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EX-32.1 - CERTIFICATION - Dephasium Corp.f10q1210ex32i_expertell.htm
EX-31.1 - CERTIFICATION - Dephasium Corp.f10q1210ex31i_expertell.htm


United States
Securities and Exchange Commission
Washington, D.C. 20549

Form 10-Q

QUARTERLY REPORT  PURSUANT TO SECTION 13 OR 15(d)
OF THE  SECURITIES  EXCHANGE ACT OF 1934

For the quarter ended: December 31, 2010

Commission file no.: 0-11596

EXPERTELLIGENCE, INC.

(Name of Small Business Issuer in its Charter)
 
 
Nevada   95-3506403
(State or other jurisdiction of incorporation or organization)
  (I.R.S.Employer Identification No.)
     
2101 Vista Pkwy. Ste. 292    
West Palm Beach, FL
 
33411
(Address of principal executive offices)
 
(Zip Code)
 
Issuer’s telephone number: (561) 228-6148

Securities  registered under Section 12(b) of the Act:
 
Title of each class  
Name of each exchange on which registered
None
  None
     
 
Securities registered under Section 12(g) of the Act:

Common Stock, $0.0001 par value per share

(Title of class)

Copies of Communications Sent to:

 
 

 
 
Indicate by Check  whether  the issuer (1) filed all  reports  required  to be filed by Section 13 or 15(d) of the  Exchange  Act during the past 12 months (or for such shorter period that the  registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.      
Yes   x  No   o

Indicate by check mark whether the registrant is an accelerated filer, a non-accelerated filer, or a smaller reporting company.
 
 
Large accelerated filer o
Accelerated filer o
 
 
Non-accelerated filer   o
Smaller reporting company  x  

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

APPLICABLE ONLY TO CORPORATE ISSUERS:

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

As of January 29, 2011, there were 94,964,138 shares of voting stock of the registrant issued  and outstanding.
 
 
 

 

 
PART I

ITEM 1.
FINANCIAL STATEMENTS

INDEX TO FINANCIAL STATEMENTS
 
 
Balance Sheets  F-2
   
Statements of Operations   F-3
   
Statements of Stockholders’ Equity   F-4
   
Statements of Cash Flows 
 F-5
   
Notes to Financial Statements  F-6
 
 
F-1

 
 
EXPERTELLIGENCE, INC.
(A Development Stage Enterprise)
Balance Sheets
   
December 31,
2010
   
September 30,
2010
 
   
(unaudited)
       
ASSETS
CURRENT ASSETS
           
   Cash and equivalents
  $ 7,031     $ 1,589  
   Promissory note receivable
    1,250       3,750  
                 
          Total current assets
    8,281       5,339  
                 
PROPERTY AND EQUIPMENT
               
   Equipment
    0       0  
   Less: Accumulated depreciation
    0       0  
                 
          Net property and equipment
    0       0  
                 
OTHER ASSETS
               
   Deposits
    0       0  
                 
          Total other assets
    0       0  
                 
Total Assets
  $ 8,281     $ 5,339  
                 
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES
               
   Accounts Payable and accrued liabilities
  $ 2,747     $ 2,747  
   Accrued interest payable
    13,092       12,335  
                 
          Total current liabilities
    15,839       15,082  
                 
   Line of credit payable
    40,000       20,000  
           Total long-term liabilities
    40,000       20,000  
Total liabilities
    55,839       35,082  
                 
STOCKHOLDERS’ EQUITY
               
   Preferred stock, $0.0001 par value, 25,000,000 shares authorized, 0 issued and outstanding
    0       0  
   Common stock, $0.0001, authorized 300,000,000 shares; 94,964,138 issued and outstanding
    9,496       9,496  
 Additional paid in capital in excess of par
    14,831,465       14,831,465  
  Deficit accumulated during the development stage
    (14,888,519 )     (14,870,704 )
                 
          Total stockholders’ equity
    (47,558 )     (29,743 )
                 
Total Liabilities and  Stockholders’ Equity
  $ 8,281     $ 5,339  

These accompanying notes are an integral part of the financial statements
 
 
F-2

 
 
EXPERTELLIGENCE, INC.
(A Development Stage Enterprise)
Statements of Operations
Three Months Ended December 31,
(unaudited)
         
Period from
Oct 1, 2003
(Inception)
through
 
   
2010
   
2009
   
Dec 31, 2010
 
                   
                   
REVENUES
  $ 0     $ 0     $ 0  
                         
OPERATING EXPENSES
                       
   General and administrative
    7,809       5,448       598,677  
   Professional fees
    9,250       8,750       69,000  
   Interest expense
    756       8,169       117,160  
                         
          Total expenses
    17,815       22,367       784,837  
                         
                         
Net loss
  $ (17,815 )   $ (22,367 )   $ (784,837 )
                         
Basic net loss per weighted average share
  $ 0.00     $ 0.00          
                         
Weighted average number of shares
    94,964,138       25,104,818          
 
These accompanying notes are an integral part of the financial statements
 
 
F-3

 
 
EXPERTELLIGENCE, INC.
(A Development Stage Enterprise)
Statements of Stockholders’ Equity
   
 
 
 
Number of Common
Shares
   
 
 
 
 
Common
Stock
   
Add’tl
Paid in
Capital in
Excess of Par
   
 
Deficit
Accumulated
During the
Development
Stage
   
 
 
Total
Stockholders’
Equity
(Deficit)
 
INCEPTION BALANCE, Sept 30, 2002
    2,343,180     $ 234     $ 11,399,832     $ (9,226,896 )   $ 2,173,170  
                                         
Shares issued to settle debt
    3,117,125       312       2,691,990       0       2,692,302  
                                         
Net loss
    0       0       0       (4,865,472 )     (4,865,472 )
                                         
BALANCE, September 30, 2003
    5,460,325       546       14,091,822       (14,092,368 )     0  
                                         
Sale of stock for cash
    19,644,513       1,964       48,036       0       50,000  
Net loss
    0       0       0       (50,000 )     (50,000 )
                                         
BALANCE, September 30, 2004
    25,104,838       2,510       14,139,858       (14,142,368 )     0  
                                         
Net loss
    0       0       0       (145,486 )     (145,486 )
BALANCE, September 30, 2005
    25,104,838       2,510       14,139,858       (14,287,854 )     (145,486 )
                                         
Net loss
    0       0       0       (80,265 )     (80,265 )
BALANCE, September 30, 2006
    25,104,838       2,510       14,139,858       (14,368,119 )     (225,751 )
                                         
Net loss
    0       0       0       (104,261 )     (104,261 )
                                         
BALANCE, September 30, 2007
    25,104,838       2,510       14,139,858       (14,472,380 )     (330,012 )
Net loss
    0       0       0       (44,614 )     (44,614 )
BALANCE, September 30, 2008
    25,104,838       2,510       14,139,858       (14,516,994 )     (374,626 )
Net loss
    0       0       0       (48,213 )     (48,213 )
BALANCE, September 30, 2009
    25,104,838       2,510       14,139,858       (14,565,207 )     (422,839 )
Common shares issued for services
    25,000,000       2,500       247,500       0       250,000  
Common shares issued to settle debt & interest
    44,859,300       4,486       444,107       0       448,593  
Net loss
    0       0       0       (305,498 )     (305,498 )
BALANCE, September 30, 2010
    94,964,138       9,496       14,831,465       (14,870,705 )     (29,744 )
Net loss
    0       0       0       (17,815 )     (17,815 )
ENDING BALANCE, December 31, 2010 (unaudited)
    94,964,138     $ 9,496     $ 14,831,465     $ (14,888,520 )   $ (47,559 )
                                         

These accompanying notes are an integral part of the financial statements
 
 
F-4

 
 
EXPERTELLIGENCE, INC.
(A Development Stage Enterprise)
Statements of Cash Flows
Three Months Ended December 31,
(unaudited)
         
From
October 1, 2003 (Inception)
through
 
   
2010
   
2009
   
December 31, 2010
 
   
(unaudited)
   
(unaudited)
   
(unaudited)
 
                   
CASH FLOWS FROM OPERATING ACTIVITIES:
                 
Net loss
  $ (17,815 )   $ (22,367 )   $ (784,837 )
Adjustments to reconcile net loss to net cash used by operating activities:
                       
        Stock issued for services
    0       0       250,000  
Changes in operating assets and liabilities
                       
        (Increase) decrease in prepaid expenses
    2,500       0       (1,250 )
        Increase (decr) in accounts payable and accrued liabilities
            0       2,747  
        Increase (decrease) in accrued interest payable
    757       8,168       117,161  
                         
Net cash used by operating activities
    (14,558 )     (14,199 )     (416,179 )
                         
CASH FLOWS FROM FINANCING ACTIVITIES:
                       
Draw on line of credit
    20,000       20,000       373,210  
Proceeds from issuance of common stock
    0       0       50,000  
                         
Net cash provided by financing activities
    20,000       20,000       423,210  
                         
Net increase (decrease) in cash
    5,442       5,801       7,031  
                         
CASH, beginning of period
    1,589       333       0  
                         
CASH, end of period
  $ 7,031     $ 6,134     $ 7,031  

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
       NONE

 
The accompanying notes are an integral part of the financial statements
 
 
F-5

 
 
EXPERTELLIGENCE, INC.
(A Development Stage Enterprise)
Notes to Financial Statements
(Information with regard to the three months ended December 31, 2010 and 2009 is unaudited)

(1) Summary of Significant Accounting Policies
 
The Company  Expertelligence, Inc., (the Company), was incorporated on March 31, 1980, under the laws of the State of California. On June 26, 2006, the Company reincorporated in Nevada.

The Company is a United States public company and  trades on the Over-the-Counter Bulletin Board, (OTC:BB).  The Company is available as a public shell to be acquired or to merge with another entity.  The Company is considered to be in the development stage since October 1, 2003, and the accompanying financial statements represent those of a development stage company in accordance with SFAS No. 7, “Accounting and Reporting by Development Stage Enterprises.”
 
The following summarize the more significant accounting and reporting policies and practices of the Company:
 
a) Use of estimates    The financial statements have been prepared in conformity with generally accepted accounting principles.  In preparing the financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the statements of financial condition and revenues and expenses for the year then ended.  Actual results may differ significantly from those estimates.
 
b)  Start-Up costs  Costs of start-up activities, including organization costs, are expensed as incurred, in accordance with Statement of Position (SOP) 98-5.
 
c)  Net loss per share Basic loss per weighted average common share excludes dilution and is computed by dividing the net loss by the weighted average number of common shares outstanding during the period.  The Company applies Statement of Financial Accounting Standards No. 128, “Earnings Per Share” (FAS 128).
 
d) Fair value of financial instruments The carrying values of cash and accrued liabilities approximate their fair values due to the short maturity of these instruments.
 
e) Income taxes The Company accounts for income taxes according to Statement of Financial Accounting Standards (SFAS) No. 109, “Accounting for Income Taxes”.  Under the liability method specified by SFAS No. 109, deferred income taxes are recognized for the future tax consequences of temporary differences between the financial statement carrying amounts and tax bases of assets and liabilities.
 
f)  Interim financial information The financial statements for the three months ended December 31, 2010 and 2009 are unaudited and include all adjustments which in the opinion of management are necessary for fair presentation, and such adjustments are of a normal and recurring nature. The results for the six months are not indicative of a full year results.
 
(2) Stockholders’ Equity The Company has authorized 300,000,000 shares of $0.0001 par common stock. At December 31, 2010 and September 30, 2010 there were 94,964,138 shares issued and outstanding..
 
In March 2010 the Company issued 25,000,000 shares for services valued at $250,000, or $0.01 per share, the then current market value. In May 2010, the Company issued 44,859,300 shares of common stock to settle $333,210 of then outstanding convertible debt and $115,383 of accrued interest thereon, after a fairness hearing in the Circuit Court of the 18th Judicial Circuit, in and for Seminole County, Florida.

 
F-6

 
 
EXPERTELLIGENCE, INC.
(A Development Stage Enterprise)
Notes to Financial Statements
 
(3) Income Taxes Deferred income taxes (benefits) are provided for certain income and expenses which are recognized in different periods for tax and financial reporting purposes.  The Company had net operating loss carry-forwards for income tax purposes of approximately $784,900 expiring beginning September 30, 2031.  The amount recorded as deferred tax asset as of December 30, 2010 is approximately $314,000, which represents the amount of tax benefit of the loss carry-forward. Deferred tax assets are reduced by a valuation allowance if, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized.  Management’s valuation procedures consider projected utilization of deferred tax assets prospectively over the next several years, and continually evaluate new circumstances surrounding the future realization of such assets. The difference between income taxes and the amount computed by applying the federal statutory tax rate to the loss before income taxes is due to an increase in the deferred tax asset valuation allowance.
 
(4) Going Concern The accompanying financial statements have been prepared assuming that the Company will continue as a going concern.  The Company’s financial position and operating results raise substantial doubt about the Company’s ability to continue as a going concern, as reflected by the net loss of $14,888,500 accumulated from March 31, 1980 (Inception) through December 31, 2010.  The ability of the Company to continue as a going concern is dependent upon commencing operations, developing sales and obtaining additional capital and financing.  The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.  The Company is currently seeking additional capital to allow it to begin its planned operations.
 
(5) Convertible Line of Credit Payable In October 2004, the Company entered into a line of credit with a third party, convertible into common stock at the discretion of the lender, for $250,000. This line of credit carries an 10% rate of interest. It is convertible into common stock at any time prior to repayment at a conversion rate of the lesser of 66 2/3 of the average closing price on the date of conversion or $0.01 per share, This line of credit carried an maturity date of December 31, 2008. In August 2009, the Company received an extension of the maturity of the line of credit to December 31, 2013 and an increase in the line of credit to $500,000. As of December 31, 2010, $40,000 has been advanced under this line of credit. In May 2010, the Company issued 44,859,300 shares of common stock to settle $333,210 of then outstanding convertible debt and $115,383 of accrued interest thereon, after a fairness hearing in the Circuit Court of the 18th Judicial Circuit, in and for Seminole County, Florida.

 
F-7

 
 
ITEM 2.
MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

Results of Operations

The Company had no revenues for the three months ended December 31, 2010 and 2009, respectively.

The Company expended $17,815 and $22,367, for the three months ended December 31, 2010 and 2009, respectively, on operating expenses.
 
Future expenditure levels are expected to be nominal, generally for the purpose of maintaining the Company's stockholder records and filing requirements to comply with the Securities Exchange Act of 1934 and for initiating the Company's current business plan, as discussed previously.

The Company does not expect to generate any meaningful revenue or incur operating expenses for purposes other than fulfilling the obligations of a reporting company under The Securities Exchange Act of 1934 unless and until such time that the Company's operating subsidiary begins meaningful operations.
 
Liquidity and Capital Resources

At December 31, 2010, the Company had a working capital deficit of $7,558.

It is the intent of management and significant stockholders to provide sufficient working capital necessary to support and preserve the integrity of the corporate entity. However, there is no legal obligation for either management or significant stockholders to provide additional future funding. Consequently, there is substantial doubt about the Company's ability to continue as a going concern, notwithstanding this funding just described.

The Company's need for capital may change dramatically as a result of the implementation of a business plan instead of a reverse merger.

Regardless of whether the Company's cash assets prove to be inadequate to meet the Company's operational needs, the Company might seek to compensate providers of services by issuances of stock in lieu of cash.

Net Operating Losses

The Company has net operating loss carry-forwards of $784,800, expiring beginning September 30, 2031.  Until the Company’s current operations begin to produce earnings, it is unclear whether the Company can utilize such carry-forwards.
 
 
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Plan of Operation

The Company is seeking either a viable business plan or a suitable reverse merger candidate.

At December 31, 2010, we had cash and cash equivalents of $7,031. Our working capital is presently minimal and there can be no assurance that our financial condition will improve. To date, we have not generated cash flow from operations. Consequently, we have been dependent upon our line of credit to fund our cash  requirements.  Specifically,  we have borrowed a total of $40,000 on this line. We therefore have $460,000 available to draw upon.

As of December 31, 2010, we had a working capital deficit of $7,558. The Company will seek funds from possible investors, lenders, strategic and joint  venture partners and financing  to cover any short term operating deficits and provide for long term working capital. No assurances can be given that the Company will  successfully  engage  strategic or joint venture partners or otherwise obtain sufficient financing through the sale of equity.

No trends have been identified which would materially  increase or decrease our results of operations or liquidity.
 
Item 3 - Quantitative and Qualitative Disclosures About Market Risk

The Company is not subject to any specific market risk other than that encountered by any other public company related to being publicly traded.

Forward-Looking Statements
 
This Form 10-Q includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended.  All statements, other than statements of historical facts, included or incorporated by reference in this Form 10-Q which address activities, events or developments which the Company expects or anticipates will or may occur in the future, including such things as future capital expenditures (including the amount and nature thereof), finding suitable merger or acquisition candidates, expansion and growth of the Company’s business and operations, and other such matters are forward-looking statements.  These statements are based on certain assumptions and analyses made by the Company in light of its experience and its perception of historical trends, current conditions and expected future developments as well as other factors it believes are appropriate in the circumstances.  However, whether actual results or developments will conform with the Company’s expectations and predictions is subject to a number of risks and uncertainties, general economic market and business conditions; the business opportunities (or lack thereof) that may be presented to and pursued by the Company; changes in laws or regulation; and other factors, most of which are beyond the control of the Company.  Consequently, all of the forward-looking statements made in this Form 10-Q are qualified by these cautionary statements and there can be no assurance that the actual results or developments anticipated by the Company will be realized or, even if substantially realized, that they will have the expected consequence to or effects on the Company or its business or operations.  The Company assumes no obligations to update any such forward-looking statements.

ITEM 4T.
CONTROLS AND PROCEDURES

As required by Rule 13a-15 under the Exchange Act, within the 90 days prior to the filing date of this report, the Company carried out an evaluation of the effectiveness of the design and operation of the Company's disclosure controls and procedures. This evaluation was carried out under the supervision and with the participation of the Company's management, including the Company's President, Chief Executive Officer and Chief Financial Officer. Based upon that evaluation, the Company's President, Chief Executive Officer and Chief Financial Officer concluded that the Company's disclosure controls and procedures are effective. There have been no significant changes in the Company's internal controls or in other factors, which could significantly affect internal controls subsequent to the date the Company carried out its evaluation.

Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in Company reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in Company reports filed under the Exchange Act is accumulated and communicated to management, including the Company's Chief Executive Officer and Chief Financial Officer as appropriate, to allow timely decisions regarding required disclosure.

 
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PART II - OTHER INFORMATION
 
 
ITEM 1.
LEGAL PROCEEDINGS.

The Company knows of no legal proceedings to which it is a party or to which any of its property is the subject which are pending, threatened or contemplated or any unsatisfied judgments against the Company.
 
ITEM 2.
Unregistered Sales of Equity Securities and Use of Proceeds

None

ITEM 3.
DEFAULTS IN SENIOR SECURITIES

None
 
ITEM 4.
SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

No matter was submitted during the quarter ending December 31, 2010, covered by this report, to a vote of the Company's shareholders, through the solicitation of proxies or otherwise.
 
ITEM 5.
OTHER INFORMATION

None
 
ITEM 6.
EXHIBITS

(a)  The exhibits  required to be filed  herewith by Item 601 of  Regulation S-K, as described in the following index of exhibits, are incorporated herein by reference, as follows:
 
 Exhibit No. Description
   
 31.1  *   Certification pursuant to Section 302 of Sarbanes-Oxley Act of 2002.
   
 32.1 *   Certification pursuant to Section 906 of Sarbanes-Oxley Act of 2002.
 
* Filed herewith
 
(b) The following  sets forth the  Company's  reports on Form 8-K that have been filed during the quarter for which this report is filed:

12/10/10 - change in auditor
12/10/10 - change in management
 
 
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SIGNATURES

In accord with Section 13 or 15(d) of the Securities Act of 1933, as amended, the Company caused this report to be signed on its behalf by the undersigned, thereto duly authorized.
 
 
  EXPERTELLIGENCE, INC.
     
Dated: February 15, 2011
By:
/s/ Francisco Terreforte
    Francisco Terreforte
   
Chief Executive Officer,
Chief Financial Officer
President and Chairman of the Board
     

 
 
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