U.S. SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q/A

 

[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE

ACT OF 1934

 

FOR THE QUARTERLY PERIOD ENDED March 31, 2011

 

Commission File Number 000-53674

 

 

REVOLUTIONARY CONCEPTS, INC.

(Exact name of Registrant as specified in its charter)

 

Nevada		7382		27-0094868
(State or other Jurisdiction		(Primary Standard Industrial		(I.R.S. Employer
of Incorporation or		Classification Code Number)		Identification No.)
Organization)

  

Revolutionary Concepts, Inc.

6000 Fairview Rd, Suite 1425

Charlotte, NC 28210

980-225-5376

(Address and telephone number of principal executive offices and principal place of business)

 

Ron Carter, President

Revolutionary Concepts, Inc.

6000 Fairview Rd, Suite 1425

Charlotte, NC 28210

980-225-5376

(Name, address and telephone number of agent for service)

 

Copies to:

Jill Arlene Robbins

Attorney at Law
525 93 Street
Surfside, Florida 33154
(305) 531-1174
(305) 531-1274 (facsimile)

 

Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the last 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," "non-accelerated filer," and "smaller reporting company" in Rule 12b-2 of the

Exchange Act.

 

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 [ ]  No [x]

 

 

Large accelerated filer [ ] Accelerated filer [ ]

Non-accelerated filer [ ] Smaller reporting company [X]

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 or the Exchange Act). YES [ ] NO [x]

 

State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date: 37,857,533 shares as of July 19, 2011.

 

EXPLANATORY NOTE:

 

The Board of Directors and officers of the Company have decided to revise and amend certain disclosures in this Form 10-Q/A for the year quarter ended March 31, 2011, specifically to revise certain matters in the financial statements and some Scribner’s errors. Other than these changes, the disclosures in this amended report are as of the initial filing date of May 23, 2011 and this report does not include subsequent events.

 

Further, as required by Rule 12b-15 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), new certifications by our principal executive officer and principal financial officer are being filed as exhibits to this Form 10-Q/A under Item 6 of Part II hereof.

 

 

 

 

TABLE OF CONTENTS

 

		Page
	PART I
Item 1.	Financial Statements	3
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	14
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	18
Item  4T	Controls and Procedures	18
	PART II
Item 1.	Legal Proceedings	19
Item  1A.	Risk Factors	19
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	19
Item 3.	Defaults Upon Senior Securities	19
Item 4.	(Removed and Reserved)	19
Item 5.	Other Information	19
Item 6.	Exhibits	19
SIGNATURES		20

 

 

 

 

 

 

ITEM 1. FINANCIAL STATEMENTS

 

Revolutionary Concepts, Inc. has included its unaudited condensed balance sheet as of March 31, 2011 and December 31, 2010 (the end of its most recently completed fiscal year), and unaudited condensed statements of operations and cash flows for the three months ended March 31, 2010 and 2011, and for the period from March 12, 2004 (date of inception) through March 31, 2011, together with unaudited condensed notes thereto.  In the opinion of management of Revolutionary Concepts, Inc., the financial statements reflect all adjustments, all of which are normal recurring adjustments, necessary to fairly present the financial condition, results of operations, and cash flows of Revolutionary Concepts, Inc. for the interim periods presented.  The financial statements included in this report on Form 10-Q should be read in conjunction with the audited financial statements of Revolutionary Concepts, Inc. and the notes thereto for the year ended December 31, 2010 included in our annual report on Form 10-K/A.

 

 

 

Revolutionary Concepts, Inc.

(A Developmental Stage Company)

 

Balance Sheet

 

 

		March 31,				December 31,
		2011				2010
ASSETS
Current Assets
Cash and cash equivalents		$	—			$	184
Total Current Assets			—				184
Fixed Assets
Computer equipment			11,331				11,331
Accumulated depreciation			(10,717	)			(10,577	)
Total Net Fixed Assets			614				754
Other Assets
Patent costs			88,306				88,306
Accumulated amortization			(77,097	)			(74,602	)
Total Patent Costs Net of Accumulated Amortization			11,209				13,704
Security deposits			1,500				1,500
Total Other Assets (net of accumulated amortization)			12,709				15,204
TOTAL ASSETS		$	13,323			$	16,142
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current Liabilities
Accounts payable		$	154,575			$	78,809
Accrued interest payable			90,527				88,860
Other accrued expenses			343,632				215,341
Total Current Liabilities			588,734				383,010
Long-term Debt
Notes payable			204,836				204,836
Notes payable - related parties			82,785				77,785
Total Long-term Debt			287,621				282,621
Stockholders' Deficit
Preferred stock 10,000,000 shares authorized, none issued			—				—
Common stock, $.001 par value, 37,857,533 shares
issued and outstanding for each period, 65,000,000 authorized			37,858				37,858
Additional paid in capital			2,248,651				2,248,651
Unpaid capital contributions (note 3)			(120,211	)			(121,952	)
Deficit accumulated during the development stage			(3,029,331	)			(2,814,046	)
			(863,033	)			(649,489	)
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT		$	13,322			$	16,142

See Notes to Financial Statements

 

 

Revolutionary Concepts, Inc.

(A Developmental Stage Company)

 

Statement of Operations

(Unaudited)

 

 

										March 12, 2004
		Quarter Ending				Quarter Ending				(Inception) to
		March 31,				March 31,				March 31,
		2011				2010				2011
OPERATING EXPENSES
Automobile expense		$	1,152			$	1,152			$	26,639
Bank charges			84				217				6,918
Compensation			—				—				35,436
Unpaid accumulated compensation			115,375				—				300,010
Depreciation and amortization expense			2,635				3,735				90,884
License and Permits			—				—				6,333
Office Expense			859				859				18,096
Office Supplies			—				539				14,565
Payroll taxes			12,916				(9,138	)			46,236
Printing and Reproduction			73				2				15,693
Professional Fees			80,978				21,524				1,649,136
Product Research and Development			—				—				560,958
Taxes			—				—				1,305
Telephone Expense			162				163				21,459
Travel Expense			—				47				98,926
Website Development			—				—				13,754
Other Expenses			524				504				50,924
Total Operating Expenses		$	214,758			$	19,604			$	2,957,272
OTHER INCOME AND (EXPENSE)
Interest income			1,140				1,862				34,030
Other income			—				—				490
Interest expense			(1,667	)			(513	)			(106,579	)
Total Other Income and Expense			(527	)			1,349				(72,059	)
NET (LOSS)		$	(215,285	)			(18,255	)		$	(3,029,331	)
Weighted average number of
common shares outstanding			29,915,120				18,483,995				29,915,120
Net (Loss) per common shares
outstanding		$	(0.01	)		$	(0.00	)		$	(0.13	)

 

See Notes to Financial Statements

 

 

 

Revolutionary Concepts, Inc.

(A Development Stage Company)

 

STATEMENTS OF STOCKHOLDER'S DEFICIT

For the Period From Inception (March 12, 2004) and For the years ending December 31,

2005, 2006, 2007, 2008, 2009 and 2010 and the Three Months Ended March 31, 2011

 

 

																										Deficit
																										Accumulated
		Number of								Number of								Additional				Unpaid				During the
		Preferred				Preferred				Common				Common				Paid in				Capital				Development
		Shares				Stock				Shares				Stock				Capital				Contribution				Stage				Total
BALANCE MARCH 12, 2004											10,000				1				32,499				—				(3,991	)			28,509
(Date of Inception)
Contributed Capital																			99,500												99,500
Unpaid capital contributions (note 3)																							(21,695	)							(21,695	)
Net (Loss)																											(86,084	)			(86,084	)
BALANCE DECEMBER 31, 2004			0				0				10,000			$	1			$	131,999			$	(21,695	)		$	(90,075	)		$	20,230
Common shares issued after re-domicile											15,990,000				15,999																15,999
Common shares for services received											1,000,000				1,000				99,000												100,000
Issued February 2005 at $.10 per share
Private placement memorandum I											850,000				850				455,151												456,001
Issued from March 2005 to 12/31/05
at $.50 per share
Unpaid capital contributions (note 3)																							(130,532	)							(130,532	)
Net (Loss)																											(518,270	)			(518,270	)
BALANCE DECEMBER 31, 2005			0				0				17,850,000			$	17,850			$	686,150			$	(152,227	)		$	(608,345	)		$	(56,572	)
Private placement memorandum I											150,000				150				61,994												62,144
Issued from 12/31/05 to March 2006
at $.50 per share
Shares repurchased with cash											(144,000	)			(144	)			(9,500	)											(9,644	)
Unpaid capital contributions (note 3)																							26,496								26,496
Net (Loss)																											(77,222	)			(77,222	)
BALANCE DECEMBER 31, 2006			0				0				17,856,000			$	17,856			$	738,644			$	(125,731	)		$	(685,567	)		$	(54,798	)
Private placement memorandum II											642,200				642				320,458												321,100
Issued from May 2007 to October 2007
at $.50 per share
Common shares for services received											313,500				314				156,436												156,750
Unpaid capital contributions (note 3)																							18,335								18,335
Net (Loss)																											(464,718	)			(464,718	)
BALANCE DECEMBER 31, 2007			0				0				18,811,700			$	18,812			$	1,215,538			$	(107,396	)		$	(1,150,285	)		$	(23,331	)
Shares issued for retirement of debt											630,811				631																631
Additional paid in capital																			314,775												314,775
Unpaid capital contributions (note 3)																							(79,776	)							(79,776	)
Net (Loss)																											(221,484	)			(221,484	)
BALANCE DECEMBER 31, 2008			0				0				19,442,511			$	19,443			$	1,530,313			$	(187,172	)		$	(1,371,769	)		$	(9,185	)
Shares issued for warrants											20,000				20				15,480												15,500
10,000 Class A @0.65/share
10,000 Class B @0.90/share
Private placement memorandum III											111,600				112				139,388												139,500
Issued from April 21 to Sept. 30, 2009
at $1.25 per share
Common shares for services received											32,500				32				40,593												40,625
Unpaid capital contributions (note 3)																							29,587								29,587
Net (Loss)																											(529,798	)			(529,798	)
BALANCE DECEMBER 31, 2009			0				0				19,606,611			$	19,607			$	1,725,774			$	(157,585	)		$	(1,901,567	)		$	(313,771	)
Shares issued for warrants											24,538				25				18,425												18,450
14,538 Class A @0.65/share
10,000 Class B @0.90/share
Common shares issued for retirement											13,517,260				13,517				38,483												52,000
of  debt
Common shares for services received											4,709,124				4,709				465,969												470,678
(Recorded at an average of $0.10 per share)
Unpaid capital contributions (note 3)																							35,633								35,633
Net (Loss)																											(912,479	)			(912,479	)
BALANCE DECEMBER 31, 2010			0				0				37,857,533			$	37,858			$	2,248,651			$	(121,952	)		$	(2,814,046	)		$	(649,489	)
Unpaid capital contributions (note 3)																							1,741								1,741
Net (Loss)																											(215,285	)			(215,285	)
BALANCE MARCH 31, 2011			0				0				37,857,533				37,858				2,248,651				(120,211	)			(3,029,331	)			(863,033	)

 

See Notes to Financial Statements

 

 

 

Revolutionary Concepts, Inc.

(A Developmental Stage Company)

 

Statement of Cash Flows

 

 

										March 12, 2004
		Quarter ended				Quarter ended				(Inception) to
		March 31,				March 31,				March 31,
		2011				2010				2011
CASH FLOWS FROM OPERATING ACTIVITIES
Net (Loss)		$	(215,285	)		$	(18,255	)		$	(3,029,331	)
Adjustments to reconcile (net loss) to net cash (used in) operating activities:
Depreciation and amortization			2,635				3,735				87,814
(Increase) in other assets			—				—				(1,500	)
Common shares issued for services received			—				—				820,684
Increase in (decrease) accounts payable and accrued expenses			205,725				(54,684	)			637,710
NET CASH (USED IN) OPERATING ACTIVITIES			(6,925	)			(69,204	)			(1,484,623	)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of computer equipment			—				—				(11,331	)
Investment in patent costs			—				—				(88,306	)
NET CASH (USED BY) INVESTING ACTIVITIES			—				—				(99,637	)
CASH FLOWS FROM FINANCING ACTIVITIES
Issuance of common stock shares from private placements			—				—				1,754
Issuance of common stock shares for warrants			—				—				34
Issuance of notes payable			5,000				—				546,146
Retirement of notes payable			—				—				(307,500	)
Paid in capital from private placements and warrants			—				—				1,010,907
Capital contributions			—				15,500				462,774
Common stock shares repurchased with cash			—				—				(9,644	)
Unpaid capital contributions (note 3)			1,741				53,704				(120,211	)
NET CASH PROVIDED BY FINANCING ACTIVITIES			6,741				69,204				1,584,260
NET (DECREASE) IN CASH			(184	)			—				—
CASH AND CASH EQUIVALENT BALANCE BEGINNING OF PERIOD			184				—				—
CASH AND CASH EQUIVALENT BALANCE END OF PERIOD		$	—			$	—			$	—
SUPPLEMENTAL DISCLOSURES
Interest paid		$	—			$	513			$	16,052
Income taxes paid		$	—			$	—			$	—

 

See Notes to Financial Statements

 

 

 

 

 

REVOLUTIONARY CONCEPTS, INC.

(A Development Stage Company)

NOTES TO FINANCIAL STATEMENTS as of March 31, 2011

 

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Nature of operations - Revolutionary Concepts, Inc. (the “Company”) was originally organized in North Carolina on March 12, 2004.  On February 28, 2005 the Company was reorganized and re-domiciled as a Nevada corporation.  The Company is in the product development stage.  Recently, the Company completed the initial development of a working prototype of the EyeTalk Communicator (“EyeTalk”).  This technology has many applications.  The EyeTalk specifically provides wireless technology that offers consumers an opportunity to interact with visitors to their front door.  This is initiated through a doorbell or a motion sensor, which sets off a series of events that result in a phone call to the consumer who then can interact with the visitor through both video and audio.  This same wireless technology could also be made portable so that you could see a child’s sporting event or school play even when you not present.  The Company is also exploring other applications for the technology.  The Company may need to raise additional capital to further develop the EyeTalk and to begin the commercialization of the EyeTalk technology.  They have obtained a patent on certain key components of the technology.

 

Basis of presentation - These financial statements have been prepared in conformity with generally accepted accounting principles in the United States of America and have been consistently applied in the preparation of the financial statements on a going concern basis, which assumes the realization of assets and the discharge of liabilities in the normal course of operations for the foreseeable future.  The Company maintains its financial records on an accrual method of accounting.  The Company’s ability to continue as a going concern is dependent upon continued ability to obtain financing to repay its current obligations and fund working capital until it is able to achieve profitable operations.  The Company will seek to obtain capital from equity financing through the exercise of warrants and through future common share private placements.  The Company may also seek debt financing, if available.  Management hopes to realize sufficient sales in future years to achieve profitable operations.  There can be no assurance that the Company will be able to raise sufficient debt or equity capital on satisfactory terms.  If management is unsuccessful in obtaining financing or achieving profitable operations, the Company may be required to cease operations.  The outcome of these matters cannot be predicted at this time.  These financial statements do not give effect to any adjustments which could be necessary should the Company be unable to continue as a going concern and, therefore, be required to realize its assets and discharge its liabilities in other than the normal course of business and at amounts differing from those reflected in the financial statements.

 

Revenue recognition – The Company will recognize sales revenue at the time of delivery when ownership has transferred to the customer, when evidence of a payment arrangement exists and the sales proceeds are determinable and collectable.  Provisions will be recorded for product returns based on historical experience.  To date, the Company’s revenue is primarily comprised of interest income.

 

Options and warrants issued – The Company allocates the proceeds received from equity financing and the attached options and warrants issued, based on their relative fair values, at the time of issuance.  The amount allocated to the options and warrants is recorded as additional paid in capital.

 

Stock-based compensation – The Company accounts for stock-based compensation at fair value in accordance with the provisions of the Financial Accounting Standards Board’s Accounting Standards Codification (“ASC”) Topic 718, “Stock Compensation”, which establishes accounting for stock-based payment transactions for employee services and goods and services received from non-employees. Under the provisions of ASC Topic 718, stock-based compensation cost is measured at the date of grant, based on the calculated fair value of the award, and is recognized as expense in the consolidated statements of operations  pro ratably over the employee’s or non-employee’s requisite service period, which is generally the vesting period of the equity grant. The fair value of stock option awards is generally determined using the Black-Scholes option-pricing model. Restricted stock awards and units are valued using the market price of the Company’s common stock on the grant date. Additionally, stock-based compensation cost is recognized based on awards that are ultimately expected to vest, therefore, the compensation cost recognized on stock-based payment transactions is reduced for estimated forfeitures based on the Company’s historical forfeiture rates. Additionally, no stock-based compensation costs were capitalized for the three months ended March 31, 2011 and 2010. For the periods from inception (March 12, 2004) to March 31, 2011, no stock options were committed to be issued to employees.

 

Income taxes – Income taxes are accounted for under the asset and liability method. 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 and operating loss carry forwards that are available to be carried forward to future years for tax purposes.  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.  When it is not considered to be more likely than not that a deferred tax asset will be realized, a valuation allowance is provided for the excess.  Although the Company has significant loss carry forwards available to reduce future income for tax purposes, no amount has been reflected on the balance sheet for deferred income taxes as any deferred tax asset has been fully offset by a valuation allowance.

 

 

 

REVOLUTIONARY CONCEPTS, INC.

(A Development Stage Company)

NOTES TO FINANCIAL STATEMENTS as of March 31, 2011

 

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

 

 

Loss per share – Basic loss per share has been calculated using the weighted average number of common shares issued and outstanding during the year.

 

Use of Estimates -   The preparation of the financial statements in conformity with generally accepted accounting principles requires management to make certain estimates and assumptions, where applicable, that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements, as well as the reported amounts of revenues and expenses during the reporting period. While actual results could differ from those estimates, management does not expect such variances, if any, to have a material effect on the financial statements.

 

Research and Development Costs - Research and development costs are expensed as incurred in accordance with generally accepted accounting principles in the United States of America.   Research is planned search or critical investigation aimed at discovery of new knowledge with the hope that such knowledge will be useful in developing a new product or service or a new process or technique or in bringing about a significant improvement to an existing product or process. Development   is the translation of research findings or other knowledge into a plan or design for a new product or process or for a significant improvement to an existing product or process whether intended for sale or use. It includes the conceptual formulation, design, and testing of product alternatives, construction of prototypes, and operation of pilot plants. It does not include routine or periodic alterations to existing products, production lines, manufacturing processes, and other on-going operations even though those alterations may represent improvements and it does not include market research or market testing activities. Elements of costs shall be identified with research and development activities as follows:  The costs of materials and equipment or facilities that are acquired or constructed for research and development activities and that have alternative future uses shall be capitalized as tangible assets when acquired or constructed. The cost of such materials consumed in research and development activities and the depreciation of such equipment or facilities used in those activities are research and development costs. However, the costs of materials, equipment, or facilities that are acquired or constructed for a particular research and development project and that have no alternative future uses and therefore no separate economic values are research and development costs at the time the costs are incurred.  Salaries, wages, and other related costs of personnel engaged in research and development activities shall be included in research and development costs.   The costs of contract services performed by others in connection with the research and development activities of an enterprise, including research and development conducted by others in behalf of the enterprise, shall be included in research and development costs.

 

Depreciation – Depreciation is computed using the straight-line method over the assets’ expected useful lives.

 

Intangible and Other Long-Lived Assets, Net - (Included in Accounting Standards Codification (“ASC”) 350 “Goodwill and Other Intangible Assets” previously SFAS No. 142 and ASC 985 “Accounting for Costs of Computer Software to be Sold, Leased, or Otherwise Marketed” previously SFAS No. 86)

 

Intangible assets are comprised of software development costs and legal fees incurred in order to obtain the patent. The software development costs are capitalized in accordance with SFAS 86. Costs of producing product masters incurred subsequent to establishing technological feasibility shall be capitalized. Those costs include coding and testing performed subsequent to establishing technological feasibility. Software production costs for computer software that is to be used as an integral part of a product or process shall not be capitalized until both (a) technological feasibility has been established for the software and (b) all research and development activities for the other components of the product or process have been completed. The fees incurred in order to obtain the patent are capitalized in accordance with SFAS 142 “Goodwill and Other Intangible Assets. This Statement applies to costs of internally developing identifiable intangible assets that an entity recognizes as assets APB Opinion 17, paragraphs 5 and 6. The Company periodically analyzes its long-lived assets for potential impairment, assessing the appropriateness of lives and recoverability of unamortized balances through measurement of undiscounted operating cash flows on a basis consistent with accounting principles generally accepted in the United States of America.

 

Amortization – Deferred charges are amortized using the straight-line method over six years.

 

NOTE 2 – RECENT ACCOUNTING PRONOUNCEMENTS

 

The Company has reviewed all recently issued, but not yet effective, accounting pronouncements and do not believe the future adoption of any such pronouncements may be expected to cause a material impact on its financial condition or the results of its operations.

 

FASB Accounting Standards Codification

 

(Accounting Standards Update (“ASU”) 2009-01)

 

 In June 2009, FASB approved the FASB Accounting Standards Codification (“the Codification”) as the single source of authoritative nongovernmental GAAP. All existing accounting standard documents, such as FASB, American Institute of Certified Public Accountants, Emerging Issues Task Force and other related literature, excluding guidance from the Securities and Exchange Commission (“SEC”), have been superseded by the Codification. All other non-grandfathered, non-SEC accounting literature not included in the Codification has become non-authoritative. The Codification did not change GAAP, but instead introduced a new structure that combines all authoritative standards into a comprehensive, topically organized online database. The Codification is effective

 

REVOLUTIONARY CONCEPTS, INC.

(A Development Stage Company)

NOTES TO FINANCIAL STATEMENTS as of March 31, 2011

 

NOTE 2 – RECENT ACCOUNTING PRONOUNCEMENTS (Continued)

 

for interim or annual periods ending after September 15, 2009, and impacts the Company’s financial statements as all future references to authoritative accounting literature will be referenced in accordance with the Codification. There have been no changes to the content of the Company’s financial statements or disclosures as a result of implementing the Codification during the fiscal year ended December 31, 2009.

 

As a result of the Company’s implementation of the Codification during the fiscal year ended December 31, 2009, previous references to new accounting standards and literature are no longer applicable. In the current annual financial statements, the Company will provide reference to both new and old guidance to assist in understanding the impacts of recently adopted accounting literature, particularly for guidance adopted since the beginning of the current fiscal year but prior to the Codification.

 

Subsequent Events

 

(Included in Accounting Standards Codification (“ASC”) 855 “Subsequent Events”, previously SFAS No. 165 “Subsequent Events”)

 

SFAS No. 165 established general standards of accounting for and disclosure of events that occur after the balance sheet date, but before the financial statements are issued or available to be issued (“subsequent events”). An entity is required to disclose the date through which subsequent events have been evaluated and the basis for that date. For public entities, this is the date the financial statements are issued. SFAS No. 165 does not apply to subsequent events or transactions that are within the scope of other GAAP and did not result in significant changes in the subsequent events reported by the Company. SFAS No. 165 became effective for interim or annual periods ending after June 15, 2009 and did not impact the Company’s financial statements. The Company evaluated for subsequent events through the issuance date of the Company’s financial statements. No recognized or non-recognized subsequent events were noted.

 

Determination of the Useful Life of Intangible Assets

 

(Included in ASC 350 “Intangibles — Goodwill and Other”, previously FSP SFAS No. 142-3 “Determination of the Useful Lives of Intangible Assets”)

 

 FSP SFAS No. 142-3 amended the factors that should be considered in developing renewal or extension assumptions used to determine the useful life of a recognized intangible asset under previously issued goodwill and intangible assets topics. This change was intended to improve the consistency between the useful life of a recognized intangible asset and the period of expected cash flows used to measure the fair value of the asset under topics related to business combinations and other GAAP. The requirement for determining useful lives must be applied prospectively to intangible assets acquired after the effective date and the disclosure requirements must be applied prospectively to all intangible assets recognized as of, and subsequent to, the effective date. FSP SFAS No. 142-3 became effective for financial statements issued for fiscal years beginning after December 15, 2008, and interim periods within those fiscal years. The adoption of FSP SFAS No. 142-3 did not impact the Company’s financial statements.

 

Non-controlling Interests

 

(Included in ASC 810 “Consolidation”, previously SFAS No. 160 “Non-controlling Interests in Financial Statements an amendment of ARB No. 51”)

 

SFAS No. 160 changed the accounting and reporting for minority interests such that they will be re-characterized as non-controlling interests and classified as a component of equity. SFAS No. 160 became effective for fiscal years beginning after December 15, 2008, with early application prohibited. The Company implemented SFAS No. 160 at the start of fiscal 2009 and no longer records an intangible asset when the purchase price of a non-controlling interest exceeds the book value at the time of buyout. The adoption of SFAS No. 160 did not have any other material impact on the Company’s financial statements.

 

Consolidation of Variable Interest Entities — Amended

 

(To be included in ASC 810 “Consolidation”, SFAS No. 167 “Amendments to FASB Interpretation No. 46(R)”)

 

SFAS No. 167 amends FASB Interpretation No. 46(R) “Consolidation of Variable Interest Entities regarding certain guidance for determining whether an entity is a variable interest entity and modifies the methods allowed for determining the primary beneficiary of a variable interest entity. The amendments include: (1) the elimination of the exemption for qualifying special purpose entities, (2) a new approach for determining who should consolidate a variable-interest entity, and (3) changes to when it is necessary to reassess who should consolidate a variable-interest entity. SFAS No. 167 is effective for the first annual reporting period beginning after November 15, 2009, with earlier adoption prohibited. The Company will adopt SFAS No. 167 in fiscal 2010 and does not anticipate any material impact on the Company’s financial statements.

 

In January 2010, the Financial Accounting Standards Board (“FASB”) issued guidance to amend the disclosure requirements related to recurring and nonrecurring fair value measurements. The guidance requires new disclosures on the transfers of assets and liabilities between Level 1 (quoted prices in active market for identical assets or liabilities) and Level 2 (significant other observable inputs) of the fair value measurement hierarchy, including the reasons and the timing of the transfers. Additionally, the guidance requires a roll forward of activities on purchases, sales, issuance, and settlements of the assets and liabilities measured using significant unobservable inputs (Level 3 fair value measurements). The guidance became effective for the

 

REVOLUTIONARY CONCEPTS, INC.

(A Development Stage Company)

NOTES TO FINANCIAL STATEMENTS as of March 31, 2011

 

NOTE 2 – RECENT ACCOUNTING PRONOUNCEMENTS (Continued)

 

Company with the reporting period beginning January 1, 2010, except for the disclosure on the roll forward activities for Level 3 fair value measurements, which will become effective for the Company in the reporting period beginning July 1, 2011. Other than requiring additional disclosures, adoption of this new guidance did not have a material impact on our consolidated financial statements.

 

On February 24, 2010, the FASB issued guidance in the “Subsequent Events” topic of the FASC to provide updates including: (1) requiring the Company to evaluate subsequent events through the date in which the financial

 

statements are issued; (2) amending the glossary of the “Subsequent Events” topic to include the definition of “SEC filer” and exclude the definition of “Public entity”; and (3) eliminating the requirement to disclose the date through which subsequent events have been evaluated. This guidance was prospectively effective upon issuance. The adoption of this guidance did not impact the Company’s consolidated results of operations of financial condition.

 

The Company adopted ASC Topic 718, using a modified prospective application transition method, which establishes accounting for stock-based awards in exchange for employee services. Under this application, the Company is required to record stock-based compensation expense for all awards granted after the date of adoption and unvested awards that were outstanding as of the date of adoption. ASC Topic 718 requires that stock-based compensation cost is measured at grant date, based on the fair value of the award, and recognized in expense over the requisite services period. Any subsequent changes in the market value of the underlying common stock are reflected in the expense recorded in the subsequent period in which that change occurs.

 

Common stock, stock options and warrants issued to other than employees or directors in exchange for services are recorded on the basis of their fair value, as required by ASC Topic 718, which is measured as of the date required by ASC Topic 505-50. In accordance with ASC Topic 505-50, the non-employee stock options or warrants are measured at their fair value as of the earlier of the date at which a commitment for performance to earn the equity instruments is reached (“performance commitment date”) or the date at which performance is complete (“performance completion date”).

 

In April 2010, the FASB issued ASU No. 2010-13 which will clarify the classification of an employee share based payment award with an exercise price denominated in the currency of a market in which the underlying security trades.  This ASU will be effective for the first fiscal quarter beginning after December 15, 2010.  The Company adopted this ASU in the quarter ended March 31, 2011.  Adoption of this ASU did not have a material financial impact on our consolidated financial statements.

 

In January 2011, the FASB released Accounting Standards Update No. 2011-01 (“ASU 2011-01”), Receivables (Topic 310): Deferral of the Effective Date of Disclosures about Troubled Debt Restructurings in Update No. 2010-20, which deferred the disclosure requirements surrounding troubled debt restructurings. These disclosures are effective for reporting periods ending on or after June 15, 2011. We do not expect the disclosure requirements to have a material impact on our current disclosures.

 

In April 2011, the FASB released Accounting Standards Update No. 2011-02 (“ASU 2011-02”), Receivables (Topic 310): A Creditor’s Determination of Whether a Restructuring is a Troubled Debt Restructuring. ASU 2011-02 clarifies the guidance for determining whether a restructuring constitutes a troubled debt restructuring. In evaluating whether a restructuring constitutes a troubled debt restructuring, a creditor must conclude that 1) the restructuring constitutes a concession and 2) the debtor is experiencing financial difficulties. ASU 2011-02 also requires companies to disclose the troubled debt restructuring disclosures that were deferred by ASU 2011-01. The guidance in ASU 2011-02 is effective for public companies in the first reporting period ending on or after June 15, 2011, but the amendment must be applied retrospectively to the beginning of the annual period of adoption. ASU 2011-02 is not expected to materially impact our consolidated financial statements.

 

No other accounting standards or interpretations issued recently are expected to a have a material impact on the Company’s consolidated financial position, operations or cash flows.

NOTE 3 – RELATED PARTY TRANSACTIONS

 

The Board of Directors have authorized the officers of the Company to receive advances from the Company for the foreseeable future, in lieu of taking compensation, under terms of promissory notes bearing 5% interest, beginning January 1, 2006. As of December 31, 2010 and March 31, 2011 the advances totaled $121,952 and $120,211, respectively. These advances are described as unpaid capital contributions for financial reporting purposes.

 

The company has several Notes payable to US Financial, Rainco and Richard M. Carter, which are affiliates of two of our board members, Claude McDougal and Solomon Ali. The total of these notes as of March 31, 2011 were $62,785. The notes bear an interest of 10% and began to become due starting in November 2010.

 

 

REVOLUTIONARY CONCEPTS, INC.

(A Development Stage Company)

NOTES TO FINANCIAL STATEMENTS as of March 31, 2011

NOTE 4 – ACCOUNTS PAYABLE

 

Accounts payable consist of the following:		12/31/10				3/31/11
Professional fees		$	8,169			$	8,536
Other			3,463				3,553
Legal fees			58,977				110,287
Consulting fees			8,200				23,200
		$	78,809			$	154.576

 

NOTE 5 – COMITMENTS AND CONTENGINCIES

 

Liabilities for loss contingencies, arising from claims, assessments, litigation, fines and penalties and other sources are recorded when it is probable that a liability has been incurred and the amount of the assessment and/or remediation can be reasonably estimated.  Recoveries from third parties, which are probable of realization are separately recorded, and are not offset against the related liability, in accordance with FASB No. 39, “Offsetting of Amounts Related to Certain Contracts.”  The Company is the plaintiff in a lawsuit seeking damages against the law firm retained to file for “EyeTalk” product patent.

 

The Company alleges professional malpractice by a patent agent, professional malpractice by attorneys, failure to supervise a non-attorney employee, respondent superior, misappropriation of funds and breach of contract.  The outcome of this lawsuit cannot be determined at this time and attorney’s fees associated with the lawsuit are contingent upon a successful outcome in this case.

 

In July and August 2009 the Company issued two notes payable in the total amount of $20,000. The two notes were later combined at the note holder’s request into on note.  The note bears interest at a rate of 10%.   Principal and interest were due in May 2010. In 2009, the board of directors agreed to guarantee a personal loan to the President of the Company, Mr. Ron Carter of $75,000 with interest of 10%, by a shareholder.  The note became due in November 2010.

 

On October 5, 2010, the company received notice that a claim for judgment had been filed in Mecklenburg County by a shareholder for the note that was in default as of May 2010. On January 7, 2011, the note holder amended the filing to include the personal loan.  The amount of the claim is $100,996, plus interest at 18% and legal costs. The Company is working to resolve the matter through the court system, but is unable to determine the outcome.   See Note 12 for further information .

 

 

NOTE 6 – CAPITAL FINANCING

 

The Company, though a Private Placement Memorandum (“PPM”) dated April 24, 2007, raised capital of $321,100.  The PPM offered 642,200 shares of common stock at a price of $.50 per share.  Expenses of this offering, $18,000, were paid from the proceeds and included legal and accounting expenses, filling fees, printing costs and other offering costs.  No commission, discount, finder’s fee or other similar remuneration or compensation was paid, directly or indirectly to any person for soliciting any prospective purchaser.  This was a non-contingent offering and there was no minimum number of shares required to be sold, except the minimum of $1,000 (2,000 shares) per purchaser was required to accredited investors.  During 2009, the Company raised $139,500 in a private placement priced at $1.25 per share for a total of 111,600 shares and had 10,000 Class A warrants exercised at $0.65 per share and 10,000 Class B warrants exercised at $0.90 per share, for 20,000 common shares.  During the nine months ending September 30, 2010 the Company had 14,538 Class A warrants exercised at $0.65 per share and 10,000 Class B warrants exercised at $0.90 per share, for 24,538 common shares, increasing paid in capital $18,450.  The warrants have now expired and no further warrants may be exercised.

 

NOTE 7 – INTELLECTUAL PROPERTY

 

The patent no. US 7,193644 B2, for the prototype was successfully obtained on March 20, 2007.  In accordance with FASB 86, the Company has established a technological feasibility date on July 21, 2004, the date that Phase I was delivered and presented.   The software development costs have been analyzed and it has been determined that all software development costs were incurred subsequent to the feasibility date.  The useful life of capitalized software costs has been assumed to be 5 years.  Total software development costs were $32,200 and the appropriate minimum amortization has been taken, also in accordance with FASB 86.  The following are patent pending applications; Video system for individually selecting and viewing events at a venue.  The Detection and viewing system method for providing multiple viewing opportunities of events at a venue.  Feeding pacifier with removable fluid source.  Mole surveillance system.  Medical audio/video communications system.  Real estate audio/video monitoring communication system. To date, the Company has expensed $88,306 for filing and legal fees related to our patent and patent pending intellectual property.

 

NOTE 8 – COMMON STOCK SHARES FOR SERVICES RECEIVED

 

In July 2010, the Company issued 4,706,784 shares of restricted common stock for professional services.  These shares were valued at $.10 the price being quoted on the OTC Pinksheets on the date of issue. In October 2010, the Company issued 12,400 restricted common shares for services received.

 

 

 

 

REVOLUTIONARY CONCEPTS, INC.

(A Development Stage Company)

NOTES TO FINANCIAL STATEMENTS as of March 31, 2011

 

NOTE 9 – CONVERSION OF DEBT TO EQUITY

 

On April 24, 2008 the Company issued two notes payable in the amount of $7,500 to unrelated parties.  On May 5, 2008 the Company issued another note payable $300.000 to another non-related party at 4% interest which began to come due in October, 2008. These promissory notes were secured by a pledge of up to 612,000 shares of restricted common stock from our authorized but unissued shares. The Company has issued 631,000 shares of restricted common stocks to the note holders in exchange for the retirement of debt and interest payable. During November and December 2010, the Company issued 13,517,200 shares of restricted common stock to the note holders in exchange for the retirement of debt and interest payable. To date, these shares have retired $52,000 in accounts payable.

 

NOTE 10 – NOTES PAYABLE

 

In July and August 2009 the Company issued two notes payable in the collective amount of $20,000.  These notes bear interest at a rate of 10%.   Principal and interest are due in May 2010. These notes are currently in default and a claim for judgment has been awarded.  At various times during 2010 and 2011 the Company issued notes payable to US Financial, Rainco and Richard M. Carter totaling $62,785, affiliates of two of our board members.  The notes bear an interest of 10% and became due starting in November 2010. $57,785 of the total are currently due on demand.

 

During 2010, the Company reclassified $289,787 in accounts payable to long term notes payable in the amount of $204,836 and $84,950 to accrued interst payable , to reflect the assignment by some of our creditors of their balance to a note from an investor that will be paid one year or more past the original due date. These notes do not bear any interest and begin coming due in July 2011. The notes can be converted to common stock at a price of $.005 per share of restricted common stock.

 

NOTE 11 – GOING CONCERN

 

The losses, negative cash flows from operations, and negative working capital deficiency sustained by the Company raise substantial doubt about the Company’s ability to continue as a going concern.  These financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts and classification of liabilities that might be necessary in the event the Company cannot continue in existence.

 

Note 12 – SUBSEQUENT EVENTS

 

On October 1, 2010, the board of directors of the Company approved an amendment to the Company’s Articles of Incorporation, as amended to date, increasing the number of authorized shares of common stock from 65,000,000 to 1,000,000,000.  The increase in authorized shares will become effective pursuant to approval by a majority of shareholders and a Certificate of Amendment to the Articles of Incorporation filed with the Secretary of State of the State of Nevada on, and effective as of the filing date. A shareholder vote has not taken place to date.

 

On October 5, 2010, the Company received notice that a claim for judgment had been filed in Mecklenburg County by a shareholder for a note that was in default as of June 1, 2010, in the amount of $20,559, plus 10% interest. On January 7, 2011, the note holder amended the filing to include a personal loan to our president that was in default as of December 1, 2010 in the amount of $80,437, plus 10% interest, which the Company guaranteed.  The total amount of the claim is $100,996, plus interest accumulated through the original due dates, and 18% interest after the default date of the notes through the date of the judgment and then at the statutory rate of 8% , until resolved . On the 10^th day of May 2011, a summary judgment was entered on behalf of the plaintiff against Mr. Carter and the Company. Mr. Carter and the company are working to resolve the matters and are unable to determine the final outcome until settlement is reached or payment arrangements have been made.  

 

On June 14, 2011, Mr. Claude McDougal submitted his resignation from the Board of Directors, for personal reasons. The Board accepted the resignation on June 17, 2011. On June 20, 2011, the Borad approved and appointed Ms. Judith Bentley to replace Mr. McDougal on the Board of Directors.

 

 

 

 

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

 

Forward-Looking Statements

 

This quarterly report on Form 10-Q contains forward-looking statements that involve risk and uncertainties. We use words such as "anticipate", "believe", "plan", "expect", "future", "intend", and similar expressions to identify such forward-looking statements. Investors should be aware that all forward-looking statements contained within this quarterly report are good faith estimates of management as of the date of this quarterly report. Our actual results could differ materially from those anticipated in these forward-looking statements for many reasons.

 

Overview

 

We are a development stage company with no history of revenue. We were incorporated as a Nevada corporation on February 28, 2005 to reincorporate and re-domesticate two existing North Carolina entities; Revolutionary Concepts, Inc. and DVMS, LLC. We intend to develop and market camera technologies that enable remote monitoring.

 

Efforts to date have been devoted to establishing a remote video monitoring system that permits interactive two-way communications called the EyeTalk Communicator (“EyeTalk”). In 2009, the Company engaged Photonic Discovery/UNC-Charlotte Optoelectronics and Optical Communication to assist in identifying an ideal development partner for the EyeTalk technology. Imaging Solutions Group of Rochester, NY is the Company identified. RCI and ISG have collaborated regarding the development of both the residential and medical applications of the EyeTalk system. Since the implementation of the EyeTalk technology is dependent on various other emerging technologies (smart phone, 3G/4G broadband) the research and development has coincided with the pace of these technologies. The system by design will provide for continuous software development and updates. Software as a Service (SAAS) is a means of recurring revenue and continuous upgrades.

 

We have funded our development through three private offerings in 2005, 2007 and 2009. We also borrowed $307,500 from four non-related parties at 4% interest to fund ongoing operations, and patent new applications. These promissory notes began to become due in October 2008 and were repaid in November 2008 by issuing 630,811 shares of restricted commons stock from authorized shares. In 2010, the Company partnered with US Financial and Rainco Industries to assist with Investor Relations services and in identifying additional funding sources. This relationship has enabled RCI to achieve a listing with Standard and Poors, approval to trade on the Frankfurt Stock Exchange and the resolution of a portion of the Company’s debt.

 

Introduction to the EyeTalk Communicator

 

Our Company designed and patented a communications and monitoring system which it expects to give users the ability to remotely and interactively monitor and communicate with, and have control of a smart camera in a variety of markets.

 

The EyeTalk technology is primarily a software platform with a hardware component of an external smart camera deployed at a chosen location. The system offers two-way communication and it streams video to designated PC or handheld devices such as PDA’s, smart phones or other smart devices. . The software interface allows the system to offer preprogrammed messages, greeting, commands, etc. The software maintains information captured by the EyeTalk system. Access to the information may be achieved via a Personal Data Assistant (PDA), Handheld Computer (HC), Smart phone, or other compatible device. The EyeTalk software platform will be able to communicate with many of the smartphone and other devices that are currently available in the market place.

 

As a residential application, the EyeTalk system allows seamless communication to a residence allowing the owner to interact remotely with visitors to the home or building via any common personal communication device with the benefit of audio, video and data communication. The system utilizes new technology to synergistically improve communication, security, convenience, messaging, and manage deliveries and guest.

 

According to USBX (US Business Exchange), “iSuppli, a respected technology market research firm, announced this quarter that they project IP video surveillance camera revenue to grow to more than $9.0 billion by 2011, a compound annual growth rate of 13.2%”. Declining cost of new surveillance technology have improved the viability of enhanced security systems while boosting the affordability and demand for basic security systems among families in the middle to lower-middle income strata of society.”

 

Our management believes that the EyeTalk technology will fill the technology gap related to false alarms in the security monitoring industry. Some municipalities no longer respond to calls from alarm companies unless an emergency has been visually verified. Traditional security monitoring companies rarely offer visual verification and therefore cannot visually ascertain that the signal is not a false alarm.

 

The EyeTalk system also records and archives via data, video and audio records. The system provides a centralized control system using a user-friendly application with a means for storing digital images and provides enhanced security features.

 

The EyeTalk system does not require wiring from the exterior of the building to its interior however in new construction wired systems are anticipated. The Company believes that the system, when fully implemented, will be relatively inexpensive to install and maintain.

 

 

Our management expects the EyeTalk to provide three primary benefits:

 

Protection – The EyeTalk may augment the capabilities of current residential and commercial security monitoring systems through audio, video and data communication which are interactive and which can be used on a remote basis.

 

Monitoring – The EyeTalk may allow the user to better facilitate the task of entry management in non-threatening circumstances, such as latch key school children, and deliveries allowing the user to maintain better control and understanding of what is going on at any given location or property .

 

Convenience – The EyeTalk may add convenience to home and business owners, providing remote access, screening of visitors and acceptance and monitoring of packages.

 

The EyeTalk has four distinct physical parts:

 

o    an internal unit(s) (the ‘Indoor Mobile Monitor’)

o    an external unit(s) (the ‘Smart Camera EyeTalk Technology)

o    a Central Application Server which may be a home personal computer (“PC”)

o    a remote access device, typically a standard smart phone or other compatible smart device

 

The EyeTalk system is expandable to include multiple peripheral devices. The main components of the system (the Indoor Mobile Monitor, the Smart Camera and the Central Application Server) communicate with each other by way of RF communications using 802.11b or higher wireless LAN. The Central Application Server will communicate with the remote access device by way of a dial-up modem connection, DSL, cable modem or other Internet-compatible method of communication.

 

INDUSTRY

The United States security services have generally divided the market into the following segments: security officer and investigation services, armored car services, monitoring services, and consulting. Security officer and investigation services are the oldest and largest segment of the security industry.

 

According to the USBX 2006 Year End Security Update the network camera video segment of the security industry is valued at $7 Billion annually and has experienced a 20% annual growth rate. While noting that the public market support for the segment has remained strong and actually led all security industry segments in 2007, hardware and software costs have shrunk which has pressured margins in the industry. According to USBX, “iSuppli, a respected technology market research firm, announced this quarter that they project IP video surveillance camera revenue to grow to more than $9.0 billion by 2011, a compound annual grown rate of 13.2%”

 

The report notes that each vertical market has differing applications but banking, gaming and inventory control are the premier growth applications. An estimated $45 billion annually is lost in inventory shrinkage and bank fraud and network camera video is often at the forefront of industry efforts.

 

USBX also published a separate “white paper” in 2006 entitled “The Security Killer App: Intelligent Video Surveillance.” The white paper cites John Chambers, CEO of Cisco Systems and notes major contracts including $255 Million from Lockheed Martin for video of New York City subways and $2.5 Billion from Boeing to secure U. S. borders. The paper focuses on quickly developing vertical markets for intelligent video in retail, banking and financial and public safety and transit sectors.

 

Our management believes that the EyeTalk technology significantly differs from existing systems. The EyeTalk allows two way communication via a wireless smart camera that communicates with a variety of other remote communication devices such as smart phones, PDAs, smart devices , computers, security and video monitoring devices. Supported by its software interface the EyeTalk system can be used to greet visitors, provide instructions to delivery personnel, interact between remote staff and patients in medical settings, as well as in security applications.

 

Further, the EyeTalk allows security owners monitoring personnel to more accurately recognize and address the threat presented as well as verifying a true threat. We believe this will relieve the large number of false alarm security calls and unneeded emergency personnel visits. Unlike many competitors the EyeTalk system is not dependent on the internet although it can use the internet as a platform.

 

The communication can be initiated by a broad array of technologies, such as doorbells, glass breakage, heat or motion detectors, weapons detectors, biometric signaling or voluntarily. The EyeTalk is programmed to manage most events with standard greetings, identifications, commands, or directions. The EyeTalk can then notify designated personnel of the triggered event, sending images of the current situation and permitting audible response.

 

We expect to compete by emphasizing the unique aspects of the EyeTalk technology in its marketing directly to distributors and end users. We also intend to compete by direct contact with larger end users such as hospitals, banks, and government agencies concerned with homeland security.

 

 

Future Plans and Potential Markets

 

Our management believes it has the capability to enter into a growing security marketplace. We are hopeful that the security industry will continue to experience increased spending on detection devices such as the EyeTalk for the residential, commercial, institutional, medical and homeland security markets. EyeTalk’s ability to shift detection to a preemptive and preventive solution we anticipate will give the EyeTalk technology a clear competitive advantage.

 

Our management also believes the EyeTalk has advantages over existing and competing technologies. Many of these applications may not relate to the security field at all, but may nonetheless be commercially useful. The additional commercial benefits of the EyeTalk include:

 

o    monitors appointments

o    monitors deliveries

o    records employee arrivals and departures

o    provides remote access

o    provides a database of activity to and from a facility

 

Our management also expects to identify additional companies that may be interested in licensing arrangements for sales to consumers. It believes the EyeTalk provides consumers with the functions and features that are superior to those currently available and offered by competitors. These include:

 

o    allows the occupant to view, record or respond to visitors or guests without opening the door or even being in the home

o    detects a visitor, providing a measure of convenience to guests who no longer need to search for and activate a doorbell button

o    allows remote access to visitors by the owner/occupant of the building

o    allows deliveries to be made and monitored while the owner of the home is away from the premises

o    detects intruders, allowing for an immediate response from the property owner

o    serves as a deterrent to criminals whose entry can be chronicled by the system and who cannot determine if persons are at home or not because of the nature of the remote interaction system.

o    functions as a recordkeeping database of all visitors to the home, welcomed or un-welcomed, with date, time and photographic records.

o    alerts the owner of a power outage at the facility.

Our management plans to use the following business development strategies:

 

1)  Use internal contacts in the local medical community to negotiate placement in hospital patient rooms, senior living rooms, recovery rooms and other medical applications.

2)  Arrange a schedule of appearances at security industry trade shows and presentations to trade groups.

3)  Continue development of phase one of our contract with Photonic Discovery/UNC-Charlotte Optoelectronics and Optical Communication

 

Sales Strategy

 

We plan to acquire an existing security provider with established industry recognition in sales and service. The EyeTalk technology sales will be integrated into the ongoing operation of the security provider/new entity. This will enable to develop the technology, train installers and provide a turn-key service to end users. In expanding sales opportunities the product brand will be promoted via marketing, advertising and the website. Staff installers will be positioned to provide training to various resellers.

 

—  Direct Selling

—  Consumers, Internet, other direct marketing methods

—  Multi-Tiered Distribution

—  Existing security companies

—  Determined by Market Size

—  Determined by Geography

—  Identification of Vertical Markets Rapid revenue growth in the shortest possible timeframe

—  Sales leverage through different, but proven, sales and marketing techniques.

—  Geographically, the initial focus will be on the North American and European marketplaces.

—  The next two major markets will be Latin America and Asia, including Australia.

 

To date, our management has delayed the commercialization phase, due to its efforts to improve upon the application of the hardware and software and also awaiting further development of wireless broadband technology to increase to sufficiently allow seamless video transmission and audio more efficiently.

 

 

Patent and Intellectual Property

On March 20, 2007, the United States Patent and Trademark Office issued to the Company a patent, number 7,193,644 B2. The patent abstract states:

 

“

The invention is audio-video communication and answering system that synergistically improves communication between an exterior and an interior of a business or residence and a remote location, enables messages to be stored and accessed from both locally and remotely, and enables viewing, listening, and recording from a remote location. The system's properties make it particularly suitable as a sophisticated door answering-messaging system. The system has a DVMS module on the exterior. The DVMS module has a proximity sensor, a video camera, a microphone, a speaker, an RF transmitter, and an RF receiver. The system also has a computerized controller with a graphic user interface DVMS database application. The computerized controller is in communication with a public switching telephone network, and an RF switching device. The RF switching device enables communication between the DVMS module and the computerized controller. The RF switching device can be in communication with the other RF devices, such as a cell phone, PDA, or computer.”

 

A complete copy of the patent is on file at our offices and can be inspected.

 

In March, 2007, we commenced a lawsuit in the Superior Courts of Mecklenburg County, North Carolina against its prior patent attorneys. The lawsuit alleges that we retained these attorneys and requested that they file a Non-publication Request (“the Request”) pursuant to 35 U.S.C. § 122, in order to ensure that the Application would not be published by the United States Patent & Trademark Office (“USPTO”) until issued as a patent. The lawsuit further alleges that the attorneys failed to file the Request.

 

The purpose of the Request was for international patent rights under procedures established by the Patent Cooperation Treaty and U.S. law implementing that treaty. By virtue of the publication of the Application in the United States without the filing of a corresponding PCT or other foreign application relating back to a date before the date of publication, one or more requirements of patentability in certain advantageous foreign jurisdictions, including the European Union, Japan, and others, to wit the absolute public novelty of the invention, can no longer be fulfilled by the Company.

 

We believe our claims have merit in the lawsuit. We are unable to determine what rights it may still have, if any, to patent or intellectual property protection in other jurisdictions.

 

COMPETITION

We expect to compete with much larger and better financed companies in the remote monitoring industry, all of which have superior name recognition, such as ADT, ATT, Pinkerton’s and others. RCI owns the patent by which many of the aforementioned companies will be dependent upon and “MAY” already be infringing in some manner

 

Remote monitoring is available through a variety of media and processes, including systems integrators, closed circuit television systems, intrusion detection systems, and others. These systems typically incorporate ultrasonic, infrared, vibration, microwave and other sensors to detect door and window openings, glass breakage, vibration, motion, temperature, and noise and transmit through alarms and other peripheral equipment.

 

For example, the ATT remote monitor integrates with Cingular and Yahoo through cell phones and wireless internet. The user can remotely select the device and determine whether notification will be triggered by door sensors, motion sensors, temperature sensors or a combination. The user can remotely control cameras with pan, tilt and zoom features. The user can download and record or view live camera. The EyeTalk system provides similar capabilities; however with two-way communication and a programmable software interface enabling the system to effectively manage itself if the user desires.

 

Industry analysts report that both Cisco and IBM are developing new hardware and software applications for remote monitoring that, if successful, could have profound implications for the industry.

 

Regulation

 

We are subject to the same federal, state and local laws as other companies conducting business in the software field. Our products are subject to copyright laws. We may become the subject of infringement claims or legal proceedings by third parties with respect to its current or future products. In addition, we may initiate claims or litigation against third parties for infringement of its proprietary rights, or to establish the validity of our proprietary rights. Any such claims could be time-consuming, divert management from our daily operations, result in litigation, cause product delays or lead us to enter into royalty or licensing agreements rather than disputing the merits of such claims. Moreover, an adverse outcome in litigation or a similar adversarial proceedings could subject us to significant liabilities to third parties, require the expenditure of significant resources to develop non-infringing products, require disputed rights to be licensed from others or require us to cease the marketing or use of certain products, any of which could have a material adverse effect on our business and operating results.

 

RESULTS OF OPERATIONS

 

RESULTS OF OPERATIONS FOR THE THREE AND NINE MONTHS ENDED MARCH 31, 2010 COMPARED TO THE THREE MONTHS ENDED MARCH 31, 2011

 

Operating Expenses We have not begun to generate revenue our total operating expenses for the three-month period ended March 31, 2011 increased to $214,758 from $19,604 over the prior year period. This increase is primarily attributable to unpaid accumulated compensation, taxes and professional fees.

 

Net Loss. Our net loss for the three-month period ended March 31, 2011 increased to $( 215,285 ) from $(18,255) over the prior year period. This increase is primarily attributable to unpaid accumulated compensation, taxes and professional fees.

 

Assets. Assets decreased by $2,819 to $13,323 as of March 31, 2011, from $16,142 as of December 31, 2010. This decrease is primarily due to depreciation and amortization.

 

Liabilities. Total liabilities increased by $210,726 to $876,356 as of March 31 2011, from $665,631 as of December 31, 2010. The increase is attributable to the increase in accounts payable and accrued expenses in the amount of $205,725 and an addition to notes payable in the amount of $5,000 .

 

Stockholders' Equity. Stockholders' equity decreased by $213,544 to $( 863,033 ) as of March 31, 2011 from $(649,489) as of December 31, 2010. The decrease was due primarily to the net loss of $(215,285) offset by a decrease in unpaid capital contributions in the amount of $1,741.

 

 

Liquidity and Capital Resources

 

General. The company’s primary sources of cash have been sales of common stock through private placements, notes converted to stock and loans from affiliates. It is a developmental stage company and will rely upon more established third party vendors for many aspects of the manufacture, sale and distribution of its product, if it becomes commercially available in this regard. The company previously contracted with Absolutely New, Inc. a California company to identify potential licenses from their database. Under the agreement, Absolutely New identified approximately twenty companies that it believes have a particular use for the EYETALK. The company did not renew the agreement with Absolutely New. The company will nonetheless pay Absolutely New twenty percent of any proceeds received as a result of the sale, license, assignment or transfer of the EYETALK to one of the identified companies for 24 months the termination of the agreement. The termination of the agreement was on September 28th, 2008. The company has engaged Photonic Discovery/UNC-Charlotte Optoelectronics and Optical Communication to design the hardware for the EyeTalk system. We expect the software and other sensing technology will be developed by Fusion Next, a North Carolina company. Since the implementation of the EyeTalk technology is dependent on various other emerging technologies (smart phone, 3G/4G broadband) the research and development has coincided with the pace of these technologies. The system by design will provide for continuous software development and updates. The company is working with Virsalent to help it identify companies that may have immediate uses for the EyeTalk technology. While it has not yet done so, the company expects to enter into an engagement agreement with Virsalent in the near future. Virsalent, is a California corporation that has expertise in marketing and sales the company’s discussions with Virsalent revolve around the development and execution of the sales and marketing plan for the Eyetalk system to the public.

 

Overall, the Company’s cash position did not change significantly for the three-month period ended March 31, 2011 over the prior year period, as result of $6,925 net cash used in operating activities and $6,741 net cash provided by financing activities.

 

Cash Flows from Operating Activities. Net cash used in operating activities of $6,925 for the three-month period ended March 31, 2011 is attributable to increase in accounts payable $205,725 , net operating expenses $( 215,285 ) reduced by depreciation and amortization $2,635 .

 

Cash Flows from Investing Activities. There were no investing activities for the three-month period ended March 31, 2011.

 

Cash Flows from Financing Activities. Net cash provided by financing activities of $6,741 for the three-month period ended March 31, 2011 is attributable to the decrease in unpaid capital contributions $1,741 and an increase in notes payable $5,000 .

 

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Not Applicable.

Item 4T. Controls and Procedures

As of the end of the period covered by this report, Revolutionary Concepts, Inc. management, including the Chief Executive Officer and Chief Financial Officer, conducted an evaluation of the effectiveness of our disclosure controls and procedures pursuant to Exchange Act Rule 13a-15(e). Based upon that evaluation, the Chief Executive Officer and the Chief Financial Officer concluded that such disclosure controls and procedures are effective in alerting them on a timely basis to material information relating to Revolutionary Concepts required to be included in Revolutionary Concepts’ periodic filings under the Exchange Act.

 

Management's Report on Internal Control Over Financial Reporting

The Company's management is responsible for establishing and maintaining effective internal control over financial reporting (as defined in Rule 13a-15(f) of the Securities Exchange Act). Management assessed the effectiveness of the Company's internal control over financial reporting as of December 31, 2008. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO") in its report entitled Internal Control—Integrated Framework. Based on the assessment, management believes that, as of December 31, 2008, the Company's internal control over financial reporting is effective based on those criteria.

Because of the inherent limitations of internal control over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may not be prevented or detected on a timely basis. Also, projections of any evaluation of the effectiveness of the internal control over financial reporting to future periods are subject to the risk that the controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Changes in internal control.    There have been no significant changes in internal controls or in factors that could significantly affect internal controls, including any corrective actions with regard to significant deficiencies and material weaknesses, subsequent to the date the Chief Executive Officer and Chief Financial Officer completed their evaluation.

This annual report does not include an attestation report of our independent registered public accounting firm regarding internal control over financial reporting. Management's report was not subject to attestation by the Company's independent registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit us to provide only management's report in this annual report.

 

PART II - OTHER INFORMATION

 

ITEM 1. LEGAL PROCEEDINGS

 

RCI is currently involved in two lawsuits, one in state court regarding legal malpractice, and one in federal court, to refute the false claims of a purported inventor, Emmanuel Ozoeneh. 

RCI has sued its former law firm for legal malpractice regarding the handling of RCI’s foreign patent rights. The Defendants moved to have the suit dismissed, claiming that the state court did not have jurisdiction to hear the case. The Court ruled in favor of RCI, and the Defendants are now appealing the ruling.

 

RCI also sued Emmanuel Ozoeneh in federal court. Ozoeneh was a former business partner in a prior business venture with CEO Ron Carter. Ozoeneh began making false claims that he was the inventor of the EyeTalk system. RCI filed suit in federal court to have Carter declared the sole inventor. This case has been resolved to the satisfaction of RCI. The terms of the agreement are confidential, but the result was that Ronald Carter and RCI were declared as the sole inventor and retains all rights to the patent(s) for the EyeTalk system.

 

ITEM 1A. RISK FACTORS

 

Refer to our “Risk Factors” in our Registration Statement on Form S-1 and our Form 10-K/A for the period ended December 31, 2010 (SEC File Number 000-53674 ) on the website at www.sec.gov

 

ITEM 2. UNREGISTERED SALES OF EQUITY AND USE OF PROCEEDS

 

None.

 

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

 

None.

 

ITEM 4. (REMOVED AND RESERVED)

 

ITEM 5. OTHER INFORMATION

 

None.

 

ITEM 6. EXHIBITS

 

Exhibit No. Description

----------- -----------

 

31.1 Sec. 302 Certification of Principal Executive Officer

 

31.2 Sec. 302 Certification of Principal Financial Officer

 

32.1 Sec. 906 Certification of Principal Executive Officer

 

32.2 Sec. 906 Certification of Principal Financial Officer

 

----------

* Exhibits are incorporated by reference and can be found in its entirety in our Registration Statement on Form S-1 and our Form 10-K/A for the period ended December 31, 2010, (SEC File Number 000-53674)on the website at www.sec.gov

 

 

 

SIGNATURES

 

Pursuant to the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf in Charlotte, NC, by the undersigned, thereunto duly authorized.

 

July 20, 2011 Registrant: Revolutionary Concepts, Inc.

 

 

By: /s/ Garry Stevenson

Garry Stevenson, Director, Vice President, and Chief Financial Officer

(Officer and Principal Accounting Officer)