10QSB 1 natcoquarter1june2008report.txt Q-1 REPORT UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-QSB Annual Report Under Section 13 OR 15(d)of The Securities Exchange Act of 1934 For the quarterly period ended June 30, 2008 Commission File Number: 333-91190 NATCO INTERNATIONAL INC. (Name of Small Business Issuer in its Charter) Delaware 98-0234680 (State of incorporation) (I.R.S. Employer Identification Number) Unit 204, 13569 - 76 Avenue Surrey, British Columbia, Canada, V3W 2W3 (Address of principal executive offices) (Zip code) Telephone Number: (604) 592-0047 Check whether the issuer: (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ] Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the exchange Act). Yes [ ] No [X] Check whether the issuer has filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of securities under a plan confirmed by a court. Yes [ ] No [ ] Shares of $0.001 par value Common Stock outstanding at June 30, 2008: 20,447,614 DOCUMENTS INCORPORATED BY REFERENCE None Transitional Small Business Disclosure Format (check one): Yes [ ] No [X] NATCO INTERNATIONAL INC. FORM 10-QSB Quarter Ended September 30, 2007 Table of Content PART I - FINANCIAL INFORMATION ITEM I. Financial Statements 3 ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 8 ITEM 3. Controls and Procedures 10 PART II - OTHER INFORMATION ITEM 1. Legal Proceedings 11 ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds 11 ITEM 3. Defaults Upon Senior Securities 12 ITEM 4. Submission of Matters to a vote of Security Holders 12 ITEM 5. Other Information 12 ITEM 6. Exhibits 13 Signatures 13 Part 1 - FINANCIAL INFORMATION ITEM 1. NATCO INTERNATIONAL INC. DEVELOPMENT STAGE COMPANY INTERIM FINANCIAL STATEMENTS June 30, 2008 (Expressed in US Dollars) Unaudited Statement 1 Natco International Inc. Development Stage Company Interim Balance Sheets As at June 30, 2008 (Expressed in U.S. Dollars) at June 30th, at March 31, 2008 2008 (Unaudited) (Audited) ASSETS CURRENT ASSETS Cash $ - $ - Accounts Receivable - - Tax Receivable - Inventory - - Prepaid Assets 2,856 4,234 Assets held in discontinued operations - *- ---------------------------------- Total Current Assets 2,856 4,234 LONG TERM ASSETS Loan to PVT $ 1,485,000 $ 1,485,000 Interest Receivable on Loan to PVT $ 121,311 95,099 Product Rights (Note 5) 1 1 *- ---------------------------------- TOTAL ASSETS $ 1,609,168 $ 1,584,334 *- ---------------- --------------- LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES Bank Indebtedness (Note 6) $ 21,776 $ 20,171 Accounts Payable 72,393 93,210 Loan Payable 440,649 403,490 Accrued Liabilities 84,011 92,344 Due to related Parties (Note 7) 832,229 811,288 *- ---------------------------------- Total Current Liabilities 1,451,058 1,420,503 *- ---------------------------------- Total Liabilities 1,451,058 1,420,503 *- ---------------- --------------- Continued Operations (Note 1) Discontinued Operations (Note 12) Subsequent events (Note 13) STOCKHOLDERS' EQUITY Authorised: 50,000,000 Common Shares, with a par value $0.001, 5,000,000 preferred shares with a par value $0.001, Issued: Common shares - 20,447,614 (2007 - 15,047,614) respectively Paid in Cpital -Statement 3 20,447 20,447 Additional Paid-in Capital -Statement 3 1,092,740 1,092,740 Share Subscriptions 1,384,277 1,384,277 Other Comprehensive Income - Statement 3 (424,662) (432,465) Deficit Accomulated during Development Stage -Statement 3 (1,914,692) (1,901,168) *- ---------------- --------------- Total Stockholders' Equity 158,110 163,831 *- ---------------- --------------- Total Liabilities and Stockholders' Equity $ 1,609,168 $ 1,584,334 *- ---------------- --------------- See accompanying notes Statement 2 Natco International Inc Development Stage Company Interim Statements of Operations For the Six Months Ended June 30 (Expressed in U.S. Dollars)

Three Months Three Months Since Inception Ended June 30 Ended June 30 to June 30 2008 2007 2008 (Unaudited) (Unaudited) (Unaudited) INCOME Sales $ - $ - $ 392,635 - Cost of Sales - - 239,602 - Gross Profit $ - $ - $ 153,033 OPERATING EXPENSES Advertising and Promotion 1,747 4,683 88,743 Amortisation 46,985 Automotive 37,035 Bad Debts 8,474 Bank Charges 761 149 16,530 Commissions 3,509 Consulting Fees 17,980 Insurance 17,481 Legal and Accounting 5,916 25,060 392,345 Office and other 823 133 63,812 Rent 2,831 3,824 214,979 Research and Development 105,537 Salaries and benefits 18,535 17,044 689,522 Telephone and Utilities 1,374 1,888 58,872 Travel and trade shows 46,386 Currency Exchange Loss (Gain) - - 554 - Total Expenses 31,987 52,781 1,808,744 - Net Loss from Operations (31,987) (52,781) (1,655,711) OTHER ITEMS Interest on PVT Loan 25,824 12,693 120,379 Other Income 25,389 Cancellation of Options - 49,500 Interest Expense (7,361) (14,476) (371,906) $ 18,463 $ 47,717 $ (226,138) Loss from Continued operations (13,524) (5,064) (1,881,849) Net Income (loss) from discontinued operations (Note 12) - - (32,843) - Net Loss (13,524) (5,064) (1,914,692) - Other comprehensive income 7,803 (58,906) (424,662) - 0 Net Loss and Comprehensive loss $ 5,721) $ 63,970) $ 2,339,354) Basic and Diluted (Loss) per Share $ 0.00) $ 0.00) $ 0.11) Weighted Average Number of Shares 20,447,614 15,047,614 20,447,614

See accompanying notes Statement 3 Natco International Inc. Development Stage Company Interim Statements of Cash Flows For the Six Months Ended June 30, 2008 (Expressed in U.S. Dollars)

Three Months Three Months (Inception) Ended Jun 30 Ended Jun 30 June 30th 2008 2007 2008 (Unaudited) (Unaudited) (Unaudited) OPERATING ACTIVITIES Net (Loss) $ (13,524) $ (5,064) # $ (1,914,692) Adjustments to reconcile Net (Loss) Common Stock issued for Services - - Depreciation - - 46,985 Write off of assets fom discontinued operations 32,843 Accrued Expenses related party 15,396 Accrued Interest due to related parties 7,157 14,233 141,681 Wages accrued to director 18,535 17,044 542,131 Cancelled stock based compensation - (49,950) - Changes in Operating Assets and Liabilities (Increase)/Decrease in Accounts Receivable - Interest receivable (26,212) (13,086) (121,311) Inventory - - - Prepaid expense 1,378 8,029 (2,856) Increase/(Decrease) in Accounts Payable (20,815) (1,472) 72,393 Increase/(Decrease) in Accrued Liabilities (8,333) 13,268 84,011 Net Cash Provided by Operating Activities (41,814) (16,998) (1,103,419) Net cash provided by (used in ) - (232) (31,984) Discontinued operations (41,814) (17,230) (1,135,403) INVESTMENT ACTIVITIES Purchase of Equipment - - (62,642) Loan to PVC - (955,000) (1,485,000) Net Cash (Used) by Investment Activities - (955,000) (1,547,642) FINANCING ACTIVITIES Bank Indebtedness 1,605 (366) 21,776 Due to Related party (4,753) 296,502 147,818 Loans Payable 37,159 735,000 440,649 Proceeds from Subscriptions Receivable - - 1,384,277 Proceeds from sale of Common Stock - - 1,113,187 Net Cash Provided by Financing Activities 34,011 1,031,136 3,107,707 Foreign Exchange 7,803 (58,906) (424,662) Change in cash and cash equivalents - - - Cash, Beginning of Period - - - Cash, End of Period $ - $ - $ - SUPPLEMENTAL INFORMATION: Interest Paid $ 204 $ 243 $ 140,207 Income Taxes Paid $ - $ - $ -

See accompanying notes Natco International Inc. Development Stage Company Notes to Interim Financial Statements June 30, 2008 (Expressed in US Dollars) =============================================================================== 1. CONDENSED FINANCIAL STATEMENTS The accompanying financial statements have been prepared by the Company without audit. In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position, results of operations and cash flows at June 30, 2008 and for all periods presented have been made. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted. It is suggested that these condensed financial statements be read in conjunction with the financial statements and notes thereto included in the Company's March 31, 2008 audited financial statements. The results of operations for the period ended June 30, 2008 are not necessarily indicative of the operating results for the full years. 2. GOING CONCERN The Company's financial statements are prepared using accounting principles generally accepted in the United States of America applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company has not yet established an ongoing source of revenues sufficient to cover its operating costs and allow it to continue as a going concern. The ability of the Company to continue as a going concern is dependent on the Company obtaining adequate capital to fund operating losses until it becomes profitable. If the Company is unable to obtain adequate capital, it could be forced to cease operations. In order to continue as a going concern, the Company will need, among other things, additional capital resources. Management's plans to obtain such resources for the Company include (1) obtaining capital from management and significant shareholders sufficient to meet its minimal operating expenses, and (2) completing the proposed merger with Lassen Energy Inc. However, management cannot provide any assurances that the Company will be successful in accomplishing any of its plans. The ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish the plans described in the preceding paragraph and eventually secure other sources of financing and attain profitable operations. The accompanying financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. Natco International Inc. Development Stage Company Notes to Interim Financial Statements June 30, 2008 (Expressed in US Dollars) ============================================================================= 3. SIGNIFICANT EVENTS i) On Feb 19, 2008 Company signed a binding Letter of agreement with Lassen Energy, Inc (LEI), a US company that manufactures Solar Panels. ii) On April 18, 2008 Natco and LEI entered into a binding definitive agreement to merge by way of share exchange. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OPERATION BACKGROUND AND OVERVIEW The following summary should be read in conjunction with the financial statements and accompanying notes to them included elsewhere in this report. We have been in existence as a company (including our predecessor British Columbia Corporation) since 1990. However, we began to concentrate on our Chemical Manufacturing business activities in 1997; prior to that time we had few shareholders and were primarily dormant. We never made a profit on Chemical Manufacturing operations. As of June 30, 2008, we had incurred a deficit of $(1,914,692) and $(1,901,168)as of March 31, 2008, which has continued to increase This deficit includes losses incurred by our predecessor over the several years of our development. Most of our losses have been recent and incurred in the development of our chemical product lines. As an example, our deficit as of October 31, 1998 was approximately $(130,000). We had sales in both the jewelry cleaner and tire sealants product lines since 1998 to 2005, but sales did not contribute a significant amount to offset expense. In the 12 months ended June 30, 2008 compared to the 12 months ended June 30, 2007, we had net loss of $(13,524) and $(5,064) respectively. Consequently, we discontinued all manufacturing activities and signed a reverse merger agreement with photo Violation Technologies Corp (PVT) of Vancouver, British Columbia, Canada The merger agreement with PVT fell through and we have signed a binding definitive agreement with Lassen Energy, Inc. of California to do a reverse merger by way of share exchange. RESULTS OF OPERATIONS Three month period ended June 30, 2008 The company is in the process of doing a reverse merger with Lassen Energy, Inc and the assets consist of Loan to PVT in the amount of $1,485,000 plus interest and the share exchange agreement with Lassen Energy and stored equipment and inventory from previous business. Consequently we had no sales in the three month period ended June 30, 2008. Therefore, it is not meaningful to compare our results of operations to our prior year since our prior year's operations have been discontinued. The company cancelled all issued and outstanding Options owned by its four directors. The Agreement with PVT stipulated that all Options be either cancelled or exercised. All directors chose to cancel their Options. No new options have been issued. LIQUIDITY AND CAPITAL RESOURCES Natco has financed its operations through equity investment from investors, shareholder loans, and credit facilities from Canadian chartered banks and increases in payables and share subscriptions. Most of the financing has been debt financing from related and un-related parties. As of June 30, 2008, the company has a debit of $1,451,058. Most of the debit is to parties related to current management of Natco. By the time the merger between Lassen and Natco is completed, the current management will pay out all debits to non-related parties. As a result all debits will be owed to current management group. The amount of debit will be roughly same as the money owed to Natco by PVT. If Natco is successful in recovering this money from PVT, the debits will be paid out but if unsuccessful all debits will be written off. Current management will indemnify the post merger company and its management. Post Merger Company will raise 10 to 20 million dollars to execute their business plan. None of this money will be used to retire current debit. Our estimated fixed costs at this time are approximately $5400 per month; not including the legal expense of law suit against PVT, but does includes $900 for lease payments, $500 for utilities, $3,000 for loan interest and principle payments, and $1,000 for miscellaneous expenses. We will have to raise approximately $5400 per month until additional funding is in place. The Legal court action will be financed separately as the money is needed. The principles of the company are committed to financing the legal action. We are currently suing PVT for the money it owes us ($1,485,000) plus Interest and damages. If this money is paid back we will not need any financing. All debits could be paid and we will have enough working capital to sustain us for the next 12 months. If we are unable to finance the company by debt or equity financing, or combination of the two, we will have to look for other sources of funding to meet our requirements. That source has not been identified as yet but most likely will be debt financing using the management's trading shares as collateral. However there is no guarantee that we will be successful in raising any additional capital. Our financial statements have been prepared on the going concern basis under which an entity is considered to be able to realize its assets and satisfy its liabilities in the ordinary course of business. Operations to date have been primarily financed by long-term debt and equity transactions as well as increases in payables and related party loans. Our future operations are dependent upon the identification and successful completion of additional long- term or permanent equity financing, the continued support of creditors and shareholders, and, ultimately, the achievement of profitable operations. There can be no assurance that we will be successful. If we are not, we will be required to reduce operations or liquidate assets. We will continue to evaluate our projected expenditures relative to our available cash and to seek additional means of financing in order to satisfy working capital and other cash requirements. Our auditors' report on the March 31, 2007 financial statements includes an explanatory paragraph that states that as we have suffered recurring losses from operations, substantial doubt exists about our ability to continue as a going concern. The consolidated financial statements do not include any adjustments relating to the recoverability of assets and classification of assets and liabilities that might be necessary should we be unable to continue as a going concern. ITEM 3. CONTROLS AND PROCEDURES As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation of our chief executive officer and chief financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures. BASED ON THIS EVALUATION, OUR CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER CONCLUDED THAT OUR DISCLOSURE CONTROLS AND PROCEDURES ARE DESIGNED TO PROVIDE REASONABLE ASSURANCE OF ACHIEVING THE OBJECTIVES OF TIMELY ALERTING THEM TO MATERIAL INFORMATION REQUIRED TO BE INCLUDED IN OUR PERIODIC SEC REPORTS AND OF ENSURING THAT SUCH INFORMATION IS RECORDED, PROCESSED, SUMMARIZED AND REPORTED WITH THE TIME PERIODS SPECIFIED. Our chief executive officer and chief financial officer also concluded that our disclosure controls and procedures were effective as of the end of the period covered by this report to provide reasonable assurance of the achievement of these objectives. PART II - OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS In May 2007 the company took a local brokerage house to court on behalf of itself and its shareholders. This action was taken because the company and some shareholders had a reason to believe that this particular Brokerage house was lending the shares to another broker Dealer for the purpose of shorting. When the shareholders demanded that their shares be converted to share certificates, the brokerage house did not produce the certificates in a reasonable time period. The company went to Supreme Court of British Columbia to force them to a) deliver the share certificates to shareholders, b) to stop lending out our shares, c) to stop shorting of the company's shares. The company managed to accomplish all three because judge agreed with the company and an order was issued to deliver the shares to shareholders immediately. On December 12, 2007, the Company commenced legal proceedings in British Columbia Supreme Court against Photo Violation Technologies Corp. ("PVT") and its president, Fred Mitschele (aka Fred Marlatt), claiming punitive, exemplary and consequential damages and other remedies arising from breach of contract and wrongful conduct on the part of Mitschele. In the Action, the Company claimed PVT has breached the agreement among the Company, PVT and Mitschele entered into on or about March 16, 2007, which provided for completion reverse merger between the Company and PVT. The Company also claimed in Court documents that Mitschele engaged in a number of wrongful acts, including inducing breach of contract, attempting to divert prospective investors from Company to PVT, failing to provide financial statements and other necessary documents. In February 2008, the company extended the law suit to include, the other two directors and one employee. In March PVT countersued Natco, One director of the company and two associates of the company, claiming breach of contract. ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS The Company issued no unregistered securities in the three Months ended on June 30, 2007. However there are subscriptions of approximately 6,300,000 on the company books that will have to be issued in the next quarter. ITEM 3. DEFAULTS UPON SENIOR SECURITIES Not Applicable ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS Not Applicable ITEM 5. OTHER INFORMATION Not Applicable ITEM 6. EXHIBITS 31.1 Certificate of Chief Executive Officer and Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 31.2 Certificate of CFO Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 32.1 Certificate of Chief Executive Officer and Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 SIGNATURES In accordance with Section 13 of the exchange act, the registrant has duly Caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Natco International, Inc. By: /s/ Raj-Mohinder S. Gurm ----------------------------------- Name: Raj-Mohinder S. Gurm Date: August 19, 2008 Title Chief Executive Officer & CFO Pursuant to the Securities Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated. /s/Raj-Mohinder S. Gurm ------------------------------------------------------------- Director, Chief Executive Officer and Chief Financial Officer August 19, 2008