##### Table of Contents

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



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FORM 10-QSB



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(Mark One)

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

For the quarterly period ended June 30, 2007



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

For the transition period from  to

Commission file number: 000-27131



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INVERTED PARADIGMS CORPORATION

(Exact name of small business issuer as specified in its charter)



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|                                                               |  |                        
|-------------------------------------------------------------- |  | -----------------------
|Delaware                                                       |  | 88-0381258             
|(State or other Jurisdiction of Incorporation or Organization) |  | (IRS Employer I.D. No.)

2203 North Lois Avenue, Suite 929

Tampa, FL 33607

(813) 600-4081

(Address, including zip code, and telephone and facsimile numbers, including area code, of registrants executive offices)

NA

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



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Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  x  YES ̈NO

The number of shares of the registrants
common stock, par value $0.001 per share, outstanding as of August 17, 2007 was 37,645,143 and there are approximately 1,000 stockholders of record.

Transitional Small Business Issuer Format: ̈Yes    x  No



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##### Table of Contents

|               |  |                                                                                                             |  |   
|-------------- |  | ----------------------------------------------------------------------------------------------------------- |  | --
|PART I.        |  | FINANCIAL INFORMATION                                                                                       |  |   
|               |  |                                                                                                            
|Item 1.        |  | Financial Statements                                                                                        |  |   
|               |  | Consolidated Balance Sheet (unaudited) at June 30, 2007                                                     |  | 3 
|               |  | Consolidated Statements of Operations (unaudited) for the Three and Six Months Ended June 30, 2007 and 2006 |  | 4 
|               |  | Consolidated Statements of Cash Flows (unaudited) for the Three and Six Months Ended June 30, 2007 and 2006 |  | 5 
|               |  | Notes to Consolidated Financial Statements (unaudited)                                                      |  | 6 
|               |  |                                                                                                            
|Item 2.        |  | Managements Discussion and Analysis or Plan of Operation                                                   |  | 13
|               |  |                                                                                                            
|Item 3A(T).    |  | Controls and Procedures                                                                                     |  | 17
|               |  |                                                                                                            
|PART II        |  | OTHER INFORMATION                                                                                           |  |   
|               |  |                                                                                                            
|Item 1.        |  | Legal Proceedings                                                                                           |  | 17
|               |  |                                                                                                            
|Item 2.        |  | Unregistered Sales of Equity Securities and Use of Proceeds                                                 |  | 17
|               |  |                                                                                                            
|Item 3.        |  | Defaults Upon Senior Securities                                                                             |  | 18
|               |  |                                                                                                            
|Item 4.        |  | Submission of Matters to a Vote of Security Holders                                                         |  | 18
|               |  |                                                                                                            
|Item 5.        |  | Other Information                                                                                           |  | 18
|               |  |                                                                                                            
|Item 6.        |  | Exhibits                                                                                                    |  | 18
|               | 
|SIGNATURE PAGE |  | 19                                                                                                         





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##### Table of Contents

INVERTED PARADIGMS CORPORATION AND SUBSIDIARIES

Consolidated Balance Sheet (unaudited)

June 30, 2007



|                                                                                                   |  |   |             |  
|-------------------------------------------------------------------------------------------------- |  | - | ----------- | -
|Assets                                                                                             |  |   |             |  
|Current assets:                                                                                    |  |   |             |  
|Cash and cash equivalents                                                                          |  | $ | 1,347       |  
|Prepaids                                                                                           |  |   | 8,458       |  
|Deposits                                                                                           |  |   | 260         |  
|                                                                                                   |  |   |             |  
|Total assets                                                                                       |  | $ | 10,065      |  
|                                                                                                   |  |   |             |  
|Liabilities and Stockholders Equity (Capital Deficiency)                                          |  |   |             |  
|Current liabilities:                                                                               |  |   |             |  
|Accounts payable                                                                                   |  | $ | 141,893     |  
|Other current liabilities                                                                          |  |   | 241,123     |  
|Notes payable  stockholders                                                                       |  |   | 773,155     |  
|                                                                                                   |  |   |             |  
|Total current liabilities                                                                          |  |   | 1,156,171   |  
|                                                                                                   | 
|Stockholders equity                                                                               |  |   |             |  
|Common stock, $0.001 par , 100,000,000 shares authorized, 37,645,143 shares issued and outstanding |  |   | 37,644      |  
|Additional paid-in capital                                                                         |  |   | 38,599,353  |  
|Accumulated deficit                                                                                |  |   | (39,783,103 | )
|                                                                                                   |  |   |             |  
|Total capital deficiency                                                                           |  |   | (1,146,106  | )
|                                                                                                   |  |   |             |  
|Total liabilities and stockholders equity                                                         |  | $ | 10,065      |  
|                                                                                                   |  |   |             |  

See accompanying notes to unaudited consolidated financial statements.





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##### Table of Contents

INVERTED PARADIGMS CORPORATION AND SUBSIDIARIES

Consolidated Statements of Operations (unaudited)



|                                                 |  |                             |            |   |                           |   |            |      |  |   |            |   |  |   |            |  
|------------------------------------------------ |  | --------------------------- | ---------- | - | ------------------------- | - | ---------- | ---- |  | - | ---------- | - |  | - | ---------- | -
|                                                 |  | Three Months Ended June 30, |            |   | Six Months Ended June 30, |  
|                                                 |  | 2007                        |            |   | 2006                      |   |            | 2007 |  |   | 2006       |  
|Net sales                                        |  | $                           |           |   |                           | $ |           |      |  | $ | 160        |   |  | $ |           |  
|                                                 |  |                             |            |  
|Cost of sales                                    |  |                             | 150        |   |                           |   |           |      |  |   | 354        |   |  |   |           |  
|                                                 |  |                             |            |   |                           |   |            |      |  |   |            |   |  |   |            |  
|Gross loss                                       |  |                             | (150       | ) |                           |   |           |      |  |   | (194       | ) |  |   |           |  
|General and administrative expenses              |  |                             | (78,414    | ) |                           |   | 522,610    |      |  |   | 18,757     |   |  |   | 864,257    |  
|                                                 |  |                             |            |   |                           |   |            |      |  |   |            |   |  |   |            |  
|Gain (loss) from continuing operations           |  |                             | (78,264    | ) |                           |   | (522,610   | )    |  |   | (18,951    | ) |  |   | (864,257   | )
|                                                 |  |                             |            |   |                           |   |            |      |  |   |            |   |  |   |            |  
|Other income (expense):                          |  |                             |            |   |                           |   |            |      |  |   |            |   |  |   |            |  
|Interest income                                  |  |                             |           |   |                           |   | 98         |      |  |   |           |   |  |   | 213        |  
|Interest expense                                 |  |                             | (19,951    | ) |                           |   | (24,302    | )    |  |   | (51,234    | ) |  |   | (33,081    | )
|                                                 |  |                             |            |   |                           |   |            |      |  |   |            |   |  |   |            |  
|Other expenses, net                              |  |                             | (19,951    | ) |                           |   | (24,204    | )    |  |   | (51,234    | ) |  |   | (32,868    | )
|                                                 |  |                             |            |   |                           |   |            |      |  |   |            |   |  |   |            |  
|Income (loss) from continuing operations         |  |                             | 58,313     |   |                           |   | (546,814   | )    |  |   | (70,185    | ) |  |   | (897,125   | )
|                                                 |  |                             |            |  
|(Loss) income from discontinued operations       |  |                             |           |   |                           |   | (761       | )    |  |   |           |   |  |   | 293        |  
|                                                 |  |                             |            |   |                           |   |            |      |  |   |            |   |  |   |            |  
|Net income (loss)                                |  | $                           | 58,313     |   |                           | $ | (547,575   | )    |  | $ | (70,185    | ) |  | $ | (896,832   | )
|                                                 |  |                             |            |   |                           |   |            |      |  |   |            |   |  |   |            |  
|Weighted average common shares outstanding:      |  |                             |            |   |                           |   |            |      |  |   |            |   |  |   |            |  
|Basic                                            |  |                             | 37,645,143 |   |                           |   | 28,439,983 |      |  |   | 37,645,143 |   |  |   | 24,527,690 |  
|                                                 |  |                             |            |   |                           |   |            |      |  |   |            |   |  |   |            |  
|Diluted                                          |  |                             | 37,645,143 |   |                           |   | 28,439,983 |      |  |   | 37,645,143 |   |  |   | 24,527,690 |  
|                                                 |  |                             |            |   |                           |   |            |      |  |   |            |   |  |   |            |  
|Net loss per share from continuing operations:   |  |                             |            |   |                           |   |            |      |  |   |            |   |  |   |            |  
|Basic                                            |  | $                           | (0.00      | ) |                           | $ | (0.01      | )    |  | $ | (0.00      | ) |  | $ | (0.03      | )
|                                                 |  |                             |            |   |                           |   |            |      |  |   |            |   |  |   |            |  
|Diluted                                          |  | $                           | (0.00      | ) |                           | $ | (0.01      | )    |  | $ | (0.00      | ) |  | $ | (0.03      | )
|                                                 |  |                             |            |   |                           |   |            |      |  |   |            |   |  |   |            |  
|Net loss per share from discontinued operations: |  |                             |            |   |                           |   |            |      |  |   |            |   |  |   |            |  
|Basic                                            |  | $                           | (0.00      | ) |                           | $ | (0.00      | )    |  | $ | (0.00      | ) |  | $ | (0.00      | )
|                                                 |  |                             |            |   |                           |   |            |      |  |   |            |   |  |   |            |  
|Diluted                                          |  | $                           | (0.00      | ) |                           | $ | (0.00      | )    |  | $ | (0.00      | ) |  | $ | (0.00      | )
|                                                 |  |                             |            |   |                           |   |            |      |  |   |            |   |  |   |            |  

See accompanying notes to unaudited consolidated financial statements.



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##### Table of Contents

INVERTED PARADIGMS CORPORATION AND SUBSIDIARIES

Consolidated Statements of Cash Flows (unaudited)

For the Six Months Ended June 30, 2007 and 2006



|                                                                                                       |  |      |          |   |      |   |          |  
|------------------------------------------------------------------------------------------------------ |  | ---- | -------- | - | ---- | - | -------- | -
|                                                                                                       |  | 2007 |          |   | 2006 |  
|Cash flows from operating activities:                                                                  |  |      |          |   |      |   |          |  
|Net loss                                                                                               |  | $    | (70,185  | ) |      | $ | (896,832 | )
|Adjustments to reconcile net loss to cash used in operating activities:                                |  |      |          |   |      |   |          |  
|Amortization of deferred stock-based employee compensation                                             |  |      |         |   |      |   | 31,481   |  
|Amortization of stock issued for services                                                              |  |      |         |   |      |   | 36,250   |  
|Consulting fee paid by investor                                                                        |  |      |         |   |      |   | 75,000   |  
|Stock issued to directors for services                                                                 |  |      |         |   |      |   | 28,000   |  
|Stock issued to vendors for services                                                                   |  |      |         |   |      |   | 4,495    |  
|Depreciation and amortization                                                                          |  |      | 1,376    |   |      |   | 1,208    |  
|Loss on the sale of assets                                                                             |  |      | 13,636   |   |      |   |          |  
|Gain on extinguishment of debt                                                                         |  |      | (149,180 | ) |      |   |          |  
|Interest expense                                                                                       |  |      | 6,042    |   |      |   | 14,552   |  
|Change in operating assets and liabilities:                                                            |  |      |          |   |      |   |          |  
|Other current assets                                                                                   |  |      | 20,981   |   |      |   | (7,058   | )
|Other assets                                                                                           |  |      |         |   |      |   | (330     | )
|Accounts payable                                                                                       |  |      | (18,900  | ) |      |   | (12,179  | )
|Accrued expenses                                                                                       |  |      | 55,062   |   |      |   | 6,886    |  
|                                                                                                       |  |      |          |   |      |   |          |  
|Net cash used in continuing operating activities                                                       |  |      | (141,168 | ) |      |   | (694,169 | )
|Net cash used in discontinued operating activities                                                     |  |      |         |   |      |   | (27,884  | )
|                                                                                                       |  |      |          |   |      |   |          |  
|Net cash used in operating activities                                                                  |  |      | (141,168 | ) |      |   | (722,053 | )
|Cash flows from investing activities:                                                                  |  |      |          |   |      |   |          |  
|Purchase of property and equipment                                                                     |  |      |         |   |      |   | (18,946  | )
|Sale of property and equipment                                                                         |  |      | 1,125    |   |      |   |          |  
|Cash acquired in connection with Silent Sword                                                          |  |      |         |   |      |   | 28,894   |  
|Proceeds from collection of loan receivable                                                            |  |      |         |   |      |   | 10,000   |  
|                                                                                                       |  |      |          |   |      |   |          |  
|Net cash provided by continuing investing activities                                                   |  |      | 1,125    |   |      |   | 19,948   |  
|Net cash provided by discontinued investing activities                                                 |  |      |         |   |      |   |         |  
|                                                                                                       |  |      |          |   |      |   |          |  
|Net cash provided by investing activities                                                              |  |      | 1,125    |   |      |   | 19,948   |  
|Cash flows from financing activities:                                                                  |  |      |          |   |      |   |          |  
|Fees paid to issue common stock                                                                        |  |      |         |   |      |   | (42,200  | )
|Proceeds from the issuance of common stock                                                             |  |      |         |   |      |   | 385,000  |  
|Proceeds from notes payable to stockholders                                                            |  |      | 140,000  |   |      |   | 250,000  |  
|                                                                                                       |  |      |          |   |      |   |          |  
|Net cash provided by continuing financing activities                                                   |  |      | 140,000  |   |      |   | 590,800  |  
|Net cash used in discontinued financing activities                                                     |  |      |         |   |      |   |         |  
|                                                                                                       |  |      |          |   |      |   |          |  
|Net cash provided by financing activities                                                              |  |      | 140,000  |   |      |   | 590,800  |  
|                                                                                                       |  |      |          |   |      |   |          |  
|Net decrease in cash and cash equivalents                                                              |  |      | (43      | ) |      |   | (111,305 | )
|                                                                                                       |  |      |          |   |      |   |          |  
|Cash, beginning of period                                                                              |  |      | 1,390    |   |      |   | 169,505  |  
|                                                                                                       |  |      |          |   |      |   |          |  
|Cash, end of period                                                                                    |  | $    | 1,347    |   |      | $ | 58,200   |  
|                                                                                                       |  |      |          |   |      |   |          |  
|                                                                                                       |  |     
|Supplemental disclosures of cash flow information:                                                     |  |      |          |   |      |   |          |  
|Cash paid during the period for Interest                                                               |  | $    |         |   |      | $ |         |  
|                                                                                                       |  |      |          |   |      |   |          |  
|Supplemental disclosures of non-cash investing and financing activities:                               |  |      |          |   |      |   |          |  
|Issuance of 10,000,000 shares of common stock in connection with the purchase of Silent Sword software |  | $    |         |   |      | $ | 150,000  |  
|                                                                                                       |  |      |          |   |      |   |          |  
|Accrued fees in connection with issuance of common stock                                               |  | $    |         |   |      | $ | 5,850    |  
|                                                                                                       |  |      |          |   |      |   |          |  

See accompanying notes to unaudited consolidated financial statements.



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##### Table of Contents

INVERTED PARADIGMS CORPORATION AND SUBSIDIARIES

Notes to Consolidated Financial Statements (unaudited)

Note 1  Basis of Presentation

The
accompanying unaudited consolidated financial statements as of and for the three and six months ended June 30, 2007 and 2006 have been prepared in accordance with accounting principles generally accepted in the United States of America for
interim financial information and pursuant to the rules and regulations of the Securities and Exchange Commission for Form 10-QSB. Accordingly, they do not include all the information and footnotes required by accounting principles generally
accepted in the United States of America for complete financial statements. In the opinion of management, the accompanying unaudited consolidated financial statements contain all adjustments, consisting only of normal recurring accruals, considered
necessary for a fair presentation of the Companys financial position, results of operations, and cash flows for the periods presented.

The results
of operations for the three and six months ended June 30, 2007 and 2006 are not necessarily indicative of the results to be expected for the full year. These interim consolidated financial statements should be read in conjunction with the
December 31, 2006 consolidated financial statements and related notes included in the Companys Annual Report on Form 10-KSB for the year ended December 31, 2006.

The Companys consolidated financial statements have been prepared assuming the Company will continue as a going concern. The Company has experienced net losses since February 16, 1999 (date of inception),
which losses have caused an accumulated deficit of approximately $39,800,000 as of June 30, 2007. This factor, among others, raises substantial doubt about the Companys ability to continue as a going concern.

Management has been able, thus far, to finance the losses through a series of private placements. The Company is continuing to seek other sources of financing and
attempting to explore alternate ways of generating revenues through partnerships with other businesses. Conversely, the maintenance of our website and the development of our software segment is expected to result in operating losses for the
foreseeable future. There are no assurances that the Company will be successful in achieving its goals.

In view of these conditions, the Companys
ability to continue as a going concern is dependent upon its ability to obtain additional financing or capital sources, to meet its financing requirements, and ultimately to achieve profitable operations. Management believes that its current and
future plans provide an opportunity to continue as a going concern. The accompanying consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts and
classification of liabilities that may be necessary in the event the Company cannot continue as a going concern.

Note 2  Organization

Reporting Entity. Inverted Paradigms Corporation (Inverted Paradigms
or the Company) was incorporated in the State of Nevada on December 18, 1997. On September 29, 2003, the Company completed a re-incorporation merger into a Delaware Corporation thus changing the state of incorporation from
Nevada to Delaware. The Company is in the businesses of developing and selling our antivirus software called Silent SwordTM.

Name Change.On April 28, 2006 a majority of the stockholders approved changing the name of the Company from Horizon Holding Corporation to Inverted
Paradigms Corporation.

Note 3  Summary of Significant Accounting Policies

Principles of Consolidation. The consolidated financial statements include the accounts of Inverted Paradigms Corporation and its three wholly owned subsidiaries. All significant intercompany accounts
and transactions are eliminated in the consolidated financial statements.



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##### Table of Contents

INVERTED PARADIGMS CORPORATION AND SUBSIDIARIES

Notes to Consolidated Financial Statements (unaudited)

Note 3  Summary of Significant Accounting Policies, Continued



Use of Estimates. The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America 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.

Revenue
Recognition. Revenue is earned by the Company from the sale of software upon delivery of a license to the customer, provided that persuasive evidence of an arrangement exists, the license fee is fixed and determinable, and collection
of the fee is considered probable.

The Company uses the gross method of revenue recognition, as prescribed under EITF 99-19, Reporting Revenue Gross
as a Principal versus Net as an Agent, as the Company is the primary obligor in the transaction and is obligated to pay the supplier for work performed regardless of whether the customer accepts the product.

Cash and Cash Equivalents.The Company considers all short-term investments with an original maturity of three months or less when purchased to be cash
equivalents.

Property and Equipment. Property and equipment are carried at cost, less accumulated depreciation. Major replacements and
improvements that extend the useful lives of property and equipment are capitalized. Routine maintenance and repairs are charged to expense when incurred. Depreciation is computed using the straight-line method over the following estimated useful
lives of the related assets.



|                        |  |                       
|----------------------- |  | ----------------------
|Description             |  | Estimated Useful Lives
|Computers and Equipment |  | 3-5 years             
|Furniture and fixtures  |  | 5 years               
|Software                |  | 3 years               

Impairment of Long-Lived Assets.The carrying values of long-lived assets are reviewed if the facts
and circumstances indicate a potential impairment of their carrying values. Management evaluates the recoverability of the net carrying value of its property and equipment and goodwill by comparing the carrying values to the estimated future
undiscounted cash flows. A deficiency in these cash flows relative to the carrying amounts is an indication of the need for a write-down due to impairment. The impairment write-down would be the difference between the carrying amounts and the fair
value of these assets. Any loss on impairment is recognized by a charge to operations in the period identified.

Income Taxes.The Company
accounts for income taxes utilizing the asset and liability method. This approach requires the recognition of deferred tax assets and liabilities for the expected future tax consequences attributable to temporary differences between the financial
statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable
income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enacted date.
Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized.

In June 2006, The FASB issued
interpretation no. 48, Accounting for Uncertainty in Income Taxes- an interpretation of FASB Statement No. 109 (FIN 48). FIN 48 clarifies the accounting for uncertainty in income taxes recognized in an enterprises financial statements in
accordance with FASB Statement No. 109, Accounting for Income Taxes (SFAS 109). This Interpretation prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or
expected to be taken in a tax return. FIN 48 is effective for fiscal years beginning after December 15, 2006.



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##### Table of Contents

INVERTED PARADIGMS CORPORATION AND SUBSIDIARIES

Notes to Consolidated Financial Statements (unaudited)

Note 3  Summary of Significant Accounting Policies, Continued



The Company adopted FIN 48 effective April 1, 2007. The adoption of this statement had no impact on the
Companys financial position or results of operation.

Stock-Based Compensation.On January 1, 2006, the Company adopted the
provisions of Statement of Financial Accounting Standards No. 123 (revised 2004), Share-Based Payment (SFAS No. 123(R)) which requires that the costs resulting from all share-based payment transactions be recognized
in the financial statements at their fair values. The Company adopted SFAS No. 123(R) using the modified prospective application method under which the provisions of SFAS No. 123(R) apply to new awards and to awards modified, repurchased, or
cancelled after the adoption date. Additionally, compensation cost for the portion of the awards for which the requisite service has not been rendered that are outstanding as of the adoption date is recognized in the Statement of Operations over the
remaining service period after the adoption date based on the awards original estimate of fair value.

Website Design Costs. Website
design costs include direct costs incurred by the Company to develop and enhance the Companys website.

Software Development Costs -The Company capitalizes software development costs incurred to develop certain of the Companys products in accordance with Financial Accounting Standards No. 86, Accounting for the Costs of Computer Software to be Sold,
Leased or Otherwise Marketed (SFAS 86). Costs are capitalized only after the technological feasibility of the project has been established. In accordance with Statement of Financial Accounting Standards No. 142 Goodwill and Other
Intangible Assets (SFAS No.142), the Company has recorded its software development costs as a definite-lived intangible asset and is amortizing these costs over the three-year estimated useful life of the software. All other costs to develop
software, either in the preliminary project stage or post implementation stage are expensed as incurred.

Net Loss Per Share Information.Basic and diluted loss per share is calculated by dividing net loss by the weighted-average number of common shares outstanding during the reporting period. The Companys common stock warrants have been excluded from the diluted loss
per share computation since their effect is anti-dilutive.

Fair Value of Financial Instruments. The carrying amount of cash and cash
equivalents, loan receivable, accounts payable, and other current liabilities approximates fair value because of the short maturity of those instruments.



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##### Table of Contents

Note 4  Notes Payable  Stockholders

Notes payable  stockholders are summarized as follows as of June, 2007:



|                                                                                                                                                                                                                         |  |   |        
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | - | -------
|December 2005 - Unsecured promissory note payable for $200,000, interest at 11%, maturity date April 2006. As additional consideration, 50,000 shares of stock will be delivered at maturity
(Note 5).                   |  | $ | 200,000
|                                                                                                                                                                                                                         | 
|March 2006 - Unsecured promissory note payable for $250,000, interest at 11%, maturity date is October 2006. As additional consideration, 50,000 shares of stock will be delivered at maturity
(Note 5).                 |  |   | 250,000
|                                                                                                                                                                                                                         | 
|July 2006 - Unsecured, non-interest bearing, promissory note payable for $20,000, maturity date is August 2006.                                                                                                          |  |   | 20,000 
|                                                                                                                                                                                                                         | 
|November 2006 - Unsecured convertible promissory note payable for $13,309, interest at 12%, maturity date is February 2007. As additional consideration, 150,000 shares of stock will be delivered
at maturity (Note 5). |  |   | 13,309 
|                                                                                                                                                                                                                         | 
|November 2006 - Unsecured convertible promissory note payable for $13,309, interest at 12%, maturity date is February 2007. As additional consideration, 150,000 shares of stock will be delivered
at maturity (Note 5). |  |   | 13,309 
|                                                                                                                                                                                                                         | 
|November 2006 - Unsecured promissory note payable for $50,000, interest at 12%, maturity date is May 2007. As additional consideration, 150,000 shares of stock will be delivered at maturity
(Note 5).                  |  |   | 50,000 
|                                                                                                                                                                                                                         | 
|March 2006 - Unsecured promissory note payable for $20,037, interest at 10%, maturity date is March 2008. As additional consideration, 250,000 shares of stock will be delivered at maturity
(Note 5).                   |  |   | 22,037 
|                                                                                                                                                                                                                         | 
|Unsecured convertible promissory note payable for $30,000, interest at 5% plus prime, maturity date is June 2008 (Note 5).                                                                                               |  |   | 30,000 
|                                                                                                                                                                                                                         | 
|Unsecured convertible promissory note payable for $10,000, interest at 5% plus prime, maturity date is June 2008 (Note 5).                                                                                               |  |   | 10,000 
|                                                                                                                                                                                                                         | 
|Unsecured convertible promissory note payable for $50,000, interest at 5% plus prime, maturity date is June 2008 (Note 5).                                                                                               |  |   | 50,000 
|                                                                                                                                                                                                                         | 
|Unsecured promissory note payable for $50,000, interest at 13%, maturity date is June 2008.                                                                                                                              |  |   | 50,000 
|                                                                                                                                                                                                                         |  |   |        
|                                                                                                                                                                                                                         | 
|Total notes payable                                                                                                                                                                                                      |  |   | 708,655
|                                                                                                                                                                                                                         | 
|Common stock payable at maturity of various promissory notes                                                                                                                                                             |  |   | 65,500 
|                                                                                                                                                                                                                         |  |   |        
|                                                                                                                                                                                                                         | 
|Total                                                                                                                                                                                                                    |  | $ | 774,155
|                                                                                                                                                                                                                         |  |   |        



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##### Table of Contents

INVERTED PARADIGMS CORPORATION AND SUBSIDIARIES

Notes to Consolidated Financial Statements (unaudited)

Note 5  Stockholders Equity

2007 Promissory Notes.On June 4, 2007, we sold, in a private placement, four
unsecured convertible promissory notes in the amount of $90,000. Interest accrues on the outstanding principal balance from and after March 16, 2007 at a rate of 5%, plus the prime rate, per annum. At maturity, June 4, 2008, the lender or
the borrower have the option of converting the notes to restricted common stock at one third of the average closing share price of the stock for the ten days prior to the conversion date.

On March 16, 2007, we entered into an unsecured promissory note in the amount of $22,037 with our former Chief Executive Officer to convert unpaid employee
reimbursements from accounts payable to a promissory note. Interest accrues on the outstanding principal balance beginning March 16, 2007 at a rate of 10% per annum. At maturity, March 17, 2007, in addition to the payment of principal
and accrued interest, we will deliver 250,000 shares of our common stock as additional incentive for making the loan. The stock is considered restricted securities as defined by the Securities Act of 1933, as amended. The fair value of these shares
amounts to $14,500 and will be amortized over the length of the loan. $3,625 and $6,042 was included in interest expense of our consolidated statements of operations for the three and six months ended June 30, 2007, respectively

2006 Promissory Notes.On November 20, 2006, we sold in a private placement, an unsecured promissory note in the amount of $50,000. Interest accrues
on the outstanding principal balance beginning March 17, 2007 at a rate of 12% per annum. At maturity, March 17, 2007, in addition to the payment of principal and accrued interest, we will deliver 150,000 shares of our common stock as
additional incentive for making the loan. The stock is considered restricted securities as defined by the Securities Act of 1933, as amended. The fair value of these shares amounts to $10,500 and were amortized over the length of the loan. $5,483
was included in interest expense of our consolidated statements of operations for the three and six months ended June 30, 2007, respectively.

On
November 8, 2006, we sold in a private placement, an unsecured promissory note in the amount of $26,618 to two stockholders. Interest accrues on the outstanding principal balance beginning November 8, 2006 at a rate of 12% per annum.
At maturity, February 7, 2007, in addition to the payment of principal and accrued interest, we will deliver 300,000 shares of our common stock as additional incentive for making the loan. The stock is considered restricted securities as
defined by the Securities Act of 1933, as amended. The fair value of these shares amounts to $21,000 and were amortized over the length of the loan. During the three months ended March 31, 2007, $8,867 was included in interest expense of our
consolidated statements of operations. The $26,618 note payable has a conversion feature for which the Company recognized $10,648 to interest expense during the year ended December 31, 2006 as a result of the beneficial conversion feature.



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##### Table of Contents

INVERTED PARADIGMS CORPORATION AND SUBSIDIARIES

Notes to Consolidated Financial Statements (unaudited)

Note 5  Stockholders Equity, Continued



The following table summarizes our warrants as of June 30, 2007:



|     |  |                                        |  |               |   |  |               |  |                 
|---- |  | -------------------------------------- |  | ------------- | - |  | ------------- |  | ----------------
|Year |  | Warrant Type                           |  | WarrantShares |   |  | ExercisePrice |  | Expiration Date 
|2004 |  | Notes payable warrants                 |  | 50,000        |   |  | 0.92          |  | None            
|2004 |  | Private placement warrants             |  | 3,718,491     |   |  | 0.75          |  | Aug. - Oct. 2007
|2005 |  | Broker warrants                        |  | 50,000        |   |  | 0.50          |  | Dec. 2008       
|2006 |  | Broker warrants                        |  | 50,000        |   |  | 0.50          |  | Mar. 2009       
|2006 |  | Broker warrants                        |  | 300,000       |   |  | 0.045         |  | Apr. 2011       
|2006 |  | Warrant exercise                       |  | (300,000      | ) |  | 0.045         |  |                 
|     |  |                                        |  |               |   |  |               |  |                 
|     |  |                                        |  |              |   |  |               |  |                 
|2006 |  | Broker warrants                        |  | 294,118       |   |  | 0.085         |  | May 2011        
|2006 |  | Warrant exercise                       |  | (294,118      | ) |  | 0.085         |  |                 
|     |  |                                        |  |               |   |  |               |  |                 
|     |  |                                        |  |              |   |  |               |  |                 
|2006 |  | Class A warrants                       |  | 2,941,177     |   |  | 0.085         |  | May 2011        
|2006 |  | Class B warrants                       |  | 2,941,177     |   |  | 0.085         |  | May 2011        
|     |  |                                        |  |               |   |  |               |  |                 
|     |  | Total warrants outstanding             |  | 11,807,845    |   |  |               |  |                 
|     |  |                                        |  |               |   |  |               |  |                 
|     |  | Total proceeds from warrants exercised |  |               |   |  |               |  |                 

Note 6  Commitments and Contingencies

Settlement Agreement. On February 9, 2006, we entered into a settlement agreement with a stockholder. This stockholder had priority rights with Delta Insights, LLC (Delta) in that he was
to be returned his $100,000 investment in Delta in the event of the sale of Deltas technology. When Delta sold its Silent Sword software to the Company, the shareholder believed he was entitled to the return of his investment. To avoid
any litigation, the Company entered into a settlement agreement that required a cash payment of $25,000 paid immediately and a $75,000 payment to be made as funds are raised by the Company. The settlement expense of $100,000 and $0 is included in
general and administrative expenses in the accompanying consolidated statements of operations for the three months ended March 31, 2007. As of March 31, 2007, we have paid $75,000 with the unpaid portion of $25,000 included in accrued
expenses in the accompanying consolidated balance sheet as of June 30, 2007 and 2006, respectively.



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##### Table of Contents

INVERTED PARADIGMS CORPORATION AND SUBSIDIARIES

Notes to Consolidated Financial Statements (unaudited)

Note 6  Commitments and Contingencies, Continued



Consulting Agreement. On September 9, 2006, we entered into an agreement (the
Agreement) with Big Apple Consulting U.S.A., Inc. (the Consultant) to provide the Company with investor relations and management consulting services for a period of one year. The fees for these services are $75,000 per month.
We issued 4,750,000 restricted shares on July 17, 2006 to an escrow agent for payment of the monthly fee. The first months fee of $75,000 was paid by a third party and charged to additional paid-in capital.

The Consultant also has the right to purchase $1,000,000 of common stock at a 35% discount to the market of the ten day average closing bid price; however, at no time
shall the ten day average closing bid price be calculated at a price per share less than $0.40.

On May 1, 2007, the Company entered into an agreement
(the Agreement II) with Consultant to terminate Agreement I. The Agreement II provides that Consultant will be compensated 4,750,000 shares issued to escrow for services performed. These services have been valued at $300,000 and included
in General and Administrative expenses in the accompanying statements of operations for the year ended December 31, 2006.

Office Lease. On
February 7, 2006, the Company committed to a non-cancelable operating lease on operating facilities which expires February 28, 2009. On September 1, 2006, the Company broke this lease and vacated the property. The landlord leased the
vacated space to another tenant in December 2006. On April 25, 2007, the Company entered into a settlement agreement with its previous landlord for $5,000 to settle the termination of its lease. A gain of $14,744 was included in general and
administrative expenses on the consolidated statement of operations for the three and six months ended June 30, 2006.

Employment Agreements.
In April 2007, the Company settled outstanding payroll with four employees of the Company for $79,000. $39,500 of the funds are to be paid when the Company secures $250,000 in operating capital and the remaining funds are to be paid when a total of
$500,000 in operating capital has been secured. Also, as part of these settlements, the employment agreement with Charles Wernicke has been cancelled.

Note 7  Subsequent Events

On July 26, 2007 and August 7, 2007, we sold unsecured convertible promissory notes in the amount
of $27,500 in a private placement. Interest accrues on the outstanding principal balance beginning July 27, 2007 and August 7, 2007 at a rate of 5% plus the prime rate, per annum. At maturity, July 26, 2008 and August 7, 2008,
the lender or the borrower have the option of converting the notes to restricted common stock at one third of the average closing share price of the stock for the ten days prior to the conversion date.



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##### Table of Contents

|Item 2. | Managements Discussion and Analysis or Plan of Operation
|------- | ---------------------------------------------------------

This Report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including,
without limitation, statements regarding the Companys expectations, beliefs, intentions or future strategies that are signified by the words expects, anticipates, intends, believes, or similar
language. These forward-looking statements, including those with respect to our operating results for 2006, are based upon current expectations and beliefs of the Companys management and are subject to risks and uncertainties that could cause
results to differ materially from those indicated in the forward-looking statements. Some, but not all, of the factors, which could cause actual results to differ materially include those set forth in the risks discussed below under the subheading
Risk Factors and elsewhere in this report. The Company undertakes no obligation to revise or publicly release the results of any revision to these forward-looking statements, or to explain why actual results differ. Readers should
carefully review the risk factors described in this section below and in any reports filed with the Securities and Exchange Commission (SEC).

Overview

We were incorporated under the name DP Charters in Nevada on December 18, 1997. On April 18, 2002, we
changed our name to Nomadic Collaboration International, Inc. Effective May 30, 2003, LGC Acquisition Company, a Delaware corporation and wholly owned subsidiary of Nomadic Collaboration International, Inc., a Nevada corporation,
merged with and into LiquidGolf Corporation, a Delaware corporation, such that LiquidGolf Corporation was the surviving entity, and by virtue thereof, LiquidGolf corporation became a wholly owned subsidiary of Nomadic Collaboration. As a result of a
merger, the name of the Company changed to LiquidGolf Holding Corporation. On September 29, 2003, the Company completed a re-incorporation merger into a Delaware Corporation thus changing the state of incorporation from Nevada to Delaware.

On August 12, 2004 a majority of our stockholders approved changing the name of the Company from LiquidGolf Holding Corporation to Horizon Holding
Corporation to reflect our business direction of diversifying its revenue streams.

Since the date of the merger with LiquidGolf Corporation in May 2003,
our goal has been to create an online community for golfers that provided an e-commerce marketplace for the sale of golf-related equipment and apparel, golf-related news and information and e-commerce solutions for other golf-related businesses. In
February 2005, we closed our retail golf operation in Apopka, Florida to focus on our golf web site operations, by seeking to partner with an experienced golf e-tailer. In August 2006 we decided to discontinue the operations of Liquidgolf, due to
the inability to attract affiliates to the website.

In January 2006, in a continuing effort to
build a revenue stream, we purchased the Silent SwordTMsoftware and all trademarks, service marks, and
logos. As of March 30, 2006, we have issued a total of 10,000,000 shares of our common stock for Silent SwordTM. Under the purchase agreement, we could have issued a maximum of 20,000,000 common shares subject to certain provisions in the agreement, but these conditions were not met. The stock issued is considered restricted
securities as defined by the Securities Act of 1933, as amended. This product was available for sale in July 2006. We are constantly improving on the product and plan on developing an EOM version and an enterprise version. The costs associated with
developing addition versions are approximately $100,000 for labor, inclusive of officers salary of $66,000, and $10,000 for equipment. Additional capital for marketing, packaging and customer services will be needed for these new versions and
if the capital is not available, the release of the new versions could be delayed.

On
April 28, 2006 a majority of our stockholders approved changing the name of the Company from Horizon Holding Corporation to Inverted Paradigms Corporation to reflect our business direction of developing our Silent SwordTMsoftware.





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##### Table of Contents

Plan of Operation

We plan to grow our business with the sales of our retail version of the Silent SwordTMsoftware. We have sold our latest version through our website from July 2006 through March 2007. We
discontinued sales in March 2007 due to our inability to fund current operations. We are currently re-evaluating the market for the software and seeking additional capital.

Based upon the Companys current level of revenues and cash position, we will need to raise additional capital in order to fund current operations. These factors raise substantial doubt about our ability to
continue as a going concern. We are pursuing several alternatives to address this situation, including raising additional funding through an equity or debt financing. We have sold in private placements restricted stock and obtained debt financing to
raise these additional funds in 2006. There can be no assurance that the requisite financing will be consummated in the necessary time frame or on terms acceptable to us. Should we be unable to raise sufficient funds, we may be required to curtail
our operating plans or worst case, cease operations. No assurance can be given that we will be able to operate profitably on a consistent basis, or at all, in the future.

Cash Requirements

We believe we will need an additional $500,000 to continue operations over the next twelve months.
These expenses include the following:



|                                              |  |   |        
|--------------------------------------------- |  | - | -------
|Marketing                                     |  | $ | 73,000 
|Officers salaries and related taxes          |  |   | 120,000
|Other general and admin expenses              |  |   | 30,000 
|Payroll and related taxes                     |  |   | 50,000 
|Liability insurance                           |  |   | 40,000 
|Legal, accounting and other professional fees |  |   | 100,000
|Rent                                          |  |   | 10,000 
|Travel                                        |  |   | 40,000 
|Director fees                                 |  |   | 30,000 
|Web design and hosting                        |  |   | 2,000  
|Other computer and office equipment           |  |   | 5,000  
|                                              |  |   |        
|Total                                         |  | $ | 500,000
|                                              |  |   |        

If we are unable to raise the required capital, we will need to reduce current and expected expenses in the
future. The most significant reduction would be in marketing of our product. This may greatly reduce our ability to generate sales.

If additional capital
is raised, we plan to use the capital to further enhance our software, increase marketing, and accelerate our ability to reach the retail market by selling our product in retail stores. Additional capital would also allow us to pay for packaging and
distribution of our software in a compact disc format and begin sales on our website again.





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##### Table of Contents

Results of Operations

Comparison of the three and six months ended June 30, 2007 and June 30, 2006.

CONSOLIDATED FINANCIAL
INFORMATION



|                                    |  |                             |         |   |                          |   |          |      |  |   |         |   |  |   |          |  
|----------------------------------- |  | --------------------------- | ------- | - | ------------------------ | - | -------- | ---- |  | - | ------- | - |  | - | -------- | -
|                                    |  | Three Months Ended June 30, |         |   | Six Months EndedJune 30, |  
|                                    |  | 2007                        |         |   | 2006                     |   |          | 2007 |  |   | 2006    |  
|Revenue                             |  | $                           |        |   |                          | $ |         |      |  | $ | 200     |   |  | $ |         |  
|Cost of Revenue                     |  |                             | 200     |   |                          |   |         |      |  |   | 400     |   |  |   |         |  
|Selling, General and Administrative |  |                             | (78,400 | ) |                          |   | 522,600  |      |  |   | 18,800  |   |  |   | 864,300  |  
|Interest (Income) Expense           |  |                             | 19,900  |   |                          |   | 24,200   |      |  |   | 51,200  |   |  |   | 32,900   |  
|Discontinued operations             |  |                             |        |   |                          |   | (800     | )    |  |   |        |   |  |   | (300     | )
|                                    |  |                             |         |   |                          |   |          |      |  |   |         |   |  |   |          |  
|Net Loss                            |  | $                           | (58,300 | ) |                          | $ | (547,600 | )    |  | $ | (70,200 | ) |  | $ | (896,900 | )
|                                    |  |                             |         |   |                          |   |          |      |  |   |         |   |  |   |          |  

Comparison of the Three Months Ended June 30, 2007 and June 30, 2006.

Net Revenue. We have had no revenue for the three months ended June 30, 2007 and 2006. The product was still in development on 2006.

Cost of Sales. Cost of sales from continuing operations was $100 in 2007. These costs are the resulting credit card processing fees.

General and administrative expenses. General and Administrative expenses decreased by $444,200. This decrease can be attributed to the reduction of
cost associated with salaries, contractors, investor relations and marketing of our new product. We have not had the means to continue funding these activities in 2007. We also had an increase in general and administrative expense from gain related
to settlement of debt and settlements from employee payroll.

Interest income and expense, net. Net interest income from bank savings was $0
and $100 for 2007 and 2006, respectively. The net interest expense from loans and stock compensation were $19,900 and $24,300 in 2007 and 2006, respectively.

Loss on discontinued operations. In September 2006 we discontinued the operation of our golf business. The business has had limited operations since closing its store in February

Comparison of the Six Months Ended June 30, 2007 and June 30, 2006.

Net Revenue. We have sold four copies of our software in 2007 and the product was still in development on 2006.

Cost
of Sales. Cost of sales from continuing operations was $400 in 2007. These costs are the resulting credit card processing fees.

General and administrative expenses. General and Administrative expenses decreased by $845,500. This decrease can be attributed to the reduction of cost associated with salaries, contractors, investor relations and
marketing of our new product. We have not had the means to continue funding these activities in 2007. We also had an increase in general and administrative expense from gain related to settlement of debt and settlements from employee payroll.

Interest income and expense, net. Net interest income from bank savings was $0 and $200 for 2007 and 2006, respectively. The net interest
expense from loans and stock compensation were $51,200 and $33,100 in 2007 and 2006, respectively.

Loss on discontinued operations. In
September 2006 we discontinued the operation of our golf business. The business has had limited operations since closing its store in February





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##### Table of Contents

Liquidity and Capital Resources

We had cash balances totaling approximately $1,300 as of June 30, 2007. Historically, our principal source of funds has been cash generated from financing activities.

We believe that we will require an additional $500,000 to fund our currently anticipated requirements for ongoing operations for our existing business for the next
twelve-month period. We currently intend to satisfy our long-term liquidity requirements from cash flow from operations and to the extent such funds are insufficient, we must raise additional funds to sustain operations.

Cash flow from operations. We have been unable to generate either significant liquidity or cash flow to fund our current operations. We frequently change
our pricing structure to take into account our customers fluctuating cash flows, service and product needs. We anticipate that cash flows from operations will be insufficient to fund our business operations for the next twelve-month period.

Variables and Trends

We have a limited operating
history in connection with the current operation of our web site and software development. Accordingly, the comparison of the financial data for the periods presented may not be a meaningful indicator of our future performance and must be considered
in light of our limited operating history and our outsourcing of certain operations of our golf Internet website.

Critical Accounting Policies

We make use of estimates and assumptions that impact the reported amounts of assets and liabilities at the date of the financial statements and the
reported amounts of revenue and expenses during the reporting period. On an ongoing basis, we evaluate our estimates, including those related to bad debts, inventories and goodwill. These estimates and assumptions are based on historical results and
trends as well as our forecasts as to how these might change in the future.

We believe the following critical accounting policies, among others, impact
the significant judgments and estimates we use in the preparation of our financial statements:

Revenue Recognition

Revenue is earned by the Company from the sale of software upon delivery of a license to the customer, provided that persuasive evidence of an arrangement exists, the
license fee is fixed and determinable, and collection of the fee is considered probable.

The Company uses the gross method of revenue recognition, as
prescribed under EITF 99-19, Reporting Revenue Gross as a Principal versus Net as an Agent, as the Company is the primary obligor in the transaction and is obligated to pay the supplier for work performed regardless of whether the
customer accepts the product.

Software Development Costs

The Company capitalizes software development costs incurred to develop certain of the Companys products in accordance with Financial Accounting Standards No. 86, Accounting for the Costs of Computer Software to be Sold,
Leased or Otherwise Marketed (SFAS 86). Costs are capitalized only after the technological feasibility of the project has been established. In accordance with Statement of Financial Accounting Standards No. 142 Goodwill and Other
Intangible Assets (SFAS No.142), the Company has recorded its software development costs as a definite-lived intangible asset and is amortizing these costs over the shorter of the three-year estimated useful life of the software or the
products life cycle.

Stock-Based Compensation

On
January 1, 2006, the Company adopted the provisions of Statement of Financial Accounting Standards No. 123 (revised 2004), Share-Based Payment (SFAS No. 123(R)) which requires that the costs resulting from all
share-based payment transactions be



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##### Table of Contents

recognized in the financial statements at their fair values. The Company adopted SFAS No. 123(R) using the modified prospective application method under
which the provisions of SFAS No. 123(R) apply to new awards and to awards modified, repurchased, or cancelled after the adoption date. Additionally, compensation cost for the portion of the awards for which the requisite service has not been
rendered that are outstanding as of the adoption date is recognized in the Statement of Operations over the remaining service period after the adoption date based on the awards original estimate of fair value.

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 are
material to investors.

ITEM 3A(T) - CONTROLS AND PROCEDURES

We have evaluated, with the participation of our Chief Executive Officer and Chief
Financial Officer, the effectiveness of our disclosure controls and procedures as of June 30, 2007. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures are
effective to ensure that we record, process, summarize, and report information required to be disclosed by us in our quarterly reports filed under the Securities Exchange Act within the time periods specified by the Securities and Exchange
Commissions rules and forms.

During the quarterly period covered by this report, there were no changes in our internal controls over financial
reporting that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. There were no significant changes in the Companys internal controls or in other factors that could significantly
affect its internal controls subsequent to the Evaluation Date.

PART II - OTHER INFORMATION



|Item 1. | Legal Proceedings.
|------- | ------------------

From time to time we are engaged in various
legal and regulatory proceedings arising in the normal course of business. While it is not possible to determine with certainty the outcome of these matters, we are of the opinion that the eventual resolution of such proceedings will not have a
material adverse impact on our financial position or operating results. The Company is not a party to any pending legal proceedings nor is any of its property subject to pending legal proceedings.



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



| | (a) | Not applicable.
| | --- | ---------------



| | (b) | Not applicable.
| | --- | ---------------



| | (c) | On June 4, 2007, we sold, in a private placement, four unsecured convertible promissory notes in the amount of $90,000. Interest accrues on the outstanding principal
balance from and after March 16, 2007 at a rate of 5%, plus the prime rate, per annum. At maturity, June 4, 2008, the lender or the borrower have the option of converting the notes to restricted common stock at one third of the average
closing share price of the stock for the ten days prior to the conversion date.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

On March 16, 2007, we entered into an
unsecured promissory note in the amount of $22,037 with our former Chief Executive Officer to convert unpaid employee reimbursements from accounts payable to a promissory note. Interest accrues on the outstanding principal balance from and after
March 16, 2007 at a rate of 10% per annum. At maturity, March 17, 2007, in addition to the payment of principal and accrued interest, we will deliver as additional incentive for making the loan, 250,000 shares of our common stock. The
stock is considered restricted securities as defined by the Securities Act of 1933, as amended. The fair value of these shares amounts to $14,500 and will be amortized over the length of the loan. $3,625 and $6,042 was included in interest expense
of our consolidated statements of operations for the three and six months ended June 30, 2007, respectively



---

##### Table of Contents

On August 7, 2006, we closed an agreement (the Agreement) with an individual for the
purchase of 294,118 shares of our common stock for $25,000. The stock is considered restricted securities as defined by Rule 144 promulgated under the Securities Act of 1933, as amended.

On May 30, 2006, we closed an agreement with an investor (the Investor) for the purchase of 2,941,177 shares of our common stock for
$250,000. The stock issued to the Investor is considered restricted securities as defined by Rule 144 promulgated under the Securities Act of 1933, as amended. We also issued two classes of warrants in accordance with this agreement. Class A
warrants allows the Investor to purchase 2,941,177 shares at $0.25 per share and Class B warrants allows the Investor to purchase 2,941,177 shares at $0.35 a share. Both classes expire on May 30, 2011.

On April 3, 2006, the Company entered into a stock purchase agreement with an investor (the
Investor). This agreement allows the investor to purchase a maximum of 35,000,000 shares of common stock of the Company at a purchase price of 20% of the bid price. These shares are deemed restricted securities as defined in Rule 144 of
the Securities Act of 1933. The investor purchased 3,000,000 shares on April 17, 2006 for $135,000. The Investor is under no obligation to purchase any further amounts of stock from the Company.

On March 9, 2006, we sold in a private placement, a secured promissory note in the amount of $250,000 to a stockholder. Interest accrues on the
outstanding principal balance from and after March 6, 2006 at a rate of 11 percent per annum. At maturity, October 31, 2006, in addition to the payment of principal and accrued interest, we will deliver as additional incentive for making
the loan, 75,000 shares of our common stock. The stock is considered restricted securities as defined by the Securities Act of 1933, as amended.



|Item 3. | Defaults Upon Senior Securities.
|------- | --------------------------------

Not Applicable.



|Item 4. | Submission of Matters to a Vote of Security Holders.
|------- | ----------------------------------------------------

Not Applicable



|Item 5. | Other Information.
|------- | ------------------

Not Applicable.



|Item 6. | Exhibits
|------- | --------

(a) Exhibits



|               |  |                                                                                                                                                           
|-------------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------
|EXHIBIT NUMBER |  | DESCRIPTION                                                                                                                                               
|31.1           |  | Certification of Chief Executive Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a), promulgated under the Securities Exchange Act of 1934, as amended*
|               | 
|31.2           |  | Certification of Chief Financial Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a), promulgated under the Securities Exchange Act of 1934, as
amended*



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##### Table of Contents

|               |  |                                                                                                                                                    
|-------------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------
|EXHIBIT NUMBER |  | DESCRIPTION                                                                                                                                        
|32.1           |  | Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of The Sarbanes-Oxley Act of 2002.*
|               | 
|32.2           |  | Certification of Chief 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.
|- | ---------------

SIGNATURES

In accordance with Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.



|                       |  |  |  |                                |  |                                                    
|---------------------- |  |  |  | ------------------------------ |  | ---------------------------------------------------
|Dated: August 20, 2007 |  |  |  | INVERTED PARADIGMS CORPORATION
|                       |  |  | 
|                       |  |  |  | By:                            |  | /s/ Steven Weldon                                  
|                       |  |  |  | Name:                          |  | Steven Weldon                                      
|                       |  |  |  | Title:                         |  | Chief Executive Officer and Chief Financial Officer

In accordance with the Securities Exchange Act of 1934, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the dates indicated.



|                       |  |  |  |                                |  |                                      
|---------------------- |  |  |  | ------------------------------ |  | -------------------------------------
|Dated: August 20, 2007 |  |  |  | INVERTED PARADIGMS CORPORATION
|                       |  |  | 
|                       |  |  |  | By:                            |  | /s/ Charles Wernicke                 
|                       |  |  |  | Name:                          |  | Charles Wernicke                     
|                       |  |  |  | Title:                         |  | Chief Technology Officer and Director
|                       |  |  | 
|                       |  |  |  | By:                            |  | /s/ Dwight Day                       
|                       |  |  |  | Name:                          |  | Dwight Day                           
|                       |  |  |  | Title:                         |  | Director                             
|                       |  |  | 
|                       |  |  |  | By:                            |  | /s/ William Parsons                  
|                       |  |  |  | Name:                          |  | William Parsons                      
|                       |  |  |  | Title:                         |  | Director                             





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##### Table of Contents

EXHIBIT INDEX



|               |  |                                                                                                                                                                                       
|-------------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|EXHIBIT NUMBER |  | DESCRIPTION                                                                                                                                                                           
|31.1           |  | Certification of Chief Executive Officer and Chief Financial Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a), promulgated under the Securities Exchange Act of 1934, as
amended*
|               | 
|32.1           |  | Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of The Sarbanes-Oxley Act of
2002.*       

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|* | Filed herewith.
|- | ---------------