10-Q 1 exti10q2q2009.txt EXTENSIONS, INC. QUARTERLY REPORT ON FORM 10-Q FOR THE QUARTER ENDED JUNE 30, 2009 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 for the quarterly period ended June 30, 2009 OR [ ] 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 000-26493 --------- EXTENSIONS, INC. (Exact name of registrant as specified in its charter) Nevada 88-0390251 -------------------------------------------------------------------------------- (State or other jurisdiction of (I. R. S. Employer Identification No.) incorporation or organization) 770 South Post Oak Lane, Suite 330, Houston, TX 77056 -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (832) 487- 8689 --------------- n/a (Former name, former address and former fiscal year, if changed since 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 [ ] Smaller reporting company [x] (Do not check if a smaller reporting company) Indicate by check mark whether the registrant is a shell company (as defined in rule 12b-2 of the Exchange Act). Yes [ ] No [x] The number of shares of the registrant's common stock outstanding as of June 30, 2009 was 889,619,940 shares. EXTENSIONS, INC. INDEX TO THE QUARTERLY REPORT ON FORM 10-Q Page Number ------ PART I - FINANCIAL INFORMATION F-3 Item 1. Financial Statements F-3 Condensed Consolidated Balance Sheets - June 30, 2009 (unaudited) F-3 and December 31, 2008 Condensed Consolidated Statements of Operations - (unaudited) - F-4 For the three and six months ended June 30, 2009 and 2008 and for the period from inception (February 19, 1997) to June 30, 2009 Condensed Consolidated Statements of Cash Flows - (unaudited) - F-5 For the three and six months ended June 30, 2009 and 2008 and for the period from inception (February 19, 1997) to June 30, 2009 Notes to unaudited Condensed Consolidated Financial Statements F-7 Item 2. Management's Discussion and Analysis of Financial Condition 11 and Results of Operations Item 3. Quantitative and Qualitative Disclosures About 11 Market Risks Item 4. Controls and Procedures 11 PART II - OTHER INFORMATION 12 Item 1. Legal Proceedings 12 Item 2. Unregistered Sales of Equity Securities and 12 Use of Proceeds Item 3. Defaults Upon Senior Securities 12 Item 4. Submission of Matters to a Vote of Security Holders 13 Item 5. Other Information 13 Item 6. Exhibits 13 Page 2 PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS EXTENSIONS, INC. ---------------- (A DEVELOPMENT STAGE COMPANY) CONSOLIDATED BALANCE SHEETS (Unaudited) JUNE 30, DECEMBER 31, ASSETS 2009 2008 ------------ ------------- Current Assets Cash $ 1,363 $ 17,950 ------------ ------------- Total Current Assets 1,363 17,950 Other Assets - Website 110,000 100,000 ------------ ------------- TOTAL ASSETS $ 111,363 $ 117,950 ============ ============= LIABILITIES & STOCKHOLDERS' DEFICIT Current Liabilities Advances from related party $ 100,754 $ 72,254 Notes payable 10,000 10,000 ------------ ------------- Total Current Liabilities 110,754 82,254 ============ ============= Stockholders' Equity Common Shares: Authorized shares 1,000,000,000, 0.0001 par value: 889,619,940 shares outstanding at June 30, 2009 and December 31, 2008 88,961 88,961 Preferred Shares Authorized Shares 5,000,000, 0.001 par value: 2,000,000 shares outstanding at June 30, 2009 and December 31, 2008 2,000 2,000 Additional paid-in Capital 280,621 280,621 Deficit accumulated during development stage (370,973) (335,886) ------------ ------------- Total Stockholders' Equity 609 35,696 ============ ============= TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $ 111,363 $ 117,950 ============ ============= See accompanying notes to financial statements F-3

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F-6 EXTENSIONS, INC. ---------------- (A Development Stage Company) Notes to the Unaudited Condensed Consolidated Financial Statements June 30, 2009 GENERAL The interim financial statements are prepared pursuant to the requirements for reporting on Form 10-Q. The December 31, 2008 balance sheet data was derived from audited financial statements but does not include all disclosures required by generally accepted accounting principles. The interim financial statements and notes thereto should be read in conjunction with the financial statements and notes included in the Company's Form 10-K for the year ended December 31, 2008. In the opinion of management, the interim financial statements reflect all adjustments of a normal recurring nature necessary for a fair statement of the results for the interim periods presented. NOTE 1 - NATURE OF OPERATIONS AND GOING CONCERN ----------------------------------------------- The accompanying financial statements have been prepared on the basis of accounting principles applicable to a "going concern", which assume that the company will continue in operation for at least one year and will be able to realize its assets and discharge its liabilities in the normal course of operations. Several conditions and events cast doubt about the company's ability to continue as a "going concern". The company incurred indeterminate net losses prior to October 1, 2003, has a liquidity problem, and requires additional financing in order to finance its business activities on an ongoing basis. The company is actively pursuing alternative financing and has had discussions with various third parties, although no firm commitments have been obtained. The company's future capital requirements will depend on numerous factors including, but not limited to, continued progress in finding a merger candidate and the pursuit of business opportunities. These financial statements do not reflect adjustments that would be necessary if the company were unable to continue as a "going concern". While management believes that the actions already taken or planned, will mitigate the adverse conditions and events which raise doubt about the validity of the "going concern" assumption used in preparing these financial statements, there can be no assurance that these actions will be successful. If the company were unable to continue as a "going concern", then substantial adjustments would be necessary to the carrying values of assets, the reported amounts of its liabilities, the reported revenues and expenses, and the balance sheet classifications used. ORGANIZATION AND BASIS OF PRESENTATION The company was incorporated under the laws of the State of Nevada on February 19, 1997 under the name of Millennium National Events, Inc. The company's name was changed in August 2007 to Extensions, Inc. The company ceased all operating activities during the period from October 1, 2003 to December 31, 2005 and was considered dormant. Since October 6, 2006, the company has been in the development stage, and has not commenced planned principal operations. The company also was delinquent on its filing with the Secretary of State for Nevada and as a result was not a corporation in good standing until October 30, 2006. The company's common shares are listed for trading on the Pink Sheets under the symbol EXTI. F-7 Prior to approximately October 1, 2003, Millennium National Events, Inc. was an operating company with its common shares listed for trading on the OTCBB market. The company failed to remain current on its SEC filing requirements and as a result was demoted to the Pink Sheets. Subsequently, the Company ceased all business operations and has been dormant since approximately October 1, 2003. During the same period, all the Company's officers and directors ceased acting on behalf of the Company and abandoned their obligations to the Company and its shareholders. As a result, the Company was considered to be dormant from October 1, 2003 to December 31, 2005. On August 18, 2006, a complaint was filed in the Superior Court for Washoe County, Nevada seeking the appointment for custodian for the Company under Nevada Revised Statutes 78.347(2). On October 6, 2006, a Custodian was appointed to the Company who commenced an investigation of the assets, management, business, condition and liabilities of the Company. As a result of the investigation by the Custodian, a report was prepared and filed with the Court, finding that there were no apparent assets, liabilities, or business of the company existing or enforceable, that there were 27,300,000 common shares and no preferred shares issued and outstanding and that the company was in revoked status under Nevada law. The accompanying financial statements were prepared on the basis of that investigation, as approved by the Court. In the event that any liabilities, liens, judgments, warrants, options, or other claims against the Company arise, these will be recorded when discovered. NATURE OF BUSINESS The company is developing several social support networks developed off an intellectual property platform including our cancer social support network which will be an interactive online community dedicated to serving the specific needs of cancer patients, and their family, friends and caregivers. The site when completed will allow cancer patients the ability to research their disease and assist in finding, organizing and managing their own cancer support network. The goal of these support networks is to assist the cancer patient in conserving needed energy by lightening the burden associated with their own daily trials and tribulations, with the hope that the energy conserved can be leveraged into a higher level of patient activity and a stronger determination to fight the disease. The primary components of our cancer social support network will be content, community, and Micro Support Networks, (MSN's) each of which serves as a gateway and complementary resource to the other. NOTE 2 - SUMMARY OF ACCOUNTING POLICIES --------------------------------------- This summary of accounting policies for Extensions, Inc. (a development stage company) is presented to assist in understanding the Company's financial statements. The accounting policies conform to generally accepted accounting principles and have been consistently applied in the preparation of the financial statements. CASH AND CASH EQUIVALENTS For purposes of the statement of cash flows, the company considers all highly liquid debt instruments purchased with a maturity of three months or less to be cash equivalents to the extent the funds are not being held for investment purposes. F-8 PERVASIVENESS OF ESTIMATES The preparation of financial statements is conformity with generally accepted accounting principles required management to make estimates and assumptions that effect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. LOSS PER SHARE Basic loss per share has been computed by dividing the loss for the year applicable to the common stockholders by the weighted average number of common shares outstanding during the years. CONCENTRATION OF CREDIT RISK The company has no significant off-balance sheet concentrations of credit risk such as foreign exchange contracts, options contracts or other foreign hedging arrangements. NOTE 3 - INCOME TAXES --------------------- The company accounts for income taxes under the provisions of SFAS No. 109, "Accounting for Income Taxes". SFAS No. 109 requires recognition of deferred income tax assets and liabilities for the expected future income tax consequences, based on enacted tax laws, of temporary differences between the financial reporting and tax bases of assets and liabilities. NOTE 4 - DEVELOPMENT STAGE COMPANY ---------------------------------- The Company has not begun principal operations and as is common with a development stage company, the company has had recurring losses during its development stage. The company's financial statements are prepared using generally accepted accounting principles applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business. However, the company does not have significant cash or other material assets, nor does it have an established source of revenues sufficient to cover its operating costs and to allow it to continue as a going concern. In the interim, shareholders of the company have committed to meeting its minimal operating expenses. NOTE 5 - COMMITMENTS -------------------- As of January 1, 2006 all activities of the company have been conducted by corporate officers from either their homes or business offices. Currently, there are no outstanding debts owed by the company for the use of these facilities and there are no commitments for future use of the facilities. NOTE 6 - COMMON STOCK --------------------- Prior to December 31, 2005, the company issued 27,300,000 shares of common stock for cash and other consideration. F-9 NOTE 7 - SUBSEQUENT EVENTS -------------------------- The Company has evaluated subsequent events through the time the June 30, 2009 Form 10Q was filed with the Securities and Exchange Commission on August 14, 2009, which is the date the consolidated financial statements were issued. No events have occurred subsequent to June 30, 2009 that require disclosure or recognition in these financial statements. F-10 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS LIQUIDITY AND CAPITAL RESOURCES We currently fund our operations primarily through funds raised through private placements completed and the limited conversion of vendor invoices for stock. On October 30, 2008 we sold 100,000 shares of common stock to one of our directors for $50,000. The shares were issued at $0.50 per share. On September 26, 2008, the Company issued 6,144 shares of its common stock for payment of an invoice in the amount of $6,144. The shares were converted at $1.00 per share. We may determine it is appropriate to raise additional capital for working capital and general corporate purposes. If we need, or elect, to obtain additional debt or equity financing, but there can be no assurance that additional financing will be available on reasonable terms, if at all. Without additional financing, we have insufficient funds to carry out our business plan for the next twelve months. RESULTS OF OPERATIONS: Our financial statements for the quarters ended June 30, 2009 and June 30, 2008 reflect minimal business activities. We had no revenue for either period. For the quarter ended June 30, 2009, we had operating expenses of $16,587. This compares with expenses of $46,632 during the same period in 2008. We attribute this to an extraordinary $23,783 expense for impairment loss incurred in 2008. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK None ITEM 4. CONTROLS AND PROCEDURES EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES The Company maintains disclosure controls and procedures (as defined in the Securities Exchange Act of 1934 Rules 13a-15(e) or 15d-15(e)) designed to ensure that information required to be disclosed in reports filed or submitted under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by the Company in its reports that it files or submits under the Exchange Act is accumulated and communicated to the Company's management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. The Company's management, including its chief executive officer and its chief financial officer, evaluated the effectiveness of the Company's disclosure controls and procedures (as defined in the Securities Exchange Act of 1934 Rules 13a-15(e) or 15d-15(e)) as of June 30, 2009. Based on that evaluation, the Company's chief executive and financial officers concluded that, as of that date, the Company's disclosure controls and procedures were not effective at a reasonable assurance level, due to the identification of one or more material weaknesses. Page 11 MANAGEMENT'S REMEDIATION PLAN Management determined that a material weakness existed due to a lack of an adequate number of personnel in the accounting department. This weakness was first identified in 2007, and additional resources were hired to perform controls and to aid in the timeliness of the financial statement closing process leading to the correct preparation, review, presentation of and disclosures in the Company's consolidated statements. However, the Company was unable to retain the additional resources through the entirety of 2008 and again has hired temporary contractors to help perform certain accounting functions, until management can employ a more permanent solution. The Company cannot assure that, as circumstances change, any additional material weakness will not be identified. The Company believes that the Company's disclosure controls and procedures, including the Company's internal control over financial reporting, have further improved due to the intensified review of all accounting and financial transactions by the board of directors and the changes described above. The Company has hired certain resources in the accounting and finance departments and it will make additional changes in the future, as it deems necessary. The Company cannot assure that, as circumstances change, any additional material weakness will not be identified. CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING As noted above, during 2008 management and the board of directors intensified its review of all accounting and financial transactions as a further effort to strengthen internal control over financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. In addition, we have hired additional temporary financial personnel to assist with our financial reporting duties. These actions, in addition to the other actions taken in the previous two years, lead us to conclude that our internal controls as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act have improved substantially but are still subject to one or more material weaknesses. There were no other changes in the Company's internal control over financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act, during the quarter ended June 30, 2009 that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting. PART II - OTHER INFORMATION ITEM 1. LEGAL PROCEDINGS None ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS. None. ITEM 3. DEFAULTS UPON SENIOR SECURITIES None Page 12 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS None ITEM 5. OTHER INFORMATION None ITEM 6. EXHIBITS EXHIBIT # DESCRIPTION --------- --------------------------------------------------------------------- 31.1 Certification Pursuant to 18 USC, Section 1350 as adopted Pursuant to Section 302 of the Sarbanes Oxley Act of 2002 31.2 Certification Pursuant to 18 USC, Section 1350 as adopted Pursuant to Section 302 of the Sarbanes Oxley Act of 2002 32.1 Certification Pursuant to 18 USC Section 1350 as adopted Pursuant to Section 906 of the Sarbanes Oxley Act of 2002 32.2 Certification Pursuant to 18 USC Section 1350 as adopted Pursuant to Section 906 of the Sarbanes Oxley Act of 2002 SIGNATURES In accordance with the requirements of the Exchange Act, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. EXTENSIONS, INC. Date: August 14, 2009 By: /s/ Crawford Shaw --------------------------- Crawford Shaw Principal Executive Officer Page 13

EXTENSIONS, INC. 10-Q