XOTC:EWRX Quarterly Report 10-Q Filing - 3/31/2012

Effective Date 3/31/2012


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2012

or

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ______to ______

Commission File Number: 000-27195

EWRX INTERNET SYSTEMS, INC.
(Exact name of registrant as specified in its charter)

NEVADA 98-0117139
(State or other jurisdiction of (I.R.S. Employee Identification No.)
incorporation or organization)  

4950 Yonge St. Suite 910, Toronto
Ontario, Canada M2N 6K1
(Address of principal executive offices) (Zip Code)

(416) 298-9606
(Registrants telephone number, including area code)

N/A
(Former name, former address and former fiscal year, if changed since last report)

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

Indicate by check mark whether the registrant 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]


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

Large accelerated filer [ ] Accelerated filer [ ]
Non-accelerated filer [ ] Smaller reporting company [X]
(Do not check if a smaller reporting company)  

Indicate by check mark whether the registrant is a shell company as defined in Rule 12b-2 of the Exchange Act. Yes
[ X ] No [ ]

The number of shares outstanding of the Registrant’s common stock as of June 21, 2012 was 100,000,000 shares of common stock, par value $0.001.


EWRX INTERNET SYSTEMS, INC.

FORM 10-Q

March 31, 2012

TABLE OF CONTENTS

  PART I— FINANCIAL INFORMATION  
     
Item 1. Financial Statements 1
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 13
Item 3. Quantitative and Qualitative Disclosures About Market Risk 15
Item 4. Controls and Procedures 15
     
  PART II— OTHER INFORMATION  
     
Item 1. Legal Proceedings 16
Item 1A. Risk Factors 16
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 16
Item 3. Defaults Upon Senior Securities 16
Item 4. Mine Safety Disclosures 16
Item 5. Other Information 16
Item 6. Exhibits 16
     
  SIGNATURES 17


PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

1


EWRX INTERNET SYSTEMS, INC.
(A Development Stage Company)

CONDENSED FINANCIAL STATEMENTS

MARCH 31, 2012

2


EWRX INTERNET SYSTEMS, INC.
(A Development Stage Company)

CONTENTS

CONDENSED BALANCE SHEETS AS OF MARCH 31, 2012 (UNAUDITED) AND AS OF DECEMBER 31, 2011

4

 

CONDENSED STATEMENTS OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 2012 AND 2011 AND FOR THE PERIOD FROM JANUARY 1, 2002 (RE-ENTERING THE DEVELOPMENT STAGE) TO MARCH 31, 2012 (UNAUDITED)

5

 

CONDENSED STATEMENT OF CHANGES IN STOCKHOLDERS' DEFICIENCY FOR THE PERIOD JANUARY 1, 2002 (RE-ENTERING THE DEVELOPMENT STAGE) TO MARCH 31, 2012 (UNAUDITED)

6

 

CONDENSED STATEMENTS OF CASH FLOWS FOR THE THREE MONTHS ENDED MARCH 31, 2012 AND 2011 AND FOR THE PERIOD FROM JANUARY 1, 2002 (RE-ENTERING THE DEVELOPMENT STAGE) TO MARCH 31, 2012 (UNAUDITED)

7

 

NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)

8 - 12

3



EWRX INTERNET SYSTEMS, INC.
(A Development Stage Company)
 
Condensed Balance Sheets

    March 31     December 31  
    2012     2011  
    (Unaudited)        
     
ASSETS  
             
             
Current Assets            
Cash $  423   $  431  
Total Current Assets   423     431  
             
Total Assets $  423   $  431  
             
             
             
LIABILITIES AND STOCKHOLDERS' DEFICIENCY   
             
             
Current Liabilities            
Accounts payable and accrued liabilities $  22,032   $  19,180  
Note payable - related party   8,675     8,538  
Advances payable - director   2,547     -  
Total Liabilities   33,254     27,718  
             
             
Commitments and Contingencies            
             
Stockholders' Deficiency            
Preferred stock, $0.01 par value per share, 500,000 shares
authorized, none and none issued and outstanding
respectively
 

-
   

-
 
             
Common stock, $0.001 par value; 200,000,000 shares
authorized, 100,000,000 and 100,000,000 shares issued
and outstanding, respectively
 

100,000
   

100,000
 
Additional paid - in capital   7,937,600     7,919,230  
Accumulated deficit   (8,496,144 )   (8,496,144 )
Accumulated other comprehensive loss   (893 )   (893 )
Earnings accumulated during the development stage   426,606     450,520  
Total Stockholders' Deficiency   (32,831 )   (27,287 )
             
Total Liabilities and Stockholders' Deficiency $  423   $  431  

4

(See accompanying notes to condensed unaudited financial statements)


EWRX INTERNET SYSTEMS, INC.
(A Development Stage Company)

Condensed Statements of Operations

"Unaudited"

              For the Period from    
              January 1, 2002    
              (Re-entering the    
                Development  
    For the Three Months     Stage) to  
    Ended March 31     March 31  
    2012     2011     2012  
Operating Expenses                  
                   
Entertainment $  -   $  -   $  1,918  
In kind contribution - services   18,000      18,000     378,000  
Management fees   -     -     15,000  
Office and General   150     772     51,420  
Professional fees   5,138     7,045     251,099  
Salary and Wages   -     -     28,000  
Telephone   -     112     2,631  
Travel   -     -     5,546  
Total Operating Expenses   23,288       25,929     733,614  
                   
Net Loss from operations   (23,288 )    (25,929 )   (733,614 )
                   
Other (Expenses) Income                  
                   
Foreign exchange loss   (33 )   (258 )   (8,017 )
                   
Interest expense   (593 )   (9,159 )   (179,975 )
Forgiveness of debt   -     -     1,348,212  
                   
Total Other Income (Expenses)   (626 )   (9,417 )   1,160,220  
                   
Net income (loss) $  (23,914 ) $  (35,346 ) $  426,606  
Net income (loss) per Share - Basic and Diluted $  -   $  -        
                   
Weighted Average Number of Common Stock during the period - Basic and Diluted   100,000,000     100,000,000      

5

(See accompanying notes to condensed unaudited financial statements)



EWRX INTERNET SYSTEMS INC.
(A Development Stage Company)
 
Statement of Changes in Stockholders' Deficiency
for the period (January 1, 2002) Re-entering the Development
Stage Through to March 31, 2012
"Unaudited"

                                  Earnings              
                                  Accumulated     Accumulated        
                      Additional           During the     Other     Total  
    Number of     Capital     Preferred     Paid-in     Accumulated     Development     Comprehensive     Stockholders'  
    Shares     Stock     Stock     Capital     Deficit     Stage     Loss     Deficiency  
                                                 
Balance, December 31, 2001   20,704,140   $  20,704   $  -   $  6,967,848    $  (8,496,144 ) $  -   $  -   $  (1,507,592 )
Stock issued on settlement of debt   1,276,227     1,276     -     197,872     -     -     -     199,148  
Stock issued on Flashback purchase   3,700,000     3,700     -     -     -     -     -     3,700  
Stock issued on private placement   445,900     446     -     44,144     -     -     -     44,590  
Finance fee   -     -     -     (9,590 )   -     -     -     (9,590 )
Net loss   -     -     -     -     -     (71,799 )   -     (71,799 )
Balance, December 31, 2002   26,126,267     26,126     -     7,200,274     (8,496,144 )   (71,799 )   -     (1,341,543 )
Stock issued on settlement of debt   40,000,000     40,000     -     -     -     -     -     40,000  
Net loss   -     -     -     -     -     (19,342 )   -     (19,342 )
Balance, December 31, 2003   66,126,267     66,126     -     7,200,274     (8,496,144 )   (91,141 )   -     (1,320,885 )
Stock issued on settlement of debt   33,873,733     33,874     -     (12,558 )   -     -     -     21,316  
Net income   -     -     -     -     -     1,030,812     -     1,030,812  
Balance, December 31, 2004   100,000,000     100,000     -     7,187,716     (8,496,144 )   939,671     -     (268,757 )
Net loss   -     -     -     -     -     (19,163 )   -     (19,163 )
Balance, December 31, 2005   100,000,000     100,000     -     7,187,716     (8,496,144 )   920,508     -     (287,920 )
Net income   -     -     -     -     -     62,506     -     62,506  
Balance, December 31, 2006   100,000,000     100,000     -     7,187,716     (8,496,144 )   983,014     -     (225,414 )
In kind contribution - interest   -     -     -     19,184     -     -     -     19,184  
In kind contribution - services   -     -     -     72,000     -     -     -     72,000  
Net loss   -     -     -     -     -     (112,224 )   -     (112,224 )
Balance, December 31, 2007   100,000,000     100,000     -     7,278,900     (8,496,144 )   870,790     -     (246,454 )
In kind contribution - interest   -     -     -     24,117     -     -     -     24,117  
In kind contribution - services   -     -     -     72,000     -     -     -     72,000  
Net loss   -     -     -     -     -     (131,538 )   -     (131,538 )
Balance, December 31, 2008   100,000,000     100,000     -     7,375,017     (8,496,144 )   739,252     -     (281,875 )
Net loss   -     -     -     -     -     (126,511 )   -     (126,511 )
Foreign currency translation adjustment   -     -     -     -     -     -     (893 )   (893 )
Total comprehensive loss                                             (127,404 )
                                                 
In kind contribution - interest   -     -     -     29,244     -     -     -     29,244  
In kind contribution - services   -     -     -     72,000     -     -     -     72,000  
Balance, December 31, 2009   100,000,000     100,000     -     7,476,261     (8,496,144 )   612,741     (893 )   (308,035 )
Net loss                                 (119,861 )         (119,861 )
In kind contribution - interest   -     -     -     33,725     -     -     -     33,725  
In kind contribution - services   -     -     -     72,000     -     -     -     72,000  
Balance, December 31, 2010   100,000,000      100,000     -      7,581,986      (8,496,144 )    492,880      (893 )    (322,171 )
Net loss                                 (42,360 )         (42,360 )
In kind contribution - interest   -     -     -     37,215     -     -     -     37,215  
In kind contribution - services   -     -     -     72,000     -     -     -     72,000  
Forgiveness of debt officer   -     -     -     228,029     -     -     -     228,029  
                                                 
Balance, December 31, 2011   100,000,000      100,000     -      7,919,230      (8,496,144 )    450,520      (893 )    (27,287 )
Net loss                                 (23,914 )         (23,914 )
In kind contribution - interest   -     -     -     370     -     -     -     370  
In kind contribution - services   -     -     -     18,000     -     -     -     18,000  
 Balance, March 31, 2012   100,000,000     $ 100,000     -   $ 7,937,600     $ (8,496,144 ) $ 426,606   $ (893 ) $ (32,831 )  

6

(See accompanying notes to condensed unaudited financial statements)


EWRX INTERNET SYSTEMS, INC.
(A Development Stage Company)

Condensed Statements of Cash Flows

"Unaudited"

                Period from  
                January 1, 2002  
                (Re-entering the  
                Development  
    For the Three Months     Stage) to  
    Ended March 31     March 31  
    2012     2011     2012  
                   
Cash Flows from Operating Activities                  
       Net (loss) income $  (23,914 ) $  (35,346 ) $  426,606  
      Adjustments to reconcile net (loss) income to net cash used in operations            
               Non-cash item - expenses recovered   -     -     (1,142,152 )
               Forgiveness of debt   -     -     (97,294 )
               In kind contribution services   18,000     18,000     378,000  
               Imputed interest on loans   370     9,069     143,855  
       Changes in operating assets and liabilities                  
               Increase/(Decrease) in accounts payable and accrued liabilities   2,852     4,921     29,687  
Net Cash Used in Operating Activities   (2,692 )   (3,356 )   (261,298 )
                   
Cash Flows from Financing Activities                  
       Settlement of debt by director   -     -     19,113  
       Proceeds from issuance of common stock   -     -     38,700  
       Loans from related parties   -     269     68,718  
       Repayment of loans from directors   -     (411 )   (1,623 )
       Repayment of loans from related parties   -     -     (60,092 )
       Advances from director   2,547     7,333     197,749  
Net Cash Provided by Financing Activities   2,547     7,191     262,565  
                   
Effect of exchange rate changes on cash and cash equivalents   137     -     (844 )
                   
Net (decrease) increase in cash   (8 )   3,835     423  
Cash, beginning of period/year   431     335     -  
                   
Cash, end of period/year $  423   $  4,170   $  423  
                   
Supplemental Information:                  
                   
           Cash paid for interest $  -   $  -   $  36,476  
           Cash paid for taxes $  -   $  -   $  -  

7

(See accompanying notes to condensed unaudited financial statements)



EWRX INTERNET SYSTEMS, INC.
(A Development Stage Company)
 
Notes to Condensed Financial Statements
March 31, 2012
 
"Unaudited"

1.

Summary of Significant Accounting Policies and Organization

     
(A)

Basis of Presentation and Organization

     

EWRX Internet Systems, Inc. (the Company) was incorporated on June 25, 1997 in the State of Nevada. The Company re-entered the development stage on January 1, 2002. The company intends to be in the business of development and marketing of computer software.

     

The accompanying unaudited condensed 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 Commission for interim financial information. Accordingly, they do not include all of the information necessary for a comprehensive presentation of financial position and results of operations. The interim results for the period ended March 31, 2012 are not necessarily indicative of results for the full year. It is management's opinion, however that all material adjustments (consisting of normal recurring adjustments) have been made which are necessary for a fair financial statements presentation.

     

Activities since re-entering the development stage have been comprised mainly of administrative matters.

     
(B)

Cash and Cash Equivalents

     

For purposes of the cash flow statements, the Company considers all highly liquid investments with original maturities of three months or less at the time of purchase to be cash equivalents. Cash includes deposits at foreign financial institutions which are not covered by FDIC.

     

As of March 31, 2012 and December 31, 2011, the Company held $76 and $103 in US Funds at a Canadian bank respectively. In addition as of March 31, 2012 and December 31, 2011, the Company held $347 (translated to USD) and $328 (translated to USD) of Canadian Fund in a Canadian bank, respectively.

     
(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 revenue and expenses during the reported period. Significant estimates include the valuation of deferred taxes and the valuation of in kind contribution of services and interest. Actual results could differ from those estimates.

     
(D)

Revenue Recognition

     

Revenue is recognized when persuasive evidence of an arrangement exists, delivery has occurred, the fee is fixed or determinable and collectability is assured. The company had no revenue for the three months ended March 31, 2012 and 2011.

8



EWRX INTERNET SYSTEMS, INC.
(A Development Stage Company)
 
Notes to Condensed Financial Statements
March 31, 2012
 
"Unaudited"

1.

Summary of Significant Accounting Policies and Organization (continued)

     
(E)

Fair Value of Financial Instruments

     

The carrying amounts of the Company's financial instruments including accounts payable and accrued liabilities approximate their fair value due to the relatively short period to maturity for these instruments.

     
(F)

Income/(Loss) Per Share

     

Basic and diluted net loss per common share is computed based upon the weighted average common shares outstanding as defined by FASB Accounting Standards Codification Topic 260, Earnings per Share. As of March 31, 2012 and 2011, there were no common share equivalents outstanding.

     
(G)

Income Taxes

     

The Company accounts for income taxes under the FASB Accounting Standards Codification Topic 740, Income taxes. Under Topic 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. Under FASB Accounting Standards Codification Topic 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.

     
(H)

Business Segments

     

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

     
(I)

Recent Accounting Pronouncements

     

In December 2011, FASB issued Accounting Standards Updte 2011-11, Balance Sheet - Disclosures about Offsetting Assets and Liabilites to enhance disclosure requirements relating to the offsetting of assets and liabilities on an entity's balance sheet. The update requires enhanced disclosures regarding assets and liabilities that are presented net or gross in the statement of financial position when the right of offset exists, or that are subject to an enforceable master netting arrangement. The new disclosure requirements relating to this update are retrospective and effective for annual and interim periods beginning on or after January 1, 2013. The update only requires additional disclosures, as such, we do not expect that the adoption of this standard will impact on our results of operations, cash flows or financial condition.

9



EWRX INTERNET SYSTEMS, INC.
(A Development Stage Company)
 
Notes to Condensed Financial Statements
March 31, 2012
  
"Unaudited"

2.

Going Concern

   

As reflected in the accompanying unaudited condensed financial statements, the Company is in the development stage with no operations, a net loss of $23,914 for the three months ended March 31, 2012, a stockholders' deficiency and a working capital deficiency of $32,831 as of March 31, 2012, and cash used in operations from re-entering the development stage of $261,298. This raises substantial doubt about its ability to continue as a going concern. The ability of the Company to continue as a going concern has been, and remains, dependent on advances from its stockholders and the Company's ability to raise additional capital. The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

   
3.

Related Party Transactions

   

Advances from director represent advances granted by Jessica Q. Wang. Ms. Wang pays for certain administrative expenses and is reimbursed by the Company. These advances have no fixed terms of repayment, are unsecured, and bear no interest. During the three months ended March 31, 2012, Ms.Wang advanced the company $2,547 for purposes of paying operating expenses on behalf of the Company. During the three months ended March 31, 2012 and 2011, the Company imputed interest on the advances from the director of $52 and $8,745, respectively. As of March 31, 2012 and December 31, 2011, the Company has loans from Ms. Wang with an outstanding balance of $2,547 and $0 respectively.

   

As of March 31, 2012, the Company has loans from Navitex Technology, Inc., a company which is controlled by one of the stockholders of the Company, with an outstanding balance of $8,675. These loans have no fixed terms of repayment, are unsecured, and bear no interest. During the three months ended March 31, 2012 and 2011, the Company imputed interest on these loans of $318 and $324, respectively.

   

On the above two transactions, the Company imputed interest at a rate of 16.67% which is comparable to past borrowings. (See Note 4(d))

10



EWRX INTERNET SYSTEMS, INC.
(A Development Stage Company)
 
Notes to Condensed Financial Statements
March 31, 2012
 
"Unaudited"

4.

Stockholders' Deficiency

     
(A)

Common Stock Issued for Purchase of Software

     

During 2002, the Company issued 3,700,000 shares of common stock in association with the purchase of computer software. Additionally, the Company has agreed to pay the seller a royalty fee of 7% of gross sales. As of March 31, 2012, the Company has not made any sales of the software that would result in the payment of a royalty fee.

     
(B)

Common Stock Issued for Debt

     

During 2002, the Company issued 1,276,227 shares of common stock in order to settle debt amounting to $199,148. ($0.1560 per share)

     

During 2003, the Company issued 40,000,000 shares of common stock in order to settle debt amounting to $40,000. ($0.0010 per share)

     

During 2004, the Company issued 33,873,733 shares of common stock in order to settle debt amounting to $21,316. ($0.0006 per share)

     
(C)

Common Stock Issued for Cash

     

During 2002, the company issued 445,900 shares of common stock for $44,590 in conjunction with a private placement offer less a finance fee of $9,590 for a net cash value of $35,000. ($0.0785 per share)

     
(D)

In-kind Contribution

     

During 2007, the Company recorded additional paid-in capital of $72,000 for the fair value of services provided to the Company by its president.

     

During 2007, the Company recorded additional paid-in capital of $19,184 for the imputed interest on loans from a related party. (see Note 3)

     

During 2008, the Company recorded additional paid-in capital of $72,000 for the fair value of services provided to the Company by its president.

     

During 2008, the Company recorded additional paid-in capital of $24,117 for the imputed interest on loans from a related party. (see Note 3)

     

During 2009, the Company recorded additional paid-in capital of $72,000 for the fair value of services provided to the Company by its president.

     

During 2009, the Company recorded additional paid-in capital of $29,244 for the imputed interest on loans from a related party. (see Note 3)

11



EWRX INTERNET SYSTEMS, INC.
(A Development Stage Company)
 
Notes to Condensed Financial Statements
March 31, 2012
 
"Unaudited"

4.

Stockholders' Deficiency (continued)


 

During 2010, the Company recorded additional paid-in capital of $72,000 for the fair value of services provided to the Company by its president.

     
 

During 2010, the Company recorded additional paid-in capital of $33,725 for the imputed interest on loans from related parties. (See Note 3)

     
 

During 2011, the Company recorded additional paid-in capital of $72,000 for fair value of services provided by the Company by its president.

     
 

During 2011, the Company recorded additional paid-in capital of $37,215 for the imputed interest on loans from related parties. (see Note 3)

     
 

In December 2011, the officer and director forgave $228,029 of advances. The total forgiveness of debt was recorded as additional paid in capital in 2011.

     
 

During three months ending March 31, 2012 the Company recorded additional paid-in capital of $18,000 for the fair value of services provided to the Company by its president.

     
 

During three months ending March 31, 2012, the Company recorded additional paid-in capital of $370 for the imputed interest on the advances from a director and note payable - related party.

     
  (E)

Amendment to Articles of Incorporation

     
 

During 1999, the Company amended its Articles of Incorporation to change the name of the corporation and provide for an increase in its authorized share capital. The name of the Company was changed from Europa Resources, Inc. to EWRX Internet Systems, Inc. The authorized capital stock increased to 100,000,000 common shares at a par value of $0.001 per share.

     
 

During 2009, the Company amended its Articles of Incorporation to increase the authorized capital stock to 200,000,000 common shares at a par value of $0.001 per share.


5.

Subsequent Events

   

Subsequent to March 31, 2012, a director advanced $2,600 to the Company to pay operating expenses. The advance has no fixed term of repayments, is unsecured and bears no interest.

   

In addition, subsequent to March 31, 2012, the director forgave the total amount advanced during the three months ended March 31, 2012 and through today of $5,147.

12


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

The following discussion should be read in conjunction with the Financial Statements and Notes thereto appearing elsewhere in this Quarterly Report on Form 10-Q. The following discussion contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 relating to future events or our future performance. Actual results may materially differ from those projected in the forward-looking statements as a result of certain risks and uncertainties set forth in this Quarterly Report. Although management believes that the assumptions made and expectations reflected in the forward-looking statements are reasonable, there is no assurance that the underlying assumptions will, in fact, prove to be correct or that actual results will not be different from expectations expressed in this Quarterly Report.

Plan of Operations

Since we formally ceased operations, we have had no business or operations. Recently, our management determined that it was in the best interests of our shareholders to seek an operating company to acquire. All of our efforts are now focused on finding such an acquisition candidate, although we do not currently have any candidates identified and we have only had very preliminary negotiations regarding potential candidates.

Results of Operations

The Company has been in a state of reorganization and development over the past two years. We have been unsuccessful in executing our business plan and therefore have been forced to cease operating. The Company continues to experience financial deficiencies that have been a source of constant concern over this and previous periods in its operations. As a result, the Company has been unable to reach some of the goals that had been set for its development and has been forced to cease operating.

We expected to be able to generate revenue and launch our product, Instant Recall, but this has been unsuccessful.

The marketplace is in a state of flux, and, continues to require constant evaluation in terms of opportunity and reward because needs change and competition for the opportunity is always present. Over the last two years, the Company has been consolidating its business operations, developing its software and preparing for the opportunities. Although, we may be in a position in the future to re-launch our operations, there can be no assurance that the Company will be able to overcome all of the circumstances confronting it. The Company will, however, do everything possible to meet these challenges and realize its goals. EWRX financial requirements over the next fiscal year are dependent, to a major extent, on the speed at which development occurs in the emerging markets. We will continue to monitor this situation closely. As our situation matures, the requirements will become clearer.

Liquidity and Capital Resources

The Company’s primary source of liquidity as of March 31, 2012 is cash on hand. Cash on hand as of March 31, 2012 was $423. Current assets totaled $423 on March 31, 2012. Current liabilities were $33,254 on March 31, 2012.

The Company will continue to evaluate alternative sources of capital to meet our requirements, including other asset or debt financing, issuing equity securities and entering into financing arrangements. There can be no assurance, however, that any of the contemplated financing arrangements described herein will be available and, if available, can be obtained on terms favorable to the Company.

13


The Company currently does not have enough cash to satisfy its minimum cash requirements for the next twelve months. The Company is going to rely on loans from our officers and directors to meet the short term cash requirements. However, the present state of the Company’s liquidity and capital resources 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 and implement its business plan.

Critical Accounting Policies

The Company’s financial statements and related public financial information are based on the application of accounting principles generally accepted in the United States (“GAAP”). GAAP requires the use of estimates; assumptions, judgments and subjective interpretations of accounting principles that have an impact on the assets, liabilities, revenue and expense amounts reported. These estimates can also affect supplemental information contained in our external disclosures including information regarding contingencies, risk and financial condition. We believe our use of estimates and underlying accounting assumptions adhere to GAAP and are consistently and conservatively applied. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Actual results may differ materially from these estimates under different assumptions or conditions. We continue to monitor significant estimates made during the preparation of our financial statements.

While all these significant accounting policies impact our financial condition and results of operations, we view certain of these policies as critical. Policies determined to be critical are those policies that have the most significant impact on our condensed financial statements and require management to use a greater degree of judgment and estimates. Actual results may differ from those estimates. Management believes that given current facts and circumstances, it is unlikely that applying any other reasonable judgments or estimate methodologies would cause effect on our results of operations, financial position or liquidity for the periods presented in this report.

Recent Accounting Pronouncements

In December 2011, FASB issued Accounting Standards Update 2011-11, Balance Sheet - Disclosures about Offsetting Assets and Liabilities” to enhance disclosure requirements relating to the offsetting of assets and liabilities on an entity's balance sheet. The update requires enhanced disclosures regarding assets and liabilities that are presented net or gross in the statement of financial position when the right of offset exists, or that are subject to an enforceable master netting arrangement. The new disclosure requirements relating to this update are retrospective and effective for annual and interim periods beginning on or after January 1, 2013. The update only requires additional disclosures, as such, we do not expect that the adoption of this standard will have a material impact on our results of operations, cash flows or financial condition.

14


Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements, financings, or other relationships with unconsolidated entities or other persons, also known as “special purpose entities” (SPEs).

Item 3. Quantitative and Qualitative Disclosures about Market Risk

Not applicable because we are a smaller reporting company.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Pursuant to Rule 13a-15(b) under the Securities Exchange Act of 1934 (“Exchange Act”), the Company carried out an evaluation, with the participation of the Company’s management, including the Company’s Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”),of the effectiveness of the Company’s disclosure controls and procedures (as defined under Rule 13a-15(e) under the Exchange Act) as of the end of the period covered by this report. Based upon that evaluation, the Company’s CEO and CFO concluded that the Company’s disclosure controls and procedures are effective to ensure that information required to be disclosed by the Company in the reports that the Company files or submits under the Exchange Act, 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 the Company’s management, including the Company’s CEO and CFO, as appropriate, to allow timely decisions regarding required disclosure.

15


Changes in Internal Controls

There have been no changes in the Company’s internal control over financial reporting during the latest fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings

We are currently not 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

Not applicable because we are a smaller reporting company.

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

None.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

N/A

Item 5. Other Information

None.

Item 6. Exhibits

31.1

Certification of Chief Executive Officer pursuant to Exchange Act Rule 13a-14 or 15d-14(a) as adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

   
31.2 Certification of Chief Financial Officer pursuant to Exchange Act Rule 13a-14 or 15d-14(a) as adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
   
32.1

Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of Sarbanes Oxley Act of 2002.*

*              The forgoing certification is being furnished to the Securities and Exchange Commission pursuant to § 18 U.S.C. Section 1350. It is not being filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and is not to be incorporated by reference into any filing of the Company, whether made before or after the date hereof, regardless of any general incorporation language in such filing.

16


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

  EWRX INTERNET SYSTEMS, INC.
   
Date: June 21, 2012 By: /s/ Jessica Q. Wang
             Jessica Q. Wang
             Chief Executive Officer and
             Principal Accounting Officer
             (Duly Authorized Officer and Principal Executive Officer)

17


XOTC:EWRX Quarterly Report 10-Q Filling

XOTC:EWRX Stock - Get Quarterly Report SEC Filing of XOTC:EWRX stocks, including company profile, shares outstanding, strategy, business segments, operations, officers, consolidated financial statements, financial notes and ownership information.

XOTC:EWRX Quarterly Report 10-Q Filing - 3/31/2012
Name |  Ticker |  Star Rating |  Market Cap |  Stock Type |  Sector |  Industry Star Rating |  Investment Style |  Total Assets |  Category |  Top Holdings |  Top Sectors |  Symbol |  Title Star Rating |  Category |  Total Assets |  Top Holdings |  Top Sectors |  Symbol |  Name Title |  Date |  Author |  Collection |  Interest |  Popularity Topic |  Sector |  Key Indicators |  User Interest |  Market Cap |  Industry Name |  Ticker |  Star Rating |  Market Cap |  Stock Type |  Sector |  Industry Star Rating |  Investment Style |  Total Assets |  Category |  Top Holdings |  Top Sectors |  Symbol / Ticker |  Title Star Rating |  Category |  Total Assets |  Symbol / Ticker |  Name Title |  Date |  Author |  Collection |  Popularity |  Interest Title |  Date |  Company |  Symbol |  Interest |  Popularity Topic |  Sector |  Key Indicators |  User Interest |  Market Cap |  Industry Title |  Date |  Company |  Symbol |  Interest |  Popularity

Previous: XOTC:EWRX Insider Activity 3 Filing - 7/30/2012  |  Next: XOTC:EWRX Quarterly Report 10-Q Filing - 6/30/2012