Phoenix Interests - F-1 Consolidated Balance Sheets as of...

Phoenix Interests - Recent Material Event

Item 1.	Financial Statements:	3

Item 2.	Management’s Discussion and Analysis or Plan of Operation.	4

Item 3.	Controls and Procedures.	7

PART II OTHER INFORMATION

Item 1.	Legal Proceedings.	8

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.	8

Item 3.	Defaults Upon Senior Securities.	8

Item 4.	Submission of Matters to a Vote of Security Holders.	8

Item 5.	Other Information.	8

Item 6.	Exhibits.	8

Table of Contents

PART I FINANCIAL INFORMATION

Item I. Financial Statements

F-1	Consolidated Balance Sheets as of September 30, 2007

F-2	Consolidated Statements of Operations For the Three and Nine Months Ended September 30, 2007 and 2006.

F-3	Consolidated Statement of Stockholders’ Deficit For the Nine Months Ended September 30, 2007.

F-4	Consolidated Statements of Cash Flows For the Nine Months Ended September 30, 2007 and 2006.

F-5	Notes to Financial Statements.

Table of Contents

PHOENIX INTERESTS, INC. AND SUBSIDIARY

CONSOLIDATED BALANCE SHEETS

AS OF SEPTEMBER 30, 2007

	September 30,		December 31,
	(unaudited)
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	-	$	-
Accounts receivable		-		1,042

TOTAL CURRENT ASSETS		-		1,042

PROPERTY AND EQUIPMENT, net of accumulated depreciation of $15,672 and $13,067		8,973		11,578

TOTAL ASSETS	$	8,973	$	12,620

LIABILITIES AND STOCKHOLDERS' DEFICIT

CURRENT LIABILITIES
Cash overdraft	$	21,215	$	21,948
Convertible notes payable		-		11,715
Note payable		25,000		2,590
Accounts payable and accrued expenses		278,036		208,564
Accrued compensation - related party		194,984		72,183
Capital lease obligation		9,331		7,134
Dividends payable		618,118		418,487
Accrued derivative liability		1,417,967		1,325,516
Preferred stock; Series A; $0.001 par value; 5,000 shares authorized; 2,656 and 2,656 shares issued and outstanding		265,600		265,600
Preferred stock; Series D convertible; $0.001 par value; 25,000 shares authorized; 8,655 and 8,969 shares issued and outstanding		865,500		896,900

Preferred stock; Series E convertible; $0.001 par value; 25,000 shares authorized; 5,758 and 5,758 shares issued and outstanding		575,800		575,800

TOTAL CURRENT LIABILITIES		4,271,551		3,806,437

CAPITAL LEASE OBLIGATION, net of current portion		-		2,196

TOTAL LIABILITIES		4,271,551		3,808,633

COMMITMENTS AND CONTINGENCIES		-		-

STOCKHOLDERS' DEFICIT

Preferred stock; Series B; $0.001 par value; 100,000 shares authorized; 0 and 0 shares issued and outstanding		-		-
Preferred stock; Series C; $0.001 par value; 12,000,000 shares authorized;228,000 and 228,000 shares issued and outstanding		228		228
Common stock; $0.001 par value; 5,000,000,000 shares authorized; 1,016,599,122 and 841,450,771 shares issued and outstanding		1,016,599		841,451
Additional paid-in capital		1,421,120		1,547,890
Accumulated deficit		(6,700,525)		(6,185,582)

TOTAL STOCKHOLDERS' DEFICIT		(4,262,578)		(3,796,013)

TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT	$	8,973	$	12,620

The accompanying notes are an integral part of these consolidated financial statements.

F-1

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PHOENIX INTERESTS, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2007 AND 2006

(Unaudited)

	Three Months Ended September 30,				Nine Months Ended September 30,
	2007		2006		2007		2006
	(unaudited)		(unaudited)		(unaudited)		(unaudited)

REVENUES	$	1,712	$	4,118	$	10,854		22,030

OPERATING EXPENSES
Compensation		45,000		45,000		135,000		135,000
Professional fees		13,665		14,973		62,043		135,225
Office expenses		5,600		1,548		12,820		14,379
Travel		-		-		-		5,050
Depreciation and amortization		868		1,778		2,605		17,887
Equipment rental		-		-				-
Rent		4,500		4,500		13,500		13,500
Insurance		-		653		-		5,160
Utilities		-		160		60		495
Bank charges		72		465		233		838
Impairment expense		-		-				42,973

TOTAL OPERATING EXPENSES		69,705		69,077		226,261		370,507

LOSS FROM OPERATIONS		(69,705)