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EX-31 - 11JUNE PRIN EXEC 302 CERT - NMI Health, Inc.exhibit31_1june2011.htm
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EX-31 - 11JUNE PRIN FIN 302 CERT - NMI Health, Inc.exhibit31_2june2011.htm
EX-32 - 11JUNE PRIN FIN 906 CERT - NMI Health, Inc.exhibit32_2june2011.htm

 U.S. 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 Quarterly Period Ended: June 30, 2011


[ ] 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. 000-27421


NANO MASK, INC.

(Exact Name of Small Business Issuer as Specified in its Charter)



NEVADA

87-0561647

(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification No.)



50 West Liberty Street, Suite 880, Reno, NV

89501

(Address of principal executive offices)

(Zip code)


Issuer's telephone number, including area code: (209) 275-9270

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.  (1) Yes [  ] No [X] (2) 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-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 ¨


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.

Large accelerated filer  ¨      Accelerated filer ¨         Non-accelerated filer    ¨       Smaller reporting company ý


Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes  ¨  Noý


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


At January 27, 2012, there were outstanding 84,742,347 shares of the Registrant's Common Stock, $.001 par value.


THIS QUARTERLY REPORT ON FORM 10-Q FOR THE QUARTER ENDED JUNE 30, 2011 IS BEING FILED SUBSTANTIALLY LATE, ON OR ABOUT JANUARY 27, 2012. SOME OF THE INFORMATION CONTAINED HEREIN REFERS TO HISTORICAL ACTIVITIES OF THE COMPANY FOR THE FISCAL PERIOD. SHAREHOLDER AND INVESTORS ARE ADVISED TO CONSULT THE COMPANY’S MORE RECENT FILINGS OF CURRENT REPORTS ON FORM 8-K AS WELL AS ADDITIONAL PERIODIC REPORTS FOR SUBSEQUENT PERIODS THAT THE COMPANY INTENDS TO FILE AS SOON AS POSSIBLE.




PART I


FINANCIAL INFORMATION


Table of Contents

Page

 

 

Part I Financial Information

 

 

 

Item 1. Financial Statements

 

 

 

Balance Sheets (Unaudited) as of June 30, 2011 and December 31, 2010

3

 

 

Statements of Operations (Unaudited) for the three and six months ended June 30, 2011 and 2010

4

 

 

Statements of Cash Flows (Unaudited) for the six months ended June 30, 2011 and 2010

5

 

 

Notes to the Financial Statements (Unaudited)

6

 

 

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

8

 

 

Item 3. Quantitative and Qualitative Disclosures About Market Risk

   10

 

 

Item 4. Controls and Procedures

10

 

 

Part II  Other Information

 

 

 

Item 1. Legal Proceedings

11

 

 

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

11

 

 

Item 3. Defaults by the Company on its Senior Securities

12

 

 

Item 4. Submission of Matter to a Vote of Security Holders

12

 

 

Item 5. Other Information

12

 

 

Item 6. Exhibits

12

 

 

Signatures

12





2




NANO MASK, INC.

Balance Sheets

(Unaudited)

 

 

 

 

 

June 30,

 

December 31,

 

 

 

 

 

2011

 

2010

 

 

 

 

 

 

 

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

 

CURRENT ASSETS

 

 

 

 

 

 

Cash

 

 

 $               6,187

 

 $              2,810

 

Accounts receivable

 

 

600

 

                   -

 

Refund receivable

 

 

                   -

 

2,500

 

Prepaid expenses and other

 

 

                   -

 

571

 

Inventory, net

 

 

              18,932

 

              14,421

 

 

              25,719

 

              20,302

FIXED ASSETS

 

 

 

 

 

 

Equipment

 

 

973

 

973

 

Accumulated depreciation

 

 

 

                (276)

 

                (178)

 

 

 

 

 

                   697

 

                   795

 

 

 

 

 

 

 

 

 

 

 

 

 

$             26,416

 

$             21,097

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' DEFICIT

 

 

 

 

 

 

 

 

 

 

 

 

CURRENT LIABILITIES

 

 

 

 

 

 

Customer advances

 

 

$               1,596

 

$                       -

 

Accounts payable

 

 

483,848

 

759,512

 

Accounts payable – related party

 

 

56,500

 

103,300

 

Accrued expenses

 

 

              292,530

 

             343,497

 

Notes payable

 

 

497,727

 

497,727

 

Note payable – related party

 

 

            25,000

 

                         -

 

 

 

 

 

       1,357,201

 

          1,704,036

 

 

 

 

 

 

 

 

STOCKHOLDERS' DEFICIT

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common stock, $.001 par, 100,000,000 shares authorized; 70,835,565 outstanding (70,765,143 issued and 70,422 issuable) in 2011 and 57,979,351 outstanding (57,808,929 issued and 170,422 issuable) in 2010

 

                  70,836

 

                  57,979

 

Additional paid-in capital

 

 

         20,799,865

 

        20,427,452

 

Accumulated deficit

 

 

   (22,201,486)

 

     (22,168,370)

 

Stockholders’ deficit

 

 

 

     (1,330,785)

 

       (1,682,939)

 

 

 

 

 

 

 

 

 

 

 

 

 

$          26,416 

 

$             21,097

 

 

 

 

 

 

 

 

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




3





NANO MASK INC.

Statements of Operations

(Unaudited)

 

 

 

 

 

For the Three Months Ended

 

For the Six Months Ended

 

June 30,

 

June 30,

 

2011

 

2010

 

2011

 

2010

 

 

 

 

 

 

 

 

NET SALES

$               25,533

 

$                       -

 

$          25,683

 

$                    -

 

 

 

 

 

 

 

 

COSTS AND EXPENSES

 

 

 

 

 

 

 

  Cost of sales

16,890

 

-

 

16,980

 

-

  Research and development

-

 

 2,250

 

-

 

          68,550

  Selling, general and administrative

     257,088

 

     131,769 

 

          396,791

 

          409,433

 

     (273,978)

 

     134,019 

 

           413,771

 

           477,983

 

 

 

 

 

 

 

 

LOSS FROM OPERATIONS

  (248,445)

 

  (134,019)

 

    (388,088)

 

    (477,983)

 

 

 

 

 

 

 

 

OTHER INCOME (EXPENSE)

 

 

 

 

 

 

 

  Gain on settlement of vendor liabilities and other

145,804

 

-

 

372,075

 

6,644

  Interest expense

         (8,416)

 

         (8,525)

 

            (17,103)

 

            (16,830)

 

137,388

 

      (8,525)

 

         354,972

 

         (10,186)

 

 

 

 

 

 

 

 

NET LOSS

 $          (111,057)

 

 $          (142,544)

 

$         (33,116)

 

$      (488,169)

BASIC LOSS PER SHARE

 $                (0.00)

 

 $                (0.01)

 

 $             (0.00)

 

 $            (0.01)

 

 

 

 

 

 

 

 

WEIGHTED-AVERAGE NUMBER OF COMMON SHARES OUTSTANDING

66,275,014 

 

53,796,536 

 

64,380,485 

 

53,792,392 

 

 

 

 

 

 

 

 

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























4






NANO MASK, INC.

Statements of Cash Flows

For the Six Months Ended June 30, 2011 and June 30, 2010

(Unaudited)

 

 

 

 

 

 

 

 

 

2011

 

2010

 

 

 

     

 

 

CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

 

Net loss

$      (33,116)

 

$ (488,169)

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

 

 

 

 

Depreciation

98

 

81

 

Common stock issued for company expenses incurred

12,170

 

15,000

 

Common stock issued for services

246,100

 

-

 

Gain on settlement of vendor liabilities

(372,075)

 

(6,644)

Changes in operating assets and liabilities:

 

 

 

 

Accounts receivable

(600)

 

-

 

Refund receivable

2,500

 

-

 

Inventory

(4,511)

 

632

 

Prepaid expenses

571

 

(1,017)

 

Customer advances

1,596

 

-

 

Accounts payable

176,611

 

     31,960

 

Accrued expenses

      (50,967)

 

       310,175

 

 

Net cash used in operating activities

        (21,623)

 

    (137,982)

 

 

 

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES:

 

 

 

 

Purchase of equipment

                    -

 

           (973)

 

 

Cash used in investing activities

                    -

 

           (973)

 

 

 

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

 

 

Proceeds from the issuance of short-term notes payable

-

 

6,855

 

Proceeds from the issuance of related party short-term note payable

25,000

 

-

 

Repayments of short-term notes payable

                    -

 

        (4,570)

 

 

Net cash provided by financing activities

          25,000

 

           2,285

 

 

 

 

 

 

NET INCREASE (DECREASE) IN CASH

      3,377

 

    (136,670)

 

 

 

 

 

 

CASH AT BEGINNING OF PERIOD

            2,810

 

       136,908

 

 

 

 

 

 

CASH AT END OF PERIOD

$          6,187

 

$            238

 

 

 

 

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION

 

 

 

Cash paid for interest

$                 -

 

$                -

Cash paid for income taxes

$                 -

 

$                -

 

 

 

 

NON-CASH INVESTING AND FINANCING ACTIVITIES

 

 

 

Common stock issued for settlement of cash advances and accounts payable

$      127,000

 

$                -

Accrued interest added to note payable balance

$                 -

 

$       12,620

 

 

 

 

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




5



NANO MASK, INC.

Notes to the Financial Statements (Unaudited)

For the Six Months Ended June 30, 2011



NOTE 1 - BASIS OF PRESENTATION


The financial information included herein is unaudited and has been prepared consistent with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 8, Rule 8.03 of Regulation S-K. Accordingly, these financial statements do not include all information required by generally accepted accounting principles for annual financial statements. These statements should be read in conjunction with the audited financial statements and notes thereto included in the Company's annual report on Form 10-K for the year ended December 31, 2010, from which the balance sheet information as of that date is derived. These interim financial statements contain all adjustments necessary in the opinion of management for a fair statement of results for the interim periods presented.


The results of operations for the six months ended June 30, 2011, are not necessarily indicative of the results to be expected for the full year.


Certain minor reclassifications in prior period amounts have been made to conform to the current period presentation.


NOTE 2 – GOING CONCERN

The Company’s financial statements have been prepared assuming the Company will continue as a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. However, in addition to a working capital deficiency at June 30, 2011, the Company has incurred negative cash flow from operations and significant losses, which have substantially increased its operating deficit at June 30, 2011.   These factors raise substantial doubt about the Company’s ability to continue as a going concern.

The Company’s ability to continue as a going concern will be dependent upon economic developments and the success of management's plans as set forth below, which cannot be assured.  The accompanying financial statements do not include any adjustments relating to the recoverability and classification of asset carrying amounts or the amount and classification of liabilities that might result from the outcome of this uncertainty.  Management and board members are continuing to discuss other alternative financing options, but no definitive proposals or agreements have been reached.


The foregoing notwithstanding, management does not believe the Company currently has sufficient capital to sustain its planned business activities for the next twelve months following the issuance of these financial statements. Accordingly, while management has historically been successful generating sufficient funds to sustain operations, there is no assurance that they will continue to do so. Nevertheless, the Company will seek additional capital to sustain its operations, either through additional private placements of common stock or loans, possibly unsecured, until such time as its operations are self-sustaining.  These funds will be required to continue the Company’s efforts to generate sales of its products and to provide sufficient working capital to meet the expected sales demand.


NOTE 3 –SIGNIFICANT TRANSACTIONS


The Company issued a short-term note payable of $25,000 to an affiliate with an annual interest rate of prime, plus 2%, payable in six months from February 22, 2011. Also, during the six months ended June 30, 2011, the Company received cash advances from an executive officer of $56,500.with no specific repayment terms.


The following table summarizes the common stock issued during the six months ended June 30, 2011:











6



NANO MASK, INC.

Notes to the Financial Statements (Unaudited)

For the Six Months Ended June 30, 2011






Summary of Stock Issuances during the Six Months ended June 30, 2011

Settlement of Advances and Payables

 

Settlement of Advances-Related Party

 

Compensation and Expenses

Common Shares

 

Fair Value

 

Carrying

Value of Related Payables

 

Common Shares

 

Fair Value

 

Carrying Value of Related Advances

 

Common Shares

 

Fair Value

900,000

 

$24,300

 

$257,775

 

3,494,428

 

$103,300

 

$103,300

 

8,461,786

 

$257,857


Due to the fair value of the common shares being less than the carrying value of the related payables, the Company recognized a gain on settlement of payables of $352,075 during the six months ended June 30, 2011.  An additional gain of $20,000 was generated by writing off payables due to the expiration of the statute of limitations.



NOTE 4 – SUBSEQUENT EVENTS


Subsequent to June 30, 2011, the Company received cash advances from one executive officer of $59,000. Also, the Board of Directors authorized the repayment of another $26,000 in loans from the same executive with 928,570 common shares of stock. Finally, 1,400,000 shares of common stock were issued in a private placement to four individual investors for $35,000 in cash.


Subsequent to June 30, 2011, the Company negotiated settlements with vendors resulting in reductions of approximately $1,000 in trade payables.


The following table summarizes the common shares issued subsequent to June 30, 2011 and their related amounts for cash proceeds from private placements offerings, stock-based compensation and expense reimbursements as well as settlement of loans payable:



Cash Proceeds from Offerings

Stock-Based Compensation and Expense Reimbursements


Settlement of

Loans Payable

Common Shares

Amount

Common Shares

Amount

Common Shares

Amount

1,400,000

$35,000

10,578,212

$415,686

1,928,570

$ 86,000



NOTE 5 – CONTINGENCIES


On December 29, 2010, the Company received a complaint from Applied Nanoscience, Inc. seeking collection of the as yet unpaid notes payable to Applied in the amount of $453,500, plus interest and litigation expenses. On February 1, 2011, the Company countersued for breach of contract and related claims. The Company maintains a right of offset against Applied’s notes in the amount of $41,360 and is reflected on the balance sheet in the net amount of $412,140.




7





ITEM 2

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS


THIS QUARTERLY REPORT ON FORM 10-Q FOR THE QUARTER ENDED JUNE 30, 2011 IS BEING FILED SUBSTANTIALLY LATE, ON OR ABOUT JANUARY 27, 2012. SOME OF THE INFORMATION CONTAINED HEREIN REFERS TO HISTORICAL ACTIVITIES OF THE COMPANY FOR THE FISCAL PERIOD. SHAREHOLDER AND INVESTORS ARE ADVISED TO CONSULT THE COMPANY’S MORE RECENT FILINGS OF CURRENT REPORTS ON FORM 8-K AS WELL AS ADDITIONAL PERIODIC REPORTS FOR SUBSEQUENT PERIODS THAT THE COMPANY INTENDS TO FILE AS SOON AS POSSIBLE.


Cautionary Statement Regarding Forward-looking Statements


This report may contain "forward-looking" statements.  Examples of forward-looking statements include, but are not limited to: (a) projections of revenues, capital expenditures, growth, prospects, dividends, capital structure and other financial matters; (b) statements of plans and objectives of our management or Board of Directors; (c) statements of our future economic performance; (d) statements of assumptions underlying other statements and statements about us and our business relating to the future; and (e) any statements using the words "anticipate," "expect," "may," "project," "intend" or similar expressions.


Overview


The Company is in the business of producing environmental masks and filters for medical devices that are designed to reduce the possibility of transmission of contagious diseases.  


Since its inception, the Company has been involved in the development of its technology.  Through June 30, 2011, revenues have not been adequate to cover operating expenses and thus, the Company has reported a loss in each of its years of existence.  Through June 30, 2011, the Company has funded itself by way of a series of private equity placements and had offset its accumulated deficit in this manner.


Results of Operations for the Three Months Ended June 30, 2011 compared with 2010


Revenues:  During the three months ended June 30, 2011, there were revenues of approximately $25,500 derived from sales of Lab Coats (60%), Vira Masks (21%), Nano Zymes (16%) and other (3%). There were no revenues in the similar period of 2010.


Cost of Sales:  Cost of sales as a percentage of sales approximated 66% for the three months ended June 30, 2011.


Operating Expenses: During the three months ended June 30, 2011 the Company increased its general and administrative expenses by approximately $125,000 or 95%, compared to the three months ended June 30, 2010, primarily due to significant auditing fees in a concerted effort to establish current filings with the SEC. The significant components of our operating expenses include salaries and wages, consulting and other professional services, accounting, audit and legal fees, product and liability insurance and travel.


Research and development: Research and development (R&D) relates to a new anti-viral and anti-bacterial mask, and includes related FDA testing. While there were no R&D expenses incurred during the three months ended June 30, 2011, approximately $2,000 was incurred in the three months ended June 30, 2010 on the new mask, an effort since discontinued. If resources are available in the future, the Company intends to bring additional products to market, assuming those products are still viable at the time the resources are available. The significant components of the Company’s research and development costs ordinarily include prototype development and materials, governmental filings and laboratory testing.


Results of Operations for the Six Months Ended June 30, 2011 compared with 2010




8





Revenues: Revenues of approximately $26,000 and $0, respectively, were made during the six months ended June 30, 2011 and 2010. Product-line percentages are similar to those for the three months noted above.


Cost of Sales:  The cost of sales percentage to sales of 66% is similar to that which occurred for the three months, as noted above.


Operating Expenses: During the six months ended June 30, 2011, the Company experienced a decrease in general and administrative expenses of approximately $13,000 or approximately 3% compared to the six months ended June 30, 2010, primarily attributable to elimination of the Chief Operating Officer position.  


Research and development: Research and development relates to a new anti-viral and anti-bacterial mask, and includes related FDA testing. While no R&D expenses were incurred during the six months ended June 30, 2011, approximately $69,000 was incurred in the six months ended June 30, 2010 for this new mask.


Liquidity and Capital Resources


             The Company has not been able to generate sufficient net cash inflows from operations to sustain its business efforts and accommodate its growth plans. During the six months ended June 30, 2011 and 2010, the Company received cash advances from an executive officer for $56,500 and $77,500, respectively. Also, during 2011, the Company received $35,000 in cash from issuance of 1,400,000 shares of common stock. Management and board members are continuing to discuss other alternative financing options, but no definitive proposals or agreements have been reached.


Beginning in the third quarter of 2008, the United States has been experiencing a severe and widespread recession accompanied by instability in the financial markets and reduced credit availability which are likely to continue to have far reaching effects on economic activity in the country for an indeterminate period. The effects and probable duration of these conditions and related risks and uncertainties on the Company's ability to obtain financing, success in its marketing efforts and ultimately, profitable operations and positive cash flows, cannot be estimated at this time.


             The Company does not believe, however, that it currently has sufficient capital to sustain its business efforts for the next twelve months.  Accordingly, the Company will need to raise additional capital in the near future to sustain operations.

  

              Accordingly, for these and other reasons, there is significant uncertainty regarding the Company’s future, and the Company’s auditors expressed substantial doubt as to the Company’s ability to continue as a going concern in their report on the Company’s 2010 audited financial statements.

                            

Impact of Inflation


At this time, the Company does not anticipate that inflation will have a material impact on its current or future operations.


Critical Accounting Policies and Estimates


Except with regard to the estimated useful lives of patents and acquired technology, the net realizable value of the Company’s inventory due to shelf-life issues and design, the allowance for bad debts on accounts receivable, and the effective provision of a 100% deferred income tax asset valuation allowance, the Company does not employ any critical accounting policies or estimates that are either selected from among available alternatives or require the exercise of significant management judgment to apply or that if changed are likely to materially affect future periods.  


Management reviews the carrying value of the technology assets annually based on its current marketing activities, plans and expectations, and the perceived effects of competitive factors and possible obsolescence, whether any write-downs should be taken or whether the estimated useful lives should be shortened.  




9





Management also reviews the carrying value of its inventory periodically for evidence of declines in estimated fair value and considers, based on its current marketing activities, plans and expectations, and the perceived effects of competitive factors and possible obsolescence due to shelf-life issues on the environmental filters, whether any write-downs should be taken.


Management also reviews the collectability of outstanding receivables based upon historical collection history from each customer, the age of the receivables, and the customers wherewithal to pay the outstanding balance, and records an estimated allowance for bad debts sufficient to cover any potential losses to be incurred for non-collections.


The carrying values of prepaid expenses, accounts payable, accrued expenses and short term notes payable generally approximate the respective fair values of these instruments due to their current nature. The Company values its warrants and non cash common stock transactions under FASB ASC 820 which defines fair value and the criteria for its determination.


The three levels of the fair value hierarchy defined by ASC 820 are as follows:


Level 1 - Quoted prices are available in active markets for identical assets or liabilities as of the reporting date. Active markets are those in which transactions for the asset or liability occur in sufficient frequency and volume to provide pricing information on an ongoing basis. Level 1 primarily consists of financial instruments such as exchange-traded derivatives, marketable securities and listed equities.


Level 2 – Pricing inputs are other than quoted prices in active markets included in level 1, which are either directly or indirectly observable as of the reported date. Level 2 includes those financial instruments that are valued using models or other valuation methodologies. These models are primarily industry-standard models that consider various assumptions, including quoted forward prices for commodities, time value, volatility factors, and current market and contractual prices for the underlying instruments, as well as other relevant economic measures. Substantially all of these assumptions are observable in the marketplace throughout the full term of the instrument, can be derived from observable data or are supported by observable levels at which transactions are executed in the marketplace. Instruments in this category generally include non-exchange-traded derivatives such as commodity swaps, interest rate swaps, options and collars.


Level 3 – Pricing inputs include significant inputs that are generally less observable from objective sources. These inputs may be used with internally developed methodologies that result in management’s best estimate of fair value.


The Company uses Level 3 inputs to value warrants issued, and Level 1 inputs to value its common stock transactions.


Recent Accounting Pronouncements


While there have been Financial Accounting Standards Board (FASB) pronouncements made effective subsequent to the issuance of these financial statements, none would have required restatement of the financial statements herein nor have they had any significant effect on future financial statements of the Company.


ITEM 3

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK


Smaller reporting companies are not required to provide the information required by this item.


ITEM 4

CONTROLS AND PROCEDURES


We maintain a system of disclosure controls and procedures that are designed for the purpose of ensuring



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that information required to be disclosed in our SEC reports is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to the Company’s management, including the Chief Executive Officer and the Principal Accounting Officer, as appropriate to allow timely decisions regarding required disclosures.


For the period ended June 30, 2011, we carried out an evaluation, under the supervision and with the participation of our Chief Executive Officer and our Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as defined in Rule 13a-15(e) or Rule 15d-15(e) under the Exchange Act. In the course of this evaluation, our management considered the material weakness in our internal control over financial reporting as discussed in our Annual Report on Form 10-K for the period ended December 31, 2010. Based on that evaluation, our Chief Executive Officer and our Chief Financial Officer concluded that, as of the end of the period covered by this report on Form 10-Q, our disclosure controls and procedures were not effective to ensure that the information required to be disclosed by us in reports filed under the Securities Exchange Act of 1934 is (i) recorded, processed, summarized and reported within the time periods specified in the SEC rules and forms and (ii) accumulated and communicated to the registrant’s management, including the Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding disclosure. To overcome this weakness, our principal executive and financial officers have reviewed and provided additional substantive accounting information and data in connection with the preparation of this quarterly report.  Therefore, despite the weaknesses identified, our principal executive and financial officers believe that there are no material inaccuracies or omissions of material facts necessary to make the statements included in this report not misleading in light of the circumstances under which they are made.  


Changes in Internal Control over Financial Reporting


We will continue to monitor and evaluate the effectiveness of our internal controls and procedures and our internal controls over financing reporting on an ongoing basis and are committed to taking further action and implementing additional enhancements or improvements, as necessary and as funds allow.


There have been no changes in our internal control over financial reporting that occurred during the quarter ended June 30, 2011 that have materially affected, or were reasonably likely to materially affect, our internal control over financial reporting.


PART II


OTHER INFORMATION


ITEM 1 - LEGAL PROCEEDINGS


On December 29, 2010, the Company received a complaint from Applied, filed in the District Court of Clark County in Nevada (Case No. A-10-631192-C) and which seeks collection of notes payable by Applied in the amount of $453,500, including accrued interest. On February 1, 2011, we countersued for breach of contract and claims related thereto. Our management believes that the value of its counterclaim will exceed the value of the claims asserted against the Company but cannot fully assess the outcome of the action at this time. Accordingly, management believes adequate provision has been made in the accompanying financial statements related to this complaint.


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


During the three months ended October 31, 2011, 1,400,000 shares of common stock were issued in a private placement to four individual investors for $35,000 in cash.


These shares were issued in reliance on the exemption from registration and prospectus delivery requirements of the Act set forth in Section 3(b) and/or Section 4(2) of the Securities Act and the regulations promulgated hereunder.



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ITEM 3 - DEFAULTS BY THE COMPANY ON ITS SENIOR SECURITIES

None.


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

None.


ITEM 5 - OTHER INFORMATION

None.


ITEM 6 - EXHIBITS


EXHIBIT NO.

DESCRIPTION

 

 

31

CERTIFICATION OF PRINCIPAL EXECUTIVE AND FINANCIAL OFFICER PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002.

31

CERTIFICATION OF PRINCIPAL EXECUTIVE AND FINANCIAL OFFICER PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002.

32

CERTIFICATION OF PRINCIPAL EXECUTIVE AND FINANCIAL OFFICER PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002.

32

CERTIFICATION OF PRINCIPAL EXECUTIVE AND FINANCIAL OFFICER PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002.

101.INS

XBRL INSTANCE DOCUMENT

101.SCH

XBRL TAXONOMY EXTENSION SCHEMA DOCUMENT

101.CAL

XBRL TAXONOMY EXTENSION CALCULATION LINKBASE DOCUMENT

101.DEF

XBRL TAXONOMY EXTENSION DEFINITION LINKBASE DOCUMENT

101.LAB

XBRL TAXONOMY EXTENSION LABEL LINKBASE DOCUMENT

101.PRE

XBRL TAXONOMY EXTENSION PRESENTATION LINKBASE DOCUMENT



SIGNATURES


In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


NANO MASK, INC.


January 27, 2012

 /s/ Edward Suydam

Edward Suydam, Chief Executive Officer


January 27, 2012

 /s/ Michael J. Marx

Michael J. Marx, Chief Financial Officer



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