UNITED STATES


SECURITIES AND EXCHANGE COMMISSION


WASHINGTON, D.C. 20549







FORM 10-Q





(Mark One)





þQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934





For The Quarterly Period Ended June 30, 2011





oTRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934





For The Transition Period from __________ To _________





Commission file number: 000-21369





A CLEAN SLATE, INC.


(Exact name of registrant as specified in its charter)




Delaware

                    

                    26-1762478(State or other jurisdiction

                        of incorporation or organization)

                    

                    (IRS Employer

                        Identification No.)




1750 Osceola Blvd., West Palm Beach, Florida

                    

                    33409(Address of principal executive offices)

                    

                    (zip code)




(561) 899-3529


(Registrant’s telephone number, including area code)





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





Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YesþNo o




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
            oNo o




Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.




Large accelerated filer

                    o

                    Accelerated filer

                    oNon-accelerated filer

                    o

                    Smaller reporting company

                    þ(Do not check if a smaller reporting company)




Indicate by check mark whether the issuer is a shell company (as defined in rule 12b-2 of the Exchange Act) Yes o No þ




APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY


PROCEEDINGS DURING THE PRECEDING FIVE YEARS





Check whether the registrant filed all documents and reports required by Section 12, 13, or 15(d) of the Exchange Act after the distribution of securities under a plan confirmed by a court  Yes o    No  o




APPLICABLE ONLY TO CORPORATE ISSUERS:





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





As of August 18, 2011, there were 450,020,635 shares of the Registrant's Common Stock outstanding.














A CLEAN SLATE, INC.


For The Quarterly Period Ended June 30, 2011





TABLE OF CONTENTS




PART I - FINANCIAL INFORMATIONItem 1.

                        Financial Statements

                        

                        

                        3Item 2.

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

                        

                        

                        13Item 3.

                        Quantitative and Qualitative Disclosures about Market Risk

                        

                        

                        15Item 4.

                        Controls and Procedures

                        

                        

                        15PART II - OTHER INFORMATIONItem 1.

                        Legal Proceedings

                        

                        

                        17Item 1A.

                        Risk Factors

                        

                        

                        17Item 2.

                        Unregistered Sales Of Equity Securities And Use Of Proceeds.

                        

                        

                        17Item 4.

                        (Removed and Reserved).

                        

                        

                        17Item 5.

                        Other Information

                        

                        

                        17Item 6.

                        Exhibits

                        

                        

                        17SIGNATURES

                        

                        

                        18


THIS REPORT CONTAINS FORWARD-LOOKING STATEMENTS THAT INVOLVE   RISKS AND UNCERTAINTIES. SUCH STATEMENTS ARE BASED ON CURRENT EXPECTATIONS, ASSUMPTIONS, ESTIMATES AND PROJECTIONS ABOUT THE COMPANY AND ITS INDUSTRY. FORWARD-LOOKING STATEMENTS ARE SUBJECT TO KNOWN AND UNKNOWN RISKS, UNCERTAINTIES AND OTHER FACTORS THAT MAY CAUSE ACTUAL RESULTS, LEVELS OF ACTIVITY, PERFORMANCE, ACHIEVEMENTS AND
            PROSPECTS TO BE MATERIALLY DIFFERENT FROM THOSE  EXPRESSED OR IMPLIED BY SUCH FORWARD-LOOKING STATEMENTS. THE COMPANY UNDERTAKES NO OBLIGATION TO UPDATE PUBLICLY ANY FORWARD-LOOKING STATEMENTS FOR ANY REASON EVEN IF NEW INFORMATION BECOMES AVAILABLE OR OTHER EVENTS OCCUR IN THE FUTURE.




2




PART I - FINANCIAL INFORMATION
 
 ITEM 1.   FINANCIAL STATEMENTS
 A Clean Slate, Inc. and Subsidiary
 Consolidated Balance Sheets
  June 30,

                                    2011

                                

                                

                                December 31,

                                    2010(Unaudited)AssetsCurrent AssetsCash

                                

                                $

                                5,908

                                

                                

                                $

                                7,153Accounts receivable

                                

                                

                                4,349

                                

                                

                                

                                6,223Total Current Assets

                                

                                $

                                10,257

                                

                                

                                $

                                13,376Liabilities and Stockholders' DeficitCurrent LiabilitiesAccounts payable

                                

                                $

                                80,048

                                

                                

                                $

                                798Accrued interest payable

                                

                                

                                35,130

                                

                                

                                

                                2,479Notes payable

                                

                                

                                45,710

                                

                                

                                

                                32,900Notes payable - related parties

                                

                                

                                551,254

                                

                                

                                

                                520,269Total Current Liabilities

                                

                                

                                712,142

                                

                                

                                

                                556,446Stockholders' DeficitSeries A Preferred Stock, $0.000001 par value, 3,000,000 shares authorized;none issued and outstanding

                                

                                

                                -

                                

                                

                                

                                -Series B Preferred Stock, $0.000001 par value, 5,000,000 shares authorized;none issued and outstanding

                                

                                

                                -

                                

                                

                                

                                -Common Stock, $0.000001 par value, 500,000,000 shares authorized;450,020,635 shares issued and outstanding

                                

                                

                                450

                                

                                

                                

                                450Additional paid in capital

                                

                                

                                (475,072

                                )

                                

                                

                                (475,072

                                )Accumulated deficit

                                

                                

                                (227,263

                                )

                                

                                

                                (68,448

                                )Total Stockholders' Deficit

                                

                                

                                (701,885

                                )

                                

                                

                                (543,070

                                )Total Liabilities and Stockholders' Deficit

                                

                                $

                                10,257

                                

                                

                                $

                                13,376
 3
  A Clean Slate, Inc. and Subsidiary
 Consolidated Statements of Operations
 (Unaudited)
   Three Months Ended June 30,

                                

                                

                                Six Months Ended June 30,2011

                                

                                

                                2010

                                

                                

                                2011

                                

                                

                                2010Revenue

                                

                                $

                                14,784

                                

                                

                                $

                                15,940

                                

                                

                                $

                                24,394

                                

                                

                                $

                                31,635General and administrative expenses

                                

                                

                                61,292

                                

                                

                                

                                14,255

                                

                                

                                

                                150,559

                                

                                

                                

                                28,471Income (loss) from operations

                                

                                

                                (46,508

                                )

                                

                                

                                1,685

                                

                                

                                

                                (126,165

                                )

                                

                                

                                3,164Interest expense

                                

                                

                                (16,325

                                )

                                

                                

                                -

                                

                                

                                

                                (32,650

                                )

                                

                                

                                -Net income (loss)

                                

                                $

                                (62,833

                                )

                                

                                $

                                1,685

                                

                                

                                $

                                (158,815

                                )

                                

                                $

                                3,164Income (loss) per common share - basic and diluted

                                

                                $

                                (0.00

                                )

                                

                                $

                                0.00

                                

                                

                                $

                                (0.00

                                )

                                

                                $

                                0.00Weighted average number of common shares outstandingduring the period - basic and diluted

                                

                                

                                450,020,635

                                

                                

                                

                                369,020,635

                                

                                

                                

                                450,020,635

                                

                                

                                

                                369,020,635
 4
  A Clean Slate, Inc. and Subsidiary
 Consolidated Statements of Cash Flows
 (Unaudited)
  Six Months Ended June 30,2011

                                

                                

                                2010CASH FLOWS FROM OPERATING ACTIVITIES:Net income (loss)

                                

                                $

                                (158,815

                                )

                                

                                $

                                3,164Adjustments to reconcile net income (loss) to net cashused in operating activities:Bad debt expense

                                

                                

                                2,253

                                

                                

                                

                                -Changes in operating assets and liabilities:Decrease in accounts receivable

                                

                                

                                (379

                                )

                                

                                

                                (2,580

                                )Increase in accounts payable

                                

                                

                                79,250

                                

                                

                                

                                -Increase in accrued interest payable

                                

                                

                                32,651

                                

                                

                                

                                -Net Cash Used In Operating Activities

                                

                                

                                (45,040

                                )

                                

                                

                                584CASH FLOWS FROM FINANCING ACTIVITIES:Proceeds from notes payable - related parties

                                

                                

                                43,795

                                

                                

                                

                                -Repayments of notes payable - related parties

                                

                                

                                -

                                

                                

                                

                                (179

                                )Net Cash Provided By Financing Activities

                                

                                

                                43,795

                                

                                

                                

                                (179

                                )Net Decrease in Cash

                                

                                

                                (1,245

                                )

                                

                                

                                405Cash - Beginning of Period

                                

                                

                                7,153

                                

                                

                                

                                2,219Cash - End of Period

                                

                                $

                                5,908

                                

                                

                                $

                                2,624SUPPLEMENTARY CASH FLOW INFORMATION:Cash paid during the period for:Income taxes

                                

                                $

                                -

                                

                                

                                $

                                -Interest

                                

                                $

                                -

                                

                                

                                $

                                -
 5
 A CLEAN SLATE, INC.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 JUNE 30, 2011 (UNAUDITED)
  NOTE 1 NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 Nature of Operations
  The Company is a legal document preparation company with a system for the practice of bankruptcy law, and the marketing, management and processing of bankruptcy cases in high volume.  The Company also developed a support system for obtaining information necessary for the preparation of documentation and pleadings necessary for initiating and completing such bankruptcy cases.  Both
                systems are marketed and sold to law firms specializing in bankruptcy law.
 
 Basis of Presentation
  The accompanying unaudited interim financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules and regulations of the United States Securities and Exchange Commission for interim financial information.
 
 The financial information as of December 31, 2010 is derived from the audited financial statements presented in the Company’s Annual Report on Form 10-K for the year ended December 31, 2010.  The unaudited interim financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K, which contains the audited financial statements and notes thereto,
                together with the Plan of Operations for the year ended December 31, 2010.
 
 Certain information or footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been or omitted, pursuant to the rules and regulations of the Securities and Exchange Commission for interim financial reporting. Accordingly, they do not include all the information and footnotes necessary for a
                comprehensive presentation of financial position, results of operations, or cash flows. It is management's opinion, however, that all material adjustments (consisting of normal recurring adjustments) have been made which are necessary for a fair financial statement presentation. The interim results for the six months ended June 30, 2011 are not necessarily indicative of results for the full fiscal year.
 
 Risks and Uncertainties
  The Company operates in an industry that is subject to rapid change. The Company's operations will be subject to significant risk and uncertainties including financial, operational, technological, regulatory and other risks, including the potential risk of business failure.
  Use of Estimates
  The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.
 
 Making estimates requires management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the financial statements, which management considered in formulating its estimate could change in the near term due to one or more future non confirming events. Accordingly, the actual
                results could differ significantly from estimates.
 
 Principles of Consolidation
  All significant inter-company accounts and transactions have been eliminated in consolidation.
 
  6
  Accounts Receivable and Allowance for Doubtful Accounts
 
 Accounts receivable represents obligations from customers that are subject to normal trade collection terms. The Company periodically evaluates the collectability of its accounts receivable and considers the need to establish an allowance for doubtful accounts based upon historical collection experience and specific customer information. Accordingly, the actual amounts could vary from the recorded
                allowances.
 
 The Company does not charge interest on past due receivables. Receivables are determined to be past due based on payment terms of original invoices.
 
 The Company has recorded bad debt of $2,253 and $3,470 for the periods ending June 30, 2011 and December 31, 2010, respectively.
 
 The Company had the following concentrations of accounts receivable with customers:
 
 Customer

                        

                        

                        June 30, 2011

                        

                        

                        December 31, 2010A

                        

                        

                        

                        55 %

                        

                        

                        

                        32 %B

                        

                        

                        

                        45 %

                        

                        

                        

                        - %C

                        

                        

                        

                        -%

                        

                        

                        

                        32%D

                        

                        

                        

                        -%

                        

                        

                        

                        19%E

                        

                        

                        

                        - %

                        

                        

                        

                        19 %
  Fair Value of Financial Instruments
 
 The Company measures assets and liabilities at fair value based on an expected exit price as defined by the authoritative guidance on fair value measurements, which represents the amount that would be received on the sale of an asset or paid to transfer a liability, as the case may be, in an orderly transaction between market participants. As such, fair value may be based on assumptions that market
                participants would use in pricing an asset or liability. The authoritative guidance on fair value measurements establishes a consistent framework for measuring fair value on either a recurring or nonrecurring basis whereby inputs, used in valuation techniques, are assigned a hierarchical level. The following are the hierarchical levels of inputs to measure fair value:
  •

                        

                        Level 1: Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.
  •

                        

                        Level 2: Inputs reflect: quoted prices for identical assets or liabilities in markets that are not active; quoted prices for similar assets or liabilities in active markets; inputs other than quoted prices that are observable for the assets or liabilities; or inputs that are derived principally from or corroborated by observable market data by correlation or other means.
  •

                        

                        Level 3: Unobservable inputs reflecting the Company’s assumptions incorporated in valuation techniques used to determine fair value. These assumptions are required to be consistent with market participant assumptions that are reasonably available.
  The Company's financial instruments consisted primarily of cash, accounts receivable, accounts payable, accrued liabilities, and notes payable. The carrying amounts of the Company's financial instruments generally approximate their fair values as of June 30, 2011 and December 31, 2010, respectively, due to the short-term nature of these instruments.
  Revenue Recognition
 
 The Company records revenue when all of the following have occurred; (1) persuasive evidence of an arrangement exists, (2) services have been rendered, (3) the sales price to the customer is fixed or determinable, and (4) collectability is reasonably assured.
  7
 
 The Company executes a service agreement with each law firm desiring to manage a bankruptcy law practice.  Under the terms of the agreement, the Company customizes various deliverables such as training, coaching and software set up.  The deliverables are completed in advance of the Company billing for services rendered. The Company is not required to provide any additional support
                after the deliverables have been provided. There is no right of return associated with the sale of these services.
  The Company had the following concentrations of revenues with customers:
  Customer

                            

                            June 30, 2011

                            

                            December 31, 2010A

                            

                            

                            50%

                            

                            

                            -%B

                            

                            

                            27%

                            

                            

                            12%C

                            

                            

                            11%

                            

                            

                            17%D

                            

                            

                            12%

                            

                            

                            -%E

                            

                            

                            - %

                            

                            

                            33%F

                            

                            

                            -%

                            

                            

                            13%
 Share-based payments
 
 Generally, all forms of share-based payments, including stock option grants, warrants, restricted stock grants and stock appreciation rights are measured at their fair value on the awards’ grant date, based on estimated number of awards that are ultimately expected to vest.  Share-based compensation awards issued to non-employees for services rendered are recorded at either the fair
                value of the services rendered or the fair value of the share-based payment, whichever is more readily determinable.
 
 Earnings per Share
 
 Basic loss per share is calculated by dividing net loss by the weighted-average number of common shares outstanding during each period. Diluted loss per common share is calculated by dividing net loss, adjusted on an “as if converted” basis, by the weighted-average number of actual shares outstanding and, when dilutive, the share equivalents that would arise from the assumed conversion of
                convertible instruments.  The effect of potentially dilutive stock options and warrants is calculated using the treasury stock method.
 
 The Company has no common stock equivalents issued or outstanding for June 30, 2011 and December 31, 2010.
 
 Recent Accounting Pronouncements
 
 There are no new accounting pronouncements that are expected to have any impact on the Company’s financial statements.
  NOTE 2 GOING CONCERN
 As reflected in the accompanying financial statements, the Company had a net loss of $158,815 and net cash used in operations of $45,040 for the period ended June 30, 2011; and a working capital deficit and stockholders’ deficit of $701,885 at June 30, 2011.
 
 The ability of the Company to continue its operations is dependent on Management's plans, which include the raising of capital through debt and/or equity markets with some additional funding from other traditional financing sources, including term notes, until such time that funds provided by operations are sufficient to fund working capital requirements.  The Company may need to incur
                additional liabilities with certain related parties to sustain the Company’s existence.
  The Company will require additional funding to finance the growth of its current and expected future operations as well as to achieve its strategic objectives.  The Company believes its current available cash along with anticipated revenues may be insufficient to meet its cash needs for the near future.  There can be no assurance that financing will be available in amounts or terms
                acceptable to the Company, if at all.
  In response to these problems, management expects to take the following actions:
 
 ·

                        seeking additional third party debt and/or equity financing; and
  ·

                        continue with the implementation of the business plan
 
  8
  The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business.  These financial statements do not include any adjustments relating to the recovery of the recorded assets or the classification of the liabilities that might be necessary should the Company be
                unable to continue as a going concern.
 
 NOTE 3 REVERSE RECAPITALIZATION
 On December 10, 2010, the Company (then known as Vigilant Legal Solutions) executed a reverse recapitalization with Darwin Resources, Inc. (“Darwin”), a then public shell corporation, where the Company was acquired by A Clean Slate Acquisition Corp (“ACSAC”).
 
 As a result of this transaction, VLS became the surviving corporation and changed its name to A Clean Slate, Inc. Darwin did not have any operations.  All voting preferred stock was cancelled and retired and VLS gained voting control.  The transaction also required a recapitalization of VLS. VLS was deemed the accounting acquirer, while Darwin was deemed the legal acquirer. The
                historical financial statements of the Company are those of VLS, and of the consolidated entities from the date of merger and subsequent.
 
 Since the transaction is considered a reverse acquisition and recapitalization, the presentation of pro-forma financial information was not required.  All share and per share amounts have been retroactively restated to the earliest periods presented to reflect the transaction.
 
 Prior to the merger, Darwin executed a 1,000 to 1 reverse common stock split, which resulted in 20,535 common shares issued and outstanding.  At the recapitalization date, Darwin issued 369,000,000 shares of common stock for all of the issued and outstanding member units of VLS.  The issuance resulted in VLS acquiring 99.99% of the issued and outstanding common shares in Darwin. The
                20,535 common shares are treated as a deemed issuance in the recapitalization.
 
 On April 14, 2011, in connection with the cancellation and retirement of the 5,000,000 shares of Series B preferred stock (retroactive to the reverse recapitalization date, December 27, 2010), the Company issued a note payable to the former owner of Darwin’s 5,000,000 shares of Series B preferred stock, for $500,000.  The note is due six months from the effectiveness of the registration
                statement on Form S-1, bears interest at 12% and has a default interest rate of 17%. The note is secured by all assets of the Company. The Company has accounted for the note as a component of the consideration in the reverse recapitalization with a charge to additional paid in capital.
 NOTE 4 DEBT
 
 (A)

                            NOTES PAYABLE - RELATED PARTIES
 
 Period Ended June 30, 2011
 
 On April 14, 2011, the Company issued a note payable with the Chief Executive Officer for $500,000 (See Note 3).  During the quarter ending June 30, 2011, the Chief Executive Officer made payments on behalf of the Company of $43,595 for legal fees.
  Year Ended December 31, 2010
 
 In September 2010, the Company executed notes with affiliate companies of the Chief Executive Officer for $7,438.  The notes originally were due April 15, 2011. In April 2011, the notes were amended to become due the later of June 30, 2011, or upon funding of the Company that will provide sufficient working capital.  The notes bear interest at 10% and have default interest of 20%.
                The notes are unsecured. Financing has not yet been secured to satisfy the repayment of this debt.
 
 Year Ended December 31, 2009
 
 During the year ended December 31, 2009, the Company executed notes payable with officers of the Company totaling $51,626. These advances are non-interest bearing, unsecured and due on demand.
 
 During 2009 and 2010, the Company repaid $37,866 and $929 of these advances.
 
  9
 The following summarizes the Company’s related party debt transactions:
 
 Balance – December 31, 2009

                        

                        $

                        13,760Proceeds

                        

                        

                        7,438Issuance in connection with recapitalization

                        

                        

                        500,000Repayments

                        

                        

                        ( 929

                        )Balance – December 31, 2010

                        

                        

                        520,269Proceeds

                        

                        

                        43,795Repayments

                        

                        

                        -Reclass from related party debt to third party debt

                        

                        

                        (12,810

                        )Balance – June 30, 2011

                        

                        $

                        551,254
   (B)

                                NOTE PAYABLE - OTHER
 On September 15, 2010, the Company executed a note for $32,900.  The note is due on demand.  The note bears interest at 10% and has a default interest of 20%. The note is unsecured.
 
 Of the total outstanding debt, $12,670 of the debt was in default as of June 30, 2011.
 
 NOTE 5 STOCKHOLDERS’ DEFICIT
 The Company has two designated series of preferred stock.
 
 Series A has been authorized, however, none are issued and outstanding.
 
 Series B has no dividends, preferences, conversion rights or liquidation value. However, this class of stock has voting rights of 1,000 votes per share held.  The Company has no shares issued and outstanding at June 30, 2011.
 
 10
  ITEM 2.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 
 THE FOLLOWING DISCUSSION SHOULD BE READ IN CONJUNCTION WITH THE COMPANY'S FINANCIAL STATEMENTS AND THE NOTES TO THOSE STATEMENTS AND OTHER FINANCIAL INFORMATION APPEARING ELSEWHERE IN THIS REPORT.
 
 General
 
 We were originally incorporated on June 24, 1993 in the State of Florida as Vitech America, Inc. for the business purpose of manufacturing and distributing computer equipment in Brazil.  Effective December 10, 2010 we changed our name to A Clean Slate, Inc.
 
 We are now a legal document preparation company with a system for the practice of bankruptcy law, law firm management and the marketing, management and processing of bankruptcy cases in high volume. We have also developed a support system for obtaining information necessary for the preparation of documentation and pleadings necessary for initiating and
                completing such bankruptcy cases. Both systems are marketed and sold to law firms specializing in bankruptcy law. Our website address is www.vigilantlegalsolutions.com.
 
 We enter into a services agreement (“Services Agreement”) with each law firm desiring to manage a bankruptcy law practice. Under the terms of the Services Agreement, we customize various documents, forms and programs; including training, coaching and software set up.
  Recent Merger
 
 On December 27, 2010, we consummated the merger with Vigilant Document Services, LLC, a Florida limited liability company (“VDS”) pursuant to which VDS merged with and into our wholly-owned subsidiary, Clean Slate Acquisition, Inc., a Delaware corporation, as previously disclosed in our Current Report on Form 8-K filed on December 28, 2010
                (the “Merger”). After the Merger, our business operations consist of those of VDS. In connection with the Merger, we amended our certificate of incorporation on December 10, 2010 to change our name to A Clean Slate, Inc. Prior to the consummation of the Merger, we were a non-operating shell company with no revenue and minimal assets. As a result of the Merger, we are no longer considered a shell company.
 
 VDS was formed in June 2008 in the State of Florida for the purpose of providing outsourced paralegal services for bankruptcy attorneys in the State of Florida for the preparation of consumer bankruptcy petitions.  With the downturn in the economy and property values in Florida, VDS was uniquely poised to provide a niche market service
                previously unknown in law. Headed by former bankruptcy attorney Scott Forgey, VDS immediately began contracting with bankruptcy attorneys to provide outsourced petition preparation services and client management services. With offices in Jacksonville and Boca Raton, Florida – operations grew to 10 paralegals and over 100 Petitions completed in 2008. The business model also included providing a marketing plan to bankruptcy attorneys for increasing their caseload.
  On April 14, 2011 we entered into an Amendment to Agreement and Plan of Merger with respect to the Redemption of the Series B Preferred Stock (the “Redemption”) pursuant to which: (i) the Redemption shall be retroactively effective as of the closing of the Merger, at which time the Preferred Stock was cancelled and retired, (ii) the Redemption Price shall be due and payable in full six
                months after the effectiveness of this Registration Statement and is secured and collateralized by all of our assets, as more particularly set forth in a Secured Promissory Note (the “Secured Promissory Note”) and a Security Agreement (the “Security Agreement”), and (iii) the holder of the Series B Preferred Stock, Richard Astrom, shall remain as a director until he receives full payment of the Redemption Price, at which time he shall resign.  A
                detailed description of this transaction is set forth in our current report on Form 8-K filed on April 15, 2011, which Form 8-K includes as exhibits the Amendment to Agreement and Plan of Merger, the Secured Promissory Note and the Security Agreement.
  11
  RESULTS OF OPERATIONS
  THREE MONTHS ENDED JUNE 30, 2011 COMPARED TO THREE MONTHS ENDED JUNE 30, 2010
 
 Revenues
 
 Revenues for the three months ended June 30, 2011 were $14,784 compared to $15,940 for the three months ended June 30, 2010; a decrease of $1,156.
 
 Operating Expenses
 
 Operating expenses for the three months ended June 30, 2011 were $61,292 compared to $14,255 for the three months ended June 30, 2010; an increase of $47,037.  Operating expenses consist entirely of general and administrative expenses which, in turn, consist principally of corporate expenses for legal, accounting and other professional fees. The
                increase is largely attributable to increased legal, accounting and professional fees associated with the Merger and the preparation and filing of the Registration Statement on Form S-1.
 
 Interest Expense
 
 Interest expense for the three months ended June 30, 2011 was $16,325 compared to $0 for the three months ended June 30, 2010; an increase of $16,325. The increase was the result of interest expense associated with increased indebtedness.  See Financial Statements Note 4 - Debt.
 
 Net income (loss)
 
 Net loss for the three months ended June 30, 2011 was $62,833 compared to net income of $1,685 for the three months ended June 30, 2010.  The net loss is directly attributable to the increase in operating and interest expenses described above.
  SIX MONTHS ENDED JUNE 30, 2011 COMPARED TO SIX MONTHS ENDED JUNE 30, 2010
 
 Revenues
 
 Revenues for the six months ended June 30, 2011 were $24,394 compared to $31,635 for the six months ended June 30, 2010; a decrease of $7,241.
 
 Operating Expenses
 
 Operating expenses for the six months ended June 30, 2011 were $150,559 compared to $28,471 for the six months ended June 30, 2010; an increase of $122,088.  Operating expenses consist entirely of general and administrative expenses which, in turn, consist principally of corporate expenses for legal, accounting and other professional fees. The
                increase is largely attributable to increased legal, accounting and professional fees associated with the Merger and the preparation and filing of the Registration Statement on Form S-1.
 
 Interest Expense
 
 Interest expense for the six months ended June 30, 2011 was $32,650 compared to $0 for the six months ended June 30, 2010; an increase of $32,650. The increase was the result of interest expense associated with increased indebtedness.  See Financial Statements Note 4 - Debt.
 
 Net income (loss)
 
 Net loss for the six months ended June 30, 2011 was $158,815 compared to net income of $3,164 for the six months ended June 30, 2010.  The net loss is directly attributable to the increase in operating and interest expenses described above.
 
 LIQUIDITY AND CAPITAL RESOURCES
 
 As of June 30, 2011, we had (i) a working capital deficit and stockholders' deficit of $701,885, (ii) cash on hand of $5,908, (iii) accounts receivable of $4,349 and (iv) total liabilities of $712,142, $500,000 of which is the Secured Promissory Note issued in connection with the Redemption of the Series B Preferred Stock.  Since our inception,
                we have historically financed our operations through operating cash flows, as well as the private placement of equity securities and debt, and other debt transactions. Most recently, on December 27, 2010, we completed a Private Placement of 80,000,000 shares of our common stock for proceeds of $100,000. In connection therewith, we entered into a Stock Purchase Agreement and a Registration Rights Agreement with 7 separate investors i n which we issued collectively 80,000,000
                shares of our common stock for $0.00125 per share for an aggregate purchase price of $100,000.
   12
  On April 14, 2011 we entered into an Amendment to Agreement and Plan of Merger with respect to the Redemption of the Series B Preferred Stock pursuant to which, in part, the $500,000 Redemption Price is due and payable in full six months after the effectiveness of the Registration Statement filed with the SEC on Form S-1.  A detailed description of this transaction is set forth in the
                    current report on Form 8-K filed by the Company on April 15, 2011, which Form 8-K includes as exhibits the Amendment to Agreement and Plan of Merger, the Secured Promissory Note and the Security Agreement.
 
 Net cash provided by financing activities was $43,795 and ($179) for the six months ended June 30, 2011 and 2010, respectively. During the quarter ending June 30, 2011, our Chief Executive Officer made payments on our behalf of $43,595 for legal fees.
 
 Prior to the Merger with VDS, we had been a shell company with nominal assets and no operations. We have only conducted operations since our acquisition of VDS. Our future operations are contingent upon increasing revenues and raising capital. Because we have a limited operating history, you will have difficulty evaluating our business and future
                prospects. We also face the risk that we may not be able to effectively implement our business plan. If we are not effective in addressing these risks, we may not operate profitably and we may not have adequate working capital to meet our obligations as they become due.
 
 We have accumulated losses since inception, a working capital deficiency and we expect to incur further losses in the development of our business, all of which, according to our accountants, casts substantial doubt about our ability to continue as a going concern. We will require additional funds through the receipt of conventional sources of capital or
                through future sales of our common stock, until such time as our revenues are sufficient to meet our cost structure, and ultimately achieve profitable operations. We expect our current cash on hand to be sufficient for the three months. There is no assurance we will be successful in raising additional capital or achieving profitable operations. Wherever possible, our board of directors will attempt to use non-cash consideration to sa tisfy obligations. In many instances, we
                believe that the non-cash consideration will consist of restricted shares of our common stock. These actions will result in dilution of the ownership interests of existing stockholders and may further dilute common stock book value, and that dilution may be material.
 
 Our ability to obtain needed financing may be impaired by such factors as the condition of the economy and capital markets, both generally and specifically in our industry, and the fact that we are not profitable, which could impact the availability or cost of future financings. If the amount of capital we are able to raise from financing activities,
                together with our revenues from operations, is not sufficient to satisfy our capital needs, even to the extent that we reduce our operations accordingly, we may be required to cease operations.
 
 Notes Payable - Related Parties
 
 Period Ended June 30, 2011
 
 On April 14, 2011, we issued a note payable with our Chief Executive Officer for $500,000 (See Note 3 to Financial Statements).  During the quarter ending June 30, 2011, our Chief Executive Officer made payments on our behalf of $43,595 for legal fees.
  Year Ended December 31, 2010
 
 In September 2010, we executed notes with affiliate companies of our Chief Executive Officer for $7,438.  The notes originally were due April 15, 2011. In April 2011, the notes were amended to become due the later of June 30, 2011, or upon funding of the Company that will provide sufficient working capital.  The notes bear interest at
                10% and have default interest of 20%. The notes are unsecured. Financing has not yet been secured to satisfy the repayment of this debt.
  Year Ended December 31, 2009
 
 During the year ended December 31, 2009, we executed notes payable with some of officers totaling $51,626. These advances are non-interest bearing, unsecured and due on demand.
 
 During 2009 and 2010, we repaid $37,866 and $929 of these advances.
  13
 
 The following summarizes our related party debt transactions:
 
 Balance – December 31, 2009

                        

                        $

                        13,760Proceeds

                        

                        

                        7,438Issuance in connection with recapitalization

                        

                        

                        500,000Repayments

                        

                        

                        ( 929

                        )Balance – December 31, 2010

                        

                        

                        520,269Proceeds

                        

                        

                        43,795Repayments

                        

                        

                        -Reclass from related party debt to third party debt

                        

                        

                        (12,810

                        )Balance – June 30, 2011

                        

                        $

                        551,254
 
 Notes Payable - Other
 
 On September 15, 2010, we executed a note for $32,900.  The note is due on demand.  The note bears interest at 10% and has a default interest of 20%. The note is unsecured.  Of the total outstanding debt, $12,670 of the debt was in default as of June 30, 2011.
  Debt Repayment and Forgiveness – Shell Stockholder
 
 In December 2010, subsequent to the Merger, we repaid $99,909 to our pre-merger controlling stockholder. Additionally, $186,779 of related party debt was forgiven. Since the forgiveness occurred with a related party, we charged additional paid in capital.
  Off-Balance Sheet Arrangements - None
  Critical Accounting Policies and Estimates
 
 Risks and Uncertainties
 
 The Company operates in an industry that is subject to rapid change. The Company's operations will be subject to significant risk and uncertainties including financial, operational, technological, regulatory and other risks, including the potential risk of business failure.
 
 Use of Estimates. The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of
                revenues and expenses during the reporting period.
 
 Making estimates requires management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the financial statements, which management considered in formulating its estimate could change in the near term due to one or more future
                confirming events. Accordingly, the actual results could differ significantly from estimates.
 
 Revenue Recognition. The Company followed the guidance of the Securities and Exchange Commission’s Staff Accounting Bulletin No. 104 for revenue recognition. The Company records revenue when all of the following have occurred; (1) persuasive evidence of an arrangement exists, (2) product delivery has occurred, (3) the sales price to the customer is
                fixed or determinable, and (4) collectability is reasonably assured.
 
 The Company executes a service agreement with each law firm desiring to manage a bankruptcy law practice. Under the terms of the agreement, the Company customizes various deliverables such as training, coaching and software set up. The deliverables are completed in advance of the Company billing for services rendered. The Company is not required to
                provide any additional support after the deliverables have been provided. There is no right of return associated with the sale of these services.
   14
  Recent Accounting Pronouncements
  There are no new accounting pronouncements that have any impact on the Company's financial statements.
 Going Concern
 
 As reflected in the accompanying financial statements, we had a net loss of $158,815 and net cash used in operations of $45,040 for the period ended June 30, 2011; and a working capital deficit and stockholders’ deficit of $701,885 at June 30, 2011.
 
 These factors raise substantial doubt about our ability to continue as a going concern. The ability to continue as a going concern is dependent on Management's plans, which include potential asset acquisitions, mergers or business combinations with other entities, further implementation of its business plan and continuing to raise funds through debt or
                equity raises. The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business.
 
 ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
 
 We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide information under this item.
 
 ITEM 4. CONTROLS AND PROCEDURES
  (a) Evaluation of Disclosure Controls and Procedures
  Based on their evaluation as of the end of the period covered by this Quarterly Report on Form 10-Q, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures (as defined in Rules 13a-15(c) and 15d-15(e) under the Exchange Act) are not effective to ensure that information required to be disclosed by us in report that we file or submit under the
                Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms and to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate to allow timely deci sions regarding required disclosure.
  (B) Management’s Assessment of Internal Control over Financial Reporting
 
 Management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a−15(f) and 15d−15(f) under the Exchange Act. Because of inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of
                effectiveness to future periods are subject to the risk that internal controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
  Management has assessed the effectiveness of our internal control over financial reporting as of June 30, 2011. In making this assessment, management used the criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The objective of this assessment is to determine whether our internal control over financial
                reporting was effective as of June 30, 2011. Based on our assessment utilizing the criteria issued by COSO, management has concluded that our internal control over financial reporting was not effective as of June 30, 2011. Management’s assessment identified the following material weaknesses:
 
 ·

                        As of June 30, 2011, there was a lack of accounting personnel with the requisite knowledge of Generally Accepted Accounting Principles (“GAAP”) in the U.S. and the financial reporting requirements of the SEC.
  ·

                        As of June 30, 2011, there were insufficient written policies and procedures to insure the correct application of accounting and financial reporting with respect to the current requirements of GAAP and SEC disclosure requirements.
 
  15
  Notwithstanding the existence of these material weaknesses in our internal control over financial reporting, our management believes that the financial statements included in its reports fairly present in all material respects the Company’s financial condition, results of operations and cash flows for the periods presented.
                We continue to evaluate the effectiveness of internal controls and procedures on an on-going basis. We plan to further address these issues once we commence operations and are able to hire additional personnel in financial reporting.
 
 (C)   Changes in Internal Controls over Financial Reporting
 
 We are committed to improving our financial organization. As part of this commitment, we will create a position to segregate duties consistent with control objectives and will increase our personnel resources and technical accounting expertise within the accounting function when funds are available to us by preparing and implementing sufficient written
                policies and checklists which will set forth procedures for accounting and financial reporting with respect to the requirements and application of US GAAP and SEC disclosure requirements.
 
 Management believes that preparing and implementing sufficient written policies and checklists will remedy the material weaknesses pertaining to insufficient written policies and procedures for accounting and financial reporting with respect to the requirements and application of US GAAP and SEC disclosure requirements. We intend to take appropriate and
                reasonable steps to make the necessary improvements to remediate these deficiencies, including:
 
 1.

                        We will document a formal code of ethics.
  2.

                        We will revise processes to provide for a greater role of independent board members in the oversight and review until such time that we are adequately capitalized to permit hiring additional personnel to address segregation of duties issues, ineffective controls over the revenue cycle and insufficient supervision and review by our corporate management.
  3.

                        We will continue to update the documentation of our internal control processes, including formal risk assessment of our financial reporting processes.
  ·

                            Commenced the development of internal controls and procedures surrounding the financial reporting process, primarily through the use of account reconciliations, and supervision.
  16
 
  PART II - OTHER INFORMATION
 
 ITEM 1. LEGAL PROCEEDINGS
 
 We are not a party to any pending legal proceedings nor is any of our property the subject of any pending legal proceedings.
 
 ITEM 1A. RISK FACTORS
 
 We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide information under this item.
 
 ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
   ITEM 3. DEFAULTS UPON SENIOR SECURITIES
  none
 
 ITEM 4. (REMOVED AND RESERVED)
   ITEM 5. OTHER INFORMATION
  none
 
 ITEM 6. EXHIBITS
  EXHIBIT

                            NUMBER

                        

                        DESCRIPTION31.1

                        

                        Certification of Chief Executive Officer and Principal Financial Officer pursuant to Sarbanes-Oxley Section 30232.1

                        

                        Certification of Chief Executive Officer and Chief Financial Officer pursuant to Sarbanes-Oxley Section 906
  17
  SIGNATURES
 
 Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
  August 19, 2011

                            By:

                            /s/ Robert S. GoldmanRobert S. GoldmanChief Executive OfficerDirector (principal financial officer and principal accounting officer)




18