Q LOTUS HOLDINGS INC - FORM 10-Q/A

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EX-32.2 - Q LOTUS HOLDINGS INC	exh_32-2.htm
EX-32.1 - Q LOTUS HOLDINGS INC	exh_32-1.htm
EX-31.2 - Q LOTUS HOLDINGS INC	exh_31-2.htm
EX-31.1 - Q LOTUS HOLDINGS INC	exh_31-1.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

______________________

Form 10-Q/A

Amendment # 1

_____________________

þ	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended: December 31, 2011

o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _______ to ________

Commission File Number 000-52595

Q LOTUS HOLDINGS, INC.

(Exact name of registrant as specified in its charter)


Nevada		14-1961383
(State or Other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification No.)

500 North Dearborn Street, Suite 605 Chicago, Illinois		60654
(Address of Principal Executive Offices)		(Zip Code)

(312) 379-1800

Registrant’s telephone number, including area code:

(Former name and former address, if changed since last report)

Check whether the issuer: (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities 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 has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes o No o

Indicate by check mark whether the registrant is an accelerated filer, a non-accelerated filer, or a smaller reporting company (as defined in Rule 12b-2 of the Act).

Large accelerated filer o		Accelerated filer o

Non-accelerated filer o		Smaller reporting company x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES o NO x

As of February 23, 2011 there were 53,577,994 shares of the registrant's common stock outstanding.

Explanatory Note

This Amendment No. 1 (“Amendment”) on Form 10-Q/A amends the quarterly report on Form 10-Q for Q Lotus Holdings, Inc. (the “Company”) for the period ended December 31 2011, as filed with the Securities and Exchange Commission on February 23, 2011 (“Form 10-Q”). The sole purpose of this Amendment is to amend the designations on the cover form to check off (i) Quarterly report pursuant to section 13 or 15(d) of the securities exchange act of 1934 (ii) Checked off filed all reports required to be filed by Section 13 or 15(d) of the Securities 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 (iii) description- check off Smaller Reporting Company (IV ) Check off- Not a shell companyIssuer description- check off Smaller Reporting Company (iii) Check off- Not a shell company.

No revisions are being made to the Company’s financial statements and, except as described below, this Amendment does not reflect events occurring after the filing of the Form 10-Q, or modify or update those disclosures that may be affected by subsequent events, and no other changes are being made to any other disclosure contained in the Form 10-Q. As required by Rule 12b-15 of the Securities Exchange Act of 1934, as amended, new certifications by our principal executive officer and principal financial officer are filed herewith as exhibits to this Amendment.

Q LOTUS HOLDINGS, INC.

(A Development Stage Company)

FORM 10-Q

QUARTERLY PERIOD ENDED DECEMBER 31, 2010

INDEX

PART I – FINANCIAL INFORMATION

Item	Description	Pages
1	Un-Audited Financial Statements	1-8
2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	9-11
3	Quantitative and Qualitative Disclosures about Market Risk	12
4	Controls and Procedures	12-13

PART II – OTHER INFORMATION

Item	Description	Pages
1	Legal Proceedings	14
2	Unregistered Sales of Equity Securities and Use of Proceeds	14
3	Defaults Upon Senior Securities	14
4	(Removed and Reserved)	14
5	Other Information	14
6	Exhibits	14
	Signatures	15

Q LOTUS HOLDINGS, INC.

(A Development Stage Company)

NOTES TO CONDENSED FINANCIAL STATEMENTS

(UNAUDITED)

FORWARD-LOOKING STATEMENTS

The following information provides cautionary statements under the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 (the Reform Act). We identify important factors that could cause our actual results to differ materially from those projected in forward-looking statements we make in this report or in other documents that reference this report. All statements that express or involve discussions as to: expectations, beliefs, plans, objectives, assumptions or future events or performance (often, but not always, identified through the use of words or phrases such as we or our management believes, expects, anticipates or hopes and words or phrases such as will result, are expected to, will continue, is anticipated, estimated, projection and outlook, and words of similar import) are not statements of historical facts and may be forward-looking. These forward-looking statements are based largely on our expectations and are subject to a number of risks and uncertainties including, but not limited to, economic, competitive, regulatory, growth strategies, available financing and other factors discussed elsewhere in this report and in the documents filed by us with the Securities and Exchange Commission ("SEC"). Many of these factors are beyond our control. Actual results could differ materially from the forward-looking statements we make in this report or in other documents that reference this report. In light of these risks and uncertainties, there can be no assurance that the results anticipated in the forward-looking information contained in this report or other documents that reference this report will, in fact, occur.

These forward-looking statements involve estimates, assumptions and uncertainties, and, accordingly, actual results could differ materially from those expressed in the forward-looking statements. Such statements involve significant risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. Information on significant potential risks and uncertainties that may also cause differences include, but is not limited to, those mentioned by Q Lotus Holdings, Inc. from time to time in its filings with the SEC. The words “may,” “will,” “believe,” “estimate,” “expect,” “plan,” “intend,” “project,” “anticipate,” “could,” “would,” “should,” “seek,” “continue,” “pursue” and similar expressions and variations thereof identify certain of such forward-looking statements, which speak only as of the dates on which they were made. The forward-looking statements may include statements regarding product development, product potential or financial performance. Q Lotus Holdings, Inc. undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events, or otherwise. Readers are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties that may be disclosed from time to time in our SEC filings or otherwise, including the factors discussed in Item 1A, Risk Factors, of our Annual Report on Form 10-K and in or periodic reports on Form 10-Q, and, therefore, readers should not place undue reliance on these forward-looking statements. Forward-looking statements in this press release should be evaluated together with the many uncertainties that affect Q Lotus Holdings' business.

PART I – FINANCIAL INFORMATION

Q LOTUS HOLDINGS, INC.
(A Development Stage Company)
CONDENSED BALANCE SHEETS

	(Unaudited)
	December 31,			March 31,
	2010			2010

Assets

Current Assets
Cash	$	45,506		$	804,882
Prepaid expenses and other current assets		39,561			--

Total Current Assets		85,067			804,882

Property and Equipment, Net		49,445			--

Total Assets	$	134,512		$	804,882


Liabilities and Stockholders' (Deficit) Equity

Current Liabilities
Accounts payable	$	80,163		$	1,192
Short term notes payable		162,500			--
Due to related party		22,653			--

Total Current Liabilities		265,316			1,192

Stockholders' (Deficit) Equity
Preferred stock, $.001 par value; 100,000,000 shares authorized,
no shares issued and outstanding		--			--
Common stock, $.0001 par value; 400,000,000 shares authorized,
53,577,994 and 30,000,000 shares issued and outstanding
at December 31, 2010 and March 31, 2010, respectively		5,358			3,000
Additional paid-in-capital		1,014,564			801,882
Deficit accumulated during development stage		(1,150,726	)		(1,192	)

Total Stockholders' (Deficit) Equity		(130,804	)		803,690

Total Liabilities and Stockholders' (Deficit) Equity	$	134,512		$	804,882

See notes to these condensed financial statements

(A Development Stage Company)

CONDENSED STATEMENT OF OPERATIONS
(UNAUDITED)


							For the Period
	For the Three			For the Nine			from March 31, 2010
	Months Ended			Months Ended			(Inception) to
	December 31, 2010			December 31, 2010			December 31, 2010

Revenue	$	--		$	--		$	--

Operating Expenses		(408,765	)		(1,149,562	)		(1,150,754	)

Interest Income		--			28			28

Net Loss	$	(408,765	)	$	(1,149,534	)	$	(1,150,726	)


Net Loss per Common Share:
Basic and diluted	$	(0.01	)	$	(0.02	)

Weighted Average Number of Shares Outstanding
Basic and diluted		53,571,298			46,788,141

See notes to these condensed financial statements

Q LOTUS HOLDINGS, INC.
(A Development Stage Company)

CONDENSED STATEMENT OF STOCKHOLDERS' (DEFICIT) EQUITY
(UNAUDITED)


											Total
	Common Stock				Additional			Accumulated			Stockholders'
	Shares		Amount		Paid-in-Capital			Deficit			Equity

Balances - March 31, 2010 (Date of Inception)		30,000,000	$	3,000	$	801,882		$	(1,192	)	$	803,690

Shares of Extreme Home Staging Inc, par value $.0001,				2,202		(2,202	)		--			(0	)
adjusted for 3 for 1 split
Q Lotus Holdings, Inc - Shares Issued 8/26/10		1,250,000		125		49,875			--			50,000

Q Lotus Holdings, Inc - Shares Issued 9/21/10		300,000		30		149,970			--			150,000

Q Lotus Holdings, Inc - Shares Issued 12/17/10				1		15,039			--			15,040

Net loss		--		--		--			(1,149,534	)		(1,149,534	)


Balances - December 31, 2010		53,577,994	$	5,358	$	1,014,564		$	(1,150,726	)	$	(130,804	)

See notes to these condensed financial statements

Q LOTUS HOLDINGS, INC.
(A Development Stage Company)

STATEMENT OF CASH FLOWS
(UNAUDITED)


				For the Period
	For the Nine			from March 31, 2010
	Months Ended			(Inception) to
	December 31, 2010			December 31, 2010

Cash Flows from Operating Activities
Net Loss	$	(1,149,534	)	$	(1,150,726	)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation expense		7,064			7,064
Amortization expense		414,500			414,500
Stock based compensation		50,000			50,000
Changes in operating liabilities:
Prepaid expenses and other current assets		(289,021	)		(289,021	)
Accounts payable		78,970			80,162

Net Cash Used in Operating Activities		(888,021	)		(888,021	)

Cash Flows from Investing Activities
Purchase of property and equipment		(56,508	)		(56,508	)

Cash Used in Investing Activities		(56,508	)		(56,508	)

Cash Flows from Financing Activities
Proceeds from loan from related party-Net		22,653			22,653
Proceeds from short term notes payable		162,500			162,500
Proceeds from the issuance of common stock		--			804,882

Cash Provided by Financing Activities		185,153			990,035

Net (Decrease) Increase in Cash and Cash Equivalents		(759,376	)		45,506

Cash and Cash Equivalents - Beginning		804,882			--

Cash and Cash Equivalents - Ending	$	45,506		$	45,506

Supplementary disclosures of non-cash
investing and financing activities:
Common stock issued for services	$	165,040		$	165,040

See notes to these condensed financial statements

Note 1 - Organization and liquidity

Organization

Q Lotus Holdings, Inc. (“Q Lotus” or the “Company”) is a Nevada Corporation formed on March 31, 2010. The Company was formed to operate as a diversified financial services company which plans to acquire either minority or controlling interests in companies which we identify as undervalued and where our management participation in operations can aid in the recognition of the business’s fair value, as well as create additional value, and to make capital investments in a variety of privately held companies. The Company anticipates that the primary revenue sources will come from interest, dividends and capital investments (both loans and equity) in both (i) startup companies with proprietary technology and (ii) medium sized businesses with an established operating history. Currently, our business has consisted solely of holding mineral rights in a portfolio of gold and other minerals and our activities have been limited to our formation, business planning, pursuit of capital and exploring possible acquisitions.

The Company plans to initiate corporate bond offerings and convertible debentures for the purpose of raising capital for the Company’s planned investments, utilizing as collateral a portfolio of gold and other mineral assets.

Effective on June 14, 2010, Extreme Home Staging, Inc. (“EXSG”) a public shell corporation, was acquired by Q Lotus, Inc. (“QLI”) in a reverse merger transaction, whereby 1,000,000 common shares of QLI were exchanged for 30,000,000 newly issued shares (10,000,000 shares prior to the 3 for 1 common stock split - See Note 8, Capital Structure) of EXSG. Subsequently, EXSG changed its name to Q Lotus Holdings, Inc., and its common stock trades on the over the counter bulletin board under the symbol “QLTS.”

In contemplation of the merger, the sole shareholder of the Company borrowed funds from the Company in April 2010 and acquired 63% (26,550,000, or 8,850,000 shares prior to the 3 for 1 common stock split) of the common shares of EXSG for $266,620. Upon consummation of the merger, these shares were cancelled.

As a result of these transactions, the former owner of the Company became the controlling stockholder of EXSG. Accordingly, the merger of EXSG and the Company was a reverse merger that has been accounted for as a recapitalization of the Company, which is deemed to be the accounting acquirer.

On July 16, 2010, the Company executed a 3 for 1 common stock split. Accordingly, all common share and per common share information has been restated within this report to reflect this stock split.

The Company is in the initial stage of operations. The Company has funded its operations to date from proceeds received from the sale of its common stock totaling approximately $805,000 and from advances from the Company’s Chairman.

Liquidity and Going Concern

The accompanying condensed financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and satisfaction of liabilities and commitments in the normal course of business. As of February 23, 2011, the Company had a minimal available cash balance. Since March 31, 2010, funds were primarily used in operations to formulate business plans and explore opportunities. The Company needs to raise additional capital from external sources in order to sustain operations while executing its business plan. The Company cannot provide any assurance that it will raise additional capital. If the Company is unable to secure additional capital, it may be required to curtail its current operating expenses, modify its existing business plan and take additional measures to reduce costs in order to conserve its cash in amounts sufficient to sustain operations and meet its obligation.

There can be no assurance that such funding initiatives will be successful and any equity placement could result in substantial dilution to current stockholders. The above factors raise substantial doubt about the Company’s ability to continue as a going concern. The condensed financial statements do not include any adjustments relating to the recoverability of the recorded assets or the classification of the liabilities that might be necessary should the Company be unable to continue as a going concern. As of December 31, 2010, the Company’s activities have been limited to its formation, business planning, pursuing capital and exploring possible acquisitions.

Note 2 – Basis of Presentation

The accompanying unaudited condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial reporting and the instructions to Form 10-Q. Accordingly, they do not include all of the information and footnotes required by United States generally accepted accounting principles. In the opinion of management, all adjustments (consisting of normal accruals) considered for a fair presentation have been included. The Company has evaluated subsequent events through the issuance date of this Form 10-Q. Operating results for the three and nine months ended December 31, 2010 are not necessarily indicative of the results that may be expected for the fiscal year ending March 31, 2011. For further information, refer to the financial statements and footnotes thereto for Q Lotus included in the Company’s Form 8-K/A filed on August 17, 2010 for the year ended March 31, 2010.

Note 3 - Summary of Significant Accounting Policies

Income Taxes

The Company determines income taxes using the asset and liability approach which results in the recognition of deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the carrying amounts and the tax basis of those assets and liabilities, as well as operating loss and tax credit carryforwards, using enacted tax rates in effect in the years in which the differences are expected to reverse. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

The Company adopted the provisions of ASC 740, “Income Taxes” on March 31, 2010, which prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. The interpretation requires that the Company recognize the impact of a tax position in its financial statements if it is more likely than not that the position will be sustained on audit, based on the technical merits of the position. It also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods and disclosure. In accordance with the provision of ASC 740, any cumulative effect resulting from the change in accounting principle is to be recorded as an adjustment to the opening balance of accumulated retained earnings. The Company has not filed its first tax return, and therefore the Company has no uncertain tax positions that would require recognition in the financial statements at this time.

The Company’s policy is to classify assessments, if any, for tax related interest as interest expense and penalties as selling, general and administrative expenses.

Net Loss Per Common Share

Basic net loss per common share is computed based on the weighted average number of shares of common stock outstanding during the periods presented on a recapitalization basis in accordance with the reverse merger. The Company does not have any potentially dilutive securities as of December 31, 2010.

Recent Accounting Pronouncements

We review new accounting standards as issued. Although some of these accounting standards issued or effective after the end of our previous fiscal year may be applicable to us, we have not identified any standards that we believe merit further discussion. We expect that none of the new standards will have a significant impact on our consolidated financial statements.

Note 4 – Commitments and Contingencies

Consulting Agreements

On April 12, 2010, the Company entered into a consulting agreement with SiteMind, Inc. to provide, build, implement and maintain a corporate website. In connection with these services, the Company paid a fee of $54,500. The development of the corporate website was completed in the quarter ended September 30, 2010, and the $54,500 payment was expensed in that quarter.

On April 12, 2010, the Company entered into a consulting agreement with RedChip Companies, Inc. to provide public and investor relation services. In connection with these services, the Company paid a fee of $210,000 that was expensed in the current quarter.

Note 4 – Commitments and Contingencies, continued

Operating Agreements

The Company is not currently leasing any office space.

On May 10, 2010, Q Lotus entered into four mineral rights agreements, whereby the Company acquired the mining rights of properties located in Utah, Arizona and Oregon in exchange for a revenue sharing arrangement. There have been no transactions relating to these mineral rights to date.

Litigation, Claims and Assessments

From time to time, in the normal course of business, the Company may be involved in litigation. The Company’s management has determined any asserted or unasserted claims to be immaterial to the consolidated financial statements.

Note 5 – Notes Payable

In July 2010 the Company received two advances totaling $22,500 from a minority shareholder of the Company that were used to pay operating expenses. In September 2010 the Company received an advance of $5,000 from another minority shareholder of the Company that was used to pay operating expenses. These notes are non-interest bearing and payable on demand. The $5,000 advance was repaid in the quarter ended December 31, 2010.

In October 2010, the Company entered into a Loan Agreement for advances totaling $150,000, $140,000 of which was funded to the Company, by a minority shareholder of the Company that were used to pay operating expenses. This note is non-interest bearing and payable on demand.

Note 6 – Stockholders’ Deficit

Common Stock

The Company has authorized 400,000,000 shares of common stock, $0.0001 par value per share, and as of December 31, 2010, adjusted for the stock split, 53,577,994 shares were issued and outstanding. The holders of the Company’s common stock are entitled to one vote per share. The holders of common stock are entitled to receive ratably such dividends, if any, as may be declared by the Board of Directors out of legally available funds. However, the current policy of the Board of Directors is to retain earnings, if any, for the operation and expansion of the business. Upon liquidation, dissolution or winding-up of the Company, the holders of common stock are entitled to share ratably in all assets of the Company which are legally available for distribution and after payment of or provision for all liabilities. The holders of common stock have no preemptive, subscription, redemption or conversion rights.

Reverse Merger

On April 16, 2010 in contemplation of the merger described below, the Company’s sole shareholder at that time, Marckensie Theresias, acquired 26,550,000 shares (8,850,000 shares prior to the 3 for 1 common stock split) of Extreme Home Staging, Inc., a publicly owned Nevada Corporation (“EXSG”) for $266,620, primarily from its former CEO, Milka Fixler.

On June 11, 2010, Q Lotus entered into and completed an Agreement and Plan of Share Exchange with EXSG.

EXSG had 22,019,994 common shares (7,339,998 shares prior to the 3 for 1 common stock split) par value $0.0001 outstanding at the time of the merger.

EXSG agreed to acquire all of the Q Lotus Common Stock from the Q Lotus Stockholder in exchange for 30,000,000 newly issued shares (10,000,000 shares prior to the 3 for 1 common stock split) of EXSG common stock. As a condition of the exchange agreement, the 26,550,000 shares (8,850,000 shares prior to the 3 for 1 common stock split), as described above, were cancelled. The name of EXSG was subsequently changed to Q Lotus Holdings, Inc. After the merger was completed there was a total of 17,339,998 common shares outstanding, and after the stock split there was a total of 52,019,994 common shares outstanding.

The completion of the transactions as described above was accounted for as a “reverse merger” and recapitalization since the stockholder of Q Lotus will now control the combined company following the completion of the transactions.

Note 6 – Stockholders’ Deficit, continued

Common Stock Issued

In August 2010, the Company issued 1,250,000 shares of common stock with an ascribed value of $50,000 (based on the value of the services) in exchange for $125 and services that related to the formation and establishment of the Company and its business operations.

In September 2010, the Company issued 300,000 shares of common stock with an ascribed value of $150,000 (based on the value of the services) in exchange for web marketing services. This amount is being amortized over the three month period of the service agreement, $125,000 and $150,000 of which was amortized as operating expenses during the three and nine month periods ended December 31, 2010, respectively.

In December 2010, the Company issued 8,000 shares of common stock with a value of $15,000, based on the closing price of the Company’s common stock on the date of issuance, as earnest money relating to a potential acquisition.

Note 7 – Related Party Transactions

The Company recorded approximately $29,000 for expenses incurred by the Chairman on behalf of the Company. This advance, in the amount of approximately $22,000 at December 31, 2010, is non-interest bearing and payable on demand.

The Company conducts its operations from office space in Chicago, Illinois, that is leased by Urban R2 Development ("Urban R2"). Urban R2 is controlled by the Company's current Chief Executive Officer, and the Company has agreed to reimburse Urban R2 for fifty percent of its monthly occupancy expenses. For the three and nine months ended December 31, 2010, the Company's share of these expenses totaled approximately $41,000 and $47,000, respectively.

Note 8 - Capital Structure

On June 17, 2010, the Company filed a Schedule 14C Information Statement disclosing the following actions, to be effective on July 16, 2010, that had been approved by the shareholders of the Company:

1.	the Company’s Articles of Incorporation was amended to change the name to Q Lotus Holdings, Inc.;

2.	the authorized capital stock of the Company was increased to 500,000,000 shares, of which 400,000,000 shares will be Common Stock par value $0.0001 per share, and 100,000,000 shares will be Preferred Stock par value $.001 per share; and

3.	the outstanding common shares of the Company were split so that each outstanding share on the books of the Company was split into three outstanding common shares.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDTION AND RESULTS OF OPERATIONS

The following discussion and analysis of the results of operations and financial condition of Q Lotus Holdings, Inc. (“Q Lotus”) for the three and nine months ended December 31, 2010 should be read in conjunction with our financial statements and the notes to those financial statements that are included elsewhere in this Quarterly Report on Form 10-Q. References in this Management’s Discussion and Analysis of Financial Condition and Results of Operations or Plan of Operations to “ us,” “ we,” “ our,” and similar terms refer to Q Lotus. This discussion includes forward-looking statements based upon current expectations that involve risks and uncertainties, such as plans, objectives, expectations and intentions. Actual results and the timing of events could differ materially from those anticipated in these forward-looking statements as a result of a number of factors. See “Risk Factors” under Item 2.01 of Q Lotus’s Form 8-K/A filed June 16, 2010. Words such as “anticipate,” “estimate,” “plan,” “continuing,” “ongoing,” “expect,” “believe,” “intend,” “may,” “will,” “should,” “could,” and similar expressions are used to identify forward-looking statements.

OVERVIEW

Q Lotus Holdings, Inc. (the “Company," “us,” “we”) was incorporated in the State of Nevada on March 31, 2010. We are a development-stage company organized to operate as a diversified financial services company. Our operations to date have been limited to our formation, business planning, pursuit of capital and exploring possible acquisitions.

The Company’s goal is to acquire and manage our operations to achieve a superior return on net assets over the long term, as opposed to short-term earnings.

We plan to diversify our business into four operating segments:

·	Transportation;

·	Specialty Lending;

·	Real Estate Operations; and

·	Natural Resources.

On July 16, 2010, the Company executed a 3 for 1 common stock split. Accordingly, all common share and per common share information has been restated within this report to reflect this stock split.

We did not earn any revenues during the nine-month period December 31, 2010. During the period we incurred operating expenses of approximately $1,140,000, comprising of travel expenses of approximately $114,000, consulting fees of approximately $151,000, promotional expenses of approximately $468,000, professional fees of approximately $100,000, payroll expense of approximately $24,000, and supplies and services of approximately $283,000.

PLAN OF OPERATIONS

We plan to operate as a diversified financial services company whereby we will make capital investments in a variety of privately-held companies. We anticipate that our primary revenue-generating center will come from our capital investments (both loans and equity) into medium-sized businesses with an established operating history and early stage companies with proprietary technology.

The principal objective of acquisitions pursuant to a roll-up strategy is to acquire either a minority or controlling interest in mature companies, consolidate an industry and either sell the acquired entities as a larger unit, or take the unit public through an initial public offering, spin-off to our shareholders, or reverse merger into a publicly traded shell corporation. We may invest in debt securities of these companies, or may acquire an equity interest in the form of common or preferred-stock, warrants or options to acquire stock or the right to convert the debt securities into stock. We may invest alone, or as part of a larger investment group.

The Company owns the rights, titles, and interest in a portfolio of gold and other mineral assets. The Company received appraisal reports from independent third parties for each of the properties acquired. The values implied in any of the appraisal reports may not reflect in any manner the value of the rights that may be realized, since the reported appraisal values are based on certain assumptions that may be effected by many factors outside the control of the Company.

Investment Selection

We are committed to a value-oriented philosophy, which will be used by members of management who will manage our portfolio and seek to minimize the risk of capital loss without foregoing potential for capital appreciation.

We have identified several criteria that we believe are important in identifying and investing in prospective portfolio companies. These criteria provide general guidelines for our acquisitions and investment decisions; however, we caution that not all of these criteria will be met by each prospective portfolio company in which we choose to invest or acquire.

Value orientation and positive cash flow

Our philosophy places a premium on fundamental analysis from an investor’s perspective and has a distinct value orientation. We will focus on companies in which we can invest at relatively low multiples of operating cash flow and that are profitable at the time of investment on an operating-cash-flow basis. We plan to also invest in select early stage companies that have proprietary technologies, or a specialized niche that will enable the company to capitalize on its specialty to emerge as a market leader in its field.

Employment Agreements/Terms of Office

There are no employment agreements. There are no terms of office. Officers of the Company serve at the pleasure of the Board of Directors.

Material Commitments

We will have an ongoing commitment to pay the salaries, administrative expenses, legal and accounting expenses. We also plan to outsource certain services as required, which we will be committed to pay on an ongoing basis.

Purchase of Significant Equipment

The Company does not plan any purchases of significant equipment in the next 12 months.

Off-Balance Sheet Arrangements

We do not currently have any off-balance sheet arrangements. We may enter into off-balance sheet arrangements in the future.

Critical Accounting Policies

Our discussion and analysis of our financial condition and results of operations are based on our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities and expenses and related disclosures. We review our estimates on an ongoing basis.

We consider an accounting estimate to be critical if it requires assumptions to be made that were uncertain at the time the estimate was made; and changes in the estimate or different estimates that could have been made could have a material impact on our results of operations or financial condition. Our critical accounting policies include the following:

Stock-Based Compensation

We have adopted the fair value recognition provisions Accounting Standards Codification 718 “Compensation - Stock Compensation” (“ASC 718”). Stock-based compensation expense for all share-based payment awards is based on the grant-date fair value estimated in accordance with the provisions ASC 718. We recognize these compensation costs over the requisite service period of the award..

We account for equity instruments issued to non-employees in accordance with the provisions of ASC 718 which requires that such equity instruments be recorded at their fair value on the measurement date, which is typically the date the services are performed. Stock-based compensation for non-employees is accounted for under ASC 718 and is reflected within general and administrative expenses.

Results of Operations

General and Administrative Expenses

To date, the Company’s activities have been limited to its formation, business planning, pursuing capital and exploring possible acquisitions.

Expenses for the nine months ended December 31, 2010 were incurred relating to travel of approximately $114,000, consulting fees of approximately $151,000, promotional expenses of approximately $468,000, professional fees of approximately $100,000, payroll expense of approximately $24,000, and supplies and services of approximately $283,000.

Expenses for the three months ended December 31, 2010 were primarily incurred relating to travel of approximately $8,000, promotional expenses of approximately $337,000, professional fees of approximately $37,000, and supplies and services of approximately $17,000.

The Company has paid approximately $56,500 for equipment purchases, consulting fees of $54,500 for website design that was expensed in the quarter ended September 30, 2010, and $210,000 for public and investor relation services that was expensed in the quarter ended December 31, 2010. The Company issued 300,000 shares of its common stock valued at $150,000 for web marketing services, $125,000 and $150,000 of which was amortized as operating expenses during the three and nine month periods ended December 31, 2010, respectively.

Liquidity and Capital Resources

As of February 23, 2011 the Company had a minimal available cash balance.

Our common stock currently trades on the over the counter bulletin board under the symbol “QLTS.”

We plan to initiate corporate bond offerings to raise capital for our planned investments utilizing as collateral our portfolio of gold and other mineral assets. There can be no assurance the Company will be successful in raising these funds or executing its business plans.

Liquidity and Going Concern

The accompanying condensed financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and satisfaction of liabilities and commitments in the normal course of business. As of February 23, 2011, the Company had a minimal available cash balance. Since March 31, 2010, funds were primarily used in operations to formulate business plans and explore possible acquisitions. The Company needs to raise additional capital from external sources in order to sustain its operations while executing its business plan. The Company cannot provide any assurance that it will raise additional capital. If the Company is unable to secure additional capital, it may be required to curtail its current operating expenses, modify its existing business plan and take additional measures to reduce costs in order to conserve its cash in amounts sufficient to sustain operations and meet its obligations.

ITEM 3. Quantitative and Qualitative Disclosures About Market Risk

Not applicable

ITEM 4. Controls and Procedures

Disclosure Controls and Procedures

Management, with the participation of our Principal Executive Officer and Principal Financial Officer, carried out an evaluation of the effectiveness of our “disclosure controls and procedures” (as defined in the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) Rules 13a-15(e) and 15d-15(e)) as of the end of the period covered by this quarterly report on Form 10-Q (the “Evaluation Date”). Based upon that evaluation, our Principal Executive and Financial Officer concluded that, as of the Evaluation Date, our disclosure controls and procedures are not effective to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act (i) is recorded, processed, summarized and reported, within the time periods specified in the SEC rules and forms and (ii) is accumulated and communicated to our management, including our Principal Executive Officer and Principal Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

Notwithstanding the conclusion that our disclosure controls and procedures were not effective as of the end of the period covered by this Quarterly Report, the Principal Executive and Financial Officer believe that the condensed consolidated financial statements and other information contained in this Quarterly Report present fairly, in all material respects, our business, financial condition and results of operations.

Our management, including our Principal Executive and Financial Officer, does not expect that our disclosure controls and procedures or our internal controls will prevent all errors and all fraud. A 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 in all 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.

In connection with the review of our interim quarterly 2010 consolidated financial statements, our independent auditors identified certain significant deficiencies that together constitute a material weakness in our disclosure controls and procedures. These significant deficiencies primarily relate to our lack of formalized written policies and procedures in the financial accounting area, our lack of appropriate resources to handle the accounting for complex equity and other transactions, our lack of sophisticated financial reporting systems, due in part to the small size of our Company prior to the merger, and our lack of a formalized disaster recovery plan in the information technology area. These significant deficiencies together constitute a material weakness in our disclosure controls and procedures.

We have work to do to bring our disclosure controls and procedures up to public-company standards. As discussed above, because the merger occurred on June 11, 2010, we were unable to upgrade our disclosure controls and procedures to the level required of a public company prior to the end of the period covered by this quarterly report. Nevertheless, we have performed additional analyses and other post-closing procedures to ensure that our financial statements contained in this Quarterly Report were prepared in accordance with U.S. GAAP and applicable SEC regulations. Our planned remediation includes formalizing written policies and procedures, determining the appropriate resources to handle complex transactions as they arise in the future, upgrading our financial reporting systems, and developing and documenting a formalized IT disaster recovery plan.

Internal Control over Financial Reporting

The term “internal control over financial reporting” is defined as a process designed by, or under the supervision of, the registrant’s principal executive and principal financial officers, or persons performing similar functions, and effected by the registrant’s board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that:

·	pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the registrant;

provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the registrant are being made only in accordance with authorizations of management and directors of the registrant; and

·	provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the registrant’s assets that could have a material effect on the financial statements.

Changes in Internal Control over Financial Reporting.

The Company maintains a system of internal controls designed to provide reasonable assurance that transactions are executed in accordance with management's general or specific authorization; transactions are recorded as necessary to (1) permit preparation of financial statements in conformity with accounting principles generally accepted in the United States of America, and (2) maintain accountability for assets. Access to assets is permitted only in accordance with management's general or specific authorization.

There was no change in the Company’s internal control over financial reporting during the Company’s last fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

It is the responsibility of the Company’s management to establish and maintain adequate internal control over financial reporting. However, due in part to the small size of our Company prior to the Merger, we lack formalized written policies and procedures in the financial accounting area, we lack the appropriate resources to handle the accounting for complex equity and other transactions and lack a sophisticated financial reporting systems.

Our independent auditors have reported to our Board of Directors certain matters involving internal controls that our independent auditors considered to be a material weakness as of the Evaluation Date, under standards established by the Public Company Accounting Oversight Board. As previously stated, the material weakness relates our lack of formalized written policies and procedures in the financial accounting area, our lack of appropriate resources to handle the accounting for complex equity and other transactions and our lack of sophisticated financial reporting systems.

PART II – OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

The Company is currently not a party to any pending legal proceedings and no such action by, or to the best of its knowledge, against the Company has been threatened.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

The issuance and sale of the securities described above were exempt from registration under the Securities Act of 1933 pursuant to Section 4(2) thereof. We did not engage in general solicitation or advertising with regard to the issuance of such securities and did not offer the securities to the public in connection with such issuances.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. (REMOVED AND RESERVED)

Not applicable.

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS

The following is a list of exhibits filed as part of this Quarterly Report on Form 10-Q.

Exhibit No.	Description

31.1	Chief Executive Officer’s Certificate pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Chief Financial Officer’s Certificate pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Chief Executive Officer’s Certificate pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	Chief Financial Officer’s Certificate pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


		Q Lotus Holdings, Inc.

Date:	May 27, 2011	By:	/s/ Gary Rosenberg

			Gary Rosenberg
			Chief Executive Officer


Date:	May 27, 2011	By:	/s/ Marckensie Theresias

			Marckensie Theresias Chief Financial officer

Q LOTUS HOLDINGS INC - FORM 10-Q/A - May 27, 2011

Attached files

Q LOTUS HOLDINGS INC Reports