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EX-31.2 - INTREorg SYSTEMS INC. | iorg10qaex312033110.htm |
EX-31.1 - INTREorg SYSTEMS INC. | iorg10qaex311033110.htm |
EX-32.1 - INTREorg SYSTEMS INC. | iorg10qaex321033110.htm |
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
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FORM 10-Q/A
(Amendment No. 1)
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(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2010
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from __________ to ___________
Commission file number: 000-53262
INTREORG SYSTEMS, INC.
(Exact name of registrant as specified in its charter)
Texas
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45-0526215
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(State or other jurisdiction of Incorporation)
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(I.R.S. Employer Identification No.)
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501 Trophy Lake Drive, Suite 314, PMB 106, Trophy Club, TX
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76262
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(Address of principal executive offices)
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(Zip Code)
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817-491-8611
(Registrant's telephone number, including area code)
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 past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to the 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 Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (ss.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 whether the registrant is a large accelerated file, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer [ ] | Accelerated filer [ ] | |
Non-accelerated filer [ ] | Smaller reporting company [X] | |
(Do not check if a smaller reporting company)
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Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [X]
Indicate the number of share outstanding of each of the issuer's classes of common stock, as of the latest practicable date.
As of May 14, 2010, there were 10,320,016 shares of the registrant's common stock issued and outstanding.
PART I - FINANCIAL INFORMATION
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Item 1. Financial Statements (Unaudited)
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Page
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Balance Sheets - March 31, 2010 and December 31, 2009
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F-1
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Statements of Operations -
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Three months ended March 31, 2010 and 2009 and
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From February 13, 1997 (Inception) to March 31, 2010
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F-2
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Statements of Changes in Shareholders' Deficit -
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From February 13, 1997 (Inception) to March 31, 2010
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F-3
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Statements of Cash Flows -
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Three months ended March 31, 2010 and
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From February 13, 1997 (Inception) to March 31, 2010
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F-4
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Notes to the Financial Statements
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F-5
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Item 2. Management's Discussion and Analysis of Financial Condition
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and Results of Operations
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1
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Item 3. Quantitative and Qualitative Disclosures About Market Risk
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- Not Applicable
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3
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Item 4. Controls and Procedures
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3
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PART II - OTHER INFORMATION
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Item 1. Legal Proceedings -Not Applicable
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4
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Item 1A. Risk Factors - Not Applicable
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Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
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4
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-Not Applicable
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Item 3. Defaults Upon Senior Securities - Not Applicable
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5
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Item 4. Removed and Reserved
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5
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Item 5. Other Information - Not Applicable
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5
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Item 6. Exhibits
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5
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SIGNATURES
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6
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EXPLANATORY NOTE
The Form 10-Q of INTREorg Systems, Inc. for the period ended March 31, 2010 as originally filed is being amended hereby to correct typographical errors which appeared in the original report, including:
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●
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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,
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●
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we incorrectly reflected $9,031 in consulting expense on our Statement of Operations during the three months ended March 31, 2009 and for the period of November 3, 2003 (inception) to March 31, 2010 which should have been depreciation expense, and
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●
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to remove disclosure under Item 4T. Disclosure Controls and Procedures related to a quarterly evaluation of internal control over financial reporting which was inadvertently included in the original Form 10-Q as filed.
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●
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we have changed the presentation on Balance Sheet at March 31, 2010 and December 31, 2009 to disclose the amount of accrued expenses due a related pary in a separate line item and to disclosed that the convertible promissory note outstanding at each of March 31, 2010 and December 31, 2009 is due to a related party,
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●
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we have added a footnote to describe the components of accrued expenses and liabilities and accrued expenses - related party which appear on our Balance Sheet at each of March 31, 2010 and Decdember 31, 2009 and we have added a footnote describing the convertible notes payable - related party.
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The correction of these typographical errors did not result in a restatement of our financial statements. The correction in the number of authorized shares of our common stock on our Balance Sheet at March 31, 2010 did not result in any other change on our Balance Sheet. The reclassification of the expense within Total Expenses on our Statement of Operations as contained in the original filing did not result in any change in our Total Expenses or Net Loss for the periods. We have also made a correction in Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations - Results of Operations, to reflect that the change in total expenses from period to period result in decreased depreciation expense instead of decreased consulting expenses. Finally, we deleted the disclosure under Item 4(T). Disclosure Controls and Procedures - Management’s Quarterly Report on Internal Control over Financial Reporting which appeared in the original Form 10-Q as the inclusion of this section was inadvertently included. Our management did not conduct a quarterly assessment of our internal control over financial reporting at March 31, 2010. Because this Amendment No. 1 is being filed to correct typographical errors in the original Form 10-Q as filed, our management did not determine that any change in the evaluation of our disclosure controls and procedures as set forth in Item 4. of the original filing was necessary.
This Amendment No. 1 to the Form 10-Q for the period ended March 31, 2010 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-Q for the period ended March 31, 2010 to modify or update the other disclosures presented in the Form 10-Q as previously filed, except as required by the restatement. This Amendment No. 1 on Form 10-Q/A does not reflect events occurring after the filing of the original Form 10-Q 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.
INTREorg Systems, Inc.
(A Development Stage Company)
Balance Sheets
March 31,
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December 31,
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|||||||
2010
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2009
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(Audited)
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||||||||
ASSETS:
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Current Assets:
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Cash
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$ | 13 | $ | 13 | ||||
Accounts Receivable
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- | - | ||||||
Total Current Assets
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13 | 13 | ||||||
Furniture and fixtures - net
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229 | 379 | ||||||
Investment - Fusion Equity
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- | - | ||||||
TOTAL ASSETS
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$ | 242 | $ | 392 | ||||
LIABILITIES & STOCKHOLDERS' DEFICIT
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Current Liabilities
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Cash overdraft
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$ | 54 | $ | 54 | ||||
Accounts payable
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237,497 | 221,035 | ||||||
Accrued expenses and liabilities
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593,589 | 585,323 | ||||||
Accrued expenses – related party
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76,432 | 58,326 | ||||||
Notes Payable
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521,000 | 521,000 | ||||||
Total Current Liabilities
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1,428,572 | 1,385,738 | ||||||
Long-Term Liabilities
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||||||||
Convertible promissory notes – related party
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471,202 | 471,202 | ||||||
Total Liabilities
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1,899,774 | 1,856,940 | ||||||
Stockholders' Deficit
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Preferred Stock, no par value; 2,000,000 shares authorized
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none and 247,100 shares issued and outstanding
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at March 31, 2010 and December 31, 2009, respectively
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- | - | ||||||
Common Stock, no par value; 100,000,000 shares authorized
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10,320,016 and 10,305,016 shares issued and outstanding
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at March 31, 2010 and December 31, 2009, respectively
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559,455 | 559,455 | ||||||
Deficit accumulated during the development stage
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(2,458,987 | ) | (2,416,003 | ) | ||||
Total Stockholders' deficit
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(1,899,532 | ) | (1,856,548 | ) | ||||
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT
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$ | 242 | $ | 392 |
The accompanying notes are an integral part of these financial statements.
F - 1
INTREorg Systems, Inc.
(A Development Stage Company)
Statements of Operations
November 3, 2003
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For the Three Months Ended
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(Inception) to
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March 31,
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March 31,
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|||||||||||
2010
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2009
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2010
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Revenue
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$ | - | $ | - | $ | 750 | ||||||
Depreciation
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9,031 | 15,206 | ||||||||||
Consulting expense
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- | 836,005 | ||||||||||
Director's fees
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- | - | 48,870 | |||||||||
General and administrative
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3,152 | 1,658 | 91,986 | |||||||||
Professional fees
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22,434 | 10,396 | 457,341 | |||||||||
Payroll expense
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- | - | 724,630 | |||||||||
Rent and utilities
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- | - | 111,858 | |||||||||
Travel expense
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495 | 456 | 98,495 | |||||||||
Total Expenses
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26,081 | 21,541 | 2,384,391 | |||||||||
Net Operating Loss
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(26,081 | ) | (21,541 | ) | (2,383,641 | ) | ||||||
Other Revenue / (Expense)
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Forgiveness of debt
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- | - | 135,750 | |||||||||
Settlement agreements
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- | - | 36,653 | |||||||||
Interest Income
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- | - | 356 | |||||||||
Miscellaneous expense
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- | - | (5,857 | ) | ||||||||
Interest Expense
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(16,903 | ) | (10,987 | ) | (242,248 | ) | ||||||
Total other revenue / (expense)
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(16,903 | ) | (10,987 | ) | (75,346 | ) | ||||||
Net Loss
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$ | (42,984 | ) | $ | (32,528 | ) | $ | (2,458,987 | ) | |||
Net Income/Loss per share of common
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stock
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$ | (0.00 | ) | $ | (0.00 | ) | ||||||
Weighted average number of common
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shares outstanding
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10,320,016 | 10,305,016 |
The accompanying notes are an integral part of these financial statements.
F - 2
INTREorg SYSTEMS, INC.
(A Development Stage Enterprise)
Statement of Stockholders' Equity (Deficit)
From November 3, 2003 (Inception) through March 31, 2010
Deficit | ||||||||||||||||||||||||
Accum. During | ||||||||||||||||||||||||
Common Stock | Preferred A Stock | the Development | ||||||||||||||||||||||
# of Shares | Amount | # of Shares | Amount | Stage | Totals | |||||||||||||||||||
Balance - November 3, 2003
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- | $ | - | $ | - | $ | - | $ | - | |||||||||||||||
Stock issued for cash
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1,000,000 | 5,000 | 5,000 | |||||||||||||||||||||
Net Loss for period
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- | (3,325 | ) | (3,325 | ) | |||||||||||||||||||
Balance - December 31, 2003
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1,000,000 | 5,000 | - | - | (3,325 | ) | 1,675 | |||||||||||||||||
Stock issued for cash
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33,000 | 16,500 | 169,100 | 169,100 | 185,600 | |||||||||||||||||||
Stock issued for services
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145,833 | 729 | 729 | |||||||||||||||||||||
Stock issued for compensation
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448,333 | 13,518 | 13,518 | |||||||||||||||||||||
Net Loss for period
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(605,823 | ) | (605,823 | ) | ||||||||||||||||||||
Balances - December 321, 2004
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1,627,166 | 35,747 | 169,100 | 169,100 | (609,148 | ) | (404,301 | ) | ||||||||||||||||
Stock issued for cash
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64,000 | 32,000 | 76,000 | 76,000 | 108,000 | |||||||||||||||||||
Stock issued for services
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297,000 | 8,850 | 8,850 | |||||||||||||||||||||
Stock issued for compensation
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61,000 | 30,500 | 30,500 | |||||||||||||||||||||
Stock issued for interest
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990,000 | 9,900 | 2,000 | 2,000 | 11,900 | |||||||||||||||||||
Net Loss for period
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(657,305 | ) | (657,305 | ) | ||||||||||||||||||||
Balances - December 31, 2005
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3,039,166 | 116,997 | 247,100 | 247,100 | (1,266,453 | ) | (902,356 | ) | ||||||||||||||||
Stock issued for services
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250,000 | 125,000 | 125,000 | |||||||||||||||||||||
Stock issued for interest
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1,831,250 | 18,313 | 18,313 | |||||||||||||||||||||
Net Loss for period
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(313,399 | ) | (313,399 | ) | ||||||||||||||||||||
Balances - December 31, 2006
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5,120,416 | 260,310 | 247,100 | 247,100 | (1,579,852 | ) | (1,072,442 | ) | ||||||||||||||||
Stock issued for services
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812,000 | 8,120 | 8,120 | |||||||||||||||||||||
Stock issued for interest
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2,635,000 | 26,350 | 26,350 | |||||||||||||||||||||
Net Loss for period
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(383,975 | ) | (383,975 | ) | ||||||||||||||||||||
Balances - December 31, 2007
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8,567,416 | 294,780 | 247,100 | 247,100 | (1,963,827 | ) | (1,421,947 | ) | ||||||||||||||||
Stock issued for services
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625,000 | 6,250 | 6,250 | |||||||||||||||||||||
Stock issued for interest
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757,500 | 7,575 | 7,575 | |||||||||||||||||||||
Convert preferred to common
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247,100 | 247,100 | (247,100 | ) | (247,100 | ) | - | |||||||||||||||||
Reconciliation differences
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108,000 | - | ||||||||||||||||||||||
Net Loss for period
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(293,201 | ) | (293,201 | ) | ||||||||||||||||||||
Balances - December 31, 2008
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10,305,016 | 555,705 | - | - | (2,257,028 | ) | (1,701,323 | ) | ||||||||||||||||
Stock issued for services
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15,000 | 3,750 | 3,750 | |||||||||||||||||||||
Net Loss for period
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(158,975 | ) | (158,975 | ) | ||||||||||||||||||||
Balances - December 31, 2009
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10,320,016 | 559,455 | - | - | (2,416,003 | ) | (1,856,548 | ) | ||||||||||||||||
Net Loss for period
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- | - | - | - | (42,984 | ) | - | |||||||||||||||||
Balances - March 31, 2010 | 10,320,016 | $ | 559,455 | - | $ | - | $ | (2,458,987 | ) | $ | (1,856,548 | ) |
The accompanying notes are an integral part of these financial statement
F - 3
INTREorg Systems, Inc.
(A Development Stage Company)
Statement of Cash Flows
(Unaudited)
November 3, 2003 | ||||||||||||
For the Three Months Ended | (Inception) to | |||||||||||
March 31, | March 31, | |||||||||||
2010 | 2009 | 2010 | ||||||||||
Cash Flows from Operating Activities
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Net Loss
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$ | (42,984 | ) | $ | (32,528 | ) | $ | (2,458,987 | ) | |||
Adjustments to reconcile net loss to net cash used
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by operating activities
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Common stock issued for services
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3,750 | |||||||||||
Depreciation
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150 | 9,031 | 16,143 | |||||||||
Allowance for doubtful accounts
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7,261 | |||||||||||
Reserve for investment
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1,000 | |||||||||||
Changes in operating assets and liabilities
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||||||||||||
Increase in Accounts Receivable and Advances
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- | - | (7,261 | ) | ||||||||
Increase in Accounts Payable and accrued liabilities
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42,834 | 21,398 | 1,321,834 | |||||||||
(Increase) Decrease in deposits
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- | - | - | |||||||||
Net Cash Flows Used by Operating Activities
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- | (2,099 | ) | (1,116,260 | ) | |||||||
Cash Flows from Investing Activities
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||||||||||||
Acquisition of Fixed Assets
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- | - | (16,372 | ) | ||||||||
Acquisition of Investments
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- | - | (1,000 | ) | ||||||||
Net Cash Flows Provided (Used) by Investing Activities
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- | - | (17,372 | ) | ||||||||
Cash Flows from Financing Activities
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Cash overdraft
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- | 53 | ||||||||||
Increase / (decrease) in loans payable
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- | 577,886 | ||||||||||
Issuance of Preferred A Stock
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- | - | 247,100 | |||||||||
Issuance of Common Stock
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- | - | 308,605 | |||||||||
Net Cash Flows Provided by Financing Activities
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- | - | 1,133,644 | |||||||||
Net (Decrease) Increase in Cash
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- | (2,099 | ) | 13 | ||||||||
Cash at Beginning of Period
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13 | 3,330 | - | |||||||||
Cash at End of Period
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$ | 13 | $ | 1,231 | $ | 13 | ||||||
Supplemental Disclosure of Cash Flow Information
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Cash paid for interest
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$ | - | $ | - | $ | 32,008 | ||||||
Cash paid for taxes
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$ | - | $ | - | $ | - | ||||||
Supplemental Disclosure of Non-Cash Flow Information
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Debt converted to Convertible Notes Payable
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$ | 471,202 | $ | - | $ | 471,202 |
The accompanying notes are an integral part of these financial statements
F - 4
INTREORG SYSTEMS, INC.
(A Development Stage Company)
Notes to the Financial Statements
For the three months ended March 31, 2010
Unaudited)
Note 1. Organization, Basis of Presentation and Summary of Significant
Accounting Policies
Organization
Intreorg Systems, Inc. (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 companies. As well
as, to pursue any other lawful business opportunity as decided upon by the board of directors. The Company's fiscal year end is December 31st.
Basis of Presentation
Interim Accounting
In the opinion of the management of the Company, the accompanying unaudited financial statements include all material adjustments, including all normal and recurring adjustments, considered necessary to present fairly the financial
position and operating results of the Company for the periods presented. The financial statements and notes do not contain certain information included in the Company's financial statements for the year ended December 31, 2009. It is the Company's opinion that when the interim financial statements are read in conjunction with the December 31, 2009 Audited Financial Statements, the disclosures are adequate to make the information presented not misleading.
Interim results are not necessarily indicative of results for a full year or any future period.
Development Stage Company
The Company has not earned significant revenues from limited principal operations. Accordingly, the Company's activities have been accounted for as those of a Development Stage Enterprise. Among the disclosures required are that the Company's financial statements be identified as those of a development stage company, and that the statements of operations, stockholders' equity (deficit) and cash flows disclose activity since the date of the Company's inception.
Going Concern
The Company's 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's current
liabilities exceed the current assets by $1,428,559 at March 31, 2010.
During the three months ended March 31, 2010, the Company did not generate any revenues. At March 31, 2010, the Company had a deficit accumulated during its development stage of $2,458,987.
F - 5
The Company is in the development stage and has not earned revenues from operations. The Company's ability to continue as a going concern is dependent upon its ability to develop additional sources of capital or locate a merger
candidate and ultimately, achieve profitable operations. There can be no assurance that the Company will be successful in obtaining such financing, or that it will attain positive cash flow from operations. Management believes that
actions presently being taken provide the opportunity for the Company to continue as a going concern. The accompanying financial statements do not include any adjustments that might result from the outcome of these
uncertainties. Management is seeking new capital to carry forward the purposes of the Company.
Summary of Significant Accounting Policies
Cash and Cash Equivalents
The Company considers all highly-liquid debt instruments, with an original maturity of three months, to be cash equivalents.
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 anti-dilutive.
Property and Equipment
Property and equipment are stated at cost, less accumulated depreciation. Depreciation is provided for using the straight-line method over the useful life of the assets.
Other Comprehensive Income
INTREorg Systems, Inc. has no material components of other comprehensive income (loss), and accordingly, net loss is equal to comprehensive loss in all periods.
Recent Accounting Pronouncements
In June 2009, the FASB issued ASC 860 "Transfers and Servicing" which improves the relevance, representational faithfulness, and comparability of the information that a reporting entity provides in its financial statements about a transfer of financial assets; the effects of a transfer on its financial position, financial performance, and cash flows; and a transferor's continuing involvement, if any, in transferred financial assets. ASC 860 is effective as of the beginning of each reporting entity's first annual reporting period that begins after November 15, 2009, for interim periods within that first annual reporting period and for interim and annual reporting periods thereafter. The Company is evaluating the impact the adoption of ASC 860 will have on its financial statements.
In June 2009, the FASB issued ASC 810 which improves financial reporting by enterprises involved with variable interest entities. ASC 810 is effective as of the beginning of each reporting entity's first annual reporting period that begins after November 15, 2009, for interim periods within that first annual reporting period, and for interim and annual reporting periods thereafter. The Company is evaluating the impact the adoption of ASC 810 will have on its financial statements.
F - 6
There were accounting standards and interpretations issued during the three months ended March 31, 2010, none of which are expected to have a material impact on the Company's financial position, operations or cash flows.
Note 2 – Accrued Expenses and Liabilities
At March 31, 2010 accrued expenses and liabilities is comprised of accrued salary of $460,743, accrued interest of $132,856. At December 31, 2009 accrued expenses and liabilities is comprised of accrued salary of $469,319, accrued interest of $116,004.
Note 3 – Accrued Expenses – related party
During the period ended March 31, 2010 and year ended December 31, 2009 a related party is owed $76,422 and $58,326 for services provided to the Company.
Note 4 - Notes Payable
Prior to the year ended December 31, 2008, the Company raised $577,886 in bridge loans in order to be able to continue operations. These loans carry interest rates from 6% to 10% per annum and have due dates between 909 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. Prior to January 1, 2009, the holders were issued shares of the Company's common stock in equal
amount to the interest accrued for extensions on the payment of the notes.
During the year ended December 31, 2009, holders of notes totaling $56,866 (principal and outstanding interest on the date of conversion) converted their notes into Commercial Convertible Promissory Notes (Convertible Promissory
Notes). The Convertible Promissory Notes are unsecured, have an interest rate of 6% and a due date of April 10, 2011. For further details, see Note 3 - Convertible Promissory Notes.
Note 5 -Convertible Notes Payable
On April 10, 2009, a vendor owed $406,961 agreed to convert the amount owed to it into long-term debt in the form of a Convertible Promissory Note.
On April 10, 2009, holders of outstanding promissory notes totaling $56,866 and accrued interest of $7,375, agreed to convert the amounts owed to them into long-term Convertible Promissory Notes.
Note 6 -Convertible Notes Payable – related party
The Convertible Promissory notes are unsecured, have an interest rate of 6% and a due date of April 10, 2011. The promissory notes provide the holders with the right to convert in part or all of the outstanding principal and/or interest into shares of the Company's common stock at a rate of $1 per share. At March 31, 2010 and December 31, 2009, $471,202 was outstanding.
Note 7 - Capital Stock Transactions
During the three months ended March 31, 2010 the Company did not issue any shares of its common stock.
During the year ended December 31, 2009, the Company issued 15,000 shares of common stock valued at $3,750 for consulting services.
On October 6, 2009 the Company entered into an investment banking agreement. The terms of the agreement are a such. 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.
Note 8 - Subsequent Events
The Company evaluated events through May 14, 2010 for subsequent events to be included in its March 31, 2010 financial statements herein.
F - 7
The following discussion should be read in conjunction with our unaudited financial statements and notes thereto included herein. In connection with, and because we desire to take advantage of, the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995, we caution readers regarding certain forward looking statements in the following discussion and elsewhere in this report and in any other statement made by, or on our behalf, whether or not in future filings with the Securities and Exchange Commission. Forward-looking statements are statements not based on historical information and which relate to future operations, strategies, financial results or other developments. Forward looking statements are necessarily based upon estimates and assumptions that are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond our control and many of which, with respect to future business decisions, are subject to change. These uncertainties and contingencies can affect actual results and could cause actual results to differ materially from those expressed in any forward looking statements made by, or on our behalf. We disclaim any obligation to update forward-looking statements.
The independent registered public accounting firm's report on the Company's financial statements as of December 31, 2009, and for each of the years in the two-year period then ended, includes a "going concern" explanatory paragraph,
that describes substantial doubt about the Company's ability to continue as a going concern.
OPERATIONS
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.
In the continuance of INTREorg's business operations it does not intend to purchase or sell any significant assets and the Company does expect to have to hire additional employees, if it is able to secure financing or sees an increase in orders.
The Company 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 has experienced 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.
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RESULTS OF OPERATIONS
For the Three Months Ended March 31, 2010 Compared to the Three Months Ended March 31, 2009
During the three months ended March 31, 2010 and 2009, we did not recognize any revenues from our operations.
During the three months ended March 31, 2010, we incurred an operational loss of $26,081 compared to $21,541 during the three months ended March 31, 2009. The increase of $4,540 was a result of the decrease in depreciation expense of $9,031
offset by a $12,038 increase in professional fees and a $1,494 in general and administrative expenses.
During the three months ended March 31, 2010, we incurred a net loss of $42,984 compared to $32,528 during the three months ended March 31, 2009. The increase of $10,456 is a direct result of the $4,540 increase in operational losses and the $5,916 increase in interest expenses from the prior period.
LIQUIDITY
At March 31, 2010, we had current assets of $13, consisting solely of cash. At March 31, 2010, we had total current liabilities of $1,428,572, consisting of accounts payable of $237,497, $670,021 in accrued expenses and liabilities and $521,000 in promissory notes and a $54 cash overdraft. Our current liabilities exceed our current assets by $1,428,559 and we will be reliant upon shareholder loans or private placements of equity to fund any kind of operations. We have secured no sources of loans or private placements at this time.
During the three months ended March 31, 2010, we neither used or received funds from our operational activities. During the three months ended March 31, 2010, we recognized a net loss of $42,834, which was adjusted for a depreciation
expense of $150. During the three months ended March 31, 2009, we used funds of $2,099 in our operational activities. During the three months ended March 31, 2010, we recognized a net loss of $35,528, which was adjusted for depreciation
expense of $9,031.
During the three months ended March 31, 2010 and 2009, we did not use or receive any funds from investment activities.
During the three months ended March 31, 2010 and 2009, we did not receive or use any funds from our financing activities.
Short Term
On a short-term basis, we do not generate any revenue or revenues sufficient to cover operations. Based on prior history, we will continue to have insufficient revenue to satisfy current and recurring liabilities as it seeks explore. For short term needs we will be dependent on receipt, if any, of offering proceeds.
Capital Resources
We have only common stock as our capital resource.
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We have no material commitments for capital expenditures within the next year, however if operations are commenced, substantial capital will be needed to pay for participation, investigation, exploration, acquisition and working capital.
Need for Additional Financing
We do not have capital sufficient to meet our cash needs. We will have to seek loans or equity placements to cover such cash needs.
No commitments to provide additional funds have been made by our management or other stockholders. Accordingly, there can be no assurance that any additional funds will be available to us to allow it to cover our expenses as they may be
incurred.
Not Applicable
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. Based on the foregoing evaluation, our Chief Executive Officer has concluded that our disclosure controls and procedures are effective
in timely alerting them to material information required to be included in our periodic SEC filings and to ensure that information required to be disclosed in our periodic SEC filings is accumulated and communicated to our management,
including our Chief Executive Officer, to allow timely decisions regarding required disclosure as a result of the deficiency in our internal control over financial reporting discussed below.
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Changes in internal control over financial reporting
There was no change in our internal control over financial reporting that occurred during the fiscal quarter ended March 31, 2010, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
NONE
NONE
NONE
NONE
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ITEM 4. REMOVED AND RESERVED
NONE
Exhibits. The following is a complete list of exhibits filed as part of this Form 10-Q. Exhibit numbers correspond to the numbers in the Exhibit Table of Item 601 of Regulation S-K.
31.1
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Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer
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31.2
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Rule 13a-14(a)/15d-14(a) Certificate of principal financial and accounting officer
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32.1
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Section 1350 Certification of Chief Executive Officer and principal financial and accounting officer
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SIGNATURES
Pursuant to the requirements of Section 12 of the Securities and Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
INTREORG SYSTEMS, INC. | |||
(Registrant) | |||
Dated: December 24, 2010
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By:
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/s/ Russell K. Boyd | |
Russell K. Boyd | |||
Chief Executive Officer and | |||
principal financial and accounting officer) |
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