##### 



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-QSB
  þ
    
    QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended March 31, 2007
 o
    
    TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
 For the transition period from       to
 Commission file number 0-51720
 InferX Corporation
  Delaware
(State or other jurisdiction of incorporation or organization)
    
    54-1614664
(I.R.S. Employer Identification No.)
 
 
 þ o
 o þ
  o þ




---



##### 



InferX Corporation
 Quarterly Report on Form 10-QSB
 for the Quarterly Period Ended
 March 31, 2007
 - INDEX -
 PagePART I- FINANCIAL INFORMATION:Item 1. Financial Statements:Report of Independent Registered Public Accounting Firm
    
    
    1Condensed Consolidated Balance Sheet as of March 31, 2007 (Unaudited)
    
    
    2Condensed Consolidated Statements of Operations for the three months ended March 31, 2007 and 2006 (Unaudited)
    
    
    3Condensed Consolidated Statements of Cash Flows for the three months endedMarch 31, 2007 and 2006 (Unaudited)
    
    
    4Notes to Condensed Consolidated Financial Statements (Unaudited)
    
    
    5Item 2. Managements Discussion and Analysis or Plan of Operation
    
    
    23Item 3. Controls and Procedures
    
    
    28PART II  OTHER INFORMATION:Item 1. Legal Proceedings
    
    
    29Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    29Item 3. Defaults Upon Senior Securities
    
    
    29Item 4. Submission of Matters to a Vote of Security Holders
    
    
    29Item 5. Other Information
    
    
    29Item 6. Exhibits
    
    
    29




---



##### 



PART I  FINANCIAL INFORMATION
 Item 1. Financial Statements.
 Report of Independent Registered Public Accounting Firm
 
      
 1




---



##### 



INFERX CORPORATION
(FORMERLY BLACK NICKEL ACQUISITION CORP. I)
CONDENSED CONSOLIDATED BALANCE SHEET (UNAUDITED)
MARCH 31, 2007
 ASSETSCURRENT ASSETSCash
    
    $
    2,065Unbilled services
    
    
    66,667Prepaid expenses and other current assets
    
    
    7,505Total current assets
    
    
    76,237Fixed assets, net of depreciation
    
    
    40,723Other AssetComputer software development costs, net of amortization
    
    
    362,211Total other asset
    
    
    362,211TOTAL ASSETS
    
    $
    479,171LIABILITIES AND STOCKHOLDERS EQUITY (DEFICIT)CURRENT LIABILITIESAccounts payable and accrued expenses
    
    $
    318,507Derivative liability
    
    
    645,549Current portion of notes payable
    
    
    16,980Unearned revenue
    
    
    66,667Total current liabilities
    
    
    1,047,703Long-term LiabilitiesNotes payable, net of current portion
    
    
    361,752TOTAL LIABILITIES
    
    
    1,409,455STOCKHOLDERS EQUITY (DEFICIT)Preferred stock, par value $0.0001 per share, 10,000,000 shares
authorized and
no shares issued and outstanding
    
    
    Common stock, par value $0.0001 per share, 75,000,000 shares
authorized and
9,129,392 issued and outstanding
    
    
    913Additional paid-in capital
    
    
    2,260,527Retained earnings (defict)
    
    
    (3,191,724
    )Total stockholders equity (deficit)
    
    
    (930,284
    )TOTAL LIABILITIES AND STOCKHOLDERS EQUITY (DEFICIT)
    
    $
    479,171
  2




---



##### 



INFERX CORPORATION
(FORMERLY BLACK NICKEL ACQUISITION CORP. I)
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
FOR THE THREE MONTHS ENDED MARCH 31, 2007 AND 2006
 2007
    
    
    2006REVENUE
    
    $
    100,000
    
    
    $
    49,997COST OF REVENUESDirect labor and other finges
    
    
    24,329
    
    
    
    21,875Subcontractor
    
    
    35,111
    
    
    
    12,478Other direct costs
    
    
    11,250
    
    
    
    20,831Amortization of computer software development costs
    
    
    44,251
    
    
    
    44,251Total costs of revenues
    
    
    114,941
    
    
    
    99,435GROSS PROFIT (LOSS)
    
    
    (14,941
    )
    
    
    (49,438
    )OPERATING EXPENSESIndirect and overhead labor and fringes
    
    
    149,884
    
    
    
    37,485Professional fees
    
    
    76,174
    
    
    
    99,000Travel related costs
    
    
    7,208
    
    
    
    4,825Rent
    
    
    26,609
    
    
    
    25,326General and administrative
    
    
    14,257
    
    
    
    17,105Depreciation and impairment
    
    
    15,361
    
    
    
    3,772Total operating expenses
    
    
    289,493
    
    
    
    187,513NET LOSS FROM OPERATIONS BEFORE OTHER EXPENSE AND
PROVISION FOR INCOME TAXES
    
    
    (304,434
    )
    
    
    (236,951
    )OTHER EXPENSEInterest expense, net of interest income
    
    
    5,685
    
    
    
    5,785NET LOSS FROM OPERATIONS BEFORE PROVISION FOR INCOME TAXES
    
    
    (310,119
    )
    
    
    (242,736
    )Provision for income taxes
    
    
    
    
    
    
    NET (LOSS) APPLICABLE TO SHARES
    
    $
    (310,119
    )
    
    $
    (242,736
    )NET (LOSS) PER BASIC AND DILUTED SHARES
    
    $
    (0.03
    )
    
    $
    (0.05
    )WEIGHTED AVERAGE NUMBER OF
SHARES OUTSTANDING
    
    
    9,129,392
    
    
    
    5,350,000
  3




---



##### 



INFERX CORPORATION
(FORMERLY BLACK NICKEL ACQUISITION CORP. I)
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW (UNAUDITED)
FOR THE THREE MONTHS ENDED MARCH 31, 2007 AND 2006
 2007
    
    
    2006CASH FLOWS FROM OPERATING ACTIVITIES:Net (loss)
    
    $
    (310,119
    )
    
    $
    (242,736
    )Adjustments to reconcile net (loss)
to net cash provided by (used in) operating activities:Stock issued for services
    
    
    
    
    
    
    22,500Impairment loss
    
    
    10,473
    
    
    
    Amortization of computer software development costs
    
    
    44,251
    
    
    
    44,251Depreciation
    
    
    4,888
    
    
    
    3,772Change in assets and liabilities(Increase) decrease in accounts receivable
    
    
    50,000
    
    
    
    (1
    )(Increase) decrease in unbilled services
    
    
    (33,333
    )
    
    
    4,687(Increase) in prepaid expenses and other current assets
    
    
    
    
    
    
    (67,245
    )Increase in accounts payable and accrued expenses
    
    
    189,123
    
    
    
    306,357Increase (decrease) in unearned revenue
    
    
    33,333
    
    
    
    (4,687
    )Total adjustments
    
    
    298,735
    
    
    
    309,634Net cash provided by (used in) operating activities
    
    
    (11,384
    )
    
    
    66,898CASH FLOWS FROM INVESTING ACTIVITIES:Capital expenditures
    
    
    (16,413
    )
    
    
    Computer software development costs
    
    
    (45,496
    )
    
    
    Net cash (used in) investing activities
    
    
    (61,909
    )
    
    
    CASH FLOWS FROM FINANCING ACTIVITIES:Increase (decrease) in cash overdraft
    
    
    
    
    
    
    (12,071
    )Contributions of capital pre-merger
    
    
    
    
    
    
    3,571(Repayment) of notes payable
    
    
    (4,196
    )
    
    
    (3,808
    )Borrowings (repayment) of note payable  related partry
    
    
    
    
    
    
    (45,000
    )Net cash (used in) financing activities
    
    
    (4,196
    )
    
    
    (57,308
    )NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
    
    
    (77,489
    )
    
    
    9,590CASH AND CASH EQUIVALENTS  BEGINNING OF PERIOD
    
    
    79,554
    
    
    
    CASH AND CASH EQUIVALENTS  END OF PERIOD
    
    $
    2,065
    
    
    $
    9,590SUPPLEMENTAL INFORMATION OF CASH FLOW ACTIVITYCash paid during the year for interest
    
    $
    27,596
    
    
    $
    6,791SUPPLEMENTAL INFORMATION ON NONCASH ACTIVITYStock issued for services  pre-merger
    
    $
    
    
    
    $
    22,500
  4




---



##### 



INFERX CORPORATION
(FORMERLY BLACK NICKEL ACQUISITION CORP. I)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2007 AND 2006 (UNAUDITED)
 ORGANIZATION AND BASIS OF PRESENTATION
      5




---



##### 



INFERX CORPORATION
(FORMERLY BLACK NICKEL ACQUISITION CORP. I)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
MARCH 31, 2007 AND 2006 (UNAUDITED)
 ORGANIZATION AND BASIS OF PRESENTATION
   Going Concern
     6




---



##### 



INFERX CORPORATION
(FORMERLY BLACK NICKEL ACQUISITION CORP. I)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
MARCH 31, 2007 AND 2006 (UNAUDITED)
 ORGANIZATION AND BASIS OF PRESENTATION
 Going Concern (Continued)
   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 Principles of Consolidation
  Use of Estimates
  Cash and Cash Equivalents
   7




---



##### 



INFERX CORPORATION
(FORMERLY BLACK NICKEL ACQUISITION CORP. I)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
MARCH 31, 2007 AND 2006 (UNAUDITED)
 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 Allowance for Doubtful Accounts
  Fixed Assets
  Computer Software Development Costs
  Recoverability of Long-Lived Assets
  8




---



##### 



INFERX CORPORATION
(FORMERLY BLACK NICKEL ACQUISITION CORP. I)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
MARCH 31, 2007 AND 2006 (UNAUDITED)
 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 Revenue Recognition
  Time-and-Material Contracts
  Fixed-Price Contracts
        9




---



##### 



INFERX CORPORATION
(FORMERLY BLACK NICKEL ACQUISITION CORP. I)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
MARCH 31, 2007 AND 2006 (UNAUDITED)
 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 Stock-Based Compensation
 Share-Based
Payment
    10




---



##### 



INFERX CORPORATION
(FORMERLY BLACK NICKEL ACQUISITION CORP. I)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
MARCH 31, 2007 AND 2006 (UNAUDITED)
 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 Concentrations
   Segment Reporting
  Fair Value of Financial Instruments (other than Derivative Financial
Instruments)
  Convertible Instruments
  11




---



##### 



INFERX CORPORATION
(FORMERLY BLACK NICKEL ACQUISITION CORP. I)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
MARCH 31, 2007 AND 2006 (UNAUDITED)
 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 Derivative Financial Instruments
  Income Taxes
  (Loss) Per Share of Common Stock
   12




---



##### 



INFERX CORPORATION
(FORMERLY BLACK NICKEL ACQUISITION CORP. I)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
MARCH 31, 2007 AND 2006 (UNAUDITED)
 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
  Three Months EndedMarch 31,
    
    March 31,2007
    
    2006Net (loss)
    
    $
    (310,119
    )
    
    $
    (242,736
    )Weighted-average common shares outstanding :Basic
    
    
    9,129,392
    
    
    
    5,350,000Effect of dilutive securities- warrants
    
    
    4,658,784
    
    
    
    Diluted
    
    
    13,788,176
    
    
    
    5,350,000Basic net (loss) per share
    
    $
    (0.03
    )
    
    $
    (0.05
    )Diluted net (loss) per share
    
    $
    (0.03
    )
    
    $
    (0.05
    )
 Research and Development
  Recent Issued Accounting Standards
  13




---



##### 



INFERX CORPORATION
(FORMERLY BLACK NICKEL ACQUISITION CORP. I)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
MARCH 31, 2007 AND 2006 (UNAUDITED)
 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 Recent Issued Accounting Standards (Continued)
  Accounting Changes and Error Corrections Accounting Changes Reporting Accounting Changes
in Interim Financial Statements
 Accounting for Certain Hybrid Instruments
  14




---



##### 



INFERX CORPORATION
(FORMERLY BLACK NICKEL ACQUISITION CORP. I)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
MARCH 31, 2007 AND 2006 (UNAUDITED)
 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 Recent Issued Accounting Standards (Continued)
      15




---



##### 



INFERX CORPORATION
(FORMERLY BLACK NICKEL ACQUISITION CORP. I)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
MARCH 31, 2007 AND 2006 (UNAUDITED)
 FIXED ASSETS
  Estimated UsefulLives (Years)Computer equipment
    
    5
    
    $
    87,417Office machinery and equipment
    
    3
    
    
    15,638Furniture and fixtures
    
    5
    
    
    538Automobile
    
    5
    
    
    58,476162,069Less: Accumulated depreciation
    
    
    
    
    (121,346
    )Total, net
    
    
    
    $
    40,723
  COMPUTER SOFTWARE DEVELOPMENT COSTS
  Estimated UsefulLives (Years)Computer software development costs
    
    5
    
    $
    865,937Less: Accumulated amortization
    
    
    
    
    (503,726
    )Total, net
    
    
    
    $
    362,211
   Period ended March 31:2008
    
    $
    152,7142009
    
    
    145,4182010
    
    
    64,079$
    362,211
 16




---



##### 



INFERX CORPORATION
(FORMERLY BLACK NICKEL ACQUISITION CORP. I)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
MARCH 31, 2007 AND 2006 (UNAUDITED)
 NOTES PAYABLE
 SBA Loan
     Automobile Loan
   17




---



##### 



INFERX CORPORATION
(FORMERLY BLACK NICKEL ACQUISITION CORP. I)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
MARCH 31, 2007 AND 2006 (UNAUDITED)
 NOTE PAYABLE
  2008
    
    $
    16,9802009
    
    
    13,5562010
    
    
    8,6452011
    
    
    8,9982012
    
    
    9,364Thereafter
    
    
    321,189378,732Less: current portion
    
    
    (16,980
    )Long-term portion
    
    $
    361,752
 NOTE PAYABLE  RELATED PARTIES
  STOCKHOLDERS EQUITY (DEFICIT)
 Preferred Stock
  Common Stock
    18




---



##### 



INFERX CORPORATION
(FORMERLY BLACK NICKEL ACQUISITION CORP. I)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
MARCH 31, 2007 AND 2006 (UNAUDITED)
 STOCKHOLDERS EQUITY (DEFICIT)
 Common Stock (Continued)
 a)
    
    The Company issued 250,000 shares of common stock for the
providing of the bridge promissory notes to InferX in May 2006. The value
of these shares was based on the stock price of $0.265 per share determined
based on the relative fair value calculation stipulated in APB 14 or
$66,250;b)
    
    The Company issued 5,350,000 shares of common stock in
exchange for 100% of the issued and outstanding shares of InferX;c)
    
    The Company issued 2,329,392 shares of common stock for
gross proceeds of $1,164,696 in the private placement that closed when the
merger was completed. From the $1,164,696, the Company repaid the bridge
promissory notes plus accrued interest in the amount of $362,196, and paid
$147,493 in closing costs. Of the total proceeds, $1,164,696, the Company
allocated $547,087 of this amount to derivative liability, which represents
the value of the Class A and Class B warrants issued with the common stock.
The Company issued 2,392,392 Class A warrants and 2,329,392 Class B
warrants (see d and e below and the Warrants section of Note 7). The price
for all components were derived utilizing the relative fair value approach
stipulated in APB 14;d)
    
    The Class A Warrants are exercisable at any time for shares
of stock at an exercise price of $0.50 per share with a term of five (5)
years, subject to anti dilution protection, so that any part of the
2,329,392 of the warrants shall be callable if the underlying warrant
shares are registered and the stock trades in the open market for thirty
(30) consecutive days at a closing price above $1.50 per share. Half of the
warrants shall be callable if the Company is awarded a contract with a
guaranteed minimum revenue of at least $1,000,000 with a department of the
United Sates Government (not including the Missile Defense Agency) to
deploy its existing technology for threat detection or other application.
1,629,513 of these warrants were exercised at a price of $.25 in April
2007;e)
    
    The Class B Warrants are exercisable at any time for shares
of stock at an exercise price of $0.62 per share with a term of five (5)
years, subject to anti dilution protection, so that any part of the
2,329,392 of the warrants shall be callable by the Company if the
underlying warrant shares are registered and the stock trades in the open
market for thirty (30) consecutive days at a closing price above $1.86 per
share;f)
    
    The Company cancelled 300,000 shares of common stock in the
reverse merger leaving 1,200,000 of the 1,500,000 previously outstanding shares from May 25, 2006 with the former owners of Black Nickel Acquisition
Corp. I; andg)
    
    Shall reserve for a period of two (2) years from the
closing of the Reverse Merger, no more than 2,200,000 shares of stock for a
stock option plan, and any options granted under this plan will be subject
to an exercise price of not less than $0.50 per share. There have been no
issuance of options under this plan as of December 31, 2006.
 19




---



##### 



INFERX CORPORATION
(FORMERLY BLACK NICKEL ACQUISITION CORP. I)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
MARCH 31, 2007 AND 2006 (UNAUDITED)
 STOCKHOLDERS EQUITY (DEFICIT)
 Warrants
  Exercise
    
    DateWarrants
    
    
    
    Price
    
    Issued
    
    Term2,329,392
    
    
    
    
    $
    0.50
    
    
    
    10/24/2006
    
    
    5 years2,329,392
    
    
    
    
    $
    0.625
    
    
    
    10/24/2006
    
    
    5 years4,658,784
  Options
  RELATED PARTY TRANSACTIONS
  COMMITMENTS
 Rental
  For the Periods EndedMarch 31,2008
    
    
    
    
    $
    105,2972009
    
    
    
    
    
    73,048$
    178,345
 20




---



##### 



INFERX CORPORATION
(FORMERLY BLACK NICKEL ACQUISITION CORP. I)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
MARCH 31, 2007 AND 2006 (UNAUDITED)
 COMMITMENTS
 Rental
  Consulting Agreements
  PROVISION FOR INCOME TAXES
  
 Net operating losses
    
    $
    932,280Valuation allowance
    
    
    (932,280
    )$
    
  21




---



##### 



INFERX CORPORATION
(FORMERLY BLACK NICKEL ACQUISITION CORP. I)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
MARCH 31, 2007 AND 2006 (UNAUDITED)
 PROVISION FOR INCOME TAXES
  2007
    
    2006Federal statutory rate
    
    
    (34.0
    )%
    
    
    (34.0
    )%State income taxes, net of federal benefits
    
    
    6.0
    
    
    
    6.0Valuation allowance
    
    
    28.0
    
    
    
    28.00
    %
    
    
    0
    %
 DEFINED CONTRIBUTION PLAN
  MAJOR CUSTOMER
  22




---



##### 



Item 2. Managements Discussion and Analysis or Plan of Operation.
 The information set forth and discussed in this Managements Discussion and Analysis or Plan of
Operation is derived from our financial statements and the related notes, which are included. The
following information and discussion should be read in conjunction with those financial statements
and notes, as well as the information provided in our Annual Report on Form 10-KSB for our fiscal
year ended December 31, 2006.
 Overview
    Critical Accounting Policies
  Cash and Cash Equivalents
   23




---



##### 



Allowance for Doubtful Accounts
  Fixed Assets
  Computer Software Development Costs
  Revenue Recognition
  Time-and-Material Contracts
  Fixed-Price Contracts
     24




---



##### 



Stock-Based Compensation
  Share-Based Payment
   Concentrations
   25




---



##### 



Derivative Financial Instruments
  Income Taxes
  Research and Development
  Recent Issued Accounting Standards
   Accounting for Certain Hybrid Instruments
   26




---



##### 



Three Months Ended March 31, 2007 and 2006
    27




---



##### 



Liquidity and Capital Resources
     Item 3. Controls and Procedures.
   28




---



##### 



PART II  OTHER INFORMATION
 Item 1. Legal Proceedings.
  Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
  Item 3. Defaults Upon Senior Securities.
  Item 4. Submission of Matters to a Vote of Security Holders.
  Item 5. Other Information.
  Item 6. Exhibits.
 31.1
    
    Certification of the Chief Executive Officer required by Rule 13a-14(a) or Rule 15d-14(a).31.2
    
    Certification of the Chief Financial Officer required by Rule 13a-14(a) or Rule 15d-14(a).32.1
    
    Certification of the Chief Executive Officer and Chief Financial Officer
required by Rule 13a-14(b) or Rule 15d-14(b) and 18 U.S.C. 1350.
 29




---



##### 



SIGNATURES
  Dated: May 12, 2007
    
    InferX CorporationBy:
    
    /s/ B.K. Gogia

B.K. GogiaPresident and Chief Executive Officer




---



##### 



InferX Corporation
 Quarterly Report on Form 10-QSB
 for the Quarterly Period Ended
 March 31, 2007
 - EXHIBIT INDEX -
 Exhibit No.
    
    Description31.1
    
    Certification of the Chief Executive Officer required by Rule 13a-14(a) or Rule 15d-14(a).31.2
    
    Certification of the Chief Financial Officer required by Rule 13a-14(a) or Rule 15d-14(a).32.1
    
    Certification of the Chief Executive Officer and Chief Financial Officer required by Rule
13a-14(b) or Rule 15d-14(b) and 18 U.S.C. 1350.