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EX-32.A - EXHIBIT 32A - INFRAX SYSTEMS, INC.opticon10q123109x321_21910.htm
EX-32.B - EXHIBIT 32B - INFRAX SYSTEMS, INC.opticon10q123109x322_21910.htm
EX-31.B - EXHIBIT 31B - INFRAX SYSTEMS, INC.opticon10q123109x312_21910.htm
EX-31.A - EXHIBIT 31A - INFRAX SYSTEMS, INC.opticon10q123109x311_21910.htm
 
UNITED STATES
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:   December 31, 2009 (Second Quarter)
 
o
TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
 
For the transition period from ________________to ________________
 
COMMISSION FILE NUMBER 000-52488

INFRAX SYSTEMS, INC.
(Exact name of Registrant as specified in charter)

NEVADA
20-2583185
(State or other jurisdiction of incorporation or organization)
(IRS Employer Identification Number)

449 Central Avenue, Suite 105, St. Petersburg, Florida 33701
(Address of principal executive offices) (ZIP Code)

813-305-7118
(Registrant's telephone no., including area code)

Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes x  No o
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes o  Nox

The number of shares outstanding of each of the issuer’s classes of common equity, as of February 12, 2010 was 142,592,432 shares.

Transitional Small Business Disclosure Format (Check one):
Yes o  No x

 

 

 

TABLE OF CONTENTS


PART I
FINANCIAL INFORMATION
PAGE
     
Item 1
Condensed Consolidated Financial Statements
3
     
 
Condensed Consolidated Balance Sheets as of December 31, 2009 (unaudited)  and June 30, 2009
3
     
 
Condensed Consolidated Statements of Operations for the Three and Six Months Ended  Ended December 31, 2009 and 2008, and for the Period from October 22, 2004 (inception) to December 31, 2009 (unaudited)
4
     
 
Condensed Consolidated Statements of Changes in Stockholders’ Deficit for the Period from October 22, 204 (inception) to December 31, 2009 (unaudited)
5
     
 
Condensed Consolidated Statements of Cash Flows for the Six Months Ended December 31, 2009 and 2008, and for the Period from October 22, 2004 (inception) to December 31, 2009 (unaudited)
6
     
 
Condensed Consolidated Notes to Financial Statements (unaudited)
7
     
Item 2
Management's Discussion and Analysis or Plan of Operation
19
     
Item 3
Quantitative and Qualitative Disclosures About Market Risk
25
     
Item 4           
Controls and Procedures
25
     
Item 4 T
Controls and Procedures
25
     
PART II
OTHER INFORMATION
 
     
Item 1
Legal Proceedings
26
     
Item 1A
Risk Factors
26
     
Item 2
Unregistered Sales of Equity Securities and Use of Proceeds
26
     
Item 3
Defaults Upon Senior Securities
26
     
Item 4
Submission of Matters to a Vote of Security Holders
26
     
Item 5
Other Information
27
     
Item 6
Exhibits
27
     
   Signatures 27





 
- 2 -

 


Infrax Systems, Inc.
 
(Formerly OptiCon Systems, Inc.)
 
(A Development Stage Enterprise)
 
Condensed Consolidated Balance Sheets
 
   
   
December 31,
   
June 30,
 
ASSETS
 
2009
   
2009
 
Current assets
 
(Unaudited)
       
Cash and cash equivalents
  $ -     $ 1,996  
Accounts receivable, net
    1,995       49,215  
Loan receivable - related party
    560       -  
Deferred contract costs
    -       26,696  
Prepaid expenses
    -       2,000  
Total current assets
    2,555       79,907  
                 
Property and equipment, net
    3,084       3,206  
Intangible assets, net
    190,612       212,206  
Investment in related party
    21,503       -  
Other assets
    2,552       -  
                 
Total assets
  $ 220,306     $ 295,319  
                 
LIABILITIES AND STOCKHOLDERS’ DEFICIT
               
 Current liabilities
               
 Bank overdraft
  $ 1,856     $ -  
 Accounts payable
    39,928       27,835  
 Deferred revenue
    -       49,215  
 Accrued expenses
    588,252       372,441  
 Note payable
    6,000       6,000  
 Loan and note payable – related parties
    160,027       59,050  
 Total current liabilities
    796,063       514,541  
                 
Stockholders’ deficit
               
Preferred stock, $.001 par value, 50,000,000 shares authorized, none issued
    -       -  
Common stock, $.001 par value, 250,000,000 shares authorized, 141,238,402
               
and 139,874,296 shares issued and outstanding
    141,238       139,874  
Additional paid-in capital
    1,912,287       1,866,593  
Subscription receivable
    (350 )     (350 )
Deficit accumulated during the development stage
    (2,628,932 )     (2,225,339 )
Total stockholders' deficit
    (575,757 )     (219,222 )
Total liabilities and stockholders' deficit
  $ 220,306     $ 295,319  
 
The accompanying notes are an integral part of these financial statements.


 
- 3 -

 


Infrax Systems, Inc.
 
(Formerly OptiCon Systems, Inc.)
 
(A Development Stage Enterprise)
 
Condensed Consolidated Statements of Operations
 
(Unaudited)
 
                           
For Period from
 
                           
October 22, 2004
 
   
For the Six Months Ended
   
For the Three Months Ended
   
(inception) to
 
   
--------------December 31,--------------
   
--------------December 31,--------------
   
December 31,
 
   
2009
   
2008
   
2009
   
2008
   
2009
 
   
(unaudited)
   
(unaudited)
   
(unaudited)
 
Net sales
  $ 1,995     $ -     $ 1,995     $ -     $ 1,995  
Cost of goods sold
    -       -       -       -       -  
Gross profit
    1,995       -       1,995       -       1,995  
                                         
Operating expenses
                                       
Salaries and benefits
    251,942       45,231       227,327       22,616       1,807,522  
Consulting services
    41,540       190,700       5,388       79,533       460,038  
Other general and administrative
    79,754       15,661       58,965       14,363       250,735  
Allocable software costs
    -       -       -       -       (115,111 )
Legal and accounting
    26,000       40,000       3,500       25,000       179,363  
Operating loss
    399,236       291,592       295,180       141,512       2,582,547  
                                         
Non operating income (expense)
                                       
Interest expense
    (5,355 )     (4,608 )     (2,779 )     (3,757 )     (47,585 )
Equity in losses of investee
    (997 )     -       (997 )     -       (997 )
Miscellaneous income
    -       -       -       -       202  
      (6,352 )     (4,608 )     (3,776 )     (3,757 )     (48,380 )
Net loss
  $ (403,593 )   $ (296,200 )   $ (296,961 )   $ (145,269 )   $ (2,628,932 )
                                         
Net loss per share
                                       
Basic
  $ (0.003 )   $ 0.004     $ (0.002 )   $ (0.002 )        
Diluted
  $ (0.003 )   $ 0.004     $ (0.002 )   $ (0.002 )        
                                         
Weighted average common shares outstanding
                                       
Basic
    140,197,611       71,668,501       140,520,926       78,142,494          
Diluted
    140,197,611       71,668,501       140,520,926       78,142,494          
 
The accompanying notes are an integral part of these financial statements.


 
- 4 -

 



Infrax Systems, Inc.
 
(Formerly OptiCon Systems, Inc.)
 
(A Development Stage Enterprise)
 
Condensed Consolidated Statement of Changes in Stockholders’ Deficit
 
For the Period October 22, 2004 (date of inception) through December 31, 2009
 
(Unaudited)
 
   
 
                     
Accumulated
       
                           
Deficit During
       
               
Additional
         
the
       
   
---------------Common---------------
   
Paid-in
   
Subscription
   
Development
       
   
Shares
   
Stock
   
Capital
   
Receivable
   
Stage
   
Total
 
Balance at October 22, 2004
    -     $ -     $ -     $ -     $ -     $ -  
Issuance of common shares in exchange for
                                               
 organization efforts
    240,857       241       15,759       -       -       16,000  
Issuance of common shares in
                                               
exchange for services
    75,268       75       4,925       -       -       5,000  
   Net (loss)
    -       -       -       -       (21,000 )     (21,000 )
Balance at June 30, 2005
    316,125       316       20,684       -       (21,000 )     -  
Issuance of common shares in exchange for
                                               
 Opticon software and other assets
    1,264,500       1,265       98,736       -       -       100,000  
   Issuance of common stock purchase
                                               
warrants in exchange for services
    -       -       17,999       -       -       17,999  
   Net (loss)
    -       -       -               (656,885 )     (656,885 )
Balance at June 30, 2006
    1,580,625       1,581       137,418       -       (677,885 )     (538,886 )
   Issuance of common stock purchase
                                               
warrants in exchange for services
    -       -       16,499       -       -       16,499  
Net (loss)
    -       -       -               (724,492 )     (724,492 )
Balance at June 30, 2007
    1,580,625       1,581       153,917       -       (1,402,377 )     (1,246,879 )
                                                 
Stock dividend
    99,118       99       (99 )     -       -       -  
Issuance of common shares in exchange
                                               
for services
    9,000       9       26,991       -       -       27,000  
Conversion of accrued expenses to common stock
    -       -       1,042,827       -       -       1,042,827  
Sale of stock for cash
    17,500       18       332       -       -       350  
Subscription receivable
    17,500       17       333       (350 )     -       -  
Discount on conversion feature of debenture
    -       -       281,401       -       -       281,401  
Amortization of conversion feature of debenture
    -       -       (281,401 )     -       -       (281,401 )
Fractional shares issued
    65       -       -       -       -       -  
Net (loss)
    -       -       -       -       (372,042 )     (372,042 )
Balance at June 30, 2008
    1,723,808       1,724       1,224,301       (350 )     (1,774,419 )     (548,744 )
Issuance of common shares on conversion
                                               
of (2) debentures and accrued interest
    68,330,134       68,330       273,322       -       -       341,652  
Issuance of common shares in exchange
                                               
for cancellation of debt
    400,000       400       5,450       -       -       5,850  
Issuance of common shares in exchange for services
    1,000,000       1,000       39,000       -       -       40,000  
     Discount on conversion feature of convertible note
    -       -       203,000       -       -       203,000  
Amortization of conversion feature of convertible note
    -       -       (203,000 )     -       -       (203,000 )
Fractional shares issued
    4       -       -       -       -       -  
Issuance of common shares in exchange for services
    2,111,724       2,112       40,888       -       -       43,000  
Issuance of common shares on the conversion
                                               
of (3) convertible promissory notes
    12,000,000       12,000       48,000       -       -       60,000  
Issuance of common shares in exchange for services
    226,626       226       5,774       -       -       6,000  
Issuance of common shares on the conversion of a
                                               
convertible promissory note
    4,000,000       4,000       16,000       -       -       20,000  
Issuance of common shares in exchange for convertible
                                               
notes and accrued interest
    50,000,000       50,000       200,000       -       -       250,000  
Issuance of common shares in exchange for rent
    82,000       82       13,858       -       -       13,940  
Net (loss)
    -       -       -       -       (450,920 )     (450,920 )
Balance at June 30, 2009
    139,874,296       139,874       1,866,593       (350 )     (2,225,339 )     (219,222 )
Issuance of common shares in exchange for services
    55,925       56       2,944       -       -       3,000  
Issuance of common shares in exchange for services
    363,636       363       16,909       -       -       17,272  
Issuance of common shares in exchange for services
    420,000       420       25,480       -       -       25,900  
Issuance of common shares in exchange for services
    270,000       270       18,630       -       -       18,900  
Issuance of common shares in exchange for services
    181,818       182       10,273       -       -       10,455  
Issuance of common shares in exchange for services
    72,727       73       3,200       -       -       3,273  
Adjustment of accrued salaries due to shares issued
    -       -       (31,742 )     -       -       (31,742 )
Net (loss)
    -       -       -       -       (403,593 )     (403,593 )
Balance at December 31, 2009 (unaudited)
    141,238,402     $ 141,238     $ 1,912,287     $ (350 )   $ (2,628,932 )   $ (575,757 )

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


 
- 5 -

 



Infrax Systems, Inc.
 
(Formerly OptiCon Systems, Inc.)
 
(A Development Stage Enterprise)
 
Condensed Consolidated Statements of Cash Flows
 
(Unaudited)
 
               
For Period from
 
               
October 22, 2004
 
   
Six Months Ended
   
(inception)
 
   
-------------December 31,-----------
   
December 31,
 
   
2009
   
2008
   
2009
 
Cash Flows From Operating Activities
                 
Net (Loss) from continuing operations
  $ (403,593 )   $ (296,200 )   $ (2,628,932 )
Adjustments to reconcile earnings from continuing operations;
                       
Depreciation and amortization
    15       1,073       10,175  
Issuance of common stock in exchange for services
    47,058       83,000       233,346  
Equity loss of investee
    997       -       997  
Change in working capital components:
                       
Accounts receivable
    47,220       -       (1,995 )
Prepaid expenses
    2,000       9,600       -  
Deferred contract costs
    26,696       -       -  
Bank overdraft
    1,856       94       1,856  
Accounts payable
    12,093       (329 )     39,928  
Accrued expenses
    215,811       168,103       1,930,233  
Deferred revenue
    (49,215 )     -       -  
Net cash (used) in operating activities
    (99,062 )     (34,659 )     (414,392 )
                         
Cash Flows From Investing Activities
                       
Purchase of property and equipment
    (799 )     -       (8,259 )
Capitalization of software development costs
    -       -       (113,112 )
Cash paid for deposits
    (2,552 )     625       (2,552 )
Net cash (used) in investing activities
    (3,351 )     625       (123,923 )
                         
Cash Flows From Financing Activities
                       
     Proceeds from the sale of common stock
    -       -       350  
     Loan payable
    -       -       12,000  
Repayment of loan payable
    -       -       (6,000 )
Loan receivable - related party
    (560 )     -       (560 )
Loan payable – related parties
    100,977       34,034       532,525  
Net cash provided from investing activities
    100,417       34,034       538,315  
Net increase (decrease) in cash and cash equivalents
    (1,996 )     -       -  
                         
Cash And Cash Equivalents
                       
Beginning of year
    1,996       -       -  
End of year
  $ 0     $ -     $ -  
                         
Supplemental Disclosures on nterest and
                       
Income Taxes Paid:
                       
Interest paid for the period
  $ -     $ -     $ -  
Income taxes paid for the period
  $ -     $ -     $ -  
                         
Supplemental Scheduleof Noncash Investing
                       
And Financing Activities:
                       
Issuance of common stock in exchange for debenture and accrued interest
  $ -     $ 401,652     $ 671,651  
Issuance of common stock in exchage for accounts payable
  $ -     $ 5,850     $ 5,850  
Issuance of common stock for software and other assets
  $ -     $ -     $ 105,000  
Investment in affiliate by trasfer of software
  $ 22,500     $ -     $ 22,500  
Sale of stock subscription
  $ -     $ -     $ 350  

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

 
- 6 -

 

Infrax Systems, Inc. 
(Formerly OptiCon Systems, Inc.)
(A Development Stage Enterprise)
Notes to Condensed Consolidated Financial Statements
For the Three and Six Months Ended December 31, 2009 and the Period from
October 22, 2004 (Date of Inception) through December 31, 2009
(Unaudited)


1. Basis of Presentation and History of the Company

(a) Basis of Presentation

The consolidated condensed balance sheet as of December 31, 2009, the condensed consolidated statements of operations, condensed statements of cash flows and condensed statements of stockholders’ deficit for the respective periods presented, have been prepared by the Company without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures, normally included in the financial statements prepared in accordance with accounting principles generally accepted in the United States of America, have been condensed or omitted as allowed by such rules and regulations, and the Company believes that the disclosures are adequate to make the information presented not misleading. The results of operations for the three and six months ended December 31, 2009 are not necessarily indicative of results expected for the full year ending June 30, 2010.  In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position at December 31, 2009, and the results of operations, changes in cash flows, and changes in stockholders’ deficit for all periods presented, have been made.  These financial statements should be read in conjunction with our audited financial statements and notes thereto included in our annual report on Form 10-K filed with the SEC on October 5, 2009.

(b) Subsequent Events
 
The Company has evaluated subsequent events that occurred after December 31, 2009 through the date that the financial statements were issued on February 19, 2010.

(c) History of the Company

Effective December 2, 2009, the Company changed its name from OptiCon Systems, Inc. to Infrax Systems, Inc.

Infrax Systems, Inc., formerly OptiCon Systems, Inc. (“the Company”) was formed as a Nevada corporation on October 22, 2004.  On July 29, 2005, the stockholders of the Company entered into an agreement to exchange 100% of the outstanding common stock of the Company, for common and preferred stock of FutureWorld Energy, Inc. (formerly Isys Medical, Inc.), a publicly traded company, at which time, the Company became a wholly owned subsidiary of FutureWorld.

FutureWorld Energy, Inc. (“FutureWorld”), Infrax’s parent company, announced its intention to spin off Infrax through the payment of a stock dividend.  In connection with the proposed spin off, Infrax’s board of directors approved a stock dividend of 99,118 shares to FutureWorld, its sole shareholder.  On August 31, 2007, FutureWorld paid a stock dividend to its stockholders, consisting of 100% of the outstanding common stock of the Company, at the rate of one share of Infrax’s stock for every two shares they own of FutureWorld.  As of that date, Infrax Systems ceased being a subsidiary of FutureWorld.

On August 11, 2009, the Company organized Infrax Systems SA (Pty) Ltd., a South African company, as a wholly owned subsidiary.  On August 12, 2009, the Company organized PowerCon Energy Systems, Inc., a Nevada corporation, as a wholly owned subsidiary, and on October 8, 2009, PowerCon issued Mr. Sam Talari, one of the Company’s directors, majority shares in PowerCon, at which time PowerCon ceased being a wholly owed subsidiary.


 
- 7 -

 

Infrax Systems, Inc. 
(Formerly OptiCon Systems, Inc.)
(A Development Stage Enterprise)
Notes to Condensed Consolidated Financial Statements
For the Three and Six Months Ended December 31, 2009 and the Period from
October 22, 2004 (Date of Inception) through December 31, 2009
(Unaudited)


(d) Development Stage Enterprise

Since its inception, the Company has been in the development stage, dedicated to selling and/or licensing a fiber optic management software system under the name OptiCon Network Manager, originally developed, and acquired from Corning Cable System, Inc. through a related company, FutureTech Capital, LLC.  The Company expects to continue to incur significant operating losses and to generate negative cash flow from operating activities while developing its customer base and establishing itself in the marketplace

The Company's ability to eliminate operating losses and to generate positive cash flow from operations in the future will depend upon a variety of factors, many of which it is unable to control.  If the Company is unable to implement the Company’s business plan successfully, it may not be able to eliminate operating losses, generate positive cash flow, or achieve or sustain profitability, which would materially adversely affect its business, operations, and financial results, as well as its ability to make payments on its debt obligations.

2.  Summary of Significant Accounting Policies

 (a) Principles of Consolidation

The consolidated financial statements include the accounts and operations of Infrax Systems, Inc., and its wholly owned subsidiary, Infrax Systems SA (Pty) Ltd. (collectively referred to as the “Company”).  Accordingly, the assets and liabilities, and expenses of this company have been included in the accompanying condensed consolidated financial statements, and intercompany transactions have been eliminated.

(b) Deconsolidation of a Subsidiary

On August 12, 2009, the Company organized PowerCon Energy Systems, Inc., a Nevada corporation, as a wholly owned subsidiary with the transfer of the R-4 software architecture in exchange for 3,000,000 shares of PowerCon’s common stock.  On October 8, 2009, PowerCon issued Mr. Sam Talari, one of the Company’s directors, 16,0000,000 shares of PowerCon in connection with a private placement, at which time PowerCon ceased being a wholly owed subsidiary.

(c) Loss per Share

Basic EPS is calculated by dividing the loss available to common shareholders by the weighted average number of common shares outstanding during each period.  Diluted EPS is similarly calculated, except that the denominator includes common shares that may be issued subject to existing rights with dilutive potential, except when their inclusion would be anti-dilutive.

Based on an estimated current value of the Company’s stock being equal to or less than the exercise price of the warrants, none of the shares assumed issued upon conversion of the warrants, nor any of the stock assumed issued under the Company's 2004 Non statutory Stock Option Plan, or its 2009 Employees and Consultants Stock Incentive Plan are included in the computation of fully diluted loss per share, since their inclusion would be anti-dilutive.


 
- 8 -

 

Infrax Systems, Inc. 
(Formerly OptiCon Systems, Inc.)
(A Development Stage Enterprise)
Notes to Condensed Consolidated Financial Statements
For the Three and Six Months Ended December 31, 2009 and the Period from
October 22, 2004 (Date of Inception) through December 31, 2009
(Unaudited)


(d) Revenue Recognition

The Company is principally in the business of licensing fiber optic management software, OptiCon Network Manager.  Revenue from licensing the software is recognized upon installation and acceptance of the software by customers.  When a software sales arrangement includes rights to customer support, the portion of the license fee allocated to such support is recognized ratably over the term of the arrangement, normally one year.  Revenue from professional services arrangements will be recognized in the month in which services are rendered over the term of the arrangement.

Revenue associated with software sales to distributors is recognized, net of discounts, when the Company has performed substantially all its obligations under the arrangement.  Until such time as substantially all obligations under the arrangement are met, software sales are recognized as deferred revenue.  Costs and expenses associated with deferred revenue are also deferred.  When a software sales arrangement includes a commitment to provide training, services or materials, the Company estimates and records the expected costs of the training, services or materials.

(e) Fair Value of Financial Instruments

The following methods and assumptions were used by the Company in estimating its fair value disclosures for financial instruments:
     
 
• 
Cash and Cash Equivalents, Accounts Receivable, Loan from Related Party, Prepaid Expenses, Bank Overdraft,  Accounts Payable,  and  Accrued Expenses :
   
The carrying amount reported in the balance sheets for these items approximates fair value because of the short maturity of these instruments.
     
 
• 
Notes Payable and Loans and Notes Payable to Related Parties:
   
The carrying value of notes payable and loans and notes payable to related parties approximates fair value as each of the notes payable carries an interest rate commensurate with commercial borrowing rates available to the Company.
     
   
As of December 31, 2009 and June 30, 2009, the fair values of the Company’s financial instruments approximate their historical carrying amount.
 
(f) Impact of Recently Issued Accounting Pronouncements
 
We have reviewed accounting pronouncements and interpretations thereof that have effectiveness dates during the periods reported and in future periods. We believe that the following impending standards may have an impact on our future filings. The applicability of any standard is subject to the formal review of our financial management and certain standards are under consideration.
 
In June 2009, the Financial Accounting Standards Board (“FASB”) issued the FASB Accounting Standards Codification (“Codification”). The Codification is the single source for all authoritative Generally Accepted Accounting Principles (“GAAP”) recognized by the FASB to be applied for financial statements issued for periods ending after September 15, 2009.  The implementation of the Codification did not impact our financial statements or disclosures other than references to authoritative accounting literature are now made in accordance with the Codification.

 
- 9 -

 

Infrax Systems, Inc. 
(Formerly OptiCon Systems, Inc.)
(A Development Stage Enterprise)
Notes to Condensed Consolidated Financial Statements
For the Three and Six Months Ended December 31, 2009 and the Period from
October 22, 2004 (Date of Inception) through December 31, 2009
(Unaudited)
 

 
In May 2009, the FASB issued guidance under ASC 855 “Subsequent Events” which established general standards of accounting for and disclosures of events that occur after the balance sheet date but before financial statements are issued or are available to be issued. This guidance requires the Company to disclose the date through which the Company has evaluated subsequent events and the basis for the date. The guidance was effective for interim periods which ended after June 15, 2009. See Note 1, “Basis of Presentation,” for disclosure of the date to which subsequent events are disclosed.
 
In June 2008, the FASB issued authoritative guidance as required by the “Derivative and Hedging” ASC Topic 815-10-15-74 in Determining Whether an Instrument (or Embedded Feature) Is Indexed to an Entity’s Own Stock, The objective is to provide guidance for determining whether an equity-linked financial instrument (or embedded feature) is indexed to an entity’s own stock and it applies to any freestanding financial instrument or embedded feature that has all the characteristics of a derivative, for purposes of determining whether that instrument or embedded feature qualifies for the first part of the scope exception. This Issue also applies to any freestanding financial instrument that is potentially settled in an entity’s own stock, regardless of whether the instrument has all the characteristics of a derivative. We currently have warrants that embody terms and conditions that require the reset of their strike prices upon our sale of shares or equity-indexed financial instruments at amounts less than the conversion prices. These features will no longer be treated as “equity” once it becomes effective.  Rather, such instruments will require classification as liabilities and measurement at fair value. Early adoption is precluded. This standard did not have a material impact on the financial statements.
 
 In March 2008, the FASB issued guidance under ASC 815 “Derivatives and Hedging”. The guidance is intended to improve financial standards for derivative instruments and hedging activities by requiring enhanced disclosures to enable investors to better understand their effects on an entity’s financial position, financial performance, and cash flows. Entities are required to provide enhanced disclosures about: (a) how and why an entity uses derivative instruments; (b) how derivative instruments and related hedged items are accounted for and its related interpretations; and (c) how derivative instruments and related hedged items affect an entity’s financial position, financial performance, and cash flows. It is effective for financial statements issued for fiscal years beginning after November 15, 2008, with early adoption encouraged.  This standard did not have a material impact on the financial statements.
 
In December 2007, the FASB issued revised guidance under ASC 805 “Business Combinations”, which establishes principles and requirements for how an acquirer recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, and any non-controlling interest in an acquiree, including the recognition and measurement of goodwill acquired in a business combination. ASC 805 is effective as of the beginning of the first fiscal year beginning on or after December 15, 2008. Earlier adoption is prohibited. The adoption of ASC 805 did not have a material impact on the Company’s financial position, results of operations or cash flows because the Company has not been involved in any business combinations during the six months ended December 31, 2009.
 
In December 2007, the FASB issued guidance under ASC 810 “Consolidation”.  This guidance establishes new accounting and reporting standards for the Non-controlling interest in a subsidiary and for the deconsolidation of a subsidiary. This guidance will change the classification and reporting for minority interest and non-controlling interests of variable interest entities. The guidance requires the minority interest and non-controlling interest of variable interest entities to be carried as a component of stockholders’ equity. Accordingly we will reflect non-controlling interest in our consolidated variable interest entities as a component of stockholders’ equity. This guidance is effective for fiscal years and interim periods within those fiscal years, beginning on or after December 15, 2008 and earlier adoption is prohibited. The Company adopted this guidance beginning July 1, 2009. The Company does not have Variable Interest Entities consolidated in its financial statements.  Disclosure of a non-controlling interest has been made on the Company’s financial statements.

 
- 10 -

 

Infrax Systems, Inc. 
(Formerly OptiCon Systems, Inc.)
(A Development Stage Enterprise)
Notes to Condensed Consolidated Financial Statements
For the Three and Six Months Ended December 31, 2009 and the Period from
October 22, 2004 (Date of Inception) through December 31, 2009
(Unaudited)
 

 
In July 2006, the FASB issued guidance under ASC 740 “Income Taxes”. This interpretation clarifies the accounting for uncertainty in income taxes recognized in an entity’s financial statements. It prescribes a recognition threshold and measurement attribute for financial statement disclosure of tax positions taken, or expected to be taken, on a tax return. The adoption of this guidance did not have any impact on our financial statements.

Other recent accounting pronouncements issued by the FASB, the American Institute of Certified Public Accountants, and the Securities and Exchange Commission did not or are not believed by management to have a material impact on the Company's present or future financial statements.

3.  Going Concern

For the six months ended December 31, 2009, the Company incurred a loss of $403,593.  For the period October 22, 2004 (date of inception) through December 31, 2009, the Company incurred a cumulative net loss of $2,628,932.  At of December 31, 2009, the Company had negative working capital of $793,508, and $0 in cash with which to satisfy any future cash requirements. These conditions raise substantial doubt about the Company's ability to continue as a going concern. The Company depends upon capital to be derived from future financing activities such as loans from its officers and directors, subsequent offerings of its common stock or debt financing in order to operate and grow the business. There can be no assurance that the Company will be successful in raising such capital. The key factors that are not within the Company's control and that may have a direct bearing on operating results include, but are not limited to, acceptance of the Company’s business plan, the ability to raise capital in the future, to continue receiving funding from its officers, directors and shareholders, the ability to expand its customer base, and the ability to hire key employees to grow the business. There may be other risks and circumstances that management may be unable to predict.
 
4.  Property and Equipment
 
Property and equipment consists of the following:
   
December 31,
   
June 30,
 
   
2009
   
2009
 
             
Computer equipment
  $ 9,386     $ 8,587  
Software
    3,873       3,873  
 
    13,259       12,460  
Accumulated depreciation
    10,175       9,254  
     Property and equipment, net
  $ 3,084     $ 3,206  

For the three and six months ended December 31, 2009, and for the period from October 22, 2004 (inception) to cember 31, 2009, the total depreciation expense charged to operations totaled $15, $15, and $10,175, respectively.

 
- 11 -

 

Infrax Systems, Inc. 
(Formerly OptiCon Systems, Inc.)
(A Development Stage Enterprise)
Notes to Condensed Consolidated Financial Statements
For the Three and Six Months Ended December 31, 2009 and the Period from
October 22, 2004 (Date of Inception) through December 31, 2009
(Unaudited)


5.  Investments in Related Party

Equity method accounting consisted of the following as of December 31, 2009 and June 30, 2009:

 Equity method investees:
 
Voting
Ownership
   
Investment
Cost
   
Equity in
Earnings 
   
December
31, 2009
   
June 30
2009
 
                                         
PowerCon Energy Systems, Inc.
   
20.0%
 
 
$
22,500
   
$
(997)
 
 
$
21,503
   
$
-
 
 
\
Effective October 8, 2009, the investment in PowerCon was deconsolidated pursuant to the requirements set forth in the Codification of Accounting Standards. This guidance requires that the Company record at fair value, on the date of deconsolidation, any remaining interest in the equity investment.  Accordingly, the Company has recorded its interest in PowerCon at its fair value which amounts to $22,500. The Company recognized no gain or loss on deconsolidation of its investment in PowerCon.

  6.   Accrued Expenses

Accrued expenses consist of the following:
 
   
December 31,
   
June 30,
 
   
2009
   
2009
 
             
Accrued and deferred Salaries
  $ 334,141     $ 124,167  
Accrued vacation
    12,618       17,835  
Payroll tax liabilities
    52,034       43,789  
Accrued consulting
    118,150       109,150  
Accrued legal
    50,500       45,000  
Accrued payroll tax penalties
    8,431       -  
Accrued software training
    -       20,000  
Accrued commissions
    -       5,790  
Accrued interest
    12,378       6,710  
    $ 588,252     $ 372,441  
                 
 
7.  Related Parties Disclosures

(a) Employment Agreements

Saed (Sam) Talari

Effective August 1, 2009, the Company entered into a three-year employment agreement with Saed (Sam) Talari, one of the Company’s directors.  The agreement is automatically renewed for successive one-year periods.  The Agreement provides for (a) a base salary of $15,000 per month, (b) four weeks vacation within one year of the starting date, and (c) all group insurance plans and other benefit plans and programs made available to the Company’s management employees. Mr. Talari waived the increase in salary for the months of August and September 2009.


 
- 12 -

 

Infrax Systems, Inc. 
(Formerly OptiCon Systems, Inc.)
(A Development Stage Enterprise)
Notes to Condensed Consolidated Financial Statements
For the Three and Six Months Ended December 31, 2009 and the Period from
October 22, 2004 (Date of Inception) through December 31, 2009
(Unaudited)


Sadruddin Currimbhoy

On October 1, 2007, the Company entered into a one-year Employment Agreement with Mr. Sadruddin Currimbhoy, our former Chief Executive Officer.  Mr. Currimbhoy had taken a leave of absence and on November 21, 2008 he resigned as Chief Executive Officer, at which time Mr. Sam Talari became Acting Chief Executive Officer of the Company.

Cristino L. Perez

On October 1, 2009, the Company entered into a new three-year employment agreement with Cristino L. Perez, one of the Company’s directors and Chief Financial Officer.  The agreement is automatically extended for successive one one-year periods, unless previously terminated.  The Agreement provides for (a) a base salary of $5,000 per month ($3,000 payable in S-8 shares at Mr. Perez’ option, $2,000 deferred until December 31, 2009 or deferred until a later date, or payable in S-8 shares; (b) a  bonus as determined by the Board; (c) an option to purchase 225,000 shares of the Company common stock at $0.08 per share to be granted over a 3 years based on the achievement of goals and objectives established by the Board; (d) three weeks vacation per  year; and (e) all group insurance plans and other benefit plans and programs made available to the Company’s management employees.

Malcolm F. Welch

On October 6, 2009, the Company entered into a one-year employment agreement with Malcolm F. Welch, one of the Company’s directors and Co-Chairman of the Board.  The agreement is automatically extended for successive one one-year periods, unless previously terminated.  The Agreement provides for (a) a base salary of $7,000 per month ($5,000 payable in S-8 shares, $2,000 deferred until December 31, 2009, or deferred until a later date, or payable in S-8 shares ; (b) a bonus based on the level of funding the Company achieves through December 31, 2010; (c) an option to purchase 375,000 shares of the Company common stock at $0.08 per share to be granted over a 3 years based on the achievement of goals and objectives established by the Board; (d) two weeks vacation during first year, four weeks vacation thereafter, and (e) all group insurance plans and other benefit plans and programs made available to the Company’s management employees.

In November 2009, the Company issued Mr. Welch 181,818 shares of its common stock in exchange for services under his employment agreement.  Also in November 2009, the Company filed a registration statement with the Securities and Exchange Commission on Form S-8 on behalf of Mr. Welch registering 272,727 shares of common stock.

Paul J. Aiello

Effective October 19, 2009, the Company entered into a three-year employment agreement with Paul J. Aiello, the Company’s Chief Executive Officer.  The agreement is automatically extended for successive one-year periods, unless previously terminated.  The Agreement provides for (a) a base salary of $14,000 per month, ($10,000 payable in S-8 shares, $4,000 deferred until December 31, 2009, or deferred until a later date, or payable in cash or in S-8 shares;  (b) a bonus based on the level of funding the Company achieves through December 31, 2010; (c) an option to purchase 750,000 shares of the Company’s common stock at $0.08 per share to be granted over  3 years based on the achievement of goals and objectives established by the Board; (d) two weeks vacation during first year, four weeks vacation thereafter, and (e) all group insurance plans and other benefit plans and programs made available to the Company’s management employees.


 
- 13 -

 

Infrax Systems, Inc. 
(Formerly OptiCon Systems, Inc.)
(A Development Stage Enterprise)
Notes to Condensed Consolidated Financial Statements
For the Three and Six Months Ended December 31, 2009 and the Period from
October 22, 2004 (Date of Inception) through December 31, 2009
(Unaudited)


In November 2009, the Company issued Mr. Aiello 363,636 shares of its common stock in exchange for services under his employment agreement.  Also in November 2009, the Company filed a registration statement with the Securities and Exchange Commission on Form S-8 on behalf of Mr. Aiello, registering 545,455 shares of common stock.  Subsequent to December 31, 2009, the Company issued Mr. Aiello 800,000 shares its common stock for services under his employment agreement, 181,819 shares already registered under his Form S-8, and 618,181 under the Company’s 2009 Employees and Consultants Stock Compensation Plan.

Terisue Lander

On October 6, 2009, the Company entered into a three-year employment agreement with Terisue Lander, one of the Company’s directors and Executive Vice-President and Chief Operating Officer.  The agreement is automatically extended for successive one one-year periods, unless previously terminated.  The Agreement provides for (a) a base salary of $12,000 per month ($9,000 payable in S-8 shares, $3,000 deferred until December 31, 2009, deferred until a later date, or payable in S-8 shares; (b) a $9,000 sign on bonus; (c) a bonus based on the level of funding the Company achieves through December 31, 2010; (d) an option to purchase 720,000 shares of the Company common stock at $0.08 per share to be granted over a 3 years based on the achievement of goals and objectives established by the Board; (e) two weeks vacation during first year, four weeks vacation thereafter, and (f) all group insurance plans and other benefit plans and programs made available to the Company’s management employees.

In October 2009, the Company issued Ms. Lander 270,000 shares of its common stock in exchange for services under her employment agreement.  Also in October 2009, the Company filed a registration statement with the Securities and Exchange Commission on Form S-8 on behalf of Ms. Lander registering the 270,000 shares of common stock.

As of December 31, 2009 and June 30, 2009, the accrued compensation under these employment agreements, and employment arrangements with other employees was $334,141 and $107,000 respectively, and accrued vacation pay for the same periods were $12,618 and 17,835 respectively.

(b) Loan from Related Parties

On September 6, 2005, Mr. Sam Talari, one of the Company’s directors, agreed to make advances to the Company as an interim unsecured loan for operational capital up to a maximum of $350,000, evidenced by a master promissory note (“Master Note”), with interest at the rate of 5% per annum, based on amounts advanced from time to time, payable annually.  The Master Note is convertible into shares of the Company’s common stock at $.005 per share.

On October 3, 2009, the Company agreed to split a portion of the remaining balance on the Master Note into two (2) $25,000 convertible notes, with interest at the rate of 5% per annum, and convertible into shares of the Company’s common stock at 40% discount to the 5-day average bid price per share.

Since September 6, 2005, and subsequent number of conversions of a portion of the note to common stock, Mr. Talari has continued making advances to the Company on the Master Note.  At December 31, 2009 and June 30, 2009, the outstanding balance due to Mr. Talari on the Master Note is $247,775 and $51,248 respectively. In addition, the Company has accrued interest due to Mr. Talari on this loan in the amount of $2,521 and $300 at December 31, 2009 and June 30, 2009 respectively.


 
- 14 -

 

Infrax Systems, Inc. 
(Formerly OptiCon Systems, Inc.)
(A Development Stage Enterprise)
Notes to Condensed Consolidated Financial Statements
For the Three and Six Months Ended December 31, 2009 and the Period from
October 22, 2004 (Date of Inception) through December 31, 2009
(Unaudited)


During the year ended June 30, 2008, FutureWorld Energy, Inc. Infrax’s former parent company, paid expenses on behalf of the Company and made cash advances.  Most of these expenses were paid, and the advances made, by FutureWorld Energy at the time Infrax was still a subsidiary, and are included in Loan & Note Payable – Related Parties on the balance sheet. At December 31, 2009 and June 30, 2009, the amount owed to FutureWorld Energy on this promissory note was $7,802 and $7,802 respectively, and has accrued interest of $345 and $31 respectively.

8.   Stock Options and Warrants

On December 2, 2005, the Company granted two unrelated individuals Series A Warrants to purchase 2,192 shares, at an adjusted average exercise price of $34.60.  All of the Warrants expire on November 11, 2011.  All of the Warrants granted were non-qualified fixed price warrants.

9.  Stock Option Plan

On October 22, 2004, the Company adopted a 2004 Non-statutory Stock Option Plan (“Option Plan”) for the benefit of its key employees (including officers and employee directors), consultants and affiliates. The Option Plan is intended to provide those persons who have substantial responsibility for the management and growth of the Company with additional incentives and an opportunity to obtain or increase their proprietary interest in the Company, encouraging them to continue in employment.

On October 2, 2009 the Board of Directors authorized additional shares under this plan bringing the total authorized to 5,000,000 shares of the Company's common stock to be set aside, which may be issued under the Option Plan.  As of December 31, 2009, no options have been granted thus no shares have yet been issued under the Option Plan.

10.  Stock Compensation Plan

On October 2, 2009, the Company adopted a 2009 Employees and Consultants Stock Compensation Plan (“Stock Plan”) for the benefit of employees and consultants (including officers and employee directors). The Stock Plan is intended to provide those persons who have substantial responsibility for the management and growth of the Company with additional incentives and an opportunity to obtain or increase their proprietary interest in the Company, encouraging them to continue in employment, and to pay independent consultants that perform services to the Company. The Board of Directors authorized 5,000,000 shares of the Company's common stock to be set aside, which may be issued under the Stock Plan.

On November 24, 2009, the Company filed a registration statement on Form S-8 with the Securities and Exchange Commission registering the 5,000,000 shares (S-8 shares) under the Stock Plan.
 
Under employment agreement of four employees, the Company is committed to pay a portion of the employees’ compensation in S-8 shares.  Furthermore, if upon the sale of such shares, the net proceeds received by the employee is not sufficient to cover the designated portion of the compensation, the Company would be required to issue additional S-8 shares as to allow the employee to receive net proceeds equal to the designated compensation amount.

During the quarter ended December 31, 2009, the Company issued a total of 1,308,181 shares to a consultant, and to the four employees for services rendered to the Company under their employment agreements, of which 210,000 shares were issued to one employee under the Stock Plan.  At December 31, 2009, the Company is required to issue 2,974,322 S-8 shares to these employees under their respective employment agreements.   Therefore, at December 31, 2009, there remain 4,790,000 shares available for future issuance under the Stock Plan, and  1,815,678 shares after the issuance of the required shares.


 
- 15 -

 

Infrax Systems, Inc. 
(Formerly OptiCon Systems, Inc.)
(A Development Stage Enterprise)
Notes to Condensed Consolidated Financial Statements
For the Three and Six Months Ended December 31, 2009 and the Period from
October 22, 2004 (Date of Inception) through December 31, 2009
(Unaudited)


11.  Income Taxes

The Company has not recognized an income tax benefit for its operating losses generated through December 31, 2009 based on uncertainties concerning the Company’s ability to generate taxable income in future periods.  The tax benefit is offset by a valuation allowance established against deferred tax assets arising from operating losses and other temporary differences, the realization of which could not be considered more likely than not.  In future periods, tax benefits and related deferred tax assets will be recognized when management considers realization of such amounts to be more likely than not.

12.  Commitments and Contingencies

(a) Employment Agreements

Francis E. Vegliante

Effective October 6, 2009, the Company entered into a three-year employment agreement with Francis E. Vegliante as Senior Vice-President of International Sales and Services.  The agreement is automatically extended for successive one-year periods, unless previously terminated.  The Agreement provides for (a) a base salary of $7,000 per month.  The first three months compensation will be non-refundable, and for all subsequent months compensation will be a refundable draw against future commissions.  The first three months compensation will be deferred until December 31, 2009, or deferred until a later date, or payable in cash or in S-8 shares at the time; (b) 10% commission on collected contract billing, limited to $300,000 during the first year of employment, (c) a bonus based on the level of funding the Company achieves through December 31, 2010; (d) an option to purchase 600,000 shares of the Company common stock at $0.08 per share to be granted over a 3 years based on the achievement of goals and objectives established by the Board; (e) one week vacation after six month of employment, four weeks vacation thereafter, and (f) all group insurance plans and other benefit plans and programs made available to the Company’s management employees.

David McCarthy

Effective October 6, 2009, the Company entered into a three-year employment agreement with David McCarthy as Vice-President of Corporate Development.  The agreement is automatically extended for successive one-year periods, unless previously terminated.  The Agreement provides for (a) a base salary of $10,000 per month, ($7,000 payable in S-8 shares, $3,000 deferred until December 31, 2009, or deferred until a later date, or payable in cash or in S-8 shares at the time); (b) a sign on bonus equal to one month salary, (c) a bonus based on the level of funding the Company achieves through December 31, 2010; (d) an option to purchase 225,000 shares of the Company common stock at $0.08 per share to be granted over a 3 years based on the achievement of goals and objectives established by the Board; (e) one week vacation after six month of employment, four weeks vacation thereafter, and (f) all group insurance plans and other benefit plans and programs made available to the Company’s management employees.

During October, November and December 2009, the Company issued Mr. McCarthy 420,000 shares of its common stock in exchange for services under her employment agreement.  In October 2009, the Company filed a registration statement with the Securities and Exchange Commission on Form S-8 on behalf of Mr. McCarthy registering the 210,000 shares of his common stock.  The additional 210,000 shares were issued under the Company’s 2009 Employees and Consultants Stock Compensation Plan.
 
 

 
- 16 -

 

Infrax Systems, Inc. 
(Formerly OptiCon Systems, Inc.)
(A Development Stage Enterprise)
Notes to Condensed Consolidated Financial Statements
For the Three and Six Months Ended December 31, 2009 and the Period from
October 22, 2004 (Date of Inception) through December 31, 2009
(Unaudited)


John Verghese

Effective December 1, 2009, the Company entered into a letter agreement with John Verghese as Director of Product Development.  The letter agreement is an interim step while an employment agreement is negotiated and executed.  The terms of the employment agreement are still being negotiated.  The letter agreement provides for (a) a base salary of $3,000 per month in the form of S-8 shares, (b) an option to purchase 360,000 shares of the Company common stock at $0.05 per share to be granted over a 3 years based on the achievement of goals and objectives established by the Board.  ; (c) two weeks vacation during first year of employment, and (d) all group insurance plans and other benefit plans and programs made available to the Company’s management employees.

(b) Rental Agreement

On August 1, 2009, the Company terminated its lease agreement with Muse River Corporation, and entered into a 5-year commercial lease with Caroline DeVale, an unrelated individual, to rent approximately 1,625 square feet of executive offices and computer center in St. Petersburg, Florida at rent of $1,930 a month, including Florida sales taxes.  The future minimum rental for each of the next four years is $23,160, and for the fifth year is $13,510.

Rent expense for the three and six months ended December 31, 2009, and for the period from October 22, 2004 (date of inception) through December 31, 2009 amounted to $5,642, $11,432 and $55,876 respectively.  Rent expense for the three and six months ended December 31, 2008 amounted to $6,497 and $9,659 respectively.
 
 
13.  Foreign Currency Translation
 
The balance sheets of the Company's foreign subsidiaries are translated at period-end rates of exchange, and the statements of earnings are translated at the weighted-average exchange rate for the period. Gains or losses resulting from translating foreign currency financial statements are included in accumulated other comprehensive income (loss) in the consolidated statements of stockholders' equity and comprehensive income. At December 31, 2009 no foreign currency translation was conducted due to the immaterial nature of its subsidiary’s balance sheet.
 
 

 
- 17 -

 

Infrax Systems, Inc. 
(Formerly OptiCon Systems, Inc.)
(A Development Stage Enterprise)
Notes to Condensed Consolidated Financial Statements
For the Three and Six Months Ended December 31, 2009 and the Period from
October 22, 2004 (Date of Inception) through December 31, 2009
(Unaudited)


14.  Subsequent Events

(a) Issuance of Common Stock

On January 15, 2010, the Company agreed to issue Mr. Sam Talari 1,500,000 shares of the Company’s common in exchange for the cancellation of $45,000 of accrued salary owed to Mr. Sam Talari.  The number of shares issued was determined based on the market price of $.03 per share on January 15, 2010. The Board agreed to issue these shares from shares previously authorized under the Company’s 2009 Employees and Consultants Stock Compensation Plan.

On January 11, 2010 and February 10, 2010, the Company issued John Verghese, one of its non-executive employees 120,000 and 107,143 shares respectively, of the Company’s common stock in exchange for services under the employee’s employment agreement.

On January 11, 2010 and February 10, 2010, the Company issued Paul J. Aiello, the Company’s CEO 800,000 and 357,143 shares respectively, of the Company’s common stock in exchange for services under the employee’s employment agreement.  These shares were issued from shares available under the Company’s 2009 Employees and Consultants Stock Compensation Plan.

(b) Note Assignment and Stock Conversion

On January 27, 2010, Mr. Sam Talari assigned one of the $25,000 convertible promissory notes owed to him by the Company to Eventus Capital, Inc., an unrelated entity.  On February 3, 2010, the Company agreed to convert the promissory note assigned to Eventus Capital into 1,860,119 shares of the Company’s common stock at a conversion price of $.01344 per share.

(c) Employment Agreement

Effective February 1, 2009, the Company entered into a letter agreement with S. Kahn as Manager of Product Development.  The letter agreement is an interim step while an employment agreement is negotiated and executed.  The terms of the employment agreement are still being negotiated.  The letter agreement provides for (a) a base salary of $1,500 per month deferred for 90 days or payable in the form of S-8 shares or cash thereafter, (b) an option to purchase 450,000 shares of the Company common stock at $0.03 per share to be granted over a 3 years based on the achievement of goals and objectives established by the Board.



 
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Item 2.   Management’s Discussion and Analysis or Plan of Operation

The following discussions should be read in conjunction with our financial statements and the notes thereto presented in “Item 1 – Financial Statements” and our audited financial statements and the related Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our report on Form 10-K for the fiscal year ended June 30, 2009. The information set forth in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” includes forward-looking statements that involve risks and uncertainties. Many factors could cause actual results to differ materially from those contained in the forward-looking statements.

Name Changes

Effective December 2, 2009, with the majority shareholder’s approval, the name of the Company was changed from OptiCon Systems, Inc. to Infrax Systems, Inc.

Changes in Management

On October 5, 2009, Paul D. Lisenby, one of our directors resigned, and on the same date Terisue Lander was elected as a director, Executive Vice-President and Chief Operating Officer, and Malcolm F. Welch was elected as a director and Co-Chairman of the Board.

On October 16, 2009, the Board of Directors approved the appointment of Paul J. Aiello to serve as our Chief Executive Officer and as a board member effective October 19, 2009.  Effective on October 19, 2009, Saed (Sam) Talari resigned as our Acting Chief Executive Officer.

On November 30, 209, the Board of Directors approved Terisue Lander’s change in position with the Company from Executive Vice-President and Chief Operating Officer to Executive Vice-President of Business Development to be more in line with Ms. Lander’ role within the Company.

On January 3, 2010 during the Company’s annual meeting of its shareholders, the following directors were appointed for the following year:  Paul J. Aiello, Malcolm F. Welch, Saed (Sam) Talari, and Cristino L. Perez.  Ms. Terisue Lander was not re-elected to the Board.  On January 25, 2010 Ms. Lander resigned her position with the Company.

Deconsolidation of a Subsidiary

On August 12, 2009, PowerCon Energy Systems, Inc. (“PowerCon”) became a wholly owned subsidiary of the Company by the issuance of 3,000,000 shares to the Company in exchange for the rights to the R4PC software architecture limited to the power industry.  On October 8, 2009, PowerCon issued 16,000,000 shares of its stock to Saed (Sam) Talari in exchange for a promissory note.  At that time, PowerCon ceased being a wholly owned subsidiary.  The accounts of the Company have been adjusted to reflect the effect of deconsolidating PowerCon.

Critical Accounting Policies

Our significant accounting policies are more fully described in Note 1 to the financial statements. However, certain accounting policies are particularly important to the portrayal of our financial position and results of operations and require the application of significant judgment by our management; as a result they are subject to an inherent degree of uncertainty. In applying these policies, our management uses its judgment to determine the appropriate assumptions to be used in the determination of certain estimates. Those estimates are based on knowledge of our industry, historical operations, terms of existing contracts, our observance of trends in the industry and information available from other outside sources, as appropriate.

 
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Our critical accounting policies include:

·   
Principals of Consolidation -The consolidated financial statements include the accounts and operations of the Infrax Systems, Inc., and its wholly owned subsidiary Infrax Systems SA (Pty) Ltd. (collectively referred to as the “Company”).  Accordingly, the assets and liabilities, and expenses of this company have been included in the accompanying consolidated financial statements, and intercompany transactions have been eliminated.
 
·   
Revenue Recognition - We recognize revenue from licensing our software upon the acceptance of the software by customers.  When a software sales arrangement includes rights to customer support, the portion of the license fee allocated to such support is recognized ratably over the term of the arrangement, normally one year.  Revenue from professional services arrangements will be recognized in the month in which services are rendered over the term of the arrangement.

·   
Long-Lived Assets - We depreciate property and equipment and amortize intangible assets, including software development costs over the respective assets’ estimated useful life and periodically review the remaining useful lives of our assets to ascertain that our estimate is still valid. If we determine a useful life has materially changed, we either change the useful life or write the asset down or if we determine the asset has exhausted its useful life, we write the asset off completely.
  
·   
Capitalized Software Development Costs - We capitalize software development costs incurred subsequent to the establishment of technological feasibility and amortize them over the estimated lives of the related products. We discontinue capitalization of software when the software product is available to be sold, leased, or otherwise marketed. Amortization of software costs begins when the developed product is available for sale to our customers. We amortize our software development costs over the estimated economic life and estimated number of units of the product to be sold.

·   
Stock Based Compensation - We recognize stock-based compensation expense net of an estimated forfeiture rate and therefore only recognize compensation cost for those shares expected to vest over the service period of the award.  Calculating stock-based compensation expense requires the input of subjective assumptions, including the expected term of the option grant, stock price volatility, and the pre-vesting option forfeiture rate.  We estimate the expected life of options granted based on historical exercise patterns.  We estimate stock price volatility based on historical implied volatility in our stock.  In addition, we are required to estimate the expected volatility rate and only recognize expense for those shares expected to vest.  We estimate the forfeiture rate based on historical experience of our stock-based awards that are granted, exercised or cancelled.

Recent Accounting Pronouncement
 
We have reviewed accounting pronouncements and interpretations thereof that have effectiveness dates during the periods reported and in future periods. We believe that the following impending standards may have an impact on our future filings. The applicability of any standard is subject to the formal review of our financial management and certain standards are under consideration.
 
In June 2009, the Financial Accounting Standards Board (“FASB”) issued the FASB Accounting Standards Codification (“Codification”). The Codification is the single source for all authoritative Generally Accepted Accounting Principles (“GAAP”) recognized by the FASB to be applied for financial statements issued for periods ending after September 15, 2009.  The implementation of the Codification did not impact our financial statements or disclosures other than references to authoritative accounting literature are now made in accordance with the Codification.
 
In May 2009, the FASB issued guidance under ASC 855 “Subsequent Events” which established general standards of accounting for and disclosures of events that occur after the balance sheet date but before financial statements are issued or are available to be issued. This guidance required the Company to disclose the date through which the Company has evaluated subsequent events and the basis for the date. The guidance was effective for interim periods which ended after June 15, 2009. See Note 1, “Basis of Presentation,” for disclosure of the date to which subsequent events are disclosed.
 

 
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In June 2008, the FASB issued authoritative guidance as required by the “Derivative and Hedging” ASC Topic 815-10-15-74 in Determining Whether an Instrument (or Embedded Feature) Is Indexed to an Entity’s Own Stock. The objective is to provide guidance for determining whether an equity-linked financial instrument (or embedded feature) is indexed to an entity’s own stock and it applies to any freestanding financial instrument or embedded feature that has all the characteristics of a derivative, for purposes of determining whether that instrument or embedded feature qualifies for the first part of the scope exception. This Issue also applies to any freestanding financial instrument that is potentially settled in an entity’s own stock, regardless of whether the instrument has all the characteristics of a derivative. We currently have warrants that embody terms and conditions that require the reset of their strike prices upon our sale of shares or equity-indexed financial instruments at amounts less than the conversion prices. These features will no longer be treated as “equity” once it becomes effective. Rather, such instruments will require classification as liabilities and measurement at fair value. Early adoption is precluded. This standard did not have a material impact on the financial statements.
 
 In March 2008, the FASB issued guidance under ASC 815 “Derivatives and Hedging”. The guidance is intended to improve financial standards for derivative instruments and hedging activities by requiring enhanced disclosures to enable investors to better understand their effects on an entity’s financial position, financial performance, and cash flows. Entities are required to provide enhanced disclosures about: (a) how and why an entity uses derivative instruments; (b) how derivative instruments and related hedged items are accounted for and its related interpretations; and (c) how derivative instruments and related hedged items affect an entity’s financial position, financial performance, and cash flows. It is effective for financial statements issued for fiscal years beginning after November 15, 2008, with early adoption encouraged.  This standard did not have a material impact on the financial statements.
 
In December 2007, the FASB issued revised guidance under ASC 805 “Business Combinations”, which establishes principles and requirements for how an acquirer recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, and any non-controlling interest in an acquiree, including the recognition and measurement of goodwill acquired in a business combination. ASC 805 is effective as of the beginning of the first fiscal year beginning on or after December 15, 2008. Earlier adoption is prohibited. The adoption of ASC 805 did not have a material impact on the Company’s financial position, results of operations or cash flows because the Company has not been involved in any business combinations during the six months ended December 31, 2009.
 
In December 2007, the FASB issued guidance under ASC 810 “Consolidation”.  This guidance establishes new accounting and reporting standards for the Non-controlling interest in a subsidiary and for the deconsolidation of a subsidiary. This guidance will change the classification and reporting for minority interest and non-controlling interests of variable interest entities. The guidance requires the minority interest and non-controlling interest of variable interest entities to be carried as a component of stockholders’ equity. Accordingly we will reflect non-controlling interest in our consolidated variable interest entities as a component of stockholders’ equity. This guidance is effective for fiscal years and interim periods within those fiscal years, beginning on or after December 15, 2008 and earlier adoption is prohibited. The Company adopted this guidance beginning July 1, 2009. We do not have Variable Interest Entities consolidated in our financial statements.  We have disclosed a non-controlling interest on our financial statements.
 
In July 2006, the FASB issued guidance under ASC 740 “Income Taxes”. This interpretation clarifies the accounting for uncertainty in income taxes recognized in an entity’s financial. It prescribes a recognition threshold and measurement attribute for financial statement disclosure of tax positions taken, or expected to be taken, on a tax return. The adoption of this guidance did not have any impact on our financial statements.
 
Other recent accounting pronouncements issued by the FASB, the American Institute of Certified Public Accountants, and the Securities and Exchange Commission did not or are not believed by management to have a material impact on the Company's present or future financial statements.

Off-Balance Sheet Arrangements:
 
We do not participate in transactions that generate relationships with unconsolidated entities or financial partnerships, such as special purpose entities or variable interest entities, which have been established for the purpose of facilitating off-balance sheet arrangements or other limited purposes.


 
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PLAN OF OPERATIONS

As more fully described in “LIQUIDITY AND CAPITAL RESOURCES”, we had $0 in cash at December 31, 2009, and $247,775 remaining on the line of credit from Mr. Talari with which to satisfy our future cash requirements.  Our management believes our cash and credit line, and revenue from the sale of our products will support only limited activities for the next twelve months. We are attempting to secure other sources of financing to develop our business plan, and to implement our sales and marketing plan.

We believe full implementation of our plan of operations and completion of development of the R4 system will cost approximately $5 million.  We have no assurance we will be able to obtain additional funding to sustain even limited operations beyond twelve months based on the available cash and balance of our line of credit with Mr. Talari, and limited revenues from the sale of our products.  If we do not obtain additional funding, we may need to cease operations until we do so, and in that event may consider a sale of our technology.  Our plan of operations set forth below depends entirely upon obtaining additional funding.

We do not have any ongoing discussions, arrangements, understandings, commitments or agreements for additional funding.  We will consider equity funding through either a private sale or a registered public offering of our common stock; however, it seems unlikely that we can obtain an underwriter.  We will consider a joint venture in which the joint venture partner provides funding to the enterprise.  We will consider debt financing, both unsecured and secured by a pledge of our technology.  As noted above, we may be forced to cease operations without additional funding, after our limited cash and line of credit with Mr. Talari are exhausted.

Our Marketing Plan

The first phase in our plan of operations, subject to adequate funding, will be implementation of our sales and marketing plan. Our plan has been to contact those companies to which Corning Cable licensed the Opticon Network Manager software to offer maintenance and professional services with respect to the R3 software they continue to utilize. Since Corning Cable stopped supporting the R3 software, these companies have been without a means to maintain and support the software, or they have acquired software from other sources for their current needs. For those companies that continue to use the R3 software, we would be able to provide them with seamless integration with other programs or newer version of programs being used, and provide them with full maintenance and support. Corning Cable has provided us with a list of companies they had previously used their software.  We have contacted a number of these companies, almost entirely in the United States, and have found that many have a keen interest in our software.  We are unable to sell our software customers until we are able to raise funds to provide adequate support for the software.

We also plan to begin marketing to the MSO (cable companies) market. In parallel with this activity we plan to contact the seven consulting firms servicing the ISO market. These firms act as a technical staff for this market, as it is too costly for the individual ISOs to keep a full time technical staff.  The consulting firms also provide strategic technical analysis for this market segment as the ISOs do not have the resources or staff to provide this function on their own.

We are also exploring the opportunities to create joint ventures, agencies or other business relationships  and are in discussion with local and regionally based companies in emerging markets with existing relationships with the key decision makers in these foreign markets, that would be willing establish strategic relationships in those markets and establishing their own Network Operating Centers to increase our visibility and support our customers in those markets.  We are considering establishing this concept as our business model for countries in these emerging markets.

Product Research and Development

The Opticon software was originally designed for two distinct applications, one for the telecommunications industry (R4) and the other for the power industry (R4PC).  The Company transferred the R4PC to PowerCon Energy Systems, Inc., in exchange for 3,000,000 shares of that company’s common stock, while the R4 remained with us. We estimated that our OptiCon R4 software system is approximately seventy-five percent complete.  We have not done any significant development on the R4.  The development of the R4 requires significant funding, and that process cannot be implemented until such time as the we obtain adequate funding. We have budgeted $2.2 million to complete the development of the R4 system.  We do not have financial or other resources to undertake this development.  Without additional funding sufficient to cover this budgeted amount, we will not have the resources to conduct this development.
 
 
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We anticipate that as funding is received, of which there is no assurance, we will begin hiring the appropriate technical staff that would be able to handle support requirements for this market segment. We anticipate a need for up to forty-four employees by the end of the first year of full operation after funding. The number of employees we hire during the next twelve months will depend upon the level of funding and sales achieved.

Funding

To support our activities and provide the initial sales and support for entry into the large service provider marketplace, which consist of the national cable companies, we will require an initial investment of approximately $5 million. We expect this level of funding to carry us into the marketplace for  IOCs,  ILECs and  RBOCs, as well as offer services to existing users of the R3 system, and provide the capital necessary to complete the development of our OptiCon R4 system, our next generation product.  The graph below depicts the areas of development, assuming attainment of different level of funding.

Level of Funding
$1,000,000
Level of Funding
$2,500,000
Level of Funding
$5,000,000
     
Securing adequate facilities (approximately 12,500 square feet of space)
N/A
Securing an additional 12,500 to 25,000 square feet facility
     
Hiring approximately 12 product support, marketing, and administrative staff
Hiring an additional 12 product support and marketing staff, 3 product development staff, and additional administrative staff.
Hiring additional 12 product support, marketing and administrative support staff.
 
     
Acquiring furniture and fixtures for the facilities and staff, acquire computer systems
Acquire additional furniture and equipment for staff, and acquire additional computers and upgrade present system.
Upgrade computer systems to accommodate handling large MSO and ISO companies
 
     
Hiring of product support and development department heads.
N/A
N/A
     
N/A
Commence the development of OptiCon R4 software system.
Complete the development of the OptiCon R4 system.

Results of  Operations

For the six months ended December 31, 2009 and 2008:

During the six month  period ended December 31, 2009, we made our first sale and installation of the Opticon Network Manager to BalsamWest FiberNET, a regional provider of broadband services in the Mid Atlantic region, in the amount of $1,995, after substantial discounts.  BalsamWest has agreed to allow us to show other potential customers their real time operation of our software.

For the six months ended December 31, 2009, we incurred a net loss of $403,593 compared to a loss of $296,200 for the six months ended December 31, 2008 an increase of 36%, reflecting primarily the hiring a new managing team, including a CEO, Executive Vice-President of Business Development, a Senior Vice-President of International Sales, a Director of Product Development and others.


 
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For the six months ended December 31, 2009 compared to December 31, 2008 salaries and benefits increased from $45,231 to $251,942 reflecting new employment agreements our new management team and other employees hired during the period.  For the same period legal and accounting decreased from $40,000 to $26,000 reflecting a decrease in legal services provided by our outside counsel, and other cost cutting measures.  For the same period, consulting expenses decreased from $190,700 to $41,540, reflecting the termination of the agreement with an independent consultant who was assisting us with the marketing of our R3 software system in the U.S.  For the period December 31, 2008 compared to the same period in 2009, our travel and entertainment expenses increased from $2,357 to $15,160 reflecting the increase activity of our management team.  For the same period, taxes and licenses increased from 6,219 to $17,140 reflecting an increase in salary based with the hiring of the new management team.  Also for the same period, rent expense decreased from $22,459 to $11,432 reflecting the cancellation of our offices in California and moving our officer to the new corporate offices in St. Petersburg, Florida.
 
For the three months ended December 31, 2009 and 2008:

For the three months ended December 31, 2009, we incurred a net loss of $296,961 compared to a loss of $145,269 for the three months ended December 31, 2008 an increase of 104%, reflecting primarily the hiring a new managing team, including a CEO, Executive Vice-President of Business Development, a Senior Vice-President of International Sales, a Director of Product Development and others at the beginning of October 2009.

For the three months ended December 31, 2009 compared to December 31, 2008 salaries and benefits increased from $22,616 to $227,327 reflecting new employment agreements our new management team and other employees hired during the period.  For the same period legal and accounting decreased from $25,000 to $3,500 reflecting a decrease in legal services provided by our outside counsel, and other cost cutting measures.  For the same period, consulting expenses decreased from $79,533 to $5,388, reflecting the termination of the agreement with an independent consultant who was assisting us with the marketing of our R3 software system in the U.S.  For the three months December 31, 2008 compared to the same period in 2009, our travel and entertainment expenses increased from $4,431 to $10,729 reflecting the increase activity of our management team.  For the same period, taxes and licenses increased from $622 to $16,618 reflecting an increase in salary based with the hiring of the new management team.  Also for the same period, rent expense increased slightly from $5,642 to $5,790 reflecting the cancellation of our offices in California and moving our officer to the new corporate offices in St. Petersburg, Florida.

LIQUIDITY AND CAPITAL RESOURCES

As of December 31, 2009, we had $0 cash with which to satisfy our cash requirements for the next twelve months, along with $247,775 remaining on the line of credit from Mr. Talari to pay normal operating expenses, while we attempt to secure other sources of financing to develop our business plan, and to start implementation of our marketing plan.  On September 6, 2005, we obtained a loan commitment from Mr. Saed (Sam)Talari, one of our directors and controlling person in the amount of $350,000 evidenced by a master promissory note, due on demand, with interest at the rate of 5% per annum.  Since its inception, Mr. Talari has continued to advance funds to us as we needed them.

Mr. Talari remains committed to continue funding the Company, so that after the conversions of the outstanding amount on the note and accrued interest to our common stock, we effectively have $247,775 of the master promissory note available to us on an as needed basis.  During the three and six months ended December 31, 2009, Mr. Talari made advances to us or paid expenses on our behalf under this master promissory note in the amount of $34,034 and $100,977.  At December 31, 2009, we owe Mr. Talari a total of $152,2225 which is comprised of $102,225 on the master promissory note, , and  $50,000 on two $25,000 convertible promissory notes, and accrued interest of $2,521. On October 3, 2009, Mr. Talari assigned one of the notes to Eventus Capital, Inc., an unrelated entity, for business unrelated to the Company. Subsequent to the end of the year, Eventus Capital converted the $25,000 note into 1,860,119 shares of the Company’s common stock.

Beginning in October 2009, we entered into employment agreements with our new CEO, our Executive Vice-President of Business Development, our Senior Vice-President of International Sales, our Director of Product Development, our CFO and others.   All of the agreements contain provisions to defer a portion of the compensation and for the employee to accept our shares in lieu of cash for a period of time, to allow our to raise funding for operations.  Most of these shares were registered to allow the employees to receive some cash from the sale of the shares in the market place.  We believe our strategy has allowed us to attract top notch talent, and will allow us to retain them using very little cash.

 
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On August 1, 2009, we terminated its lease agreement with Muse River Corporation, and entered into a 5-year commercial lease with Caroline DeVale, an unrelated individual, to rent approximately 1,625 square feet of executive offices and computer center in St. Petersburg, Florida at a rent of $1,930 a month.

At December 31, 2009, we had no other contractual obligation or material commercial commitments for capital expenditures.


Item 3.
Quantitative and Qualitative Disclosures About Market Risk

Not Applicable


Item 4.
Controls and Procedures

Not Applicable


Item 4T.
Controls and Procedures

Disclosure controls and procedures:  As of December 31, 2009, we carried out an evaluation of the effectiveness of our disclosure controls and procedures, with the participation of our principal executive and principal financial officers.   Disclosure controls and procedures are defined in Exchange Act Rule 15d–15(e) as “controls and other procedures of an issuer that are designed to ensure that information required to be disclosed by the issuer in the reports that it files or submits under the Act (15 U.S.C. 78a et seq.) is recorded, processed, summarized and reported, within the time periods specified in the Commission's rules and forms and include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Act is accumulated and communicated to the issuer's management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.”  Based on our evaluation, our President/Chief Executive Officer and Chief Financial Officer have concluded that, as of December 31, 2009, such disclosure controls and procedures were not effective.

Changes in internal control over financial reporting: Based upon an evaluation by our management of our internal control over financial reporting, with the participation of our principal executive and principal financial officers, there were no changes made in our internal control over financial reporting during the quarter ended December 31, 2009 that have materially affected or are reasonably likely to materially affect this control.

Limitations on the Effectiveness of Internal Control: Our management does not expect that our disclosure controls and procedures or our internal control over financial reporting will necessarily prevent all fraud and material errors.  An internal control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met.  Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs.  Because of the inherent limitations on all internal control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected.  These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake.  Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, and/or by management override of the control.  The design of any system of internal control is also based in part upon certain assumptions about risks and the likelihood of future events, and there is no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes in circumstances and the degree of compliance with the policies and procedures may deteriorate.  Because of the inherent limitations in a cost-effective internal control system, financial reporting misstatements due to error or fraud may occur and not be detected on a timely basis.


 
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PART II - OTHER INFORMATION

Item 1
Legal Proceedings.

The registrant is not engaged in any legal proceedings at the date of this report.

Item 1A
Risk Factors.

There have been no material changes to the risk factors previously disclosed in our Annual Report on Form 10-K for the year ended June 30, 2009 filed on October 5, 2009 with the Securities and Exchange Commission.
 
Item 2
Unregistered Sales of Equity Securities and Use of Proceeds.

The following table sets forth information about our unregistered sales of securities during the three months ended December 31, 2009.

Date
Title of Security
Amount
Purchaser
Price
Exemption
           
2009
Common stock
72,727
Jacques Laurin (1)
Services
Section 4(2)

 (1) Issued to one of our consultants in exchange for services under a consulting arrangement for services during the quarter ended December 31, 2009.

We did not pay and no one acting on our behalf or to our knowledge paid any commissions or other compensation with respect to the sale of the shares listed in the tables above.  A legend was placed on the certificate that has been issued to Mr. Laurin, prohibiting public resale of the shares, except subject to an effective registration statement under the Securities Act of 1933, as amended (the "Act") or in compliance with Rule 144. We claim exemption from the registration requirement of the Act by reason of Section 4(2) of the Act and the rules and regulations there under, on grounds that the referenced sale listed above involve does not involve a public offering within the meaning of the Act. Furthermore, although the value of the shares we have issued and agreed to issue is uncertain, we believe we may also rely on Rule 504 under Regulation D as an exemption from registration.
 

Item 3
 Defaults Upon Senior Securities.

Not applicable.
 

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

Change in Company Name:

Effective December 2, 2009 the name the name of the Company was changed from OptiCon Systems, Inc. to Infrax Systems, Inc.  This action was presented to and approved by the majority shareholder in writing and without a meeting in lieu of a special meeting of the shareholders.

The action was approved by vote of the majority shareholder, Saed (Sam) Talari representing 114,000,000 shares or 82.0% of the issued and outstanding shares of the Company.

Election of Directors:

On January 2, 2010 by vote of the majority shareholder in writing and without a meeting in lieu of the annual meeting of shareholders, the following individuals were elected directors for the ensuing year, or until their resignation or removal:

Malcolm F. Welch – Co-Chairman
Saed (Sam) Talari – Co-Chairman
Paul J. Aiello
Cristino L. Perez

 
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The action was approved by vote of the majority shareholder, Saed (Sam) Talari representing 117,949,232 shares or 83.51% of the issued and outstanding shares of the Company.

Item 5
 Other Information.

Not applicable.

Item 6
Exhibits
 
   
31.A
Principal Executive Officer's Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.B
Principal Financial & Accounting Officer's Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.A
Principal Executive Officer’s Certification Pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.B
Principal Financial & Accounting Officer’s Certification Pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002



SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant cause this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 
Infrax Systems, Inc. (Registrant)
   
Date: February 19, 2010
By:  /s/  Paul J. Aiello
 
Paul J. Aiello
 
Principal Executive Officer
   
Date: February 19, 2010
By:  /s/ Cristino L. Perez
 
Cristino L. Perez,
 
Principal Financial & Accounting Officer
   


 
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