iGenii, Inc. - FORM 10-Q - August 29, 2012

Attached files

file	filename
EXCEL - IDEA: XBRL DOCUMENT - iGenii, Inc.	Financial_Report.xls
EX-32.1 - EXHIBIT 32.1 - iGenii, Inc.	ex32-1.htm
EX-31.1 - EXHIBIT 31.1 - iGenii, Inc.	ex31-1.htm

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q
x QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarter ended March 31, 2012

o TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _____ to _____

Commission File Number: 333-152775

			iGENII, INC.
(Exact name of small business issuer as specified in its charter)

	Delaware			26-2046163
(State of incorporation)			(IRS Employer ID Number)

40 Exchange Place,
Suite 401
New York, New York 10005
(Address of principal executive offices)

	(212) 932- 7483
(Issuer’s telephone number)


(Former name, former address and former fiscal year, if changed since last report)

Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that 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 o

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


Large accelerated filer	o	Accelerated filer	o
Non-accelerated filer	o	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

As of August 21, 2012, 9,373,000 shares of common stock, par value $0.001 per share, were outstanding.

TABLE OF CONTENTS


		Page

PART I
Item 1. Financial Statements		3
Item 2. Management’s Discussion and Analysis or Plan of Operation		14
Item 3. Quantitative and Qualitative Disclosures About Market Risk		16
Item 4. Controls and Procedures		17
PART II		18
Item 1. Legal Proceedings		18
Item IA. Risk Factors		18
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		18
Item 3. Defaults Upon Senior Securities		18
Item 4. Submission of Matters to a Vote of Security Holders		18
Item 5. Other Information		18
Item 6. Exhibits		19

PART I

FINANCIAL INFORMATION


Item 1.	Financial Statements.

iGENII, INC.

FINANCIAL STATEMENTS

(UNAUDITED)

MARCH 31, 2012

TABLE OF CONTENTS


Balance Sheets	5

Statements of Operations	6

Statements of Cash Flows	7

Notes to Financial Statements	8 - 13

iGENII, INC.

BALANCE SHEETS

	March 31, 2012					Dec. 31, 2011
	(Unaudited)
ASSETS
Current Assets
Cash and cash equivalents		$	4,506		$	405

Total Current Assets			4,506			405

Equipment, net			5,517			6,584
Intangibles, net			22,000			22,000
Security deposit			5,600			5,600

Total Assets		$	37,623		$	34,589

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current Liabilities
Deferred revenue		$	25,353		$	38,178
Deferred rent obligation			5,545			5,545
Accounts payable and accrued expenses			42,076			58,770

Total Current Liabilities			72,974			102,493

Stockholders’ Equity

Preferred stock, 5,000,000 shares authorized			-			-
Common stock, $.001 par value, 95,000,000 shares authorized, 9,339,000 and 9,331,000 issued and outstanding, respectively			9,339			9,331
Additional paid in capital			369,412			361,420
Accumulated deficit			(414,102	)		(438,655	)

Total Stockholders’ Equity			(35,351	)		(67,904	)

Total Liabilities and Stockholders’ Equity		$	37,623		$	34,589

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

iGENII, INC.

STATEMENTS OF OPERATIONS (UNAUDITED)

FOR THE THREE MONTHS ENDED MARCH 31

	2012		2011
Sales	$	189,887	$	164,603

Selling, General and administrative expenses		165,333		283,455
Income (loss) from operations		24,554		(118,852	)

Net income (loss)	$	24,554	$	(118,852	)

Net income per common share
Basic and diluted	$	.00		.00
Weighted average common shares outstanding
Basic and diluted		9,334,300		9,303,600

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

iGENII, INC.

STATEMENT OF CASH FLOWS (UNAUDITED)

FOR THE THREE MONTHS ENDING MARCH 31

	2012		2011
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)	$	24,554	$	(118,852)
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		1,066		1,561
Stock based compensation		-		106,400
Security deposit		-		(3,600)

Increase / (decrease) in current liabilities:

Deferred revenue		(12,825)		-
Deferred rent obligation		-		-
Accounts payable		(16,694)		4,679

Total Adjustments		(28,453)		109,040

Net cash used by operating activities		(3,899)		(9,812)

CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of computer equipment		-		(1,200)
Net cash provided by investing activities		-		(1,200)

CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from sales of common stock		-		400
Proceeds from exercise of employee options		8,000		-
Net cash provided by financing activities		8,000		400

Net change in cash and cash equivalents		4,101		(10,612)
Cash and cash equivalents, beginning balance		405		21,796
Cash and cash equivalents, ending balance	$	4,506	$	11,184

SUPPLEMENTAL DISCLOSURES:
Cash paid during the year for:
Income tax payments	$	-	$	-

Interest payments	$	-	$	-

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

iGENII, INC.

NOTES TO FINANCIAL STATEMENTS

MARCH 31, 2012

Note 1 - ORGANIZATION

iGenii, Inc. was incorporated on February 22, 2008 under the laws of the State of Delaware. iGenii is a full service internet provider. We are involved in all phases of web development, hosting and search engine optimization for wide variety of business from small mom-and-pop shops to big multi-nationals, we also serve not-for-profit and governmental entities. iGenii developed a SEP or Search Engine Positioning formula that allows businesses to be placed on the first page of Google’s natural or organic search in their relevant business category. We are working on supplanting Yellow Pages’ services in Local Business Searches.

Note 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying financial statements have been prepared in conformity with accounting principle generally accepted in the United States of America.

Interim Condensed Financial Statements

The condensed financial statements as of March 31, 2012 and for the year ended December 31, 2011 are unaudited. In the opinion of management, such condensed financial statements include all adjustments (consisting of normal recurring accruals) necessary for the fair representation of the financial position and the results of operations. The results of operations for the periods presented are not necessarily indicative of the results to be expected for the full year. The interim condensed financial statements should be read in conjunction with the audited financial statements for the year end December 31, 2011 appearing in Form 10K filed on July 9, 2012.

Going Concern

These financial statements have been prepared in accordance with generally accepted accounting principles applicable to a going concern, which contemplates the realization of assets and the satisfaction of liabilities and commitments in the normal course of business. As of March 31, 2012, the Company has accumulated operating losses of $414,102. The Company’s ability to continue as a going concern is contingent upon the successful completion of additional financing arrangements and its ability to achieve and maintain profitable operations. While the Company is giving its best efforts to achieve the above plans, there is no assurance that any such activity will generate funds that will be available for operations.

These conditions raise substantial doubt about the Company’s ability to continue as a going concern. These financial statements do not include any adjustments that might arise from this uncertainty.

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 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. Actual results could differ from those estimates.

Risks and Uncertainties

The Company is subject to substantial risks from, among other things, intense competition associated with the industry in general, other risks associated with financing, liquidity requirements, rapidly changing customer requirements, limited operating history and the volatility of public markets.

Long-Lived Assets

The Company assesses long-lived assets for impairment as required under ASC 360-10, Accounting for the Impairment or Disposal of Long-Lived Assets. The Company reviews for impairment whenever events or circumstances indicate that the carrying amount of these assets may not be recoverable. The Company assesses these assets for impairment based on estimated future cash flows from these assets.

iGENII, INC.

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 2011

Note 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Fair Value Measurements

Accounting Standards Codification (“ASC”) 820-10, Fair Value Measurements, defines fair value, establishes a framework for measuring fair value under generally accepted accounting principles and enhances disclosures about fair value measurements. Fair value is defined under ASC 820-10 as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or the most advantageous market for an asset or liability in an orderly transaction between participants on the measurement date. Valuation techniques used to measure fair value under ASC 820-10 must maximize the use of observable inputs and minimize the use of unobservable inputs. The standard describes a fair value hierarchy based on the levels of inputs, of which the first two are considered observable and the last unobservable, that may be used to measure fair value which are the following:

● Level 1 - Quoted prices in active markets for identical assets or liabilities.

● Level 2 - Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or corroborated by observable market data or substantially the full term of the assets or liabilities.

● Level 3 - Unobservable inputs that are supported by little or no market activity and that are significant to the value of the assets or liabilities

Revenue Recognition

We recognize revenue in accordance with Accounting Standards Codification, or (“ASC”), 605, Revenue Recognition. We recognize revenue when all of the following conditions are satisfied: (1) there is persuasive evidence of an arrangement; (2) the service has been provided to the customer; (3) the amount of fees to be paid by the customer is fixed or determinable; and (4) the collection of our fees is reasonably assured.

Thus, we recognize subscription revenue on a monthly basis, as services are provided. Customers are billed for the subscription on a monthly, quarterly, semi-annual or annual basis, at the customer’s option. For all of our customers, regardless of the method we use to bill them, subscription revenue is recorded as deferred revenue in the accompanying balance sheets. As services are performed, we recognize subscription revenue on a monthly basis over the applicable service period. When we provide a free trial period, we do not begin to recognize subscription revenue until the trial period has ended and the customer has been billed for the services.

Payments received before all of the relevant criteria for revenue recognition are satisfied are recorded as unearned revenue. Set up fees are treated as deferred revenues, and are amortized over the original contract period or fully written off once the service agreement is cancelled.

Advertising

Advertising expenses consist primarily of costs of promotion for corporate image and product. The Company expenses all advertising costs as incurred. For the three months ended March 31, 2012 and 2011, advertising expenses were $0 and $1,375 respectively.

Income Taxes

Income taxes are provided for the tax effects of transactions reported in the financial statements and consist of taxes currently due plus deferred taxes related primarily to differences between the bases of assets and liabilities for financial and income tax reporting. The deferred tax assets and liabilities represent the future tax return consequences of those differences, which will either be taxable or deductible when the assets and liabilities are recovered or settled. Deferred taxes are also recognized for operating losses that are available to offset future federal and state income taxes. Any interest charges on underpayment or other assessments are recorded as interest expense. Any penalties are recorded in Operating Expenses.

Effective January 1, 2007, the Company adopted the provisions of ASC 740-10, Accounting for Uncertainty in Income Taxes. The implementation of ASC 740-10 had no impact on the Company’s financial statements as the Company has not recognized any uncertain income tax positions.

iGENII, INC.

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 2011

Earnings (Loss) Per Share

In accordance with ASC 260, basic net loss per common share is computed by dividing net loss by the weighted-average number of common shares outstanding. Diluted net loss per common share is computed similarly to basic net loss per share, except that the denominator is increased to include all potential dilutive common shares, including outstanding options. Potentially dilutive common shares have been excluded from the diluted loss per common share computation for the three month ended March 31, 2012 and 2011 because such securities have an anti-dilutive effect on loss per share due to the Company’s net loss.

The following table sets forth a reconciliation of the number of shares used in the basic and diluted EPS computation for three months ended March 31, 2012 and 2011:

	Mar 31, 2012		Mar 31,2011

Weighted average common shares outstanding		9,334,300		9,303,600
Dilutive securities - Options		-		-
Diluted average common stock equivalents outstanding		9,334,300		9,303,600

The following table sets forth the number of potential shares of common stock that have been excluded from diluted earnings per share because their effect was anti-dilutive:

	Mar 31, 2012		Mar 31,2011


Outstanding stock options		63,000		90,000

Intangibles

Website and trademarks

Intangible assets are amortized using the straight-line method over their estimated period of benefit. Evaluation of the recoverability of intangible assets is made annually to take into account events or circumstances that warrant revised estimates of useful lives or that indicate that impairment exists. Not all of our intangible assets are subject to amortization. No impairments of intangible assets have been identified during any of the periods presented. On July 1, 2008 the Company signed an agreement to purchase a website and telephone number for $20,000. $5,000 of the purchase price was allocated to the website and this finite life intangible is being amortized over 36 months using the straight line method and $15,000 was allocated to telephone number. In addition, the Company paid $950 for registering iGENII’s Trademark. The Company purchased an additional telephone number for $ 7,000 on May 27, 2009. This intangible asset’s finite life is being amortized over 36 months under the straight line method. The $22,000 paid for the two telephone numbers (212-WEBSIE and 718-WEBSITE) is deemed an intangible asset with an infinite life and is not being amortized.

	3/31/2012			12/31/2011
Telephone numbers		22,000			22,000

Website and Trademarks		5,950			5,950

Accumulated amortization		(5,950	)		(5,950	)

Totals		22,000			22,000

iGENII, INC.

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 2011

Company fully amortized all Company’s finite life intangible assets on the books as of March 31, 2012 and December 31, 2011.

Reclassifications

Certain accounts have been reclassified to conform to the current year presentations.

Stock-Based Employee Compensation

The Company accounts for stock and stock options issued to employees and non-employees for services and other compensation under the provisions of ASC No. 718, Compensation - Stock Compensation and ASC No. 505-50, Equity-Based Payments to Non-Employees, which establish standards for the accounting for transactions in which an entity exchanges its equity instruments for goods and services at fair value. These standards also address transactions in which an entity incurs liabilities in exchange for goods and services that are based on the fair value of the entity’s equity instruments or that may be settled by the issuance of those equity instruments. For employees, stock awarded is valued based on the closing bid price on the date of grant. For non-employees, stock issued for services is valued at either the invoiced or contracted value of services provided, or to be provided or the fair value of the stock at the due date per the service agreement, or stock issuance date, whichever is more readily determinable.

We recognize expense for our share-based compensation based on the fair value of the awards at the time they are granted. We estimate the value of stock option awards on the date of grant using the Black-Scholes model. The determination of the fair value of share-based payment awards on the date of grant is affected by our stock price as well as assumptions regarding a number of complex and subjective variables. These variables include our expected stock price volatility over the term of the awards, expected term, risk-free interest rate, expected dividends and expected forfeiture rates. The forfeiture rate is estimated using historical option cancellation information, adjusted for anticipated changes in expected exercise and employment termination behavior. Our outstanding awards do not contain market or performance conditions therefore we have elected to recognize share-based employee compensation expense on a straight-line basis over the requisite service period.

Recent Accounting Pronouncements

No new accounting pronouncements issued or effective during the fiscal year has had or is expected to have a material impact on the financial statements.

Note 3 – COMMITMENTS

On January 6, 2011 the Company signed new leases which commenced February 15, 2011 and expires February 2016. Rent expenses were $8,600 and $5,875 for three months ended March 31, 2012 and 2011, respectively.

Minimum lease commitments are as follows:


2012	$	27,200
2013	$	36,990
2014	$	38,100
2015	$	39,241
2016	$	3,278

iGENII, INC.

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 2011

Note 4 – INCOME TAXES

The Company, through its operations in the United States had incurred net accumulated operating losses of approximately $307,000 as of March 31, 2012 for income tax purposes. However, a valuation allowance has been created to the extent of the amount of the deferred tax asset of approximately $130,000 due to uncertainty of its realization.

Note 5 – PROPERTY, PLANT & EQUIPMENT

Computer equipment depreciated over 5 years using straight line method.

	3/31/2012			12/31/2011

Computer Equipment	$	21,330		$	21,330

Accumulated Depreciation		(15,813	)		(14,746	)
Total	$	5,517		$	6,584

Depreciation expenses were $1,066 and $1,066 for the three months ended March 31, 2012 and 2011, respectively.

Note 6 – COMMON STOCK

On February 22, 2011, the board of directors of the Company adopted stock incentive plan as well as a stock option plan under which eligible key employees, officers, directors, consultants and agents of the Company may acquire shares of common stock of the Company. Accordingly, the Company reserves 5,000,000 shares of common stock for issuance under Stock Incentive Plan and a maximum of 5,000,000 shares of common stock for issuance under Stock Option Plan.

On February 22, 2011, the board granted 90,000 options of the Company’s stock to various officers and directors of the Company at an exercise price of $1.00 which vest immediately. In the fourth quarter of 2011 Officers and Directors, exercised 19,000 options for the aggregate consideration of $19,000. The Company recorded stock based compensation expense of $90,000 during three months ended March 31, 2011.

During the three months ended March 31, 2012 officer and director exercised 8,000 options for the aggregate consideration of $8,000.

Note 7 – RELATED PARTY TRANSACTIONS

For the first three months of 2012 and 2011 the Company paid $1,277 and $8,948 commissions to its officers, respectively.

iGENII, INC.

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 2011

Note 8 – SUBSEQUENT EVENTS

From April 1, 2012 through August 21, 2012 the Company issued 34,000 shares of Company stock for cash proceeds of $34,000 dollars.

Note 9 - STOCK BASED COMPENSATION

Equity Incentive Plans

On February 22, 2011 the stockholders approved the adoption of the Company’s 2011 Employee Stock Option Plan. Under the Plan, options may be granted which are intended to qualify as Incentive Stock Options (“ISOs”) under Section 422 of the Internal Revenue Code of 1986 (the “Code”) or which are not (“Non-ISOs”) intended to qualify as Incentive Stock Options thereunder. The maximum number of options made available for issuance under the Plan are five million (5,000,000) options. The options may be granted to officers, directors, employees or consultants of the Company and its subsidiaries at not less than 100% of the fair market value of the date on which options are granted. The term of each Option granted under the Plan shall be contained in a stock option agreement between the Optionee and the Company.

The Board of Directors or a committee thereof, administers all of the equity incentive plans and determines the terms of options granted, including the exercise price, the number of shares subject to individual option awards and the vesting period of options, within the limits set forth in the plans. Options have a maximum term of 10 years and vest as determined by the Board of Directors.

In February 2011 the board granted 90,000 options of the Company’s common stock to various officers and directors of the Company at an exercise price of $1.00 which vest immediately.

The weighted-average fair value per share of the options granted during first quarter of 2011 was estimated on the date of grant using the Black-Scholes-Merton option pricing model; the following assumptions were used to estimate the fair value of the options at grant date based on the following:

	March 31,
	2012		2011
Risk-Free interest rate		-		3.37	%
Expected dividend yield		-		-
Expected stock price volatility		-		298	%
Expected life			9.75 years
Weighted average fair value of options granted	$	-	$	1.00

	Number Of Options Available		Number Of Options Outstanding		Weighted average remaining contractual Term			Weighted Average Exercise Price		Aggregate Intrinsic Value		Number Exercisable
Balance December 31, 2011		4,910,000		71,000		9 years		$	1.00	$	0		71,000

Exercised options				8,000			-
Vested and exercisable options							-			$	0		63,000
Balance March 31, 2012		4,910,000		63,000		8.75 years		$	1.00	$	0		63,000

Item 2.

Management’s Discussion and Analysis or Plan of Operations.

As used in this Form 10-Q, references to the “iGenii,” Company,” “we,” “our” or “us” refer to iGenii, Inc. Unless the context otherwise indicates.

Forward-Looking Statements

The following discussion should be read in conjunction with our financial statements, which are included elsewhere in this Form 10-Q (the “Report”). This Report contains forward-looking statements which relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as “may,” “should,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “potential” or “continue” or the negative of these terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties, and other factors that may cause our or our industry’s actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements.

For a description of such risks and uncertainties refer to our Registration Statement on Form S-1, filed with the Securities and Exchange Commission on August 5, 2008 and declared effective on August 28, 2008. While these forward-looking statements, and any assumptions upon which they are based, are made in good faith and reflect our current judgment regarding the direction of our business, actual results will almost always vary, sometimes materially, from any estimates, predictions, projections, assumptions or other future performance suggested herein. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results.

Business Overview

We were incorporated under the laws of the State of Delaware on February 22, 2008. We are an operating company that is focused on becoming an interactive-services and media company. Our primary activities involve designing, creating and marketing the following core services: interactive web site planning, design and development, as well as Internet marketing and advertising consulting services.

Our marketing services are also expected to include, without limitation, search engine marketing, banner advertising, news group postings, statistical counters, web site tracking logs, as well as traditional marketing methods. At this stage of our development, all services will be provided by our officers and directors and the persons employed in our sales department.

Target Markets and Marketing Strategy

Our operational activities since our incorporation on February 22, 2008 consist primarily of direct telephone sales of our products mainly to small businesses and individuals. We mainly sell inexpensive web sites, hosting and search engine optimization. During the next 12 months, we will continue our marketing efforts toward executing our strategy in low end internet market. We also hope to target larger private and government end-users, via RFP’s Our other marketing initiatives will include the following: placement of print advertisements in small business, entrepreneurial, and special interest magazines; placement of advertisements and links to our website in industry focused websites; promoting our products at industry tradeshows and cable TV advertisements. We believe that these marketing initiatives will optimize our access. We hope to execute our marketing strategy with the assistance of sales representatives we intend to hire or by engaging an outside marketing firm. In addition, with our website now operational we intend to execute an internet specific marketing campaign. Such marketing would include “pay-per-click” keyword campaigns on major search engines such as Google and Yahoo and Search Engine Optimization (“SEO”). SEO is the process of improving the volume and quality of traffic to a web site from search engines via “natural” (“organic” or “algorithmic”) search results for targeted keywords. Usually, the higher a site “ranks”, the more searchers will visit that site. SEO means ensuring that web sites are accessible to search engines and are focused in ways that help improve the chances they will be found. An organic search is a process by which internet users find web sites having unpaid search engine listings, as opposed to using the pay per click (PPC) advertisement listings displayed among the search results. Our marketing initiatives will create brand awareness and should help drive traffic to our website. We estimate that the marketing expenses for the next 12 months will be approximately $10,000,000 in order to reach our targeted audience; our management thinks that we have the window of opportunity to reach former Yellow Pages clientele, that naturally needs iGenii’s SEO service.

Growth Strategy

Our objective is to become a leading provider of web development and search engine optimization products. We believe there are significant opportunities to increase our revenues through the further implementation of our operating strategy and by growing our customer base, both organically and through strategic acquisitions. Key elements of our growth strategy for the next 12 months will focus on the most efficient methods to acquire new customers and increase sales with existing customers. We intend to implement our growth strategy through the following methods:

	o	selectively expand our web development and SEO product lines;
	o	target new categories of customers such as large private firms, not-for-profits and governmental entities;
	o	tailor our marketing, advertising and promotions to attract new customers and increase sales with existing customers;

	o	actively seek to evaluate opportunities to develop or acquire businesses within web development and SEO categories or with a similar customer base;
	o	attend tradeshows in order to create awareness of our company and products;
	o	hire an independent sales reps; and
	o	enhance relationships with clients by providing high quality customer service which will include low prices, efficient and timely product fulfillment, and providing excellent communication channels between our company and our customers.

Competition

The web development and SEO market is highly fragmented and competitive. We compete directly or indirectly with the following categories of companies: web.com and verizone.net. Many of our competitors have a substantially greater market presence, name recognition and financial, distribution, marketing and other resources than we have. In addition, if our competitors reduce their prices, we may have to reduce our prices in order to compete. As a result of this competition, we may need to spend significant sums on advertising and promotion. If these competitors were to begin offering a broader array of competing products, or if any of the other factors listed above occurred, our revenues could be reduced or our costs could be increased, resulting in reduced profitability.

Significant Customers

Company has no major customers that represent any substantial percentage of sales.

Employees

We have 9 full time employees.

Results of Operations

During the fiscal quarter ended March 31, 2012, the Company’s net sales were $189,887 and a 15% increase from net sales of $164,603in the fiscal quarter ended March 31, 2011 due the amortization of deferred revenue, as well as to higher prices charged for the services.

The selling, general and administrative expenses amounted to $165,333 for the three months ended March 31, 2012 compared to $283,455 during 1st quarter of 2011, which is equal to $118,122 or 42% decrease. The decrease in the selling, general and administrative expenses was attributed mainly to options granted in the first quarter of 2011.

Net income was $24,554 oppose to a net loss of $118,852 in the corresponding quarter of 2011.

The Company had an accumulated loss from operation of $414,102, a significant portion of which is attributed to sales and development expenses, stock option expenses as well as, the result of professional services in connection with the filing of our Registration Statement, which was filed with the Securities and Exchange Commission on July 18, 2008.

Liquidity and Capital Resources

At March 31, 2012 the Company had total current assets of $4,506 and total current liabilities of $72,974 resulting in negative working capital of $68,468. The Company’s current assets consisted of cash and cash equivalents of $4,506. The Company’s current liabilities at March 31, 2012 consisted of accounts payable and accrued expenses of $42,076, deferred revenue of $25,353 and deferred rent obligations of $5,545.

For the three months ended March 31, 2012, we mainly used funds from operations to support operations. Additional funds were obtained from exercise of employee options which raised $8,000.

The Company has taken efforts to reduce operating costs, but should our sales decline significantly, profits will decline and additional funds will be required and the Company can provide no guarantee that the funds will be realized.

Net cash used by operations for the three months ended March 31, 2012 was $3,899 as compared to the net cash used by operations of $9,812 for the same period ended March 31, 2011.

Net cash used in investing activities in the three months ended March 31, 2012was $0 compared to $1,200 for the same prior year period.

Net cash provided by financing activities during the three months ended March 31, 2012 was $8,000 as compared to $400 net cash provided by for financing activities for the same prior year period ended. All proceeds in 2012 came from the options exercised by officers.

From April 2012 to August 2012 the Company raised $34,000 in cash by issuing 34,000 shares of its common stock.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements.

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.

Evaluation of Disclosure Controls and Procedures

Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, 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 Officer and Chief Financial Officer concluded that our disclosure controls and procedures as of the end of the period covered by this report were not effective such 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’s rules and forms and (ii) accumulated and communicated to our management to allow 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 there were material weaknesses in our internal controls as of March 31, 2012. A material weakness in the Company’s internal controls exists in that, beyond the Company’s Chief Financial Officer there is a limited financial background amongst other executive officers or the board of directors. This material weakness may affect management’s ability to effectively review and analyze elements of the financial statement closing process and prepare financial statements in accordance with U.S.GAAP. In making this assessment, our management used the criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). As a result of the material weaknesses described above, our management concluded that as of March 31, 2012, we did not maintain effective internal control over financial reporting based on the criteria established in Internal Control — Integrated Framework issued by the COSO.

Changes in Internal Control

Our management, with the participation our Chief Executive Officer and Chief Financial Officer, performed an evaluation as to whether any change in our internal controls over financial reporting occurred during the Quarter ended March 31, 2012. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that no change occurred in the Company’s internal controls over financial reporting during the 2012 Quarter ended March 31, 2012 that has materially affected, or is reasonably likely to materially affect, the Company’s internal controls over financial reporting.

Limitations on Effectiveness of Controls and Procedures

In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply its judgment in evaluating the benefits of possible controls and procedures relative to their costs.

PART II
OTHER INFORMATION

Item 1.

Legal Proceedings.

There are no pending legal proceedings to which the Company is a party or in which any director, officer or affiliate of the Company, any owner of record or beneficially of more than 5% of any class of voting securities of the Company, or security holder is a party adverse to the Company or has a material interest adverse to the Company. The Company’s property is not the subject of any pending legal proceedings.

Item 1A.

Risk Factors

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

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds.

Unregistered Sales of Equity Securities

None.

Purchases of equity securities by the issuer and affiliated purchasers

None.

Use of Proceeds

None

Item 3.

Defaults Upon Senior Securities.

None

Item 4.

Submission of Matters to a Vote of Security Holders.

There was no matter submitted to a vote of security holders during the fiscal quarter ended March 31, 2012.

Item 5.

Other Information.

None

Item 6.

Exhibits

Exhibit No.		Description

31.1		Rule 13a-14(a)/15d-14(a) Certifications of Ross Lavnikevich, the President, Chief Executive Officer and Director (attached hereto)

31.1		Rule 13a-14(a)/15d-14(a) Certifications of Rafael Abdurachmanov, the Chief Financial Officer and Director (attached hereto)

32.1		Section 1350 Certifications of Ross Lavnikevich, the President, Chief Executive Officer, and Director (attached hereto)

32.1		Section 1350 Certifications of Rafael Abdurachmanov, the Chief Financial Officer and Director (attached hereto)

SIGNATURE

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


		iGenii Inc

Dated: August 21, 2012

	By:	/s/ Ross Lavnikevich
	Name:	Ross Lavnikevich
	Title:	President, Chief Executive Officer, and Director (Principal Executive Officer)

	By:	/s/ Rafael Abdurachmanov
	Name:	Rafael Abdurachmanov
	Title:	Chief Financial Officer, and Director (Principal Financial and Accounting Officer)

Attached files

iGenii, Inc. Reports

Also read