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EX-33 - EXHIBIT 33.1 - INFORMATION ARCHITECTS CORPexhibit331.htm
EX-32 - EXHIBIT 32.1 - INFORMATION ARCHITECTS CORPexhibit321.htm
EX-31 - EXHIBIT 31.1 - INFORMATION ARCHITECTS CORPexhibit311.htm
EX-34 - EXHIBIT 34.1 - INFORMATION ARCHITECTS CORPexhibit341.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 QUARTERLY PERIOD ENDED JUNE 30, 2011


COMMISSION FILE NUMBER 0-22325


INFORMATION ARCHITECTS CORPORATION

(Exact name of registrant as specified in its charter)

      

NORTH CAROLINA

State or other jurisdiction of incorporation


 87-0399301

IRS Employer Identification No.


7625 Chapelhill Drive

Orlando, FLA 32819

(Address of principal executive offices) (Zip Code)


(954) 358-7099

(Registrants telephone number, including area code)


Indicate by check mark whether we: (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 we were required to file such reports), and (2) has been subject to such filing requirements for past 90 days. Yes [] No [X]


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 (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes [] No [X]


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

 

Large accelerated filer []   Accelerated filer []    

 Non-accelerated filer []       Smaller reporting company [X]


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


The number of shares of common equity outstanding as at August 15, 2011 was 5,489,361.


1


PART I – FINANCIAL INFORMATION

ITEM 1 – Financial Statements


INFORMATION ARCHITECTS CORPORATION

CONDENSED BALANCE SHEETS

  

(Derived

  

from

  

audited

  

financial

 

(UNAUDITED)

statements)

 

June 30,

December 31,

 

2011

2010

   

Assets

  

Cash

 $                  146

 $                   -

Total assets

 $                  146

 $                   -

   

Liabilities and shareholders' deficit

  

Current liabilities

  

Accounts payable - trade

 $             11,747

 $           8,225

Other - Payroll taxes

                75,128

            75,128

Short term notes payable

                20,000

                      -

Accrued salaries

              142,500

-

Shareholder advances

                  8,400

                      -

Total current liabilities

              257,775

            83,353

   

Shareholders' deficit

  

Preferred stock issuable (Authorized 500,000,000 shares, par value $.001)

  

Preferred B - To be issued (2011 - 7,108,820 shares,

  

2010 - 5,083,820 shares)

                  7,109

              5,084

Common stock (Authorized 2,000,000,000 shares, par value $.001)

  

(Issued 2011 - 5,489,361 and 2010 - 5,489,361 shares)

                  5,490

              5,490

Paid in capital

        77,124,267

     76,610,217

Deferred stock based compensation

            (345,260)

                      -

Accumulated deficit

       (77,049,235)

   (76,704,144)

Total Shareholders' deficit

            (257,629)

          (83,353)

Total liabilities and shareholders' deficit

 $                  146

 $                   -


See the accompanying notes to unaudited condensed financial statements


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INFORMATION ARCHITECTS CORPORATION

UNAUDITED CONDENSED STATEMENTS OF OPERATIONS

FOR THE THREE AND SIX MONTH PERIODS ENDED JUNE 30, 2011 AND 2010

 

Three-month

Three-month

Six-month

Six-month

 

Period ended

Period ended

Period ended

Period ended

 

June 30,

June 30,

June 30,

June 30,

 

2011

2010

2011

2010

     

Sales

$            -

 $              -

 $                -

 $                -

     

Less cost of goods sold

               -

                 -

                   -

                   -

     

Gross profit

 -

                 -

                   -

                   -

     

General and Administrative Expenses

   311,399

      282,715

      345,091

       282,715

     

Income from operations

 (311,399)

   (282,715)

     (345,091)

     (282,715)

     

Other income (expense)

               -

-

                    -

                   -

     

Loss before provision for income taxes

(311,399)

   (282,715)

     (345,091)

     (282,715)

     

Provision for income taxes

               -

                 -

                   -

-

     

Loss before benefit from tax loss carryforward

 (311,399)

   (282,715)

     (345,091)

     (282,715)

     

Benefit from tax loss carryforward

               -

                 -

                   -

                   -

     

Net Loss

$(311,399)

 $(282,715)

 $   (345,091)

 $  (282,715)

     

Loss applicable to common stockholders

$(311,399)

 $(282,715)

 $  (345,091)

 $  (282,715)

     

Weighted average common shares outstanding

5,489,361

   4,001,491

     5,489,361

    3,806,580

     

Basic and diluted loss per share

 $     (0.06)

 $      (0.07)

 $         (0.06)

 $        (0.07)

     

See the accompanying notes to unaudited condensed financial statements


3


INFORMATION ARCHITECTS CORPORATION

UNAUDITED CONDENSED STATEMENT OF SHAREHOLDERS' ACCUMULATED DEFICIT

      

Deferred

  
 

Issuable Preferred Stock

COMMON STOCK

Additional

Stock

 

Total

 

Series B

  

Paid-In

Based

Accumulated

Stockholders'

 

# of Shares*

Amount

# of Shares**

Amount

Capital

Compensation

Deficit

Equity

         

Balance - December 31, 2010

    5,083,820

 $ 5,084

5,489,361

 $ 5,490

$76,610,217

 $                  -

$(76,704,144)

 $     (83,353)

         

Issuance of stock for compensation

2,025,000

    2,025

              -

            -

       505,050

                     -

                     -

       507,075

Capital Contributions

              -

            -

              -

           -

           9,000

                     -

                     -

            9,000

Deferred stock based compensation

              -

            -

              -

            -

                  -

       (345,260)

                     -

      (345,260)

Net loss for first half of 2011

              -

            -

              -

           -

                  -

                    -

       (345,091)

      (345,091)

         

Balance - June 30, 2011

7,108,820

 $ 7,109

5,489,361

 $ 5,490

$77,124,267

 $    (345,260)

$(77,049,235)

 $   (257,629)

         

*Restated for 2-to-1 reverse stock split (See Note 2)

      

**Restated for 100-to-1 reverse stock split (See Note 2)

      
         

The accompanying notes are an integral part of these unaudited condensed financial statements


4


INFORMATION ARCHITECTS CORPORATION

UNAUDITED CONDENSED STATEMENTS OF CASH FLOWS

FOR THE SIX-MONTH PERIODS ENDED JUNE 30, 2011 AND 2010

 

Six-month

 

Period Ended

 

June 30,

 

2011

2010

   

Net loss

 $(345,091)

 $(282,715)

Adjustments to reconcile net loss to cash provided (used)

  

by operating activities

  

Issuance of stock for services

     507,075

     282,715

Deferred stock based compensation

   (345,260)

                 -

Changes in:

  

Accrued wages

     142,500

                 -

Accounts payable

         3,522

                 -

 

 

 

   

Net cash used in operating activities

     (37,254)

                 -

   

Cash flows from financing activities

  

Cash from short term notes payable

       20,000

                 -

Cash from shareholder advances

         8,400

                 -

Capital contribution

         9,000

                 -

   

Net cash provided by financing activities

       37,400

 

   

Net change in cash

            146

                 -

   

Cash - Beginning of period

                 -

                 -

   

Cash - End of period

 $         146

 $              -

   

Supplemental cash flow information:

  

Cash paid during the period for interest

 $              -

 $              -

Cash paid during the period for taxes

 $              -

 $              -

   

See the accompanying notes to unaudited condensed financial statements


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INFORMATION ARCHITECTS CORPORATION

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS



INTERIM FINANCIAL STATEMENTS

 

The accompanying condensed unaudited financial statements of Information Architects Corporation  (the “Company,” “we,” “us,” or “our”) have been prepared in accordance with the instructions to quarterly reports on Form 10-Q. In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position, results of operations and changes in financial position at June 30, 2011, and for all periods presented, have been made. Certain information and footnote data necessary for a fair presentation of financial position and results of operations in conformity with accounting principles generally accepted in the United States of America have been condensed or omitted. It is therefore suggested that these financial statements be read in conjunction with the summary of significant accounting policies and notes to financial statements included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”) for the year ended December 31, 2010. The results of operations for the period ended June 30, 2011 are not necessarily an indication of operating results for the full year.

 

Principles of Consolidation

 

The accompanying financial statements include the accounts of Information Architects Corporation and its wholly owned subsidiary, IA Green Corp.


Loss per share

 

Loss per share of common stock is computed based on the weighted average number of common shares outstanding during the period. Conversion of preferred shares and warrants issued in connection with the short term notes are not considered in the calculation, as the impact of the potential common shares (totaling 710,882,000 post reverse split shares at June 30, 2011 and 508,382,000 post reverse split at December 31, 2010) would be to decrease loss per share. Therefore, diluted loss per share is equivalent to basic loss per share.


Going Concern

 

The accompanying interim financial statements have been prepared assuming that the Company will continue as a going concern. The Company has incurred operating losses, has a retained deficit and limited liquid assets. Management's plans with regard to these matters are to actively search for merger candidates and for opportunities for related funding activities. The accompanying financial statements do not include any adjustments that might result from the outcome of this uncertainty.  The Company’s ability to continue as a going concern depends on the success of management's plans in this regard.


6


Note 1 – Letter of Intent for Merger and Related Funding Transactions


The Company is currently involved in due diligence with respect to two potential acquisitions and/or business opportunities. As of the date of this filing, no transactions have occurred and the due diligence has not yet been completed therefore nothing related to these potential activities or business opportunities have been recorded in the accompanying interim financial statements.


Note 2 – Equity transactions


During the quarter ended June 30, 2011, the Company designated for issuance 2,025,000 Preferred B post reverse shares as compensation to officers and consultants. There were no other equity transactions during the quarter ended June 30, 2011 except for the capital contribution of $9,000 by a shareholder and consultant in payment of audit fees in 2011.


During the quarter ended June 30, 2011, the Company effected a 100-to-1 reverse split of its common shares and a 2-to-1 reverse split of its preferred B shares. All per share amounts and share counts have been retroactively adjusted in the accompanying financial statements.


Issuable Series B Preferred Stock - Series B preferred shares are convertible into 100 shares of common stock without any further action by the holders of such shares, and have the right to vote based on 200 votes for each share of Series B preferred stock. All Series B shares are listed as Issuable in the accompanying financial statements until such time as a new transfer agent is selected and the shares can be issued to the recipients.


Note 3 – Short term notes payable


During the first quarter of 2011, the Company borrowed $20,000 under the terms of three separate short term notes payable from unrelated parties (One note for $10,000 (due April 28, 2011) and two separate notes for $5,000 each totaling $10,000 (one note is due May 2, 2011 and one is due May 4, 2011)), the balance of $20,000 remained outstanding as of June 30, 2011. The terms of the notes require payment at three months from the date of the notes, which dates occurred in the second quarter of 2011. The Company is in negotiations with the note holders to convert the balances owed to shares. The two $5,000 notes give each of the holders the right to convert to 100,000 post reverse split shares (200,000 post reverse split total shares) of common stock at any time prior to maturity ($.0005 per share conversion rate, fair value of the shares at the time the notes were negotiated). The $10,000 note gives the holder the right to convert to common stock at any time prior to maturity at a rate of $.0006 per share (fair value of the shares at the time the note was negotiated) (total potential post reverse split shares 166,667) and granted warrants to purchase 2,500 common shares post reverse split at $.05 par share for a three month period from the maturity date (the fair value of the warrants was calculated using the Black-Scholes method which resulted in a zero valuation). There were no interest rates specified on the notes. Since the fair value of the notes approximated the conversion rates at the time the notes were negotiated, no beneficial conversion feature existed at the time the notes were negotiated and therefore no such expense was recognized.

 

7


Note 4 – Shareholder advances


During the first two quarters of 2011, three shareholders advanced a total of $8,400 to the Company for the payment of various expenses. There are no specified repayment terms regarding these advances, which are shown as current liabilities on the accompanying financial statements. The amounts are due to a shareholder, officer and director (a related party transaction) - $5,800, a shareholder and officer (a related party transaction) - $600, and a shareholder - $2,000.


Note 5 – Income Taxes


The Company records its income taxes in accordance with ASC 740 Income Taxes.  The Company incurred net operating losses during all periods presented resulting in a deferred tax asset, which has been fully allowed for; therefore, the net benefit and expense resulted in no income taxes.


The Company’s policy is to record estimated interest and penalties related to the underpayment of income taxes as income tax expense in the consolidated statements of operations.  There has been no interest or penalties recognized in the condensed financial statements.


Note 6 – Related Party Transactions


During the six month period ended June 30, 2011, the Company had the following related party transactions:


Transactions with an officer and director:


A total of $1,400 was reimbursed to the officer for payment of office expenses.


$4,500 was paid to the officer for consulting fees. An additional $37,500 salary was accrued during the quarter ended June 30, 2011. 250,000 post reverse split Preferred B shares were designated for issuance as compensation.


The officer advanced $2,600 to the Company and the Company repaid $2,000 to the officer, leaving a net balance due the officer at June 30, 2011 of $600.


Transactions with a former officer and director and current consultant:


$4,000 was paid to the officer and director for consulting fees. An additional $45,000 salary was accrued during the quarter ended June 30, 2011. 1,250,000 post reverse split Preferred B shares were designated for issuance as compensation.


The officer and director advanced $16,800 to the Company and the Company repaid $11,000 to the officer and director, leaving a net balance due the officer and director at June 30, 2011 of $5,800.


8


Transactions with an officer and director and former consultant:


250,000 post reverse split Preferred B shares were designated for issuance as compensation. An additional $37,500 salary was accrued during the quarter ended June 30, 2011.


Transactions with a director:


150,000 post reverse split Preferred B shares were designated for issuance as compensation. An additional $22,500 salary was accrued during the quarter ended June 30, 2011.


Note 7 – Stock based compensation


During the quarter ended June 30, 2011, the Company issued a total of 2,025,000 Preferred B shares (post reverse split numbers) as compensation to certain employees and a contractor. The shares were valued at fair value on the date of issuance based on the equivalent common shares into which the preferred shares can be converted. The total value of the shares in the accompanying financial statements was $507,075, of which $115,090 was expensed as general and administrative expense and $345,260 was deferred to later periods according to the terms of the contracts. Of these shares 125,000 were designated for issuance to unrelated parties for legal and other consulting services and 1,900,000 were designated for issuance to related parties as detailed in Note 6.


Note 8 – Subsequent Events


The Company has evaluated events and transactions occurring subsequent to June 30, 2011 and through August 10, 2011, the date these financial statements were available to be issued. During this period, there were no subsequent events other than those described below requiring recognition or disclosure in the accompanying financial statements.


The three short term notes payable (one note for $10,000 and two notes each for $5,000, totaling $20,000) were all extended 90 additional days subsequent to June 30, 2011 with no other changes in their terms. No payments of any kind have been made on any of the notes.


On its Form 10K for December 31, 2010, the Company reported that it had begun investigating two business opportunities. As of August 10, 2011 there have been no transactions related to these opportunities which would require adjustment to the accompanying financial statements as no transactions have occurred and the due diligence operations continue.


9


ITEM 2 - Management’s Discussion and Analysis of Financial Condition and Results of Operations


We were founded in 1982 as a Utah corporation under the name of Enertronix Corporation. In 1992 we changed our name to Alydaar Software Corporation ("Alydaar"). Alydaar later changed its corporate domicile to North Carolina through a merger with and into Daar Corporation, a North Carolina corporation established by Alydaar. Alydaar was the surviving corporation. On June 28, 1999 we changed our name to Information Architects Corporation. Information Architects Corporation is referred to herein as the "Company" or "IA." The Company is currently listed as active in the State of North Carolina.


Results of Operations


Three-month Period Ended June 30, 2011 compared to Three-month Period Ended June 30, 2010


INFORMATION ARCHITECTS CORPORATION

UNAUDITED CONDENSED STATEMENTS OF OPERATIONS

FOR THE THREE  MONTH PERIODS ENDED JUNE 30, 2011 AND 2010

 

Three-month

Three-month

 

Period ended

Period ended

 

June 30,

June 30,

 

2011

2010

   

Sales

 $                         -

 $                           -

Less cost of goods sold

                            -

                              -

Gross profit

                            -

                               -

   

General and Administrative Expenses

                 311,399

                   282,715

   

Income from operations

              (311,399)

               (282,715)

   

Other income (expense)

                            -

                               -

   

Loss before provision for income taxes

              (311,399)

                 (282,715)

   

Provision for income taxes

                            -

                               -

   

Loss before benefit from tax loss carryforward

              (311,399)

                 (282,715)

   

Benefit from tax loss carryforward

                            -

                               -

   

Net Loss

 $           (311,399)

 $              (282,715)


The major component of the Company’s activity during the second quarter of 2011 was stock based compensation and accrual of salaries for certain officers and consultants. Stock based compensation was also a major component of the 2011 figure, however the amount was less.


10


Six-month Period Ended June 30, 2011 compared to Six-month Period Ended June 30, 2010


INFORMATION ARCHITECTS CORPORATION

UNAUDITED CONDENSED STATEMENTS OF OPERATIONS

FOR THE SIX MONTH PERIODS ENDED JUNE 30, 2011 AND 2010

 

Six-month

Six-month

 

Period ended

Period ended

 

June 30,

June 30,

 

2011

2010

   

Sales

 $                         -

 $                            -

Less cost of goods sold

                            -

                                       -

Gross profit

                            -

                                       -

   

General and Administrative Expenses

                 345,091

                   282,715

   

Income from operations

              (345,091)

                 (282,715)

   

Other income (expense)

                            -

                               -

   

Loss before provision for income taxes

              (345,091)

                 (282,715)

   

Provision for income taxes

                            -

                              -

   

Loss before benefit from tax loss carryforward

              (345,091)

                 (282,715)

   

Benefit from tax loss carryforward

                            -

                               -

   

Net Loss

 $           (345,091)

 $              (282,715)


The major component of the Company’s activity during the second quarter of 2011 was stock based compensation and accrual of salaries for certain officers and consultants. Stock based compensation was also a major component of the 2011 figure, however the amount was less.


11

  

Liquidity and Capital Resources


At June 30, 2011 and December 31, 2010, the Company had $146 and $0 cash or cash equivalents, respectively. The Company increased its cash during the first half of 2011 by borrowing funds from outside investors ($20,000) and from cash advances from shareholders (a balance of $8,400 at June 30, 2011). These types of transactions had not occurred prior to the first quarter of 2011.

 


CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION AND STATEMENTS

 

Certain statements in Management’s Discussion and Analysis of Financial Condition and Results of Operations and other portions of this report are forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and are subject to the safe harbor created thereby. These statements relate to future events or our future financial performance and involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements or our industry to be materially different from those expressed or implied by any forward-looking statements. In some cases, forward-looking statements can be identified by terminology such as “may,” “will,” “could,” “would,” “should,” “expect,” “plan,” “anticipate,” “intend,” “believe,” “estimate,” “predict,” “potential” or other comparable terminology. Although we believe that the expectations reflected in these forward-looking statements are reasonable, we can give no assurance that such expectations will prove to be correct. Unless otherwise required by applicable securities laws, we disclaim any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

 

Item 3 - Quantitative and Qualitative Disclosures about Market Risk

 

Not applicable to smaller reporting companies.

 

Item 4 - Controls and Procedures

 

Evaluation of Disclosure Controls and Procedures.

 

Our management, including our acting chief executive officer, has conducted an evaluation of the effectiveness of our disclosure controls and procedures (as defined in the Securities Exchange Act of 1934 Rules 13a-15(e) and 15d-15(e)) as of the last day of the period of the accompanying interim financial statements (the “Evaluation Date”). Based on that review and evaluation, our acting chief executive officer concluded that, as of the Evaluation Date, our disclosure controls and procedures were adequate and effective to ensure that material information relating to us would be made known to them by others within the Company in a timely manner, particularly during the period in which this quarterly report on Form 10-Q was being prepared, and that no changes are required at this time. 


12

 

Changes in Internal Control over Financial Reporting

 

There was no change in internal controls over financial reporting (as defined in Rule 13a-15(f) promulgated under the Securities Exchange Act or 1934) identified in connection with the evaluation described in the preceding paragraph that occurred during the Company’s first fiscal quarter that has materially affected or is reasonably likely to materially affect the Company’s internal control over financial reporting.

 

PART II   OTHER INFORMATION


Item 1 - Legal Proceedings

 

None.

 

Item 1A - Risk Factors

 

The Company’s business, financial condition, operating results and cash flows can be impacted by a number of factors, any one of which could cause the Company’s actual results to vary materially from recent results or from the Company’s anticipated future results.  See Form 10-K for the year ended December 31, 2010 for the Company’s Risk Factors.

 

Item 2 - Unregistered Sales of Equity Securities and Use of Proceeds

 

None.

 

Item 3 - Defaults Upon Senior Securities

 

None.

 

Item 4 - (Removed and Reserved)


Item 5 - Other Information

 

None.


13

 

Item 6 - Exhibits

 

  

31.1

Certification of Chief Executive Officer Pursuant to Rules 13a-14 and 15d-14 of the Securities Exchange Act of 1934 (1)

  

32.1

Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (1) (2)

  

33.1

Certification of Chief Financial Officer Pursuant to Rules 13a-14 and 15d-14 of the Securities Exchange Act of 1934 (1)

  

34.1

Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (1) (2)


(1) Filed herewith.

(2) Furnished upon request.


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.


INFORMATION ARCHITECTS CORPORATION

DATED:

August 15, 2011,

Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.

 

      BY: /s/ Roland Breton

      ——————————————

      Roland Breton

      President and Acting Chief Executive


14