Inelco Corp - FORM 10-Q/A - April 25, 2011

Attached files

file	filename
EX-31.1 - CERTIFICATION - Inelco Corp	infospi_ex311.htm
EX-31.2 - CERTIFICATION - Inelco Corp	infospi_ex312.htm
EX-32.1 - CERTIFICATION - Inelco Corp	infospi_ex321.htm

U.S. SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

AMENDMENT NO. 3 TO

Form 10-Q

Mark One

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

For the quarter ended June 30, 2010

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

For the transition period from ______ to _______

Commission File No. 000-53104

Onteco Corporation

Formerly known as

InfoSpi Inc.

(Name of small business issuer in its charter)

Nevada		51-0668045
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

19495 Biscayne Blvd. Suite 411 Aventura, Florida 33180 (Address of principal executive offices)

(305) 932-9795 (Issuer’s telephone number)

Securities registered pursuant to Section 12(b) of the Act:		Name of each exchange on which registered:
None

Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $0.001
(Title of Class)

Indicate by checkmark whether the issuer: (1) has 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 Noo

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 (Section 229.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files.

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

Applicable Only to Issuer Involved in Bankruptcy Proceedings During the Preceding Five Years. N/A

Indicate by checkmark whether the issuer has filed all documents and reports required to be filed by Section 12, 13 and 15(d) of the Securities Exchange Act of 1934 after the distribution of securities under a plan confirmed by a court. Yes o No o

Applicable Only to Corporate Registrants

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the most practicable date:

Class	Outstanding as of August 13, 2010
Common Stock, $0.001

ONTECO CORPORATION

Formerly known as INFOSPI INC.

Amendment No. 3 to

Form 10-Q

Part 1.	FINANCIAL INFORMATION	1

Item 1.	Financial Statements	1
	Restated Balance Sheets	2
	Restated Statements of Operations	3
	Restated Statements of Cash Flows	4
	Notes to Consolidated Financial Statements	6

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	16

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	24

Item 4.	Controls and Procedures	24

Part II.	OTHER INFORMATION

Item 1.	Legal Proceedings	27

Item 1A.	Risk Factors	27

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	27

Item 3.	Defaults Upon Senior Securities	27

Item 4.	Reserved and Removed	27

Item 5.	Other Information	28

Item 6.	Exhibits	28

PART I

ITEM 1. FINANCIAL STATEMENTS

INFOSPI INC.

RESTATED FINANCIAL STATEMENTS

JUNE 30, 2010

(Unaudited)

INFOSPI, INC.

(A Development Stage Company)

Restated - Financial Statements

(Expressed in U.S. Dollars)

		Index

Index to Restated – Financial Statements		1

Restated - Balance Sheets		2

Restated - Statements of Operations		3

Restated – Statements of Cash Flows		4

Restated - Statements of Stockholders’ Equity (Deficit)		5

Notes to the Restated - Financial Statements		6

INFOSPI, INC.

(A DEVELOPMENT STAGE COMPANY)

RESTATED – BALANCE SHEETS

	As of
	June 30, 2010			As of
	(Unaudited )			December 31, 2009
ASSETS
CURRENT ASSETS
Cash	$	5,354		$	-
Receivables from Others		-			1,000
TOTAL CURRENT ASSETS		5,354			1,000
OTHER ASSETS
Project Development Costs		27,600			-
TOTAL ASSETS	$	32,954		$	1,000
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
CURRENT LIABILITIES
Accrued Expenses	$	5,000		$	64.000
Accrued Employee Compensation		237,000			-
Notes Payable		119,555			-
TOTAL CURRENT LIABILITIES		361,555			64,000
OTHER LIABILITIES		-			-
TOTAL LIABILITIES		361,555			64,000
STOCKHOLDERS’ EQUITY (DEFICIT)
Common Stock, $0.001 Par Value, 75,000,000 Shares
Authorized, 69,990,258 Issued and Outstanding		69,990			69,990
Paid in Capital		43,132			43,132
Accumulated Deficit		(441,723	)		(176,122	)
TOTAL STOCKHOLDERS’ EQUITY (DEFICIT)		(328,601	)		(63,000	)
TOTAL LIABILITIES AND STOCKHOLDERS’
EQUITY (DEFICIT)	$	32,954		$	1,000

See Notes to Restated Financial Statements

INFOSPI, INC.

(A DEVELOPMENT STAGE COMPANY)

RESTATED – STATEMENTS OF OPERATIONS

									Inception
									12/31/2007
	Three Months Ended				Six Months Ended				Through
	6/30/2010		6/30/2009		6/30/2010		6/30/2009		6/30/2010
	(Unaudited)				(Unaudited)				(Unaudited)

REVENUE
Total Revenue	$	-	$	-	$	-	$	-	$	-
EXPENSES
Professional Expenses		225		-		11,175		-		19,825
General and Admin Expenses		3,671		15,000		3,671		20,000		63,021
Stock-Based Compensation		-		-		-		-		107,555
Executive Compensation		45,000		-		240,000		-		240,000
Total Expenses		48,896		15,000		254,846		20,000		430,401
OPERATING LOSS		48,896		15,000		254,846		20,000		430,401
OTHER EXPENSES
Loss on Disposition of Asset		-		-		-		-		567
Write-off Amount Due from Others		-		-		1,000		-		1,000
Bonus – Interest Expense		-		-		9,755		-		9,755
Total Other Expenses		-		-		10,755		-		11,322
NET (LOSS) BEFORE
PROVISION FOR INCOME TAXES		48,896		15,000		265,601		20,000		441,723
PROVISION FOR INCOME TAXES		-		-		-		-		-
NET LOSS	$	48,896	$	15,000	$	265,601	$	20,000	$	441,723
Basic (Loss) Per Share	$	0.00	$	0.00	$	0.01	$	0.00
Weighted Average Number
of Common Shares
Outstanding		25,075,632		5,567,324		25,075,632		5,567,324

See Notes to Restated Financial Statements

INFOSPI, INC.

(A DEVELOPMENT STAGE COMPANY)

RESTATED – STATEMENTS OF CASH FLOWS

													Inception
													12/31/2007
	Three Months Ended						Six Months Ended						Through
	6/30/2010			6/30/2009			6/30/2010			6/30/2009			6/30/2010
	(Unaudited)						(Unaudited)						(Unaudited)
CASH FLOWS FROM OPERATING
ACTIVITIES
Net Loss	$	(48,896	)	$	(15,000	)	$	(265,601	)	$	(20,000	)	$	(441,723	)
Adjustments to Reconcile Net Loss
To Cash Provided (Used) by Operations
Stock-Based Compensation		-			-			-			-			107,555
Write-off Amounts Due from Others		-			-			1,000
Disposition of Software		-			-			-			-			567
Increase (Decrease) in Operating
Assets and Liabilities:
Accrued Expenses		-			15,000			(59,000	)		-			5,000
Accrued Employee Compensation		42,000			-			237,000			-			237,000
NET CASH USED BY OPERATIONS		(6,896	)		-			(86,601	)		-			(91,601	)
CASH FLOWS USED IN INVESTING
ACTIVITIES
Acquisition of Software		-			-			-			-			(567	)
Project Development Costs		-			-			(27,600	)		-			(27,600	)
NET CASH USED IN INVESTING
ACTIVITIES		-			-			(27,600	)		-			(28,167	)
CASH FLOWS FROM FINANCING
ACTIVITIES
Proceeds from Notes Payable		15,000			-			122,305			20,000			122,305
Payments on Notes Payable		(2,750	)		-			(2,750	)		-			(2,750	)
Sale of Common Stock		-			-			-			-			5,567
NET CASH FROM INVESTING
ACTIVITIES		12,250			-			119,555			20,000			125,122
NET INCREASE (DECREASE) IN CASH		5,354			-			5,354			-			5,354
CASH AT BEGINNING OF PERIOD		-			-			-			-			-
CASH AT END OF PERIOD	$	5,354		$	-		$	5,354		$	-		$	5,354
SUPPLEMENTARY DISCLOSURE OF
CASH FLOW INFORMATION
Interest Paid	$	-		$	-		$	-		$	-		$	-
Income Taxes Paid	$	-		$	-		$	-		$	-		$	-
Stock-Based Compensation	$	-		$	-		$	-		$	-		$	107,555

See Notes to Restated Financial Statements

INFOSPI, INC.

(A DEVELOPMENT STAGE COMPANY)

RESTATED – STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (DEFICIT)

JUNE 30, 2010

								Accumulated
								During
					Additional			the			Total
	Common Stock				Paid In			Development			Stockholders’
	Shares		Amount		Capital			Stage			Equity (Deficit)
Common Stock Issued Per Court Order
Dec. 31, 2007		567,324	$	567	$	-		$	-		$	567
Net Loss for the Year Ended
Dec. 31, 2007		-		-		-			(225	)		(225	)
Balance, Dec. 31, 2007		567,324		567		-			(225	)		342
Common Stock Issued Per Court Order
Jan. 15, 2008		1,000,000		1,000		-			-			1,000
Common Stock Issued For Cash
Feb. 4, 2008		4,000,000		4,000		-			-			4,000
Net Loss for Year Ended
Dec. 31, 2008		-		-		-			(3,775	)		(3,775	)
Balance, Dec. 31, 2008		5,567,324		5,567		-			(4,000	)		1,567
Common Stock Issued For Warrants
Sept. 22, 2009		28,571,429		28,571		(28,571	)		-			-
Common Stock Issued For Compensation
Sept. 23, 2009		35,851,505		35,852		71,703			-			107,555
Net Loss for the Year Ended
Dec. 31, 2009		-		-		-			(172,122	)		(172,122	)
Balance, Dec. 31, 2009		69,990,258		69,990		43,132			(176,122	)		(63,000	)
Net loss for the Quarter Ended
Mar. 31, 2010		-		-		-			(216,705	)		(216,705	)
Net loss for the Quarter Ended
June 30, 2010		-		-		-			(48,896	)		(48,896	)
Balance, June 30, 2010		69,990,258	$	69,990	$	43,132		$	(441,723	)	$	(328,601	)

See Notes to Restated Financial Statements

INFOSPI, INC.

(A Development Stage Company)

Notes to Restated Financial

Statements June 30, 2010

NOTE 1. NATURE AND BACKGROUND OF BUSINESS

InfoSpi, Inc. ("the Company" or "the Issuer") was organized under the laws of the State of Nevada on December 31, 2007. The Company was established as part of the implementation of the Chapter 11 plan of reorganization of Arrin Systems, Inc. ("Arrin"). Arrin filed for Chapter 11 Bankruptcy in April 2007 in the U.S. Bankruptcy Court for the Southern District of California. Arrin’s plan of reorganization was confirmed by the Court on December 12, 2007 and became effective on December 30, 2007. The plan of reorganization provided for the establishment of the Issuer and the sale to the Issuer of Arrin’s proprietary software (used in the employee background screening industry) in exchange for 567,324 shares of InfoSpi’s common stock which were distributed to Arrin’s general unsecured creditors. The Company has been in the development stage since its formation and has not yet realized any revenues from its planned operations.

Management believes the Company lacks the resources to effectively market its services on its own and is therefore engaged in a search for a merger or acquisition partner with the resources to either develop this business or enter another line of business which will bring value to the Issuer's shareholders.

This Annual Report on Form 10-K is being amended based upon the advisement from our newly appointed public accountants, Randall N. Drake, CPA., P.A. (“Drake”), that our financial statements reviewed and/or audited by our prior independent public accountant, Cornell, Beale & Leigh, LLC (CB&L”), for the periods referenced below as filed with the Securities and Exchange Commission could not be relied upon since CB&L is not registered under the Public Company Accounting Oversight Board (the “PCAOB”):

Period Ended	Form	Date Filed with SEC

September 30, 2009	10-Q	November 23, 2009
December 31, 2009	10-K	April 14, 2010
March 31, 2010	10-Q	April 24, 2010
June 30, 2010	10-Q	August 13, 2010

As a result, our Board of Directors concluded on December 5, 2010 that our previously issued financial statements for the periods above should no longer be relied upon. Therefore, we are restating our financial statements for the quarterly period ended June 30, 2010 to reflect: (i) previous unrecorded expenses; (ii) additional common stock issuances; (iii) change in earnings per share; and (iv) the effect on retained earnings (deficit). We are also amending the disclosure in the Annual Report to reflect these changes.

RESTATED FINANCIAL STATEMENTS

The Company is restating its financial statements to reflect (1) previous unrecorded expenses (2) additional common stock issuances (3) change in earnings per share and (4) the effect on retained earnings (deficit).

The resulting changes do not impact the company’s income tax provision.

The following chart represents the company’s balance sheet as originally filed and as restated for the quarter ended June 30, 2010.

	Originally Filed			Restated
	Quarter Ended			Quarter Ended
ASSETS	6/30/2010			6/30/2010
ASSETS
CURRENT ASSETS
Cash	$	5,454		$	5,354
Receivables from Others		1,000			-
Software		567			-
Development Costs		97,550			-
TOTAL CURRENT ASSETS		104,571			5,354
OTHER ASSETS
Project Development Costs		-			27,600
TOTAL ASSETS	$	104,571		$	32,954
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
CURRENT LIABILITIES
Accounts Payable	$	38,550		$	-
Accrued Expenses		-			5,000
Accrued Employee Compensation		-			237,000
Notes Payable		2,120			119,555
Long-Term Liabilities		68,982			-
TOTAL CURRENT LIABILITIES		109,562			361,555
TOTAL LIABILITIES		109,562			361,555
STOCKHOLDERS’ EQUITY (DEFICIT)
Common Stock, $0.001 Par Value, 75,000,000 Shares
Authorized, 69,990,258 Issued and Outstanding		5,567			69,990
Paid in Capital		-			43,132
Accumulated Deficit		(10,648	)		(441,723	)
TOTAL STOCKHOLDERS’ EQUITY (DEFICIT)		(5,081	)		(328,601	)
TOTAL LIABILITIES AND STOCKHOLDERS’
EQUITY (DEFICIT)	$	104,571		$	32,954

The following chart represents the company’s operating results as originally filed and as restated for the quarter ended June 30, 2010.

	Originally Filed		Restated
	Quarter Ended		Quarter Ended
	6/30/2010		6/30/2010
REVENUE
Total Revenue	$	-	$	-

EXPENSES
Professional Expenses		125		225

General & Administrative Expenses		6,523		3,671

Executive Compensation		-		45,000

Total Expenses		6,648		48,896

OPERATING LOSS		6,648		48,896

OTHER EXPENSES		-		-

Total Other Expenses		-		-

NET LOSS BEFORE PROVISION FOR INCOME TAXES		6,648		48,896

PROVISION FOR INCOME TAXES		-		-

NET LOSS	$	6,648	$	48,896
	$	6,648	$	48,896
Basic (Loss) per Share	$	0.012	$	0.00
	$	0.012	$	0.00
Weighted Average Number Of Common Shares Outstanding		5,567,324		25,075,632

Diluted (loss) per Share Assuming all
5,000,000 Warrants were Exercised	$	0.0006	$	0.00
	$	0.0006	$	0.00
Weighted Number of Shares Outstanding after Exercise
of 5,000,000 Warrants		10,567,324		-

NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES a. BASIS OF ACCOUNTING

The Company’s financial statements are prepared using the accrual method of accounting. The Company has elected a December 31 year-end.

b. BASIC EARNINGS PER SHARE

The Company computes loss per share for both basic and diluted earnings per share (EPS) on the face of the Income Statement. Basic EPS is computed by dividing net income (loss) available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method and convertible preferred stock using the if-converted method. In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all dilutive potential shares if their effect is anti-dilutive.

c. 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 revenues and expenses during the reporting period. Actual results could differ from those estimates.

d. CASH AND CASH EQUIVALENT

For the Balance Sheets and Statements of Cash Flows, all highly liquid investments with maturity of three months or less are considered to be cash equivalents.

e. STOCK-BASED COMPENSATION

The Company accounts for employee stock-based compensation costs such that all share-based payments to employees, including grants of employee stock options, are recognized in our statements of operations based on their fair values. We will utilize the Black-Scholes option pricing model, as appropriate, to estimate the fair value of employee stock based compensation at the date of grant, which requires the input of highly subjective assumptions, including expected volatility and expected life. Changes in these inputs and assumptions can materially affect the measure of estimated fair value of our stock-based compensation.

During the three months and six ended June 30, 2010 and 2009, the Company had stock-based compensation expenses related to issuances of stock options and warrants to the Company's employees, directors and consultants; for three months ended June 30, 2010, $0 and $0 respectively and for the six months ended June 30, 2010, $0 and $0 respectively.

f. IMPACT OF NEW ACCOUNTING STANDARDS

In January 2010, the FASB issued an amendment to ASC 820, Fair Value Measurements and Disclosure, to require reporting entities to separately disclose the amounts and business rationale for significant transfers in and out of Level 1 and Level 2 fair value measurements and separately present information regarding purchase, sale, issuance, and settlement of Level 3 fair value measures on a gross basis. This standard, for which the Company is currently assessing the impact, is effective for interim and annual reporting periods beginning after December 15, 2009 with the exception of disclosures regarding the purchase, sale, issuance, and settlement of Level 3 fair value measures which are effective for fiscal years beginning after December 15, 2010.

In January 2010, the FASB issued an amendment to ASC 505, Equity, where entities that declare dividends to shareholders that may be paid in cash or shares at the election of the shareholders are considered to be a share issuance that is reflected prospectively in EPS, and is not accounted for as a stock dividend. This standard is effective for interim and annual periods ending on or after December 15, 2009 and is to be applied on a retrospective basis. The adoption of this standard is not expected to have a significant impact on the Company’s financial statements.

Management has considered and included all current standards through and including ASU No. 2010-29 – Business Combinations and ASU No. 2011-01 – Receivables and does not anticipate the retroactive application of any new accounting standard(s) to change the restated financial statements as currently presented.

NOTE 3. GOING CONCERN

The Company's financial statements are prepared in accordance with generally accepted accounting principles applicable to a going concern. This contemplates the realization of assets and the liquidation of liabilities in the normal course of business. Currently, the Company does not have significant cash or other material assets, nor does it have operations or a source of revenue sufficient to cover its operation costs and allow it to continue as a going concern. The officers and directors have committed to advancing certain operating costs of the company.

Management plans to seek a merger or acquisition target with adequate funds to support operations. Management has yet to identify a merger or acquisition target, and there is no guarantee that the Company will be able to identify such a target business in the future.

Going concern limitations may prevent the realization of the recorded values of assets and/or liabilities.

NOTE 4. PROJECT DEVELOPMENT COSTS

On January 15, 2010 the Company engaged an engineering firm to design, plan and supervise the development of proprietary “critical reactor” equipment to be used in environmentally friendly sewer and sludge conversion and used tire and plastic recovery. The initial cost of this project, in the amount of $27,600 was capitalized pending the results of the Company’s efforts to commercialize this technology.

NOTE 5. ACCRUED LIABILITIES

Accrued Liabilities	June 30, 2010		Dec. 31, 2009
Accrued Expenses	$	5,000	$	64,000
Accrued Executive Compensation		237,000		-
	$	242,000	$	64,000

NOTE 6. EXECUTIVE COMPENSATION AGREEMENT

On January 8, 2010, the Company entered an Executive Employment Agreement effective January 11, 2010 with its Chief Executive Officer. Terms of the agreement include an inception bonus of $150,000 and monthly payments of $15,000. The agreement expires on December 31, 2013.

As of June 30, 2010 and 2009, the Company has recorded executive compensation under this agreement in the amounts of $240,000 accrued and $3,000 paid ($237,000 net) and $0, respectively.

NOTE 7. CONVERTIBLE NOTES PAYABLE

On January 17, 2010 the Company entered into a convertible promissory demand note with an advisory firm in the amount of $59,000. Terms include a bonus payment (simple interest at 10%) in the amount of $5,900. The note includes a voluntary conversion feature allowing the holder to convert all or part of the amount outstanding into fully paid, non-assessable whole shares of the Company at a rate of $0.03 per share. The note has no stated due date.

On February 10, 2010 the Company entered into a convertible promissory demand note with a web designer in the amount of $3,150. Terms include a bonus payment (simple interest at 10%) in the amount of $315. The note includes a voluntary conversion feature allowing the holder to convert all or part of the amount outstanding into fully paid, non-assessable whole shares of the Company at a rate of $0.03 per share. The note has no stated due date.

On January 3, 2011 the parties amended the terms and conditions of the promissory note dated February 10, 2010 as follows:

The “Note Conversion Price” shall be adjusted from $0.03 to the par value of the common stock, or $0.001 per share.

On February 10, 2010 the Company entered into a convertible promissory demand note with a project consultant in the amount of $7,800. Terms include a bonus payment (simple interest at 10%) in the amount of $780. The note includes a voluntary conversion feature allowing the holder to convert all or part of the amount outstanding into fully paid, non-assessable whole shares of the Company at a rate of $0.03 per share. The note has no stated due date.

On February 10, 2010 the Company entered into a convertible promissory demand note with an engineering firm in the amount of $27,600. Terms include a bonus payment (simple interest at 10%) in the amount of $2,760. The note includes a voluntary conversion feature allowing the holder to convert all or part of the amount outstanding into fully paid, non-assessable whole shares of the Company at a rate of $0.03 per share. The note has no stated due date.

On June 7, 2010 the Company entered into a non-interest-bearing convertible promissory demand note with a related party investor in the amount of $5,000. Terms include a voluntary conversion feature allowing the holder to convert all or part of the amount outstanding into fully paid, non-assessable whole shares of the Company at a rate of $0.03 per share. The note has no stated due date.

On June 7, 2010 the Company entered into a non-interest-bearing convertible promissory demand note with an investor in the amount of $10,000. Terms include a voluntary conversion feature allowing the holder to convert all or part of the amount outstanding into fully paid, non-assessable whole shares of the Company at a rate of $0.03 per share. The note has no stated due date.

NOTE 8. STOCKHOLDERS' EQUITY - COMMON STOCK

The authorized common stock of the Company consists of 75,000,000 shares with $0.001 par value. No other class of stock is authorized. As of June 30, 2010 and December 31, 2009, there were a total of 69,990,258 common shares issued and outstanding, respectively.

The Company's first and second stock issuances took place pursuant to the Plan of Reorganization confirmed by

the Bankruptcy Court: On December 12, 2007, the Court ordered the distribution of shares in InfoSpi, Inc. to

all general unsecured creditors of Arrin Systems, Inc. ("Arrin"), with these creditors to receive one share in InfoSpi for each $2.94 of Arrin’s debt which they held. These creditors received an aggregate of 567,324 shares in the Company on December 31, 2008.

On February 4, 2008 the Company issued a total of 4,000,000 shares of common stock to an Officer and Director in exchange for $4,000 in cash to be used as operating capital for the Company. The shares were issued at a price of $0.001 per share which is their par value.

The Court also ordered the distribution of shares and warrants in InfoSpi, Inc. to all administrative creditors of Arrin, with these creditors to receive one share and five warrants in InfoSpi for each $0.10 of Arrin's administrative debt which they held. On January 15, 2008, these creditors received an aggregate of 1,000,000 common shares in the Company and 5,000,000 warrants.

On November 13, 2009 and effective September 22, 2009, our Board of Directors pursuant to unanimous written consent acknowledged the warrants and authorized the exchange of 5,000,000 warrants and issuance of an aggregate 28,571,429 shares of our common stock at a per share price of $0.001.

The 28,571,429 shares of common stock were issued to approximately thirteen non-United States investors in reliance on Regulation S promulgated under the United States Securities Act of 1933, as amended.

Effective June 15, 2010, the Board approved an Amendment to our Articles to increase the authorized capital stock from 75,000,000 shares to 350,000,000 shares of Common Stock, $0.001 par value, and 100,000,000 shares of Preferred Stock, $0.001 par value.

SERVICES RENDERED

On October 28, 2009 and effective September 23, 2009, our Board of Directors pursuant to unanimous written consent authorized the issuance of an aggregate 35,851,505 shares of restricted common stock at $0.003 per share in exchange for prior services rendered including, but not limited to, introduction to potential funding arrangements and various strategic partners. Factors considered by the Board in determining the fair value of the 35,851,515 shares of common stock included:

1)	a lack of observable market prices because of the minimal volume of shares that had been traded on any independent market since the inception of the Company,

2)	the large number of shares being issued compared to the number of shares of common stock outstanding prior to the stock issuance,

3)	the Company’s issuance of 28,571,429 shares for 5,000,000 warrants converted to common stock effective September 22, 2009 at an issuance price of $0.001 per share,

4)	the unregistered status of the shares which limits the marketability of the shares,

5)	the fact that issuance of these shares does not change who is in control of the Company, and

6)	the estimated value of the services provided.

The 35,851,505 shares of common stock were issued to approximately five United States investors in reliance on Regulation D promulgated under the Securities Act.

NOTE 9. INCOME TAXES

The Company accounts for income taxes for financial statement recognition of the impact of a tax position, if that position is more likely than not to be sustained on examination, based on the technical merits of the position. Based on management's assessment, the Company's results of operations or financial position required no adjustments. The period-end analysis supports the conclusion that the Company does not have an accrual for uncertain tax positions as of June 30, 2010. If interest and penalties were to be assessed, the Company would charge interest to interest expense and penalties to other operating expense. It is not anticipated that unrecognized tax benefits would significantly increase or decrease within twelve (12) months of the reporting date.

The Company provides for a net deferred tax asset/liability equal to the expected future tax benefit/expense of temporary reporting differences between book and tax accounting methods and any available operating loss or tax credit carryforwards. The Company has incurred net operating losses of $441,723 which expire in 2024.

The amount of and ultimate realization of the benefits from the operating loss carryforwards for income tax purposes is dependent, in part, upon the tax laws in effect, the future earnings of the Company, and other future events, the effects of which cannot be determined. Because of the uncertainty surrounding the realization of the loss carryforwards, the Company has established a valuation allowance equal to the tax effect of the loss carryforwards and, therefore, no deferred tax asset has been recognized for the loss carryforwards. The net deferred tax asset is approximately $nil as of June 30, 2010, for which the Company recorded a valuation allowance because the Company cannot be assured it is more likely than not it will utilize the net operating losses carried forward in future years.

The components of the net deferred tax asset for the quarter ended June 30, 2010 and from inception (December 31, 2007) through June 30, 2010 and the statutory tax rate, the effective tax rate and the elected amount of the valuation allowance are indicated below:

				Period
				From
				Inception
				on
				December
	Quarter			31, 2007 to
	Ended
		June30, 2010			June 30, 2010

Net operating losses carried forward	$	48,896		$	441,723
Statutory tax rate		35	%		35	%
Effective tax rate		-			-
Deferred tax asset		18,000			155,000
Valuation allowance		(18,000	)		(155,000	)
Net deferred tax asset	$	0		$	0

NOTE 10. RELATED PARTY TRANSACTIONS

The Company neither owns nor leases any real or personal property. An officer of the corporation provides office services without charge. Such costs are immaterial to the financial statements and accordingly, have not been reflected therein. The officers and directors for the Company are involved in other business activities and may, in the future, become involved in other business opportunities. If a specific business opportunity becomes available, such persons may face a conflict in selecting between the Company and their other business interest. The Company has not formulated a policy for the resolution of such conflicts.

NOTE 11. COMMITMENT AND CONTINGENCY

As of the date of this Quarterly Report, we have entered into the following material commitments:

On January 8, 2010, the Company entered an Executive Employment Agreement effective January 11, 2010 with the previous Chief Executive Officer. Terms of the agreement include an (inception bonus) of $150,000 and monthly payments of $15,000. The agreement expires on December 31, 2013.

During the first quarter, 2010, the Company converted certain accrued expense into notes payable each note including a voluntary convertible feature allowing the holder to convert all or part of the outstanding balance into fully paid non-assessable whole shares of the Company. The notes have a “bonus interest” feature calculated at ten percent (10%) and are due on demand.

During the second quarter, 2010, the Company entered into two convertible demand notes. Each note includes a voluntary convertible feature allowing the holder to convert all or part of the outstanding balance into fully paid non-assessable whole shares of the Company. The notes have no stated interest rate and are due on demand.

NOTE 12. CONSULTING AGREEMENT

On March 1, 2009, we entered into a consulting agreement (the “Consulting Agreement”) with an advisory firm. In accordance with the terms and provisions of the Consulting Agreement: (i) we are to pay monthly fees in the amount of $5,000 and reimburse expenses up to $9,000 previously incurred; (ii) the advisory firm shall provide services including, but not limited to, economic analysis, economic forecast, negotiate and endeavor to arrange sales and/or purchases and/or distribution agreements and/or joint venture agreements on a best efforts basis; and (iii) either party can terminate upon a 90-days written notice.

On January 17, 2010, the agreement was terminated by mutual consent. The parties entered into a convertible promissory demand note in exchange for the outstanding balance of $59,000. Terms include a bonus payment (simple interest at 10%) in the amount of $5,900. The note includes a voluntary conversion feature allowing the holder to convert all or part of the amount outstanding into fully paid, non-assessable whole shares of the Company at a rate of $0.03 per share. The note has no stated due date.

NOTE 13. SUBSEQUENT EVENTS

These financial statements were approved by management and were issued on January 19, 2011. Subsequent events have been evaluated through this date and include the following:

•

On July 5, 2010 the Company entered into a convertible promissory note with an investment firm (a related party) in the amount of $5,000. Terms include a bonus payment (interest) in the amount of $500. The note includes a voluntary conversion feature allowing the holder to convert all or part of the amount outstanding into fully paid, non-assessable whole shares of the Company at a rate of $0.03 per share.

•

On July 19, 2010 the Company entered into a convertible promissory note with a private individual (a related party) in the amount of $14,000. Terms include a bonus payment (interest) in the amount of $1,400. The note includes a voluntary conversion feature allowing the holder to convert all or part of the amount outstanding into fully paid, non-assessable whole shares of the Company at a rate of $0.03 per share.

•

Effective July 22, 2010, the Board approved an Amendment to our Articles to: (i) increase the authorized capital structure of the Company by increasing the number of authorized shares of Common Stock from 350,000,000 shares of Common Stock to 750,000,000 shares of Common Stock; and (ii) ratify the prior amendment to the articles of incorporation increasing the number of authorized shares of common stock, par value $0.001, to 350,000,000 shares of Common Stock effected July 22, 2010 (the “2010 Amendment”).

•

On August 5, 2010 the Board of Directors approved the acceptance of a loan from an investment firm (a related party) in the amount of $11,000. On October 14, 2010 the Board approved a convertible promissory note in the amount of $11,000. Terms include a bonus payment (interest) in the amount of $1,100. The note includes a voluntary conversion feature allowing the holder to convert all or part of the amount outstanding into fully paid, non-assessable whole shares of the Company at a rate of $0.001 per share.

•

On August 11, 2010 the Board of Directors approved the acceptance of a loan from an investment firm (a related party) in the amount of $5,000. On November 9, 2010 the Board approved a convertible promissory note in the amount of $5,000. Terms include a bonus payment (interest) in the amount of $500. The note includes a voluntary conversion feature allowing the holder to convert all or part of the amount outstanding into fully paid, non-assessable whole shares of the Company at a rate of $0.001 per share.

•

On November 2, 2010 the Board of Directors approved the acceptance of a loan from a management firm (a related party) in the amount of $9,300. On November 29, 2010 the Board approved a convertible promissory note in the amount of $9,300. Terms include a bonus payment (interest) in the amount of $930. The note includes a voluntary conversion feature allowing the holder to convert all or part of the amount outstanding into fully paid, non-assessable whole shares of the Company at a rate of $0.001 per share.

•	On November 10, 2010 the Company received a letter of comment from the Securities and Exchange Commission (SEC) regarding Form 10-K for the fiscal year ending December 31, 2009. Management is cooperating fully with the SEC regarding their comments.

•

Effective on November 25, 2010, the holders of an aggregate 28,915,810 shares of common stock of InfoSpi. Inc., a Nevada corporation (the “Company”), entered into a share purchase agreement dated November 25, 2010 (the “Share Purchase Agreement”) with the Chief Executive Officer (the “Buyer”). In accordance with the terms and provisions of the Share Purchase Agreement, the Seller sold the 28,915,810 shares of restricted common stock of the Company to the Buyer at a price of $0.011 per share for a total purchase price of $325,000.00.

•

The sale and purchase of the 28,915,810 shares of common stock of the Company constitutes29.8% of the total issued and outstanding shares. In accordance with the further terms and provisions of the transactions, the Company shall issue an additional 12,500,000 shares of restricted common stock to the Chief Executive Officer pursuant to his appointment as the sole officer and sole director of the Company. This will result in a change in control of the Company.The source of funds used by Buyer to acquire the 28,915,810 shares of common stock of the Company is personal funds. There are no arrangements or understandings between the Buyer and Seller and their respective associates with respect to election of directors or other matters.

•

On January 1, 2011 the Company entered into an Office Building Lease for its corporate headquarters located in Aventura, Florida. Lease terms include: (i) Thirty six (36) month lease term; (ii) Triple-net provisions; (iii) Rent commencing on February 1, 2011 and; (iv) Company responsible for the cost of build-out and partitioning of the space.

•

Effective on January 20, 2011, the Board of Directors approved and authorized the execution of a letter of intent to acquire, dated January 20, 2011 with NexPhase Lighting, Inc., a privately held Florida corporation. NexPhase is in the business of designing, developing and manufacturing high quality LED intelligent lighting fixtures.

FORWARD LOOKING STATEMENTS

Statements made in this Form 10-Q that are not historical or current facts are "forward-looking statements" made pursuant to the safe harbor provisions of Section 27A of the Securities Act of 1933 (the "Act") and Section 21E of the Securities Exchange Act of 1934. These statements often can be identified by the use of terms such as "may," "will," "expect," "believe," "anticipate," "estimate," "approximate" or "continue," or the negative thereof. We intend that such forward-looking statements be subject to the safe harbors for such statements. We wish to caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made. Any forward-looking statements represent management's best judgment as to what may occur in the future. However, forward-looking statements are subject to risks, uncertainties and important factors beyond our control that could cause actual results and events to differ materially from historical results of operations and events and those presently anticipated or projected. We disclaim any obligation subsequently to revise any forward-looking statements to reflect events or circumstances after the date of such statement or to reflect the occurrence of anticipated or unanticipated events.

This Quarterly Report is being amended in accordance with the comment letter dated March 28, 2011 from the Securities and Exchange Commission regarding our controls and procedures.

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

BUSINESS DEVELOPMENT

InfoSpi, Inc., now known as Onteco Corporation , was organized under the laws of the State of Nevada on December 31, 2007 as part of the implementation of the Chapter 11 plan of reorganization of Arrin Systems, Inc. ("Arrin"). Arrin filed for Chapter 11 Bankruptcy in April 2007 in the U.S. Bankruptcy Court for the Southern District of California. Arrin's plan of reorganization was confirmed by the U.S. Bankruptcy Court for the Southern District of California on December 12, 2007 and became effective on December 30, 2007. The plan of reorganization provided for our establishment and the sale to us of Arrin's proprietary software (used in the employee background screening industry) in exchange for 567,324 shares of our common stock, which were distributed to Arrin's general unsecured creditors. The shares of common stock were distributed to Arrin’s general unsecured creditors pursuant to section 1145 of the Bankruptcy code and were exempt from the registration requirements of Section 5 of the Securities Act of 1933 and any state or local law requiring registration for an offer or sale of securities.

Agreement for the Purchase of Common Stock and Warrants

Effective September 16, 2009, Daniel C. Masters, Attorney at Law, representing certain selling shareholders and warrant holders (collectively, the “Sellers”) and Westmount Securities Corp., a corporation organized under the laws of the Province of Quebec, representing certain purchasers (collectively, the “Purchasers”) entered into that certain agreement for the purchase of common stock and warrants (the “Purchase Agreement”). In accordance with the terms and provisions of the Purchase Agreement, the Sellers sold 4,990,000 shares of our common stock and 5,000,000 warrants to purchase shares of our common stock (the “Warrants”) in exchange for $275,000. In further accordance with the terms and provisions of the Purcahse Agreement, the initial $10,000 was deposited on or before September 22, 2009 and the remaining final payment of $265,000 was to be paid by September 30, 2009. All funds were paid accordingly.

Thus, based upon our change in control, our business operations currently involve the implementation of proprietary processes through strategic alliances. Our purpose is to commercialize proven technologies which have been developed to address such areas as sewer and sludge conversion and used tires and plastic recovery. The objective is to minimize and reverse the impact of these products on the environment. We have been in the development stage since our formation and have not yet realized any revenues from its planned operations.

RECENT DEVELOPMENT

On June 15, 2010, our Board of Directors and shareholders holding a majority of the total issued and outstanding shares of common stock pursuant to written consents in lieu of a meeting approved an amendment to our Articles of Incorporation to increase the authorized capital (the “Amendment”). The Amendment was filed with the Nevada Secretary of State on July 22, 2010 increasing our authoirzed capital from 75,000,000 shares of common stock to 350,000,000 shares of common stock, par value $0.001, and 100,000,000 shares of preferred stock, par value $0.001.

CURRENT OPERATIONS

Our business operations involve the commercialization of proven technologies which have been developed to address such areas as sewer and sludge conversion and used tires and plastic recovery. The objective is to minimize and reverse the impact of these products on the environment. We do not engage in research and development but seek innovations that can clearly demonstrate the viability of large scale implementations with sustainable benefits to the environment.

We have an office in Fort Lauderdale with five employees and additional offices in the United Kingdom and Valencia. We are currently setting up a fabrication center in Israel to take advantage of important technology.

The key areas of business will be:

·	Waste management and treatment

·	Tire recycling

·	Alternate fuels

We plan to implement two revolutionary technologies in the United States that management believes will eliminate some of the most challenging contamination problems.

Used tires and plastic recycling

Management believes that our revolutionary equipment will enable the recovery of up to 95% of raw materials from tires and plastics through pyrolysis technology with no environmental contamination. Pyrolysis is the chemical decomposition of organic materials by heat in the absence of oxygen. This process allows for the treatment of plastic and used tires to be converted to liquid fuel oil and carbon. The system has the following advantages over the procedure that is currently utilized: (i) elimination of contaminated waste being transported to landfills; (ii) neither pollutant outputs nor wasted materials require final disposal; (iii) the pyrolysis technology uses low temperatures; (iv) the exhaust can be completely recycled to the heating system; and (v) reduced environmental hazards by burning tires.

Sewage and Sludge Treatment

The technology that we intend to bring to the North American market will provide for the conversion of sludge and sewer into biocrude. Pursuant to the terms and provisions of an exclusive agreement currently being negotiated with IBS of Spain, we intend to manufacture and install a series of sewage re-treatment plants in North America. Management believes that this technology will permit the process to plug into existing sewage treatment plants prior to the initial stage of the current sewage treatment process at the point where the normal procedure would be to transport the residual sludge to local landfill sites. This process will thus allow for the treatment of the whole biomass obtained at the sewage treatment plants. Management believes that such a process will result in a biofuel of a high energy content.

Management believes that the system has the following advantages over anaerobic digestion treatment, the only alternative currently used: (i) elimination of costly anaerobic digesters; (ii) neither pollutant outputs nor wasted materials require final disposal; (iii) reduced production costs; (iv) the water treatment component can recuperate up to 80% of the volume of sludge input as potable water; (v) there is no waste sent to landfills and no waste water; (vi) all inputs are converted into biopetroleum, which, once burned, does not add to the net Co2 in the environment; and (vii) methane gas release, which is a direct consequence of anaerobic digesters, is avoided.

Methane gas is a greenhouse pollutant 14 times more potent than carbon dioxide.

Alternate Fuels

Alternate energy crops for biofuel production is another of our key objectives. As of the date of this Quarterly Report, we are developing a strategy with regard to both micro algae feed stock and jatropha/castor feedstock.

RESULTS OF OPERATION

STATEMENT OF OPERATIONS	Six Month Periods Ended June 30, 2010 and June 30, 2009						For the Period from December 29, 2003 (inception) to June 30, 2010

Revenue		-0-			-0-			-0-

Expenses
Professional expenses		11,175			-0-			19,825
General and administrative expenses		3,671			20,000			63,021
Stock-Based Compensation		-0-			-0-			,107,555
Executive Compensation		240,000			-0-			240,000
Operating Income (Loss)		(254,846	)		(20,000	)		(430,401	)

Other Expenses
Loss on Disposition of Asset		-0-			-0-			567
Write-off Amount Due from Others		1,000			-0-			1,000
Bonus – Interest Expense		9,755			-0-			9,755
Net Income (Loss)		(265,601	)		(20,000	)		(441,723	)

BALANCE SHEET DATA	June 30, 2010			December 31, 2009
Total Assets		32,954			1,000
Total Liabilities		361,555			64,000
Total Stockholders’ Equity (Deficit)		(328,601	)		(63,000	)

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULT OF OPERATION

The summarized financial data set forth in the table below is derived from and should be read in conjunction with our restated unaudited financial statements for the period from inception (December 31, 2007) through March 31, 2010, including the notes to those financial statements which are included in this Quarterly Report. The following discussion should be read in conjunction with our audited financial statements and the related notes that appear elsewhere in this Quarterly Report. The following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in the forward looking statements. Our audited financial statements are stated in United States Dollars and are prepared in accordance with United States Generally Accepted Accounting Principles.

We expect we will require additional capital to meet our long term operating requirements. We expect to raise additional capital through, among other things, the sale of equity or debt securities.

RESULTS OF OPERATION

Six Month Period Ended June 30, 2010 Compared to Six Month Period Ended June 30, 2009.

Our net loss for the six month period ended June 30, 2010 was ($265,601) compared to a net loss of ($20,000) for the six month period ended June 30, 2009 (an increase of $245,601). During the six month periods ended June 30, 2010 and 2009, we did not generate any revenue from operations.

During the six month period ended June 30, 2010, we incurred expenses of $254,846 compared to expenses of $20,000 incurred during the six month period ended June 30, 2009 (an increase of $234,846). The expenses incurred during the six month period ended June 30, 2010 consisted of: (i) professional expenses of $11,175 (2009: $-0-); (ii) general and administrative expenses of $3,671 (2009: $20,000); and (iii) executive compensation of $240,000 (2009: $-0-). We did not have any substantial business operations during the six month period ended June 30, as a result of the bankruptcy. Our expenses increased primarily based on the incurrence of $240,000 as executive compensation resulting from the consummation of an executive services agreement dated January 8, 2010 with Haim Mayan, our prior President/Chief Executive Officer. General and administrative expenses generally include corporate overhead, financial and administrative contracted services, marketing, and consulting costs. See “ – Material Commitments” below.

The basic weighted average number of shares outstanding was 25,075,632 for the six month period ended June 30, 2010 compared to 5,567,324 for the six month period ended June 30, 2009.

Three Month Period Ended June 30, 2010 Compared to Three Month Period Ended June 30, 2009.

Our net loss for the three month period ended June 30, 2010 was ($48,896) compared to a net loss of ($15,000) for the six month period ended June 30, 2009 (an increase of $33,896). During the three month periods ended June 30, 2010 and 2009, we did not generate any revenue from operations.

During the three month period ended June 30, 2010, we incurred expenses of $48,896 compared to expenses of $15,000 incurred during the three month period ended June 30, 2009 (an increase of $33,896). The expenses incurred during the three month period ended June 30, 2010 consisted of: (i) professional expenses of $225 (2009: $-0-); (ii) general and administrative expenses of $3,671 (2009: $15,000); and (iii) executive compensation of $45,000 (2009: $-0-). We did not have any substantial business operations during the three month period ended June 30, as a result of the bankruptcy. Our expenses increased primarily based on the incurrence of $45,000 as executive compensation resulting from the consummation of an executive services agreement dated January 8, 2010 with Haim Mayan, our prior President/Chief Executive Officer.

The basic weighted average number of shares outstanding was 25,075,632 for the three month period ended June 30, 2010 compared to 5,567,324 for the three month period ended June 30, 2009.

LIQUIDITY AND CAPITAL RESOURCES

Six Month Period Ended June 30, 2010

As of June 30, 2010, our current assets were $5,354 and our current liabilities were $361,555, which resulted in a working capital deficit of $356,231. As of June 30, 2010, our total assets of $32,954 were comprised of: (i) $5,354 in cash; and (ii) $27,600 in project development costs$5,454 in cash. As of June 30, 2010, our total liabilities of $361,555 were comprised of: (i) $5,000 in accrued expenses; (ii) $237,000 in accrued employee compensation; and (iii) $119,555 in notes payable.

Stockholders’ equity (deficit) increased from ($63,000) for fiscal year ended December 31, 2010 to ($328,601) for the six month period ended June 30, 2010.

Cash Flows from Operating Activities

We have not generated positive cash flows from operating activities. For the six month period ended June 30, 2010, net cash flows used by operating activities was ($86,601). Net cash flows used in operating activities for the six month period ended June 30, 2010 consisted of a net loss of ($265,601) adjusted by $1,000 in write-off amounts due from others, increased by $237,000 in accrued employee compensation and further decreased by $59,000 in accrued expenses. . For the six month period ended June 30, 2009, net cash flows used in operating activities was $-0-.

Cash Flows from Investing Activities

For the six month period ended June 30, 2010, net cash flows used in investing activities was ($27,600) consisting of project development costs. We did not engage in any investing activities during the six month period ended June 30, 2009. .

Cash Flows from Financing Activities

We have financed our operations primarily from debt or the issuance of equity instruments. For the six month period ended June 30, 2010, net cash flows provided from financing activities was $119,555 consisting of notes payable. We did not engage in any financing activities during the six month period ended June 30, 2009.

PLAN OF OPERATION AND FUNDING

As noted above, we were recently organized as the result of the bankruptcy of our former affiliate. We have conducted no operations other than acquisition of certain software from our former affiliate, Arrin Systems, Inc., the preparation of our filings with the SEC, and preliminary discussions with various individuals and businesses concerning licensing (with one party) or a business combination (with several parties). We have no cash. It is anticipated that we will incur expenses in the implementation of the business plan described herein. Because we have no capital with which to pay these anticipated expenses, our present management may pay these charges with their personal funds, as interest free loans us, or as capital contributions. Therefore, we will also need advances and issuance of debt instruments to fund our operations over the next six months. In connection with our future business plan, management anticipates additional increases in operating expenses and capital expenditures relating to our business operations. We would finance these expenses with further issuances of securities and debt issuances. We expect we would need to raise additional capital and generate revenues to meet long-term operating requirements. Additional issuances of equity or convertible debt securities would result in dilution to our current shareholders. Further, such securities may have rights, preferences or privileges senior to our common stock. Additional financing may not be available upon acceptable terms, or at all.

MATERIAL COMMITMENTS

As of the date of this Quarterly Report, we do not have any material commitments other than as described below.

Convertible Promissory Notes

On January 17, 2010, we entered into a convertible promissory note with an advisory consulting firm in the amount of $59,000. The terms of the convertible promissory note included a bonus payment (interest) in the amount of $5,900 and a voluntary conversion feature allowing the holder thereof to convert all or a portion of the amount outstanding into shares of our restricted common stock at the rate of $0.03 per share.

On February 10, 2010, we entered into a convertible promissory note with a web designer in the amount of $3,150. The terms of the convertible promissory note included a bonus payment (interest) in the amount of $315 and a voluntary conversion feature allowing the holder thereof to convert all or a portion of the amount outstanding into shares of our restricted common stock at the rate of $0.03 per share.

On February 10, 2010, we entered into a convertible promissory note with a project consultant in the amount of $7,800. The terms of the convertible promissory note included a bonus payment (interest) in the amount of $780 and a voluntary conversion feature allowing the holder thereof to convert all or a portion of the amount outstanding into shares of our restricted common stock at the rate of $0.03 per share.

On February 10, 2010, we entered into a convertible promissory note with an engineering firm in the amount of $27,600. The terms of the convertible promissory note included a bonus payment (interest) in the amount of $2,760 and a voluntary conversion feature allowing the holder thereof to convert all or a portion of the amount outstanding into shares of our restricted common stock at the rate of $0.03 per share.

Executive Employment Agreement

On January 8, 2010, we entered into an executive employment agreement effective January 11, 2010 with our then President/Chief Executive Officer (the “Executive Employment Agreement”). In accordance with the terms and provisions of the Executive Employment Agreement: (i) we shall pay a monthly fee of $15,000; (ii) we shall pay an inception bonus of $150,000; and (iii) the termination date shall be December 31, 2013. As of June 30, 2010, we accrued executive compensation of $237,000. As of the date of this amended Quarterly Report, the Executive Employment Agreement has been terminated.

PURCHASE OF SIGNIFICANT EQUIPMENT

We do not intend to purchase any significant equipment during the next twelve months.

OFF-BALANCE SHEET ARRANGEMENTS

As of the date of this Quarterly Report, we do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors.

GOING CONCERN

The independent auditors' report accompanying our December 31, 2009 and December 31, 2008 financial statements contains an explanatory paragraph expressing substantial doubt about our ability to continue as a going concern. The financial statements have been prepared "assuming that we will continue as a going concern," which contemplates that we will realize our assets and satisfy our liabilities and commitments in the ordinary course of business.

ITEM III. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

Market risk represents the risk of loss that may impact our financial position, results of operations or cash flows due to adverse change in foreign currency and interest rates.

Exchange Rate

Our reporting currency is United States Dollars (“USD”). Since we plan to distribute and market our products outside of the United States, the fluctuation of exchange rates may have positive or negative impacts on our results of operations. However, all revenue and expenses will be denominated in U.S. Dollars, and the net income effect of appreciation and devaluation of the currency against the U.S. Dollar will be limited to our costs of goods sold.

Interest Rate

Interest rates in the United States are generally controlled. Any potential future loans will relate mainly to acquisition of properties and will be mainly short-term. However our debt may be likely to rise in connection with expansion and if interest rates were to rise at the same time, this could have a significant impact on our operating and financing activities. We have not entered into derivative contracts to hedge existing risks for speculative purposes.

ITEM IV. CONTROLS AND PROCEDURES

Evaluation of disclosure controls and procedures

Management performed an evaluation under the supervision and with the participation of our management, including our Chief Executive Officer/Chief Financial Officer, of the effectiveness of our disclosure controls and procedures, (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act). Based on that evaluation, our management, including our C hief Executive Officer/Chief Financial Officer, concluded that our disclosure controls and procedures were not effective as of June 30, 2010 to provide reasonable assurance that information required to be disclosed by us in the reports filed or submitted by us under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms; and (ii) such information is accumulated and communicated to our management, including our Chief Executive Officer/Chief Financial Officer, as appropriate to allow timelydecisions regarding required disclosure. In designing and evaluating our disclosure controls and procedures, our management recognized that any controls and procesures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and our management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based upon that evaluation and the identification of certain material weakness described below, our Chief Executive Officer/Chief Financial Officer concluded that our disclosure controls and procedures were ineffective as of the end of the period covered by this report.

We began preparing to be in compliance with the internal control obligations, including Section 404, for our fiscal year ending December 31, 2010. We believe that our current accounting staff is professional and experienced in accounting requirements and procedures generally accepted in the United States. Management, however, has determined that our internal audit function may be deficient due to insufficient qualified resources to perform internal audit functions. Our management determined that the lack of an audit committee of our Board of Directors at March 31, 2010 may have contributed to insufficient oversight of our accounting and audit functions.

In order to correct the foregoing weaknesses, we have taken certain remediation measures and designed new internal controls and procedures to ensure: (a) effectiveness and efficiency of operations; (b) reliability of financial reporting; and (c) compliance with laws and regulations. To that end, management will provide a controlled environment which organizes and influences its people.

In early January 2011, we acquired new office space and relocated its headquarters. Additionally, management is establishing an information and communication system for its executives and employees allowing them to carry out their responsibilities in an organized and process driven manner.

Following the recent change in control the following steps have been implemented:

(a)	The new public accounting firm Randall N. Drake, CPA, P.A. has been engaged on December 5, 2010 to review and or audit our restated financial statements beginning with the quarterly report for period ended September 30, 2010.

(b)

The firm engaged an accounting facilitator on November 26, 2010 to assist with: (a) compiling and maintaining our financial records; (b) assisting the bookkeeping staff with proper recording of transactions; (c) maintaining permanent accounting records and proper backup procedures; and (d) providing continuous monitoring of accounting functions throughout the company. In addition, the facilitator will perform a risk assessment which identifies and analyzes the relevant risks management should address in order to achievement of its objectives. The facilitator will also assist with the preparation of written policies and procedures that will help ensure management directives are carried out.

(c)	Our President/Chief Executive Officer is serving as the primary point of communication between us and the audit firm. Management has established a direct line of communication with the audit firm to ensure that the auditor is aware of management's intent and actions.

Due to our size and nature, segregation of all conflicting duties may not always be possible and may not be economically feasible. However, to the extent possible, we will implement procedures to assure that the initiation of transactions, the custody of assets and the recording of transactions will be performed by separate individuals.

We believe that the foregoing steps will remediate the significant deficiencies identified above, and we will continue to monitor the effectiveness of these steps and make any changes that our management deems appropriate. A material weakness (within the meaning of PCAOB Auditing Standard No. 5) is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control over financial reporting that is less severe than a material weakness, yet important enough to merit attention by those responsible for oversight of the company's financial reporting.

Inherent Limitations on Effectiveness of Controls

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

We believe that a control system, no matter how well designed and operated, cannot provide absolute assurance that the objectives of the controls system are met, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected. Our disclosure controls and procedures are designed to provide reasonable assurance of achieving their objectives, and our prior Chief Executive Officer/Chief Financial Officer have concluded that these controls and procedures are effective at the “reasonable assurance” level.

Changes in internal controls

No significant changes were implemented in our internal controls over financial reporting during the second quarterly period covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

AUDIT COMMITTEE REPORT

Our Board of Directors has not established an audit committee. The respective role of an audit committee has been conducted by our Board of Directors. We are contemplating establishment of an audit committee during fiscal year 2010. When established, the audit committee's primary function will be to provide advice with respect to our financial matters and to assist our Board of Directors in fulfilling its oversight responsibilities regarding finance, accounting, and legal compliance. The audit committee's primary duties and responsibilities will be to: (i) serve as an independent and objective party to monitor our financial reporting process and internal control system; (ii) review and appraise the audit efforts of our independent accountants; (iii) evaluate our quarterly financial performance as well as its compliance with laws and regulations; (iv) oversee management's establishment and enforcement of financial policies and business practices; and (v) provide an open avenue of communication among the independent accountants, management and our Board of Directors.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

Management is not aware of any legal proceedings contemplated by any governmental authority or any other party involving us or our properties. As of the date of this Quarterly Report, no director, officer or affiliate is (i) a party adverse to us in any legal proceeding, or (ii) has an adverse interest to us in any legal proceedings. Management is not aware of any other legal proceedings pending or that have been threatened against us or our properties

ITEM 1A. RISK FACTORS

No report required.

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

No report required.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

No report required.

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

Removed and reserved.

ITEM 5. OTHER INFORMATION

DEPARTURE OF DIRECTORS OR PRINCIPAL OFFICERS; ELECTION OF DIRECTORS; APPOINTMENT OF PRINCIPAL OFFICERS.

Effective on May 25, 2010, our Board of Directors accepted the resignation from Ashley Hollington as the Chief Operating Officer and a director effective May 25, 2010. Therefore, as of the date of this Current Report, the Board of Directors is comprised of Haim Mayan and Michel Brunet. There were no disagreements between us and Mr. Hollington relating to his resignation.

Effective on April 27, 2010, our Board of Directors accepted the resignations from Chris Hamilton as the Vice President and a director and Oliver Danan as the Vice President and Chief Operating Officer and a director effective April 27, 2010. Simultaneously, out Board of Directors accepted the consent from Haim Mayan as the interim Chief Executive Officer and Chief Financial Officer effective April 27, 2010 and confirmed Mr. Mayan’s continuing appointment to our Board of Directors.

Biography

Haim Mayan. Since 1990, Mr. Mayan has been engaged in executive roles with private and/or public companies. Prior to joining us, Mr. Mayan served as president of Mayan group LLC in Miami, Florida. Mayan Group LLC owned and operated a large condo community and home rentals. From 1991 to present, Mr. Mayan owned and managed a construction company and several real-estate development and commercial properties including, Oxembergeve LTD, Gvahim LTD in Tel Aviv, and Mayan Group LLC which had several other successful development. Since 2005, Haim has made exhaustive research into the conversion of existing products into oil especially into the tire to oil market and the conversion of algae into oil for bio-diesel.

As of the date of this amended Quarterly Report, our management has changed and effective November 25, 2010; (i) Haim Mayan resigned as a member of the Board of Directors and as the President/Chief Executive Officer, Secretary and Treasurer/Chief Financial Officer of the Company; and (ii) Dror Svorai consented to act as a member of the Board of Directors and as the President/Chief Executive Officer, Secretary and Treasurer/Chief Financial Officer of the Company. Michel Brunet previously had resigned as a member of the Board of Directors effective August 3, 2010.

ITEM 6. EXHIBITS

Exhibits:

31.1	Certification of the registrant’s Principal Executive Officer under the Exchange Act Rules,12a-14(a) or 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act 2002.

31.2	Certification of the registrant’s Principal Financial Officer under the Exchange Act Rules, 12a-14(a) or 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act 2002.

32.1.1	Certifications of the registrant’s Principal Executive Officer and Principal Financial Officer under 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

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.

	ONTECO CORPORATION

Dated: April 25, 2011	By:	/s/ Dror Svorai
		Dror Svorai, Chief Executive Officer


Dated: April 25, 2011	By:	/s/ Dror Svorai
		Dror Svorai, Chief Financial Officer

Inelco Corp - FORM 10-Q/A - April 25, 2011

Attached files

Inelco Corp Reports