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EX-10.1 - INTREorg SYSTEMS INC.iorg10kaex101123109.htm


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K/A
(Amendment No. 1)

[X]      ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2009
or

[ ]      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: 000-53451
INTREORG SYSTEMS, INC.
(Exact name of registrant as specified in its charter)
 
Texas     45-0526215
State or other jurisdiction of     I.R.S. Employer 
incorporation or organization     Identification No. 
     
501 Trophy Lake Drive, Suite 314, PMB 106, Trophy Club, TX  
76262
(Address of principal executive offices)    (Zip Code) 
     
Registrant's telephone number, including area code: 817-491-8611
   
     
     
Securities registered pursuant to Section 12(b) of the Act:
     
    Name of each exchange 
Title of each class registered   on which registered
Not Applicable     Not Applicable 
     
Securities registered pursuant to Section 12(g) of the Act: 
 Common Stock

Indicate  by  check  mark if the  registrant  is not  required  to file  reports pursuant to Section 13 or Section 15(d) of the Act.  |-|

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 has submitted  electronically  and posted on its corporate Website, if any, every Interactive Data file required to be submitted and posted pursuant to Rule 405 of Regulation S-T (section  232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files)  Yes |_| No |_|

Indicate by check mark if disclosure of delinquent  filers  pursuant to Item 405 of Regulation  S-K (ss.  229.405 of this chapter) is not contained  herein,  and will not be  contained,  to the best of  registrant's  knowledge,  in definitive proxy or information  statements  incorporated  by reference in Part III of this Form 10-K or any amendment to this Form 10-K.|X|

Indicate by check mark whether the registrant is a large  accelerated  filer, an accelerated filer, a non-accelerated  filer, or a smaller reporting company. See definitions  of "large  accelerated  filer,"  "accelerated  filer" and  "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check One).

Large accelerated filer     [___]          Accelerated filer             [___]
Non-accelerated filer       [___]          Smaller reporting company     [_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|

The  aggregate  market  value of  voting  stock  held by  non-affiliates  of the registrant was approximately $2,512,432 as of April 14, 2010.

There were 10,320,016 shares outstanding of the registrant's  Common Stock as of April 14, 2010.



 
 

 


TABLE OF CONTENTS
 
PART I
 
   
ITEM 1
Business
ITEM 1 A.
Risk Factors
ITEM 1 B.
Unresolved Staff Comments
ITEM 2
Properties
ITEM 3
Legal Proceedings
ITEM 4
Removed and Reserved
   
 PART II
 
   
ITEM 5
Market for Registrant's Common Equity, Related Stockholder Matters  and Issuer Purchases of Equity Securities
ITEM 6
Selected Financial Data
ITEM 7
Management's Discussion and Analysis of Financial Condition and Results of Operations
ITEM 7 A.
Quantitative and Qualitative Disclosures About Market Risk
ITEM 8
Financial Statements and Supplementary Data
ITEM 9
Changes in and Disagreements with Accountants on Accounting and   Financial Disclosure
ITEM 9 A(T).
Controls and Procedures
ITEM 9B
Other Information
   
PART III
 
   
ITEM 10
Directors, Executive Officers, and Corporate Governance
ITEM 11
Executive Compensation
ITEM 12
Security Ownership of Certain Beneficial Owners and Management and  Related Stockholder Matters
ITEM 13
Certain Relationships and Related Transactions, and Director Independence
ITEM 14
Principal Accounting Fees and Services
   
PART IV
 
   
ITEM 15
Exhibits, Financial Statement Schedules
SIGNATURES

                                    
 
 

 

EXPLANATORY NOTE

The Form 10-K of INTREorg Systems, Inc. for the year ended December 31, 2009 as originally filed is being amended hereby to reflect the following:

 
we incorrectly reflected the number of authorized shares of our common stock on our Balance Sheet as 10,000,000 instead of 100,000,000,
 
we have changed the presentation on Balance Sheet a December 31, 2009 to disclose the amount of accrued expenses due a related party in a separate line item and to disclose that the convertible promissory note outstanding at December 31, 2009 is due to a related party,
 
we have added a footnotes to describe the components of accrued expenses and liabilities and accrued expenses- related party which appear on our Balance Sheet at December 31, 2009 and we have added a footnote describing the convertible notes payable - related party,
 
we have expanded the disclosure under Item 9A. Disclosure Controls and Procedures to include the conclusion of our management following their assessment of the effectiveness of our internal control over financial reporting,
 
we have expanded the disclosure under Item 13. Certain Relationships and Related Transactions, and
 
we have amended Item 15. Exhibits, Financial Statement Schedules to file copies of various notes payable as exhibits.

These revisions to our Form 10-K as originally filed did not result in a restatement of our financial statements.  Neither the correction in the number of authorized shares of our common stock on our Balance Sheet at December 31, 2009 or the changes in presentations resulted in any other change on our Balance Sheet.  Because of the nature of the corrections contained in this Amendment No. 1, our management did not determine that any change in the evaluation of our disclosure controls and procedures as set forth in Item 9A(T). or the evaluation of our internal control over financial reporting also set forth in Item 9A. of the original filing was necessary.

This Amendment No. 1 to the Form 10-K for the year ended December 31, 2009 contains currently dated certifications as Exhibits 31.1, 31.2 and 32.1.  No attempt has been made in this Amendment No. 1 to the Form 10-K for the year ended December 31, 2009 to modify or update the other disclosures presented in the Form 10-K as previously filed, except as required by the restatement. This Amendment No. 1 on Form 10-K/A does not reflect events occurring after the filing of the original Form 10-K or modify or update those disclosures that may be affected by subsequent events.  Accordingly, this Amendment No. 1 should be read in conjunction with our other filings with the SEC.


 
 

 

FORWARD LOOKING STATEMENTS

This  document   includes   forward-looking   statements,   including,   without limitation,  statements  relating to  INTREorg  plans,  strategies,  objectives, expectations,  intentions  and  adequacy  of  resources.  These  forward-looking statements  involve known and unknown  risks,  uncertainties,  and other factors that may cause  INTREorg's  actual  results,  performance or  achievements to be materially  different  from any  future  results,  performance  or  achievements
expressed or implied by the forward-looking  statements.  These factors include, among  others,  the  following:  ability of INTREorg to  implement  its business strategy;  ability to obtain additional financing;  INTREorg's limited operating history;  unknown liabilities  associated with future  acquisitions;  ability to manage growth;  significant competition;  ability to attract and retain talented employees;  and future  government  regulations;  and other factors described in this registration  statement or in other of INTREorg filings with the Securities and Exchange Commission.  INTREorg is under no obligation, to publicly update or revise any forward-looking  statements,  whether as a result of new information, future events or otherwise.


PART I

ITEM 1. BUSINESS

General

The  following  is a  summary  of  some  of the  information  contained  in this document. Unless the context requires otherwise,  references in this document to "INTREorg" or the "Company" are to INTREorg Systems, Inc. and its subsidiaries.

About INTREorg Systems, Inc.

INTREorg  Systems,  Inc. was formed as a Texas  corporation on November 3, 2003.  The Company was organized for the purpose of providing  internet  consulting and "back office" services to other companies.

BUSINESS PLAN

INTREorg  Systems Inc.  ("INTREorg"  or "The  Company") has developed a business plan to become an  integrated  provider  of  outsourced  information  technology ("IT") services, Software as a Service (SaaS) applications,  enterprise support,
and  business  process  outsourcing   services.   INTREorg's  target  market  is publicly-traded,  emerging  growth  companies  in need of  rapidly  expanded  IT services. Primarily the Company intends to focus on publicly traded companies to
allow  it  to  evaluate  the  financial   position  and  business  situation  of prospective  clients due to the inherent  transparency  required  with  publicly traded firms.

The  primary  focus of the  Company  is to  provide  outsourced,  day-to-day  IT operations to emerging companies in need of state-of-the-art IT services,  tools and  processes.  INTREorg  focuses  on  providing  IT  services  and  systems to
emerging,  technologically  sophisticated companies that have grown beyond their ability to manage their network.  Additionally,  the Company  intends to provide infrastructure  services and  products to meet the specific  demands of INTREorg
customers. All of the Company's services will be offered individually or bundled as a comprehensive solution.

IT OUTSOURCING SYSTEMS

INTREorg Systems plans to provide Information Technology solutions to assist the Company's  clients in assessing  their  business  needs and  identifying  the IT solutions to meet these needs. INTREorg intends to deliver services that include
the  selection  and   implementation   of  packaged  software  and  the  design, construction, testing, and integration of new systems.
 
 
 
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The primary focus of INTREorg's IT Outsourcing Services will be to assume all of the responsibility of a client's IT organization.  In most cases, INTREorg would evaluate the client's  current  personnel  and augment that  expertise  with the Company's IT  experience  as well as its  industry  partners.  This  approach is designed to allow  INTREorg to help the Company's  customers  minimize the costs associated with acquiring and training an IT staff--allowing them to focus their
time and resources on their core business.

INTREorg's  IT  Outsourcing   Services   segment  will  provide  help  desk  and infrastructure support  around-the-clock for its clients. The Company intends to maintain  and  support a full  range of its  clients'  IT and  business  process
infrastructures  from  network  environments  to  computing  systems,  and  from shrink-wrapped  applications to advanced  proprietary  and acquired  application systems.

User Services

INTREorg  intends to manage each of the  client's  assets to ensure that each of the client's  end user's PC and other  devices run  consistently  and at maximum efficiency.  INTREorg provides the staffing,  management and processes needed to
manage the whole  enterprise,  meeting desired  service levels while  leveraging clients' existing infrastructure investments. INTREorg intends to help companies increase  end  user  productivity  while  decreasing  their  downtime.  End user
services will include:

     o    Help Desk--call management, problem solving and problem resolution
     o    Desktop Services--installations, upgrades and software problems
     o    Procurement and Product Services-- streamlined, controlled and managed
          procurement process and certified product reseller

Computing Services

INTREorg intends to help its customers  manage all of their computing  resources helping them manage their network resources more effectively. Computing Services include:

     o    IT Backup and Recovery Services
     o    Data Center Outsourcing
     o    Database Management
     o    Facility Management

Network Management Services

INTREorg  intends to manage its  clients'  entire  Wide Area  Network  (WAN) for maximum performance and reliability. The Company will use its internal expertise in  conjunction  with its clients'  personnel to manage  disparate  carriers and
providers to provide maximum up time and higher efficiencies. Network Management Services will include:

     o    Managed   Communication   Services--enhancing   the   performance  and reliability of critical networks and connectivity
     o    Remote  Access  Services--Support  secure  and  cost-effective  remote access using the latest in wireless and wired technology
     o    On site  Network  Management--maximizing  network  uptime  and  device functionality


                                     
 
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Security Services

The Company  provides custom security  solutions for its clients,  regardless of the size or  complexity  of their  system.  INTREorg  works with its  clients to identify key threats and risks and create customized security policies, and then install, implement and manage the security solution. Security services include:

     o    Network Security--intrusion detection, secure VPN access
     o    Application Security--monitor and protect email and web content
     o    Security  Monitoring--effective   monitoring  and  management  of  the client's network

Applications Services

Applications  Services  include  services such as  application  development  and maintenance,  including the  development  and maintenance of custom and packaged application  software  for  customers  and  application  systems  migration  and
testing,  which includes the migration of applications from legacy  environments to current  technologies,  as well as, performing quality assurance functions on custom  applications.  INTREorg  also  intends  to  provide  other  applications
services  such  as   application   assessment  and   evaluation,   hardware  and architecture consulting, systems integration, and INTREorg-based services.

Software as a Service (SaaS)

INTREorg Systems,  Inc. is currently developing a SaaS software delivery as part of its overall  business  plan.  The  Company  believes  that this model  offers significant  advantages  over  conventional  software  deployment,  as well  as,
traditional web-based ASP models. Traditionally, software has been thought of as a stand-alone  product that is purchased  separately and installed on individual computers.

The Company  believes that customized  software offers no specific  advantage to their  business  and that it is their  delivery  processes  that are unique.  By offering  standard,  off-the-shelf  software  via  the  web  using  multi-tenant
architecture, INTREorg intends to offer a variety of applications to its clients at a  fraction  of the cost of  client  purchased  software.  SaaS  software  is network-based  and  centrally  deployed  and  managed.  These  applications  are
accessed via the web and are available anytime and anywhere there is an Internet connection. Software updates and patches are handled in one central location

Software delivered via SaaS:

     o    Customer Relations Management
     o    Video Conferencing
     o    Human Resources
     o    Accounting and Email
     o    Enterprise Resource Planning
     o    Document Management

The Company is focusing on marketing the IT outsourcing  portion of the business to drive the SaaS model.

INTREorg's Lines of Business

INTREorg  Systems,  Inc.  offers  services  under two primary lines of business: Industry  Solutions  and  Consulting  and  Applications  Solutions.  The Company considers  these  lines  of  business  to be  reportable  segments  and  include
financial  information and disclosures  about these  reportable  segments in its financial  statements.  Based on a  quantitative  and  qualitative  analysis  of varying  factors,  the  Company may  increase or decrease  the amount of ongoing
investment in each of these business areas,  make  acquisitions  that strengthen its market position, divest, exit, or downsize aspects of a business area.
 
 
 
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Infrastructure Solutions

INTREorg's  Infrastructure  Solutions group will be responsible for defining the technology  strategies  for  the  Company's  Industry  Solutions  customers  and INTREorg while actively enforcing  Capability  Maturity Model Integration (CMMI)
methodologies.  This group  identifies new technology  offerings and innovations that deliver value to the Company's customers.  It manages updates and maintains the  technology  infrastructure  for  the  Company's  customers  and  ourselves,
including networks, data centers, help desks, mainframes,  servers, storage, and workspace  computing.  It also provides senior technology  consultants to assist the  Company's  customers  with  more  complex  technology  transformations.  It
manages,  resolves and documents problems in the Company's  customers' computing environments.  The group will also provide comprehensive  monitoring,  planning, and  safeguarding  of  information   technology  systems  against  intrusion  by
monitoring  system and network  status,  collecting and analyzing data regarding system and network performance, and applying appropriate corrective actions. All of these  activities are designed to either be performed at customer  facilities
or  delivered  through  centralized  data  processing  centers  that the Company intends to maintain.

Consulting and Applications Solutions

The  Consulting  and  Applications  Services  Group  intends to  provide  global consulting and  integration  services,  applications  development and management services,  and applications  outsourcing  services to the Company's client base.
These  services  are designed to be delivered  on-site and  offshore,  providing innovative  industry  focused  solutions.  Leading  through domain  expertise to provide  performance  improvement,  business  and  technology  architecture  and
transformation   these   services   will   include:    enterprise applications implementation  and  integration;  the development and maintenance of custom and packaged  applications;  application  systems migration;  testing;  migration of
applications from legacy  environments to current  technologies;  and performing quality assurance functions on custom applications.

Competitive Features

INTREorg  Systems,  Inc.  intends to offer a unique blend of premium IT services designed to assist the Company's clients in improving  financial and operational performance  across  their  enterprise.  INTREorg  intends to  develop  business
strategies  and  technology  solutions  that address their  specific needs while providing them with increased competitive advantage.  INTREorg intends that five core values may differentiate INTREorg from the competition:

         1.       Delivery Performance

 INTREorg's  delivery  performance  is  based  on a  carefully  designed business plan,  highly-skilled  consultants,  technical expertise,  and well designed  implementation and support methodologies.  INTREorg will emphasize  strong quality  assurance and project  management to achieve rapid and successful deployment of the Company's solutions.

         2.       Flexible application delivery

INTREorg believes it can provide the Company's customers  sophisticated business software at a fraction of the cost of traditional client-based software  delivery.  By leveraging  the inherent  flexibility  and cost savings of the SaaS software  delivery model, this is an ideal solution for rapidly  growing  customers  that must have scalable  solutions for  their rapidly changing business environment.
 

 
 
4

 
                                    
3.       Vertical Expertise

         INTREorg intends to combine  vertical-industry  knowledge with a proven core of key strategic  technologies to offer to serve  customers' needs and offer tailored and innovative strategies and solutions.

         4.       Technology Excellence

INTREorg  intends to deliver its services by blending  proven  software and business practices to build scalable custom solutions.  The Company believes  its team of  professionals  has the  technology  expertise to offer comprehensive strategies and solutions.

         5.       Operational Metrics

         INTREorg's intent is to maintain operational  excellence,  tracking key performance indicators and well-defined operating metrics to manage the Company's consulting resources, Company utilization and gross margin.

         6.       Information Based Sales and Marketing Efforts

INTREorg has  developed a set of metrics by which each  client's  needs and that client's potential profitability can be assessed. As a result, INTREorg's  intent  is to focus  its sales  and  marketing  efforts  on  growing  public  companies  where  publicly  reported   information  is available to assess the potential needs, revenue and profitability of a client. This approach allows the Company to be focused in its sales and
marketing efforts,  to bring solutions to the accounting,  and internal controls and procedures issues inherent in public financial reporting.

Business Strategy

The Company's business strategy is to position INTREorg's Company as the leading provider  of premium IT services  for both the middle  market and  divisions  of Global 2000 companies.  INTREorg believes it can attain this strategic objective
by  delivering  a range of business  and  technology  offerings.  This  approach enables the Company to attain its business strategy objective.  INTREorg intends to maximize the Company's ability to deliver the following capabilities:

     o    Envision  and  realize  strategic  business  solutions  to  serve  the Company's clients by delivering  industry-based process re-engineering services coupled with strategic technology management services.
     o    Implement  Corporate  Performance   Management  solutions  to  improve financial   performance  and  operating   metrics  across  a  client's enterprise.
     o    Optimize  business  processes  to improve the delivery of products and services
     o    Provide program and project management.
     o    Offer a  complete  range  of  managed  IT  services  that  enable  the Company's middle-market clients to concentrate on their core business, while being assured their technical  infrastructure  will support them as they grow.
     o    Leverage  the  Company's  blend of industry and  technology  expertise across all of the Company's service offerings.
 
 
 
5

 

Competition

The Company  intends to offer a full  spectrum  of IT  consulting  and  Software services and  expertise to ensure the success of IT projects to small and middle market companies. Competitors include IT solutions providers, in-house technical
staff,   software  product   companies  with  extended  service   organizations, international  outsourcers of IT development,  application and Web hosting firms and specialized providers of CPM/BAM/BI. There is significant competition in the
management  and IT consulting  services  space.  INTREorg also believes that the principle criteria considered by prospective clients when selecting a consulting firm include skills and capabilities of consultants, cost to value ratios, scope
of services,  service model approach,  global  presence,  industry and technical expertise,  reputation and quality of past work,  perceived  value and a results orientation.

The following is a  representative  list of competitors in the IT and management consulting services space:

     o    Technical  Consulting/Systems  integrators:  Accenture,  Collaborative Consulting, CMGI, EDS, IBM Global Services, Inforte, Keane Consulting, LogicaCMG, Perficient, and Sapient;

     o    Business SaaS providers;

     o    Email outsourcing firms;

     o    Management/Business  Consulting  firms:  Bain & Company,  Booz-Allen & Hamilton,  Boston Consulting Group,  Diamond Management and Technology Consultants, Inc., and McKinsey & Company;

 o    Corporate Performance  Management (CPM) / Business Activity Monitoring (BAM) / Business  Intelligence  (BI) providers:  AnswerThink,  Hitachi Consulting Corporation, Informatica Corporation, ISA, Hewlett-Packard, Longview Solutions,    Oracle, Palladium Consulting; and

     o    Computer    hardware,    software   and   service    vendors:    Dell, Hewlett-Packard, IBM, Oracle and SAP.

Employees

As of December 31,  2009,  INTREorg  did not have any full time  employees.  The officers and directors  currently provide certain services  dedicated to current corporate and business  development  activities on an as needed part-time basis.
Officers currently serve up to 20 hours per week.


ITEM 1A. RISK FACTORS

                          GENERAL BUSINESS RISK FACTORS

DEVELOPMENT STAGE BUSINESS

INTREorg Systems, Inc. commenced operations in November 2003 and is organized as a corporation  under the laws of the State of Texas.  Accordingly,  INTREorg has only a limited  history upon which an  evaluation  of its  prospects  and future
performance  can be made.  INTREorg's  proposed  operations  are  subject to all business risks  associated  with new  enterprises.  The likelihood of INTREorg's success must be  considered in light of the  problems,  expenses,  difficulties,
complications,   and  delays  frequently  encountered  in  connection  with  the expansion of a business,  operation in a competitive industry, and the continued development of advertising,  promotions and a corresponding customer base. There
is a possibility that INTREorg could sustain losses in the future.  There can be no assurances that INTREorg will even operate profitably.
 
 
 
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DEPENDENCE ON MANAGEMENT

In the early stages of  development  INTREorg's  business will be  significantly dependent on INTREorg's management team. INTREorg's success will be particularly dependent upon Russell K. Boyd, the Company's CEO and sole officer.  The loss of
our sole officer or any of our directors could have a material adverse effect on INTREorg.  Management  is not working full time for the Company and each devotes about twenty hours per week to the operations of the Company.

DEPENDENCE UPON OUTSIDE CONTRACTORS OR ADVISORS

To supplement the business  experience of its officers and  directors,  INTREorg may  be  required  to  employ  contractors,   accountants,   technical  experts, appraisers,  attorneys, or other consultants or advisors. INTREorg's Management,
without  any  input  from  shareholders,  will  make the  selection  of any such advisors.  Furthermore, it is anticipated that such persons may be engaged on an "as  needed"  basis  without  a  continuing  fiduciary  or other  obligation  to
INTREorg.  In  the  event  INTREorg  considers  it  necessary  to  hire  outside contractors or advisors,  they may elect to hire persons who are affiliates,  if they are able to provide the required services.

RISKS OF BORROWING

If  INTREorg  incurs  indebtedness,  a portion  of its cash flow will have to be dedicated to the payment of principal and interest on such indebtedness. Typical loan  agreements  also might  contain  restrictive  covenants,  which may impair
INTREorg's  operating  flexibility.  Such loan agreements would also provide for default under certain  circumstances,  such as failure to meet certain financial covenants.  A default under a loan  agreement  could result in the loan becoming
immediately  due and payable and, if unpaid,  a judgment in favor of such lender which  would be senior to the rights of  shareholders  of  INTREorg.  A judgment creditor would have the right to foreclose on any of INTREorg's assets resulting
in a  material  adverse  effect on  INTREorg's  business,  operating  results or financial condition.

RISK OF NEW VENTURE

INTREorg is a development  stage business.  The Company has a limited history of operation and no history of earnings. As a new development it will be subject to all of the difficulties  associated with establishing a new business enterprise,
including the following:  hiring and retaining skilled employees or contractors; licensing,  permitting,  and  operating  problems;  competing  with  established operators;  and implementing the business  infrastructure and support systems to
effectively carryout the business plan.

GENERAL ECONOMIC CONDITIONS
The financial success of INTREorg may be sensitive to adverse changes in general economic  conditions  in  the  United  States  such  as  recession,   inflation, unemployment,  and interest rates. Such changing  conditions could reduce demand
in the marketplace for the IT Outsourcing services which is INTREorg's business.  Management  believes that the services developed by INTREorg will maintain valuelong term. Nevertheless, INTREorg has no control over these changes.

NEED FOR ADDITIONAL FINANCING

INTREorg has very limited funds and such funds will not be adequate to carry out the business plan without borrowing  significant  funds. The ultimate success of INTREorg may depend upon its ability to raise additional  capital.  INTREorg has
not  investigated  the  availability,  source,  or terms that  might  govern the acquisition of additional  capital and will not do so until it determines a need for additional financing. If additional capital is needed, there is no assurance that funds will be available from any source or, if available,  that they can be obtained  on  terms  acceptable  to  INTREorg.  If  not  available,   INTREorg's operations  will be  limited  to those  that  can be  financed  with its  modest capital.
 
 
 
7

 

LACK OF REVENUE HISTORY

The Company was incorporated under the laws of the State of Texas on November 3, 2003. The Company was organized for the purpose of providing internet consulting and "back  office"  services  to other  companies.  The  Company  has not earned significant  revenues  from  limited  principal  operations.  The Company is not profitable and the business  effort is considered to be in an early  development stage.  INTREorg Systems,  Inc. must be regarded as a new or development venture
with all of the unforeseen costs, expenses,  problems, risks and difficulties to which such ventures are subject.

NO ASSURANCE OF SUCCESS OR PROFITABILITY.

There is no assurance  that INTREorg will ever operate  profitably.  There is no assurance  that it will  generate  revenues  or  profits,  or that the  value of INTREorg's shares will be increased thereby.

                    RISK FACTORS RELATING TO THE COMMON STOCK

HIGHLY SPECULATIVE NATURE OF INVESTMENT

Due to the highly  speculative nature of INTREorg's  business,  Investors should not invest unless they can financially bear the loss of their entire investment. Investment should,  therefore, be limited to that portion of discretionary funds
not needed  for normal  living  purposes  or for  reserves  for  disability  and retirement.


THERE ARE LIMITED TRADING MARKETS FOR INTREorg'S COMMON STOCK,  THEREBY LIMITING A SHAREHOLDERS' OPPORTUNITY TO SELL SUCH COMMON STOCK.

Currently, only a limited trading market exists for INTREorg's common stock. The common stock trades on the Over the Counter  Bulletin Board  ("OTCBB") under the symbol  "IORG."  The  OTCBB is a  limited  market  and  subject  to  substantial
restrictions   and   limitations  in  comparison  to  the  NASDAQ  system.    Any broker/dealer  that makes a market in the  Company's  stock or other person that buys or sells INTREorg  stock could have a significant  influence over its price
at any given time. INTREorg cannot assure its shareholders that a greater market for  INTREorg's  common  stock will be  sustained.  There is no  assurance  that INTREorg's  common stock will have any greater liquidity than shares that do not
trade on a public market.  A shareholder  may be required to retain their shares for an indefinite  period of time, and may not be able to liquidate their shares in the event of an emergency or for any other reasons.

THE REGULATION OF PENNY STOCKS BY SEC AND FINRA MAY  DISCOURAGE THE  TRADABILITY OF INTREorg'S SECURITIES.

INTREorg is a "penny stock" company.  INTREorg securities currently trade on the OTCBB and will be subject to a  Securities  and  Exchange  Commission  rule that imposes special sales practice  requirements upon  broker-dealers  who sell such
securities to persons other than established  customers or accredited investors.   For purposes of the rule, the phrase  "accredited  investors"  means, in general terms, institutions with assets in excess of $5,000,000, or individuals having a net worth in excess of  $1,000,000  or  having  an annual  income  that  exceeds $200,000 (or that, when combined with a spouse's income, exceeds $300,000).  For transactions  covered  by the  rule,  the  broker-dealer  must  make  a  special suitability  determination for the purchaser and receive the purchaser's written agreement to the transaction  prior to the sale.  Effectively,  this discourages broker-dealers  from executing  trades in penny stocks.  Consequently,  the rule will affect the ability of purchasers in this offering to sell their  securities in any  market  that might  develop  therefore  because  it  imposes  additional regulatory burdens on penny stock transactions.
 
 
 
8

 

In addition,  the  Securities  and Exchange  Commission  has adopted a number of rules to regulate "penny stocks". Such rules include Rules 3a51-1, 15g-1, 15g-2, 15g-3,  15g-4,  15g-5, 15g-6, 15g-7, and 15g-9 under the Securities and Exchange Act of 1934, as amended.  Because INTREorg securities  constitute "penny stocks" within the  meaning of the  rules,  the rules  would  apply to  INTREorg  and to INTREorg  securities.  The rules will  further  affect the  ability of owners of shares to sell  INTREorg  securities  in any market that might  develop for them because it imposes additional regulatory burdens on penny stock transactions.

Shareholders  should  be  aware  that,  according  to  Securities  and  Exchange Commission,  the  market  for penny  stocks has  suffered  in recent  years from patterns of fraud and abuse. Such patterns include (i) control of the market for the  security  by one or a few  broker-dealers  that are  often  related  to the promoter or issuer; (ii) manipulation of prices through prearranged  matching of purchases and sales and false and misleading press releases; (iii) "boiler room"
practices   involving   high-pressure   sales  tactics  and  unrealistic   price projections  by  inexperienced  sales persons;  (iv)  excessive and  undisclosed bid-ask  differentials  and  markups  by  selling  broker-dealers;  and  (v) the wholesale dumping of the same securities by promoters and  broker-dealers  after prices have been manipulated to a desired consequent  investor losses.  INTREorg management is aware of the abuses that have occurred  historically  in the penny stock market.  Although  INTREorg does not expect to be in a position to dictate the behavior of the market or of  broker-dealers  who participate in the market, management  will strive within the confines of practical  limitations to prevent the  described   patterns  from  being  established  with  respect  to  INTREorg securities.

NO FORESEEABLE DIVIDENDS

The Company has not paid  dividends on its Common Stock and does not  anticipate paying such dividends in the foreseeable future.

RULE 144 SALES IN THE  FUTURE MAY HAVE A  DEPRESSIVE  EFFECT ON  INTREorg  STOCK
PRICE.

All of the  outstanding  shares of common  stock  are held by  INTREorg  present officers,  directors,  and affiliate  stockholders  as  "restricted  securities" within the meaning of Rule 144 under the Securities Act of 1933, as amended.  As
restricted  Shares,  these  shares may be resold only  pursuant to an  effective registration statement or under the requirements of Rule 144 or other applicable exemptions  from  registration  under the Act and as required  under  applicable
state  securities  laws. Rule 144 provides in essence that a person who has held restricted  securities for six months may, under certain conditions,  sell every three months, in brokerage transactions, a number of shares that does not exceed
the  greater of 1.0% of a  company's  outstanding  common  stock or the  average weekly trading volume during the four calendar weeks prior to the sale. There is no  limit  on  the  amount  of  restricted  securities  that  may be  sold  by a
non-affiliate after the owner has held the restricted securities for a period of 6 months.  A sale under Rule 144 or under any other  exemption  from the Act, if available,  or pursuant to subsequent  registration of shares of common stock of
present stockholders,  may have a depressive effect upon the price of the common stock in any market that may develop.


 
9

 

INTREorg  INVESTORS  MAY SUFFER  FUTURE  DILUTION DUE TO ISSUANCES OF SHARES FOR VARIOUS CONSIDERATIONS IN THE FUTURE.

There may be substantial dilution to INTREorg shareholders as a result of future decisions of the Board to issue shares  without  shareholder  approval for cash, services, or acquisitions.

INTREorg COMMON STOCK MAY BE VOLATILE,  WHICH  SUBSTANTIALLY  INCREASES THE RISK THAT THE INVESTOR MAY NOT BE ABLE TO SELL THEIR SECURITIES AT OR ABOVE THE PRICE THAT THE INVESTOR PAID FOR THE SECURITY.

Because of the limited trading market for INTREorg's common stock and because of the possible price  volatility,  the investor may not be able to sell its shares of common  stock when the investor  desires to do so. The  inability to sell the
investors  securities in a rapidly declining market may  substantially  increase the risk of loss because of such  illiquidity and because the price for INTREorg shares may suffer greater declines because of INTREorg's price volatility.

The price of  INTREorg's  common  stock  that will  prevail in the market may be higher or lower than the price the investor may pay.  Certain  factors,  some of which are beyond  INTREorg's  control,  that may cause INTREorg's share price to
fluctuate significantly include, but are not limited to the following:

     o    Variations in INTREorg's quarterly operating results;

     o    Loss  of  a  key  relationship  or  failure  to  complete  significant  transactions;

     o    Additions or departures of key personnel; and

     o    Fluctuations in stock market price and volume.

Additionally,   in  recent   years  the  stock   market  in  general,   and  the over-the-counter  markets in  particular,  have  experienced  extreme  price and volume  fluctuations.  In  some  cases,  these  fluctuations  are  unrelated  or disproportionate to the operating  performance of the underlying company.  These market and industry factors may materially and adversely affect INTREorg's stock price,  regardless  of its  operating  performance.  In the past,  class  action litigation  often  has been  brought  against  companies  following  periods  of volatility  in the market price of those  companies  common  stock.  If INTREorg becomes  involved in this type of litigation  in the future,  it could result in substantial  costs and diversion of management  attention and  resources,  which could have a further  negative  effect on the investor's  investment in INTREorg stock.

                        RISK FACTORS RELATING TO COMPANY

LIMITED LIQUIDITY CASH FLOWS AND CAPITAL RESOURCES

INTREorg has minimum  liquid  assets at December  31, 2009,  and will be reliant upon stock offerings to fund any kind of operations.  The only capital resources of INTREorg is its common stock.

The  monies  raised  by any  private  offering  may  not be  sufficient  for the continued proposed operations of INTREorg. There is no assurance that additional monies or financing will be available in the future or, if available, will be at terms favorable to INTREorg.

INTREorg may borrow money to finance its future operations, although it does not currently  contemplate  doing so. Any such  borrowing  will increase the risk of loss to the investor in the event that INTREorg is unsuccessful in repaying such
loans.

INTREorg has achieved no cash flows to date.


 
10

 
 
ITEM 1B. UNRESOLVED STAFF COMMENTS

Not Applicable.


ITEM 2. PROPERTIES

The Company's  principal  mailing address is 501 Trophy Lake Dr., Suite 314, PMB 106, Trophy Club, Texas 76262,  and the telephone number is (817) 491-8611.  The Company does not currently pay monthly rent for the use of this mailing address.
The  Company  will  office  out of the  homes of its  executive  officers  until additional capital is raised.

ITEM 3. LEGAL PROCEEDINGS

INTREorg anticipates that it will from time to time become subject to claims and legal proceedings arising in the ordinary course of business. It is not feasible to predict the outcome of any such  proceedings  and INTREorg  cannot assure you
that  their  ultimate  disposition  will not have a material  adverse  effect on INTREorg business, financial condition, cash flows or results of operations.

ITEM 4. REMOVED AND RESERVED


                                     PART II


ITEM 5. MARKET FOR REGISTRANT'S  COMMON EQUITY,  RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Market Information

There is a limited  public  trading  market for the common stock.  The Company's symbol is "IORG" on the Over The  Counter  Bulletin  Board.  The  Company  began trading on the Over The Counter Bulletin Board in August 2008.
 
 
 
HIGH
   
LOW
 
Quarter Ended:
           
             
March 31, 2009
  $ 1.15     $ 0.30  
June 30, 2009
  $ 0.40     $ 0.36  
September 30, 2009
  $ 0.47     $ 0.15  
December 31, 2009
  $ 0.74     $ 0.17  
                 
Quarter Ended:
               
December 31, 2008
  $ 1.15     $ 1.05  
September 30, 2008
  $ 1.01     $ 1.01  
               
Holders

There are  approximately  118 holders of record of INTREorg  common  stock as of December 31, 2009.

                                    
 
11

 
 
Dividend Policy

Holders of INTREorg  common stock are entitled to receive such  dividends as may be declared by INTREorg  board of  directors.  INTREorg has not declared or paid any  dividends on INTREorg  common  shares and it does not plan on declaring any dividends in the near future.  INTREorg  currently  intends to use all available funds to finance the operation and expansion of its business.

Recent Sales of Unregistered Securities

We made the following  unregistered sales of its securities from January 1, 2009 through December 31, 2009.

DATE OF SALE
TITLE OF SECURITIES
NO. OF SHARES
CONSIDERATION
CLASS OF PURCHASER
         
9/30/2009
Common shares
15,000
$3,750 in services
Business associate

Exemption From Registration Claimed

All of the  sales  by  INTREorg  of its  unregistered  securities  were  made in reliance upon Section 4(2) of the  Securities Act of 1933, as amended (the "1933 Act"). The entity listed above that purchased the unregistered securities was an existing  shareholder,   known  to  the  Company  and  its  management,  through pre-existing business relationships,  as a long standing business associate. The entity was provided access to all material information,  which it requested, and
all information  necessary to verify such information and was afforded access to InTREorg's  management in connection  with the  purchases.  The purchaser of the unregistered  securities  acquired such securities for investment and not with a
view  toward  distribution,  acknowledging  such  intent  to  the  Company.  All certificates  or  agreements  representing  such  securities  that  were  issued contained restrictive legends,  prohibiting further transfer of the certificates or agreements representing such securities, without such securities either being first registered or otherwise exempt from  registration in any further resale or disposition.

Issuer Purchases of Equity Securities

INTREorg did not repurchase any shares of its common stock during the year ended December 31, 2009.

ITEM 6. SELECTED FINANCIAL DATA

Not applicable.


ITEM 7. MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

CAUTIONARY AND FORWARD LOOKING STATEMENTS

In  addition  to  statements  of  historical   fact,  this  Form  10-K  contains forward-looking  statements.  The  presentation  of future  aspects of  INTREorg Systems,  Inc.  ("INTREorg  Systems",  the "Company" or "issuer") found in these
statements  is subject to a number of risks and  uncertainties  that could cause actual results to differ  materially  from those  reflected in such  statements.   Readers  are  cautioned  not to place undue  reliance  on these  forward-looking statements,  which  reflect  management's  analysis  only as of the date hereof.  Without limiting the generality of the foregoing,  words such as "may",  "will", "expect",  "believe",  "anticipate",   "intend",  or  "could"  or  the  negative
variations   thereof  or  comparable   terminology   are  intended  to  identifyforward-looking statements.
 
 
 
12

 

These forward-looking statements are subject to numerous assumptions,  risks and uncertainties  that may cause INTREorg  Systems' actual results to be materially different  from any future results  expressed or implied by INTREorg  Systems in
those  statements.  Important  facts that could  prevent  INTREorg  Systems from achieving any stated goals include, but are not limited to, the following:

Some of these risks might include, but are not limited to, the following:

     a)   Limited or no trading of the company shares;
     b)   volatility or decline of the Company's stock price;
     c)   potential fluctuation in quarterly results;
     d)   failure of the Company to earn revenues or profits;
     e)   inadequate  capital to continue or expand its  business,  inability to raise additional capital or financing to implement its business plans;
     f)   failure to commercialize its products and services or to make sales;
     g)   rapid and significant changes in markets;
     h)   litigation with or legal claims and allegations by outside parties;
     i)   insufficient revenues to cover operating costs.

There is no assurance that the Company will be  profitable,  the Company may not be able to successfully develop, manage or market its products and services, the Company may not be able to attract or retain qualified executives and technology
personnel,  the Company's products and services may become obsolete,  government regulation may hinder the Company's business, additional dilution in outstanding stock ownership may be incurred due to the issuance of more shares, warrants and stock options,  or the exercise of warrants and stock  options,  and other risks inherent in the Company's businesses.

The Company  undertakes no obligation to publicly  revise these  forward-looking statements to reflect events or circumstances  that arise after the date hereof. Readers should  carefully  review the factors  described in other  documents the
Company  files from time to time with the  Securities  and Exchange  Commission, including  the  Quarterly  Reports on Form 10-Q and Annual  Reports on Form 10-K filed by the Company and any Current Reports on Form 8-K filed by the Company.

Business Overview

INTREorg  Systems Inc.  ("INTREorg"  or "The  Company") has developed a business plan to become an  integrated  provider  of  outsourced  information  technology ("IT") services, Software as a Service (SaaS) applications,  enterprise support,
and  business  process  outsourcing   services.   INTREorg's  target  market  is publicly-traded,  emerging  growth  companies  in need of  rapidly  expanded  IT services. Primarily the Company intends to focus on publicly traded companies to
allow  it  to  evaluate  the  financial   position  and  business  situation  of prospective  clients due to the inherent  transparency  required  with  publicly traded firms.

The  primary  focus of the  Company  is to  provide  outsourced,  day-to-day  IT operations to emerging companies in need of state-of-the-art IT services,  tools and  processes.  INTREorg  focuses  on  providing  IT  services  and  systems to
emerging,  technologically  sophisticated companies that have grown beyond their ability to manage their network.  Additionally,  the Company  intends to provide infrastructure  services and  products to meet the specific  demands of INTREorg
customers. All of the Company's services will be offered individually or bundled as a comprehensive solution.

                                    
 
 
13

 
 
During the year ended  December  31,  2009,  the Company  focused its efforts on maintaining its reporting status with the SEC and identify  potential  financing opportunities.

In the  continuance  of  INTREorg's  business  operations  it does not intend to purchase  or sell any  significant  assets  and the  Company  does not  expect a significant change in the number of its employees.

The INTREorg is dependent on raising additional equity and/or,  debt to fund any negotiated  settlements  with its  outstanding  creditors and meet the Company's ongoing operating expenses.  There is no assurance that INTREorg will be able to
raise the necessary equity and/or debt that it will need to be able to negotiate acceptable  settlements  with its  outstanding  creditors  or fund  its  ongoing operating expenses.  INTREorg cannot make any assurances that it will be able to raise funds through such activities.

In addition, the United States and the global business community is experiencing severe  instability in the commercial  and investment  banking  systems which is likely to continue to have far-reaching  effects on the economic activity in the
country for an indeterminable  period. The long-term impact on the United States economy and the  Company's  operating  activities  and ability to raise  capital cannot be predicted at this time, but may be substantial.

RESULTS OF OPERATIONS

For the Year Ended December 31, 2009 Compared to December 31, 2008

During the year ended  December  31,  2009,  the Company did not  recognize  any revenues from its  operational  activities.  During the year ended  December 31, 2008, the Company recognized $750 in revenue.

During the year ended  December  31,  2009,  the  Company  incurred  operational expenses  of $97,093  compared to $245,148  during the year ended  December  31, 2008.  The  decrease of $147,305  was a result of the  decreases  of $121,088 in
consulting  expenses  combined  with a $12,750  decrease in  directors'  fees, a $13,101  decrease  in  traveling  expenses  and a  $9,612  decrease  in rent and utilities  during the year ended  December 31, 2009. The decreases were a result of a pull back in general and administrative expenses as the Company focused its efforts on financing efforts to support operations.

During the year ended December 31, 2009, the Company recognized interest expense of $61,882 compared to $48,803 during the year ended December 31, 2008.

During the year ended  December 31, 2009,  the Company  recognized a net loss of $158,975  compared to a net loss of $293,201  during the year ended December 31, 2008. The $134,226  decrease was a result of the $147,305  decrease in operating
expenses offset by a $13,079 increase in interest expense, as discussed above.

During the year ended December 31, 2009, the Company had a net loss of $0.02 per share compared to $0.03 per share for the year ended December 31, 2008.

LIQUIDITY

At December 31, 2009, the Company total current assets of $13, consisting solely of cash, and current  liabilities of $1,385,738.  At December 31, 2009,  current liabilities exceed current assets by $1,385,725.

Net cash used in operating  activities  during the year ended  December 31, 2009 was $3,370,  compared to net cash used in operating  activities  during the year ended December 31, 2008 of $83,537. During the year ended December 31, 2009, the
net cash used  represented  a net loss of $158,975,  which was adjusted for such non-cash  items of $3,750 in stock issued for services,  $9,828 in  depreciation expense, $7,261 in doubtful accounts and $1,000 reserve for investment.
 
 
 
14

 

During the year ended  December 31, 2008,  the net cash used  represented  a net loss of $293,201 and was not adjusted for any non-cash items.

During the years ended  December  31, 2009 and 2008,  the Company did not use or receive cash from its investing activities.

During the year  ended  December  31,  2009,  the  Company  received  $53 in its financing  activities , as a result of a cash over draft.  During the year ended December 31, 2008, the Company  received  $87,325 from its financing  activities consisting of the receipt of proceeds of $73,500 from notes payable.

During the year ended  December  31,  2008,  the Company has paid  approximately $5,000 in bridge  loans.  Prior to  January  1,  2008,  the  Company  had raised $494,386 to be able to continue  operations.  During the year ended December 31, 2008,  the Company raised an additional  $73,500 in cash to support  operations.  These  loans  carry  interest  rates from 6% to 10% per annum and have due dates between 90 and 180 days.  The  providers of these loans were also given  "equity
kickers" of stock in the amount of 1 share of common  stock for each one cent of loan amount.  At renewal time the providers  were given an equal amount of stock while the interest was accrued.

During the year ended December 31, 2008, the Company,  pursuant to a vote of the stockholders approved the conversion of the 247,100 shares of preferred stock to 247,100  shares of restricted  common stock was approved.  The preferred  shares
were convertible at a rate of 1 share of preferred for 1 share for common stock, at the discretion of the  shareholder  or the Company.  The Company does not pay dividends on and there are no dividend preferences on its preferred shares.

During the year ended December 31, 2009, the Company issued 15,000 shares of its common stock for services rendered valued at $3,750.

On October 6, 2009 the Company entered into an investment banking agreement. The terms of the  agreement  are such that for any money they  raise the  Company is obligated to an 8%  commission  in cash and a 2% expenses  allowance in cash and
10% additional in common stock at a 110% of market price over a 5 day average.

Going Concern

The  independent  registered  public  accounting  firm's report on the Company's financial statements as of December 31, 2009 and 2008 includes a "going concern" explanatory  paragraph  that  describes  substantial  doubt about the  Company's
ability to continue as a going concern.

INTREorg is  dependent on raising  additional  equity  and/or,  debt to fund any negotiated  settlements  with its  outstanding  creditors  and meet its  ongoing operating expenses. There is no assurance that the Company will be able to raise
the necessary equity and/or debt that INTREorg will need to be able to negotiate acceptable  settlements  with its  outstanding  creditors  or fund  its  ongoing operating expenses. INTREorg cannot make any assurances that the Company will be
able to raise funds through such activities.

Critical Accounting Policies

INTREorg  has  identified  the  policies  below  as  critical  to  its  business operations and the understanding of the Company's  results from operations.  The impact and any  associated  risks  related to these  policies  on the  Company's
business operations is discussed throughout Management's Discussion and Analysis of Financial  Conditions  and Results of Operations  where such policies  affect INTREorg's reported and expected financial results. For a detailed discussion on
the application of these and other accounting policies,  see Note 1 in the Notes to the Financial  Statements beginning on page F-__ for the years ended December 31, 2009 and 2008.
 
 
 
15

 

Use of Estimates

The preparation of financial  statements in conformity  with generally  accepted accounting principles requires management to make estimates and assumptions that affect the  reported  amounts  of assets  and  liabilities,  and  disclosure  of
contingent  assets and  liabilities at the date of the financial  statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.

Net Loss Per Share

Net loss per share is based on the  weighted  average  number  of common  shares outstanding during the period. This number has not been adjusted for outstanding options since the average would be antidilutive.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable.


ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The audited financial  statements of INTREorg  Systems,  Inc. for the year ended December 31, 2009, period from November 3, 2003 (inception) through December 31, 2009, appear as pages F-1 through F-8.


ITEM  9.  CHANGES  IN AND  DISAGREEMENTS  WITH  ACCOUNTANTS  ON  ACCOUNTING  AND FINANCIAL DISCLOSURE

Not applicable.


ITEM 9A. CONTROLS AND PROCEDURES

Disclosures Controls and Procedures

We have adopted and maintain disclosure controls and procedures (as such term is defined in Rules  13a-15(e) and 15d-15(e)) under the Securities  Exchange Act of 1934,  as  amended  (the  "Exchange  Act")  that are  designed  to  ensure  that
information  required to be disclosed in our reports  under the Exchange Act, is recorded,  processed,  summarized and reported within the time periods  required under  the  SEC's  rules and forms  and that the  information  is  gathered  and
communicated to our management, including our Chief Executive Officer (Principal Executive Officer) and Chief Financial Officer (Principal Financial Officer), as appropriate, to allow for timely decisions regarding required disclosure.

As required by SEC Rule 15d-15(b),  our Chief  Executive  Officer carried out an evaluation  under the supervision and with the  participation of our management, of the effectiveness of the design and operation of our disclosure  controls and
procedures  pursuant  to  Exchange  Act Rule  15d-14 as of the end of the period covered by this report.
 
 
 
16

 

The Company,  under the supervision and with the  participation of the Company's management,  including  the  Company's  Chief  Executive  Officer  and the Chief Financial  Officer,  performed an evaluation of the  effectiveness of the design
and operation of the Company's disclosure controls and procedures as of December 31, 2009.  Based on that evaluation,  the Chief Executive  Officer and the Chief Financial  Officer  concluded  that  the  Company's   disclosure   controls  and
procedures were effective of December 31, 2009.


MANAGEMENT'S ANNUAL REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING.

Our management is responsible for establishing and maintaining adequate internal control over financial  reporting for the company in accordance  with as defined in Rules  13a-15(f) and 15d-15(f)  under the Exchange Act. Our internal  control
over financial  reporting is designed to provide reasonable  assurance regarding the reliability of  financial  reporting and  the preparation of  financial statements for external purposes  in  accordance  with  generally accepted accounting  principles.  Our internal control over financial  reporting includes those policies and procedures that:
 
(i)  pertain to the  maintenance  of records that,  in  reasonable  detail, accurately and fairly reflect the transactions and dispositions of our assets;
 
(ii) provide  reasonable   assurance  that  transactions  are  recorded  as necessary to permit preparation of financial  statements in accordance with generally accepted accounting  principles,  and that our receipts and expenditures  are being made on in accordance with  authorizations of our management and directors; and
 
(iii)provide reasonable  assurance regarding prevention or timely detection of  unauthorized  acquisition,  use or  disposition of our assets that could have a material effect on our financial statements.

Because of its inherent  limitations,  internal control over financial reporting may not prevent or detect misstatements.  Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become
inadequate  because of changes in  conditions,  or that the degree of compliance with the policies or procedures may deteriorate.

Management's  assessment  of  the  effectiveness  of the  registrant's  internal control over  financial  reporting is as of the year ended December 31, 2009. In making this assessment,  Management used the criteria set forth by the Committee of  Sponsoring  Organizations  of the  Treadway  Commission  (COSO) in  Internal Control--Integrated  Framework.  Based on this assessment, our management has concluded that as of December 31, 2009, our internal control over financial reporting was effective to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. generally accepted accounting principles. Our management has not identified any,  current material weaknesses,  considering the nature and extent of the Company's current operations  and any  risks  or  errors  in  financial  reporting  under  current operations.

This  annual  report  does not include an  attestation  report of the  Company's registered  public  accounting  firm regarding  internal  control over financial reporting.  Management's  report was not subject to attestation by the Company's
registered  public  accounting  firm pursuant to temporary rules of the SEC that permit the Company to provide only management's report in this annual report.

There  was no change in our  internal  control  over  financial  reporting  that occurred  during our fourth fiscal quarter that has  materially affected,  or is reasonably  likely to materially  affect,  our internal control over financial reporting.
 
 
 
17

 

ITEM 9B. OTHER INFORMATION

Not applicable.


                                    PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

The following table sets forth  information as to persons who currently serve as INTREorg  directors or executive  officers,  including their ages as of December 31, 2009.
 
Name
Age
Position
     
Russell K. Boyd
38
Chief Executive Officer, President and Chairman of the Board
   
 
Malcolm C. Davenport, V
58
Director
     
Redgie T. Green
57
Director

INTREorg  officers are elected by the board of  directors  at the first  meeting after each annual meeting of INTREorg  shareholders  and hold office until their successors are duly elected and qualified under INTREorg bylaws.

The  directors  named  above will  serve  until the next  annual  meeting of the Company's stockholders. Thereafter, directors will be elected for one-year terms at the annual stockholders'  meeting.  Officers will hold their positions at the
pleasure of the board of directors absent any employment agreement.  There is no arrangement or  understanding  between the directors and officers of the Company and any other  person  pursuant to which any director or officer was or is to be
selected as a director or officer.

The  directors  and  officers  of the  Company  will not devote full time to the Company's affairs, but will devote sufficient time (up to 20 hours weekly) until the  operations  and  working  capital of the  Company  require  more time to be devoted.

Biographical Information

Management will not devote full time to the Company's  affairs,  but will devote sufficient  time until the operations and working capital of the Company require more time to be devoted  and any time spent  will be  devoted to  screening  and
assessing and, if warranted, negotiating to acquire business opportunities.

Russell K. Boyd,  age 38, has served as Chairman of the Board of  Directors  for the Company  since  November of 2004.  In April 2009, he was appointed the Chief Executive Officer and acting principal  accounting officer. He has experience in
the electronic  data processing and consulting  industries  leading and managing project delivery teams. He currently independently contracts his services to the government  sector.  Previous to this, Mr. Boyd was employed by Electronic  Data
Systems  (EDS)  and for a seven  year  period  worked on a  variety  of  service delivery and consulting  projects.  Prior to EDS, Mr. Boyd's career  consists of progressively broader roles and responsibilities with TIER Technologies, Inc. He holds a Bachelor of Arts Degree in Computer  Information  Systems from  Tarleton State University.
 
 
 
18

 

Malcolm C.  Davenport,  V, age 58, was  appointed  a Director  of the Company on April 21, 2009.  Mr.  Davenport  previously  served as a director of ITC Holding Company,  Inc.,  a  West  Point,  Georgia-based  private  technology  investment
company. Some of the companies which it founded and grew include Powertel, Inc., (acquired  by Deutche  Telkom for $5.89  billion +  assumption  of $1.2  billion debt), Mindspring, Inc. (merged with EarthLink {NASDAQ: ELNK}), E-Company Store,
Inc., PreSolutions,  Inc., ASYNC, Inc., and Knology, Inc. {symbol NASDAQ: KNOL}.  He  also  served  as a  director  for ITC  DeltaCom,  Inc.  {OTC  BB:  ITCD},  a Competitive Local Exchange Carrier (CLEC) company that is regionally significant
in both the fiber and direct long distance sale business in the southeast United States.  Mr.  Davenport  is  licensed  and active as an Attorney in the State of Georgia,  and holds an inactive  license in Alabama as both an Attorney and as a
Certified Public  Accountant.  He also serves as a Director of LeanStream Media, Inc.

Redgie  Green,  age 57, is  Director  of  INTREorg  Services,  Inc.  He has been Secretary  and Director of Sun River  Energy,  Inc.  since 1998 and in September 2009, became the Chief Executive Officer of Sun River Energy, Inc. Mr. Green has been co-owner and operator of Green's B&R  Enterprises,  a wholesale donut baker since  1983.  He has been an active  investor  in small  capital  and  high-tech adventures since 1987. Mr. Green was a director of Colorado Gold & Silver,  Inc. in 2000. He was a director for Houston  Operating Company during 2004. He served as a director for Mountains West Exploration,  Inc. in 2005. He is a Director of Concord Ventures, Inc. (2006) and ASPI Inc. (2006 - 2009) and has been appointed as an officer and director of Captech Financial,  Inc. in May 2006. He served as a director of Baymark Technologies, Inc. 2005-2006.

Annual Meeting

The annual meeting of INTREorg  stockholders  is expected to be held at a future date as soon as practicable.  This will be an annual meeting of stockholders for the election of  directors.  The annual  meeting will be held at the  INTREorg's
principal office or at such other place as permitted by the laws of the State of Texas  and on such  date as may be  fixed  from  time to time by  resolution  of INTREorg's board of directors.

Committees of the Board of Directors

INTREorg is managed under the  direction of its board of  directors.  INTREorg's board of directors plans to establish an audit committee as soon as practicable.

Executive Committee

INTREorg does not have an executive committee.

Audit Committee

INTREorg  currently  does not have an audit  committee.  When formed,  the audit committee  will  be  comprised  solely  of  directors  who are  independent  and financially  literate,  as required by the  Securities  Exchange Act of 1934, as amended,  which INTREorg refers to as the Securities  Exchange Act. At least one member of the committee  will have  accounting or related  financial  management expertise.

Previous "Blank Check" or "Shell" Company Involvement

Management of INTREorg has not been involved in prior private  "blank-check"  or "shell" companies.

Conflicts of Interest

The officers and directors of the Company will not devote more than a portion of their time to the affairs of the Company.  There will be occasions when the time requirements of the Company's  business conflict with the demands of their other
business and investment activities.  Such conflicts may require that the Company attempt to employ additional personnel.  There is no assurance that the services of such  persons  will be  available  or that they can be  obtained  upon  terms
favorable to the Company.
 
 
 
19

 

Conflicts of Interest - General.

Certain of the  officers and  directors  of the Company may be directors  and/or principal  shareholders of other companies and, therefore,  could face conflicts of interest with respect to potential  acquisitions.  In addition,  officers and directors  of the Company may in the future  participate  in business  ventures, which could be deemed to compete directly with the Company. Additional conflicts of interest and non-arms length transactions may also arise in the future in the event the Company's  officers or directors are involved in the management of any firm with which the Company transacts business. The Company's Board of Directors has  adopted  a  policy  that the  Company  will  not  seek a  merger  with,  or acquisition of, any entity in which  management  serve as officers or directors, or in which they or their  family  members own or hold a  controlling  ownership interest. Although the Board of Directors could elect to change this policy, the Board of  Directors  has no  present  intention  to do so. In  addition,  if the Company and other companies with which the Company's  officers and directors are affiliated  both desire to take advantage of a potential  business  opportunity, then the Board of Directors has agreed that said opportunity should be available to each such company in the order in which such  companies  registered or became current in the filing of annual  reports  under the Exchange Act  subsequent  to January 1, 1997.


ITEM 11. EXECUTIVE COMPENSATION

The  following  table sets forth the  compensation  paid to  officers  and board members  during the fiscal years ended  December 31,  2009,  2008 and 2007.  The table sets forth this  information for INTREorg,  including  salary,  bonus, and certain other compensation to the Board members and named executive officers for the past three fiscal  years and  includes all Board  Members and Officers as of December 31, 2009.
 
SUMMARY EXECUTIVES COMPENSATION TABLE
 
                              Non-equity     Non-qualified              
                              incentive     deferred              
                  Stock     Option     plan     compensation     All other        
      Salary     Bonus     awards     awards     compensation     earnings     compensation     Total  
Name & Position   Year   ($)     ($)     ($)     ($)     ($)     ($)     ($)     ($)  
                                                   
Russell K. Boyd,
                                                 
Chief Executive
2009
    0       0       0       0       0       0       0       0  
Officer and
2008
    0       0       0       0       0       0       0       0  
President
2007
    0       0       0       0       0       0       0       0  
                                                                   
Denis L. Iler,
2009
    0       0        $       0       0       0        $        $  
Former President
2008
    0       0       $1,000       0               $250       0       $1,250  
and CEO (1)
2007
    0       0       0       0       0       0       0       0  
                                                                   
Austin Andres,
2009
    0       0        $       0       0       0       0          
Former COO (2)
2008
    0       0       $1,000       0       0       0       0       $1,000  
 
2007
            0       0       0       0       0       0          
                                                                   
Jeff Huitt, Former
2009
    0       0       0       0       0       0       0        $  
CFO (3)
2008
    $  9,800       0       0       0       0       0       0       $9,800  
 
2007
    $15,900       0       0       0       0       0       0       $15,900  


 
 
20

 

 
(1)  Mr.  Denis Iler  resigned as a director and officer of the Company in March 2009.  During the year ended December 31, 2009, he received  100,000 shares of common stock valued at $1,000 for his services as a director.
 
(2)  Mr.  Andres  resigned  as an officer of the  Company in April 2009 and as a Director on May 26,  2009.  During the year ended  December  31,  2008,  he received  100,000 shares of the Company's common stock valued at $1,000 for his consulting services as an officer of the Company.
 
(3)  Mr.  Huitt  resigned  as an officer  of the  Company in April 2009 and as a Director on May 7, 2009.  The Company  paid Huitt  Consulting,  LLC $50 per  hour for work performed by PersonNameJeff  Huitt as the Company's contract CFO.  During the year ended  December 30, 2008,  the Company paid Mr. Huitt cash of $2,850 and accrued $6,950 in connection with his services.


                    OPTION/SAR GRANTS IN THE LAST FISCAL YEAR

INTREorg does not have a stock option plan as of December 31, 2009. There was no grant of stock options to the Chief Executive  Officer and other named executive officers during the fiscal year ended December 31, 2009.

 
Employment  Agreements  and  Termination  of  Employment  and  Change-In-Control Arrangements

None  of the  Company's  officers,  directors,  advisors,  or key  employees  is currently party to employment  agreements  with the Company.  The Company has no pension,  health, annuity,  bonus,  insurance,  stock options, profit sharing or
similar benefit plans;  however, the Company may adopt such plans in the future.  There are presently no personal benefits available for directors,  officers,  or employees of the Company.

Compensation Committee Interlocks and Insider Participation

The  INTREorg  board  of  directors  in its  entirety  acts as the  compensation committee for INTREorg.  Mr. Russell K. Boyd is the Chief Executive  Officer and Chairman of the Company.

Stock Option Plan

The Company does not have a stock option plan at the time of this filing.

Director Compensation

The Company pays $500 for Directors fees for meeting attendance,  unless the fee is waived. The Company's directors waived the fee during the year ended December 31, 2009.



 
21

 


The following table sets forth certain information concerning  compensation paid to the Company's directors during the year ended December 31, 2009:
 
       Fees            Non-equity  
Nonqualified
       
       earned or            incentive    deferred        
       paid in    Stock    Option    plan    compensation    All other    
       cash    awards    awards    compensation    earnings    compensation     Total
Name        ($)    ($)    ($)    ($)    ($)    ($)    ($)
                               
Russell K. Boyd
    $-0-   $   $-0-   $-0-   $-0-   $-0-   $
                               
Malcolm C.Davenport, V
    $-0-   $   $-0-   $-0-   $-0-   $-0-   $
                               
Redgie T. Green
    $-0-   $   $-0-   $-0-   $-0-   $-0-   $
                               
Denis L. Iler(1)
    $-0-   $   $-0-   $-0-   $-0-   $   $
                               
Austin Andres(2)
    $-0-   $-0-   $-0-   $-0-   $-0-   $   $
                               
Jeff Huitt(3)
    $-0-   $-0-   $-0-   $-0-   $-0-   $   $
                               
Wesley F. Whiting (4)
    $-0-   $-0-   $-0-   $-0-   $-0-   $-0-  
$-0-


(1)  Mr.  Denis Iler  resigned as a director  and officer of the Company in March 2009.
(2)  Mr. Andres  resigned as an officer of the Company in April 2009 and as a Director on May 26, 2009.
(3)  Mr. Huitt resigned as an officer of the Company in April 2009 and as a Director on May 7, 2009.
(4)  Wesley F. Whiting has resigned as Director effective January 8, 2009.

Limitation on Liability and Indemnification

INTREorg  is a Texas  corporation.  The Texas  Business  Corporation  Act (TBCA) provides that the articles of incorporation of a Texas corporation may contain a provision  eliminating  or limiting the personal  liability of a director to the corporation  or its  shareholders  for monetary  damages for breach of fiduciary duty as a director,  except that any such  provision  may not eliminate or limit the liability of a director (i) for any breach of the director's duty of loyalty to the corporation or its shareholders, (ii) acts or omissions not in good faith or which involve  intentional  misconduct or a knowing  violation of law,  (iii) acts  specified  in  TBCA  (concerning  unlawful  distributions),  or  (iv)  any transaction  from which a director  directly or  indirectly  derived an improper personal  benefit.  INTREorg's  articles  of  incorporation  contain a provision eliminating  the  personal  liability  of  directors  to  INTREorg  or  INTREorg shareholders for monetary damages to the fullest extent provided by the TBCA.

The TBCA  provides  that a Texas  corporation  must  indemnify  a person who was wholly  successful,  on the merits or otherwise,  in defense of any  threatened, pending,  or completed  action,  suit, or proceeding,  whether civil,  criminal,
administrative,   or   investigative   and   whether   formal  or   informal  (a "Proceeding"),  in which he or she was a party  because  the  person is or was a director,  against reasonable expenses incurred by him or her in connection with the Proceeding,  unless such indemnity is limited by the corporation's  articles of  incorporation.  INTREorg  articles of  incorporation do not contain any such limitation.
 
 
 
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The TBCA provides that a Texas  corporation  may indemnify a person made a party to a Proceeding  because the person is or was a director  against any obligation incurred  with respect to a Proceeding to pay a judgment,  settlement,  penalty,
fine (including an excise tax assessed with respect to an employee benefit plan) or  reasonable  expenses  incurred  in the  Proceeding  if the person  conducted himself or herself in good faith and the person reasonably believed, in the case of conduct in an  official  capacity  with the  corporation,  that the  person's conduct was in the corporation's  best interests and, in all other cases, his or her conduct was at least not opposed to the  corporation's  best  interests and, with respect to any criminal proceedings,  the person had no reasonable cause to believe  that  his or her  conduct  was  unlawful.  The  Company's  articles  of incorporation and bylaws allow for such  indemnification.  A corporation may not indemnify a director in connection with any Proceeding by or in the right of the corporation in which the director was adjudged  liable to the corporation or, in connection  with any other  Proceeding  charging  that the  director  derived an improper  personal  benefit,  whether or not  involving  actions in an  official capacity,  in which  Proceeding the director was judged liable on the basis that he or she derived an improper personal benefit. Any indemnification permitted in connection with a Proceeding by or in the right of the corporation is limited to reasonable expenses incurred in connection with such Proceeding.

The TBCA, unless otherwise  provided in the articles of  incorporation,  a Texas corporation  may  indemnify  an officer,  employee,  fiduciary,  or agent of the corporation to the same extent as a director and may indemnify such a person who is not a director to a greater extent,  if not  inconsistent  with public policy and if provided  for by its bylaws,  general or specific  action of its board of directors or  shareholders,  or  contract.  INTREorg  articles of  incorporation provide for indemnification of directors,  officers, employees,  fiduciaries and agents of INTREorg to the full extent permitted by Texas law.

INTREorg  articles of incorporation  also provide that INTREorg may purchase and maintain  insurance  on behalf of any person who is or was a director or officer of  INTREorg  or who is or was serving at the request of INTREorg as a director,
officer or agent of another  enterprise  against any liability  asserted against him or her and incurred by him or her in any such capacity or arising out of his or her status as such, whether or not INTREorg would have the power to indemnify him or her against such liability.

                      EQUITY COMPENSATION PLAN INFORMATION

The Company has not established an equity  compensation  plan or Incentive Stock Option Plan at this time.

ITEM 12.  SECURITY  OWNERSHIP OF CERTAIN  BENEFICIAL  OWNERS AND  MANAGEMENT AND RELATED STOCKHOLDER MATTERS.

The  following  table  sets forth  information  with  respect to the  beneficial ownership of INTREorg outstanding common stock by:

     o    each  person who is known by INTREorg  to be the  beneficial  owner of  five percent (5%) or more of INTREorg common stock;
     o    INTREorg's chief executive officer, its other executive officers,  and each  director  as  identified   in  the   "Management   --  Executive Compensation" section; and
     o    all of the Company's directors and executive officers as a group.

                                 
 
23

 

Beneficial  ownership  is  determined  in  accordance  with  the  rules  of  the Securities and Exchange  Commission and generally  includes voting or investment power with respect to securities.  Shares of common stock and options,  warrants and convertible  securities that are currently exercisable or convertible within 60 days of the date of this  document  into shares of INTREorg  common stock are deemed to be outstanding and to be beneficially  owned by the person holding the options,  warrants or  convertible  securities  for the purpose of computing the percentage  ownership of the person,  but are not treated as outstanding for the purpose of computing the percentage ownership of any other person.

The information  below is based on the number of shares of INTREorg common stock that  INTREorg  believes was  beneficially  owned by each person or entity as of December 31, 2009.

   
Number of Shares of
       
   
Common Stock
   
Percent of Class
 
Name and Address of Beneficial Owner (1)
 
Beneficially Owned
   
Beneficially Owned (4)
 
             
J.H. Brech, LLC (2)
    1,009,666       9.78 %
                 
Russell K. Boyd, Chief Executive Officer, President and Chairman of the Board (3)
    1,434,000       13.90 %
                 
Malcolm C. Davenport, V, Director
    0       0 %
                 
Redgie T. Green, Director
    25,000       2.42 %
 
               
All directors and executive officers as a group (3 persons)
    1,459,000       14.13 %

(1)Except  as noted above the  business  address for all listed  individuals  or entities is c/o INTREorg Systems,  Inc.,501 Trophy Lake Dr., Suite 314, PMB 106, Trophy Club, TX 76262.
(2) J.H.  Brech,  LLC owns 698,833  shares of common stock.  Mr. Charles J. Webb owns 311,333 shares of ISI common stock and 553,833 shares beneficially  through J.H. Brech, LLC of which he is a manager.
(3) Mr. Boyd has Proxy Control of 900,000  shares  previously  held by Mr. Alton Smith. Mr. Boyd has direct control of 534,000 common shares  representing  5.17% of the outstanding shares of common stock.
(4) Based on  10,320,016  shares of  common  stock  issued  and  outstanding  on December 31, 2009.

Rule 13d-3 under the Securities  Exchange Act of 1934 governs the  determination of  beneficial  ownership of  securities.  That rule  provides that a beneficial owner of a security includes any person who directly or indirectly has or shares voting power and/or  investment power with respect to such security.  Rule 13d-3 also provides that a beneficial owner of a security  includes any person who has the right to acquire  beneficial  ownership of such security  within sixty days, including  through  the  exercise  of any  option,  warrant or  conversion  of a security.  Any  securities  not  outstanding  which are subject to such options, warrants or conversion  privileges are deemed to be outstanding  for the purpose of computing the percentage of outstanding securities of the class owned by such person.  Those  securities are not deemed to be  outstanding  for the purpose of computing the  percentage  of the class owned by any other  person.  Included in
this  table are only those  derivative  securities  with  exercise  prices  that INTREorg  believes  have a reasonable  likelihood of being "in the money" within the next sixty days.
 
 
 
24

 

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

No officer or  director  of the  Company  has or  proposes to have any direct or indirect  material  interest in any asset proposed to be acquired by the Company through security holdings, contracts, options, or otherwise.

The  following  table shows the  issuances  of stock,  in lieu for  services for compensation to officers or directors or affiliates in 2008 and 2009:


Name
Date of Issuance
Number of Shares
Position
       
Austin Andres
03/14/2008
100,000
Former Chief Operating
     
Officer & Former Director
     
 
Russell K. Boyd
03/14/2008
200,000
Chief Executive Officer,
     
President and Chairman of
     
the Board
       
Redgie Green
03/14/2008
25,000
Director
       
Denis L. Iler
03/14/2008
125,000
Former Chief Executive
     
Officer & Former Director
       
Wesley F. Whiting
03/14/2008
25,000
Former Director

In January 2009, Mr. Wesley F. Whiting resigned as a director of INTREorg.

In March  2009,  Mr.  Denis L. Iler  resigned  as the Chief  Executive  Officer, President  and Director of INTREorg.  In March 2009,  Mr. Boyd was appointed the Chief Executive Officer of INTREorg.

In April 2009, Mr. Huitt resigned as the Chief Financial Officer of INTREorg and on May 7, 2009 he resigned as a Director.

In April 2009, Mr. Andres  resigned as the Chief  Operating  Officer of INTREorg and on May 26, 2009 he resigned as a Director.

On April 10, 2009 we borrowed approximately $406,961 from J.H. Brech, LLC, a principal shareholder of the Company, under the terms of a Commercial Convertible Promissory Note.  On April 21, 2009 we borrowed an additional $34,400.  We used the funds for working capital.  The terms of the notes are identical and each mature one year from the date of issuance.  Under the notes, we agreed to pay interest at the rate of 6% per annum, payable monthly.  We are permitted to prepay the notes at any time without penalty.  At the option of the holder, all or any portion of the notes are convertible into shares of our common stock at a conversion price of $1.00 per share.  At December 31, 2009, an aggregate of $471,202 was outstanding under these notes.

At each of December 31, 2009 and 2008 a related party is owed $58,326 and $30,006, respectively, for services provided to the Company.

ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES

GENERAL.  Larry O'Donnell,  CPA, P.C.  ("O'Donnell") is the Company's  principal auditing  accountant  firm.  The  Company's  Board of Directors  has  considered whether  the  provisions  of audit  services  are  compatible  with  maintaining
O'Donnell's independence.


The  following  table  represents  aggregate  fees billed to the Company for the years ended  December 31, 2009 and December  31, 2008 by Larry  O'Donnell,  CPA, P.C.
 
 
 
Year Ended
   
December 31,
 
 
 
2009
   
2008
 
Audit Fees
  $ 5,620     $ 1,400  
                 
Audit-related Fees
  $ 0     $ 0  
                 
Tax Fees
  $ 0     $ 0  
                 
All Other Fees
  $ 0     $ 0  
                 
Total Fees
  $ 5,620     $ 1,400  

                                        
 
25

 
                                    
All audit work was performed by the auditors' full time employees.

                                     PART IV

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES

The  following  is a complete  list of exhibits  filed as part of this Form 10-K/A. Exhibit  number  corresponds  to the numbers in the Exhibit table of Item 601 of Regulation S-K.


(a) Audited financial statements for years ended December 31, 2009 and 2008
 
(b)   Exhibit No.
Description
     
 
     3.1
Articles of Incorporation (1)
   
     3.2
Articles of Amendment (1)
   
     3.7
Bylaws of INTREorg Systems, Inc. (1)
   
     10.1
Form of bridge note *
   
     10.2
Form of Commercial Convertible Promissory Note dated April 10, 2009 in the principal amount of $407,960.90 to J.H. Brech, LLC *
   
     10.3
Form of Commercial Convertible Promissory Note dated April 21, 2009 in the principal amount of $34,400 to J.H. Brech, LLC *
 
 
     31.1
Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer*
   
     31.1
Rule 13a-14(a)/15d-14(a) Certification of principal financial and accounting officer*
   
     32.1
Section 1350 Certification of Chief Executive Officer and principal financial and accountingofficer*

*           filed herewith

(1)  Incorporated by reference from the exhibits  included in the Company's Form 10 filed with the Securities and Exchange  Commission  (www.sec.gov),  dated May 29, 2008. A copy can be provided by mail,  free of charge,  by sending a written
request to  INTREorg  Systems,  Inc.,  501 Trophy Lake Dr,  Suite 314,  PMB 106, Trophy Club, TX 76262.





 
26

 

O'Donnell, CPA, P.C.
 
Telephone (303) 745-4545
2228 South Fraser Street
Fax (303) 369-9384
Unit I
Email larryodonnellcpa@msn.com
Aurora, Colorado  80014
www.larryodonnellcpa.com
 




INDEPENDENT AUDITOR'S REPORT
 
Board of Directors
INTREorg Systems, Inc.

I have audited the accompanying  balance sheets of INTREorg Systems,  Inc. as of December  31, 2009 and 2008,  and the  related  statements  of loss,  changes in stockholders'  equity,  and cash  flows for the years  then ended and the period from  inception,  November  3,  2003  to  December  31,  2009.  These  financial statements are the responsibility of the Company's management. My responsibility is to express an opinion on these financial statements based on my audits.

I  conducted  my audits in  accordance  with  standards  of the  Public  Company Accounting Oversight Board (United States).  Those standards require that I plan and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement.  An audit includes examining, on a test basis,  evidence  supporting  the amounts and  disclosures in the financial statements.  An audit also includes assessing the accounting principles used and
significant  estimates  made by  management,  as well as evaluating  the overall financial statement presentation.  I believe that my audits provide a reasonable basis for my opinion.

In my opinion, the financial statements referred to above present fairly, in all material  respects,  the  financial  position  of INTREorg  Systems,  Inc. as of December 31, 2009 and 2008, and the results of its operations and cash flows for the years then ended and the period from inception, November 3, 2003 to December 31, 2009 in conformity  with  accounting  principles  generally  accepted in the United States of America.

The accompanying  financial  statements have been presented on the basis that it is a going  concern,  which  contemplates  the  realization  of  assets  and the satisfaction of liabilities in the normal course of business. The Company has an
accumulated  deficit of $2,416,003 at December 31, 2009.  Additionally,  for the year ended  December 31, 2009,  they had a net loss of $158,975.  These  matters raise  substantial  doubt  about the  Company's  ability to  continue as a going concern.  Management's  plans in regards to these matters are also  described in Note 1. The  financial  statements  do not  include any  adjustments  that might result from the outcome of this uncertainty.


/s/ Larry O'Donnell, CPA, P.C.

Larry O'Donnell, CPA, P.C.
April 14, 2010
                                     

 
 
F - 1

 



INTREorg Systems, Inc.
(A Development Stage Company)
Balance Sheets


   
December 31
 
   
2009
   
2008
 
   
(Audited)
   
(Audited)
 
             
ASSETS:
           
             
Current Assets:
           
        Cash
  $ 13     $ 3,330  
        Accounts Receivable
    -       7,261  
 
               
               Total Current Assets
    13       10,591  
                 
Furniture and fixtures - net
    379       10,207  
                 
Investment - Fusion Equity
    -       1,000  
 
               
                 
TOTAL
  $ 392     $ 21,798  
 
               
                 
LIABILITIES & STOCKHOLDERS' DEFICIT
               
                 
Current Liabilities
               
                 
        Cash overdraft
  $ 54     $ -  
        Accounts payable
    221,035       581,295  
        Accrued expenses and liabilities
    585,323       533,934  
        Accrued expenses – related party
    58,326       30,006  
        Notes Payable
    521,000       577,886  
                 
                 
               Total Current Liabilities
    1,385,738       1,723,121  
                 
Long-Term Liabilities
               
        Convertible promissory note  – related party
    471,202       -  
 
               
               Total Liabilities
    1,856,940       1,723,121  
                 
Stockholders' Deficit
               
                 
Preferred Stock, no par value; 2,000,000 shares authorized
               
        none and 247,100 shares issued and outstanding
               
        at December 31, 2009 and 2008, respectively
    -       -  
                 
Common Stock, no par value; 100,000,000 shares authorized
               
        10,320,016 and 10,305,016 shares issued and outstanding
               
        at December 31, 2009 and 2008, respectively
    559,455       555,705  
                 
Deficit accumulated during the development stage
    (2,416,003 )     (2,257,028 )
               Total Stockholders' deficit
    (1,856,548 )     (1,701,323 )
                 
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT
  $ 392     $ 21,798  
 

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

                                    
 
F - 2

 



INTREorg Systems, Inc.
(A Development Stage Company)
Statements of Operations
(Audited)
 
               
November 3, 2003
 
   
For the Year Ended
   
(Inception) to
 
   
December 31,
   
December 31,
 
   
2009
   
2008
   
2009
 
                   
Revenue
  $ -     $ 750     $ 750  
                         
         Depreciation
    9,031       -       15,206  
         Consulting expense
            121,088       836,005  
         Director's fees
    -       12,750       48,870  
         General and administrative
    31,437       32,198       88,834  
         Professional fees
    52,192       52,146       434,907  
         Payroll expense
    -       -       724,630  
         Rent and utilities
    -       9,612       111,858  
         Travel expense
    4,433       17,354       98,000  
 
                       
                         
                 Total Expenses
    97,093       245,148       2,358,310  
 
                       
                         
Net Operating Loss
    (97,093 )     (244,398 )     (2,357,560 )
 
                       
                         
Other Revenue / (Expense)
                       
                         
         Forgiveness of debt
    -       -       135,750  
         Settlement agreements
    -       -       36,653  
         Interest Income
    -       -       356  
         Miscellaneous expense
    -       -       (5,857 )
         Interest Expense
    (61,882 )     (48,803 )     (225,345 )
 
                       
                         
                 Total other revenue / (expense)
    (61,882 )     (48,803 )     (58,443 )
 
                       
Net Loss
  $ (158,975 )   $ (293,201 )   $ (2,416,003 )
 
                       
                         
Net Income/Loss per share of common
                       
stock
  $ (0.02 )   $ (0.03 )        
 
                       
Weighted average number of common
                       
         shares outstanding
    10,320,016       9,667,745          

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

                                    
 
F - 3

 



INTREorg Systems, Inc.
(A Development Stage Company)
Statement of Cash Flows
 (Unaudited)
 
               
November 3, 2003
 
   
For the year ended
   
(Inception) to
 
   
December 31,
   
December 31,
 
   
2009
   
2008
   
2009
 
                   
Cash Flows from Operating Activities
                 
Net Loss
  $ (158,975 )   $ (293,201 )   $ (2,416,003 )
Adjustments to reconcile net loss to net cash used
                       
         by operating activities
                       
         Common stock issued for services
    3,750               3,750  
         Depreciation
    9,828       -       15,993  
         Allowance for doubtful accounts
    7,261               7,261  
         Reserve for investment
    1,000               1,000  
Changes in operating assets and liabilities
                       
         Increase in Accounts Receivable and Advances
    -       13,394       (7,261 )
         Increase in Accounts Payable and accrued liabilities
    133,766       189,370       1,279,000  
         (Increase) Decrease in deposits
    -       6,900       -  
 
                       
                         
Net Cash Flows Used by Operating Activities
    (3,370 )     (83,537 )     (1,116,260 )
 
                       
                         
Cash Flows from Investing Activities
                       
         Acquisition of Fixed Assets
    -       -       (16,372 )
         Acquisition of Investments
    -       -       (1,000 )
 
                       
Net Cash Flows Provided (Used) by Investing Activities
    -       -       (17,372 )
 
                       
Cash Flows from Financing Activities
                       
         Cash overdraft
    53               53  
         Increase / (decrease)  in loans payable
            73,500       577,886  
         Issuance of Preferred A Stock
    -       -       247,100  
         Issuance of Common Stock
    -       13,825       308,605  
 
                       
Net Cash Flows Provided by Financing Activities
    53       87,325       1,133,644  
 
                       
Net (Decrease) Increase in Cash
    (3,317 )     3,788       13  
 
                       
Cash at Beginning of Period
    3,330       (458 )     -  
 
                       
Cash at End of Period
  $ 13     $ 3,330     $ 13  
 
                       
Supplemental Disclosure of Cash Flow Information
                       
                         
         Cash paid for interest
  $ -     $ -     $ 32,008  
 
                       
         Cash paid for taxes
  $ -     $ -     $ -  
 
                       
                         
Supplemental Disclosure of Non-Cash Flow Information
                       
                         
         Debt converted to Convertible Notes Payable
  $ 471,202     $ -     $ 471,202  

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


 
F - 4

 



INTREorg SYSTEMS, INC.
                                (A Development Stage Enterprise)
                           Statement of Stockholders' Equity (Deficit)
                  From November 3, 2003 (Inception) through September 30, 2009
 
 
                                     Deficit          
                                     Accum. During          
       Common Stock       Preferred A Stock         the Development          
       # of Shares        Amount      # of Shares         Amount         Stage        Totals  
                                               
Balance - November 3, 2003
    -     $ -           $ -     $ -     $ -  
   Stock issued for cash
    1,000,000       5,000                             5,000  
Net Loss for period
            -                     (3,325 )     (3,325 )
                                               
 
                                             
Balance - December 31, 2003
    1,000,000       5,000       -       -       (3,325 )     1,675  
 
                                               
                                                 
   Stock issued for cash
    33,000       16,500       169,100       169,100               185,600  
   Stock issued for services
    145,833       729                               729  
   Stock issued for compensation
    448,333       13,518                               13,518  
Net Loss for period
                                    (605,823 )     (605,823 )
 
                                               
Balances - December 321, 2004
    1,627,166       35,747       169,100       169,100       (609,148 )     (404,301 )
                                                 
   Stock issued for cash
    64,000       32,000       76,000       76,000               108,000  
   Stock issued for services
    297,000       8,850                               8,850  
   Stock issued for compensation
    61,000       30,500                               30,500  
   Stock issued for interest
    990,000       9,900       2,000       2,000               11,900  
Net Loss for period
                                    (657,305 )     (657,305 )
 
                                               
Balances - December 31, 2005
    3,039,166       116,997       247,100       247,100       (1,266,453 )     (902,356 )
                                                 
   Stock issued for services
    250,000       125,000                               125,000  
   Stock issued for interest
    1,831,250       18,313                               18,313  
Net Loss for period
                                    (313,399 )     (313,399 )
 
                                               
Balances - December 31, 2006
    5,120,416       260,310       247,100       247,100       (1,579,852 )     (1,072,442 )
                                                 
   Stock issued for services
    812,000       8,120                               8,120  
   Stock issued for interest
    2,635,000       26,350                               26,350  
Net Loss for period
                                    (383,975 )     (383,975 )
 
                                               
Balances - December 31, 2007
    8,567,416       294,780       247,100       247,100       (1,963,827 )     (1,421,947 )
                                                 
   Stock issued for services
    625,000       6,250                               6,250  
   Stock issued for interest
    757,500       7,575                               7,575