcome of this uncertainty. These consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts, or amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.  These interim financial statements however, do include all necessary adjustments to not make them misleading
The Company plans to take the following steps that it believes will be sufficient to provide the Company with the ability to continue in existence.  The Company is seeking additional equity or debt capital to expand its mobile application business.
Principles of Consolidation
The accompanying consolidated financial statements include the accounts of the Company and its 91%-owned subsidiary, Legend Studios, and its 50% owned subsidiary, Legend Credit. Significant intercompany accounts and transactions have been eliminated.
Cash and Cash Equivalents
For purposes of the statements of cash flows, the Company defines cash equivalents as all highly liquid debt instruments purchased with a maturity of three months or less, plus all certificates of deposit.
Use of Estimates
The preparation of consolidated financial statements in conformity with accounting  principles  generally accepted in the  United States of America requires management to make  estimates and  assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the consolidated financial  statements and the reported  amounts of revenue and expenses during the reporting periods. As of December 31, 2009, the Company used estimates in determining the value of common stock issued to consultants for services. Actual results could differ from these estimates.
Concentration of Credit Risk
Financial instruments, which potentially subject the Company to concentrations of credit risk, consist of cash. The Company places its cash with high quality financial institutions and at times may exceed the FDIC $250,000 insurance limit. The Company extends credit based on an evaluation of the customer's financial condition, generally without collateral.  Exposure to losses on receivables is principally dependent on each customer's financial condition. The Company monitors its exposure for credit losses and maintains allowances for anticipated losses, as required.
Comprehensive Income
The Company has adopted SFAS No. 130 (ASC220-10), "Reporting Comprehensive Income." This statement establishes standards for reporting comprehensive income and its components in a financial statement. Comprehensive income as defined includes all changes in equity (net assets) during a period from non-owner sources. Examples of items to be included in comprehensive
CEPHAS HOLDING CORP. AND SUBSIDIARIES
CONSOLIDATED NOTES TO INTERIM FINANCIAL STATEMENTS
JUNE 30, 2010
(UNAUDITED)
Note 1 -
Organization and Significant Accounting Policies (continued)
Comprehensive Income(continued)
income, which are excluded from net income, include foreign currency translation adjustments and unrealized gains and losses on available-for-sale securities. Comprehensive income (loss) is not presented in the Company's financial statements since there is no difference between net loss and comprehensive loss in any period presented.
Stock Based Compensation
Stock-based compensation is accounted for at fair value in accordance with SFAS No. 123 and 123 (R) (ASC 718).  During the six months ended June 30, 2010, the Company has not adopted a stock option plan and has not granted any stock options.
Stock-based compensation represents the cost related to common stock and options to purchase common stock granted to employees and related parties of the Company. The Company determines the cost of common stock grants at the date the common stock was issued, based on the quoted market price of the Company's common stock and recognizes the cost as expense over the requisite service period. The Company estimates the fair value of all warrants and options issued during the period using the Black-Scholes option-pricing model with the assumptions appropriate to the circumstances of the Company at the time of the transaction. There were no options or warrants issued during the six months ended June 30, 2010.
The Company records deferred tax assets for awards that result in deductions on the Company's income tax returns, based on the amount of compensation cost recognized and the Company's statutory tax rate in the jurisdiction in which it will receive a deduction. Differences between the deferred tax assets recognized for financial reporting purposes and the actual tax deduction reported on the Company's income tax return are recorded in Additional Paid-In Capital.
Fair Value of Financial Instruments
For certain of the Company's  financial  instruments,  including  cash, accounts  payable,  accrued  expenses,  accrued  interest,  license fee payable, due to related parties, and advances from an officer,  the carrying  amounts  approximate fair value due to their short  maturities.  The amounts shown for notes payable also approximate fair value because current interest rates and terms offered to the Company for similar debt are substantially the same.
Property and equipment
Property and equipment is recorded at cost. Depreciation is provided on a straight-line basis over estimated useful lives of the assets.
Expenditures for maintenance and repairs are charged to operations as incurred while renewals and betterments are capitalized.  Gains and losses on disposals are included in the results of operations.
CEPHAS HOLDING CORP. AND SUBSIDIARIES
CONSOLIDATED NOTES TO INTERIM FINANCIAL STATEMENTS
JUNE 30, 2010
(UNAUDITED)
Note 1 -
Organization and Significant Accounting Policies (continued)
Revenue Recognition
The Company generates revenue from the sale of products on its web sites and through other channels, the sale of advertisements on radio stations it operated and service fees from the sale of debit cards. The Company recognizes revenue for these product sales when the product is shipped to the customer.  The Company recognizes revenue from the radio stations it operated when advertisements were aired.  The Company recognizes service fee revenue from the sale of debit cards at the time the customer is sent the debit card.  Shipping and handling costs are recorded as revenue and related costs are charged to cost of sales.
Income Taxes
Income taxes are computed using the asset and liability method.  Under the asset and liability method, deferred income tax assets and liabilities are determined based on the differences between the financial reporting and tax bases of assets and liabilities and are measured using the currently enacted tax rates and laws.  A valuation allowance is provided for the amount of deferred tax assets that, based on available evidence, are not expected to be realized.
Reclassifications
Certain accounts and financial statement captions in the prior periods have been reclassified to conform to the current period financial statement presentation.
Impairment of Long-Lived Assets
In October 2001, the FASB issued SFAS No. 144 (ASC 360), "Accounting for Impairment or Disposal of Long-Lived Assets".  This statement also amends ARB No. 51 (ASC 810), "Consolidated Financial Statements", to eliminate the exception to consolidation for a subsidiary for which control is likely to be impaired. SFAS No. 144 (ASC 360) requires that long-lived assets  to be  disposed  of by sale,  including  those of  discontinued operations,  be measured at the lower of carrying  amount or fair value less cost to sell,  whether  reported in  continuing  operations  or in discontinued  operations.  SFAS No. 144 (ASC 360)  broadens  the  reporting  of discontinued  operations  to include all  components  of an entity with operations  that can be  distinguished  from the rest of the entity and that will be eliminated from the ongoing  operations of the entity in a disposal  transaction.  SFAS No. 144 (ASC 360) also establishes a "primary-asset" approach to determine the cash flow estimation period for a group of assets and liabilities that represents the unit of accounting for a long-lived asset to be held and used. The Company's adoption effective January 1, 2002 did not have a material impact to the Company's financial position or results of operations.
CEPHAS HOLDING CORP. AND SUBSIDIARIES
CONSOLIDATED NOTES TO INTERIM FINANCIAL STATEMENTS
JUNE 30, 2010
(UNAUDITED)
Note 1 -
Organization and Significant Accounting Policies (continued)
Earnings (Loss) Per Share
The Company reports earnings (loss) per share in accordance with SFAS No. 128 (ASC 260), "Earnings per Share."  Basic earnings (loss) per share is computed by dividing income (loss) available to common shareholders by the weighted average number of common shares available.  Diluted earnings (loss) per share is computed similar to basic earnings (loss) per share  except  that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive.  Diluted earnings (loss) per share has not been presented since the effect of the assumed conversion of options and warrants to purchase common shares would have an anti-dilutive effect.  The following potential common shares have been excluded from the computation of diluted net loss per share for the six months ended June 30, 2010 and 2009 respectively because the effect would have been anti-dilutive:
2010
2009
Conversion of Series A preferred stock
44,500
44,500
Conversion of Series B preferred stock
8,500,000
8,500,000
Conversion of Series C preferred stock
14,777,500
14,777,500
Total
23,322,000
23,322,000
All warrants and stock options were cancelled during the year ended December 31, 2007.
Non-Controlling Interest
In December 2007, the FASB issued SFAS No. 160 (ASC 810), "Non-controlling Interests in Consolidated Financial Statements, an amendment of ARB No. 51 (ASC 810)", which addresses the accounting and reporting framework for minority interests by a parent company. SFAS 160 (ASC 810) also addresses disclosure requirements to distinguish between interests of the parent and interests of the non-controlling owners of a subsidiary. SFAS 160 (ASC 810) became effective beginning with our first quarter of 2009. We will be reporting minority interest as a component of equity in our Consolidated Balance Sheets and below income tax expense in our Consolidated Statement of Operations. As minority interest will be recorded below income tax expense, it will have an impact to our total effective tax rate, but our total taxes will not change. For comparability, we will be retrospectively applying the presentation of our prior year balances in our Consolidated Financial Statements.
Recently Issued Accounting Pronouncements
Effective January 1, 2010, the Company adopted an accounting standard update regarding accounting for transfers of financial assets. As codified under Accounting Standards Codification, or ASC, 860, this update prescribes the information that a reporting entity must provide in its financial reports about a transfer of financial assets; the effects of a transfer on its financial position, financial performance, and cash flows; and a transferor's continuing involvement in transferred financial assets. Specifically, among other aspects, the update amends Statement of Financial Accounting Standards No. 140,
Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities
, or SFAS 140, by removing the concept of a qualifying special-purpose entity from SFAS 140 and removes the exception from applying FASB Interpretation No. 46,
Consolidation of Variable Interest Entities (revised)
, to variable interest
CEPHAS HOLDING CORP. AND SUBSIDIARIES
CONSOLIDATED NOTES TO INTERIM FINANCIAL STATEMENTS
JUNE 30, 2010
(UNAUDITED)
Note 1 -
Organization and Significant Accounting Policies (continued)
Recently Issued Accounting Pronouncements (continued)
entities that are qualifying special-purpose entities. It also modifies the financial-components approach used in SFAS 140. Since the update is effective for transfer of financial assets occurring on or after January 1, 2010 and the Company has not had any such transactions subsequent to January 1, 2010 to date, the adoption of this update did not have an impact on the Company's condensed consolidated financial statements.
Effective January 1, 2010, the Company adopted an accounting standard update regarding fair value measures. As codified under ASC 820, this update requires additional disclosures about fair value measurements including transfers in and out of Levels 1 and 2 and a higher level of disaggregation for the different types of financial instruments. For the reconciliation of Level 3 fair value measurements, information about purchases, sales, issuances and settlements should be presented separately. Since this update addresses disclosure requirements, the adoption of this update did not impact the Company's financial position, results of operations or cash flows.
In February 2010, FASB issued ASU 2010-9 Subsequent Events (Topic 855) Amendments to Certain Recognition and Disclosure Requirements". ASU 2010-9 amends disclosure requirements within Subtopic 855-10. An entity that is an SEC filer is not required to disclose the date through which subsequent events have been evaluated. This change alleviates potential conflicts between Subtopic 855-10 and the SEC's requirements. ASU 2010-9 is effective for interim and annual periods ending after June 15, 2010. The Company expects the adoption of ASU 2010-06 will not have a material impact on the Company's results of operations or financial position.
Note 2 –
Property and Equipment
Property and equipment as at June 30, 2010 and December 31, 2009 consisted of the following:
2010
2009
Computer equipment
$      11,376
$      11,376
Less: Accumulated depreciation
(11,376)
(11,376)
Net Fixed Assets
$               0
$           0
Depreciation expense for the six months ended June 30, 2010 and 2009 was $0 and $163, respectively.
Note 3 -
Accrued Expenses
Accrued expenses at June 30, 2010 and December 31, 2009 consisted of the following:
2010
2009
Michael Jordan settlement
$    468,750
$    468,750
Management salary
481,250
393,750
Professional fees
3,000
3,000
Total Accrued Expenses
$    953,000
$    865,500
The amount owing to Michael Jordan bears interest at 12% per annum and is currently in default.  Accrued interest on that settlement to date amounts to $431,767.
CEPHAS HOLDING CORP. AND SUBSIDIARIES
CONSOLIDATED NOTES TO INTERIM FINANCIAL STATEMENTS
JUNE 30, 2010
(UNAUDITED)
Note 4 -
Notes Payable - Officer
As of September 30, 2004, the Company converted $291,000 of advances from its CEO, Mr. Klamka, into a note payable that bears interest at 21% per annum and is payable upon demand.  As of March 31, 2010, the balance on this note is $263,496 with accrued interest related to this note amounted to $311,560.
During the year ended December 2006 the Company converted certain of the accrued amounts owing to the CEO and for salaries payable to the CEO into a note totaling $758,920.  This note is unsecured and bears interest at the rate of 21% per annum.  Accrued interest to date is $602,898.
Additional notes were issued during 2007 to Peter Klamka for unpaid salaries of $175,000 bearing interest at the rate of 8% per annum. Interest accrued to date is $36,750. Additionally, a note for expenses paid by Mr. Klamka on behalf of the Company totaling $29,733 was issued and bears interest at 10% per annum.  Interest accrued to date is $7,182.
The total amount due for notes payable – officer is $1,217,149 as of June 30, 2010.
Note 5 -
Notes Payable
In July and August 1997, the Company received $56,250 through the issuance of 8% promissory notes and common stock purchase warrants to acquire Company stock.  In 1999, one of the note holders converted $25,000 of principal and $5,500 of accrued interest into 6,100 shares of the Company's common stock. The remainder of the notes, which amounts to $31,250, continues to be outstanding notwithstanding the fact that payments owed by the Company there under are now past due.  Interest accrued to date is $29,125.
In July and August of 1999, the Company's Subsidiaries, Legend Studios issued 10% promissory notes aggregating to $160,000.  The notes are due the earlier of one year or the completion of an initial public offering of Legend Studios common stock. In addition, Legend Studios issued to the note  holders  an  aggregate  of  96,000  two-year  stock  purchase warrants to purchase  Legend  Studios  common stock at $3.50 per share. During the year ended  December  31, 2002,  two note holders  converted principal  and accrued  interest  of $35,000  and  $13,358  into 48,358 shares of the Company's common stock. As of June 30, 2010, $125,000 of these notes and accrued interest of $133,334 are still outstanding. These notes were in default as of December 31, 2006.
In August  2001,  the Company  issued  notes  payable for  $100,000 and $300,000  which  were  due in 60 days  and 14  days,  respectively. The balance of those loans as of June 30, 2010 was $100,000 and $282,000, respectively.
In October 2003, the Company issued a note payable in the amount of $20,000.  The note was due 45 days after issuance.  The note was forgiven in 2009 and written off as other income.
During the six months ended June 30, 2010, the Company converted $15,500 of certain notes payable into 3,500,000 shares of the company's common stock.
CEPHAS HOLDING CORP. AND SUBSIDIARIES
CONSOLIDATED NOTES TO INTERIM FINANCIAL STATEMENTS
JUNE 30, 2010
(UNAUDITED)
Note 5 -
Notes Payable(continued)
During the six months ended June 30, 2010, an outside party loaned the Company a total $85,000.  These loans aggregated bear and are payable interest only at the rate of 7% per annum with no fixed terms of repayment and may be converted into common stock at $.005 per share.
The total amount due for notes payable is $610,250 as of June 30, 2010.
Note 6 –
Notes Payable – Related Party
The Company issued a note to Eric Joffe for unpaid salaries for 2006 for $100,000 of which $5,000 was repaid. The remaining balance of $95,000 bears interest at 7% per annum and accrued interest to date is $19,501.
Note 7 -
Stockholders' Deficit
Series A Preferred Stock
The Company has 1,000,000 shares of $0.001 par value Series A Preferred Stock ("Series A") authorized of which 2,225 shares are issued and outstanding at March 31, 2010. Each share of Series A can be converted into 20 shares of common stock.
Series B Convertible Preferred Stock
The Company has 850,000 shares of $0.01 par value Series B Convertible Preferred Stock ('Series B") authorized of which 850,000 shares are issued and outstanding at March 31, 2010.
In the event of a voluntary or involuntary liquidation,  dissolution or winding  up of the  Company,  prior to the time  the  Series B  becomes convertible  into  common  shares,  the  holders  of  Series B shall be entitled to $0.01 per share. In the event of a voluntary or involuntary liquidation,  dissolution  or winding up of the Company  after the time the Series B becomes  convertible  into common  shares,  the holders of Series B shall be entitled  to share with the  holders of common  stock pari  passu in the assets of the  Company,  on an as  converted  basis, whether such assets are capital or surplus of any nature. The Series B shall be convertible upon the earlier to occur of: (i) the date the Company generates net profits in any two consecutive fiscal quarters or (ii) April 1, 2006.
The  conversion  of  Series B shall be on the  basis of ten  shares  of common  stock for one Series B share,  as may be adjusted  from time to time. Upon conversion, the holder of the Series B will be required to pay to the Company a conversion price for each share of common stock equal to $0.10.
The holders of the Series B shall vote on all matters with the holders of the common stock (and not as a separate class) on a ten votes per share basis.  The holders of the Series B shall be entitled to receive all notices relating to voting as are required to be given to the holders of the common stock.
CEPHAS HOLDING CORP. AND SUBSIDIARIES
CONSOLIDATED NOTES TO INTERIM FINANCIAL STATEMENTS
JUNE 30, 2010
(UNAUDITED)
Series B Convertible Preferred Stock(continued)
During 2003, the Company issued to Mr. Peter Klamka, the Company's CEO, 850,000 shares of Series B as consideration for the contribution of an affinity credit card business to Legend Credit.
Series C Convertible Preferred Stock
The Company has 147,775 shares of $0.01 par value Series C Convertible Preferred Stock ("Series C") authorized of which 147,775 shares are issued and outstanding at June 30, 2010.
In the event of a voluntary or involuntary liquidation,  dissolution or winding  up of the  Company  prior  to the time  the  Series C  becomes convertible  into  common  shares,  the  holders  of  Series C shall be entitled to $0.01 per share. In the event of a voluntary or involuntary liquidation,  dissolution  or winding up of the Company  after the time the Series C becomes  convertible  into common  shares,  the holders of Series C shall be  entitled  to share with the holders of  shares of common stock and Series B convertible preferred stock pari passu in the assets of the Company, on an as converted  basis, whether such assets are capital or surplus of any nature.   The Series C shall be convertible upon the earlier to occur of:  (i) the date the Company generates net profits in any two consecutive fiscal quarters; (ii) April 1, 2006; or (iii) any date that the market price per share of common stock equals or exceeds $0.50.
Note 7 -
Stockholders' Deficit (continued)
Series C Convertible Preferred Stock (continued)
The  conversion of Series C shall be on the  basis of one hundred shares of common stock for one Series C share,  as may be adjusted  from time to time. Upon conversion, the holder of the Series C will be required to pay to the Company a conversion price for each share of common stock equal to $0.10.
The holders of the Series C shall vote on all matters with the holders of the common stock (and not as a separate class) on a ten votes per share basis.  The holders of the Series C shall be entitled to receive all notices relating to voting as are required to be given to the holders of the common stock.
During 2004, the Company issued to Mr. Peter Klamka, the Company's CEO, 147,775 shares of Series C as consideration for the contribution of an additional 10% ownership in Legend Credit. (See Note 3)
Common Stock
During the three months ended March 31, 2010 the Company issued a total of 3,100,000 common shares to convert notes payable for a total consideration of $15,500.
CEPHAS HOLDING CORP. AND SUBSIDIARIES
CONSOLIDATED NOTES TO INTERIM FINANCIAL STATEMENTS
JUNE 30, 2010
(UNAUDITED)
Note 8 -
Commitments and Contingencies
Litigation
Legend Studios, Inc. vs. Quorum Radio Partners, Inc., Quorum Radio Partners of Virginia, Inc. and Quorum Communications, Inc.
Legend Studios lawsuit arises from defendants' breach of the parties' Asset Purchase Agreement and Time Brokerage Agreement that govern the sale, programming, operations and revenues of certain radio stations (KELE-AM, KELE-FM, WIQO, WKEY and WKCI). Legend Studios seeks specific performance of the agreements, as well as in excess of $1.5 million in damages.  Defendants have been served with the complaint, but have not filed answers and may be subject to entry of default.  Quorum Radio Partners of Virginia, Inc., however, filed a bankruptcy petition after being served with the complaint, which stays Legend Studios' proceedings solely against that entity.
In the ordinary course of business, the Company is generally subject to claims, complaints, and legal actions. At June 30, 2010, management believes that the Company is not a party to any action which would have a material impact on its financial condition, operations, or cash flows.
Commitments
In September, 2007, Legend Credit, Inc. entered into an agreement with UCE, Inc. in which the Company agreed to contribute $500,000 toward production, marketing and promotion costs for a weekly mixed martial arts event scheduled and produced by UCE, Inc.  The Company contributed $29,562 toward the agreed-upon.  The investment of $29,562 was fully impaired during the year ended December 31, 2008.
During the six months ended June 30, 2010 the Company invested a total of $62,000 worth of units in Network Talent, LLC.
Item 2.
Management's Discussion and Analysis or Plan of Operation
Forward looking statements
This report contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Shareholders are cautioned that all forward-looking statements involve risks and uncertainty, including without limitation, our ability to fully establish our proposed websites and our ability to conduct business with Palm, Inc. and be successful in selling products. Although we believe the assumptions underlying the forward-looking statements contained herein are reasonable, any of the assumptions could be inaccurate, and therefore, there can be no assurance that the forward-looking statements contained in the report will prove to be accurate.
GENERAL
The following discussion and analysis should be read in conjunction with our consolidated financial statements and related footnotes for the year ended December 31, 2009 included in our Annual Report on Form 10-K.  The discussion of results, causes and trends should not be construed to imply any conclusion that such results or trends will necessarily continue in the future.
We were incorporated in Delaware on January 13, 1998 and are the successor to Interactive Entertainment Studio, Inc. (IES). IES was incorporated in the State of Nevada on May 27, 1997 and was merged into us in March 1998 for the sole purpose of changing the domicile of the company to Delaware. This merger was retroactively reflected in the December 31, 1997 financial statements. On June 27, 2002 we changed our name to Legend Mobile, Inc. In October 2008, the Company amended its articles to change the name to Cephas Holding Corp.
.
We are a developer and marketer of  mobile phone applications for the iPhone platform. We currently have three apps available to consumers. Our three apps our "Iron Sheik Soundboard", "MMAUnderboss" and "Metal News".
We have a contract with undisputed, mixed martial arts heavyweight champion, Fedor Emelinenko, granting us the right to develop iPhone applications.
We are currently developing applications under the license granted from Mr. Emelinenko.
We are currently negotiating with several other celebrity personalities outside of combat sports for iPhone applications. There can be no assurance we will succeed in securing any of these brands or if we do successfully bringing a product to market.
Since our inception, we have incurred significant losses and at June 30, 2010 our current liabilities exceeded current assets. In addition, we are delinquent in certain payments due for license fees and notes payable. In an effort to preserve our cash, we are currently using shares of our common stock to pay down debt.
We may be unable to continue in existence unless we are able to arrange additional financing and achieve profitable operations. We plan to raise additional capital
Significant Accounting Policies and Estimates
Management's Discussion and Analysis of Financial Condition and Results of Operations
discusses the Company's consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements 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 revenues and expenses during the reporting period. Management bases its estimates and judgments on historical experiences and on various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. The most significant accounting estimates inherent in the preparation of the Company's financial statements relate to the allowance for doubtful accounts. These accounting policies are described at relevant sections in this discussion and analysis and in the notes to the consolidated financial statements included in this Annual Report on Form l0-KSB for the year ended December 31, 2009.
Results of Operations
Six  months ended  June 30, 2010  vs. June 30, 2009
Revenue for the six months ended June 30, 2010 was $172 compared to $0 for the three months ended June 30, 2009
The cost of revenue for the six months ended June 30, 2010 was $0  as compared to  $0 for the period ended June 30, 2009
Selling, general and administrative expenses for the
six
months ended June 30, 2010 was $94,676  as compared to $91,095 for the six months ended June 30, 2009.
Interest expense and financing costs for the six  months ended June 30, 2010 was $167,925 as compared to $ 166,878 for the nine months ended June 30 , 2009.
Liquidity and Capital Resources
We have incurred an accumulated deficit since our inception of $
21,923,504
. In order for us to continue in existence, we will have to raise additional capital through the sale of equity or debt or generate sufficient profits from operations, or a combination of both.
Off-balance sheet arrangements
There are no off balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors.
Item 3.
Controls and Procedures
As required by SEC rules, we have evaluated the effectiveness of the design and operation of our disclosure controls and procedures at the end of the period covered by this report. This evaluation was carried out under the supervision and with the participation of our management, including our principal executive officer and principal financial officer. Based on this evaluation, these officers have concluded that the design and operation of our disclosure controls and procedures
are effective except in regard weakness in our controls related to the issuance of shares for the year ending December 31, 2009. There were no changes in our internal control over financial reporting or in other factors that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Disclosure controls and procedures are our controls and other procedures that are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Securities & Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in the reports that we file under the Exchange Act is accumulated and communicated to our management, including principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.
Part II.
OTHER INFORMATION
Item 1.
Legal Proceedings
The company is party to legal proceedings from time to time. None of the legal proceedings in management's opinion would have an adverse material impact on the company.
On September 26, 2008, Mr. Denner filed a suit against the Company and Mr. Klamka in the Iowa District Court for Polk County alleging, among other things, that the Company's and Mr. Klamka's failure to pay a loan made by Mr. Denner to the Company constituted a breach of contract.  Mr. Denner is seeking compensatory damages plus interest and costs. The loan was made by Mr. Denner in 2001 in the principal amount of $100,000 and bears interest only upon default at a rate of 24% per annum.  As Of July 31, 2010 case against Cephas Holdings f/k/a Legend Mobile and Peter Klamka,, individually, was dismissed.
There are several judgments against our company that could effect our operations
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds
During the quarter ended June 30, 2010 the Company issued 13,250,000for a total of consideration of $46,250.
Item 3.
Defaults Upon Senior Securities
None
Item 4.
Submission of Matters to a Vote of Security Holders
None
Item 5.
Other Information
None
Item 6.
Exhibits
31.1
Certification of the Chief Executive Officer and Principal Accounting Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1
Certification of the Chief Executive Officer and Principal Accounting Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Cephas Holding ,Corp.
Dated: October 27, 2010
By:
/s/ Peter Klamka
Peter Klamka, Principal  Executive Officer  and
Principal Financial  Officer
EXHIBIT 31.1
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
AND PRINCIPAL EXECUTIVE OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 302 OF
THE SARBANES-OXLEY ACT OF 2002
I, Peter Klamka, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Cephas Holding Corp.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the small business issuer as of, and for, the periods present in this report;
4. The small business issuer's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13-a-15(f) and 15d-15(f)) for the small business issuer and have:
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the small business issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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 principals;
c) Evaluated the effectiveness of the small business issuer's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d) Disclosed in this report any change in the small business issuer's internal control over financing reporting that occurred during the small business issuer's most recent fiscal quarter (the small business issuer's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the small business issuer's internal control over financial reporting; and
5. The small business issuer's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the small business issuer's auditors and the audit committee of the small business issuer's board of directors (or persons performing the equivalent functions):
a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the small business issuer's ability to record, process, summarize and report financial information; and
b) Any fraud, whether or not material, that involved management or other employees who have a significant role in the small business issuer's internal control over financial reporting.
Dated:  October 27, 2010
/s/ Peter Klamka
Peter Klamka
Chief Executive Officer
(Principal Executive Officer)
EXHIBIT 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Cephas Holding Corp. (the "Registrant") on Form 10-Q for the period ending June 30, 2010 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Peter Klamka, certify, pursuant to 18 U.S.C. ss. 1350, as adopted pursuant to Section. 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:
(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant.
Dated:  October 27 2010
/s/ Peter Klamka
Peter Klamka
Chief Executive Officer
(Principal Executive Officer)