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, 2013.
 
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: 333-170779

VIZCONNECT, INC.
(Exact name of registrant as specified in its charter)

Nevada
 
27-3687123
(State or other jurisdiction of incorporation or organization)
 
(I.R.S. Employer Identification No.)

1350 Main Street, Suite 1407
Springfield, Massachusetts 01103
(Address of principal executive offices (Zip Code)

(855) 849-2666
(Registrant’s telephone number, including area code)

VB CLOTHING, INC.
 (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 o
 
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x  No o
 
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
o
Accelerated filer
o
Non-accelerated filer
o   
Smaller reporting company
x
(do not check if 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 o No x
 
As of August 13, 2013, there were 40,680,000 shares of common stock, $0.001 par value per share, issued and outstanding.
 
 
 
 
 
VIZCONNECT, INC.
TABLE OF CONTENTS
FORM 10-Q REPORT
June 30, 2013
 
   
Page
Number
 
PART I - FINANCIAL INFORMATION
     
       
Item 1.
Financial Statements.
    4  
Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations.
    17  
Item 3.
Quantitative and Qualitative Disclosures About Market Risk.
    22  
Item 4.
Controls and Procedures.
    22  
           
PART II - OTHER INFORMATION
       
         
Item 1.
Legal Proceedings.
    24  
Item 1A.
Risk Factors.
    24  
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds.
    24  
Item 3.
Defaults Upon Senior Securities.
    25  
Item 4.
Mine Safety Disclosures
    25  
Item 5.
Other Information.
    25  
Item 6.
Exhibits.
    26  
           
SIGNATURES
    27  
 
 
2
 
 
CAUTIONARY STATEMENT ON FORWARD-LOOKING INFORMATION
 
This Quarterly Report on Form 10-Q (this “Report”) contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Forward-looking statements discuss matters that are not historical facts. Because they discuss future events or conditions, forward-looking statements may include words such as “anticipate,” “believe,” “estimate,” “intend,” “could,” “should,” “would,” “may,” “seek,” “plan,” “might,” “will,” “expect,” “predict,” “project,” “forecast,” “potential,” “continue” negatives thereof or similar expressions. Forward-looking statements speak only as of the date they are made, are based on various underlying assumptions and current expectations about the future and are not guarantees. Such statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, level of activity, performance or achievement to be materially different from the results of operations or plans expressed or implied by such forward-looking statements.
 
We cannot predict all of the risks and uncertainties. Accordingly, such information should not be regarded as representations that the results or conditions described in such statements or that our objectives and plans will be achieved and we do not assume any responsibility for the accuracy or completeness of any of these forward-looking statements. These forward-looking statements are found at various places throughout this Report and include information concerning possible or assumed future results of our operations, including statements about potential acquisition or merger targets; business strategies; future cash flows; financing plans; plans and objectives of management, any other statements regarding future acquisitions, future cash needs, future operations, business plans and future financial results, and any other statements that are not historical facts.
 
These forward-looking statements represent our intentions, plans, expectations, assumptions and beliefs about future events and are subject to risks, uncertainties and other factors. Many of those factors are outside of our control and could cause actual results to differ materially from the results expressed or implied by those forward-looking statements. In light of these risks, uncertainties and assumptions, the events described in the forward-looking statements might not occur or might occur to a different extent or at a different time than we have described. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this Report. All subsequent written and oral forward-looking statements concerning other matters addressed in this Report and attributable to us or any person acting on our behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this Report.
 
Except to the extent required by law, we undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events, a change in events, conditions, circumstances or assumptions underlying such statements, or otherwise.
 
CERTAIN TERMS USED IN THIS REPORT
 
When this report uses the words “we,” “us,” “our,” and the “Company,” they refer to the combined business of VizConnect, Inc. and its subsidiary, VizConnect LLC. “SEC” refers to the Securities and Exchange Commission.

Except as otherwise indicated, the information presented in this 10-Q reflects our 4-for-1 forward stock split, which became effective as of February 25, 2013.
 
 
3
 
 
PART I - FINANCIAL INFORMATION

Item 1.  Financial Statements.
 
VIZCONNECT, INC. AND SUBSIDARY
CONDENSED CONSOLIDATED BALANCE SHEETS
 
   
As of
   
As of
 
   
June 30,
2013
   
December 31,
2012
 
   
(unaudited)
       
ASSETS
             
CURRENT ASSETS
           
Cash
  $ 57,126     $ 19,842  
Prepaid expenses
    8,002       760  
TOTAL CURRENT ASSETS
    65,128       20,602  
                 
Property, plant and equipment - net
    2,130       -  
                 
TOTAL ASSETS
  $ 67,258     $ 20,602  
                 
LIABILITIES AND STOCKHOLDERS' DEFICIT
                 
CURRENT LIABILITIES
               
Accounts Payable
  $ 185,227     $ 93,401  
Accrued Expenses
    61,008       21,943  
Deferred Revenues
    85,800       36,667  
Notes Payable- Related Party
    22,500       22,500  
Notes Payable
    15,000       15,000  
Derivative liability
    633,477       -  
TOTAL CURRENT LIABILITIES
    1,003,012       189,511  
                 
Convertible Notes Payable net of discount of $356,578 and $0 respectively
    5,922       310,000  
TOTAL LIABILITIES
    1,008,934       499,511  
                 
COMMITMENTS AND CONTINGENCIES- See Note 9
               
                 
STOCKHOLDERS' DEFICIT
               
Preferred Stock: $0.001 par value, 5,000,000 shares authorized, 0 shares issued and outstanding as of June 30, 2013 and December 31, 2012
    -       -  
Common Stock: $0.001 par value, 250,000,000 shares authorized, 40,680,000 shares issued and outstanding as of June 30, 2013, and 25,000,000 shares issued and outstanding as of December 31, 2012
    40,680       25,000  
Additional paid in capital
    (680 )     (5,000 )
Accumulated deficit
    (981,676 )     (498,909 )
Total stockholders' deficit
    (941,676 )     (478,909 )
                 
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT
  $ 67,258     $ 20,602  
 
See Accompanying Notes to the Unaudited Condensed Consolidated Financial Statements
 
 
4
 
 
VIZCONNECT, INC. AND SUBSIDARY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
 
   
For the three month period ended
   
For the three month period ended
   
For the six month period ended
   
For the six month period ended
 
   
June 30,
2013
   
June 30,
2012
   
June 30,
2013
   
June 30,
2012
 
                         
REVENUE
                       
Revenue
  $ 55,651     $ 4,425     $ 108,334     $ 7,850  
                                 
Total Revenue
    55,651       4,425       108,334       7,850  
                                 
OPERATING EXPENSES
                               
Programming, Hosting & Technology Expense
    21,131       17,651       35,964       18,014  
Professional Fees
    58,488       5,000       120,381       5,000  
General and Administrative
    60,558       32,124       84,847       34,166  
Selling Expense
    34,226       1,908       59,035       3,587  
Total Operating Expenses
    174,403       56,683       300,227       60,767  
                                 
Loss From Operations
    (118,752 )     (52,258 )     (191,893 )     (52,917 )
                                 
Loss on derivative exchange
    (270,977 )     -       (270,977 )     -  
Interest Expense
    (12,339 )     -       (19,897 )     -  
                                 
NET LOSS BEFORE INCOME TAX
    (402,068 )     (52,258 )     (482,767 )     (52,917 )
                                 
Provision for income taxes
    -       -       -       -  
                                 
NET LOSS
  $ (402,068 )   $ (52,258 )   $ (482,767 )   $ (52,917 )
                                 
Basic and diluted loss per common share
  $ (0.01 )   $ (0.00 )   $ (0.01 )   $ (0.00 )
                                 
Basic and diluted weighted average shares outstanding
    40,680,000       25,000,000       36,934,222       25,000,000  
 
See Accompanying Notes to the Unaudited Condensed Consolidated Financial Statements
 
 
5
 
 
VIZCONNECT, INC. AND SUBSIDARY
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
 
   
For the six month period ended
   
For the six month period ended
 
   
June 30,
2013
   
June 30,
2012
 
CASH FLOWS FROM OPERATING ACTIVITIES:
           
             
Net loss
  $ (482,767 )   $ (52,917 )
Adjustments to Reconcile Net Loss To Net Cash Used in Operating Activities:
               
Depreciation Expense
    22       −  
Amortization of debt discount
    5,922       −  
Changes in Operating Assets and Liabilities:
               
Derivative liability
    270,977       −  
Accounts Payable
    91,826       16,858  
Accrued Expenses
    39,065       −  
Deferred Revenue
    49,133       −  
Prepaid Expenses
    (7,242 )     −  
Net Cash Used In Operating Activities
    (33,064 )     (36,059 )
                 
CASH FLOWS FROM INVESTING ACTIVITIES:
               
Fixed asset purchases
    (2,152 )     −  
Net Cash Used In Investing Activities
    (2,152 )     -  
                 
CASH FLOWS FROM FINANCING ACTIVITIES:
               
Loans Payable- Related Party
    −       −  
Loans Payable
    52,500       35,000  
Equity Contributions
    20,000       −  
Net Cash Provided by Financing Activities
    72,500       35,000  
                 
NET INCREASE (DECREASE) IN CASH
    37,284       (1,059 )
                 
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
    19,842       1,746  
                 
CASH AND CASH EQUIVALENTS AT END OF PERIOD
  $ 57,126     $ 687  
                 
Cash Paid for Interest
  $ -     $ -  
Cash Paid for Taxes
  $ -     $ -  
                 
SUPPLEMENTAL DISCLOSURE OF NON-CASH FINANCING ACTIVITIES:
               
During the six months ended June 30, 2013 the Company allocated $362,500 of notes payable to derivative liability.
               

See Accompanying Notes to the Unaudited Condensed Consolidated Financial Statements
 
 
6
 
VIZCONNECT, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF JUNE 30, 2013
(unaudited)
 
NOTE 1   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ORGANIZATION
 
(A)   Organization
 
VizConnect, Inc. (the "Company") was setup as a corporation under the laws of the State of Nevada on October 8, 2010. The Company, through its wholly-owned subsidiary, VizConnect LLC, a Massachusetts limited liability company, provides cloud based marketing services using a combination of mobile video marketing, video storage, and cloud computing in one easy to access system for a monthly fee. The Company’s year-end is December 31.
 
On February 13, 2013, VizConnect, Inc. consummated a share exchange with VizConnect LLC. Under the terms of the share exchange, the members of VizConnect LLC received 25,000,000 shares of the common stock of VizConnect, Inc. for 100% of the issued and outstanding member’s interest of VizConnect LLC. As a result of the transaction, the members of VizConnect LLC became the majority owners of VizConnect, Inc. and VizConnect LLC became a wholly-owned subsidiary.
 
The reverse merger is deemed a capital transaction and the net assets, of VizConnect LLC (the accounting acquirer) are carried forward to the VizConnect, Inc. (the legal acquirer and the reporting entity) at their carrying value before the combination. The acquisition process utilizes the capital structure of VizConnect, Inc. and the assets and liabilities of VizConnect LLC, which are recorded at historical cost. The equity of VizConnect, Inc. is the historical equity of VizConnect LLC retroactively restated to reflect the number of shares issued by the Company in the transaction.
 
In connection with this transaction, the historical shareholders of VizConnect, Inc. were deemed to have been issued 15,680,000 shares of common stock upon completion of the reverse merger.
 
On or about February 23, 2013, VizConnect, Inc, concluded a 4-for-1 stock split, following which there were 40,680,000 shares of common stock issued and outstanding.
 
In accordance with the reverse merger and stock split, all references to common stock, share and per share amounts have been retroactively restated in accordance with the share exchange ratio and 4 for 1 stock split.
 
On or about April 13, 2013, the Company received written consents in lieu of a meeting of Stockholders from stockholders holding 50.86% of the outstanding shares of the Company’s common stock. This written consent authorized the Company to amend its Articles of Incorporation to change the name of the Company from “VB Clothing, Inc.” to “VizConnect, Inc.” and to increase the number of authorized shares of common stock, par value $0.001, from 70,000,000 to 250,000,000. The Certificate of Amendment, referencing these amendments, was recorded with the State of Nevada on May 10, 2013.
 
 
7
 
 
VIZCONNECT, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF JUNE 30, 2013
(unaudited)
 
(B)   Basis of Presentation
 
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules and regulations of the Securities and Exchange Comission for interim financial information. Accordingly, they do not include all the information necessary for a comprehensive presentation of financial position and results of operations.
 
It is management’s opinion that all material adjustments (consisting of normal reoccurring adjustments) have been made, which are necessary for a fair financial statement presentations. The results for the interim period are not necessarily indicative of the results to be expected for the year.
 
(C)   Use of Estimates
 
In preparing financial statements in conformity with generally accepted accounting principles, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and revenues and expenses during the reported period. Actual results could differ from those estimates. Significant estimates include the calculation of deferred revenue during the period.
 
(D)   Cash and Cash Equivalents
 
The Company considers all highly liquid temporary cash investments with an original maturity of three months or less to be cash equivalents. At June 30, 2013 and December 31, 2012, the Company had no cash equivalents.
 
(E)   Income Taxes
 
The Company accounts for income under FASB accounting standards certification No.740 income taxes. Under FASB accounting standards codification No. 740, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amounts expected to be realized. The tax return for the years ended December 31, 2012 and 2011 is subject to examination by the Internal Revenue Service.
 
 
8
 
 
VIZCONNECT, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF JUNE 30, 2013
(unaudited)
 
(F)   Advertising Costs
 
Advertising Costs are expensed in the period when the advertisements have reached their intended users. Advertising expense for the six-month period ended June 30, 2013 and June 30, 2012 were $403 and $0 respectively.
 
(G)   Software Development Costs
 
We expense software development costs to be marketed to external users, before  technological feasibility of such products is reached. We have determined that technological feasibility is reached shortly before the release of those products and as a result, the development costs incurred after the establishment of technological feasibility and before the release of those products were not material, and accordingly, were expensed as incurred. Software development costs totaled $10,614 and $17,200 for the six-month periods ended June 30, 2013 and June 30, 2012, respectively.
 
(H)   Business Segments
 
The Company operates in one segment and therefore segment information is not presented.
 
(I)   Revenue Recognition
 
The Company recognizes revenue on arrangements in accordance with FASB ASC No. 605, “Revenue Recognition”. In all cases, revenue is recognized only when the price is fixed and determinable, persuasive evidence of an arrangement exists, the service is performed and collectability of the resulting receivable is reasonably assured.
 
The Company recognizes revenue from monthly subscriptions fees in the month in which services are provided.
 
The Company recognizes revenue from set up fees at the time the initial set up is complete and the fees are earned.
 
The Company recognizes revenue from distributor membership fees monthly over the one year membership period. Any fees collected in which the services are not provided are recorded as deferred revenue.
 
(J)   Selling Expenses
 
The Company incurs selling expenses under a “multi-level” compensation plan, which includes commissions for subscription sales made and bonuses for assisting associated distributors in closing initial subscription sales. Commissions are earned from direct sales as well as the sales made through the sales network they have developed. Accrued commissions payable were $31,526 and $6,436 as of June 30, 2013 and December 31, 2012 respectively.
 
 
9
 
 
VIZCONNECT, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF JUNE 30, 2013
(unaudited)
 
(K)   Concentrations
 
As of June 30, 2013, and June 30, 2012, respectively, the Company had no customers whose sales account for more than 10% of total sales.
 
(L)   Property and Equipment
 
Property and equipment are recorded at cost. Additions and betterments are capitalized; maintenance and repairs are expensed as incurred. Depreciation is calculated using the straight-line method over the asset’s estimated useful life, which is 5 years for leasehold improvements, computers, equipment and furniture and 3 years for software. Gains or losses on disposal are charged to operations.
 
(M)   Fair Value
 
The Company’s capital structure includes the use of convertible debt features that are classified as derivative financial instruments. Derivative financial instruments are recognized as either assets or liabilities and are measured at fair value under ASC 815 Derivatives and Hedging. ASC 815 requires that changes in the fair value of derivative financial instruments with no hedging designation be recognized as gains/(losses) in the earnings statement. The fair value measurement is determined in accordance with ASC 820 Fair Value Measurements and Disclosures.
 
(N)   Financial Instruments
 
The fair values of financial instruments that include cash and amounts due to related parties were estimated to approximate their carrying values due to the immediate or relatively short maturity of these instruments.
 
The Company’s operations and financing activities are conducted primarily in United States dollars, and as a result the Company is not subject to significant exposure to market risks from changes in foreign currency rates. Management has determined that the Company is not exposed to significant credit risk.
 
 
10
 
 
VIZCONNECT, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF JUNE 30, 2013
(unaudited)
 
The following is a summary of the fair value of liabilities measured at fair value on a recurring basis:
 
   
Fair value
at
June 30, 2013
   
Quoted prices in active markets for identical assets / liabilities
(Level 1)
   
Significant other observable inputs
(Level 2)
   
Significant unobservable inputs
(Level 3)
 
Derivatives: *
                       
Conversion Feature Liability
  $ 633,477     $ 0     $ 0     $ 633,477  
Total of Derivative Liabilities
  $ 633,477     $ 0     $ 0     $ 633,477  
___________
* The fair value of the derivative instruments was estimated using the Black Scholes option pricing model (See Note 6).
 
Level 1: Observable inputs such as quoted prices (unadjusted) in active markets for identical assets or liabilities.
 
Level 2: Inputs other than quoted prices that are observable, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active.
 
Level 3: Unobservable inputs in which little or no market data exists, therefore developed using estimates and assumptions developed by us, which reflect those that a market participant would use.
 
(O)   Re-classifications
 
Certain amounts from prior periods have been reclassified to conform to the current period presentation. These reclassifications had no impact on the Company’s net loss or cash flows.
 
(P)   Loss per Share
 
The Company computes net loss per share in accordance with ASC 740 "Earnings per Share". ASC 260 requires presentation of both basic and diluted earnings per share (“EPS”) on the face of the income statement. Basic EPS is computed by dividing net income (loss) available to common shareholders by the weighted average number of common shares outstanding during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period including stock options, using the treasury stock method, and convertible preferred stock, using the if-converted method. In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all dilutive potential common shares if their effect is anti-dilutive.
 
 
11
 
 
VIZCONNECT, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF JUNE 30, 2013
(unaudited)
 
The following summarizes potential anti-dilutive shares:
 
(number of shares)
 
June 30,
2013
   
June 30,
2012
 
Convertible Notes
    2,589,286       - 0 -  
TOTAL
    2,589,286       - 0 -  
 
(Q)   Recent Account Pronouncements
 
In February 2013, FASB issued Accounting Standards Update 2013-04, Liabilities (Topic 405): Obligations Resulting from Joint and Several Liability Arrangements for Which the Total Amount of the Obligation Is Fixed at the Reporting Date (a consensus of the FASB Emerging Issues Task Force). This guidance requires an entity to measure obligations resulting from joint and several liability arrangements for which the total amount of the obligation within the scope of this guidance is fixed at the reporting date. This stipulates that (1) it will include the amount the entity agreed to pay for the arrangement between them and the other entities that are also obligated to the liability and (2) any additional amount the entity expects to pay on behalf of the other entities. The objective of this update is to provide guidance for the recognition, measurement, and disclosure of obligations resulting from joint and several liability arrangements. The amendments in this update are effective for fiscal periods (and interim reporting periods within those years) beginning after December 15, 2013. This standard is not expected to have a material impact on the Company’s reported results of operations or financial position.
 
In February 2013, FASB issued Accounting standards update 2013-02, Comprehensive Income Topic 220): Reporting of Amounts Reclassified out of Accumulated Other Comprehensive Income. This update requires an entity to provide information amount the amount reclassified out of accumulated other comprehensive income by component. The entity is also required to disclose significant amounts reclassified out of accumulated other comprehensive income by the respective line items of net income but only if the amount reclassified is required under U.S. GAAP to be reclassified to net income in its entirety in the same reporting periods. For other amounts that are not required under U.S. GAAP to be reclassified in their entirety to net income, an entity is required to cross-reference to other discourses required under U.S. GAAP that provide additional detail about those amounts. The objective in this Update is to improve the reporting of reclassifications out of accumulated other comprehensive income. The amendments in this update should be applied prospectively for reporting periods beginning after December 15, 2012. This standard did not have a material impact on the Company’s reported results of operations or financial position.
 
 
12
 
 
VIZCONNECT, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF JUNE 30, 2013
(unaudited)
 
In March 2013, FASB issued Accounting Standards Update No. 2013-05 Foreign Currency Matters (Topic 830): Parents accounting for the cumulative translation adjustment upon derecognition of certain subsidiaries of group of assets within a foreign entity or of an investment in a foreign entity. When a reporting entity (parent) ceases to have a controlling financial interest in a subsidiary or group of assets that is a nonprofit activity or a business (other than a sale of in substance real estate or conveyance of oil and gas mineral rights) within a foreign entity, the parent is required to apply the guidance in Subtopic 830-30 to release any related cumulative translation adjustment into net income. Accordingly, the cumulative translation adjustment should be released into net income only if the sale or transfer results in the complete or substantially complete liquidation of the foreign entity in which the subsidiary or group of assets had resided. For an equity method investment that is a foreign entity, the partial sale guidance in Section 830-30-40 still applies. As such, a pro rata portion of the cumulative translation adjustment should be released into net income upon a partial sale of such an equity method investment. However, this treatment does not apply to an equity method investment that is not a foreign entity. In those instances, the cumulative translation adjustment is released into net income only if the partial sale represents a complete or substantially complete liquidation of the foreign entity that contains the equity method investment. Additionally, the amendments in this Update clarify that the sale of an investment in a foreign entity includes both (1) events that result in the loss of a controlling financial interest in a foreign entity (that is, irrespective of any retained investment) and (2) events that result in an acquirer obtaining control of an acquiree in which it held an equity interest immediately before the acquisition date (sometimes also referred to as a step acquisition). Accordingly, the cumulative translation adjustment should be released into net income upon the occurrence of those events. The amendments in this Update are effective prospectively for fiscal years (and interim reporting periods within those years) beginning after December 15, 2013. Early adoption is permitted. If an entity elects to early adopt the amendments, it should apply them as of the beginning of the entity’s fiscal year of adoption. This standard is not expected to have a material impact on the Company’s reported results of operations or financial position.
 
In April 2013, FASB issued Accounting Standards Update No. 2013-07 Presentation of Financial Statements (Topic 205) Liquidation Basis of Accounting. This guidance requires an entity to prepare its financial statements using the liquidation basis of accounting when liquidation is imminent. Liquidation is imminent when the likelihood is remote that the entity will return from liquidation and either (a) a plan for liquidation is approved by the person or persons with the authority to make such a plan effective and the likelihood is remote that the execution of the plan will be blocked by other parties or (b) a plan for liquidation is being imposed by other forces (for example, involuntary bankruptcy). If a plan for liquidation was specified in the entity’s governing documents from the entity’s inception (for example, limited-life entities), the entity should apply the liquidation basis of accounting only if the approved plan for liquidation differs from the plan for liquidation that was specified at the entity’s inception. The amendments require financial statements prepared using the liquidation basis of accounting to present relevant information about an entity’s expected resources in liquidation by measuring and presenting assets at the amount of the expected cash proceeds from liquidation. The entity should include in its presentation of assets any items it had not previously recognized under U.S. GAAP but that it expects to either sell in liquidation or use in settling liabilities (for example, trademarks). An entity should recognize and measure its liabilities in accordance with U.S. GAAP that otherwise applies to those liabilities. The entity should not anticipate that it will be legally released from being the primary obligor under those liabilities, either judicially or by creditor(s). The entity also is required to accrue and separately present the costs that it expects to incur and the income that it expects to earn during the expected duration of the liquidation, including any costs associated with sale or settlement of those assets and liabilities. Additionally, the amendments require disclosures about an entity’s plan for liquidation, the methods and significant assumptions used to measure assets and liabilities, the type and amount of costs and income accrued, and the expected duration of the liquidation process. The amendments are effective for entities that determine liquidation is imminent during annual reporting periods beginning after December 15, 2013, and interim reporting periods therein. Entities should apply the requirements prospectively from the day that liquidation becomes imminent. Early adoption is permitted. This standard is not expected to have any impact on the Company’s reported results of operations or financial position.
 
 
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VIZCONNECT, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF JUNE 30, 2013
(unaudited)
 
In July 2013, FASB issued Accounting Standards Update No. 2013-11 Income taxes (Topic 740): Presentation of an unrecognized tax benefit when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists. This guidance requires an entity to present an unrecognized tax benefit, or portion of an unrecognized tax benefit as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carry forward, expect for the following conditions. To the extent a net operating loss carryforward, a similar tax loss, or a tax credit carryforward is not available at the reporting date under the tax law of the applicable jurisdiction to settle any additional income taxes that would result from the disallowance of a tax position or the tax law of the applicable jurisdiction does not require the entity to use, and the entity does not intend to use, the deferred tax asset for such purpose, the unrecognized tax benefit should be presented in the financial statements as a liability and should not be combined with deferred tax assets. The assessment of whether a deferred tax asset is available is based on the unrecognized tax benefit and deferred tax asset that exist at the reporting date and should be made presuming disallowance of the tax position at the reporting date. For example, an entity should not evaluate whether the deferred tax asset expires before the statute of limitations on the tax position or whether the deferred tax asset may be used prior to the unrecognized tax benefit being settled. The amendments in this Update are effective for fiscal years, and interim periods within those years, beginning after December 15, 2013. Early adoption is permitted. This standard is not expected to have a material impact on the Company’s reported results of operations or financial position.
 
NOTE 2   GOING CONCERN
 
The Company had a net loss of $482,767 for the six months ended June 30, 2013, a Stockholders’ deficit of $941,676 and a working capital deficit of $937,884 as of June 30, 2013. This raises substantial doubt about its ability to continue as a going concern. The ability of the Company to continue as a going concern is dependent on the Company’s ability to raise additional capital through member contributions and implement its business plan. The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.
 
Management believes that actions presently being taken to obtain additional funding through implementing its strategic plans, multilevel marketing strategy and sales incentives to expand operations and will provide the opportunity for the Company to continue as a going concern.
 
NOTE 3   NOTES PAYABLE-RELATED PARTY
 
During 2011, the Company entered into two notes payable for a total of $22,500. The Notes have an interest rate of 10%, are unsecured, and due March 15, 2012. As of June 30, 2013 and December 31, 2012, the total amount outstanding is $22,500. Accrued interest totaled $3,484 and $2,921 as of June 30, 2013 and December 31, 2012, respectively. The notes are currently in default (See Note 8).
 
NOTE 4   NOTES PAYABLE
 
During 2011, The Company entered into a note payable for $15,000. The Note has an interest rate of 2% monthly, is unsecured, and due on demand. As of June 30, 2013 and December 31, 2012, the total amount outstanding is $15,000. Accrued Interest totaled $5,030 and $4,130 as of June 30, 2013 and December 31, 2012, respectively.
 
 
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VIZCONNECT, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF JUNE 30, 2013
(unaudited)
 
NOTE 5   CONVERTIBLE NOTES PAYABLE
 
During 2012 and through June 30, 2013, the Company received various unsecured convertible loans totaling $362,500. One series of convertible notes has a total face value of $312,500, has an interest rate of 8% and matures in February 2018. The second series of convertible notes has a total face value of $50,000, has an interest rate of 12% per annum and matures in March 2018 (See Note 6).
 
These notes can be converted following a holding period established in the respective notes, and at a set price per share, subject to certain re-set provisions. This includes price protection terms, which would reset the per-share purchase price if the Company were obligated to convert other convertible liabilities at a lower the per-share purchase price.
 
The following is a summary of the unsecured convertible loans:
 
 
 
Origination Date
 
 
Maturity
Date
 
Interest
Rate
 
Ending Principal June 30, 2013
   
Current
Portion
   
Long
Term
 
February 2013
 
February 2018
    8 %   $ 312,500     $ 0     $ 312,500  
May 2013
 
March 2018
    12 %   $ 20,000     $ 0     $ 20,000  
June 2013
 
March 2018
    12 %   $ 30,000     $ 0     $ 30,000  
Discount on notes payable
                              $ (356,578 )
TOTAL
              $ 362,500     $ 0     $ 5,922  
 
NOTE 6   DERIVATIVES
 
The company has entered into convertible notes of $362,500 with certain investors. These notes and related accrued interest payable are redeemable into common stock of the Company under certain circumstances, and therefore these convertible notes meet the criteria for liability accounting. These notes can be converted following a holding period established in the respective notes, and at a set price per share, subject to certain re-set provisions. This includes price protection terms, which would reset the per-share purchase price if the Company were obligated to convert other convertible liabilities at a lower the per-share purchase price.
 
The derivative liability is recorded at fair value on the Company’s financial statements, and any changes in their fair value are included in the statement of operations as a non-cash item.
 
The derivative liability is revalued and reported at a fair value of $633,477 at June 30, 2013.
 
The fair value of the convertible notes was estimated using the Black Scholes option pricing model with the following assumptions for the six months ended June 30, 2013.
 
 
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VIZCONNECT, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF JUNE 30, 2013
(unaudited)
 
Significant valuation assumptions of derivative instruments at June 30, 2013
 
Risk free interest rate
    1.41%  
Dividend yield
    0%  
Expected volatility
    41.80%  
Expected life (range in years)
 
4.58 to 4.75
 
 
NOTE 7   STOCKHOLDERS’ EQUITY
 
During the six month period ended June 30, 2013, a shareholder contributed cash in the amount of $20,000 as contributed capital.
 
NOTE 8   RELATED PARTY TRANSACTIONS
 
During 2011, the Company entered into two notes payable for a total of $22,500. The Notes have an interest rate of 10%, are unsecured, and due March 15, 2012. As of June 30, 2013 and December 31, 2012, the total amount outstanding is $22,500. Accrued interest totaled $3,484 and $2,921 as of June 30, 2013 and December 31, 2012, respectively. The notes are currently in default (See NOTE 3).
 
During the period ending June 30, 2013, the Company incurred software development expenses totaling $5,400 from a company owned by an officer. As of June 30, 2013, the total amount owed to the related vendor is $38,100 and is recorded in accounts payable.
 
During the period ending June 30, 2013, commissions were owed to a company owned by the spouses of the officers. The commissions owed to this company were $1,380.
 
NOTE 9   COMMITMENTS AND CONTINGENCIES
 
On March 11, 2013 the Company entered into a twelve month lease for its corporate office in Springfield Massachusetts. The lease commenced on March 11, 2013 and requires an annual rent of $26,026 payable at $2,169 monthly.
 
NOTE 10   SUBSEQUENT EVENT
 
On June 26, 2013, the Company executed a convertible note payable to a third-party investor. The note matures on May 28, 2014 with simple interest charged at an 8% annual rate. The Company received the cash advances from this note on July 11, 2013 and therefore, the loan will be recorded on the financials in the third quarter of 2013. This note can be converted following a holding period established in the note, and at a price per share calculated based upon the publicly traded price of Company common stock prior to the conversion date.
 
 
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Item 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations.
 
The following discussion provides information which management believes is relevant to an assessment and understanding of our results of operations and financial condition. The discussion should be read along with our financial statements and notes thereto contained elsewhere in this Report. The following discussion and analysis contains forward-looking statements, which involve risks and uncertainties. Our actual results may differ significantly from the results, expectations and plans discussed in these forward-looking statements.

Overview

The Company was incorporated in the State of Nevada on October 15, 2010. We assist companies across a diverse range of industries to utilize mobile devices, technology, and targeted advertising to enhance and cultivate companies’ marketing campaigns.  Our proprietary video marketing platform (the “Platform”) allows companies to integrate traditional print media with video messages to create effective mobile marketing. Our Platform utilizes QR (Quick Response) codes that have the ability to link to or store all types of media and data information. A QR code is a visual pattern that directs the browser on the user’s mobile device to a particular location or IP address. It allows that device to quickly go to that link on the Internet. Our Company specializes in linking video data, in a user-friendly format, into these QR codes. Accordingly, when a mobile device equipped with a QR Code reader application scans a QR code associated with our Platform, a unique video created by the subscriber will play. A subscriber can further enhance its marketing by providing ways for the viewer to connect with the company following conclusion of the video message. Our Company delivers the integration of video marketing messages with the strategic placement of QR codes.
 
In July 2013, the Company began offering certain SMS texting services as a supplement to the Platform.  Through a licensing agreement with AvidMobile LLC, the Company offers its subscribers the ability to receive “keyword” texts from consumers, as well as send out text messages to consumers who have “opted in” to such communications.  Text messages from Company subscribers can include links to video hosted on the Platform.

On February 13, 2013 (the “Closing Date”), we entered into a Share Exchange Agreement (the “Exchange Agreement”) with (i) VizConnect LLC (“VizConnect”), (ii) all of the members of VizConnect (the “Members”) and (iv) our former principal shareholder pursuant to which we acquired all of the outstanding units of VizConnect in exchange for the issuance of 25,000,000 shares of our common stock to the Members (the “Share Exchange”). The shares issued to the Members in the Share Exchange constituted approximately 61.46% of our issued and outstanding shares of common stock as of and immediately after the consummation of the Share Exchange. In connection with the closing, 40,000,000 shares of our common stock held by our former principal shareholder have been cancelled. As a result of the Share Exchange, VizConnect became our wholly owned subsidiary.
 
The acquisition is being accounted for as a “reverse merger,” and VizConnect is deemed to be the accounting acquirer in the reverse merger. Consequently, the assets and liabilities and the historical operations that will be reflected in the financial statements prior to the acquisition will be those of VizConnect and will be recorded at the historical cost, and the consolidated financial statements after completion of the acquisition will include the assets, liabilities and operation of the Company and VizConnect from the closing date of the acquisition. As a result of the issuance of the shares of common stock pursuant to the Exchange Agreement, a change in control of occurred as a result of the acquisition.
 
In connection with the closing of the Exchange Agreement, Mr. Anthony Pasquale, the Company’s principal shareholder, agreed to cancel his 10,000,000 pre-split (or 40,000,000 post-split) shares of common stock that he owned in the Company and we issued 6,250,000 pre-split (or 25,000,000 post-split) shares to members of VizConnect. Additionally, the existing officers and directors from the Company resigned from its board of directors and all officer positions effective immediately after the closing of the reverse merger. Accordingly, our Board of Directors appointed Mr. Paul Cooleen as our President, Mr. Brian Dee as our Secretary, and Mr. James Henderson as our Treasurer, effective upon the closing of the Share Exchange.
 
 
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The Company’s directors approved the Exchange Agreement and the transactions contemplated thereby. Simultaneously, the Members of VizConnect also approved the Exchange Agreement and the transactions contemplated thereby.
 
As a result of the Exchange Agreement, the Company ceased its prior business and acquired 100% of the mobile marketing operations of VizConnect, the business and operations of which now constitutes its primary business and operations. Specifically, as a result of the Exchange Agreement on February 13, 2013:
 
 
●
The Company acquired and now owns 100% of the issued and outstanding units of VizConnect LLC, a Massachusetts limited liability company and their mobile marketing business; and
 
 
●
The Company issued 25,000,000 shares of common stock to the Members of VizConnect, constituting approximately 61.46% of the issued and outstanding common stock.
 
As a result of the Company’s reverse acquisition of VizConnect, the Company has assumed the business and operations of VizConnect with its principal activities engaged in the mobile marketing platform business.

We effected a 4-for-1 forward stock split, which became effective as of February 25, 2013.

On or about April 13, 2013, the Company received written consents in lieu of a meeting of Stockholders from stockholders holding 50.86% of the outstanding shares of the Company’s common stock. This written consent authorized the Company to amend its Articles of Incorporation to change the name of the Company from “VB Clothing, Inc.” to “VizConnect, Inc.” and to increase the number of authorized shares of common stock, par value $0.001, from 70,000,000 to 250,000,000.  The Certificate of Amendment, referencing these amendments, was recorded with the State of Nevada on May 10, 2013.
 
Results of Operations

Comparison for the three months ended June 30, 2013 and 2012

Revenue:

Revenues for the quarter ended June 30, 2013 were $55,561, compared with $4,425 for the quarter ended June 30, 2012, reflecting an increase of 1,158%. The increase in revenues was primarily attributable to   the implementation of the Company’s new business and sales model.

Operating Expenses:

Operating expenses for the quarter ended June 30, 2013 were $174,403, compared with $56,683 for the quarter ended June 30, 2012, reflecting an increase of 208%. The increase in operating expenses was primarily attributable to the implementation of the Company’s new business and sales model, including investment in consulting and business infrastructure.

Operating loss:

We incurred operating losses totaling $118,752 for the quarter ended June 30, 2013, compared to losses from operations totaling $52,258 for the quarter ended June 30, 2012 reflecting an increase of 127%. The increase in operating losses was primarily attributable to the implementation of the Company’s new business and sales model, including investment in consulting and business infrastructure.
 
 
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Other Expense:

The Company had interest expenses in the quarter ended June 30, 2013 in the amount of $12,339, compared with $0 in the quarter ended June 30, 2012. The increase in interest in the quarter ended June 30, 2013 was primarily attributable to the issuance of promissory notes during 2012 and the first quarter of 2013 and amortization of debt discount.
 
The Company recognized losses based upon the derivative liability attributed to convertible promissory notes issued to certain investors.  The amount of the loss was $270,977 for the quarter ended June 30, 2013, compared with $0 for the quarter ended June 30, 2012.  This loss reflects the difference between the calculated fair value of the derivative liability, which was $633,477 at June 30, 2013, and the issuance price of the notes, which is $362,500.
 
The loss on the derivative exchange reflected in the income statement is associated with the potential future contingent payments that could result upon a conversion of the note payable at its face value at issuance into shares of common stock at their current fair value at June 30, 2013, discounted to its net present value using a Black Scholes modeling calculation.  The convertible notes are recorded initially at their issuance price and then marked to market using the Company's current stock price extrapolated among all the units of stock traded by the Company through June 30, 2013.  The mark to market adjustment is discounted to its net present value using a Black Scholes formula and the difference in issuance price and its calculated fair value is included in the statement of operations in accordance with the guidance ASC 815.   The loss on the derivative exchange is not a normal component of the net loss from the operations of the Company, because this item is merely a mark to market adjustment on a contingent note rather than an item of income or expense associated with normal and recurring business transactions associated with the Company's daily operating activities.
 
Comparison for the six months ended June 30, 2013 and 2012

Revenue:

Revenues for the six-month period ended June 30, 2013 were $108,334, compared with $7,850 for the six-month period ended June 30, 2012, reflecting an increase of 1,280%. The increase in revenues was primarily attributable to   the implementation of the Company’s new business and sales model.

Operating Expenses:

Operating expenses for the six-month period ended June 30, 2013 were $300,227, compared with $60,767 for the six-month period ended June 30, 2012, reflecting an increase of 394%. The increase in operating expenses was primarily attributable to the implementation of the Company’s new business and sales model, including investment in consulting and business infrastructure.

Operating loss:

We incurred operating losses totaling $191,893 for the six-month period ended June 30, 2013, compared to losses from operations totaling $52,917 for the six-month period ended June 30, 2012 reflecting an increase of 263%. The increase in operating losses was primarily attributable to the implementation of the Company’s new business and sales model, including investment in consulting and business infrastructure.

Other Expense:
 
The Company had interest expenses in the six-month period ended June 30, 2013 in the amount of $19,897, compared with $0 in the six-month period ended June 30, 2012. The increase in interest in the six-month period ended June 30, 2013 was primarily attributable to the issuance of promissory notes during 2012 and the first quarter of 2013 and amortization of debt discount.
 
The Company recognized losses based upon the derivative liability attributed to convertible promissory notes issued to certain investors.  The amount of the loss was $270,977 for the six-month period ended June 30, 2013, compared with $0 for the six-month period ended June 30, 2012.  This loss reflects the difference between the calculated fair value of the derivative liability, which was $633,477 at June 30, 2013, and the issuance price of the notes, which is $362,500.
 
 
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Plan of Operations

Over the next 12 months, we are looking to expand our IBA number from approximately 400 current IBA consultants to 600 by the end of the 3 rd quarter of 2013 and 1,000 by the end of the 4 th quarter. We expect that this goal will be supported by the recruitment of top sales people and an increase in our marketing campaign. We currently have IBAs in 29 states with most being located in the northeast where our headquarters are located. 
 
By the end of fiscal year 2013, we plan to begin expanding our subscriber reach into Canada.
 
Critical Accounting Policies and Estimates

Organization

The Company was incorporated in the State of Nevada on October 15, 2010. The Company provides cloud based marketing services using a combination of mobile video marketing, video storage, and cloud computing in one easy to access system for a monthly fee. The Company’s year-end is December 31.
 
Use of Estimates

In preparing financial statements in conformity with generally accepted accounting principles, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and revenues and expenses during the reported period. Actual results could differ from those estimates.

Cash and Cash Equivalents

The Company considers all highly liquid temporary cash investments with an original maturity of three months or less to be cash equivalents. At June 30, 2013, the Company had no cash equivalents.

Income Taxes

The Company accounts for income taxes under FASB Accounting Standards Codification No. 740, Income Taxes.  Under FASB Accounting Standards Codification No. 740, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective bases.  Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.  Under FASB Accounting Standards Codification No. 740, the effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

Advertising Costs

Advertising Costs are expensed in the period when the advertisements have reached their intended users. Advertising expense the period ended June 30, 2013 were $403.
 
 
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Software Development Costs

We expense software development costs to be marketed to external users, before technological feasibility of such products is reached. We have determined that technological feasibility is reached shortly before the release of those products and as a result, the development costs incurred after the establishment of technological feasibility and before the release of those products were not material, and accordingly, were expensed as incurred. Software development costs totaled $10,614 and $17,200 for the period ended June 30, 2013 and 2012, respectively.

Business Segments

The Company operates in one segment and therefore segment information is not presented.

Revenue Recognition

The Company will recognize revenue on arrangements in accordance with FASB ASC No. 605, “Revenue Recognition”. In all cases, revenue is recognized only when the price is fixed and determinable, persuasive evidence of an arrangement exists, the service is performed and collectability of the resulting receivable is reasonably assured. The Company recognizes revenue from monthly subscriptions fees in the month in which services are used. Because a portion of the fees are earned over a month period, any fees collect in which the services are not provided are recorded as deferred revenue.
 
Concentrations

As of June 30, 2013, the Company has no customers whose sales account for more than 10% of total sales.
 
Fair Value of Financial Instruments

The carrying amount reported in the balance sheet for accounts payable approximate fair value based on the short-term maturity of these instruments.

Recent Accounting Pronouncements
 
In February 2013, FASB issued Accounting Standards Update 2013-04, Liabilities (Topic 405): Obligations Resulting from Joint and Several Liability Arrangements for Which the Total Amount of the Obligation Is Fixed at the Reporting Date (a consensus of the FASB Emerging Issues Task Force). This guidance requires an entity to measure obligations resulting from joint and several liability arrangements for which the total amount of the obligation within the scope of this guidance is fixed at the reporting date. This stipulates that (1) it will include the amount the entity agreed to pay for the arrangement between them and the other entities that are also obligated to the liability and (2) any additional amount the entity expects to pay on behalf of the other entities. The objective of this update is to provide guidance for the recognition, measurement, and disclosure of obligations resulting from joint and several liability arrangements. The amendments in this update are effective for fiscal periods (and interim reporting periods within those years) beginning after December 15, 2013. This standard is not expected to have a material impact on the Company’s reported results of operations or financial position.
 
In February 2013, FASB issued Accounting standards update 2013-02, Comprehensive Income Topic 220): Reporting of Amounts Reclassified out of Accumulated Other Comprehensive Income. This update requires an entity to provide information amount the amount reclassified out of accumulated other comprehensive income by component. The entity is also required to disclose significant amounts reclassified out of accumulated other comprehensive income by the respective line items of net income but only if the amount reclassified is required under U.S. GAAP to be reclassified to net income in its entirety in the same reporting periods. For other amounts that are not required under U.S. GAAP to be reclassified in their entirety to net income, an entity is required to cross-reference to other discourses required under U.S. GAAP that provide additional detail about those amounts. The objective in this Update is to improve the reporting of reclassifications out of accumulated other comprehensive income. The amendments in this update should be applied prospectively for reporting periods beginning after December 15, 2012. This standard is not expected to have a material impact on the Company’s reported results of operations or financial position.
 
 
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Liquidity and Capital Resources
 
Our cash and cash equivalents is $57,126, and a working capital deficit of $937,884, as of June 30, 2013. Despite capital contributions and sales, and both related party and third party loan commitments, we may experience cash flow shortages that can slow our expected growth. We have primarily financed our activities from loans from related and third parties. A significant portion of the funds raised from loans from related and third parties have been and will be used to cover working capital needs such as office expenses, software development expenses and various professional fees.
 
Our cash flow requirements during this period have been met by contributions of capital and debt financing, plus receipts from sales of the Company’s services and from membership fees from the Company’s distributors. We anticipate that financing will be required until such time as we are able to generate adequate cash flow from operations to support both our cash needs for normal operations, and to support the cash needs for our investment into additional resources and assets to support our growth. Currently we cannot determine when either will occur and as such we will need to obtain financing to cover our costs for the foreseeable future. We continue to seek financing sources, such as those described hereinbelow, as well as others, in order to continue funding normal operations.  However, no assurance can be given that these sources of financing will continue to be available. If we are unable to generate profits, or unable to obtain additional funds for its working capital needs, we may have to curtail normal operations, or cease operations completely.
 
Between March 2013 and May 2013, a shareholder contributed $20,000 in capital to the Company for the purpose of paying certain professional fees.
 
On May 6, 2013, the Company made available to certain investors a private placement memorandum, pursuant to which the Company offered convertible promissory notes, at a purchase price of $10,000 per note.  In response to such offer, the Company closed on sales of single notes to five (5) individuals, on May 23, May 30, June 24 and June 30, 2013, resulting in total net proceeds to the Company of $50,000.  The notes bear interest at the rate of 12% per annum.  All interest and principal must be repaid on March 1, 2018.  Each note may be converted, in whole or in part, into common stock of the Company at any time beginning on March 1, 2014 and ending on March 1, 2018.  At the time an investor elects to convert a note, such note is convertible into shares of the Company’s common stock at a conversion price of $0.14 per share.  The Company used the proceeds therefore for working capital purposes, including software development associated with the Company’s compensation system and new short code texting service.

On June 26, 2013, the Company entered into a Securities Purchase Agreement with Asher Enterprises, Inc. ("Asher"), for the sale of an 8% convertible note in the principal amount of $42,500.  The financing closed on July 11, 2013.  The note bears interest at the rate of 8% per annum.  All interest and principal must be repaid on May 28, 2014.  The note is convertible into common stock, at Asher’s option, at a 42% discount to the average of the three lowest closing bid prices of the common stock during the 10 trading day period prior to conversion.

Going Concern
 
The Company had a net loss of $402,068 for the three months ended June 30, 2013, a Stockholders’ deficit of $941,676 and a working capital deficit of $937,884 as of June 30, 2013. This raises substantial doubt about its ability to continue as a going concern.  The ability of the Company to continue as a going concern is dependent on the Company’s ability to raise additional capital through member contributions and implement its business plan.  The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.
 
Management believes that actions presently being taken to obtain additional funding through implementing its strategic plans, multilevel marketing strategy and sales incentives to expand operations and will provide the opportunity for the Company to continue as a going concern.
 
Off-balance Sheet Commitments and Arrangements
 
We have no off-balance sheet transactions, arrangements, obligations (including contingent obligations), or other relationships with unconsolidated entities or other persons that have, or may have, a material effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.
 
Item 3.  Quantitative and Qualitative Disclosures About Market Risk.
 
We are a Smaller Reporting Company and are not required to provide the information under this item.
 
Item 4.  Controls and Procedures.
 
Disclosure of controls and procedures.
 
We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports, filed 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 chief executive officer and chief financial officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable and not absolute assurance of achieving the desired control objectives. In reaching a reasonable level of assurance, management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures. In addition, the design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, a control may become inadequate because of changes in conditions or the degree of compliance with policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.
 
 
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As required by the SEC Rule 13a-15(b), we carried out an evaluation under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this report. Based on the foregoing, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures were not effective at the reasonable assurance level due to the material weaknesses described below. 

In light of the material weaknesses described below, we performed additional analysis and other post-closing procedures to ensure our financial statements were prepared in accordance with generally accepted accounting principles. Accordingly, we believe that the financial statements included in this report fairly present, in all material respects, our financial condition, results of operations and cash flows for the periods presented.

A material weakness is a control deficiency (within the meaning of the Public Company Accounting Oversight Board (PCAOB) Auditing Standard No. 2) or combination of control deficiencies that result in more than a remote likelihood that a material misstatement of the annual or interim financial statements will not be prevented or detected. Management has identified the following two material weaknesses which have caused management to conclude that as of June 30, 2013 our disclosure controls and procedures were not effective at the reasonable assurance level:
 
1.  
We do not have written documentation of our internal control policies and procedures. Written documentation of key internal controls over financial reporting is a requirement of Section 404 of the Sarbanes-Oxley Act which is applicable to us for the quarter ended June 30, 2013. Management evaluated the impact of our failure to have written documentation of our internal controls and procedures on our assessment of our disclosure controls and procedures and has concluded that the control deficiency that resulted represented a material weakness.

2.  
We do not have sufficient segregation of duties within accounting functions, which is a basic internal control. Due to our size and nature, segregation of all conflicting duties may not always be possible and may not be economically feasible. However, to the extent possible, the initiation of transactions, the custody of assets and the recording of transactions should be performed by separate individuals. Management evaluated the impact of our failure to have segregation of duties on our assessment of our disclosure controls and procedures and has concluded that the control deficiency that resulted represented a material weakness.
 
To address these material weaknesses, management performed additional analyses and other procedures to ensure that the financial statements included herein fairly present, in all material respects, our financial position, results of operations and cash flows for the periods presented.
 
Changes in internal controls over financial reporting.
 
There has been no change in our internal control over financial reporting that occurred during the fiscal quarter covered by this Quarterly Report on Form 10-Q that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
 
 
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PART II - OTHER INFORMATION
 
Item 1.   Legal Proceedings.
 
We are not currently involved in any litigation that we believe could have a material adverse effect on our financial condition or results of operations. There is no action, suit, proceeding, inquiry or investigation before or by any court, public board, government agency, self-regulatory organization or body pending or, to the knowledge of the executive officers of our company or any of our subsidiaries, threatened against or affecting our company, our common stock, any of our subsidiaries or of our companies or our subsidiaries’ officers or directors in their capacities as such, in which an adverse decision could have a material adverse effect.
 
Item 1A.  Risk Factors.
 
We are a Smaller Reporting Company and are not required to provide the information under this item.
 
Item 2.   Unregistered Sales of Equity Securities and Use of Proceeds.
 
On May 6, 2013, the Company made available to certain investors a private placement memorandum, pursuant to which the Company offered up to fifty (50) convertible promissory notes, at a purchase price of $10,000 per note.  In response to such offer, the Company closed on sales of single notes to five (5) individuals, on May 23, May 30, June 24 and June 30, 2013, resulting in total net proceeds to the Company of $50,000.  The offering ended on June 30, 2013.
 
The notes bear interest at the rate of 12% per annum.  All interest and principal must be repaid on March 1, 2018.  Each note may be converted, in whole or in part, into common stock of the Company at any time beginning on March 1, 2014 and ending on March 1, 2018.  At the time an investor elects to convert a note, such note is convertible into shares of the Company’s common stock at a conversion price of $0.14 per share.  Principal may be prepaid at the sole discretion of the Company, without a prepayment penalty.  The notes are a debt obligation arising other than in the ordinary course of business, which constitutes a direct financial obligation of the Company.
 
The Company claims an exemption from the registration requirements of the Securities Act of 1933, as amended (the "Act") for the private placement of these securities pursuant to Section 4(2) of the Act and/or Regulation D promulgated there under since, among other things, the transaction did not involve a public offering,

On June 26, 2013, the Company entered into a Securities Purchase Agreement (the “Asher Agreement”) with Asher Enterprises, Inc. ("Asher"), for the sale of an 8% convertible note in the principal amount of $42,500 (the "Note").  The financing closed on July 11, 2013.
 
The Note bears interest at the rate of 8% per annum.  All interest and principal must be repaid on May 28, 2014.  The Note is convertible into common stock, at Asher’s option, at a 42% discount to the average of the three lowest closing bid prices of the common stock during the 10 trading day period prior to conversion.  In the event the Company prepays the Note in full, the Company is required to pay off all principal, interest and any other amounts owing multiplied by (i) 110% if prepaid during the period commencing on the closing date through 30 days thereafter, (ii) 115% if prepaid 31 days following the closing through 60 days following the closing and (iii) 120% if prepaid 61 days following the closing through 90 days following the closing and (iv) 125% if prepaid 91 days following the closing through 120 days following the closing and (v) 130% if prepaid 121 days following the closing through 180 days following the closing.  After the expiration of 180 days following the date of the Note, the Company has no right of prepayment.
 
 
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Asher has agreed to restrict its ability to convert the Note and receive shares of common stock such that the number of shares of common stock held by them in the aggregate and their affiliates after such conversion or exercise does not exceed 4.99% of the then issued and outstanding shares of common stock.   The total net proceeds the Company received from this Offering were $42,500, less attorneys’ fees. As of the date of the Note, the Company is obligated on the Note issued to Asher in connection with the offering. The Note is a debt obligation arising other than in the ordinary course of business, which constitutes a direct financial obligation of the Company. 
 
The Company claims an exemption from the registration requirements of the Securities Act of 1933, as amended (the "Act") for the private placement of these securities pursuant to Section 4(2) of the Act  and/or Regulation D promulgated there under since, among other things, the transaction did not involve a public offering, Asher is an accredited  investor, Asher had access to information about the Company  and their  investment,  Asher  took the  securities  for investment and not resale, and the Company took appropriate measures to restrict the transfer of the securities.
 
The foregoing descriptions of the Asher Agreement and the Note are qualified in their entirety by reference to such Asher Agreement and Asher Note, which are filed as Exhibits 10.1 and 4.1, respectively, hereto and are incorporated herein by reference.
 
Item 3.   Defaults Upon Senior Securities.
 
During 2011, the Company entered into two notes payable for a total of $22,500. The Notes have an interest rate of 10%, are unsecured, and due March 15, 2012. As of June 30, 2013, the total amount outstanding is $22,500 and accrued interest of $3,484.
 
Item 4.     Mine Safety Disclosures.
 
Not applicable
 
Item 5.   Other Information
 
See “Item 2. Unregistered Sales of Equity Securities and Use of Proceeds" regarding the unregistered sale of equity securities, which is incorporated herein by reference.
 
 
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Item 6.   Exhibits
 
Exhibit Number
 
Exhibit Title
 
 
 
4.1
 
8% Convertible Promissory Note dated June 26, 2013.
 
 
 
4.2   Form of Convertible Note for offering that closed on June 30, 2013.
     
10.1
 
Securities Purchase Agreement dated June 26, 2013.
 
   
31.1
 
Certification of Principal Executive Officer, pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
     
31.2
 
Certification of Principal Financial Officer, pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
     
32.1
 
Certification of Principal Executive Officer, pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
     
32.2
 
Certification of Principal Financial Officer, pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
 
101.INS *
 
XBRL Instance Document
 
 
 
101.SCH *
 
XBRL Taxonomy Schema
 
 
 
101.CAL *
 
XBRL Taxonomy Calculation Linkbase
 
 
 
101.DEF *
 
XBRL Taxonomy Definition Linkbase
 
 
 
101.LAB *
 
XBRL Taxonomy Label Linkbase
 
 
 
101.PRE *
 
XBRL Taxonomy Presentation Linkbase
__________________
In accordance with SEC Release 33-8238, Exhibits 32.1 and 32.2 are being furnished and not filed.
 
* Furnished herewith. XBRL (Extensible Business Reporting Language) information is furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections. 
 
 
26
 
 
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.
 
 
VizConnect, Inc.
 
     
Dated: August 19, 2013
By:
/s/ Paul Cooleen
 
   
Paul Cooleen
 
   
President
(Duly Authorized Officer, Principal Executive Officer)
 
 
 
 
 
Dated: August 19, 2013
By:
/s/ James Henderson
 
 
 
James Henderson
 
 
 
Treasurer
(Duly Authorized Officer, Principal Financial and Accounting Officer)
 
 
 
 
 
 
 
 
 
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