UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
S QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2008
£ TRANSITION REPORT UNDER SECTION 13 or 15(d) OF THE EXCHANGE ACT
For the transition period from ___________ to _____________
Commission file number 333-147839
IP TECHNOLOGY SERVICES, INC.
(Exact name of small business issuer as specified in its charter)
Delaware |
| 26-0378308 |
(State or other jurisdiction of incorporation or organization) |
| (IRS Employer Identification No.) |
1576 East 21st Street
New York, New York 11210
(Address of principal executive offices)
(212) 363-7500 |
(Issuer's telephone number) |
|
(Former name, former address and former fiscal year, if changed since last report) |
Check whether the registrant (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 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 £ No S
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company filer. See definition of accelerated filer and large accelerated filer in Rule 12b-2 of the Exchange Act (Check one):
Large Accelerated Filer £ Accelerated Filer £ Non-Accelerated Filer £ Smaller Reporting Company S
State the number of shares outstanding of each of the issuers classes of common equity, as of the latest practicable date: 2,500,000 shares of Common Stock, as of July 2, 2008.
Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Securities Exchange Act of 1934) (check one): Yes £ No S
Transitional Small Business Disclosure Format (check one): Yes £ No S
IP TECHNOLOGY SERVICES, INC.
2
IP TECHNOLOGY SERVICES, INC.
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ITEM 1 Financial Information |
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Balance Sheets at June 30, 2008 (Unaudited) and December 31, 2007 | 4 |
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Statements of Operations for the Three Months Ended June 30, 2008 and the Period from June 6, 2007 (inception) through June 30, 2008 (Unaudited) | 5 |
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Statements of Operations for the nine Months Ended June 30, 2008 and the Period from June 6, 2007 (inception) through June 30, 2008 (Unaudited) | 6 |
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Statements of Cash Flows for the Nine Months Ended June 30, 2008 and the Period from June 6, 2007 (inception) through June 30, 2008 (Unaudited) | 7 |
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Notes to the Unaudited Financial Statements | 8 |
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3
ITEM 1 Financial Information
IP TECHNOLOGY SERVICES, INC.
Balance Sheets
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| June 30, 2008 |
| September 30, 2007 |
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| (Unaudited) |
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ASSETS |
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CURRENT ASSETS: |
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Cash | $ | 138,608 | $ | 18,869 |
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TOTAL ASSETS | $ | 138,608 | $ | 18,869 |
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LIABILITIES AND STOCKHOLDERS DEFICIT |
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CURRENT LIABILITIES: |
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Accrued expenses | $ | 13,300 | $ | 22,000 |
Income taxes payable |
| 30,705 |
| - |
Current Liabilities |
| 44,005 |
| 22,000 |
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STOCKHOLDERS EQUITY: |
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Common stock at $0.0001 par value; 99,000,000 shares authorized; 2,500,000 shares issued and outstanding as of March 31, 2008 and September 30, 2007 respectively |
| 250 |
| 250 |
Additional paid-in capital |
| 34,750 |
| 34,750 |
Retained earnings (deficit) |
| 59,603 |
| (38,131) |
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Stockholders Equity (Deficit) |
| 94,603 |
| (3,131) |
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TOTAL LIABILITIES AND STOCKHOLDERS EQUITY (DEFICIT) | $ | 138,608 | $ | 18,869 |
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See accompanying notes to the financial statements. |
4
IP TECHNOLOGY SERVICES, INC.
Statements of Operations
(Unaudited)
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| Three Months Ended June 30, 2008 |
| Period From June 6, 2007 through June 30, 2007 |
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Revenue | $ | 160,000 | $ | - |
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Operating expenses |
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Advertising |
| 1,728 |
| - |
Professional fees |
| 6,500 |
| - |
General and administrative expenses |
| 282 |
| 514 |
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Total operating expenses |
| 8,510 |
| 514 |
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Net income before income taxes |
| 151,490 |
| (514) |
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Income tax provision |
| 30,705 |
| - |
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Net income (loss) | $ | 120,785 | $ | (514) |
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Net income (loss) per common share basic and diluted | $ | 0.05 | $ | (0.00) |
Weighted average number of common shares outstanding basic and diluted |
| 2,500,000 |
| 2,299,000 |
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See accompanying notes to the financial statements.
5
IP TECHNOLOGY SERVICES, INC.
Statements of Operations
(Unaudited)
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| Nine Months Ended June 30, 2008 |
| Period From June 6, 2007 through June 30, 2007 |
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Revenue | $ | 160,000 | $ | - |
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Operating expenses |
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Advertising |
| 5,889 |
| - |
Professional fees |
| 21,999 |
| - |
General and administrative expenses |
| 3,673 |
| 514 |
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Total operating expenses |
| 31,561 |
| 514 |
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Net income (loss) before income taxes |
| 128,439 |
| (514) |
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Income tax provision |
| 30,705 |
| - |
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Net income (loss) | $ | 97,734 | $ | (514) |
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Net income (loss) per common share basic and diluted | $ | 0.04 | $ | (0.00) |
Weighted average number of common shares outstanding basic and diluted |
| 2,500,000 |
| 2,299,000 |
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See accompanying notes to the financial statements.
6
IP TECHNOLOGY SERVICES, INC.
Statements of Cash Flows
(Unaudited)
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| Nine Months Ended June 30, 2008 |
| Period From June 6, 2007 through June 30, 2007 |
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CASH FLOW FROM OPERATING ACTIVITIES: |
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Net income (loss) | $ | 97,734 | $ | (514) |
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: |
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Decrease in accrued expenses |
| (8,700 |
| - |
Increase in income taxes payable |
| 30,705 |
| - |
Net Cash Provided by (Used in) Operating Activities |
| 119,739 |
| (514) |
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CASH FLOWS FROM FINANCING ACTIVITIES: |
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Sale of common stock |
| - |
| 1,200 |
Loan from officer |
| 12,500 |
| - |
Repayment of loan from officer |
| (12,500 |
| - |
Net Cash Provided by Financing Activities |
| - |
| 1,200 |
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NET INCREASE IN CASH |
| 119,739 |
| 686 |
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CASH AT BEGINNING OF PERIOD |
| 18,869 |
| - |
CASH AT END OF PERIOD | $ | 138,608 | $ | 686 |
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SUPPLEMENTAL SCHEDULE OF CASH FLOW ACTIVITIES: |
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Interest paid | $ | - | $ | - |
Taxes paid | $ | 300 | $ | - |
See accompanying notes to the financial statements.
7
IP TECHNOLOGY SERVICES, INC.
NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2008
(UNAUDITED)
NOTE 1 - | NATURE OF OPERATIONS |
IP Technology Services, Inc. (IP or the Company) was incorporated on June 6, 2007 under the laws of the State of Delaware. IP provides a range of services to assist inventors to leverage their patents and related intellectual property (Portfolios) and formulate a strategy to maximize the revenue and profit generated by the Portfolios.
NOTE 2 - | SUMMARY OF ACCOUNTING POLICIES |
Basis of Presentation
The accompanying interim financial statements for the three and nine month periods ended June 30, 2008 and the period from June 6, 2007 (Inception) through June 30, 2007 are unaudited and have been prepared in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. The results of operations realized during an interim period are not necessarily indicative of results to be expected for a full year. These financial statements should be read in conjunction with the information filed as part of the Companys Registration Statement on Form S-1 which was declared effective on February 6, 2008.
Cash Equivalents
The Company considers all highly liquid investments with maturities of three months or less at the time of purchase to be cash equivalents.
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States 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 financial statements as well as the reported amount of revenues and expenses during the reporting period. Actual results could differ from these estimates.
Fair value of financial instruments
The fair value of a financial instrument is the amount at which the instrument could be exchanged in a current transaction between willing parties. The carrying amounts of financial assets and liabilities, such as cash and accrued expenses, approximate their fair values because of the short maturity of these instruments and market rates of interest.
Revenue recognition
The Companys revenues are derived principally from commissions earned through retaining a buyer or licensee(s) or obtaining product development funding for the Portfolios holder the Company represents. The Company follows the guidance of the Securities and Exchange Commissions Staff Accounting Bulletin 104 (SAB No. 104) for revenue recognition. The Company recognizes revenue when it is realized or realizable and earned less estimated future doubtful accounts. The Company considers revenue realized or realizable and earned when it has persuasive evidence of an arrangement that the product has been shipped or the services have been rendered to the customer, the sales price is fixed or determinable, and collectibility is reasonably assured. In addition to the aforementioned general policy, the following are the specific revenue recognition policies for each category of revenue:
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Licensing revenues: Licensing revenues, net of licensor participations, are recognized when the underlying royalties from the sales of the related products are earned. The Company recognizes guaranteed royalties, net of licensor participations, at the time the arrangement becomes effective if the Portfolios holder has signed a non cancelable contract, has agreed to a fixed fee, has delivered the rights to the licensee who is free to exercise them, and the Portfolios holder and the Company, as a licensing agent has no remaining significant obligations with the underlying Portfolios or obligation to the licensee, and collectibility of the full fee is reasonably assured. Where the Company has significant continuing direct involvement with the underlying Portfolios or obligation to the licensee, guaranteed minimum royalties, net of licensor participations, are recognized ratably over the term of the license or based on sales of the related products, if greater. Licensing advances and guaranteed payments collected but not yet earned by the Company are classified as deferred revenue in the accompanying balance sheet.
Commission income: Commission income, net of licensor participations, is recognized when the underlying commission from the sale of the Portfolios or securing product development funding is earned. The Company recognizes commission income, net of licensor participations, at the time the sale of the Portfolios or product development funding arrangement becomes effective if the Portfolios holder has signed a non cancelable contract, has agreed to a fixed or determinable amount, has sold the rights to the buyer or obtained the funding from the financing institutions, and collectibility of the full commission is reasonably assured. If the Company determines that collection of the full commission is not reasonably assured, the Company defers the revenue recognition and recognizes commission income at the time collection becomes reasonably assured, which is generally upon receipt of cash.
Net income ( loss) per common share
Net income (loss) per common share is computed pursuant to Statement of Financial Accounting Standards No. 128. "Earnings per Share" ("SFAS No. 128"). Basic net loss per common share is computed by dividing net loss by the weighted average number of shares of common stock outstanding during the period. Diluted net loss per common share is computed by dividing net loss by the weighted average number of shares of common stock and potentially outstanding shares of common stock during each period. There were no potentially dilutive shares outstanding as of June 30, 2008.
Recently Issued Accounting Pronouncements
In June 2003, the Securities and Exchange Commission (SEC) adopted final rules under Section 404 of the Sarbanes-Oxley Act of 2002 (Section 404), as amended by SEC Release No. 33-8889 on February 1, 2008. Commencing with its annual report for the fiscal year ending October 31, 2009, the Company will be required to include a report of management on its internal control over financial reporting. The internal control report must include a statement
· | of management’s responsibility for establishing and maintaining adequate internal control over its financial reporting; |
· | of management’s assessment of the effectiveness of its internal control over financial reporting as of year end; and |
· | of the framework used by management to evaluate the effectiveness of the Companys internal control over financial reporting. |
Furthermore, in the following fiscal year, it is required to file the auditors attestation report separately on the Companys internal control over financial reporting on whether it believes that the Company has maintained, in all material respects, effective internal control over financial reporting.
On September 15, 2006, the FASB issued FASB Statement No. 157 Fair Value Measurements (SFAS No. 157). SFAS No. 157 defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. SFAS No. 157 is effective as of the beginning of the first fiscal year beginning after November 15, 2007. The Company does not anticipate that the adoption of this statement will have a material effect on the Companys financial condition and results of operations.
On February 15, 2007, the FASB issued FASB Statement No. 159 The Fair Value Option for Financial Assets and Financial Liabilities: Including an amendment of FASB Statement No. 115 (SFAS No. 159). SFAS No. 159 permits all entities to elect to measure many financial instruments and certain other items at fair value with changes in fair value reported in earnings. SFAS No. 159 is effective as of the beginning of the first fiscal year that begins after November 15, 2007, with earlier adoption permitted. The Company does not anticipate that the adoption of this statement will have a material effect on the Companys financial condition and results of operations.
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In June 2007, the Emerging Issues Task Force of the FASB issued EITF Issue No. 07-3 Accounting for Nonrefundable Advance Payments for Goods or Services to be Used in Future Research and Development Activities (EITF Issue No. 07-3) which is effective for fiscal years beginning after December 15, 2007. EITF Issue No. 07-3 requires that nonrefundable advance payments for future research and development activities be deferred and capitalized. Such amounts will be recognized as an expense as the goods are delivered or the related services are performed. The Company does not expect the adoption of EITF Issue No. 07-3 to have a material impact on the financial results of the Company.
In December 2007, the FASB issued FASB Statement No. 141 (Revised 2007) Business Combinations (SFAS No. 141(R)), which requires the Company to record fair value estimates of contingent consideration and certain other potential liabilities during the original purchase price allocation, expense acquisition costs as incurred and does not permit certain restructuring activities previously allowed under Emerging Issues Task Force Issue No. 95-3 to be recorded as a component of purchase accounting. SFAS No. 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, except for the presentation and disclosure requirements, which shall be applied retrospectively for all periods presented. The Company will adopt this standard at the beginning of the Companys fiscal year ending October 31, 2009 for all prospective business acquisitions. The Company has not determined the effect that the adoption of SFAS No. 141(R) will have on the financial results of the Company.
In December 2007, the FASB issued FASB Statement No. 160 Noncontrolling Interests in Consolidated Financial Statements - an amendment of ARB No. 51 (SFAS No. 160), which causes noncontrolling interests in subsidiaries to be included in the equity section of the balance sheet. SFAS No. 160 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, except for the presentation and disclosure requirements, which shall be applied retrospectively for all periods presented. The Company will adopt this standard at the beginning of the Companys fiscal year ending October 31, 2009 for all prospective business acquisitions. The Company has not determined the effect that the adoption of SFAS No. 160 will have on the financial results of the Company.
In March 2008, the FASB issued FASB Statement No. 161 Disclosures about Derivative Instruments and Hedging Activities an amendment of FASB Statement No. 133 (SFAS No. 161), which changes the disclosure requirements for derivative instruments and hedging activities. Pursuant to SFAS No.161, Entities are required to provide enhanced disclosures about (a) how and why an entity uses derivative instruments, (b) how derivative instruments and related hedged items are accounted for under Statement 133 and its related interpretations, and (c) how derivative instruments and related hedged items affect an entitys financial position, financial performance, and cash flows. SFAS No. 161 is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008 with early application encouraged. SFAS No. 161 encourages but does not require disclosures for earlier periods presented for comparative purposes at initial adoption. In years after initial adoption, this Statement requires comparative disclosures only for periods subsequent to initial adoption. The Company will adopt this standard at the beginning of the Companys year ending December 31, 2008. The Company does not expect the adoption of SFAS No. 161 to have a material impact on the financial results of the Company.
Management does not believe that any recently issued, but not yet effective accounting pronouncements, if adopted, would have a material effect on the accompanying financial statements.
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ITEM 2
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995
Information set forth herein contains "forward-looking statements" which can be identified by the use of forward-looking terminology such as "believes," "expects," "may, should" or "anticipates" or the negative thereof or other variations thereon or comparable terminology, or by discussions of strategy. No assurance can be given that the future results covered by the forward-looking statements will be achieved. The Company cautions readers that important factors may affect the Companys actual results and could cause such results to differ materially from forward-looking statements made by or on behalf of the Company. These factors include the Companys lack of historically profitable operations, dependence on key personnel, the success of the Companys business, ability to manage anticipated growth and other factors identified in the Company's filings with the Securities and Exchange Commission, press releases and/or other public communications.
Plan of Operation
The Company earned revenues of $160,000 in the quarter. The revenues were fees earned for successfully completing the sale of two patent portfolios. The sale of one patent portfolio, directed to a novel method for organizing menu search terms, was completed on April 17, 2008. The sale of the other patent portfolio, directed to a novel method for refining search criteria, was completed on June 16, 2008. Presently, we received a preliminary offer for an additional patent portfolio directed to a method of communications between unsecured parties over a network.
We continue to look for commercially viable Portfolios to represent. To that end, we will continue to work with our industry contacts, advertise and use our website at www.iptechnologyservices.com to identify additional Portfolios. We continue to receive numerous Portfolio submissions covering a broad range of technologies and we enter into agreements to represent such Portfolios where appropriate. For each such Portfolio, we analyze the Portfolio, identify relevant markets and/or identify potential acquirers, licensees and/or investors for the Portfolio. In addition, we are in the process of developing a proprietary software program that we believe will assist us in identifying patent portfolios that have substantial commercial value. We cannot guarantee, however, that we will find additional suitable Portfolios for which will be successful in completing a revenue generating transaction.
Generally, we will enter into one or more agreements with our clients depending on the range of services to be provided. If a client is seeking to sell or license a Portfolio, we will typically enter into a Patent Broker Agreement (Broker Agreement) under which we earn a commission for finding a buyer and/or licensee of the Portfolio. Our commission rates are typically one-third (33.33%) of revenues generated through the sale/license of the Portfolio but in certain situations we may negotiate a different rate. Where a client is seeking funding for product development, we may enter into a Patent Finance Agreement (Finance Agreement) under which we earn commission based on the amount of capital we assist in raising. In certain situations, we may consider purchasing all or part of a Portfolio and develop a licensing campaign for the Portfolio to generate revenues for the Company..
As of June 30, 2008, the Company had $138,608 in cash. We believe that the Companys current cash position will be sufficient to fund operations over the next twelve months including general overhead expenses such as salaries, corporate legal and accounting fees, office overhead and general working capital. In the event the Company may require additional cash to fund operations or purchase a Portfolio, we may have to borrow money from shareholders or issue debt or equity or enter into a strategic arrangement with a third party. Our officer will fund any expenses which arise until such time as the Company raises sufficient funds. There can be no assurance that additional capital will be available to us. We currently have no agreements, arrangements or understandings with any person to obtain funds through bank loans, lines of credit or any other sources.
Recently Issued Accounting Pronouncements
In June 2003, the Securities and Exchange Commission (SEC) adopted final rules under Section 404 of the Sarbanes-Oxley Act of 2002 (Section 404), as amended by SEC Release No. 33-8889 on February 1, 2008. Commencing with its annual report for the fiscal year ending October 31, 2009, the Company will be required to include a report of management on its internal control over financial reporting. The internal control report must include a statement
· | of management’s responsibility for establishing and maintaining adequate internal control over its financial reporting; |
· | of management’s assessment of the effectiveness of its internal control over financial reporting as of year end; and |
· | of the framework used by management to evaluate the effectiveness of the Company’s internal control over financial reporting. |
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Furthermore, in the following fiscal year, it is required to file the auditor’s attestation report separately on the Companys internal control over financial reporting on whether it believes that the Company has maintained, in all material respects, effective internal control over financial reporting.
On September 15, 2006, the FASB issued FASB Statement No. 157 Fair Value Measurements (SFAS No. 157). SFAS No. 157 defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. SFAS No. 157 is effective as of the beginning of the first fiscal year beginning after November 15, 2007. The Company does not anticipate that the adoption of this statement will have a material effect on the Companys financial condition and results of operations.
On February 15, 2007, the FASB issued FASB Statement No. 159 The Fair Value Option for Financial Assets and Financial Liabilities: Including an amendment of FASB Statement No. 115 (SFAS No. 159). SFAS No. 159 permits all entities to elect to measure many financial instruments and certain other items at fair value with changes in fair value reported in earnings. SFAS No. 159 is effective as of the beginning of the first fiscal year that begins after November 15, 2007, with earlier adoption permitted. The Company does not anticipate that the adoption of this statement will have a material effect on the Companys financial condition and results of operations.
In June 2007, the Emerging Issues Task Force of the FASB issued EITF Issue No. 07-3 Accounting for Nonrefundable Advance Payments for Goods or Services to be Used in Future Research and Development Activities (EITF Issue No. 07-3) which is effective for fiscal years beginning after December 15, 2007. EITF Issue No. 07-3 requires that nonrefundable advance payments for future research and development activities be deferred and capitalized. Such amounts will be recognized as an expense as the goods are delivered or the related services are performed. The Company does not expect the adoption of EITF Issue No. 07-3 to have a material impact on the financial results of the Company.
In December 2007, the FASB issued FASB Statement No. 141 (Revised 2007) Business Combinations (SFAS No. 141(R)), which requires the Company to record fair value estimates of contingent consideration and certain other potential liabilities during the original purchase price allocation, expense acquisition costs as incurred and does not permit certain restructuring activities previously allowed under Emerging Issues Task Force Issue No. 95-3 to be recorded as a component of purchase accounting. SFAS No. 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, except for the presentation and disclosure requirements, which shall be applied retrospectively for all periods presented. The Company will adopt this standard at the beginning of the Companys fiscal year ending October 31, 2009 for all prospective business acquisitions. The Company has not determined the effect that the adoption of SFAS No. 141(R) will have on the financial results of the Company.
In December 2007, the FASB issued FASB Statement No. 160 Noncontrolling Interests in Consolidated Financial Statements - an amendment of ARB No. 51 (SFAS No. 160), which causes noncontrolling interests in subsidiaries to be included in the equity section of the balance sheet. SFAS No. 160 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, except for the presentation and disclosure requirements, which shall be applied retrospectively for all periods presented. The Company will adopt this standard at the beginning of the Companys fiscal year ending October 31, 2009 for all prospective business acquisitions. The Company has not determined the effect that the adoption of SFAS No. 160 will have on the financial results of the Company.
In March 2008, the FASB issued FASB Statement No. 161 Disclosures about Derivative Instruments and Hedging Activities an amendment of FASB Statement No. 133 (SFAS No. 161), which changes the disclosure requirements for derivative instruments and hedging activities. Pursuant to SFAS No.161, Entities are required to provide enhanced disclosures about (a) how and why an entity uses derivative instruments, (b) how derivative instruments and related hedged items are accounted for under Statement 133 and its related interpretations, and (c) how derivative instruments and related hedged items affect an entitys financial position, financial performance, and cash flows. SFAS No. 161 is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008 with early application encouraged. SFAS No. 161 encourages but does not require disclosures for earlier periods presented for comparative purposes at initial adoption. In years after initial adoption, this Statement requires comparative disclosures only for periods subsequent to initial adoption. The Company will adopt this standard at the beginning of the Companys year ending December 31, 2008. The Company does not expect the adoption of SFAS No. 161 to have a material impact on the financial results of the Company.
Management does not believe that any recently issued, but not yet effective accounting pronouncements, if adopted, would have a material effect on the accompanying financial statements.
Critical Accounting Policies
The preparation of financial statements and related notes requires us to make judgments, estimates, and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses, and related disclosure of contingent assets and liabilities.
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An accounting policy is considered to be critical if it requires an accounting estimate to be made based on assumptions about matters that are highly uncertain at the time the estimate is made, and if different estimates that reasonably could have been used, or changes in the accounting estimates that are reasonably likely to occur periodically, could materially impact the financial statements.
Financial Reporting Release No. 60 requires all companies to include a discussion of critical accounting policies or methods used in the preparation of financial statements. There are no critical policies or decisions that rely on judgments that are based on assumptions about matters that are highly uncertain at the time the estimate is made.
Seasonality
To date, we have not noted any significant seasonal impacts.
Off Balance Sheet Arrangements
We have no off-balance sheet arrangements.
Item 3 - Quantitative and Qualitative Disclosures About Market Risk
The Company is subject to certain market risks, including changes in interest rates and currency exchange rates. The Company does not undertake any specific actions to limit those exposures.
ITEM 4- CONTROLS AND PROCEDURES
(a)
Evaluation of disclosure controls and procedures.
Pursuant to Rule 13a-15(b) under the Securities Exchange Act of 1934 (Exchange Act), the Company carried out an evaluation, with the participation of the Companys management, including the Companys Chief Executive Officer (CEO) and Chief Accounting Officer (CAO) (the Companys principal financial and accounting officer), of the effectiveness of the Companys disclosure controls and procedures (as defined under Rule 13a-15(e) under the Exchange Act) as of the end of the period covered by this report. Based upon that evaluation, the Companys CEO and CAO concluded that the Companys disclosure controls and procedures are effective to ensure that information required to be disclosed by the Company in the reports that the Company files or submits under the Exchange Act, is recorded, processed, summarized and reported, within the time periods specified in the SECs rules and forms, and that such information is accumulated and communicated to the Companys management, including the Companys CEO and CAO, as appropriate, to allow timely decisions regarding required disclosure.
b)
Managements Report on Internal Controls over Financial Reporting
Internal control over financial reporting is a process to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. generally accepted accounting principles. There has been no change in the Companys internal control over financial reporting during the quarter ended June 30, 2008 that has materially affected, or is reasonably likely to materially affect, the Companys internal control over financial reporting.
The Companys management, including the Companys CEO and CAO, does not expect that the Companys disclosure controls and procedures or the Companys internal controls will prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of the controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected.
Management conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in Internal Control Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this evaluation, management concluded that the companys internal control over financial reporting was effective as of June 30, 2008.
This quarterly report does not include an attestation report of the Company's registered public accounting firm regarding internal control over financial reporting. Management's report was not subject to attestation by the Company's registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit the Company to provide only management's report in this quarterly report.
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PART II OTHER INFORMATION
Item 1. - Legal Proceedings
None.
Item 2. - Unregistered Sales of Equity Securities and Use of Proceeds
Not applicable.
Item 3. - Defaults Upon Senior Securities
Not applicable.
Item 4. - Submission of Matters to a Vote of Security Holders
Not applicable.
Item 5. - Other Information
Not applicable
Item 6. - Exhibits and Reports on Form 8-K
Exhibits.
31.1 |
| Section 302 Certification Of Chief Executive and Chief Financial Officer |
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|
|
32.1 |
| Certification of Chief Executive Officer and Chief Financial Officer Pursuant To 18 U.S.C. Section 1350, As Adopted Pursuant To Section 906 Of The Sarbanes-Oxley Act Of 2002 |
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Reports on Form 8-K
Not applicable
Exhibit Number |
| Description |
|
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|
31.1 |
| Section 302 Certification Of Chief Executive and Chief Financial Officer |
|
|
|
32.1 |
| Certification of Chief Executive Officer and Chief Financial Officer Pursuant To 18 U.S.C. Section 1350, As Adopted Pursuant To Section 906 Of The Sarbanes-Oxley Act Of 2002 |
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SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| IP TECHNOLOGY SERVICES, INC. | |
|
|
|
|
|
|
| /s/ Joseph Levi | |
| Joseph Levi | |
| Title: | President, Chief Executive Officer |
|
| Chief Financial Officer |
|
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|
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|
|
| Date: | July 2, 2008 |
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