UNITED STATES


SECURITIES AND EXCHANGE COMMISSION


WASHINGTON, DC 20549










FORM 10-K





(Mark One)


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





For the fiscal year ended December 31, 2011or





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





For the transition period from

to





Commission File Number: 333-152775iGENII, INC.(Exact name of small business issuer as specified in its charter)





Delaware



26-2046163(State of incorporation)

(IRS Employer ID Number)





40 Exchange Place,Suite 401New York, New York 10005(Address of principal executive offices)(212) 932- 7483(Issuer’s telephone number)


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





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





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





Large accelerated filer
o

Accelerated filer
oNon-accelerated filer
o

Smaller reporting company
x(Do not check if a smaller reporting company)





Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act.).


Yes o   No x





As of July 6, 2012, 9,354,000 shares of common stock, par value $0.001 per share, were outstanding.











Table of Contents





PART I

1Item 1.

Business

1Item 1A.

Risk Factors

3Item 1B.

Unresolved Staff Comments

5Item 2.

Properties

5Item 3.

Legal Proceedings

5Item 4.

Submission of Matters to a Vote of Security Holders

5PART II

5Item 5.

Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

5Item 6.

Selected Financial Data

7Item 7.

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

7Item 7A.

Quantitative and Qualitative Disclosures About Market Risk

8Item 8.

Financial Statements and Supplementary Data

8Item 9.

Changes in and Disagreements With Accountants on Accounting and Financial Disclosure

9Item 9A(T).

Controls and Procedures

9PART III

10Item 10.

Directors, Executive Officers and Corporate Governance

10Item 11.

Principal Accounting Fees and Services

11PART IV

11Item 15.

Exhibits, Financial Statement Schedules

11










Forward-Looking Statements





From time to time, we may provide information, whether orally or in writing, including certain statements in this Annual Report on Form 10-K, which are deemed to be “forward-looking” within the meaning of the Private Securities Litigation Reform Act of 1995 (the “Litigation Reform Act”). These forward-looking statements and other information are based on our beliefs as well as assumptions made by us using information currently available.





The words “believe,” “plan,” “expect,” “intend,” “anticipate,” “estimate,” “may,” “will,” “should” and similar expressions are intended to identify forward-looking statements. Such statements reflect our current views with respect to future events and are subject to certain risks, uncertainties and assumptions. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those described herein as anticipated, believed, estimated, expected or intended or using other similar expressions. We do not intend to update these forward-looking statements, except as required by law. In accordance with the provisions of the Litigation Reform Act, we are making investors aware that such forward-looking statements, because they relate to future events, are by their very nature subject to many important factors that could cause actual results to differ materially from those contemplated by the forward-looking statements contained in this Annual Report on Form 10-K, any exhibits to this Form 10-K and other public statements we make. Such factors are discussed in the “Risk Factors” section of this Annual Report on Form 10-K.





PART I





ITEM 1.   BUSINESS


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





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




1





Target Markets and Marketing Strategy


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





Growth Strategy





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


●
selectively expand our web development and SEO product lines;●
target new categories of customers such as large private firms, not-for-profits and governmental entities;●
tailor our marketing, advertising and promotions to attract new customers and increase sales with existing customers;●
actively seek to evaluate opportunities to develop or acquire businesses within web development and SEO categories or with a similar customer base;●
attend tradeshows in order to create awareness of our company and products;


●
hire an independent sales reps; and●
enhance relationships with clients by providing high quality customer service which will include low prices, efficient and timely product fulfillment, and providing excellent communication channels between our company and our customers.





Competition


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





Significant Customers


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





Employees


We have 11 employees.




2





ITEM 1A.  RISK FACTORS


The Company’s business is subject to numerous risk factors, including the following.





1.           Our limited operating history makes it difficult for us to evaluate our future business prospects and make decisions based on those estimates of our future performance.


We were incorporated on February 22, 2008. Since our inception, we have not entered into any contracts or significant relationship. Our limited operating history, based upon limited revenues and a lack of profitability makes it difficult to evaluate our business on the basis of historical operations. As a consequence, our past results may not be indicative of future results. Although this is true for any business, it is particularly true for us because of our limited operating history. Reliance on historical results may hinder our ability to anticipate and timely adapt to increases or decreases in sales, revenues or expenses. For example, if we overestimate our future sales for a particular period or periods based on our historical growth rate, we may increase our overhead and other operating expenses to a greater degree than we would have if we correctly anticipated the lower sales level for that period and reduced our controllable expenses accordingly.  If we make poor budgetary decisions as a result of unreliable historical data, we could continue to incur losses.





2.           The revenue of our business model is proven and our success is dependent on our ability to develop and then expand our customer base.


Our business model is to generate revenues from the sale of web development and SEO to small and medium size private businesses. During the fiscal year ended December 31, 2011, a significant portion of our revenues was generated from sales under $200. It is not possible for us to predict the future level of demand for our products that will be generated by these customers or the future demand for the products in the end-user marketplace. Our success is dependent on our ability to develop and then expand our customer base. We believe that we are able to generate more revenues; we will be able to earn higher profits and continue operations.  The past history upon which we base our assumption as to the likelihood that we will prove successful, and we can provide investors with assurance that we will generate bigger operating revenues and will achieve greater operating profitability.





3.           We do require additional funding in the future because our operations do not generate sufficient cash flow to maintain and grow current operation.


For the year ended December 31, 2011, we had gross revenues of $659,084and selling, general, and administrative expenses of $888,007 and net loss of $228,923.  We need to realize higher gross margins, to generate sufficient cash flow and to be able to fund our operating expenses over the next twelve months. We constantly increasing our sales force in order to continuously increase sales and thereby increase our cash position.





4.           We may be unable to anticipate changes in consumer preferences for web development, Social Media and SEO, which may result in decreased demand for our products and may negatively affect our revenues and our operating results.


Our continued operation in the sales of web development, Social Media Services and SEO products is in large part dependent on our ability to anticipate selling products that appeal to the changing tastes, spending habits and preferences of customers. If we are not able to anticipate and identify new consumer trends and sell new products accordingly, demand for our products may decline and our operating results may be adversely affected. In addition, we may incur significant costs relating to identifying new consumer trends and marketing new products or expanding our existing product lines in reaction to what we perceive to be a consumer preference or demand.  Such development or marketing may not result in the level of market acceptance, volume of sales or profitability anticipated.





3




5.           The loss of our Chief Executive Officer or our inability to recruit a suitable replacement may harm our business.


We are highly dependent on the Chief Executive Officer, Mr. Ross Lavnikevich, to manage our overall operations and identify new products to expand our sales and enhance our existing product line. We do not maintain key man life insurance on any of our officers and directors. The loss of Mr. Lavnikevich would have a material adverse effect on our business and operations. If we were to lose his services, or if he is not available to us when we need him, our ability to continue our business model would suffer and we may be forced to cease operations until such time as we could hire a suitable replacement.





6.           We may, in the future, issue additional common shares, which would reduce investors’ percent of ownership and may dilute our share value.


Our Certificate of Incorporation authorizes the issuance of 95,000,000 shares of common stock, par value $0.001 per share, of which 9,349,000 shares are issued and outstanding. The future issuance of shares of common stock may result in substantial dilution in the percentage of our common stock held by our then existing shareholders. We may value any common stock issued in the future on an arbitrary basis. The issuance of common stock for future services or acquisitions or other corporate actions may have the effect of diluting the value of the shares held by our investors, and might have an adverse effect on any trading market for our common stock.





7.           Our common shares are subject to the “Penny Stock” Rules of the SEC and the trading market in our securities is limited, which makes transactions in our stock cumbersome and may reduce the value of an investment in our stock.


The Securities and Exchange Commission has adopted Rule 15g-9 which establishes the definition of a “penny stock,” for the purposes relevant to us, as any equity security that has a market price of less than $5.00 per share or with an exercise price of less than $5.00 per share, subject to certain exceptions. For any transaction involving a penny stock, unless exempt, the rules require:


●
that a broker or dealer approve a person’s account for transactions in penny stocks; and●
the broker or dealer receive from the investor a written agreement to the transaction, setting forth the identity and quantity of the penny stock to be purchased.


In order to approve a person’s account for transactions in penny stocks, the broker or dealer must:


●
obtain financial information and investment experience objectives of the person; and●
make a reasonable determination that the transactions in penny stocks are suitable for that person and the person has sufficient knowledge and experience in financial matters to becapable of evaluating the risks of transactions in penny stocks.


The broker or dealer must also deliver, prior to any transaction in a penny stock, a disclosure schedule prescribed by the Commission relating to the penny stock market, which, in highlight form:


●
sets forth the basis on which the broker or dealer made the suitability determination; and●
that the broker or dealer received a signed, written agreement from the investor prior to the transaction.


Generally, brokers may be less willing to execute transactions in securities subject to the “penny stock” rules. This may make it more difficult for investors to dispose of our Common shares and cause a decline in the market value of our stock.





Disclosure also has to be made about the risks of investing in penny stocks in both public offerings and in secondary trading and about the commissions payable to both the broker-dealer and the registered representative, current quotations for the securities and the rights and remedies available to an investor in cases of fraud in penny stock transactions. Finally, monthly statements have to be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny stocks.





8.           Because we do not intend to pay any cash dividends on our common stock, our stockholders will not be able to receive a return on their shares unless they sell them.


We intend to retain any future earnings to finance the development and expansion of our business. We do not anticipate paying any cash dividends on our common stock in the foreseeable future. Unless we pay dividends, our stockholders will not be able to receive a return on their shares unless the value of such shares appreciates and they sell them. There is no assurance that stockholders will be able to sell shares when desired.





4





9.           We may issue shares of preferred stock in the future that may adversely impact your rights as holders of our common stock.


Our Certificate of Incorporation authorizes us to issue up to 5,000,000 shares of “blank check” preferred stock. Accordingly, our board of directors will have the authority to fix and determine the relative rights and preferences of preferred shares, as well as the authority to issue such shares, without further stockholder approval. As a result, our board of directors could authorize the issuance of a series of preferred stock that would grant to holders preferred rights to our assets upon liquidation, the right to receive dividends before dividends are declared to holders of our common stock, and the right to the redemption of such preferred shares, together with a premium, prior to the redemption of the common stock. To the extent that we do issue such additional shares of preferred stock, your rights as holders of common stock could be impaired thereby, including, without limitation, dilution of your ownership interests in us. In addition, shares of preferred stock could be issued with terms calculated to delay or prevent a change in control or make removal of management more difficult, which may not be in your interest as holders of common stock.





ITEM 1B.  UNRESOLVED STAFF COMMENTS


None.




ITEM 2.  PROPERTIES


The Company’s leases 1,700 sq. feet office, located at 40 Exchange Place, New York, NY 10005. Company pays $3,000 of rent per month on a 60 month lease.





ITEM 3.  LEGAL PROCEEDINGS


There is no litigation pending or threatened by or against the Company.  The Company may become involved in legal proceedings in the ordinary course of its business.





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


No matters were submitted to a vote of the Company’s shareholders during the fiscal year ended December 31, 2011.








PART II





ITEM 5.  MARKET FOR THE REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES


MARKET INFORMATION


Our Registration Statement, as filed with the SEC on Form S-1 on August 21, 2008, was declared effective by the SEC on August 28, 2008. Company registered with FINRA and received symbol IGNI on January 13, 2011.


DIVIDEND POLICY


The Company has never paid cash dividends on any of its securities. The Company currently intends to retain any earnings for use in its operations and does not anticipate paying cash dividends in the foreseeable future. Future dividend policy will be determined by the Company’s Board of Directors based upon the Company’s earnings, if any, its capital needs and other relevant factors.


RECENT SALES OF UNREGISTERED SECURITIES; USE OF PROCEEDS FROM UNREGISTERED SECURITIES





5





SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT





The following table lists, as of December 31, 2011, the number of shares of common stock of our Company that are beneficially owned by (i) each person or entity known to our Company to be the beneficial owner of more than 5% of the outstanding common stock; (ii) each officer and director of our Company; and (iii) all officers and directors as a group. Information relating to beneficial ownership of common stock by our principal shareholders and management is based upon information furnished by each person using “beneficial ownership” concepts under the rules of the Securities and Exchange Commission. Under these rules, a person is deemed to be a beneficial owner of  a security if that person has or shares voting power, which includes the power to vote or direct the voting of the security, or investment power, which includes the power to vote or direct the voting of the security. The person is also deemed to be a beneficial owner of any security of which that person has a right to acquire beneficial ownership within 60 days. Under the Securities and Exchange Commission rules, more than one person may be deemed to be a beneficial owner of the same securities, and a person may be deemed to be a beneficial owner of securities as to which he or she may not have any pecuniary beneficial interest. Except as noted below, each person has sole voting and investment power.





The percentages below are calculated based on 9,331,000 shares of our common stock issued and outstanding as of December 31, 2011.  We do not have any outstanding options, warrants or other securities exercisable for or convertible into shares of our common stock.  Unless otherwise indicated, the address of each person listed is c/o iGenii Inc., 40 Exchange Place, New York, NY 10005.





Name of Beneficial Owner
Title Of Class
Amount and Nature of

Beneficial Ownership
Percent of ClassRoss Lavnikevich
Common Stock
3,054,740
32.69%Rafael Abdurachmanov
Common Stock
2,502,000
26,92%Rafael Mordukhaev
Common Stock
3,197,000(1)
35.36%Directors and Officers as a Group (3 person)
Common Stock
8,731,000
93.97%





(1)  Includes 64,000 shares of common stock owned by Elena Mordukhaev, the wife of Rafael Mordukhaev.





DIRECTOR INDEPENDENCE





We are not subject to listing requirements of any national securities exchange or national securities association and, as a result, we are not at this time required to have our board comprised of a majority of “independent directors.” We do not believe that any of our directors currently meet the definition of “independent” as promulgated by the rules and regulations of the American Stock Exchange.





CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS





In 4th quartet of 2011 Ross Lavnikevich, our President, Chief Executive Officer and a director, exercised his options to purchase 16,000 common shares for the aggregate consideration of $16,000.  This transaction was conducted in reliance upon an exemption from registration provided under Section 4(2) of the Securities Act of 1933, as amended.  Mr. Lavnikevich was our officer and director and had access to all of the information which would be required to be included in a registration statement, and the transaction did not involve a public offering As of December 31, 2011 Ross Lavnikevich owned 3,054,740 shares of our common stock.




6





In October, 2011 Rafael Mordukhaev, our Secretary, Treasurer and a director exercised his options to purchase 3,000 common shares for the aggregate consideration of $3,000.   This transaction was conducted in reliance upon an exemption from registration provided under Section 4(2) of the Securities Act of 1933, as amended.  Mr. Mordukhaev was our officer and director and had access to all of the information which would be required to be included in a registration statement, and the transaction did not involve a public offering. As of December 31, 2011 Rafael Mordukhaev owned 3,133,000 shares of our common stock.





Rafael Abdurachmanov, our Chief Financial Officer and a director, did not exercise his options and did not purchase any additional common shares. As of December 31, 2011 Rafael Abdurachmanov owned 2,502,000 shares of our common stock.





ITEM 6.  SELECTED FINANCIAL DATA


The Company is not subject to this requirement since it is a smaller reporting company.





ITEM 7.  MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION ANDRESULTS OF OPERATIONS


This discussion contains forward-looking statements which relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as “may”, “should”, “expects”, “plans”, “anticipates”, “believes”, “estimates”, “predicts”, “potential” or “continue” or the negative of these terms or other comparable terminology.  These statements are only predictions and involve known and unknown risks, uncertainties and other factors, including the risks in the section entitled “Risk Factors,” that may cause our or our industry’s actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. While these forward-looking statements, and any assumptions upon which they are based, are made in good faith and reflect our current judgment regarding the direction of our business, actual results will almost always vary, sometimes materially, from any estimates, predictions, projections, assumptions or other future performance suggested herein. Except as required by applicable law, including the Securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results.





Business Overview


iGenii is a full service internet provider. We are involved in all phases of web development, hosting and search engine optimization for wide variety of business from small mom-and-pop shops to big multi-nationals, we also serve non-for-profit and governmental entities. iGenii developed SEP or Search Engine Positioning formula that allows businesses to be placed on 1st page of Google’s natural or organic search  in relevant business category. We are working on supplanting Yellow Pages’ service in Local Business Search.





Results of Operation


For the year ended December 31, 2011, we had gross revenues of $659,084, representing an increase of $85,731, or 15% compared to the year ended December 31, 2010. We increased our product line which allowed us to increase drastically sales. We are constantly working on increasing our product offerings, sales force and our ability to reach more clientele and to enlarge our customer base.





The selling, general and administrative expenses were $888,007 for the fiscal year ended December 31, 2011 compared to $552,756 for the year ended December 31, 2010. Stock based compensation, higher rental payments and executive salaries attributed to increase in the general expenses. We hope to maintain our ability to keep costs of sale under control in next 12 month.





For the year ended December 31, 2011 the Company generated a net loss of $228,923, as compared to net profit of $20,597 for the fiscal year ended December 31, 2010. The loss was due to higher operating expenses.  This lead the Company to increase its Current Liabilities to $102,072 from $21,389 and decrease its cash position to $405 from $21,796 by the end of the fiscal year ended December 31, 2010. We hope to reverse momentum and increase the Company’s profitability in the next 12 months.




7





Liquidity and Capital Resources


Our cash decreased to $405 as to compare to $21,795, on December 31, 2010.


In 2011 the Company received $400 from sale of common shares and $19,000 from exercise of options. The proceeds from the sale of the shares were used to fund our accounts payable from prior years among others, professional fees, insurance, payroll and office expenses.  Managements believe that company should operate without loans and therefore asked majority stakeholders to purchase additional shares.  We hope that funds generated by current operations will be sufficient to fund our operating expenses over the next twelve months. If our operating revenues during the next twelve months would increase rapidly, we will be able to finance our continued operations from our operating revenues and will have no need to raise the funds to pay for these expenses.  We did not borrow money from shareholders or issue debt at present and 12 next month and therefore we currently have no agreements, arrangements or understandings with any person to obtain funds through bank loans, lines of credit or any other sources. Since we have no such arrangements or plans currently in effect, our ability to raise funds for a marketing program will be limited to equity financing through the sale of additional shares.





As of December 31, 2011, the company has accumulated operating losses of $438,657. The company’s ability to continue as a going concern is contingent upon the successful completion of additional financing arrangements and its ability to achieve and maintain profitable operations. While the company is expanding its best efforts to achieve the above plans, there is no assurance that any such activity will generate funds that will be available for operations.





Critical Accounting Policies and Estimates


Use of Estimates


The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.





Long-Lived Assets


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




Revenue Recognition


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


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




Payments received before all of the relevant criteria for revenue recognition are satisfied are recorded as unearned revenue. Set up fees treated as deferred revenues, and are amortized over 12 months or fully written off once service agreement is cancelled.





Off-Balance Sheet Arrangements


We have no off-balance sheet arrangements.





ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK


The Company is not subject to this requirement since it is a smaller reporting company.





ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA


The Financial Statements of the Company called for by this item are contained in a separate section of this report.  See “Index to Consolidated Financial Statements” on Page F-1.




8




ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING ANDFINANCIAL DISCLOSURES
 On March 30, 2012, our current independent registered public accounting firm, Acqavella, Chiarelli, Shuster, Berkower & Co., LLP (“ACSB”) resigned and on April 2, 2012, we appointed Rosenberg Rich Baker Berman & Company (“RRBB”) as our new independent registered public accounting firm.
  There have not been any changes in or disagreements with accountants on accounting and financial disclosure or any other matter.
 
 Our Board of Directors approved the appointment of Rosenberg Rich Baker Berman & Company as our new independent registered public accounting firm effective as of April 2, 2012. During the two most recent fiscal years and through the date of our engagement, we did not consult with RRBB regarding either (1) the application of accounting principles to a specified transaction, either completed or proposed, or the type of audit opinion that might be rendered on our financial statements, or (2) any matter that was either the subject of a disagreement (as defined in Regulation S-K Item 304(a)(1)(v)), during the two most recent fiscal years.
  ITEM 9A(T). CONTROLS AND PROCEDURES
  Evaluation of Disclosure Controls and Procedures
  Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”) as of the end of the period covered by this Annual Report on Form 10-K. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures as of the end of the period covered by this report were not effective such that the information required to be disclosed by us in reports filed under the Securities Exchange Act of 1934 is (i) recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and (ii) accumulated and communicated to our management to allow timely decisions regarding disclosure. A controls system cannot provide absolute assurance, however, that the objectives of the controls system are met, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud if any, within a company have been detected.
  Management has determined that there were material weaknesses in our internal controls as of December 31, 2011. A material weakness in the Company’s internal controls exists in that, beyond the Company’s Chief Financial Officer there is a limited financial background amongst other executive officers or the board of directors. This material weakness may affect management’s ability to effectively review and analyze elements of the financial statement closing process and prepare financial statements in accordance with U.S.GAAP. In making this assessment, our management used the criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). As a result of the material weaknesses described above, our management concluded that as of December 31, 2011, we did not maintain effective internal control over financial reporting based on the criteria established in Internal Control — Integrated Framework issued by the COSO.
  Changes in Internal Control
  Our management, with the participation our Chief Executive Officer and Chief Financial Officer, performed an evaluation as to whether any change in our internal controls over financial reporting occurred during the year ended December 31, 2011. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that no change occurred in the Company’s internal controls over financial reporting during the year ended December 31, 2011 that has materially affected, or is reasonably likely to materially affect, the Company’s internal controls over financial reporting.
  Limitations on Effectiveness of Controls and Procedures
  In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply its judgment in evaluating the benefits of possible controls and procedures relative to their costs.
  9
  PART III
  ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
  DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
  Directors and Executive Officers
 Set forth below is certain information relating to our current sole director and executive officer, including his name, age, and business experience.
  Name and Business Address

Age

PositionRoss Lavnikevich

44

President, Chief Executive Officer and DirectorRafael Abdurachmanov

47

Chief Financial Officer and DirectorRafael Mordukhaev

47

Treasurer, Secretary and Director
  Ross Lavnikevich has been our President, Chief Executive Officer and a Director since our inception on February 22, 2008. Since 1992, Mr. Lavnikevich has worked at a Computer Scientist for Citibank, Merrill Lynch, NYSE and Solomon Brothers. Mr. Lavnikevich obtained a B.S. in Electronic Engineering from New York Polytechnic University in 1992.
  Rafael Abdurachmanov has been our Chief Financial Officer and a Director since our inception on February 22, 2008. Mr. Abdurachmanov has over 20 years of diversified Public and Private Accounting experience. From 2003 to 2006, Mr. Abdurachmanov worked with the accounting firm of Morgenstern Svoboda & Baer, CPAs, P.C. and From 2001 to 2003 he worked as a certified public accountant with BuyFuton.com. From 1998 to 2001, Mr. Abdurachmanov worked with the accounting firm of Deloitte & Touche, LLC. as a certified public accountant. Mr. Abdurachmanov obtained a B.A. in Economics, Accounting and Informational Systems from the City University of New York, Queens College.
  Rafael Mordukhaev has been our Treasurer, Secretary and Director since our inception on February 22, 2008. Since 2003 Mr. Mordukhaev has been a real estate developer and is currently the owner and manager of Cross Town Realty LLC. In 1992, Mr. Mordukhaev founded CityRide Transportation, a limousine company. Mr. Mordukhaev graduated from Tashkent Radio and Television Broadcasting Institute in 1988.
  There are no familial relationships among any of our directors or officers. None of our directors or officers is a director in any other U.S. reporting companies. None of our directors or officers has been affiliated with any company that has filed for bankruptcy within the last five years. The Company is not aware of any proceedings to which any of the Company’s officers or directors, or any associate of any such officer or director, is a party adverse to the Company or any of the Company’s subsidiaries or has a material interest adverse to it or any of its subsidiaries.
  Each director of the Company serves for a term of one year or until the successor is elected at the Company’s annual shareholders’ meeting and is qualified, subject to removal by the Company’s shareholders. Each officer serves, at the pleasure of the board of directors, for a term of one year and until the successor is elected at the annual meeting of the board of directors and is qualified.
  Code of Ethics
 
 We do have a Code of Ethics applicable to our principal executive, financial or accounting officer. Code of Ethics posted on the corporate website at www.iGenii.com.
 
 Outstanding Equity Awards
 During the fiscal year ended December 31, 2011, three of our directors or executive officers were granted and held unexercised options, stock that had been vested. We have no pension, health, annuity, bonus, insurance, non-equity incentive, profit sharing or similar benefit plans.
  Executive Compensation
 
 During the fiscal year ended December 31, 2011, Ross Lavnikevich our President, Chairman of the Board of Directors and Chief Executive Officer received $23,000 as a salary and 30,000 Stock Options; he exercised 16,000 options during the year. Rafael Abdurachmanov ourChief Financial Officer and Director received $10,990 as a commission and 30,000 Stock Options. Rafael Morukhaev our Treasurer and Director received $18,648 as a commission and 30,000 Stock Options; he exercised 3,000 options during the year.
 
 10
  ITEM 11. PRINCIPAL ACCOUNTANT FEES AND SERVICES
 AUDIT FEES
 The aggregate fees billed for professional services rendered by our principal accountant for the audit of our financial statements, review of financial statements included in our quarterly reports and other fees that are normally provided by the accountant in connection with statutory and regulatory filings or engagements during the years ended December 31, 2011 and 2010 were $14,000 and $14,000 each respectively.
  AUDIT COMMITTEE
 The Company’s Board of Directors functions as its audit committee. We do not currently have a “financial expert”, as such term is defined under the Securities Exchange Act, on the Board of Directors. It is the policy of the Company for all work performed by our principal accountant to be approved in advance by the Board of Directors. All of the services described above in this Item 14 were approved in advance by our Board of Directors.
  PART IV
  ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
  Financial Statements.
 See index to financial statements
 Exhibits
  Number
Exhibit31.1
Certificate of Chief Executive Officer and Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.32.1
Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
 
 11
 
 SIGNATURES
  Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this Annual Report on Form 10-K to be signed on its behalf by the undersigned, thereunto duly authorized.
  Date: July 9, 2012
  iGENII, INC.By:
/s/ Ross LavnikevichRoss LavnikevichPresident, Chairman of the Board of 
Directors and

Chief Executive Officer
  POWER OF ATTORNEY
  KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Ross Lanikevich, Rafael Abdurachmanov and Rafael Mordukhaev, jointly and severally, his or her attorney-in-fact, with the power of substitution, for him or her in any and all capacities, to sign any amendments to this Annual Report on Form 10-K and to file the same, with exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, hereby ratifying and confirming all that each of said attorneys-in-fact, or his or her substitute or substitutes, may do or cause to be done by virtue hereof.
  Pursuant to the requirements of the Securities Exchange Act of 1934, this Annual Report on Form 10-K has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
  Signature

Title

Date/s/ Ross Lavnikevich

President, Chairman of the Board of Directors and Chief

July 9, 2012Ross Lavnikevich

Executive Officer (Principal Executive Officer)/s/ Rafael Abdurachmanov

Chief Financial Officer (Principal Financial and Accounting

July 9, 2012Rafael Abdurachmanov

Officer) and Director/s/ Rafael Mordukhaev

Treasurer and Director

July 9, 2012Rafael Mordukhaev
  12
  iGENII, INC.
 FINANCIAL STATEMENTS
 (AUDITED)
 DECEMBER 31, 2011
  TABLE OF CONTENTS
 Report of Independent Registered Public Accounting Firm

F-1Balance Sheets

F-2Statements of Operations

F-3Statements of Cash Flows

F-4Statements of Stockholders Equity

F-5Notes to Financial Statements

F-6 - F-13
 
 
  REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
  To the Board of Directors and Stockholders of
 iGenii, Inc.
  We have audited the accompanying balance sheet of iGENII, Inc.(the “Company”) as of December 31, 2010, and the related statements of operations, stockholders’ equity and cash flows for the year then ended. The Company’s management is responsible for these financial statements. Our responsibility is to express an opinion on these financial statements based on our audits.
  We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that out audits provide a reasonable basis for our opinion.
  In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of iGenii, Inc. as of December 31, 2010, and the results of its operations and its cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States of America.
  /S/ ACSB LLP
  New York, New York
 April 8, 2012
  
  Report of Independent Registered Public Accounting Firm
  To the Board of Directors and
 Stockholders of iGenii, Inc.
 
 We have audited the accompanying balance sheets of iGenii, Inc. as of December 31, 2011 and the related statements of operations, stockholders’ equity and cash flows for the year then ended. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.
  We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal controls over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
  In our opinion, based on our audit, the financial statements referred to above present fairly, in all material respects, the financial position of iGenii, Inc. as of December 31, 2011, and the results of its operations and its cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America.
  The accompanying financial statements have been prepared assuming the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company, has incurred significant losses, has net stockholders’ deficit and, its current liabilities exceed its current assets. These factors raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are also described in in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
  /s/ Rosenberg Rich Baker Berman & Company
 
 Somerset, New Jersey
  July 6, 2012
 
 F-1
  iGENII, INC.
 BALANCE SHEETS
 AS OF DECEMEBER 31,
  2011


2010ASSETSCurrent AssetsCash and cash equivalents

$
405


$
21,796Total Current Assets


405



21,796Equipment , net


6,584



9,710Intangibles, net


22,000



23,103Security deposit


5,600



2,000Total Assets

$
34,589


$
56,608LIABILITIES AND STOCKHOLDERS’ EQUITYCurrent LiabilitiesDeferred revenue

$
38,178


$
-Deferred rent obligation


5,545



-Accounts payable and accrued expenses


58,770



21,389Total Current Liabilities


102,493



21,389Stockholders’ EquityPreferred stock, 5,000,000 shares authorized


-



-Common stock, $.001 par value, 95,000,000 shares authorized, 9,331,000 and 9,295,200 issued and outstanding, respectively


9,331



9,295Additional paid in capital


361,420



235,656Accumulated deficit


(438,655
)


(209,732
)Total Stockholders’ Equity


(67,904)



35,219Total Liabilities and Stockholders’ Equity

$
34,589


$
56,608
  The accompanying notes are an integral part of these financial statements.
  F-2
 
 iGENII, INC.
 STATEMENTS OF OPERATIONS
 FOR THE YEAR ENDED DECEMBER 31,
  2011


2010Sales, net

$
659,084


$
573,353Selling, general and administrative expenses


888,007



552,756Income (loss) from operations


(228,923
)


20,597Net income (loss)

$
(228,923
)

$
20,597Net income (loss) per common shareBasic and diluted

$
(.02
)

$
.00Weighted average common shares outstandingBasic and diluted


9,310,451



9,282,750
  The accompanying notes are an integral part of these financial statements.
  F-3
 iGENII, INC.
 STATEMENT OF CASH FLOWS
 FOR THE YEARS ENDED DECEMBER 31,
 2011


2010CASH FLOWS FROM OPERATING ACTIVITIESNet income (loss)

$
(228,923
)

$
20,597Adjustments to reconcile net income to net cash provided by operating activities:Depreciation and amortization


5,428



5,907Stock based compensation


106,400Security deposit


(3,600
)


2,200Increase / (decrease) in current liabilities:Deferred revenue


38,178



-Deferred rent obligation


5,545



-Accounts payable


37,381



(18,452
)Total Adjustments


189,332



(10,345
)Net cash provided/(used) by operating activities


(39,591
)


10,252CASH FLOWS FROM INVESTING ACTIVITIESPurchase of computer equipment


(1,200
)


(680
)Purchase of infinite life intangiblesNet cash used by investing activities


(1,200
)


(680
)CASH FLOWS FROM FINANCING ACTIVITIESProceeds from sales of common stock


400



11,300Proceeds from exercise of employee options


19,000Net cash used by financing activities


19,400



11,300Net change in cash and cash equivalents


(21,391
)


20,872Cash and cash equivalents, beginning balance


21,796



923Cash and cash equivalents, ending balance

$
405


$
21,796SUPPLEMENTAL DISCLOSURES:Cash paid during the year for:Income tax payments

$
-


$
-Interest payments

$
-


$
-
  The accompanying notes are an integral part of these financial statements.
 
 F-4
 
 iGENII, INC.
 STATEMENT OF STOCKHOLDERS’ EQUITY
 FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010
  AdditionalPaid-InCapital


Retained

Earnings

(AccumulatedDeficit)


TotalStockholders’
Equity/(Deficit)Common StockShares


AmountBalance – December 31, 2009


9,272,900


$
9,273


$
224,378


$
(230,329
)

$
3,323Sale of common stock


22,300



22



11,278







11,300Net income














20,597



20,597Balance – December 31, 2010


9,295,200


$
9,295


$
235,656


$
(209,732
)

$
35,219Common stock issued for cash


400



1



399







400Common stock issued for services -employees


16,400



16



16,384







16,400Employee option expense










90,000







90,000Employee option exercise


19,000



19



18,981







19,000Net (loss)


-



-



-



(228,923
)


(228,923
)Balance – December 31, 2011


9,331,000


$
9,331


$
361,420


$
(438,655
)

$
(67,904
)
  The accompanying notes are an integral part of these financial statements.
 
 F-5




iGENII, INC.
 NOTES TO FINANCIAL STATEMENTS
 DECEMBER 31, 2011
 
 Note 1 - ORGANIZATION
 
 iGenii, Inc. was incorporated on February 22, 2008 under the laws of the State of Delaware.  iGenii is a full service internet provider. We are involved in all phases of web development, hosting and search engine optimization for wide variety of business from small mom-and-pop shops to big multi-nationals, we also serve not-for-profit and governmental entities. iGenii developed a SEP or Search Engine Positioning formula that allows businesses to be placed on the first page of Google’s natural or organic search  in their relevant business category. We are working on supplanting Yellow Pages’ services in Local Business Searches.
  Note 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
 Basis of Presentation
 
 The accompanying financial statements have been prepared in conformity with accounting principle generally accepted in the United States of America.
 
 Going Concern
  These financial statements have been prepared in accordance with generally accepted accounting principles applicable to a going concern, which contemplates the realization of assets and the satisfaction of liabilities and commitments in the normal course of business. As of December 31, 2011, the Company has accumulated operating losses of $438,657. The company’s ability to continue as a going concern is contingent upon the successful completion of additional financing arrangements and its ability to achieve and maintain profitable operations. While the Company is expanding its best efforts to achieve the above plans, there is no assurance that any such activity will generate funds that will be available for operations.
  These conditions raise substantial doubt about the Company’s ability to continue as a going concern. These financial statements do not include any adjustments that might arise from this uncertainty.
  Use of Estimates
 
 The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
 
 Risks and Uncertainties
 
 The Company is subject to substantial risks from, among other things, intense competition associated with the industry in general, other risks associated with financing, liquidity requirements, rapidly changing customer requirements, limited operating history and the volatility of public markets.
 
 Long-Lived Assets
 
 The Company assesses long-lived assets for impairment as required under ASC 360-10, Accounting for the Impairment or Disposal of Long-Lived Assets. The Company reviews for impairment whenever events or circumstances indicate that the carrying amount of these assets may not be recoverable. The Company assesses these assets for impairment based on estimated future cash flows from these assets.
 
 F-6
 
 iGENII, INC.
 NOTES TO FINANCIAL STATEMENTS
 DECEMBER 31, 2011
 
 Note 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
 
 Fair Value Measurements
 
 Accounting Standards Codification (“ASC”) 820-10, Fair Value Measurements, defines fair value, establishes a framework for measuring fair value under generally accepted accounting principles and enhances disclosures about fair value measurements. Fair value is defined under ASC 820-10 as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or the most advantageous market for an asset or liability in an orderly transaction between participants on the measurement date. Valuation techniques used to measure fair value under ASC 820-10 must maximize the use of observable inputs and minimize the use of unobservable inputs. The standard describes a fair value hierarchy based on the levels of inputs, of which the first two are considered observable and the last unobservable, that may be used to measure fair value which are the following:
 
 • Level 1 - Quoted prices in active markets for identical assets or liabilities.
 
 • Level 2 - Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or corroborated by observable market data or substantially the full term of the assets or liabilities.
 
 • Level 3 - Unobservable inputs that are supported by little or no market activity and that are significant to the value of the assets or liabilities
 
 Revenue Recognition
 
 We recognize revenue in accordance with Accounting Standards Codification, or (“ASC”), 605, Revenue Recognition. We recognize revenue when all of the following conditions are satisfied: (1) there is persuasive evidence of an arrangement; (2) the service has been provided to the customer; (3) the amount of fees to be paid by the customer is fixed or determinable; and (4) the collection of our fees is reasonably assured.
 
 Thus, we recognize subscription revenue on a monthly basis, as services are provided. Customers are billed for the subscription on a monthly, quarterly, semi-annual or annual basis, at the customer’s option. For all of our customers, regardless of the method we use to bill them, subscription revenue is recorded as deferred revenue in the accompanying balance sheets. As services are performed, we recognize subscription revenue on a monthly basis over the applicable service period. When we provide a free trial period, we do not begin to recognize subscription revenue until the trial period has ended and the customer has been billed for the services.
 
 Payments received before all of the relevant criteria for revenue recognition are satisfied are recorded as unearned revenue. Set up fees treated as deferred revenues, and are amortized over 12 months or fully written off once service agreement is cancelled.
 
 Advertising
 
 Advertising expenses consist primarily of costs of promotion for corporate image and product.  The Company expenses all advertising costs as incurred. For the year ended December 31, 2011 and 2010, advertising expenses were $13,695 and $600 respectively.
 
 Income Taxes
 
 Income taxes are provided for the tax effects of transactions reported in the financial statements and consist of taxes currently due plus deferred taxes related primarily to differences between the bases of assets and liabilities for financial and income tax reporting. The deferred tax assets and liabilities represent the future tax return consequences of those differences, which will either be taxable or deductible when the assets and liabilities are recovered or settled. Deferred taxes are also recognized for operating losses that are available to offset future federal and state income taxes. Any interest charges on underpayment or other assessments are recorded as interest expense. Any penalties are recorded in Operating Expenses.
  F-7
 
 Effective January 1, 2007, the Company adopted the provisions of ASC 740-10, Accounting for Uncertainty in Income Taxes. The implementation of ASC 740-10 had no impact on the Company’s financial statements as the Company has not recognized any uncertain income tax positions.
  Earnings (Loss) Per Share
 
 In accordance with ASC 260, basic net loss per common share is computed by dividing net loss by the weighted-average number of common shares outstanding. Diluted net loss per common share is computed similarly to basic net loss per share, except that the denominator is increased to include all potential dilutive common shares, including outstanding options. Potentially dilutive common shares have been excluded from the diluted loss per common share computation for the year ended December 31, 2010 because such securities have an anti-dilutive effect on loss per share due to the Company’s net loss.
 
 The following table sets forth a reconciliation of the number of shares used in the basic and diluted EPS computation for the years ended December 31, 2010 and 2011:
 
 at December 31,2011


2010WWeighted average common shares outstanding


9,313,100



9,284,050DiDilutive securities - Options


-



-Diluted average common stock equivalents outstanding


9,313,100



9,284,050
 
 The following table sets forth the number of potential shares of common stock that have been excluded from diluted earnings per share because their effect was anti-dilutive (in thousands):
 
 at December 31,2011


2010Outstanding stock options


71,000



-
  Intangibles
 
 Website and trademarks
 Intangible assets are amortized using the straight-line method over their estimated period of benefit. Evaluation of the recoverability of intangible assets is made annually to take into account events or circumstances that warrant revised estimates of useful lives or that indicate that impairment exists. Not all of our intangible assets are subject to amortization. No impairments of intangible assets have been identified during any of the periods presented. On July 1, 2008 the Company signed an agreement to purchase a website and telephone number for $20,000.  $5,000 of the purchase price was allocated to the website and this finite life intangible is being amortized over 36 months using the straight line method and $15,000 was allocated to telephone number.  In addition, the Company paid $950 for registering iGENII’s Trademark. The Company purchased an additional telephone number for $ 7,000 on May 27, 2009.  This intangible asset’s finite life is being amortized over 36 months under the straight line method. The $22,000 paid for the two telephone numbers (212-WEBSIE and 718-WEBSITE) is deemed an intangible asset with an infinite life and is not being amortized.
 
 F-8
 
 iGENII, INC.
 NOTES TO FINANCIAL STATEMENTS
 DECEMBER 31, 2011
 
 Note 2 -SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
 
 Intangibles(Continued)
 
 12/31/2011


12/31/2010Telephone numbers


22,000



22,000Website and Trademarks


5,950



5,950Accumulated amortization


(5,950
)


(4,847
)Totals


22,000



23,103
  Amortization expenses were $1,103 and 1,983 for the twelve months ended December 31, 2011 and 2010 respectively. Company fully amortized all company’s finite life intangible assets on the books as of December 31, 2011.
 
 Reclassifications
  Certain accounts have been reclassified to conform to the current year presentations.
  Stock-Based Employee Compensation
  The Company has exchanged its common stock for services rendered by employees, directors, consultants and others. The Company accounts for stock and stock options issued to employees and non-employees for services and other compensation under the provisions of ASC No. 718, Compensation - Stock Compensation and ASC No. 505-50, Equity-Based Payments to Non-Employees , which establish standards for the accounting for transactions in which an entity exchanges its equity instruments for goods and services at fair value. These standards also address transactions in which an entity incurs liabilities in exchange for goods and services that are based on the fair value of the entity’s equity instruments or that may be settled by the issuance of those equity instruments. For employees, stock awarded is valued based on the closing bid price on the date of grant. For non-employees, stock issued for services is valued at either the invoiced or contracted value of services provided, or to be provided or the fair value of the stock at the due date per the service agreement, or stock issuance date, whichever is more readily determinable.
 
 We recognize expense for our share-based compensation based on the fair value of the awards at the time they are granted. We estimate the value of stock option awards on the date of grant using the Black-Scholes model. The determination of the fair value of share-based payment awards on the date of grant is affected by our stock price as well as assumptions regarding a number of complex and subjective variables. These variables include our expected stock price volatility over the term of the awards, expected term, risk-free interest rate, expected dividends and expected forfeiture rates. The forfeiture rate is estimated using historical option cancellation information, adjusted for anticipated changes in expected exercise and employment termination behavior. Our outstanding awards do not contain market or performance conditions therefore we have elected to recognize share-based employee compensation expense on a straight-line basis over the requisite service period.
  Recent Accounting Pronouncements
 
 No new accounting pronouncements issued or effective during the fiscal year has had or is expected to have a material impact on the financial statements.
 
 Note 3 – COMMITMENTS
 
 On January 6, 2011 the Company signed new leases which commenced February 15, 2011 and expires February 2016. Rent expenses were $28,275 and $13,382 for the twelve months ended December 31, 2011 and December 31, 2010, respectively.
 
 Minimum lease commitments are as follows:
  2012

$
35,8002013

$
36,9902014

$
38,1002015

$
39,2412016

$
3,278
 
 F-9
 
 iGENII, INC.
 NOTES TO FINANCIAL STATEMENTS
 DECEMBER 31, 2011
 
 Note 4 – INCOME TAXES
  As a result of the Company incurring net losses, an income tax benefit in the form of net operating loss carry-backs and carry-forwards have been generated for the years ended December 31, 2011 and 2010. Since the Company has not had taxable income for the last four years, utilization of net operating loss carry-backs is currently not possible. The potential future benefit from income taxes arising from operations for the years ended December 31, 2011 and 2010 consist of the following:
  December 31,2011


2010Current:Federal

$
-


$
-State


-



-Deferred:


-



-Federal


114,000



72,000State


22,000



12,000136,000



84,000Increase in valuation allowance


(136,000)



(84,000
)Income tax benefit


-



-
  F-10
 
 The effective tax rates differ from the statutory rates for 2011 and 2010 primarily due to the following:
  2011


2010Tax Rate


Tax RateAmount


Percentage


Amount


PercentageFederal income tax liability (benefit)


(77,834
)


(34.0
%)


7,002



34.0
%State taxes


(18,314
)


(8.0
%)


1,649



8.0
%Non-deductible expenses


44,688



19.5
%


-



-Tax expense (benefit)


(51,460
)


(22.5
%)

$
8,651


$
42.0
%
  The Company’s net deferred tax assets consist primarily of net operating loss carry-forwards. At December 31, 2011, the Company had federal net operating loss carry-forwards totaling approximately $332,000 which may be used to offset future taxable income. These net operating loss carry-forwards expire over various years through 2023. As of December 31, 2011 and 2010, the Company has determined that due to the uncertainty regarding its future profitability, a full valuation allowance is required for deferred tax assets. Net deferred tax assets and liabilities are comprised of the following as of December 31, 2011 and 2010:
  December 31,2011


2010Deferred tax assetsDomestic and operating loss carry-forwards

$
136,000


$
84,000Total deferred tax asset


136,000



84,000Less: Valuation allowance for deferred assets


(136,000
)


(84,000
)Net deferred tax asset

$
 ̄


$
 ̄Net deferred tax liabilities

$
 ̄


$
 ̄
  Note 5 –PROPERTY, PLANT & EQUIPMENT
 Computer equipment depreciated over 5 years using straight line method.
 
 12/31/2011


12/31/2010Computer Equipment

$
21,330


$
20,130Accumulated Depreciation


(14,746
)


(10,420
)Total

$
6,584


$
9,710
 
 Depreciation expenses were $4,386 and $3,924 for the twelve months ended December 31, 2011 and December 31, 2010, respectively.
 
 F-11
 
 Note 6 – COMMON STOCK
 
 During fiscal year ended December 31, 2011 the Company sold 400 shares of common stock for $400. Also during fiscal year 2011 the Company issued 19,000 shares of common stock for $19,000 to the employees who exercise employee options that were issued in 2011. Additionally, the Company granted 16,400 shares of common stock to Company employees for services provided. These services were valued at $16,400 which represented the fair value of the Company’s stock.
 
 On February 22, 2011, the board of directors of the Company adopted stock incentive plan as well as a stock option plan under which eligible key employees, officers, directors, consultants and agents of the Company may acquire shares of common stock of the Company. Accordingly, the Company reserves 5,000,000 shares of common stock for issuance under Stock Incentive Plan and a maximum of 5,000,000 shares of common stock for issuance under Stock Option Plan.
 
 On February 22, 2011, the board of directors of the Company granted 90,000 options to three officers of the Company.
  Note 7 – RELATED PARTY TRANSACTIONS
 
 During 2011 and 2010 the Company paid commissions to officers and directors in the amount of $29,638 and $21,345 for the twelve months ended December 31, 2011 and December 31, 2010, respectively.
  Note 8 – SUBSEQUENT EVENTS
 The Company has evaluated subsequent events after the balance sheet date of December 31, 2011 through filing of this report, and has determined all material subsequent events have been disclosed.
  Note 9 - STOCK BASED COMPENSATION
 Equity Incentive Plans
 On February 22, 2011 the stockholders approved the adoption of the Company’s 2011 Employee Stock Option Plan. Under the Plan, options may be granted which are intended to qualify as Incentive Stock Options (“ISOs”) under Section 422 of the Internal Revenue Code of 1986 (the “Code”) or which are not (“Non-ISOs”) intended to qualify as Incentive Stock Options thereunder. The maximum number of options made available for issuance under the Plan are five million (5,000,000) options. The options may be granted to officers, directors, employees or consultants of the Company and its subsidiaries at not less than 100% of the fair market value of the date on which options are granted. The term of each Option granted under the Plan shall be contained in a stock option agreement between the Optionee and the Company.
 
 The Board of Directors or a committee thereof, administers all of the equity incentive plans and determines the terms of options granted, including the exercise price, the number of shares subject to individual option awards and the vesting period of options, within the limits set forth in the plans. Options have a maximum term of 10 years and vest as determined by the Board of Directors.
 
 In February 2011 the board granted 90,000 options of the Company’s common stock to various officers and directors of the Company at an exercise price of $1.00 which vest immediately. In fourth quarter of 2011 Officers and Directors, exercised 19,000 options for the aggregate consideration of $19,000. The Company recorded stock base compensation expense of $90,000 for the fiscal year ended December 31, 2011.
 
 F-12
  The weighted-average fair value per share of the options granted during first quarter of 2011 was estimated on the date of grant using the Black-Scholes-Merton option pricing model; the following assumptions were used to estimate the fair value of the options at grant date based on the following:
  December 31,2011


2010Risk-Free interest rate


3.37
%


-Expected dividend yield


-



-Expected stock price volatility


298
%Expected life


9 yearsWeighted average fair value of options granted

$
1.00


$
-
 Number

Of

Options

Available


Number

Of Options

Outstanding


Weighted

average

remaining

contractual

Term


Weighted

Average

Exercise

Price


Aggregate

Intrinsic

Value


Number

ExercisableBalance January 1, 2011


0Balance February 22, 2011


5,000,000



0






$Options granted under plan


90,000



90,000


10 years



1.00Options expired under plan






-



-



-







-Exercised options






19,000



-Vested and exercisable options










-






$
0



71,000Balance December 31, 2011


4,910,000



71,000


9 years


$
1.00


$
0



71,000