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EX-32.1 - EXHIBIT 32.1 SECTION 906 CERTIFICATION - C2C CrowdFunding, Inc.f10q123111_ex32z1.htm
EX-31.1 - EXHIBIT 31.1 SECTION 302 CERTIFICATION - C2C CrowdFunding, Inc.f10q123111_ex31z1.htm
EX-31.2 - EXHIBIT 31.2 SECTION 302 CERTIFICATION - C2C CrowdFunding, Inc.f10q123111_ex31z2.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549


FORM 10-Q


(Mark One)

 

  X .      . QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


For the quarterly period ended December 31, 2011


      .      . TRANSITION REPORT UNDER SECTION 13 or 15(d) OF THE EXCHANGE ACT


For the transition period from ___________ to _____________


Commission file number 000-53827


IP TECHNOLOGY SERVICES, INC.

(Exact name of registrant as specified in its charter)


Delaware

 

26-0378308

(State or Other Jurisdiction of Incorporation

Or organization)

 

(IRS Employer Identification No.)


1202 Lexington Ave., Suite 355

New York, NY 10028

(Address of Principal Executive Offices) (Zip Code)


(646) 481-4524

(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 Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes  X . No      .


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 Regulations 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  X . 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 definition of “accelerated filer,” “large accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act (Check one):


Large accelerated filer

      .

Accelerated filer

      .

Non-accelerated filer

      . (Do not check if a smaller reporting company)

Smaller reporting company

  X .


Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Securities Exchange Act of 1934) (check one): Yes  X . No      .


Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date:  2,656,611 shares of common stock outstanding at February 21, 2012.




IP TECHNOLOGY SERVICES, INC.


 

Page

PART I

 

 

 

Item 1 – Financial Statements.

3

 

 

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

15

 

 

Item 3 – Quantitative and Qualitative Disclosures About Market Risk.

16

 

 

Item 4 - Controls and Procedures.

16

 

 

PART II

16

 

 

Item 1 - Legal Proceedings.

16

 

 

Item 1A. – Risk Factors

16

 

 

Item 2 – Unregistered Sale of Equity Securities and Use of Proceeds.

16

 

 

Item 3 - Defaults Upon Senior Securities.

16

 

 

Item 4 – [Removed and Reserved]

16

 

 

Item 5 – Other Matters.

16

 

 

Item 6 – Exhibits.

17

 

 

SIGNATURE

17




2





IP Technology Services, Inc.


December 31, 2011 and 2010


Index to the Consolidated Financial Statements


Contents

Page(s)

Consolidated Balance Sheets at December 31, 2011 (Unaudited) and September 30, 2011

4

 

 

Consolidated Statements of Operations for the Three Months Ended December 31, 2011 and 2010 (Unaudited)

5

 

 

Consolidated Statement of Stockholders’ Equity (Deficit) for the Fiscal Year Ended September 30, 2010 and for the Interim Period Ended December 31, 2011

6

 

 

Consolidated Statements of Cash Flows for the Three Months Ended December 31, 2011 and 2010 (Unaudited)

7

 

 

Notes to the Consolidated Financial Statements (Unaudited)

8





3




IP Technology Services, Inc.

 

 Consolidated Balance Sheets

 

 

 

 

 

 

December 31,

2011

 

September 30,

2011

 

 

 

 

 

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 Assets

 

 

 

 

 Current assets

 

 

 

 

 

 Cash

$

8,381

$

2,845

 

 Accounts receivable

 

 

 

 

 

 Advances to stockholder

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Total current assets

 

8,381

 

2,845

 

 

 

 

 

 

 

 

 

 

 

 Total assets

$

8,381

$

2,845

 

 

 

 

 

 

 

 

 Liabilities and deficit

 

 

 

 

 Current liabilities:

 

 

 

 

 

 Accrued expenses

$

10,908

$

5,559

 

 Accounts Payable

 

-

 

-

 

 Common stock to be issued

 

-

 

-

 

 Advances from stockholder

 

-

 

-

 

 

 

 

 

 

 

 

 

 

 Total current liabilities

 

10,908

 

5,559

 

 

 

 

 

 

 

 

 Deficit

 

 

 

 

 

Preferred stock: $0.0001 par value: 1,000,000 shares authorized; none issued or outstanding

 

-

 

-

 

Common stock: $0.0001 par value: 99,000,000 shares authorized; 2,656,611 and 2,558,000 shares issued and outstanding, respectively

 

266

 

256

 

 Additional paid-in capital

 

73,366

 

63,515

 

 Accumulated deficit

 

(76,159)

 

(66,485)

 

 

 

 

 

 

 

 

 

 

 IP stockholders' deficit

 

(2,527)

 

(2,714)

 

 

 

 

 

 

 

 

 

 Noncontrolling interest

 

-

 

-

 

 

 

 

 

 

 

 

 

 

 Total deficit

 

(2,527)

 

(2,714)

 

 

 

 

 

 

 

 

 

 

 

 Total liabilities and deficit

$

8,381

$

2,845

 

 

 

 

 

 

 

 

 See accompanying notes to the consolidated financial statements.




4




IP Technology Services, Inc.

 

Consolidated Statements of Operations


 

 

For the Three

 

For the Three

 

 

Months

Ended

 

Months

Ended

 

 

December 31,

2011

 

December 31,

2010

 

 

(Unaudited)

 

(Unaudited)

 

 

 

 

 

 Revenues

$

-

$

-

 

 

 

 

 

 Operating expenses

 

 

 

 

 

 Compensation

 

-

 

-

 

 Professional fees

 

7,739

 

-

 

 Rent

 

-

 

-

 

 Amortization

 

-

 

631

 

 General and administrative expenses

 

1,935

 

10

 

 

 

 

 

 

 

 Total operating expenses

 

9,674

 

641

 

 

 

 

 

 LOSS FROM OPERATIONS

 

(9,674)

 

(641)

 

 

 

 

 

 OTHER (INCOME) EXPENSES

 

 

 

 

 

 Gain on sale of patent

 

-

 

(38,701)

 

 Income tax refund

 

-

 

-

 

 

 

 

 

 

 

 Total Other (Income) Expenses

 

-

 

(38,701)

 

 

 

 

 

 Income (loss) before taxes

 

(9,674)

 

38,060

 

 

 

 

 

 Income tax provision

 

-

 

-

 

 

 

 

 

 Net income (loss)

 

(9,674)

 

38,060

 Net income (loss) attributable to noncontrolling interest  

 

-

 

-

 Net income (loss) attributable to IP Technology

$

(9,674)

$

38,060

 

 

 

 

 

 Net income (loss) per common share attributed to IP Technology:

- Basic and diluted

$

(0.00)

$

0.02

 

 

 

 

 

 

Weighted average common shares outstanding - basic and diluted

 

2,578,245

 

2,500,000


See accompanying notes to the consolidated financial statements.



5




IP Technology Services, Inc.

 

Consolidated Statement of Stockholders' Equity (Deficit)

For the Fiscal Year Ended September 30, 2010 and for the Interim Period Ended December 31, 2011

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common Stock, $0.0001

Par Value

Additional

Retained

Total IP

Stockholders'

 

Total

 

Number of

 

 

Paid-in

Earnings

Equity

Noncontrolling

Equity

 

Shares

Amount

Capital

(Deficit)

(Deficit)

Interest

(Deficit)

 

 

 

 

 

 

 

 

 

 

 Balance, September 30, 2010

2,500,000

 

250

 

34,750

 

(43,112)

 

(8,112)

 

-

 

(8,112)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Cancellation of common stock upon change of control

(17,000)

 

(2)

 

2

 

 

 

-

 

-

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Sale of common stock  

75,000

 

8

 

7,492

 

 

 

7,500

 

-

 

7,500

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Capital contribution

 

 

 

 

21,271

 

 

 

21,271

 

-

 

21,271

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Net loss

 

 

 

 

 

 

(23,373)

 

(23,373)

 

-

 

(23,373)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Balance, September 30, 2011

2,558,000

 

256

 

63,515

 

(66,485)

 

(2,714)

 

-

 

(2,714)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Sale of common stock  

98,611

 

10

 

9,851

 

 

 

9,861

 

-

 

9,861

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Net loss

 

 

 

 

 

 

(9,674)

 

(9,674)

 

-

 

(9,674)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Balance, December 31, 2011

2,656,611

$

266

$

73,366

$

(76,159)

$

(2,527)

$

-

$

(2,527)



6




IP Technology Services, Inc.

 

Consolidated Statements of Cash Flows


 

 

For the Three

 

For the Three

 

 

Months

Ended

 

Months

Ended

 

 

December 31,

2011

 

December 31,

2010

 

 

(Unaudited)

 

(Unaudited)

 

 

 

 

 

 CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

 

 

 Net income (loss)

$

(9,674)

$

38,060

 

 

 

 

 

Adjustments to reconcile net income (loss) to net cash used in operating activities:

 

 

 

 

 

 Gain on sale of patent

 

-

 

(38,701)

 

 Amortization

 

-

 

631

 

 Changes in operating assets and liabilities:

 

 

 

 

 

 

 Accrued expenses

 

5,349

 

-

 

 

 

 

 

 Net cash used in operating activities

 

(4,325)

 

(10)

 

 

 

 

 

 CASH FLOWS FROM INVESTING ACTIVITIES:

 

 

 

 

 

 Proceeds from sale of patent

 

-

 

60,000

 

 

 

 

 

NET CASH PROVIDED (USED) IN INVESTING ACTIVITIES

 

-

 

60,000

 

 

 

 

 

 CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

 

 

 

 Proceeds from sale of common stock

 

9,861

 

-

 

 

 

 

 

 Net cash provided by financing activities

 

9,861

 

-

 

 

 

 

 

 NET CHANGE IN CASH

 

5,536

 

59,990

 

 

 

 

 

 CASH, BEGINNING OF YEAR

 

2,845

 

3,943

 

 

 

 

 

 CASH, END OF YEAR

$

8,381

$

63,933

 

 

 

 

 

 SUPPLEMENTAL DISCLOSURE OF CASH FLOWS INFORMATION:

 

 

 

 

 

 Interest paid

$

-

$

-

 

 Income tax paid

$

-

$

-


See accompanying notes to the consolidated financial statements.



7



IP Technology Services, Inc.

December 31, 2011 and 2010

Notes to the Consolidated Financial Statements

(Unaudited)


Note 1 - Organization and Operations


IP Technology Services, Inc.


IP Technology Services, Inc. (“IP” or the “Company”) was incorporated on June 6, 2007 under the laws of the State of Delaware. IP provides a range of services to assist inventors to leverage their patents and related intellectual property (“Portfolios”) and formulate a strategy to maximize the revenue and profit generated by the Portfolios.


Mural Comm LLC


On June 9, 2008, the company formed Mural Comm LLC (“LLC”) under the laws of the State of Delaware. The LLC, of which the Company is a 75% member, was formed to provide the same services as IP and is currently inactive.


Change in Control


On May 18, 2011, Joseph Levi, the Company’s then President, Chief Executive Officer, Chief Financial Officer, director and the stockholder sold 2,301,000 shares of the Company’s common stock (the “Shares”), through a Stock Purchase Agreement with R-Squared Partners representing 92% of the issued and outstanding common shares; (ii) the Company cancelled 17,000 shares of its common stock;  (iii) Mr. Levi assumed certain outstanding liabilities of the Company; (iv) Neil Rock was elected President and as a member of the board of directors; and (v) Mr. Levi resigned as President, Chief Executive Officer, Chief Financial Officer and director of the Company.


Note 2 - Summary of Significant Accounting Policies


Basis of Presentation – Unaudited Interim Financial Information


The accompanying unaudited interim financial statements and related notes have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for the interim financial information, and with the rules and regulations of the United States Securities and Exchange Commission (“SEC”) to Form 10-Q and Article 8 of Regulation S-X.  Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements.  The unaudited interim financial statements furnished reflect all adjustments (consisting of normal recurring accruals) which are, in the opinion of management, necessary to a fair statement of the results for the interim period presented.  Unaudited interim results are not necessarily indicative of the results for the full fiscal year.  These financial statements should be read in conjunction with the financial statements of the Company for the fiscal year ended September 30, 2011 and notes thereto contained in the information filed as part of the Company’s Annual Report on Form 10K filed with the SEC on January 13, 2012.


Principles of Consolidation


The consolidated financial statements include all accounts of IP and LLC as of December 31, 2011 and 2010 and for the interim period then ended.  All inter-company balances and transactions have been eliminated.


Use of Estimates and Assumptions


The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.


The Company’s significant estimates and assumptions include the fair value of financial instruments; income tax rate, income tax provision, deferred tax assets and the valuation allowance of deferred tax assets, and the assumption that the Company will continue as a going concern.  Those significant accounting estimates or assumptions bear the risk of change due to the fact that there are uncertainties attached to those estimates or assumptions, and certain estimates or assumptions are difficult to measure or value.



8




Management bases its estimates on historical experience and on various assumptions that are believed to be reasonable in relation to the financial statements taken as a whole under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources.


Management regularly evaluates the key factors and assumptions used to develop the estimates utilizing currently available information, changes in facts and circumstances, historical experience and reasonable assumptions. After such evaluations, and if deemed appropriate, those estimates are adjusted accordingly.  Actual results could differ from those estimates.


Fair Value of Financial Instruments


The Company follows paragraph 820-10-35-37 of the FASB Accounting Standards Codification (“Paragraph 820-10-35-37”) to measure the fair value of its financial instruments and paragraph 825-10-50-10 of the FASB Accounting Standards Codification for disclosures about fair value of its financial instruments. Paragraph 820-10-35-37 establishes a framework for measuring fair value in accounting principles generally accepted in the United States of America (U.S. GAAP), and expands disclosures about fair value measurements. To increase consistency and comparability in fair value measurements and related disclosures, Paragraph 820-10-35-37 establishes a fair value hierarchy which prioritizes the inputs to valuation techniques used to measure fair value into three (3) broad levels.  The three (3) levels of fair value hierarchy defined by Paragraph 820-10-35-37 are described below:


Level 1

 

Quoted market prices available in active markets for identical assets or liabilities as of the reporting date.

 

 

 

Level 2

 

Pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date.

 

 

 

Level 3

 

Pricing inputs that are generally observable inputs and not corroborated by market data.


Financial assets are considered Level 3 when their fair values are determined using pricing models, discounted cash flow methodologies or similar techniques and at least one significant model assumption or input is unobservable.


The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs.  If the inputs used to measure the financial assets and liabilities fall within more than one level described above, the categorization is based on the lowest level input that is significant to the fair value measurement of the instrument.


The carrying amounts of the Company’s financial assets and liabilities, such as cash and accrued expenses approximate their fair values because of the short maturity of these instruments.


Transactions involving related parties cannot be presumed to be carried out on an arm's-length basis, as the requisite conditions of competitive, free-market dealings may not exist. Representations about transactions with related parties, if made, shall not imply that the related party transactions were consummated on terms equivalent to those that prevail in arm's-length transactions unless such representations can be substantiated.


It is not, however, practical to determine the fair value of advances from stockholders due to their related party nature.


Fiscal Year End


The Company elected September 30 as its fiscal year end date.


Cash Equivalents


The Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents.



9




Patent


The Company follows the guidelines as set out in paragraph 350-30-25-3 and paragraph 350-30-35-6 of the FASB Accounting Standards Codification for patent.  Under the requirements as set out in paragraph 350-30-25-3 and paragraph 350-30-35-6 of the FASB Accounting Standards Codification, the Company amortizes the costs of acquired patent over its remaining legal lives, or estimated useful life, or the term of the contract, whichever is shorter.  Upon becoming fully amortized, the related cost and accumulated amortization are removed from the accounts.


Related Parties


The Company follows subtopic 850-10 of the FASB Accounting Standards Codification for the identification of related parties and disclosure of related party transactions.


Pursuant to Section 850-10-20 the Related parties include a. affiliates of the Company; b. Entities for which investments in their equity securities would be required, absent the election of the fair value option under the Fair Value Option Subsection of Section 825–10–15, to be accounted for by the equity method by the investing entity; c. trusts for the benefit of employees, such as pension and profit-sharing trusts that are managed by or under the trusteeship of management; d. principal owners of the Company; e. management of the Company; f. other parties with which the Company may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests; and g. Other parties that can significantly influence the management or operating policies of the transacting parties or that have an ownership interest in one of the transacting parties and can significantly influence the other to an extent that one or more of the transacting parties might be prevented from fully pursuing its own separate interests.


The financial statements shall include disclosures of material related party transactions, other than compensation arrangements, expense allowances, and other similar items in the ordinary course of business. However, disclosure of transactions that are eliminated in the preparation of consolidated or combined financial statements is not required in those statements. The disclosures shall include:  a. the nature of the relationship(s) involvedb. description of the transactions, including transactions to which no amounts or nominal amounts were ascribed, for each of the periods for which income statements are presented, and such other information deemed necessary to an understanding of the effects of the transactions on the financial statements; c. the dollar amounts of transactions for each of the periods for which income statements are presented and the effects of any change in the method of establishing the terms from that used in the preceding period; and d. mounts due from or to related parties as of the date of each balance sheet presented and, if not otherwise apparent, the terms and manner of settlement.


Commitment and Contingencies


The Company follows subtopic 450-20 of the FASB Accounting Standards Codification to report accounting for contingencies. Certain conditions may exist as of the date the consolidated financial statements are issued, which may result in a loss to the Company but which will only be resolved when one or more future events occur or fail to occur.  The Company assesses such contingent liabilities, and such assessment inherently involves an exercise of judgment.  In assessing loss contingencies related to legal proceedings that are pending against the Company or unasserted claims that may result in such proceedings, the Company evaluates the perceived merits of any legal proceedings or unasserted claims as well as the perceived merits of the amount of relief sought or expected to be sought therein.


If the assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in the Company’s consolidated financial statements.  If the assessment indicates that a potentially material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, and an estimate of the range of possible losses, if determinable and material, would be disclosed.


Loss contingencies considered remote are generally not disclosed unless they involve guarantees, in which case the guarantees would be disclosed.  Management does not believe, based upon information available at this time, that these matters will have a material adverse effect on the Company’s consolidated financial position, results of operations or cash flows. However, there is no assurance that such matters will not materially and adversely affect the Company’s business, financial position, and results of operations or cash flows.



10




Revenue Recognition


The Company’s revenues are derived principally from commissions earned through retaining a buyer or licensee(s) or obtaining product development funding for the Portfolios holder the Company represents. The Company follows paragraph 605-10-S99-1 of the FASB Accounting Standards Codification for revenue recognition.  The Company will recognize revenue when it is realized or realizable and earned.  The Company considers revenue realized or realizable and earned when all of the following criteria are met: (i) persuasive evidence of an arrangement exists, (ii) the product has been shipped or the services have been rendered to the customer, (iii) the sales price is fixed or determinable, and (iv) collectability is reasonably assured. In addition to the aforementioned general policy, the following are the specific revenue recognition policies for each category of revenues:


Licensing revenues: Licensing revenues, net of licensor participations, are recognized when the underlying royalties from the sales of the related products are earned. The Company recognizes guaranteed royalties, net of licensor participations, at the time the arrangement becomes effective if the Portfolios holder has signed a non cancelable contract, has agreed to a fixed fee, has delivered the rights to the licensee who is free to exercise them, and the Portfolios holder and the Company, as a licensing agent has no remaining significant obligations with the underlying Portfolios or obligation to the licensee, and collectability of the full fee is reasonably assured. Where the Company has significant continuing direct involvement with the underlying Portfolios or obligation to the licensee, guaranteed minimum royalties, net of licensor participations, are recognized ratably over the term of the license or based on sales of the related products, if greater. Licensing advances and guaranteed payments collected but not yet earned by the Company are classified as deferred revenue in the accompanying consolidated balance sheets.


Commission income: Commission income, net of licensor participations, is recognized when the underlying commission from the sale of the Portfolios or securing product development funding is earned. The Company recognizes commission income, net of licensor participations, at the time the sale of the Portfolios or product development funding arrangement becomes effective if the Portfolios holder has signed a non cancelable contract, has agreed to a fixed or determinable amount, has sold the rights to the buyer or obtained the funding from the financing institutions, and collectability of the full commission is reasonably assured. If the Company determines that collection of the full commission is not reasonably assured, the Company defers the revenue recognition and recognizes commission income at the time collection becomes reasonably assured, which is generally upon receipt of cash.


Noncontrolling Interest


The Company follows paragraph 810-10-65-1 of the FASB Accounting Standards Codification to include non-controlling interests in Mural Comm LLC, its majority owned subsidiary in the equity section of the consolidated balance sheets.  Noncontrolling interests represent 25% of the equity of the Company’s majority-owned subsidiary, Mural Comm LLC. Noncontrolling interests are adjusted for the noncontrolling interest holders’ proportionate share of the earnings or losses of Mural Comm LLC and the noncontrolling interest continues to be attributed its share of losses even if that attribution results in a deficit noncontrolling interest balance.


Income Taxes


The Company accounts for income taxes under Section 740-10-30 of the FASB Accounting Standards Codification, which requires recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns.  Under this method, deferred tax assets and liabilities are based on the differences between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the fiscal year in which the differences are expected to reverse.  Deferred tax assets are reduced by a valuation allowance to the extent management concludes it is more likely than not that the assets will not be realized.  Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the fiscal years in which those temporary differences are expected to be recovered or settled.  The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the Statements of Income and Comprehensive Income in the period that includes the enactment date.


The Company adopted section 740-10-25 of the FASB Accounting Standards Codification (“Section 740-10-25”) with regards to uncertainty income taxes.  Section 740-10-25 addresses the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements.  Under Section 740-10-25, the Company may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position.  The tax benefits recognized in the financial statements from such a position should be measured based on the largest benefit that has a greater than fifty percent (50%) likelihood of being realized upon ultimate settlement. Section 740-10-25 also provides guidance on de-recognition, classification, interest and penalties on income taxes, accounting in interim periods and requires increased disclosures.



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The estimated future tax effects of temporary differences between the tax basis of assets and liabilities are reported in the accompanying consolidated balance sheets, as well as tax credit carry-backs and carry-forwards. The Company periodically reviews the recoverability of deferred tax assets recorded on its consolidated balance sheets and provides valuation allowances as management deems necessary.


Management makes judgments as to the interpretation of the tax laws that might be challenged upon an audit and cause changes to previous estimates of tax liability. In addition, the Company operates within multiple taxing jurisdictions and is subject to audit in these jurisdictions. In management’s opinion, adequate provisions for income taxes have been made for all years. If actual taxable income by tax jurisdiction varies from estimates, additional allowances or reversals of reserves may be necessary.


Uncertain Tax Positions


The Company did not take any uncertain tax positions and had no adjustments to unrecognized income tax liabilities or benefits pursuant to the provisions of Section 740-10-25 for the interim period ended December 31, 2011 or December 31, 2010.


Limitation on Utilization of NOLs due to Change in Control


Pursuant to the Internal Revenue Code Section 382 (“Section 382”), certain ownership changes may subject the NOL’s to annual limitations which could reduce or defer the NOL.  Section 382 imposes limitations on a corporation’s ability to utilize NOLs if it experiences an “ownership change.”  In general terms, an ownership change may result from transactions increasing the ownership of certain stockholders in the stock of a corporation by more than 50 percentage points over a three-year period.  In the event of an ownership change, utilization of the NOLs would be subject to an annual limitation under Section 382 determined by multiplying the value of its stock at the time of the ownership change by the applicable long-term tax-exempt rate. Any unused annual limitation may be carried over to later years.  The imposition of this limitation on its ability to use the NOLs to offset future taxable income could cause the Company to pay U.S. federal income taxes earlier than if such limitation were not in effect and could cause such NOLs to expire unused, reducing or eliminating the benefit of such NOLs.


Net Income (Loss) per Common Share


Net income (loss) per common share is computed pursuant to section 260-10-45 of the FASB Accounting Standards Codification.  Basic net income (loss) per common share is computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding during the period.  Diluted net income (loss) per common share is computed by dividing net income (loss) by the weighted average number of shares of common stock and potentially outstanding shares of common stock during the period to reflect the potential dilution that could occur from common shares issuable through convertible debt or preferred stock, contingent share arrangements, stock options and warrants.


There were no potentially dilutive common shares outstanding for the interim period ended December 31, 2011 or 2010.


Cash Flows Reporting

 

The Company adopted paragraph 230-10-45-24 of the FASB Accounting Standards Codification for cash flows reporting, classifies cash receipts and payments according to whether they stem from operating, investing, or financing activities and provides definitions of each category, and uses the indirect or reconciliation method (“Indirect method”) as defined by paragraph 230-10-45-25 of the FASB Accounting Standards Codification to report net cash flow from operating activities by adjusting net income to reconcile it to net cash flow from operating activities by removing the effects of (a) all deferrals of past operating cash receipts and payments and all accruals of expected future operating cash receipts and payments and (b) all items that are included in net income that do not affect operating cash receipts and payments.  The Company reports the reporting currency equivalent of foreign currency cash flows, using the current exchange rate at the time of the cash flows and the effect of exchange rate changes on cash held in foreign currencies is reported as a separate item in the reconciliation of beginning and ending balances of cash and cash equivalents and separately provides information about investing and financing activities not resulting in cash receipts or payments in the period pursuant to paragraph 830-230-45-1 of the FASB Accounting Standards Codification.


Subsequent Events


The Company follows the guidance in Section 855-10-50 of the FASB Accounting Standards Codification for the disclosure of subsequent events. The Company will evaluate subsequent events through the date when the financial statements were issued.  Pursuant to ASU 2010-09 of the FASB Accounting Standards Codification, the Company as an SEC filer considers its financial statements issued when they are widely distributed to users, such as through filing them on EDGAR.



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Recently Issued Accounting Pronouncements


In May 2011, the FASB issued the FASB Accounting Standards Update No. 2011-04 “Fair Value Measurement” (“ASU 2011-04”).  This amendment and guidance are the result of the work by the FASB and the IASB to develop common requirements for measuring fair value and for disclosing information about fair value measurements in accordance with U.S. GAAP and International Financial Reporting Standards (IFRSs).


This update does not modify the requirements for when fair value measurements apply; rather, they generally represent clarifications on how to measure and disclose fair value under ASC 820, Fair Value Measurement, including the following revisions:


·

An entity that holds a group of financial assets and financial liabilities whose market risk (that is, interest rate risk, currency risk, or other price risk) and credit risk are managed on the basis of the entity’s net risk exposure may apply an exception to the fair value requirements in ASC 820 if certain criteria are met. The exception allows such financial instruments to be measured on the basis of the reporting entity’s net, rather than gross, exposure to those risks.

·

In the absence of a Level 1 input, a reporting entity should apply premiums or discounts when market participants would do so when pricing the asset or liability consistent with the unit of account.

·

Additional disclosures about fair value measurements.


The amendments in this Update are to be applied prospectively and are effective for public entity during interim and annual periods beginning after December 15, 2011.


In June 2011, the FASB issued the FASB Accounting Standards Update No. 2011-05 “Comprehensive Income” (“ASU 2011-05”), which was the result of a joint project with the IASB and amends the guidance in ASC 220, Comprehensive Income, by eliminating the option to present components of other comprehensive income (OCI) in the statement of stockholders’ equity. Instead, the new guidance now gives entities the option to present all non-owner changes in stockholders’ equity either as a single continuous statement of comprehensive income or as two separate but consecutive statements. Regardless of whether an entity chooses to present comprehensive income in a single continuous statement or in two separate but consecutive statements, the amendments require entities to present all reclassification adjustments from OCI to net income on the face of the statement of comprehensive income.


The amendments in this Update should be applied retrospectively and are effective for public entity for fiscal years, and interim periods within those years, beginning after December 15, 2011.


Management does not believe that any other recently issued, but not yet effective accounting pronouncements, if adopted, would have a material effect on the accompanying financial statements.


Note 3 – Going Concern


The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates continuity of operations, realization of assets, and liquidation of liabilities in the normal course of business.


As reflected in the accompanying consolidated financial statements, the Company had an accumulated deficit at December 31, 2011, a net loss and net cash used in operating activities for the interim period then ended, respectively.


While the Company is attempting to commence operations and generate sufficient revenues, the Company’s cash position may not be sufficient enough to support the Company’s daily operations. While the Company believes in the viability of its strategy to generate sufficient revenues and in its ability to raise additional funds, there can be no assurances to that effect.  The ability of the Company to continue as a going concern is dependent upon the Company’s ability to further implement its business plan and generate sufficient revenues. The consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. Management believes that the actions presently being taken to further implement its business plan and generate revenues provide the opportunity for the Company to continue as a going concern.


The consolidated financial statements do not include any adjustments related to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.



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Note 4 – Related Party Transactions


Free Office Space


The Company leases office space from a related party.  There is no formal lease agreement existing at the present that obligates the Company to record any future minimum payments.


Note 5 – Stockholders’ Deficit


Common stock


The Company sold 98,611 shares of its common stock at $0.10 per share ($9,861) to four (4) investors during the quarter ended December 31, 2011.


Note 6 – Subsequent Events


The Company has evaluated all events that occurred after the balance sheet date through the date when the financial statements were issued to determine if they must be reported.  The Management of the Company determined that there were no reportable subsequent events.



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


Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995


Information set forth herein contains "forward-looking statements" which can be identified by the use of forward-looking terminology such as "believes," "expects," "may,” “should" or "anticipates" or the negative thereof or other variations thereon or comparable terminology, or by discussions of strategy. No assurance can be given that the future results covered by the forward-looking statements will be achieved. The Company cautions readers that important factors may affect the Company’s actual results and could cause such results to differ materially from forward-looking statements made by or on behalf of the Company. These factors include the Company’s lack of historically profitable operations, dependence on key personnel, the success of the Company’s business, ability to manage anticipated growth and other factors identified in the Company's filings with the Securities and Exchange Commission, press releases and/or other public communications.


Plan of Operation


The Company earned no revenues in the quarter ended December 31, 2011. On March 3, 2009, the Company, through its subsidiary Mural Comm LLC, purchased from BancTec, Inc. for $90,000 U.S. Patent No. 6,341,351 titled Method for Communication and Controlling Transactions Between Unsecured Parties (the “Patent” ). After several attempts at licensing the Patent, on December 15, 2010, the Company sold the Patent for $60,000.


In addition, we continue to look for commercially viable Portfolios to represent.  To that end, we will continue to work with our industry contacts, advertise and use our website at  www.iptechnologyservices.com  to identify additional Portfolios.   For each such Portfolio, we analyze the Portfolio, identify relevant markets and/or identify potential acquirers, licensees and/or investors for the Portfolio.  In addition, we developed a proprietary software program that we believe will assist us in identifying patent portfolios that have substantial commercial value.  We cannot guarantee, however, that we will find additional suitable Portfolios for which will be successful in completing a revenue generating transaction.   


Generally, we will enter into one or more agreements with our clients depending on the range of services to be provided. If a client is seeking to sell or license a Portfolio, we will typically enter into a Patent Broker Agreement (“Broker Agreement”) under which we earn a commission for finding a buyer and/or licensee of the Portfolio. Our commission rates are typically one-third (33.33%) of revenues generated through the sale/license of the Portfolio but in certain situations we may negotiate a different rate. Where a client is seeking funding for product development, we may enter into a Patent Finance Agreement (“Finance Agreement”) under which we earn commission based on the amount of capital we assist in raising. In certain situations, we may consider purchasing all or part of a Portfolio and develop a licensing campaign for the Portfolio to generate revenues for the Company.


As of December 31, 2011, the Company had $8,381 in cash. The Company’s current cash position is not sufficient to fund operations over the next twelve months including general overhead expenses such as salaries, corporate legal and accounting fees, office overhead and general working capital. In the event the Company may require additional cash to fund operations or purchase a Portfolio, we may have to borrow money from shareholders or issue debt or equity or enter into a strategic arrangement with a third party. Our officer will fund any expenses which arise until such time as the Company raises sufficient funds. There can be no assurance that additional capital will be available to us. We currently have no agreements, arrangements or understandings with any person to obtain funds through bank loans, lines of credit or any other sources.


Critical Accounting Policies


The preparation of financial statements and related notes requires us to make judgments, estimates, and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses, and related disclosure of contingent assets and liabilities.


An accounting policy is considered to be critical if it requires an accounting estimate to be made based on assumptions about matters that are highly uncertain at the time the estimate is made, and if different estimates that reasonably could have been used, or changes in the accounting estimates that are reasonably likely to occur periodically, could materially impact the financial statements.


Financial Reporting Release No. 60 requires all companies to include a discussion of critical accounting policies or methods used in the preparation of financial statements. There are no critical policies or decisions that rely on judgments that are based on assumptions about matters that are highly uncertain at the time the estimate is made.



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Seasonality


To date, we have not noted any significant seasonal impacts.


Off Balance Sheet Arrangements

 

We have no off-balance sheet arrangements.


Item 3 - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

 

Not applicable.


ITEM 4 - CONTROLS AND PROCEDURES


As of December 31, 2011, we carried out the evaluation of the effectiveness of our disclosure controls and procedures required by Rule 13a-15(e) under the Exchange Act under the supervision and with the participation of our management, including our President. Based upon that evaluation, our President concluded that, as of December 31, 2011, our disclosure controls and procedures were not effective to ensure that information we are required to disclose in reports that we file or submit under the Exchange Act is: (i) recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and (ii) accumulated and communicated to our management, including our President, as appropriate to allow timely decisions regarding required disclosure.  


There has been no change in our internal control over financial reporting identified in connection with this evaluation that occurred during our fiscal quarter ended December 31, 2011 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.  


PART II — OTHER INFORMATION


Item 1. - Legal Proceedings


None.


Item 1A. – Risk Factors


Not applicable.


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


During the period ended December 31, 2011, the Company issued and sold an aggregate of 98,611 shares of common stock at a purchase price of $0.10 per shared to four accredited investors for aggregate proceeds of $9,861.


We issued the forgoing securities in reliance on the safe harbor provided under Rule 506 of Regulation D and/or Section 4(2) of the Securities Act of 1933 as amended, without payment of commissions to any person.


Item 3. - Defaults Upon Senior Securities


Not applicable.


Item 4. – [Removed and Reserved]


Item 5. - Other Information


Not applicable



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Item 6. - Exhibits and Reports on Form 8-K


Exhibits


31.1

 

Certification of Principal Executive Officer pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2

 

 Certification of Principal Financial Officer pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1

 

Certification of Principal Executive Officer and Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant To Section 906 Of The Sarbanes-Oxley Act Of 2002.


SIGNATURES



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


 

 

 

 

IP TECHNOLOGY SERVICES, INC.

 

 

 

 

 

/s/ Neil Rock

 

 

Neil Rock

 

Title:

President (Principal  Executive Officer and Principal Financial Officer)

 

 

 

 

Date:

February 21, 2012




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