10-Q 1 oct06-10q.txt UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended October 31, 2006 ---------------- [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ________ to _________ Commission File number: 0-26843 Nortia Capital Partners, Inc. ------------------------------------------------------ (Exact name of registrant as specified in its charter) Nevada 90-025041 ------------------------------ ------------------- (STATE OR JURISDICTION OF (IRS EMPLOYER INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.) 400 Hampton View Court, Alpharetta, Georgia 30004 -------------------------------------------------------- (ADDRESS OF PRINCIPAL EXECUTIVE OFFICE) (ZIP CODE) REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (770) 777-6795 ---------------- Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ] Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Large accelerated filer [ ] Accelerated filer [ ] Non-Accelerated filer [X] Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [X] As of November 15, 2006, there were approximately 26,494,054 shares of common stock, $0.001 par value, issued and outstanding and 1,964,955 shares issuable. Nortia Capital Partners, Inc. Form 10-Q Index October 31, 2006 Page ---- Part I-Financial Information Item 1. Financial Statements 2 Balance Sheets at October 31, 2006 (Unaudited) 3 Statement of Operations for the Six and Three Months Ended October 31, 2006 and 2005 and for the period from May 1, 2006 (inception of development stage) to October 31, 2006 (Unaudited) 4 Statement of Cash Flows for the Six Months Ended October 31, 2006 and 2005 and for the period from May 1, 2006 (inception of development stage) to October 31, 2006 (Unaudited) 5 Notes to Financial Statements (Unaudited) 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 22 Item 3. Quantitative and Qualitative Disclosures About Market Risk 31 Item 4. Controls and Procedures 31 Part II-Other Information Item 1. Legal Proceedings 32 Item 1A. Risk Factors 33 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 35 Item 3. Defaults upon Senior Securities 38 Item 4. Submission of Matters to a Vote of Security Holders 36 Item 5. Other Information 36 Item 6. Exhibits 36 Signatures 37 PART I FINANCIAL INFORMATION Item 1-Financial Statements 2 Nortia Capital Partners, Inc. (A Development Stage Company) Balance Sheets

~~Post~~October ~~Election~~31, ~~Pre~~April ~~Election Post Election Pre Election as a Business as a Business as a Business as a Business Development Development Development Development Period from Company Company Company Company May 1~~30, ~~2003~~ --------------------------- 2006 2006 ----------- ----------- ASSETS ------~~----------~~ ~~Three~~Current ~~One~~Assets ~~Two~~Cash ~~Nine~~$ ~~One~~13,962 ~~Eight~~$ ~~(Inception of Months Month Months Months Month Months Development Ended Ended Ended Ended Ended Ended Stage) to Jan. 31~~32,401 ~~Jan.~~Accounts ~~31,~~receivable ~~Jan.~~- ~~31,~~related ~~Dec.~~party 3165,000 ~~Jan.~~- ~~31,~~Other ~~Jan.~~receivable 3150,000 ~~Dec. 31~~4,150 ~~2006 2006 2005 2004 2006 2005 2004~~ ----------- ----------- Total Current Assets 128,962 36,551 =========== =========== Property and Equipment, net 2,872 - ----------- -----------~~---------------------------------------------~~ ~~Revenues~~Investments $ Non-Marketable $Securities -Related $party non-marketable $equity -securities $at -cost ~~$ 153~~1,~~699~~250 ~~$ 300~~1,~~000~~250 ~~Operating~~Non-marketable ~~Expenses~~equity ~~General~~securities ~~and~~at ~~administrative~~cost 53100,~~533~~000 ~~35,996 39,299 257,476 35,996 94,223 529,388 Bad debt~~ - - - - - - 1,625 Rent 1,611 3,884 7,516 14,906 3,884 23,072 53,905 Consulting 33,118 7,490 66,427 141,698 7,490 82,342 783,540 Compensation 116,435 30,385 198,765 449,605 30,385 245,465 1,009,395 Debenture penalty - ~~9,225~~ - - ~~9,225 2,175 11,400 Directors fees~~ - - ~~224,100~~ - - ~~225,150 237,150 Interest expense 160 12,615~~ - ~~160 12,615 15,054 53,304 Impairment of investments~~ --------- ~~45,331~~Total Non-Marketable -Securities 45101,~~331~~250 31,250 ~~48,581~~Total ~~Professional~~Investments ~~167~~101,~~853~~250 151,~~284~~250 ~~26,253 413,158 15,284 109,892 620,778~~ ----------- ----------- Other Assets Loan receivable - 100,000 ----------- ----------- Total Other Assets - 100,000 ----------- ----------- Total Assets 233,084 137,801 =========== =========== LIABILITIES -----------~~-----------~~ ~~Total~~Current ~~Operating~~Liabilities ~~Expenses~~Accounts ~~372,710~~payable ~~160,210~~- ~~562~~17,~~360~~193 ~~1,277,003~~Accrued ~~160,210~~expenses ~~800~~40,~~623~~313 34,~~349,065~~128 ----------- ----------- Total Current Liabilities 40,313 21,321 =========== =========== Commitments and Contingencies (Note 6) STOCKHOLDERS' EQUITY --------------------~~------------------------------------------------~~ ~~Loss~~Preferred ~~from Operations (372~~stock,~~710)~~ ~~(160,210)~~Series ~~(562~~A,~~360)~~ ~~(1,277,003)~~$0.001 ~~(160,210)~~par ~~(646~~value,~~924)~~ (35,~~049~~000,~~065)~~000 ~~Other~~shares ~~Income~~authorized ~~(Expense)~~No ~~Loss~~shares onissued ~~sale~~and ofoutstanding ~~available~~$ ~~for sale securities~~ - - -Common -stock, -$0.001 ~~(64~~par value,~~738)~~ ~~(64~~50,~~738)~~000,000 ~~Loss~~shares onauthorized ~~conversion~~26,494,054 ofand ~~debt - - - - - - (2~~22,~~738~~813,~~559)~~254 ~~Other~~shares ~~than~~issued ~~temporary~~and ~~loss~~outstanding on26,494 ~~for~~22,813 ~~sale~~Common ~~securities~~stock ~~- - - - - (195~~issuable,~~000)~~ ~~(195~~1,~~000)~~964,955 ~~Other~~and ~~income -~~ 4,874,855 36shares ~~- 4 4~~1,~~536~~965 4,~~568~~875 ~~Interest~~Additional ~~income~~paid 52in -capital ~~(35) 390 - 8 401 ------------------------------------------------------------------------------------------ Total Other Income (Expense) 52 4 1 390 4 (255~~7,~~194)~~346,286 (26,~~993~~500,~~328)~~828 ~~------------------------------------------------------------------------------------------~~Accumulated ~~Net~~deficit ~~Loss Before Income Taxes $~~ (~~372~~6,~~658) $ (160~~412,~~205~~035) $ (~~562~~12,~~359~~398) ~~$(1,276,613)~~Deficit $accumulated ~~(160,205)~~during $development stage (~~902~~769,~~119~~939) $(6,~~042~~399,~~393~~638) ~~========================================================================================== Income tax expense~~ - - - - - - ~~(4,397)~~ ----- -----------~~--------------------------------------------------------------------------~~ ~~Net~~Total ~~Loss~~Stockholders' $Equity ~~(372~~192,~~658)~~771 ~~$(160~~116,~~205)~~480 ~~$ (562,359) $(1,276,613) $ (160,205) $ (902,119) $(6,046,790)~~ =========== ===========~~====================================================================~~ ~~Net~~Total ~~Loss~~Liabilities ~~Per Share - Basic~~ and ~~Diluted~~Stockholders' $Equity ~~(0.01)~~ $ ~~(0.01)~~233,084 $ ~~(0.03)~~137,801 ~~$ (0.05) $ (0.01) $ (0.07) $ (0.40)~~ ===========~~===============================================================================~~ ~~Weighted Average Shares 27,085,220 21,757,254 19,842,584 26,482,720 21,757,254 13,522,418 15,054,964~~ ===========~~===============================================================================~~

See accompanying notes to unaudited financial statements. 3 Nortia Capital Partners, Inc. (A Development Stage Company) Statement of Operations (Unaudited)

~~Post Election Pre Election as a Business As a Business Development Development~~ Period ~~from~~From ~~Company Company~~ May 1, ~~2003~~2006 ~~Nine~~Six ~~One~~Three ~~Eight~~ (Inception of Months ~~Month~~Ended Months ~~Development~~ Ended ~~Ended~~Development ~~Ended~~ Stage) toOctober ~~Jan.~~ 31, ~~Jan.~~October 31, ~~Dec.~~to ~~31,~~October ~~Jan.~~ 31, 2006 2005 ~~2004~~2006 2005 2006 ---------- ---------- ---------- ---------- ------------------ ~~Cash~~Revenues ~~Flows From Operating Activities: Net loss~~ $~~(1,276,613)~~ ~~$ (160~~140,~~205)~~000 $- ~~(902~~140,~~119)~~000 ~~$(6,046,790) Adjustments to reconcile net loss to net cash used in operations: Debenture issued for legal services~~ - ~~- - 5~~140,000 ~~Contributed~~Operating ~~services~~Expenses ~~expense~~General ~~4,400~~and -administrative ~~- 4~~128,~~400~~311 ~~Bad debt expense - - - 1~~203,~~625~~941 ~~Impairment of investments - 45~~50,~~331~~494 3109,~~250~~845 48128,~~581~~311 ~~Debenture~~Rent ~~issued~~10,754 ~~for consulting services - - 7~~13,~~000~~295 75,~~000~~350 ~~Loss on sale of available for sale securities - - 64~~1,~~738~~218 6410,~~738~~754 ~~Other~~Consulting ~~than temporary loss on available for sale securities - - 195~~43,~~000~~181 ~~195~~108,~~000~~580 ~~Compensation related to conversion of debt - - - 2~~40,~~000~~181 ~~Loss on conversion of debt - - - 2~~71,~~738,559~~724 ~~Transfer of available for sale securities for consulting services - - 2~~43,~~100~~181 ~~2,100~~Stock ~~Common stock issued for~~ compensation ~~- - 196~~550,000 ~~356,000 Common stock issued for directors fees~~ - ~~- 225~~550,~~150 237,150 Common stock issued for consulting services - 15,~~000 ~~4,065 128,565 Common stock issued for legal services~~ - ~~- 10~~550,000 ~~10,000~~Compensation ~~Amortization of deferred consulting 86~~133,~~700~~758 ~~- 58~~333,~~917~~171 ~~585~~16,~~400~~148 ~~Common stock based revenue - - (153~~203,~~699)~~411 ~~(300~~133,~~000)~~758 ~~Changes~~Professional ~~in operating assets and liabilities: Decrease in prepaid expenses - - - 540 Increase in other receivable - - (6~~94,~~500)~~167 (6245,~~500)~~305 ~~Increase in employee receivable - - (26~~28,~~932)~~949 ~~- Increase (decrease) in accounts payable 24~~157,~~546~~807 (694,~~500)~~167 ~~6,501 48,387 Decrease in due to related party~~ - - ~~(1,113)~~ - ~~Increase (decrease) in accrued expenses (49,765) 14,492 69,837 63,411~~ -------------------- ----------------------- ----------------- ~~Net~~Total ~~Cash Used In~~ Operating ~~Activities~~Expenses (1960,~~210~~171 904,~~732)~~292 ~~(91~~691,~~882)~~122 ~~(247~~544,~~805)~~005 (1960,~~854,835)~~171 ----------------------- ----------------------- ------------ ~~Cash Flows From Investing Activities: Purchase of available for sale securities~~ - - --- Operating Loss (49820,~~948~~171) ~~Issuance~~(904,292) of(551,122) ~~note~~(544,005) ~~receivable~~ (52820,~~500~~171) -Other -Income (~~52,500~~Expense) ~~Proceeds~~Gain ~~from~~on sale of available for sale securities -50,000 - 1450,~~405~~000 14- 50,~~405~~000 ~~Net~~Interest ~~Cash~~expense ~~Provided By~~ (~~Used In~~10) ~~Investing~~- -~~---------------------------------------------------------~~ ~~Activities~~ (5217,500) ~~- 14,405~~ (~~88,043~~10) Interest income 242 338 111 127 242 ----------------------- ----------------------- ------------ ~~Cash Flows From Financing Activities: Proceeds from issuance of promissory notes~~ - ~~86,000 75,000 188,000 Proceeds from issuance of stock subscription deposit 39,600~~ - - ~~39,600 Proceeds from sale of common stock 1,229,420~~ - - ~~1,315,770~~Total ~~Proceeds~~Other ~~from~~Income ~~issuance~~(Expense) of50,232 ~~debentures~~338 - 50,~~000~~111 ~~197~~(17,~~000~~373) ~~417~~50,~~000~~232 ----------------------- ----------------------- ----------------- Net ~~Cash~~Loss ~~Provided~~$ By(769,939) ~~Financing~~$ ~~Activities 1~~(903,~~269,020~~954) ~~136,000~~$ ~~272~~(501,~~000~~011) 1$ (561,~~960,370~~378) ~~----------------------------------------------------------~~$ ~~Net~~(769,939) ~~Increase~~======================= in======================= ~~Cash~~================= ~~5,788~~Comprehensive ~~44,118~~Loss ~~38,600~~Unrealized ~~17,491~~gain ~~Cash~~on atavailable ~~Beginning~~for ofsale ~~Period~~securities ~~11,703~~- ~~47,364~~- 8(200,~~764~~000) - - ----------------------- ----------------------- ----------------- ~~Cash~~Total atComprehensive ~~End~~Loss of$ ~~Period~~(769,939) $ 17(903,~~491~~954) $ 91(701,~~482~~011) $ 47(561,~~364~~378) $ 17(769,~~491~~939) ======================= ======================= ================= ~~Supplemental~~Net ~~Disclosure~~Loss ofPer ~~Cash~~Share ~~Flow~~- ~~Information:~~Basic ~~Cash~~and ~~paid~~Diluted ~~for~~$ ~~interest~~(0.03) $ -(0.04) $ -(0.02) $ -(0.02) $ -(0.03) ======================= ======================= ================= ~~Cash~~Weighted ~~paid~~Average ~~for~~Shares ~~taxes~~28,024,040 $26,181,470 -28,202,370 $26,560,812 -28,024,040 ~~$ - $ -~~ ======================= ======================= ============ Supplemental Disclosure of Non-Cash Investing and Financing Transactions: Debenture issued for available-for-sale securities $ - $ - $ - $ 75,000 Recapitalization of accounts payable - 63,330 - 63,330 Common stock issuable for conversion of debentures and accrued interest - - - 552,235 Common stock issuable for conversion of promissory notes and accrued interest - - - 192,927 Common stock issued for cancellation of services 84 - - 84 Common stock issued for conversion of preferred stock 300 300 - 300=====

See accompanying notes to unaudited financial statements 4 Nortia Capital Partners, Inc. (A Development Stage Company) Statement of Cash Flows (Unaudited)

~~Percentage~~Period offrom ~~Title~~May of1, ~~Class~~2006 ~~Held~~Six on(Inception ~~Portfolio~~of ~~Securities~~Months ~~Held~~Ended aDevelopment ~~Fully~~Stage) ~~Diluted~~to AtOctober ~~Jan.~~31, October 31, 2006 ~~Company~~2005 ~~Industry~~2006 ~~By The Company Basis Cost Fair Value~~ ----------------------- --------------------~~---------------------------------------------------------------------~~ ~~Investments~~Cash -Flows ~~(1)~~From Operating Activities: Net loss $ (2769,939) ~~----------------------------------------------------------------------------------------------------------------~~$ ~~Avix Technologies~~(903,954) ~~Inc.~~$ (3769,939) ~~Telecom~~Adjustments ~~Common~~to reconcile net loss to net cash used in operations: Stock ~~11%~~compensation $expense 43550,~~706~~000 $ - ~~----------------------------------------------------------------------------------------------------------------~~550,000 BFGain ~~Acquisition~~on ~~Group~~sale Vof available for sale securities (50,000) ~~Inc.~~- (350,000) ~~Shell~~Contributed ~~Common~~services ~~Stock~~expense ~~10%~~- 14,~~625~~400 - Amortization of deferred consulting - 61,200 -~~--------------------------------------------------------------------------------------------------------------~~ ~~Total~~Changes ~~Investments~~in operating assets and liabilities: Increase in accounts receivable - ~~Minority~~related ~~Owned~~party ~~Other~~(65,000) ~~Non~~-~~Controlled~~ ~~Affiliates~~(65,000) 45Decrease in other receivable 4,~~331~~150 - 4,150 Decrease in accounts payable (12,194) (62,157) (12,194) Increase in accrued expenses 36,187 30,503 36,187 ----------------------- --------------------~~---------------------------------------------------------------------~~ ~~Universal~~Net ~~Capital~~Cash ~~Management~~Used In Operating Activities (306,796) ~~Inc.~~(870,008) (3306,796) ~~Investments~~Cash ~~Common~~Flows ~~Stock~~From 1%Investing 1Activities: Purchase of property and equipment (2,~~625~~872) - (2,872) ----------------------- -------------------- Net Cash Used In Investing Activities (2,872) - (2,872) ----------------------- --------------------~~-------------------------~~ BFCash ~~Acquisition~~Flows ~~Group~~From ~~III,~~Financing ~~Inc.~~Activities: ~~(3)~~Proceeds ~~Shell~~from ~~Common~~sale ~~Stock~~of 3%common 1stock 291,~~625~~229 -876,920 291,229 ----------------------- -------------------- Net Cash Provided By Financing Activities 291,229 876,920 291,229 ----------------------- --------------------~~--------------------------~~ ~~Total~~Net ~~Investments~~decrease -in ~~Unaffiliated~~Cash ~~Issuers~~(18,439) 36,~~250~~912 -(18,439) ----------------------- -------------------- Cash at Beginning of Period 32,401 11,703 32,401 ----------------------- --------------------~~--------------------------~~ ~~Total~~Cash ~~Investments~~at End of Period $ 4813,~~581~~962 $ -18,615 $ 13,962 ======================= ==================== Supplemental Disclosure of Cash Flow Information: ------------------------------------ Cash paid during the period for: Interest $ - $ - $ - ======================= ==================== Taxes $ - $ - ======================= ==================== Supplemental Disclosure of Non-Cash Investing and Financing Transactions: -------------------------------------~~---------------------------------~~ ~~Total~~Conversion ~~Investments~~of ~~48,581~~loan receivable to non-marketable ~~Unearned~~equity ~~Income~~securities -at -cost $ 100,000 $ -~~-----------------~~ ~~Total~~$ ~~Investments~~100,000 ~~net~~Common stock issuable for conversion of ~~Unearned~~accounts ~~Income~~payable $5,000 48- 5,~~581~~000 $Common stock issued for conversion of preferred stock - ~~==================~~300 -

See accompanying notes to unaudited financial statements 5 Nortia Capital Partners, Inc. (A Development Stage Company) Notes to Financial Statements October 31, 2006 (Unaudited) Note 1. Basis of Presentation ------------------------------ The accompanying unaudited financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules and regulations of the United States of America Securities and Exchange Commission ("SEC") for interim financial information. Accordingly, they do not include all the information and footnotes necessary for a comprehensive presentation of financial position and results of operations. It is management's opinion, however, that all material adjustments (consisting of normal recurring adjustments and certain non-recurring adjustments) have been made that are necessary for a fair financial statement presentation. The results for the interim period are not necessarily indicative of the results to be expected for the year. These unaudited financial statements should be read in conjunction with Nortia Capital Partners, Inc.'s ("Nortia", "we", "us", "our", or the "Company") audited financial statements and notes thereto for the year ending April 30, 2006 included in the Company's Form 10-K filed with the SEC on August 16, 2006. Previously, the Company's financial statements were prepared in accordance with the guidance in the AICPA's Audit and Accounting Guide, "Audits of Investment Companies" because the Company elected to be regulated as a business development company (a "BDC") under the Investment Company Act of 1940 (the "1940 Act"), effective January 4, 2005. The Company operated as a BDC for regulatory oversight and reporting purposes throughout the period covered by its Form 10-K for the year ended April 30, 2006. Effective May 2, 2006, the Company filed a Form N-54C with the SEC withdrawing its election to be regulated as a BDC. The Company has commenced a new business model whereby it provides merchant banking- type services to small, private companies seeking to become publicly held and traded, as discussed further under Note 2 - Nature of Operations. The withdrawal of the Company's election to be regulated as a BDC resulted in a change in its method of accounting. BDC financial statement presentation and accounting uses the "fair value" method of accounting, which allows BDCs to value their investments at market value as opposed to historical cost and to recognize unrealized gains or losses in operations. As an operating company, the Company will use either the fair-value or historical-cost methods of accounting for financial statement presentation and accounting for securities held, depending on how the investment is classified and how long the Company intends to hold the investment and recognize unrealized gains or losses as a component of stockholders' equity. In light of its limited assets, the effect of the change in method of accounting was not material. In accordance with generally accepted accounting principles, the change from a BDC to an operating company has been retrospectively applied to prior periods. With the new business model, effective May 2, 2006, the Company has commenced a new development stage and has not generated any significant revenue to date from its new business model. The results of operations for May 1, 2006 through May 2, 2006 were not material and therefore, the Company will utilize May 1, 2006 as the inception date for the new development stage. 6 Nortia Capital Partners, Inc. (A Development Stage Company) Notes to Financial Statements October 31, 2006 (Unaudited) Note 2. Nature of Operations and Summary of Significant Accounting Policies -------------------------------------------------------------------- Nature of Operations Nortia is an Atlanta, Georgia based company that elected to become a BDC in January 2005, pursuant to the provisions of the 1940 Act. The Company operated as a BDC for regulatory oversight and reporting purposes throughout the period covered by its Form 10-K for the period ended April 30, 2006. Effective May 2, 2006, the Company filed a Form N-54C with the SEC withdrawing its election to be regulated as a BDC. The Company has commenced a new business model whereby it provides merchant banking-type services to small, private companies seeking to become publicly held and traded, as discussed further below. The ability of the Company to continue as a going concern is dependent on the Company's ability to implement its new business plan, raise capital, and generate revenues. There can be no assurance that the Company will be successful in implementing its revised business plan (see Note 3 - Going Concern for further discussion). History of Company Development Nortia was organized as BF Acquisition Group I, Inc. under the laws of the State of Florida on April 15, 1999, as a "shell" company, with plans to seek business partners or acquisition candidates. Due to capital constraints, however, we were unable to continue with our original business plan. In March 2001, we ceased our business activities and became dormant through May 2003, whereby we incurred only minimal administrative expenses. During June 2003, we engaged present management, began to raise additional capital, and initiated activities to re-establish our business. During our fiscal quarterly period ending July 31, 2003, we re-entered the development stage. At that time, present management raised capital and commenced preparations to operate as a BDC, whereby we intended to operate as an investment company investing in small, private companies. Effective August 2, 2004, BF Acquisition Group I, Inc. changed its name to Nortia Capital Partners, Inc. On October 15, 2004, we entered into a definitive share exchange agreement (the "Exchange Agreement") with Global Life Sciences, Inc. ("Global"), a publicly traded Nevada corporation, which then changed its name to "Nortia Capital Partners, Inc." On December 2, 2004, the Exchange Agreement was consummated and, pursuant to its terms, we became a wholly owned subsidiary of the Nevada corporation in a transaction accounted for as a recapitalization of the Company. On December 3, 2004, we were merged into the Nevada corporation with the Nevada corporation surviving. As a result of the recapitalization, we are no longer a Florida corporation and are now organized under the laws of the State of Nevada. On January 4, 2005, we filed Form N-54A with the SEC and elected to be regulated as a BDC pursuant to Section 54 of the 1940 Act. The Company expected to invest in emerging and development-stage companies that intended to be listed and traded on US equity markets, including the OTC Bulletin Board. It was intended that the primary use of Company resources would be to invest in private and micro-cap companies that typically lack the necessary capital and depth of management to expand their businesses. 7 Nortia Capital Partners, Inc. (A Development Stage Company) Notes to Financial Statements October 31, 2006 (Unaudited) In June 2005, we determined to commence an offering of shares of our common stock as a BDC in accordance with the exemption from the registration requirements of the Securities Act of 1933 as provided by Regulation E. In connection with that prospective offering, we filed a Form 1-E with the SEC, which was reviewed in the ordinary course, and with respect to which a comment letter was issued by the SEC staff to the Company. As a result, we understood we were out of compliance with certain of the rules and regulations governing the business and affairs, financial status, and financial reporting items required of BDCs. Ultimately, the Board of Directors of the Company (the "Board") caused the Company to take immediate and substantial steps to remediate certain of the compliance failures, and the Company informed the SEC staff of these steps. Accordingly, after careful consideration of the 1940 Act requirements applicable to BDCs, an evaluation of the Company's ability to operate as a going concern in an investment company regulatory environment, the cost of 1940 Act compliance needs and a thorough assessment of potential alternative business models, the Board determined that continuation as a BDC was not in the best interest of the Company and its shareholders. On February 10, 2006, upon the recommendation of the Board, a majority of the then outstanding shares voted to approve withdrawal of our election as a BDC. On May 2, 2006, we filed form N-54C with the SEC formally withdrawing our election to be subject to the 1940 Act, pursuant to the provisions of section 54(c) of the Act. As of that date, the Company was no longer a BDC and now intends to conduct its activities in such a way that it will not be deemed an "investment company" subject to regulation under the 1940 Act. Thus, it will not hold itself out as being engaged primarily in the business of investing, reinvesting or trading in securities. In addition, the Company intends to conduct its business in such a manner as to ensure that it will at no time own or propose to acquire investment securities having a value exceeding 40 percent of the Company's total assets at any one time. As a result, on September 15, 2006, the Company sold its entire 50,000 share interest in Universal Capital Management, Inc. to an unrelated third party for a price of $50,000 and received a non interest bearing note receivable due and payable in six months. The Company liquidated the Universal position in order to not be subject to the 1940 Act. However, as of the date of these unaudited financial statements, the Company currently holds investment securities exceeding 40 percent (43%) of the Company's total assets. Management is making every effort to remediate this situation as soon as practicable. In that regard, the Company is considering all of the options available to it in order to terminate its investment company status. There can be no assurance as to when, if at all, the Company will no longer being an investment company. Because the Company has operated as an investment company without complying with the 1940 Act, it is subject to potential enforcement action by the SEC and may be subject to additional liability. For the period between January 4, 2005 (commencement of our status as a BDC) and April 30, 2006, we explored certain investment opportunities. In July 2005, we entered into an agreement, as our first project, to acquire a minority equity interest in Holley Communications Investment, Inc. However, the Company has made the decision to not pursue this opportunity further. Additionally, in March 2006, we acquired a minority interest in Knight Energy Corp. The Company, however, never generated any revenue from its business as a BDC. 8 Nortia Capital Partners, Inc. (A Development Stage Company) Notes to Financial Statements October 31, 2006 (Unaudited) New Business Model Subsequent to our withdrawal as a BDC, Nortia changed the nature of its business focus from investing, owning, holding, or trading in investment securities to that of an operating company intending to provide merchant banking-type services to small, private companies seeking to become publicly held and traded. Specifically, the Company intends to identify small private companies and assist them with managerial, accounting and financial advice and help them to raise necessary capital by introducing them to potential investors. As compensation for these services, the Company proposes to receive shares of the companies, which we expect will then be registered in their initial public offerings. The Company will at all times report shares it receives as compensation on its periodic reports filed with the SEC. Upon the client company's initial public offering, the Company intends to immediately distribute to its shareholders a portion of the shares held. The Company intends to conduct its activities in such a way that it will not be deemed an "investment company" subject to regulation under the 1940 Act. Thus, it will not hold itself out as being engaged primarily in the business of investing, reinvesting or trading in securities. In addition, the Company intends to conduct its business in such a manner as to ensure that it will at no time own or propose to acquire investment securities having a value exceeding 40 percent of the Company's total assets at any one time. However, as discussed above, of the date of these unaudited financial statements, the Company currently holds investment securities exceeding 40 percent (43%) of the Company's total assets. The management of the Company is making every effort to remediate this issue as soon as practicable. See Note 4 - Investments & Loan Receivable. The Company has not engaged in this line of business before and there is no guarantee that it will be successful in implementing the business plan, or that, if implemented, it will ever have revenues from the business. Significant Accounting Policies Accounting Estimates When preparing financial statements in conformity with United States Generally Accepted Accounting Principles ("U.S. GAAP"), our management must make estimates based on future events that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities as of the date of the financial statements, and revenues and expenses during the reporting period. Actual results could differ from these estimates. Significant estimates in the accompanying financial statements include the determination of the fair value of financial instruments, the valuation of our investments and the valuation allowance for deferred tax assets. Cash and Cash Equivalents Cash and cash equivalents include all highly liquid investments with a maturity date of three months or less when purchased. 9 Nortia Capital Partners, Inc. (A Development Stage Company) Notes to Financial Statements October 31, 2006 (Unaudited) Accounts Receivable Accounts receivable result from the sale of the Company's services and is reported at anticipated realizable value. The Company estimates its allowance for doubtful accounts based on a specific identification basis and additional allowances as needed based upon historical collections experience. Accounts receivable is considered past due if payment has not been received from the customer within thirty days and management reviews the customer accounts on a routine basis to determine if an account should be charged off. Derivative Instruments In connection with the sale of debt or equity instruments, we may sell options or warrants to purchase our common stock. In certain circumstances, these options or warrants may be classified as derivative liabilities, rather than as equity. Additionally, the debt or equity instruments may contain embedded derivative instruments, such as variable conversion options, which in certain circumstances may be required to be bifurcated from the host instrument and accounted for separately as a derivative instrument liability. The identification of, and accounting for, derivative instruments is complex. Derivative instrument liabilities are re-valued at the end of each reporting period, with changes in fair value of the derivative liability recorded as charges or credits to income in the period in which the changes occur. For options, warrants and bifurcated conversion options that are accounted for as derivative instrument liabilities, we determine the fair value of these instruments using the Black-Sholes option pricing model, binomial stock price probability trees, or other valuation techniques, sometimes with the assistance of a certified valuation expert. These models require assumptions related to the remaining term of the instruments and risk- free rates of return, our current common stock price and expected dividend yield, and the expected volatility of our common stock price based on not only the history of our stock price but also the experience of other entities considered comparable to us. The identification of, and accounting for, derivative instruments and the assumptions used to value them can significantly affect our financial statements. Beneficial Conversion Feature in Debentures In accordance with EITF Issue 98-5, as amended by EITF 00-27, we must evaluate the potential effect of beneficial conversion terms related to convertible instruments such as convertible debt or convertible preferred stock. If the Company issues convertible instruments, a beneficial conversion may exist if the holder, upon conversion, may receive instruments that exceed the value of the convertible instrument. Valuation of the benefit is determined based upon various factors including the valuation of equity instruments, such as warrants, that may have been issued with the convertible instruments, conversion terms, value of the instruments to which the convertible instrument is convertible, etc. Accordingly, the ultimate value of the beneficial feature is considered an estimate due to the partially subjective nature of valuation techniques. Fair Value of Financial Instruments We define the fair value of a financial instrument as the amount at which the instrument could be exchanged in a current transaction between willing parties. The carrying value of accounts payable and accrued liabilities approximates fair value because of the short maturity of those instruments. The estimated fair value of our other obligations is estimated based on the current rates offered to us for 10 Nortia Capital Partners, Inc. (A Development Stage Company) Notes to Financial Statements October 31, 2006 (Unaudited) similar maturities. Based on prevailing interest rates and the short- term maturity of all of our indebtedness, management believes that the fair value of our obligations approximates book value at October 31, 2006. Stock-Based Compensation Prior to its election as a BDC, the Company accounted for stock options issued to employees in accordance with the provisions of Accounting Principles Board ("APB") Opinion No. 25, "Accounting for Stock Issued to Employees," ("ABP 25") and related interpretations. As such, compensation cost is measured on the date of grant as the excess of the current market price of the underlying stock over the exercise price. Such compensation amounts are amortized over the respective vesting periods of the option grant. The Company adopted the disclosure provisions of Statement of Financial Accounting Standards No. 123, "Accounting for Stock-Based Compensation" ("SFAS 123"), and Statement of Financial Accounting Standards No. 148 "Accounting for Stock Based Compensation - Transition and Disclosure" ("SFAS 148"), which permits entities to provide pro forma earnings (loss) per share disclosures for employee stock option grants as if the fair value based method defined in SFAS 123 had been applied. The Company accounted for stock options or warrants issued to non- employees in exchange for goods or services in accordance with the fair value method of SFAS 123. Under this method, the Company records an expense equal to the fair value of the options or warrants issued. The fair value is computed using an options pricing model. Effective May 1, 2006, the Company adopted SFAS No. 123 (Revised), entitled Share-Based Payment. This revised Statement eliminates the alternative to use APB 25's intrinsic value method of accounting that was provided in SFAS No. 123 as originally issued. Under APB 25, issuing stock options to employees generally resulted in recognition of no compensation cost. This Statement requires entities to recognize the cost of employee services received in exchange for awards of equity instruments based on the grant-date fair value of those awards. SFAS 123 (Revised) may have an impact and will require further evaluation by the Company. Value of Investments The Company invests in various marketable equity instruments and accounts for such investments in accordance with Statement of Financial Accounting Standards No. 115 "Accounting for Certain Investments in Debt and Equity Securities" ("SFAS 115") (see Note 4 - Investments and Loan Receivable). Certain securities that the Company may invest in may be determined to be non-marketable. Non-marketable securities where the Company owns less than 20% of the investee are accounted for at cost pursuant to APB No. 18, "The Equity Method of Accounting for Investments in Common Stock" ("APB 18"). Management determines the appropriate classification of its investments at the time of acquisition and reevaluates such determination at each balance sheet date. Available-for-sale securities are carried at fair value, with unrealized gains and losses, 11 Nortia Capital Partners, Inc. (A Development Stage Company) Notes to Financial Statements October 31, 2006 (Unaudited) net of tax, reported as a separate component of stockholders' equity. Investments classified as held-to-maturity are carried at amortized cost. In determining realized gains and losses, the cost of the securities sold is based on the specific identification method. The Company periodically reviews its investments in marketable and non-marketable securities and impairs any securities whose value is considered non-recoverable. The Company's determination of whether a security is other than temporarily impaired incorporates both quantitative and qualitative information; GAAP requires the exercise of judgment in making this assessment, rather than the application of fixed mathematical criteria. The Company considers a number of factors including, but not limited to, the length of time and the extent to which the fair value has been less than cost, the financial condition and near term prospects of the issuer, the reason for the decline in fair value, changes in fair value subsequent to the balance sheet date, and other factors specific to the individual investment. The Company's assessment involves a high degree of judgment and accordingly, actual results may differ materially from the Company's estimates and judgments. The Company recorded no impairment charges for securities during the six or three month periods ended October 31, 2006 and 2005, respectively. Revenue Recognition The Company recognized revenues in accordance with the guidance in the SEC Staff Accounting Bulletin 104. Revenue is recognized when persuasive evidence of an arrangement exists, as services are provided over the term of a service contract, and when collection of the fixed or determinable selling price is reasonably assured. Income Taxes Income taxes are accounted for under the asset and liability method of Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes ("SFAS 109")." Under SFAS 109, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Under SFAS 109, the effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. In assessing the recoverability of deferred tax assets and liabilities, management considers whether it is more likely than not that some portion or all of the deferred tax assets and liabilities will be realized. Income (Loss) per Share of Common Stock Basic earnings per share ("EPS") are computed only on the weighted average number of common shares outstanding during the respective periods. There were no additional common stock equivalents or other items to adjust the numerator or denominator in the EPS computations. The Company previously announced that its Board of Directors had approved a two-for-one stock split of its common shares. The record date for the split was February 28, 2005 and the pay date was March 3, 2005. In accordance with SFAS 128, the Company has retroactively presented the effect of the stock split for all periods presented in the accompanying financial statements for all share and per share data. 12 Nortia Capital Partners, Inc. (A Development Stage Company) Notes to Financial Statements October 31, 2006 (Unaudited) At October 31, 2006, there were warrants to purchase 1,960,410 shares of the Company's common stock which may dilute future earnings per share. The October 31, 2006 total includes 1,196,155 warrants exercisable and 764,255 warrants that will become exercisable at the closing date of the existing private placement offering, which had not occurred as of the date of these unaudited financial statements. Comprehensive Income (Loss) Comprehensive income (loss) includes net income (loss) as currently reported by the Company adjusted for other comprehensive gains (losses). Other comprehensive gains (losses) for the Company consists of unrealized gains (losses) related to the Company's equity securities accounted for as available-for-sale with changes in fair value recorded through stockholders' equity. Note 3. Going Concern ---------------------- As reflected in the accompanying financial statements, the Company had a net loss of $769,939 (inclusive of a one time $550,000 non-cash stock compensation charge) and net cash used in operations of $306,796 for the six months ended October 31, 2006. The Company has an accumulated deficit of $6,412,035 and a deficit accumulated during the development stage of 769,939 at October 31, 2006. The ability of the Company to continue as a going concern is dependent on the Company's ability to further implement its new business model, raise capital, and generate revenues. The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. We plan on generating revenues from our new business model by providing merchant banking-type services to small, private companies seeking to become publicly held and traded. Specifically, the Company intends to identify small, private companies and assist them with managerial, accounting and financial advice and help them to raise necessary capital by introducing them to potential investors. As compensation for these services, the Company proposes to receive shares of the companies, which we expect will then be registered in their initial public offerings. The time required for us to become profitable from operations is highly uncertain, and we cannot assure you that we will achieve or sustain operating profitability or generate sufficient cash flow to meet our planned capital expenditures and working capital requirements. If required, our ability to obtain additional financing from other sources also depends on many factors beyond our control, including the state of the capital markets and the prospects for our business. The necessary additional financing may not be available to us or may be available only on terms that would result in further dilution to the current owners of our common stock. Note 4. Investments and Loan Receivable ---------------------------------------- In April and May 2004, we paid $6,500 for professional services for four companies and recorded a $1,625 receivable from each company. For three of these companies, we agreed to receive shares of their common stock instead of the cash due of $1,625 each. The remaining $1,625 from the final company is not collectible. All of these companies had a limited operating history and a significant stockholders' deficiency and there was no practical way to value the common stock. For the three companies that we received common stock, we recorded an impairment loss for the combined $4,875 of investments 13 Nortia Capital Partners, Inc. (A Development Stage Company) Notes to Financial Statements October 31, 2006 (Unaudited) in our statement of operations for the year ended April 30, 2005. For the remaining company that we did not receive common stock from, we recorded $1,625 of bad debt expense in our statement of operations for the year ended April 30, 2005. In June 2006, one of the companies that we received common stock for as discussed above commenced trading on the Over the Counter Bulletin Board and changed its name to Universal Capital Management, Inc. ("Universal"). Universal is a venture capital firm specializing in emerging growth and late stage companies. The firm primarily seeks to invest in the consumer products, business services, healthcare services, medical devices, and nanotechnology sectors. It invests in equity; equity related securities, a combination of debt and equity instruments, as well as other beneficial ownership interest including warrants, options, and convertible or exchangeable securities. The Company owned 50,000 common shares of Universal, which it acquired in November 2004 for $1,625 and which represented a non-controlling position of approximately 1% of the outstanding common stock of Universal. As discussed in the preceding paragraph, the entire $1,625 purchase price was impaired previously and the Company's basis in Universal was zero. As of July 31, 2006, the Company valued the Universal investment at $200,000, and recorded this amount as an unrealized gain on available for sale equity securities in the stockholders' equity section of the financial statements as of July 31, 2006. In accordance with SFAS 115, the Company had classified the investment as an available-for- sale marketable security at fair value in the financial statements as of July 31, 2006. On September 15, 2006, the Company sold its entire 50,000 share interest in Universal to an unrelated third party for a price of $50,000 and received a non interest bearing note receivable due and payable in six months. The Company liquidated the Universal position in order to not be subject to the 1940 Act. Accordingly, the Company has recorded the transaction as note receivable with an offset as a gain on the sale of available for sale securities. As a result of the sale, during the three months ended October 31, 2006, the Company reversed the $200,000 unrealized gain on available for sale securities previously recorded. In April 2004, we acquired 2,587,983 shares for a purchase price of $43,706 representing approximately 11% of Avix Technologies, Inc. ("Avix"), a publicly held company that emerged from bankruptcy under Chapter 11 of the federal bankruptcy code. There was a minimal active trading market for the shares and the company was in the process of developing its primary product to offer to the market. Accordingly, the Company recorded an impairment loss in fiscal year 2004 for the entire $43,706, which was classified as impairment of investments. In early August 2006, we determined that Avix had ceased business by filing for liquidation of its assets with the bankruptcy court. However, since the Company has previously impaired the entire investment, there is no effect on the financial statements of the Company. In July 2005, the Company announced the execution of a definitive Share Exchange Agreement by and among Holley Communications, Inc., a Delaware corporation and wholly-owned subsidiary of the Company (the "Investment Sub"), Holley Communications Canada, Inc., a Canadian Corporation ("Holley Canada"), and us. Pursuant to the Share Exchange Agreement and subject to certain closing conditions, the Investment Sub will issue 28,500,000 shares of its common stock, equivalent to 95% of its then-issued and outstanding common stock, to Holley Canada. In exchange, Holley Canada will transfer and assign all of Holley Canada's equity interest in Holley Communications Investment, Inc., a British Virgin Islands company ("Holley Communications"), to the 14 Nortia Capital Partners, Inc. (A Development Stage Company) Notes to Financial Statements October 31, 2006 (Unaudited) Investment Sub. Holley Communications is a provider of wireless communication technology application and integrated solutions in China. Specifically, it is engaged in two segments of the mobile communications business: a handset segment and a system integration segment. Its handset segment focuses on research and development, operation, distribution and retail and provides customers with handset solutions, reference design, module and handset. Its system segment focuses on voice quality enhancement system application, integration, sales and engineering services. In October 2006, the Company made the decision to terminate the definitive Share Agreement and all discussions related to a transaction have ceased. In December 2005, the Company signed a letter of intent to provide $100,000 of funding for All American Pet, Inc., ("AAPC"), a New York corporation, with its principal office in Encino, California. AAPC produces, markets, and sells super premium dog food primarily through supermarkets and grocery stores and has secured commitments to distribute its products through approximately 6,000 supermarkets and grocery stores. As of April 30, 2006, the Company had funded the entire $100,000 commitment and was working on a formal agreement for the terms of the funding. Accordingly, the $100,000 was recorded as a Loan Receivable in the Financial Statements as of April 30, 2006. In May 2006, the Company formally completed an agreement related to the $100,000 of funding provided to AAPC. The agreement grants the Company 750, 000 common shares of AAPC, representing a non-controlling equity position of approximately 7% of AAPC as of October 31, 2006. Additionally, the Company received 500,000 warrants to purchase AAPC shares at $0.50 per share. As a result of the agreement, the Company's Loan Receivable position of $100,000 as of April 30, 2006 was converted to an investment in common shares of AAPC. The Company evaluated the investment as of October 31, 2006 and since there is no trading market for the common stock, considered numerous factors in its impairment evaluation. As a result of this analysis, the Company believes that the investment is not impaired and the historical cost of $100,000 has been utilized as the value as of October 31, 2006. In accordance with APB 18, the Company had classified the investment as a non-marketable security at cost in the accompanying financial statements. In March 2006, the Company acquired 1,250,000 shares, representing a non-controlling equity position of approximately 7% of the common shares outstanding of Knight Energy Corp. ("Knight") for a purchase price of $1,250. Knight is a holding company that operates and develops energy related businesses and assets. In March of 2006, Knight acquired a 75% equity interest in an independent oil and gas services company that owns an executed lease agreement among other assets in Stephens County, Texas. The lease agreement contains approximately 160 acres that includes four producing natural gas wells. Stephens County has been a successful producer of oil and gas over the last fifty years. Subsequently, Knight acquired the remaining 25% interest and now owns 100% of the independent oil and gas services company. Knight also owns and operates its own drilling rig that will be used to drill additional wells on the current leased property as well as other potential properties that Knight is reviewing for consideration. Knight is currently reviewing further acquisitions and investments in the oil and gas industry as well as other energy related businesses and assets. Nortia has agreed to provide Knight with merchant banking services that include advice on mergers and acquisitions, capital markets, public markets strategies and raising capital. In exchange for these services, Knight has granted Nortia warrants to purchase additional common shares. Nortia received 1,250,000 warrants to purchase Knight common shares with an exercise price of $.50, as well as 1,250,000 warrants to purchase Knight common shares with an exercise price of $1.00. The Company evaluated the warrants in accordance with Statement of Financial Accounting Standards No. 123 "FASB 123" and utilized the Black Scholes method to determine valuation. As a result of its evaluation, no value was assigned to the warrants as the exercise price was significantly greater than the fair value of the warrants, resulting in a fair value 15 Nortia Capital Partners, Inc. (A Development Stage Company) Notes to Financial Statements October 31, 2006 (Unaudited) of zero under the Black-Scholes method. See Note 7 - Related Party Transactions. In June 2006, Knight executed a stock exchange agreement with Integrated Technology Group, Inc. ("ITGI"), which, upon closing, would result in the former stockholders of Knight owning approximately 85 percent, or 16,762,505 shares, of the issued and outstanding common stock of ITGI. In connection with this transaction, ITGI has changed its name to Knight. ITGI securities are currently traded over-the- counter on the pink sheets under the symbol "KNEC." However, the stock exchange agreement has not closed as of the date of these unaudited financial statements. Therefore, in accordance with APB 18, the Company had classified the investment as a non-marketable security at cost or $1,250. Additionally, since the investment is with a related party, the Company has classified the investment separately as a related party transaction in the accompanying financial statements. The Company intends to conduct its activities in such a way that it will not be deemed an "investment company" subject to regulation under the 1940 Act. Thus, it will not hold itself out as being engaged primarily in the business of investing, reinvesting or trading in securities. In addition, the Company intends to conduct its business in such a manner as to ensure that it will at no time own or propose to acquire investment securities having a value exceeding 40 percent of the Company's total assets at any one time. As discussed above, on September 15, 2006, the Company sold its entire 50,000 share interest in Universal to an unrelated third party for a price of $50,000 and received a non interest bearing note receivable due and payable in six months. The Company liquidated the Universal position in order to not be subject to the 1940 Act. However, as of the date of these unaudited financial statements, the Company currently holds investment securities exceeding 40 percent (43%) of the Company's total assets. Management is making every effort to remediate this situation as soon as practicable. In that regard, the Company is considering all of the options available to it in order to terminate its investment company status. There can be no assurance as to when, if at all, the Company will no longer being an investment company. Because the Company has operated as an investment company without complying with the 1940 Act, it is subject to potential enforcement action by the SEC and may be subject to additional liability. See Note 2 - Nature of Operations and Summary of Significant Accounting Policies. Note 5. Stockholders' Equity ----------------------------- Capital Structure We are authorized to issue up to 50,000,000 shares of our common stock, $0.001 par value per share, of which 26,494,054 were issued and outstanding at October 31, 2006, after giving consideration to 5,104,406 common shares previously issued by the Company's transfer agent that were returnable to the Company under a mutual rescission agreement. The mutual rescission agreement was a component of a December 2004 transaction accounted for as a recapitalization of the Company. These shares have been restricted as to transfer by the transfer agent and are not included in outstanding shares at October 31, 2006. As of October 31, 2006, 3,300,021 of these shares had been returned and cancelled by the Company's transfer agent. The holders of the Company's common stock do not have any preemptive right to subscribe for, or purchase, any shares of any class of stock. Additionally, we have 1,964,955 shares that are issuable and outstanding at October 31, 2006. Including issuable shares, we have 28,459,009 shares outstanding and issuable as of October 31, 2006. 16 Nortia Capital Partners, Inc. (A Development Stage Company) Notes to Financial Statements October 31, 2006 (Unaudited) We were previously authorized to issue up to 5,000,000 shares of preferred stock, $0.001 par value per share, of which 300,000, designated as Series A, were authorized, issued and outstanding at July 31, 2005. In September 2005, such shares were converted into an aggregate of 600,000 post-split Common Shares and the authorization for Series A Preferred Stock has been cancelled. Accordingly, at October 31, 2006, the Company had no preferred stock authorized, issued and outstanding. Common Stock and Common Stock Issuable At January 31, 2005, we had $504,000 of ten percent (10%) debentures outstanding. Utilizing an effective date of April 15, 2005, the entire $504,000 was exchanged for the Company's $0.001 par value common stock at an exchange rate of $0.25 per share. Additionally, an amount equal to twenty percent (20%) of the debenture principal exchange shares was granted in lieu of accrued interest and penalties. As of January 31, 2005, $228,000 of the Debentures were in default as the term was for one (1) year and the debenture provisions included a penalty of five percent (5%) for any default that occurs. As a result of the debenture exchange, we recorded 2,427,200 shares of our common stock as issuable at April 30, 2005 and recorded a loss on exchange of debt during fiscal 2005 in the amount of $2,104,285 in the statement of operations. The loss on exchange of debt was calculated utilizing a $1.10 per share fair market value for our common stock, obtained from a recent private placement offering. In September and October 2006, all of the shares were issued by the transfer agent and transferred by the Company from Common Stock issuable to Common Stock in the accompanying financial statements. From November 2004 through February of 2005, we received $188,000 of proceeds from the issuance of promissory notes to several parties. The promissory note terms earned interest at ten percent (10%) per annum, payable in ninety (90) days from the date of the promissory notes. Utilizing an effective date of April 15, 2005, the entire $188,000 was exchanged for the Company's $0.001 par value common stock at an exchange rate of $0.25 per share. No exchange of accrued interest was offered in the exchange documents. As a result of the promissory note exchange, we recorded 752,000 shares of our common stock as issuable at April 30, 2005 and recorded a loss on exchange of debt during fiscal 2005 in the amount of $634,273 in the statement of operations. The loss on exchange of debt was calculated utilizing a $1.10 per share fair market value for our common stock, obtained from a recent private placement offering. In September 2006, all of the shares were issued by the transfer agent and transferred by the Company from Common Stock issuable to Common Stock in the accompanying financial statements. In April 2005, the Company initiated a private placement offering for the issuance of up to 1,000,000 units at an offering price of $1.10 per share ("Unit"). Each Unit consisted of one share of the Company's $0.001 par value common stock and one two-year warrant to purchase the Company's common stock at an exercise price of $2.00 per share. The offering included an option for an over-allotment of up to 200,000 units or a maximum issuance of 1,200,000 units. Effective January 16, 2006, the offering was terminated and in total, the Company received $1,315,770 of proceeds from the issuance of the Units, representing 1,196,155 shares of common stock and 1,196,155 two-year warrants to purchase common stock at $2.00 per share. As of October 31, 2006, none of the common stock has been issued and is classified as common stock issuable in the accompanying financial statements. In January 2006, the Company initiated a new private placement offering for the issuance of up to 1,000,000 units at an offering price of $1.10 per share ("Unit"). Each Unit consisted of one share of the Company's $0.001 par value common stock and one two-year warrant to purchase the Company's common stock at an exercise price of $2.00 per share. The offering included an option for an over- 17 Nortia Capital Partners, Inc. (A Development Stage Company) Notes to Financial Statements October 31, 2006 (Unaudited) allotment of up to 200,000 units or a maximum issuance of 1,200,000 units. As of October 31, 2006, the Company has received $840,679 of proceeds from the issuance of the Units ($549,450 and $291,229 in fiscal years 2006 and 2007, respectively), representing 764,255 shares of common stock and 764,255 two-year warrants to purchase common stock at $2.00 per share. As of October 31, 2006, none of the common stock has been issued and is classified as common stock issuable in the accompanying financial statements. In total for the combined private placements, from April 2005 through October 31, 2006, the Company has received $2,146,449 of proceeds from the issuance of the Units ($86,350, $1,778,870 and $291,229 in fiscal years 2005, 2006 and 2007, respectively), representing 1,960,410 shares of common stock and 1,960,410 two-year warrants to purchase common stock at $2.00 per share. The private placement offerings were offered without registration under the Securities Act of 1933, as amended, pursuant to the exemptions provided by Section 4(2) thereof and Rule 506 of Regulation D (or Rule 903 of Regulation S where investor is a non-U.S. person) promulgated by the SEC. For the two private placement offerings discussed above, the warrants issued pursuant to each offering become exercisable at each closing date of the private placement offering. At October 31, 2006, there were warrants to purchase 1,960,410 shares of the Company's common stock, of which 1,196,155 warrants were exercisable and 764,255 warrants that will become exercisable at the closing date of the existing private placement offering, which had not occurred as of the date of these unaudited financial statements. The Company evaluated the 1,196,155 warrants from the April private placement that has closed and that are exercisable in accordance with FAS 123 and utilized the Black Scholes method to determine valuation. As a result of its evaluation, a valuation of approximately $803,000 was assigned to the warrants and was recorded to additional paid in capital as the warrants were a component of a private placement offering. The warrants from the second private placement offering will be evaluated when the offering is closed and the warrants become exercisable. In September 2005, the Company issued 600,000 post-split shares of common stock from the conversion of 300,000 shares of Series A Preferred Stock discussed above. 18 Nortia Capital Partners, Inc. (A Development Stage Company) Notes to Financial Statements October 31, 2006 (Unaudited) Warrants As discussed previously, in April 2005, the Company initiated a Private Placement Offering for the issuance of up to 1,000,000 units at an offering price of $1.10 per share. Each unit consists of one share of the Company's $0.001 par value common stock and one two-year warrant to purchase the Company's common stock at an exercise price of $2.00 per share. The offering included an option for an over- allotment of up to 200,000 units or a maximum issuance of 1,200,000 units. Effective January 16, 2006, the offering was terminated and in total, the Company received $1,315,770 of proceeds from the issuance of the Units, representing 1,196,155 shares of common stock and 1,196,155 two-year warrants to purchase common stock at $2.00 per share. In January 2006, the Company initiated a new private placement offering for the issuance of up to 1,000,000 units at an offering price of $1.10 per share ("Unit"). Each Unit consisted of one share of the Company's $0.001 par value common stock and one two-year warrant to purchase the Company's common stock at an exercise price of $2.00 per share. The offering included an option for an over- allotment of up to 200,000 units or a maximum issuance of 1,200,000 units. As of October 31, 2006, the Company has received $840,679 of proceeds from the issuance of the Units ($549,450 and $291,229 in fiscal years 2006 and 2007, respectively), representing 764,255 shares of common stock and 764,255 two-year warrants to purchase common stock at $2.00 per share. As of October 31, 2006, none of the common stock has been issued and is classified as common stock issuable in the accompanying financial statements. In total for the combined private placements, from April 2005 through October 31, 2006, the Company has received $2,146,449 of proceeds from the issuance of the Units ($86,350, $1,778,870 and $291,229 in fiscal years 2005, 2006 and 2007, respectively), representing 1,960,410 shares of common stock and 1,960,410 two-year warrants to purchase common stock at $2.00 per share. For the two private placement offerings discussed above, the warrants issued pursuant to each offering become exercisable at each closing date of the private placement offering. At October 31, 2006, there were warrants to purchase 1,960,410 shares of the Company's common stock, of which 1,196,155 warrants were exercisable and 764,255 warrants that will become exercisable at the closing date of the existing private placement offering, which had not occurred as of the date of these unaudited financial statements. The private placement offerings were offered without registration under the Securities Act of 1933, as amended, pursuant to the exemptions provided by Section 4(2) thereof and Rule 506 of Regulation D (or Rule 903 of Regulation S where investor is a non-U.S. person) promulgated by the SEC. The Company evaluated the 1,196,155 warrants from the April private placement, that has closed and that are exercisable, in accordance with FAS 123 and utilized the Black Scholes method to determine valuation. As a result of its evaluation, a valuation of approximately $803,000 was assigned to the warrants and was recorded to additional paid in capital, as the warrants were a component of a private placement offering. The warrants from the second private placement offering will be evaluated when the offering is closed and the warrants become exercisable. 19 Nortia Capital Partners, Inc. (A Development Stage Company) Notes to Financial Statements October 31, 2006 (Unaudited) The following table summarizes activity related to warrants during the six months ended October 31, 2006:

~~Securities~~Number inof ~~loss~~Shares ~~positions~~Weighted ~~Aggregate~~Average ~~less~~Exercise ~~than~~Price 12Balance ~~Unrealized~~at ~~Aggregate~~April ~~months:~~30, ~~Losses~~2006 ~~Fair~~1,695,655 ~~Value~~$ 2.00 Granted 264,755 2.00 Exercised - - Forfeited - -~~-------------~~ ---------- ---------- ~~Equity~~Balance ~~securities~~at $October 4831,~~581~~ 2006 1,960,410 $ -2.00 ========= ==========

All warrants to purchase our common stock were issued with exercise prices equal to or greater than fair market value on the date of issuance. The terms of exercisable warrants to purchase our common stock are summarized below:

Weighted Number Average Weighted Number Weighted Range of Outstanding at Remaining Average ~~Shares~~Exercisable at Average Exercise October 31, Contractural Exercise October 31, Exercise Prices 2006 Life Price 2006 Price ---------- -------------- ~~Balance at April 30, 2005 78,500 $ 2.00 Granted 1,117,655 2.00 Exercised~~ - - ~~Forfeited~~ - - --------- ------------------------------------------- ~~Balance~~$2.00 at1,960,410 ~~January~~2.00 ~~31,~~years ~~2006~~$2.00 1,196,155 $ 2.00 ===== ========= ========== ===== ========= =====

Note 6. Commitments and Contingencies -------------------------------------- From time to time we may become subject to proceedings, lawsuits and other claims in the ordinary course of business including proceedings related to environmental and other matters. Such matters are subject to many uncertainties, and outcomes are not predictable with assurance. Our corporate office is in Atlanta, Georgia, and we currently do not have a lease and are not paying rent for this space. It is being provided to the Company by an officer/director free of charge (See Note 7 - Related Party Transactions). Usage of this office space and the related value is de minimis. Therefore, no expense has been recorded in the accompanying unaudited financial statements. Additionally, we utilize executive office space in both New York and Los Angeles on a month-to-month basis. The cost of this space is recorded as office rent in the accompanying unaudited financial statements. We expect we will have to lease more substantial corporate office space in the near future and that the cost of the space may be material to our operations. As discussed previously in Note 2 - Nature of Operations and Summary of Significant Accounting Policies and Note 4 - Investments and Loan Receivable, as of October 31, 2006, the Company fell within the definition of an "investment company" in the 1940 Act. Thus, the Company is in violation of the 1940 Act because it is neither registered as an investment company nor has it elected to be registered as a business development company under that Act. Further, it is not in compliance with the numerous and complex provisions of the 1940 Act applicable to it as an entity meeting the definition of an "investment company." 20 Nortia Capital Partners, Inc. (A Development Stage Company) Notes to Financial Statements October 31, 2006 (Unaudited) Management is making every effort to remediate this situation as soon as practicable. In that regard, the Company is considering all of the options available to it in order to terminate its investment company status. There can be no assurance as to when, if at all, the Company will no longer being an investment company. Because the Company has operated as an investment company without complying with the 1940 Act, it is subject to potential enforcement action by the SEC and may be subject to additional liability. Note 7. Related Party Transactions ----------------------------------- As discussed in Note 6 - Commitments and Contingencies, for our corporate office in Atlanta, Georgia, we currently do not have a lease and we are not paying rent. It is being provided to the Company by an officer/director free of charge. Usage of this office space and the related value is de minimis. Therefore, no expense has been recorded in the accompanying Financial Statements. We expect we will have to lease more substantial corporate office space in the near future and that the cost of the space may be material to our operations. As discussed in Note 4 - Investments and Loan Receivable, in March 2006, the Company acquired 1,250,000 shares of Knight Energy Corp. ("Knight") for a purchase price of $1,250. Knight is a holding company that operates and develops energy related businesses and assets. Nortia has agreed to provide Knight with merchant banking services that include advice on mergers and acquisitions, capital markets, public markets strategies and raising capital. In exchange for these services, Knight has granted Nortia warrants to purchase additional common shares. Nortia received 1,250,000 warrants to purchase Knight common shares with an exercise price of $.50, as well as 1,250,000 warrants to purchase Knight common shares with an exercise price of $1.00. Although the Nortia investment in Knight represents only approximately seven percent (7%) of the outstanding shares of Knight, the Company's CEO and CFO are also the CEO and CFO of Knight. In August and September 2006, the Company recorded $140,000 of revenue from two related parties. In August 2006, the Company recorded $65,000 of consulting revenue from AAPC, a company that Nortia holds an ownership position as discussed in Note 4 - Investments and Loan receivable. As of October 31, 2006, the accounts receivable balance has not been collected. However, management has discussed the balance with AAPC and is confident as to its collectibility in full. In August and September 2006, the Company recorded $75,000 of consulting revenue from Knight, a company that Nortia holds an ownership position in as discussed in Note 4 - Investments and Loan receivable. As of October 31, 2006, the entire $75,000 accounts receivable balance was collected in full by the Company. Note 8. Concentration of Risk ------------------------------ Our financial instruments that are potentially exposed to credit risk consist primarily of cash. At certain times during the year our demand deposits held in banks exceeded the federally insured limit of $100,000. 21 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. The following analysis of our financial condition and results of operations contained in this section should be read in conjunction with our unaudited financial statements and related notes and schedules thereto appearing elsewhere in this Quarterly Report, as well as the sections entitled "Selected Financial Data" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" and the financial statements and related notes and schedules thereto included in our annual report on Form 10-K for the year ended April 30, 2006. This Quarterly Report, including the Management's Discussion and Analysis of Financial Condition and Results of Operations, contains forward-looking statements that involve substantial risks and uncertainties. These forward-looking statements are not historical facts, but rather are based on current expectations, estimates and projections about our industry, our beliefs, and our assumptions. Words such as "anticipates", "expects", "intends", "plans", "believes", "seeks", and "estimates" and variations of these words and similar expressions are intended to identify forward-looking statements. These statements are not guarantees of future performance and are subject to risks, uncertainties, and other factors, some of which are beyond our control and difficult to predict and could cause actual results to differ materially from those expressed or forecasted in the forward-looking statements, including without limitation: * economic downturns or recessions may impair our performance; * a contraction of available credit and/or an inability to access the equity markets could impair our activities; * the risks associated with the possible disruption in the Company's operations due to terrorism; * future changes in laws or regulations and conditions in our operating areas; and * the risks, uncertainties and other factors we identify from time to time in our filings with the Securities and Exchange Commission, including our Form 10-Ks, Form 10-Qs and Form 8-Ks. Although we believe that the assumptions on which these forward- looking statements are based are reasonable, any of those assumptions could prove to be inaccurate, and as a result, the forward-looking statements based on those assumptions also could be inaccurate. In light of these and other uncertainties, the inclusion of a projection or forward-looking statement in this Quarterly Report should not be regarded as a representation by us that our plans and objectives will be achieved. You should not place undue reliance on these forward- looking statements, which apply only as of the date of this Quarterly Report. We undertake no obligation to update such statements to reflect subsequent events. Overview Nortia is an Atlanta, Georgia based firm that elected to become a BDC in January 2005, pursuant to the provisions of the 1940 Act. The Company operated as a BDC for regulatory oversight and reporting 22 purposes throughout the period covered by its Form 10-K for the period ended April 30, 2006. Effective May 2, 2006, the Company filed a Form N-54C with the SEC withdrawing its election to be regulated as a BDC. The Company has commenced a new business model whereby it provides merchant banking-type services to small, private companies seeking to become publicly held and traded, as discussed further below. The ability of the Company to continue as a going concern is dependent on the Company's ability to implement its new business plan, raise capital, and generate revenues. There can be no assurance that the Company will be successful in implementing its revised business plan. Subsequent to our withdrawal as a BDC, Nortia has changed the nature of its business focus from investing, owning, holding, or trading in investment securities toward that of an operating company intending to pursue a business model whereby it will provide merchant banking-type services to small, private companies seeking to become publicly held and traded. Specifically, the Company intends to identify small private companies and assist them with managerial, accounting and financial advice and help them to raise necessary capital by introducing them to potential investors. As compensation for these services, the Company proposes to receive shares of the companies, which we expect will then be registered in their initial public offerings. The Company will report shares it receives as compensation on its periodic reports filed with the SEC. Upon the initial public offering, the Company will immediately distribute to its shareholders a portion of the shares held. The Company intends to conduct its activities in such a way that it will not be deemed an "investment company" subject to regulation under the 1940 Act. Thus, it will not hold itself out as being engaged primarily in the business of investing, reinvesting or trading in securities. In addition, the Company intends to conduct its business in such a manner as to ensure that it will at no time own or propose to acquire investment securities having a value exceeding 40 percent of the Company's total assets at any one time. The Company owned 50,000 common shares of Universal Capital Management, Inc. ("Universal"), which it acquired in November 2004 for $1,625 and which represented a non-controlling position of approximately 1% of the outstanding common stock of Universal. On September 15, 2006, the Company sold its entire 50,000 share interest in Universal to an unrelated third party for a price of $50,000 and received a non interest bearing note receivable due and payable in six months. The Company liquidated the Universal position in order to not be subject to the 1940 Act. Accordingly, the Company has recorded the transaction as note receivable with an offset as a gain on the sale of available for sale securities. As a result of the sale, during the three months ended October 31, 2006, the Company reversed the $200,000 unrealized gain on available for sale securities previously recorded. As of October 31, 2006, the Company fell within the definition of an "investment company" in the 1940 Act. The Company is not registered as an investment company nor has it elected to be registered as a business development company under that Act, as would be required for companies which hold investment securities having a value exceeding 40 percent of the value of such company's total assets on an unconsolidated basis. Further, it is not in compliance with other provisions of the 1940 Act applicable to investment companies and, therefore, may be subject to potential regulatory action by Federal and state regulators and other potential litigation. The Company is considering all of the options available to it in order to comply with applicable regulations including, but not limited to, terminating its investment company status by selling sufficient shares of its remaining investments. There can be no assurance as to if or how the Company will resolve the issues caused by its status as an unregistered investment company. The Company has not engaged in this line of business before and there is no guarantee that it will be successful in implementing the business plan, or that if implemented, it will ever have revenues from the business. 23 Going Concern Our long-term viability as a going concern is dependent on certain key factors, as follows: * The ability to continue to obtain sources of outside financing to support near term operations and to allow us to continue to make investments. * The ability to increase profitability and sustain a cash flow level that will ensure support for continuing operations. As reflected in the accompanying financial statements, the Company had a net loss of $769,939 (inclusive of a one time $550,000 non-cash stock compensation charge) and net cash used in operations of $306,796 for the six months ended October 31, 2006. The Company has an accumulated deficit of $6,412,035 and a deficit accumulated during the development stage of 769,939 at October 31, 2006. The ability of the Company to continue as a going concern is dependent on the Company's ability to further implement its new business model, raise capital, and generate revenues. The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. We plan on generating revenues from our new business model by providing merchant banking-type services to small, private companies seeking to become publicly held and traded. Specifically, the Company intends to identify small, private companies and assist them with managerial, accounting and financial advice and help them to raise necessary capital by introducing them to potential investors. As compensation for these services, the Company proposes to receive shares of the companies, which we expect will then be registered in their initial public offerings. The time required for us to become profitable from operations is highly uncertain, and we cannot assure you that we will achieve or sustain operating profitability or generate sufficient cash flow to meet our planned capital expenditures and working capital requirements. If required, our ability to obtain additional financing from other sources also depends on many factors beyond our control, including the state of the capital markets and the prospects for our business. The necessary additional financing may not be available to us or may be available only on terms that would result in further dilution to the current owners of our common stock. Critical Accounting Estimates and Policies The methods, estimates and judgment we use in applying our most critical accounting policies have a significant impact on the results we report in our financial statements. The SEC has defined the most critical accounting policies as the ones that are most important to the portrayal of our financial condition and results, and require us to make our most difficult and subjective judgments, often as a result of the need to make estimates of matters that are inherently uncertain. Based upon this definition, our most critical estimates include the valuation of our financial instruments, valuation of our investments, revenue recognition and the valuation allowance for deferred tax assets. We also have other key accounting estimates and policies, but we believe that these other policies either do not generally require us to make estimates and judgments that are as difficult or as subjective, or it is less likely that they would have a material impact on our reported results of operations for a given period. For additional information, see Note 2 "Nature of Operations and Summary of Significant Accounting Policies" in the notes to our unaudited financial statements contained in this Quarterly Report. 24 Although we believe that our estimates and assumptions are reasonable, they are based upon information presently available. Actual results may differ significantly from these estimates. Fair Value of Financial Instruments We define the fair value of a financial instrument as the amount at which the instrument could be exchanged in a current transaction between willing parties. The carrying value of accounts receivable, accounts payable and accrued liabilities approximates fair value because of the short maturity of those instruments. The estimated fair value of our other obligations is estimated based on the current rates offered to us for similar maturities. Based on prevailing interest rates and the short-term maturity of all of our indebtedness, management believes that the fair value of our obligations approximates book value at October 31, 2006. Valuation of Investments The Company invests in various marketable equity instruments and accounts for such investments in accordance with Statement of Financial Accounting Standards No. 115 "Accounting for Certain Investments in Debt and Equity Securities" ("SFAS 115"). Certain securities that the Company may invest in may be determined to be non-marketable. Non-marketable securities where the Company owns less than 20% of the investee are accounted for at cost pursuant to APB No. 18, "The Equity Method of Accounting for Investments in Common Stock" ("APB 18"). Management determines the appropriate classification of its investments at the time of acquisition and reevaluates such determination at each balance sheet date. Available-for-sale securities are carried at fair value, with unrealized gains and losses, net of tax, reported as a separate component of stockholders' equity. Investments classified as held-to-maturity are carried at amortized cost. In determining realized gains and losses, the cost of the securities sold is based on the specific identification method. The Company periodically reviews its investments in marketable and non-marketable securities and impairs any securities whose value is considered non-recoverable. The Company's determination of whether a security is other than temporarily impaired incorporates both quantitative and qualitative information; GAAP requires the exercise of judgment in making this assessment, rather than the application of fixed mathematical criteria. The Company considers a number of factors including, but not limited to, the length of time and the extent to which the fair value has been less than cost, the financial condition and near term prospects of the issuer, the reason for the decline in fair value, changes in fair value subsequent to the balance sheet date, and other factors specific to the individual investment. The Company's assessment involves a high degree of judgment and accordingly, actual results may differ materially from the Company's estimates and judgments. The Company recorded no impairment charges for securities during the six or three month periods ended October 31, 2006 and 2005, respectively. Revenue Recognition The Company recognized revenues in accordance with the guidance in the SEC Staff Accounting Bulletin 104. Revenue is recognized when persuasive evidence of an arrangement exists, as services are provided over the term of a service contract, and when collection of the fixed or determinable selling price is reasonably assured. 25 Income Taxes Income taxes are accounted for under the asset and liability method of Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes" ("SFAS 109"). Under SFAS 109, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Under SFAS 109, the effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. In assessing the recoverability of deferred tax assets and liabilities, management considers whether it is more likely than not that some portion or all of the deferred tax assets and liabilities will be realized. 26

~~Weighted~~Results ~~Weighted~~of ~~Average~~Operations ~~Weighted~~Financial ~~Number~~Analysis ~~Weighted~~of ~~Range~~the ofSix ~~Number~~and ~~Remaining~~Three ~~Average~~Months ~~Exercisable~~Ended ~~Average~~October ~~Exercise~~31, ~~Outstanding~~2006 ~~Contractual~~and ~~Exercise~~2005 at------------------------------------------------------------------------------ ~~Exercise~~Six ~~Prices~~Three ~~Jan.~~Months Ended Months Ended October 31, October 31, 2006 ~~Life~~2005 ~~Price~~2006 ~~Jan.~~2005 31------------------------ ------------------------ Revenues $ 140,000 ~~2006~~- ~~Price~~140,000 - Operating Expenses General and administrative 128,311 203,941 50,494 109,845 Rent 10,754 13,295 5,350 1,218 Consulting 43,181 108,580 40,181 71,724 Stock compensation 550,000 - 550,000 - Compensation 133,758 333,171 16,148 203,411 Professional 94,167 245,305 28,949 157,807 ------------------------ ------------------------ Total Operating Expenses 960,171 904,292 691,122 544,005 ------------------------ ------------------------ Operating Loss (820,171) (904,292) (551,122) (544,005) Other Income Gain on sale of available for sale securities 50,000 - 50,000 - Interest expense (10) - - (17,500) Interest income 242 338 111 127 ------------------------ ------------------------ Other Income 50,232 338 50,111 (17,373) ------------------------ ------------------------ Net Loss $~~2.00~~ 1(769,~~196~~939) $ (903,~~155~~954) ~~2.00~~$ ~~years~~(501,011) $~~2.00~~ 1(561,~~196~~378) ======================== ======================== Comprehensive Loss Unrealized gain on available for sale securities - - (200,~~155~~000) - ------------------------ ------------------------ Total Comprehensive Loss $~~2.00~~ (769,939) $ (903,954) $ (701,011) $ (561,378) ======================== ========================

Six Months Ended October 31, 2006 Compared with Six Months Ended ---------------------------------------------------------------- October 31, 2005 ---------------- Revenues: --------- Revenues increased $140,000 to $140,000 for 2006 from zero in 2005. The Company has recently commenced a new development stage and new business model as previously discussed and had its first revenues from the new business model in 2006. 27 Operating Expenses: ------------------- Operating expenses increased $55,878, or 6%, to $960,170 for 2006 from $904,292 for 2005. The increase was primarily the result of a $550,000 increase in stock compensation offset by a $199,413 decrease in compensation, a $151,138 decrease in professional, a $75,630 decrease in general and administration and a $65,399 decrease in consulting. The increase in stock compensation was for stock issued to an officer for services. The decrease in compensation was directly related to a lack of cash available to pay compensation and management's desire to forgo compensation in order to provide financing for operational requirements to grow the business. The decrease in professional and consulting was primarily from a decrease in legal expense because in 2005, the Company was gearing up for the extensive requirements of being a BDC as compared to in 2006, the Company is now an operating company without those same requirements. The decrease in consulting was primarily from the amortization of a deferred consulting agreement in 2005 with no corresponding amount in 2006. The decrease in general and administrative was primarily from a decrease in analysis and research expense from 2005 to 2006 related to requirements of being a publicly traded company. Other Income: ------------ Other income increased $49,894 or 14,761% to $50,232 of income for 2006 from $338 of income in 2005. The increase was primarily from a $50,000 gain on the sale of available for sale securities. Three Months Ended October 31, 2006 Compared with Three Months Ended -------------------------------------------------------------------- October 31, 2005 ---------------- Revenues: -------- Revenues increased $140,000 to $140,000 for 2006 from zero in 2005. The Company has recently commenced a new development stage and new business model as previously discussed and had its first revenues from the new business model in 2006. Operating Expenses: ------------------ Operating expenses increased $147,115, or 27%, to $691,122 for 2006 from $544,005 for 2005. The increase was primarily the result of a $550,000 increase in stock compensation offset by an $187,264 decrease in compensation, a $128,858 decrease in professional, a $59,351 decrease in general and administration and a $31,543 decrease in consulting. The increase in stock compensation was for stock issued to an officer for prior services. The decrease in compensation was directly related to a lack of cash available to pay compensation and management's desire to forgo compensation in order to provide financing for operational requirements to grow the business. The decrease in professional and consulting was primarily from a decrease in legal expense because in 2005, the Company was gearing up for the extensive requirements of being a BDC as compared to in 2006. The Company is now an operating company without those same requirements. The decrease in consulting was primarily from the amortization of a deferred consulting agreement in 2005 with no corresponding amount in 2006. The decrease in general and administrative was primarily from a decrease in analysis and research expense from 2005 to 2006 related to requirements of being a publicly traded company. Other Income: ------------ Other income increased $67,484 or 388% to $50,111 of income for 2006 from $17,373 of expense in 2005. The increase was primarily from a $50,000 gain on the sale of available for sale securities and a $17,500 decrease in interest expense. The decrease in interest expense was for interest on debentures and promissory notes in 2005 with no corresponding amount in 2006. 28 Comprehensive Loss: ------------------ Comprehensive loss increased $200,000 or 100% to $200,000 of expense for 2006 from zero in 2005. The increase was due entirely to the reversal of unrealized gains on available for sale equity securities recorded during the three month period ended July 31, 2006. The available for sale securities were sold during the three month period ended October 31, 2006 and the gain was recorded in other income as discussed previously. Liquidity and Capital Resources To continue with our business plan, we will require additional short- term working capital. We have not generated any significant revenue or sufficient cash to fund our new business model operating activities for the next twelve months. Presently, our only primary source of cash is from external financing in the form of the issuance of our common stock. We cannot assure you that that we will obtain sufficient proceeds, if any, or that any proceeds obtained will be sufficient to meet our projected cash flow needs. Cash was $13,962 at October 31, 2006 as compared to $32,401 at April 30, 2006. The decrease in cash was the result of $291,229 of net proceeds from the sale of common stock, offset by $306,796 of cash used in operations and $2,872 for the purchase of property and equipment. Operating Activities: Cash used in operating activities was $306,796 -------------------- for 2006 as compared to $870,008 for 2005. The decrease in cash used resulted primarily from a $550,000 stock compensation expense add back for stock issued for past services to an officer of the Company. Investing Activities: Cash used in investing activities was $2,872 in -------------------- 2006 as compared to zero in 2005. All of the cash used in 2006 was from the purchase of property and equipment. Financing Activities: Cash flows provided by financing activities -------------------- were $291,229 for 2006 as compared to $876,920 for 2005. The decrease in cash provided by financing activities was entirely due to a decrease in cash proceeds received by the Company from the sale of common stock. As discussed previously, we have had no significant revenues for 2006 and effective May 2, 2006, are no longer a BDC and are commencing a new business model and a new development stage as a merchant banking firm. There is no guarantee that we will be successful under our new business model, achieve revenues and provide sufficient cash flow to fund our required expenditures. Presently, our primary source of cash is from external financing in the form of the issuance of our common stock. We cannot assure you that we can obtain sufficient proceeds, if any, and borrowings or the sale of our common stock under any financing structures we are able to secure will be sufficient to meet our projected cash flow needs. Our ability to obtain additional financing depends on many factors beyond our control, including the state of the capital markets, the implied market value of our common stock and the prospects for our business. The necessary additional financing may not be available to us or may be available only on terms that would result in further dilution to the current owners of our common stock. Failure to obtain commitments for financing would have a material adverse effect on our business, results of operations and financial condition. If the financing we require to sustain our working capital needs is unavailable or insufficient or we do not receive the necessary financing, we may be unable to continue as a going concern. We are planning on obtaining additional cash proceeds from the issuance of our common stock and believe that we will have sufficient operating cash to meet our required expenditures for the next 12 months. 29 Debt We had no debt outstanding at October 31, 2006. Equity Financing In April 2005, the Company initiated a private placement offering for the issuance of up to 1,000,000 units at an offering price of $1.10 per share ("Unit"). Each Unit consisted of one share of the Company's $0.001 par value common stock and one two-year warrant to purchase the Company's common stock at an exercise price of $2.00 per share. The offering included an option for an over-allotment of up to 200,000 units or a maximum issuance of 1,200,000 units. Effective January 16, 2006, the offering was terminated and in total, the Company received $1,315,770 of proceeds from the issuance of the Units, representing 1,196,155 shares of common stock and 1,196,155 two-year warrants to purchase common stock at $2.00 per share. As of October 31, 2006, none of the common stock has been issued and is classified as common stock issuable in the accompanying financial statements. In January 2006, the Company initiated a new private placement offering for the issuance of up to 1,000,000 units at an offering price of $1.10 per share ("Unit"). Each Unit consisted of one share of the Company's $0.001 par value common stock and one two-year warrant to purchase the Company's common stock at an exercise price of $2.00 per share. The offering included an option for an over- allotment of up to 200,000 units or a maximum issuance of 1,200,000 units. As of October 31, 2006, the Company has received $840,679 of proceeds from the issuance of the Units ($549,450 and $291,229 in fiscal years 2006 and 2007, respectively), representing 764,255 shares of common stock and 764,255 two-year warrants to purchase common stock at $2.00 per share. As of October 31, 2006, none of the common stock has been issued and is classified as common stock issuable in the accompanying financial statements. In total for the combined private placements, from April 2005 through October 31, 2006, the Company has received $2,146,449 of proceeds from the issuance of the Units ($86,350, $1,778,870 and $291,229 in fiscal years 2005, 2006 and 2007, respectively), representing 1,960,410 shares of common stock and 1,960,410 two-year warrants to purchase common stock at $2.00 per share. The private placement offerings were offered without registration under the Securities Act of 1933, as amended, pursuant to the exemptions provided by Section 4(2) thereof and Rule 506 of Regulation D (or Rule 903 of Regulation S where investor is a non-U.S. person) promulgated by the SEC. Contractual Obligations and Commitments We have no contractual obligations and commitments at October 31, 2006. Off-Balance Sheet Arrangements We have no off-balance sheet arrangements at October 31, 2006. Contingent Liabilities From time to time we may become subject to proceedings, lawsuits and other claims in the ordinary course of business including proceedings related to environmental and other matters. Such matters are subject to many uncertainties, and outcomes are not predictable with assurance. 30 Our corporate office is in Atlanta, Georgia, and we currently do not have a lease and are not paying rent for this space. It is being provided to the Company by an officer/director free of charge. Usage of this office space and the related value is de minimis. Therefore, no expense has been recorded in the accompanying unaudited financial statements. Additionally, we utilize executive office space in both New York and Los Angeles on a month-to-month basis. The cost of this space is recorded as office rent in the accompanying unaudited financial statements. We expect we will have to lease more substantial corporate office space in the near future and that the cost of the space may be material to our operations. The Company intends to conduct its activities in such a way that it will not be deemed an "investment company" subject to regulation under the 1940 Act. Thus, it will not hold itself out as being engaged primarily in the business of investing, reinvesting or trading in securities. In addition, the Company intends to conduct its business in such a manner as to ensure that it will at no time own or propose to acquire investment securities having a value exceeding 40 percent of the Company's total assets at any one time. As discussed previously, on September 15, 2006, the Company sold its entire 50,000 share interest in Universal to an unrelated third party for a price of $50,000 and received a non interest bearing note receivable due and payable in six months. The Company liquidated the Universal position in order to not be subject to the 1940 Act. However, as of the date of these unaudited financial statements, the Company currently holds investment securities exceeding 40 percent (43%) of the Company's total assets. Management is making every effort to remediate this situation as soon as practicable. In that regard, the Company is considering all of the options available to it in order to terminate its investment company status. There can be no assurance as to when, if at all, the Company will no longer being an investment company. Because the Company has operated as an investment company without complying with the 1940 Act, it is subject to potential enforcement action by the SEC and may be subject to additional liability. Item 3. Quantitative and Qualitative Disclosures About Market Risk Because we currently have no long-term debt and do not expect that, in the next twelve months, we will incur any (although there can be no assurance that the funds that we will require to operate our business during that period will be available to us through sales of our equity or through short-term borrowings), we do not consider a principal risk to be interest rate fluctuations. If, in the future, we incur, or consider incurring, a material amount of long-term debt, the occurrence of such event could result in interest rate fluctuations becoming a principal risk. Item 4. Controls and Procedures As of October 31, 2006 (the end of the period covered by this report), we, including our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) of the 1934 Act). Based on that evaluation, our management, including the Chief Executive Officer and Chief Financial Officer, concluded that our disclosure controls and procedures were effective and provided reasonable assurance that information required to be disclosed in our periodic SEC filings is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. However, in evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated can provide only reasonable assurance of achieving the desired control objectives, and management necessarily 31 was required to apply its judgment in evaluating the cost-benefit relationship of such possible controls and procedures. There was no significant change in our internal control over financial reporting (as defined in Rule 13a-15(f) of the Securities Exchange Act of 1934) that occurred during our most recently completed fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. PART II OTHER INFORMATION Item 1. Legal Proceedings On April 21, 2005, Mirador Consulting, Inc., filed a Complaint against Nortia Capital Partners, a Florida corporation and predecessor to us, in the County Court in and for Palm Beach County, Florida, styled as Mirador Consulting, Inc., a Florida corporation, Plaintiff, vs. Nortia Capital Partners, Inc., a Florida corporation, Defendant, Case No. 502005CC004932XXXXSB DIV RD. Mirador alleged causes of action for Breach of Contract and Unjust Enrichment/Quantum Meruit and sought $10,000.00 in damages for payments allegedly due to Mirador pursuant to a consulting agreement dated December 22, 2004. Pursuant to the terms of that agreement, Mirador received shares in our Company. On December 6, 2004, 16 days prior to the execution of the consulting agreement, the defendant (the Florida corporation) was merged with and into us and, as a result, ceased to exist. In June 2005, the court entered a judgment of default against the Florida defendant. A motion to set aside the judgment against the defendant was granted on August 30, 2005. A Motion to Dismiss the Complaint with Prejudice was filed on September 16, 2005 and remains pending. We believe that both the Florida defendant and we have meritorious defenses to the Complaint. On September 1, 2005, we filed a Complaint against Mirador in the Circuit Court of the Fifteenth Judicial Circuit for Palm Beach County, Florida. The case is styled Nortia Capital Partners, Inc., a Nevada corporation v. Mirador Consulting, Inc., a Florida corporation, Case No. 50 2005 CA 008373 XXXX MB AN. We are seeking a Declaratory Judgment from the Court declaring that Mirador is not entitled to retain any of its shares in our Company and that those shares should be cancelled of record. On November 1, 2005, Mirador filed its Answer and Affirmative Defenses to the Complaint, as well as a Counterclaim and Third Party Complaint. Mirador is claiming that it performed the required services under the consulting agreement and that it is, therefore, entitled to retain its shares in our Company and to receive $10,000.00 it claims is due to it under the consulting agreement. Mirador also claims other unspecified damages due to our Company's refusal to issue Mirador an original stock certificate for additional shares resulting from our Company's stock split on or about February 28, 2005. In its Third Party Complaint, Mirador also named our President, among others, and alleged causes of action for tortuous interference with contractual rights and conspiracy with the Company in respect of such shares. Our charter and bylaws provide indemnification rights to our executive officers and directors. We believe that all named third-party defendants have meritorious defenses to Mirador's Counterclaims, for the reasons set forth in our Complaint. 32 Item 1A. Risk Factors An investment in our common stock is highly speculative, involves a high degree of risk, and should be considered only by those persons who are able to bear the economic risk of losing their investment for an indefinite period. Except as disclosed below, no risk factors have changed that were previously disclosed in the Company's form 10-K filed August 16, 2006. The following specific risks, not listed in any particular order of priority, and the risks described previously in the Company's 10-K filed August 16, 2006, should be considered carefully in evaluating the Company, its business, and its common stock. We have previously suffered significant operating losses. As reflected in the accompanying financial statements, the Company had a net loss of $769,939 (inclusive of a one time $550,000 non-cash stock compensation charge) and net cash used in operations of $306,796 for the six months ended October 31, 2006. The Company has an accumulated deficit of $6,412,035 and a deficit accumulated during the development stage of $769,939 at October 31, 2006. The ability of the Company to continue as a going concern is dependent on the Company's ability to further implement its new business model, raise capital, and generate revenues. The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. We plan on generating revenues from our new business model by providing merchant banking-type services to small, private companies seeking to become publicly held and traded. Specifically, the Company intends to identify small private companies and assist them with managerial, accounting and financial advice and help them to raise necessary capital by introducing them to potential investors. As compensation for these services, the Company proposes to receive shares of the companies, which we expect will then be registered in their initial public offerings. The time required for us to become profitable from operations is highly uncertain, and we cannot assure you that we will achieve or sustain operating profitability or generate sufficient cash flow to meet our planned capital expenditures and working capital requirements. If required, our ability to obtain additional financing from other sources also depends on many factors beyond our control, including the state of the capital markets and the prospects for our business. The necessary additional financing may not be available to us or may be available only on terms that would result in further dilution to the current owners of our common stock. We have a limited operating history which may affect our ability to manage our business and may impair your ability to assess our prospects. We were incorporated in April 1999 but only commenced business and investment operations as a BDC in mid-January 2005. Additionally, effective May 2006, we have withdrawn our election to be a BDC and have commenced a new business model as a merchant banking firm. We are subject to all of the business risks and uncertainties associated with any new business enterprise, including the risk that we will not achieve our business objective and that the value of our common stock or other securities could decline substantially. As a result, we have very limited operating results under these regulatory frameworks that would demonstrate either their effect on the business or our ability to manage the business within these frameworks. In addition, the Company has not engaged in this line of business before and there is no guarantee that it will be successful in implementing the business plan, or that if implemented, it will ever have revenues from the business. Our business model is highly dependant on key relationships. Our new business model depends to a significant extent upon strong 33 referral relationships with venture capital, private equity fund sponsors and other investment banking and financial institutions, and our inability to develop or maintain these relationships, or the failure of these relationships to generate investment opportunities, could adversely affect our business. We expect that members of our management team will maintain their relationships with venture capital, private equity firms, and investment banking and financial institutions, and we will rely to a significant extent upon these relationships to provide us with our deal flow. If we fail to maintain our existing relationships or to develop new relationships with other firms or sources of investment opportunities, then we will not be able to grow our investment portfolio. In addition, persons with whom members of our management team have relationships are not obligated to provide us with investment opportunities, and, therefore, there is no assurance that such relationships will lead to the origination of equity or debt investments. The Company is subject to the underlying risks of the new, developing businesses which the Company will assist. Effective May 2, 2006, the Company is pursuing a business model whereby it provides merchant banking-type services to small, private companies seeking to become publicly held and traded. Specifically, the Company will identify small private companies (the "Clients") and assist them with managerial, accounting and financial advice and help them to raise necessary capital by introducing them to potential investors. As compensation for these services, the Company proposes to receive shares of each Client, which will then be registered by the Client in its initial public offering. Successful growth of the Company is dependent upon the growth in value of the securities of these unseasoned companies. Whether this appreciation in value will occur depends upon numerous factors outside the control of the Company. Moreover, the Company's task of identifying and helping to build successful new and emerging enterprises is difficult. There can be no assurance that the Company will be successful in identifying and developing these ventures. The Company may continue to be deemed an "investment company" subject to regulation under the 1940 Act. Under the new business model as a merchant bank, the Company intends to conduct its activities in such a way that it will not be deemed an "investment company" subject to regulation under the 1940 Act. Thus, it will not hold itself out as being engaged primarily in the business of investing, reinvesting or trading in securities. In addition, the Company intends to conduct its business in such a manner as to ensure that it will at no time own or propose to acquire investment securities having a value exceeding 40 percent of the Company's total assets at any one time. The regulations under the 1940 Act are complex. There is a risk that the Company will perform an activity such that it meets the criteria as an "investment company" and will be subject to the 1940 Act requirements. Under the Company's new business model as a merchant banking firm, it will acquire shares in Clients. Accordingly, the Company must ensure that these shares of Clients do not put the Company in the business of "investing, reinvesting or trading in securities." The consequences of such an event would result in significant financial and regulatory liability to the Company. The Company may hold investment securities having a value exceeding 40 percent of the Company's assets at any one time. The Company intends to conduct its activities in such a way that it will not be deemed an "investment company" subject to regulation under the 1940 Act. Thus, it will not hold itself out as being engaged primarily in the business of investing, reinvesting or trading in securities. In addition, the Company intends to conduct its business in such a manner as to ensure that it will at no time own or propose 34 to acquire investment securities having a value exceeding 40 percent of the Company's total assets at any one time. On September 15, 2006, the Company sold its entire 50,000 share interest in Universal to an unrelated third party for a price of $50,000 and received a non interest bearing note receivable due and payable in six months. The Company liquidated the Universal position in order to not be subject to the 1940 Act. However, as of the date of these unaudited financial statements, the Company currently holds investment securities exceeding 40 percent (43%) of the Company's total assets. Management is making every effort to remediate this situation as soon as practicable. In that regard, the Company is considering all of the options available to it in order to terminate its investment company status. There can be no assurance as to when, if at all, the Company will no longer being an investment company. Because the Company has operated as an investment company without complying with the 1940 Act, it is subject to potential enforcement action by the SEC and may be subject to additional liability. Item 2. Unregistered Sales of Equity Securities and Use of Proceeds In April 2005, the Company initiated a private placement offering for the issuance of up to 1,000,000 units at an offering price of $1.10 per share ("Unit"). Each Unit consisted of one share of the Company's $0.001 par value common stock and one two-year warrant to purchase the Company's common stock at an exercise price of $2.00 per share. The offering included an option for an over-allotment of up to 200,000 units or a maximum issuance of 1,200,000 units. Effective January 16, 2006, the offering was terminated and in total, the Company received $1,315,770 of proceeds from the issuance of the Units, representing 1,196,155 shares of common stock and 1,196,155 two-year warrants to purchase common stock at $2.00 per share. As of October 31, 2006, none of the common stock has been issued and is classified as common stock issuable in the accompanying financial statements. In January 2006, the Company initiated a new private placement offering for the issuance of up to 1,000,000 units at an offering price of $1.10 per share ("Unit"). Each Unit consisted of one share of the Company's $0.001 par value common stock and one two-year warrant to purchase the Company's common stock at an exercise price of $2.00 per share. The offering included an option for an over- allotment of up to 200,000 units or a maximum issuance of 1,200,000 units. As of October 31, 2006, the Company has received $840,679 of proceeds from the issuance of the Units ($549,450 and $291,229 in fiscal years 2006 and 2007, respectively), representing 764,255 shares of common stock and 764,255 two-year warrants to purchase common stock at $2.00 per share. As of October 31, 2006, none of the common stock has been issued and is classified as common stock issuable in the accompanying financial statements. In total for the combined private placements, from April 2005 through October 31, 2006, the Company has received $2,146,449 of proceeds from the issuance of the Units ($86,350, $1,778,870 and $291,229 in fiscal years 2005, 2006 and 2007, respectively), representing 1,960,410 shares of common stock and 1,960,410 two-year warrants to purchase common stock at $2.00 per share. The private placement offerings were offered without registration under the Securities Act of 1933, as amended, pursuant to the exemptions provided by Section 4(2) thereof and Rule 506 of Regulation D (or Rule 903 of Regulation S where investor is a non-U.S. person) promulgated by the SEC. Item 3. Defaults upon Senior Securities None. 35 Item 4. Submission of Matters to a Vote of Security Holders None Item 5. Other Information None Item 6. Exhibits The following exhibits are filed with this report or are incorporated herein by reference to a prior filing, in accordance with Rule 12b-32 under the Securities Exchange Act of 1934. ------------------------------------------------------------------------- Exhibit No. Description of Exhibit ------------------------------------------------------------------------- 3.1 Certificate of Incorporation of Nortia Capital Partners, Inc.[1] 3.2 Bylaws of Nortia Capital Partners, Inc.1 14 Code of Ethics[2] 23 Consent of Salberg & Company, P.A. [3] 31.1* Certification of Chief Executive Officer pursuant to Rule 13a-14 of the Securities Exchange Act of 1934, as amended.* 31.2* Certification of Chief Financial Officer pursuant to Rule 13a-14 of the Securities Exchange Act of 1934, as amended.* 32.1* Certification of Chief Executive Officer pursuant to section 906 of The Sarbanes-Oxley Act of 2002.* 32.2* Certification of Chief Financial Officer pursuant to section 906 of The Sarbanes-Oxley Act of 2002.* * Filed herewith [1] Incorporated by reference to the Company's Form 10-SB filed July 27, 1999. [2] Incorporated by reference to the Company's Form 10-K filed November 23, 2005 [3] Incorporated by reference to the Company's Form 10-K filed August 16, 2006 36 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. NORTIA CAPITAL PARTNERS, INC. (Registrant) Date: December 11, 2006 /s/ William Bosso -------------------------------- William Bosso Chief Executive Officer Date: December 11, 2006 /s/ Bruce A. Hall -------------------------------- Bruce A. Hall Chief Financial Officer 37

Post Election Pre Election Post Election Pre Election as a Business as a Business as a Business as a Business Development Development Development Development Company Company Company Company ------------------------- ------------- ------------------------- ------------- Three One Two Nine One Eight Months Month Months Months Month Months Ended Ended Ended Ended Ended Ended Jan. 31, Jan. 31, Dec. 31, Jan. 31, Jan.31, Dec. 31, 2006 2005 2004 2006 2005 2004 ----------- ----------- ----------- ----------- ----------- ----------- Revenues $ - $ - $ - $ - $ - $ 153,699 Operating Expenses General and administrative 53,533 35,996 39,299 257,475 35,996 94,223 Rent 1,611 3,884 7,516 14,906 3,884 23,072 Consulting 33,118 7,490 66,427 141,698 7,490 82,342 Compensation 116,435 30,385 198,765 449,605 30,385 245,465 Debenture penalty - 9,225 - - 9,225 2,175 Directors fees - - 224,100 - - 225,150 Interest expense 160 12,615 - 160 12,615 15,054 Impairment of investments - 45,331 - - 45,331 3,250 Professional 167,853 15,284 26,253 413,158 15,284 109,892 ----------- ----------- ----------- ----------- ----------- ----------- Total Operating Expenses 372,710 160,210 562,360 1,277,003 160,210 800,623 ----------- ----------- ----------- ----------- ----------- ----------- Loss from Operations (372,710) (160,210) (562,360) (1,277,003) (160,210) (646,924) Other Income (Expense) Loss on sale of available for sale securities - - - - - (64,738) Other than temporary loss on for sale securities - - - - - (195,000) Other income - 4 36 - 4 4,536 Interest income 52 - (35) 390 - 8 ----------- ----------- ----------- ----------- ----------- ----------- Total Other Income (Expense) 52 4 1 390 4 (255,194) ----------- ----------- ----------- ----------- ----------- ----------- Net Loss Before Income Taxes $ (372,658) $ (160,205) $ (562,359) $(1,276,613) $ (160,205) $ (902,119) =========== =========== =========== =========== =========== ===========

Filing Compare · NORTIA CAPITAL PARTNERS, INC.