formatform10q033111.htm


 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 10-Q
 
x
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934:
For the quarterly period ended March 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: 000-52213
Format, Inc.
(Exact name of registrant as specified in its charter)

Nevada
33-0963637
(State or other jurisdiction
of incorporation or organization)
(I.R.S. Employer
Identification No.)

3553 Camino Mira Costa, Suite E, San Clemente, California 92672
(Address of principal executive offices) (Zip Code)

949-481-9203
(Registrant’s telephone number, including area code)
 
Indicate by check mark whether the issuer (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  x Yes   o No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§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). o Yes   o No

Indicate by check mark whether the registrant is a large accelerated file, 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
o
Accelerated filer
o
Non-accelerated filer
(Do not check if a smaller reporting company)
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).  o Yes   x No

As of April 27, 2011, there were 3,770,083 shares of the issuer's $.001 par value common stock issued and outstanding.
 

 
1

 
 
 
TABLE OF CONTENTS
 
  PART I  
     
Item 1. Financial Statements 3
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 12
Item 3. Quantitative and Qualitative Disclosures about Market Risk 13
Item 4.  Controls and Procedures  13
     
  PART II  
     
Item 1. Legal Proceedings 14
Item 1A. Risk Factors 14
Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds 14
Item 3. Defaults Upon Senior Securities  14
Item 4.  (Removed and Reserved) 14
Item 5. Other Information 14
Item 6. Exhibits  14
 

 
2

 
 
 
PART I - FINANCIAL INFORMATION
 
Item 1.  Financial Statements.
 
FORMAT, INC.
CONDENSED BALANCE SHEETS
     
March 31, 2011
   
December 31, 2010
     
(Unaudited)
       
               
ASSETS
               
CURRENT ASSETS
           
   Cash
 
69,111
 
47,988
 
   Accounts receivable, net
 
 -
   
 -
 
   Loan receivable, net
 
 -
   
 -
 
   Prepaid expense
 
                      1,248
   
                      1,248
 
   Security deposit
 
                      1,200
   
                      1,200
 
 
Total current assets
 
                    71,559
   
                    50,436
 
               
PROPERTY AND EQUIPMENT, NET
 
                      2,732
   
                      3,333
 
               
TOTAL ASSETS
74,291
 
53,769
 
               
 
LIABILITIES AND STOCKHOLDERS' (DEFICIT)
             
               
CURRENT LIABILITIES
           
   Accounts payable and accrued expenses
106,158
   
 87,285
 
   Accrued officer compensation
 
                    50,000
   
                    42,500
 
   Income taxes payable
 
                      1,600
   
                         800
 
   Due to related party
 
                  114,156
   
                  116,656
 
 
Total current liabilities
 
                  271,914
   
                  247,241
 
               
TOTAL LIABILITIES
 
                  271,914
   
                  247,241
 
               
STOCKHOLDERS'  (DEFICIT)
           
   Preferred stock, par value $0.001 per share, 5,000,000 shares authorized
       
        and 0 shares issued and outstanding
 
                              -
   
                             -
 
   Common stock, par value $0.001 per share, 50,000,000 shares authorized
       
        and 3,770,083 shares issued and outstanding
 
                      3,770
   
                      3,770
 
   Additional paid-in capital
 
                    37,809
   
                    37,809
 
   Accumulated deficit
 
                 (239,202)
   
                (235,051)
 
 
Total stockholders' (deficit)
 
                 (197,623)
   
                (193,472)
 
 
 
           
TOTAL LIABILITIES AND STOCKHOLDERS'  (DEFICIT)
 74,291    53,769  
               
 
The accompanying notes are an integral part of these unaudited condensed financial statements.
 


 
3

 
 
FORMAT, INC.
CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
       
Three Months Ended
 
       
March 31,
 
       
2011
   
2010
 
                 
REVENUE
 
 10,261
 
10,176
 
                 
OPERATING EXPENSES
             
    Wages and wage related expenses
 
7,500
   
7,500
 
    Professional fees
   
20,676
   
11,753
 
    Rent expense
   
3,744
   
3,744
 
    Depreciation expense
   
                601
   
                666
 
    Other general and administrative expenses
 
1,091
   
2,387
 
                 
 
Total operating expenses
 
           33,612
   
           26,050
 
                 
LOSS FROM OPERATIONS
   
          (23,351
 
          (15,874)
 
                 
OTHER INCOME
             
   Non-refundable fee relating to
       
     merger-related activities
 
           20,000
   
                   -
 
                 
LOSS BEFORE PROVISION
             
   FOR INCOME TAXES
   
            (3,351
 
          (15,874
                 
   Provision for income taxes
   
               (800
 
               (800
                 
NET LOSS
 
(4,151
(16,674
                 
NET LOSS PER COMMON SHARE -
       
    BASIC AND DILUTED
 
(0.00
$
 (0.00
                 
WEIGHTED AVERAGE NUMBER OF
       
 COMMON SHARES OUTSTANDING
 
      3,770,083
   
      3,770,083
 
                 
 
The accompanying notes are an integral part of these unaudited condensed financial statements.


 
4

 
FORMAT, INC.
CONDENSED STATEMENT OF CASH FLOWS
(UNAUDITED)
     
Three Months Ended
 
     
March 31,
 
     
 2011
   
 2010
 
               
CASH FLOWS FROM OPERATING ACTIVITIES
             
     Net loss
 
(4,151)
  $
(16,674)
 
     Adjustments to reconcile net loss to net cash provided by (used in)
 
 
   
 
 
          operating activities:
             
          Depreciation
   
                 601
   
                 666
 
          Net changes in operating assets and liabilities:
             
               Prepaid expenses and other current assets
   
                    -
   
            (1,791)
 
               Accounts payable and accrued expenses
   
            19,673
   
            11,803
 
               Accrued officer compensation
   
              7,500
   
              5,000
 
                   Net cash provided by (used in) operating activities
 
            23,623
   
               (996)
 
               
CASH FLOWS USED BY INVESTING ACTIVITIES
   
 
   
 
 
     Purchase of fixed assets
   
                    -
   
                    -
 
                   Net cash provided by investing activities
   
                    -
   
                    -
 
               
CASH FLOWS FROM FINANCING ACTIVITIES
   
 
   
 
 
     Repayments to related party
   
            (2,500)
   
               (278)
 
                   Net cash used in financing activities
   
            (2,500)
   
               (278)
 
               
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
 
            21,123
   
            (1,274)
 
 
   
 
   
 
 
CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD
 
            47,988
   
            56,763
 
 
 
 
 
   
 
 
CASH AND CASH EQUIVALENTS - END OF PERIOD
69,111
 
55,489
 
               
               
SUPPLEMENTAL DISCLOSURES OF CASH FLOW ACTIVITY
       
   Cash paid during the period for income taxes
 
 800
 
-
 
   Cash paid during the period for interest expense
 
 -
  $
-
 
               
 
The accompanying notes are an integral part of these unaudited condensed financial statements.
 

 
5

 

FORMAT, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2011
(UNAUDITED)
 
NOTE 1
ORGANIZATION AND BASIS OF PRESENTATION
 
Format, Inc. (the “Company”) was incorporated in the State of Nevada on March 21, 2001.  The Company provides EDGARizing services to various commercial and corporate entities.  The Company provides services throughout the United States.

Interim Financial Statements

The accompanying unaudited financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and pursuant to the rules and regulations of the Securities and Exchange Commission.  Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been omitted pursuant to such rules and regulations.
 
In the opinion of management, all adjustments, consisting of normal and recurring adjustments, necessary for a fair presentation of the financial position and the results of operations for the periods presented have been included.  The operating results of the Company on a quarterly basis may not be indicative of operating results for the full year.  For further information, refer to the financial statements and notes included in Format Inc.’s Form 10-K for the year ended December 31, 2010.
 
Going Concern

As shown in the accompanying financial statements the Company has an accumulated deficit of $239,202 and a working capital deficit of $197,623 as of March 31, 2011. The Company has experienced cash shortages that have been funded by the Company’s President. There is no guarantee that the Company will be able to sustain operations to alleviate the working capital deficit or continued operating losses, or that the Company’s President will continue to fund operations. These conditions raise substantial doubt about the Company’s ability to continue as a going concern for a reasonable period.
 
Management’s plans to mitigate the effects that give rise to the conditions involve seeking a viable merger candidate.  This will include working closely with lawyers, associations and investment advisors.
 
The accompanying financial statements do not include any adjustments related to the recoverability and classification of assets or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

Reclassification

Certain reclassifications have been made to conform the prior period financial statement amounts to the current period presentation for comparative purposes.

 
6

 
 
FORMAT, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2011
(UNAUDITED)
 
NOTE 2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
Cash and Cash Equivalents

The Company considers all highly liquid debt instruments and other short-term investments with a maturity of three months or less, when purchased, to be cash equivalents.
 
The Company maintains cash balances at one financial institution that is insured by the Federal Deposit Insurance Corporation up to $250,000.

Use of Estimates

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

Accounts Receivable

Accounts receivable are reported at the customer’s outstanding balances less any allowance for doubtful accounts.  Interest is not accrued on overdue accounts receivable.

Allowance for Doubtful Accounts

An allowance for doubtful accounts on accounts receivable is charged to operations in amounts sufficient to maintain the allowance for uncollectible accounts at a level management believes is adequate to cover any probable losses.  Management determines the adequacy of the allowance based on historical write-off percentages and information collected from individual customers.  Accounts receivable are charged off against the allowance when collectibility is determined to be permanently impaired.  Management has determined that as of March 31, 2011 an allowance of $25,156 is required.

Property and Equipment

Property and equipment are stated at cost.  Depreciation and amortization are computed using the straight-line method on the estimated useful lives of the assets, generally ranging from three to seven years.  Expenditures of major renewals and improvements that extended the useful lives of property and equipment are capitalized.  Expenditures for repairs and maintenance are charged to expense as incurred.  Leasehold improvements are amortized using the straight-line method over the shorter or the estimated useful life of the asset or the lease term. Gains or losses from retirements or sales are credited or charged to income.
 
 
7

 
 
FORMAT, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2011
(UNAUDITED)
 
NOTE 2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
 
Long-Lived Assets

The Company accounts for its long-lived assets in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 360, “Accounting for the Impairment or Disposal of Long-Lived Assets.”  ASC No. 360 requires that long-lived assets be reviewed for impairment whenever events or changes in circumstances indicate that the historical cost carrying value of an asset may no longer be appropriate.  The Company assesses recoverability of the carrying value of an asset by estimating the future net cash flows expected to result from the asset, including eventual disposition.  If the future net cash flows are less than the carrying value of the asset, an impairment loss is recorded equal to the difference between the asset’s carrying value and fair value or disposable value. As of March 31, 2011, the Company does not believe there has been any impairment of its long-lived assets.

Fair Value of Financial Instruments

Pursuant to ASC No. 820, “Fair Value Measurements and Disclosures”, the Company is required to estimate the fair value of all financial instruments included on its balance sheet as of March 31, 2011. The Company’s financial instruments consist of cash, accounts receivables, payables, and other obligations.  The Company considers the carrying value of such amounts in the financial statements to approximate their fair value due to their short term nature.

Revenue Recognition

The Company generates revenue from professional services rendered to customers either at time of delivery or completion, when the earning process is complete and collectibility is probable.

Concentrations

During the three months ended March 31, 2011 and 2010, the Company derived 100% of its operating revenue from one customer.  The revenue from this customer was earned pursuant to a service contract entered into on July 8, 2009.   
 
The Company’s cash balance in financial institutions at times may exceed federally insured limits of $250,000.

Loss Per Share of Common Stock

The Company follows ASC No. 260, “Earnings Per Share” (ASC No. 260) that requires the reporting of both basic and diluted earnings (loss) per share.  Basic earnings (loss) per share is computed by dividing net income (loss) available to common stockholders by the weighted average number of common shares  outstanding for the period.  The calculation of diluted earnings (loss) per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock. In accordance with ASC No. 260, any anti-dilutive effects on net earnings (loss) per share are excluded.  For the three months ended March 31, 2011 and 2010, there were no common stock equivalents.
 
There were no options or warrants to purchase shares of common stock at March 31, 2011 and 2010.
 
 
8

 
 
FORMAT, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2011
(UNAUDITED)

 
NOTE 2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
 
Recent Accounting Pronouncements

In January 2011, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update 2011-01 (ASU 2011-01) Receivables (Topic 310): Deferral of the Effective Date of Disclosures about Troubled Debt Restructurings in Update No. 2010-20.  ASU 2011-01 temporarily delay the effective date of the disclosures about troubled debt restructurings.  The effective date of the new disclosures about troubled debt restructurings for public entities and the guidance for determining what constitutes a troubled debt restructuring will then be coordinated.  Currently, the guidance is anticipated to be effective for interim and annual period ending after June 15, 2011.    The Company does not expect the provisions of ASU 2011-01 to have a material effect on its financial position, results of operations or cash flows.
 
Other pronouncements issued by the FASB or other authoritative accounting standards groups with future effective dates are either not applicable or are not expected to be significant to the financial statements of the Company.
 
NOTE 3
FAIR VALUE ACCOUNTING
 
Fair Value Measurements
 
On January 1, 2008, the Company adopted ASC No. 820-10 (ASC 820-10), Fair Value Measurements.  ASC 820-10 relates to financial assets and financial liabilities.
 
ASC 820-10 defines fair value, establishes a framework for measuring fair value in accounting principles generally accepted in the United States of America (GAAP), and expands disclosures about fair value measurements. The provisions of this standard apply to other accounting pronouncements that require or permit fair value measurements and are to be applied prospectively with limited exceptions.
 
ASC 820-10 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. This standard is now the single source in GAAP for the definition of fair value, except for the fair value of leased property as defined in SFAS 13. ASC 820-10 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’s own assumptions, about market participant assumptions, that are 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 under ASC 820-10 are described below:

 
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. These inputs rely on management's own assumptions about the assumptions that market participants would use in pricing the asset or liability. (The unobservable inputs are developed based on the best information available in the circumstances and may include the Company's own data.)
 
 
9

 
 
FORMAT, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2011
(UNAUDITED)
 
NOTE 3
FAIR VALUE ACCOUNTING (continued)
 
The following table presents the Company's fair value hierarchy for those assets and liabilities measured at fair value on a recurring basis as of March 31, 2011 and December 31, 2010:
                                              
             
March 31,
2011
     
December 31,
2010
 
       
Level
   
Fair Value
   
Carrying Amount
   
Fair Value
 
Carrying Amount
 
 
Assets
                           
 
  Cash
   
1
   
$
69,111
   
$
69,111
   
$
47,988
 
$
47,988
 
 
  Accounts receivable
   
2
     
-
     
-
     
-
   
-
 
 
Liabilities
                                     
 
  Accounts payable and accrued expenses
   
2
     
107,758
     
107,758
     
88,085
   
88,085
 
 
   Accrued officer compensation
   
2
     
50,000
     
50,000
     
42,500
   
42,500
 
 
Due to related party
   
2
     
114,156
     
114,156
     
116,656
   
116,656
 
 
NOTE 4               LOAN RECEIVABLE

As of March 31, 2011 and December 31, 2010, the Company has a loan receivable from an outside party in the amount of $20,500.  The loan is interest free and due on demand.  At March 31, 2011 and December 31, 2010, collectability is uncertain and an allowance has been setup for the full amount due of $20,500.

NOTE 5
PROPERTY AND EQUIPMENT

Property and equipment consisted of the following as of March 31, 2011 and December 31, 2010.
 
 
       
March 31,
2011
   
December 31,
2010
 
  Office machinery and equipment   33,901   $  33,901  
  Furniture and fixtures     2,011      2,011  
         35,912     35,912  
  Less: Accumulated depreciation       (33,180   (32,579
       2,732    3,333  
                 
 
Depreciation expense for the three months ended March 31, 2011 and 2010 amounted to $601 and $666, respectively.
 
 
10

 
 
FORMAT, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2011
(UNAUDITED)
 
NOTE 6
RELATED PARTY TRANSACTIONS
 
 
The Company’s President, who is also a stockholder, has made advances to the Company which are unsecured, non-interest bearing, and due on demand.  For the three months ended March 31, 2011, the Company did not receive any advances and repaid $2,500.  For the three months ended March 31, 2010, the Company did not receive any advances and repaid $278.  The total amount due at March 31, 2011 was $114,156.
 
 
Effective July 1, 2009, the Company agreed to compensate its President $2,500 per month for services rendered, and to pay such compensation at a later date when sufficient funds are available.  The accrued compensation due to the President totaled $50,000 at March 31, 2011. Accrued compensation charged to operations for the three months ended March 31, 2011 and 2010 was $7,500 and $7,500 respectively.

NOTE 7               INCOME TAXES

The Company accounts for income taxes under ASC No. 740 (ASC 740).  This statement mandates the liability method of accounting for deferred income taxes and permits the recognition of deferred tax assets subject to an ongoing assessment of realizability.
 
As of March 31, 2011, the Company had estimated federal net operating loss carryforwards totaling approximately $177,000 which can be used to offset future federal income tax.  The federal net operating loss carryforwards expire at various dates through 2031.  Deferred tax assets resulting from the net operating losses are reduced by a valuation allowance, when, in the opinion of management, utilization is not reasonably assured.  At March 31, 2011, the Company’s gross deferred tax asset totaled $42,480. This amount was reduced 100% by a valuation allowance, making the net deferred tax asset $0.
 
The components of the Company’s income tax provision for the three months ended March 31, 2011 and 2010 amounted to:
 
       
March 31,
2011
   
March 31,
2010
 
  Current income tax expense   $ 800   $ 800  
  Deferred income tax benefit     (42,480    (7,680
  Change in valuation allowance      42,480     7,680  
      $ 800   $ 800  
 
NOTE 8              MERGER - RELATED ACTIVITIES
 
The Company has engaged in activities relating to a potential merger with a privately held company. In connection therewith, through March 31, 2011, the Company had received payments totaling $45,000, of which $25,000 is held in our attorney's trust account to be utilized as an expense reimbursement under specified conditions.  The remaining $20,000 is non-refundable and has been credited to operations.
 
NOTE 9               SUBSEQUENT EVENT

In connection with the merger-related activities, the Company received on April 1, 2011 an additional non-refundable payment of $12,500.
 
 
11

 

Item 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations.

This following information specifies certain forward-looking statements of management of the company. Forward-looking statements are statements that estimate the happening of future events are not based on historical fact. Forward-looking statements may be identified by the use of forward-looking terminology, such as “may”, “shall”, “could”, “expect”, “estimate”, “anticipate”, “predict”, “probable”, “possible”, “should”, “continue”, or similar terms, variations of those terms or the negative of those terms. The forward-looking statements specified in the following information have been compiled by our management on the basis of assumptions made by management and considered by management to be reasonable. Our future operating results, however, are impossible to predict and no representation, guaranty, or warranty is to be inferred from those forward-looking statements.

The assumptions used for purposes of the forward-looking statements specified in the following information represent estimates of future events and are subject to uncertainty as to possible changes in economic, legislative, industry, and other circumstances. As a result, the identification and interpretation of data and other information and their use in developing and selecting assumptions from and among reasonable alternatives require the exercise of judgment. To the extent that the assumed events do not occur, the outcome may vary substantially from anticipated or projected results, and, accordingly, no opinion is expressed on the achievability of those forward-looking statements. No assurance can be given that any of the assumptions relating to the forward-looking statements specified in the following information are accurate, and we assume no obligation to update any such forward-looking statements.

Critical Accounting Policy and Estimates. Our Management's Discussion and Analysis of Financial Condition and Results of Operations section discusses our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. On an on-going basis, management evaluates its estimates and judgments, including those related to revenue recognition, accrued expenses, financing operations, and contingencies and litigation. Management bases its estimates and judgments on historical experience and on various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. The most significant accounting estimates inherent in the preparation of our financial statements include estimates as to the appropriate carrying value of certain assets and liabilities which are not readily apparent from other sources.  These accounting policies are described at relevant sections in this discussion and analysis and in the notes to the financial statements included in our Quarterly Report on Form 10-Q for the period ended March 31, 2011.

For the three months ended March 31, 2011, as compared to the three months ended March 31, 2010.

Results of Operations.

Revenues.  We generated revenues of $10,261 for the three months ended March 31, 2011, as compared to $10,176 for the three months ended March 31, 2010.
 
Operating Expenses. For the three months ended March 31, 2011, our total operating expenses were $33,612, as compared to total operating expenses of $26,050 for the three months ended March 31, 2010. The increase in total operating expenses is due primarily to an increase in professional fees between the two periods.  Specifically, we had an increase in professional fees, which was $20,676 for the three months ended March 31, 2011, as compared to $11,753 for the three months ended March 31, 2010.

 
12

 
Other Income. We had other income of $20,000 for the three months ended March 31, 2011, as compared to no other income for the three months ended March 31, 2010

Net Loss. We had net loss of $4,151 for the three months ended March 31, 2011, as compared to net loss of $16,674 for the three months ended March 31, 2010.
 
Liquidity and Capital Resources.  We had cash of $69,111 as of March 31, 2011.  Our total current assets of $71,559 as of March 31, 2011, included cash of $69,111, prepaid expense of $1,248 and a security deposit of $1,200. As of March 31, 2011, the total of our property and equipment, less accumulated depreciation, was a net value of $2,731, which together our current assets of $71,559 equal our total assets of $74,291 as of March 31, 2011.

As of March 31, 2011, our current liabilities were $271,914, of which $106,158 was represented by accounts payable and accrued expenses, $50,000 was accrued officer compensation, $1,600 of income taxes payable and $114,156 was represented by a related party advance.  The related party advance is payable to Mr. Neely, our officer, principal shareholder and one of our directors. Mr. Neely had advanced those funds to us for working capital. We had no other long term liabilities, commitments or contingencies.
 
We had cash of $69,111 as of March 31, 2011, which we estimate will not be sufficient to fund our operations for the next twelve months. Our forecast for the period for which our financial resources will be adequate to support our operations involves risks and uncertainties and actual results could fail as a result of a number of factors, Our  President, who is also a stockholder, has made advances to us which are unsecured, non-interest bearing, and due on demand.  For the three months ended March 31, 2011, we made net repayments of $2,500.  The total amount due at March 31, 2011, was $114,156. All of those loans are interest free and due on demand.
 
Off-Balance Sheet Arrangements. We have no off-balance sheet arrangements.

Item 3. Quantitative and Qualitative Disclosures about Market Risk.
 
Not applicable.
 
Item 4. Controls and Procedures.

Evaluation of disclosure controls and procedures. We maintain controls and procedures that are designed to ensure that information required to be disclosed in the reports that we file or submit under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management including our principal executive and principal financial officers, as appropriate, to allow timely decisions regarding required disclosures. Based upon their evaluation of those controls and procedures performed as of the end of the period covered by this report, our principal executive officer and our principal financial officer concluded that our disclosure controls and procedures were effective.

Changes in internal controls. There were no changes in our internal control over financial reporting that occurred during the fiscal quarter covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 
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PART II — OTHER INFORMATION

Item 1. Legal Proceedings.

None.

Item 1A. Risk Factors.

Not applicable.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

None.

Item 3.  Defaults Upon Senior Securities.

None.

Item 4. (Removed and Reserved).


Item 5.  Other Information.

None.
  
Item 6.  Exhibits.
 
Exhibit No.  Description

 

 
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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.
 
 
Format, Inc.,
a Nevada corporation
 
       
Date: April 28, 2011    
By:
/s/ Ryan Neely
 
   
Ryan Neely
Chief Executive Officer, Chief Financial Officer, President and a Director
(Principal, Executive, Financial and Accounting Officer)
 

 
 
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