UNITED
STATES
 SECURITIES
AND EXCHANGE COMMISSION
 WASHINGTON,
D.C. 20549
 
 AMENDED
FORM 10-Q
 
 For
Period ended September 30, 2008 - Restated
 
 Quarterly
Report Under Section 13 or 15 (d) of
 Securities
Exchange Act of 1934
 For
Period ended September 30, 2008
 Commission
File Number: 333-141927
  MIPSOLUTIONS,
INC.
 (Exact
Name of Issuer as Specified in Its Charter)
  Nevada
                4941
                20-4047619State
      of Incorporation
                Primary
      Standard Industrial
                I.R.S.
      EmployerClassification
      Code Number
                Identification
      No.
 
 2130
East Bidwell Street
 Folsom,
CA 95630
 509-209-3235
 (Address and Telephone
Number of Issuer's Principal Executive Offices)
 
 Laughlin
Associates, Inc.
 2533
N. Carson Street
 Carson
City, NV 89706
 Telephone
(775) 883-8484  ext 202
 (Name, Address, and Telephone Number of
Agent for Service)
 
 Indicate
by check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days. Yes x  No o
  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
 
 Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of “large accelerated filer,” “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act.
 Large
accelerated filer oAccelerated filer
oNon-accelerated
filer o (Do
not check if a smaller reporting company)    Smaller
reporting company x
 
 APPLICABLE
ONLY TO CORPORATE ISSUERS
  Indicate
the number of shares outstanding of each of the issuer's classes of common stock
at the latest practicable date. As of October 31, 2008, the registrant had
8,196,436 shares of common stock, $0.001 par value, issued and
outstanding.
 
 SEC
      1296 (02-08)
              Potential
      persons who are to respond to the collection of information contained in
      this form are not required to respond unless the form displays a currently
      valid OMB control number.
 
 
  TABLE OF
CONTENTS
  PAGEPART
      I - FINANCIAL INFORMATION
                        
                        
                        3Item
      1. Financial Statements – Unaudited
                        
                        
                        3Balance
      Sheets
                        
                        
                        3Statements
      of Operations
                        
                        
                        4Statements
      of Cash Flows
                        
                        
                        5Notes
      to Financial Statements
                        
                        
                        6Item
      2. Management’s Discussion and Analysis of Financial Condition and Results
      of Operations
                        
                        
                        19Item
      3.  Quantitative and Qualitative Disclosures about Market
      Risk
                        
                        
                        21Item
      4. Controls and Procedures
                        
                        
                        21PART
      II - OTHER INFORMATION
                        
                        
                        21Item
      1. Legal Proceedings
                        
                        
                        21Item
      1A. Risk Factors
                        
                        
                        22Item
      2. Unregistered Sales of Equity Securities and Use of
    Proceeds
                        
                        
                        22Item
      3. Defaults Upon Senior Securities
                        
                        
                        22Item
      4. Submission of Matters to a Vote of Security Holders
                        
                        
                        22Item
      5. Other Information
                        
                        
                        22Item
      6. Exhibit and Reports on Form 8-K
                        
                        
                        24
  2
 
 PART I -
FINANCIAL INFORMATION
 
 Item 1. Financial Statements
(unaudited)
 MIP SOLUTIONS, INC.
 (A
Development Stage Company)
 BALANCE
SHEETS
 
 September30,
                                        
                                        
                                        December31,2008
                                        
                                        
                                        2007(unaudited)
                                        
                                        
                                        (restated)restatedASSETSCURRENT
      ASSETSCash
                                        
                                        $
                                        18,178
                                        
                                        
                                        $
                                        14,816Prepaid
      expenses
                                        
                                        
                                        551
                                        
                                        
                                        
                                        2,795Total
      Current Assets
                                        
                                        
                                        18,729
                                        
                                        
                                        
                                        17,611PROPERTY
      AND EQUIPMENT, NET OF DEPRECIATION
                                        
                                        
                                        9,037
                                        
                                        
                                        
                                        11,321OTHER
      ASSETSLicense
                                        
                                        
                                        145,550
                                        
                                        
                                        
                                        125,550Patent
                                        
                                        
                                        24,293
                                        
                                        
                                        
                                        16,905Accumulated
      amortization
                                        
                                        
                                        (22,690
                                        )
                                        
                                        
                                        10,724Total
      Other Assets
                                        
                                        
                                        147,153
                                        
                                        
                                        
                                        153,179TOTAL
      ASSETS
                                        
                                        $
                                        174,919
                                        
                                        
                                        $
                                        182,111LIABILITIES
      AND STOCKHOLDERS' DEFICITCURRENT
      LIABILITIESAccounts
      payable
                                        
                                        $
                                        57,540
                                        
                                        
                                        $
                                        51,650Accrued
      expense
                                        
                                        
                                        35,000
                                        
                                        
                                        
                                        35,000Accrued
      interest
                                        
                                        
                                        13,290
                                        
                                        
                                        
                                        9,691Accrued
      payroll
                                        
                                        
                                        44,805
                                        
                                        
                                        
                                        105,000Note
      payable
                                        
                                        
                                        57,500
                                        
                                        
                                        
                                        67,060Note
      payable - related party
                                        
                                        
                                        16,205
                                        
                                        
                                        
                                        16,905License
      fee payable
                                        
                                        
                                        -
                                        
                                        
                                        
                                        80,000Common
      stock to be issued
                                        
                                        
                                        31,875
                                        
                                        
                                        
                                        -Total
      Current Liabilities
                                        
                                        
                                        256,215
                                        
                                        
                                        
                                        365,306COMMITMENTS
      AND CONTINGENCIES
                                        
                                        
                                        -
                                        
                                        
                                        
                                        -STOCKHOLDERS'
      DEFICITCommon
      stock, $0.001 par value; 50,000,000 shares authorized, 7,958,434 and
      5,887,800 shares issued and outstanding, respectively
                                        
                                        
                                        7,959
                                        
                                        
                                        
                                        5,888Additional
      paid-in capital
                                        
                                        
                                        1,941,356
                                        
                                        
                                        
                                        753,640Subscription
      receivable
                                        
                                        
                                        -
                                        
                                        
                                        
                                        -Deficit
      accumulated during the development stage
                                        
                                        
                                        (2,030,611
                                        )
                                        
                                        
                                        (964,171
                                        )Total
      Stockholders' Deficit
                                        
                                        
                                        (81,296
                                        )
                                        
                                        
                                        (204,643
                                        )TOTAL
      LIABILITIES AND STOCKHOLDERS' DEFICIT
                                        
                                        $
                                        174,919
                                        
                                        
                                        $
                                        160,663
 
 The
accompanying condensed notes are an integral part of these interim financial
statements.
  3
 
 MIP SOLUTIONS, INC.
 (A
Development Stage Company)
 STATEMENTS
OF OPERATIONS
 
 Three
      Months
                                  
                                  
                                  Three
      Months
                                  
                                  
                                  Nine
      Months
                                  
                                  
                                  Nine
      MonthsEnded
                                  
                                  
                                  Ended
                                  
                                  
                                  Ended
                                  
                                  
                                  Ended
                                  
                                  
                                  From
      December 19,September
      30,
                                  
                                  
                                  September
      30,
                                  
                                  
                                  September
      30,
                                  
                                  
                                  September
      30,
                                  
                                  
                                  2005
      (Inception) to2008
                                  
                                  
                                  2007
                                  
                                  
                                  2008
                                  
                                  
                                  2007
                                  
                                  
                                  September
      30, 2008(unaudited)
                                  
                                  
                                  (unaudited)
                                  
                                  
                                  (unaudited)
                                  
                                  
                                  (unaudited)
                                  
                                  
                                  (unaudited)(restated)
                                  
                                  
                                  
                                  
                                  
                                  (restated)
                                  
                                  
                                  
                                  
                                  
                                  (restated)REVENUES
                                  
                                  $
                                  -
                                  
                                  
                                  $
                                  -
                                  
                                  
                                  $
                                  -
                                  
                                  
                                  $
                                  -
                                  
                                  
                                  $
                                  -OPERATING
      EXPENSESConsulting
                                  
                                  
                                  53,707
                                  
                                  
                                  
                                  1,500
                                  
                                  
                                  
                                  718,557
                                  
                                  
                                  
                                  16,676
                                  
                                  
                                  
                                  918,902Depreciation
      and amortization
                                  
                                  
                                  4,848
                                  
                                  
                                  
                                  1,702
                                  
                                  
                                  
                                  14,032
                                  
                                  
                                  
                                  4,093
                                  
                                  
                                  
                                  18,816General
      and administrative
                                  
                                  
                                  36,322
                                  
                                  
                                  
                                  16,673
                                  
                                  
                                  
                                  87,462
                                  
                                  
                                  
                                  39,180
                                  
                                  
                                  
                                  155,229Professional
      fees
                                  
                                  
                                  15,509
                                  
                                  
                                  
                                  12,834
                                  
                                  
                                  
                                  58,867
                                  
                                  
                                  
                                  28,543
                                  
                                  
                                  
                                  283,432Research
      and development
                                  
                                  
                                  6,718
                                  
                                  
                                  
                                  393
                                  
                                  
                                  
                                  12,436
                                  
                                  
                                  
                                  5,199
                                  
                                  
                                  
                                  167,347Officers
      and directors fees
                                  
                                  
                                  45,000
                                  
                                  
                                  
                                  45,000
                                  
                                  
                                  
                                  135,000
                                  
                                  
                                  
                                  210,000
                                  
                                  
                                  
                                  390,000Option
      fee
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  2,500
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  5,000Travel
      and meals
                                  
                                  
                                  11,544
                                  
                                  
                                  
                                  345
                                  
                                  
                                  
                                  14,554
                                  
                                  
                                  
                                  4,361
                                  
                                  
                                  
                                  41,330TOTAL
      OPERATING EXPENSES
                                  
                                  
                                  173,648
                                  
                                  
                                  
                                  78,447
                                  
                                  
                                  
                                  1,043,408
                                  
                                  
                                  
                                  308,052
                                  
                                  
                                  
                                  1,980,056LOSS
      FROM OPERATIONS
                                  
                                  
                                  (173,648
                                  )
                                  
                                  
                                  (78,447
                                  )
                                  
                                  
                                  (1,043,408
                                  )
                                  
                                  
                                  (308,052
                                  )
                                  
                                  
                                  (1,980,056
                                  )OTHER
      INCOME (EXPENSE)Interest
      expense
                                  
                                  
                                  (10,102
                                  )
                                  
                                  
                                  (1,244
                                  )
                                  
                                  
                                  (22,301
                                  )
                                  
                                  
                                  (2,739
                                  )
                                  
                                  
                                  (34,449
                                  )Loss
      on disposition of assets
                                  
                                  
                                  (86
                                  )
                                  
                                  
                                  -
                                  
                                  
                                  
                                  (731
                                  )
                                  
                                  
                                  -
                                  
                                  
                                  
                                  (7,619
                                  )TOTAL
      OTHER INCOME
                                  
                                  
                                  (10,188
                                  )
                                  
                                  
                                  (1,244
                                  )
                                  
                                  
                                  (23,032
                                  )
                                  
                                  
                                  (2,739
                                  )
                                  
                                  
                                  (42,068
                                  )LOSS
      BEFORE TAXES
                                  
                                  
                                  (183,836
                                  )
                                  
                                  
                                  (79,691
                                  )
                                  
                                  
                                  (1,066,440
                                  )
                                  
                                  
                                  (310,791
                                  )
                                  
                                  
                                  (2,022,124
                                  )INCOME
      TAX EXPENSE
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -NET
      LOSS
                                  
                                  $
                                  (183,836
                                  )
                                  
                                  $
                                  (79,691
                                  )
                                  
                                  $
                                  (1,066,440
                                  )
                                  
                                  $
                                  (310,791
                                  )
                                  
                                  $
                                  (2,022,124
                                  )NET
      LOSS PER COMMON SHARE, BASIC AND DILUTED
                                  
                                  $
                                  (0.02
                                  )
                                  
                                  $
                                  (0.01
                                  )
                                  
                                  $
                                  (0.15
                                  )
                                  
                                  $
                                  (0.05
                                  )WEIGHTED
      AVERAGE NUMBER OF COMMON STOCK SHARES OUTSTANDING, BASIC AND
      DILUTED
                                  
                                  
                                  7,860,267
                                  
                                  
                                  
                                  5,857,800
                                  
                                  
                                  
                                  7,047,304
                                  
                                  
                                  
                                  5,830,689
  The
accompanying condensed notes are an integral part of these interim financial
statements.
  4
 
 MIP SOLUTIONS, INC.
 (A
Development Stage Company)
 STATEMENTS
OF CASH FLOWS
 
 Nine
      Months
                                    
                                    
                                    Nine
      MonthsEnded
                                    
                                    
                                    Ended
                                    
                                    
                                    From
      December 19,
                                      2005
      (Inception) to
                                      'September
      30, 2008September
      30,
                                    
                                    
                                    September
      302008
                                    
                                    
                                    2007(unaudited)
                                    
                                    
                                    (unaudited)
                                    
                                    
                                    (unaudited)(restated)
                                    
                                    
                                    
                                    
                                    
                                    (restated)CASH
      FLOWS FROM OPERATING ACTIVITIES:Net
      loss
                                    
                                    $
                                    (1,066,440
                                    )
                                    
                                    $
                                    (310,791
                                    )
                                    
                                    $
                                    (2,022,124
                                    )Adjustments
      to reconcile net loss to net cash provided (used) by operating
      activities:Depreciation
      and amortization
                                    
                                    
                                    14,032
                                    
                                    
                                    
                                    4,093
                                    
                                    
                                    
                                    18,816Loss
      on disposition of assets
                                    
                                    
                                    731
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    7,619Common
      stock and warrants issued for services
                                    
                                    
                                    680,816
                                    
                                    
                                    
                                    75,000
                                    
                                    
                                    
                                    855,816Common
      stock issued for payables
                                    
                                    
                                    50,000
                                    
                                    
                                    
                                    2,500
                                    
                                    
                                    
                                    52,500Decrease
      (increase) in:Refund
      receivable
                                    
                                    
                                    -
                                    
                                    
                                    
                                    1,139
                                    
                                    
                                    
                                    -Prepaid
      expenses
                                    
                                    
                                    2,244
                                    
                                    
                                    
                                    4,785
                                    
                                    
                                    
                                    (551
                                    )Increase
      (decrease) in:License
      fee payable
                                    
                                    
                                    (80,000
                                    )
                                    
                                    
                                    
                                    
                                    
                                    
                                    -Accounts
      payable
                                    
                                    
                                    8,388
                                    
                                    
                                    
                                    21,898
                                    
                                    
                                    
                                    60,037Accrued
      expense
                                    
                                    
                                    -
                                    
                                    
                                    
                                    (15,000
                                    )
                                    
                                    
                                    35,000Accrued
      interest
                                    
                                    
                                    17,129
                                    
                                    
                                    
                                    2,188
                                    
                                    
                                    
                                    26,820Accrued
      payroll
                                    
                                    
                                    94,005
                                    
                                    
                                    
                                    75,500
                                    
                                    
                                    
                                    199,005Related
      party payable
                                    
                                    
                                    (700
                                    )
                                    
                                    
                                    -
                                    
                                    
                                    
                                    16,205Common
      stock to be issued
                                    
                                    
                                    31,875
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    31,875Net
      cash provided (used) by operating activities
                                    
                                    
                                    (247,920
                                    )
                                    
                                    
                                    (138,688
                                    )
                                    
                                    
                                    (718,982
                                    )CASH
      FLOWS FROM INVESTING ACTIVITIES:Purchase
      of equipment
                                    
                                    
                                    405
                                    
                                    
                                    
                                    (13,231
                                    )
                                    
                                    
                                    (20,350
                                    )Purchase
      of license
                                    
                                    
                                    (20,000
                                    )
                                    
                                    
                                    -
                                    
                                    
                                    
                                    (145,000
                                    )Purchase
      of patents
                                    
                                    
                                    (7,388
                                    )
                                    
                                    
                                    (3,711
                                    )
                                    
                                    
                                    (23,171
                                    )Purchase
      of option
                                    
                                    
                                    -
                                    
                                    
                                    
                                    (2,500
                                    )
                                    
                                    
                                    -Sale
      of asset
                                    
                                    
                                    9,555
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    9,555Net
      cash provided (used) by investing activities
                                    
                                    
                                    (17,428
                                    )
                                    
                                    
                                    (19,442
                                    )
                                    
                                    
                                    (178,966
                                    )CASH
      FLOWS FROM FINANCING ACTIVITIES:Common
      stock and warrants for cash, net of fees
                                    
                                    
                                    208,070
                                    
                                    
                                    
                                    122,650
                                    
                                    
                                    
                                    786,080Collection
      of subscriptions receivable
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    2,346Proceeds
      from note payable
                                    
                                    
                                    87,957
                                    
                                    
                                    
                                    23,324
                                    
                                    
                                    
                                    164,517Repayment
      of note payable
                                    
                                    
                                    (27,317
                                    )
                                    
                                    
                                    -
                                    
                                    
                                    
                                    (36,817
                                    )Net
      cash provided by financing activities
                                    
                                    
                                    268,710
                                    
                                    
                                    
                                    145,974
                                    
                                    
                                    
                                    916,126Net
      increase (decrease) in cash and cash equivalents
                                    
                                    
                                    3,362
                                    
                                    
                                    
                                    (12,156
                                    )
                                    
                                    
                                    18,178Cash,
      beginning of period
                                    
                                    
                                    14,816
                                    
                                    
                                    
                                    12,160
                                    
                                    
                                    
                                    -Cash,
      end of period
                                    
                                    $
                                    18,178
                                    
                                    
                                    $
                                    4
                                    
                                    
                                    $
                                    18,178SUPPLEMENTAL
      CASH FLOW INFORMATION:Interest
      paid
                                    
                                    $
                                    -
                                    
                                    
                                    $
                                    -
                                    
                                    
                                    $
                                    -Income
      taxes paid
                                    
                                    $
                                    -
                                    
                                    
                                    $
                                    -
                                    
                                    
                                    $
                                    -NON-CASH
      TRANSACTIONS:Common
      stock issued for license
                                    
                                    $
                                    -
                                    
                                    
                                    $
                                    -
                                    
                                    
                                    $
                                    550Common
      stock issued for patent
                                    
                                    $
                                    -
                                    
                                    
                                    $
                                    -
                                    
                                    
                                    $
                                    1,122Common
      stock issued for note payable & accrued interest
                                    
                                    $
                                    84,000
                                    
                                    
                                    $
                                    
                                    
                                    
                                    $
                                    84,000Common
      stock issued for asset
                                    
                                    $
                                    10,200
                                    
                                    
                                    $
                                    
                                    
                                    
                                    $
                                    10,200Common
      stock issued for officers & directors fees
                                    
                                    $
                                    154,200
                                    
                                    
                                    $
                                    
                                    
                                    
                                    $
                                    154,200
 
 The
accompanying condensed notes are an integral part of these interim financial
statements.
  5
  MIP
SOLUTIONS, INC.
 (A
DEVELOPMENT STAGE COMPANY)
 CONDENSED
NOTES TO THE FINANCIAL STATEMENTS
 SEPTEMBER
30, 2008
 
 NOTE
1 - BASIS OF PRESENTATION
  MIP
Solutions, Inc, was incorporated on December 19, 2005 in the State of Nevada,
and has been in the development stage since its formation.
 
 The
principal business of the Company is the development of Molecularly Imprinted
Polymers (“MIPs”) for various commercial applications relating to the removal of
targeted molecules from water. The Company has various patents and a license
agreement with The Johns Hopkins University Applied Physics Laboratory (JHU/APL)
and is currently developing applications for the removal of arsenic from
drinking water and for the extraction of precious metals from various mining
operations.
 
 The
foregoing unaudited interim financial statements have been prepared in
accordance with generally accepted accounting principles for interim financial
information. Accordingly, these financial statements do not include all of the
disclosures required by generally accepted accounting principles in the United
States of America for complete financial statements.  These unaudited
interim financial statements should be read in conjunction with the Company’s
audited financial statements for the year ended December 31, 2007.  In the
opinion of management, the unaudited interim financial statements furnished
herein include all adjustments, all of which are of a normal recurring nature,
necessary for a fair statement of the results for the interim period presented.
Operating results for the nine month period ended September 30, 2008 are not
necessarily indicative of the results that may be expected for the year ending
December 31, 2008.
 
 The
preparation of financial statements in accordance with generally accepted
accounting principles in the United States of America require the use of
estimates and assumptions that affect the reported amounts of assets and
liabilities, disclosure of contingent assets and liabilities known to exist as
of the date the financial statements are published, and the reported amounts of
revenues and expenses during the reporting period.  Uncertainties with
respect to such estimates and assumptions are inherent in the preparation of the
Company’s financial statements; accordingly, it is possible that the actual
results could differ from these estimates and assumptions and could have a
material effect on the reported amounts of the Company’s financial position and
results of operations.
 
 NOTE
2 - SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES
 
 This
summary of significant accounting policies of MIP Solutions, Inc. is presented
to assist in understanding the Company’s financial statements. The financial
statements and notes are representations of the Company’s management, which is
responsible for their integrity and objectivity. These accounting policies
conform to accounting principles generally accepted in the United States
of America, and have been consistently applied in the preparation of the
financial statements.
  6
 MIP
SOLUTIONS, INC.
 (A
DEVELOPMENT STAGE COMPANY)
 CONDENSED
NOTES TO THE FINANCIAL STATEMENTS
 SEPTEMBER
30, 2008
 Accounting
Method
 
 The
Company’s financial statements are prepared using the accrual basis of
accounting in accordance with accounting principles generally accepted in the
United States of America.
 
 Accounting for Stock Options
and Warrants Granted to Employees and Nonemployees
 Statement
of Financial Accounting Standards No. 123, “Accounting for Stock-Based
Compensation”,defines
a fair value-based method of accounting for stock options and other equity
instruments. The Company has adopted this method, which measures compensation
costs based on the estimated fair value of the award and recognizes the cost
over the service period. In 2004, the Company adopted the changes to SFAS No.
123 as prescribed by SFAS No. 123(R). See Note 13.
  Cash and Cash
Equivalents
 For
purposes of the statement of cash flows, the Company considers all highly liquid
investments and short-term debt instruments with original maturities of three
months or less to be cash equivalents.
 
 Earnings Per
Share
 The
Company has adopted Statement of Financial Accounting Standards No. 128, which
provides for calculation of "basic" and "diluted" earnings per share. Basic
earnings per share includes no dilution and is computed by dividing net income
(loss) available to common shareholders by the weighted average common shares
outstanding for the period. Diluted earnings per share reflect the potential
dilution of securities that could share in the earnings of an entity similar to
fully diluted earnings per share. There were 2,361,100 warrants outstanding at
September 30, 2008, they were not included in the calculation of earnings per
share because they would have been considered anti-dilutive.
 
 Fair Value of Financial
Instruments
 The
Company's financial instruments as defined by Statement of Financial Accounting
Standards No. 107, "Disclosures about Fair Value of Financial Instruments,"
include cash, receivables, accounts payable and accrued expenses. All
instruments are accounted for on a historical cost basis, which, due to the
short maturity of these financial instruments, approximates fair value at
September 30, 2008.
 
 SFAS No.
157, “Fair Value Measurements(“SFAS 157), define fair value, establishes a
framework for measuring fair value in accordance with generally accepted
accounting principles, and expands disclosures about fair value measurements.
SFAS 157 establishes a three-tier fair value hierarchy which prioritizes the
inputs used in measuring fair value as follows:
 Level 1.
Observable inputs such as quoted prices in active markets;
 Level 2.
Inputs, other than the quoted prices in active markets, that are observable
either directly or indirectly; and
 Level 3.
Unobservable inputs in which there is little or no market data, which requires
the reporting entity to develop its own assumptions.
 
 7
  MIP
SOLUTIONS, INC.
 (A
DEVELOPMENT STAGE COMPANY)
 CONDENSED
NOTES TO THE FINANCIAL STATEMENTS
 SEPTEMBER
30, 2008
 
 The
Company does not have any assets or liabilities measured at fair value on a
recurring basis at September 30, 2008. The Company did not have any fair value
adjustments for assets and liabilities measured at fair value on a nonrecurring
basis during the three months ended September 30, 2008.
 
 Income
Taxes
 Income
taxes are provided based upon the liability method of accounting pursuant to
Statement of Financial Accounting Standards No. 109, “Accounting for Income
Taxes.” Under this approach, deferred income taxes are recorded to reflect the
tax consequences in future years of differences between the tax basis of assets
and liabilities and their financial reporting amounts at each year-end. A
valuation allowance is recorded against deferred tax assets if management does
not believe the Company has met the “more likely than not” standard imposed by
SFAS No. 109 to allow recognition of such an asset.
  At
September 30, 2008 the Company had deferred tax assets calculated at an expected
rate of 34% of approximately $687,500 principally arising from net operating
loss carryforwards for income tax purposes. As management of the Company cannot
determine that it is more likely than not that the Company will realize the
benefit of the deferred tax asset, a valuation allowance equal to the deferred
tax asset has been established at September 30, 2008. The significant components
of the deferred tax asset at September 30, 2008 and December 31, 2007 were as
follows:
  September 30,
                                2008
                              
                              
                              December 31,
                                2007Net
      operating loss carryforward
                              
                              $
                              2,022,100
                              
                              
                              $
                              955,000Deferred
      tax asset
                              
                              $
                              687,500
                              
                              
                              $
                              324,800Deferred
      tax asset valuation allowance
                              
                              
                              (687,500
                              )
                              
                              
                              (324,800
                              )Net
      deferred tax asset
                              
                              $
                              -
                              
                              
                              $
                              -
  At
September 30, 2008, the Company has net operating loss carryforwards of
approximately $2,022,100, which expire in the years 2026-2028. The change in the
allowance account from December 31, 2007 to September 30, 2008 was
$362,700.
 
 Use of
Estimates
 The
process of preparing financial statements in conformity with accounting
principles generally accepted in the United States of America requires the use
of estimates and assumptions regarding certain types of assets, liabilities,
revenues, and expenses. Such estimates primarily relate to unsettled
transactions and events as of the date of the financial statements. Accordingly,
upon settlement, actual results may differ from estimated amounts.
 
 8
  MIP
SOLUTIONS, INC.
 (A
DEVELOPMENT STAGE COMPANY)
 CONDENSED
NOTES TO THE FINANCIAL STATEMENTS
 SEPTEMBER
30, 2008
  Going
Concern
 As shown
in the accompanying financial statements, the Company had negative working
capital and an accumulated deficit of $2,022,124 as of September 30, 2008. These
factors raise substantial doubt about the Company’s ability to continue as a
going concern. However, the Company is currently developing technology that, if
successful, will mitigate these factors. The financial statements do not include
any adjustments relating to the recoverability and classification of recorded
assets, or the amounts and classification of liabilities that might be necessary
in the event the company cannot continue in existence.
 
 Management
has established plans to develop products which will provide revenue through
sales or revenue sharing arrangements that will allow the Company to decrease
debt and reverse the present deficit. Furthermore, management plans include
negotiations to convert significant portions of existing debt into
equity.
  An
estimated $1 million is believed necessary to continue operations and increase
development through the next fiscal year. Management intends to seek additional
capital from new equity securities offerings that will provide funds needed to
increase liquidity, fund internal growth and fully implement its business
plan.
 
 Restatement
 Financials
statements from prior periods have been restated in the current quarter, See
Note 10.
  Accounting for Stock Options
and Warrants Granted to Employees and Non-employees
 In
December 2004, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 123, “Accounting for Stock Based
Compensations.” (SFAS 123R) This statement supersedes APB Opinion No. 25,
“Accounting for Stock Issued to Employees,” and its related implementation
guidance. This statement establishes standards for the accounting for
transactions in which an entity exchanges its equity instruments for goods or
services. It also addresses transactions in which an entity incurs liabilities
in exchange for goods or 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. This statement focuses primarily on accounting for
transactions in which an entity obtains employee services in share-based payment
transactions. This statement does not change the accounting guidance for share
based payment transactions with parties other than employees provided in
Statement of Financial Accounting Standards No. 123(R). This statement does not
address the accounting for employee share ownership plans, which are subject to
AICPA Statement of Position 93-6, “Employers’ Accounting for Employee Stock
Ownership Plans.” The Company has adopted SFAS No. 123(R) which measures
compensation costs based on the estimated fair value of the award and recognizes
cost over the service period.
 
 9
  MIP
SOLUTIONS, INC.
 (A
DEVELOPMENT STAGE COMPANY)
 CONDENSED
NOTES TO THE FINANCIAL STATEMENTS
 SEPTEMBER
30, 2008
 
 Accounting
Pronouncements
 In May,
2008, the Financial Accounting Standards Board issued Statement of Financial
Accounting Standards No. 163, “Accounting for Financial Guarantee Insurance
Contracts—an interpretation of FASB Statement No. 60” (SFAS 163). This Statement
requires that an insurance enterprise recognize a claim liability prior to an
event of default (insured event) when there is evidence that credit
deterioration has occurred in an insured financial obligation. This Statement
also clarifies how Statement 60 applies to financial guarantee insurance
contracts, including the recognition and measurement to be used to account for
premium revenue and claim liabilities. Those clarifications will increase
comparability in financial reporting of financial guarantee insurance contracts
by insurance enterprises. This Statement requires expanded disclosures about
financial guarantee insurance contracts. The accounting and disclosure
requirements of the Statement will improve the quality of information provided
to users of financial statements. This Statement is effective for financial
statements issued for fiscal years beginning after December 15, 2008, and all
interim periods within those fiscal years, except for some disclosures about the
insurance enterprise’s risk-management activities. This Statement requires that
disclosures about the risk-management activities of the insurance enterprise be
effective for the first period (including interim periods) beginning after
issuance of this Statement. Except for those disclosures, earlier application is
not permitted. The adoption of this statement will have no material effect
on the Company’s financial condition or results of operations.
 
 In May,
2008, the Financial Accounting Standards Board issued Statement of Financial
Accounting Standards No. 162, “The Hierarchy of Generally Accepted Accounting
Principles” (SFAS No. 162). This Statement identifies the sources of accounting
principles and the framework for selecting the principles to be used in the
preparation of financial statements of nongovernmental entities that are
presented in conformity with generally accepted accounting principles (GAAP) in
the United States (the GAAP hierarchy). The sources of accounting
principles1 that are generally accepted are categorized in descending order of
authority as follows:
 
 a. FASB
Statements of Financial Accounting Standards and Interpretations, FASB Statement
133 Implementation Issues, FASB Staff Positions, and American Institute of
Certified Public Accountants (AICPA) Accounting Research Bulletins and
Accounting Principles Board Opinions that are not superseded by actions of the
FASB
 
 b. FASB
Technical Bulletins and, if cleared2 by the FASB, AICPA Industry Audit and
Accounting Guides and Statements of Position
 
 10
 
 MIP
SOLUTIONS, INC.
 (A
DEVELOPMENT STAGE COMPANY)
 CONDENSED
NOTES TO THE FINANCIAL STATEMENTS
 SEPTEMBER
30, 2008
 
 c. AICPA
Accounting Standards Executive Committee Practice Bulletins that have been
cleared by the FASB, consensus positions of the FASB Emerging Issues Task Force
(EITF), and the Topics discussed in Appendix D of EITF Abstracts(EITF
D-Topics)
 
 d.
Implementation guides (Q&As) published by the FASB staff, AICPA Accounting
Interpretations, AICPA Industry Audit and Accounting Guides and Statements of
Position not cleared by the FASB, and practices that are widely recognized and
prevalent either generally or in the industry.
 
 The
adoption of this statement will have no material effect on the Company’s
financial condition or results of operations.
  In March
2008, the Financial Accounting Standards Board issued Statement of Financial
Accounting Standards No. 161, “Disclosures about Derivative Instruments and
Hedging Activities—an amendment of FASB Statement No. 133” (SFAS No. 161). This
statement changes the disclosure requirements for derivative instruments and
hedging activities. Entities are required to provide enhanced disclosures about
(a) how and why an entity uses derivative instruments, (b) how derivative
instruments and related hedged items are accounted for under Statement 133 and
its related interpretations, and (c) how derivative instruments and related
hedged items affect an entity’s financial position, financial performance, and
cash flows. This Statement is intended to enhance the current disclosure
framework in Statement 133. The Statement requires that objectives for using
derivative instruments be disclosed in terms of underlying risk and accounting
designation. This disclosure better conveys the purpose of derivative use in
terms of the risks that the entity is intending to manage. Disclosing the fair
values of derivative instruments and their gains and losses in a tabular format
should provide a more complete picture of the location in an entity’s financial
statements of both the derivative positions existing at period end and the
effect of using derivatives during the reporting period. Disclosing information
about credit-risk-related contingent features should provide information on the
potential effect on an entity’s liquidity from using derivatives. Finally, this
Statement requires cross-referencing within the footnotes, which should help
users of financial statements locate important information about derivative
instruments.
  NOTE
3 - PROPERTY AND EQUIPMENT
 
 Property
and equipment are stated at cost. Depreciation is provided using the
straight-line method over the estimated useful lives of the assets. The useful
lives of property, plant and equipment for purposes of computing depreciation
are five to forty years. The following is a summary of property, equipment, and
accumulated depreciation:
 11
  MIP
SOLUTIONS, INC.
 (A
DEVELOPMENT STAGE COMPANY)
 CONDENSED
NOTES TO THE FINANCIAL STATEMENTS
 SEPTEMBER
30, 2008
 September 30,
                                    2008
                                  
                                  
                                  December 31,
                                    2007Office
      equipment
                                  
                                  $
                                  1,779
                                  
                                  
                                  $
                                  2,269Lab
      Equipment
                                  
                                  
                                  11,598
                                  
                                  
                                  
                                  11,598Total
      property & equipment
                                  
                                  
                                  13,377
                                  
                                  
                                  
                                  13,867Less
      accumulated depreciation
                                  
                                  
                                  (4,340
                                  )
                                  
                                  
                                  (2,546
                                  )$
                                  9,037
                                  
                                  
                                  $
                                  11,321
 
 Depreciation
expense for the period ended September 30, 2008 and December 31, 2007 was $2,066
and $2,342, respectively. The Company evaluates the recoverability of property
and equipment when events and circumstances indicate that such assets might be
impaired. The Company determines impairment by comparing the undiscounted future
cash flows estimated to be generated by these assets to their respective
carrying amounts. Maintenance and repairs are expensed as incurred. Replacements
and betterments are capitalized. The cost and related reserves of assets sold or
retired are removed from the accounts, and any resulting gain or loss is
reflected in results of operations.
 
 NOTE
4 – LICENSE AGREEMENT
 
 During
the year ended December 31, 2006 the Company signed an exclusive license
agreement with Johns Hopkins University/Applied Physics Laboratory to
commercially develop, manufacture, use and distribute products and process
embodying JHU/APL Intellectual Property with in the filed of drinking water
safety, wastewater treatment, and water based mining operations using
filtration, treatment, reclamation, and extraction processes throughout the
world.
 
 The cost
of the License was $95,000 in cash and $30,550 in common stock and warrants if
paid by January 31, 2008, $40,550 in common stock and warrants if paid by March
31, 2008 and $50,550 in common stock and warrants if paid by May 31,
2008.  See Note 8.  The amount is being amortized over a
period of 10 years. At September 30, 2008, accumulated amortization was
$19,070.
 
 NOTE
5 - COMMON STOCK AND WARRANTS
 
 Common
Stock
 The
Company is authorized to issue 50,000,000 shares of common stock. All shares
have equal voting rights, are non-assessable and have one vote per share. Voting
rights are not cumulative and, therefore, the holders of more than 50% of the
common stock could, if they choose to do so, elect all of the directors of the
Company.
 
 12
 
 MIP
SOLUTIONS, INC.
 (A
DEVELOPMENT STAGE COMPANY)
 CONDENSED
NOTES TO THE FINANCIAL STATEMENTS
 SEPTEMBER
30, 2008
 
 In its
initial capitalization in December 2005, the Company issued 4,590,000 shares of
common stock for a total of $1,122 in patents and $3,468 in subscription
receivables. These subscriptions were paid during the year ended December 31,
2006.
 
 During
the year ended December 31, 2006 the Company issued 360,000 additional common
stock shares to the founders at par.
  On
January 23, 2006, the Company issued 550,000 shares of its common stock to The
Johns Hopkins University as partial payment for a license fee at
par.
 
 During
the year ended December 31, 2006, the Company issued 200,000 shares of common
stock for legal services valued at $100,000.
 
 During
the year ended December 31, 2006, the Company cancelled 1,122,500 of the initial
founders shares issued in 2005. These shares were not related to the common
shares issued for patents.
 
 Also
during the year ended December 31, 2006, the Company issued 880,000 “units” to
investors at a price of $0.50 per unit in a private placement. Each unit
consists of one share of common stock and one common share purchase warrant. The
warrants, which entitle the holder to purchase, at a price of $0.50, one common
share for a period of three years.
 
 During
the year ended December 31, 2007, the Company issued 245,300 “units” to
investors at a price of $0.50 per unit in a private placement. Each unit
consists of one share of common stock and one common share purchase warrant. The
warrants, which entitle the holder to purchase, at a price of $0.50, one common
share for a period of three years.
 
 Also
during the year ended December 31, 2007, the Company issued 150,000 shares for
services valued at $75,000, 5,000 shares for payables valued at $2,500, and
30,000 shares for the exercise of 30,000 warrants.
 
 During
the period ended September 30, 2008, the Company issued 892,500 shares of common
stock for services valued at $530,626, 132,334 “units” for services valued at
$130,819, 67,000 shares of common stock for the exercise of 67,000 warrants and
cash of $33,500, 168,000 “units” for the payment of debt valued at $84,000,
20,400 “units” for the purchase of an asset valued at $10,200, 308,400 “units”
for accrued payroll of $154,200, 100,000 “units” for a license agreement valued
at $50,000, 100,000 warrants issued for services valued at $19,371, and 382,000
“units” for $191,000 in cash
 
 13
  MIP
SOLUTIONS, INC.
 (A
DEVELOPMENT STAGE COMPANY)
 CONDENSED
NOTES TO THE FINANCIAL STATEMENTS
 SEPTEMBER
30, 2008
  NOTE 6 - STOCK
OPTION PLAN
  The
Company’s board of directors approved the adoption of the “2008 Stock Plan” on
September 9, 2008, pursuant to which the Company may grant stock options to
employees and consultants, including directors and officers, from time to time.
The Company intends to register the Plan on Form S-8 prior to the grant of any
stock options pursuant to the Plan. The Board of directors of the Company
reserved 2,500,000 shares of Company Common Stock for eventual issuance pursuant
to the exercise of stock options granted under the Plan.
 
 NOTE
7 - COMMITMENTS
 
 During
the period ended June 30, 2008, the Company and JHU/APL signed Amendment #4 to
the License Agreement between the parties regarding the minimum Research and
Development commitment. The Company will contract with JHU/APL with the initial
funding being no less than $175,000; provided that this is the first project of
a five (5) year program to be funded at a minimum of $400,000 total over the
five (5) years.  For any and each subsequent year after the first
anniversary of the EFFECTIVE DATE during which COMPANY does not pay a minimum of
$50,000 towards research projects at JHU/APL, COMPANY shall pay JHU/APL, as a
buyout provision, a cash payment as follows: 2007 - $5,000 (this payment shall
be due on the effective date of this Amendment NO. 4); and for each of the four
years comprising 2008 – 2011 - $18,750 per year wherein each $18,750 payment
represents 25% of the balance of the credit applied towards the License
Execution Fee ($100,000) in lieu of the Minimum R&D commitment for research
dollars spent at JHU/APL ($100,000 credit - $25,000 satisfied with initial
R&D commitment = $75,000 remaining credit/4 years = $18,750 per year.) These
buyout cash payments will be paid at the conclusion of the year that is
partially or not funded by COMPANY but the total of these buyout cash payments
will in no event exceed a total of $75,000
 
 The
Company signed a consulting agreement with Global Media Partners, the terms
being 300,000 shares of the Company’s common stock, which was issued during the
quarter ended June 30, 2008, and $25,000 in cash to be paid. $10,000 was paid in
April 2008, and $15,000 to be invoiced and paid with in thirty days of receipt.
As of September 30, 2008, this contract expired without the $15,000 being earned
or invoiced by the consultant.   These shares of common stock are
deemed to be restricted securities.
 
 During
the quarter ended June 30, 2008 the company entered into a consulting agreement
with an individual for CEO services, with terms of $5,000 per month for a period
of six months. Effective September 1, 2008 the consulting agreement was
cancelled, and an employment agreement was signed with terms of $5,000 per month
until a cumulative investment of $2,000,000 is raised, beginning with the date
of the employment agreement, and 50,000 shares of the Company’s common stock
payable on January 9, 2009.
  14
 
 MIP
SOLUTIONS, INC.
 (A
DEVELOPMENT STAGE COMPANY)
 CONDENSED
NOTES TO THE FINANCIAL STATEMENTS
 SEPTEMBER
30, 2008
 
 NOTE 8 - NOTES
PAYABLE
 
 The
Company issued a promissory note, for a total of $20,000 on October 25, 2006.
The note bears interest at a rate of 1% per month for twelve months, 11⁄2% for the
next six months and then increases by 1⁄2 % ever six months thereafter. The note
is payable on demand six months from issuance.  As of September 30,
2008, related interest of $9,504 has been accrued and expensed. The note is
payable on demand six months from issuance.
 
 The
Company issued a promissory note, for a total of $8,076 on March 9, 2007. The
note bears interest at the rate of 8% per year. As of September 31, 2008,
related interest of $551 has been expensed.  This note was paid in
full as of September 30, 2008.
 
 The
Company issued a promissory note, for a total of $40,000 on December 14, 2007.
The note is due 90 days from the date of the note, with interest of $6,000. On
March 7, 2008, the company negotiated a new note for the outstanding principal
and interest balance, which is due 60 days from the date of the note, with
interest of $4,000. This note was converted into 100,000 “units” as of May 6,
2008. See Note 8
 
 The
Company issued a promissory note, for a total of $20,000 on January 11, 2008.
The note is due 90 days from the date of the note, with interest of $3,000. This
note was converted into 46,000 “units” as of May 1, 2008. See Note
8
 
 The
Company issued a promissory note, for a total of $10,000 on January 24, 2008.
The note is due 120 days from the date of the note, with interest of $1,000.
This note was converted to 22,000 “units” on May 27, 2008.
 
 The
Company issued a promissory note, for a total of $5,000 on June 03,
2008.  The note is due 30 days from the date of the note, with
interest of $500.  If the note is not paid within 10 days of the due
date a $100 penalty will be charged, and interest of 1% will begin to accrue on
the principal and accrued interest.  This note was paid on July.28,
2008.
 
 The
Company signed a loan agreement with JHU/APL on July 1, 2008 to satisfy the cash
requirements of Amendment #3 to the License Agreement between the Company and
JHU/APL dated December 26, 2007.  Under the terms of the loan
agreement the Company will make monthly payments as follows:
 
 July
      31, 2008
                    
                    $
                    10,000August
      31, 2008
                    
                    $
                    5,000September
      30, 2008
                    
                    $
                    5,000October
      31, 2008
                    
                    $
                    5,000November
      30, 3008
                    
                    $
                    5,000December
      31, 2008
                    
                    $
                    5,000January
      31, 2009
                    
                    $
                    5,000February
      28, 2009
                    
                    $
                    5,000March
      31, 2009
                    
                    $
                    5,000April
      30, 2009
                    
                    $
                    3,929.18
  15
 
 MIP
SOLUTIONS, INC.
 (A
DEVELOPMENT STAGE COMPANY)
 CONDENSED
NOTES TO THE FINANCIAL STATEMENTS
 SEPTEMBER
30, 2008
 
 The last
payment consists of a $2500 penalty fee and 8% per annum interest.
 
 NOTE
9 - RELATED PARTY TRANSACTIONS
 
 During
the year ended December 31, 2007, the Company advanced to one of its officers a
total of $27,000. Because the transactions occurred while the Company was still
private, it was not subject to the Sarbanes-Oxley Act of 2002, and therefore,
was not prohibited. The officer repaid $12,000 of the loaned amount and the
remaining receivable was fully satisfied through payroll
deductions.
 
 The
Company issued a promissory note to one of its officers, for a total of $5,000
on July 11, 2007. The note bears interest at a rate of 1% per month for twelve
months, 11⁄2% for the next six months and then increases by 1⁄2 % ever six months
thereafter. The note is payable on demand six months from issuance. As of
September 30, 2008, related interest of $876 has been accrued and
expensed.
  The
Company issued a promissory note to one of its directors, for a total of $10,000
on August 24, 2007. An additional $1,000 was added to this note on October 18,
2007. The note bears interest at a rate of 1% per month for twelve months, 11⁄2%
for the next six months and then increases by 1⁄2 % ever six months thereafter.
The note is payable on demand six months from issuance. As of September 30,
2008, related interest of $1626 has been accrued and expensed.
 
 NOTE 10 - SUBSEQUENT
EVENTS
 
 On
October 1, 2008 the Company issued 12,500 restricted common shares, valued at
$5000 to Rocky Arnold pursuant to his Employment Agreement.
 
 On
October 9, 2008 the Company Promissory Note holders converted $48,332 of notes
and accrued interest into 96,664 “units”.
 
 On
October 13, 2008 Amendment #5 with The Johns Hopkins University Applied Physics
Laboratory (“JHU/APL”) was fully executed between the Company and
JHU/APL.  This Amendment changed the Terms and Conditions of the
License Agreement between the two parties relating to the first commercial sale
deadline and minimum royalty payments.
 
 16
 
 MIP
SOLUTIONS, INC.
 (A
DEVELOPMENT STAGE COMPANY)
 CONDENSED
NOTES TO THE FINANCIAL STATEMENTS
 SEPTEMBER
30, 2008
 
 Also on
October 13, the Company entered into a consulting agreement with terms of $5,000
per month for a period of six months, and 50,000 shares of common stock valued
at $19,500.  The stock will be held by the Company until the
completion of the contract and be rescinded if Mr., Lakeman resigns or
terminates the contract prior to the end of the six month term.
 
 On
October 15, 2008 the company issued 7,858 restricted common shares valued at
$3064.52, prorated for 13 days for the month of October to Russ Lakeman as part
of his Consulting Agreement.
 
 On
October 28, 2008 the Company issued 30,000 “units” to an attorney for
services.
 
 On
October 29, 2008 the Company issued 17,000 “units” to a consultant for
services.
 
 On
November 18, 2008 the Company executed an 18 month 12% Promissory Note in the
amount of $25,000 with a current shareholder.  The note is convertible into
common shares, $.001 par value, at a 20% discount to the average closing bid
price for the ten days proceeding conversion and includes warrants exercisable
at $0.20 per share for a period of three years.
 
 NOTE
11 – CORRECTION OF AN ERROR
 
 The
previously issued financial statements for December 31, 2007, have been restated
to correct an error in the recognition of a license fee payable and license fee
asset, and the associated amortization.  The Company failed to
recognize both the license fee payable, the license fee asset and the
amortization.  The effect of the restatement was to increase license
fee payable by $80,000 and to increase license fee by $80,000, increase net loss
by $8,487 and increase the accumulated deficit by $8,487.
 
 The
previously issued financial statements dated March 31, 2008, have been restated
to correct an error in the recognition of a license fee payable and license fee
asset. The Company failed to recognize the license fee payable, the license fee
asset and the amortization.  The effect of the correction was to
increase license fee payable by $10,000 and to increase license fee by $10,000
and increase net loss by $3,139 and increase the accumulated deficit by
$3,139.
 
 The
previously issued financial statements dated June 30, 2008, have been restated
to correct an error in the recognition of a license fee payable and license fee
asset, The Company failed to recognize the license fee payable, the license fee
asset and the amortization. Also, the Company failed to recognize an issuance of
common stock for services. The effect of the restatement was to increase license
fee payable by $10,000, increase license fee by $10,000 increase consulting
expense by $61,000, increase common stock by $100, increase additional paid in
capital by $60,900, and increase the net loss and accumulated deficit by
$64,472.
 
 17
 
 MIP
SOLUTIONS, INC.
 (A
DEVELOPMENT STAGE COMPANY)
 CONDENSED
NOTES TO THE FINANCIAL STATEMENTS
 SEPTEMBER
30, 2008
 
 The
accompanying financial statements dated September 30, 2008, have been restated
to correct an error in the recognition of amortization associated with the
license fee asset. The Company failed to recognize the
amortization.  The effect of the correction was to increase net loss
by $3,639 and increase the accumulated deficit by $3,639.
 
 The
effect of the Company’s previously issued 2007 financial statements is
summarized as follows:
 
 As Previously
                                  Reported
                                
                                
                                Increase (Decrease)
                                
                                
                                As RestatedFinancial Position (or Balance
      Sheet)Other
      assets
                                
                                
                                60,218
                                
                                
                                
                                71,513
                                
                                
                                
                                131,731Total
      assets
                                
                                
                                89,150
                                
                                
                                
                                71,513
                                
                                
                                
                                160,663Current
      liabilities
                                
                                
                                285,306
                                
                                
                                
                                80,000
                                
                                
                                
                                365,306Stockholders
      deficit
                                
                                
                                (196,156
                                )
                                
                                
                                (118,852
                                )
                                
                                
                                (315,008
                                )Total
      liabilities &  Stockholders deficit
                                
                                
                                89,150
                                
                                
                                
                                71,513
                                
                                
                                
                                160,663Results of OperationsDepreciation
      & Amortization Expense
                                
                                
                                4,215
                                
                                
                                
                                8,487
                                
                                
                                
                                12,702Net
      Loss
                                
                                
                                (387,985
                                )
                                
                                
                                (8,487
                                )
                                
                                
                                (396,472
                                )Net
      Loss Per Share
                                
                                
                                (0.07
                                )
                                
                                
                                -
                                
                                
                                
                                (0.07
                                )
 
 The
effect of the Company’s previously issued September 30, 2008 financial
statements is summarized as follows:
 
 As Previously
                                  Reported
                                
                                
                                Increase
                                  (Decrease)
                                
                                
                                As
                                  RestatedFinancial Position (or Balance
      Sheet)Other
      assets
                                
                                
                                166,223
                                
                                
                                
                                (19,070
                                )
                                
                                
                                147,153Total
      assets
                                
                                
                                193,989
                                
                                
                                
                                (19,070
                                )
                                
                                
                                174,919Current
      liabilities
                                
                                
                                258,245
                                
                                
                                
                                (2,030
                                )
                                
                                
                                256,215Stockholders
      deficit
                                
                                
                                (64,256
                                )
                                
                                
                                (17,040
                                )
                                
                                
                                (81,296
                                )Total
      liabilities &  Stockholders deficit
                                
                                
                                193,989
                                
                                
                                
                                (19,070
                                )
                                
                                
                                174,919Results of OperationsDepreciation
      & Amortization Expense
                                
                                
                                1,209
                                
                                
                                
                                3,639
                                
                                
                                
                                4,848Net
      Loss
                                
                                
                                (179,727
                                )
                                
                                
                                (4,109
                                )
                                
                                
                                (183,836
                                )Net
      Loss Per Share
                                
                                
                                (0
                                )
                                
                                
                                -
                                
                                
                                
                                (0
                                )
 
 18
  THIS
REPORT CONTAINS FORWARD-LOOKING STATEMENTS THAT INVOLVE RISKS AND UNCERTAINTIES
SUCH AS THE DEPENDENCE OF THE COMPANY ON AND THE ADEQUACY OF CASH FLOWS. THESE
FORWARD-LOOKING STATEMENTS AND OTHER STATEMENTS MADE ELSEWHERE IN THIS REPORT
ARE MADE IN RELIANCE ON THE PRIVATE SECURITIES LITIGATION REFORM ACT OF
1995.
 
 Item
2.   Management’s Discussion and Analysis of Financial Condition and
Results of Operations
 
 Cautionary
Note Regarding Forward-Looking Information
 
 This
quarterly report on Form 10-Q includes “forward-looking statements” within the
meaning of Section 27A of the Securities Act of 1933, as amended, and Rule 175
promulgated thereunder, and Section 21E of the Securities Exchange Act of
1934, as amended, and Rule 3b-6 promulgated thereunder, that involve inherent
risks and uncertainties.  Any statements about our expectations, beliefs,
plans, objectives, strategies or future events or performance constitute
forward-looking statements.  These statements are often, but not always,
made through the use of words or phrases such as "anticipate," "estimate,"
"plan," "project," "continuing," "ongoing," "expect," "believe," "intend" and
similar words or phrases.  Accordingly, these statements involve estimates,
assumptions and uncertainties that could cause actual results to differ
materially from those expressed or implied in them.  All forward-looking
statements are qualified in their entirety by reference to the risk factors
discussed in our Annual Report on Form 10-K for the year ended December 31,
2006.  Among the key factors that could cause actual results to differ
materially from the forward-looking statements are the following:
 
 §
              dependence on commercialization
      of our Molecularly Imprinted Polymer (MIP)
    technology;
 
 §
              our ability to continue as a
      “going concern”;
 
 §
              our need and ability to raise
      sufficient additional
capital;
 
 §
              ineffective internal operational
      and financial control
systems;
 
 §
              our ability to hire and retain
      specialized and key
personnel;
 
 §
              Ineffective financial accounting
      controls and procedures which resulted in the correction of an
      error;
 
 §
              dependence on our ability to
      purchase Float Concentrate and/or raw ore at a discount of its gold value
      in the marketplace;
 
 §
              our limited operating history and
      continued losses;
 
 §
              rapid technological
      change;
 
 §
              uncertainty of intellectual
      property protection;
 
 §
              potential infringement on the
      intellectual property rights of
others;
 
 §
              factors affecting our common
      stock as a “penny stock;”
 
 §
              extreme price fluctuations in our
      common stock;
  19
 
 §
              price decreases due to future
      sales of our common stock;
 
 §
              general economic and market
      conditions;
 
 §
              future shareholder dilution;
      and
 
 §
              absence of
      dividends.
 
 Because
the risk factors referred to above could cause actual results or outcomes to
differ materially from those expressed or implied in any forward-looking
statements made by us or on our behalf, you should not place undue reliance on
any forward-looking statements.  Further, any forward-looking statement
speaks only as of the date on which it is made, and we undertake no obligation
to update any forward-looking statement to reflect events or circumstances after
the date on which the statement is made or to reflect the occurrence of future
events or developments.  New factors emerge from time to time, and it is
not possible for us to predict which factors will arise.  In addition, we
cannot assess the impact of each factor on our business or the extent to which
any factor, or combination of factors, may cause actual results to differ
materially from those contained in any forward-looking statements. The following
discussion of our financial condition and results of operations should be read
together with our audited financial
statements and accompanying notes that are included elsewhere in
this report.
 
 Executive
Overview
 
 We
continue to need additional capital to fund the development of our Molecularly
Imprinted Polymer (“MIP”) technology as well as cover our general and
administrative expenses.
 
 In the
period ending September 30, 2008 our current liabilities decreased $97,656 to
$267,650 from $365,306, our accumulated deficit increased $1,208,522 from
$964,171 to $2,172,693 and, our stockholders deficit decreased $94,900 from
$204,643 to $110,243 from the year ended December 31, 2007. The decrease in
current liabilities, increase of accumulated deficit, and decrease of
stockholders deficit was primarily caused by the issuance of 892,500 shares of
common stock for services valued at $530,626, 132,334 “units” for services
valued at $130,819, 67,000 shares of common stock for the exercise of 67,000
warrants and cash of $33,500, 168,000 “units” for the payment of debt valued at
$84,000, 20,400 “units” for the purchase of an asset valued at $10,200, 308,400
“units” for accrued payroll of $154,200, 100,000 “units” for a license agreement
valued at $50,000, 100,000 warrants issued for services valued at $19,371, and
382,000 “units” for $191,000 in cash. These items also contributed to operating
expenses increasing $876,655 from $308,052 in the period ended December 31, 2007
to $1,184,707 for the period ended September 30, 2008.
  As noted
below under Item 2, the Company was accepting subscriptions for “units’
consisting of one common share (.001 par value) and one common stock purchase
warrant to purchase an additional common share (.001 par value) for $.50 per
unit through it’s private placement offering of securities pursuant to Rule 506
of Regulation D approved at a meeting of the Board of Directors on April 15,
2008 during the period ended September 30, 2008. Once this offering is completed
or closed, the Company will need to begin another round of fund raising within
the next 60 days to continue to execute its business and commercialization plans
and to cover general and administrative expenses. Should the company be unable
to continue to raise sufficient capital then it is unlikely that will be able to
continue as a going concern unless it is able to borrow capital form
shareholders or financial institutions which is highly unlikely.
 
 Correction
of an Error in the previously filed 10-Q for the period ending September 30,
2008
 
 The
accompanying financial statements dated September 30, 2008, have been restated
to correct an error in the recognition of amortization associated with the
license fee asset. The Company failed to recognize the
amortization.  The effect of the correction was to increase net loss
by $3,639 and increase the accumulated deficit by $3,639.
  20
 
 The
effect of the Company’s previously issued 2007 financial statements is
summarized as follows:
 
 Previously Reported
                        
                        
                        Increase (Decrease)
                        
                        
                        RestatedCurrent
      assets
                        
                        
                        17,611
                        
                        
                        
                        -
                        
                        
                        
                        17,611PP&E
                        
                        
                        11,321
                        
                        
                        
                        -
                        
                        
                        
                        11,321Other
      assets
                        
                        
                        60,218
                        
                        
                        
                        71,513
                        
                        
                        
                        131,731Total
      assets
                        
                        
                        89,150
                        
                        
                        
                        71,513
                        
                        
                        
                        160,663Current
      liabilities
                        
                        
                        285,306
                        
                        
                        
                        80,000
                        
                        
                        
                        365,306Stockholders
      deficit
                        
                        
                        (196,156
                        )
                        
                        
                        (8,487
                        )
                        
                        
                        (204,643
                        )Total
      liabilities &Stockholders
      deficit
                        
                        
                        89,150
                        
                        
                        
                        -
                        
                        
                        
                        160,663
 
 Item
3.  Quantitative and Qualitative Disclosures about Market Risk
 
 Market
risk represents the risk of loss that may impact our financial position due to
adverse changes in financial market prices and rates.  We do not hold or
issue financial instruments for trading purposes or have any derivative
financial instruments. Our principal exposure to market risk is that the price
of our stock can either enhance or deter our ability to raise equity capital
through the private placement of our securities and/or the exercise of our
outstanding warrants.
 
 Item
4. Controls and Procedures
 
 In
connection with the preparation of this Quarterly Report on Form 10-Q, an
evaluation was carried out by the Company’s management, with the participation
of the Company’s Chief Executive Officer and Principal Financial Officer, of the
effectiveness of the Company’s disclosure controls and procedures (as defined
Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934
(Exchange Act)).  Disclosure controls and procedures are designed to ensure
that information required to be disclosed in reports filed or submitted under
the Exchange Act is recorded, processed, summarized, and reported within the
time periods specified in SEC rules and forms and that such information is
accumulated communicated to management, including the Principal Executive
Officer and Principal Financial Officer, to allow timely decisions regarding
required disclosures.  Based on its evaluation, and in light of the
previously identified material weaknesses in internal control over financial
reporting, as of December 31, 2007, relating to entity-level controls, the
financial closing and reporting process, and segregation of duties, the
Company’s Principal Executive Officer and Principal Financial Officer concluded
that, as of September 30, 2008, the Company’s disclosure controls and procedures
were ineffective.
  Changes
in Internal Controls.
 
 There
have been no material changes in internal control over financial reporting
during the quarter ended September 30, 2008.
 
 PART II -
OTHER INFORMATION
 
 Item
1. Legal Proceedings
 
 There are
no legal proceedings pending against us, and, to the knowledge of management,
there was one material legal proceeding threatened by the Company’s former
President, CEO and CFO, Michael T. Pieniazek. Details of the threatened
litigation are contained herein under Item 1A and in the Company’s SB-2 Filing
dated September 28, 2008 which can be found at www.sec.gov.
  21
 
 Item
1A.   Risk Factors
 
 There
have been no material changes in risk factors described in our Annual Report of
Form 10-K for the year ended December 31, 2007.
 
 Item
2.  Unregistered Sales of Equity Securities and Use of
Proceeds
  As of
September 30, 2008 Company has accepted subscriptions for $463,900 worth of
subscriptions for “units’ consisting of one common share (.001 par value) and
one common stock purchase warrant to purchase an additional common share (.001
par value) for $.50 per unit in it’s private placement of securities pursuant to
Rule 506 of Regulation D approved at a meeting of the Board of Directors on
April 15, 2008 in the form of cash, conversion of promissory Notes and accrued
salary, amendments to its license agreement, and in exchange for
services.
 
 Item
3.    Defaults Upon Senior Securities
 
 None.
 
 Item
4. Submission of Matters to a Vote of Security Holders
 
 In
accordance with the Company’s Bylaws, the annual meeting of shareholders
was held on January 31, 2008, within one month of Company’s fiscal year end. At
the meeting, the majority of our shareholders re-elected four directors,
including Dale Carlton, Edward Hunton, Duane Simon and Glen Southard. One new
director, Gary MacDonald was elected to replace Mark Quinn who did not seek
another term. All five directors to serve until the next annual meeting of
shareholders or until their respective successors are duly elected and
qualified.
 
 Item
5. Other Information
 
 CORRECTION
OF AN ERROR
 
 The
previously issued financial statements for December 31, 2007, have been restated
to correct an error in the recognition of a license fee payable and license fee
asset, and the associated amortization.  The Company failed to
recognize both the license fee payable, the license fee asset and the
amortization.  The effect of the restatement was to increase license
fee payable by $80,000 and to increase license fee by $80,000, increase net loss
by $8,487 and increase the accumulated deficit by $8,487.
 
 The
previously issued financial statements dated March 31, 2008, have been restated
to correct an error in the recognition of a license fee payable and license fee
asset. The Company failed to recognize the license fee payable, the license fee
asset and the amortization.  The effect of the correction was to
increase license fee payable by $10,000 and to increase license fee by $10,000
and increase net loss by $3,139 and increase the accumulated deficit by
$3,139.
 
 The
previously issued financial statements dated June 30, 2008, have been restated
to correct an error in the recognition of a license fee payable and license fee
asset, The Company failed to recognize the license fee payable, the license fee
asset and the amortization. Also, the Company failed to recognize an issuance of
common stock for services. The effect of the restatement was to increase license
fee payable by $10,000, increase license fee by $10,000 increase consulting
expense by $61,000, increase common stock by $100, increase additional paid in
capital by $60,900, and increase the net loss and accumulated deficit by
$64,472.
  22
  
 The
accompanying financial statements dated September 30, 2008, have been restated
to correct an error in the recognition of amortization associated with the
license fee asset. The Company failed to recognize the
amortization.  The effect of the correction was to increase net loss
by $3,639 and increase the accumulated deficit by $3,639.
 
 The
effect of the Company’s previously issued 2007 financial statements is
summarized as follows:
 
 As Previously
                                          Reported
                                        
                                        
                                        Increase (Decrease)
                                        
                                        
                                        As RestatedFinancial Position (or Balance
      Sheet)Other
      assets
                                        
                                        
                                        60,218
                                        
                                        
                                        
                                        71,513
                                        
                                        
                                        
                                        131,731Total
      assets
                                        
                                        
                                        89,150
                                        
                                        
                                        
                                        71,513
                                        
                                        
                                        
                                        160,663Current
      liabilities
                                        
                                        
                                        285,306
                                        
                                        
                                        
                                        80,000
                                        
                                        
                                        
                                        365,306Stockholders
      deficit
                                        
                                        
                                        (196,156
                                        )
                                        
                                        
                                        (118,852
                                        )
                                        
                                        
                                        (315,008
                                        )Total
      liabilities &  Stockholders deficit
                                        
                                        
                                        89,150
                                        
                                        
                                        
                                        71,513
                                        
                                        
                                        
                                        160,663Results of OperationsDepreciation
      & Amortization Expense
                                        
                                        
                                        4,215
                                        
                                        
                                        
                                        8,487
                                        
                                        
                                        
                                        12,702Net
      Loss
                                        
                                        
                                        (387,985
                                        )
                                        
                                        
                                        (8,487
                                        )
                                        
                                        
                                        (396,472
                                        )Net
      Loss Per Share
                                        
                                        
                                        (0.07
                                        )
                                        
                                        
                                        -
                                        
                                        
                                        
                                        (0.07
                                        )
 
 The
effect of the Company’s previously issued September 30, 2008 financial
statements is summarized as follows:
 
 As Previously
                                                  Reported
                                                
                                                
                                                Increase
                                                  (Decrease)
                                                
                                                
                                                As RestatedFinancial Position (or Balance
      Sheet)Other
      assets
                                                
                                                
                                                166,223
                                                
                                                
                                                
                                                (19,070
                                                )
                                                
                                                
                                                147,153Total
      assets
                                                
                                                
                                                193,989
                                                
                                                
                                                
                                                (19,070
                                                )
                                                
                                                
                                                174,919Current
      liabilities
                                                
                                                
                                                258,245
                                                
                                                
                                                
                                                (2,030
                                                )
                                                
                                                
                                                256,215Stockholders
      deficit
                                                
                                                
                                                (64,256
                                                )
                                                
                                                
                                                (17,040
                                                )
                                                
                                                
                                                (81,296
                                                )Total
      liabilities &  Stockholders deficit
                                                
                                                
                                                193,989
                                                
                                                
                                                
                                                (19,070
                                                )
                                                
                                                
                                                174,919Results of OperationsDepreciation
      & Amortization Expense
                                                
                                                
                                                1,209
                                                
                                                
                                                
                                                3,639
                                                
                                                
                                                
                                                4,848Net
      Loss
                                                
                                                
                                                (179,727
                                                )
                                                
                                                
                                                (4,109
                                                )
                                                
                                                
                                                (183,836
                                                )Net
      Loss Per Share
                                                
                                                
                                                (0
                                                )
                                                
                                                
                                                -
                                                
                                                
                                                
                                                (0
                                                )
 
 MANAGEMENT
CHANGES
 
 On
September 1, 2008, Rocky Richard Arnold, PhD, accepted the positions of
President and CEO of the Company. On September 9, 2008 Dr. Arnold was voted onto
the Board of Directors.
 
 On August
31, 2008, Jeff Lamberson, resigned the position of President.
 
 Details
of this change in management can be found in the Company’s 8-K filing on
September 2, 2008 along with all other 8-K filings at www.sec.gov
..
  23
 
 Item
6. Exhibits
 
 Exhibit
                  Number
                
                Description31.1
                
                Section
      302 Certification of Chief Executive Officer and Chief Financial
      Officer32.1
                
                Certification
      Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of
      The Sarbanes-Oxley Act of
2002
 
 In
accordance with the requirements of the Exchange Act, the registrant caused this
report to be signed on its behalf by the undersigned, thereunto duly
authorized.
 
 MIP
Solutions, Inc.
 Dated:
      June 3, 2009
              /s/
      Jeff
      Lamberson
              
              /s/
      Gary
      MacDonaldJeff
      Lamberson
                Principal
      Accounting Officer
              
              Gary
      MacDonald
                Chief
      Executive Officer
  24