UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION




WASHINGTON,
D.C.  20549









FORM
10-Q




(Mark
      One)
              [X] QUARTERLY
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
      EXCHANGE  ACT OF 1934.
              For the quarterly period ended October 31, 2008OR[   ] TRANSITION
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934.
              
              For
      the transition period from ______ to
______







Commission
File Number: 000-51263





iDcentrix,
Inc.


(Exact
Name of Registrant as Specified in Its Charter)




Nevada
              (State
      or Other Jurisdiction of Incorporation or
              Organization)
            
            20-4650531
              (I.R.S.
      Employer Identification No.)





2101
      Rosecrans Avenue, Suite 4240
              El
      Segundo, California
              (Address
      of Principal Executive Offices)
            
            90245
              (Zip
      Code)





(310)
      414-2675
                (Registrant’s
      Telephone Number, Including Area Code)(Former
      Name, Former Address and Former Fiscal Year, if Changed Since Last
      Report)







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




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.  (Check one):




Large
      accelerated
      filer                                            ̈
              Accelerated
      filer                                     ̈Non-accelerated
      filer                                          
         ̈
              Smaller
      reporting
      company                 
      ý


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




At
December 2, 2008, there were 32,242,000 shares of common stock, par value
$0.00001, outstanding.













TABLE
OF CONTENTS
 
 Page




PART I. FINANCIAL INFORMATION
                      2Item
      1.  Financial Statements
                      2Condensed
      Consolidated Balance Sheets as of October 31, 2008 (Unaudited) and January
      31, 2008
                      2Condensed
      Consolidated Statements of Operations for the Three and Nine Months Ended
      October 31, 2008 and 2007 and for the Cumulative Period from January 3,
      2007 (Inception) to October 31, 2008 (Unaudited)
                      3Condensed
      Consolidated Statements of Cash Flows for the Nine Months Ended October
      31, 2008 and 2007 and for the Cumulative Period from January 3, 2007
      (Inception) to October 31, 2008 (Unaudited)
                      4Condensed
      Consolidated Statement of Stockholders’ Equity for the Period January 3,
      2007 (Inception) to January 31, 2008 and the Nine Months Ended October 31,
      2008 (Unaudited)
                      5Notes
      to Condensed Consolidated Financial Statements for the Three and Nine
      Months Ended October 31, 2008 (Unaudited)
                      7Item
      2.   Management’s Discussion and Analysis of Financial Condition
      and Results of Operations.
                      17Item
      3.   Quantitative and Qualitative Disclosures About Market
      Risk
                      29Item
      4.   Controls and Procedures
                      29Item
      4T. Controls and Procedures
                      31PART
      II  OTHER INFORMATION
                      32Item
      1.  Legal Proceedings
                      32Item
      1A.  Risk Factors
                      32Item
      2.  Unregistered Sales of Equity Securities and Use of
      Proceeds
                      32Item
      3.  Defaults Upon Senior Securities
                      32Item
      4.  Submission of Matters to a Vote of Security
      Holders
                      32Item
      5.  Other Information
                      32Item
      6.  Exhibits
                      32SIGNATURES
                      33





-i-


Forward-Looking
Statements





This
report on Form 10-Q may contain forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended (the “Securities Act”),
and Section 21E of the Securities Exchange Act of 1934, as amended (the
“Exchange Act”), which are intended to be covered by the safe harbors created
thereby. Forward-looking statements are not historical facts but instead
represent only our belief regarding future events, many of which, by their
nature, are inherently uncertain and outside of our control.  These
statements include statements other than historical information or statements of
current conditions and may relate to our future plans, operations and objectives
and results, among other things, our plans to develop and implement a strategic
marketing plan and enhance our product offerings, our expectations with respect
to the future contributions of recently hired employees and our plans to hire
additional marketing and technical employees, our plans to consider possible
acquisitions, statements with respect to our beliefs with respect to growth in
the market for security cards and other security-related technology, statements
with respect to our expectations or beliefs with respect to future competition,
statements with respect to our plans and expectations about research and
development and statements concerning our need for and ability to attract
additional capital.  We have no duty to update these
statements.  Actual future events, circumstances, performance and
trends could materially differ from those set forth in these statements due to
various factors, including the risks, uncertainties and other factors discussed
in Item 1A “Risk Factors” of Part I of our Annual Report to the Securities and
Exchange Commission on Form 10-K for the year ended January 31, 2008, and in
Part I, Item 2 “Management’s Discussion and Analysis of Financial Condition and
Results of Operations” and Part II, Item 1A “Risk Factors” of this Quarterly
Report on Form 10-Q.




1


PART
I. FINANCIAL INFORMATION




Item
1.  Financial Statements




IDCENTRIX


(A
Development Stage Company)


CONDENSED
CONSOLIDATED BALANCE SHEETS


October
      31,
                                        
                                        
                                        January
      31,2008
                                        
                                        
                                        2008(Unaudited)ASSETSCurrent
      AssetsCash
      and cash equivalents
                                        
                                        $
                                        636,681
                                        
                                        
                                        $
                                        2,117,091Prepaid
      expenses
                                        
                                        
                                        56,869
                                        
                                        
                                        
                                        29,969Total
      current assets
                                        
                                        
                                        693,550
                                        
                                        
                                        
                                        2,147,060Property
      and equipment, net
                                        
                                        
                                        25,886
                                        
                                        
                                        
                                        8,862Other
      AssetsSecurity
      deposits
                                        
                                        
                                        4,730
                                        
                                        
                                        
                                        4,730Sublicensing
      agreements
                                        
                                        
                                        179,143
                                        
                                        
                                        
                                        203,572Total
      other assets
                                        
                                        
                                        183,873
                                        
                                        
                                        
                                        208,302Total
      Assets
                                        
                                        $
                                        903,309
                                        
                                        
                                        $
                                        2,364,224LIABILITIES
      AND STOCKHOLDERS' EQUITYCurrent
      LiabilitiesAccounts
      payable
                                        
                                        $
                                        197,633
                                        
                                        
                                        $
                                        673,306Accrued
      expenses
                                        
                                        
                                        129,104
                                        
                                        
                                        
                                        85,440Total
      liabilities
                                        
                                        
                                        326,737
                                        
                                        
                                        
                                        758,746Commitments
      and contingenciesStockholders'
      equityCommon
      stock, $0.00001 par value, 100,000,000 sharesauthorized;
      32,242,000 shares issued and outstanding at
                                          October 31,
      2008 and 31,742,000 shares issued and outstanding at
                                          January 31,
      2008
                                        
                                        
                                        322
                                        
                                        
                                        
                                        317Additional
      paid-in capital
                                        
                                        
                                        3,849,607
                                        
                                        
                                        
                                        3,320,557Deficit
      accumulated during the development stage
                                        
                                        
                                        (3,273,357
                                        )
                                        
                                        
                                        (1,715,396
                                        )Total
      Stockholders' Equity
                                        
                                        
                                        576,572
                                        
                                        
                                        
                                        1,605,478Total
      Liabilities and Stockholders' Equity
                                        
                                        $
                                        903,309
                                        
                                        
                                        $
                                        2,364,224
  See
      notes to condensed consolidated financial statements.


2







IDCENTRIX(A  Development
      Stage Company)CONDENSED
      CONSOLIDATED STATEMENTS OF OPERATIONS
  (Unaudited)





CumulativePeriod
      FromJanuary
      3,2007Three
      Months Ended
                      
                      
                      Nine
      Months Ended
                      
                      
                      (Inception)
      toOctober
      31,
                      
                      
                      October
      31,
                      
                      
                      October
      31,2008
                      
                      
                      2007
                      
                      
                      2008
                      
                      
                      2007
                      
                      
                      2008Revenue
                      
                      $
                      -
                      
                      
                      $
                      -
                      
                      
                      $
                      -
                      
                      
                      $
                      -
                      
                      
                      $
                      -Operating
      ExpensesSelling,
      general and administrative
                      
                      
                      442,557
                      
                      
                      
                      321,683
                      
                      
                      
                      1,585,162
                      
                      
                      
                      739,643
                      
                      
                      
                      3,263,155Research
      and development
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      40,096
                      
                      
                      
                      40,096Loss
      from Operations
                      
                      
                      (442,557
                      )
                      
                      
                      (321,683
                      )
                      
                      
                      (1,585,162
                      )
                      
                      
                      (779,739
                      )
                      
                      
                      (3,303,251
                      )Interest
      Income
                      
                      
                      4,830
                      
                      
                      
                      1,920
                      
                      
                      
                      27,201
                      
                      
                      
                      2,252
                      
                      
                      
                      29,894Net
      Loss
                      
                      $
                      (437,727
                      )
                      
                      $
                      (319,763
                      )
                      
                      $
                      (1,557,961
                      )
                      
                      $
                      (777,487
                      )
                      
                      $
                      (3,273,357
                      )Basic
      and diluted net lossper
      share common
                      
                      $
                      (0.01
                      )
                      
                      $
                      (0.04
                      )
                      
                      $
                      (0.05
                      )
                      
                      $
                      (0.12
                      )Weighted
      average number ofcommon
      shares outstanding
                      
                      
                      31,824,391
                      
                      
                      
                      8,500,000
                      
                      
                      
                      31,788,745
                      
                      
                      
                      6,311,941



































See
      notes to condensed consolidated financial statements.







3










IDCENTRIX(A  Development
      Stage Company)CONDENSED
      CONSOLIDATED STATEMENTS OF CASH FLOWS
  (Unaudited)





CumulativePeriod
      FromJanuary
      3,2007Nine
      Months Ended
                    
                    
                    (Inception)
      toOctober
      31,
                    
                    
                    October
      31,2008
                    
                    
                    2007
                    
                    
                    2008Cash
      Flows from Operating ActivitiesNet
      loss
                    
                    $
                    (1,557,961
                    )
                    
                    $
                    (777,487
                    )
                    
                    $
                    (3,273,357
                    )Adjustment
      to reconcile net loss to net cash used inoperating
      activities:Depreciation
      and amortization
                    
                    
                    28,099
                    
                    
                    
                    18,451
                    
                    
                    
                    56,277Fair
      value of vested stock options
                    
                    
                    75,563
                    
                    
                    
                    45,644
                    
                    
                    
                    144,041Fair
      value of restricted stock issuances
                    
                    
                    81,000
                    
                    
                    
                    -
                    
                    
                    
                    394,500Fair
      value of stock issued to employee
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    50,000Changes
      in operating assets and liabilitiesPrepaid
      expenses and security deposits
                    
                    
                    (26,900
                    )
                    
                    
                    (21,731
                    )
                    
                    
                    (60,070
                    )Accounts
      payable
                    
                    
                    (475,673
                    )
                    
                    
                    208,401
                    
                    
                    
                    140,772Accrued
      expenses
                    
                    
                    43,664
                    
                    
                    
                    25,153
                    
                    
                    
                    127,575Net
      cash used in operating activities
                    
                    
                    (1,832,208
                    )
                    
                    
                    (501,569
                    )
                    
                    
                    (2,420,262
                    )Cash
      Flows from Investing ActivitiesNet
      cash received in reverse merger with Sterling Gold
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    503,055Purchase
      of property and equipment
                    
                    
                    (20,694
                    )
                    
                    
                    (12,612
                    )
                    
                    
                    (33,306
                    )Net
      cash (used in) provided by investing activities
                    
                    
                    (20,694
                    )
                    
                    
                    (12,612
                    )
                    
                    
                    469,749Cash
      Flows from Financing ActivitiesDeferred
      offering costs
                    
                    
                    -
                    
                    
                    
                    (15,000
                    )
                    
                    
                    -Net
      proceeds from issuance of common stock
                    
                    
                    372,492
                    
                    
                    
                    656,293
                    
                    
                    
                    2,587,194Net
      cash provided by financing activities
                    
                    
                    372,492
                    
                    
                    
                    641,293
                    
                    
                    
                    2,587,194Net
      (decrease) increase in cash
                    
                    
                    (1,480,410
                    )
                    
                    
                    127,112
                    
                    
                    
                    636,681Cash
      and Cash Equivalents, Beginning of Period
                    
                    
                    2,117,091
                    
                    
                    
                    -
                    
                    
                    
                    -Cash
      and Cash Equivalents, End of Period
                    
                    $
                    636,681
                    
                    
                    $
                    127,112
                    
                    
                    $
                    636,681Supplemental
      non cash investing and financing activities:Issuance
      of common stock for sublicense agreement
                    
                    $
                    -
                    
                    
                    $
                    228,000
                    
                    
                    $
                    228,000See
      notes to condensed consolidated financial statements





4





IDCENTRIX


(A
Development Stage Company)


CONDENSED
CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY


FOR
THE PERIOD JANUARY 3, 2007 (INCEPTION) TO JANUARY 31, 2008 AND


THE
NINE MONTHS ENDED OCTOBER 31, 2008 (unaudited)




Common
      Stock
                          
                          
                          Additional
                            Paid-in
                          
                          
                          AccumulatedShares
                          
                          
                          Amount
                          
                          
                          Capital
                          
                          
                          Deficit
                          
                          
                          TotalBalance,
      January 3, 2007
                          
                          
                          -
                          
                          
                          $
                          -
                          
                          
                          $
                          -
                          
                          
                          $
                          -
                          
                          
                          $
                          -Net
      loss
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          (40,000
                          )
                          
                          
                          (40,000
                          )Balance,
      January 31, 2007
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          (40,000
                          )
                          
                          
                          (40,000
                          )Private
      placements of
                            common
    stock:Shares
      issued at $0.10 per share
                          
                          
                          3,400,000
                          
                          
                          
                          34
                          
                          
                          
                          310,310
                          
                          
                          
                          
                          
                          
                          
                          310,344Shares
      issued at $0.30 per share
                          
                          
                          1,100,000
                          
                          
                          
                          11
                          
                          
                          
                          301,186
                          
                          
                          
                          
                          
                          
                          
                          301,197Shares
      issued at $0.75 per share
                          
                          
                          2,342,000
                          
                          
                          
                          23
                          
                          
                          
                          1,603,138
                          
                          
                          
                          
                          
                          
                          
                          1,603,161Fair
      value of vested stock options
                            issued to
      employees
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          68,478
                          
                          
                          
                          -
                          
                          
                          
                          68,478Fair
      value of vesting of restricted stock
                            issuances to
      directors ($0.75
                            per
      share)
                          
                          
                          920,000
                          
                          
                          
                          9
                          
                          
                          
                          313,491
                          
                          
                          
                          -
                          
                          
                          
                          313,500Fair
      value of stock issued to employee
                            ($0.10 per
      share)
                          
                          
                          500,000
                          
                          
                          
                          5
                          
                          
                          
                          49,995
                          
                          
                          
                          -
                          
                          
                          
                          50,000Fair
      value of common stock issued in
                            exchange for
      sublicense (A)
                          
                          
                          10,000,000
                          
                          
                          
                          100
                          
                          
                          
                          227,900
                          
                          
                          
                          -
                          
                          
                          
                          228,000Shares
      issued pursuant to share
                            exchange with
      Sterling Gold
                            Corp.($0.04 per
      share)
                          
                          
                          13,480,000
                          
                          
                          
                          135
                          
                          
                          
                          446,059
                          
                          
                          
                          -
                          
                          
                          
                          446,194Net
      loss
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          (1,675,396
                          )
                          
                          
                          (1,675,396
                          )Balance,
      January 31, 2008
                          
                          
                          31,742,000
                          
                          
                          
                          317
                          
                          
                          
                          3,320,557
                          
                          
                          
                          (1,715,396
                          )
                          
                          
                          1,605,478Private
      placement of common stock
                            at $0.75 per
      share
                          
                          
                          500,000
                          
                          
                          
                          5
                          
                          
                          
                          372,487
                          
                          
                          
                          -
                          
                          
                          
                          372,492Fair
      value of vested stock options
                            issued to
      employees
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          75,563
                          
                          
                          
                          -
                          
                          
                          
                          75,563





5





Fair
      value of vesting of restricted stock
                  issuances to
      directors ($0.75
                  per
      share)
                
                
                -
                
                
                
                -
                
                
                
                81,000
                
                
                
                -
                
                
                
                81,000Net
      loss
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                (1,557,961
                )
                
                
                (1,557,961
                )Balance,
      October 31, 2008 (unaudited)
                
                
                32,242,000
                
                
                $
                322
                
                
                $
                3,849,607
                
                
                $
                (3,273,357
                )
                
                $
                576,572





(A)  3.5
million shares were valued at $0.065 per share and 6.5 million shares were
valued at nil.





See notes
to condensed consolidated financial statements.


6


IDCENTRIX




(A
Development Stage Company)




Notes to
Condensed Consolidated Financial Statements (unaudited)


For the
Three and Nine Months Ended October 31, 2008






NOTE 1
-           DESCRIPTION OF
BUSINESS




iDcentrix
(the “Company”) was incorporated in Delaware in January of 2007. The Company is
in the business of producing hi-tech security identification solutions.
Substantially all of the efforts of the Company are devoted to these business
activities. The Company is a development stage company as defined by Statement
of Financial Accounting Standards (SFAS) No. 7, “Accounting and Reporting by
Development Stage Enterprises.” All losses accumulated since the inception of
the Company will be considered as part of the Company’s development stage
activities. The Company has generated no revenue. The ability of the Company to
carry out its business plan rests with its ability to secure equity and other
financing. Sterling Gold Corp. was incorporated in January of 2004.




On
January 31, 2008, the Company consummated a Share Exchange Agreement with
Sterling Gold Corp. Pursuant to the terms of the Share Exchange Agreement all of
the issued and outstanding common shares of iDcentrix were exchanged on a
one-for–one basis for common shares of Sterling Gold Corp. The acquisition was
accounted for as a reverse merger (recapitalization) with iDcentrix deemed to be
the accounting acquirer and Sterling Gold deemed to be the legal acquirer. As
such, the condensed consolidated financial statements herein reflect the
historical activity of iDcentrix since its inception, and the historical
stockholders’ equity of iDcentrix has been retroactively restated for the
equivalent number of shares received in the exchange after giving effect to any
differences in the par value offset to paid in capital. In connection with the
Share Exchange Agreement, the Company is deemed to have issued an additional
13,480,000 shares of common stock to the shareholders of Sterling Gold. Upon the
exchange, the Company reflected the receipt of Sterling Gold’s net assets,
including $503,055 of cash less the costs of the reverse merger of approximately
$59,000, as an adjustment to paid-in capital.


NOTE 2
-           SIGNIFICANT
ACCOUNTING POLICIES


Principles
of Consolidation




The
accompanying condensed consolidated financial statements include the accounts of
the Company and its wholly owned subsidiary, IDCX Co. Intercompany transactions
have been eliminated in consolidation.


Basis of Presentation and
Going Concern




In the
opinion of management, the accompanying (a) consolidated balance sheet as
of January 31, 2008, which has been derived from audited financial statements,
and (b) the unaudited interim condensed consolidated financial statements
for the three and nine months ended October 31, 2008 and 2007 include all
adjustments (consisting of normal recurring accruals) which management considers
necessary to present fairly the consolidated financial position of the Company
as of October 31, 2008, the results of its consolidated operations for the three
and nine months ended October 31, 2008 and 2007, and its consolidated cash flows
for the nine months ended October 31, 2008 and 2007 in conformity with
accounting principles generally accepted in the United States.




These
condensed consolidated financial statements have been prepared consistently with
the accounting policies described in the Company’s Annual Report on
Form 10-K for the year ended January 31, 2008, as filed with the Securities
and Exchange Commission on May 15, 2008 which should be read in conjunction
with this Quarterly Report on Form 10-Q. The notes from the condensed
consolidated financial statements for 2008 are incorporated by reference from
the Notes to




7
 IDCENTRIX
 (A
Development Stage Company)
  Notes to
Condensed Consolidated Financial Statements (unaudited)
 For the
Three and Nine Months Ended October 31, 2008


Consolidated
Financial Statements as of January 31, 2008 as described in the Company’s Annual
Report on Form 10-K for the year ended January 31, 2008. The results of
operations for the three and nine months ended October 31, 2008 are not
necessarily indicative of the consolidated results of operations to be expected
for the full fiscal year ending January 31, 2009. The following unaudited
condensed consolidated financial statements have been prepared pursuant to the
rules and regulations of the Securities and Exchange Commission. Certain
information and note disclosures normally included
in annual financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to those rules and
regulations, although the Company believes that the disclosures made are
adequate to make the information not misleading.




The
accompanying condensed consolidated financial statements have been prepared
assuming that the Company will continue as a going concern. This basis of
accounting contemplates the recovery of the Company’s assets and the
satisfaction of its liabilities. Since inception, the Company has been engaged
in organizational activities, including research and development and obtaining
financing. Through October 31, 2008, the Company has incurred accumulated losses
of approximately $3,273,000. Successful completion of the Company’s development
programs and its transition to attaining profitable operations is dependent upon
obtaining financing adequate to complete its product development and the
successful market introduction of its product and services.


Use of
Estimates




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




Concentration of Credit
Risk




Financial
instruments that potentially subject the Company to concentrations of credit
risk consist primarily of cash and cash equivalents.  The Company
places its cash and cash equivalents with high credit quality financial
institutions.  From time to time such cash balances may be in excess
of the FDIC insurance limit of $250,000.




Equity Based
Compensation




The
Company periodically issues restricted stock, stock options and warrants to
employees and non-employees in non-capital raising transactions for services and
for financing costs. The Company uses the modified prospective method in which
compensation cost is recognized beginning with the effective date (a) based on
the requirements of SFAS No. 123R for all share-based payments granted after the
effective date and (b) based on the requirements of SFAS No. 123R for all awards
granted to employees prior to the effective date of SFAS No. 123R that remain
unvested on the effective date. The Company accounts for stock option and
warrant grants issued and vesting to non-employees in accordance with EITF No.
96-18: “Accounting for Equity Instruments that are Issued to Other Than
Employees for Acquiring, or in Conjunction with Selling, Goods or Services” and
EITF No. 00-18 “Accounting Recognition for Certain Transactions involving Equity
Instruments Granted to Other Than Employees” whereas the value of the stock
compensation is based upon the measurement date as determined at either a) the
date at which a performance commitment is reached, or b) the date at which the
necessary performance to earn the equity instruments is complete.




8
 IDCENTRIX
 (A
Development Stage Company)
  Notes to
Condensed Consolidated Financial Statements (unaudited)
 For the
Three and Nine Months Ended October 31, 2008


Long-Lived Assets




SFAS No.
144, “Accounting for the Impairment or Disposal of Long-Lived Assets”, requires
that long-lived assets be reviewed for impairment whenever events or changes in
circumstances indicate that their carrying amounts may not be recoverable. If
the cost basis of a long-lived asset is greater than the projected future
undiscounted net cash flows from such asset (excluding interest), an impairment
loss is recognized. Impairment losses are calculated as the difference between
the cost basis of an asset and its estimated fair value.




As of
October 31, 2008, no adjustments have been made to the carrying values of
long-lived assets based upon management’s assessment. There can be no assurance,
however, that market conditions will not change or demand for the Company’s
products or services will continue which could result in impairment of
long-lived assets in the future.


Loss per common
share




Basic
loss per share is calculated by dividing net loss by the weighted average number
of common shares outstanding during the period.  The 13,480,000 shares
issued to the legal acquirer are included in the weighted average share
calculation from January 31, 2008, the date of the exchange
agreement.




Diluted
loss per share is calculated assuming the issuance of common shares, if
dilutive, resulting from the exercise of stock options and warrants. At October
31, 2008, potentially dilutive securities consisted of outstanding common stock
options to acquire an aggregate of 1,110,000 common shares and 12,375,000
warrants to acquire 6,187,000 common shares. Since the Company reported a net
loss for the three and nine months ended October 31, 2008, these potentially
dilutive common shares were excluded from the diluted loss per share calculation
because they were anti-dilutive.




Fair
Values of Financial Instruments




SFAS No.
107, “Disclosures about Fair Value of Financial Instruments”, requires
disclosure of fair value information about financial instruments when it is
practicable to estimate their value. Management believes that the carrying
amounts of the Company’s financial instruments, consisting primarily of cash and
cash equivalents, accounts payable, and accrued expenses approximated their fair
values as of quarter end due to their short-term nature.




Effective
January 1, 2008, the Company adopted Statement of Financial Accounting Standards
(SFAS) No. 157, “Fair Value Measurements.” This Statement defines fair
value for certain financial and nonfinancial assets and liabilities that are
recorded at fair value, establishes a framework for measuring fair value, and
expands disclosures about fair value measurements. This guidance applies to
other accounting pronouncements that require or permit fair value measurements.
On February 12, 2008, the FASB finalized FASB Staff Position (FSP) No.
157-2, Effective Date of FASB Statement No. 157. This Staff Position delays
the effective date of SFAS No. 157 for nonfinancial assets and liabilities
to fiscal years beginning after November 15, 2008 and interim periods within
those fiscal years, except for those items that are recognized or disclosed at
fair value in the financial statements on a recurring basis (at least annually).
The adoption of SFAS No. 157 had no effect on the Company’s condensed
consolidated financial position or results of operations.




9
 IDCENTRIX
 (A
Development Stage Company)
  Notes to
Condensed Consolidated Financial Statements (unaudited)
 For the
Three and Nine Months Ended October 31, 2008


Registration Payment
Arrangements




The
Company accounts for registration payment arrangements under Financial
Accounting Standards Board (FASB) Staff Position EITF 00-19-2, “Accounting for
Registration Payment Arrangements” (“FSP EITF 00-19-2”). FSP EITF 00-19-2
specifies that the contingent obligation to make future payments under a
registration payment arrangement should be separately recognized and measured in
accordance with SFAS No. 5, “Accounting for Contingencies.” FSP EITF 00-19-2 was
issued in December 2006. Early adoption of FSP EITF 00-19-2 is permitted and the
Company adopted FSP EITF 00-19-2 effective January 3, 2007. At October 31, 2008,
the Company estimates that it will not have to pay any estimated penalties in
connection with its outstanding registration rights obligations. (see Note
4)




Recent
Accounting Pronouncements




In
December 2007, the FASB issued FASB Statement No. 141 (R), “Business
Combinations” (FAS 141(R)), which establishes accounting principles and
disclosure requirements for all transactions in which a company obtains control
over another business. Statement 141 (R) applies prospectively to business
combinations for which the acquisition date is on or after the beginning of the
first annual reporting period beginning on or after December 15, 2008. Earlier
adoption is prohibited.




In
December 2007, the FASB issued SFAS No. 160, “Non-controlling Interests in
Consolidated Financial Statements, an amendment of ARB No. 51”. SFAS No. 160
establishes accounting and reporting standards that require that the ownership
interests in subsidiaries held by parties other than the parent be clearly
identified, labeled, and presented in the consolidated statement of financial
position within equity, but separate from the parent’s equity; the amount of
consolidated net income attributable to the parent and to the non-controlling
interest be clearly identified and presented on the face of the consolidated
statement of income; and changes in a parent’s ownership interest while the
parent retains its controlling financial interest in its subsidiary be accounted
for consistently. SFAS No. 160 also requires that any retained non-controlling
equity investment in the former subsidiary be initially measured at fair value
when a subsidiary is deconsolidated. SFAS No. 160 also sets forth the disclosure
requirements to identify and distinguish between the interests of the parent and
the interests of the non-controlling owners. SFAS No. 160 applies to all
entities that prepare consolidated financial statements, except not-for-profit
organizations, but will affect only those entities that have an outstanding
non-controlling interest in one or more subsidiaries or that deconsolidate a
subsidiary. SFAS No. 160 is effective for fiscal years, and interim periods
within those fiscal years, beginning on or after December 15, 2008. Earlier
adoption is prohibited. SFAS No. 160 must be applied prospectively as of the
beginning of the fiscal year in which it is initially applied, except for the
presentation and disclosure requirements. The presentation and disclosure
requirements are applied retrospectively for all periods presented.




In March
2008, the FASB issued SFAS No. 161,”Disclosures about Derivative
Instruments and Hedging Activities—an amendment of FASB Statement No. 133”
(SFAS 161). This Statement requires enhanced disclosures about an entity’s
derivative and hedging activities, including (a) how and why an entity uses
derivative instruments, (b) how derivative instruments and related hedged
items are accounted for under SFAS No. 133, “Accounting for Derivative
Instruments and Hedging Activities” (SFAS 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. SFAS 161 is
effective for financial statements issued for fiscal years and interim periods
beginning after November 15, 2008.




10
 IDCENTRIX
 (A
Development Stage Company)
  Notes to
Condensed Consolidated Financial Statements (unaudited)
 For the
Three and Nine Months Ended October 31, 2008


The
Company does not believe that the adoption of the above recent pronouncements
will have a material effect on the Company’s condensed consolidated results of
operations, financial position, or cash flows.




NOTE 3
-           PROPERTY AND
EQUIPMENT




Property
and equipment consists of the following at:




October
      31, 2008
                    
                    
                    January
      31, 2008Trade
      show equipment
                    
                    $
                    4,775
                    
                    
                    $
                    4,775Computer
      equipment
                    
                    
                    6,433
                    
                    
                    
                    5,397Demonstration
      equipment
                    
                    
                    19,658
                    
                    
                    
                    -Leasehold
      improvement
                    
                    
                    2,440
                    
                    
                    
                    2,44033,306
                    
                    
                    
                    12,612Accumulated
      depreciation and amortization
                    
                    
                    (7,420
                    )
                    
                    
                    (3,750
                    )Property
      and equipment, net
                    
                    $
                    25,886
                    
                    
                    $
                    8,862





Depreciation
and amortization expense for the three and nine months ended October 31, 2008
was $1,387 and $3,670, respectively.  For the three and nine months
ended October 31, 2007 depreciation and amortization expense was $1,020 and
$2,165, respectively.   For the period January 3, 2007
(inception) to October 31, 2008 depreciation and amortization expense was
$7,420.




NOTE
      4 -
              SUBLICENSE AGREEMENTS




The
Company entered into a sublicensing agreement (“Canadian Sublicensing
Agreement”) with Fortress Identification Cards, Ltd. (“Fortress”) on April 25,
2007 whereby the Company licensed certain patents and security card intellectual
property, on a royalty free basis, in exchange for 3,500,000 shares of the
Company’s common stock. The Canadian Sublicensing Agreement was valued at
$228,000 based on management’s assessment which involved obtaining an
independent valuation. The sublicensing agreement consists of the exclusive
utilization of the intellectual property associated with Landqart AG’s security
cards for the territory of Canada, and the term of the agreement shall be
through the expiration of the final patent licensed under this
agreement.




On
January 31, 2008, the Company entered into an additional sublicensing agreement
(“Worldwide Sublicensing Agreement”) with Fortress. Under the terms of this
additional sublicensing agreement, the Company received a license for the same
patents and security card intellectual property as described in the Canadian
Sublicense Agreement, on a royalty free basis, in exchange for 6,500,000 shares
of the Company’s common stock. This Worldwide Sublicensing Agreement provides
exclusive access to the intellectual property in the United States and Mexico
and non-exclusive access to the intellectual property in the rest of the world
(excluding Switzerland and Africa). The term of this agreement shall be through
the expiration of the final patent licensed under this agreement. At the time of
the agreement Fortress was deemed to be a related party and significant
shareholder based upon its ownership percentage in the Company both before and
after the transaction. As a result, the Company has valued this sublicense
agreement using  Fortress’ carrying value, which was nil.




11
 IDCENTRIX
 (A
Development Stage Company)
  Notes to
Condensed Consolidated Financial Statements (unaudited)
 For the
Three and Nine Months Ended October 31, 2008


The
Company was required to expend a minimum amount of $2 million on research and
development to improve the licensed technology during the initial five (5) years
under the two sublicense agreements with a minimum expenditure of $800,000 by
January 31, 2010.  As of October 31, 2008, the Company has not
expended any amounts for research and development as provided under the
agreements and it does not anticipate expending any amounts on research and
development during the remainder of fiscal 2009.  Subsequent to
October 31, 2008, the Company and Fortress amended the agreement to remove all
minimum research and development expenditure requirements.




In
conjunction with the Canadian and Worldwide Sublicensing Agreements, the Company
also signed a Registration Rights Agreement with Fortress. Per such agreement,
the Company is required to register Fortress’s common shares of the Company in
2,500,000 increments, with (a) the registration statement for such initial
tranche required to be filed no later than ninety (90) days subsequent to the
effective date of the Exchange Agreement, and (b) the Company is required to use
its best efforts to have the registration statement effective no later than one
hundred eighty (180) days subsequent to the effective date of the Exchange
Agreement. Additionally, Fortress is permitted to request future registrations
for its remaining shares in 2,500,000 share tranches on each anniversary
relative to the initial registered tranche.  Subsequent to October 31,
2008, Fortress agreed to defer the filing date of the second registration
statement for a period of three months.  The Company is required to
use its best efforts to have this registration statement effective no later than
one hundred eighty (180) days subsequent to the filing of the second
registration statement.  The filing requirements for the remaining
registration statements remain unchanged.




In the
event that the Company does not (a) meet any of the registration deadlines
discussed above, (b) does not maintain the effectiveness of a previously filed
registration statement as required under this agreement or (c) does not meet
other requirements discussed in the agreement, then the Company must pay damages
to Fortress as defined in the agreement. The registration rights agreement
requires the payment of liquidated damages to Fortress calculated as the total
Transfer Restricted Shares multiplied by $0.75 multiplied by the sum of the
prime rate (as defined by the Royal Bank of Canada) plus 5% per annum applied to
the number of days delinquent in the filing. On April 25, 2008, a waiver of the
potential liability for failure to timely file a registration statement covering
the registration of the initial tranche of common stock was obtained from
Fortress. The waiver was effective from May 1, 2008 to May 15, 2008 and the
Company filed the initial registration statement on May 15, 2008.  The
registration statement was declared effective by the SEC on October 23,
2008.




Sublicense
agreements consist of the following at:




October
      31, 2008
                          
                          
                          January
      31, 2008Sublicense
      agreement
                          
                          $
                          228,000
                          
                          
                          $
                          228,000Accumulated
      amortization
                          
                          
                          (48,857
                          )
                          
                          
                          (24,428
                          )Sublicense
      agreement, net
                          
                          $
                          179,143
                          
                          
                          $
                          203,572




The
Company is amortizing the value of the Canadian Sublicense Agreement over a
7-year period, management’s estimate of the useful life of the agreement.
Amortization expense for the three and nine months ended October 31, 2008 was
$8,141 and $24,429, respectively.  For the three and nine months ended
October 31, 2007 amortization expense was $8,143 and $16,286
respectively.  Amortization expense for the period January 3, 2007
(“inception”) to October 31, 2008 was $48,857.   Amortization
expense for the next five years is expected to be $32,571 per year.




12


NOTE
      5 -
              COMMON STOCK





During
the nine months ended October 31, 2008, the Company completed a private
placement offering resulting in the sale of 500,000 shares of common stock at
$0.75 per share and received net proceeds after offering costs of approximately
$372,000.




During
the nine months ended October 31, 2008, the Company recognized $81,000 of
expense related to the vesting of shares of common stock covered by restricted
stock awards granted to members of the Company’s board of directors under the
Equity Participation Plan described in Note 6, below.




NOTE
      6 -
              OPTIONS AND WARRANTS





Stock
Options




On May 1,
2007, the Company adopted the Equity Participation Plan (the “Plan”), which
provides for the issuance of restricted stock, incentive stock options and
nonqualified stock options to key employees, independent directors of, and
consultants to the Company. The Compensation Committee administers the Plan,
approves the individuals to whom options will be granted, determines the number
of options to be granted, and sets the term and exercise price of each option.
Generally, the Plan provides for options to be granted at fair market value on
the date of grant. The term of the options granted under the Plan cannot be
greater than ten years, or five years for certain optionees who have a certain
level of ownership in the Company. Options granted generally vest twenty-five
(25) percent after one year, with the remaining vesting evenly on each of the
next three years. An aggregate of 3,400,000 shares of common stock has been
reserved for issuance under the plan.




On May 1,
2007, the Company granted options to purchase a total of 1,000,000 shares of
common stock at $0.30 per share to its chief executive officer. The fair value
of the options is measured on the grant date and is recognized over the vesting
period. The options vest over the two years from the date of grant and expire
May 1, 2014. The options were valued at $163,618, the fair value of the stock on
the date granted determined using a Black-Scholes pricing model with the
following assumptions: expected volatility of 50.00%, average risk free rate of
4.75%, dividend yield of 0.00%, and expected life of 6 years. The weighted
average fair value of options granted during the year ended January 31, 2008 was
$0.164.




On April
28, 2008, the Company granted options to certain employees to purchase a total
of 110,000 shares of common stock at $1.40 per share.  One option
grant for 100,000 options vests over two years and the other option grant for
10,000 options vests over four years and they both expire on April 28,
2018.  The options were valued at $89,370, the fair market value of
the options on the date granted determined using a Black-Scholes pricing model
with the following assumptions: expected volatility of 50.00%, average risk free
rate of 3.19%, dividend yield of 0.00%, and expected life of 8
years.  The weighted average fair value of options granted during the
three months ended April 30, 2008 was $0.812.




For the
three and nine months ended October 31, 2008, the Company recognized $31,116 and
$75,563, respectively, of compensation expense related to the fair value of the
vested stock options.  For the three and nine months ended October 31,
2007, the Company recognized $22,818 and $45,644, respectively, of compensation
expense related to the fair value of the vested stock options.  For
the period January 3, 2007 (“inception”) to October 31, 2008, the Company
recognized $144,041 of compensation expense related to the fair value of the
vested stock options.




13
 IDCENTRIX
 (A
Development Stage Company)
  Notes to
Condensed Consolidated Financial Statements (unaudited)
 For the
Three and Nine Months Ended October 31, 2008


Activity
under the Plan for the nine months ended October 31, 2008 is as
follows:




Options
                    Outstanding
                  
                  
                  Intrinsic
                    Value
                  
                  
                  Weighted
                    Average
                    Exercise
                    PriceOptions
      outstanding at January 31, 2008
                  
                  
                  1,000,000
                  
                  
                  
                  
                  
                  $
                  0.30Granted
                  
                  
                  110,000
                  
                  
                  
                  
                  
                  $
                  1.40Exercised
                  
                  
                  -
                  
                  
                  
                  
                  
                  $
                  -Forfeited
                  
                  
                  -
                  
                  
                  
                  
                  
                  $
                  -Options
      outstanding at October 31, 2008
                  
                  
                  1,110,000
                  
                  
                  $
                  -
                  
                  
                  $
                  0.41Options
      exercisable at October 31, 2008
                  
                  
                  525,000
                  
                  
                  $
                  -
                  
                  
                  $
                  0.35




The
aggregate intrinsic value was calculated as the difference between the market
price and the exercise price of the Company’s stock for the 1,110,000 options
outstanding and 525,000 options exercisable.  As of October 31, 2008,
no options were in-the-money and the intrinsic value for exercisable and
non-exercisable options was nil.




A summary
of the status of the Company’s non vested options granted under the Company’s
stock option plan as of October 31, 2008 and changes during the nine months
ended October 31, 2008 is presented below:




Non
      Vested Options
                                                          
                                                          Options
                                                          
                                                          
                                                          WeightedAverage
      Grant
                                                            Date
      Fair ValueNon
      vested options at January 31, 2008
                                                          
                                                          
                                                          750,000
                                                          
                                                          
                                                          $
                                                          0.164Granted
                                                          
                                                          
                                                          110,000
                                                          
                                                          
                                                          $
                                                          0.812Vested
                                                          
                                                          
                                                          275,000
                                                          
                                                          
                                                          $
                                                          0.223Forfeited
                                                          
                                                          
                                                          -
                                                          
                                                          
                                                          $
                                                          -Non
      vested options at October 31, 2008
                                                          
                                                          
                                                          585,000
                                                          
                                                          
                                                          $
                                                          0.258




The
following table summarizes information regarding options outstanding and
exercisable as of October 31, 2008:




Options
      Outstanding
                
                
                Options
      ExercisableNumber
                
                
                Weighted
                
                
                
                
                
                Number
                
                
                
                
                
                WeightedOutstanding
                
                
                Average
                
                
                Weighted
                
                
                Exercisable
                
                
                Weighted
                
                
                AverageRange
      of
                
                
                as
      of
                
                
                Remaining
                
                
                Average
                
                
                as
      of
                
                
                Average
                
                
                RemainingExercise
                
                
                October
      31,
                
                
                Contractual
                
                
                Exercise
                
                
                October
      31,
                
                
                Exercise
                
                
                ContractualPrices
                
                
                2008
                
                
                Life
                
                
                Price
                
                
                2008
                
                
                Price
                
                
                Life$
                0.30
                
                
                
                1,000,000
                
                
                
                5.50
                
                
                $
                0.30
                
                
                
                500,000
                
                
                $
                0.30
                
                
                
                5.50$
                1.40
                
                
                
                110,000
                
                
                
                9.50
                
                
                $
                1.40
                
                
                
                25,000
                
                
                $
                1.40
                
                
                
                9.50$
                0.30-$1.40
                
                
                
                1,110,000
                
                
                
                5.90
                
                
                $
                0.41
                
                
                
                525,000
                
                
                $
                0.35
                
                
                
                5.69




14
 IDCENTRIX
 (A
Development Stage Company)
  Notes to
Condensed Consolidated Financial Statements (unaudited)
 For the
Three and Nine Months Ended October 31, 2008


As of
October 31, 2008, the Company had not yet recognized compensation cost totaling
approximately $108,947 on non-vested awards. The weighted average period over
which this will be recognized is 15 months.




Stock
Warrants




As of
October 31, 2008, the Company has 12,375,000 warrants for the purchase of
6,187,500 shares of common stock outstanding, all of which are exercisable at a
price of $0.25 per share. Each warrant is exercisable for a period of five (5)
years from the date of the subscriber’s subscription agreement and will expire
in 2012.




NOTE
      7 -
              INCOME TAXES





At
October 31, 2008, the Company had available Federal and state net operating loss
carryforwards to reduce future taxable income. The amounts available were
approximately $3,800,000 for Federal purposes and $3,500,000 for state purposes.
The Federal carryforward expires in 2023 and the state carryforward expires in
2012. Given the Company’s history of net operating losses, management has
determined that it is more likely than not the Company will not be able to
realize the tax benefit of the carryforwards. Accordingly, the Company has not
recognized a deferred tax asset for this benefit.




SFAS No.
109 requires that a valuation allowance be established when it is more likely
than not that all or a portion of deferred tax assets will not be realized. Due
to restrictions imposed by Internal Revenue Code Section 382 regarding
substantial changes in ownership of companies with loss carry-forwards, the
utilization of the Company’s net operating loss carry-forwards will likely be
limited as a result of cumulative changes in stock ownership. The company has
not recognized a deferred tax asset and, as a result, the change in
stock ownership has not resulted in any changes to valuation
allowances.




Upon the
attainment of taxable income by the Company, management will assess the
likelihood of realizing the tax benefit associated with the use of the
carryforwards and will recognize a deferred tax asset at that
time.




Significant
components of the Company’s deferred income tax assets consist of the following
as of:




October
      31, 2008
                        
                        
                        January
      31, 2008Deferred
      tax asset:Net
      operating loss carryforward
                        
                        $
                        1,653,000
                        
                        
                        $
                        941,000Valuation
      allowance
                        
                        
                        (1,653,000
                        )
                        
                        
                        (941,000
                        )Net
      deferred income tax asset
                        
                        $
                        -
                        
                        
                        $
                        -





Reconciliation
of the effective income tax rate to the U.S. statutory rate is as
follows:




Three
      Months Ended
                                                    
                                                    
                                                    Nine
      Months EndedOctober
      31,
                                                    
                                                    
                                                    October
      31,2008
                                                    
                                                    
                                                    2007
                                                    
                                                    
                                                    2008
                                                    
                                                    
                                                    2007Tax
      expense at the U.S. statutory income tax rate
                                                    
                                                    
                                                    (34.00
                                                    )%
                                                    
                                                    
                                                    (34.00
                                                    )%
                                                    
                                                    
                                                    (34.00
                                                    )%
                                                    
                                                    
                                                    (34.00
                                                    )%Increase
      in valuation allowance
                                                    
                                                    
                                                    34.00
                                                    %
                                                    
                                                    
                                                    34.00
                                                    %
                                                    
                                                    
                                                    34.00
                                                    %
                                                    
                                                    
                                                    34.00
                                                    %Effective
      tax rate
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -




15
 IDCENTRIX
 (A
Development Stage Company)
  Notes to
Condensed Consolidated Financial Statements (unaudited)
 For the
Three and Nine Months Ended October 31, 2008


Effective
January 3, 2007, the Company adopted Financial Accounting Standards Board
Interpretation No. 48, “Accounting for Uncertainty in Income Taxes (“FIN
48”)— an interpretation
of FASB Statement No. 109, Accounting for Income Taxes.” The Interpretation
addresses the determination of whether tax benefits claimed or expected to be
claimed on a tax return should be recorded in the financial statements. Under
FIN 48, we may recognize the tax benefit from an uncertain tax position only if
it is more likely than not that the tax position will be sustained on
examination by the taxing authorities, based on the technical merits of the
position. The tax benefits recognized in the financial statements from such a
position should be measured based on the largest benefit that has a greater than
fifty percent likelihood of being realized upon ultimate settlement. FIN 48 also
provides guidance on derecognition, classification, interest and penalties on
income taxes, accounting in interim periods and requires increased disclosures.
At the date of adoption, and as of October 31, 2008, the Company does not have a
liability for unrecognized tax benefits.




The
Company files income tax returns in the U.S. federal jurisdiction and various
states. The Company is subject to U.S. federal or state income tax examinations
by tax authorities for five years after 2002. During the periods open to
examination, the Company has net operating loss and tax credit carry
forwards for U.S. federal and state tax purposes that have attributes from
closed periods. Since these NOLs and tax credit carry forwards may
be utilized in future periods, they remain subject to
examination.




The
Company’s policy is to record interest and penalties on uncertain tax provisions
as income tax expense. As of October 31, 2008, the Company has no accrued
interest or penalties related to uncertain tax positions.




16


Item
      2.  Management’s Discussion and Analysis of Financial Condition
      and Results of Operations




The
following discussion and analysis should be read together with (i) the factors
discussed in Item 1A “Risk Factors” of Part I of our Annual Report to the
Securities and Exchange Commission on Form 10-K for the year ended January 31,
2008, (ii) the factors discussed in Part II, Item 1A “Risk Factors,” if any, of
this Quarterly Report on Form 10-Q and (iii) the financial statements, including
the notes thereto, and the other financial information appearing elsewhere in
this Report.  Period-to-period comparisons of financial data are not
necessarily indicative, and therefore should not be relied upon as indicators,
of the Company’s future performance.  Words or phrases such as
“believe,” “does not believe,” “will,” “may,” “plan,” “estimate,” “anticipate,”
“expect,” “intend” and similar expressions, when used in this Form 10-Q or other
filings with the Securities and Exchange Commission, are intended to identify
“forward-looking statements” within the meaning of the Private Securities
Litigation Reform Act of 1995.




Plan
of Operations




We are a
start-up, development stage corporation and have not yet generated or realized
any revenues from our business operations.




We expect
that our sales and marketing activities will continue to be the cornerstone of
the Company’s activities for the remainder of fiscal 2009. Our objective is to
gain customers through a consistent presence at trade shows around the world,
participating in industry associations, engaging in public relations activities,
entering into partnering agreements with other service providers and pursuing
speaking engagements. We believe that IDCX’s initial exposure in fiscal 2008 was
positive and that by reinforcing our current presence vis-à-vis our competitors
and end-users, our technology will gain attention in the market and customers
will begin seeking our products and services.




We have
entered into certain marketing agreements with companies that have established
market presence in certain targeted countries.  We believe that our
association with these partners, usually systems integrators or prime
contractors who sell to government agencies, will increase our business
opportunities.  We also market our products directly to governmental
agencies.




We do not
anticipate securing any large transactions with governments in the near future,
as governments generally move slowly with the incorporation of new technologies.
However, we plan to engage in strategic opportunities in an effort to accelerate
growth while developing our management team and integrating industry
expertise.




As of
October 31, 2008, we have approximately $637,000 of cash, which may not be
enough money to operate through the remainder of fiscal 2009. We will need to
raise additional capital in order to execute our business plan. We will attempt
to raise additional money through private placements and public
offerings.  We can give no assurance that future financing will be
available to us on acceptable terms or at all.  If financing is not
available, we may not be able to continue to develop and expand our operations
as currently planned and we may be required to scale back our plans in order to
conserve cash, to terminate staff or to cease operations until we are able to
raise additional financing.




Our
sublicensing agreements with Fortress Paper originally required us to conduct $2
million of research and development over the first five years of the term, of
which, $800,000 was allocated to be spent during the two year period beginning
on January 31, 2008. On December 11, 2008, the agreements with Fortress were
amended to remove these requirements.  However, the Company
anticipates that it will need to conduct certain research and development
activities to further enhance the marketability of its products, and recently
added technical expertise to support these initiatives.




During
the quarter ended October 31, 2008, we acquired approximately $20,000 of
equipment for demonstration purposes.  Over the next year we
anticipate purchasing an additional $35,000 of equipment to be primarily used
for demonstration purposes to assist our sales and marketing efforts. Most
likely the acquisition of this equipment will be with cash as the Company does
not anticipate being able to establish a credit facility.




17


As a
result of our current limited cash availability we do not anticipate hiring any
additional employees for the foreseeable future.  If we are able to
raise additional financing, we may modify these plans and engage full or part
time employees, or independent contractors, to facilitate our sales and
marketing efforts and provide technical support.  We are also taking
steps to reduce our expenses by reducing staff and modifying employment
agreements.  The lease for our corporate headquarters expires on
February 28, 2009 and we are considering the relocation of our corporate offices
to reduce facility related expenses.




If we are
unable to complete any phase of our plan of operations because we do not have
enough liquidity, we may be required to scale back our plans in order to
conserve cash, to terminate staff or to cease operations until we are able to
raise additional financing.




Results
of Operations





Three
Months Ended October 31, 2008 Compared to the Three Months Ended October 31,
2007




For the
three months ended October 31, 2008, we incurred a net loss of approximately
$438,000 compared to a net loss of approximately $320,000 during the three
months ended October 31, 2007.  During the three months ended October
31, 2007, the Company began its sales and marketing activities.  The
increase in expenses during the three months ended October 31, 2008 reflects the
hiring of sales,  marketing and technical personnel, attendance at
trade shows and conferences, and fees paid to outside consultants and
professionals.




Nine
Months Ended October 31, 2008 Compared to the Nine Months Ended October 31,
2007




For the
nine months ended October 31, 2008, we incurred a net loss of approximately
$1,558,000 compared to a net loss of $777,000 during the same period in the
prior year.  During the nine months ended October 31, 2007, our
activities were limited to basic administrative functions and ramping up our
sales and marketing activities.  The Company had only one employee
during this period.  The increase in expenses for the nine months
ended October 31, 2008 reflects the hiring of sales, marketing and technical
personnel, attendance at trade shows and conferences, board of director
compensation, and fees paid to outside consultants and
professionals.




Liquidity
and Capital Resources





As of
October 31, 2008, we have not generated any revenue and we have cash on-hand of
approximately $637,000.  At the present time, our expenses are running
at the rate of approximately $150,000 per month.  Considering our
current burn rate, we are unable to provide assurance that we will have
sufficient capital resources available through the end of our fiscal year
without raising additional capital.  In the event that we do not have
sufficient capital to finance our operations through the end of the fiscal year,
we may be required to scale back our plans in order to conserve cash, to
terminate staff or to cease operations until we are able to raise additional
financing.




During
the nine months ended October 31, 2008, we issued 500,000 shares of common stock
in a private placement in exchange for approximately $372,000 of net
proceeds.




Our
sublicensing agreements with Fortress Paper originally required us to conduct $2
million of research and development over the first five years of the term, of
which, $800,000 was allocated to be spent during the two year period beginning
on January 31, 2008. On December 11, 2008, the agreements with Fortress were
amended to remove these requirements.  However, the Company
anticipates that it will need to conduct certain research and development
activities to further enhance the marketability of its products, and recently
added technical expertise to support these initiatives.




During
the second fiscal quarter of 2009, the Company began to seek additional equity
through private placements.  To date, the Company has been
unsuccessful in raising additional equity.  The Company believes that
the current market conditions, coupled with the Company’s lack of revenue, have
been deterrents to its ability to raise capital.  The Company will
continue to seek additional sources of capital; however, there can be no
assurance that additional capital can be raised on terms that will be acceptable
to the Company or at all.  If the Company is successful in raising
capital, it may result in significant dilution to existing
shareholders.




We have
no long-term debt and do not regard long-term borrowing as a good, prospective
source of financing.




18


Going
Concern




We
incurred net losses of approximately $438,000 and $1,558,000, respectively,
during the three month and nine month periods ended October 31, 2008, and a
cumulative net loss of approximately $3,273,000 since
inception.  Accordingly, there is substantial doubt about our ability
to continue as a going concern. Successful completion of our development
programs and our transition to attaining profitable operations is dependent upon
obtaining financing adequate to complete our product development and the
successful market introduction of our product and services and this loss may
impact our ability to raise additional funds to adequately execute our business
plan.  Although we currently have products that are commercially
available for sale, we will require additional funds to finance working capital
needs.  Additional funds will also be needed to further develop the
product.  Although the exact amount of additional funding that will be
required is not presently known, management has estimated that it will need to
raise a minimum of $4 million over the next twelve to twenty-four months in
order to continue our development.  At the present time, our expenses
are running at the rate of approximately $150,000 per month.




Critical
Accounting Policies




Use
of Estimates




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




Equity
Based Compensation




The
Company periodically issues restricted stock, stock options and warrants to
employees and non-employees in non-capital raising transactions for services and
for financing costs. The Company uses the modified prospective method in which
compensation cost is recognized beginning with the effective date (a) based on
the requirements of SFAS No. 123R for all share-based payments granted after the
effective date and (b) based on the requirements of SFAS No. 123R for all awards
granted to employees prior to the effective date of SFAS No. 123R that remain
unvested on the effective date. The Company accounts for stock option and
warrant grants issued and vesting to non-employees in accordance with EITF No.
96-18: “Accounting for Equity Instruments that are Issued to Other Than
Employees for Acquiring, or in Conjunction with Selling, Goods or Services” and
EITF No. 00-18: “Accounting Recognition for Certain Transactions involving
Equity Instruments Granted to Other Than Employees” whereas the value of the
stock compensation is based upon the measurement date as determined at either a)
the date at which a performance commitment is reached, or b) the date at which
the necessary performance to earn the equity instruments is
complete.




Long-Lived
Assets





SFAS No.
144, “Accounting for the Impairment or Disposal of Long-Lived Assets”, requires
that long-lived assets be reviewed for impairment whenever events or changes in
circumstances indicate that their carrying amounts may not be recoverable. If
the cost basis of a long-lived asset is greater than the projected future
undiscounted net cash flows from such asset (excluding interest), an impairment
loss is recognized. Impairment losses are calculated as the difference between
the cost basis of an asset and its estimated fair value.




As of
October 31, 2008, no adjustments have been made to the carrying values of
long-lived assets based upon management’s assessment. There can be no assurance,
however, that market conditions will not change or demand for the Company’s
products or services will continue which could result in impairment of
long-lived assets in the future.




Recent
Accounting Pronouncements





In
December 2007, the FASB issued FASB Statement No. 141 (R), “Business
Combinations” (FAS 141(R)), which establishes accounting principles and
disclosure requirements for all transactions in which a company obtains control
over another business. Statement 141 (R) applies prospectively to business
combinations for which the




19


acquisition
date is on or after the beginning of the first annual reporting period beginning
on or after December 15, 2008. Earlier adoption is prohibited.




In
December 2007, the FASB issued SFAS No. 160, “Non-controlling Interests in
Consolidated Financial Statements, an amendment of ARB No. 51”. SFAS No. 160
establishes accounting and reporting standards that require that the ownership
interests in subsidiaries held by parties other than the parent be clearly
identified, labeled, and presented in the consolidated statement of financial
position within equity, but separate from the parent’s equity; the amount of
consolidated net income attributable to the parent and to the non-controlling
interest be clearly identified and presented on the face of the consolidated
statement of income; and changes in a parent’s ownership interest while the
parent retains its controlling financial interest in its subsidiary be accounted
for consistently. SFAS No. 160 also requires that any retained non-controlling
equity investment in the former subsidiary be initially measured at fair value
when a subsidiary is deconsolidated. SFAS No. 160 also sets forth the disclosure
requirements to identify and distinguish between the interests of the parent and
the interests of the non-controlling owners. SFAS No. 160 applies to all
entities that prepare consolidated financial statements, except not-for-profit
organizations, but will affect only those entities that have an outstanding
non-controlling interest in one or more subsidiaries or that deconsolidate a
subsidiary. SFAS No. 160 is effective for fiscal years, and interim periods
within those fiscal years, beginning on or after December 15, 2008. Earlier
adoption is prohibited. SFAS No. 160 must be applied prospectively as of the
beginning of the fiscal year in which it is initially applied, except for the
presentation and disclosure requirements. The presentation and disclosure
requirements are applied retrospectively for all periods presented.




In March
2008, the FASB issued SFAS No. 161, “Disclosures about Derivative
Instruments and Hedging Activities—an amendment of FASB Statement No. 133”
(SFAS 161). This Statement requires enhanced disclosures about an entity’s
derivative and hedging activities, including (a) how and why an entity uses
derivative instruments, (b) how derivative instruments and related hedged
items are accounted for under SFAS No. 133, “Accounting for Derivative
Instruments and Hedging Activities” (SFAS 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. SFAS 161 is
effective for financial statements issued for fiscal years and interim periods
beginning after November 15, 2008.




The
Company does not believe that the adoption of the above recent pronouncements
will have a material effect on the Company’s condensed consolidated results of
operations, financial position, or cash flows.




Inflation





We
believe that inflation has not had a material effect on our operations to
date.




Risk
Factors




There
are many factors that affect our business, prospects, liquidity and the results
of operations, some of which are beyond our control. The following is a
discussion of some, but not all, of these and other important risk factors that
may cause the actual results of our operations in future periods to differ
materially from those currently expected or desired. Additional risks not
presently known to management or risks that are currently believed to be
immaterial, but which may become material, may also affect our business,
prospects, liquidity and results of operations. The failure to successfully
address the risks and uncertainties described below would have a material
adverse effect on our business, financial condition and/or results of
operations, and the trading price of our common stock may decline and investors
may lose all or part of their investment. We cannot assure you that the Company
will successfully address these risks.




We are a recently
organized company with limited operating
history.




iDcentrix
was formed in January of 2004 and our subsidiary was formed in January of 2007.
We have no operating history upon which an evaluation of our future success or
failure can be made. We have limited assets, no customer contracts, and our
prospects of future profitable operations may be delayed or never realized. In
addition, we have recently abandoned our prior mineral exploration business and
determined to pursue the business plan of our newly acquired subsidiary, IDCX,
to develop and market high-end security identification cards and related
equipment and consumables. We may encounter difficulties that prevent us from
operating the business as intended or that will




20


prevent
us from doing so in a profitable manner. Our business must be evaluated in view
of long lead times in the adoption and implementation of business plans,
possible delays, additional expenses, and other unforeseen complications that
are often encountered by new business ventures.




Going
Concern.




We
incurred net losses of approximately $438,000 and $1,558,000, respectively,
during the three month and nine month periods ended October 31, 2008, and a
cumulative net loss of approximately $3,273,000 since
inception.  Accordingly, there is substantial doubt about our ability
to continue as a going concern. Successful completion of our development
programs and our transition to attaining profitable operations is dependent upon
obtaining financing adequate to complete our product development and the
successful market introduction of our product and services and this loss may
impact our ability to raise additional funds to adequately execute our business
plan.  Although we currently have products that are commercially
available for sale, we will require additional funds to finance working capital
needs.  Additional funds will also be needed to further develop the
product.  Although the exact amount of additional funding that will be
required is not presently known, management has estimated that it will need to
raise a minimum of $4 million over the next twelve to twenty-four months in
order to continue our development.  At the present time, our expenses
are running at the rate of approximately $150,000 per month.




We
have material weaknesses in our internal control over financial reporting, which
could adversely affect our ability to report our financial conditions and
results of operations accurately and on a timely basis.




In
connection with our assessment of internal control over financial reporting as
of January 31, 2008 under Section 404 of the Sarbanes-Oxley Act of 2002 (“SOX”),
we determined that we have material weaknesses which could adversely impact our
ability to provide timely and accurate financial information, including (i) a
lack of a documented and reviewed system of internal controls, (ii) a lack of
segregation of duties resulting from the fact that we have only our Chief
Executive Officer and Chief Financial Officer in our corporate offices, (iii) a
lack of a comprehensive disaster recovery program, (iv) a lack of control over
purchasing, accounts payable and disbursements, as a result of which employees
are authorized to purchase goods and services and approve the related invoices
for payment without supervisory approval or pursuant to a delegation of
authority and may be authorized to sign checks, (v) a lack of controls over
payroll processing, as a result of which both our Chief Executive Officer and
Chief Financial Officer are authorized to initiate and approve our payrolls and
related functions and have access to our bank accounts, and (vi) a lack of
adequate application and general controls over our information and technology
systems which results in most computer generated reports being reviewed by the
author without independent verification.




Our
present directors and management succeeded to their positions on January 31,
2008 and had no opportunity to plan, implement and evaluate the Company’s system
of internal control over financial reporting prior to assuming their current
positions.  Since January 31, 2008, our management has been focused on
beginning the implementation of its business plan and has begun to fully
consider the implementation of a system of internal control appropriate to its
level of business and operations.  We still have only four full-time
employees and one part-time employee.  We intend to develop a system
of internal control over financial reporting appropriate under SOX for a company
of our size and complexity and to remediate the deficiencies that exist as
promptly as reasonably practical.  As described below, we have taken
certain steps to begin the remediation process.




During
the first quarter of fiscal 2009, we implemented a delegation of authority, a
code of company ethics and began to identify specific areas for remediation. We
also adopted a budget and revised our internal financial reporting model. On a
monthly basis the Company’s board of directors reviews the financial statements
with management and variances between actual and budgeted results are
discussed.




During
the second quarter of fiscal 2009, we modified certain procedures related to our
disbursement program including requirements that all checks require two
signatures and that bank reconciliations be reviewed by both our CEO and CFO. We
also began a program to back-up our computer systems.




During
the third quarter of fiscal 2009, we implemented a procedure whereby one of the
Company’s outside board members reviews our monthly bank
reconciliations.  We also implemented a new payroll system and
strengthened our controls over payroll.




21




The
remediation process is on-going, and due to our limited personnel resources and
cash availability, we can give no assurances when it will be
completed.




We may be
required to hire additional employees or consultants to address these weaknesses
and may experience higher than anticipated capital expenditures and operating
expenses in order to implement the necessary changes. Our limited cash
availability may make it difficult to implement the necessary changes. If we are
unable to address these weaknesses effectively, or if other weaknesses develop,
there could be a material adverse effect on our business, financial condition
and results of operations. If we are unsuccessful in implementing or following a
remediation plan, or fail to update our internal control as our business
evolves, we may not be able to timely or accurately report our financial
condition, results of operations or cash flows or maintain effective disclosure
controls and procedures. If we are unable to report financial information timely
and accurately, or to maintain effective disclosure controls and procedures, we
could be subject to, among other things, regulatory or enforcement actions by
the SEC, securities litigation and a general loss of investor confidence, any
one of which could adversely affect our business prospects and the valuation of
our common stock.




Furthermore,
there are inherent limitations to the effectiveness of any system of controls
and procedures, including the possibility of human error and the circumvention
or overriding of the controls and procedures.




Our
business model is unproven and may not generate revenues sufficient for the
Company to continue as a going concern.




There can
be no assurance that sufficient numbers of customers will make use of our
intended products or related services, and thus we may not be able to generate
the revenues necessary to remain a going concern. There can be no assurance that
our strategy will become or remain a viable vehicle for the marketing of
products and services in the identification security card industry. If the
business model or strategies do not become viable or effective, our business,
financial condition and results of operations would be materially and adversely
affected.




We
will require future financing to continue as a going concern.




In
connection with the consummation of the Share Exchange, IDCX sold 2,842,000
shares of common stock of IDCX for gross aggregate proceeds of $2,131,500 in a
private placement.  In view of our current burn rate, and the fact
that future revenues can not be assured, we may need to raise additional capital
in order to remain a going concern through the end of our current fiscal
year.  In any event, we will require additional working capital to
continue to implement our plan of operation and desire additional capital to
allow us more flexibility in implementing our plan of operation and exploring
more growth opportunities. We plan on engaging in future financing activities
within the next six months to raise additional capital for our operations. Such
financing activities could include issuing debt or equity securities in the
Company and could result in a dilution of the Company’s existing share
capital.




We can
give no assurance that future financing will be available to us on acceptable
terms or at all. If financing is not available, we may not be able to continue
to develop and expand our operations as currently planned and we may be required
to scale back our plans in order to conserve cash, to terminate staff or to
cease operations until we are able to raise additional financing.




The loss of or
failure to enter into any contracts may result in a lack of
revenue.




Identification
card contracts with government agencies are normally subject to a competitive
bidding process and have varying durations, generally five or more years in
length. Some contracts contain cancellation clauses. In addition, after a
contract period expires, the government agency can normally re-open the contract
for competitive bidding. We currently have no customer contracts. If we fail to
obtain contracts or were to lose any future contracts due to cancellation or a
competitive bidding situation, we could fail to realize revenues, which would
adversely affect our financial results.




The
market for our products is highly competitive, and as a result, alternative
technologies or larger companies may undermine, limit or eliminate the market
for our products, which would decrease our revenue and profits.




The
markets in which we compete for business are intensely competitive and rapidly
evolving. We expect competition to continue from both existing competitors and
new market entrants. We face competition from other


22


companies
and from alternative technologies. The potential for an influx of federal funds
into the market has drawn competition and is likely to continue to do so. As we
work to expand the applications for the LQard Technology, we expect to
experience increased competition from products and services that are substitutes
for its applications. Technologies that may directly or indirectly compete with
particular applications of the LQard Technology include, but are not limited
to:





•
            Encryption—securing
      data during distribution using a secret code so it cannot be accessed
      except by authorized users;•
            Containers—inserting
      a media object in an encrypted wrapper, which prevents the media object
      from being duplicated and is used for content distribution and transaction
      management;•
            DataGlyphs®—a
      slightly visible modification of the characteristics of an image or
      document that is machine-readable;•
            Scrambled
      Indicia®—an optical refraction-based data-hiding technique that is
      inserted into an image and can be read with a lens;•
            Traditional
      anti-counterfeiting technologies—a number of solutions used currently by
      many governments (and that compete for budgetary outlays) designed to
      deter counterfeiting, including optically sensitive ink, magnetic threads
      and other materials used in the printing of currencies;•
            Radio
      frequency tags—embedding a chip that emits a signal when in close
      proximity with a receiver, which is being used in photo identification
      credentials, labels and tags;•
            Digital
      fingerprints and signatures—a metric, or metrics, computed solely from a
      source image or audio or video track, that can be used to uniquely
      identify an image or track, or authenticate the image or
      track;•
            Smart
      cards—badges and cards including a semiconductor memory and/or processor
      used for authentication and related purposes; and•
            Bar
      codes—a data-carrying code, typically visible in nature (but invisible if
      printed in ultraviolet- or infrared-responsive
  inks).





We
cannot assure that the LQard Technology, or our products and services using
these technologies, will gain widespread market acceptance.




New
developments are expected to continue, and we cannot assure that discoveries by
others, including current and potential competitors, will not render our
services and products noncompetitive. Moreover, because of rapid technological
changes, we may be required to expend greater amounts of time and money than
currently anticipated to develop new products and services, which in turn may
make it necessary to realize greater revenue streams on such products and
services to cover developmental costs. Many of the companies that currently
compete with our business, as well as other companies with whom we may compete
in the future, are larger and national or international in scope and may have
greater technical, financial, marketing, and political resources than we do.
These resources could enable these companies to initiate severe price cuts or
take other measures in an effort to gain market share or otherwise impede our
progress. We cannot assure you that we will be able to compete successfully
against current or future participants in our market or against alternative
technologies, nor can we assure you that the competitive pressures we will face
will not decrease our revenue and profits in the future.




Our
products could have unknown defects or errors, which may give rise to claims
against us, divert application of our resources from other purposes or increase
our project implementation and support costs.




Products
and systems as complex as those we offer or develop may contain undetected
defects or errors. Furthermore, we may provide complex implementation,
integration, customization, consulting and other technical services in
connection with the implementation and ongoing maintenance of our products.
Despite testing, defects or errors in our products and services may occur, which
could result in delays in the development and implementation of products and
systems, inability to meet customer requirements or expectations in a timely
manner, loss of revenue or market share, increased implementation and support
costs, failure to achieve market acceptance, diversion of


23


development
resources, injury to our reputation, increased insurance costs, increased
service and warranty costs and warranty or breach of contract claims. Although
we will attempt to reduce the risk of losses resulting from warranty or breach
of contract claims through warranty disclaimers and liability limitation clauses
in our sales agreements, these contractual provisions are sometimes not included
and may not be enforceable in every instance. If a court refuses to enforce the
liability-limiting provisions of our contracts for any reason, or if liabilities
arise that are not contractually limited or adequately covered by insurance, the
expense associated with defending such actions or paying the resultant claims
could be significant.





If
leading companies in our industry or standard-setting bodies or institutions
downplay, minimize, or reject the use of the LQard Technology, its deployment
may be slowed and we may be unable to achieve revenue growth.




Customers
in the identification card industry may delay or reject initiatives that relate
to the deployment of the LQard Technology in various markets. Such a development
would make the achievement of our business objectives in this market difficult
or impossible.




If
we are unable to respond to regulatory or industry standards effectively, or if
we are unable to develop and integrate new technologies effectively, our growth
and the development of our products and services could be delayed or
limited.




Our
future success will depend in part on our ability to enhance and improve the
responsiveness, functionality and features of our products and services in
accordance with regulatory or industry standards. Our ability to remain
competitive will depend in part on our ability to influence and respond to
emerging industry and governmental standards, in a timely and cost-effective
manner. If we are unable to influence these or other standards or respond to
such standards effectively, our growth and the development of certain products
and services could be delayed or limited.




Our
market is characterized by new and evolving technologies. The success of our
business will depend on our ability to develop and integrate new technologies
effectively and address the increasingly sophisticated technological needs of
our customers in a timely and cost-effective manner. Our ability to remain
competitive will depend in part on our ability to:




•
            enhance
      and improve the responsiveness, functionality and other features of the
      products and services we offer or plan to offer;•
            continue
      to develop our technical expertise; and•
            develop
      and introduce new services, applications and technologies to meet changing
      customer needs and preferences and to integrate such new
      technologies.





We cannot
assure that we will be successful in responding to these technological and
industry challenges in a timely and cost-effective manner. If we are unable to
develop or integrate new technologies effectively or respond to these changing
needs, our projected margins could decrease, and our release of new products and
services and the deployment of new technology could be adversely
affected.




We
rely upon Fortress Paper and its wholly-owned subsidiary Landqart AG for the
development and expansion of the LQard Technology.





Pursuant
to the Second Sub-License Agreement, we will use commercially reasonable efforts
to actively coordinate research and development activities.  We will
rely upon Landqart, the owner of the LQard Technology, to aid in the research
and development of new and expanded LQard technologies. We will not own the
rights to any further developments of the LQard Technology and will retain only
our current sub-licensing rights over any such developments. We exercise no
control over Landqart. If we are unable to successfully co-operate with Landqart
in the development and expansion of the LQard Technology, or if Landqart is
unable to further develop the LQard Technology, we may be unable to compete
within our market and our revenues could be adversely affected.




24


We
will need to retain additional employees or contract labor in the future in
order to take advantage of new business opportunities arising from increased
demand, which could impede our ability to achieve or sustain
profitability.




We
believe that the identification card market will demonstrate increased demand in
future periods. Our current staffing levels could affect our ability to respond
to increased demand for our services. As of October 31, 2008, we had only 4
full-time employees and 1 part-time employee.  In order to meet any
increased demand and take advantage of new business opportunities in the future,
we will need to increase our workforce through additional employees or contract
labor, which would increase our costs. If we experience such an increase in
costs, we may not succeed in achieving or sustaining profitability.




We
depend on our senior management and key employees for our future success. If we
are not able to retain, hire or integrate these employees, we may not be able to
meet our commitments.




Our
success depends to a significant extent on the performance and continued service
of our senior management, including our Chief Executive Officer, Francine
Dubois, our Chief Financial Officer, David Fractor, and our Vice President,
Sales and Marketing, Tate Preston. The loss of the services of any of our senior
management could delay projects or undermine customer
relationships.




Due to
the high level of technical expertise that our industry requires, our ability to
successfully develop, market, sell, license and support our products, services,
and intellectual property depends to a significant degree upon the continued
contributions of our key personnel, who would be difficult to replace, as well
as the addition of significant numbers of additional personnel. We believe our
future success will depend in large part upon our ability to retain our current
key employees and our ability to attract, integrate and retain such personnel as
we may require in the future. It may not be practical for us to match the
compensation certain of our current or potential employees could garner with
competitors. In addition, we may encounter difficulties in hiring and retaining
employees because of concerns related to our financial performance and lack of
operating history. These circumstances may have a negative impact on the market
price of our common stock, and employees and prospective employees may factor in
the uncertainties relating to our stability and the value of any equity-based
incentives in their decisions regarding employment opportunities.




Our
business is based in part on patented technology. New employees will require
substantial training, involving significant resources and management attention.
Competition for experienced personnel in our business can be intense. If we do
not succeed in attracting new, qualified personnel or in integrating, retaining
and motivating our current personnel, our growth and ability to deliver products
and services that our customers require may be hampered.




Although
we generally attempt to control access to and distribution of our proprietary
information by our employees, there can be no assurances that the confidential
nature of our proprietary information will be maintained in the course of future
employment of our employees. Any of these events could have a material adverse
effect on our financial and business prospects.




We
expect the iDcentrix Card business to experience variability in gross
margins.




We are
likely to experience variability in gross margins on contracts due to numerous
factors, including, among other things, the following:





•
              delays
      in project implementation;•
              failure
      to achieve add-on sales to existing customers;•
              governmental
      regulation of credentials and issuance policies;•
              private
      sector usage trends for drivers licenses and other
      credentials;•
              level
      of commodity vs. proprietary components applicable to customer system
      specifications;•
              whether
      contracts have been extended or renewed and the amount of capital
      expenditures associated with such extensions or
  renewals;





25


•
                price
      competition in competitive bids, contract renewals and contract
      extensions;•
                variations
      in costs of materials and manufacturing;•
                varying
      levels of efficiency of workforce in delivering, implementing, and
      servicing contracts;•
                seasonality
      of issuance volumes;•
                sales
      mix related to card issuance revenues compared to product
      sales;•
                sales
      mix related to domestic sales compared to international
    sales;•
                sales
      mix related to adoption of new products compared to sales of current
      products;•
                strategic
      decisions on new business;•
                depreciation
      and amortization of capitalized project costs related to new or upgraded
      programs; and•
                variability
      in the extent to which we are able to allocate personnel expenses to
      capital projects and thereby amortize such costs over the life of the
      relevant contract, rather than expensing such costs in the quarter in
      which they are incurred.


For
reasons such as those listed above, we expect that there will be fluctuations in
our future operating results as a result of the variability in margins from
period to period in the security identification card industry.




Our
future growth will depend on intellectual property owned by third parties and
may be subject to infringement claims and other litigation, which could
adversely affect our business.




Our
business strategy relies, in part, on deployment of the LQard Technology by
Fortress Paper and its wholly owned subsidiary, Landqart. To protect our
licensed intellectual property investments, we rely on a combination of patent,
copyright, trademark and trade secret rights, confidentiality procedures and
licensing arrangements. Unlicensed copying and use of our licensed intellectual
property or illegal infringements of such licensed intellectual property rights
represent potential losses of revenue.




We do not
own any patents.  Landqart owns the patent rights and other
intellectual property rights in the LQard Technology and, as a result, we are
reliant on the ability of Landqart to maintain and successfully enforce its
patent rights to the LQard Technology. If Landqart’s patents and other
intellectual property rights to the LQard Technology are
successfully challenged, invalidated, or otherwise eliminated or diminished, we
may lose the exclusive rights to such technology and our competitive advantage
in the industry could be adversely affected.





We face
risks associated with Landqart’s patent position, including the potential and
sometimes actual need from time to time to engage in significant legal
proceedings to enforce patents, the possibility that the validity or
enforceability of patents may be denied, and the possibility that third parties
will be able to compete against the Company without infringing patents.
Budgetary concerns may cause us and/or Landqart not to file, or continue,
litigation against known infringers of patent rights, or may cause us or
Landqart not to file for, or pursue, patent protection for all jurisdictions
where we may have value. Some governmental entities that might infringe these
intellectual property rights may enjoy sovereign immunity from such claims.
Failure to reliably enforce patent rights against infringers may make
competition within the industry more difficult.




Effective
protection of intellectual property rights may be unavailable or limited, both
in the United States and in other countries. Patent protection throughout the
world is generally established on a country-by-country basis. We cannot assure
that the protection of our proprietary rights will be adequate or that our
competitors will not independently develop similar technologies, duplicate our
services or design around any of Landqart’s patents or other intellectual
property rights.




We are
the exclusive sub-licensee under some patents, and may need the assistance of
these parties if we choose to enforce any of these patent rights. The
cooperation of these third parties cannot be assured even though we rely on
these technologies for our products.




As more
companies engage in business activities relating to secure identification
technologies and develop corresponding intellectual property rights, it is
increasingly likely that claims may arise which assert that some of




26


our
products or services infringe upon other parties’ intellectual property rights.
These claims could subject us to costly litigation, divert management resources
and result in the invalidation of our intellectual property rights. These claims
may require us to pay significant damages, cease production of infringing
products, terminate our use of infringing technologies or develop non-infringing
technologies. In these circumstances, continued use of technologies may require
that we acquire licenses to the intellectual property that is the subject of the
alleged infringement, and we might not be able to obtain these licenses on
commercially reasonable terms or at all. Our use of protected technologies may
result in liability that threatens our continuing operation.




As part
of our confidentiality procedures, we generally enter into non-disclosure
agreements with our employees, directors, consultants and corporate partners,
and attempt to control access to and distribution of our technologies,
solutions, documentation and other proprietary information. Despite these
procedures, third parties could copy or otherwise obtain and make unauthorized
use of our technologies, solutions or other proprietary information or
independently develop similar technologies, solutions or information. The steps
that we have taken to prevent misappropriation of our solutions, technologies or
other proprietary information may not prevent their misappropriation,
particularly outside the United States where laws or law enforcement
practices may not protect our proprietary rights as fully as in the United
States.




Our
revenue models relating to anticipated products and services are under
development. If these revenue models and pricing structures do not gain market
acceptance, the corresponding anticipated products and services may fail to
attract or retain customers and we may not be able to generate or sustain
revenue.




We have
not fully developed revenue models for certain of our anticipated products and
applications. Because our products and services are not yet well-established in
the marketplace, and because some such products and services will not directly
displace existing solutions, we cannot be certain that the pricing structure for
these products and services will gain market acceptance or be sustainable over
time or that the marketing for such products and services will be
effective.





The
security systems used in our products and services may be circumvented or
sabotaged by third parties, which could result in the disclosure of sensitive
government information or private personal information or cause other business
interruptions that could damage our reputation and disrupt our
business.




Our
business will rely on information technologies, both in-house and at customer
and vendor locations. In addition, many of the systems we propose to sell manage
private personal information and protect information and locations involved in
sensitive government and private industry functions. The protective measures
that we use in these systems may not prevent security breaches, and failure to
prevent security breaches may disrupt business, damage our reputation, and
expose us to litigation and liability. A party who is able to circumvent
security measures used in these systems could misappropriate sensitive or
proprietary information, gain access to sensitive locations or materials or
cause interruptions or otherwise damage products and services. If unintended
parties obtain sensitive data and information or otherwise sabotage our
customers, we may receive negative publicity, incur liability to customers or
lose the confidence of customers, any of which may cause the termination or
modification of our contracts. Further, our insurance coverage may be
insufficient to cover losses and liabilities that may result from such
events.




In
addition, we may be required to expend significant capital and other resources
to protect against the threat of security breaches or to alleviate problems
caused by these breaches. Such protection or remedial measures may not be
available at a reasonable price or at all, or may not be entirely effective if
commenced.




We
may decline to pursue new business opportunities in secure identification card
markets due to objectionable terms required by contracting agencies, or we may
agree to objectionable contract terms for competitive reasons.




Government
agencies sometimes insist on unduly onerous terms in their contracts with
vendors of secure identification issuance systems. For example, it is customary
for state agencies to require that a vendor fund the capital-intensive initial
deployment of a drivers license issuance system (the costs of which the vendor
normally recoups over the life of the contract in per-card fees), while
reserving the right to terminate the contract for convenience. Objectionable
contract terms may lead us to decline to bid on identification issuance systems
to new customers, or to decline to retain business with customers, which could
reduce our potential market share and lower




27


our
expected revenues or profits. Alternatively, we may decide to accept at least
some level of objectionable terms rather than cede an important contract to a
competitor, which could also lower our expected revenues or
profits.




A
loss of a material supplier could have a material adverse effect on our ability
to perform effectively under some contracts.




We are
materially dependent on a limited number of third parties to produce systems or
assemblies necessary to produce our products. While we will strive to have
alternative suppliers provide us with many of our products, a loss of one or
more of such suppliers could have a material adverse effect on our ability to
operate effectively.





We
are subject to risks encountered by companies developing and relying upon new
technologies, products and services for substantial amounts of their growth or
revenue.




Our
business and prospects must be considered in light of the risks and
uncertainties to which companies with new and rapidly evolving technologies,
products and services are exposed. These risks include the
following:




•
                We
      may be unable to develop sources of revenue or sustainable growth in
      revenue because our current and anticipated technologies, products and
      services may be inadequate or we may be unable to attract or retain
      customers;•
                The
      intense competition and rapid technological change in our industry could
      adversely affect the market’s acceptance of our existing and new products
      and services; and•
                We
      may be unable to develop and maintain new technologies upon which existing
      and new products and services are dependent in order for our products and
      services to be sustainable and competitive and in order to obtain business
      and generate revenues.




We may be
required to incur unanticipated capital expenditures in the event product
changes or improvements are required. Additionally, new industry standards might
redefine the products that we are able to sell, especially if these products are
only in the prototype stage of development. If product changes or improvements
are required, success in marketing these products and achieving profitability
from these products could be delayed or halted. We may also be required to fund
such changes or improvements out of operating income, which could adversely
affect our profitability.




If
a judgment were to be entered against the Company and our director and officer
liability insurance was inadequate or unavailable, the obligation to pay the
judgment may materially harm our business and financial condition.




Our
director and officer liability insurance policies provide protection against
certain liabilities relating to securities class action and derivative lawsuits
and certain of our officers and directors, up to prescribed policy limits. If
these policies do not adequately cover expenses and certain liabilities relating
to such lawsuits, our financial condition could be materially harmed. In
addition, if this insurance coverage becomes unavailable to us or premiums
increase significantly in the future, it could make it more difficult for us to
retain and attract officers and directors and could expose us to self-funding
certain future liabilities ordinarily mitigated by director and officer
liability insurance.




We
may become subject to risks associated with operations in foreign
countries.




We plan
to seek opportunities and contracts outside the United States. If we are
successful in those efforts and obtain a significant amount of business from
sales outside the Untied States we will become subject to the risks associated
with operating in multiple countries, including:




•
                Currency
      devaluations and fluctuations in exchange rates, including impacts of
      transactions in various currencies;•
                Imposition
      of or increase in customs duties and other tariffs;•
                Imposition
      of or increase in currency exchange controls, including imposition of or
      increases in limitations on conversion of various currencies into dollars,
      remittances of dividends or other


28
 payments;•
                  Imposition
      of or increase in revenue, income or earnings taxes and withholding or
      other taxes on remittances or other payments by local
      subsidiaries;•
                  Imposition
      of or increases in investment or trade restrictions by non-US governments,
      or trade sanctions adopted by the US;•
                  Inability
      to definitively determine or satisfy legal requirements, inability to
      effectively enforce contract or legal rights and inability to obtain
      complete financial information under local legal, judicial, regulatory and
      other systems; and•
                  Nationalization
      or expropriation of assets, and other risks which could result from a
      change in government or government policy, or from other political, social
      or economic
instability.
 We cannot
assure you that we would be able to mitigate such risks if we expand
internationally in the future.




Because
there is a limited public trading market for our common stock, you may
experience difficulty in reselling your stock.




There is
currently only a limited public trading market for our common stock on the OTC
Bulletin Board operated by FINRA. As a result, you may experience difficulty in
reselling your shares of our common stock.




Because
our securities are subject to the penny stock rules, you may have difficulty
reselling your shares.




Our
shares, as penny stocks, are subject to Section 15(g) of the Exchange Act which
imposes additional sales practice requirements on broker-dealers who sell the
Company’s securities including the delivery of standardized disclosure
documents; disclosure and confirmation of quotation prices; disclosure of
compensation the broker-dealer receives; and furnishing monthly account
statements. For sales of our securities, the broker-dealer must make a special
suitability determination and receive from its customers a written agreement
prior to making a sale. The imposition of the foregoing additional sales
practices could adversely affect your ability to dispose of your shares of our
common stock.




Item
3.  Quantitative and Qualitative Disclosures About Market
Risk




Not
applicable.




Item
4.  Controls and Procedures




Management’s
Report on Disclosure Controls and Procedures




Our
management, including our Chief Executive Officer (“CEO”) and our Chief
Financial Officer (“CFO”), conducted an evaluation of the effectiveness of
disclosure controls and procedures (as such term is defined in Rules 13a-15(e)
and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the
“Exchange Act”)) as of the end of the period covered by this
report.  Disclosure controls and procedures are controls and other
procedures that are designed to ensure that the information we are required to
disclose in our periodic reports filed or submitted under the Exchange Act is
(i) recorded, processed, summarized and reported within the time periods
specified in the SEC’s rules and forms, and (ii) accumulated and communicated to
management, including the CEO and CFO, as appropriate, to allow timely decisions
regarding required disclosure.




Based on
the results of this evaluation, and the material weaknesses in our internal
control over financial reporting discussed below, our CEO and CFO concluded that
our disclosure controls and procedures were not effective at the reasonable
assurance level as of October 31, 2008.




Management’s
Report on Internal Control over Financial Reporting




Our
management, under the supervision of our CEO and CFO, is responsible for
establishing and maintaining adequate internal control over financial
reporting.  Internal control over financial reporting is a process
designed to provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external purposes in
accordance with GAAP.




29


Because
of its inherent limitations, internal control over financial reporting may not
prevent or detect misstatements.  Also, projections of any evaluation
of effectiveness to future periods are subject to the risk that controls may
become inadequate because of changes in conditions, or that the degree of
compliance with existing policies or procedures may deteriorate.




Our CEO
and CFO conducted an assessment of our internal control over financial reporting
as of October 31, 2008 based on the framework in Internal Control - Integrated
Framework issued by the Committee of Sponsoring Organizations of the
Treadway Commission (“COSO”).  A material weakness is a deficiency or
a combination of deficiencies in internal control over financial reporting, such
that there is a reasonable possibility that a material misstatement of the
Company’s annual or interim financial statements will not be prevented or
detected.




As part
of their assessment, our CEO and CFO evaluated whether the material weaknesses
in internal control over financial reporting previously reported in our Annual
Report on Form 10-K for the fiscal year ended January 31, 2008 continue to
exist.  Although the Company has begun to address its material
weaknesses in internal control over financial reporting, we have not completed
the implementation and testing of the changes in controls and procedures which
we believe are necessary to conclude that all of the material weaknesses have
been remediated.  Accordingly, based upon that assessment, we have
identified the following material weaknesses which continue to exist in our
internal control over financial reporting:




Lack of documented internal control
system.




We have a
material weakness due to the lack of a documented and reviewed system of
internal controls.  We have determined that to perform the processes
and remediate this internal control deficiency, we will either need to engage an
internal control consultant or reassign existing personnel.  During
the second quarter of fiscal 2009 we began to change some of our internal
control systems and began to document those changes; however, this process is
on-going and the implementation of policies and procedures may take several
quarters.




Lack
of segregation of duties.




We have
limited staff in our corporate offices and, as such, there is a lack of
segregation of duties.  Many functions, including, purchasing,
accounts payable, bank reconciliations and month end closings, are not
adequately segregated.  The lack of a proper segregation of duties can
lead to individuals performing incompatible functions such as signing checks and
preparing bank reconciliations.  During the second quarter of fiscal
2009, we modified certain procedures related to our disbursement program
including the requirement that all checks require two signatures and bank
reconciliations are reviewed by both the CEO and CFO.  During the
third quarter of 2009, we implemented additional controls whereby a
non-management member of our board of directors reviews our monthly bank
reconciliations.  We also strengthened our payroll
procedures.  Due to our limited number of personnel, until such time
as we have additional employees we may require additional oversight from our
board of directors in addressing certain weaknesses related to a proper
segregation of duties.




Inadequate
disaster recovery program.




We do not
currently have a comprehensive disaster recovery program.  During the
first quarter of fiscal 2009, we implemented a computer back up solution as a
first step in remediating this weakness.  Our efforts to improve our
disaster recovery program are on-going.




Lack
of controls over purchasing, accounts payable and disbursements.




Our
employees are authorized to purchase goods and services and approve the related
invoices for payment without obtaining supervisory approval or pursuant to a
delegation of authority.  Additionally, the same employees are
authorized to sign checks.  This lack of control and lack of
segregation of duties can lead to errors and irregularities.  As
discussed below in “Changes in Internal Control Over Financial Reporting,” we
have implemented a delegation of authority and improved our internal control
procedures related to check signing and bank reconciliation
process.  We will continue to strengthen our internal controls in this
area in future periods.




30


Lack
of controls over payroll processing.




Our CEO
and CFO are both authorized to individually initiate and approve our payrolls
and related payroll functions.  Additionally, both individuals have
access to our bank accounts.  The lack of proper controls could allow
each of these individuals to conceal errors and irregularities related to
payroll processing.  During the third quarter of fiscal 2009, we
modified our payroll controls so that the CEO and CFO both receive payroll
reports from our payroll provider thereby providing an opportunity to timely
identify errors and irregularities.




Our
information technology system lacks appropriate application and general
controls.




The
application and general controls over our information and technology systems are
not adequate. Our accounting software lacks appropriate controls and most
computer generated reports are reviewed by the author without independent
verification.  To partially compensate for this weakness, the
Company’s board of directors receives monthly financial statements that compare
actual results to budgeted results and variances are analyzed.




As a
result of the material weaknesses described above, management concluded that, as
of October 31, 2008, we did not maintain effective control over financial
reporting based on the criteria established in Internal Control – Integrated
Framework, issued by COSO.




Changes
in Internal Control over Financial Reporting




From its
incorporation in 2004 through January 31, 2008, the Company had minimal
operations and few, if any, full time employees.  In addition, IDCX
Co., which became a wholly-owned subsidiary of the Company on January 31, 2008
through a share exchange, and whose business plan the Company has now adopted,
was a private company prior to the share exchange and was not subject to the
requirements of SOX.




The
Company’s present directors and management succeeded to those positions on
January 31, 2008 and had no opportunity to plan, implement and evaluate the
Company’s system of internal control over financial reporting prior to assuming
their current positions.  Since January 31, 2008, the Company’s
management has been focused on beginning the implementation of its business plan
and has begun to fully consider the implementation of a system of internal
control appropriate to its level of business and operations.  The
Company has only four full-time employees and one part-time
employee.  The Company intends to develop a system of internal control
over financial reporting appropriate under SOX for a company of its size and
complexity and to remediate the deficiencies that continue to exist as promptly
as reasonably practical.  As described below, we have taken certain
initial steps to begin the remediation process.  However, because this
process is still in its initial stages, and due to our limited personnel
resources and cash availability, we can give no assurance as to when it will be
completed.




During
the second fiscal quarter of 2009, we began to change some of our internal
control procedures and to document these changes.  We also eliminated
some of the deficiencies relating to our purchasing, disbursement and bank
reconciliation functions, including adding a requirement that all checks require
two signatures and that bank reconciliations be reviewed by our CEO and
CFO.  During the third quarter of fiscal 2009, we engaged a new
payroll service and improved our payroll controls.  We also developed
policies and procedures to improve our internal control over purchasing and
accounts payable and added a requirement that a non-management member of the
board of directors review our monthly bank reconciliations in addition to the
CEO and CFO.  To the extent reasonably possible, we will continue to
seek the advice of outside consultants and internal resources to implement
additional controls.




Because
the remedial actions additionally require hiring of personnel, upgrading certain
of our information technology systems, and relying extensively on manual review
and approval, the successful operation of these controls for several quarters
may be required before management may be able to conclude that the material
weaknesses have been remediated.




Item
4T. Controls and Procedures




Not
applicable.






31


PART
II


OTHER
INFORMATION








Item
1.  Legal Proceedings




We are
not currently involved in any material pending legal proceeding.




Item
1A.  Risk Factors




See, Part
I, Item 2, “Management’s Discussion and Analysis of Financial Condition and
Results of Operations – Risk Factors.”




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




None.




Item
3.  Defaults Upon Senior Securities




None.




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




None.




Item
5.  Other Information




None.









Item
6.  Exhibits




Exhibit Number
                        Description31.1
                        Rule
      13a-14(a) Certification of Principal Executive Officer.31.2
                        Rule
      13a-14(a) Certification of Principal Financial Officer.32.1
                        Certification
      of Principal Executive Officer furnished pursuant to Section 906 of the
      Sarbanes-Oxley Act of 2002.32.2
                        Certification
      of Principal Financial Officer furnished pursuant to Section 906 of the
      Sarbanes-Oxley Act of
2002.







32


SIGNATURES




Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned thereunto
duly authorized.








IDCENTRIX,
      INC.
                      (Registrant)Date:  December
      15, 2008
                    By:
                    /s/
      Francine DuboisFrancine
      Dubois
                      President
      and Chief Executive Officer
                      (Principal
      Executive Officer)Date:  December
      15, 2008
                    By:
                    /s/
      David E. FractorDavid
      E. Fractor
                      Chief
      Financial Officer and Treasurer
                      (Principal
      Financial Officer)





33


INDEX
TO EXHIBITS








Exhibit
                Number
              Description31.1
              Rule
      13a-14(a) Certification of Principal Executive Officer.31.2
              Rule
      13a-14(a) Certification of Principal Financial Officer.32.1
              Certification
      of Principal Executive Officer furnished pursuant to Section 906 of the
      Sarbanes-Oxley Act of 2002.32.2
              Certification
      of Principal Financial Officer furnished pursuant to Section 906 of the
      Sarbanes-Oxley Act of 2002.


34