Xsovt Brands (XSVT) 10-Q 2010 Q2 Quarterly report

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarter ended June 30, 2010

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

For the transition period from ____________ to____________

Commission File Number: 000-53373

RxBids

(Exact name of issuer as specified in its charter)

Nevada	20-1226081
(State or Other Jurisdiction of	(I.R.S. Employer Identification No.)
incorporation or organization)

9050 W. Warm Springs Rd #12-2129

Las Vegas, Nevada 89148

(Address of principal executive offices)

(702) 540-2222

(Registrant’s telephone number, including area code)

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 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  x   No  o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).Yes  o    No  o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.

Large accelerated filer o Accelerated filer o Non-accelerated filer o Smaller reporting company x

(Do not check if a smaller reporting company)

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

APPLICABLE ONLY TO CORPORATE ISSUERS

Indicate the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date.

Class	Outstanding as of August 13, 2010
Common Stock, $.01 par value	5,274,400

TABLE OF CONTENTS

Heading		Page
	PART  I    —   FINANCIAL INFORMATION
Item 1.	Financial Statements	2
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	9
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	10
Item 4(T).	Controls and Procedures	10
	PART  II    —   OTHER INFORMATION
Item 1.	Legal Proceedings	11
Item 1A.	Risk Factors	11
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	11
Item 3.	Defaults Upon Senior Securities	11
Item 4.	(Removed and Reserved)	11
Item 5.	Other Information	11
Item 6.	Exhibits	11
	Signatures	12

1

PART  I   —   FINANCIAL INFORMATION

Item 1.  Financial Statements

The accompanying unaudited balance sheet of RxBids at June 30, 2010 and related unaudited statements of operations, stockholders’ equity (deficit) and cash flows for the three and six months ended June 30, 2010 and 2009 and the period from June 18, 2004 (date of inception) through June 30, 2010, have been prepared by management in conformity with United States generally accepted accounting principles.  In the opinion of management, all adjustments considered necessary for a fair presentation of the results of operations and financial position have been included and all such adjustments are of a normal recurring nature.  It is suggested that these financial statements be read in conjunction with the financial statements and notes thereto included in the RxBids December 31, 2009 audited financial statements.  Operating results for the period ended June 30, 2010, are not necessarily indicative of the results that can be expected for the fiscal year ending December 31, 2010 or any other subsequent period.

2

RXBIDS

(A Development Stage Company)

Balance Sheets

	June 30,			December 31,
	2010			2009
	(Unaudited)
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	199		$	954
Accounts receivable		36			-
Total Current Assets		235			954
EQUIPMENT, NET		-			-
TOTAL ASSETS	$	235		$	954
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES
Accounts payable and accrued expenses	$	33,226		$	32,757
Payable - related party		86,550			69,600
Notes payable		6,500			-
Total Current Liabilities		126,276			102,357
STOCKHOLDERS' EQUITY (DEFICIT)
Common stock; 20,000,000 shares  authorized at $0.01 par value, 5,274,400 shares issued and outstanding		52,744			52,744
Additional paid-in capital		502,488			502,488
Deficit accumulated during the development stage		(681,273	)		(656,635	)
Total Stockholders' Equity (Deficit)		(126,041	)		(101,403	)
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY (DEFICIT)	$	235		$	954

The accompanying notes are an integral part of these financial statements.

3

RXBIDS

(A Development Stage Company)

Statements of Operations

(Unaudited)

													From Inception on
													June 18,
	For the Three Months Ended						For the Six Months Ended						2004 Through
	June 30,						June 30,						June 30,
	2010			2009			2010			2009			2010
REVENUES	$	36		$	-		$	435		$	-		$	1,814
COST OF SALES		-			-			-			-			-
GROSS MARGIN		36			-			435			-			1,814
OPERATING EXPENSES
Depreciation expense		-			33			-			88			1,100
Sales and marketing		240			1,724			1,234			3,896			46,094
Research and development		-			-			-			-			155,325
Professional fees		15,708			8,757			20,133			11,991			168,317
General and administrative		1,476			1,417			2,166			3,892			308,318
Total Operating Expenses		17,424			11,931			23,533			19,867			679,154
LOSS FROM OPERATIONS		(17,388	)		(11,931	)		(23,098	)		(19,867	)		(677,340	)
OTHER INCOME (EXPENSE)
Interest expense		(807	)		(376	)		(1,540	)		(376	)		(3,933	)
Total Other Income (Expense)		(807	)		(376	)		(1,540	)		(376	)		(3,933	)
LOSS BEFORE INCOME TAXES		(18,195	)		(12,307	)		(24,638	)		(20,243	)		(681,273	)
INCOME TAX EXPENSE		-			-			-			-			-
NET LOSS	$	(18,195	)	$	(12,307	)	$	(24,638	)	$	(20,243	)	$	(681,273	)
BASIC AND DILUTED LOSS PER SHARE	$	(0.00	)	$	(0.00	)	$	(0.00	)	$	(0.00	)
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING		5,274,400			5,274,400			5,274,400			5,274,400

The accompanying notes are an integral part of these financial statements.

4

RXBIDS

(A Development Stage Company)

Statements of Stockholders' Equity (Deficit)

										Deficit
										Accumulated			Total
					Additional		Stock			During the			Stockholders'
	Common Stock				Paid-In		Subscriptions			Development			Equity
	Shares		Amount		Capital		Receivable			Stage			(Deficit)
Balance, June 8, 2004		-	$	-	$	-	$	-		$	-		$	-
Net loss from inception through December 31, 2004		-		-		-		-			(61,907	)		(61,907	)
Balance, December 31, 2004		-		-		-		-			(61,907	)		(61,907	)
Net loss for the year ended December 31, 2005		-		-		-		-			(28,321	)		(28,321	)
Balance, December 31, 2005		-		-		-		-			(90,228	)		(90,228	)
Issuance of common stock for cash and debt at $0.07 per share		4,480,000		44,800		311,832		(24,000	)		-			332,632
Net loss for the year ended December 31, 2006		-		-		-		-			(52,007	)		(52,007	)
Balance, December 31, 2006		4,480,000		44,800		311,832		(24,000	)		(142,235	)		190,397
Cash received for stock subscriptions receivable		-		-		-		24,000			-			24,000
Issuance of common stock for cash at $0.25 per share		414,400		4,144		99,456		-			-			103,600
Net loss for the year ended December 31, 2007		-		-		-		-			(238,813	)		(238,813	)
Balance, December 31, 2007		4,894,400		48,944		411,288		-			(381,048	)		79,184
Issuance of common stock for cash at $0.25 per share		180,000		1,800		43,200		-			-			45,000
Issuance of common stock for services at $0.25 per share		200,000		2,000		48,000		-			-			50,000
Net loss for the year ended December 31, 2008		-		-		-		-			(240,251	)		(240,251	)
Balance, December 31, 2008		5,274,400		52,744		502,488		-			(621,299	)		(66,067	)
Net loss for the year ended December 31, 2009		-		-		-		-			(35,336	)		(35,336	)
Balance, December 31, 2009		5,274,400		52,744		502,488		-			(656,635	)		(101,403	)
Net loss for the six months ended June 30, 2010 (unaudited)		-		-		-		-			(24,638	)		(24,638	)
Balance,June 30, 2010 (unaudited)		5,274,400	$	52,744	$	502,488	$	-		$	(681,273	)	$	(126,041	)

The accompanying notes are an integral part of these financial statements.

5

RXBIDS

(A Development Stage Company)

Statements of Cash Flows

(Unaudited)

							From Inception on
							June 18, 2004
	For the Six Months Ended						Through
	June 30,						June 30,
	2010			2009			2010
OPERATING ACTIVITIES
Net loss	$	(24,638	)	$	(20,243	)	$	(681,273	)
Adjustments to reconcile net loss to net cash  used by operating activities:
Common stock issued for services		-			-			50,000
Depreciation and amortization		-			88			1,100
Changes in operating assets and liabilities:
Change in accounts receivable		(36	)		-			(36	)
Change in accounts payable		469			1,192			33,226
Net Cash Used in
Operating Activities		(24,205	)		(18,963	)		(596,983	)
INVESTING ACTIVITIES
Purchase of property and equipment		-			-			(1,100	)
Net Cash Used in
Investing Activities		-			-			(1,100	)
FINANCING ACTIVITIES
Proceeds from related party loans		16,950			18,884			419,182
Proceeds from notes payable		6,500			-			6,500
Proceeds from common stock issued		-			-			172,600
Net Cash Provided by
Financing Activities		23,450			18,884			598,282
NET INCREASE (DECREASE) IN CASH		(755	)		(79	)		199
CASH AT BEGINNING OF PERIOD		954			678			-
CASH AT END OF PERIOD	$	199		$	599		$	199
SUPPLEMENTAL DISCLOSURES OF
CASH FLOW INFORMATION
CASH PAID FOR:
Interest	$	485		$	-		$	485
Income Taxes	$	-		$	-		$	-
NON-CASH FINANCING ACTIVITIES:
Common stock issued for services	$	-		$	-		$	50,000
Common stock issued for debt	$	-		$	-		$	332,632

The accompanying notes are an integral part of these financial statements.

6

 RxBids

(A Development Stage Company)

Notes to Financial Statements

(Unaudited)

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The accompanying financial statements have been prepared by the Company without audit.  In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position, results of operations, and cash flows at June 30, 2010, and for all periods presented herein, have been made.

Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted.  It is suggested that these condensed financial statements be read in conjunction with the financial statements and notes thereto included in the Company’s December 31, 2010 audited financial statements.  The results of operations for the period ended June 30, 2010 is not necessarily indicative of the operating results for the full year.

NOTE 2 - GOING CONCERN

The Company’s financial statements are prepared using generally accepted accounting principles in the United States of America applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company has not yet established an ongoing source of revenues sufficient to cover its operating costs and allow it to continue as a going concern. The ability of the Company to continue as a going concern is dependent on the Company obtaining adequate capital to fund operating losses until it becomes profitable. If the Company is unable to obtain adequate capital, it could be forced to cease operations.

In order to continue as a going concern, the Company will need, among other things, additional capital resources. Management’s plan is to obtain such resources for the Company by obtaining capital from management and significant shareholders sufficient to meet its minimal operating expenses and seeking equity and/or debt financing. However management cannot provide any assurances that the Company will be successful in accomplishing any of its plans.

The ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish the plans described in the preceding paragraph and eventually secure other sources of financing and attain profitable operations. The accompanying financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

NOTE 3 – SIGNIFICANT ACCOUNTING POLICIES

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.

Recent Accounting Pronouncements

Management has considered all recent accounting pronouncements issued since the last audit of our financial statements. The Company’s management believes that these recent pronouncements will not have a material effect on the Company’s financial statements.

7

RxBids

(A Development Stage Company)

Notes to Financial Statements

(Unaudited)

NOTE 4 - RELATED PARTY TRANSACTIONS

From its inception through December 28, 2006, the Company received $332,632 in loans from shareholders.  On December 28, 2006, the Company issued 4,000,000 shares of its common stock in satisfaction of those loans.

Through the June 30, 2010 the Company has received cash advances from a shareholder and officer of $86,550. The advances are unsecured, non interest bearing and due upon demand.

NOTE 5 – NOTES PAYABLE

On May 13, 2010, the Company entered into a promissory note for $6,500.  The note bears interest at 10% per annum and is due one year from the signing date.  As of June 30, 2010 the Company has accrued $322 of interest associated with this note.

NOTE 6 – CAPITAL STOCK  

The Company has 20,000,000 common shares authorized at a par value of $0.01.  As of June 30, 2010 and December 31, 2009 the Company has 5,274,400 shares of common stock issued and outstanding.  The following is a list of all sales of common the Company’s common stock from inception through the year ended December 31, 2009.

During 2006 the Company issued 4,480,000 shares of its common stock for cash at $0.05 per share. On January 18, 2007, the Company collected the $24,000 of stock subscriptions receivable.

During 2007, the Company issued 414,400 shares of common stock for cash of $103,600 at $0.25 per share.

During 2008, the Company issued 180,000 shares of common stock for cash of $45,000 and 200,000 shares for services valued at $50,000. The Company’s common stock was issued at $0.25 per share.

NOTE 7 – SUBSEQUENT EVENTS

In accordance with ASC 855-10 Company management reviewed all material events through the date of this filing and there are no material subsequent events to report.

8

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

The following information should be read in conjunction with the financial statements and notes thereto appearing elsewhere in this Form 10-Q.

Liquidity and Capital Resources

In December 2007, we realized gross proceeds of $103,600 from the public offering of our common stock.  We have used these proceeds to develop our website and to commence advertising to promote and market our medical prescription auction service.  At June 30, 2010, we had available cash of $199 compared to $954 at December 31, 2009.  We are currently being funded by loans from our President, Mack Bradley.  Mr. Bradley has indicated that he will avail his personal financial resources to the company on an as needed basis until such a time that we can procure additional financing.  We are currently exploring the possibility of additional alternative financing, but there is no assurance that we will be able to secure financing on favorable terms or at all.

At June 30, 2010, we had total current assets of $235 in cash and accounts receivable and total current liabilities of $126,276, consisting of accounts payable and accrued expenses of $33,226 and a payable to a related party of $86,550.  At December 31, 2009, we had total current assets of $954 in cash and total current liabilities of $102,357, consisting of accounts payable and accrued expenses of $32,757 and a payable to related party of $69,600.  Working capital at June 30, 2010 was a negative $126,067 compared to $101,403 at December 31, 2009.  This decrease in working capital for the first six months of 2010 is primarily due to the 24% increase in the payable to related party, which represents additional borrowing during the period.  At June 30, 2010, we had total assets of $209 and a stockholders’ deficit of $126,067, compared to total assets of $954 and a stockholders’ deficit of $101,403 at December 31, 2009.

Net cash used in operating activities was $24,205 for the first six months of 2010 compared to $18,963 for the comparable 2009 period.  This result is primarily attributed to the increased net loss from $20,243 for the 2009 period, compared to $24,664 for the 2010 period.  Also during the first six months of 2010, we realized $16,950 in proceeds from related party loans compared to $18,884 for the 2009 period.  We also realized $6,500 in proceeds from notes payable during the first six months of 2010.

Results of Operations

During the three-month period (“second quarter”) ended June 30, 2010 we realized $36 in revenues compared to $0 revenues for the second quarter of 2009.  Total operating expenses for the second quarter of 2010 were $17,424, a 46% increase from $11,931 for the second quarter of 2009.  The increase is primarily attributed to the 79% increase in professional fees due to additional legal and accounting expenses related to preparing and filing our requisite SEC reports.  Our net loss was $18,195 for the second quarter of 2010 compared to $12,307 for the second quarter of 2009.

During the six-month period (“first half”) ended June 30, 2010, revenues were $435 compared to $0 for the first half of 2009.  Total operating expenses for the first half of 2010 were $23,533, an 18% increase from $19,867 for the comparable 2009 period.  The increase is primarily attributed to the 68% increase in professional fees for the first half of 2010 also reflecting additional legal and accounting expenses.  Our net loss for the first half of 2010 was $24,638 compared to $20,243 for the first half of 2009.

In the opinion of management, inflation has not and will not have a material effect on our operations in the immediate future.  Management will continue to monitor inflation and evaluate the possible future effects of inflation on our business and operations.

Net Operating Loss

The Company has accumulated approximately $603,604 of net operating loss carryforward at December 31, 2009.  This loss carryforward may be offset against future taxable income through the year 2029.  The use of these losses to reduce future income taxes will depend on the generation of sufficient taxable income prior to the expiration of the net operating loss carryforwards.  In the event of certain changes in control, there will be an annual limitation on the amount of net operating loss carryforwards that can be used.  No tax benefit has been reported in the financial statements for the year ended December 31, 2009 or six-month period ended June 30, 2010 because it has been fully offset by a valuation allowance.

9

Inflation

In the opinion of management, inflation has not and will not have a material effect on our operations in the immediate future.  Management will continue to monitor inflation and evaluate the possible future effects of inflation on our business and operations.

Off-balance Sheet Arrangements

We have no off-balance sheet arrangements.

Forward-Looking and Cautionary Statements

This report includes “forward-looking statements” that may relate to such matters as anticipated financial performance, future revenues or earnings, business prospects, projected ventures, new products and services, anticipated market performance and similar matters.

When used in this report, the words “may,” “will,” expect,” anticipate,” “continue,” “estimate,” “project,” “intend,” and similar expressions are intended to identify forward-looking statements regarding events, conditions, and financial trends that may affect our future plans of operations, business strategy, operating results, and financial position.

We caution readers that a variety of factors could cause our actual results to differ materially from the anticipated results or other matters expressed in forward-looking statements. These risks and uncertainties, many of which are beyond our control, include:

● the sufficiency of existing capital resources and the ability to raise additional capital to fund cash requirements for future operations;

● the ability to successfully operate our website and generate a sufficient number of consumers and pharmacies to purchase their medications from RxBIDS.com and the ability to broaden our pharmaceutical network;

● volatility of the stock market, particularly within the online medical prescription sector; and

● general economic conditions.

Although we believe the expectations reflected in these forward-looking statements are reasonable, such expectations cannot guarantee future results, levels of activity, performance or achievements.

Item 3.  Quantitative and Qualitative Disclosures About Market Risk.

This item is not required for a smaller reporting company.

Item 4(T).  Controls and Procedures.

Evaluation of Disclosure Controls and Procedures.  Disclosure controls and procedures (as defined in Rules  13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934) are designed to ensure that information required to be disclosed in reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms.  Disclosure and control procedures are also designed to ensure that such information is accumulated and communicated to management, including the chief executive officer and principal accounting officer, to allow timely decisions regarding required disclosures.

As of the end of the period covered by this quarterly report, we carried out an evaluation, under the supervision and with the participation of management, including our chief executive officer and principal accounting officer, of the effectiveness of the design and operation of our disclosure controls and procedures.  In designing and evaluating the disclosure controls and procedures, management recognizes that there are inherent limitations to the effectiveness of any system of disclosure controls and procedures, including the possibility of human error and the circumvention or overriding of the controls and procedures.  Accordingly, even effective disclosure controls and procedures can only provide reasonable assurance of achieving their desired control objectives.  Additionally, in evaluating and implementing possible controls and procedures, management is required to apply its reasonable judgment.  Based on the evaluation described above, our management, including our principal executive officer and principal accounting officer, have concluded that, as of June 30, 2010, our disclosure controls and procedures were effective.

10

Changes in Internal Control Over Financial Reporting.  Management has evaluated whether any change in our internal control over financial reporting occurred during the second quarter of fiscal 2010. Based on its evaluation, management, including the chief executive officer and principal accounting officer, has concluded that there has been no change in our internal control over financial reporting during the second quarter of fiscal 2010 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART  II   —   OTHER INFORMATION

Item 1.  Legal Proceedings

There are no material pending legal proceedings to which we are a party or to which any of our property is subject and, to the best of our knowledge, no such actions against us are contemplated or threatened.

Item 1A.  Risk Factors

This item is not required for a smaller reporting company.

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

This Item is not applicable.

Item 3.  Defaults Upon Senior Securities

This Item is not applicable.

Item 4.  (Removed and reserved)

Item 5.  Other Information

This Item is not applicable.

Item 6.  Exhibits

Exhibit 31.1 Certification of C.E.O. and Principal Accounting Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

Exhibit 32.1 Certification of C.E.O. and Principal Accounting Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

11

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.

	RxBids
Date:August 16, 2010	By:	/s/Mack Bradley
		Mack Bradley, CEO and Director
		(Acting Principal Accounting Officer)

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