**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

**WASHINGTON, D.C. 20549**

 

FORM 10-Q

(Mark One)

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

For the quarterly period ended July 31, 2009

OR

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

For the transition period from ______ to ______

Commission File Number: 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.) |
|--------------------------------------------------------------------------------------------|------------------------------------------------------|
| **444 N. Nash Street****El Segundo, California**

(Address of Principal Executive Offices) | **90245**

(Zip Code)                                |

 

**(310) 321-5566**

(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        x   No **o**  

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

| Large accelerated filer | **o**   | Accelerated filer | **o**   |
|-------------------------|-------------------|-------------------|-------------------|

| Non-accelerated filer | **o**   | Smaller reporting company | x |
|-----------------------|-------------------|---------------------------|---|

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

 

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Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (Section 229.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).        Yes **o**     No  **o**  

At September 15, 2009, there were 32,559,500 shares of common stock, par value $0.00001, outstanding.

 

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**TABLE OF CONTENTS**

                                              Page

| Part I. Financial Information | 3 |
|-------------------------------|---|

| Item 1. Financial Statements | 3 |
|------------------------------|---|

|   | Condensed Consolidated Balance Sheets as of July 31, 2009 (Unaudited) and January 31, 2009 | 3 |
|--------|--------------------------------------------------------------------------------------------|---|

|   | Condensed Consolidated Statements of Operations for the Three and Six Months Ended July 31, 2009 and                         2008 and for the Cumulative Period January 3, 2007 (Inception) to July 31, 2009 (Unaudited) | 4 |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---|

|   | Condensed Consolidated Statements of Cash Flows for the Six Months Ended July 31, 2009 and 2008 and for the Cumulative Period January 3, 2007 (Inception) to July 31, 2009 (Unaudited) | 5 |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---|

|   | Condensed Consolidated Statements of Stockholders' Equity (Deficiency) for the Period January 3, 2007 (Inception) to July 31, 2009 (Unaudited) | 6 |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------|---|

|   | Notes to Condensed  Consolidated Financial Statements for the Three and Six Months Ended July 31, 2009                         and 2008 (Unaudited) | 7 |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------|---|

| Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operation. | 15 |
|-----------------------------------------------------------------------------------------------|----|

| Item 3. Quantitative and Qualitative Disclosures About Market Risk | 18 |
|--------------------------------------------------------------------|----|

| Item 4. Controls and Procedures | 18 |
|---------------------------------|----|

| Item 4T. Controls and Procedures | 18 |
|----------------------------------|----|

| Part II. Other Information | 20 |
|----------------------------|----|

| Item 1. Legal Proceedings | 20 |
|---------------------------|----|

| Item 1A. Risk Factors | 20 |
|-----------------------|----|

| Item 2. Unregistered Sales of Equity Securities and Use of Proceeds | 20 |
|---------------------------------------------------------------------|----|

| Item 3. Defaults Upon Senior Securities | 20 |
|-----------------------------------------|----|

| Item 4. Submission of Matters to a Vote of Security Holders | 20 |
|-------------------------------------------------------------|----|

| Item 5. Other Information | 20 |
|---------------------------|----|

| Item 6. Exhibits | 20 |
|------------------|----|

| Signatures | 21 |
|------------|----|

 

i

 

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**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, 2009, and in Part I, Item 2        “Management’s Discussion and Results of Operations” and Part II, Item 1A “Risk Factors”, if any, of this Quarterly Report on Form 10-Q.

We expressly qualify in their entirety all forward-looking statements attributable to us or any person acting on our behalf by the cautionary statements contained or referred to in this section.

 

2

 

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**PART I. FINANCIAL INFORMATION**

**Item 1. Financial Statements**

**IDCENTRIX**

**(A Development Stage Company)**

**CONDENSED CONSOLIDATED BALANCE SHEETS**

|                                                                                                                                            |   |   | **July 31,****2009** |   |   | **January 31,****2009** |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|----------------------|--------|--------|-------------------------|--------|
|                                                                                                                                            |   |   | (Unaudited)          |   |   |                    |   |
| ASSETS                                                                                                                                          |   |   |                 |   |   |                    |   |
|                                                                                                                                            |   |   |                 |   |   |                    |   |
| Current Assets                                                                                                                                  |   |   |                 |   |   |                    |   |
| Cash and cash equivalents                                                                                                                       |   | $      | 22,292               |   | $      | 275,082                 |   |
| Prepaid expenses                                                                                                                                |   |   | 23,522               |   |   | 21,430                  |   |
|                                                                                                                                            |   |   |                 |   |   |                    |   |
| Total current assets                                                                                                                            |   |   | 45,814               |   |   | 296,512                 |   |
|                                                                                                                                            |   |   |                 |   |   |                    |   |
| Property and equipment, net                                                                                                                     |   |   | 713                  |   |   | 24,309                  |   |
|                                                                                                                                            |   |   |                 |   |   |                    |   |
| Security deposits                                                                                                                               |   |   | -                    |   |   | 4,730                   |   |
|                                                                                                                                            |   |   |                 |   |   |                    |   |
| Total Assets                                                                                                                                    |   | $      | 46,527               |   | $      | 325,551                 |   |
|                                                                                                                                            |   |   |                 |   |   |                    |   |
|                                                                                                                                            |   |   |                 |   |   |                    |   |
| LIABILITIES AND STOCKHOLDERS’ EQUITY(DEFICIENCY)                                                                                          |   |   |                 |   |   |                    |   |
|                                                                                                                                            |   |   |                 |   |   |                    |   |
| Current Liabilities                                                                                                                             |   |   |                 |   |   |                    |   |
| Accounts payable                                                                                                                                |   | $      | 160,690              |   | $      | 186,080                 |   |
| Accrued expenses                                                                                                                                |   |   | 41,945               |   |   | 41,026                  |   |
|                                                                                                                                            |   |   |                 |   |   |                    |   |
| Total Liabilities                                                                                                                               |   |   | 202,635              |   |   | 227,106                 |   |
|                                                                                                                                            |   |   |                 |   |   |                    |   |
| Commitments and contingencies                                                                                                                   |   |   |                 |   |   |                    |   |
|                                                                                                                                            |   |   |                 |   |   |                    |   |
| Stockholders’ equity (deficiency)                                                                                                         |   |   |                 |   |   |                    |   |
| Common stock, $0.00001 par value, 100,000,000 shares authorized; 32,242,000 shares issued and outstanding at July 31, 2009 and January 31, 2009 |   |   |  

 

322  |   |   |  

 

322     |   |
| Additional paid-in capital                                                                                                                      |   |   | 4,000,522            |   |   | 3,910,474               |   |
| Deficit accumulated during the development stage                                                                                                |   |   | (4,156,952           | )      |   | (3,812,351              | )      |
|                                                                                                                                            |   |   |                 |   |   |                    |   |
| Total Stockholders’ Equity (Deficiency)                                                                                                   |   |   | (156,108             | )      |   | 98,445                  |   |
|                                                                                                                                            |   |   |                 |   |   |                    |   |
| Total Liabilities and Stockholders’ Equity (Deficiency)                                                                                   |   | $      | 46,527               |   | $      | 325,551                 |   |

 

See notes to condensed consolidated financial statements.

 

3

 

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**IDCENTRIX**

**(A Development Stage Company)**

**CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)**

|                                                 |   | **Three Months Ended****July 31,** | **Six Months Ended****July 31,** |     | **Cumulative Period From Inception January 3, 2007 to July 31,** |       |
|------------------------------------------------------|--------|------------------------------------|----------------------------------|----------|------------------------------------------------------------------|------------|
|                                                 |   | **2009**                           |                             | **2008** |                                                             | **2009**   |   | **2008** |   | **2009** |   |
| Revenue                                              |   | $                                  | -                                |     | $                                                                | -          |   | $ | - |   | $ | - |   | $ | - |   |
| Operating Expenses                                   |   |                               |                             |     |                                                             |       |   |   |   |   |   |   |   |   |   |   |
| Selling, general and administrative                  |   |                               | 138,370                          |     |                                                             | 515,860    |   |   | 344,973 |   |   | 1,142,605 |   |   | 3,977,491 |   |
| Research and development                             |   |                               | -                                |     |                                                             | -          |   |   | - |   |   | - |   |   | 40,096 |   |
| Impairment of sublicensing agreements                |   |                               |  

-                        |     |                                                             | -          |   |   |  

- |   |   |  

- |   |   |  

171,000 |   |
| Loss from Operations                                 |   |                               | (138,370                         | )        |                                                             | (515,860   | ) |   | (344,973 | ) |   | (1,142,605 | ) |   | (4,188,587 | ) |
| Interest Income                                      |   |                               | 39                               |     |                                                             | 8,734      |   |   | 372 |   |   | 22,371 |   |   | 31,635 |   |
| Net Loss                                             |   | $                                  | (138,331                         | )        | $                                                                | (507,126   | ) | $ | (344,601 | ) | $ | (1,120,234 | ) | $ | (4,156,952 | ) |
| Basic and diluted net loss per common share          |   | $                                  | (0.00                            | )        | $                                                                | (0.02      | ) | $ | (0.01 | ) | $ | (0.04 | ) |   |   |   |
| Weighted average number of common shares outstanding |   |                               | 31,927,957                       |     |                                                             | 31,788,000 |   |   | 31,912,376 |   |   | 31,770,497 |   |   |   |   |
|                                                      |        |                                    |                                  |          |                                                                  |            |  |  |  |  |  |  |  |  |  |  |  |

 

See notes to condensed consolidated financial statements.

 

4

 

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**IDCENTRIX**

**(A Development Stage Company)**

**CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)**

|                                                                       |     |   |     | **Cumulative Period From Inception January 3, 2007 to July 31, 2009** |   |
|----------------------------------------------------------------------------|----------|--------|----------|-----------------------------------------------------------------------|--------|
| **Six Months Ended July 31**                                               |
| **2009**                                                                   | **2008** |
| Cash Flows from Operating Activities                                       |     |   |     |                                                                  |   |   |   |   |   |   |
| Net loss                                                                   |     | $      | (344,601 | )                                                                     | $      | (1,120,234 | ) | $ | (4,156,952 | ) |
| Adjustment to reconcile net loss to net cash used in operating activities: |     |   |     |                                                                  |   |   |   |   |   |   |
| Depreciation and amortization                                              |     |   | 4,350    |                                                                  |   | 18,571 |   |   | 71,431 |   |
| Loss on disposal of property and equipment                                 |     |   | 18,546   |                                                                  |   | - |   |   | 18,546 |   |
| Fair value of vested stock options                                         |     |   | 54,048   |                                                                  |   | 44,447 |   |   | 231,956 |   |
| Fair value of restricted stock issuances                                   |     |   | 36,000   |                                                                  |   | 54,000 |   |   | 457,500 |   |
| Fair value of stock issued to employee                                     |     |   | -        |  

 

                                                 |   | - |   |   | 50,000 |   |
| Impairment of sublicensing agreements                                      |     |   | -        |                                                                  |   | - |   |   | 171,000 |   |
| Changes in operating assets and liabilities                                |     |   |     |                                                                  |   |   |   |   |   |   |
| Prepaid expenses and security deposits                                     |     |   | 2,638    |                                                                  |   | (16,581 | ) |   | (21,993 | ) |
| Accounts payable                                                           |     |   | (25,390  | )                                                                     |   | (591,231 | ) |   | 103,829 |   |
| Accrued expenses                                                           |     |   | 919      |                                                                  |   | 83,177 |   |   | 40,416 |   |
|                                                                       |     |   |     |                                                                  |   |   |   |   |   |   |
| Net cash used in operating activities                                      |     |   | (253,490 | )                                                                     |   | (1,527,851 | ) |   | (3,034,267 | ) |
|                                                                       |     |   |     |                                                                  |   |   |   |   |   |   |
| Cash Flows from Investing Activities                                       |     |   |     |                                                                  |   |   |   |   |   |   |
| Net cash received in reverse merger with Sterling Gold                     |     |   | -        |                                                                  |   | - |   |   | 503,055 |   |
| Proceeds from the sale of property and equipment                           |     |   | 700      |                                                                  |   | - |   |   | 700 |   |
| Purchase of property and equipment                                         |     |   | -        |                                                                  |   | - |   |   | (34,390 | ) |
| Net cash provided by investing activities                                  |     |   | 700      |                                                                  |   | - |   |   | 469,365 |   |
|                                                                       |     |   |     |                                                                  |   |   |   |   |   |   |
| Cash Flows from Financing Activities                                       |     |   |     |                                                                  |   |   |   |   |   |   |
| Deferred offering costs                                                    |     |   | -        |                                                                  |   | (19,514 | ) |   | - |   |
| Net proceeds from issuance of common stock                                 |     |   | -        |                                                                  |   | 372,493 |   |   | 2,587,194 |   |
| Net cash provided by financing activities                                  |     |   | -        |                                                                  |   | 352,979 |   |   | 2,587,194 |   |
| Net (decrease) increase in cash                                            |     |   | (252,790 | )                                                                     |   | (1,174,872 | ) |   | 22,292 |   |
|                                                                       |     |   |     |                                                                  |   |   |   |   |   |   |
| Cash and Cash Equivalents, Beginning of Period                             |     |   | 275,082  |                                                                  |   | 2,117,091 |   |   | - |   |
|                                                                       |     |   |     |                                                                  |   |   |   |   |   |   |
| Cash and Cash Equivalents, End of Period                                   |     | $      | 22,292   |                                                                  | $      | 942,219 |   | $ | 22,292 |   |
| Supplemental non cash investing and financing activities:                  |     |   |     |                                                                  |   |   |   |   |   |   |
| Issuance of common stock for sublicense agreement                          |     | $      | -   |                                                                  | $      | -  |   | $ |  

228,000 |   |
|                                                                            |          |        |          |                                                                       |        |  |  |  |  |  |  |

 

See notes to condensed consolidated financial statements.

 

5

 

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**IDCENTRIX**

**(A Development Stage Enterprise)**

**CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIENCY)**

**FOR THE PERIOD JANUARY 3, 2007 (INCEPTION) TO JULY 31, 2009 (UNAUDITED)**

|                                                                                |   | Common Stock |       | Additional Paid-in Capital |   | Accumulated Deficit |   | Total  |      |
|-------------------------------------------------------------------------------------|--------|--------------|------------|----------------------------|--------|---------------------|--------|--------|-----------|
| Shares                                                                              | Amount |
| Balance, January 3, 2007                                                            |   |         | -          |                       | $      | -                   |   | $      | -         |   | $ | - |   | $ | - |   |
| Net loss                                                                            |   |         | -          |                       |   | -                   |   |   | -         |   |   | (40,000 | ) |   | (40,000 | ) |
| Balance, January 31, 2007                                                           |   |         | -          |                       |   | -                   |   |   | -         |   |   | (40,000 | ) |   | (40,000 | ) |
| Private placements of common stock, net of offering costs                           |   |         |       |                       |   |                |   |   |      |   |   |   |   |   |   |   |
| Shares issued at $0.10 per share                                                    |   |         | 3,400,000  |                       |   | 34                  |   |   | 310,310   |   |   | - |   |   | 310,344 |   |
| Shares issued at $0.30 per share                                                    |   |         | 1,100,000  |                       |   | 11                  |   |   | 301,186   |   |   | - |   |   | 301,197 |   |
| Shares issued at $0.75 per share                                                    |   |         | 2,342,000  |                       |   | 23                  |   |   | 1,603,138 |   |   | - |   |   | 1,603,161 |   |
| Fair value of vested stock options issued to employees                              |   |         | -          |                       |   | -                   |   |   | 68,478    |   |   | - |   |   | 68,478 |   |
| Fair value of vesting of restricted stock issuance to directors ($0.75 per share)   |   |         | 920,000    |                       |   | 9                   |   |   | 313,491   |   |   | - |   |   | 313,500 |   |
| Fair value of stock issued to employee ($0.10 per share)                            |   |         | 500,000    |                       |   | 5                   |   |   | 49,995    |   |   | - |   |   | 50,000 |   |
| Fair value of common stock issued in exchange for sublicense (A)                    |   |         | 10,000,000 |                       |   | 100                 |   |   | 227,900   |   |   | - |   |   | 228,000 |   |
| Shares issued pursuant to share exchange with Sterling Gold Corp. ($0.04 per share) |   |         | 13,480,000 |                       |   | 135                 |   |   | 446,059   |   |   | - |   |   | 446,194 |   |
| Net loss                                                                            |   |         | -          |                       |   | -                   |   |   | -         |   |   | (1,675,396 | ) |   | (1,675,396 | ) |
| Balance, January 31, 2008                                                           |   |         | 31,742,000 |                       |   | 317                 |   |   | 3,320,557 |   |   | (1,715,396 | ) |   | 1,605,478 |   |
| Private placement of common stock, net of offering costs at $0.75 per share         |   |         | 500,000    |                       |   | 5                   |   |   | 372,487   |   |   | - |   |   | 372,492 |   |
| Fair value of vested stock options issued to employees                              |   |         | -          |                       |   | -                   |   |   | 109,430   |   |   | - |   |   | 109,430 |   |
| Fair value of vesting of restricted stock issuances to directors ($0.75 per share)  |   |         | -          |                       |   | -                   |   |   | 108,000   |   |   | - |   |   | 108,000 |   |
| Net loss                                                                            |   |         | -          |                       |   | -                   |   |   | -         |   |   | (2,096,955 | ) |   | (2,096,955 | ) |
| Balance, January 31, 2009                                                           |   |         | 32,242,000 |                       |   | 322                 |   |   | 3,910,474 |   |   | (3,812,351 | ) |   | 98,445 |   |
| Fair value of vested stock options issued to employees                              |   |         | -          |                       |   | -                   |   |   | 54,048    |   |   | - |   |   | 54,048 |   |
| Fair value of vesting of restricted stock issuances to directors ($0.75 per share)  |   |         | -          |                       |   | -                   |   |   | 36,000    |   |   | - |   |   | 36,000 |   |
| Net loss                                                                            |   |         | -          |                       |   | -                   |   |   | -         |   |   | (344,601 | ) |   | (344,601 | ) |
| Balance, July 31, 2009                                                              |   |         | 32,242,000 |                       | $      | 322                 |   | $      | 4,000,522 |   | $ | (4,156,952 | ) | $ | (156,108 | ) |
|                                                                                     |        |              |            |                            |        |                     |        |        |           |  |  |  |  |  |  |  |  |

 

(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

 

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**IDCENTRIX**

**(A Development Stage Company)**

**NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

**FOR THE THREE AND SIX MONTHS ENDED JULY 31, 2009 AND 2008**

**AND THE PERIOD JANUARY 3, 2007 (INCEPTION) TO JULY 31, 2009 (UNAUDITED)**

 

NOTE 1 –DESCRIPTION OF THE BUSINESS

iDcentrix (the “Company”) was incorporated in Delaware in January of 2007. Due to the Company’s inability to raise additional capital or generate revenue, the Company ceased operations effective June 16, 2009. Previously, the Company was in the business of producing hi-tech security identification solutions. Substantially all of the efforts of the Company were devoted to these business        activitiesThe 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. 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 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. Prior to the share exchange iDcentrix had 18,762,000 shares of        common stock issued and outstanding and Sterling Gold had 13,480,000 shares of common stock issued and outstanding. Each share of iDcentrix common stock was exchanged for one share of Sterling Gold common stock. For accounting purposes, iDcentrix was deemed to have issued 13,480,000 shares of its common stock to the former Sterling Gold shareholders. Accordingly, after the share exchange there was a total of 32,242,000 shares of common stock issued and outstanding. 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, 2009, which has been derived from audited financial statements, and (b) the unaudited interim condensed consolidated financial statements for the three and six months ended July 31, 2009 and 2008 include all adjustments (consisting of normal recurring accruals) which management considers necessary to present        fairly the consolidated financial position of the Company as of July 31, 2009, the results of its consolidated operations for the three and six months ended July 31, 2009 and 2008, and its consolidated cash flows for the six months ended July 31, 2009 and 2008 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, 2009, as filed with the Securities and Exchange Commission on May 15, 2009 which should be read in conjunction with this Quarterly Report on Form 10-Q. The notes from the condensed consolidated financial        statements for 2009 are incorporated by reference from the Notes to Consolidated Financial Statements as of January 31, 2009 as described in the Company’s Annual Report on Form 10-K for the year ended January 31, 2009. The results of operations for the three and six months ended July 31, 2009 are not necessarily indicative of the consolidated results of operations to be expected for the full fiscal year ending January 31, 2010. The following unaudited condensed consolidated        financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission.

7

 

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**IDCENTRIX**

**(A Development Stage Company)**

**NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

**FOR THE THREE AND SIX MONTHS ENDED JULY 31, 2009 AND 2008**

**AND THE PERIOD JANUARY 3, 2007 (INCEPTION) TO JULY 31, 2009 (UNAUDITED)**

 

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, sales and marketing activities to create market awareness of its        products, and obtaining financing. Through July 31, 2009, the Company has incurred accumulated losses of approximately $4.2 million and it currently has only limited cash on hand.

The Company’s ability to continue as a going concern is dependent upon its ability to develop additional sources of capital and to ultimately achieve profitable operations. The Company’s consolidated financial statements do not include any adjustments that might result from the outcome of these uncertainties.

At July 31, 2009, the Company had not yet commenced any revenue-generating operations. All activity through July 31, 2009 has been related to the Company’s formation, capital raising efforts and sales and marketing activities. As such, the Company has yet to generate any cash flows from operations, and has been dependent on equity funding from both related and unrelated parties to finance its        operations.

The Company does not have sufficient resources to fund its operations for the next twelve months. Although the Company attempted to raise additional funding, its efforts were unsuccessful due to unfavorable capital markets and the Company’s inability to generate revenue from operations. Accordingly, on June 16, 2009, the Company’s Board of Directors determined that the Company should abandon its        business plan and cease operations. The Company will consider selling itself; however, the Company has not entered into any agreement to sell itself, and there can be no assurance that such an agreement can be entered into or on terms that would be favorable to the Company and its stakeholders.

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.

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        

 

8

 

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**IDCENTRIX**

**(A Development Stage Company)**

**NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

**FOR THE THREE AND SIX MONTHS ENDED JULY 31, 2009 AND 2008**

**AND THE PERIOD JANUARY 3, 2007 (INCEPTION) TO JULY 31, 2009 (UNAUDITED)**

 

“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) at the date at which the necessary performance to earn the equity instruments is complete.

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.

Diluted loss per share is calculated assuming the issuance of common shares, if dilutive, resulting from the exercise of stock options and warrants. At July 31, 2009 and 2008, potentially dilutive securities consisted of outstanding common stock options to acquire an aggregate of 0 and 1,110,000 shares, respectively, and 12,375,000 warrants to acquire 6,187,000 shares. Since the Company reported a net loss        for the three and six months ended July 31, 2009 and 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

Fair Value Measurements are determined by the Company’s adoption of SFAS No. 157, “Fair Value Measurements” (“SFAS 157”) as of February 1, 2008, with the exception of the application of the statement to non-recurring, non-financial assets and liabilities as permitted. The adoption of SFAS 157 did not have a material impact on the Company’s fair value        measurements.

SFAS 157 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. SFAS 157 establishes a fair value hierarchy, which prioritizes the inputs used in measuring fair value into three broad levels as        follows:

Level 1-Quoted prices in active markets for identical assets or liabilities.

Level 2-Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly.

Level 3-Unobservable inputs based on the Company’s assumptions.

SFAS 157 requires the use of observable market data if such data is available without undue cost and effort.

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 July 31, 2009 and January 31, 2009, the Company has no accrued estimated penalty. (see Note 3)

Recent Accounting Pronouncements

References to the “FASB” and “SFAS” herein refer to the “Financial Accounting Standards Board” and “Statement of Financial Accounting Standards”, respectively.

9

 

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**IDCENTRIX**

**(A Development Stage Company)**

**NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

**FOR THE THREE AND SIX MONTHS ENDED JULY 31, 2009 AND 2008**

**AND THE PERIOD JANUARY 3, 2007 (INCEPTION) TO JULY 31, 2009 (UNAUDITED)**

 

In December 2007, Financial Accounting Standards Board (FASB) Statement 141R, “Business Combinations (revised 2007)” (SFAS 141R”) was issued. SFAS 141R replaces SFAS 141 “Business Combinations”. SFAS 141R requires the acquirer of a business to recognize and measure the identifiable assets acquired, the liabilities assumed, and any non-controlling interest in the acquiree at        fair value. SFAS 141R also requires transactions costs related to the business combination to be expensed as incurred. SFAS 141R 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. The effective date, as well as the adoption date for the Company was February 1, 2009. Although SFAS 141R may impact our reporting in future financial periods, we have        determined that the standard did not have any impact on our historical consolidated financial statements at the time of adoption.

In April 2008 the FASB issued FASB Staff Position (“FSP”) No. 142-3, “Determination of the Useful Life of Intangible Assets” (“FSP 142-3”), which amends the factors that should be considered in developing renewal or extension assumptions used to determine the useful life of a recognized intangible asset under SFAS 142. This pronouncement requires enhanced disclosures        concerning a company’s treatment of costs incurred to renew or extend the term of a recognized intangible asset. FST 142-3 is effective for financial statements issued for fiscal years beginning after December 15, 2008. The effective date, as well as the adoption date for the Company was February 1, 2009. Although FSP 142-3 may impact our reporting in future financial periods, we have determined that the standard did not have any impact on our historical consolidated financial        statements at the time of adoption.

In April 2009, the FASB issued FSP No. FAS 141(R)-1, “Accounting for Assets Acquired and Liabilities Assumed in a Business Combination That Arise from Contingencies.” FSP No. FAS 141(R)-1 amends and clarifies FASB Statement No. 141(R), to address application issues raised on initial recognition and measurement, subsequent measurement and accounting and disclosure of assets and liabilities        arising from contingencies in a business combination. FSP No. FAS 141(R)-1 is effective for the first annual reporting period on or after December 31, 2008. The impact of FSP No. FAS 141(R)-1 on the Company’s consolidated financial statements will depend on the number and size of acquisition transactions, if any, engaged in by the Company.

In April 2009, the FASB issued FSP FAS 107-1 and APB 28-1, “Interim Disclosures about Fair Value of Financial Instruments” (FSP FAS 107-1 and APB 28-1). FSP FAS 107-1 and APB 28-1 amend SFAS No. 107, “Disclosures About Fair Value of Financial Instruments”, to require disclosures about fair value of financial instruments for interim reporting periods of publicly traded companies as        well as in annual financial statements. FSP FAS 107-1 and APB 28-1 also amend APB Opinion No. 28, “Interim Financial Reporting”, to require those disclosures in summarized financial information at interim reporting periods. FSP FAS 107-1 and APB 28-1 are effective for interim reporting periods ending after June 15, 2009, with early adoption permitted for periods ending after March 15, 2009. FSP FAS 107-1 and APB 28-1 does not require disclosures for earlier periods presented        for comparative purposes at initial adoption. In periods after initial adoption, FSP FAS 107-1 and APB 28-1 requires comparative disclosures only for periods ending after initial adoption. The Company does not expect the changes associated with adoption of FSP FAS 107-1 and APB 28-1 will have a material effect on its financial statements and disclosures.

Other recent accounting pronouncements issued by the FASB (including its Emerging Issues Task Force), the AICPA, and the SEC did not or are not believed by management to have a material impact on the Company’s present or future consolidated financial statements.

Reclassification

In presenting the Company’s statement of operations for the year ended January 31, 2009 and for the period from January 3, 2007 (inception) to January 31, 2009, the Company presented the impairment of its sublicenses of $171,000 as a component of other income. In computing the cumulative loss since inception for the period January 3, 2007 (inception) to July 31, 2009, the Company has reclassified the        impairment of the sublicenses of $171,000 to loss from operations.

10

 

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**IDCENTRIX**

**(A Development Stage Company)**

**NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

**FOR THE THREE AND SIX MONTHS ENDED JULY 31, 2009 AND 2008**

**AND THE PERIOD JANUARY 3, 2007 (INCEPTION) TO JULY 31, 2009 (UNAUDITED)**

 

NOTE 3 – SUBLICENSING 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 was 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.

In conjunction with the Canadian Sublicensing Agreement and Worldwide Sublicensing Agreement, 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.

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. On May 26, 2009, Fortress agreed to temporarily waive the requirement to register the next tranche of shares until at least July 31, 2009. The Company is discussing an additional waiver with Fortress. Accordingly, no penalty has been recorded for the failure to maintain the effectiveness of        the previous registration statement or the requirement to file future registration statements.

As of January 31, 2009, the Company evaluated the Canadian Sublicensing Agreement and the Worldwide Sublicensing Agreement and determined that the future undiscounted net cash flows was less than the carrying amount of the asset and recognized an impairment loss equal to the remaining book value of the sublicense. No amortization expense was recognized during the three and six months ended July 31, 2009.        For the three and six months ended July 31, 2008 the Company recognized $8,143 and $16,286 of amortization expense respectively.

 

11

 

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**IDCENTRIX**

**(A Development Stage Company)**

**NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

**FOR THE THREE AND SIX MONTHS ENDED JULY 31, 2009 AND 2008**

**AND THE PERIOD JANUARY 3, 2007 (INCEPTION) TO JULY 31, 2009 (UNAUDITED)**

 

For the period January 3, 2007 (inception) to July 31, 2009 the Company recognized $57,000 of amortization expense.

With the Company’s decision to terminate its business operations, the Company anticipates that the Canadian Sublicensing Agreement and the Worldwide Sublicensing Agreement will terminate in accordance with their terms.

NOTE 4 – COMMON STOCK

During the three and six months ended July 31, 2009 and 2008, the Company recognized $9,000, $36,000, $27,000 and $54,000 respectively of expense relating 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 5, below.

NOTE 5 – 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 Board of Directors 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 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.

During the three and six months ended July 31, 2009, no options were issued to employees or nonemployees. For the three and six months ended July 31, 2009 the Company recognized $10,983 and $54,048 of compensation expense related to the fair value of the vested stock options. For the three and six months ended July 31, 2008 and for the period January 3, 2007 (inception) to July 31, 2009, the Company        recognized $31,116, $44,447 and $231,956 of compensation expense related to the fair value of the vested stock options. As of July 31, 2009, there were no stock options outstanding.

Activity under the Plan for the six months ended July 31, 2009 is as follows:

|                                    |   | Options Outstanding |      | Intrinsic Value |   | Weighted Average Exercise Price |
|-----------------------------------------|--------|---------------------|-----------|-----------------|--------|---------------------------------|
| Options outstanding at January 31, 2009 |   |                | 1,326,000 |            | $      | -                               |   | $ | 0.36 |
| Granted                                 |   |                | -         |            |   |                            |   |   | - |
| Exercised                               |   |                | -         |            |   |                            |   |   | - |
| Forfeited                               |   |                | 1,326,000 |            | $      | -                               |   |   | 0.36 |
| Options outstanding at July 31, 2009    |   |                | -         |            | $      | -                               |   | $ | - |
| Options exercisable at July 31, 2009    |   |                | -         |            | $      | -                               |   | $ | - |

 

 

12

 

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**IDCENTRIX**

**(A Development Stage Company)**

**NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

**FOR THE THREE AND SIX MONTHS ENDED JULY 31, 2009 AND 2008**

**AND THE PERIOD JANUARY 3, 2007 (INCEPTION) TO JULY 31, 2009 (UNAUDITED)**

 

A summary of the status of the Company’s non vested options granted under the Company’s stock option plan as of July 31, 2009 and changes during the six months ended July 31, 2009 is presented below:

| Nonvested Options                     |   |   | Options |   |   | Weighted                        Average Grant Date Fair Value |
|---------------------------------------|--------|--------|---------|--------|--------|---------------------------------------------------------------|
|                                  |   |   |    |   |   |                                                          |
| Nonvested options at January 31, 2009 |   |   | 551,000 |   | $      | 0.23                                                          |
| Granted                               |   |   | -       |   |   | -                                                             |
| Vesting                               |   |   | 371,500 |   |   | 0.20                                                          |
| Forfeited                             |   |   | 179,500 |   |   | 0.33                                                          |
| Nonvested options at July 31, 2009    |   |   | -       |   | $      | -                                                             |

 

As of July 31, 2009, there were no stock options outstanding.

Warrants

As of July 31, 2009, the Company has 12,375,000 warrants for the issuance 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. On August 20, 2009, the Company issued 317,500 shares of common stock pursuant        to agreements privately negotiated with holders of the outstanding warrants to terminate 6,350,000 outstanding warrants. Following the termination of the warrants, the Company has outstanding 6,025,000 warrants for the issuance of 3,012,500 shares of common stock.

NOTE 7 – INCOME TAXES

At July 31, 2009, the Company had available Federal and state net operating loss carryforwards to reduce future taxable income. The amounts available were approximately $4,807,000 for Federal purposes and $4,232,000 for state purposes. The Federal carryforward expires in 2029 and the state carryforward expires in 2014. 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:

|                            |   |   | July 31, 2009 |   |   | January 31, 2009 |   |
|---------------------------------|--------|--------|---------------|--------|--------|------------------|--------|
| Deferred tax asset              |   |   |          |   |   |             |   |
| Net operating loss carryforward |   | $      | 2,072,000     |   | $      | 1,827,000        |   |
| Valuation allowance             |   |   | (2,072,000    | )      |   | (1,827,000       | )      |
| Net deferred income tax asset   |   | $      | -             |   | $      | -                |   |

 

 

13

 

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**IDCENTRIX**

**(A Development Stage Company)**

**NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

**FOR THE THREE AND SIX MONTHS ENDED JULY 31, 2009 AND 2008**

**AND THE PERIOD JANUARY 3, 2007 (INCEPTION) TO JULY 31, 2009 (UNAUDITED)**

 

 

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

|                                              |   |   | July 31, 2009 |   |   | July 31, 2008 |   |
|---------------------------------------------------|--------|--------|---------------|--------|--------|---------------|--------|
| Tax expense at the U.S. statutory income tax rate |   |   | (34.00        | )%     |   | (34.00        | )%     |
| Increase in valuation allowance                   |   |   | 34.00         |   |   | 34.00         |   |
| Effective tax rate                                |   |   | -             |   |   | -             |   |

 

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 July 31, 2009 and January 31, 2009, 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 July 31, 2009, the Company has no accrued interest or penalties related to uncertain tax positions. 

.

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

*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, 2009, (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.*

*Suspension of Active Pursuit of Operations*

Through June 16, 2009, we were a start-up exploration stage company and sales and marketing activities were the focus of our activities. We attended domestic and international trade shows, participated in industry associations, engaged in public relations activities and entered into partnering agreements with other service providers. Despite these efforts we were unsuccessful in generating revenue. We        attempted to raise additional capital; however, due to unfavorable conditions in the capital markets and our failure to generate revenue from operations, we were unsuccessful in these efforts.

On June 16, 2009, in view of the Company’s extremely limited cash resources, its continuing inability to secure additional funding and its continuing lack of success in generating revenues from operations, the Board of Directors determined that the Company should suspend the active pursuit of its business operations and further reduce its expenses. Accordingly, the Company terminated the services of        all of its employees except for Ms. Dubois, its President and Chief Executive Officer (whose compensation had previously been significantly reduced), and Mr. Fractor, its Chief Financial Officer and Treasurer, who continues to serve in a part-time capacity at a reduced rate of compensation. The Board authorized Ms. Dubois and Mr. Fractor to attempt to settle the Company’s remaining obligations and to pursue the possibility of a sale of the Company. Although the        Company has been in discussion with certain potential acquirers, no agreement has been reached for the sale of the Company and no assurance can be given that any such agreement will be reached upon acceptable terms, or at all. If a sale is consummated, there will not be a meaningful return to shareholders.

*Results of Operations*

*Three Months Ended July 31, 2009 Compared to the Three Months Ended July 31, 2008*

For the three months ended July 31, 2009, the Company incurred a loss of approximately $138,000, or $0.00 per share basic and diluted, compared to a loss of approximately $507,000, or $0.02 per share basic and diluted in the same period of the prior year. The reduction in the net loss was due to reductions in compensation, occupancy costs, legal expenses, reductions in outside board member compensation,        elimination of trade show attendance and a reduction in travel expense.

During the three months ended July 31, 2009, the Company terminated two of its three remaining full time employees after significantly reducing their compensation in the prior quarter. Additionally, the Company’s Chief Executive Officer agreed to a significant reduction in her compensation.

The Company relocated its offices to an interim facility on a rent free basis. This reduced the Company’s rent and other occupancy related expenses. The member’s of the Board of Directors waived their cash and equity compensation during the three months ended July 31, 2009. Legal expenses during the quarter were reduced compared to the same period in the prior year. Additionally, since the        Company abandoned its business plan, it did not participate in trade shows; thereby reducing sales and marketing and travel expenses.

 

15

 

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*Six Months Ended July 31, 2009 Compared to the Six Months Ended July 31, 2008*

For the six months ended July 31, 2009, the Company incurred a loss of approximately $345,000, or $0.01 per share basic and diluted, compared to a loss of approximately $1,120,000, or $0.04 per share basic and diluted in the same period of the prior year. The reduction in the net loss was due to reductions in compensation, occupancy costs, legal expenses, reductions in outside board member compensation,        elimination of trade show attendance and a reduction in travel expense.

*Liquidity and Capital Resources*

As of July 31, 2009, we have not generated any revenue and we have cash on-hand of approximately $22,000. Despite the expense reductions mentioned above, we will not have enough capital resources available to continue operating through the end of our next fiscal year.

During the second fiscal quarter of 2009, the Company began to seek additional equity through private placements. Due to unfavorable conditions in the capital markets and our failure to generate revenue from operations, we were unsuccessful in raising additional capital. Consequently, we do not expect to have sufficient capital to finance our operations through the end of the current fiscal year and have        determined to suspend the active pursuit of our business plan while scaling back all operations to conserve cash. The Company’s Board of Directors instructed management to settle with its creditors and to pursue the sale of the Company. Although the Company has been in discussion with certain potential acquirers, no agreement has been reached for the sale of the Company and no assurance can be given that any such agreement will be reached upon acceptable terms, or at all. If a        sale is consummated, there can be no assurance that it will result in a meaningful return to shareholders.

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

*Going Concern*

We incurred a net loss of approximately $345,000 during the six month period ended July 31, 2009 and a cumulative net loss of approximately $4.2 million since inception. Accordingly, there is substantial doubt about our ability to continue as a going concern. Given our inability to raise additional capital or to generate revenues from operations, we determined to suspend the active pursuit of our business        operations. As of July 31, 2009, we had cash on hand of approximately $22,000 and current liabilities of approximately $203,000.

**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 

16

 

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at which performance commitment is reached, or b) the date at which the necessary performance to earn the equity instruments is complete.

**Recent Accounting Pronouncements**

References to the “FASB” and “SFAS” herein refer to the “Financial Accounting Standards Board” and “Statement of Financial Accounting Standards”, respectively. In December 2007, Financial Accounting Standards Board (FASB) Statement 141R, “Business Combinations (revised 2007)” (SFAS 141R”) was issued. SFAS 141R replaces SFAS 141        “Business Combinations”. SFAS 141R requires the acquirer of a business to recognize and measure the identifiable assets acquired, the liabilities assumed, and any non-controlling interest in the acquiree at fair value. SFAS 141R also requires transactions costs related to the business combination to be expensed as incurred. SFAS 141R 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. The effective date, as well as the adoption date for the Company was February 1, 2009. Although SFAS 141R may impact our reporting in future financial periods, we have determined that the standard did not have any impact on our historical consolidated financial statements at the time of adoption.

In April 2008 the FASB issued FASB Staff Position (“FSP”) No. 142-3, “Determination of the Useful Life of Intangible Assets” (“FSP 142-3”), which amends the factors that should be considered in developing renewal or extension assumptions used to determine the useful life of a recognized intangible asset under SFAS 142. This pronouncement requires enhanced disclosures        concerning a company’s treatment of costs incurred to renew or extend the term of a recognized intangible asset. FST 142-3 is effective for financial statements issued for fiscal years beginning after December 15, 2008. The effective date, as well as the adoption date for the Company was February 1, 2009. Although FSP 142-3 may impact our reporting in future financial periods, we have determined that the standard did not have any impact on our historical consolidated financial        statements at the time of adoption.

In April 2009, the FASB issued FSP No. FAS 141(R)-1, “Accounting for Assets Acquired and Liabilities Assumed in a Business Combination That Arise from Contingencies.” FSP No. FAS 141(R)-1 amends and clarifies FASB Statement No. 141(R), to address application issues raised on initial recognition and measurement, subsequent measurement and accounting and disclosure of assets and liabilities        arising from contingencies in a business combination. FSP No. FAS 141(R)-1 is effective for the first annual reporting period on or after December 31, 2008. The impact of FSP No. FAS 141(R)-1 on the Company’s consolidated financial statements will depend on the number and size of acquisition transactions, if any, engaged in by the company.

In April 2009, the FASB issued FSP FAS 107-1 and APB 28-1, “Interim Disclosures about Fair Value of Financial Instruments” (FSP FAS 107-1 and APB 28-1). FSP FAS 107-1 and APB 28-1 amend SFAS No. 107, “Disclosures About Fair Value of Financial Instruments”, to require disclosures about fair value of financial instruments for interim reporting periods of publicly traded companies as        well as in annual financial statements. FSP FAS 107-1 and APB 28-1 also amend APB Opinion No. 28, “Interim Financial Reporting”, to require those disclosures in summarized financial information at interim reporting periods. FSP FAS 107-1 and APB 28-1 are effective for interim reporting periods ending after June 15, 2009, with early adoption permitted for periods ending after March 15, 2009. FSP FAS 107-1 and APB 28-1 does not require disclosures for earlier periods presented        for comparative purposes at initial adoption. In periods after initial adoption, FSP FAS 107-1 and APB 28-1 requires comparative disclosures only for periods ending after initial adoption. The Company does not expect the changes associated with adoption of FSP FAS 107-1 and APB 28-1 will have a material effect on its financial statements and disclosures.

Other recent accounting pronouncements issued by the FASB (including its Emerging Issues Task Force), the AICPA, and the SEC did not or are not believed by management to have a material impact on the Company’s present or future consolidated financial statements.

*Inflation*

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

 

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**Item 3. Quantitative and Qualitative Disclosures About Market Risk**

Not applicable.

**Item 4. Controls and Procedures**

Not applicable.

**Item 4T. 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 July 31, 2009.

*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. From January 31, 2008 through June 16, 2009, the Company’s management began the implementation of a system of        internal control appropriate to its level of business and operations. 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. Due to our lack of capital, we have suspended our efforts to remediate the deficiencies described below.

Our CEO and CFO conducted an assessment of our internal control over financial reporting as of July 31, 2009 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, 2009 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. This process has been suspended due to lack of resources.

 

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> 
*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.

> 
*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.

> 
*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.

 

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**Part II**

**Other Information**

**Item 1. Legal Proceedings**

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

**Item 1A. Risk Factors**

The following new Risk Factor is added to those set forth 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, 2009.

**The Company has determined to suspend the active pursuit of its business operations.**

On June 16, 2009, in view of the Company’s extremely limited cash resources, its continuing inability to secure additional funding and its continuing lack of success in generating revenues from operations, the Board of Directors determined that the Company should suspend the active pursuit of its business operations and further reduce its expenses. Accordingly, the Company terminated the services of        all of its employees except for Ms. Dubois, its President and Chief Executive Officer (whose compensation had previously been significantly reduced), and Mr. Fractor, its Chief Financial Officer and Treasurer, who continues to serve in a part-time capacity with a reduced rate of compensation. The Board authorized Ms. Dubois and Mr. Fractor to attempt to settle the Company’s remaining obligations and to pursue the possibility of a sale of the Company. No        agreement has been reached for the sale of the Company and no assurance can be given that any such agreement will be reached upon acceptable terms, or at all. If a sale is consummated, there will not be a meaningful return to shareholders.

**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 | Description                                                                                                       |
|----------------|-------------------------------------------------------------------------------------------------------------------|
| 31.1           | 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. |
|------|-------------------------------------------------------------------------------------------------------------------|

 

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**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: September 21, 2009 | By: /s/ Francine Dubois                                                                                 Francine Dubois

President and Chief Executive Officer

(Principal Executive Officer)   |
|--------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                     |  

 

                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| Date: September 21, 2009 | By: /s/ David E. Fractor                                                                                 David E. Fractor

Chief Financial Officer and Treasurer

(Principal Financial Officer) |

 

 

 

 

 

 

 

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**INDEX TO EXHIBITS**

| **Exhibit Number** | **Description**                                                                                                   |
|--------------------|-------------------------------------------------------------------------------------------------------------------|
| 31.1               | 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. |

 

 

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