U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2018
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to __________
Commission File Number
INTREorg Systems, Inc.
(Exact name of registrant as specified in its charter)
Texas |
| 45-0526215 |
(State or other jurisdiction of incorporation or organization) |
| (IRS Employer Identification No.) |
2600 West Southlake Blvd, Ste 120-366
Southlake, TX 76092
(Address of principal executive offices)
817-313-5005
(Issuer's telephone number)
Indicate by check mark whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [ ] No [X]
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes [ ] No [X]
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Ruble 12b-2 of the Exchange Act.
Large accelerated filer | [ ] | Accelerated filer | [ ] |
Non-accelerated filer | [ ] (Do not check if a smaller reporting company) | Smaller reporting company | [X] |
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| Emerging Growth Company | [X] |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [ ]
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [X]
The number of shares of Common Stock, no par value, issued and outstanding as of September 30, 2018 was 18,678,978.
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TABLE OF CONTENTS
Part I - | FINANCIAL INFORMATION |
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Item 1. | Financial Statements | 4 |
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 10 |
Item 3. | Quantitative and Qualitative Disclosures about Market Risk | 12 |
Item 4. | Controls and Procedures | 12 |
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Part II - | OTHER INFORMATION |
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Item 1. | Legal Proceedings | 13 |
Item 1A. | Risk Factors | 13 |
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 13 |
Item 3. | Defaults Upon Senior Securities | 13 |
Item 4. | Mine Safety Disclosures | 13 |
Item 5. | Other Information | 13 |
Item6. | Exhibits | 14 |
SIGNATURES | 15 | |
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INTRODUCTORY NOTE
Unless specifically set forth to the contrary, when used in this report the terms “INTREorg,” "we"", "our", the "Company" and similar terms refer to INTREorg Systems, Inc., a Texas corporation.
Special Note Regarding Forward-Looking Statements
This report contains forward-looking statements and information that are based on the beliefs of our management as well as assumptions made by and information currently available to us. Such statements should not be unduly relied upon. When used in this report, forward-looking statements include, but are not limited to, the words “anticipate,” “believe,” “estimate,” “expect,” “intend,” “plan” and similar expressions, as well as statements regarding new and existing products, technologies and opportunities, statements regarding market and industry segment growth and demand and acceptance of new and existing products, any projections of sales, earnings, revenue, margins or other financial items, any statements of the plans, strategies and objectives of management for future operations, any statements regarding future economic conditions or performance, uncertainties related to conducting business, any statements of belief or intention, and any statements or assumptions underlying any of the foregoing. These statements reflect our current view concerning future events and are subject to risks, uncertainties and assumptions. There are important factors that could cause actual results to vary materially from those described in this report as anticipated, estimated or expected, including, but not limited to: competition in the industry in which we operate and the impact of such competition on pricing, revenues and margins, volatility in the securities market due to the general economic downturn; Securities and Exchange Commission (the “SEC”) regulations which affect trading in the securities of “penny stocks,” and other risks and uncertainties. Except as required by law, we assume no obligation to update any forward-looking statements publicly, or to update the reasons actual results could differ materially from those anticipated in any forward- looking statements, even if new information becomes available in the future. Depending on the market for our stock and other conditional tests, a specific safe harbor under the Private Securities Litigation Reform Act of 1995 may be available. Notwithstanding the above, Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) expressly state that the safe harbor for forward-looking statements does not apply to companies that issue penny stock. Because we may from time to time be considered to be an issuer of penny stock, the safe harbor for forward-looking statements may not apply to us at certain times.
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Item1. FINANCIAL STATEMENTS.
Contents
Balance Sheets at March 31, 2018 and December 31, 2017 (Unaudited) |
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Unaudited Statements of Operations for the three months ended March 31, 2018 and 2017 |
| 6 |
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Unaudited Statements of Cash Flows for the three months ended March 31, 2018 and 2017 |
| 7 |
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Unaudited Notes to Financial Statements |
| 8 |
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INTREorg Systems, Inc. | ||||
Balance Sheets (Unaudited) | ||||
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| March 31, 2018 |
| December 31, 2017 |
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ASSETS |
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Current Assets: |
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Cash | $ | - | $ | 100 |
Total Current Assets |
| - |
| 100 |
TOTAL ASSETS | $ | - | $ | 100 |
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LIABILITIES & STOCKHOLDERS' DEFICIT |
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Current Liabilities |
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Accounts payable | $ | 547,049 | $ | 544,608 |
Accounts payable - related parties |
| 545,962 |
| 535,839 |
Accrued interest and other liabilities |
| 854,556 |
| 800,656 |
Accrued contingencies |
| 453,290 |
| 453,290 |
Notes payable |
| 521,000 |
| 521,000 |
Revolving line of credit - related party |
| 325,796 |
| 325,796 |
Total Current Liabilities |
| 3,247,653 |
| 3,181,189 |
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Commitments and Contingencies |
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Stockholders' Deficit |
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Preferred Stock, no par value; 10,000,000 shares authorized none issued and outstanding |
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| - |
| - | |
Common Stock, no par value; 100,000,000 shares authorized 16,734,260 and 16,624,260 shares issued and outstanding at March 31, 2018 and December 31, 2017, respectively |
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| 2,987,350 |
| 2,970,455 | |
Additional paid in capital |
| 446,466 |
| 430,353 |
Accumulated deficit |
| (6,681,469) |
| (6,581,897) |
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Total stockholders' deficit |
| (3,247,653) |
| (3,181,089) |
Total liabilities and stockholders’ deficit | $ | - | $ | 100 |
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The accompanying notes are an integral part of these financial statements. | ||||
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INTREorg Systems, Inc.
Statements of Operations
(Unaudited)
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| For the Three Months Ended March 31, | ||
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| 2018 |
| 2017 |
General and administrative expenses | $ | 82,923 | $ | 29,399 |
Operating Loss |
| (82,923) |
| (29,399) |
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Other Expense |
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Interest Expense |
| 10,439 |
| 10,439 |
Interest expense- related party |
| 6,210 |
| 6,211 |
Total other expenses |
| 16,649 |
| 16,650 |
Net loss | $ | (99,572) | $ | (46,049) |
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Net loss per share of common stock | $ | (0.01) | $ | (0.00) |
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Weighted average number of common shares outstanding |
| 16,634,260 |
| 15,889,485 |
The accompanying notes are an integral part of these financial statements.
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INTREorg Systems, Inc.
Statements of Cash Flows
(Unaudited)
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| For the Three Months Ended March 31, | ||
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| 2018 |
| 2017 |
Cash Flows from Operating Activities: |
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Net Loss | $ | (99,572) | $ | (46,049) |
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Adjustments to reconcile net loss to net cash used by operating activities: |
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Common stock and options issued for services |
| 33,008 |
| 43,291 |
Changes in operating assets and liabilities: |
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Increase in accounts payable |
| 1,354 |
| 1,436 |
Increase in accounts payable related parties |
| 11,210 |
| 6,510 |
Increase in accrued liabilities and other |
| 53,900 |
| (5,560) |
Net Cash Flows Used by Operating Activities |
| (100) |
| (372) |
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Net Cash Flows Provided (Used) by Investing Activities |
| - |
| - |
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Cash Flows from Financing Activities |
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Increase in related party revolving line of credit |
| - |
| 397 |
Net Cash Flows Provided by Financing Activities |
| - |
| 397 |
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Net Change in Cash |
| (100) |
| 25 |
Cash at Beginning of Period |
| 100 |
| - |
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Cash at End of Period | $ | - | $ | 25 |
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Supplemental Disclosure of Cash Flow Information |
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Cash paid for interest |
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Cash paid for taxes | $ | - | $ | - |
The accompanying financial statements are an integral part of these financial statements.
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INTREORG SYSTEMS, INC.
Notes to the Financial Statements March 31, 2018
(Unaudited)
NOTE 1. ORGANIZATION, BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES.
Organization
INTREorg Systems, Inc. (the “Company”) was incorporated under the laws of the State of Texas on November 3, 2003. The Company was organized for the purpose of providing internet consulting and "back office" services to companies. The Company's fiscal year end is December31st.
Reclassifications
Certain amounts in the prior period financial statements have been reclassified to conform to the current period presentation.
Going Concern
The Company's financial statements have been presented on the basis that it is a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company's current liabilities exceed the current assets by $3,247,653 at March 31, 2018. During the three-month period ended March 31, 2018, the Company did not generate any revenues. At March 31, 2018, the Company had an accumulated deficit of $6,681,469.
The Company has not earned revenues from operations. The Company's ability to continue as a going concern is dependent upon its ability to raise the necessary capital to further implement its business plan, launch its operations and ultimately achieve profitable operations. There can be no assurance that the Company will be successful in obtaining such financing, or that it will attain positive cash flow from operations. Accordingly, there is substantial doubt as to our ability to continue as a going concern. However, management believes that actions presently being taken provide the opportunity for the Company to continue as a going concern. The accompanying financial statements do not include any adjustments that might result from the outcome of these uncertainties.
Basis of Presentation
Interim Accounting
The accompanying unaudited interim financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission ("SEC") and should be read in conjunction with the audited financial statements and notes thereto contained in the Company's annual report on Form 10-K for the year ended December 31, 2017 as filed with the SEC on September 28 2018. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim periods presented have been reflected herein. The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year. Notes to the financial statements which would substantially duplicate the disclosure contained in the audited financial statements for the most recent fiscal year ended December 31, 2017 as reported in Form 10-K have been omitted.
Summary of Significant Accounting Policies
Recent Accounting Pronouncements
In May 2017, the FASB issued ASU No. 2017-09, Compensation - Stock Compensation (Topic 718) ("ASU 2017-09"). ASU 2017-09 provides guidance on when changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting. An entity should account for the effects of a modification unless all of the following are met:
The fair value of the modified award is the same as the fair value of the original award immediately before the original award is modified
The vesting conditions of the modified award are the same as the vesting conditions of the original award immediately before the original award is modified
The classification of the modified award as an equity instrument or a liability instrument is the same as the classification of the original award immediately before the original award is modified.
The amendments in ASU 2017-09 are effective for all entities for annual periods, and interim periods within those annual periods, beginning after December 15, 2017. The amendments should be applied prospectively to an award modified on or after the adoption date. ASU 2017-09 is not expected to have a material impact on the Company's consolidated financial statements
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INTREORG SYSTEMS, INC.
Notes to the Financial Statements March 31, 2018
(Unaudited)
NOTE 2. CAPITAL STOCK
During the quarter ended March 31, 2018, the Company authorized the issuance of 20,000 shares per month to Public Issuer Stock Analytics pursuant to the terms of the intellectual property license and consulting agreement the Company maintains with them. The grants aggregated 60,000 shares valued at the closing price as of the date of grant for a total of $9,895. While we have not issued the certificates for certain of these shares as of March 31, 2018, the issuance of the certificate is considered a ministerial act and we have reflected these shares as issued and outstanding at March 31, 2018. The shares have been issued as of the date of this Report.
On March 13, 2018, Mr. Robert Flynn was appointed to the Board as Director, Secretary and Treasurer. Mr. Flynn was issued 50,000 shares of common stock upon appointment to the Board. A copy of the Director Agreement attached hereto as an exhibit.
2010 Stock Option and Award Incentive Plan
On June 29, 2010, the Company’s shareholders approved the adoption of the Company’s 2010 Stock Option and Award Incentive Plan (the “Plan”). The Plan, which provides for the grant of stock options to the Company’s directors, officers, employees, consultants, and advisors of the Company, is administered by a committee consisting of members of the Board of Directors (the "Stock Option Committee"), or in its absence, the Board of Directors. The Plan provides for a total of 2,000,000 shares of common stock to be reserved for issuance subject to options.
During the three months ended March 31, 2018, no stock options were granted.
Stock option expense of $16,113 and $24,946 was recorded for the periods ended March 31, 2018 and 2017.
NOTE 3. SUBSEQUENT EVENTS
Board of Directors:
On June 27, 2018, the Company named Mr. Richard M. Nummi, Director and Chairman of the Executive Compensation Committee. Subject to vesting requirements, the Company granted 50,000 shares of common stock to Mr. Nummi on the date of this agreement.
Management:
On October 1, 2016, Mr. Thomas E. Lindholm was named interim Chief Executive Officer and executive director to act as the company’s sole officer until a new executive officer could be hired. On March 13, 2018, Mr. Robert Flynn was named Vice President / General Counsel. Messrs. Lindholm and Flynn entered into management consulting agreements for one year. 599,718 shares were issued to Messrs. Lindholm and Flynn on April 3, 2018 related to these agreements.
Public Stock Issuer Analytics, Inc. (“PISA”):
On November 11, 2017, the PISA Intellectual Property License Agreement was extended ten years from September 30, 2017 through September 30, 2027. Pursuant to the terms of the intellectual property license, the Company issued 60,000 shares through September 30, 2018 to Public Issuer Stock Analytics.
J.H. Brech Revolving 8% Credit Note:
The balance on the line of credit as of September 30, 2018 was $225,556.
Other:
During September 2018, the Company issued 1,235,000 shares of common stock for $247,000.
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Item 2. DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion provides information which management believes is relevant to an assessment and understanding of our results of operations and financial condition. The discussion should be read along with our unaudited financial statements for the three months ended March 31, 2018 and 2017 and notes thereto contained elsewhere in this Report, and our annual report on Form 10-K for the year ended December 31, 2017 including the financial statements and notes thereto. The following discussion and analysis contain forward-looking statements, which involve risks and uncertainties. Our actual results may differ significantly from the results, expectations and plans discussed in these forward-looking statements. See “Cautionary Note Concerning Forward-Looking Statements.”
Going Concern
We have incurred accumulated losses of $6,681,469 as of March 31, 2018. The report of our independent registered public accounting firm on our financial statements for the year ended December 31, 2017 contained an explanatory paragraph regarding our ability to continue as a going concern based upon our operating losses and need to raise additional capital. These factors, among others, raise substantial doubt about our ability to continue as a going concern. Our financial statements do not include any adjustments that might result from the outcome of this uncertainty. There are no assurances we will be successful in our efforts to increase our revenues and report profitable operations or to continue as a going concern, in which event investors would lose their entire investment in our company.
Results of Operations
For the Three Months Ended March 31, 2018 Compared to the Three Months Ended March 31, 2017
During the fiscal quarters ended March 31, 2018 and 2017, we did not recognize any revenue from our operational activities.
During the fiscal quarter ended March 31, 2018, we recognized general and administrative expenses of $82,923 compared to $29,399 during the same quarter in 2017. The increase of $53,524 was primarily due to an increase in director’s fee expenses of $23,000 and an increase in CEO expense of $30,000.
We expect these expenses will increase during 2018 as we begin to further implement our business plan, although we are unable at this time to quantify the actual amount of this anticipated increase as it will be based upon our varying level of operations.
During the three months ended March 31, 2018, we recognized a net loss of $99,572, compared to $46,049 for the same quarter in 2017. The increase of $53,523 was attributable to higher operating expenses as stated above.
Liquidity and Capital Resources
Three Months Ended March 31, 2018 and 2017
The following table sets forth a summary of our cash flows for the periods indicated:
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| For the Three Months Ended March 31, | ||
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| 2018 |
| 2017 |
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Net cash used in operating activities | $ | (100) | $ | (372) |
Net cash (used in) investing activities | $ | - | $ | - |
Net cash provided by financing activities | $ | - | $ | 397 |
Liquidity is the ability of a company to generate sufficient cash to satisfy its needs for cash. At March 31, 2018, we had a working capital deficit of $3,247,653 as compared to a working capital deficit of $3,181,189 at December 31, 2017. Historically we have relied upon debt funding and advances and loans from related parties to fund our cash needs. Our current liabilities increased $66,464 at March 31, 2018 from December 31, 2017 primarily related to net increase in accounts payable-related parties, accrued interest and other liabilities and additional advances under our revolving line of credit. At March 31, 2018, we owe a total of $325,796 under the working capital line of credit.
Our balance sheet at March 31, 2018, includes $453,290 of accrued contingencies. This amount represents an estimate of certain operating liabilities which may have been incurred by prior management that we are unable to confirm.
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At March 31, 2018, we have $521,000 principal amount and $475,896 of accrued interest due under the terms of various promissory notes to third parties. These notes, which are unsecured, are all in default and we do not have sufficient funds to repay these obligations. As a result of the default, the note holders could enforce their rights under these notes at any time.
Net cash used in operating activities for the three months ending March 31, 2018 was $100 as compared to net cash used in operating activities of $372 for the period ending March 31, 2017. We did not generate or use any cash from investing activities during the three months ended March 31, 2018 and 2017.
We have not generated any revenues and we are dependent upon advances from a related party to fund our ongoing general and administrative expenses and satisfy our obligations. We need to initially raise $500,000 to fund the initial launch of our business plan, in addition to funds necessary to satisfy our current obligations. In March 2011, we raised
$100,000 in a private placement of our securities and we continue to seek the additional necessary capital. We do not, however, have any agreements or understanding with any third party to provide this financing. Until we can raise the necessary funds, we will be unable to further implement our business plan. Given the development stage nature of our company and the thinly traded nature of the public market for our common stock, there are no assurances we will be able to raise the necessary capital. If we are unable to raise capital as necessary, our ability to continue as a going concern is in jeopardy and investors could lose their entire investment in our company.
Critical Accounting Policies
The discussion and analysis of our financial condition and results of operations are based upon our financial statements, which have been prepared in accordance with U.S. GAAP. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an on-going basis, we evaluate our estimates based on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.
A summary of significant accounting policies is included in Note 1 to the financial statements included in this Report. Management believes that the application of these policies on a consistent basis enables us to provide useful and reliable financial information about our operating results and financial condition.
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Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
Not applicable.
Item 4. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
Going forward from this filing, once cash flows from operations improve to a level where it is able to implement remediation plans, the Company intends to re-establish and maintain disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) that are designed to be effective in providing reasonable assurance that information required to be disclosed in our reports under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission (the “SEC”), and that such information is accumulated and communicated to our management to allow timely decisions regarding required disclosure.
In designing and evaluating disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable, not absolute assurance of achieving the desired objectives. Also, the design of a control system must reflect the fact that there are resource constraints and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake. The design of any system of controls is based, in part, upon certain assumptions about the likelihood of future events and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.
We carried out an evaluation, under the supervision and with the participation of management, including our chief executive officer and principal financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this Report. Based upon that evaluation, management concluded that our disclosure controls and procedures were not effective as of March 31, 2018, to cause the information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods prescribed by SEC, and that such information is accumulated and communicated to management, including our chief executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.
Changes in Internal Control over Financial Reporting
There have not been any changes in our internal control over financial reporting during the three-month period ended March 31, 2018 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Because of its inherent limitations, a system of internal control over financial reporting can provide only reasonable assurance and may not prevent or detect misstatements. Further, because of changes in conditions, effectiveness of internal controls over financial reporting may vary over time. Our system contains self-monitoring mechanisms, and actions are taken to correct deficiencies as they are identified.
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PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
From time to time, we may become involved in various lawsuits and legal proceedings which arise in the ordinary course of business. We are currently not aware of any legal proceedings or claims that would require disclosure under Item 103 of Regulation S-K. However, litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm our business.
ITEM 1A. RISK FACTORS
Not applicable.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
Information on any and all equity securities we have sold during the period covered by this Report that were not registered under the Securities Act of 1933, as amended is set forth below:
During the quarter ended March 31, 2018, the Company authorized the issuance of 60,000 shares valued at $9,895 to Public Issuer Stock Analytics pursuant to the terms of the intellectual property license and consulting agreement the Company maintains with them.
On March 13, 2018, Mr. Robert Flynn was appointed to the Board as Director, Secretary and Treasurer. Mr. Flynn was issued 50,000 shares of common stock upon appointment to the Board. A copy of the Director Agreement is attached hereto as an exhibit.
All of the transactions listed above were made pursuant to the exemption from the registration provisions of the Securities Act of 1933, as amended, provided by Section 4(a)(2) of the Securities Act or Rule 506(b) of Regulation D promulgated thereunder, for sales not involving a public offering. The securities issued have not been registered under the Securities Act and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
ITEM 5. OTHER INFORMATION
None
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ITEM 6. EXHIBITS
The following is a complete list of exhibits filed as part of this Form 10-Q. Exhibit numbers correspond to the numbers in the Exhibit Table of Item 601 of Regulation S-K.
| Articles of Incorporation (Incorporated by reference to the registration statement on Form 10, SEC File No. 000-53262, as amended) | |
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| Articles of Amendment to our Articles of Incorporation (Incorporated by reference to the registration statement on Form 10, SEC File No. 000-53262, as amended). | |
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| Bylaws (Incorporated by reference to the registration statement on Form 10, SEC File No. 000-53262, as amended) | |
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| Form of Agreement with Central Coast Technology Associates (Incorporated by reference to Exhibit 10.1 to the Current Report on Form 8K filed on June 18,2013) | |
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| Form of Option Agreement for Central Coast Technology (Incorporated by reference to Exhibit 10.2 to the Current Report on Form 8K filed on June 18,2013) | |
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| Consulting Agreement with Darren Dunckel (Incorporated by reference to Exhibit 10.1 to the Current Report on Form 8K filed on January 14,2014) | |
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| Form of First Letter of Addendum and First Amendment to $500,000 8% Revolving Credit Note by and between the Company and J.H. Brech, LLC (Incorporated by reference to Exhibit 10.1 to the Current Report on Form 8K filed on August 28,2014) | |
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| Certification of the Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. (Filed herewith) | |
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| Certification of the Principal Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. (Filed herewith) | |
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| Certification of the Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (Filed herewith) | |
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| Certification of the Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (Filed herewith) | |
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101 |
| Interactive Data Files (Filed herewith) |
101.INS |
| XBRL INSTANCE DOCUMENT |
101.SCH |
| XBRL TAXONOMY EXTENSION SCHEMA |
101.CAL |
| XBRL TAXONOMY EXTENSION CALCULATION LINKBASE |
101.DEF |
| XBRL TAXONOMY EXTENSION DEFINITION LINKBASE |
101.LAB |
| XBRL TAXONOMY EXTENSION LABEL LINKBASE |
101.PRE |
| XBRL TAXONOMY EXTENSION PRESENTATION LINKBASE |
14
SIGNATURES
Pursuant to the requirements of Section 12 of the Securities and Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
INTREorg Systems, Inc.
Dated: October 9, 2018
By: /s/Thomas E. Lindholm
Thomas E. Lindholm
President and CEO
15
EXHIBIT 31.1
SECTION 302 CERTIFICATION OF PERIODIC REPORT
I, Thomas E. Lindholm, certify that:
1. I have reviewed this quarterly report on Form 10-Q of INTREorg Systems, Inc.;
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. As the registrant's sole certifying officer, I am 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)) 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 4th 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.
5. As the registrant's certifying officer, 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.
INTREorg Systems, Inc.
Dated: October 9, 2018
By: /s/Thomas E. Lindholm
Thomas E. Lindholm
Interim President and CEO
EXHIBIT 31.2
SECTION 302 CERTIFICATION OF PERIODIC REPORT
I, Thomas E. Lindholm, certify that:
1. I have reviewed this quarterly report on Form 10-Q of INTREorg Systems, Inc.;
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. As the registrant's sole certifying officer, I am 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)) 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 4th 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.
5. As the registrant's certifying officer, 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.
INTREorg Systems, Inc.
Dated: October 9, 2018
By: /s/Thomas E. Lindholm
Thomas E. Lindholm
Interim President and CEO
EXHIBIT 32.1
CERTIFICATION OF DISCLOSURE PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of INTREorg Systems, Inc. (the "Company") on Form 10-Q for the period ending March 31, 2018 as filed with the Securities and Exchange Commission on the date hereof (the "Report") I, Thomas E. Lindholm, President and CEO of the Company, certify, pursuant to 18 USC section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge and belief:
(1)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 the Company.
INTREorg Systems, Inc.
Dated: October 9, 2018
By: /s/Thomas E. Lindholm
Thomas E. Lindholm
Interim President and CEO
This certification accompanies the Report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by the Sarbanes-Oxley Act of 2002, be deemed filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.
EXHIBIT 32.2
CERTIFICATION OF DISCLOSURE PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of INTREorg Systems, Inc. (the "Company") on Form 10-Q for the period ending March 31, 2018 as filed with the Securities and Exchange Commission on the date hereof (the "Report") I, Thomas E. Lindholm, Principal Financial Officer of the Company, certify, pursuant to 18 USC section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge and belief:
(1)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 the Company.
INTREorg Systems, Inc.
Dated: October 9, 2018
By: /s/Thomas E. Lindholm
Thomas E. Lindholm
Interim President and CEO
This certification accompanies the Report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by the Sarbanes-Oxley Act of 2002, be deemed filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.
Document and Entity Information - $ / shares |
3 Months Ended | |
|---|---|---|
Sep. 30, 2018 |
Mar. 31, 2018 |
|
| Details | ||
| Registrant Name | INTREorg SYSTEMS INC. | |
| Registrant CIK | 0001295560 | |
| SEC Form | 10-Q | |
| Period End date | Mar. 31, 2018 | |
| Fiscal Year End | --12-31 | |
| Trading Symbol | iorg | |
| Tax Identification Number (TIN) | 450526215 | |
| Number of common stock shares outstanding | 18,678,978 | |
| Filer Category | Non-accelerated Filer | |
| Current with reporting | No | |
| Small Business | true | |
| Emerging Growth Company | true | |
| Ex Transition Period | false | |
| Amendment Flag | false | |
| Document Fiscal Year Focus | 2018 | |
| Document Fiscal Period Focus | Q1 | |
| Entity Incorporation, State Country Name | Texas | |
| Entity Address, Address Line One | 2600 West Southlake Blvd | |
| Entity Address, Address Line Two | Ste 120-366 | |
| Entity Address, City or Town | Southlake | |
| Entity Address, State or Province | TX | |
| Entity Address, Postal Zip Code | 76092 | |
| City Area Code | 817 | |
| Local Phone Number | 313-5005 | |
| Phone Fax Number Description | Issuer's telephone number | |
| Entity Listing, Par Value Per Share | $ 0 |
Balance Sheets (Unaudited) - USD ($) |
Mar. 31, 2018 |
Dec. 31, 2017 |
|---|---|---|
| Current Assets: | ||
| Cash | $ 0 | $ 100 |
| Total Current Assets | 0 | 100 |
| TOTAL ASSETS | 0 | 100 |
| Current Liabilities | ||
| Accounts payable | 547,049 | 544,608 |
| Accounts payable - related parties | 545,962 | 535,839 |
| Accrued interest and other liabilities | 854,556 | 800,656 |
| Accrued contingencies | 453,290 | 453,290 |
| Notes payable | 521,000 | 521,000 |
| Revolving line of credit - related party | 325,796 | 325,796 |
| Total Current Liabilities | 3,247,653 | 3,181,189 |
| Stockholders' Deficit | ||
| Preferred Stock, Value | 0 | 0 |
| Common Stock, Value | 2,987,350 | 2,970,455 |
| Additional paid in capital | 446,466 | 430,353 |
| Accumulated deficit | (6,681,469) | (6,581,897) |
| Total stockholders' deficit | (3,247,653) | (3,181,089) |
| Total liabilities and stockholders' deficit | $ 0 | $ 100 |
Balance Sheets (Unaudited) - Parenthetical - $ / shares |
Mar. 31, 2018 |
Dec. 31, 2017 |
|---|---|---|
| Details | ||
| Preferred Stock, Par or Stated Value Per Share | $ 0 | $ 0 |
| Preferred Stock, Shares Authorized | 10,000,000 | 10,000,000 |
| Preferred Stock, Shares Issued | 0 | 0 |
| Preferred Stock, Shares Outstanding | 0 | 0 |
| Common Stock, Par or Stated Value Per Share | $ 0 | $ 0 |
| Common Stock, Shares Authorized | 100,000,000 | 100,000,000 |
| Common Stock, Shares, Issued | 16,734,260 | 16,624,260 |
| Common Stock, Shares, Outstanding | 16,734,260 | 16,624,260 |
Statements of Operations (Unaudited) - USD ($) |
3 Months Ended | |
|---|---|---|
Mar. 31, 2018 |
Mar. 31, 2017 |
|
| Details | ||
| General and administrative expenses | $ 82,923 | $ 29,399 |
| Operating Loss | (82,923) | (29,399) |
| Other Expense | ||
| Interest Expense | 10,439 | 10,439 |
| Interest expense- related party | 6,210 | 6,211 |
| Total other expenses | 16,649 | 16,650 |
| Net loss | $ (99,572) | $ (46,049) |
| Net loss per share of common stock | $ (0.01) | $ (0.00) |
| Weighted average number of common shares outstanding | 16,634,260 | 15,889,485 |
Statements of Cash Flows (Unaudited) - USD ($) |
3 Months Ended | |
|---|---|---|
Mar. 31, 2018 |
Mar. 31, 2017 |
|
| Cash Flows from Operating Activities: | ||
| Net Loss | $ (99,572) | $ (46,049) |
| Adjustments to reconcile net loss to net cash used by operating activities: | ||
| Common stock and options issued for services | 33,008 | 43,291 |
| Changes in operating assets and liabilities: | ||
| Increase in accounts payable | 1,354 | 1,436 |
| Increase in accounts payable related parties | 11,210 | 6,510 |
| Increase in accrued liabilities and other | 53,900 | (5,560) |
| Net Cash Flows Used by Operating Activities | (100) | (372) |
| Net Cash Flows Provided (Used) by Investing Activities | 0 | 0 |
| Cash Flows from Financing Activities | ||
| Increase in related party revolving line of credit | 0 | 397 |
| Net Cash Flows Provided by Financing Activities | 0 | 397 |
| Net Change in Cash | (100) | 25 |
| Cash and Cash Equivalents, at Carrying Value, Beginning Balance | 100 | 0 |
| Cash and Cash Equivalents, at Carrying Value, Ending Balance | 0 | 25 |
| Supplemental Disclosure of Cash Flow Information | ||
| Cash paid for taxes | $ 0 | $ 0 |
NOTE 1. ORGANIZATION, BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
3 Months Ended |
|---|---|
Mar. 31, 2018 | |
| Notes | |
| NOTE 1. ORGANIZATION, BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 1. ORGANIZATION, BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES.
Organization
INTREorg Systems, Inc. (the “Company”) was incorporated under the laws of the State of Texas on November 3, 2003. The Company was organized for the purpose of providing internet consulting and "back office" services to companies. The Company's fiscal year end is December31st.
Reclassifications
Certain amounts in the prior period financial statements have been reclassified to conform to the current period presentation.
Going Concern
The Company's financial statements have been presented on the basis that it is a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company's current liabilities exceed the current assets by $3,247,653 at March 31, 2018. During the three-month period ended March 31, 2018, the Company did not generate any revenues. At March 31, 2018, the Company had an accumulated deficit of $6,681,469.
The Company has not earned revenues from operations. The Company's ability to continue as a going concern is dependent upon its ability to raise the necessary capital to further implement its business plan, launch its operations and ultimately achieve profitable operations. There can be no assurance that the Company will be successful in obtaining such financing, or that it will attain positive cash flow from operations. Accordingly, there is substantial doubt as to our ability to continue as a going concern. However, management believes that actions presently being taken provide the opportunity for the Company to continue as a going concern. The accompanying financial statements do not include any adjustments that might result from the outcome of these uncertainties.
Basis of Presentation
Interim Accounting
The accompanying unaudited interim financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission ("SEC") and should be read in conjunction with the audited financial statements and notes thereto contained in the Company's annual report on Form 10-K for the year ended December 31, 2017 as filed with the SEC on September 28 2018. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim periods presented have been reflected herein. The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year. Notes to the financial statements which would substantially duplicate the disclosure contained in the audited financial statements for the most recent fiscal year ended December 31, 2017 as reported in Form 10-K have been omitted.
Summary of Significant Accounting Policies
Recent Accounting Pronouncements
In May 2017, the FASB issued ASU No. 2017-09, Compensation - Stock Compensation (Topic 718) ("ASU 2017-09"). ASU 2017-09 provides guidance on when changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting. An entity should account for the effects of a modification unless all of the following are met:
· The fair value of the modified award is the same as the fair value of the original award immediately before the original award is modified · The vesting conditions of the modified award are the same as the vesting conditions of the original award immediately before the original award is modified · The classification of the modified award as an equity instrument or a liability instrument is the same as the classification of the original award immediately before the original award is modified.
The amendments in ASU 2017-09 are effective for all entities for annual periods, and interim periods within those annual periods, beginning after December 15, 2017. The amendments should be applied prospectively to an award modified on or after the adoption date. ASU 2017-09 is not expected to have a material impact on the Company's consolidated financial statements. |
NOTE 2. CAPITAL STOCK |
3 Months Ended |
|---|---|
Mar. 31, 2018 | |
| Notes | |
| NOTE 2. CAPITAL STOCK | NOTE 2. CAPITAL STOCK
During the quarter ended March 31, 2018, the Company authorized the issuance of 20,000 shares per month to Public Issuer Stock Analytics pursuant to the terms of the intellectual property license and consulting agreement the Company maintains with them. The grants aggregated 60,000 shares valued at the closing price as of the date of grant for a total of $9,895. While we have not issued the certificates for certain of these shares as of March 31, 2018, the issuance of the certificate is considered a ministerial act and we have reflected these shares as issued and outstanding at March 31, 2018. The shares have been issued as of the date of this Report.
On March 13, 2018, Mr. Robert Flynn was appointed to the Board as Director, Secretary and Treasurer. Mr. Flynn was issued 50,000 shares of common stock upon appointment to the Board. A copy of the Director Agreement attached hereto as an exhibit. 2010 Stock Option and Award Incentive Plan
On June 29, 2010, the Company’s shareholders approved the adoption of the Company’s 2010 Stock Option and Award Incentive Plan (the “Plan”). The Plan, which provides for the grant of stock options to the Company’s directors, officers, employees, consultants, and advisors of the Company, is administered by a committee consisting of members of the Board of Directors (the "Stock Option Committee"), or in its absence, the Board of Directors. The Plan provides for a total of 2,000,000 shares of common stock to be reserved for issuance subject to options.
During the three months ended March 31, 2018, no stock options were granted.
Stock option expense of $16,113 and $24,946 was recorded for the periods ended March 31, 2018 and 2017.
|
NOTE 3. SUBSEQUENT EVENTS |
3 Months Ended |
|---|---|
Mar. 31, 2018 | |
| Notes | |
| NOTE 3. SUBSEQUENT EVENTS | NOTE 3. SUBSEQUENT EVENTS
Board of Directors:
On June 27, 2018, the Company named Mr. Richard M. Nummi, Director and Chairman of the Executive Compensation Committee. Subject to vesting requirements, the Company granted 50,000 shares of common stock to Mr. Nummi on the date of this agreement.
Management:
On October 1, 2016, Mr. Thomas E. Lindholm was named interim Chief Executive Officer and executive director to act as the company’s sole officer until a new executive officer could be hired. On March 13, 2018, Mr. Robert Flynn was named Vice President / General Counsel. Messrs. Lindholm and Flynn entered into management consulting agreements for one year. 599,718 shares were issued to Messrs. Lindholm and Flynn on April 3, 2018 related to these agreements.
Public Stock Issuer Analytics, Inc. (“PISA”):
On November 11, 2017, the PISA Intellectual Property License Agreement was extended ten years from September 30, 2017 through September 30, 2027. Pursuant to the terms of the intellectual property license, the Company issued 60,000 shares through September 30, 2018 to Public Issuer Stock Analytics.
J.H. Brech Revolving 8% Credit Note:
The balance on the line of credit as of September 30, 2018 was $225,556.
Other:
During September 2018, the Company issued 1,235,000 shares of common stock for $247,000. |
NOTE 1. ORGANIZATION, BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Organization (Policies) |
3 Months Ended |
|---|---|
Mar. 31, 2018 | |
| Policies | |
| Organization | Organization
INTREorg Systems, Inc. (the “Company”) was incorporated under the laws of the State of Texas on November 3, 2003. The Company was organized for the purpose of providing internet consulting and "back office" services to companies. The Company's fiscal year end is December31st. |
NOTE 1. ORGANIZATION, BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Reclassifications (Policies) |
3 Months Ended |
|---|---|
Mar. 31, 2018 | |
| Policies | |
| Reclassifications | Reclassifications
Certain amounts in the prior period financial statements have been reclassified to conform to the current period presentation. |
NOTE 1. ORGANIZATION, BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Going Concern (Policies) |
3 Months Ended |
|---|---|
Mar. 31, 2018 | |
| Policies | |
| Going Concern | Going Concern
The Company's financial statements have been presented on the basis that it is a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company's current liabilities exceed the current assets by $3,247,653 at March 31, 2018. During the three-month period ended March 31, 2018, the Company did not generate any revenues. At March 31, 2018, the Company had an accumulated deficit of $6,681,469.
The Company has not earned revenues from operations. The Company's ability to continue as a going concern is dependent upon its ability to raise the necessary capital to further implement its business plan, launch its operations and ultimately achieve profitable operations. There can be no assurance that the Company will be successful in obtaining such financing, or that it will attain positive cash flow from operations. Accordingly, there is substantial doubt as to our ability to continue as a going concern. However, management believes that actions presently being taken provide the opportunity for the Company to continue as a going concern. The accompanying financial statements do not include any adjustments that might result from the outcome of these uncertainties. |
NOTE 1. ORGANIZATION, BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Interim Accounting (Policies) |
3 Months Ended |
|---|---|
Mar. 31, 2018 | |
| Policies | |
| Interim Accounting | Interim Accounting
The accompanying unaudited interim financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission ("SEC") and should be read in conjunction with the audited financial statements and notes thereto contained in the Company's annual report on Form 10-K for the year ended December 31, 2017 as filed with the SEC on September 28 2018. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim periods presented have been reflected herein. The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year. Notes to the financial statements which would substantially duplicate the disclosure contained in the audited financial statements for the most recent fiscal year ended December 31, 2017 as reported in Form 10-K have been omitted. |
NOTE 1. ORGANIZATION, BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: New Accounting Pronouncements, Policy (Policies) |
3 Months Ended |
|---|---|
Mar. 31, 2018 | |
| Policies | |
| New Accounting Pronouncements, Policy | Recent Accounting Pronouncements
In May 2017, the FASB issued ASU No. 2017-09, Compensation - Stock Compensation (Topic 718) ("ASU 2017-09"). ASU 2017-09 provides guidance on when changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting. An entity should account for the effects of a modification unless all of the following are met:
· The fair value of the modified award is the same as the fair value of the original award immediately before the original award is modified · The vesting conditions of the modified award are the same as the vesting conditions of the original award immediately before the original award is modified · The classification of the modified award as an equity instrument or a liability instrument is the same as the classification of the original award immediately before the original award is modified.
The amendments in ASU 2017-09 are effective for all entities for annual periods, and interim periods within those annual periods, beginning after December 15, 2017. The amendments should be applied prospectively to an award modified on or after the adoption date. ASU 2017-09 is not expected to have a material impact on the Company's consolidated financial statements. |
NOTE 1. ORGANIZATION, BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Organization (Details) |
3 Months Ended |
|---|---|
Mar. 31, 2018 | |
| Details | |
| Entity Incorporation, State Country Name | Texas |
| Entity Incorporation, Date of Incorporation | Nov. 03, 2003 |
NOTE 1. ORGANIZATION, BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Going Concern (Details) - USD ($) |
Mar. 31, 2018 |
Dec. 31, 2017 |
|---|---|---|
| Details | ||
| Stockholders' Equity, Including Portion Attributable to Noncontrolling Interest | $ (3,247,653) | |
| Accumulated deficit | $ (6,681,469) | $ (6,581,897) |
NOTE 2. CAPITAL STOCK: 2010 Stock Option and Award Incentive Plan (Details) - Stock Option and Award Transaction 1 |
3 Months Ended |
|---|---|
Mar. 31, 2018 | |
| Sale of Stock, Transaction Date | Jun. 29, 2010 |
| Sale of Stock, Description of Transaction | Company’s shareholders approved the adoption of the Company’s 2010 Stock Option and Award Incentive Plan |
NOTE 3. SUBSEQUENT EVENTS (Details) |
3 Months Ended |
|---|---|
|
Mar. 31, 2018
USD ($)
shares
| |
| Event 1 | |
| Subsequent Event, Date | Jun. 27, 2018 |
| Subsequent Event, Description | Company named Mr. Richard M. Nummi, Director and Chairman of the Executive Compensation Committee |
| Stock Issued During Period, Shares, New Issues | 50,000 |
| Event 2 | |
| Subsequent Event, Date | Oct. 01, 2016 |
| Subsequent Event, Description | Mr. Thomas E. Lindholm was named interim Chief Executive Officer and executive director |
| Event 3 | |
| Subsequent Event, Date | Mar. 13, 2018 |
| Subsequent Event, Description | Mr. Robert Flynn was named Vice President / General Counsel |
| Event 4 | |
| Stock Issued During Period, Shares, New Issues | 599,718 |
| Event 5 | |
| Subsequent Event, Date | Nov. 11, 2017 |
| Subsequent Event, Description | PISA Intellectual Property License Agreement was extended ten years from September 30, 2017 through September 30, 2027 |
| Event 6 | |
| Stock Issued During Period, Shares, New Issues | 60,000 |
| Event 7 | |
| Subsequent Event, Date | Sep. 30, 2018 |
| Subsequent Event, Description | balance on the line of credit |
| Balance due on line of credit | $ | $ 225,556 |
| Event 8 | |
| Subsequent Event, Description | Company issued 1,235,000 shares of common stock for $247,000 |
| Stock Issued During Period, Shares, New Issues | 1,235,000 |
| Stock Issued During Period, Value, New Issues | $ | $ 247,000 |
| Event 8 | Minimum | |
| Subsequent Event, Date | Sep. 01, 2018 |
| Event 8 | Maximum | |
| Subsequent Event, Date | Sep. 30, 2018 |
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