[X] | QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
[ ] | TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT For the transition period from ________________to ________________ |
NEVADA | 20-2583185 |
(State or other jurisdiction of incorporation or organization) | (IRS Employer Identification Number) |
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. | ||
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. | oNo | |
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). | ||
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not be contained, to the best of |
Accelerated filer ☐ | |||||||||
Non-accelerated filer | Smaller reporting company ☒ | ||||||||
Emerging growth company ☐ |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). | xNo | ||||||||
PART I | FINANCIAL INFORMATION | PAGE | |
Item 1 | Condensed Consolidated Financial Statements | ||
Condensed Consolidated Balance Sheets as of | 3 | ||
Condensed Consolidated Statements of Operations for the | 4 | ||
Condensed Consolidated Statements of Cash Flows for the | 5 | ||
Condensed Consolidated Notes to Financial Statements (unaudited) | 6 | ||
Item 2 | Management's Discussion and Analysis or Plan of Operation | 16 | |
Item 3 | Quantitative and Qualitative Disclosures About Market Risk | ||
Item 4 | Controls and Procedures | ||
PART II | OTHER INFORMATION | ||
Item 1 | Legal Proceedings | ||
Item 1A | Risk Factors | ||
Item 2 | Unregistered Sales of Equity Securities and Use of Proceeds | ||
Item 3 | Defaults Upon Senior Securities | ||
Item 4 | Mine Safety Disclosures | ||
Item 5 | Other Information | ||
Item 6 | Exhibits | ||
Signatures |
24 |
For the Three Months Ended September 30, For the Three Months Ended September 30, for the Nine Months Ended For the Three September 30, For the Three Months Ended September 30, March 31, 2017 13, 2016. Condensed Consolidated Financial Statements revenue is recognized as the contract is completed, based on defined milestones (see policy on revenue recognition). An allowance for doubtful accounts is considered to be established for any amounts that may not be recoverable, which is based on an analysis of the March 31, 2017. 2016. 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 and collection is probable. respectively. 2016. March 31, 2017; to $500,000, under the same terms as the original Master Note. Mr. Talari, from time to time, has converted advances and accrued interest in exchange for equity shares. Mr. Talari continued making advances to the Company on the loan, of which 2016. March 31, 2017. 2016. six months ended March 31, 2016. control over financial reporting during the quarter ended
Consolidated Balance Sheets(unaudited) September 30, June 30, 2016 2016 (unaudited) (unaudited) Assets Current assets Cash $ 63 $ 114 Inventory 6,200 6,200 Total current assets 6,263 6,314 Property & equipment, net of accumulated - Intangible property, net of accumulated 752,595 752,595 Total Assets $ 758,858 $ 758,910 Liabilities and Stockholders' Equity Current liabilities Accounts payable $ 172,471 $ 171,665 Accrued expenses 133,406 131,449 Notes payable, net 39,078 24,090 Payroll Liabilities 92,201 92,201 Notes payable, affiliates 20,678 20,678 Total current liabilities 457,834 440,083 Non-Current liabilities Notes payable to shareholder 342,862 342,862 Total liabilities 800,695 782,944 Stockholders' Equity Preferred stock, 50,000,000 authorized, $.001 par value: Series A Convertible: 5,000,000 shares designated; 2,523,624 and 2,523,624 issued and outstanding 2,525 2,525 Series A1 Convertible: 33,000,000 issued and outstanding - Common stock, $.001 par value, 1,950,000,000 shares authorized; 925,518,595 and 925,518,595 shares issued and outstanding, respectively 925,520 925,520 Additional paid-in capital 13,526,836 13,527,257 Accumulated deficit (14,496,717) (14,479,336) Total stockholders' equity (41,836) (24,035) Total Liabilities and Stockholders' Equity $ 758,858 $ 758,910
For the nine months ended March 31, 2017
(unaudited)Infrax Systems, Inc.Consolidated Statements of Operations(Unaudited) 2016 2015 Revenues $ $ - Direct costs - Gross Profit - Operating expenses: Salaries and benefits - Professional fees - General and administrative 857 2,986 Amortization and depreciation 14,567 6,578 Total operating expenses 15,424 9,564 Other income (expense): Gain from Settlement of Debit Interest expenses (1,957) (38,794 ) Total other (expense) (1,957) (38,794) Income (Loss) from continuing operations before income taxes and minority interest (17,381) (48,358) Provision for income taxes — Income (Loss) from continuing operations before minority interest (17,381) (48,358 ) Income (Loss) from discontinued operations, Gain from sale of asset Net Income (loss) $ (17,381) $ (48,358) Basic net Income (loss) per share Loss from continuing operations $ $ (0.00 ) Loss from discontinued operations (0.00 ) Net Income (loss) per share $ $ (0.00 ) Weighted average shares outstanding Basic 925,518,595 539,280,618 March 31, June 30, 2017 2016 (unaudited) (unaudited) Assets Current assets Cash $ 63 $ 114 Inventory 6,200 6,200 Total current assets 6,263 6,314 Property & equipment, net of accumulated Marketable Securities 752,596 Total Assets Liabilities and Stockholders' Equity Current liabilities Accounts payable $ 172,924 $ 171,665 Accrued expenses 134,941 131,449 Convertible Notes payable, net 25,948 24,090 Payroll Liabilities 92,201 92,201 Notes payable, affiliates Total current liabilities 446,701 440,083 Non-Current liabilities Notes payable to shareholder Total liabilities 789,553 782,944 Stockholders' Equity Preferred stock, 50,000,000 authorized, $.001 par value: Series A Convertible: 5,000,000 shares designated; 2,523,624 and 2,523,624 issued and outstanding 2,525 2,525 Series A1 Convertible: 33,000,000 issued and outstanding - Common stock, $.001 par value, 1,950,000,000 shares authorized; 1,411,911,416 and 925,518,595 shares issued and outstanding, respectively 1,411,911 925,520 Additional paid-in capital 13,314,347 13,527,257 Accumulated deficit ) ) Total stockholders' equity (30,694 ) (24,035 ) Total Liabilities and Stockholders' Equity $ 758,859 $ 758,910 Infrax Systems, Inc. Consolidated Statements of Operations (Unaudited) 2017 2016 Revenues $ - $ - Direct costs - - Operating expenses: Salaries and benefits - Professional fees 1,259 16,825 General and administrative 51 30,594 Amortization and depreciation Total operating expenses 33,911 397,189 Other income (expense): Interest Expense (5,097 ) (12,997 ) Total other (expense) (5,097 ) (12,997 ) Income (Loss) from continuing operations before income taxes and minority interest (39,008 ) (410,186 ) Provision for income taxes 0 0 Income (Loss) from continuing operations before minority interest (39,008 ) (410,232 ) Income (Loss) from discontinued operations, Gain from sale of asset (net) 0 (73,048 ) Net Income (loss) $ (39,008 ) $ (483,234 ) Basic net Income (loss) per share Loss from continuing operations $ (0.00 ) $ (0.00 ) Loss from discontinued operations (0.00 ) (0.00 ) Net Income (loss) per share $ (0.00 ) $ (0.00 ) Weighted average shares outstanding Basic 1,076,710,612 841,518.595
Months Ended 2016 2015 Cash Flows from Operating Activities: Net (loss) income $ (17,381) $ (48,358 ) Adjustment to reconcile Net Income to net cash provided by or (used in) operations: Depreciation and amortization 6,578 Amortization of deferred revenue Amortization of debt discount (14,567) 34,672 Gain on settlement of debt - Stock based compensation - Minority interest - Changes in assets and liabilities: Accounts receivable - Inventory - Related party loans - Accounts Payable 806 1,067 Accrued Expenses 1,957 3,835 Change in Convertible Notes 43,292 - Change in unamortized debt discount (13,737) - Net Cash (Used) by Operating Activities 370 (2,206) Cash Flows from Investing Activities: (Purchase) disposal of property and equipment - - Net Cash (Used) Provided by Investing Activities 0 - Cash Flows from Financing Activities: Net proceeds from debt - Payments from (to) Related Parties 1,941 Change in Additional Paid in Capital (421) - Net Cash (Used) Provided by Financing Activities 0 1,941 Net increase/decrease in Cash (51) (256) Cash at beginning of period 114 274 Cash at end of period $ 63 $ 9 Supplemental cash flow information: Interest paid $ - $ - Taxes paid $ - $ - The accompanying notes are an integral part of these financial statements. For the Nine Months Ended March 31, For the Nine Months Ended March 31, 2017 2016 Cash Flows from Operating Activities: Net (loss) income $ (39,008 ) $ (483,234 ) Adjustment to reconcile Net Income to net cash provided by or (used in) operations: Depreciation and amortization - 10,865 Amortization of deferred revenue Amortization of debt discount 32,601 43,838 Gain on settlement of debt - Stock based compensation - - Interest expense 0 0 Changes in assets and liabilities: Accounts receivable - 11,157 Inventory - Related party loans 0 (98,222 ) Accounts Payable 1,259 - Accrued Expenses 0 (5,627 ) Gains from sale of assets 0 521,337 Change in unamortized debt discount 0 - Net Cash (Used) by Operating Activities (51 ) (134 ) Cash Flows from Investing Activities: (Purchase) disposal of property and equipment - - Net Cash (Used) Provided by Investing Activities 0 - Cash Flows from Financing Activities: Net proceeds from debt - Payments from (to) Related Parties - Change in Additional Paid in Capital 0 - Net Cash (Used) Provided by Financing Activities 0 0 Net increase/decrease in Cash (51 ) (134 ) Cash at beginning of period 114 274 Cash at end of period $ 63 140 Supplemental cash flow information: Interest paid - - Taxes paid - - September 30, 2016(“Trimax”("Trimax"), in exchange for equity and a note payable. In April 2011, the Company acquired controlling interest in Lockwood Technology Corporation (“Lockwood”("Lockwood"), a provider of advanced asset management solutions. In June of 2015,2016, the Company sold its interest in Lockwood Technology Corporation and has accountied for its assets, liabilities and results of operations as a discontinued operation for all periods presented.“Smart Grid”"Smart Grid" energy sector. The Company believes our secure integrated platform will hasten the deployment of all Smart Grid technology for resource constrained small and mid-sized utilities. Infrax’sInfrax's advantage comes from our products ability to enable the creation of a secure platform scalable to deliver a broad set of intelligent Smart Grid initiatives across millions of endpoints for Utilities.September 30, 2016,March 31, 2017, the consolidated statements of operations and statements of cash flows for the threenine months then ended, and the statement of stockholders’stockholders' equity 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.September 30, 2016,March 31, 2017, and the results of operations and changes in cash flows for the threesix months then ended have been made. These financial statements should be read in conjunction with our unaudited financial statements and notes thereto included in our annual report for the year ended June 30, 20152016 on Form 10-K filed with the SEC on October 14, 2014.Company’sCompany's balance sheets include the following financial instruments: cash, accounts receivable, inventory, accounts payable, accrued expenses, deferred revenue, and notes payable and notes payable to stockholder. The carrying amounts of current assets and current liabilities approximate their fair value because of the relatively short period of time between the origination of these instruments and their expected realization. The carrying values of the note payable to stockholder approximates fair value based on borrowing rates currently available to the Company for instruments with similar terms and remaining maturities.“"Fair Value Measurements and Disclosures”" (ASC 820) defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date.. ASC 820 also establishes a fair value hierarchy that distinguishes between (1) market participant assumptions developed based on market data obtained from independent sources (observable inputs) and (2) an entity’sentity's own assumptions about market participant assumptions developed based on the best information available in the circumstances (unobservable inputs). The fair value hierarchy consists of three broad levels, which gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The Three levels of the fair value hierarchy are described below:·Level 1 - Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities7 -·Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly, including quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; inputs other than quoted prices that are observable for the asset or liability (e.g., interest rates); and inputs that are derived principally from or corroborated by observable market data by correlation or other means.·Level 3 - Inputs that are both significantthe fair value measurement and unobservable.· Level 1 - Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities · Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly, including quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; inputs other than quoted prices that are observable for the asset or liability (e.g., interest rates); and inputs that are derived principally from or corroborated by observable market data by correlation or other means. · Level 3 - Inputs that are both significant to the fair value measurement and unobservable. September 30, 2016.March 31, 2017. The respective carrying value of certain on-balance-sheet financial instruments approximated their fair values due to the short-term nature of these instruments. These financial instruments include accounts receivable, other current assets, accounts payable, accrued compensation and accrued expenses. The fair value of the Company’sCompany's notes payable is estimated based on current rates that would be available for debt of similar terms which is not significantly different from its stated value.Company’sCompany's financial statements.September 30, 2016 and June 30, 2015,March 31, 2017, the fair values of the Company’sCompany's financial instruments approximate their historical carrying amount.
Cash and Cash EquivalentsCompany’sCompany's customer credit worthiness, and current economic trends. Based on management’smanagement's review of accounts receivable, no allowance for doubtful accounts was considered necessary. Receivables are determined to be past due, based on payment terms of original invoices. The Company does not typically charge interest on past due receivables.September 30, 2016.
Amortization begins when the product is available for release and sold to customers. Software development costs will be amortized based on the estimated economic life of the product, anticipated to be 10 years. Company’sCompany's intangible assets, consisting of the Trimax acquired intellectual property, OptiCon Network Manager software and its trademark, intangibles and goodwill and record an impairment loss to the extent that the carrying amounts of the assets exceed its fair value. Based upon management's most recent analysis, the Company believes that no impairment of the Company’sCompany's tangible or intangible assets exist at September 30, 2016March 31, 2017 and June 30, 2015. (“ ("ASC 205-20”205-20"), we reported the results of Lockwood Technology Corporation as discontinued operations. The application of ASC 205-20 is discussed in the notes to the financial statements.
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 arrangements include a commitment to provide training and/or other services or materials, the Company estimates and records the expected costs of these training and/or other services and/or materials.Company’sCompany's operating expenses. Advertising expense was $0 and $0 for the threesix month periods ending September 30,March 31, 2017 and 2016, and 2015, respectivelyCompany’sCompany'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, are included in the computation of fully diluted loss per share, since their inclusion would be anti-dilutive. Convertible preferred shares have been included in the dilutive computation, as if they would have been converted at the end of the period. September 30, 2016 2015 Earnings (Loss) per share: Net Loss $ (17,381) $ (63,131) Common shares – weighted average 925,518,595 539,280,618 Earnings (loss) per share, basic $ (0.00) $ (0.00) March 31, 2017 2016 Earnings (Loss) per share: Net Loss $ (39,008 ) $ (63,131 ) Common shares – weighted average 1,411,911,416 539,280,618 Earnings (loss) per share, basic $ (0.00 ) $ (0.00 ) September 30,March 31, 2017 and 2016, and 2015, respectively, because their inclusion would be anti-dilutive.corporation’scorporation's reported financial position or operations in the near term. The applicability of any standard is subject to the formal review of our financial management and certain standards are under consideration. Those standards have been addressed in the notes to the unaudited financial statement and in our Annual Report, filed on Form 10-K for the period ended June 30, 2015. Going ConcernSeptember 30, 2016,March 31, 2017September 30, 2016,March 31, 2017, the Company had negative working capital of approximately $ 370$51 and approximately $63 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 currently has no revenue, although management’smanagement's plans do anticipate revenue in the future. Accordingly, 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’sCompany'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.Property and equipment consists of the following: September 30, June 30, 2016 2015 (unaudited) (unaudited) Office and computer equipment $ 0 $ 2,011 Furniture and fixtures & improvements 0 0 Computer software 0 0 0 2,011 Accumulated depreciation 0 0 $ 0 $ 2,011 Property and equipment consists of the following: March 31, June 30, 2017 2016 (unaudited) (unaudited) Office and computer equipment $ 0 $ 0 Furniture and fixtures & improvements 0 0 Computer software 0 0 0 0 Accumulated depreciation 0 0 $ 0 $ 0 threesix months ended September 30,March 31, 2017 and 2016, and 2015, the total depreciation expense charged to continuing operations was $148,$0, and $6,575$0 respectively. Discontinued OperationsIn June of 2015, the Company sold its 70% controlling interest in Lockwood Technology Corporation to Sam Talari, the Company’s Chairman in exchange for approximately $735,000 of accrued compensation and related party debt payable to Mr. Talari. As a result of the decision to sell this subsidiary, the Company has identified the assets and liabilities of Lockwood as pertaining to discontinued operations at September 30, 2016 and 2015 and has segregated its operating results and presented them separately as a discontinued operation for all periods presented.September 30, 2016; September 30, 2016 June 30, 2015 Convertible note to LG Capital Funding in the amount of $32,500. Interest at 8% and principal are due on August 28, 2015. Convertible at 55% of market. Balance is net of discounts of $0 and $5,199, respectively. - 6,686 Convertible note to KBM Worldwide in the original amount of $53,500. Interest at 8% and principle are due on August 17, 2015. Convertible at 40% of market. Balance is net of discounts of $0 and $3,801, respectively. - 11,759 Convertible note to Typenex Investments in the original amount of $52,000. Interest at 10% and principal are due on October 3, 2015. Convertible at 40% of market. Balance is net of discounts of $0 and $10,400. 18,168 31,200 Convertible note to KBM Worldwide in the original amount of $43,000. Interest at 8% and principal are due on September 21, 2015. Convertible at 40% of market. Balance is net of discounts of $0 and $6,109, respectively. - 36,891 Convertible note to KBM Worldwide in the original amount of $43,000. Interest at 8% and principal are due on September 21, 2016. Convertible at 40% of market. Balance is net of discounts of $6,109 and $24,437, respectively. 20,910 18,563 39,078 105,099 Less current portion (39,078) (105,099) Long-term portion - - March 31, 2017 June 30, 2016 Convertible note to Typenex Investments in the original amount of $52,000. Interest at 10% and principal are due on October 3, 2016. Convertible at 40% of market. Balance is net of discounts of $0 and $10,400. $ 0 $ 27,009 Convertible note to KBM Worldwide in the original amount of $43,000. Interest at 8% and principal are due on September 21, 2016. Convertible at 40% of market. Balance is net of discounts of $12,897 and $24,437, respectively. 38,845 43,000 38,845 70,009 Less unamortized Discount (12,897 ) (45,919 ) Long-term portion $ 25,948 $ 24,090 $342,862$342,852 and $350,000$342,862 remains outstanding at September 30, 2016March 31, 2017 and June 30, 2015,2016, respectively.$172,471$172,924 and $1,123$171,665 due to two individuals as of September 30, 2016March 31, 2017 and June 30. 2015. 2015.2016. The Company has not recognized an income tax benefit for its operating losses generated through September 30, 2016 based on uncertainties concerning the Company’sCompany'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.$14,496,717$14,518,344 from inception to September 30, 2016,March 31, 2017, which will expire, unless used to offset future federal taxable income beginning in 2024. The tax years ending June 30, 2010 through June 30, 2015March 31, 2017 are open for inspection by both Federal and State Agencies.Company’sCompany's common stock, at the option of the holder, at the prescribed conversion rate. Conversions are as follows: Shares Conversion Outstanding Rate to Common Preferred Series A 2,400,000 375 Preferred Series A1 8,889 89 Preferred Series A2 88,889 20 Preferred Series A3 25,846 16 Preferred Series B1 830 300 Preferred Series B2 1,210 300 2,525,664 Shares Outstanding Common Preferred Series A 2,400,000 375 Preferred Series A1 8,889 89 Preferred Series A2 88,889 20 Preferred Series A3 25,846 16 Preferred Series B1 830 300 Preferred Series B2 1,210 300 2,525,664
Our executive office, located in an office complex under an annual five year lease through the discontinued operations of Lockwood Technology Corporation, began June 1, 2012 at a rent of $ 4,729 per month in St. Petersburg, Florida with Kalyvas Group II, LLC. The lease provides approximately 4,100 square feet of: reception area, nine offices, a lab/production area, inventory room, server room, kitchenette and one conference rooms.threesix months ended September 30,March 31, 2017 and 2016 and 2015 for continuing operations amounted to $0 and $6,482$0 respectively.Company’sCompany's consolidated financial position or results of operations as of September 30, 2016.Item 2. Management’sManagement's Discussion and Analysis or Plan of OperationManagement’sManagement's Discussion and Analysis or Plan of Operation“safe harbor”"safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. This filing contains a number of forward-looking statements which reflect management’smanagement's current views and expectations with respect to our business, strategies, products, future results and events, and financial performance. All statements made in this filing other than statements of historical fact, including statements addressing operating performance, events, or developments which management expects or anticipates will or may occur in the future, including statements related to distributor channels, volume growth, revenues, profitability, new products, adequacy of funds from operations, statements expressing general optimism about future operating results, and non-historical information, are forward looking statements. In particular, the words “believe,” “expect,” “intend,” “anticipate,” “estimate,” “may,”"believe," "expect," "intend," "anticipate," "estimate," "may," variations of such words, and similar expressions identify forward-looking statements, but are not the exclusive means of identifying such statements, and their absence does not mean that the statement is not forward-looking. These forward-looking statements are subject to certain risks and uncertainties, including those discussed below. Our actual results, performance or achievements could differ materially from historical results as well as those expressed in, anticipated, or implied by these forward-looking statements. We do not undertake any obligation to revise these forward-looking statements to reflect any future events or circumstances.management’smanagement's current expectations and projections about future events, are not guarantees of future performance, are subject to risks, uncertainties and assumptions (including those described below), and apply only as of the date of this filing. Our actual results, performance or achievements could differ materially from the results expressed in, or implied by, these forward-looking statements. Factors which could cause or contribute to such differences include, but are not limited to, the risks to be discussed in our Annual Report on form 10-K and in the press releases and other communications to shareholders issued by us from time to time which attempt to advise interested parties of the risks and factors which may affect our business. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.“Item"Item 1 – Financial Statements”Statements" and our audited financial statements and the related Management’sManagement'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, 2015.2016. The information set forth in this “Management’s"Management's Discussion and Analysis of Financial Condition and Results of Operations”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.utility’sutility's technological platform into the 21st. century. Our SIEP™ platform provides: 1) Network Transport and Management (secure 2 way communications), 2) Secure Smart Devices (Smart Meters), and 3) Asset management, Grid Optimization and Security, all in an integrated state-of-the-art Smart Grid solution that truly provides our customers with end to end grid management capability.INFRAX’INFRAX' advantage comes from our advanced patented technologies, which provide a highly secure, reliable platform that allows two-way communication with our Secure Intelligent Endpoint Devices for Advanced Metering Infrastructure and Substations applications.industry’sindustry's aggressive deployment of Advanced Metering Infrastructure (AMI) and data management devices has led to the accelerated reliance on fiber optic communications to many of the key substations. However, the existing utility networks cannot provide the security, reliability and connectivity to extend the reach to the consumer locations.Today’s(“DoS”("DoS") attack against homes and businesses.
By entering the market without the burden of legacy products and technology, Infrax is able to focus on future technologies and will be poised to provide advanced solutions for companies that are yet to deploy AMI and harden previously installed networks and devices.company’scompany's flagship product - Secure Network Interface Card (SNIC) for electric meters. While the initial focus will be to develop the card for one of the largest meter manufactures in the world, the final objective is to have a universal card that can be used in any meter in the world. The wireless part of the first prototype has been completed and successfully tested. With the development and improvements continuing, we will have a complete working prototype by the end of this summer. Although details of the card cannot be disclosed for obvious reasons, our emphasis has been to address the security of the data to and from a meter as well as to provide a robust communication platform that can be used not only for meter data but also in Distribution Automation projects such as capacitor bank and volt/var controllers. The Company believes that the SNIC along with newly created Professional Services division will hasten the deployment of all Smart Grid technology for resource constrained small and mid-sized utilities. Systems’Systems' vision is based on a trusted network of intelligent devices which detect intrusion at any level and quickly determines friend or foe thus taking action when necessary to secure critical infrastructure and intelligent property.“Smart Grid”"Smart Grid" built on information-based devices, digital communication and advanced analytics. Networking giant Cisco has estimated that the market for smart grid communications will grow into a $20 billion-a-year opportunity as the infrastructure is built out over the next five years. Researchers at Specialists in Business Information (SBI) forecast the market will grow to $17 billion-per-year by 2014 from today’stoday's $6 billion. Globally, SBI expects the market for smart grid technologies to grow to about $171 by 2014 up from approximately $70 billion in 2009.· “Company”"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 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 arrangements include a commitment to provide training and/or other services or materials, the Company estimates and records the expected costs of these training and/or other services and/or materials. · assets’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.· · corporation’scorporation's reported financial position or operations in the near term. The applicability of any standard is subject to the formal review of our financial management and certain standards are under consideration. Those standards have been addressed in the notes to the unaudited financial statement and in our Annual Report, filed on Form 10-K for the period ended June 30, 2016. ThreeSix Months Ended September 30,March 31, 2017 and 2016 and 2015:2015.2015,2016, The Company sold all of its 70% ownership interest of Lockwood to a related party. Consequently, during the three months ended September 30, 2016, there are no results of operations.threenine month period ended September 30,March, 2017 and 2016 and 2015 we had no sales.$14,567$32,601 for the threenine Months Ended September 30, 2016March 31, 2017 as compared to $334,835$10,865 for the Three Months Ended September 30, 2015.September 30, 2016,March 31, 2017, we had approximately $63 in cash with which to satisfy our cash requirements for the next twelve months, along with approximately $650,000 remaining on the line of credit from Mr. Talari to pay normal operating expenses, while we attempt to secure other sources of financing. September 30, 2016,March 31, 2017, we owe Mr. Talari $352,345$342,852 on the master promissory note plus accrued interest. Mr. Talari has pledged funding for operating capital, up to $1,000,000, under the same terms as the original Master Note.Item 3. Quantitative and Qualitative Disclosures About Market Risk Item 4. Controls and Procedures “controls"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. 78aet 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 September 30, 2016, such disclosure controls and procedures were not effective.September 30, 2016March 31, 2017 that have materially affected or are reasonably likely to materially affect this control.Item 11.Legal Proceedings. Item 1A1A.Risk Factors. 20152016 filed on October 14, 20152016 with the Securities and Exchange Commission.Item 22.Unregistered Sales of Equity Securities and Use of Proceeds. NoneItem 33. Defaults Upon Senior Securities. Item 44.applicableapplicable.Item 55. Other Information. NoneItem 66.Exhibits 31.A31.1Principal Executive Officer's Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 31.B31.2 Principal Financial & Accounting Officer's Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 32.A32.1 Principal Executive Officer’sOfficer's Certification Pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 200232.BPrincipal 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 2002101.INS XBRL Instance Document 101.SCH XBRL Taxonomy Extension Schema 101.CAL XBRL Taxonomy Extension Calculation Linkbase 101.DEF XBRL Taxonomy Extension Definition Linkbase 101.LAB XBRL Taxonomy Extension Label Linkbase 101.PRE XBRL Taxonomy Presentation Linkbase Infrax Systems, Inc. (Registrant) Date: 11/21/16May 22, 2017 John Verghese Date: 11/21/16May 22, 2017 Sam Talari Principal Financial & Accounting Officer