UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 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 April 30, 2010

OR

¨    TRANSITION REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______ to _______

Commission File Number 0-53359

WEBDIGS, INC.

(Exact name of registrant as specified in its charter)

Delaware
11-3820796
(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification No.)

3433 West Broadway St, NE, Suite 501, Minneapolis, MN
(Address of Principal Executive Offices)

(612) 767-3854
(Registrant’s telephone number, including area code)

(Former name, former address and former fiscal year, if changed from last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ¨
Accelerated filer ¨
Non-accelerated filer ¨ (Do not check if a smaller reporting company)
Smaller reporting company x

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

As of June 14, 2010 there were 33,396,719 shares of the issuer’s common stock, $0.001 par value, outstanding.

 
 
 

Table of Contents

 
   
Page
PART I – FINANCIAL INFORMATION
  
Item 1.
Consolidated Financial Statements
1
Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
2
Item 3.
Quantitative and Qualitative Disclosures About Market Risk
10
Item 4.
Controls and Procedures
10
       
PART II – OTHER INFORMATION
11
Item 1.
Legal Proceedings
11
Item 1A.
Risk Factors
11
Item 2.
Unregistered Sales of Equity Securities
11
Item 3.
Defaults Upon Senior Securities
11
Item 4.
Submission of matters to a Vote of Security Holders
11
Item 5.
Other Information
11
Item 6.
Exhibits
12
     
SIGNATURES
12
     
EXHIBIT INDEX
13
 
 
 

PART I – FINANCIAL INFORMATION

Item 1.  Consolidated Financial Statements.
 
   
WEBDIGS, INC.

CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

FOR THE THREE AND SIX MONTH
PERIODS ENDED APRIL 30, 2010 AND 2009
 
 
1
 

WEBDIGS, INC.
 
TABLE OF CONTENTS

 
PAGE
   
Consolidated Financial Statements:
  
   
Consolidated Balance Sheets
F-2
   
Consolidated Statements of Operations
F-4
   
Consolidated Statements of Cash Flows
F-5
   
Notes to Consolidated Financial Statements
F-7
 
 
F – 1
 
 
WEBDIGS, INC.
 
CONSOLIDATED BALANCE SHEETS
(Unaudited)

   
April 30, 2010
(Unaudited)
    
October 31, 2009
(Audited)
  
             
ASSETS
            
             
Current assets:
            
Cash and cash equivalents
   $ 30,377     $ 36,023  
Commissons and fees receivable
     16,949       9,449  
Prepaid expenses and deposits
     8,516       10,847  
Other current assets
     20,984       10,284  
                 
Total current assets
     76,826       66,603  
                 
Office equipment and fixtures, net
     19,513       30,678  
                 
Intangible assets, net
     1,687,278       2,103,243  
                 
Total assets
   $ 1,783,617     $ 2,200,524  

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

 
F --2
 

WEBDIGS, INC.
 
CONSOLIDATED BALANCE SHEETS (continued)
(Unaudited)

   
April 30, 2010
(Unaudited)
    
October 31, 2009
(Audited)
  
LIABILITIES AND STOCKHOLDERS' EQUITY
            
             
Current liabilities:
            
Current portion of capital lease obligations
   $ 4,395     $ 4,197  
Accounts payable
     162,189       259,064  
Accounts payable - minority stockholder
     555,871       562,858  
Due to officers
     10,610       58,606  
Convertible notes payable - officer/stockholder
     477,000       173,000  
Accrued expenses:
                
Professional fees
     19,500       39,000  
Payroll and commissions
     174,688       53,207  
Other liabilities
     51,529       20,174  
                 
Total current liabilities
     1,455,782       1,170,106  
                 
Long term liabilities:
                
Capital lease obligation, less current portion
     3,985       6,233  
                 
Total liabilities
     1,459,767       1,176,339  
                 
Stockholders' equity:
                
Common stock  - $.001 par value; 125,000,000 shares authorized as common
                
stock and an additional 125,000,000 shares designated as common or
                
preferred stock;  33,396,719 common shares issued and
                
outstanding at April 30, 2010 and October 31, 2009
     33,397       33,397  
Treasury stock - $.001 par value; 1,063,628 shares held in
                
treasury as of April 30, 2010 and October 31, 2009
     (265,907 )     (265,907 )
Additional paid-in-capital
     5,046,377       5,034,458  
Accumulated deficit
     (4,490,017 )     (3,777,763 )
                 
Total stockholders' equity
     323,850       1,024,185  
                 
Total liabilities and stockholders' equity
   $ 1,783,617     $ 2,200,524  

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

 
F --3
 

WEBDIGS, INC.
 
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
 
   
Three Months Ended
    
Six Months Ended
  
   
April 30,
    
April 30,
  
   
2010
    
2009
    
2010
    
2009
  
   
(unaudited)
    
(unaudited)
    
(unaudited)
    
(unaudited)
  
Revenue:
                        
Gross revenues
   $ 260,043     $ 91,166     $ 416,772     $ 179,192  
Less: customer rebates and third-party agent commissions
     (97,766 )     (31,925 )     (162,978 )     (81,324 )
                                 
Net revenues
     162,277       59,241       253,794       97,868  
                                 
Operating expenses:
                                
Selling
     103,352       132,993       243,113       250,900  
General and administrative
     142,804       192,208       252,928       347,653  
Amortization of intangible assets
     291,187       34,459       437,725       68,919  
                                 
Total operating expenses
     537,343       359,660       933,766       667,472  
                                 
Operating loss from continuing operations
     (375,066 )     (300,419 )     (679,972 )     (569,604 )
                                 
Other income (expense):
                                
Equity in income from Marketplace Home Mortgage
                                
Webdigs, LLC
     -       (68 )     -       18,785  
Interest expense
     (17,520 )     (55,812 )     (32,282 )     (92,854 )
Loss on change in fair value of derivatives and warrants
     -       (38,154 )     -       (63,708 )
                                 
Total other income (expense)
     (17,520 )     (94,034 )     (32,282 )     (137,777 )
 
                               
Loss from continuing operations before income taxes
     (392,586 )     (394,453 )     (712,254 )     (707,381 )
                                 
Income tax provision
     -       -       -       -  
                                 
Net loss from continuing operations
     (392,586 )     (394,453 )     (712,254 )     (707,381 )
                                 
Income (loss) from discontinued operations of Marquest
                                
Financial Inc. net of applicable taxes of zero
     -       5,008       -       (8,277 )
                                 
Net loss
   $ (392,586 )   $ (389,445 )   $ (712,254 )   $ (715,658 )
                                 
Net loss per common share - basic and diluted:
                                
Loss from continuing operations
   $ (0.01 )   $ (0.02 )   $ (0.02 )   $ (0.03 )
Loss from discontinued operations
     -       -       -       -  
Net loss
   $ (0.01 )   $ (0.02 )   $ (0.02 )   $ (0.03 )
                                 
Weighted average common shares outstanding -
                                
basic and diluted
     33,396,719       22,739,511       33,396,719       22,622,239  

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

 
F --4
 

WEBDIGS, INC.
 
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

   
Six Months Ended
  
   
April 30,
  
   
2010
    
2009
  
   
(unaudited)
    
(unaudited)
  
             
Cash flows from operating activities:
            
Net loss
   $ (712,254 )   $ (715,658 )
Adjustments to reconcile net loss to net cash flows used in operating activities:
          
Depreciation
     11,165       6,689  
Amortization of intangible assets
     437,725       90,730  
Amortization of convertible note payable discounts
     -       73,790  
Amortization or debt issuance costs
     -       2,000  
Loss on change in fair value of derivatives and warrants
     -       63,708  
Equity in the income of Marketplace Home Mortgage - Webdigs, LLC
     -       (18,785 )
Share-based compensation
     11,919       130,970  
Common stock issued for services
     -       7,000  
Changes in operating assets and liabilities:
                
Commissions and fees receivable
     (7,500 )     (5,527 )
Prepaid expenses and deposits
     2,331       70,155  
Other current assets
     (10,700 )     45  
Accounts payable
     (96,875 )     (70,552 )
Accounts payable - minority stockholder
     (6,987 )     81,679  
Accrued expenses
     68,706       4,281  
Other liabilities
     31,355       (2,133 )
Net cash flows used in operating activities
     (271,115 )     (281,608 )
                 
Cash flows from investing activities:
                
Purchase of intangible assets
     (21,760 )     -  
Net cash flows used in investing activities
     (21,760 )     -  
                 
Cash flows from financing activities:
                
Proceeds from issuance of common stock
     -       500  
Proceeds from issuance of convertible debentures, net of debt issuance
                
costs of $4,000 and unrelated accrued legal fees of $20,000
     -       226,000  
Proceeds from issuance of convertible notes payable to officer/stockholder
     304,000       -  
Increase (decrease) in due to officers
     (14,721 )     25,730  
Principal payments on capital lease obligations
     (2,050 )     (1,871 )
Net cash flows provided by financing activities
     287,229       250,359  
                 
Net change in cash and cash equivalents
     (5,646 )     (31,249 )
                 
Cash and cash equivalents, beginning of period
     36,023       37,802  
                 
Cash and cash equivalents, end of period
   $ 30,377     $ 6,553  
 
F --5
 
WEBDIGS, INC.
 
CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
(Unaudited)
 
                 
Supplemental cash flow information
                
Cash paid for interest
   $ -     $ 11,497  
                 
Supplemental disclosure of non-cash investing and financing activities
                
Issuance of common stock to convertible debt holder as a discount on the debt
   $ -     $ 20,000  
                 
Discount on convertible debt due to detachable warrant and embedded
                
conversion option
   $ -     $ 127,583  
                 
Accrued legal fees paid from convertible debenture proceeds
   $ -     $ 20,000  
                 
Related party contribution of Webdigs common stock to consultant for prepaid
                
consulting fees
   $ -     $ 40,000  
                 
Common stock issued for prepaid consulting fees
   $ -     $ 80,000  
                 
Reclassification of amounts due to officers as accrued expenses
   $ 33,275     $ -  

The accompanying notes are an integral part of these unaudited consolidated financial statements.
 
F --6
 
WEBDIGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Three and Six Month Periods Ended April 30, 2010 and 2009

1            BASIS OF PRESENTATION

The accompanying unaudited consolidated financial information has been prepared by Webdigs, Inc. (the “Company”) in accordance with accounting principles generally accepted in the United States of America for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X of the Securities and Exchange Commission (SEC).  Accordingly, it does not include all of the information and notes required by accounting principles generally accepted in the United States of America for complete financial statements.  In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair statement of this financial information have been included.  Financial results for the interim period presented are not necessarily indicative of the results that may be expected for the fiscal year as a whole or any other interim period.  This financial information should be read in conjunction with the audited consolidated financial statements and notes included in the Company’s Annual Report on Form 10K for the year ended October 31, 2009.

2            SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of Business

Webdigs, Inc. (“the Company”), a Delaware corporation, became a public company in October 2007 after a reverse shell transaction with Select Video, Inc. which was incorporated in Delaware in 1994.  Our business is dedicated to web-assisted residential real estate brokerage services. This is done through our wholly-owned subsidiary Webdigs, LLC.

All of the Company’s real estate brokerage operations are operated under Webdigs, LLC. Our three main real estate brokerage brands are Webdigs, Iggys House and theMLSDirect.com.   Webdigs.com is a web-assisted real estate website and brokerage, offering a similar customer experience as a full service brokerage utilizing a discounted percentage fee structure for listing services to their selling customers and a graduated fee structure for their buying customers by rebating up to one-half of its broker commissions. IggysHouse.com is a web-assisted real-estate listing service which enables the customer to pay a monthly discounted fee to list their homes on their local real estate multiple listing service. Our third brand, theMLSDirect.com, offers consumers a flat-fee MLS listing for $299. Similar to IggysHouse.com, there is a full menu of add-on services available for customers to purchase.

Basis of Consolidation

The consolidated financial statements for the three and six month periods ended April 30, 2010 and 2009 include the accounts of Webdigs, Inc. and its wholly-owned subsidiary, Webdigs, LLC, which includes wholly-owned subsidiaries of Home Equity Advisors, LLC, and Credit Garage, LLC.  The consolidated financial statements for Webdigs, Inc. for the three and six month periods ended April 30, 2009 also includes its former wholly-owned subsidiary of Marquest Financial Inc. (Marquest). The Company divested Marquest on June 4, 2009 (see Note 5).  The net results from Marquest have been segregated for all periods presented in the statement of operations.   The investment of Marketplace Home Mortgage – Webdigs, LLC (49% ownership) was recorded on the equity method.  This unconsolidated joint venture was dissolved on October 26, 2009 (see Note 7). All significant intercompany accounts and transactions have been eliminated in the consolidation.

F --7
 
WEBDIGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Three and Six Month Periods Ended April 30, 2010 and 2009
 
Estimates

The preparation of consolidated financial statements in conformity with generally accepted accounting principles in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and reported amounts of revenues and expenses during the reporting period.  Actual results could differ from those estimates.

Intangible Assets

The Company has five types of intangible assets:

Website Development
The primary interface with the customer in our web-assisted real estate broker operation is the Webdigs.com website.  Certain costs incurred in development of this website have been capitalized.  Amortization is on a straight-line method over the estimated three year useful life of the website.   The Company also has incurred costs for the IggysHouse.com website. Those costs are being amortized on a straight-line method over the estimated two year useful life of the website.

Customer Lists
The Company capitalizes the fair value of pre-existing customer relationships acquired as part of business combinations and asset acquisitions.  Amortization expense is calculated using the straight-line method (which approximates the anticipated revenue stream back to the Company) over an estimated useful life of 2 to 3 years.

Non-Compete Agreements
The Company capitalizes the fair value of non-compete agreements at the inception of the agreement. Amortization expense is calculated using the straight-line method (which approximates the anticipated revenue stream back to the Company) over the agreement’s estimated 2 year life.

F --8
 
WEBDIGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Three and Six Month Periods Ended April 30, 2010 and 2009
 
Other
The Company capitalizes the fair value of website domain names and contractual relationships acquired through business combinations or asset acquisitions.  The Company has purchased 17 domain names and 17 contractual broker relationships in 17 states in May 2009 from theMLSDirect.com and are amortizing the fair value of these names over a 2 year estimated useful life.

The Company last assessed impairment of the intangible assets at October 31, 2009 and determined that there was no impairment. During the three and six months ended April 30, 2010 and 2009, the Company did not record an impairment charge related to its intangible assets.

The Company has been experiencing limited revenue from the IggysHouse.com website since it went live on January 6, 2010.   A continued lack of growth from this website over the next quarter or two may result in impairment to our related intangible assets and could result in changes to the Company’s expectations with respect to future financial results and cash flows. These changes could indicate an unfavorable change in management’s estimates of the fair value of the Company’s operating brands and could result in a review of our intangible assets, which could indicate potential impairment to the carrying value of the Company’s assets.

Investment in Marketplace Home Mortgage – Webdigs, LLC
 
On August 1, 2008, the Company contributed non-cash assets into a joint venture created with Marketplace Home Mortgage, LLC for a 49% ownership interest (see Note 7). The Company accounted for its investment in the joint venture using the equity method. Accordingly, the Company recorded an increase in its investment for contributions to the joint venture and for its 49% share of any income of the joint venture, and a reduction in its investment for its 49% share of any losses of the joint venture or disbursements of profits from the joint venture.  On October 26, 2009, the Company and Marketplace Home Mortgage, LLC agreed to dissolve Marketplace Home Mortgage – Webdigs, LLC.  All remaining assets were distributed upon dissolution.

Segments

Historically, the Company has reported two strategic operating segments; (1) web-assisted real estate brokerage and (2) mortgage brokerage.  Due to the divestiture of Marquest Financial, Inc. and the dissolution of Marketplace Home Mortgage – Webdigs, LLC in 2009, the Company has determined that the mortgage segment is no longer significant to its operations and therefore, now reports as one strategic reporting segment.
 
F --9
 
WEBDIGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Three and Six Month Periods Ended April 30, 2010 and 2009
 
Income Taxes

The Company accounts for income taxes using an asset and liability approach to financial accounting and reporting for income taxes.  Accordingly, deferred tax assets and liabilities arise from the difference between the tax basis of an asset or liability and its reported amount in the consolidated financial statements.  Deferred tax amounts are determined using the tax rates expected to be in effect when the taxes will actually be paid or refunds received, as provided under currently enacted tax law.  Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized.  Income tax expense or benefit is the tax payable or refundable, respectively, for the period plus or minus the change in deferred tax assets and liabilities during the period.  The Company has recorded a full valuation allowance against its net deferred tax assets as of April 30, 2010 and 2009 because realization of those assets is not reasonably assured.

The Company will recognize a financial statement benefit of a tax position only after determining that the relevant tax authority would more likely than not sustain the position following an audit.  For tax positions meeting the more-likely-than-not threshold, the amount recognized in the financial statements is the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate settlement with the relevant tax authority.

The Company believes its income tax filing positions and deductions will be sustained upon examination and, accordingly, no reserves, or related accruals for interest and penalties has been recorded at April 30, 2010.

Recently Issued Accounting Pronouncements

In January 2010, the FASB issued ASU 2010-06, Fair Value Measurements and Disclosures (Topic 820).  ASU 2010-06 provides additional disclosure requirements related to fair value measurements. ASU 2010-06 is effective for interim and annual reporting periods beginning after December 15, 2009, except for the disclosures about purchases, sales, issuances, and settlements in the roll forward of activity in Level 3 fair value measurements.  Disclosure requirements applicable to Level 3 transactions are effective for fiscal years beginning after December 15, 2010 and for interim periods within those fiscal years, with early adoption permitted.  The portion of ASU 2010-06 that was effective beginning after December 15, 2009 did not have a material effect on the financial position, results of operations or cash flows of the Company. Additionally, the Company does not anticipate that the disclosure requirements applicable to Level 3 transactions that are effective for fiscal years beginning after December 15, 2010 will have a material effect on the financial position, results of operations or cash flows of the Company.
F --10
 
WEBDIGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Three and Six Month Periods Ended April 30, 2010 and 2009
 
3            GOING CONCERN

The Company has incurred significant operating losses for the three and six month periods ended April 30, 2010 and 2009.  At April 30, 2010, the Company reports a negative working capital position of $1,378,956, and an accumulated deficit of $4,490,017.  It is management’s opinion that these facts raise substantial doubt about the Company’s ability to continue as a going concern without additional debt or equity financing.

In order to meet its working capital needs through the next twelve months, the Company plans to raise additional funds through the issuance of additional shares of common stock and debt through private placements.  The Company is also working with some of its current vendors (including the Company’s principal website developer/minority stockholder) to potentially negotiate a payout settlement that could be less than the April 30, 2010 balances owed. Although the Company intends to obtain additional financing to meet our cash needs, we may be unable to secure any additional financing on terms that are favorable or acceptable to us, if at all.  The Company significantly reduced operating expenditures during the year ended October 31, 2009 and has continued reducing operating expenses during the six months ended April 30, 2010.  Management of the Company anticipates that further expense reductions could occur during the current fiscal year.  The Company expects to increase revenues through its existing Webdigs.com customer base, increased website traffic (driven largely by internet advertising) and the addition of real estate agents joining the Webdigs team in the months ahead.

4            RELATED PARTY TRANSACTIONS

Accounts Payable – Minority Stockholder

The Company’s principal advertising agency/website developer was owed $555,871 at April 30, 2010 and $562,858 at October 31, 2009.  The two principals of this advertising company are also minority stockholders in the Company – holding approximately 1.6% of the Company’s outstanding shares at April 30, 2010.  For the six month periods ended April 30, 2010 and 2009, the Company incurred $43,013 and $81,679 in services and rent from this related party, respectively. Included in these amounts is office rent expense for the Company of $21,000 for each of the six month periods ended April 30, 2010 and 2009.  The Company informally rents office space for its headquarters and real estate operation in Minneapolis from the related party on a month to month basis.  The Company is currently in negotiations with the website developer to settle this debt with cash and some form of the Company’s equity.

F --11
 
WEBDIGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Three and Six Month Periods Ended April 30, 2010 and 2009
 
Due to Officers

As of April 30, 2010 and October 31, 2009, the Company was indebted to its officers for amounts totaling $10,610 and $58,606 respectively, for business expenses.  All of the indebtedness represents non-interest bearing payables due on demand.

Convertible Note Payable – Officer/Stockholder

During the six months ended April 30, 2010, the Company borrowed $304,000 from its CEO under a convertible promissory note accruing interest at an annual rate of 12%.   At April 30, 2010 and October 31, 2009, the balances due under this note were $477,000 and $173,000, respectively.   The board of directors has approved conversion of up to $300,000 of the note into the Company’s common stock at $0.11 per share at any time.  An additional $166,000 of the note has been approved for conversion into the Company’s common stock at a price equal to the price of shares to potentially be sold to current shareholders under a resolution passed by the Company’s board of directors on April 23, 2010.   Under the April 23, 2010 resolution, the Company is authorized to sell up to 15 million shares of the Company’s common stock to existing shareholders at a price as low as $0.03 per share.   There was no beneficial conversion feature for the first conversion element because the Company’s stock price was trading at $0.11 at the time the Board of Directors approved the first conversion feature (allowing the CEO to convert shares at $0.11 per share).  The second conversion feature is a contingent conversion feature and will need to be reviewed for a beneficial conversion feature if and when the conversion occurs.  For the three and six month periods ended April 30, 2010, the Company incurred $12,784 and $20,556 of interest expense in connection with this note, respectively.   Accrued interest due under the note as of April 30, 2010 was $21,972.

5            DISCONTINUED OPERATIONS

On June 4, 2009, the Company sold its 100% equity interest in Marquest Financial, Inc., a non-operating entity which until August 2008 had been the Company’s principal mortgage brokerage operation, back to its former owner and founder.  In August 2008, the Company had entered into a joint venture with Marketplace Home Mortgage, LLC forming Marketplace Home Mortgage – Webdigs, LLC, and thus, there has been limited current activity within Marquest Financial, Inc. from that date forward.
 

F --12
 
WEBDIGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Three and Six Month Periods Ended April 30, 2010 and 2009
 
As of April 30, 2010 and for the three and six month period ended April 30, 2010, there were no assets or liabilities related to the discontinued operations and there were no revenues and expenses. All of the assets and liabilities were sold back to its former owner as of June 4, 2009.

A summarized statement of operations for the discontinued operations for the comparable three and six month periods ended April 30, 2009 is as follows:

Discontinued Operations of
  
Three months ended
    
Six months ended
  
Marquest Financial, Inc.
  
April 30, 2009
    
April 30, 2009
  
             
Net revenue
   $ -     $ -  
Operating income (expenses)
     5,008       (8,277 )
Other income (expense)
     -       -  
                 
Operating income (loss)
     5,008       (8,277 )
                 
Income taxes
     -       -  
                 
Net operating income (loss)
   $ 5,008     $ (8,277 )
 
6            FIXED ASSETS AND INTANGIBLE ASSETS

At April 30, 2010 and October 31, 2009, the Company’s fixed assets are as follows:

   
April 30, 2010
    
October 31, 2009
  
   
Gross
          
Net
    
Gross
          
Net
  
   
Carrying
    
Accumulated
    
Carrying
    
Carrying
    
Accumulated
    
Carrying
  
   
Amount
    
Depreciation
    
Amount
    
Amount
    
Depreciation
    
Amount
  
Fixed Assets
                                    
Furniture and Fixtures
   $ 9,981     $ (5,989 )   $ 3,992     $ 9,981     $ (4,791 )   $ 5,190  
Computer hardware
     50,972       (35,451 )     15,521       50,972       (25,484 )     25,488  
                                                 
Total Fixed Assets
   $ 60,953     $ (41,440 )   $ 19,513     $ 60,953     $ (30,275 )