UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


WASHINGTON,
D.C.  20549







FORM
10-Q




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







Commission
File Number: 000-51263





iDcentrix,
Inc.


(Exact
Name of Registrant as Specified in Its Charter)




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





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





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







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




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




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


 ̈ T




At
July 31, 2008, there were 32,242,000 shares of common stock, par value $0.00001,
outstanding.














TABLE
OF CONTENTS
 
 Page




PART
      I.
              FINANCIAL
      INFORMATION
              2Item
      1.
              Financial
      Statements
              2Condensed
      Consolidated Balance Sheets as of July 31, 2008 (Unaudited) and
      January 31, 2008
              2Condensed
      Consolidated Statements of Operations for the Three and Six Months Ended
      July 31, 2008 and 2007 and for the Cumulative Period from January 3, 2007
      (Inception) to July 31, 2008 (Unaudited)
              3Condensed
      Consolidated Statements of Cash Flows for the Six Months Ended July 31,
      2008 and 2007 and for the Cumulative Period from January 3, 2007
      (Inception) to July 31, 2008 (Unaudited)
              4Condensed
      Consolidated Statement of Stockholders’ Equity for the Period January 3,
      2007 (Inception) to January 31, 2008 and the Six Months Ended July 31,
      2008 (Unaudited)
              5Notes
      to Condensed Consolidated Financial Statements for the Three and Six
      Months Ended July 31, 2008 (Unaudited)
              7Item
      2.
              Management’s
      Discussion and Analysis of Financial Condition and Results of
      Operations.
              17Item
      3.
              Quantitative
      and Qualitative Disclosures About Market Risk
              29Item
      4.
              Controls
      and Procedures
              29Item
      4T.
              Controls
      and Procedures
              31PART
      II
              OTHER
      INFORMATION
              32Item
      1.
              Legal
      Proceedings
              32Item
      1A.
              Risk
      Factors
              32Item
      2.
              Unregistered
      Sales of Equity Securities and Use of Proceeds
              32Item
      3.
              Defaults
      Upon Senior Securities
              32Item
      4.
              Submission
      of Matters to a Vote of Security Holders
              32Item
      5.
              Other
      Information
              32Item
      6.
              Exhibits
              33SIGNATURES
              34










-i


Forward-Looking
Statements





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




1


PART
I. FINANCIAL INFORMATION




Item
1.  Financial Statements




IDCENTRIX


(A
Development Stage Company)


CONDENSED
CONSOLIDATED BALANCE SHEETS




July
      31,
              2008
            
            
            January
      31,
              2008(Unaudited)ASSETSCurrent
      AssetsCash
      and cash equivalents
            
            $
            942,219
            
            
            $
            2,117,091Prepaid
      expenses
            
            
            46,550
            
            
            
            29,969Total
      current assets
            
            
            988,769
            
            
            
            2,147,060Property
      and equipment, net
            
            
            6,579
            
            
            
            8,862Other
      AssetsSecurity
      deposits
            
            
            4,730
            
            
            
            4,730Sublicensing
      agreements
            
            
            187,284
            
            
            
            203,572Deferred
      offering costs
            
            
            19,514
            
            
            
            -Total
      other assets
            
            
            211,528
            
            
            
            208,302Total
      Assets
            
            $
            1,206,876
            
            
            $
            2,364,224LIABILITIES
      AND STOCKHOLDERS’ EQUITYCurrent
      LiabilitiesAccounts
      payable
            
            $
            82,075
            
            
            $
            673,306Accrued
      expenses
            
            
            168,617
            
            
            
            85,440Total
      liabilities
            
            
            250,692
            
            
            
            758,746Commitments
      and contingenciesStockholders’
      equityCommon
      stock, $0.00001 par value, 100,000,000 sharesauthorized; 32,242,000
      shares issued and outstandingat July 31, 2008 and 31,742,000 shares
      issued and outstanding at January 31, 2008
            
            
            322
            
            
            
            317Additional
      paid-in capital
            
            
            3,791,492
            
            
            
            3,320,557Deficit
      accumulated during the development stage
            
            
            (2,835,630
            )
            
            
            (1,715,396
            )Total
      Stockholders’ Equity
            
            
            956,184
            
            
            
            1,605,478Total
      Liabilities and Stockholders’ Equity
            
            $
            1,206,876
            
            
            $
            2,364,224




See
notes to condensed consolidated financial statements.


2







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
      31,2008
            
            
            2007
            
            
            2008
            
            
            2007
            
            
            2008Revenue
            
            $
            -
            
            
            $
            -
            
            
            $
            -
            
            
            $
            -
            
            
            $
            -Operating
      ExpensesSelling,
      general andadministrative
            
            
            515,860
            
            
            
            235,224
            
            
            
            1,142,605
            
            
            
            417,960
            
            
            
            2,820,598Research
      anddevelopment
            
            
            -
            
            
            
            40,096
            
            
            
            -
            
            
            
            40,096
            
            
            
            40,096Loss
      from Operations
            
            
            (515,860
            )
            
            
            (275,320
            )
            
            
            (1,142,605
            )
            
            
            (458,056
            )
            
            
            (2,860,694
            )Interest
      Income
            
            
            8,734
            
            
            
            307
            
            
            
            22,371
            
            
            
            332
            
            
            
            25,064Net
      Loss
            
            $
            (507,126
            )
            
            $
            (275,013
            )
            
            $
            (1,120,234
            )
            
            $
            (457,724
            )
            
            $
            (2,835,630
            )Basic
      and diluted net loss pershare common
            
            $
            (0.02
            )
            
            $
            (0.03
            )
            
            $
            (0.04
            )
            
            $
            (0.09
            )Weighted
      average number of common sharesoutstanding
            
            
            31,788,000
            
            
            
            8,230,769
            
            
            
            31,770,497
            
            
            
            5,217,912




See
notes to condensed consolidated financial statements.







3







IDCENTRIX


(A
Development Stage Company)


CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)




Six
      Months Ended
              July
      31,
            
            
            Cumulative
              Period
      From
              Inception
              January
      3,
              2007
      to
              July
      31,2008
            
            
            2007
            
            
            2008Cash
      Flows from Operating ActivitiesNet
      loss
            
            $
            (1,120,234
            )
            
            $
            (457,724
            )
            
            $
            (2,835,630
            )Adjustment
      to reconcile net loss to net cash used inoperating
      activities:Depreciation
      and amortization
            
            
            18,571
            
            
            
            9,288
            
            
            
            46,749Fair
      value of vested stock options
            
            
            44,447
            
            
            
            22,826
            
            
            
            112,925Fair
      value of restricted stock issuances
            
            
            54,000
            
            
            
            -
            
            
            
            367,500Fair
      value of stock issued to employee
            
            
            -
            
            
            
            -
            
            
            
            50,000Changes
      in operating assets and liabilitiesPrepaid
      expenses and security deposits
            
            
            (16,581
            )
            
            
            (18,615
            )
            
            
            (49,751
            )Accounts
      payable
            
            
            (591,231
            )
            
            
            111,575
            
            
            
            25,214Accrued
      expenses
            
            
            83,177
            
            
            
            (25,199
            )
            
            
            167,088Net
      cash used in operating activities
            
            
            (1,527,851
            )
            
            
            (357,849
            )
            
            
            (2,115,905
            )Cash
      Flows from Investing ActivitiesNet
      cash received in reverse merger with Sterling Gold
            
            
            -
            
            
            
            -
            
            
            
            503,055Purchase
      of property and equipment
            
            
            -
            
            
            
            (7,021
            )
            
            
            (12,612
            )Net
      cash provided by investing activities
            
            
            -
            
            
            
            (7,021
            )
            
            
            490,443Cash
      Flows from Financing ActivitiesDeferred
      offering costs
            
            
            (19,514
            )
            
            
            -
            
            
            
            (19,514
            )Net
      proceeds from issuance of common stock
            
            
            372,493
            
            
            
            670,000
            
            
            
            2,587,195Net
      cash provided by financing activities
            
            
            352,979
            
            
            
            670,000
            
            
            
            2,567,681Net
      (decrease) increase in cash
            
            
            (1,174,872
            )
            
            
            305,130
            
            
            
            942,219Cash
      and Cash Equivalents, Beginning of Period
            
            
            2,117,091
            
            
            
            -
            
            
            
            -Cash
      and Cash Equivalents, End of Period
            
            $
            942,219
            
            
            $
            305,130
            
            
            $
            942,219Supplemental
      non cash investing and financing activities:Issuance
      of common stock for sublicense agreement
            
            $
            -
            
            
            $
            228,000
            
            
            $
            228,000








See
notes to condensed consolidated financial statements.





4





IDCENTRIX


(A
Development Stage Company)


CONDENSED
CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY


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


THE
SIX MONTHS ENDED JULY 31, 2008 (unaudited)




Common
      Stock
              
              
              Additional
                Paid-in
              
              
              AccumulatedShares
              
              
              Amount
              
              
              Capital
              
              
              Deficit
              
              
              TotalBalance,
      January 3, 2007
              
              
              -
              
              
              $
              -
              
              
              $
              -
              
              
              $
              -
              
              
              $
              -Net
      loss
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              (40,000
              )
              
              
              (40,000
              )Balance,
      January 31, 2007
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              (40,000
              )
              
              
              (40,000
              )Private
      placements of
                common
      stock:Shares
      issued at $0.10 per share
              
              
              3,400,000
              
              
              
              34
              
              
              
              310,310
              
              
              
              
              
              
              
              310,344Shares
      issued at $0.30 per share
              
              
              1,100,000
              
              
              
              11
              
              
              
              301,186
              
              
              
              
              
              
              
              301,197Shares
      issued at $0.75 per share
              
              
              2,342,000
              
              
              
              23
              
              
              
              1,603,138
              
              
              
              
              
              
              
              1,603,161Fair
      value of vested stock optionsissued
      to employees
              
              
              -
              
              
              
              -
              
              
              
              68,478
              
              
              
              -
              
              
              
              68,478Fair
      value of vesting of restricted stockissuances
      to directors ($0.75|per
      share)
              
              
              920,000
              
              
              
              9
              
              
              
              313,491
              
              
              
              -
              
              
              
              313,500Fair
      value of stock issued to employee($0.10
      per share)
              
              
              500,000
              
              
              
              5
              
              
              
              49,995
              
              
              
              -
              
              
              
              50,000Fair
      value of common stock issued inexchange
      for sublicense (A)
              
              
              10,000,000
              
              
              
              100
              
              
              
              227,900
              
              
              
              -
              
              
              
              228,000Shares
      issued pursuant to shareexchange
      with Sterling GoldCorp.($0.04
      per share)
              
              
              13,480,000
              
              
              
              135
              
              
              
              446,059
              
              
              
              -
              
              
              
              446,194Net
      loss
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              (1,675,396
              )
              
              
              (1,675,396
              )Balance,
      January 31, 2008
              
              
              31,742,000
              
              
              
              317
              
              
              
              3,320,557
              
              
              
              (1,715,396
              )
              
              
              1,605,478Private
      placement of common stockat
      $0.75 per share
              
              
              500,000
              
              
              
              5
              
              
              
              372,488
              
              
              
              -
              
              
              
              372,493Fair
      value of vested stock optionsissued
      to employees
              
              
              -
              
              
              
              -
              
              
              
              44,447
              
              
              
              -
              
              
              
              44,447


5








Common
      Stock
                
                
                Additional
                  Paid-in
                
                
                AccumulatedShares
                
                
                Amount
                
                
                Capital
                
                
                Deficit
                
                
                TotalFair
      value of vesting of restricted stockissuances
      to directors ($0.75per
      share)
                
                
                -
                
                
                
                -
                
                
                
                54,000
                
                
                
                -
                
                
                
                54,000Net
      loss
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                (1,120,234
                )
                
                
                (1,120,234
                )Balance,
      July 31, 2008 (unaudited)
                
                
                32,242,000
                
                
                $
                322
                
                
                $
                3,791,492
                
                
                $
                (2,835,630
                )
                
                $
                956,184




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





See
notes to condensed consolidated financial statements.


6


IDCENTRIX




(A
Development Stage Company)




Notes
to Condensed Consolidated Financial Statements (unaudited)


For
the Three and Six Months Ended July 31, 2008







NOTE
      1 -
            DESCRIPTION
      OF BUSINESS





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




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




NOTE
      2 -
            SIGNIFICANT
      ACCOUNTING POLICIES






Principles of
Consolidation


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






Basis of Presentation and
Going Concern


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




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




7






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


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




The
accompanying condensed consolidated financial statements have been prepared
assuming that the Company will continue as a going concern. This basis of
accounting contemplates the recovery of the Company’s assets and the
satisfaction of its liabilities. Since inception, the Company has been engaged
in organizational activities, including research and development and obtaining
financing. Through July 31, 2008, the Company has incurred accumulated losses of
approximately $2,836,000. Successful completion of the Company’s development
programs and its transition to attaining profitable operations is dependent upon
obtaining financing adequate to complete its product development and the
successful market introduction of its product and services.






Use of
Estimates


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




Concentration of Credit
Risk




Financial
instruments that potentially subject the Company to concentrations of credit
risk consist primarily of cash and cash equivalents.  The Company
places its cash and cash equivalents with high credit quality financial
institutions.  From time to time such cash balances may be in excess
of the FDIC insurance limit of $100,000.




Deferred Stock Offering
Costs




The
Company capitalizes costs incurred related to a private placement and future
issuance of common stock until such time as the stock is issued, or the stock
offering is abandoned by the Company (usually within six months of when the cost
was incurred.)  These costs include attorney’s fees related to the
private placement and future issuance of common stock.  Deferred
offering costs of $19,514 are included in the condensed consolidated balance
sheet as of July 31, 2008 in connection with the Company’s private placement
anticipated to commence in the third quarter of calendar 2008.




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




8










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


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






Long-Lived
Assets


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




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






Loss per common
share


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




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






Fair Values of Financial
Instruments


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




Effective
January 1, 2008, the Company adopted Statement of Financial Accounting Standards
(SFAS) No. 157, “Fair Value Measurements.” This Statement defines fair
value for certain financial and nonfinancial assets and liabilities that are
recorded at fair value, establishes a framework for measuring fair value, and
expands disclosures about fair value measurements. This guidance
applies




9






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


to
other accounting pronouncements that require or permit fair value measurements.
On February 12, 2008, the FASB finalized FASB Staff Position (FSP) No.
157-2, Effective Date of FASB Statement No. 157. This Staff Position delays
the effective date of SFAS No. 157 for nonfinancial assets and liabilities
to fiscal years beginning after November 15, 2008 and interim periods within
those fiscal years, except for those items that are recognized or disclosed at
fair value in the financial statements on a recurring basis (at least annually).
The adoption of SFAS No. 157 had no effect on the Company’s condensed
consolidated financial position or results of operations.






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, 2008,
the Company estimates that it will not have to pay any estimated penalties in
connection with its outstanding registration rights obligations. (see Note
4)






Recent Accounting
Pronouncements


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




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




In
March 2008, the FASB issued SFAS No. 161,”Disclosures about Derivative
Instruments and Hedging Activities—an amendment of FASB Statement No. 133”
(SFAS 161). This Statement




10


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




requires
enhanced disclosures about an entity’s derivative and hedging activities,
including (a) how and why an entity uses derivative instruments,
(b) how derivative instruments and related hedged items are accounted for
under SFAS No. 133,”Accounting for Derivative Instruments and Hedging
Activities” (SFAS 133), and its related interpretations, and (c) how
derivative instruments and related hedged items affect an entity’s financial
position, financial performance, and cash flows. SFAS 161 is effective for
financial statements issued for fiscal years and interim periods beginning after
November 15, 2008.




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




NOTE
      3 -
            PROPERTY
      AND EQUIPMENT




Property
and equipment consists of the following at:




July
      31, 2008
            
            
            January
      31, 2008Trade
      show equipment
            
            $
            4,775
            
            
            $
            4,775Computer
      equipment
            
            
            5,397
            
            
            
            5,397Leasehold
      improvement
            
            
            2,440
            
            
            
            2,44012,612
            
            
            
            12,612Accumulated
      depreciation and amortization
            
            
            (6,033
            )
            
            
            (3,750
            )Property
      and equipment, net
            
            $
            6,579
            
            
            $
            8,862




Depreciation
and amortization expense for the three and six months ended July 31, 2008 was
$1,153 and $2,283, respectively.  For the three and six months ended
July 31, 2007 depreciation and amortization expense was $687 and $1,145,
respectively.   For the period January 3, 2007 (inception) to
July 31, 2008 depreciation and amortization expense was $6,033.




NOTE
      4 -
            SUBLICENSE
      AGREEMENTS




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




On
January 31, 2008, the Company entered into an additional sublicensing agreement
(“Worldwide Sublicensing Agreement”) with Fortress. Under the terms of this
additional sublicensing agreement, the Company received a license for the same
patents and security card intellectual property as described in the Canadian
Sublicense Agreement, on a royalty free basis, in exchange for 6,500,000 shares
of the Company’s common stock. This Worldwide Sublicensing Agreement provides
exclusive access to the intellectual property in the United States and Mexico
and non-exclusive access to the intellectual property in the rest of the world
(excluding Switzerland and Africa). The term of this




11






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


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.




The
Company is required to expend a minimum amount of research and development
budgeted at $2 million to improve the licensed technology during the initial
five (5) years under the two sublicense agreements with a minimum expenditure of
$800,000 by January 31, 2010.




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




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.  Subsequently, the Securities and Exchange Commission has
provided a first and a second round of comments which are being addressed by the
Company.  As of July 31, 2008, the Company believes it will comply
with all registration requirements enumerated above.




Sublicense
agreements consist of the following at:




July
      31, 2008
            
            
            January
      31, 2008Sublicense
      agreement
            
            $
            228,000
            
            
            $
            228,000Accumulated
      amortization
            
            
            (40,716
            )
            
            
            (24,428
            )Sublicense
      agreement, net
            
            $
            187,284
            
            
            $
            203,572




The
Company is amortizing the value of the Canadian Sublicense Agreement over a
7-year period, management’s estimate of the useful life of the agreement.
Amortization expense for the three and six months ended July 31, 2008 was $8,145
and $16,288, respectively.  For the three and six months ended July
31, 2008 amortization expense was $8,143 for both
periods.  Amortization expense for the period January 3, 2007
(“inception”) to July 31, 2008 was $40,716.   Amortization
expense for the next five years is expected to be $32,571 per year.






12
   IDCENTRIX
 (A
Development Stage Company)
  Notes
to Condensed Consolidated Financial Statements (unaudited)
 For
the Three and Six Months Ended July 31, 2008






NOTE
      5 -
            COMMON
      STOCK





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




During
the six months ended July 31, 2008, the Company recognized $54,000 of expense
related to the vesting of shares of common stock covered by restricted stock
awards granted to members of the Company’s board of directors under the Equity
Participation Plan described in Note 6, below.






NOTE
      6 -
            OPTIONS
      AND WARRANTS




Stock
Options




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




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




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




For
the three and six months ended July 31, 2008, the Company recognized $31,116 and
$44,447, respectively, of compensation expense related to the fair value of the
vested stock options.  For the three and six months ended July 31,
2007, the Company recognized $22,826 for both periods of compensation expense
related to the fair value of the vested stock options.  For the period
January 3, 2007 (“inception”) to July 31, 2008, the Company recognized $112,925
of compensation expense related to the fair value of the vested stock
options.




13




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




Activity
under the Plan for the six months ended July 31, 2008 is as
follows:




Options
              Outstanding
            
            
            Intrinsic
              Value
            
            
            Weighted
              Average
              Exercise
              PriceOptions
      outstanding at January 31, 2008
            
            
            1,000,000
            
            
            
            
            
            $
            0.30Granted
            
            
            100,000
            
            
            
            
            
            $
            1.40Exercised
            
            
            -
            
            
            
            
            
            $
            -Forfeited
            
            
            -
            
            
            
            
            
            $
            -Options
      outstanding at July 31, 2008
            
            
            1,100,000
            
            
            $
            250,000
            
            
            $
            0.41Options
      exercisable at July 31, 2008
            
            
            500,000
            
            
            $
            125,000
            
            
            $
            0.30




The
aggregate intrinsic value was calculated, as of July 31, 2008, as the difference
between the market price and the exercise price of the Company’s stock for the
1,000,000 options outstanding and 500,000 options exercisable which were
in-the-money.




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




Non
      Vested Options
            
            Options
            
            
            Weighted
              Average
      Grant
              Date
      Fair ValueNon
      vested options at January 31, 2008
            
            
            750,000
            
            
            $
            0.164Granted
            
            
            110,000
            
            
            $
            0.812Vested
            
            
            250,000
            
            
            $
            0.164Forfeited
            
            
            -
            
            
            $
            -Non
      vested options at July 31, 2008
            
            
            610,000
            
            
            $
            0.281




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




Options
      Outstanding
            
            
            Options
      ExercisableNumber
            
            
            Weighted
            
            
            
            
            
            Number
            
            
            
            
            
            WeightedOutstanding
            
            
            Average
            
            
            Weighted
            
            
            Exercisable
            
            
            Weighted
            
            
            AverageRange
      of
            
            as
      of
            
            
            Remaining
            
            
            Average
            
            
            as
      of
            
            
            Average
            
            
            RemainingExercise
            
            July
      31,
            
            
            Contractual
            
            
            Exercise
            
            
            July
      31,
            
            
            Exercise
            
            
            ContractualPrices
            
            2008
            
            
            Life
            
            
            Price
            
            
            2008
            
            
            Price
            
            
            Life$            0.30
            
            
            1,000,000
            
            
            
            5.75
            
            
            $
            0.30
            
            
            
            500,000
            
            
            $
            0.30
            
            
            
            5.75$            1.40
            
            
            110,000
            
            
            
            9.75
            
            
            $
            1.40
            
            
            
            -
            
            
            $
            -
            
            
            
            -$  0.30-$1.40
            
            
            1,110,000
            
            
            
            6.15
            
            
            $
            0.41
            
            
            
            500,000
            
            
            $
            0.30
            
            
            
            5.75




As
of July 31, 2008, the Company had not yet recognized compensation cost totaling
approximately $140,062 on non-vested awards. The weighted average period over
which this will be recognized is 1 year.




14






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


Stock
Warrants




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




NOTE
      7 -
            INCOME
      TAXES





At
July 31, 2008, the Company had available Federal and state net operating loss
carryforwards to reduce future taxable income. The amounts available were
approximately $3,400,000 for Federal purposes and $3,100,000 for state purposes.
The Federal carryforward expires in 2023 and the state carryforward expires in
2012. Given the Company’s history of net operating losses, management has
determined that it is more likely than not the Company will not be able to
realize the tax benefit of the carryforwards. Accordingly, the Company has not
recognized a deferred tax asset for this benefit.




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




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




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




July
      31, 2008
            
            
            January
      31, 2008Deferred
      tax asset:Net
      operating loss carryforward
            
            $
            1,445,000
            
            
            $
            941,000Valuation
      allowance
            
            
            (1,445,000
            )
            
            
            (941,000
            )Net
      deferred income tax asset
            
            $
            -
            
            
            $
            -







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






Year
      Ended
              January
      31,
              2008Tax
      expense at the U.S. statutory income
      tax
            
            
            (34.00
            )%Increase
      in the valuation allowance
            
            
            34.00
            %Effective
      tax rate
            
            
            —




15






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


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




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




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









16


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




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




Plan
of Operations




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




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




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




As
of July 31, 2008, we have approximately $942,000 of cash, which may not be
enough money to operate through the remainder of fiscal 2009. We will need to
raise additional capital in order to execute our business plan. We will attempt
to raise additional money through private placements and public
offerings.  We can give no assurance that future financing will be
available to us on acceptable terms or at all.  If financing is not
available, we may not be able to continue to develop and expand our operations
as currently planned and we may be required to scale back our plans in order to
conserve cash, to terminate staff or to cease operations until we are able to
raise additional financing.




Pursuant
to our sublicensing agreement with Fortress Paper, we are required to conduct $2
million of research and development over the next five years, of which, $800,000
is allocated to be spent during the two year period beginning on January 31,
2008. We do not anticipate conducting any research and development during the
remainder of fiscal 2009.




Over
the next year we anticipate purchasing $55,000 of equipment to be primarily used
for demonstration purposes to assist our sales and marketing efforts. Most
likely the acquisition of this equipment will be with cash as the Company does
not anticipate being able to establish a credit facility.




We
anticipate hiring a limited number of full time employees during the remainder
of this year to facilitate our sales and marketing efforts and to provide
technical support. We may modify these plans and engage part time employees or
independent contractors depending on our cash availability.




If
we are successful in raising additional equity, we might explore acquiring a
suitable acquisition candidate to gain access to an existing customer base,
technology and management.  To date, no acquisition candidates have
been identified.




17


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




Results
of Operations





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




For
the three months ended July 31, 2008, we incurred a net loss of approximately
$507,000 compared to a net loss of approximately $275,000 during the three
months ended July 31, 2007.  During the three months ended July 31,
2007, the Company’s activities were primarily limited to basic administrative
activities and it engaged only one employee.  The increase in expenses
during the three months ended July 31, 2008 reflects the hiring of sales and
marketing personnel, attendance at trade shows, board of director compensation,
and fees paid to outside consultants and professionals.




Six
Months Ended July 31, 2008 Compared to the Six Months Ended July 31,
2007




For
the six months ended July 31, 2008, we incurred a net loss of approximately
$1,120,000 compared to $458,000 during the same period in the prior
year.  During the six months ended July 31, 2007, our activities were
limited to basic administrative functions.  The Company had only one
employee and had not begun to develop its sales and marketing
activities.  The increase in expenses for the six months ended July
31, 2008 reflects the hiring of sales and marketing personnel, attendance at
trade shows, board of director compensation, and fees paid to outside
consultants and professionals.




Liquidity
and Capital Resources





As
of July 31, 2008, we have not generated any revenue and we have cash on-hand of
approximately $942,000.  At the present time, our expenses are running
at the rate of approximately $200,000 per month.  Considering our
current burn rate, we are unable to provide assurance that we will have
sufficient capital resources available through the end of our fiscal year
without raising additional capital.  In the event that we do not have
sufficient capital to finance our operations through the end of the fiscal year,
we may be required to scale back our plans in order to conserve cash, to
terminate staff or to cease operations until we are able to raise additional
financing.




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




The
Company is obligated to spend $2 million in research and development in
connection with the Fortress sublicense agreement over the next five years, of
which, $800,000 is allocated to be spent during the two year period beginning on
January 31, 2008. The Company will seek to raise money through private
placements and public offerings to fund this research and for general
needs.




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




Going
Concern




We
incurred net losses of approximately $507,000 and $1,120,000, respectively,
during the three month and six month periods ended July 31, 2008, and a
cumulative net loss of approximately $2,836,000 since
inception.  Accordingly, there is substantial doubt about our ability
to continue as a going concern. Successful completion of our development
programs and our transition to attaining profitable operations is dependent upon
obtaining financing adequate to complete our product development and the
successful market introduction of our product and services and this loss may
impact our ability to raise additional funds to adequately execute our business
plan.  Although we currently have products that are commercially
available for sale, we will require additional funds to finance working capital
needs.  Additional funds will also be needed to further develop the
product.  Although the exact amount of additional funding that will be
required is not presently known, management has estimated that it will need to
raise a minimum of $4 million over the next twelve to twenty-four months in
order to continue our development.  At the present time, our expenses
are running at the rate of approximately $200,000 per month.




18


Critical
Accounting Policies




Use
of Estimates




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




Equity
Based Compensation




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




Long-Lived
Assets





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




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




Recent
Accounting Pronouncements





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




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




19


subsidiaries
or that deconsolidate a subsidiary. SFAS No. 160 is effective for fiscal years,
and interim periods within those fiscal years, beginning on or after December
15, 2008. Earlier adoption is prohibited. SFAS No. 160 must be applied
prospectively as of the beginning of the fiscal year in which it is initially
applied, except for the presentation and disclosure requirements. The
presentation and disclosure requirements are applied retrospectively for all
periods presented.




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




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




Inflation





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




Risk
Factors




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




We are a recently
organized company with limited operating
history.




iDcentrix
was formed in January of 2004 and our subsidiary was formed in January of 2007.
We have no operating history upon which an evaluation of our future success or
failure can be made. We have limited assets, no customer contracts, and our
prospects of future profitable operations may be delayed or never realized. In
addition, we have recently abandoned our prior mineral exploration business and
determined to pursue the business plan of our newly acquired subsidiary, IDCX,
to develop and market high-end security identification cards and related
equipment and consumables. We may encounter difficulties that prevent us from
operating the business as intended or that will prevent us from doing so in a
profitable manner. Our business must be evaluated in view of long lead times in
the adoption and implementation of business plans, possible delays, additional
expenses, and other unforeseen complications that are often encountered by new
business ventures.




Going
Concern.




We
incurred net losses of approximately $507,000 and $1,120,000, respectively,
during the three month and six month periods ended July 31, 2008, and a
cumulative net loss of approximately $2,836,000 since
inception.  Accordingly, there is substantial doubt about our ability
to continue as a going concern. Successful completion of our development
programs and our transition to attaining profitable operations is dependent upon
obtaining financing adequate to complete our product development and the
successful market introduction of our product and services and this loss may
impact our ability to raise additional funds to adequately execute our business
plan.  Although we currently have products that are commercially
available for sale, we will require additional funds to finance working capital
needs.  Additional funds will also be needed to further develop the
product.  Although the exact amount of additional funding that will be
required is not presently known, management has estimated that it




20


will
need to raise a minimum of $4 million over the next twelve to twenty-four months
in order to continue our development.  At the present time, our
expenses are running at the rate of approximately $200,000 per
month.




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




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






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






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






During
the second quarter of fiscal 2009, we modified certain procedures related to our
disbursement program including requirements that all checks require two
signatures and that bank reconciliations be reviewed by both our CEO and CFO. We
also began a program to back-up our computer systems. Following the end of the
second quarter, we implemented a new payment service. We will continue to
develop internal control procedures relating to purchasing, accounts payable and
disbursements during the third quarter of fiscal 2009.






Because
the remediation process is still in its initial stages, and due to our limited
personnel resources, we can give no assurances when it will be
completed.






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






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




21




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




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




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




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




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




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




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




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




The
markets in which we compete for business are intensely competitive and rapidly
evolving. We expect competition to continue from both existing competitors and
new market entrants. We face competition from other companies and from
alternative technologies. The potential for an influx of federal funds into the
market has drawn competition and is likely to continue to do so. As we work to
expand the applications for the LQard Technology, we expect to experience
increased competition from products and services that are substitutes for its
applications. Technologies that may directly or indirectly compete with
particular applications of the LQard Technology include, but are not limited
to:





•
            Encryption—securing
      data during distribution using a secret code so it cannot be accessed
      except by authorized users;•
            Containers—inserting
      a media object in an encrypted wrapper, which prevents the media object
      from being duplicated and is used for content distribution and transaction
      management;•
            DataGlyphs®—a
      slightly visible modification of the characteristics of an image or
      document that is machine-readable;•
            Scrambled
      Indicia®—an optical refraction-based data-hiding technique that is
      inserted into an image and can be read with a lens;




22








•
            Traditional
      anti-counterfeiting technologies—a number of solutions used currently by
      many governments (and that compete for budgetary outlays) designed to
      deter counterfeiting, including optically sensitive ink, magnetic threads
      and other materials used in the printing of currencies;•
            Radio
      frequency tags—embedding a chip that emits a signal when in close
      proximity with a receiver, which is being used in photo identification
      credentials, labels and tags;•
            Digital
      fingerprints and signatures—a metric, or metrics, computed solely from a
      source image or audio or video track, that can be used to uniquely
      identify an image or track, or authenticate the image or
      track;•
            Smart
      cards—badges and cards including a semiconductor memory and/or processor
      used for authentication and related purposes; and•
            Bar
      codes—a data-carrying code, typically visible in nature (but invisible if
      printed in ultraviolet- or infrared-responsive
  inks).





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




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




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




Products
and systems as complex as those we offer or develop may contain undetected
defects or errors. Furthermore, we may provide complex implementation,
integration, customization, consulting and other technical services in
connection with the implementation and ongoing maintenance of our products.
Despite testing, defects or errors in our products and services may occur, which
could result in delays in the development and implementation of products and
systems, inability to meet customer requirements or expectations in a timely
manner, loss of revenue or market share, increased implementation and support
costs, failure to achieve market acceptance, diversion of development resources,
injury to our reputation, increased insurance costs, increased service and
warranty costs and warranty or breach of contract claims. Although we will
attempt to reduce the risk of losses resulting from warranty or breach of
contract claims through warranty disclaimers and liability limitation clauses in
our sales agreements, these contractual provisions are sometimes not included
and may not be enforceable in every instance. If a court refuses to enforce the
liability-limiting provisions of our contracts for any reason, or if liabilities
arise that are not contractually limited or adequately covered by insurance, the
expense associated with defending such actions or paying the resultant claims
could be significant.





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




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




23


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




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




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




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





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




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





Pursuant
to the Second Sub-License Agreement, we will use commercially reasonable efforts
to actively coordinate research and development activities and to support
research and product enhancement with a budget provided by us of $2,000,000 for
a five-year term. We will rely upon Landqart, the owner of the LQard Technology,
to aid in the research and development of new and expanded LQard technologies.
We will not own the rights to any further developments of the LQard Technology
and will retain only our current sub-licensing rights over any such
developments. We exercise no control over Landqart. If we are unable to
successfully co-operate with Landqart in the development and expansion of the
LQard Technology, or if Landqart is unable to further develop the LQard
Technology, we may be unable to compete within our market and our revenues could
be adversely affected.




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




We
believe that the identification card market will demonstrate increased demand in
future periods. Our current staffing levels could affect our ability to respond
to increased demand for our services. As of July 31, 2008, we had only 3
full-time employees and 1 part-time employee.  In order to meet any
increased demand and take advantage of new business opportunities in the future,
we will need to increase our workforce through additional employees or contract
labor, which would increase our costs. If we experience such an increase in
costs, we may not succeed in achieving or sustaining profitability.




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




Our
success depends to a significant extent on the performance and continued service
of our senior management, including our Chief Executive Officer, Francine
Dubois, our Chief Financial Officer, David Fractor, and our Vice




24


President,
Sales and Marketing, Tate Preston. The loss of the services of any of our senior
management could delay projects or undermine customer
relationships.




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




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




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





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




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




•
            delays
      in project implementation;•
            failure
      to achieve add-on sales to existing customers;•
            governmental
      regulation of credentials and issuance policies;•
            private
      sector usage trends for drivers licenses and other
      credentials;•
            level
      of commodity vs. proprietary components applicable to customer system
      specifications;•
            whether
      contracts have been extended or renewed and the amount of capital
      expenditures associated with such extensions or renewals;•
            price
      competition in competitive bids, contract renewals and contract
      extensions;•
            variations
      in costs of materials and manufacturing;•
            varying
      levels of efficiency of workforce in delivering, implementing, and
      servicing contracts;•
            seasonality
      of issuance volumes;•
            sales
      mix related to card issuance revenues compared to product
      sales;•
            sales
      mix related to domestic sales compared to international
      sales;•
            sales
      mix related to adoption of new products compared to sales of current
      products;•
            strategic
      decisions on new business;




25




•
            depreciation
      and amortization of capitalized project costs related to new or upgraded
      programs; and•
            variability
      in the extent to which we are able to allocate personnel expenses to
      capital projects and thereby amortize such costs over the life of the
      relevant contract, rather than expensing such costs in the quarter in
      which they are incurred.





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




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




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




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





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




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




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




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




As
part of our confidentiality procedures, we generally enter into non-disclosure
agreements with our employees, directors, consultants and corporate partners,
and attempt to control access to and distribution of our technologies,
solutions, documentation and other proprietary information. Despite these
procedures, third parties could copy or




26


otherwise
obtain and make unauthorized use of our technologies, solutions or other
proprietary information or independently develop similar technologies, solutions
or information. The steps that we have taken to prevent misappropriation of our
solutions, technologies or other proprietary information may not prevent their
misappropriation, particularly outside the United States where laws or law
enforcement practices may not protect our proprietary rights as fully as in the
United States.




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




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





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




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




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




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




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




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




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





27


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




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




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




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




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




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




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




•
            Currency
      devaluations and fluctuations in exchange rates, including impacts of
      transactions in various currencies;•
            Imposition
      of or increase in customs duties and other tariffs;•
            Imposition
      of or increase in currency exchange controls, including imposition of or
      increases in limitations on conversion of various currencies into dollars,
      remittances of dividends or other payments;•
            Imposition
      of or increase in revenue, income or earnings taxes and withholding or
      other taxes on remittances or other payments by local
      subsidiaries;•
            Imposition
      of or increases in investment or trade restrictions by non-US governments,
      or trade sanctions adopted by the US;Inability
      to definitively determine or satisfy legal requirements, inability to
      effectively enforce contract or legal rights and inability to obtain
      complete financial information under local legal, judicial, regulatory and
      other systems; andNationalization
      or expropriation of assets, and other risks which could result from a
      change in government or government policy, or from other political, social
      or economic instability.




We
cannot assure you that we would be able to mitigate such risks if we expand
internationally in the future.


28


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




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




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




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




Item
3.  Quantitative and Qualitative Disclosures About Market
Risk




Not
applicable.




Item
4.  Controls and Procedures




Management’s
Report on Disclosure Controls and Procedures




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




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




Management’s
Report on Internal Control over Financial Reporting




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




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




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




29


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




Lack of documented internal control
system.




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




Lack
of segregation of duties.




We
only have our CEO and CFO 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.  We will
continue to develop additional internal control procedures in these areas in the
third quarter of fiscal 2009.  Due to our limited number of personnel,
until such time as we have additional employees we may require additional
oversight from our board of directors in addressing certain weaknesses related
to a proper segregation of duties.




Inadequate
disaster recovery program.




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




Lack
of controls over purchasing, accounts payable and disbursements.




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




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.  After the end of the
second fiscal quarter of 2009, we implemented a new payroll service and we plan
on updating our controls over payroll processing during the third fiscal quarter
of 2009.




Our
information technology system lacks appropriate application and general
controls.




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




30


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




Changes
in Internal Control over Financial Reporting




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




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




During
the second fiscal quarter of 2009, we began to change some of our internal
control procedures and to document these changes.  We also eliminated
some of the deficiencies relating to our purchasing, disbursement and bank
reconciliation functions, including adding a requirement that all checks require
two signatures and that bank reconciliations be reviewed by both our CEO and our
CFO.  Following the end of the second quarter we implemented a new
payroll service.  We plan on establishing policies and procedures
relating to purchasing, accounts payable and disbursements during the third
quarter of fiscal 2009.    To the extent reasonably
possible, we will continue to seek the advice of outside consultants and
internal resources to implement additional controls.




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




Item
4T. Controls and Procedures




Not
applicable.









31


PART
II


OTHER
INFORMATION








Item
1.  Legal Proceedings




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




Item
1A.  Risk Factors




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




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




None.




Item
3.  Defaults Upon Senior Securities




None.




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




None.




Item
5.  Other Information




None.









32


Item
6.  Exhibits




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







33


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
      11, 2008
            By:  /s/ Francine
      DuboisFrancine
      Dubois
              President
      and Chief Executive Officer
              (Principal
      Executive Officer)Date:  September
      11, 2008
            By:  /s/ David E.
      FractorDavid
      E. Fractor
              Chief
      Financial Officer and Treasurer
              (Principal
      Financial Officer)





34


INDEX
TO EXHIBITS








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






35