Attached files
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
{X} QUARTERLY REPORT PURSUANT TO SECTION 13
OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 2009
OR
{ } TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE EXCHANGE ACT
For transition period from _______________ to _______________
Commission File Number: 0-17953
INFRARED SYSTEMS INTERNATIONAL
(Exact Name of Registrant as Specified in its Charter)
NEVADA 38-3767357
________________________________ ____________________________________
(State or other jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)
15 N. LONGSPUR DRIVE
THE WOODLANDS, TX 77380
(Address of Principal Executive Offices)
(310) 213-2143
(Registrant's Telephone Number, including Area Code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the 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 has submitted electronically and
posted on its corporate Web site, if any, every Interactive Data File required
to be submitted and posted pursuant to Rule 405 of Regulation S-T (ss.232.405 of
this chapter) during the preceding 12 months (or for such shorter period that
the registrant was required to submit and post such files). YES { } NO { }
Large Accelerated filer { } Accelerated filer { }
Non-accelerated filer { } Smaller reporting company {X}
There are 1,167,279 shares of common stock issued and outstanding as of February
8, 2010.
1
INFRARED SYSTEMS INTERNATIONAL - QUARTERLY REPORT ON FORM 10-Q
TABLE OF CONTENTS
PAGE
____
PART I
Item 1. Financial Information (unaudited) 3
Balance Sheet 4
Statements of Operations 5
Statements of Cash Flows 6
Notes to Financial Statements 7
Item 2. Management's Discussion and Analysis or Plan of Operations 10
Item 3. Quantitative and Qualitative Discussions 13
Item 4. Controls and Procedures 13
PART II
Item 1. Legal Proceedings 14
Item 1A. Risk Factors
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 14
Item 3. Defaults Upon Senior Securities 14
Item 4. Submission of Matters to a Vote of Securities Holders 14
Item 5. Other Information 14
Item 6. Exhibits 14
Signatures 14
2
PART I FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
INFRARED SYSTEMS INTERNATIONAL
DECEMBER 31, 2009 CONDENSED
FINANCIAL STATEMENTS (UNAUDITED)
TABLE OF CONTENTS
PAGE
____
Condensed Balance Sheets,
December 31, 2009 (unaudited) and
September30, 2009 4
Condensed Statements of Operations,
for the three months ended December 31, 2009
and 2008 (unaudited) 5
Condensed Statements of Cash Flows,
for the three months ended December 31, 2009
and 2008 (unaudited) 6
Notes to the Condensed Financial Statements (Unaudited) 7
3
INFRARED SYSTEMS INTERNATIONAL
CONDENSED BALANCE SHEETS
DECEMBER 31, 2009 AND SEPTEMBER 30, 2009
ASSETS
December 31,
2009 September 30,
(unaudited) 2009
_________________ ___________________
CURRENT ASSETS:
Cash $ 388 1,015
Accounts receivable 16,800 30,400
Prepaid expenses 1,774 8,174
_________________ ___________________
Total Current Assets 18,962 39,589
PROPERTY AND EQUIPMENT, net 6,407 6,802
DEFINITE-LIFE INTANGIBLE ASSETS 34,970 33,970
_________________ ___________________
TOTAL ASSETS $ 60,339 80,361
================= ===================
LIABILITIES AND STOCKHOLDERS' (DEFICIT)
CURRENT LIABILITIES:
Accounts payable $ 34,590 25,425
Customer deposits 53,568 66,168
_________________ ___________________
Total Current Liabilities 88,158 91,593
STOCKHOLDERS' DEFICIT:
Preferred stock, $0.001 par value, 50,000,000 shares authorized, no
shares issued and outstanding - -
Common stock, $0.001 par value, 50,000,000 shares authorized,
1,167,279 shares issued. 1,167 1,167
Capital in excess of par value 1,003,452 1,003,452
Retained earnings (Deficit) (1,032,438) (1,015,851)
_________________ ___________________
Total Stockholders' (Deficit) (27,819) (11,232)
_________________ ___________________
TOTAL LIABILITIES AND STOCKHOLDERS' (DEFICIT) $ 60,339 80,361
================= ===================
See accompanying notes.
4
INFRARED SYSTEMS INTERNATIONAL
CONDENSED STATEMENTS OF OPERATIONS
THREE MONTHS ENDED DECEMBER 31, 2009 AND 2008
(UNAUDITED)
2009 2008
_________________ ___________________
REVENUES:
Royalty $ 16,800 $ 20,800
OPERATING EXPENSES:
Professional fees 21,280 22,471
Transfer agent fees - 10,370
Management fees 1,895 9,724
Travel, meals, and entertainment 2,926 3,770
Research and development 229 1,079
Other general and administrative 6,200 2,539
_________________ ___________________
Total Operating Expenses 32,530 49,953
_________________ ___________________
LOSS FROM OPERATIONS (15,730) (29,153)
OTHER INCOME (EXPENSE):
Interest expense (857) (596)
LOSS BEFORE INCOME TAX PROVISION (16,587) (29,749)
PROVISION FOR INCOME TAXES - -
_________________ ___________________
NET LOSS $ (16,587) $ (29,749)
================ ===================
BASIC AND DILUTED LOSS PER SHARE $ (0.01) $ (0.01)
================ ===================
WEIGHTED AVERAGE SHARES OUTSTANDING 1,167,279 5,527,234
================ ===================
See accompanying notes.
5
INFRARED SYSTEMS INTERNATIONAL
CONDENSED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED DECEMBER 31, 2009 AND 2008
(UNAUDITED)
2009 2008
__________________ ________________
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (16,587) $ (29,749)
Adjustments to reconcile net loss to net cash by operating activties:
Depreciation 395 139
Net (increase) decrease in operating assets:
Accounts receivable 13,600 (7,200)
Prepaid expenses 6,400 (3,500)
Net increase (decrease) in operating liabilities:
Accounts payable 9,165 14,446
Customer deposits (12,600) (9,000)
Deferred income tax liability -
__________________ ________________
Net Cash Provided (Used) by Operating Activities 373 (34,864)
__________________ ________________
CASH FLOWS FROM INVESTING ACTIVITIES:
Payments for definite-life intangible assets (1,000) (6,000)
__________________ ________________
Net Cash Provided (Used) by Investing Activities (1,000) (6,000)
__________________ ________________
CASH FLOWS FROM FINANCING ACTIVITIES - --
Net Cash Provided by Financing Activities - --
__________________ ________________
NET INCREASE (DECREASE) IN CASH (627) (40,864)
CASH AT BEGINNING OF PERIOD 1,015 93,327
__________________ ________________
CASH AT END OF PERIOD $ 388 $ 52,463
================== =================
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest $ 857 $ 596
Income taxes $ - $ -
SUPPLEMENTAL DISCLOSURES OF NONCASH INVESTING AND FINANCING ACTIVITIES:
In December 2008, the Company cancelled 4,832,721 common stock shares
previously owned by Parent $ - $ 4,833
See accompanying notes.
6
INFRARED SYSTEMS INTERNATIONAL
NOTES TO THE CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accompanying financial statements have been prepared by the Company in
accordance with Article 8 of U.S. Securities and Exchange Commission Regulation
S-X. 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 December 31, 2009 and 2008 and for the
periods then ended have been made. Certain information and footnote disclosures
normally included in financial statements prepared in accordance with U.S.
generally accepted accounting principles 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 September
30, 2009 audited financial statements. The results of operations for the periods
ended December 31, 2009 and 2008 are not necessarily indicative of the operating
results for the full year.
NOTE 2 - GOING CONCERN
The Company's financial statements have been presented on the basis that it is a
going concern, which contemplates the realization of assets and the satisfaction
of liabilities in the normal course of business. At December 31, 2009, the
Company had a retained deficit of $1,032,438 and current liabilities in excess
of current assets by $69,196. During the three months ended December 31, 2009,
the Company incurred a net loss of $16,587 and only cash flows from operations
of $373. These factors create an uncertainty about the Company's ability to
continue as a going concern. The financial statements do not include any
adjustments that might be necessary if the Company is unable to continue as a
going concern.
The Company's continuation as a going concern is dependent upon its ability to
increase revenues, decrease or contain costs, and achieve profitable operations.
In this regard, Company management is proposing to develop additional
applications for the Company's technology, specifically in security system
surveillance. Management estimates 6 to 12 months before the Company will start
realizing revenues from security system surveillance applications. Should the
Company's financial resources prove inadequate to meet the Company's needs
before additional revenue sources can be realized, the Company may raise
additional funds through loans or through sales of common stock. There is no
assurance that the Company will be successful in achieving profitable operations
or in raising any additional capital.
NOTE 3 - RELATED PARTY TRANSACTIONS
Management Compensation - During the three months ended December 31, 2009, the
Company paid or accrued management fees of $1,895 to its officer.
Office Space - During the three months ended December 31, 2009 and 2008, the
Company paid or accrued $2,700 and $1,200 in rent to its officer.
NOTE 4 - PROPERTY AND EQUIPMENT
Estimated Useful Lives December 31, 2009
___________________________________ ____________________________
Optical equipment 5 years $ 39,386
Office equipment 3 - 10 years 8,231
____________________________
47,617
Less accumulated depreciation (41,210)
____________________________
Net property and equipment $ 6,407
____________________________
Depreciation expense for the three months ended December 31, 2009 and 2008 was
$395 and $139, respectively.
7
INFRARED SYSTEMS INTERNATIONAL
NOTES TO THE CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
NOTE 5 - DEFINITE-LIFE INTANGIBLE ASSETS
Estimated Useful Life December 31, 2009
______________________________ _____________________________
Pending patent application Not Applicable $ 34,970
_____________________________
34,970
Less accumulated amortization
_____________________________
Net definite-life intangible assets $ 34,970
_____________________________
The Company's definite-life intangible assets consist only of a pending patent
application. Once a patent has been granted, the Company will amortize the
related costs over the estimated useful life of the patent. If a patent
application is denied, the related costs will be expensed immediately.
NOTE 6 - CUSTOMER DEPOSITS
At December 31, 2009, the Company had received net cash deposits of $53,568 from
a customer in Taiwan to purchase infrared detectors, affix them to cameras
supplied by the customer, and ready them for shipment back to the customer in
accordance with the requirements of the Company's export license. Although the
terms of the arrangement provide that the deposits are not refundable, the
Company has recorded them as a current liability as of December 31, 2009 because
the earnings process was incomplete. The project has required additional
research and testing and the funds paid to the Company have been used to pay
those costs. The Company plans to negotiate a new agreement with the customer
after the research and testing are complete.
NOTE 7 - CONCENTRATIONS
At December 31, 2009, 100% of the Company's accounts receivable was due from a
single licensee. During the three months ended December 31, 2009 and 2008, 100%
of the Company's royalty revenues were generated through a single licensee.
NOTE 8 - INCOME TAXES
At December 31, 2009, the Company has federal net operating loss carryovers of
$198,403 available to offset future taxable income and expiring as follows:
$2,320 in 2026, $12,616 in 2027, $127,675 in 2028, $38,545 in 2029, and $17,247
in 2030. The Company also has a federal contribution carryover of $150 that
expires in 2014. At December 31, 2009, the Company had experienced losses since
inception and had not yet generated any taxable income; therefore, the Company
established a valuation allowance to offset the net deferred tax assets. The
income tax provision consists of the following components for the three months
ended December 31, 2009 and 2008:
8
INFRARED SYSTEMS INTERNATIONAL
NOTES TO THE CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
2009 2008
___________ ______________
Current income tax expense (benefit) $ - $ -
Deferred income tax expense (benefit) -
___________ ______________
Net income tax expense (benefit) charged to operations $ - $ -
___________ ______________
The income tax provision differs from the amounts that would be obtained by
applying the federal statutory income tax rate to loss before income tax
provision as follows for the three months ended December 31, 2009 and 2008:
2009 2008
___________________ __________________
Loss before income tax provision $ (16,587) $ (29,749)
Expected federal income tax rate 15.0% 15.0%
___________________ __________________
Expected income tax expense (benefit) at statutory rate $ (2,488) $ (4,462)
Tax effect of:
Meals and entertainment 46 86
Change in valuation allowance 2,442 4,376
___________________ __________________
Net income tax expense (benefit) $ - $ -
___________________ __________________
The Company's deferred tax assets, deferred tax liabilities, and valuation
allowance are as follows:
December 31, 2009
---------------------
Deferred tax assets:
Organization costs $ 75
Accrued management fees 23
Net operating loss carryovers 29,760
---------------------
Total deferred tax assets $ 29,858
---------------------
Deferred tax liabilities:
Book basis of patent application $ (5,246)
Tax depreciation in excess of book (519)
---------------------
Total deferred tax liabilities $ (5,765)
---------------------
Total deferred tax assets $ 29,858
Total deferred tax liabilities (5,765)
Valuation allowance (24,093)
---------------------
Net deferred tax asset (liability) $ -
---------------------
These amounts have been presented in the financial statements as follows:
December 31, 2009
---------------------
Current deferred tax asset (liability) $ -
Non-current deferred tax asset (liability) -
---------------------
$ -
---------------------
NOTE 9 - SUBSEQUENT EVENTS
The Company evaluated events subsequent to December 31, 2009 through February
11, 2010, which is the date that the December 31, 2009 financial statements were
issued and determined there are no events to disclosed. Previously, the Company
evaluated events subsequent to December 31, 2008 through February 4, 2009, which
is the date that the December 31, 2008 financial statements were issued.
9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
The management discussions contain certain forward-looking statements and
information that are based on the beliefs of management as well as assumptions
made by and information currently available to management. When used in this
document, the words "anticipate," "believe," "estimate," "expect," "intend,"
"will," "plan," "should," "seek," and similar expressions, are intended to
identify forward-looking statements. Such statements reflect the current view of
management regarding future events and are subject to certain risks,
uncertainties and assumptions. Should one or more of these risks or
uncertainties materialize, or should underlying assumptions prove incorrect,
actual actions or results may vary materially from those described herein as
anticipated, believed, estimated, expected or intended.
The following discussion and analysis should be read in conjunction with the
company's financial statements and related footnotes for the year ended
September 30, 2009. The discussion of results, causes and trends should not be
construed to imply any conclusion that such results or trends will necessarily
continue in the future.
OVERVIEW
We were formed on April 11, 2006 to pursue the development of a proprietary
infrared security system. Prior to December 22, 2008, we had been a wholly-owned
subsidiary of China Sxan Biotech, Inc. (CSBI). All of our common stock was
distributed to the holders of record of CSBI common stock on December 22, 2008.
With the completion of the distribution, ISI management has been able to
concentrate on the primary business of the corporation.
ENHANCED VISION SYSTEM
We previously were engaged in the development of an infrared imaging camera
system for commercial aircraft to allow civilian pilots to land their aircraft
under conditions of low or reduced visibility. The infrared camera system is
especially designed to enhance the performance of the imager by proprietary
techniques of selective wavelength enhancement. An exclusive license for this
system was granted to Kollsman Instruments in 1997. The licensing agreement with
Kollsman grants to Kollsman a worldwide, exclusive license under ISI proprietary
data to make, sell, maintain and repair products utilizing such data for use on
any aircraft licensed to operate by the Federal Aviation Administration or by
equivalent foreign regulatory agencies. Royalty payments are required for each
EVS system sold utilizing a licensed product, based upon the number of units
sold. Pursuant to the license agreement, the royalty is $800 per unit for units
201 through 2,000 (the first 20 units were prepaid and no payment was required
for units 21 through 200), $1,400 per unit for units 2,001 through 5,000, $3,800
per unit for units 5,001 through 10,000, and $200 per unit thereafter. Through
December 31, 2009, a total of 659 units have been sold. The license continues
until terminated by the mutual consent of the parties, or at the written
election of a party in the event of an uncured default by the other party, or by
us if Kollsman fails to sell an EVS system containing our licensed rights for 24
months.
We recognize our royalty revenues as Kollsman sells EVS units that include our
technology. At that time, in accordance with the license agreement, the royalty
fee has been earned by us, there is an agreed upon amount for the royalty fee,
and collection of the royalty is reasonably assured because the customer has
timely made all payments required under the license agreement since it was
signed in July 1997.
10
INFRARED SECURITY SYSTEM
On January 17, 2010, the US Patent Office accepted our response to their eighth
rejection since late 2008. We are awaiting the next action from the US Patent
Office, guardedly optimistic. Last year our legal fees were approximately
$27,000, a number that exceeded our total patent expense for the last five years
which includes our application, preparation costs, and filing fee.
When you file a patent there is always the uncertainty in the out come. As ISI
progressed through the review cycle we have gained confidence in the merits of
our submittal based in large part on the weakness of the Government's responses.
Our confident continues to rise, our expenses continue to mount, and our
understanding of the potential value of ISS remains unresolved.
UIS MEDICAL ACTIVITY
ISI has acted as an export agent and service contractor for a Taiwanese
corporation from time to time since 2000. That corporation, among other things,
has developed and markets a digital infrared medical diagnosis system known as
the SPECTRUM9000 System. We currently have been engaged by the corporation to
purchase 40 infrared detectors from a U.S. supplier, install them into a camera
shell provided by the corporation with a test circuit board, and ship them in
the camera shell to the corporation in Taiwan. The Taiwanese corporation then
completes the NV-2000 IR camera which is part of the SPECTRUM9000 System. The
system conforms to the applicable directives and standards for medical thermal
imaging radiometer systems, and is registered with the U.S. Food and Drug
Administration.
In December 2009 two electronic detector modules were exported to UIS under the
DOC export license. These units have been successfully integrated into the
SPECTRUM 9000 System. This event signifies the completion of the R&D work by ISI
for the UIS project. A cost to complete offer has been prepared and submitted to
UIS containing the terms and conditions required to complete the export delivery
of the 38 unit balance authorized under the DOC License. UIS has accepted our
offer. We would like to complete the project by July 2010.
OVERVIEW OF OPERATIONS
The spin-off was a lengthy and resource-consuming enterprise. The corporate
reserves have been seriously depleted, as we wait for our long expected EVS
sales to start to increase with new customers. The serious crash of the world's
financial markets and credit institutions are of a major concern to us. Our
existing EVS market was unaffected so far as the large backlog seems to be a
stabilizing force. From the last quarter (September 2009) our sales declined
~50%. We believe the change over to the new G-650 and G-250 caused this decline
in sales. We expect a gradual recovery for the balance of 2010, with full
recovery by 2011. The emerging EVS markets have been affected, other aircraft
OEM's are delaying their introduction of EVS. The small low end Biz jet market
has been undercut by a surplus of aircraft as operators cut back, sell-off and
cancelled orders. Likewise we see the Physical Security Market will suffer as
corporations review their budgets looking for areas to reduce or eliminate
costs. Our Patent application remains an unexpected drain on our balance sheet.
We have eliminated all discretionary spending for 2010 as we assess the impact
on our sales.
LIQUIDITY AND CAPITAL RESOURCES
Based upon our anticipated monthly expenses of approximately $5,000 to $6,000
per month, we do not have sufficient capital resources to implement our business
plan over the coming year. The EVI royalties are expected to generate revenues
of at least $80,000 to $100,000 during the next twelve months. Our SEC
compliance costs are ~ $60,000 per year. Our only source of revenues is from
royalties from the EVS licensee, Kollsman.
11
RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED DECEMBER 31, 2009 COMPARED WITH
THE THREE MONTHS ENDED DECEMBER 31, 2008
REVENUES
The first Quarter of fiscal year 2009 (4th quarter CY 2008) the Company showed a
decrease in royalty income to $16,800 as compared to $20,800 in the like quarter
of last year. A total of 21 EVS II units were sold by Kollsman during the three
months ended December 31, 2008 as compared to 26 units in the three months ended
December 31, 2007. The decrease in sales reflected the conversion by Gulfstream
to their new G-650 & G-250. The Company expects its royalties will stabilize in
2010 leading to greater sales in 2011 as the G-250 moves into full production.
Industry analysts are optimistic over the G-250 potential. The G-250 is build in
Israel and features many lightweight composite materials. The G-250 represents a
mid-size business jet, a new and larger base market for Gulfstream.
OPERATING EXPENSES
In the first Quarter of fiscal year 2010 the Company's Operating Expenses
decreased to $32,530 from $49,953 for same quarter last year. This decrease of
$17,423 was the result of three major factors. The transfer agent had a
non-recurring cost of issuing the IFRS stock certificates of $10,370 in 2009
that was $0 in 2010. The G&A increased from $2,539 to $6,200. And the management
fees decreased from $9,724 to $1,895 reflecting the completion of the spin off
activities.
OTHER INCOME AND EXPENSE
Interest expense increased from $596 in 2009 to $ 857in first quarter of 2010.
NET PROFIT (LOSS) BEFORE PROVISIONS FOR INCOME TAXES
The Net loss for the first Quarter of 2010 was $16,587 compared to $29,749 in
the like first Quarter of Fiscal 2009. The lower loss ($13,162) was the result
of the completion of the spin-off in 2009. Our operating expenses have been held
in check and will continue to be held down in 2010. Uncertainty over the EVS
royalty revenue from erratic sales is the major concern. The management of the
company continues to investigate corporate alternatives to offset lacking sales.
GOING CONCERN
We have limited working capital and limited revenues from sales of products or
licenses. During 2009, all of our revenues were generated from a single
licensee. These factors have caused our accountants to express substantial doubt
about our ability to continue as a going concern. The accompanying financial
statements do not include any adjustment that might be necessary if we are
unable to continue as a going concern.
Our ability to continue as a going concern is dependent on our attaining future
profitable operations. Management's plans include strict restrictions on the
cost of ongoing operations, such as providing minimal compensation to
management, and limiting professional, travel and other operating expenses in
order to remain within our budget of approximately $60,000 per year. Operating
expenses were more than this amount during the past three fiscal years, but such
costs included professional and other expenses related to merger and spin-off
activities. There can be no assurance we will be successful in these efforts.
OFF-BALANCE SHEET ARRANGEMENTS
There are no off-balance sheet arrangements.
12
ITEM 3. QUANTITATIVE AND QUALILITATIVE DISCUSSIONS
We are a smaller reporting company as defined in Item 10 of Regulation S-K and
are not required to report the quantitative and qualitative measures of market
risk specified in Item 305 of Regulation S-K.
ITEM 4. CONTROLS AND PROCEDURES
(a) Evaluation of disclosure controls and procedures.
The term "disclosure controls and procedures" (defined in SEC Rule 13a-15(e))
refers to the controls and other procedures of a company that are designed to
ensure that information required to be disclosed by a company in the reports
that it files under the Securities Exchange Act of 1934 (the "Exchange Act") is
recorded, processed, summarized and reported within required time periods. The
Company's management, with the participation of the Chief Executive Officer and
the Chief Financial Officer, has evaluated the effectiveness of the Company's
disclosure controls and procedures as of the end of the period covered by this
quarterly report (the "Evaluation Date"). Based on that evaluation, the
Company's Chief Executive Officer and Chief Financial Officer have concluded
that, as of the Evaluation Date, such controls and procedures were effective.
(b) Changes in internal controls.
The term "internal control over financial reporting" (defined in SEC Rule
13a-15(f)) refers to the process of a company that is designed to provide
reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with
generally accepted accounting principles. The Company's management, with the
participation of the Chief Executive Officer and Chief Financial Officer, has
evaluated any changes in the Company's internal control over financial reporting
that occurred during the first quarter of the year covered by this quarterly
report, and they have concluded that there was no change to the Company's
internal control over financial reporting that has materially affected, or is
reasonably likely to materially affect, the Company's internal control over
financial reporting.
(c) Management's Report on Internal Control over Financial Reporting
The President/CEO/CFO maintains direct control over all financial proceedings of
the Company. The President reviews all expenditures and reconciles all income
and expenses through the Corporate Bank account. The President is the only
person authorized for this account. This procedure has been used since the
original Company was established in 1993. The President maintains budget
control, and the Board of Directors authorizes any new expenses.
13
PART II OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None.
ITEM 1A. RISK FACTORS
As a smaller reporting company, the Company is not required to provide
disclosure under this Part II, Item 1A. 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 SECURITIES HOLDERS.
None
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS
Exhibit List
3.1.1 Articles of Incorporation. - filed as an exhibit to the Company's
Registration Statement on Form SB-2 (33-147367) and incorporated
herein by reference.
3.2. By-laws. - filed as Exhibit 3.2 to the Company's Quarterly Report on
Form 10-Q filed on September 2, 2008, and incorporated herein by
reference.
31.1 Rule 13a-14(a) Certification
32.1 Section 906 Certification
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
DATE: FEBRUARY 12 , 2010 INFRARED SYSTEMS INTERNATIONAL
(REGISTRANT)
BY: /s/ GARY E. BALL
____________________________________________
GARY E. BALL, PRESIDENT, PRINCIPAL FINANCIAL
OFFICER AND DIRECTOR
1
