China Network Media 10Q 2009 Q1 Quarterly report

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 March 31, 2009

¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 (No fee required)

For the transition period from to

Commission file number 333-152539

Inscrutor, Inc.

(Name of Small Business Issuer in Its Charter)

DELAWARE		32-0251358
(State or Other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification No.)

410 Park Avenue, 15th Floor, New York, NY 10022

(Address of Principal Executive Offices) (Zip Code)

212-231-8526

(Issuer's Telephone Number, including Area Code)

Check whether the issuer (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for such shorter period that the issuer was required to file such reports), and (2)has been subject to such filing requirements for the past 90 days. Yes x No o

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

Large Accelerated Filer o Accelerated Filer o Non-Accelerated Filero Smaller Reporting Companyx

Indicate by check mark whether the registrant is a shell company as defined in Rule 12b-2 of the Exchange Act. Yes o Nox

State the number of shares outstanding of each of the issuer’s classes of common equity, as of April 30, 2009: 11,350,030 shares of common stock.

INSCRUTOR, INC.

(A DEVELOPMENT STAGE COMPANY)

FORM 10-Q

THREE MONTHS ENDED MARCH 31, 2009

TABLE OF CONTENTS

		Page
PART I - FINANCIAL INFORMATION

Item 1.	Financial Statements:

	Condensed Balance Sheets as of March 31, 2009 (Unaudited) and as of December 31, 2008	3

	Condensed Statements of Operations for the three months ended March 31, 2009 (Unaudited) and for the Period from April 18, 2008 (Inception) through March 31, 2009 (Unaudited)	4

	Condensed Statement of Changes in Stockholders' (Deficit) Equity for the period from April 18, 2008 (Inception) through December 31, 2008 and the three months ended March 31, 2009 (Unaudited)	5

	Condensed Statements of Cash Flows for the three months ended March 31, 2009 (Unaudited) and the Period from April 18, 2008 (Inception) through March 31, 2009 (Unaudited)	6

	Notes to the Condensed Financial Statements (Unaudited)	7-11

Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	12-14

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	15

Item 4.	Controls and Procedures	15

PART II - OTHER INFORMATION

Item 1.	Legal Proceedings	15

Item 1A.	Risk Factors	15

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	16

Item 3.	Defaults Upon Senior Securities	17

Item 4.	Submission of Matters to a Vote of Security Holders	17

Item 5.	Other Information	17

Item 6.	Exhibits	17

Signatures		18

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PART I - FINANCIAL INFORMATION

Item 1.

Financial Statements

INSCRUTOR, INC.

(A DEVELOPMENT STAGE COMPANY)

Condensed Balance Sheets


	March 31, 2009			December 31, 2008
	(Unaudited)
ASSETS
Current Assets:
Cash	$	496		$	49
Accounts receivable		1,000			9,000

Total Current Assets		1,496			9,049

Property, Plant & Equipment:
Website costs, net of accumulated amortization of $410 and $261,
respectively		1,379			1,528

Other Assets:
Security deposits		465			465

TOTAL ASSETS	$	3,340		$	11,042

LIABILITIES AND STOCKHOLDERS' DEFICIT
Current Liabilities:
Accounts payable and accrued expenses	$	21,473		$	17,618
Accrued expenses - related party		6,000			3,000
Loans payable - related party		2,853			2,853
Notes payable - related party		45,000			45,000

TOTAL LIABILITIES		75,326			68,471

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' DEFICIT
Series A Convertible Preferred stock - $.001 par value; 100,000 shares
authorized; 100,000 and 100,000 to be issued		100			100
Preferred stock - $.001 par value; 9,900,000 shares authorized;
none and none issued and outstanding, respectively		-			-
Common stock - $.001 par value; 100,000,000 shares authorized;
11,350,030 and 11,350,030 shares to be issued, respectively		11,350			11,350
Additional paid-in capital		74,290			73,624
Accumulated deficit during the development stage		(157,726	)		(142,503	)
TOTAL STOCKHOLDERS' DEFICIT		(71,986	)		(57,429	)
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT	$	3,340		$	11,042

See accompanying notes to the unaudited condensed financial statements.

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INSCRUTOR, INC.

(A DEVELOPMENT STAGE COMPANY)

Condensed Statements of Operations (Unaudited)

	Three months ended March 31, 2009			April 18, 2008 (Inception) - March 31, 2009


REVENUE - Related Party	$	9,000		$	30,000

COST OF GOODS SOLD		3,450			11,500

GROSS PROFIT		5,550			18,500

Selling, general & administrative expenses:
Consulting fees and services - related party		3,000			61,000
Professional fees		14,141			93,315
Other general & administrative expenses		2,966			8,671
Total operating expenses		20,107			162,986

Loss from operations		(14,557	)		(144,486	)

Other expense:
Interest expense		(666	)		(1,935	)
Total other expense		(666	)		(1,935	)

NET LOSS BEFORE PROVISION FOR INCOME TAXES		(15,223	)		(146,421	)

Provision for income taxes		-			-

NET LOSS	$	(15,223	)	$	(146,421	)

Basic and diluted net loss per weighted-average shares common stock	$	-		$	(0.01	)

Basic and diluted weighted-average number of shares of common stock		11,350,030			11,340,304
to be issued

See accompanying notes to the unaudited condensed financial statements.

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INSCRUTOR, INC.

(A DEVELOPMENT STAGE COMPANY)

Condensed Statement of Changes in Stockholders' Deficit

For the three months ended March 31, 2009 (Unaudited) and the Period from April 18, 2008 (Inception) through December 31, 2008

											Accumulated
	Common Stock				Series A Convertible Preferred Stock				Additional Paid-in		Deficit during the development
	Shares		Par Value		Shares		Par Value		Capital		stage			Total

Balance April 18, 2008 (Inception)		11,305,030	$	11,305		-	$	-	$	-	$	(11,305	)	$	-

Series A Preferred stock issued for consulting services - related party		-		-		100,000		100		49,900		-			50,000

Common stock issued for professional services		45,000		45		-		-		22,455		-			22,500

In-kind contribution of interest expense		-		-		-		-		1,269		-			1,269

Net loss for the period from April 18, 2008 (inception) to December 31, 2008		-		-		-		-		-		(131,198	)		(131,198	)

Balance December 31, 2008		11,350,030		11,350		100,000		100		73,624		(142,503	)		(57,429	)

In-kind contribution of interest expense		-		-		-		-		666		-			666

Net loss for the period ended March 31, 2009		-		-		-		-		-		(15,223	)		(15,223	)

Balance March 31, 2009		11,350,030	$	11,350		100,000	$	100	$	74,290	$	(157,726	)	$	(71,986	)

See accompanying notes to the unaudited condensed financial statements.

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INSCRUTOR, INC.

(A DEVELOPMENT STAGE COMPANY)

Condensed Statements of Cash Flows (Unaudited)

	Three months ended March 31, 2009			For the Period April 18, 2008 (Inception) - March 31, 2009


CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(15,223	)	$	(146,421	)
Adjustments to reconcile net loss to cash provided by (used in) operating activities:
Series A Convertible Preferred Stock issued for services - related party		-			50,000
Common stock Issued for services		-			22,500
In-kind contribution of interest expense		666			1,935
Amotization expense		149			410
Changes in operating assets and liabilities:
Decrease (Increase) in accounts receivable		8,000			(1,000	)
Increase in security deposits		-			(465	)
Increase in accounts payable and accrued expenses		6,855			27,473
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES		447			(45,568	)

CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property, plant & equipment		-			(1,789	)
NET CASH (USED IN) INVESTING ACTIVITIES		-			(1,789	)

CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from loans payable -related related party		-			2,853
Proceeds from notes payable - related party		-			45,000
NET CASH PROVIDED BY FINANCING ACTIVITIES		-			47,853

NET INCREASE IN CASH		447			496
Cash, beginning of period		49			-
Cash, END OF PERIOD	$	496		$	496

Supplementary disclosures of cash flow information
Cash paid during the period for:

Income taxes	$	-		$	-
Interest paid	$	-		$	-

See accompanying notes to the unaudited condensed financial statements.

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INSCRUTOR, INC.

(A DEVELOPMENT STAGE COMPANY)

NOTES TO THE UNAUDITED CONDENSED FINANCIAL STATEMENTS

NOTE 1 – ORGANIZATION AND BASIS OF PRESENTATION

The accompanying unaudited condensed financial statements have been prepared in accordance with accounting principles generally accepted in The United States of America and the rules and regulations of the Securities and Exchange Commission for interim financial information. Accordingly, they do not include all of the information necessary for a comprehensive presentation of financial position and results of operations. The interim results for the period ended March 31, 2009 are not necessarily indicative of results for the full fiscal year. It is management’s opinion, however that all material adjustments (consisting of normal recurring adjustments) have been made which are necessary for a fair financial statements presentation.

Inscrutor, Inc. (“Inscrutor” or the “Company”), a development stage company, was incorporated on April 18, 2008 under the laws of the State of Delaware. Inscrutor owns, manages, and intends to exploit a sophisticated data mining technology primarily useful for organizations, which are involved in the handling of masses of unstructured textual information. Such information often comprises that which is available via the Internet, but can also include databases, etc. that are owned internally by those organizations. The Company plans to derive revenue from its technology mainly through license agreements with information-intensive organizations and others with related needs. Further development will focus on organizations that need to share and control data from among two or more internal information systems with different structures or specifications; organizations that desire to include a sophisticated searching device on their websites as a visitor aide; and organizations desiring to construct customized search and monitoring facilities over unique data sources. Activities during the development stage involve developing the business plan and raising capital.

The technology that the Company owns was acquired via a Separation and Distribution Agreement on May 30, 2008 from Visator, Inc. (“Visator”), a Delaware corporation that specializes in on-line media monitoring. Prior to that time, Inscrutor was a wholly-owned subsidiary of Visator. Inscrutor was spun out from Visator with the purpose of ensuring optimal value-creation for the shareholders of both Inscrutor and Visator. According to the terms of the Separation Agreement, Visator decided to distribute the common stock of Inscrutor on a 1-for-1 basis to the holders of Visator’s common and preferred stock (“the Distribution”). On June 1, 2008 (the "Distribution Date"), Visator transferred its shares of Inscrutor to the shareholders of record of Visator common stock and preferred stock at the close of business on May 30, 2008 (the "Record Date"), without any consideration being paid by such holders. As of October 9, 2008, the stock certificates were delivered to shareholders. Currently, we derive revenue from a management services agreement with Visator.

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Going concern

The accompanying financial statements have been prepared under a going concern basis which contemplates the realization of assets and liquidation of liabilities in the normal course of business. However, the Company has incurred operating losses from inception of $146,421. In addition at March 31, 2009 current liabilities exceed current assets by $71,986, the Company has a stockholders’ deficit of $71,986 and net cash used in operations since inception is $45,568. These factors raise substantial doubt about the Company’s ability to continue as a going concern. The Company does not have enough cash to continue operations for twelve months without receiving additional debt or equity financing or increasing our revenues.

Management believes that the actions presently being taken and the success of future operations will be sufficient to enable the Company to continue as a going concern.

However, there can be no assurance that the raising of equity will be successful and that the Company’s anticipated financing will be available in the future, at terms satisfactory to the Company. Failure to achieve the equity and financing at satisfactory terms and amounts could have a material adverse effect on the Company’s ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Use of estimates

The preparation of 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 financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Revenue recognition

The Company’s revenues are derived from advisory and technology consulting services related to software maintenance over the term of the agreements. The Company follows the guidance of the Securities and Exchange Commission’s Staff Accounting

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NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED

Revenue recognition continued

Bulletin 104 (“SAB No. 104”) for revenue recognition. The Company will recognize revenue when it is realized or realizable and earned. The Company considers revenue realized or realizable and earned when it has persuasive evidence of an arrangement that the services have been rendered to the customer, the sales price is fixed or determinable, and collectability is reasonably assured.

Cash and cash equivalents

For purposes of the cash flow statements, the Company considers all highly liquid investments with original maturities of three months or less at the time of purchase to be cash equivalents.

Website Development Costs

The Company has adopted the provisions of EITF 00-2, “Accounting for Website Development Costs.” Costs incurred in the planning stage of a website are expensed, while costs incurred in the development state are capitalized and amortized over the estimated three year life of the asset. For the three months ended March 31, 2009 and the year ended December 31, 2008, the Company paid none and $1,789, respectively to develop its website.

Income taxes

The Company follows SFAS No. 109, “Accounting for Income Taxes.” Under the asset and liability method of SFAS No. 109, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. A valuation allowance can be provided for a net deferred tax asset, due to uncertainty of realization.

Effective January 1, 2007, the Company adopted Financial Accounting Standard Board Interpretation No. 48 Accounting for Uncertainty in Income Taxes (“FIN 48”). FIN 48 clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements in accordance with SFAS Statement No. 109 Accounting for Income Taxes. FIN 48 prescribes a recognition threshold and measurement attributes for the financial statement recognition and measurement of a tax position taken or expected to be taken in tax return. FIN 48 also provides guidance on derecognition, classification, interest and penalties, accounting interim period, disclosure and transition. There were no adjustments required upon adoption of FIN 48.

Net loss per common share

Net 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 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 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. 100,000 Series A convertible Performed shares were omitted from the calculation of earnings per share- diluted as their inclusion is anti-dilutive as of March 31, 2009.

Recently Issued Accounting Pronouncements

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 Company’s year ending December 31, 2008 for all prospective business acquisitions. The Company has not determined the effect that the adoption of SFAS No. 141(R) would have on the financial results of the Company.

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NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED

Recently Issued Accounting Pronouncements continued

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 has adopted this standard at the beginning of the Company’s year ending December 31, 2008 for all prospective business acquisitions. The Company has not determined the effect that the adoption of SFAS No. 160 would have on the financial results of the Company.

In March 2008, the FASB issued SFAS No. 161, “Disclosures about Derivative Instruments and Hedging Activities—an amendment of FASB Statement No. 133.” Constituents have expressed concerns that the existing disclosure requirements in FASB Statement No. 133, Accounting for Derivative Instruments and Hedging Activities, do not provide adequate information about how derivative and hedging activities affect an entity’s financial position, financial performance, and cash flows. SFAS No. 161 requires enhanced disclosures about an entity’s derivative and hedging activities and thereby improves the transparency of financial reporting. This Statement is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008, with early application encouraged. This Statement encourages, but does not require, comparative disclosures for earlier periods at initial adoption. The adoption of FASB 161 is not expected to have a material impact on the Company’s financial position.

In May 2008, the FASB issued SFAS No. 162, “The Hierarchy of Generally Accepted Accounting Principles.” SFAS No. 162 identifies the sources of accounting principles and provides entities with a framework for selecting the principles used in preparation of financial statements that are presented in conformity with GAAP. The current GAAP hierarchy has been criticized because it is directed to the auditor rather than the entity, it is complex, and it ranks FASB Statements of Financial Accounting Concepts, which are subject to the same level of due process as FASB Statements of Financial Accounting Standards, below industry practices that are widely recognized as generally accepted but that are not subject to due process. The Board believes the GAAP hierarchy should be directed to entities because it is the entity (not its auditors) that is responsible for selecting accounting principles for financial statements that are presented in conformity with GAAP. The adoption of FASB 162 is not expected to have a material impact on the Company’s financial position.

In May 2008, the FASB issued SFAS No. 163, “Accounting for Financial Guarantee Insurance Contracts-an interpretation of FASB Statement No. 60.” Diversity exists in practice in accounting for financial guarantee insurance contracts by insurance enterprises under FASB Statement No. 60, Accounting and Reporting by Insurance Enterprises. This results in inconsistencies in the recognition and measurement of claim liabilities. This Statement requires that an insurance enterprise recognize a claim liability prior to an event of default (insured event) when there is evidence that credit deterioration has occurred in an insured financial obligation. This Statement requires expanded disclosures about financial guarantee insurance contracts. The accounting and disclosure requirements of the Statement will improve the quality of information provided to users of financial statements. The adoption of FASB 163 is not expected to have a material impact on the Company’s financial position.

Fair Value of Financial Instruments

The carrying amounts reported in the balance sheet for the accounts receivable, accounts payable, accrued expenses, loans payable – related party and notes payable – related party approximate fair value based on the short-term maturity of these instruments.

NOTE 3 – PROPERTY AND EQUIPMENT

At March 31, 2009 (Unaudited) and December 31, 2008, property and equipment is as follows:

	March 31, 2009		December 31, 2008
Website costs	$	1,789	$	1,789
Less accumulated amortization		410		261
	$	1,379	$	1,528

Amortization expense for the three months ended March 31, 2009 and the period from April 18, 2008 (inception) to March 31, 2009 was $149 and $410, respectively.

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NOTE 4 – CONCENTRATION RISK

For the three months ended March 31, 2009 and the period from April 18, 2008 (inception) to March 31, 2009, the Company had one customer, Visator, who individually accounted for 100% of total revenues in the amount of $9,000 and $30,000, respectively. This customer is also a related party. While the Company believes the relationship with the customer is stable, a significant decrease or interruption in business from the significant customer could have a material adverse effect on the Company’s business, financial condition and results of operations. The Company plans to greatly expand their customer base in the upcoming year to mitigate this risk (See Note 10).

As of March 31, 2009 and December 31, 2008, the Company has an accounts receivable balance of $1,000 and $9,000. These amounts are owed by one customer, Visator, a related party (See Note 10).

NOTE 5 – LOAN PAYABLE – RELATED PARTIES

On June 30, 2008, the Company received a loan from Jesper Toft, the Chairman of the Board of Directors, Chief Executive Officer and Chief Financial Officer of the Company, in the amount of $1,000 to pay for incorporation filing fees of the Company. The loan is due on demand, unsecured and bears no interest (See Notes 7 and 10).

On July 24, 2008, the Company received a loan from Jesper Toft, the Chairman of the Board of Directors, Chief Executive Officer and Chief Financial Officer of the Company, in the amount of $1,789 to pay for the Company’s website and design. The loan is due on demand, unsecured and bears no interest (See Notes 7 and 10).

On July 23, 2008, the Company received a loan from Jesper Toft, the Chairman of the Board of Directors, Chief Executive Officer and Chief Financial Officer of the Company, in the amount of $64 to pay for incorporation filing fees of the Company. The loan is due on demand, unsecured and bears no interest (See Notes 7 and 10).

NOTE 6 –NOTES PAYABLE – RELATED PARTIES

On July 2, 2008, the Company executed a $35,000 promissory note to Toft ApS, a wholly owned company of Jesper Toft, the Chairman of the Board of Directors, Chief Executive Officer and Chief Financial Officer of the Company, in exchange for $35,000 cash. The note is due on demand, unsecured and bears no interest (See Notes 7 and 10).

In August 18, 2008, the Company received a loan from Toft ApS, a wholly owned company of Jesper Toft, the Chairman of the Board of Directors, Chief Executive Officer and Chief Financial Officer of the Company, in the amount of $10,000 for funding the Company’s operating expenses. The note is due on demand, unsecured and bears no interest (See Notes 7 and 10).

NOTE 7 – STOCKHOLDERS’ EQUITY

The Company was incorporated on April 18, 2008. The Company authorized 100,000,000 shares of common stock with a par value of $.001 and 10,000,000 shares of preferred stock with a par value of $.001, of which 100,000 shares are designated as Series A Convertible Preferred Stock. Per the Distribution agreement, as of June 1, 2008, the Company is committed to issuing 11,305,030 shares of common stock, par value $.001, to the shareholders of Visator. As of October 9, 2008, the shares were issued (See Note 1).

On July 2, 2008, the Company authorized the issuance of 20,000 shares of common stock to Anslow & Jaclin LLP for legal services related to the registration of the Company. For the period from April 18, 2008 (inception) to March 31, 2009, the Company has recorded the fair value of $10,000 in legal fees for the share issuance.

On July 2, 2008, the Company authorized the issuance of 25,000 shares of common stock to Profit Planners, Inc. for accounting services related to the registration of the Company. For the period from April 18, 2008 (inception) to March 31, 2009, the Company has recorded the fair value of $12,500 in consulting fees.

On July 16, 2008, the Company authorized the issuance of 100,000 Series A Convertible Preferred Stock to Jesper Toft, the Chief Executive Officer. This compensation for services is contingent upon the filing of the Company’s registration statement, which became effective on October 21, 2008. For the period from April 18, 2008 (inception) to March 31, 2009, the Company has recorded the fair value of $50,000 in consulting fees to Jesper Toft related to this issuance.

The Series A Convertible Preferred stockholders are entitled to receive, when and if declared by the Board of Directors out of funds legally available for the purpose, quarterly dividends payable in cash on the first day of April, July, October and January in each year (the “Quarterly dividend payment date”). The quarterly dividend payment date could begin after the first issuance of a share of Series A Convertible Preferred Stock. The Series A Convertible Preferred stockholders are entitled to 1,000 votes per each share they hold on all matters submitted to a vote of the stockholders of the Company. At any time on or after the issuance date, the holders of Series A Convertible Preferred shares may convert a portion or all of their shares into Common stock on a one to one basis.

At March 31, 2009 and December 31 2008, $666 and $1,269, respectively were recorded as an in kind contribution of interest on related party notes (See Notes 5 and 6).

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NOTE 8 – MANAGEMENT AGREEMENT

As part of the terms of the Separation Agreement described in Note 1, on June 1, 2008, Visator entered into a twelve month Management Services Agreement with the Company for consulting services pertaining to software maintenance provided to Visator’s management. The agreement provides for a management fee of $3,000 per month to be paid to the Company. As of three months ended March 31, 2009 and the period from April 18, 2008 (inception) to March 31, 2009, the Company has recorded revenue of $9,000 and $30,000, respectively to reflect three and ten months, respectively, worth of revenue.

NOTE 9 – COMMITMENTS AND CONTINGENCIES

Consulting agreement- Related party

Effective May 1, 2008, the Company entered into a consulting agreement with Jesper Toft, CEO, to provide consulting services starting in May 2008 at a rate of $1,000 per month. As of March 31, 2009, the Company has recorded a related party liability of $6,000 (See Note 10) based on this agreement and expenses of $11,000.

Consulting agreement

On June 1, 2008, the Company entered into a consulting agreement with Jude Dixon to provide maintenance services from June 1, 2008 to May 31, 2009 at a rate of $1,150 per month. As of March 31, 2009, the Company has recorded a liability and expense of $11,500 based on this agreement.

NOTE 10 – RELATED PARTY TRANSACTIONS

For the period from April 18, 2008 (inception) to March 31, 2009, the Company had one customer, Visator, who individually accounted for 100% of total revenues in the amount of $30,000. This customer is also a related party (See Note 4).

As of March 31, 2009 and December 31, 2008, the Company has an accounts receivable balance of $1,000 and $9,000, respectively. These amounts are owed by one customer, Visator, a related party (See Note 4).

Effective May 1, 2008, the Company entered into a consulting agreement with Jesper Toft, the Chairman of the Board of Directors, Chief Executive Officer and Chief Financial Officer of the Company, to provide consulting services from May 2008 to December 2008 at a rate of $1,000 per month. As of March 31, 2009, the Company has recorded a related party liability of $6,000 based on this agreement (See Note 9) and expenses of $11,000.

On August 18, 2008, the Company executed a promissory note to Toft ApS, a wholly owned company of Jesper Toft, the Chairman of the Board of Directors, Chief Executive Officer and Chief Financial Officer of the Company, in exchange for $10,000 for funding the Company’s operating expenses. The note is due on demand, unsecured and bears no interest (See Note 6).

At March 31, 2009 and December 31 2008, $666 and $1,269, respectively were recorded as an in kind contribution of interest on related party notes (See Notes 5 and 6).

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Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

Plan of Operation

We own, manage, and intend to exploit a sophisticated data mining technology primarily useful for organizations, which are involved in the handling of masses of unstructured textual information. Such information often comprises that which is available via the Internet, but can also include databases, etc. that are owned internally by those organizations. We plan to derive revenue from the technology mainly through license agreements with information-intensive organizations and others with related needs. Further development will focus on organizations that need to share and control data from among two or more internal information systems with different structures or specifications; organizations that desire to include a sophisticated searching device on their websites as a visitor aide; and organizations desiring to construct customized search and monitoring facilities over unique data sources. We intend to be active in upgrading and extending this technology to establish market competitiveness, to ensure steady growth and appeal as a successful and dynamic company.

Results of Operations

For the three months ended March 31, 2009 and the period from April 18, 2008 (Inception) through March 31, 2009, we had management service income of $9,000 and $30,000, respectively, from a related entity and cost of goods related to this service income was $3,450 and $11,500, respectively, due to consulting labor. For the three months ended March 31, 2009 and the period from April 18, 2008 (Inception) through March 31, 2009, operating expenses totaled $20,107 and $162,986, respectively, resulting in a net loss of $15,223 and $146,421, respectively.

For the three months ended March 31, 2009 and the period from April 18, 2008 (Inception) through March 31, 2009, selling, general and administrative expenses of $20,107 and $162,986, respectively, mainly comprised of legal fees of $1,841 and $44,402, consulting fees of $5,800 and $33,480, audit fees of $6,500 and $15,433, related party consulting fees for Jesper Toft, CEO, of $3,000 and $61,000 and office service expense of $2,966 and $8,671, respectively. For the three months ended March 31, 2009 and the period from April 18, 2008 (Inception) through March 31, 2009, we also had interest expense of $666 and $1,935, respectively related to in-kind contribution of interest on non-interest bearing loans payable-related party.

Capital Resources and Liquidity

As of March 31, 2009, we had cash of $496. While we are attempting to commence operations and produce revenues, our cash position may not be significant enough to support our daily operations. Management intends to raise additional funds through debt or equity.

However, if we are unable to satisfy our cash requirements we may be unable to proceed with our plan of operations. We do not anticipate the purchase or sale of any significant equipment. We also do not expect any significant additions to the number of employees. The foregoing represents our best estimate of our cash needs based on current planning and business conditions. In the event we are not successful in reaching our initial revenue targets, additional funds may be required, and we may not be able to proceed with our business plan for the development and marketing of our core services. Should this occur, we will suspend or cease operations.

We anticipate that depending on market conditions and our plan of operations, we may incur operating losses in the foreseeable future. Therefore, our auditors have raised substantial doubt about our ability to continue as a going concern. We do not have enough cash to continue operations for twelve months without receiving additional debt or equity financing or increasing our revenues.

Operating Activities

Operating activities provided $447 and used $45,568, respectively of cash during the three months ended March 31, 2009 and the period from April 18, 2008 (Inception) through March 31, 2009. We had a net loss of $15,223 and $146,421, respectively. We had a decrease and an increase in accounts receivable of $8,000 and of $1,000 and prepaid expenses of none and $465, respectively offset by an increase in accounts and accrued expenses payable of $6,855 and $27,473, respectively and we had none and $72,500 of stock issued for consulting fees and services – related party and professional fees, in-kind contribution of interest for loans payable – related party of $666 and $1,935 and depreciation expense of $149 and $410, respectively.

Investing Activities

We used none and $1,789, respectively of cash in our investing activities during the three months ended March 31, 2009 and the period from April 18, 2008 (Inception) through March 31, 2009.

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Financing Activities

We had none and $47,853, respectively, of cash provided by our financing activities during the three months ended March 31, 2009 and the period from April 18, 2008 (Inception) through March 31, 2009. We had none and $2,853, respectively of proceeds of loans payable to related party and none and $45,000, respectively of proceeds of loans payable to Toft Aps related party.

Critical Accounting Policies

Use of estimates

Revenue recognition

Our revenues are derived from advisory and technology consulting services related to software maintenance that we recognize over the term of the agreements. We follow the guidance of the Securities and Exchange Commission’s Staff Accounting Bulletin 104 (“SAB No. 104”) for revenue recognition. We will recognize revenue when it is realized or realizable and earned. We consider revenue realized or realizable and earned when it has persuasive evidence of an arrangement that the services have been rendered to the customer, the sales price is fixed or determinable, and collectability is reasonably assured.

Income taxes

We follow SFAS No. 109, “Accounting for Income Taxes.” Under the asset and liability method of SFAS No. 109, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. A valuation allowance has been provided for the Company's net deferred tax asset, due to uncertainty of realization.

Effective January 1, 2007, we adopted Financial Accounting Standard Board Interpretation No. 48 Accounting for Uncertainty in Income Taxes (“FIN 48”). FIN 48 clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements in accordance with SFAS Statement No. 109 Accounting for Income Taxes. FIN 48 prescribes a recognition threshold and measurement attributes for the financial statement recognition and measurement of a tax position taken or expected to be taken in tax return. FIN 48 also provides guidance on derecognition, classification, interest and penalties, accounting interim period, disclosure and transition. There were no adjustments required upon adoption of FIN 48.

Net loss per common share

Net 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 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 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 March 31, 2009.

Recently Issued Accounting Pronouncements

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Recently Issued Accounting Pronouncements continued

Off-Balance sheet arrangements

At March 31, 2009, we had no off-balance sheet arrangements.

Spin Out

In May 2008, Visator, Inc. spun out, pro rate, all of its shares of our common stock held by it to their 42 shareholders. These shares were not registered under the Securities Act of 1933 and may not have been appropriately exempt from registration under the Act. Based upon same, if it is determined that the shares issued pursuant to this spin out do not qualify for this exemption we may be subject remedial sanctions. Such sanctions could include the payment of disgorgement, prejudgment interest and civil penalties. We may also be subject to prejudgment interest on such amount as well as civil penalties in amount that would have to be determined by the court.

We are not aware of any pending claims for sanctions against us based upon the failure to properly register such shares under the Securities Act of 933. Nevertheless, it is possible that it could be determined that such shares may not have been exempt from registration and that we may be subject to sanctions and possible civil penalties. In the event that a shareholder brings a claim against us for failure to properly register these shares it could have an adversely affect on our results of operations and financial condition since we would need to pay fees to defend such claim or pay damages if the shareholder is successful in their claim against us.

Inflation

We believe that inflation does not significantly impact our current operations.

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Item 3.

Quantitative and Qualitative Disclosures About Market Risk

Not required for smaller reporting companies.

Item 4.

Controls and Procedures

a) Evaluation of Disclosure Controls. Jesper Toft, our Chief Executive Officer and Principal Accounting Officer, evaluated the effectiveness of our disclosure controls and procedures as of the end of our first fiscal quarter 2009 pursuant to Rule 13a-15(b) of the Securities and Exchange Act. Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in the reports that we file under the Exchange Act is accumulated and communicated to our management, as appropriate to allow timely decisions regarding required disclosure. Based on their evaluations, Jesper Toft concluded that our disclosure controls and procedures were effective as of March 31, 2009.

It should be noted that any system of controls, however well designed and operated, can provide only reasonable, and not absolute, assurance that the objectives of the system are met. In addition, the design of any control system is based in part upon certain assumptions about the likelihood of future events. Because of these and other inherent limitations of control systems, there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions

(b) Changes in internal control over financial reporting. There have been no changes in our internal control over financial reporting that occurred during the last fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. Our management team will continue to evaluate our internal control over financial reporting in 2009 as we implement our Sarbanes Oxley Act testing.

PART II - OTHER INFORMATION

Item 1.

Legal Proceedings

None.

Item 1A.

Risk Factors

THIS REPORT CONTAINS CERTAIN STATEMENTS RELATING TO FUTURE EVENTS AND THE FUTURE FINANCIAL PERFORMANCE OF OUR COMPANY. PROSPECTIVE INVESTORS ARE CAUTIONED THAT SUCH STATEMENTS ARE ONLY PREDICTIONS, INVOLVE RISKS AND UNCERTAINTIES, AND THAT ACTUAL EVENTS OR RESULTS MAY DIFFER MATERIALLY. IN EVALUATING SUCH STATEMENTS, PROSPECTIVE INVESTORS SHOULD SPECIFICALLY CONSIDER THE VARIOUS FACTORS IDENTIFIED IN THIS REPORT, INCLUDING THE MATTERS SET FORTH BELOW, WHICH COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE INDICATED BY SUCH FORWARD-LOOKING STATEMENTS.

An investment in our common stock involves a high degree of risk. You should carefully consider the risks described below and the other information in this prospectus before investing in our common stock. If any of the following risks occur, our business, operating results and financial condition could be seriously harmed. Please note that throughout this prospectus, the words “we”, “our” or “us” refer to the Company and not to the selling stockholders.

WE HAVE A LIMITED OPERATING HISTORY THAT YOU CAN USE TO EVALUATE US, AND THE LIKELIHOOD OF OUR SUCCESS MUST BE CONSIDERED IN LIGHT OF THE PROBLEMS, EXPENSES, DIFFICULTIES, COMPLICATIONS AND DELAYS FREQUENTLY ENCOUNTERED BY A SMALL DEVELOPING COMPANY.

We were incorporated in Delaware in April 2008. We have no significant financial resources and only a small amount of revenues to date. The likelihood of our success must be considered in light of the problems, expenses, difficulties, complications and delays frequently encountered by a small developing company starting a new business enterprise and the highly competitive environment in which we will operate. Since we have a limited operating history, we cannot assure you that our business will be profitable or that we will ever generate sufficient revenues to meet our expenses and support our anticipated activities.

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WE WILL REQUIRE FINANCING TO ACHIEVE OUR CURRENT BUSINESS STRATEGY AND OUR INABILITY TO OBTAIN SUCH FINANCING COULD PROHIBIT US FROM EXECUTING OUR BUSINESS PLAN AND CAUSE US TO SLOW DOWN OUR EXPANSION OF OPERATIONS.

We will need to raise additional funds through public or private debt or sale of equity to achieve our current business strategy. Such financing may not be available when needed. Even if such financing is available, it may be on terms that are materially adverse to your interests with respect to dilution of book value, dividend preferences, liquidation preferences, or other terms. Our capital requirements to implement our business strategy will be significant. Moreover, in addition to monies needed to continue operations over the next twelve months, we anticipate requiring additional funds in order to execute our plan of operations. No assurance can be given that such funds will be available or, if available, will be on commercially reasonable terms satisfactory to us. There can be no assurance that we will be able to obtain financing if and when it is needed on terms we deem acceptable.

If we are unable to obtain financing on reasonable terms, we could be forced to delay or scale back our plans for expansion. In addition, such inability to obtain financing on reasonable terms could have a material adverse effect on our business, operating results, or financial condition.

OUR AUDITOR HAS EXPRESSED SUBSTANTIAL DOUBT AS TO OUR ABILITY TO CONTINUE AS A GOING CONCERN.

Based on our financial history since inception, our auditor has expressed substantial doubt as to our ability to continue as a going concern. We are a development stage company that has never generated any revenue. If we cannot obtain sufficient funding, we may have to delay the implementation of our business strategy.

OUR FUTURE SUCCESS IS DEPENDENT, IN PART, ON THE PERFORMANCE AND CONTINUED SERVICE OF JESPER TOFT. WITHOUT HIS CONTINUED SERVICE, WE MAY BE FORCED TO INTERRUPT OR EVENTUALLY CEASE OUR OPERATIONS.

We are presently dependent to a great extent upon the experience, abilities and continued services of Jesper Toft. We currently have a consulting agreement with Mr. Toft. The loss of his services could have a material adverse effect on our business, financial condition or results of operation.

FROM INCEPTION, WE HAVE HAD ONLY ONE CUSTOMER WHO HAS ACCOUNTED FOR 100% OF OUR TOTAL REVENUES.

We currently have only one customer, Visator, who accounts for 100% of total revenues. This customer is also a related party. While we believe our relationship with Visator is stable, a significant decrease or interruption in business from our significant customer could have a material adverse effect on our business, financial condition and results of operations. We plan to expand our customer base in the upcoming year to mitigate this risk.

OUR COMMON STOCK IS CONSIDERED A PENNY STOCK, WHICH IS SUBJECT TO RESTRICTIONS ON MARKETABILITY, SO YOU MAY NOT BE ABLE TO SELL YOUR SHARES.

If our common stock becomes tradable in the secondary market, we will be subject to the penny stock rules adopted by the Securities and Exchange Commission that require brokers to provide extensive disclosure to their customers prior to executing trades in penny stocks. These disclosure requirements may cause a reduction in the trading activity of our common stock, which in all likelihood would make it difficult for our shareholders to sell their securities.

Penny stocks generally are equity securities with a price of less than $5.00 (other than securities registered on certain national securities exchanges or quoted on the NASDAQ system). Penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document that provides information about penny stocks and the risks in the penny stock market. The broker-dealer also must provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson in the transaction, and monthly account statements showing the market value of each penny stock held in the customer’s account. The broker-dealer must also make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser’s written agreement to the transaction. These requirements may have the effect of reducing the level of trading activity, if any, in the secondary market for a security that becomes subject to the penny stock rules. The additional burdens imposed upon broker-dealers by such requirements may discourage broker-dealers from effecting transactions in our securities, which could severely limit their market price and liquidity of our securities. These requirements may restrict the ability of broker-dealers to sell our common stock and may affect your ability to resell our common stock.

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

None.

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Item 3.

Defaults Upon Senior Securities

None.

Item 4.

Submission of Matters to a Vote of Security Holders

None.

Item 5.

Other Information

None

Item 6.

Exhibits

Exhibit Index

31.1 Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer

31.2 Rule 13a-14(a)/15d-14(a) Certification of the Principal Accounting Officer

32.1 Certification Pursuant to 18 U.S.C. §1350 of Chief Executive Officer

32.2 Certification Pursuant to 18 U.S.C. §1350 of the Principal Accounting Officer

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SIGNATURES

In accordance with Section 13(a) or 15(d) of the Exchange Act, the registrant has caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


	INSCRUTOR, INC.

Dated: April 30, 2009	By:	/S/ JESPER TOFT
		Jesper Toft Chairman of the Board of Directors, Chief Executive Officer, Chief Financial Officer, Chief Accounting Officer

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Positive
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Constraining
Legalese
Litigious
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China Network Media (CNNM) Inactive 10-Q2009 Q1 Quarterly report

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