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 quarterly period ended: October 31, 2008
or
[ ] 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 333-143750
BARRICODE, INC.
_________________________________________________________________
(Exact name of small business issuer as specified in its charter)
Nevada 20-4662814
________________________________________ ____________________________________
(State of Incorporation or organization) (I.R.S. Employer 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 [ ] (Do not check if a smaller reporting company)
Smaller reporting company [X]
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 November 24, 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
Condensed Balance Sheets as of October 31, 2008 and April 30, 2008
(audited)................................................................. 4
Condensed Statements of Operations for three months ended October 31, 2008
and October 31, 2007; six months ended October 31, 2008 and October 31,
2007 and cumulative from inception (April 3, 2006) to October 31, 2008.... 5
Condensed Statements of Stockholders' Equity (Deficit) From inception
(April 3, 2006) to October 31, 2008 (Unaudited)........................... 6
Condensed Statements of Cash Flows for six months ended October 31, 2008;
Six months ended October 31, 2007 and cumulative results from inception
(April 3, 2006) to October 31, 2008....................................... 7
Notes to the Condensed Financial Statements to October 31, 2008........... 8
Item 2. Management's Discussion and Analysis or Plan of Operation......... 9
Item 3. Quantitative and Qualitative Disclosure about Market Risk......... 11
Item 4T. Controls and Procedures.......................................... 11
PART II - OTHER INFORMATION
Item 1. Legal Proceedings................................................. 13
Item 1A. Risk Factors..................................................... 13
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds....... 13
Item 3. Defaults Upon Senior Securities................................... 13
Item 4. Submission of Matters to a Vote of Security Holders............... 13
Item 5. Other Information................................................. 14
Item 6. Exhibits.......................................................... 14
2
BARRICODE, INC.
(A DEVELOPMENT STAGE COMPANY)
CONDENSED FINANCIAL STATEMENTS
OCTOBER 31 2008
(UNAUDITED)
CONDENSED BALANCE SHEETS
CONDENSED STATEMENTS OF OPERATIONS
CONDENSED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
CONDENSED STATEMENTS OF CASH FLOWS
NOTES TO CONDENSED FINANCIAL STATEMENTS
3
BARRICODE, INC.
(A DEVELOPMENT STAGE COMPANY)
CONDENSED BALANCE SHEETS
(UNAUDITED)
October 31, 2008 April 30, 2008
(Audited)
__________________________________________________________________________________________________________________________
ASSETS
CURRENT ASSETS
Cash $ 2,845 $ 8,729
__________________________________________________________________________________________________________________________
TOTAL ASSETS $ 2,845 $ 8,729
==========================================================================================================================
LIABILITIES AND STOCKHOLDERS EQUITY (DEFICIT)
CURRENT LIABILITIES
Due to related party (Note 5) 1,279 1,279
Accrual of Expense 10,910 8,828
__________________________________________________________________________________________________________________________
TOTAL CURRENT LIABILITIES $ 12,189 $ 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 October 31, 2008 and April 30, 2008 17,475 17,475
Additional paid-in capital 9,900 9,900
Deficit accumulated during the development stage (36,719) (28,753)
__________________________________________________________________________________________________________________________
Total stockholder's deficit $ (9,344) $ (1,378)
__________________________________________________________________________________________________________________________
Total Liabilities and Stockholder's Equity $ 2,845 $ 8,729
==========================================================================================================================
The accompanying notes are an integral part of these financial statements.
4
BARRICODE, INC.
(A DEVELOPMENT STAGE COMPANY)
CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
Cumulative
results of
operations
from April 3,
Three months Three months Six months Six months 2006 (date of
ended ended ended ended inception) to
October 31, October 31, October 31, October 31, October 31,
2008 2007 2008 2007 2008
_____________________________________________________________________________________________________________________
REVENUE $ - $ - $ - $ - $ -
_____________________________________________________________________________________________________________________
EXPENSES
Office and general $ (688) $ (4,000) $ (1,816) $ (1,910) $ (8,707)
Professional fees (2,500) (945) (6,150) (8,000) (28,012)
_____________________________________________________________________________________________________________________
NET LOSS BEFORE INCOME TAXES $ (3,168) $ (4,945) $ (7,966) $ (9,910) $ (36,719)
PROVISION FOR INCOME TAXES - - - - -
_____________________________________________________________________________________________________________________
NET LOSS AFTER INCOME TAXES $ (3,168) $ (4,945) $ (7,966) $ (9,910) $ (36,719)
=====================================================================================================================
BASIC AND DILUTED NET LOSS
PER COMMON SHARE $ 0.00 $ 0.00 $ 0.00 $ 0.00
===================================================================================================
WEIGHTED AVERAGE NUMBER
OF BASIC AND DILUTED
COMMON SHARES OUTSTANDING 17,475,000 16,377,047 17,475,000 16,377,047
===================================================================================================
The accompanying notes are an integral part of these financial statements.
5
BARRICODE, INC.
(A DEVELOPMENT STAGE COMPANY)
CONDENSED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
FROM INCEPTION (APRIL 3, 2006) TO OCTOBER 31, 2008 (UNAUDITED)
Deficit
Common Stock Accumulated
_______________________ Additional Share During the
Number of Paid-in Subscription Development
shares Amount Capital Receivable Stage Total
___________________________________________________________________________________________________________________________________
Common stock issued for cash at $0.001
per share
- - Inception April 3, 2006 - $ - $ - $ - $ - $ -
- - April 26, 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 October
31, 2008 - - - - (7,966) (7,966)
===================================================================================================================================
Balance, October 31, 2008 17,475,000 $ 17,475 $ 9,900 $ - $ (36,719) $ (9,344)
===================================================================================================================================
The accompanying notes are an integral part of these financial statements.
6
BARRICODE, INC.
(A DEVELOPMENT STAGE COMPANY)
CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Cumulative
results of
operations from
April 3, 2006
(date of
Six months ended Six months ended inception) to
October 31, 2008 October 31, 2007 October 31, 2008
____________________________________________________________________________________________________________________________
OPERATING ACTIVITIES
Net loss $ (7,966) $ (9,910) $(36,719)
Changes in operating assets and liabilities
Prepaid Expense - - -
Accrual of Expenses 2,082 (1,034) 10,910
____________________________________________________________________________________________________________________________
NET CASH FROM OPERATING ACTIVITIES (5,884) (10,944) (25,809)
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 (5,884) (10,944) 2,845
CASH, BEGINNING 8,729 26,112 -
____________________________________________________________________________________________________________________________
CASH, ENDING 2,845 15,168 2,845
============================================================================================================================
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.
7
BARRICODE, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
OCTOBER 31, 2008
________________________________________________________________________________
NOTE 1 - CONDENSED FINANCIAL STATEMENTS
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 October 31, 2008, 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 April 30, 2008
audited financial statements. The results of operations for the periods ended
October 31, 2008 and 2007 are not necessarily indicative of the operating
results for the full years.
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.
8
ITEM 2: MANAGEMENT DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
Overview
Barricode, Inc. (" the Company," "Barricode," "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 users 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 October 31,
2008. During the period we incurred operating expenses of $3,168 comprising of
professional fees in the amount of $2,500 and office and administrative expenses
of $688.
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 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
9
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 our development and 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.
10
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 4T. CONTROLS AND PROCEDURES
The management of the Company is responsible for establishing and maintaining
adequate internal control over financial reporting. Internal Control over
financial reporting is defined in rule 13a-15(f) or 15d015(f) promulgated under
the Securities Exchange Act of 1934 as a process designed by, or under the
supervision of the Company's principal executive and principal financial
officers and effected by the Company's board of directors, management and other
personnel, to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external
purposes in accordance with accounting principles generally accepted in the
United States of America and includes those policies that:
- - Pertain to the maintenance of records that in reasonable detail accurately
and fairly reflect the tractions and dispositions of the assets of the
Company;
- - Provide reasonable assurance that transactions are recorded as necessary to
permit preparation of financial statements in accordance with accounting
principles generally accepted in the United States of America and that
receipts and expenditures of the company are being made only in accordance
with authorizations of management and directors of the company; and
11
- - Provide reasonable assurance regarding prevention or timely detection of
unauthorized acquisition, use or disposition of the company's assets that
could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting
may not prevent or detect misstatements. Projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance
with the policies or procedures may deteriorate. All internal control systems,
no matter how well designed, have inherent limitations. Therefore, even those
systems determined to be effective can provide only reasonable assurance with
respect to financial statement preparation and presentation. Because of the
inherent limitations of internal control, there is a risk that material
misstatements may not be prevented or detected on a timely basis by internal
control over financial reporting. However, these inherent limitations are known
features of the financial reporting process. Therefore, it is possible to design
into the process safeguards to reduce, though not eliminate, this risk.
As of October 31, 2008 management assessed the effectiveness of our internal
control over financial reporting based on the criteria for effective internal
control over financial reporting established in Internal Control - Integrated
Framework issued by the Committee of Sponsoring Organizations of the Treadway
Commission ("COSO") and 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; and (3) 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 October 31, 2008.
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, results in
ineffective oversight in the establishment and monitoring of required internal
controls and procedures could result in material misstatement in our financial
statements in future periods.
In an effort to remediate the identified material weaknesses and other
deficiencies and enhance our internal controls, we have initiated, or plan to
initiate, the following series of measures:
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 us. We plan to
12
appoint one or more outside directors to our board of directors who shall be
appointed to the audit committee resulting in a fully functioning audit
committee who will undertake the oversight in the establishment and monitoring
of required internal controls and procedures such as reviewing and approving
estimates and assumptions made by management when funds are available to.
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.
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 October 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
13
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: December 11, 2008
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