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EX-32 - EXHIBIT 32.2 CERTIFICATION - Liberty Gold Corp.exhibit322apg.htm
EX-32 - EXHIBIT 32.1 CERTIFICATION - Liberty Gold Corp.exhibit321apg.htm
EX-31 - EXHIBIT 31.1 CERTIFICATION - Liberty Gold Corp.exhibit311apg.htm
EX-31 - EXHIBIT 31.2 CERTIFICATION - Liberty Gold Corp.exhibit312apg.htm


UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549


FORM 10-Q

 

[X]

Quarterly report pursuant Section 13 or 15(d) of the Securities Exchange Act of 1934

 

For the quarterly period ended December 31, 2010

 

 

[  ]

Transition report pursuant Section 13 or 15(d) of the Securities Exchange Act of 1934

 

For the transition period from _______ to _______.


333-16135

(Commission file number)

 

iBOS, INC.

(Exact name of small business issuer as specified in its charter)


Delaware

80-0372385

(State or other jurisdiction

(IRS Employer

of incorporation or organization)

Identification No.)

 

4879 East La Palma Avenue – Suite 201

Anaheim, CA 92807

(Address of principal executive offices)


(310) 595-5454

 (Registrant’s telephone number)


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 is a large accelerated filer, 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. (Check one):


Large accelerated filer [  ]

Accelerated filer [  ] 

Non-accelerated filer [  ] 

Smaller reporting company [X]

(Do not check if a smaller reporting company)

 


Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [   ] No [X]


State the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date:

9,520,000 shares of common stock, par value $0.0001 per share, as of February 8, 2011

 

Transitional Small Business Disclosure Format (Check one). YES [   ] NO [X]




iBOS, Inc.


Form 10-Q


December 31, 2010


INDEX


PART I – FINANCIAL INFORMATION

 

F-1

Item 1.

Financial Statements

 

F-1

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

1

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

 

5

Item 4.

Controls and Procedures

 

5

PART II – OTHER INFORMATION

 

7

Item 1.

Legal Proceedings

 

7

Item 1A.

Risk Factors

 

7

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

 

7

Item 3.

Defaults Upon Senior Securities

 

7

Item 4.

Submission of Matters to a Vote of Security Holders

 

7

Item 5.

Other Information

 

7

Item 6.

Exhibits

 

8

SIGNATURES

 

 

8

 




 

PART I – FINANCIAL INFORMATION


ITEM 1.   FINANCIAL STATEMENTS


IBOS, Inc.


December 31, 2010 and 2009


Index to Financial Statements


Contents                                                                                                                                                                                                                 Page(s)



Balance Sheets at December 31, 2010 (Unaudited) and March 31, 2010


Statements of Operations for the Three and Nine Months Ended December 31, 2010 and 2009 (Unaudited)


Statement of Stockholders’ Equity (Deficit) for the Nine Months Ended December 31, 2010 (Unaudited)


Statements of Cash Flows for the Nine Months Ended December 31, 2010 and 2009 (Unaudited)


Notes to the Financial Statements (Unaudited)


F-2


F-3


F-4


F-5


F-6 to F-12





F-1





IBOS, INC.

 

 BALANCE SHEETS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2010

 

 

March 31, 2010

 

 

 

 

 

(Unaudited)

 

 

 

 

 ASSETS

 

 

 

 

 

 

 

 

 CURRENT ASSETS:

 

 

 

 

 

 

 

 

 Cash

 

 

 $

3,772 

 

 

29,591 

 

 Accounts receivable

 

 

31,423 

 

 

 

23,861 

 

 Prepaid expenses

 

 

4,336 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Total Current Assets

 

 

39,531 

 

 

 

53,452 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Total Assets

 

 $

39,531 

 

 

53,452 

 

 

 

 

 

 

 

 

 

 

 

 LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

 

 

 

 

 

 

 

 CURRENT LIABILITIES:

 

 

 

 

 

 

 

 

 Accounts payable

 

 $

27,573 

 

 

24,639 

 

 Accrued expenses

 

 

2,300 

 

 

 

8,100 

 

 Advances from stockholders

 

 

23,959 

 

 

 

401 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Total Current Liabilities

 

 

53,832 

 

 

 

33,140 

 

 

 

 

 

 

 

 

 

 

 

 STOCKHOLDERS' EQUITY (DEFICIT):

 

 

 

 

 

 

 

 

 Preferred stock at $0.0001 par value: 5,000,000 shares authorized;

 

 

 

 

 

 

 

 

 

 none issued or outstanding

 

 

 

 

 

 

 Common stock at $0.0001 par value: 100,000,000 shares authorized,

 

 

 

 

 

 

 

 

 9,520,000 shares issued and outstanding

 

 

952 

 

 

 

952 

 

 Additional paid-in capital

 

 

57,456 

 

 

 

57,456 

 

 Accumulated deficit

 

 

(72,709)

 

 

 

(38,096)

 

 

 

 

 

 

 

 

 

 

 

 

 

 Total Stockholders' Equity (Deficit)

 

 

(14,301)

 

 

 

20,312 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Total Liabilities and Stockholders' Equity (Deficit)

 

 $

39,531 

 

 

53,452 

 

 

 

 

 

 

 

 

 

 

 

 See accompanying notes to the financial statements.




F-2





IBOS, INC.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 STATEMENTS OF OPERATIONS

 

 

 

 

 

 

For the Three Months

 

For the Three Months

 

For the Nine Months

 

For the Nine Months

 

 

 

 

 

Ended

 

Ended

 

Ended

 

Ended

 

 

 

 

 

December 31,

2010

 

December 31,

2009

 

December 31, 2010

 

December 31, 2009

 

 

 

 

 

 (Unaudited)

 

 (Unaudited)

 

 (Unaudited)

 

 (Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 NET REVENUES

 

 

$

32,109 

 

 

34,259 

 

$

94,010 

 

$

173,988 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 COST OF SERVICES

 

 

 

29,158 

 

 

31,108 

 

 

85,407 

 

 

159,884 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 GROSS PROFIT

 

 

 

2,951 

 

 

3,151 

 

 

8,603 

 

 

14,104 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 OPERATING EXPENSES:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Advertising and promotion

 

 

 

 

 

 

 

3,578 

 

 Professional fees

 

 

 

12,863 

 

 

2,000 

 

 

38,180 

 

 

14,310 

 

 General and administrative expenses

 

2,189 

 

 

2,731 

 

 

3,436 

 

 

5,246 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Total operating expenses

 

15,052 

 

 

4,731 

 

 

41,616 

 

 

23,134 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 LOSS FROM OPERATIONS

 

(12,101)

 

 

(1,580)

 

 

(33,013)

 

 

(9,030)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 LOSS BEFORE INCOME TAXES

 

(12,101)

 

 

(1,580)

 

 

(33,013)

 

 

(9,030)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 INCOME TAXES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Federal

 

 

 

 

 

 

 

 

 

 

 State

 

 

 

800 

 

 

 

 

1,600 

 

 

800 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Total income taxes

 

 

 

800 

 

 

 

 

1,600 

 

 

800 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 NET LOSS

 

 

$

(12,901)

 

$

(1,580)

 

$

(34,613)

 

$

(9,830)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 NET LOSS PER COMMON SHARE

 

 

 

 

 

 

 

 

 

 

 

 

 - BASIC AND DILUTED:

$

(0.00)

 

$

(0.00)

 

$

(0.00)

 

$

(0.00)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted common shares outstanding

 

 

 

 

 

 

 

 

 

 

 

 

 - basic and diluted

 

 

 

9,520,000 

 

 

9,520,000 

 

 

9,520,000 

 

 

9,407,136 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 See accompanying notes to the financial statements




F-3





IBOS, INC.

 

STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)

For the Interim Periods Ended December 31, 2010

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Common Stock, $0.0001 Par Value

 

 Additional

 

 

 

 Total

 

 

 

 

 Number of

 

 

 

 

 Paid-in

 

 Accumulated

 

 Stockholders'

 

 

 

 

 Shares

 

 Amount

 

 Capital

 

 Deficit

 

 Equity(Deficit)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Balance, March 31, 2009

 

9,200,000 

 

920 

 

14,758 

 

(15,273)

 

405 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Issuance of common stock for cash

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 at $0.10 per share from July 6, 2009

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 through July 27, 2009

 

320,000 

 

 

32 

 

 

31,968 

 

 

 

 

 

32,000 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Forgiveness of debt by stockholders

 

 

 

 

 

 

 

10,730 

 

 

 

 

 

10,730 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Net (loss)

 

 

 

 

 

 

 

 

 

 

(22,823)

 

 

(22,823)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Balance, March 31, 2010

 

9,520,000 

 

 

952 

 

 

57,456 

 

 

(38,096)

 

 

20,312 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Net (loss)

 

 

 

 

 

 

 

 

 

 

(34,613)

 

 

(34,613)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Balance,  December 31, 2010

 

9,520,000 

 

952 

 

57,456 

 

(72,709)

 

(14,301)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 See accompanying notes to the financial statements.




F-4





IBOS, INC.

 

 

 

 

 

 

 

 

 

 

 

 STATEMENTS OF CASH FLOWS

 

 

 

 

 

 

 

For the Nine Months

 

For the Nine Months

 

 

 

 

 

 

Ended

 

Ended

 

 

 

 

 

 

December 31, 2010

 

December 31, 2009

 

 

 

 

 

 

 (Unaudited)

 

 (Unaudited)

 CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

 

 

 

 

 

 

 Net (loss)

 

 

 

(34,613)

 

(9,830)

 

 

 

 

 

 

 

 

 

 

 

 Adjustments to reconcile net loss to net cash used in operating activities

 

 

 

 

 

 

 

 

 

 Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

 

 

 Accounts receivable

 

 

 

 

(7,562)

 

 

42,000 

 

 

 Prepaid expenses

 

 

 

 

(4,336)

 

 

 

 

 Accounts payable

 

 

 

 

2,934 

 

 

(37,774)

 

 

 Accrued expenses  

 

 

 

 

(5,800)

 

 

(5,500)

 

 

 

 

 

 

 

 

 

 

 

 NET CASH (USED IN) OPERATING ACTIVITIES

 

 

 

 

(49,377)

 

 

(11,104)

 

 

 

 

 

 

 

 

 

 

 

 CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

 

 

 

 

 

 

 

 Amounts received from (paid to) stockholders

 

 

 

 

23,558 

 

 

233 

 

 Proceeds from sale of common stock

 

 

 

 

 

 

32,000 

 

 

 

 

 

 

 

 

 

 

 

 NET CASH PROVIDED BY FINANCING ACTIVITIES

 

 

 

 

23,558 

 

 

32,233 

 

 

 

 

 

 

 

 

 

 

 

 NET CHANGE IN CASH

 

 

 

 

(25,819)

 

 

21,129 

 

 

 

 

 

 

 

 

 

 

 

 Cash at beginning of period

 

 

 

 

29,591 

 

 

11,511 

 

 

 

 

 

 

 

 

 

 

 

 Cash at end of period

 

 

 

3,772 

 

32,640 

 

 

 

 

 

 

 

 

 

 

 

 SUPPLEMENTAL DISCLOSURE OF CASH FLOWS INFORMATION:

 

 

 

 

 

 

 

 

 Interest paid

 

 

 

 

 

 Income taxes paid

 

 

 

1,600 

 

800 

 

 

 

 

 

 

 

 

 

 

 

 See accompanying notes to the financial statements.



F-5




IBOS, Inc.

December 31, 2010 and 2009

Notes to the Financial Statements

(Unaudited)


NOTE 1 – ORGANIZATION AND OPERATIONS


IBOS, Inc. (“IBOS” or the “Company”) was incorporated as a Subchapter S corporation on April 11, 2006 under the laws of the State of California.  It was converted into a C corporation, incorporated in the State of Delaware on March 5, 2009, in a transaction in which the newly-formed corporation issued an aggregate of 9,000,000 shares of common stock to the former stockholders of the S corporation for all of the issued and outstanding shares of the Company.  All shares were held by and all shares of common stock were issued to the Company’s stockholders and President and Chief Executive Officer, Chief Technology Officer and Chief Financial Officer.  No cash consideration was paid.  No value was given to the shares issued by the newly formed corporation.  Therefore, the shares were recorded to reflect the $.0001 par value and additional paid-in capital was recorded as a negative amount ($900).  The Company applied paragraph 505-10-S99-3 of the FASB Accounting Standards Codification (formerly Topic 4B of the Staff Accounting Bulletins (“SAB”) (“SAB Topic 4B”) issued by the United States Securities and Exchange Commission (the “SEC”)), by reclassifying all of the Company’s undistributed earnings and losses to additional paid-in capital as of March 5, 2009.  The accompanying financial statements have been prepared as if the Company had its corporate capital structure as of the first date of the first period presented.


The Company provides web-based comprehensive selection of electronic medical claims processing and collection solutions to the healthcare provider industry.  Revenue generated for the interim periods ended December 31, 2010 and 2009 were solely from electronically indexing documents.


NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES


Basis of presentation


The accompanying unaudited interim financial statements and related notes have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information, and with the rules and regulations of the United States Securities and Exchange Commission (“SEC”) to Form 10-Q and Article 8 of Regulation S-X.  Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements.  The unaudited interim financial statements furnished reflect all adjustments (consisting of normal recurring accruals) which are, in the opinion of management, necessary to a fair statement of the results for the interim periods presented.  Unaudited interim results are not necessarily indicative of the results for the full fiscal year.  These financial statements should be read in conjunction with the financial statements of the Company for the fiscal year ended March 31, 2010 and notes thereto contained in the information filed as part of the Company’s Registration Statement on Form S-1, which was declared effective on October 25, 2010.


Reclassification


Certain amounts in the prior period financial statements have been reclassified to conform to the current period presentation.   These reclassifications had no effect on reported losses.


Use of estimates


The preparation of financial statements in conformity with U.S. GAAP 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 reporting amounts of revenues and expenses during the reported period. Significant estimates include the estimated useful lives of property and equipment, software copyright and technology.  Actual results could differ from those estimates.


Fiscal year end


The Company elected March 31 as its fiscal year ending date.


Cash equivalents


The Company considers all highly liquid investments with maturities of three months or less at the time of purchase to be cash equivalents.



F-6





Accounts receivable


Accounts receivable are recorded at the invoiced amount, net of an allowance for doubtful accounts.  The allowance for doubtful accounts is the Company’s best estimate of the amount of probable credit losses in the Company’s existing accounts receivable. The Company determines the allowance based on historical write-off experience, customer specific facts and economic conditions.  Bad debt expense is included in general and administrative expenses, if any.


Outstanding account balances are reviewed individually for collectability.  Account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote.  To date, the Company has not charged off any balances as it has yet to exhaust all means of collection.


The Company does not have any off-balance-sheet credit exposure to its customers.


Fair value of financial instruments


The Company follows paragraph 825-10-50-10 of the FASB Accounting Standards Codification for disclosures about fair value of its financial instruments and has adopted paragraph 820-10-35-37 of the FASB Accounting Standards Codification (“Paragraph 820-10-35-37”) to measure the fair value of its financial instruments.  Paragraph 820-10-35-37 of the FASB Accounting Standards Codification establishes a framework for measuring fair value in generally accepted accounting principles (GAAP), and expands disclosures about fair value measurements. To increase consistency and comparability in fair value measurements and related disclosures, paragraph 820-10-35-37 of the FASB Accounting Standards Codification establishes a fair value hierarchy which prioritizes the inputs to valuation techniques used to measure fair value into three (3) broad levels.  The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs.  The three (3) levels of fair value hierarchy defined by paragraph 820-10-35-37 of the FASB Accounting Standards Codification are described below:


Level 1

 

Quoted market prices available in active markets for identical assets or liabilities as of the reporting date.

 

 

 

Level 2

 

Pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date.

 

 

 

Level 3

 

Pricing inputs that are generally observable inputs and not corroborated by market data.


The carrying amounts of the Company’s financial assets and liabilities, such as cash, accounts receivable, prepaid expenses, accounts payable and accrued expenses, approximate their fair values because of the short maturity of these instruments.


The Company does not have any assets or liabilities measured at fair value on a recurring or a non-recurring basis, consequently, the Company did not have any fair value adjustments for assets and liabilities measured at fair value at December 31, 2010 or March 31, 2010, no gains or losses are reported in the statement of operations that are attributable to the change in unrealized gains or losses relating to those assets and liabilities still held at the reporting date for the interim periods ended December 31, 2010 or 2009.


Revenue recognition


The Company applies paragraph 605-10-S99-1 of the FASB Accounting Standards Codification for revenue recognition.  The Company recognizes revenue when it is realized or realizable and earned.  The Company considers revenue realized or realizable and earned when all of the following criteria are met: (i) persuasive evidence of an arrangement exists, (ii) the product has been shipped or the services have been rendered to the customer, (iii) the sales price is fixed or determinable, and (iv) collectability is reasonably assured.  The Company derives its revenues from sales contracts with its customer with revenues being generated upon rendering of services.  Persuasive evidence of an arrangement is demonstrated via invoice; service is considered provided when the service is delivered to the customers; and the sales price to the customer is fixed upon acceptance of the purchase order and there is no separate sales rebate, discount, or volume incentive.  The Company receives a fee for each document indexed on a charge per page basis, or a minimum base fee of $252 (the “Base Fee”) for each 24 hour period except holidays and weekends if a certain number of indexed pages are not met.


The Company outsources all of its services to an unrelated third party and follows paragraph 605-45-45-4 through 14 (formerly paragraphs 7 through 14 of EITF 99-19) of the FASB Accounting Standards Codification for revenue recognition to report



F-7




revenue gross as a principal for its services since the Company (1) acts as principal contractor in the transaction, (2) takes title to the products and services, (3) has risks and rewards of ownership, such as the risk of loss for collection, delivery, or returns, and (4) does not act as an agent or broker (including performing services, in substance, as an agent or broker) with compensation on a commission or fee basis on its document indexing services.  The management of the Company determined that the Company should report revenue based on the gross amount billed to a customer when considering each of the following eight (8) indicators of gross revenue reporting listed in ASC 605-45-45-4 through 605-45-45-14 as specified (1) The entity is the primary obligor in the arrangement — The Company signed a service agreement with its customer and represented in writing that the Company is responsible for fulfillment, including the acceptability of the product(s) or service(s) ordered or purchased by the customer; (2) The entity has general inventory risk (before customer order is placed or upon customer return) — Not applicable; (3) The entity has latitude in establishing price — The Company has reasonable latitude, within economic constraints, to establish the exchange price with a customer for the product or service; (4) The entity changes the product or performs part of the service — Not applicable; (5) The entity has discretion in supplier selection — The Company has multiple suppliers for the services ordered by a customer and discretion to select the supplier that will provide the product(s) or service(s) ordered by a customer; (6) The entity is involved in the determination of product or service specifications — The Company determines the nature, type, characteristics, or specifications of the product(s) or service(s) ordered by the customer; (7) The entity has physical loss inventory risk — after customer order or during shipping — Not applicable; and (8) The entity has credit risk — The Company is responsible for collecting the sales price from its customer but must pay the amount owed to its supplier after the supplier performs, regardless of whether the sales price is fully collected


Equity instruments issued to parties other than employees for acquiring goods or services


The Company accounts for equity instruments issued to parties other than employees for acquiring goods or services under guidance of section 505-50-30 of the FASB Accounting Standards Codification (“ASC Section 505-50-30”).  Pursuant to ASC Section 505-50-30, all transactions in which goods or services are the consideration received for the issuance of equity instruments are accounted for based on the fair value of the consideration received or the fair value of the equity instrument issued, whichever is more reliably measurable.  The measurement date used to determine the fair value of the equity instrument issued is the earlier of the date on which the performance is complete or the date on which it is probable that performance will occur.


Income taxes


The Company was a Subchapter S corporation, until March 5, 2009 during which time the Company was treated as a pass through entity for federal income tax purposes.  Under Subchapter S of the Internal Revenue Code stockholders of an S corporation are taxed separately on their distributive share of the S corporation’s income whether or not that income is actually distributed.


Effective March 6, 2009, the Company follows paragraph 710-10-30-2 of the FASB Accounting Standards Codification, which requires recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns.  Under this method, deferred tax assets and liabilities are based on the differences between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse.  Deferred tax assets are reduced by a valuation allowance to the extent management concludes it is more likely than not that the assets will not be realized.  Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.  The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the Statements of Operations in the period that includes the enactment date.


The Company adopted the provisions of paragraph 740-10-25-13 of the FASB Accounting Standards Codification. Paragraph 740-10-25-13.addresses the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements.  Under paragraph 740-10-25-13, the Company may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position.  The tax benefits recognized in the financial statements from such a position should be measured based on the largest benefit that has a greater than fifty percent (50%) likelihood of being realized upon ultimate settlement.  Paragraph 740-10-25-13 also provides guidance on de-recognition, classification, interest and penalties on income taxes, accounting in interim periods and requires increased disclosures.  The Company had no material adjustments to its liabilities for unrecognized income tax benefits according to the provisions of paragraph 740-10-25-13.


Net income (loss) per common share


Net income (loss) per common share is computed pursuant to section 260-10-45 of the FASB Accounting Standards Codification.   Basic net income (loss) per common share is computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding during the period.  Diluted net income (loss) per common share is computed by dividing net income (loss) by the weighted average number of shares of common stock and potentially outstanding shares of common stock during



F-8




the period.  There were no potentially dilutive shares outstanding at the reporting date for the interim period ended December 31, 2010 or 2009.


Commitments and contingencies


The Company follows subtopic 450-20 of the FASB Accounting Standards Codification to report accounting for contingencies.  Liabilities for loss contingencies arising from claims, assessments, litigation, fines and penalties and other sources are recorded when it is probable that a liability has been incurred and the amount of the assessment can be reasonably estimated.


Cash flows reporting


The Company adopted paragraph 230-10-45-24 of the FASB Accounting Standards Codification for cash flows reporting, classifies cash receipts and payments according to whether they stem from operating, investing, or financing activities and provides definitions of each category, and uses the indirect or reconciliation method (“Indirect method”) as defined by paragraph 230-10-45-25 of the FASB Accounting Standards Codification to report net cash flow from operating activities by adjusting net income to reconcile it to net cash flow from operating activities by removing the effects of (a) all deferrals of past operating cash receipts and payments and all accruals of expected future operating cash receipts and payments and (b) all items that are included in net income that do not affect operating cash receipts and payments.  The Company reports the reporting currency equivalent of foreign currency cash flows, using the current exchange rate at the time of the cash flows and the effect of exchange rate changes on cash held in foreign currencies is reported as a separate item in the reconciliation of beginning and ending balances of cash and cash equivalents and separately provides information about investing and financing activities not resulting in cash receipts or payments in the period pursuant to paragraph 830-230-45-1 of the FASB Accounting Standards Codification.


Subsequent events


The Company follows the guidance in Section 855-10-50 of the FASB Accounting Standards Codification for the disclosure of subsequent events. The Company will evaluate subsequent events through the date when the financial statements were issued.  Pursuant to ASU 2010-09 of the FASB Accounting Standards Codification, the Company as an SEC filer considers its financial statements issued when they are widely distributed to users, such as through filing them on EDGAR.


Recently issued accounting pronouncements


In January 2010, the FASB issued the FASB Accounting Standards Update No. 2010-06 “Fair Value Measurements and Disclosures (Topic 820) Improving Disclosures about Fair Value Measurements”, which provides amendments to Subtopic 820-10 that requires new disclosures as follows:

1.

Transfers in and out of Levels 1 and 2. A reporting entity should disclose separately the amounts of significant transfers in and out of Level 1 and Level 2 fair value measurements and describe the reasons for the transfers.

2.

Activity in Level 3 fair value measurements. In the reconciliation for fair value measurements using significant unobservable inputs (Level 3), a reporting entity should present separately information about purchases, sales, issuances, and settlements (that is, on a gross basis rather than as one net number).


This Update provides amendments to Subtopic 820-10 that clarify existing disclosures as follows:

1.

Level of disaggregation. A reporting entity should provide fair value measurement disclosures for each class of assets and liabilities. A class is often a subset of assets or liabilities within a line item in the statement of financial position. A reporting entity needs to use judgment in determining the appropriate classes of assets and liabilities.

2.

Disclosures about inputs and valuation techniques. A reporting entity should provide disclosures about the valuation techniques and inputs used to measure fair value for both recurring and nonrecurring fair value measurements. Those disclosures are required for fair value measurements that fall in either Level 2 or Level 3.


This Update also includes conforming amendments to the guidance on employers' disclosures about postretirement benefit plan assets (Subtopic 715-20). The conforming amendments to Subtopic 715-20 change the terminology from major categories of assets to classes of assets and provide a cross reference to the guidance in Subtopic 820-10 on how to determine appropriate classes to present fair value disclosures. The new disclosures and clarifications of existing disclosures are effective for interim and annual reporting periods beginning after December 15, 2009, except for the disclosures about purchases, sales, issuances, and settlements in the roll forward of activity in Level 3 fair value measurements. Those disclosures are effective for fiscal years beginning after December 15, 2010, and for interim periods within those fiscal years.



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In April 2010, the FASB issued ASU No. 2010-13, “Compensation—Stock Compensation (Topic 718): Effect of Denominating the Exercise Price of a Share-Based Payment Award in the Currency of the Market in Which the Underlying Equity Security Trades” (“ASU 2010-13”). This update provides amendments to Topic 718 to clarify that an employee share-based payment award with an exercise price denominated in the currency of a market in which a substantial portion of the entity’s equity securities trades should not be considered to contain a condition that is not a market, performance, or service condition. Therefore, an entity would not classify such an award as a liability if it otherwise qualifies as equity. The amendments in ASU 2010-13 are effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2010. 


In August 2010, the FASB issued ASU 2010-21, “Accounting for Technical Amendments to Various SEC Rules and Schedules: Amendments to SEC Paragraphs Pursuant to Release No. 33-9026: Technical Amendments to Rules, Forms, Schedules and Codification of Financial Reporting Policies” (“ASU 2010-21”), was issued to conform the SEC’s reporting requirements to the terminology and provisions in ASC 805, Business Combinations, and in ASC 810-10, Consolidation. ASU No. 2010-21 was issued to reflect SEC Release No. 33-9026, “Technical Amendments to Rules, Forms, Schedules and Codification of Financial Reporting Policies,” which was effective April 23, 2009. The ASU also proposes additions or modifications to the XBRL taxonomy as a result of the amendments in the update.


In August 2010, the FASB issued ASU 2010-22, “Accounting for Various Topics: Technical Corrections to SEC Paragraphs” (“ASU 2010-22”), which amends various SEC paragraphs based on external comments received and the issuance of SEC Staff Accounting Bulletin (SAB) No. 112, which amends or rescinds portions of certain SAB topics.  The topics affected include reporting of inventories in condensed financial statements for Form 10-Q, debt issue costs in conjunction with a business combination, sales of  stock by subsidiary, gain recognition on sales of business, business combinations prior to an initial public offering, loss contingent and liability assumed in business combination, divestitures, and oil and gas exchange offers. 


In December 2010, the FASB issued the FASB Accounting Standards Update No. 2010-28 “Intangibles—Goodwill and Other (Topic 350): When to Perform Step 2 of the Goodwill Impairment Test for Reporting Units with Zero or Negative Carrying Amounts” (“ASU 2010-28”).Under ASU 2010-28, if the carrying amount of a reporting unit is zero or negative, an entity must assess whether it is more likely than not that goodwill impairment exists. To make that determination, an entity should consider whether there are adverse qualitative factors that could impact the amount of goodwill, including those listed in ASC 350-20-35-30. As a result of the new guidance, an entity can no longer assert that a reporting unit is not required to perform the second step of the goodwill impairment test because the carrying amount of the reporting unit is zero or negative, despite the existence of qualitative factors that indicate goodwill is more likely than not impaired. ASU 2010-28 is effective for public entities for fiscal years, and for interim periods within those years, beginning after December 15, 2010, with early adoption prohibited.


In December 2010, the FASB issued the FASB Accounting Standards Update No. 2010-29 “Business Combinations (Topic 805): Disclosure of Supplementary Pro Forma Information for Business Combinations” (“ASU 2010-29”). ASU 2010-29 specifies that if a public entity presents comparative financial statements, the entity should disclose revenue and earnings of the combined entity as though the business combination(s) that occurred during the current year had occurred as of the beginning of the comparable prior annual reporting period only. The amendments in this Update also expand the supplemental pro forma disclosures under Topic 805 to include a description of the nature and amount of material, nonrecurring pro forma adjustments directly attributable to the business combination included in the reported pro forma revenue and earnings. The amended guidance is effective prospectively for business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2010. Early adoption is permitted.


Management does not believe that any other recently issued, but not yet effective accounting pronouncements, if adopted, would have a material effect on the accompanying consolidated financial statements.


NOTE 3 – GOING CONCERN


The accompanying financial statements have been prepared assuming that the Company will continue as a going concern.  As reflected in the accompanying financial statements, the Company had an accumulated deficit of $72,709 at December 31, 2010, a net loss of $34,613 and net cash used in operating activities of $49,377 for the interim period then ended, respectively.


While the Company is attempting to generate sufficient revenues, the Company’s cash position may not be sufficient enough to support the Company’s daily operations.  Management intends to raise additional funds by way of a public or private offering.  Management believes that the actions presently being taken to further implement its business plan and generate sufficient revenues provide the opportunity for the Company to continue as a going concern.  While the Company believes in the viability of its strategy to generate sufficient revenues and in its ability to raise additional funds, there can be no assurances to that effect.  The ability of the Company to continue as a going concern is dependent upon the Company’s ability to further implement its business plan and generate



F-10




sufficient revenues.


The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.


NOTE 4 – RELATED PARTY TRANSACTIONS


Advances from stockholders


Advances from stockholders at December 31, 2010 and March 31, 2010 consisted of the following:


 

 

 

December 31,

2010

 

 

March 31,

2010

 

Advances from stockholders

 

23,959 

 

 

401 

 

 

 

 

 

 

 

 

 

 

 

 

23,959 

 

 

401 

 

 

 

 

 

 

 

 


Stockholders of the Company advanced $29,298 in aggregate to the Company for working capital purposes  and the Company repaid $5,740 in aggregate for the interim period ended December 31, 2010. The remaining balance of advances from stockholders at December 31, 2010 was $23,959. Such amounts are unsecured, non-interest bearing and are due on demand.


Free office space from American Commercial Lighting, Inc.


The Company has been provided office space at no cost by American Commercial Lighting, Inc., an entity under common control of the stockholders of the Company, which holds a formal lease to the premises.  No formal lease exists between the Company and American Commercial Lighting, Inc.  The management determined that such cost is nominal and did not recognize rent expense in its financial statements.  The office space provides office equipment and services needed to operate our business, including furniture, phones, internet connection, supplies, and printer use.


NOTE 5 – STOCKHOLDERS’ EQUITY


Common stock


For the period from July 6, 2009 through July 27, 2009, the Company sold 320,000 shares of its common stock to 32 individuals at $0.10 per share or $32,000 in aggregate.


Additional paid-in capital


On March 31, 2010, the stockholders and officers of the Company forgave $10,730 of their advances to the Company and contributed the same amount to capital.


NOTE 6 – CONCENTRATIONS AND CREDIT RISK


Customers and Credit Concentrations


One (1) customer accounted for all of the sales and accounts receivable for the interim period ended December 31, 2010 and 2009.  A reduction in sales from or loss of such customer would have a material adverse effect on the Company’s results of operations and financial condition.


Vendors and Credit Concentrations


One (1) vendor provided all of the services to its customer on a subcontractor basis and accounted for most of its accounts payable for the interim period ended December 31, 2010 and 2009.


NOTE 7 – COMMITMENTS AND CONTINGENCIES


Service agreement




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On April 26, 2010, the Company entered into an agreement (“Agreement”) with an unrelated third party. Pursuant to the Agreement, the Company is required to pay $13,000 for stock transfer agent services over a 12 month period, $6,500 of which was paid upon signing and the remaining $6,500 was paid in November 2010. The Company amortizes the $13,000 ratably over the period in which the stock transfer services are performed.


NOTE 8 – SUBSEQUENT EVENTS


The Company has evaluated all events that occurred after the balance sheet date through the date when the financial statements were issued to determine if they must be reported.  The Management of the Company determined that there were no reportable subsequent events to be disclosed.



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ITEM 2.  MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS


Management’s Discussion and Analysis contains statements that are forward-looking. These statements are based on current expectations and assumptions that are subject to risks and uncertainties. Actual results could differ materially because of factors discussed in “Factors That May Affect Future Results and Financial Condition.”


OVERVIEW


Revenue Recognition


The Company applies paragraph 605-10-S99-1 of the FASB Accounting Standards Codification for revenue recognition.  The Company recognizes revenue when it is realized or realizable and earned.  The Company considers revenue realized or realizable and earned when all of the following criteria are met: (i) persuasive evidence of an arrangement exists, (ii) the product has been shipped or the services have been rendered to the customer, (iii) the sales price is fixed or determinable, and (iv) collectability is reasonably assured.  The Company derives its revenues from sales contracts with its sole customer and any potential future customer with revenues being generated upon rendering of services.  Persuasive evidence of an arrangement is demonstrated via invoice; service is considered provided when the service is delivered to the customer or future customer; and the sales price to the customer is fixed upon acceptance of the purchase order and there is no separate sales rebate, discount, or volume incentive.  The Company receives a fee for each document indexed on a charge per page basis, or a minimum base fee of $252 (the “Base Fee”) for each 24 hour period except holidays and weekends if a certain number of indexed pages are not met.


The Company outsources all of its services to an unrelated third party and follows paragraph 605-45-45-4 through 14 (formerly paragraphs 7 through 14 of EITF 99-19) of the FASB Accounting Standards Codification for revenue recognition to report revenue gross as a principal for its services since the Company (1) acts as principal contractor in the transaction, (2) takes title to the products and services, (3) has risks and rewards of ownership, such as the risk of loss for collection, delivery, or returns, and (4) does not act as an agent or broker (including performing services, in substance, as an agent or broker) with compensation on a commission or fee basis on its document indexing services.  The management of the Company determined that the Company should report revenue based on the gross amount billed to a customer when considering each of the following eight (8) indicators of gross revenue reporting listed in ASC 605-45-45-4 through 605-45-45-14 as specified (1) The entity is the primary obligor in the arrangement — The Company signed a service agreement with its customer and represented in writing that the Company is responsible for fulfillment, including the acceptability of the product(s) or service(s) ordered or purchased by the customer; (2) The entity has general inventory risk (before customer order is placed or upon customer return) — Not applicable; (3) The entity has latitude in establishing price — The Company has reasonable latitude, within economic constraints, to establish the exchange price with a customer for the product or service; (4) The entity changes the product or performs part of the service — Not applicable; (5) The entity has discretion in supplier selection — The Company has multiple suppliers for the services ordered by a customer and discretion to select the supplier that will provide the product(s) or service(s) ordered by a customer; (6) The entity is involved in the determination of product or service specifications — The Company determines the nature, type, characteristics, or specifications of the product(s) or service(s) ordered by the customer; (7) The entity has physical loss inventory risk — after customer order or during shipping — Not applicable; and (8) The entity has credit risk — The Company is responsible for collecting the sales price from its customer but must pay the amount owed to its supplier after the supplier performs, regardless of whether the sales price is fully collected


RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED DECEMBER 31, 2010 AND 2009 AND THE NINE MONTHS ENDED DECEMBER 31, 2010 AND 2009


The following table sets forth for the periods indicated certain statement of operations data:



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STATEMENTS OF OPERATIONS DATA:

For the Three

Months ended

December

31, 2010

(Unaudited)

For the Three

Months ended

December

31, 2009

(Unaudited)

For the Nine

Months ended

December

31, 2010

(Unaudited)

For the Nine

Months ended

December

31, 2009

(Unaudited) 

Net Revenues:

$                32,109 

$                34,259 

$              94,010 

$             173,988 

Cost of Services:

$                29,158 

$                 31,108 

$              85,407 

$             159,884 

Gross Profit:

$                  2,951 

$                   3,151 

$                8,603 

$               14,104 

Operating Expenses:

$                15,052 

$                  4,731 

$              41,616 

$               23,134 

Loss before income tax:

$              (12,101)

$                (1,580)

$            (33,013)

$               (9,030)

Income tax expense:

$                     800 

$                          - 

$                1,600 

$                    800 

Net Loss:

$              (12,901)

$                (1,580)

$            (34,613)

$               (9,830)

Net Loss Per Common Share – Basic and diluted:

$                   (0.00)

$                   (0.00)

$                (0.00)

$                 (0.00)



Segment information


We report information about operating segments, as well as disclosures about our services, geographic areas, and sole major customer.  Operating segments are defined as revenue-producing components of the enterprise, which are generally used internally for evaluating segment performance.


Our revenue base is derived from providing a web based section of electronic medical claims processing.  We have concluded that we have only one reportable segment.


OPERATIONS


Net Revenues


A summary of net revenues generated for the three and nine months ending December 31, 2010 and 2009 is as follows:


 

Three Months Ended

December 31,

Nine Months Ended

December 31,

 

2010

(Unaudited)

2009

(Unaudited)

2010

(Unaudited)

2009

(Unaudited)

Net Revenues

$32,109

$34,259

$94,010

$173,988



Total revenue for the three months ended December 31, 2010 was $32,109 compared to $34,259 for the three months ended December 31, 2009. This represents a decrease of $2,150 from that of the prior fiscal period or a decrease of 6.3%.  This decrease reflects a decrease in the number of pages and documents processed for our sole customer.


Our periodic revenues directly correlate to the number of pages and documents processed within that period.  Although we expect to generate revenue in the future from subscription fees, billing solution fees, support fees, customization, and consulting fees, as discussed elsewhere herein, our sole revenue source during these periods has been through indexing fees, where we bill a per page processing fee to our sole customer.  This service is currently provided by an independent third-party subcontractor.


In the three months ended December 31, 2010, we processed approximately 320,000 pages, as compared to processing approximately 340,000 pages for same period in the prior year.  This is a decrease of about 5.9% of pages and documents processed between the two periods.  If we were to lose this sole customer’s business, our revenue stream would be greatly affected and decrease completely until we found other customers or generated income elsewhere.


Total revenue for the nine months ended December 31, 2010 was $94,010 compared to $173,988 for the nine months ended December 31, 2009.  This represents a decrease of $79,978 from that of the nine months ended December 31, 2009, or 46%.  This



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decrease reflects a decrease in the number of pages and documents processed for our sole customer.  This decrease in pages and documents processed is due to our sole customer being affected by the economic slowdown in the United States.


Cost of Services 


 

Three Months Ended

December 31,

Nine Months Ended

December 31,

 

2010

(Unaudited)

2009

(Unaudited)

2010

(Unaudited)

2009

(Unaudited)

Cost of Services

$29,158

$31,108

$85,407

$159,884

% of Revenue

90.8%

90.8%

90.8%

91.9%


Our cost of services is comprised solely of the cost of the third party vendor that provides all of the services to our sole customer on a subcontractor basis.  Our costs are on a per page basis and remain fairly constant as a percentage of revenue.  The period to period decreases in the cost of our revenue reflects a decrease in the overall costs for pages and documents processed for our sole customer.  This decrease in the pages and documents processed is due to our sole customer being affected by the economic slowdown in the United States.


Gross Profit


 

Three Months Ended

December 31,

Nine Months Ended

December 31,

 

2010

(Unaudited)

2009

(Unaudited)

2010

(Unaudited)

2009

(Unaudited)

  Gross Profit

$2,951

$3,151

$8,603

$14,104

  % of Revenue

9.2%

9.2%

9.2%

8.1%


Gross profit decreased by $200 for the three months ended December 31, 2010 compared to the corresponding period in the prior year.  The decrease was due to an overall higher cost of services per page and documents processed, making the ratio of costs of services over net revenues higher in 2010.


Gross profit decreased by $5,501 for the nine months ended December 31, 2010, compared to the corresponding period in the prior year. The decrease was due to a decrease in the number of pages and documents processed.


Operating Expenses


 

Three Months Ended

December 31,

Nine Months Ended

December 31,

 

2010

(Unaudited)

2009

(Unaudited)

2010

(Unaudited)

2009

(Unaudited)

  Operating Expenses

$15,052

$4,731

$41,616

$23,134

  % of Revenue

46.9%

13.8%

44.3%

13.3%


Operating expenses for the three month periods ended December 31, 2010 and 2009 were $15,052 and $4,731 respectively.  This increase was due to increased professional costs such as accounting fees related to the preparation of our private placement documents and Registration Statement on Form S-1, auditing fees, attorney fees related to the preparation of offering documents and the Registration Statement on Form S-1, transfer agent fees that were not present in the three month period ended December 31, 2009, and increased advertising and promotion expenses.  These increases were due to increased activity and S-1 Registration Statement costs.  We had no officer compensation expenses in the three month periods ended December 31, 2010 and 2009.  


Operating expenses increased from $23,134 for the nine months ended December 31, 2009, to $41,616 for the nine months ended December 31, 2010, due to increased costs related to professional services incurred.  Increased professional service costs including EDGARization fees, audit and accounting related fees for the filing of our Registration Statement on Form S-1.  We were also amortizing a pre-paid one year services contract with our transfer agent in 2010 that was not in force in 2009.




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The Company recorded the minimum state tax provision of $800 for the State of California for the three months ended December 31, 2010 and $1,600 in aggregate during the nine months ended December 31, 2010.  The state minimum tax recorded of $800 for the nine months ended December 31, 2009.


Liquidity and Capital Resources


Since our inception, we have financed our operations through loans, sale of our common stock, and funds generated by our business.  From time to time, our major stockholders and chief executive officer advance funding to the Company for our working capital purpose.  As of December 31, 2010, remaining advances from stockholders were $23,959.  The advances from the major stockholders and chief executive officer bear no interest and due on demand. However, our major stockholders and chief executive officer have no contractual obligations to fund our operations and no assurance can be given that future funding will be available through advances or loans from, our major stockholders and chief executive officer, or additional proceeds from sale of our common stock.  As of December 31, 2010, we had $3,772 in cash, which is not adequate to satisfy our ongoing working capital needs past March 2011.  During Fiscal Year 2011, our primary objectives in managing liquidity and cash flows will be to ensure financial flexibility to keep the Company operating and support growth.


Net Cash Provided by (Used in) Operating Activities. Net cash used in operating activities amounted to ($49,377) for the nine months ended December 31, 2010.  We incurred net loss of ($34,613), a decrease in accounts receivable, a decrease in prepaid expenses, an increase in accounts payable and a decrease in accrued expenses, which resulted in a net cash used in operating activities of ($49,377).


Net Cash Provided by (Used in) Investing Activities.  None.


Net Cash Provided by (Used in) Financing Activities.  Net cash provided by financing activities was $23,558 for the nine months ended December 31, 2010, which represented a loan from our shareholders.


Given our recent trend of negative cash flows in our operations, which is an approximately $4,000 per month burn rate, we believe that unless gross profits increase we do not have sufficient capital to carry on operations past March 2011.  We plan to raise additional capital in a Regulation D Rule 505 exemption private placement equity offering within six months to secure the funds needed to finance our plan of operation for 2011 and overcome the uncertainty of our ability to continue as a going concern.  This $50,000 raise would allow us to continue for approximately 12 months past March 2011 at the projected burn rate of $4,000 per month, or $48,000 for 12 months.  However, this is a forward-looking statement, and there may be changes that could consume available resources before such time.  Our contingency plan if the funds cannot be raised is to; 1) have the company seek a bank credit line; 2) receive loans from our officers; 3) private equity investments or debt financing from individuals or entities.  Our long term capital requirements and the adequacy of our available funds will depend on many factors, including the eventual reporting company costs and public relations fees, among others.  If we are unable to raise additional capital or generate sufficient revenue we will have to curtail or cease our operations.


Management plans to also seek additional capital to fund operations, growth, and expansion through additional equity financing, debt financing, or credit facilities.  We have had early stage discussions with investors about potential investment in our firm at a future date.  No assurance can be made that such financing would be available on acceptable terms, and if available, it may take either the form of debt or equity.  In either case, the financing could have a negative impact on our financial condition and our shareholders.


Our continuing operations are dependent on our ability to obtain financing and upon our ability to achieve future profitable operations.  Our independent registered public accounting firm issued its audit report including an explanatory paragraph as to an uncertainty with respect to our ability to continue as a going concern.  If we are not able to continue as a going concern, it is likely investors will lose all of their investment.


Off Balance Sheet Arrangements


None




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Forward-Looking Statements


This report contains forward-looking statements, which relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as "may", "should", "expects", "plans", "anticipates", "believes", "estimates", "predicts", "potential" or "continue" or the negative of these terms or other comparable terminology.  These statements are only predictions and involve known and unknown risks, uncertainties and other factors, including the risks detailed in our Registration Statement on Form S-1 filed with the SEC on October 6, 2010, in the section entitled "Risk Factors," that may cause our or our industry's actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements.


While these forward-looking statements, and any assumptions upon which they are based, are made in good faith and reflect our current judgment regarding the direction of our business, actual results will almost always vary, sometimes materially, from any estimates, predictions, projections, assumptions or other future performance suggested herein.  Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results.


INFLATION


Inflation can be expected to have an impact on our operating costs.  A prolonged period of inflation could cause interest rates, wages and other costs to increase which would adversely affect our results of operations unless event planning rates could be increased correspondingly.  However, the effect of inflation has been minimal over the past two years.


FACTORS THAT MAY AFFECT FUTURE RESULTS AND FINANCIAL CONDITION


Our future operations and financial condition are dependent on our ability to successfully sustain not only our current revenue generating services, electronic document indexing, but also supplement or replace that revenue with revenue to be generated from other services we plan to provide, such as medical claims processing and collection solutions to the healthcare provider industry. Inherent in this process are a number of factors that we must successfully manage in order to achieve favorable future operating results and financial condition. Potential risks and uncertainties that could affect future operating results and financial condition include, without limitation, the factors discussed below.


ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK


The Company is subject to certain market risks, including changes in interest rates and currency exchange rates.  The Company does not undertake any specific actions to limit those exposures.


ITEM 4.  CONTROLS AND PROCEDURES


An evaluation was carried out under the supervision and with the participation of our management, including our Chief Executive Officer and our Chief Financial Officer, of the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report on Form 10-Q. Disclosure controls and procedures are procedures that are designed with the objective of ensuring that information required to be disclosed in our reports filed under the Securities Exchange Act of 1934, such as this Form 10-Q, is recorded, processed, summarized and reported, within the time period specified in the Securities and Exchange Commission’s rules and forms, and that such information is accumulated and is communicated to our management, including our principal executive and principal financial officers, or persons performing similar functions, as appropriate, to allow timely decisions regarding required disclosure.  Based on that evaluation, our management concluded that, as of December 31, 2010, our disclosure controls and procedures are effective to satisfy the objectives for which they are intended.


Management's Report on Internal Controls over Financial Reporting


Internal control over financial reporting is a process to provide reasonable assurance regarding the reliability of consolidated financial reporting and the preparation of financial statements for external purposes in accordance with U.S. generally accepted accounting principles. There has been no change in the Company's internal control over financial reporting during the quarter ended December 31, 2010, that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting.

 



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The Company's management, including the Company's CEO, does not expect that the Company's disclosure controls and procedures or the Company's internal controls will prevent all errors and all fraud.  A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met.  Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs.  Because of the inherent limitations in all control systems, no evaluation of the controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected.


Management conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission.  Based on this evaluation, management concluded that the company's internal control over financial reporting was effective as of December 31, 2010.


This quarterly 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 Securities and Exchange Commission that permit the Company to provide only management's report in this quarterly report.



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Part II. OTHER INFORMATION


ITEM 1.  LEGAL PROCEEDINGS


The Company is not currently party to any legal proceedings.

 

ITEM 1A.  RISK FACTORS


None.


ITEM 2.  UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS 


None


ITEM 3.  DEFAULTS UPON SENIOR SECURITIES


None.


ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS


None.


ITEM 5.  OTHER INFORMATION


None.




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ITEM 6.  EXHIBITS


(a)  Exhibits


Exhibit Number

Description of Exhibit

 

 

31.1

Rule 13a-14(a)/15d-14(a) Certification by the Principal Executive Officer.**

 

 

31.2

Rule 13a-14(a)/15d-14(a) Certification by the Principal Financial Officer.**

 

 

32.1

Section 1350 Certification by the Principal Executive Officer.**

 

 

32.2

Section 1350 Certification by the Principal Financial Officer and Principal Accounting Officer.**


** Filed herewith


(b) Reports on Form 8-K




SIGNATURES


In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


 

iBOS, Inc.

 

 

February 8, 2011

By:  

/s/ Deepak Danavar

 

Deepak Danavar , President and CEO






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