SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
For the quarterly period ended: July 31, 2008
or
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the transition period from ________________ to __________________
Commission File Number 333-143750
BARRICODE, INC.
_________________________________________________________________
(Exact name of small business issuer as specified in its charter)
Nevada 20-4662814
_______________________ ___________________
(State of Incorporation (I.R.S. Employer
or organization) Identification No.)
112 North Curry Street
Carson City, Nevada, 89703
________________________________________
(Address of principal executive offices)
(775) 284-3769
___________________________
(Issuer's telephone number)
Indicate by check whether the registrant (1) has filed all reports required to
be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [ ]
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 [ ] Accelerated filer [ ]
Non-accelerated filer [ ] 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 |X] No |_|
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: As of July 31, 2008, the registrant
had 17,475,000 shares of common stock, $0.001 par value, issued and outstanding.
Index
Page
Number
PART I - FINANCIAL INFORMATION
ITEM 1. Financial Statements.............................................. 3
Balance Sheets as of July 31, 2008 and April 30, 2008(audited)............ 4
Interim Statements of Operations for three months ended July 31, 2008;
three months ended July 31, 2007 and cumulative from inception
(April 7, 2006) to July 31, 2008.......................................... 5
Interim Statement of Stockholders' Equity (Deficit)
From inception (April 7, 2006) to July 31, 2008........................... 6
Interim Statements of Cash Flows for three months ended July 31, 2008;
three months ended July 31, 2007 and cumulative results from inception
(April 7, 2006) to July 31, 2008.......................................... 7
Notes to Interim Financial Statements to July 31, 2008.................... 8
Item 2. Management's Discussion and Analysis or Plan of Operation......... 12
Item 3. Quantitative and Qualitative Disclosure about Market Risk......... 14
Item 4. Controls and Procedures........................................... 14
Item 4T. Controls and Procedures.......................................... 14
PART II - OTHER INFORMATION
Item 1. Legal Proceedings................................................. 16
Item 1A. Risk Factors..................................................... 16
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds....... 16
Item 3. Defaults Upon Senior Securities .................................. 16
Item 4. Submission of Matters to a Vote of Security Holders............... 16
Item 5. Other Information................................................. 17
Item 6. Exhibits.......................................................... 17
BARRICODE, INC.
(A DEVELOPMENT STAGE COMPANY)
FINANCIAL STATEMENTS
JULY 31 2008
(UNAUDITED)
BALANCE SHEETS
STATEMENTS OF OPERATIONS
STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
STATEMENTS OF CASH FLOWS
NOTES TO FINANCIAL STATEMENTS
BARRICODE, INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEETS
(UNAUDITED)
July 31, 2008 April 30, 2008
(Audited)
______________________________________________________________________________________
ASSETS
CURRENT ASSETS
Cash $ 2,880 $ 8,729
______________________________________________________________________________________
TOTAL ASSETS $ 2,880 $ 8,729
======================================================================================
LIABILITIES AND STOCKHOLDERS EQUITY (DEFICIT)
CURRENT LIABILITIES
Due to related party (Not5) 1,279 1,279
Accrual of Expense 7,778 8,828
______________________________________________________________________________________
TOTAL CURRENT LIABILITIES $ 9,057 $ 10,107
______________________________________________________________________________________
STOCKHOLDER'S EQUITY (DEFICIT)
Capital stock (Note 4)
Authorized
75,000,000 shares of common stock,
$0.001 par value,
Issued and outstanding
17,475,000 shares of common stock at
April 30, 2008 and July 31, 2008 17,475 17,475
Additional paid-in capital 9,900 9,900
Deficit accumulated during the exploration
stage (33,552) (28,753)
______________________________________________________________________________________
Total stockholder's deficit $( 6,177) $( 1,378)
______________________________________________________________________________________
Total Liabilities and Stockholder's Equity $ 2,880 $ 8,729
======================================================================================
The accompanying notes are an integral part of these financial statements.
BARRICODE, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS
(UNAUDITED)
Cumulative
results of
operations from
April 3, 2006
Three months Three months (date of
ended ended inception) to
July 31, 2008 July 31, 2007 July 31, 2008
__________________________________________________________________________________________
EXPENSES
Office and general $ (1,687) $ (964) $ (8,040)
Professional fees (3,112) (4,000) (25,512)
__________________________________________________________________________________________
NET LOSS BEFORE INCOME TAXES $ (4,799) $ (4,964) $ (33,552)
PROVISION FOR INCOME TAXES - - -
__________________________________________________________________________________________
NET LOSS AFTER INCOME TAXES $ (4,799) $ (4,964) $ (33,552)
==========================================================================================
BASIC AND DILUTED NET LOSS
PER COMMON SHARE $ 0.00 $ 0.00
===================================================================
WEIGHTED AVERAGE NUMBER OF
BASIC AND DILUTED COMMON
SHARES OUTSTANDING 17,475,000 16,100,671
===================================================================
The accompanying notes are an integral part of these financial statements.
BARRICODE, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
FROM INCEPTION (APRIL 3, 2006) TO JULY 31, 2008 (UNAUDITED)
Deficit
Common Stock Accumulated
_______________________ Additional Share During the
Number of Paid-in Subscription Exploration
shares Amount Capital Receivable Stage Total
___________________________________________________________________________________________________________________________
Common stock issued for cash at
$0.001 per share
- - April 6, 2006 15,000,000 $ 15,000 $ - $(15,000) $ - $ -
Net Loss for the year ended April
30, 2006 - - - - (1,279) (1,279)
___________________________________________________________________________________________________________________________
Balance, April 30, 2006 15,000,000 15,000 - (15,000) (1,279) (1,279)
Share Subscription Received - - 15,000 - 15,000
Common stock issued for cash at
$0.005 per share (May 1, 2006 to
April 30, 2007) 2,475,000 2,475 9,900 - 12,375
Net loss for year ended April 30,
2007 - - - - (8,691) (8,691)
___________________________________________________________________________________________________________________________
Balance, April 30, 2007 17,475,000 17,475 9,900 - (9,970) 17,405
Net loss for year ended April 30,
2008 (18,783) (18,783)
___________________________________________________________________________________________________________________________
Balance, April 30, 2008 17,475,000 17,475 9,900 - (28,753) (1,378)
Net loss for three months ended
July 31, 2008 - - - - (4,799) (4,799)
===========================================================================================================================
Balance, July 31, 2008 17,475,000 $ 17,475 $9,900 $ - $ (33,552) $ (6,177)
===========================================================================================================================
The accompanying notes are an integral part of these financial statements.
BARRICODE, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
(UNAUDITED)
Cumulative results
of operations from
April 3, 2006
Three months ended Three months ended (date of inception)
July 31, 2008 July 31, 2007 to July 31, 2008
_______________________________________________________________________________________________________________________
OPERATING ACTIVITIES
Net loss $ (4,799) $ (4,964) $ (33,552)
Changes in operating assets and liabilities
Prepaid Expense - (145) -
Accrual of Expenses (1,050) (4,928) 7,778
_______________________________________________________________________________________________________________________
NET CASH FROM OPERATING ACTIVITIES (5,849) (10,037) (25,774)
FINANCING ACTIVITIES
Proceeds from sale of common stock - - 27,375
Amounts due to related part - - 1,279
_______________________________________________________________________________________________________________________
NET CASH FROM FINANCING ACTIVITIES - - 28,654
_______________________________________________________________________________________________________________________
NET INCREASE (DECREASE) IN CASH (5,849) (10,037) 2,880
CASH, BEGINNING 8,729 26,112 -
_______________________________________________________________________________________________________________________
CASH, ENDING 2,880 16,075 2,880
=======================================================================================================================
Supplemental cash flow information:
Cash paid for:
Interest - - -
Income Taxes - - -
=======================================================================================================================
NON-CASH ACTIVITIES
Stock issued for services - - -
Stock issued for accounts payable - - -
Stock issued for notes payable - - -
Stock issued for convertible debentures and
interest - - -
Convertible debentures issued for services - - -
Warrants issued - - -
Stock issued for penalty on default of
convertible debenture - - -
Note payable issued for finance charges - - -
Forgiveness of not payable and accrued
interest - - -
Stock issued for investment - - -
The accompanying notes are an integral part of these financial statements.
BARRICODE, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
(UNAUDITED)
JULY 31, 2008
________________________________________________________________________________
NOTE 1 - NATURE OF OPERATIONS AND BASIS OF PRESENTATION
________________________________________________________________________________
Barricode, Inc. (the "Company") is in the initial development stage and has
incurred losses since inception totaling $33,552 The Company was incorporated on
April 3, 2006 in the State of Nevada. The fiscal year end of the Company is
April 30. The Company was organized to enter into the Computer Network Security
Software industry with two planned proprietary technologies, ChainMail Pro, a
document and email encryption software and Impasse which is a computer network
intrusion monitor.
The ability of the Company to continue as a going concern is dependent on
raising capital to fund its business plan and ultimately to attain profitable
operations. Accordingly, these factors raise substantial doubt as to the
Company's ability to continue as a going concern. The Company is funding its
initial operations by way of issuing Founders' shares and entering into a
private placement offering for 2,550,000 shares at $0.005 per share. As of July
31, 2008, the Company had issued 15,000,000 Founders shares at $0.001 per share
for proceeds of $15,000, and 2,475,000 shares at $0.005 per share for proceeds
of $12,375, which have been received by the Company.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
________________________________________________________________________________
BASIS OF PRESENTATION
These financial statements are presented in United States dollars and have been
prepared in accordance with accounting principles generally accepted in the
United States.
SEGMENTED REPORTING
SFAS Number 131, "Disclosure About Segments of an Enterprise and Related
Information", changed the way public companies report information about segments
of their business in their quarterly reports issued to shareholders. It also
requires entity-wide disclosures about the products and services the entity
provides, the material countries in which it holds assets and reports revenues
and its major customers.
For the period ended July 31, 2008 all operations took place in Ontario, Canada.
COMPREHENSIVE LOSS
SFAS No. 130, "Reporting Comprehensive Income," establishes standards for the
reporting and display of comprehensive loss and its components in the financial
statements. As at July 31, 2007 and July 31, 2008 the Company has no items that
represent a comprehensive loss and, therefore, has not included a schedule of
comprehensive loss in the financial statements.
USE OF ESTIMATES AND ASSUMPTIONS
Preparation of the financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect certain 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 period. Accordingly,
actual results could differ from those estimates.
FINANCIAL INSTRUMENTS
All significant financial assets, financial liabilities and equity instruments
of the Company are either recognized or disclosed in the financial statements
together with other information relevant for making a reasonable assessment of
future cash flows, interest rate risk and credit risk. Where practical the fair
values of financial assets and financial liabilities have been determined and
disclosed; otherwise only available information pertinent to fair value has been
disclosed.
BARRICODE, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
(UNAUDITED)
JULY 31, 2008
________________________________________________________________________________
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
________________________________________________________________________________
LOSS PER COMMON SHARE
Basic earnings (loss) per share includes no dilution and is computed by dividing
income (loss) available to common stockholders by the weighted average number of
common shares outstanding for the period. Dilutive earnings (loss) per share
reflect the potential dilution of securities that could share in the earnings of
the Company. Because the Company does not have any potential dilutive
securities, the accompanying presentation is only on the basic loss per share.
INCOME TAXES
The Company follows the liability method of accounting for income taxes. Under
this method, 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
balances and tax loss carry-forwards. Deferred tax assets and liabilities are
measured using enacted or substantially enacted tax rates expected to apply to
the taxable income in the years in which those differences are expected to be
recovered or settled. The effect on deferred tax assets and liabilities of a
change in tax rates is recognized in income in the period that includes the date
of enactment or substantive enactment.
STOCK-BASED COMPENSATION
The Company accounts for stock-based compensation issued to employees based on
SFAS No. 123R "Share Based Payment". SFAS No. 123R is a revision of SFAS No. 123
"Accounting for Stock-Based Compensation", and supersedes APB Opinion No. 25,
"Accounting for Stock Issued to Employees" and its related implementation
guidance. SFAS 123R establishes standards for the accounting for transactions in
which an entity exchanges its equity instruments for goods or services. It also
addresses transactions in which an entity incurs liabilities in exchange for
goods or services that are based on the fair value of the entity's equity
instruments or that may be settled by the issuance of those equity instruments.
SFAS 123R focuses primarily on accounting for transactions in which an entity
obtains employee services in share-based payment transactions. SFAS 123R does
not change the accounting guidance for share-based payment transactions with
parties other than employees provided in SFAS 123 as originally issued and
Emerging Issues Task Force Issue No. 96-18, "Accounting for Equity Instruments
That Are Issued to Other Than Employees for Acquiring, or in Conjunction with
Selling, Goods or Services".
SFAS 123R does not address the accounting for employee share ownership plans,
which are subject to AICPA Statement of Position 93-6, "Employers' Accounting
for Employee Stock Ownership Plans".
SFAS 123R requires an entity to measure the cost of employee services received
in exchange for an award of equity instruments based on the grant-date fair
value of the award (with limited exceptions). That cost will be recognized over
the period during which an employee is required to provide service in exchange
for the award - the requisite service period (usually the vesting period). SFAS
123R requires that the compensation cost relating to share-based payment
transactions be recognized in financial statements. That cost will be measured
based on the fair value of the equity or liability instruments issued. The scope
of SFAS 123R includes a wide range of share-based compensation arrangements
including share options, restricted share plans, performance-based awards, share
appreciation rights, and employee share purchase plans.
As at July 31, 2008 the Company had not adopted a stock option plan nor had it
granted any stock options. Accordingly no stock-based compensation has been
recorded to date.
BARRICODE, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
(UNAUDITED)
JULY 31, 2008
________________________________________________________________________________
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
________________________________________________________________________________
RECENT ACCOUNTING PRONOUNCEMENTS
In February 2007, the FASB issued SFAS No. 159, "The Fair Value Option for
Financial Assets and Financial Liabilities". This Statement permits entities to
choose to measure many financial assets and financial liabilities at fair value.
Unrealized gains and losses on items for which the fair value option has been
elected are reported in earnings. SFAS No. 159 is effective for fiscal years
beginning after November 15, 2007.
In September 2006, the FASB issued SFAS No. 157, "Fair Value Measurements"
("SFAS No. 157"). SFAS 155 establishes framework for measuring fair value and
expands disclosures about fair value measurements. The changes to current
practice resulting from the application of this statement relate to the
definition of fair value, the methods used to measure fair value, and the
expanded disclosures about fair value measurements. The statement is effective
for fiscal years beginning after November 15, 2007 and periods with those fiscal
years.
The Financial Accounting Standards Board has issued SFAS No. 155 "ACCOUNTING FOR
CERTAIN HYBRID FINANCIAL INSTRUMENTS AN AMENDMENT OF FASB STATEMENTS NO. 133 AND
140" and No. 156 "ACCOUNTING FOR SERVICING OF FINANCIAL ASSETS - AN AMENDMENT OF
FASB STATEMENT NO. 140", but they will not have a material effect in the
COMPANYS' RESULTS OF OPERATIONS OR FINANCIAL POSITION.
The adoption of these new pronouncements is not expected to have a material
effect on the Company's financial position or results of operations
NOTE 3 - FAIR VALUE OF FINANCIAL INSTRUMENTS
________________________________________________________________________________
In accordance with the requirements of SFAS No. 107, the Company has determined
the estimated fair value of financial instruments using available market
information and appropriate valuation methodologies. The fair value of financial
instruments classified as current assets or liabilities approximate their
carrying value due to the short-term maturity of the instruments.
NOTE 4 - CAPITAL STOCK
________________________________________________________________________________
The Company's capitalization is 75,000,000 common shares with a par value of
$0.001 per share. No preferred shares have been authorized or issued.
As of July 31, 2008, the sole Director had purchased 15,000,000 shares of the
common stock in the Company at $0.001 per share with proceeds to the Company
totalling $15,000.
PRIVATE PLACEMENT
On April 26, 2006, the Company authorized a private placement offering of up to
2,550,000 shares of common stock at a price of $0.005 per share. The total
amount to be raised in this financing is $12,750. As of July 31, 2008, the
Company had issued 2,475,000 shares at $0.005 per share and received $12,375
from the sale of its private placement stock.
NOTE 5 - RELATED PARTY TRANSACTIONS
________________________________________________________________________________
As of July 31, 2008, the Company received advances from a Director in the amount
of $1,279 to pay for incorporation costs. The amounts due to the related party
are unsecured and non-interest bearing with no set terms of repayment.
BARRICODE, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
(UNAUDITED)
JULY 31, 2008
________________________________________________________________________________
NOTE 6 - INCOME TAXES
________________________________________________________________________________
As of July 31, 2008, the Company had net operating loss carry forwards of
approximately $33,552 that may be available to reduce future years' taxable
income and will expire commencing in 2026. Availability of loss usage is subject
to change of ownership limitations under Internal Revenue Code 382. Future tax
benefits which may arise as a result of these losses have not been recognized in
these financial statements, as their realization is determined not likely to
occur and, accordingly, the Company has recorded a full valuation allowance for
the deferred tax asset relating to these tax loss carryforwards.
ITEM 2: MANAGEMENT DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
Overview
Barricode, Inc. (" the Company," "we," "us," "it" and "our" refer to Barricode,
Inc.) was incorporated in the State of Nevada as a for-profit company on April
3, 2006. Barricode is a development-stage company organized to enter into the
computer security software industry specializing in the packaging, sales,
distribution and support of user-friendly open-source network security software.
Our low cost security software products and services will add value to
open-source code supplied by independent third party providers.
The Company's goal is to become a major supplier and supporter of easy-to-use
open-source network security software that works seamlessly in the background to
protect computers and computer networks. Our "set it and forget it" approach
frees uses to concentrate on the work that makes them more productive while the
security of their systems is monitored automatically without the user being
required to actively monitor the process.
Barricode plans to provide three network security products. The first will be
ChainMail, an easy to use freeware document protection (encryption) application.
ChainMail will allow users to encrypt outgoing email messages and decrypt
incoming messages. The second product is ChainMail Pro, a retail version of
ChainMail that will have more features and functionality than the freeware
version. The third is Impasse, a network intrusion detection application which
monitors networks and detects activity that indicates the presence of an
intruder on the network.
We did not earn any revenues during the three-month period ending July 31, 2008.
During the period we incurred operating expenses of $4,799 comprising of
professional fees in the amount of $3,112 and office and administrative expenses
of $1,687.
Plan of Operation
The following discussion and analysis of our financial condition and results of
operations should be read in conjunction with our financial statements and
related notes included elsewhere in this report.
This interim report contains forward looking statements relating to our
Company's future economic performance, the plans and objectives of management
for future operations, projections of revenue mix and other financial items that
are based on the beliefs of, as well as assumptions made by and information
currently known to, our management. The words "expects", "intends", "believes",
"anticipates", "may", "could", "should" and similar expressions and variations
thereof are intended to identify forward-looking statements. The cautionary
statements set forth in this section are intended to emphasize that actual
results may differ materially from those contained in any forward looking
statement.
We anticipate that our current cash and cash equivalents and cash generated from
operations, if any, will be insufficient to satisfy our liquidity requirements
for at least the next 12 months. We will require additional funds prior to such
time and the Company will seek to sell additional capital through private equity
placements, debt or other sources of financing. If we are unable to obtain
sufficient additional financing, we may be required to reduce the scope of our
business plan, which could harm our business, financial condition and operating
results. Additional funding to meet our requirements may not be available on
favourable terms, if at all.
Over the next 12 months the company must raise capital and start the procurement
of our security software systems. We plan to first obtain open-source e-mail
encryption and network intrusion software applications that we can customize to
provide initial freeware security applications to a wide variety of computer
users. The estimated cost to customize these applications is $7,000.
The company's primary revenue stream will be derived from subscribers who will
pay a recurring monthly fee to obtain security threat updates and computer
protection software enhancements. We expect the majority of subscribers will pay
for the material by using a credit card. A small percentage of the subscribers,
less than two percent (2%), are expected to pay using a money order sent via the
post office. We will contract with a third party e-commerce gateway provider to
support our e-commerce transactions software required to distribute and receive
payment for our proposed software products. We expect this license to cost
$7,000.
Barricode, Inc intends to develop and operate a website which will feature the
current products and news of our future products. Product documentation
including user's manuals, product registration and other supporting
documentation will also be delivered electronically from our web site in Adobe
PDF format. Website development and content is anticipated to cost $6,000
The final activity will be to procure client functionality modules in order to
augment the network intrusion systems with automatic periodic updates of
resident threat signatures and website integration at an estimated cost of
$8,000.
We also plan to initiate our marketing initiative out of which we expect to
attract a large number of customers (personal and institutional computer network
users) for our security systems. The marketing plan, which includes advertising
in trade journals and attendance at industry trade shows, is estimated to cost
$15,000.
At the present time, we have not made any arrangements to raise any additional
cash to support and enhance product development. If we need additional cash but
are unable to raise it, we will either suspend marketing operations until we do
raise the cash, or cease operations entirely. Other than as described in this
paragraph, we have no other financing plans.
If we are unable to complete any phase of our systems development or marketing
efforts because we don't have enough money, we will cease our development and or
marketing operations until we raise sufficient funding. Attempting to raise
capital after failing in any phase of our software procurement plan would be
difficult. As such, if we cannot secure additional proceeds we will have to
cease operations.
Management does not plan to hire employees at this time. Our sole officer and
director will be responsible for the initial product development. Once the
company has product to market over the Internet, we will hire an independent
consultant to build our website. The company also intends to hire sales
representatives initially on a commission only basis to keep administrative
overhead to a minimum.
We do not expect to purchase or sell plant or significant equipment in the next
twelve months.
Off Balance Sheet Arrangements.
As of the date of this quarterly report, the current funds available to the
Company will not be sufficient to continue operations. The cost to establish the
Company and begin operations is estimated to be approximately $43,000 over the
next twelve months and the cost of maintaining our reporting status is estimated
to be $12,000 over this same period. The officer and director, Mr. Delaney has
undertaken to provide the Company with initial operating capital to sustain our
business over the next twelve month period as the expenses are incurred in the
form of a non-secured loan. However, there is no contract in place or written
agreement securing this agreement. Management believes that if the Company
cannot raise sufficient revenues or maintain its reporting status with the SEC
it will have to cease all efforts directed towards the Company. As such, any
investment previously made would be lost in its entirety.
Other than the above described situation the Company does not have any
off-balance sheet arrangements that have or are reasonably likely to have a
current or future effect on the Company's financial condition, changes in
financial condition, revenues or expenses, results of operations, liquidity,
capital expenditures or capital resources that are material to investors.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We are a smaller reporting company as defined by Rule 12b-2 of the Securities
Act of 1934 and are not required to provide the information under this item.
ITEM 4. CONTROLS AND PROCEDURES
Within 90 days prior to the end of the period covered by this report the
registrant carried out an evaluation of the effectiveness of the design and
operation of its disclosure controls and procedures pursuant to Rule 13a-15
under the Securities Exchange Act of 1934, as amended ("Exchange Act"). This
evaluation was done under the supervision and the participation of the
registrant's President and Principal Financial Officer. Based upon that
evaluation, he identified that the lack of segregation of accounting duties as a
result of limited personal resources to be a material weakness the registrant's
disclosure controls and procedures. Other than for this exception he believes
that the Company's disclosure controls are effective in gathering, analyzing and
disclosing information needed to satisfy the registrant's disclosure obligations
under the Exchange Act. Management believes that the material weaknesses did not
have an affect on the Company's financial results.
ITEM 4T. CONTROLS AND PROCEDURES
The management of the Company is responsible for establishing and maintaining
adequate internal control over financial reporting, as required by
Sarbanes-Oxley (SOX) Section 404 A. The Company's internal control over
financial reporting is a process designed under the supervision of the Company's
Chief Executive Officer and Chief Financial Officer to provide reasonable
assurance regarding the reliability of financial reporting and the preparation
of the Company's financial statements for external purposes in accordance with
U.S. generally accepted accounting principles.
As of July 31, 2008 management assessed the effectiveness of the Company's
internal control over financial reporting based on the criteria for effective
internal control over financial reporting established in SEC guidance on
conducting such assessments. Based on that evaluation, they concluded that,
during the period covered by this report, such internal controls and procedures
were not effective to detect the inappropriate application of US GAAP rules as
more fully described below. This was due to deficiencies that existed in the
design or operation of our internal control over financial reporting that
adversely affected our internal controls and that may be considered to be
material weaknesses.
The matters involving internal controls and procedures that the Company's
management considered to be material weaknesses under the standards of the
Public Company Accounting Oversight Board were: (1) lack of a functioning audit
committee and lack of a majority of outside directors on the Company's board of
directors, resulting in ineffective oversight in the establishment and
monitoring of required internal controls and procedures; (2) inadequate
segregation of duties consistent with control objectives; (3) insufficient
written policies and procedures for accounting and financial reporting with
respect to the requirements and application of US GAAP and SEC disclosure
requirements; and (4) ineffective controls over period end financial disclosure
and reporting processes. The aforementioned material weaknesses were identified
by the Company's Chief Financial Officer in connection with the review of our
financial statements as of July 31, 2008 and communicated the matters to our
management.
Management believes that the material weaknesses set forth in items (2), (3) and
(4) above did not have an affect on the Company's financial results. However,
management believes that the lack of a functioning audit committee and lack of a
majority of outside directors on the Company's board of directors, resulting in
ineffective oversight in the establishment and monitoring of required internal
controls and procedures can result in the Company's determination to its
financial statements for the future years.
We are committed to improving our financial organization. As part of this
commitment, we will create a position to segregate duties consistent with
control objectives and will increase our personnel resources and technical
accounting expertise within the accounting function when funds are available to
the Company: i) Appointing one or more outside directors to our board of
directors who shall be appointed to the audit committee of the Company resulting
in a fully functioning audit committee who will undertake the oversight in the
establishment and monitoring of required internal controls and procedures; and
ii) Preparing and implementing sufficient written policies and checklists which
will set forth procedures for accounting and financial reporting with respect to
the requirements and application of US GAAP and SEC disclosure requirements.
Management believes that the appointment of one or more outside directors, who
shall be appointed to a fully functioning audit committee, will remedy the lack
of a functioning audit committee and a lack of a majority of outside directors
on the Company's Board. In addition, management believes that preparing and
implementing sufficient written policies and checklists will remedy the
following material weaknesses (i) insufficient written policies and procedures
for accounting and financial reporting with respect to the requirements and
application of US GAAP and SEC disclosure requirements; and (ii) ineffective
controls over period end financial close and reporting processes. Further,
management believes that the hiring of additional personnel who have the
technical expertise and knowledge will result proper segregation of duties and
provide more checks and balances within the department. Additional personnel
will also provide the cross training needed to support the Company if personnel
turn over issues within the department occur. This coupled with the appointment
of additional outside directors will greatly decrease any control and procedure
issues the company may encounter in the future.
We will continue to monitor and evaluate the effectiveness of our internal
controls and procedures and our internal controls over financial reporting on an
ongoing basis and are committed to taking further action and implementing
additional enhancements or improvements, as necessary and as funds allow.
There have been no significant changes in our internal control over financial
reporting that occurred during the quarter ended July 31, 2008 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
The Company is not a party to any pending legal proceedings, and no such
proceedings are known to be contemplated.
No director, officer, or affiliate of the issuer and no owner of record or
beneficiary of more than 5% of the securities of the issuer, or any security
holder is a party adverse to the small business issuer or has a material
interest adverse to the small business issuer.
ITEM 1A. RISK FACTORS
We are a smaller reporting company as defined by Rule 12b-2 of the Securities
Act of 1934 and are not required to provide the information under this item.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS
31.1 Rule 13(a)-14(a)/15(d)-14(a) Certification of Chief Executive Officer
31.2 Rule 13(a)-14(a)/15(d)-14(a) Certification of Chief Financial Officer *
32.1 Section 1350 Certification of Chief Executive Officer
32.2 Section 1350 Certification of Chief Financial Officer **
* Included in Exhibit 31.1
** Included in Exhibit 32.1
SIGNATURES
Pursuant to the requirements of the Exchange Act of 1934, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
BARRICODE, INC.
By: /s/ TOM DELANEY
____________________________________________
Tom Delaney
President, Secretary Treasurer,
Principal Executive Officer,
Principal Financial Officer and Director
Dated: September 5, 2008