Incoming, Inc. - FORM 10-Q - August 15, 2011

Attached files

file	filename
EX-31.1 - 302 CERTIFICATION OF CEO - Incoming, Inc.	ex-31_1.htm
EX-32.1 - 906 CERTIFICATION OF CEO - Incoming, Inc.	ex-32_1.htm
EX-32.2 - 906 CERTIFICATION OF CFO - Incoming, Inc.	ex-32_2.htm
EX-31.2 - 302 CERTIFICATION OF CFO - Incoming, Inc.	ex-31_2.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarter ended June 30, 2011

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

Commission file number 333-152012

Incoming, Inc.

(Exact name of registrant as specified in its charter)

Nevada

(State or other jurisdiction of incorporation or organization)

244 5th Avenue, Ste V235

New York, NY 10001

(Address of principal executive offices, including zip code.)

(917) 210-1074

(Registrant's telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES [X] NO [ ]

Indicate by check mark whether the registrant 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-Y (§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 [X] NO [ ]

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

Large accelerated filer [ ]	Accelerated filer [ ]

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

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

As of August 15, 2011, there are 27,524,332 shares of Class A commons stock and 1,980,000 shares of Class B common stock outstanding.

All references in this Report on Form 10-Q to the terms “we”, “our”, “us”, the “Company”, “ICNN” and the “Registrant” refer to Incoming, Inc. unless the context indicates another meaning.

ITEM 1. FINANCIAL STATEMENTS

The accompanying condensed unaudited financial statements of Incoming, Inc., a Nevada corporation, are condensed and, therefore, do not include all disclosures normally required by accounting principles generally accepted in the United States of America. These statements should be read in conjunction with the Company's most recent annual financial statements for the year ended November 30, 2010 included in our Annual Report on Form 10-K filed with the U.S. Securities and Exchange Commission (“SEC”) on March 15, 2011. In the opinion of management, all adjustments necessary for a fair presentation have been included in the accompanying condensed financial statements and consist of only normal recurring adjustments. The results of operations presented in the accompanying condensed financial statements for the period ended June 30, 2011 are not necessarily indicative of the operating results that may be expected for the full year ending December 31, 2011.

Index to the Unaudited Financial Statements	3

CONSOLIDATED BALANCE SHEETS	4

CONSOLIDATED STATEMENTS OF OPERATIONS	5

CONSOLIDATED STATEMENTS OF CASH FLOWS	6

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS	7

INCOMING, INC.

CONSOLIDATED BALANCE SHEETS

(unaudited)

	SUCCESSOR June 30, 2011			SUCCESSOR December 31, 2010

ASSETS
Current Assets
Cash	$	13,232		$	191,272
Accounts receivable		67,468			12,435
Accounts receivable, related parties		232,448			278,968
Inventory		35,422			6,744
Tax credit receivable		310,669			176,988
Prepaid expenses		14,308			8,645
Other current assets		100			717
Total current assets		673,647			675,769

Property and equipment, net		687,148			696,109
Construction in progress		227,000			222,700
Total assets	$	1,587,795		$	1,594,578


LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable		843,511			688,186
Short term debt		61,380			60,662
Accrued liabilities		6,592			6,384
Accounts payable – related parties		14,348			71,601
Short term debt – related parties		67,500			97,500
Total current liabilities		993,331			924,333

Long-term debt		147,598			175,260
Total Liabilities		1,140,929			1,099,593

Capital stock $.001 par value; 75,000,000 shares authorized
Class A – 19,024,332 and 18,149,332 shares issued and outstanding		19,024			18,149
Class B – 1,980,000 shares issued and outstanding		1,980			1,980
Additional paid in capital		4,783,148			4,618,815
Accumulated deficit		(4,357,286	)		(4,143,959	)
Total stockholders’ equity		446,866			494,985

Total liabilities and stockholders' equity	$	1,587,795		$	1,594,578

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

INCOMING, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited)

	SUCCESSOR Three months ended June 30, 2011			PREDECESSOR Three months ended June 30, 2010			SUCCESSOR Six months ended June 30, 2011			PREDECESSOR Six months ended June 30, 2010			SUCCESSOR One month ended December 31, 2010
Revenue	$	247,825		$	37,105		$	251,852		$	39,058		$	2,493
Renewable identification number sales		154,722			-			178,376			-			-
Revenue from related parties		34,727			290,615			85,671			379,693			-
Cost of revenue		(298,855	)		(291,357	)		(376,701	)		(347,529	)		(12,768	)
Depreciation		(15,353	)		(7,172	)		(30,706	)		(18,877	)		(5,815	)
Gross profit		123,066			29,191			108,492			52,345			(16,090	)

Selling, General, and Administrative Expenses		232,438			19,762			366,957			24,981			13,253

Other income (expense)
Other income		49,878			4,500			49,878			4,500			1,829
Interest income		617			-			1,203			-			580
Interest expense		(2,869	)		(3,656	)		(5,943	)		(7,288	)		(53	)
Total other income (expense)		47,626			844			45,138			(2,788	)		2,356

Net Income (Loss)	$	(61,746	)	$	10,273		$	(213,327	)	$	24,576		$	(26,987	)

Net Income (Loss) per Class A Common Share (Basic and Diluted)	$	(0.00	)		-			(0.01	)		-			(0.00	)
Net Income (Loss) per Class B Common Share (Basic and Diluted)		(0.03	)		-			(0.11	)		-			(0.00	)

Weighted Average Number of Class A Common Shares Outstanding (Basic and Diluted)		18,640,999			-			18,527,457			-			18,149,332
Weighted Average Number of Class B Common Shares Outstanding (Basic and Diluted)		1,980,000			-			1,980,000			-			1,980,000

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

INCOMING, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)

	Successor Six months ended June 30, 2011			Predecessor Six months ended June 30, 2010			Successor One month Ended December 31, 2010
Cash Flows from operating Activities
Net income (loss)	$	(213,327	)	$	24,576		$	(26,987	)
Adjustments to reconcile net income (loss)
to net cash provided by (used in) operations:
Stock based compensation		165,208			-			-
Depreciation		30,706			18,877			5,815
Changes in operating assets and liabilities
Accounts receivable		(55,033	)		(233,598	)		(2,820	)
Accounts receivable – related party		46,520			-			25
Tax credit receivable		(133,681	)		(12,798	)		-
Prepaid expenses & other current assets		(5,663	)		(20,438	)		1,966
Inventory		(28,678	)		(16,299	)		354
Other assets		617			-			(150	)
Accounts payable		155,325			254,092			(21,426	)
Accounts payable – related party		(57,253	)		-			6,549
Accrued expenses		14			893			(22,861	)
Net cash provided by (used in) operating activities		(95,245	)		15,305			(59,535	)
Cash flows from investing activities
Purchase of fixed assets		(25,851	)		(9,066	)		(4,729	)
Net cash provided by (used in) investing activities		(25,851	)		(9,066	)		(4,729	)
Cash flows from financing activities
Payments on related party debt		(30,000	)		-			-
Principal payments on debt		(26,944	)		(15,031	)		(2,071	)
Net cash provided by (used in) financing activities		(56,944	)		(15,031	)		(2,071	)
Net cash increase (decrease) for period		(178,040	)		(8,792	)		(66,335	)
Cash at beginning of period		191,272			12,447			257,607
Cash at end of period	$	13,232		$	3,655			191,272


Cash paid for interest	$	5,943		$	7,288			53
Cash paid for income taxes		-			-			-

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

INCOMING, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

Note 1

Organization, and Summary of Significant Accounting Policies

Organization

We were incorporated in the state of Nevada on December 22, 2006. Our fiscal year end is December 31.

Successor company references herein are referring to consolidated information pertaining to Incoming, Inc., the registrant.

Predecessor company references herein relate to North American Bio-Energies, LLC, the former owner and manager of the biodiesel production facility (doing business as Foothills Bio-Energies), and its operations at the facility located in Lenoir, North Carolina.

Consolidation

The accompanying consolidated successor financial statements represent the consolidated operations of Incoming, Inc. and its wholly-owned subsidiary North American Bio-Energies, LLC. Intercompany balances and transactions have been eliminated in consolidation.

Basis of Presentation – Successor

The accompanying consolidated financial statements as of June 30, 2011 included herein have been prepared without an audit pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with United States generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations. In the opinion of Management of Incoming, Inc. (the "Company", "us", "our", or "we"), all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. These financial statements should be read in conjunction with the November 30, 2010 audited financial statements and notes thereto. The balance sheet at November 30, 2010 has been derived from the audited financial statements at that date, but does not include all of the information and footnotes required by accepted accounting principles for complete financial statements. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the year ended November 30, 2010. Additionally, the Company changed its fiscal year end to December 31 during the first quarter of 2011. Results of operations during the one-month period covering the transition period (December 2010) are included in the Company’s Quarterly Report on Form 10-Q for the period ended March 31, 2011. The results of operations for the six-month period ended June 30, 2011 are not necessarily indicative of the results that may be expected for the year.

Basis of Presentation – Predecessor

These financial statements include the accounts of NABE. The accompanying financial statements have been prepared to present the statements of financial position of NABE and statements of operations and cash flows of NABE for inclusion in the Company’s Form 10-Q for purposes of complying with the rules and regulations of the Securities and Exchange Commission as required by S-X Rule 8-02. These statements include only those assets, liabilities and related operations of NABE. The accompanying financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America using NABE-specific information where available. These financial statements should be read in conjunction with the financial statements and footnotes included in the Company’s Form 8-K filed on August 24, 2010.

Revenue Recognition – Renewable Identification Numbers (“RINs”)

As a means for ensuring renewable fuels were being blended with petroleum products for consumption in the United States, the Environmental Protection Agency (“EPA”) created a mechanism for holding obligated parties (refiners and importers) accountable. This mechanism requires that obligated parties annually demonstrate they have met the EPA's minimum renewable fuel blending limits, which are established annually and referenced as the renewable volume obligation (“RVO”). Companies demonstrate compliance with the RVO by accumulating and submitting RIN-gallons annually to the EPA. RINs may be generated at renewable fuel production facilities and essentially function as commodities capable of being "separated" from the fuel and traded on an active market.

NABE typically transfers RINs to its customers at the time of biodiesel sale. Transferring RINs takes place through the EPA Moderated Transaction System (“EMTS”). It is through the EMTS that the EPA is ultimately capable of tracking the RIN transfer activity. As RINs are separated from their respective gallons, they may be re-sold multiple times before finally arriving in the possession of an obligated party. For those customers who do not wish to participate in the EPA's renewable fuel program, NABE offers the option for separating the RINs and handling all of the required EMTS administration.

Once RINs have been separate from biodiesel, NABE has the option of selling the commodities directly to obligated parties or selling them to brokers. To date, all of NABE's RIN sales have been to brokers due to the smaller quantities that have been available. Brokers will often aggregate RINs from multiple parties and then sell them to obligated parties. RIN market values fluctuate daily and are readily determinable from online sources. NABE offers buyers a 10-day return policy. NABE recognizes revenue from sales of RINs after the parties have established a sales price, the RINs have been transferred to the buyer through the EMTS, the related revenue is deemed realizable and the return period has expired.

Note 2

Going Concern

These financial statements have been prepared on a going concern basis. As of December 31, 2010, the Company had a working capital deficiency of $248,564, and had accumulated a deficit of $4,143,959. As of June 30, 2011, the Company had a working capital deficiency of $319,684, and had accumulated a deficit of $4,357,286. Its ability to continue as a going concern is dependent upon the ability of the Company to generate profitable operations in the future and/or to obtain the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due. The outcome of these matters cannot be predicted with any certainty at this time. These factors raise substantial doubt that the Company will be able to continue as a going concern. The Company to date has funded its initial operations through the issuance of capital stock and common stock options, loans from related parties, and revenue generated in the normal course of business. Management plans to continue to provide for its capital needs by the issuance of common stock and related party advances. These financial statements do not include any adjustments to the amounts and classification of assets and liabilities that may be necessary should the Company be unable to continue as a going concern.

Note 3

Change in Fiscal Year

On February 14, 2011, the Company changed its fiscal year end from November 30th to December 31st. In addition to the six months ended June 30, 2011 and 2010, this Form 10-Q covers the transition period commencing December 1, 2010 and ending on December 31, 2010. Notice of the election of a change in fiscal year was made on Form 8-K, filed on February 16, 2011.

Note 4

Related Party Transactions

On January 14, 2011, the Company repaid $30,000 to Echols Oil Company (“Echols”), leaving a remaining balance of $67,500 still due. The Company’s current Chairman and CEO, R. Samuel Bell, Jr. is the owner of Echols.

As of June 30, 2011, the Company owed $14,348 to certain officers and directors for expenses paid on behalf of the Company.

NABE sells a portion of its finished goods to Verde Bio Fuels and Echols Oil Company, companies owned by Incoming, Inc’s CEO, R. Samuel Bell, Jr. During the six months ended June 30, 2011, sales to the related companies were $85,671. As of June 30, 2011, the Company had outstanding receivables from these companies of $232,448.

Note 5

Equity Transactions

During the six months ended June 30, 2011, Incoming consummated the following equity transactions:

Issued 375,000 Class Common shares in exchange for services valued at $31,875.

The Company amended its Articles of Incorporation on March 3, 2011 to provide each holder of Class B Common Stock with the right to convert, at the holder’s election, one share of Class B Common Stock into one share of Class A Common Stock. The effective date of the Certificate of Amendment was March 17, 2011. The Company determined that the fair value of the Class B Common Stock did not exceed the fair value of the Class A Common Stock on the date of the amendment and therefore no additional value was given to the holders of the Class B Common Stock as a result of the amendment.

On June 9, 2011, the Company granted 2,000,000 shares of Class A Common Stock to a director with a fair value of $300,000. 250,000 of the shares vested immediately and 250,000 shares vest every 90 days through March 2012. As of June 30, 2011, the Company had issued 500,000 Class A Common shares in conjunction with this grant and recognized $133,333 of stock-based compensation during the six months ended June 30, 2011.

Note 6

Subsequent Events

Related Party Transactions

Subsequent to June 30, 2011, the Company repaid $30,000 of the note payable owed by its wholly owned subsidiary NABE to Echols Oil Company (“Echols”) resulting in a remaining balance of $37,500. The Company’s current Chairman and CEO, R. Samuel Bell, Jr. is the owner of Echols.

Equity Transactions

1.	On July 22, 2011, the Company issued 8,000,000 Class A Common shares in exchange for services valued at $880,000.

2.	On July 27, 2011, the Company issued 500,000 Class A Common shares to a director in conjunction with the share grant described in Note 5 above.

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

THE FOLLOWING DISCUSSION OF THE RESULTS OF OUR OPERATIONS AND FINANCIAL CONDITION SHOULD BE READ IN CONJUNCTION WITH OUR FINANCIAL STATEMENTS AND THE NOTES THERETO INCLUDED ELSEWHERE IN THIS REPORT.

This section of the report includes a number of forward-looking statements that reflect the Company’s current views with respect to future events and financial performance. Forward-looking statements are often identified by words like: "believe," "expect," "estimate," "anticipate," "intend," "project" and similar expressions, or words which, by their nature, refer to future events. You should not place undue certainty on these forward-looking statements, which apply only as of the date of this annual report. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from historical results or our predictions.

The following discussion provides an analysis of the results of our operations, an overview of our liquidity and capital resources and other items related to our business. The following discussion and analysis should be read in conjunction with our unaudited consolidated financial statements and related notes included in this Quarterly Report on Form 10-Q and our audited financial statements and notes included in our Annual Report on Form 10-K as of and for the year ended November 30, 2010 and our transition period report included with our Quarterly Report on Form 10-Q for the period ended March 31, 2011.

Overview

Successor company references herein are referring to consolidated information pertaining to the Company, the registrant.

Predecessor company references herein are referring to North American Bio-Energies, LLC (“NABE”), the former owner and manager of the biodiesel production facility in Lenoir, NC, and their operations at the facility.

The following discussion is an overview of the important factors that management focuses on in evaluating our businesses, financial condition and operating performance and should be read in conjunction with the financial statements included in this Quarterly Report on Form 10-Q. This discussion contains forward-looking statements that involve risks and uncertainties. Actual results could differ materially from those anticipated in these forward looking statements as a result of any number of factors, including those set forth in this Quarterly Report and elsewhere in the Company’s Annual Report on Form 10-K and other public filings.

All written and oral forward-looking statements made in connection with this Quarterly Report on Form 10-Q that are attributable to us or persons acting on our behalf are expressly qualified in their entirety by these cautionary statements. Given the uncertainties that surround such statements, you are cautioned not to place undue reliance on such forward-looking statements.

Going Concern

The financial statements presented in this document have been prepared on a going-concern basis. As of June 30, 2011, the Company had a working capital deficiency of $319,684, and had an accumulated deficit of $4,357,286 since inception. Its ability to continue as a going concern is dependent upon the ability of the Company to generate profitable operations in the future and/or to obtain the necessary financing to meet its obligations and repay liabilities arising from normal business operations when they come due. The outcome of these matters cannot be predicted with any certainty at this time. These factors raise substantial doubt that the Company will be able to continue as a going concern.

The Company has funded its initial operations through the issuance of capital stock and loans from the former director and related parties. Management plans to continue to provide for the Company’s capital needs through the issuance of common stock and through related party advances. These financial statements do not include any adjustments to the amounts and classification of assets and liabilities that may be necessary should the Company be unable to continue as a going concern.

We do not expect to generate sufficient revenue to sustain operation during the next twelve months. Consequently, we will continue to depend on additional financing in order to maintain our operations and continue with our corporate activities. Based on these uncertainties, our independent auditors included additional comments in their report on our financial statements for the period from inception (December 22, 2006) to November 30, 2010, indicating concerns about our ability to continue as a going concern.

Our financial statements contain additional note disclosures describing the circumstances that led to this disclosure by our independent auditors. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Company Overview

NABE is a refiner and producer of commercial-grade biodiesel as specified by the American Society of Testing and Materials (ASTM D6751). Our refining and production facility is located in Lenoir, North Carolina with a nameplate annual capacity of five million gallons. Our facility produces biodiesel from virgin, agri-based feedstock using commercial specifications. The biodiesel we produce is sold throughout North Carolina, South Carolina and Virginia directly or through wholesale distributors. Currently, we are engaged in producing biodiesel and strategically purchasing biodiesel from other producers to meet commercial requirements. We are also de-methylating glycerin created as a byproduct of the biodiesel production. Once the facility has accumulated sufficient de-methylated glycerin to make full loads, it is intended that the product will be sold to the market.

Our production process starts with purchasing the most cost effective and suitable agri-based feedstock (e.g., soy, canola, sunflower, cotton seed and chicken/pork fat). A sample of every feedstock is then tested by our in-house laboratory in order to develop the proper recipe of catalysts for the transesterification process. Glycerin, a byproduct, is then separated from the biodiesel and any excess methanol is recovered. The recovered methanol is reused in the production process and the glycerin is sold on the open market. While biodiesel is our main product, glycerin is a popular chemical used in pharmaceutical and hygiene applications and serves as an additional source of revenue.

Our facility is capable of producing biodiesel from a wide range of agri-based feedstocks: soy, canola, sunflower, cotton seed and chicken/pork fat. Biodiesel production costs are highly dependent on the cost of feedstock, and we believe the ability to utilize a variety of feedstocks efficiently and interchangeably is imperative to gaining a competitive advantage in the biodiesel production market.

Our goal is to become the leading diversified energy company with divisions in production, blending, marketing and distribution. We continue to pursue an acquisition plan that includes the expansion into Brazil’s renewable energy market. Government mandates, strong tax incentives and an auction-based selling platform make Brazil, in management’s view, a potentially profitable climate for clean energy.

Major Performance Factors

Revenue

We derive the majority of our revenue from the sale of biodiesel and the balance is derived from the sale of glycerin. Revenue may be affected by the following factors:

- Price volatility of petroleum diesel;

- Government incentives;

- Processing capacity; and

- Market demand.

Price volatility of petroleum diesel. Biodiesel is primarily used in blends with petroleum diesel as heating oil and as a fuel for trucks, automobiles, and marine transportation. Biodiesel can be mixed at any level with petroleum diesel to create a biodiesel blend. Unlike ethanol, where engines need to be modified to handle blend ratios above 10%, biodiesel blends can be used in diesel engines without modifications. Petroleum diesel is a traded commodity and subject to daily pricing swings. The price that we can charge our customers for biodiesel needs to be competitive with the price of petroleum diesel fuel, regardless of our cost to produce.

Government incentives. The American Jobs Creation Act of 2004 provided for a biodiesel fuel credit of $1.00 to a biodiesel fuel blender for each gallon of biodiesel produced by the taxpayer and sold to another person. Our customers are biodiesel blenders who purchase the biodiesel from us at a price of $1.00 per gallon in excess of the market price of petroleum and then our customers are reimbursed the $1.00 per gallon from the federal government. There is an additional $0.10 per gallon tax credit for small producers (not to exceed 60 million gallons per year) using virgin vegetable oils and animal fats. Our facility has passed all necessary inspections and complied with the applicable regulations to be eligible for both programs.

The blender credit expired December 31, 2009 at the end of the tax year and was not renewed for the majority of calendar year 2010. In December of 2010, the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 retroactively restored the biodiesel tax credit for all of 2010 and further extended it through December 31, 2011. Although Congress has extended this credit on multiple occasions, no assurance can be given that the tax incentive will be further extended by Congress.

Processing capacity. Our current annual maximum (assuming the facility is running 24 hours a day, 350 days per year) or “nameplate” capacity is 5.0 million gallons; however, our highest production output was 914,000 gallons in 2009. Production volume decreased during 2010 due to the biodiesel tax credit expiring on December 31, 2009. As a result, the market price of biodiesel effectively increased by $1.00. Profit margins were eliminated forcing management to pursue other revenue generating sources, such as, refining the glycerin stored at the Company’s facilities as well as purchasing off-specification product from neighboring plants. As a result of the renewal of the biodiesel tax credit and with additional funding from investors, our 2011 processing capacity has increased significantly. During the first six months of 2011, we have sold approximately 100,000 gallons of biodiesel. Feedstock availability will certainly impact our ability to increase production throughout the remainder of the year.

Market demand. The growth potential of our revenue depends on the market demand for our products. We believe there is high growth potential for our sales given the increase of national “green” initiatives, the cooperation of U.S. auto manufacturers and the mandate by the EPA to require the use of 800 million gallons of biodiesel in 2011.

Cost of Sales

The cost of sales is composed of the following items: raw materials, blending materials, labor and overhead. Raw materials refer to feedstock, which accounts for approximately 70% of the total cost of sales. Blending materials refer to methanol and catalyst, which combined account for approximately 12% of the total cost of sales. Labor cost is low and only makes up a small portion of the cost of sales. Overhead includes utilities, maintenance costs, and inspections, and accounts for approximately 16% of the total cost of sales.

Cost of sales is, directly or indirectly, determined by the following factors:

- The availability and pricing of feedstock; and

- Operating efficiency of the production facility.

The availability and pricing of feedstock. Our ability to produce or refine biodiesel from a variety of agri-based feedstocks allows us to shift production to the highest yielding feedstocks based on market prices. While this diversity limits exposure to volatile markets, feedstock remains the major cost of sales item and its fluctuation will have a material impact on our total cost. Transportation costs also affect the overall feedstock cost, but are minimized due to the location of our facility in North Carolina. There are readily available supplies of local feedstock materials including soy oil, canola oil, sunflower oil and animal (chicken and pork) fats. Competition with the food and animal feed industries may keep feedstock prices high even while biodiesel prices fall.

Operating efficiency of the production facility. Our onsite laboratory saves us significant time and expense during the biodiesel production and refining process. It also allows us to ensure a high quality finished product. All feedstocks are tested for quality and for their fatty acid levels upon receipt, allowing us to adjust the mix of catalysts and methanol in a quick and efficient manner. At multiple times during the refining process, additional samples are taken and tested for quality on site. The finished product is ultimately tested to ensure that it meets the ASTM-D6751 standards. With the frequency of testing needed, an onsite laboratory saves money and time that would have been spent sending samples off and waiting for results.

Operating Expenses

Operating expenses consist of selling expenses and general and administrative expenses. Generally, operating expenses are only a small portion of total costs and expenses.

Selling expenses are nominal as we have no advertising expenses and no sales staff due to our verbal off-take agreements with related party distributors.

General and administrative expenses consist of payroll for our plant manager and clerical staff in addition to professional fees, telephone, tax, and licenses and related fees. Professional fees include independent accountants and legal advisors associated with operating as a public company.

Results of Operations

The following is a discussion and analysis of our results of operations for the six-month period ended June 30, 2011, and the factors that could affect our future financial condition. This discussion and analysis should be read in conjunction with our financial statements and the notes thereto included elsewhere in this report. Our financial statements are prepared in accordance with United States generally accepted accounting principles. All references to dollar amounts in this section are in United States dollars unless expressly stated otherwise.

Revenue, RIN sales and Revenue From Related Parties

On a post-acquisition basis, we generated $437,274 in revenues during the three months ended June 30, 2011. Revenue for the post-acquisition period was generated through biodiesel sales and through RIN sales. RIN-gallons are EPA-regulated, market-traded commodities generated during biodiesel production. During the quarter, our biodiesel sales to third parties totaled approximately $247,824 and our sales to related parties amounted to $34,728. Sales of RINs to third parties totaled $154,722 for the quarter ended June 30, 2011. There were no sales of either glycerin or recovered methanol during the quarter.

The Predecessor generated revenues of $327,720 for the three months ended June 30, 2010. Revenue generated during the period was due primarily to 1) re-processing distressed material, 2) toll processing, and 3) glycerin sales. Through an arrangement with a neighboring plant, we purchased off-specification product at deeply discounted rates and further refined the product to commercial grade (ASTM D6751) specifications. The absence of affordable feedstock made this type of arrangement most practical. Of the total sales, approximately $294,400 was related to re-processed off-specification biodiesel. An additional $14,892 of revenue was generated during the period which was attributable to sales of biodiesel produced through an arrangement with a local soy farmer (toll-blending). Our plant received tolling revenue for converting the farmer’s soy oil into biodiesel. De-methylated glycerin (biodiesel production process by-product) sales totaled$18,428 for the three months ended June 30, 2011. Sales to third parties amounted to $37,105 while the remaining sales of $290,616 were made to related parties.

Comparing the Successor’s activity for the three-month period ended June 30, 2011 to the Predecessor’s activity for the three-month period ended June 30, 2010, there was an increase in revenue of $109,554 from $327,720 to $437,274. The period-over-period increase was due primarily to the sale of RINs during the current quarter. The Company had no RIN sales during the three months ended June 30, 2010. Biodiesel sales experienced a decline of approximately 52,000 fewer gallons sold during the second quarter of 2011 than during the second quarter of 2010. Slightly offsetting the impact of reduced sales was the fact that the selling price increased from an average of about $2.20 per gallon during the second quarter of 2010 to an average of about $3.15 per gallon during the second quarter of 2011. Considering period-over-period balances, sales of toll-blended product were non-existent during the second quarter of 2011 while they had been approximately $14,900 during the second quarter of 2010.

On a post-acquisition basis, we generated $515,899 in revenues during the six months ended June 30, 2011. Revenue for the post-acquisition period was generated through biodiesel sales, through RIN sales, and through the sale of wet methanol. During the six-month period, our biodiesel sales to third parties totaled approximately $251,852 and our sales to related parties amounted to $85,671. Sales of RINs to third parties totaled $178,376 for the six months ended June 30, 2011. Sales of wet methanol amounted to $6,527 during the six months ended June 30, 2011. There were no sales of glycerin during the first six months of 2011.

The Predecessor generated revenues of $418,751 for the six months ended June 30, 2010. Revenue generated during the period was due primarily to 1) re-processing distressed material, 2) toll processing, and 3) glycerin sales. Through an arrangement with a neighboring plant, we purchased off-specification product at deeply discounted rates and further refined the product to commercial grade (ASTM D6751) specifications. The absence of affordable feedstock made this type of arrangement most practical. Of the total sales, approximately $343,100 was related to re-processed off-specification biodiesel. An additional $57,190 of revenue was generated during the period which was attributable to sales of biodiesel produced through the toll-blending arrangement describe above. De-methylated glycerin (biodiesel production process by-product) sales totaled$18,427 for the six months ended June 30, 2011. Sales to third parties amounted to $39,058 while the remaining sales of $379,693 were made to related parties.

Comparing the Successor’s activity for the six-month period ended June 30, 2011 to the Predecessor’s activity for the six-month period ended June 30, 2010, there was an increase in revenue of $97,148 from $418,751 to $515,899. The period-over-period increase was due primarily to the sale of RINs during the first six months of 2011. The Company had no RIN sales during the six months ended June 30, 2010. Biodiesel sales experienced a decline of approximately 59,000 fewer gallons sold during the first half of 2011 than during the first half of 2010. Slightly offsetting the impact of reduced sales was the fact that the selling price increased from an average of about $2.20 per gallon for the six months ended June 30, 2010 to an average of about $3.25 per gallon for the six months ended June 30, 2011. Considering period-over-period balances, sales of toll-blended product were non-existent during the first half of 2011 while they had been approximately $57,190 during the first half of 2010.

Cost of Revenue

On a post-acquisition basis, our cost of revenue was $298,855 during the three months ended June 30, 2011. For the same period, cost of revenue consisted of costs associated with raw material (feedstocks, methanol, and catalyst) purchases, direct labor and overhead costs. Offsetting the cost of revenue was the filing for tax credits available to biodiesel blenders, which amounted to $119,255 during the three months ended June 30, 2011.

Cost of revenue for the Predecessor totaled $291,357 for the three months ended June 30, 2010. For the same period, cost of revenue consisted of labor, overhead, and material costs associated with toll processing and with re-processing off-specification biodiesel from neighboring plants.

Comparing the Successor’s activity for the three-month period ended June 30, 2011 to the Predecessor’s activity for the three-month period ended June 30, 2010, there was an increase in cost of revenues of $7,498 as the cost of revenues rose from $291,357 to $298,855. The period-over-period increase was due in large part to not having discounted off-specification product available for re-processing.

On a post-acquisition basis, our cost of revenue was $376,701 during the six months ended June 30, 2011. For the same period, cost of revenue consisted of costs associated with raw material (feedstocks, methanol, and catalyst) purchases, direct labor and overhead costs. Offsetting the cost of revenue was the filing for tax credits available to biodiesel blenders, which amounted to $119,255 during the six months ended June 30, 2011.

Cost of revenue for the Predecessor totaled $347,529 for the six months ended June 30, 2010. For the same period, cost of revenue consisted of labor, overhead, and material costs associated with toll processing and with re-processing off-specification biodiesel from neighboring plants.

Comparing the Successor’s activity for the six-month period ended June 30, 2011 to the Predecessor’s activity for the six-month period ended June 30, 2010, there was an increase in cost of revenues of $29,172 as the cost of revenues rose from $347,529 to $376,701. The period-over-period increase was due in large part to not having discounted off-specification product available for re-processing.

Depreciation

On a post-acquisition basis, depreciation expense was $15,353 for the three months ended June 30, 2011.

Depreciation expense for the Predecessor totaled $7,172 for the three month period June 30, 2010.

On a post-acquisition basis, depreciation expense was $30,706 for the six months ended June 30, 2011.

Depreciation expense for the Predecessor totaled $18,876 for the six month period ended June 30, 2010.

Gross Profit

On a post-acquisition basis, gross profit was $123,066 for the three months ended June 30, 2011. The primary reason for the gross profit during the period was the sale of RINs to third parties. Another factor impacting gross profit was raw material costs, which have remained fairly stable at approximately $0.54 per pound, but have yielded finished product that had to be sold at a loss due to biodiesel market conditions.

Gross profit for the Predecessor totaled $29,191 for the three months ended June 30, 2010 as biodiesel was selling for more than the cost to produce due to the advantageous arrangement for selling re-processed off-specification product from neighboring plants.

On a post-acquisition basis, gross profit was $108,492 for the six months ended June 30, 2011. The primary reason for the gross profit during the period was the sale of RINs to third parties. Another factor impacting gross profit was raw material costs, which have remained fairly stable at approximately $0.54 per pound, but have yielded finished product that had to be sold at a loss due to biodiesel market conditions.

Gross profit for the Predecessor totaled $52,345 for the six months ended June 30, 2010 as biodiesel was selling for more than the cost to produce due to the advantageous arrangement for selling re-processed off-specification product from neighboring plants.

Selling, General and Administrative (SG&A) Expenses

SG&A expenses for the Successor totaled $232,438 for the three month period ended June 30, 2011. During the second quarter of 2011, the Successor’s SG&A expenses were primarily comprised of payroll, fundraising fees ($12,000), and consulting fees ($133,333).

SG&A expenses for the Predecessor totaled $19,762 for the three months ended June 30, 2010. During the three months ended June 30, 2010, the Predecessor’s SG&A expenses were primarily comprised of payroll, accounting fees, and fees paid to an outside engineer for consulting services.

Comparing the Successor’s activity for the three-month period ended June 30, 2011 to the Predecessor’s activity for the three months ended June 30, 2010, there was an increase in SG&A expenses of $212,676 as SG&A rose from $19,762 to $232,438. The period-over-period increase was due in large part to expenses recognized as the Company continued developing business opportunities in Brazil. Fundraising and consulting fees accounted for approximately $145,000 of the total SG&A expense for the quarter. All other SG&A costs remained essentially unchanged on a period-over-period basis.

SG&A expenses for the Successor totaled $366,957 for the six month period ended June 30, 2011. During the first half of 2011, the Successor’s SG&A expenses were primarily comprised of payroll, professional fees associated filings for publicly traded companies ($63,700), fundraising fees ($20,200), and consulting fees ($193,000).

SG&A expenses for the Predecessor totaled $24,981 for the six months ended June 30, 2010. During the six months ended June 30, 2010, the Predecessor’s SG&A expenses were primarily comprised of payroll, accounting fees, and fees paid to an outside engineer for consulting services.

Comparing the Successor’s activity for the six-month period ended June 30, 2011 to the Predecessor’s activity for the six months ended June 30, 2010, there was an increase in SG&A expenses of $341,976 as SG&A rose from $24,981 to $366,957. The period-over-period increase was due in large part to expenses recognized as part of operating as a publicly traded company and to expenses paid for business development and fundraising efforts. During the first half of 2010, the Predecessor operated as a stand-alone biodiesel producer with no reporting requirements. For the first half of 2011, the post-acquisition Company was responsible for all charges amounting to approximately $63,700, which were associated with a public company that submits consolidated financial reports. The Company continued developing business opportunities in Brazil. Fundraising and consulting fees accounted for approximately $213,400 of the total SG&A expense for the six months ended June 30, 2011. All other SG&A costs remained essentially unchanged on a period-over-period basis.

Other Income (Expense)

On a post-acquisition basis, the Company had Other Income of $49,878 for the three months ended June 30, 2011. The source of the Other Income for the post-acquisition Company was from funding provided by the North Carolina Green Business Fund Grant.

Other Income of $4,500 for the Predecessor during the period April 1, 2010 through June 30, 2010 was the result of funding from a North Carolina Department of Energy and Natural Resources grant.

On a post-acquisition basis, the Company had Other Income of $49,878 for the six months ended June 30, 2011. The source of the Other Income for the post-acquisition Company was from funding provided by the North Carolina Green Business Fund Grant.

Other Income of $4,500 for the Predecessor during the period January 1, 2010 through June 30, 2010 was the result of funding from a North Carolina Department of Energy and Natural Resources grant.

Interest Income

On a post-acquisition basis, the Company had interest income of $617 for the three months ended June 30, 2011.

The Predecessor had no interest income for the three months ended June 30, 2010.

On a post-acquisition basis, the Company had interest income of $1,203 for the six months ended June 30, 2011.

The Predecessor had no interest income for the six months ended June 30, 2010.

Interest Expense

On a post-acquisition basis, the Company had interest expense of $2,869 for the three months ended June 30, 2011.

Interest expense for the Predecessor was $3,656 for the three months ended June 30, 2010.

On a post-acquisition basis, the Company had interest expense of $5,943 for the six months ended June 30, 2011.

Interest expense for the Predecessor was $7,288 for the six months ended June 30, 2010.

Net Income (Loss)

On a post-acquisition basis, the Company had a net profit of $61,746 for the three months ended June 30, 2011.

Net profit for the Predecessor was $10,273 for the three months ended June 30, 2010.

On a post-acquisition basis, the Company had a net loss of ($213,327) for the six months ended June 30, 2011.

Net profit for the Predecessor was $24,576 for the six months ended June 30, 2010.

Debt Obligations and Commitments

Contractual Obligations	Total		Less than one year		1 - 3 Years		3 - 5 Years		More than 5 Years
Term loan (1)	$	99		99		-		-		-
Term loan (2)		208,879		61,281		104,882		42,716
Demand note - related party (3)		67,500		67,500		-		-		-

Total	$	276,478		128,880		104,882		42,717		-

_______________________

(1) Variable rate term loan dated November 7, 2006 in the original principal amount of $100,000 payable to BB&T Bank by NABE in monthly principal and interest installments of $2,125. Interest is calculated at a variable rate equal to prime plus one percent. For purposes of calculating total obligations due under this term loan, the prime rate, as of June 30, 2011, the date of calculation, was five and a quarter percent (5.25%). This note matures on November 10, 2011, is secured, and contains a cross default provision that will result in the imposition of a default interest rate equal to the lender’s prime rate plus 5% in the event of default of any loan agreement. This note was amended on May 22, 2007, the date that Mr. Bell purchased the membership interests of two of the founding members of NABE. The modification occurred to remove the previous members of NABE as payors on the note and to include Mr. Bell as a payor. The proceeds from this note were used to purchase lab and processing equipment. The information presented regarding this term loan is as of June 30, 2011. The foregoing description constitutes all of the material terms of this loan and is qualified in its entirety by reference to Exhibit 4.2, which is incorporated herein by reference.

(2) Variable rate term loan dated November 7, 2006 in the original principal amount of $250,000 payable to BB&T Bank by NABE in monthly principal and interest installments of $4,805. Interest is calculated at a variable rate equal to prime plus one percent. For purposes of calculating total obligations due under this term loan, the prime rate, as of June 30, 2011, the date of calculation, was five and a quarter percent (5.25%). This note matures on April 25, 2015, is secured, and contains a cross default provision that will result in the imposition of a default interest rate equal to the lender’s prime rate plus 5% in the event of default of any loan agreement. This note was amended on April 27, 2010 to convert it from a line-of-credit loan to a term loan. The proceeds from this note were used to purchase additional processing equipment. The information presented regarding this term loan is as of June 30, 2011. The foregoing description constitutes all of the material terms of this loan and is qualified in its entirety by reference to Exhibit 4.3, which is incorporated herein by reference.

(3) Unsecured non-interest bearing demand loan payable to Echols Oil Company, Inc., a related party. For additional information regarding this loan, please refer to "Certain Relationships and Related Transactions and Director Independence." The information presented regarding this loan is as of June 30, 2011.

Liquidity and Capital Resources

Working Capital

	Successor As of June 30, 2011			Predecessor As of June 30, 2010
Current Assets	$	673,647		$	611,103
Current Liabilities		993,331			673,383

Working Capital (Deficiency)	$	(319,684	)	$	(62,280	)

Retained Earnings (Accumulated Deficit)	$	(4,357,286	)	$	225,109

Cash Flows

	Successor Six Months Ended June 30, 2011			Predecessor Six Months Ended June 30, 2010
Cash provided by (used in) operating activities	$	(95,245	)	$	15,305
Cash provided by (used in) investing activities		(25,851	)		(9,066	)
Cash provided by (used in) financing activities		(56,944	)		(15,031	)
Net increase (decrease) in cash	$	(178,040	)	$	(8,792	)

As of June 30, 2011, our post-acquisition current assets totaling $673,647 consisted of cash, accounts receivable, inventory, tax credits receivable, other current assets and prepaid expenses. Our post-acquisition accounts payable and accrued liabilities and current portion of amounts due to related parties and third parties were $993,331 for the period ended June 30, 2011. As a result, we had a working capital deficiency of $319,684.

Current assets for the Predecessor totaled $611,103 for the period ended June 30, 2010. Current liabilities for the Predecessor totaled $673,383 for the period ended June 30, 2010, which resulted in a working capital deficiency of $62,280.

Comparing the working capital deficiency at June 30, 2011 to the deficiency at June 30, 2010, there is an increase of $257,404 as the deficiency deepened from $62,280 to $319,684. The primary contributors to the overall decrease were the legal and accounting fees incurred in association with being a listed company.

On a short-term basis, it is anticipated that the Company’s liquidity needs will be met through selling biodiesel and RIN-gallons, through borrowing from related party and through the sale of common stock. NABE’s period-over-period sales have remained essentially the same comparing the first six months of 2011 to the first six months of 2010; however, Other Income has increased approximately $225,000 over the same period. This increase in Other Income is primarily attributable to RIN sales. Considering the long-term view, the Company intends to provide liquidity through operation of its biodiesel plant in Lenoir, North Carolina. If the Company is able to successfully partner with existing biodiesel production facilities in Brazil, the associated sales will generate additional liquidity.

To date, cash flow requirements have been primarily met through sales of biodiesel related products, through collections of accounts receivable, through share issuances, and through gross proceeds from bank and related party loans. For the three months ended June 30, 2011, the Company generated a gross profit of $123,066 on sales of $437,274 over the same period. For the three months ended June 30, 2010, the Predecessor generated $29,191 in gross profit on sales of $327,720 over the same period.

As of June 30, 2011, NABE had outstanding balances on bank borrowings of $208,978, which originally totaled $350,000 when the loans were first executed. As of June 30, 2010, NABE had an outstanding balance of $25,423 on a single bank loan and another outstanding balance of $241,583 on a term loan that resulted from the conversion of its line of credit.

At June 30, 2011, NABE had an outstanding liability of $67,500 with a related party. Due to a payment made during the first quarter of 2011, this balance is $30,000 less than the June 30, 2010 balance of $97,500 that was owed to the related party.

A portion of the Company’s operations have been funded through the issuance of stock shares. As of June 30, 2011, the Company has issued 21,004,332 shares of capital stock (19,024,332 shares of Class A stock and 1,980,000 shares of Class B stock).

We expect to incur losses as the business expands. Management expects to keep operational costs to a minimum until cash is available through financing or operating activities. Management plans to continue to seek other sources of financing on favorable terms; however, there are no assurances that any such financing can be obtained on favorable terms, if at all. If we are unable to generate sufficient profits or are unable to obtain additional funds for our working capital needs, we may need to cease or curtail operations. Moreover, there is no assurance that the net proceeds from any successful financing arrangement will be sufficient to cover cash requirements during the initial stages of the Company's operations. For these reasons, our registered auditors believe that there is substantial doubt that we will be able to continue as a going concern.

Cash Provided By (Used In) Operating Activities

During the six months ended June 30, 2011, the post-acquisition Company’s cash used in operating activities totaled $95,245. During the first six months of 2011, the post-acquisition Company’s cash used in operating activities was primarily associated with increasing receivables from the federal government on tax credits for biodiesel blending activities. These receivables increased approximately $134,000. Offsetting the increase in tax credit receivables was the recognition of approximately $165,000 in stock-based compensation for consulting services.

Prior to the Company’s acquisition of NABE, the Predecessor’s cash provided by operating activities totaled $15,305 during the period January 1, 2010 through June 30, 2010. For the Predecessor during the first six months of 2010, cash provided by operating activities was primarily attributable to profitably re-processing and selling out-of-specification biodiesel that had been purchased from neighboring plants.

Cash Provided By (Used In) Investing Activities

During the six months ended June 30, 2011, the post-acquisition Company’s cash used in investing activities totaled $25,851. For the first six months of 2011, the post-acquisition Company’s cash used in investing activities was primarily related to a plant-wide effort to improve operating efficiency by insulating equipment and piping at the biodiesel production facility in Lenoir, NC..

Prior to the Company’s acquisition of NABE, the Predecessor’s cash used in investing activities totaled $9,066 during the period January 1, 2010 through June 30, 2010. For the Predecessor during the first six months of 2010, cash used in investing activities was chiefly the result of making payments on filtration equipment, which was recorded as construction in progress.

Cash Provided By (Used In) Financing Activities

During the six months ended June 30, 2011, the post-acquisition Company’s cash used in financing activities totaled $56,944. For the six months ended June 30, 2011, the post-acquisition Company’s cash used in financing activities consisted of repaying $30,000 in related party debt, and making payments of $26,944 on long-term debt to third-party creditors.

Prior to the Company’s acquisition of NABE, the Predecessor’s cash used in financing activities totaled $15,031 during the period January 1, 2010 through June 30, 2010. For the Predecessor during the first six months of 2010, cash used in financing activities represented payments on long-term debt obligations to third-party creditors.

Future Financings

We anticipate that additional funding will be required in the form of equity financing from the sale of our common stock. However, we cannot provide investors with any assurance that we will be able to raise sufficient funding from the sale of our common stock to fund our marketing plan and operations. At this time, we cannot provide investors with any assurance that we will be able to raise sufficient funding from the sale of our common stock or through a loan from our directors to meet our obligations over the next twelve months. We do not have any arrangements in place for any future equity financing.

Off-Balance Sheet Arrangements

We have no significant 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 stockholders.

Recent Accounting Pronouncements

Management does not expect any financial statement impact from any recently-issued pronouncements.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information required under this item.

ITEM 4. CONTROLS AND PROCEDURES

(a)	Evaluation of Disclosure Controls and Procedures

As of the end of the period covered by this Quarterly Report on Form 10-Q, we conducted an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer (“CEO”) of our disclosure controls and procedures (as defined in Rules13a-15(e) and 15d-15(e) under the Exchange Act). Based on this evaluation, the CEO concluded that our disclosure controls and procedures were not effective as of June 30, 2011. We have identified the following material weaknesses in our internal control over financial reporting:

Lack of Independent Board of Directors and Audit Committee

Management is aware that an audit committee composed of the requisite number of independent members along with a qualified financial expert has not yet been established. Considering the costs associated with procuring and providing the infrastructure to support an independent audit committee and the limited number of transactions, management has concluded that the risks associated with the lack of an independent audit committee are not sufficient to justify the creation of such a committee at this time. Management will periodically reevaluate this situation.

Lack of Segregation of Duties

Management is aware that there is a lack of segregation of duties at the Company due to the small number of employees dealing with general administrative and financial matters. However, at this time management has decided that considering the abilities of the employees now involved and the control procedures in place, the risks associated with such lack of segregation are low and the potential benefits of adding employees to clearly segregate duties do not justify the substantial expenses associated with such increases. Management will periodically reevaluate this situation.

(b)	Changes in Internal Controls Over Financial Reporting

There were no changes that occurred during the first quarter covered by this Quarterly Report on Form 10-Q that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting

PART II – OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

Currently we are not involved in any pending litigation or legal proceeding.

ITEM 1A. RISK FACTORS

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.

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

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. OTHER INFORMATION

None.

ITEM 5. EXHIBITS

The following documents are filed as a part of this report or are incorporated by reference to previous filings, if so indicated:

Exhibit No.	Description

3.1	Articles of Incorporation (1)
3.2	Bylaws (1)
31.1	Section 302 Certification of CEO*
31.2	Section 302 Certification of Principal Financial Officer *
32.1	Section 906 Certification of CEO*
32.2	Section 906 Certification of Principal Financial Officer*

*filed herewith

(1) Incorporated by reference to the Form S-1 registration statement filed on June 30, 2008.

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.

August 15, 2011
	By:
	INCOMING, INC.

	/s/ R. Samuel Bell, Jr.
	R. Samuel Bell, Jr., CEO and Chairman, Board of Directors


	/s/ Victor AbiJaoudi
	Victor AbiJaoudi, President, Chief Operating Officer and Director

	/s/ Eric Norris
	Vice President, Finance(Principal Financial Officer)

Attached files

Incoming, Inc. Reports

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