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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 March 31, 2012

or

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

For the transition period from ______________ to ______________

Commission File Number 333-136492

VERIFY SMART CORP.
(Exact name of registrant as specified in its charter)



Nevada                                        20-5005810
 (State or other jurisdiction                 (IRS Employer Identification No.)
of incorporation or organization)


564 Wedge Lane

Fernley, Nevada 89408

(Address of principal executive offices)

(775) 575-5897
(Registrant's telephone number, including area code)

N/A
(Former name and former fiscal year,
if changed since last report)

57 Montague Street, Brooklyn NY 11201

(Former address, changed since last report)

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. [X] YES [ ] NO

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-K (ss.229.405 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 [ ]



1




Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a small reporting company. See the definitions of "large accelerated filer", "accelerated filer" and "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 [X] No

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS

Check whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Exchange Act after the distribution of securities under a plan confirmed by a court. [ ] Yes [ ] No

APPLICABLE ONLY TO CORPORATE ISSUERS

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.

54,535,000 common shares issued and outstanding as of January 24, 2013

















2




VERIFY SMART CORP.

   

Quarterly Report on Form 10-Q for the period ended March 31, 2012


INDEX

  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

   

   

   

Page

   

PART I - FINANCIAL INFORMATION

   



 

 

 

 

 

 

 

 

  

Item 1.

Financial Statements

  

  

 

 

  

Unaudited Balance Sheets

  

  

6

  

  

Unaudited Statements of Operations

  

  

7

  

  

Unaudited Statements of Cash Flows

  

  

8

 

 

Unaudited Statements of Stockholders’ Deficit

 

 

10

 

  

Unaudited Condensed Notes to the Interim Financial Statements

  

  

11

  

Item 2. 

Management’s Discussion and Analysis of Financial Condition and Results of Operations

  

  

16

  

Item 3.   

Quantitative and Qualitative Disclosures About Market Risk

  

  

22

  

Item 4. 

Controls and Procedures

  

  

22

  

 

  

PART II - OTHER INFORMATION

  

 

  

Item 1.  

Legal Proceedings

  

  

23

  

Item 1A. 

Risk Factors

  

  

23

  

Item 2.   

Unregistered Sales of Equity Securities and Use of Proceeds

  

  

23

  

Item 3.  

Defaults Upon Senior Securities

  

  

23

  

Item 4.   

Submission of Matters to a Vote of Security Holders

  

  

23

  

Item 5.  

Other Information

  

  

23

  

Item 6.   

Exhibits

  

  

23

  

                        Signatures

  

  

25

  





3



PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS.

These financial statements have been prepared by Verify Smart Corp. without audit, pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC"). Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been omitted in accordance with such SEC rules and regulations. In the opinion of management, the accompanying statements contain all adjustments necessary to present fairly the financial position of our company as of March 31, 2012, and our results of operations, and our cash flows for the nine month period ended March 31, 2012. The results for these interim periods are not necessarily indicative of the results for the entire year. The accompanying financial statements should be read in conjunction with the financial statements and the notes thereto filed as a part of our company's Form 10-K.







4
















VERIFY SMART CORP.

(A Development Stage Company)


FINANCIAL STATEMENTS


MARCH 31, 2012

(Stated in U.S. Dollars)

(Unaudited)








5



VERIFY SMART CORP.

(A Development Stage Company)


BALANCE SHEETS

(Stated in U.S. Dollars)

(Unaudited)

 

As Of March 31, 2012

 

As of June 30, 2011

Assets

 

 

 

Current

 

 

 

   Cash

$

 

$

2,727 

   Prepaid expenses

 

26,563 

       Total Assets

$

 

$

29,290 

 

 

 

 

       LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

Current Liabilities:

 

 

 

Accounts Payable

$

16,253 

 

$

16,253 

Loans Payable

119,029 

 

119,029 

       Total Liabilities

135,282 

 

135,282 

Stockholders' Deficit

 

 

 

Share Capital Authorized:

 

 

 

     Common Stock- $0.001 par value, 250,000,000 shares

 

 

 

     Issued and Outstanding:

 

 

 

     Common Stock- 52,785,000 shares (June 30, 2011- 52,785,000 shares)

52,785 

 

52,785 

Additional Paid-in Capital

1,433,337 

 

1,433,337 

Accumulated Deficit during the Development Stage

(1,621,404)

 

(1,592,114)

     Total Stockholders' Deficit

(135,282)

 

(105,992) 

     Total Liabilities and Stockholders' Deficit

$

 

$

29,290 









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



6




VERIFY SMART CORP.

(A Development Stage Company)


STATEMENTS OF OPERATIONS

(Stated in U.S. Dollars)

(Unaudited)

 

Three Months Ended March 31

 

Nine Months Ended March 31

 

From May 31, 2006 (Inception) to March 31,

 

2012

 

2011

 

2012

 

2011

 

2012

Revenue

$                       -

 

$                  -

 

$                  -

 

$                      -

 

$                -

Expenses

 

 

 

 

 

 

 

 

 

     General and administrative

-

 

140

 

2,727

 

390

 

84,372

     Professional fees

-

 

-

 

-

 

803

 

96,080

     Consulting fees

-

 

53,205

 

26,563

 

166,535

 

1,432,679

Total operation expenses

-

 

53,345

 

29,290

 

167,728

 

1,613,131

 

 

 

 

 

 

 

 

 

 

Loss from Operations

-

 

(53,345)

 

(29,290)

 

(167,728)

 

(1,613,131)

 

 

 

 

 

 

 

 

 

 

Other Expenses

 

 

 

 

 

 

 

 

 

     Interest Expense

-

 

(385)

 

-

 

(1,166)

 

(1,767)

     Foreign exchange loss

-

 

-

 

-

 

-

 

(6,506)

Total other (expense)

-

 

(385)

 

-

 

(1,166)

 

(8,273)

 

 

 

 

 

 

 

 

 

 

Net Loss

 $                           -

 

 $   (53,730)

 

 $   (29,290)

 

 $        (168,894)

 

 $ (1,621,404)

 

 

 

 

 

 

 

 

 

 

Net (Loss) Per Share- Basic and Diluted

$                  (0.00)

 

$         (0.00)

 

$         (0.00)

 

$              (0.00)

 

 

Weighted Average Shares Outstanding

52,785,000

 

52,785,000

 

52,785,000

 

52,785,000

 

 








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


7




VERIFY SMART CORP.

(A Development Stage Company)

 

STATEMENTS OF CASH FLOWS

(Stated in U.S. Dollars)

(Unaudited)


 

Nine Months Ended March 31

 

 

 

2012

 

2011

 

From May 31, 2006 (Inception) to March 31, 2012

Cash Flows Provided By (Used In) Operating Activities:

 

 

 

 

 

Net (loss)

 $      (29,290)

 

 $            (168,894)

 

 $            (1,621,404)

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

 

 

 

 

 

     Stock-based compensation

26,563

 

159,445

 

1,369,750

Changes to operating assets and liabilities:

 

 

 

 

 

     Accounts payable and accrued liabilities

-

 

(4,421)

 

16,253

Net cash used in operating activities

(2,727)

 

(13,870)

 

(235,401)

 

 

 

 

 

 

Investing Activity

-

 

-

 

-

Financing Activities

 

 

 

 

 

     Issuance of common stock

-

 

-

 

117,500

     Share issue costs

-

 

-

 

(1,128)

     Proceeds from loan payable

-

 

6,190

 

119,029

Net cash provided in financing activities

-

 

6,190

 

235,401

 

 

 

 

 

 

(Decrease) in Cash

(2,727)

 

(7,000)

 

-

   Cash, Beginning of Period

2,727

 

9,728

 

-

Cash, End of Period

 $           -

 

 $                 2,728

 

 $                   -

 

 

 

 

 

 

Supplemental Information:

 

 

 

 

 

Cash Activities:

 

 

 

 

 

   Interest Paid

$                   -

 

$                         -

 

$                           -

   Income taxes paid

$                   -

 

$                         -

 

$                           -

Non-cash Investing and Financing Activities:

 

 

 

 

 

   Common stock issued for services

$                   -

 

 $                         -

 

 $             1,369,750




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




8







Verify Smart Corp.

(Development Stage Company)

 

Statements of Stockholders' Equity

From May 31, 2006 (Inception) to March 31, 2012

(Stated in U.S. Dollars)

(Unaudited)

 

 

 

Common Stock

 

 

 

 

 

 

 

 

 

 

 

 

 Shares

#

 

 

 Par Value

$

 

 

 Additional

Paid-in

Capital

$

 

 

Deficit Accumulated

During the Development Stage

$

 

 

 Total

$

 

Balance - May 31, 2006 (Date of Inception)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock issued for cash on May 31, 2006 at $0.0003 per share

 

 

30,000,000

 

 

 

30,000

 

 

 

(20,000

)

 

 -

 

 

 

10,000

 

  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss for the period

 

 

 

 

 

-

 

 

 

-

 

 

 

(430

)

 

 

(430

)

  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance - June 30, 2006

 

 

30,000,000

 

 

 

30,000

 

 

 

(20,000

)

 

 

(430

)

 

 

9,570

 

  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock issued for cash on October 31, 2006

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

at $0.0013 per share

 

 

30,000,000

 

 

 

30,000

 

 

 

10,000

 

 

 

-

 

 

 

40,000

 

  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss for the year

 

 

 

 

 

 

 

 

 

 

 

(14,000

)

 

 

(14,000

)

  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance - June 30, 2007

 

 

60,000,000

 

 

 

60,000

 

 

 

(10,000

)

 

 

(14,430

)

 

 

35,570

 

  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss for the year

 

 

 

 

 

 

 

 

 

 

 

(14,502

)

 

 

(14,502

)

  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance - June 30, 2008

 

 

60,000,000

 

 

 

60,000

 

 

 

(10,000

)

 

 

(28,932

)

 

 

21,068

 

  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock issued for consulting services

 

 

1,015,000

 

 

 

1,015

 

 

 

850,735

 

 

 

 

 

 

851,750

 

  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock issued for cash on May 27, 2009 at $1.25 per share, net of share issuance costs

 

 

10,000

 

 

 

10

 

 

 

11,362

 

 

 

 

 

 

11,372

 

  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss for the year

 

 

 

 

 

 

 

 

 

 

 

(494,853

)

 

 

(494,853

)

  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance - June 30, 2009

 

 

61,025,000

 

 

 

61,025

 

 

 

852,097

 

 

 

(523,785

)

 

 

389,337

 

  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock issued for consulting services

 

 

1,190,000

 

 

 

1,190

 

 

 

516,810

 

 

 

 

 

 

518,000

 

  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock cancelled

 

 

(10,000,000

)

 

 

(10,000

)

 

 

10,000

 

 

 

 

 

 

-

 

  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock issued for cash on June 30, 2010 at $0.10 per share

 

 

550,000

 

 

 

550

 

 

 

54,450

 

 

 

-

 

 

 

55,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock issued for finders fees

 

 

20,000

 

 

 

20

 

 

 

(20

)

 

 

-

 

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss for the year

 

 

 

 

 

 

 

 

 

 

 

(845,764

)

 

 

(845,764

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance – June 30, 2010

 

 

52,785,000

 

 

 

52,785

 

 

 

1,433,337

 

 

 

(1,369,549

)

 

 

116,573

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss for the year

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(222,565

)

 

 

(222,565

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance – June 30, 2011

 

 

52,785,000

 

 

 

52,785

 

 

 

1,433,337

 

 

 

(1,592,114

)

 

 

(105,992

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss for the period

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(29,290

)

 

 

(29,290

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance – March 31, 2012

 

 

52,785,000

 

 

$

52,785

 

 

$

1,433,337

 

 

$

(1,621,404

)

 

$

(135,282

)




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



10





VERIFY SMART CORP.

(A Development Stage Company)


CONDENSED NOTES TO THE INTERIM FINANCIAL STATEMENTS

NINE MONTHS ENDED MARCH 31, 2012 AND 2010

(Stated in U.S. Dollars)

(Unaudited)


1.

ORGANIZATION AND DESCRIPTION OF BUSINESS


Verify Smart Corp. (the "Company") was incorporated under the laws of the State of Nevada on May 31, 2006. The Company was originally formed to engage in the acquisition, exploration and development of natural resource properties. Effective March 25, 2009, the Company commenced activity involving developing and selling internet security software for credit card fraud prevention (Note 6).


2.

GOING CONCERN

The accompanying financial statements have been prepared assuming the Company will continue as a going concern. As shown in the accompanying financial statements, the Company has incurred a net loss since inception of $1,621,404 for the period from May 31, 2006 (inception) to March 31, 2012, has a stockholders’ deficit of $135,282, and has no revenue. The future of the Company is dependent upon its ability to obtain financing and upon future profitable operations from the development and marketing of its projects. The Company plans to continue as a going concern by actively developing and marketing its technology. It intends to raise additional capital for the development and marketing of its project primarily through the issuance of common shares and or the issuance of debt securities. It may also raise additional capital by selling interests in its projects. There can be no assurance that the Company will be successful in marketing and developing its project or in securing financing. These financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts of and classification of liabilities that might be necessary in the event the Company cannot continue in existence.

The unaudited financial information furnished herein reflects all adjustments, which are of a recurring nature and which in the opinion of management are necessary to fairly state the Company’s financial position and the results of its operations for the periods presented. These statements should be read in conjunction with the Company’s financial statements and notes thereto for the fiscal year ended June 30, 2011. The Company assumes that users of the interim financial information herein have read or have access to the audited financial statements for the preceding fiscal year and that the adequacy of additional disclosure needed for a fair presentation may be determined in that context. Accordingly, certain footnote disclosure, which would substantially duplicate the disclosure contained in the June 30, 2011 financial statements, has been omitted. The results of operations for the nine month period ended March 31, 2012 are not necessarily indicative of results for the entire year ending June 30, 2012.

3.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES


These financial statements have, in management’s opinion, been properly prepared within reasonable limits of materiality and within the framework of the significant accounting policies summarized below:


Basis of Accounting


These financial statements and related notes are presented in accordance with accounting principles generally accepted in the United States, and are expressed in US dollars.


Use of Estimates and Assumptions


Preparation of the Company’s financial statements in conformity with United States GAAP requires management to make estimates and assumptions that affect certain reported amounts and disclosures.  Accordingly, actual results could differ from those estimates.  The significant areas requiring management’s estimates and assumptions relate to determining the fair value of stock-based compensation, fair value of shares issued for services and the acquisitions, and useful lives of long-lived assets.


Development Stage Company


The Company is a development stage company as defined by SFAS 7, Accounting and Reporting by Development Stage Enterprises (codified in ASC 915, Development Stage Entities).  The Company is devoting substantially all of its present efforts to establishing a new business.  All losses accumulated since inception have been considered as part of the Company’s development stage activities.



11






Cash and Cash Equivalents


The Company considers all highly liquid investments purchased with an original maturity of three

months or less to be cash equivalents. At March 31, 2012 and June 30, 2011, cash consists primarily of cash on deposit.


Impairment of Long-Lived Assets


In accordance with SFAS 144, Accounting for the Impairment or Disposal of Long-Lived Assets (codified in ASC 360, Property, Plant, and Equipment), the carrying value of intangible assets and other long-lived assets is reviewed on a regular basis for the existence of facts or circumstances that may suggest impairment.  The Company recognizes impairment when the sum of the expected undiscounted future cash flows is less than the carrying amount of the asset.  Impairment losses, if any, are measured as the excess of the carrying amount of the asset over its estimated fair value.


Fair Value of Financial Instruments and Concentration of Risk


A fair value hierarchy was established that prioritizes the inputs used to measure fair value.  The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements).


Level 1:  classification is applied to any asset or liability that has a readily available quoted market price from an active market where there is significant transparency in the executed/quoted price.

Level 2:  classification is applied to assets and liabilities that have evaluated prices where the data inputs to these valuations are observable either directly or indirectly, but do not represent quoted market prices from an active market.

Level 3:  classification is applied to assets and liabilities when prices are not derived from existing market data and requires us to develop our own assumptions about how market participants would price the asset or liability.


The fair values of financial instruments, which include cash, accounts payable and accrued liabilities and loans payable, were estimated to approximate their carrying values due to the immediate or relatively short maturity of these instruments.  Management does not believe that the Company is subject to significant interest currency or credit risks arising from these financial instruments.


Basic and Diluted Net Income (Loss) Per Share


The Company computes net income (loss) per share in accordance with SFAS 128, Earnings per Share (codified in ASC 260, Earnings Per Share), which requires presentation of both basic and diluted earnings per share (“EPS”) on the face of the income statement.  Basic EPS is computed by dividing net income (loss) available to common shareholders (numerator) before and after discontinued operations, by the weighted average number of common shares outstanding (denominator) during the period, including contingently issuable shares where the contingency has been resolved.  Diluted EPS gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method and convertible preferred stock using the if-converted method.  In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all dilutive potential shares if their effect is anti-dilutive.


Foreign Currency Translation


The Company’s functional and reporting currency is the United States dollar.  Monetary assets and liabilities denominated in foreign currencies are translated in accordance with SFAS 52, Foreign Currency Translation (codified in ASC 830, Foreign Currency Matters), using the exchange rate prevailing at the balance sheet date.  Gains and losses arising on settlement of foreign currency denominated transactions or balances are included in the determination of income. Foreign currency transactions are primarily undertaken in Canadian dollars.  The Company has not, to the date of these financial statements, entered into derivative instruments to offset the impact of foreign currency fluctuations.


Comprehensive Loss


SFAS 130, Reporting Comprehensive Income, (codified in ASC 220, Comprehensive Income) establishes standards for the reporting and display of comprehensive loss and its components in the financial statements.  At March 31, 2012 and at June 30, 2011, the Company had no items that represent a comprehensive loss and, therefore, has not included a schedule of comprehensive loss in the financial statements.



12






Common Share Non-Monetary Consideration


In situations where common shares are issued and the fair value of the goods or services received is readily determinable, the fair value of the common shares is used to measure and record the transaction.  The fair value of the common shares issued in exchange for the receipt of goods and services is based on the stock price as of the earliest of the date at which:


 

 

 

 

i)

the counterparty’s performance is complete;

 

ii)

a commitment for performance by the counterparty to earn the common shares is reached; or

 

 

iii)

the common shares are issued if they are fully vested and non-forfeitable at that date.


Stock-Based Compensation


The Company had adopted the fair value recognition provisions of SFAS 123R, Share-Based Payment, (codified in ASC 718, Compensation-Stock Compensation).  The Company adopted SFAS 123R using the modified-prospective-transition method.  Under this method, compensation cost recognized for all periods prior to December 1, 2005 includes: a) compensation cost for all share-based payments granted prior to, but not yet vested as of November 30, 2005, based on the grant-date fair value estimated in accordance with the original provisions of SFAS 123, and b) compensation cost for all share-based payments granted subsequent to November 30, 2005, based on the grant-date fair value estimated in accordance with the provisions of SFAS 123R.  In addition, deferred stock compensation related to non-vested options is required to be eliminated against additional paid-in capital upon adoption of SFAS 123R. 


The Company accounts for equity instruments issued in exchange for the receipt of goods or services from parties other than employees in accordance with SFAS 123 and the conclusions reached by the Emerging Issues Task Force (“EITF”) in Issue No. 96-18, (codified in ASC 505, Equity).  Costs are measured at the estimated fair market value of the consideration received or the estimated fair value of the equity instruments issued, whichever is more reliably measurable.  The value of equity instruments issued for consideration other than employee services is determined on the earliest of a performance commitment or completion of performance by the provider of goods or services as defined by EITF 96-18.


Recent Accounting Pronouncements


In June 2011, the FASB issued ASU 2011-05, Comprehensive Income (Topic 220): Presentation of Comprehensive Income. This update will require the presentation of the components of net income and other comprehensive income either in a single continuous statement or in two separate but consecutive statements. In addition, companies are also required to present reclassification adjustments for items that are reclassified from other comprehensive income to net income on the face of the financial statements. The update is effective for fiscal years and interim periods beginning after December 15, 2011. The Company will adopt the new disclosure requirements for comprehensive income beginning for the September 30, 2012 interim period.


4.

LOANS PAYABLE


At March 31, 2012, the Company was indebted for non-interest bearing loans, with no formalized terms of repayment, for $119,029 (June 30, 2011 - $119,029), of which $3,000 was an advance from a shareholder.


5.

CAPITAL STOCK


a) Common Stock


During the nine month period ended March 31, 2012, the Company had no stock activity.


As of March 31, 2012 the Company had 52,785,000 shares of common stock issued and outstanding.


b) Share Purchase Warrants and Stock Options


There were no share purchase warrants or stock options outstanding at March 31, 2012 to acquire any additional shares of common stock.



13






6.

JOINT VENTURE AGREEMENT


Effective March 25, 2009, the Company entered into a joint venture agreement with Verified Capital Corp. and Verified Transactions Corp. relating to the formation and operation of a joint venture corporation that will sell internet security software for credit card fraud prevention.


Upon the satisfaction of customary closing conditions, the Company will contribute an aggregate of $5,000,000 to the joint venture corporation, payable as to $2,000,000 by May 1, 2009 and $3,000,000 by July 1, 2009, for a 70% interest in the joint venture corporation.


By amendment of May 19, 2009, the companies have agreed that all obligations of the Joint Venture agreement have been deemed to have occurred and the agreement is in full force in good standing. In addition to the foregoing, Verified Transactions Corp. will grant to the joint venture corporation a 25 year worldwide exclusive license to market and sell Verified Transaction Corp.'s internet security software and all other internet business of whatsoever nature and including all future developments of such business for a 25 % interest in the joint venture corporation. Verified Capital Corp. will be granted a 5% interest in the joint venture corporation upon the transfer of certain assets.


Upon the closing of the joint venture agreement, the Company is the operator of the joint venture corporation and will contract with Verified Capital Corp. to be the sub-operator.

As at September 19, 2012, the joint venture agreement was terminated by mutual consent of the parties and ownership of the patented verification technology was transferred to Assured Mobile Technologies LLC. During the course of this former joint venture agreement, the Company did not pay any cash or share consideration to Verified Capital Corp or to Verified Transaction Corp. in respect its ownership stake in the joint venture or in respect of the license to use the patented technology. No joint venture corporation was formed in relation to the joint venture and the Company did not incur any material costs in respect of its obligations under the joint venture. Additionally, the Company is not subject to any penalty or residual obligations under the joint venture agreement.


7.

COMMITMENTS AND CONTRACTUAL OBLIGATIONS


On August 14, 2009, the Company entered into a consulting agreement with Cohen Independent Group ("Cohen") wherein Cohen has agreed to provide certain consulting services to the Company. As compensation under the agreement, the Company agreed to issue 1,000,000 restricted shares of common stock. The agreement expires on August 14, 2011. On September 14, 2009, the Company issued 1,000,000 restricted shares of common stock at a fair value of $425,000 to Cohen for services to be provided over two year periods. As at March 31, 2012, all costs had been recognized over the term of the consulting agreement.


8.

SUBSEQUENT EVENTS


a) Share Purchase Agreement


On June 22, 2012 the Company entered into a share purchase agreement, with Ukabobs LLC (doing business as iMobile Interactive) (“Ukabobs”), a New Jersey limited liability company and the selling equity members of Ukabobs (the "Selling Members"), to acquire from the Selling Members, 100% of their outstanding ownership interest in Ukabobs.


As consideration for this purchase, the Company has agreed to pay a cash purchase price of $300,000 and to issue 8,800,000 shares of its common stock on closing, subject to certain conditions being met.


To date these conditions have not been met and the transaction has not yet been completed.

b) Patent License Agreement

On September 19, 2012 the Company entered into a patent license agreement with Assured Mobile Technologies LLC., a Nevada limited liability corporation (“Assured”). Pursuant to the license agreement the Company acquired a 20 year, exclusive worldwide license to exploit the patented technology entitled "A System and Method for Verifying a User's Identity in Electronic Transactions." The patented verification technology is an electronic method and system for verifying the identity of a user by a verifier in the course of an electronic transaction.



14






In consideration of the license agreement, the Company has agreed to pay to Assured aggregate cash payment of $300,000, payable as follows:

i) $100 upon execution of the license agreement;

ii) $10,000 by March 19, 2013 (extended date);

iii) $40,000 by March 19, 2013; and

iv) $249,900 by September 19, 2013.


As additional consideration, the Company will issue to Assured 8,500,000 common shares in its capital stock within 30 days of September 19, 2012 (the “effective date”). This license will also be subject to a royalty payable to Assured equal to 2.5% of any gross sales made by the Company in respect of the technology.


By a license agreement amendment dated October 17, 2012, the Company and Assured mutually agreed to extend the effective date 90 days, or earlier if mutually agreed upon, from the date of the original agreement of September 19, 2012.


c) Consulting Agreement – Micro-Teck Consulting, Inc.


Effective July 15, 2012 the Company entered into a consulting agreement with Micro-Teck Consulting, Inc. a New Jersey corporation (the "Consultant"), whereby the Consultant is to provide certain services to the Company as Executive Director Mobile Applications. These services consist generally of supporting the Company in respect of advising, development and maintenance of the Company’s proprietary software as well as installation and training.


For all services rendered by the Consultant to the Company under this Agreement or otherwise, the Company will compensate the Consultant as follows:


i) Subject to the terms and conditions of the Company’s stock option agreement, the Company will grant to the Consultant the option to purchase 300,000 shares of common stock of the Company, with an exercise price of $0.25 per share (the “Option”).  The Option will vest with respect to 75,000 shares when the Consultant completes each additional three-month period of continuous service thereafter, such that all of the shares will completely vest 12 months from the vesting commencement date.


These options will only be granted should the Consultant complete the successful development, testing and deployment of the initial mobile application development project as prescribed by the Company at the time of the exercise. Should this agreement with the Consultant be terminated, only those options allotted to the Consultant as of the termination date as per the quarterly vesting schedule, will be considered vested. Following the termination date of the Consultant’s contractual relationship with the Company, the Consultant will have 60 days in which to exercise the vested options.  


ii) The Company will grant to the Consultant 75,000 shares of the Company’s common stock.  The Shares will be held in escrow, and will be released completely after the successful development, testing and deployment of the initial mobile application development project, as prescribed by the Company.


iii)  The Company agrees to award additional stock options to Consultant for each mobile application development project agreed upon by Company and the Consultant.  The amount of the stock option award will be mutually agreed upon by the Company and the Consultant prior to the start of project development efforts.  The price of the additional stock option award will be at 40% of the market price at the time of the award.  

iv) The Company will pay to the Consultant 2.5% percent of revenue generated for the products/services delivered by the Consultant, which will be applied to the purchase of options on a quarterly basis.  After all options have been paid in full, said quarterly payments will be made directly to the Consultant.


v) The Company will pay the Consultant $2,000 per month to cover expenses, including travel and accommodation.


To date, the Company has not issued any options and shares relating to this agreement.



15






d) Consulting Agreements – Other


On October 19, 2012, the Company signed two invoice and professional services agreements with two individuals for equity investment consulting services. As compensation, the initial fee for expenses for these services will be in the form of an aggregate of 1,200,000 shares of common stock of the Company, by way of stock options and or warrants, exercisable for 18 months at $0.30 per share.


To date, the Company has not issued any shares relating to this agreement.

f) Issuance of Units

During the months of April, November and December, 2012, under a private placement subscription agreement, the Company accepted five subscription agreements to issue 1,750,000 units to four investors, at $0.10 per unit, for total proceeds of $175,000. Each unit consists of one common share in the capital of the Company and one common share purchase warrant.  Each warrant entitles the holder to purchase one common share in the capital stock of the Issuer. The warrants are exercisable for 18 months at $0.30 per share.


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

FORWARD-LOOKING STATEMENTS

This quarterly report contains forward-looking statements. These statements 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. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. 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.

Our unaudited financial statements are stated in United States dollars and are prepared in accordance with United States Generally Accepted Accounting Principles. The following discussion should be read in conjunction with our financial statements and the related notes that appear elsewhere in this quarterly report. The following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in the forward looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed below and elsewhere in this quarterly report.

In this quarterly report, unless otherwise specified, all dollar amounts are expressed in United States dollars. All references to "common stock" refer to the common shares in our capital stock.

As used in this quarterly report, the terms "we", "us", "our", "our company" and "Verify" mean Verify Smart Corp., unless otherwise stated.

CORPORATE OVERVIEW

The address of our principal executive office is 564 Wedge Lane, Fernley, Nevada 89408. Our telephone number is (775) 575-5897.

Effective March 19, 2009, we effected a fifteen (15) for one (1) forward stock split of our authorized and issued and outstanding common stock. and the reduction of our authorized common stock As a result, our authorized capital has changed to 250,000,000 shares of common stock with a par value of $0.001 and our issued and outstanding shares have increased from 4,000,000 shares of common stock to 60,000,000 shares of common stock.

Also, effective March 19, 2009, we have changed our name from "Treasure Explorations Inc." to "Verify Smart Corp".

The name change and forward stock split became effective with the Over-the-Counter Bulletin Board at the opening for trading on March 24, 2009 under the new stock symbol "VSMR".

We have not been involved in any bankruptcy, receivership or similar proceeding.



16






GENERAL OVERVIEW

We were incorporated in the state of Nevada on May 31, 2006. Since our incorporation, we had been in the business of the exploration and development of a mineral property in New Westminster, Simalkameen Mining Division of British Columbia, consisting of 336 hectares included with 16 mineral title cells. Our property was without known reserves and our program was exploratory in nature. We completed the Phase 1 exploration program in our property, the results of which were not promising and did not justify further expense. Because we were not successful in our exploration program, we abandoned the mineral claims and focused on the identification of suitable businesses with which to enter into a business opportunity or business combination.

Effective March 19, 2009, we effected a fifteen (15) for one (1) forward stock split of our authorized and issued and outstanding common stock. As a result, our authorized capital has changed to 250,000,000 shares of common stock with a par value of $0.001 and our issued and outstanding shares have increased from 4,000,000 shares of common stock to 60,000,000 shares of common stock.

Also effective March 19, 2009, we have changed our name from "Treasure Explorations Inc." to "Verify Smart Corp". The change of name was approved by our directors and a majority of our shareholders.

On March 25, 2009, we entered into a joint venture agreement with Verified Capital Corp. and Verified Transactions Corp. relating to the formation and operation of a joint venture corporation that will sell internet security software for credit card fraud prevention. Upon the satisfaction of customary closing conditions, we will earn a 70% interest in the joint venture.

We were required to contribute $2,000,000 by May 1, 2009, of which $250,000 will be paid to Verified Transactions Corp. as a license fee. Until such time as we have raised the $2,000,000, we will not be entitled to receive any revenue from the joint venture corporation. We were further required to contribute $3,000,000 to the joint venture by July 1, 2009, of which $500,000 will be paid to Verified Transactions Corp. as a license fee. As of the date of this report, we have not yet contributed the $2,000,000 owed to the joint venture. A joint venture corporation has not been formed.

As at September 19, 2012, the joint venture agreement was terminated by mutual consent of the parties and ownership of the patented verification technology was transferred to Assured Mobile Technologies LLC. During the course of this former joint venture agreement, the Company did not pay any cash or share consideration to Verified Capital Corp or to Verified Transaction Corp. in respect its ownership stake in the joint venture or in respect of the license to use the patented technology. No joint venture corporation was formed in relation to the joint venture and the Company did not incur any material costs in respect of its obligations under the joint venture. Additionally, the Company is not subject to any penalty or residual obligations under the joint venture agreement.

Effective August 14, 2009, we entered into a consulting agreement with Cohen Independent Research Group wherein Cohen Independent Research has agreed to provide certain consulting services to our company. As compensation under the agreement we have agreed to issue 1,000,000 restricted common shares of our company. The 1,000,000 common shares were issued on August 14, 2009. The agreement expired on August 14, 2011.


On December 11 and December 13, 2012, respectively, Anthony Lalley and Sandy Manata were appointed as directors of our company.

Our board of directors now consists of Tony Cinotti, Anthony Lalley and Sandy Manata.

DESCRIPTION OF THE BUSINESS

The business will market and sell its licensed software which provides a comprehensive solution to credit card fraud by addressing the security needs of consumer clients, credit card companies, banks and merchants through instant verification that is inexpensive to implement and simple to use.

The software operates through the use of a cellular phone for secured verification of monetary transactions. The software has been developed to include debit card purchases, internet purchases, ATM, passport and mortgage verification.

We had also entered into preliminary discussions with Verified Capital Corp. wherein we would acquire either the assets or outstanding shares of common stock of Verified Capital Corp. The parties will jointly determine the optimum structure for the acquisition in order to best satisfy tax planning, regulatory and other considerations, including mutually agreed upon performance based milestones.

The acquisition contemplated by the preliminary discussions was subject to the fulfillment of certain conditions precedent, due diligence and the negotiation of a definitive agreement. As at September 19, 2012, the joint venture agreement was terminated by mutual consent of the parties.



17






Our Products / Services

We currently offer, or intend to offer, the following four product lines, consisting of:

(i) VerifyNGo,

(ii) VerifyGateway,

(iii) VerifyTransfer and

(iv) VeriSmart Card.


VerifyNGo


VerifyNGo is a comprehensive authentication system which addresses security concerns through an instant verification process. It is an easy, inexpensive and unique solution that uses a response to an individual's mobile phone as verification for a transaction. VerifyNGo address the security needs of clients, credit card companies, banks and merchants through an instant verification process.


VerifyNGo will provide secure verification for the following types of transactions:

       *    debit and credit card purchases

       *    internet purchases

       *    ATM transactions

       *    passport applications

       *    credit applications

       *    mortgage verifications

       *    access to medical history

       *    entry into secured areas

VerifyNGo requires no special hardware, software, upgrades or training. All that is required is for the user to have a mobile phone or PDA.

A typical VerifyNGo process occurs in the following way:

. The process starts when a user performs an action which contains a certain security constraint (i.e. online purchase, website login). . Once the user performs an action that contains a security constraint, a VerifyNGO authentication is triggered sending a message to the user's mobile phone or PDA.

The message options include:

       *    Phone call

       *    SMS detailing the action

       *    One time password via SMS

       *    WAP Push, opening a mobile web page

The user receives the request and authorizes the action via mobile phone or PDA. Finally, the system receives the response, determines authenticity and then grants or denies the user's access to the action.


VerifyGateway

VerifyGateway is cutting-edge technology for secure and confidential online payment processing. It acts as a processing hub and intermediary between a business' website and their account provider, giving an enhanced network and superior transaction capabilities to make e-commerce reliable and seamless. It's simple, economical technology, accredited by most major banks and ensures the secure, successful delivery of billions of transactions to billions of ports worldwide.

VerifyGateway provides a system that easily accepts credit card payments from customers and instills confidence because every transaction is sent through a secured system. The system complies with privacy and security regulations globally, and allows client companies to safely manage and track funds across all borders and boundaries. This innovative technical infrastructure is unrivaled in the industry.

Business-to-business services include:

       *    Processing transaction for major credit cards such as MasterCard and Visa

       *    PCI-certified processing centers



18





       *    Support for major merchant processing networks

       *    Transaction reports with the necessary data to track daily activity

       *    Reliable and secure business solutions


VerifyTransfer

VerifyTransfer is a comprehensive remittance service allowing business clients to easily and securely send and receive money instantly, in person, online, wirelessly, or by phone.

Using VerifyGateway, VerifyTransfer covers all aspects of the process from transaction logging to retrieval.


The service offers:

       *    easier remittance payments

       *    faster data transmission    

       *    multiple recipient accounts

       *    fast, flexible payment options

       *    24 hour, 7 day/week client support

       *    cutting-edge security, fraud monitoring, and reporting

       *    increased accuracy and speed of contributions to member accounts

       *    synchronization with sophisticated retrieval methods, including remittance on Visa cards

       *    mobile to mobile money transfers (PDA's and iphones) comprehensive tracking and reporting on transactions and client accounts, providing details and  history.

VeriSmart Card

The VeriSmart Card is a Visa co-branded, multipurpose prepaid card designed to work optimally with VeriSmart's own secure remittance service, VerifyTransfer, or to be easily integrated with any existing remittance platform.

It can be used, worldwide, for:

       *    traditional debit/credit card transactions in Visa affiliated establishments payment processing between individuals and organizations (e.g.; commission and payroll  payments, accounts payable, etc.)

       *    ATM transactions for Visa ATMs

       *    gift cards (pre-loaded format).


RESULTS OF OPERATIONS FOR THE THREE AND NINE MONTHS ENDED MARCH 31, 2012 AND 2011

We have not generated any revenue since inception and are dependent upon obtaining financing to pursue our business activities. For these reasons, our auditors believe that there is substantial doubt that we will be able to continue as a going concern.


Our operating results for the three and nine months ended March 31, 2012 and 2011 are summarized as follows:


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

   

   

Three Months Ended March 31,

   

   

Nine Months Ended March 31,

   

   

   

2012

(Unaudited)

   

   

2011

(Unaudited)

   

   

2012

(Unaudited)

   

   

2011

(Unaudited)

   

Revenue

   

$

-

   

   

$

-

   

   

$

-

   

   

$

-

   

Operation expenses

   

   

-

   

   

   

53,345

   

   

   

29,290  

   

   

   

167,728

   

(Loss) from Operations

   

$

-

 

   

$

(53,345

   

$

(29,290)

 

   

$

( 167,728

    

The Company has not generated any revenue since inception. The decrease in operating expenses is due to decreased management fee resulting from less business activity as the Company prepares for its new business venture.



19






       

Operating Expenses

   

Our expenses for the three and nine months ended March 31, 2012 and 2011 are outlined in the table below:


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

   

   

Three Months Ended March 31,

   

   

Nine Months Ended March 31,

   

   

   

2012

(Unaudited)

   

   

2011

(Unaudited)

   

   

2012

(Unaudited)

   

   

2011

(Unaudited)

   

General and administrative

   

$

-

   

   

$

140

   

   

$

2,727

   

   

$

390

   

Professional fees

   

   

-

   

   

   

-

   

   

   

-

   

   

   

803

   

Management fees

   

   

-

   

   

   

53,205

   

   

   

26,563

   

   

   

166,535

   

Total Operation Expenses

   

$

-

   

   

$

53,345

   

   

$

29,290

   

   

$

167,728

   

   

The decrease in management fees in 2011 is primarily related to termination of consulting agreements and less business activity as the Company prepares for its new business venture.

   

Liquidity and Capital Resources


As of March 31, 2012, we had cash of $Nil and our working capital deficit was $135,282.  During the nine-month period ended March 31, 2012, we generated no revenues and have a net loss of $29,290.  As of March 31, 2012, we have a cumulative net loss of since inception of $1,621,404.   We are illiquid and need cash infusions from investors and/or current shareholders to support our proposed business venture.  

   

Working Capital (Deficit)

   

 

 

 

 

 

 

 

 

 

   

   

As of

March 31,

2012

   

   

As of

June 30,

2011

   

   

   

(Unaudited)

   

   

   

   

   

   

   

   

   

   

   

Current assets

   

$

-

   

   

$

29,290

   

Current liabilities

   

   

135,282

   

   

   

135,282

   

Working capital (deficit)

   

$

(135,282

   

$

(105,992

)

      


Cash Flows

   

 

 

 

 

 

 

 

 

 

   

   

Nine Months Ended March 31,

   

   

   

2012

(Unaudited)

   

   

2011

(Unaudited)

   

Net cash (used in) operating activities

   

$

(2,727

)

   

$

(13,870

Net cash provided by financing activities

   

   

-

   

   

   

6,870

  

Net (decrease) in cash

   

$

(2,727

)

   

$

(7,000)

  

   

Cash From Operating Activities

   

Cash used in operating activities of $2,727 in the nine months ended March 31, 2012 is due to a net operating loss of $29,290, offset by non-cash stock-based compensation in the same period of $26,563.  Cash used by operating activities of $13,870 in the nine months ended March 31, 2011 is due to net operating loss of $168,894, offset in the same period by non-cash stock-based compensation of $159,445 and an increase in accounts payable of $4,421.


Cash From Financing Activities

   

There was no cash provided by financing activities in the nine months ended March 31, 2012. Cash provided by financing activities of $6,190 in the nine months ended March 31, 2011 is due to cash proceeds received from a non-interest bearing loan from unrelated parties.



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GOING CONCERN

Due to the uncertainty of our ability to meet our current operating and capital expenses, in their report on the annual financial statements for the year ended June 30, 2011, our independent auditors included an explanatory paragraph regarding concerns about our ability to continue as a going concern.

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

CONTRACTUAL OBLIGATIONS

As a "smaller reporting company", we are not required to provide tabular disclosure obligations.

OFF-BALANCE SHEET ARRANGEMENTS

We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to stockholders.

CRITICAL ACCOUNTING POLICIES

BASIS OF ACCOUNTING

The Company's financial statements are prepared using the accrual method of accounting. We have elected a June 30, year-end.

BASIC AND DILUTED NET INCOME (LOSS) PER SHARE

Our company computes net loss per share in accordance with ASC 260 Earnings Per Share which requires presentation of both basic and diluted earnings per share (EPS) on the face of the income statement. Basic EPS is computed by dividing net income (loss) available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method and convertible preferred stock using the if-converted method. In computing Diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all dilutive potential shares if their effect is anti dilutive.

CASH EQUIVALENTS

We consider all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents.

USE OF ESTIMATES AND ASSUMPTIONS

The preparation of the 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.


STOCK-BASED COMPENSATION

The Company had adopted the fair value recognition provisions of SFAS 123R, Share-Based Payment, (codified in ASC 718, Compensation-Stock Compensation).  The Company adopted SFAS 123R using the modified-prospective-transition method.  Under this method, compensation cost recognized for all periods prior to December 1, 2005 includes: a) compensation cost for all share-based payments granted prior to, but not yet vested as of November 30, 2005, based on the grant-date fair value estimated in accordance with the original provisions of SFAS 123, and b) compensation cost for all share-based payments granted subsequent to November 30, 2005, based on the grant-date fair value estimated in accordance with the provisions of SFAS 123R.  In addition, deferred stock compensation related to non-vested options is required to be eliminated against additional paid-in capital upon adoption of SFAS 123R. 



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The Company accounts for equity instruments issued in exchange for the receipt of goods or services from parties other than employees in accordance with SFAS 123 and the conclusions reached by the Emerging Issues Task Force (“EITF”) in Issue No. 96-18, (codified in ASC 505, Equity).  Costs are measured at the estimated fair market value of the consideration received or the estimated fair value of the equity instruments issued, whichever is more reliably measurable.  The value of equity instruments issued for consideration other than employee services is determined on the earliest of a performance commitment or completion of performance by the provider of goods or services as defined by EITF 96-18.

RECENT ACCOUNTING PRONOUNCEMENTS


In February 2010, FASB issued Accounting Standards Update (“ASU”) 2010-09 Subsequent Events (Topic 855) Amendments to Certain Recognition and Disclosure Requirements. ASU 2010-09 removes the requirement for an SEC filer to disclose a date in both issued and revised financial statements.  Revised financial statements include financial statements revised as a result of either correction of an error or retrospective application of GAAP. All of the amendments in ASU 2010-09 are effective upon issuance of the final ASU, except for the use of the issued date for conduit debt obligors. That amendment is effective for interim or annual periods ending after June 15, 2010. The Company adopted ASU 2010-09 in March, 2010 but this did not have a material impact on our company’s financial statements.

In January 2010, the FASB issued ASU 2010-06, Fair Value Measurements and Disclosures (Topic 820), Improving Disclosures about Fair Value Measurements, amending ASC 820. ASU 2010-06 requires entities to provide new disclosures and clarify existing disclosures relating to fair value measurements.  The new disclosures and clarifications of existing disclosures are effective for interim and annual reporting periods beginning after December 15, 2009, except for the disclosures about purchases, sales, issuances, and settlements in Level 3 fair value measurements, which are effective for fiscal years beginning after December 15, 2010 and for interim periods within those fiscal years. The Company adopted ASU 2010-06 in January 2012 but this did not have a material impact on our company’s financial statements.

In May 2009, FASB issued ASC 855, Subsequent Events, which establishes general standards of for the evaluation, recognition and disclosure of events and transactions that occur after the balance sheet date. Although there is new terminology, the standard is based on the same principles as those that currently exist in the auditing standards. The standard, which includes a new required disclosure of the date through which an entity has evaluated subsequent events, is effective for interim or annual periods ending after June 15, 2009. The adoption of ASC 855 did not have a material effect on our company's financial statements.

ITEM 3. QUANTITATIVE DISCLOSURES ABOUT MARKET RISKS.

As a "smaller reporting company", we are not required to provide the information required by this Item.

ITEM 4(T). CONTROLS AND PROCEDURES.


MANAGEMENT'S REPORT ON DISCLOSURE CONTROLS AND PROCEDURES


Our management is responsible for establishing and maintaining adequate internal control over financial reporting to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with US GAAP. Management has concluded that there are material weaknesses in both the design and operation of the Company’s internal controls and procedures for financial reporting. A material weakness, as defined by SEC rules, is a control deficiency, or combination of control deficiencies, such that there is a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis. The material weaknesses in internal control over financial reporting that were identified include:


i. there is a lack of adequate segregation of duties in our accounting and financial reporting functions;

ii. there is a lack of entity wide controls, including no audit committee, and a failure to maintain formalized accounting policies and procedures;

iii. senior management has not established and maintained a “proper tone” as to internal control over financial reporting.


As a result of the existence of these material weaknesses as of March 31, 2012, management has concluded that we did not maintain effective internal control over financial reporting as of March 31, 2012.


While we believe our financial statements included in this Quarterly Report present fairly, in all material respects, our financial condition, results of operations and cash flows for the periods presented, as a result of the material weaknesses in our internal control over financial reporting, there is a reasonable possibility that material misstatements of the financial statements including disclosures will not be prevented or detected on a timely basis.



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Remediation


We will engage an independent accounting firm to advise us in respect of our internal controls over financial reporting, and to provide accounting counsel on various matters relating thereto. We will continue to implement further improvements to our internal controls as they are identified. We will use the criteria and framework set forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in the publication Internal Control-Integrated Framework, an integrated framework for the evaluation of internal controls, for the evaluation of our internal controls in the future. Senior management will continue to consult with external experts to assist with the accounting for complex and non-routine accounting transactions.

CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING

There have been no changes in our internal controls over financial reporting that occurred during our quarter ended March 31, 2012 that have materially or are reasonably likely to materially affect, our internal controls over financial reporting.

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS.

We know of no material, existing or pending legal proceedings against our company, nor are we involved as a plaintiff in any material proceeding or pending litigation. There are no proceedings in which any of our directors, officers or affiliates, or any registered or beneficial shareholder, is an adverse party or has a material interest adverse to our interest.

ITEM 1A. RISK FACTORS.

Not applicable, as we are a smaller reporting company.

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

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

None.

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

None.

ITEM 5. OTHER INFORMATION.

None.

ITEM 6. EXHIBITS.

Exhibits required by Item 601 of Regulation S-K

Those exhibits marked with an asterisk (*) refer to exhibits filed herewith. The other exhibits are incorporated herein by reference, as indicated in the following list.



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Exhibit
Number                             Description
------                             -----------

(3)      ARTICLES OF INCORPORATION AND BY-LAWS

3.1      Articles of Incorporation (incorporated by reference from our
        Registration Statement on Form SB-2 filed on August 10, 2006)

3.2      Bylaws (incorporated by reference from our Registration Statement on
        Form S-1 filed on July 21, 2008)

3.3      Certificate of Change (incorporated by reference from our Current
        Report on Form 8-K filed on March 26, 2009)

3.4      Certificate of Amendment (incorporated by reference from our Current
        Report on Form 8-K filed on March 26, 2009)

(10)     MATERIAL CONTRACTS

10.1     Joint Venture Agreement among Verified Capital Corp., Verified
        Transactions Corp. and our company dated effective March 25, 2009
        (incorporated by reference to Exhibit 10.1 of the Company’s Form 8-K dated
        March 26, 2009)

10.2     Consulting Agreement with Cohen Independent Research Group
        (incorporated by reference to Exhibit 10.1 of the Company’s Form 8-K dated
        September 22, 2009)

10.3     Compensation Agreement with AMG Group Inc. (incorporated by reference
        to Exhibit 10.1 of the Company’s Form 8-K dated October 1, 2009)


10.4     Share Purchase Agreement with Ukabobs LLC (doing business as iMobile

         Interactive)(incorporated by reference to Exhibit 10.1 of the Company’s Form

         8-K dated June 27, 2012)

10.5     Patent License Agreement with Assured Mobile Technologies LLC (incorporated

         by reference to Exhibit 10.1 of the Company’s Form 8-K dated September 20,

         2012)

10.6     Changes in Registrant’s Certifying Accountant (incorporated by reference to

         Exhibit 10.1 of the Company’s Form 8-K dated December 21, 2012)


10.7     Private Placement Subscription Agreements with the following subscribers:


10.7  *  (A) Jim O’Callaghan, dated November 30, 2012, for 500,000 units

             (incorporated by reference to Exhibit 10.1 of the Company’s Form 10-Q

             for the period ended September 30, 2011 dated January 25, 2013)


      +  (B) Jim O’Callaghan, dated December 13, 2012, for 200,000 units

      +  (C) Brian Baily, dated December 12, 2012, for 50,000 units

      +  (D) Joseph Zenko, JR, dated December 17, 2012, for 500,000 units

      +  (E) Murray Polischuk/Murling Holdings Inc., dated April 23, 2012,

             For 500,000 units

          

10.8  *  Invoice and Professional Services Agreement with Lloyd Dohner, initial fee

         in the form of an aggregate of 400,000 shares of common stock of the

         Company, by way of stock options and or warrants, dated October 19, 2012

         (incorporated by reference to Exhibit 10.1 of the Company’s Form 10-Q

          for the period ended September 30, 2011 dated January 25, 2013)


10.9  ++ Invoice and Professional Services Agreement with Jim O’Callaghan, initial

         fee in the form of an aggregate of 800,000 shares of common stock of the

         Company, by way of stock options and or warrants, dated October 19, 2012

         

10.10 *  Consulting Agreement with Micro-Teck Consulting, Inc. dated July 15, 2012

         (incorporated by reference to Exhibit 10.1 of the Company’s Form 10-Q

          for the period ended September 30, 2011 dated January 25, 2013)


(31)     RULE 13A-14(D)/15D-14(D) CERTIFICATIONS

31.1 *   Section 302 Certification of Principal Executive Officer and Principal
        Financial Officer.

(32)     SECTION 1350 CERTIFICATIONS

32.1 *   Section 906 Certification of Principal Executive Officer and Principal
        Financial Officer.


(101)    INTERACTIVE DATA FILE


101    Interactive Data File (Form 10-Q for the quarterly period ended March 31,

         2012 furnished in XBRL)


    +    Document omitted, as substantially identical in all material respects to

         document 10.7 (A), except as to the date of execution and number of units


    ++   Document omitted, as substantially identical in all material respects to

         document 10.8, except as to the date of execution and number of shares


    






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SIGNATURES

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.

VERIFY SMART CORP.
(Registrant)



Dated: January 25, 2013                   /s/ Tony Cinotti
                                     ------------------------------------
                                     Tony Cinotti
                                     President, Chief Executive Officer, Chief Financial Officer





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EXHIBIT 31.1

CERTIFICATION PURSUANT TO
18 U.S.C. SS 1350, AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Tony Cinotti, certify that:

1. I have reviewed this quarterly report on Form 10-Q/A of Verify Smart Corp.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.


Dated: January 25, 2013                   /s/ Tony Cinotti
                                     ------------------------------------------
                                     Tony Cinotti
                                     President, Chief Executive Officer, Chief Financial Officer




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EXHIBIT 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

I, Tony Cinotti, hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) the Quarterly Report on Form 10-Q/A of Verify Smart Corp. for the period ended March 31, 2012 (the "Report") fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Verify Smart Corp.


Dated: January 25, 2013                   /s/ Tony Cinotti
                                     ------------------------------------------
                                     Tony Cinotti
                                     President, Chief Executive Officer, Chief Financial Officer


A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to Verify Smart Corp. and will be retained by Verify Smart Corp. and furnished to the Securities and Exchange Commission or its staff upon request.



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