Appolo Shoe

| Apollo Shoes, Inc. | | | |

|Prepaid Expenses Lead Schedule | | | | |

|For Year Ended 12/31/2007 | | | | |

| | |

|and Rock Solids’ premiums | | | | | | | | | |36,106.92 | | | | | | | | | |353,603.73 | | | | | | | | | |533,401.26 | | | | | | | | | |923,111.91 | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

At first glance I did not see any major problems with the accounting for fixed assets. The listings and amounts all appear to be accurate and verifiable. All of the calculations for depreciation appear to be correct. The only thing I would dispute is the calculations for depreciation are assuming no salvage value for the assets at the end of their useful life. They are using straight-line depreciation and they are consistent with not using any salvage values for their fixed assts. This does cause a significant overstatement of depreciation expense. We need to establish salvage values for all these assets at the end of their useful life and recalculate the depreciation expenses I think this is more in compliance with GAAP.

Another factor that may require some further investigation is the $200,000 expense for “system analysis consulting”. As long as this expense was part of the startup of the system, this expense may be eligible to be capitalized. If this is just an ongoing consultation fee,...