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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 quarterly period ended December 31, 2011

 
Commission file number: 000-52765

iMEDICOR, INC.
(Exact Name of Registrant as Specified in Its Charter)
 
Nevada
 
95-4696799
(State or other jurisdiction of incorporation or organization)
 
(I.R.S. Employer Identification No.)
 
523 Avalon Gardens Drive, Nanuet, New York 10954
(Address of principal executive offices) (Zip Code)

(845) 371-7380
(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 o   No  x
 
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes o   No  x

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
 
 Large accelerated filer      ¨     
 Accelerated filer                      ¨
 Non-accelerated filer        ¨   
 Smaller reporting company   x
 (Do not check if a smaller reporting company)        
 
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o   No  x
 
There were 347,376,527 outstanding shares of the issuer’s  Common Stock, $0.001 par value, on March 9, 2012.
 
 
iMEDICOR, INC.
FORM 10-Q QUARTERLY REPORT
FOR THE QUARTER ENDED DECEMBER 31, 2011
 
TABLE OF CONTENTS
 
 
Page
Part I Financial Information
 
       
Item 1.
3
    3
    4
    6
    7
       
Item 2.
10
       
Item 3.  Quantitative and Qualitative Disclosures About Market Risk 14
       
Item 4.
14
       
Part II Other Information
 
       
Item 5.   Other Information 15
       
Item 6.
15
       
  16
 
 
 
PART I:  FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS
iMEDICOR, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS
 
   
12/31/2011
   
6/30/2011
 
ASSETS
 
(unaudited)
   
audited
 
Current assets:
           
Cash and cash equivalents - interest bearing
 
$
22,968
   
$
18,208
 
Accounts receivable, net of allowance for doubtful accounts of
  $-0 - at December 31, 2011 and June 30, 2011
   
73,280
     
251,780
 
Prepaid expenses
   
32,304
     
16,108
 
                 
  Total Current Assets
   
128,552
     
286,096
 
                 
Other assets:
               
Technology & Medical software
   
1,555,567
     
2,138,914
 
     
1,555,567
     
2,138,914
 
                 
Accounts Receivables in Litigation, net of allowance of $130,000
and $26,000 at December 31, 2011 and 2010 respectively
   
416,000
     
282,000
 
     
416,000
     
282,000
 
                 
                 
  Total Assets
 
$
2,100,119
   
$
2,708,355
 
                 
                 
                 
LIABILITIES AND STOCKHOLDERS' EQUITY
               
Current liabilities:
               
Short-term notes payable
   
3,685,809
     
3,293,079
 
Accounts payable and accrued expenses
   
2,119,178
     
1,804,101
 
Deferred income
   
-
     
182,000
 
                 
 Current and Total  Liabilities
   
5,788,911
     
5,279,180
 
                 
                 
Stockholders' Equity
               
Preferred Stock, Series A par value $.001, non- cumulative
 authorized 200,000,000Issued and outstanding 28 and 28 shares,
 as of December 31, 2011 and June 30, 2011, respectively
   
-
     
-
 
Preferred Stock, Series B par value $.001, non- cumulative
 authorized 200,000,000 Issued and outstanding 18.75 and 18.75 shares,
 as of December 31, 2011 and June 30, 2011, respectively
   
-
     
-
 
Common stock, par value $.001 per share, authorized 600,000,000
  Issued: 347,744,944 and 332,744,944 shares; and
 Outstanding: 347,376,537 and 332, 376,537 at December 31, 2011
 And June 30, 2011, respectively
   
347,377
     
332,337
 
Additional Paid in Capital
   
43,888,097
     
43,839,597
 
Less: Treasury stock, 368,407 shares at both December 31, 2011
 and June 30, 2011
   
(508,195
)
   
(508,195
)
Accumulated deficit
   
(47,416,071
)
   
(46,234,604
                 
Total Stockholders' Equity
   
(3,688,792
)
   
(2,570,825
)
                 
Total Liabilities and Stockholders' Equity
 
$
2,100,119
   
$
2,708,355
 
 
See notes to Condensed Consolidated Financial Statements (unaudited).
 
 
iMEDICOR, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
 (unaudited)
 
   
For the
   
For the
 
   
3 mos ended
   
3 mos ended
 
   
12/31/2011
   
12/31/2010
 
             
Revenues
           
   Licensing
  $ 69,722     $ 101,136  
   Consulting
    93,000       -  
                 
       Total Revenues
    162,722       101,136  
                 
Expenses:
               
Stock issued for fees and services
    -       254,697  
Consulting, commissions and travel
   
300,757
      157,182  
Operational fees and expenses
    94,792       132,339  
Professional fees
    16,850       12,695  
Payroll and related taxes
    -       -  
Depreciation and amortization
    291,673       514,695  
Bad debt expenses
    13,000       13,000  
Production, advertising, brochures and public relations
    -       5,000  
                 
  Total Expenses
    717,072       1,089,608  
                 
Loss before other expenses
    (554,350 )     (988,472 )
                 
Other Income/(Expenses:)
               
Other income - debt cancellation
    -       91,511  
Interest expense
   
(73,551
)     (77,352 )
  Total Other Income/(Expenses)
   
(73,551
)     14,159  
                 
Loss before dividend
   
(627,901
)     (974,313 )
                 
Dividends related to warrants issued      -      
-
 
                 
Net loss attributable to common shareholders
  $
(627,901
)   $ (974,313 )
                 
Net loss per share, available to common stockholders
  $ (0.00 )   $ (0.00 )
                 
Weighted average number of shares, basic and diluted
    347,376,537       273,859,755  
 
See notes to Condensed Consolidated Financial Statements (unaudited).


iMEDICOR, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
 
   
For the
   
For the
 
   
6 mos ended
   
6 mos ended
 
   
12/31/2011
   
12/31/2010
 
         
Restated
 
             
Revenues
               
Licensing
  $
139,444
    $
101,136
 
Consulting
   
212,500
       -  
                 
Total Revenues
    351,944       149,733  
                 
Expenses:
               
Stock issued for fees and services
    -       545,309  
Consulting, commissions and travel
   
571,364
      391,318  
Operational fees and expenses
    181,851       293,596  
Professional fees
    18,650       43,992  
Payroll and related taxes
    36,000       -  
Depreciation and amortization
    584,691       1,030,811  
Bad debt expenses
    26,000       13,000  
Production, advertising, brochures and public relations
    -       27,152  
                 
  Total Expenses     1,382,826       2,345,178  
                 
Loss before other expenses
    (1,030,882 )     (2,195,445 )
                 
Other Income/(Expenses:)                
Other income - debt cancellation
    -       91,511  
Interest expense
   
(150,584
)     (319,303 )
  Total Other Income/(Expenses)    
(150,584
)     (227,792 )
                 
Loss before dividend
   
(1,181,466
)     (2,423,237 )
                 
Dividends related to warrants issued
    -       186,000  
                 
Net loss attributable to common shareholders
  $
(1,181,466
)   $ (2,609,237 )
                 
Net loss per share, available to common stockholders
  $ (0.00 )   $ (0.01 )
                 
Weighted average number of shares, basic and diluted
   
342,241,120
      235,051,489  
 
See notes to Condensed Consolidated Financial Statements (unaudited).
 
 
iMEDICOR, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
 
   
For the
   
For the
 
   
6 mos ended
   
6 mos ended
 
   
12/31/2011
   
12/31/2010
 
         
Restated
 
Cash Flows From Operating Activities
           
   Receipts from customers
 
$
175,444
   
$
(4,047
)
   Payments to suppliers, salaries
   
(476,330
)
   
(858,131
)
   Other income
   
91,511
         
   Interest paid
   
(10,968
)
   
4,989
 
   Net Cash Used in Operating Activities
   
(311,854
)
   
(765,678
)
                 
Cash Flows Used in Investing Activities
               
   Purchase of Technology & Medical software
   
-
     
(55,000
)
   Net Cash Used in Investing Activities
   
-
     
(55,000
)
                 
Cash Flows From Financing Activities
               
   Payments on bank note payable
   
-
     
(29,242
)
   Payments on notes payable
   
-
     
(80,000
)
   Short term loans
   
316,614
     
384,500
 
   Sale of common stock
   
-
     
459,000
 
   Net Cash Provided by Financing Activities
   
316,614
     
734,258
 
                 
Net Increase/(Decrease) in Cash
   
4,760
     
(86,420
)
                 
Cash at the Beginning of Period
   
18,208
     
86,644
 
                 
Cash at End of Period
 
$
22,968
   
$
224
 
                 
                 
                 
Reconciliation of Net Loss to Net Cash  
   Used by Operating Activities
               
   Net loss
 
$
(1,181,466
)
 
$
(2,423,236
)
Adjustments to reconcile net income/(loss) to net cash
       used by operating activities:
               
   Allowance for bad debt
   
26,000
     
13,000
 
   Depreciation & amortization
   
584,691
     
1,030,810
 
   Stock issued for accrued consulting fees
   
-
     
545,308
 
   Changes in:
               
   Trade receivables
   
18,500
     
(152,780
)
   Prepaid expenses
   
(16,195
)
   
(1,395
)
   Accounts payable and accrued expenses
   
299,001
     
(100,677
)
   Accrued interest payable
   
139,615
     
324,292
 
   Deferred income
   
(182,000
)
   
(1,000
)
   Net Cash Used by Operating Activities
 
$
(311,854
)
 
$
(765,678
)
   
               
   Supplemental disclosures:
               
   Schedule of Noncash Investing and financing Transactions:
               
   Stock issued for fees and services
 
$
-
   
$
545,308
 
   Exchanged stock for note payable and accrued interest
   
63,500
     
4,651,960
 
 
See notes to Condensed Consolidated Financial Statements (unaudited).
 
 
IMEDICOR, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
December 31, 2011

1.           BASIS OF PRESENTATION

iMedicor, Inc., formerly Vemics, Inc. (the “Company”), builds portal-based, virtual work and learning environments  in healthcare and related industries. Our focus is twofold: iMedicor, our web-based portal which allows Physicians and other healthcare providers to exchange patient specific healthcare information via the internet while maintaining compliance with all Health Insurance Portability and Accountability Act of 1996 (“HIPAA”) regulations.   The iMedicor portal is called SocialHIE (Health Information Exchange), and includes its ClearLobby technology. ClearLobby is our web-based portal adjunct which provides for direct communications between pharmaceutical companies and physicians for the dissemination of  information on new drugs without the costs related to direct sales forces.  Our solutions allow physicians to use the internet in ways previously unavailable to them due to HIPAA restrictions to quickly and cost-effectively exchange and share patient medical information and to interact with pharmaceutical companies and review information on new drugs offered by these companies at a time of their choosing.  Our second focus is consulting with Medical Practices and Dental Practices to assist them in becoming “Meaningful Use” compliant and positioning these practices to receive the Federal Incentive funds to underwrite the transition from a paper to an electronic health records system. iMedicor began this service as an official agent of the NJ-HITEC / REC project working with primary care practices. Recently, iMedicor has expanded into specialists and dental practices.
 
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America for interim financial information.  Accordingly, they do not include all of the information and footnotes required by generally accepted principles in the United States for full year financial statements.  In the opinion of management, all adjustments considered necessary for a fair presentation have been included and are of a normal, recurring nature.  Operating results for the three and six month period ended December 31, 2011, are not necessarily indicative of the results that may be expected for the full year. These consolidated financial statements should be read in conjunction with the consolidated financial statements and the notes thereto that are included in the Company’s Form 10-K for the fiscal year ended June 30, 2011.
 
2.           GOING CONCERN

From inception through December 31, 2011, the Company had devoted substantially all of its efforts to research and development of its technologies, acquisition of equipment and raising capital.  The Company has incurred operating losses to date and has an accumulated deficit of approximately $47,400,000 and $46,234,000 at December 31, 2011 and at June 30, 2011, respectively.  The Company’s activities have been primarily financed through convertible debentures and private placements of equity.  The Company intends to raise additional capital through the issuance of debt or equity securities to fund its operations.  The financing may not be available on terms satisfactory to the Company, if at all. No formal commitments or arrangements to advance or loan funds to the Company or repay any such advances or loans exist.  There is no legal obligation for either management or significant stockholders to provide additional future funding.
 
3.           USE OF ESTIMATES

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities and disclosures at the date of the financial statements and the reported amounts of revenue and expenses during the reporting periods.  Actual results could differ from those estimates.

4.           NET EARNING (LOSS) PER SHARE
 
Basic net loss per share is computed by dividing net loss by the weighted average number of shares of common stock outstanding for the period, less shares subject to repurchase.  Diluted net loss per share reflects the potential dilution of securities by adding other common stock equivalents, including stock options, shares subject to repurchase, warrants and convertible notes to the weighted-average number of common shares outstanding for a period, if dilutive.  All potentially dilutive securities have been excluded from the computation, as their effect is anti-dilutive.
 
 
5.           WARRANTS
 
As of December 31, 2011, the Company has issued warrants to purchase shares  of Common Stock reserved for issuance upon exercise to various shareholders and service providers according to the schedule below:
 
No. Shares
             
Issuable on Exercise
   
Expiration
   
Exercise Price
 
 
4,000,000
     
2013
   
$
0.04
 
 
4,840,000
     
2013
   
$
0.03
 
 
8,800,000
     
2014
   
$
0.03
 
 
16,160,000
     
2013 – 2015
   
$
0.05
 
 
Management has reserved the right to redeem the warrants at $.10 per warrant if there is a subsequent initial public offering and market value per share meets certain levels.

6.           TECHNOLOGY AND MEDICAL SOFTWARE

The Company has capitalized all acquisition costs associated with the acquisition of NuScribe Inc.  In addition, we have elected to capitalize all related development costs associated with the completion of the iMedicor portal, which was included in the asset purchase of Nuscribe.  The iMedicor portal was launched in late October 2007 and we have begun to amortize its cost on a straight-line basis over 60 months.  Amortization expenses were $2,056,033 for the year ended June 30, 2011.  The Company accounts for impairment of technology assets in accordance with recently issued and adopted accounting pronouncements, which require that technology with indefinite useful lives should be amortized, but also be tested for impairment at least annually at the reporting unit level.  If impairment exists, a write-down to fair value (normally measured by discounting estimated future cash flows) is recorded.  Intangible assets with finite lives are amortized primarily on a straight-line basis over their estimated useful lives and are reviewed for impairment.  The Company has evaluated the technology and medical software for impairment as of June 30, 2011 for and has determined that the asset be impaired by $854,094.
 
   
12/31/2011
   
6/30/2011
 
    (unaudited)      (audited)   
Technology and medical software
 
$
10,238,894
   
$
10,238,894
 
Less: Accumulated Amortization
   
7,829,233
     
7,245,886
 
Less: Impairment as of June 30, 2011
   
854,094
     
854,094
 
                 
   
$
1,555,567
   
$
2,138,914
 
 
7.           SHORT TERM NOTES PAYABLE
 
Terms of convertible debentures

Amount outstanding*
   
Interest Rate
   
Conversion Features
$
**150,000
     
17.98
%
 
convertible into common shares at $0.45 per share
 
120,155
     
8.00
 
convertible into common shares at $0.03 per share
 
233,575
     
15.00
%
 
convertible into common shares at $0.05 per share
 
58,821
     
8.00
%
 
convertible into common shares at $0.05 per share
$
562,551
   
Total
     
 
 
Terms of the notes payable vary from 0% to 18% interest.
 
   
12/31/2011
   
6/30/2011
 
    (unaudited)     (audited)  
Company
  $ 2,439,439       2,601,219  
Individual – Former Director
    340,359       77,925  
Individual
    318,459       50,000  
Trust
    15,000       15,000  
Individual – Former Director
    10,000       10,000  
      Total
  $ 3,123,257     $ 2,754,144  
 
8.           REVENUE

The Company has recorded income in the quarter ended December 31, 2011 from Mass Mutual Insurance in the amount of $65,000.  Mass Mutual has refused to pay citing unenforceable contracts.  iMedicor has instituted legal proceedings against Mass Mutual and is confident that we will collect all amounts due plus legal fees associated with the lawsuits.  The company has taken an allowance for bad debt relating to this receivable of 20% on the gross amount for the quarter; however the attorneys representing the company have indicated that the entire amount should be collectable.

9.         SUBSEQUENT EVENTS

The Company has evaluated subsequent events from the balance sheet date through March 9, 2012, the date the accompanying financial statements were issued and have found no material events to report.
 

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

Statements made in this Quarterly Report on Form 10-Q, including without limitation this Management's Discussion and Analysis of Financial Condition and Operations, other than statements of historical information, are forward looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).  These forward-looking statements may sometimes be identified by such words as "may," "will," "expect," "anticipate," "believe," "estimate" and "continue" or similar words.

We believe that it is important to communicate our future expectations to investors.  However, these forward-looking statements involve many risks and uncertainties, including the risk factors disclosed under the heading “Risk Factors” included in the Company's Form 10-K filed with the Securities and Exchange Commission (“SEC”) on February 22, 2012.  Our actual results could differ materially from those indicated in such forward-looking statements as a result of certain factors.  We are under no duty to update any of the forward-looking statements after the date of this Report on Form 10-Q to conform these statements to actual results.

Overview

The Company has built a portal-based, virtual work, learning and communication/collaboration environment for healthcare and related industries called iMedicor. Our primary focus shifted with our development of  iMedicor, over 4 years ago.  The portal has been in active use by physicians for approximately 3 1/2   years.  iMedicor has developed its Network to include “interoperability” or the ability to securely transport and exchange, electronically, all forms of medical documentation between the vast array of disparate healthcare systems.  One of the key components of the Federal “Meaningful Use” guidelines to be eligible for stimulus funds is interoperability. iMedicor has solved that problem with its HIPAA compliant, interoperable communications network, now referred to as iMedicor’s SocialHIE

The iMedicor Portal was initially launched in October of 2007.  In February of 2009 we launched version 2.0 of the Portal with completely redesigned functionality and security.  During the redesign phase we focused less on increasing membership and more on working with a core group of physician members to address functionality within the site and make recommended changes for the launch of the 2.0 version. Last fiscal year the subscription model for iMedicor switched from a free service for all users to a $24.95 per month subscription service per physician user, with reduced rates for administrative staff within a physician’s office.  As part of the shift we offered all existing members as well as new members, a sixty-day trial period at no cost.  The percentage of users who agreed to convert from our free service to paying was not what we had hoped at less than 10%.  Therefore, we are currently revamping the cost structure and our membership acquisition efforts.  Rather than market ourselves as a stand-alone solution, we are partnering with EHR network, insurance, clearinghouses, PPO’s, MCO’s and other complimentary technology companies that have established membership bases and paying users, to offer a more robust and complete solution.
 
Currently the company has several pilots running with partners, that if successful could evolve into a boost in paying membership to approximately 40,000 members by the end of calendar 2012, representing gross revenues to iMedicor of approximately $800,000 per month, representing more than 5 times our current cash needs.  There are several more relationships that the company is in the development stage of now which could boost that number dramatically   As we build this paying customer base over time, the Company has also initiated a new line of revenue generating business in conjunction with the State of New Jersey HITEC, a Regional Extension Center of the Health Information Technology for Economic and Clinical Health Act, or the "HITECH Act".  Among other things, the HITECH Act provides federal incentive dollars to physicians adopting EMR systems prior to the federally mandated 2014 deadline. The Company is acting as a health IT consultant with NJ-HITEC in its efforts to promote meaningful use of Electronic Health Records among New Jersey-based providers.  In the quarter ending December 31, 2011 the company generated approximately $93,000 in revenue from the NJ HITEC program.  It is the company’s intention to develop more of these programs with other regional HITEC authorities. The HITEC project participation is becoming a viable stepping stone to further the iMedicor SocialHIE deployment.
 
As of December 31, 2011, we require approximately $150,000 per month to fund our operations.  This amount has consistently decreased over the past several quarters and the company continues to consolidate its operations until such a time as revenue is able to exceed operational costs,  This amount is expected to increase as we expand our sales and marketing efforts and continue to develop new products and services; however we do not have the funds available to increase our operations to date  As of the date of this report the Company has reduced operations to a bare minimum to conserve what cash is available and costs have been further reduced from the $150,000 per month needed.
 
 
We are currently seeking up to $4,000,000 in capital through a private placement of preferred stock, and have received a signed subscription agreement from an accredited investor for $2,000,000, payable in two tranches of $1,000,000 however, due to delays in finalizing other initiatives outside of iMedicor, the investor has not to date been able to make the first tranche payment.  As of the date of this report no funds have been received in association with the above subscription agreement and we have been reliant on two of the Company’s major investors and its employees and management to fund critical operational costs, however not all costs have been able to be met.  For example,  in the quarter ended December 30, 2011 the company was only able to meet approximately 53% of its payroll obligations to its staff, and that trend has continued into the current quarter, with the company having met less than 1% of its payroll obligations to date in calendar 2012. While we are seeking funding, if revenue increases to a point where we are able to sustain ourselves and increase our budget to match our growth needs, we may significantly reduce the amount of investment capital we are seeking.  The exact amount of funds raised and revenue generated will determine how aggressively we can grow and what additional projects we will be able to undertake.  
 
Critical Accounting Policies and Estimates

Our discussion and analysis of financial condition and results of operations are based upon the condensed consolidated financial statements included in this Form 10-Q for the quarterly period ended December 30, 2011,, which have been prepared in accordance with generally accepted accounting principles as recognized in the U.S.  The preparation of these financial statements requires that we make estimates and judgments that affect the reported amounts of assets, liabilities, revenue and expenses, and disclosure of contingent assets and liabilities.  Our estimates include those related to revenue recognition, the valuation of inventory, and valuation of deferred tax assets and liabilities, useful lives of intangible assets and accruals.  We base our estimates on historical experience and on various other assumptions that management believes to be reasonable under the circumstances.  Actual results may differ from these estimates under different assumptions or conditions.
  
Results of Operations

Three months ended December 31, 2011 Compared to Three Months Ended December 31, 2010

The following table sets forth for the periods indicated the percentage of total revenues represented by certain items reflected in our statements of operations:

   
Three Months Ended December 31
 
   
2011
   
2010
 
   
(unaudited)
   
(Restated)
 
Revenue
  $ 162,772     $ 101,136  
                 
Operational General and Administrative Expenses
    425,399       576,635  
Depreciation and amortization
    291,673       514,695  
Total Expenses
    717,072       1,091,330  
Loss before other income (expense)
  $ (554,350 )   $ (988,472 )
 
Revenues

The Company's revenues for the three months ended December 31, 2011 increased by approximately 60% to $162,772 from $101,136 in the three months ended December 31, 2010.  The increase in revenue is due largely to the new line of revenue generating business in conjunction with the State of New Jersey HITEC.
 

Operational, General and Administrative Expenses
 
Operational, general and administrative expenses for the quarter ending December 31, 2011 decreased to $425,399 from $576,635, for the quarter ending December 31, 2010 or approximately 26%.  This decrease reflects the Company’s continued effort to consolidate operations until such time that it can sustain growth through revenue generation.
 
Depreciation and Amortization

Depreciation and Amortization expenses decreased to 291,673 for the quarter ended December 31, 2011 from $514,695, for the quarter ending December 31, 2010.  On June 30, 2011 the company tested its medical technology and software for impairment and found it to be impaired.  The current depreciation number reflects depreciation after impairment, with a new finite life of the asset based on current revenue generating contracts in hand.

Loss from Operations

Income (loss) from operations for the quarter ended December 31, 2011 totaled ($554,350) compared to ($988,472) for the quarter ended December 31, 2010 or a decrease of approximately 44%.  The decrease in loss from operations for the quarter ended December 31, 2011 is primarily due to the increase in revenue from a new line of business, the company’s continued consolidation of operations and the significant decrease in amortization of our technology.
 
Results of Operations

Six months ended December 31, 2011 Compared to Six Months Ended December 31, 2010

The following table sets forth for the periods indicated the percentage of total revenues represented by certain items reflected in our statements of operations:

   
Six Months Ended December 31
 
   
2011
   
2010
 
   
(unaudited)
   
(restated)
 
Revenue
  $ 351,944     $ 149,733  
                 
Operational General and Administrative Expenses
    798,135       769,058  
Depreciation and amortization
    584,691       1,030,811  
Stock issued for fees and services
    -       545,309  
Total Expenses
    1,382,826       2,345,178  
Loss before other income (expense)
  $ (1,030,882 )   $ (2,195,445 )

Revenues

The Company's revenues for the six months ended December 31, 2011 increased by approximately 135% to $351,944 from $149,733 in the six months ended December 31, 2010.  The increase in revenue is due primarily the new line of revenue generating business in conjunction with the State of New Jersey HITEC.  
 

Operational, General and Administrative Expenses
 
Operational, general and administrative expenses for the six months ending December 31, 2011 increased slightly to $798,135, from $769,058 for the six months ending December 31, 2010 or approximately 3.7%.  This increase is attributed to the company electing to consolidate operations rather than issue stock as fees for services.  In six months ended December 31, 2010 the company issued stock valued at $545,309 as fees for services.  In the same period in 2011 it issued none.
 
Depreciation and Amortization

Depreciation and Amortization expenses decreased to $584,691 for the six months ended December 31, 2011 from $1,030,811, for the quarter ending December 31, 2010.  On June 30, 2011 the company tested its medical technology and software for impairment and found it to be impaired.  The current depreciation number reflects depreciation after impairment, with a new finite life of the asset based on current revenue generating contracts in hand

Loss from Operations

Income (loss) from operations for the six months ended December 31, 2011 decreased by $1,164,563 to ($1,030,882) as compared to ($2,195,445) for the six months ended December 31, 2010, or approximately 53%.  The decrease in loss from operations for the quarter ended December 31, 2011 is primarily due to the increase in revenue from a new line of business, the company’s continued consolidation of operations and the significant decrease in amortization of our technology.

Liquidity and Capital Resources

Cash and cash equivalents were $22,968 at December 31, 2011 compared to $18,208 at June 30, 2011.

Net cash used by operating activities was $311,854 for the six months ended December 31, 2011 as compared to $765,678 for the six months ended December 31, 2010, representing a decrease of approximately 59%.  This is attributed to the lack of investment capital available and the company’s inability to off-set that lack with revenues.

Net cash used by investing activities was $-0- for the six months ended December 31, 2011 as compared to cash used by investing activities of $55,000 for the six months ended December 31, 2010.  

Net cash provided by financing activities was $316,614 for the six  months ended December 31, 2011 as compared to net cash used by financing activities of $734,258 for the six  months ended December 31, 2010, or a decrease of approximately 57%.  This reflects the difficulties as a smaller reporting company in raising capital in the current market.

Due to our serious cash position and the lack of adequate sales revenue as the iMedicor portal has not yet begun to generate any significant sales, the Company has continued to reduce costs where possible, including eliminating non-essential staff positions and eliminating non-essential operating costs as well as reducing salaries and benefits of current employees.

The Company continues to operate at a loss and is projected to do so until the third or fourth quarter of this fiscal year.  The Company is reliant, therefore, on raising capital through equity investments and/or debt instruments to maintain operations.  The Company is actively engaging in fundraising efforts to increase its current level of operations.
 
Off-Balance Sheet Arrangements
 
The Company does not have any off-Balance Sheet Arrangements that are likely to have a current or future affect on our financial condition, revenues, results of operations, liquidity, or future effect on capital expenditures.
 
 

N/A.
 
ITEM 4.  CONTROLS AND PROCEDURES

(a) Evaluation of Disclosure Controls and Procedures

Under the supervision and with the participation of our management, including the Chief Executive and Chief Financial Officers, we evaluated the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rule 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”), as of the end of the period covered by this Quarterly Report on Form 10-Q. Based upon that evaluation, our Chief Executive and Chief Financial Officers concluded that our disclosure controls and procedures as of the end of the period covered by this report were not effective so that that the information required to be disclosed by us in reports filed 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 in order to allow for timely decisions regarding disclosure. A controls system cannot provide absolute assurance, however, that the objectives of the controls system are met, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected.

Management has determined that, as of December 31, 2011, there were material weaknesses in both the design and effectiveness of our internal control over financial reporting. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.
 
The deficiencies in our internal controls over financial reporting and disclosure controls and procedures are related to the lack of segregation of duties due to the size of our accounting department, and limited enterprise resource planning systems. When our financial position improves, we intend to hire additional personnel and implement enterprise resource planning systems required to remedy such deficiencies.
 
(b)  Changes in Internal Controls over Financial Reporting

There were no changes in our internal controls over financial reporting (as defined in Exchange Act Rule 13a-15(f)) during the three-months ended December 31, 2011 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
 
 
PART II:  OTHER INFORMATION
  
 
ITEM 6.  EXHIBITS
 
4.1
 
Secured Convertible Promissory Note of the Company dated April 18, 2009*
     
4.2
  
Modification Agreement dated December 31, 2010**
     
4.3
 
Secured Convertible Promissory Note dated December 31, 2010**
     
4.4
 
Series “A” Preferred Stock Description**
     
4.5 
 
Series "B" Preferred Stock Subscription Agreement**
     
4.6 
 
Series “B” Preferred Stock Description**
     
31.1
 
     
31.2
 
     
32
 
     
101.INS   
XBRL Instance Document
     
101.SCH   
XBRL Taxonomy Extension Schema
     
101.CAL   
XBRL Taxonomy Extension Calculation Linkbase
     
101.DEF   
XBRL Taxonomy Extension Definition Linkbase
     
101.LAB   
XBRL Taxonomy Extension Label Linkbase
     
101.PRE   
XBRL Taxonomy Extension Presentation Linkbase
             
*           Incorporated by reference to the Company’s 8-K filing dated May 5, 2009
**       Incorporated by reference to the Company’s 8-K filing dated January 18, 2011
 
 
 
Pursuant to the requirements of Section 13 or 15(d) 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.

 
iMedicor, Inc.
(Registrant)
 
       
Date: March 9, 2012
By:
/s/ Fred Zolla
 
   
Fred Zolla
 
   
President and Chief Executive Officer
(Principal Executive Officer)
 
       
 
Date: March 9, 2012
By:
/s/ Craig Stout
 
   
Craig Stout
 
   
Interim Chief Financial Officer
(Principal Accounting Officer)