Xcel Brands
NETFABRIC HOLDINGS, INC (Form: 10-Q, Received: 05/10/2011 16:07:27)



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


FORM 10-Q

 
x    QUARTERLY REPORT UNDER SECTION 13 OR 15 (D) OF THE SECURITES
EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED March 31, 2011

COMMISSION FILE NUMBER: 0-21419

NETFABRIC HOLDINGS, INC.
(Exact Name of Small Business Issuer as Specified in Its Charter)

Delaware
 
76-0307819
(State or Other Jurisdiction of
Incorporation or Organization)
  
(I.R.S Employer Identification No.)

(Address of Principal Executive Offices)
117 Randolph Avenue, 
Jersey City, New Jersey 07305,

(201)-706-2998
(Issuer's Telephone Number, Including Area Code)
(Former address, if changed since last report)
299 Cherry Hill Road,
Parsippany, New Jersey 07054

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 past 90 days.
Yes   ¨ No x
 
Indicate by check mark whether the registrant has submitted electronically and posted on its Website, 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 small reporting company.

 
Large accelerated filer ¨
Accelerated filer ¨
   
Non- accelerated filer ¨
Small reporting company x

Indicate by a check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes x    No ¨

State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date: As of May 2, 2011, 97,053,044 shares of common stock, $.001 par value per share, of the issuer were outstanding. 
Transitional Small Business Disclosure Format (check one): Yes ¨    No x

 
 
 

 

 

NETFABRIC HOLDINGS, INC.

 
INDEX
 
   
Page
     
PART I.
FINANCIAL INFORMATION
 
     
Item 1.
Financial Statements (Unaudited)
 
     
 
Condensed Consolidated Balance Sheets
1
     
 
Condensed Consolidated Statements of Operations
2
     
 
Condensed Consolidated Statements of Cash Flows
3
     
 
Notes to Interim Condensed Consolidated Financial Statements
4
     
Item 2.
Management's Discussion and Analysis of Financial Condition and Results of Operations
5
     
Item 3.
Quantitative and Qualitative Disclosures about Market Risk
              9
     
Item 4.
Controls and Procedures
9
     
PART II.
OTHER INFORMATION
9
     
Item 1.
Legal Proceedings
9
     
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds
9
     
Item 3.
Defaults Upon Senior Securities
9
     
Item 4.
Submission of Matters to a Vote of Security Holders
9
     
Item 5.
Other Information
9
     
Item 6.
Exhibits
10
     
 
Signatures
11

 
 

 
 

 

NETFABRIC HOLDINGS, INC. AND SUBSIDIARIES
           
CONDENSED  CONSOLIDATED BALANCE SHEETS
           
             
   
MARCH 31, 2011
   
DECEMBER 31, 2010
 
ASSETS
 
(UNAUDITED)
       
             
CURRENT ASSETS:
           
Cash
  $ 150,196     $ 251,256  
Other receivable
    75,000       -  
                 
Total current assets
    225,196       251,256  
                 
                 
                 
                 
TOTAL ASSETS
  $ 225,196     $ 251,256  
                 
LIABILITIES AND STOCKHOLDERS' EQUITY
               
                 
CURRENT LIABILITIES:
               
Accounts payable and accrued liabilities
  $ 72,174     $ 84,272  
                 
                 
Total current liabilities
    72,174       84,272  
                 
                 
                 
Total liabilities
    72,174       84,272  
                 
COMMITMENTS AND CONTINGENCIES
               
                 
STOCKHOLDERS' EQUITY :
               
Common Stock, $.001 par value, authorized shares 200,000,000, 97,053,044 shares issued and outstanding
    97,053       97,053  
Additional paid-in capital
    38,243,128       38,243,128  
Accumulated deficit
    (38,187,159 )     (38,173,197 )
                 
Total stockholders' equity
    153,022       166,984  
                 
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
  $ 225,196     $ 251,256  
                 
                 
See accompanying notes to interim condensed consolidated financial statements.
               
                 
 
 
 

 
1

 
 

 
NETFABRIC HOLDINGS, INC. AND SUBSIDIARIES
           
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
           
 
(UNAUDITED)
           
     
Three Months
   
Three Months
 
     
Ended
   
Ended
 
     
March 31, 2011
   
March 31, 2010
 
               
REVENUES
    $ -     $ -  
                   
OPERATING EXPENSES:
               
 
General and administrative expenses
    13,962       33,113  
                   
                   
                   
Loss before provision for income taxes
    13,962       33,113  
                   
Provision for income taxes
    -       -  
                   
                   
NET LOSS
    $ 13,962     $ 33,113  
                   
                   
                   
Net loss per common share, basic and diluted
  $ 0.00     $ 0.00  
                   
Weighted average number of shares outstanding, basic and diluted
    97,053,044       97,053,044  
                   
                   
                   
 
See accompanying notes to interim condensed consolidated financial statements.
               

 
2

 

 
NETFABRIC HOLDINGS, INC. AND SUBSIDIARIES
           
 
  CONDENSED   CONSOLIDATED STATEMENT OF CASH FLOWS
           
 
(UNAUDITED)
           
     
Three Months
   
Three Months
 
     
Ended
   
Ended
 
OPERATING ACTIVITIES
 
March 31, 2011
   
March 31, 2010
 
               
Net loss
    $ (13,962 )   $ (33,113 )
Changes in operating assets and liabilities:
               
Other receivable
    (75,000 )     -  
Accounts payable and accrued liabilities
    (12,098 )     (11,252 )
Net cash used in operating activities
    (101,060 )     (44,365 )
                   
INVESTING ACTIVITIES
               
Net cash (used in) provided by investing activities
    -       -  
                   
FINANCING ACTIVITIES
               
Net cash (used in) provided by financing activities
    -       -  
                   
Net decrease in cash
      (101,060 )     (44,365 )
                   
Cash at beginning of period
    251,256       55,509  
                   
Cash at end of period
    $ 150,196     $ 11,144  
                   
                   
See accompanying notes to interim condensed consolidated financial statements.
               
 
 
 

 
3

 

 
 
 
NETFABRIC HOLDINGS INC. AND SUBSIDIARIES

NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 
NOTE 1. NATURE OF BUSINESS AND MANAGEMENT'S PLANS
 
NetFabric Holdings, Inc. ("Holdings" or the "Company") was incorporated under the laws of the State of Delaware on August 31, 1989.  As of December 31, 2010, the Company has one wholly-owned subsidiary, NetFabric Corporation (“NetFabric”) which is not active.
 
On May 20, 2005 Holdings acquired UCA, a New Jersey company, an information technology ("IT") services company that serves the information and communications needs of a wide range of Fortune 500 and small to mid-size business clients in the financial markets industry as well as the pharmaceutical, health care and hospitality sectors. UCA delivers a broad range of IT services in the practice areas of infrastructure builds and maintenance, managed services and professional services.

Effective August 24, 2009, pursuant to a Memorandum of Understanding, the Company sold UCA to Fortify Infrastructure Services, Inc. (“Fortify”) for $5,850,000 consisting of $5,000,000 in cash, resulting from the cancellation of a $5,000,000 note previously issued to Fortify by UCA on March 12, 2009, and a receivable of $850,000, which was paid in May 2010. The Memorandum of Understanding referred to above was signed on April 27, 2010 and amended the terms of previous agreements dated March 12, 2009 and August 24, 2009 between UCA and Fortify.

Management's plans

As discussed above, the Company sold UCA to Fortify for $5,850,000.  Out of proceeds from the transaction, the Company repaid all of its debt. After the sale, the Company does not have any operations. However, the Company will be debt free. The Company intends to explore strategic alternatives including merger with another entity. Currently, the Company does not have any agreement or understanding with any entity and there is no assurance that such a transaction will ever be consummated. The Company believes that it will be able to meet its cash requirements throughout fiscal 2011 and continue its business development efforts.

NOTE 2.  BASIS OF PRESENTATION
 
The accompanying unaudited condensed interim consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC"), except for the condensed consolidated balance sheet as of December 31, 2010, which was derived from audited financial statements. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles in the United States of America have been omitted pursuant to such rules and regulations. However the Company believes that the disclosures are adequate to make the information presented not misleading. The financial statements reflect all adjustments (consisting only of normal recurring adjustments) that are, in the opinion of management, necessary for a fair presentation of the Company's financial position and results of operations.

The operating results for the three months ended March 31, 2011 and, 2010 are not necessarily indicative of the results to be expected for any other interim period or any future year. The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the Company's December 31, 2010 consolidated financial statements, including the notes thereto, which are included in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2010 filed on March 3, 2011.

Use of Estimates
 
The condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States. In preparing the financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the statements of financial condition and revenues and expenses for the period then ended. Actual results may differ significantly from those estimates.

Fair Value of Financial Instruments

The carrying amounts reported in the balance sheet for cash and accounts payable and accrued expenses approximate their fair market value based on the short-term maturity of these instruments.

Earnings (Loss) Per Share
 
The Company calculates earnings (loss) basic earnings (loss) per share by dividing the net income (loss) by the weighted average number of shares of common stock outstanding during the period. Diluted earnings (loss) per share is computed by dividing the net income (loss) by the weighted average number of shares of common stock outstanding during the period plus the effects of any dilutive securities. Diluted earnings (loss) per share considers the impact of potentially dilutive securities except in periods in which there is a loss because the inclusion of the potential common shares would have an anti-dilutive effect. The Company's  potentially dilutive securities include common shares which may be issued upon exercise of its stock options or exercise of warrants.
 
Diluted loss per share for the three months ended March 31, 2011 and 2010 exclude potentially issuable common shares of approximately 1,166,782 and 7,156,867, respectively, primarily related to the Company's outstanding stock options and warrants, because the assumed issuance of such potential common shares is antidilutive.

NOTE 3. RECENT ACCOUNTING PRONOUNCEMENTS

The Company has adopted all recently issued accounting pronouncements. The adoption of the accounting pronouncements, including those not yet effective, is not anticipated to have a material effect on the financial position or results of operations of the Company.
 
NOTE 4.  STOCKHOLDERS' EQUITY
 
Warrants
Outstanding warrant securities consist of the following at March 31, 2011:

         
Exercise
   
         
Price
 
Expiration
Laurus Warrants
   
554,282
   
$
0.001
 
None
Investment advisor’s services
   
312,500
   
$
0.82
 
June 2011
     
886,782
           

  NOTE 5. OTHER RECEIVABLE

In March 2011, the Company commenced negotiations for a transaction with a third party and placed $75,000 as a deposit in an escrow account. The negotiations were terminated in April 2011 and the deposit was returned to the Company.  In the accompanying balance sheets at March 31, 2011, this deposit is disclosed as other receivable.
 

 
 
4

 


ITEM 2.
  
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 
The following discussion and analysis and results of operations should be read in conjunction with the unaudited condensed consolidated financial statements and accompanying notes and the other financial information appearing elsewhere in this report and reports included herein by reference. The following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements.

Plan of Operation - General

During the next 12 months, the Company intends to seek, investigate and, if such investigation warrants, acquire an interest in one or more  business  opportunities  presented to it by persons or firms who or which desire to seek the perceived advantages of a publicly held corporation. At this time, the  Company  has no  plan,  proposal,  agreement,  understanding  or arrangement to acquire or merge with any specific  business or company,  and the Company has not  identified any specific  business or company for  investigation and  evaluation.  No member of Management or promoter of the Company has had any material discussions with any other company with respect to any acquisition of that company.

The Company will not restrict its search to any specific business, industry or geographical location, and the Company may participate in a business venture of virtually any kind or nature. The discussion of the proposed plan of operation under this caption and throughout this Annual Report is purposefully general and is not meant to be restrictive of the Company's virtually unlimited discretion to search for and enter into potential business opportunities.

The Company may have to obtain funds in one or more private placements to finance the operation of any acquired business. Persons purchasing securities in these placements and other shareholders will likely not have the opportunity to participate in the decision relating to any acquisition.  The Company's proposed business is sometimes referred to as a "blind pool" because any investors  will entrust their investment  monies to the Company's  management before they have a chance  to  analyze  any   ultimate  use  to  which  their  money  may  be  put. Consequently,  the  Company's  potential  success  is heavily dependent  on the Company's management, which  will  have  virtually  unlimited  discretion  in searching for and entering into a business opportunity. None of the officers and directors of the Company has had any experience in the proposed business of the Company.  There can be no assurance that the Company will be able to raise any funds in private placements.  In any private placement, management may purchase shares on the same terms as offered in the private placement.

Management anticipates that it will only participate in one potential business venture. This lack of diversification should be considered a substantial risk in investing  in the  Company  because  it will not  permit  the  Company to offset potential  losses  from one  venture  against  gains  from  another.  The Company  may seek a business  opportunity  with a firm which only  recently commenced  operations,  or a developing  company in need of additional funds for expansion  into new products or markets,  or seeking to develop a new product or service,  or an  established  business  which may be  experiencing  financial or operating  difficulties  and is in the  need  for  additional  capital  which is perceived  to be  easier  to raise by a public  company.  In some instances, a business opportunity may involve the acquisition or merger with a corporation which does not need substantial additional cash but which desires to establish a public trading market for its common stock.  The Company may purchase assets and establish wholly owned subsidiaries in various business or purchase existing businesses as subsidiaries.

The Company anticipates that the selection of a business opportunity in which to participate will be complex and extremely risky.  Because of general economic conditions,  rapid  technological  advances being made in some  industries,  and shortages  of available  capital,  management  believes  that there are numerous firms  seeking the benefits of a publicly  traded  corporation.  Such  perceived benefits of a publicly traded corporation may include  facilitating or improving the  terms  on  which  additional  equity  financing  may be  sought,  providing liquidity  for the  principals  of a  business,  creating a means for  providing incentive  stock  options  or  similar  benefits  to  key  employees,  providing liquidity (subject to restrictions of applicable statutes) for all shareholders, and other factors.  Potentially available   business opportunities may occur in many different industries and at various stages of development, all of which will make the task of comparative investigation and analysis of such business opportunities extremely difficult and complex.

As part of any transaction, the acquired company may require that management or other stockholders  of the Company sell all or a portion of their shares to the acquired  company,  or  to  the  principals  of  the  acquired  company.  It is anticipated that the sales price of such shares will be lower than the current market price or anticipated market price of the Company's Common Stock.  The Company's funds are not expected to be used for purposes of any stock purchase from insiders.  The Company shareholders will not be provided the opportunity to approve or consent to such sale.  The opportunity to sell all or a portion of their shares in connection with an acquisition may influence management's decision to enter into a specific transaction. However, management believes that since the  anticipated  sales  price will be less than  market  value,  that the potential of a stock  sale by  management  will be a  material  factor on their decision to enter a specific transaction.


 
5

 

The above description of potential sales of management stock is not based upon any corporate bylaw, shareholder or board resolution, or contract or agreement. No other payments of cash or property are expected to be received by Management in connection with any acquisition.

The Company has not formulated any policy regarding the use of consultants or outside advisors, but does not anticipate that it will use the services of such persons.

The Company may not have sufficient capital with which to provide the owners of business opportunities with any significant cash or other assets.  However, management believes the Company will offer owners of business opportunities the opportunity to acquire a controlling ownership interest in a public company at substantially less cost than is required to conduct an initial public offering.  The owners of the business opportunities will, however, incur significant post-merger or acquisition registration costs in the event they wish to register a portion of their shares for subsequent sale. The Company will also incur significant legal and accounting costs in connection with the acquisition of a business opportunity including the costs of preparing post-effective amendments, Forms 8-K, agreements and related reports and  documents  nevertheless,  the officers and directors of the Company have not conducted  market research and are not aware of statistical  data which would support the perceived benefits of a merger or acquisition  transaction for the owners of a business opportunity.

The Company does not intend to make any loans to any prospective merger or acquisition candidates or to unaffiliated third parties.

Sources of Opportunities

The Company  anticipates that business  opportunities for possible  acquisition will be referred by various  sources,  including  its  officers  and  directors, professional advisers, securities broker-dealers,  venture capitalists,  members of the financial community, and others who may present unsolicited proposals.

The Company will seek a potential business opportunity from all known sources, but will rely principally on personal contacts of its officers and directors as well as indirect associations between them and other business and professional people.  It is not presently anticipated that the Company will engage professional firms specializing in business acquisitions or reorganizations.

The officers  and  directors  of the Company are  currently  employed in other positions  and will  devote only a portion of their time (not more than three hours per week)  to the  business  affairs  of the  Company,  until  such  time as an acquisition  has been  determined  to be highly  favorable,  at which  time they expect to spend full time in  investigating  and closing any  acquisition  for a period of two weeks.  In addition, in the face of competing demands for their time, the officers and directors may grant priority to their full-time positions rather than to the Company.

Evaluation of Opportunities

The analysis of new business opportunities will be undertaken by or under the supervision of the officers and directors of the Company. Management intends to concentrate on identifying   prospective   business opportunities which may be brought to its attention through present associations with management.  In analyzing  prospective business  opportunities,  management will consider such matters as the available technical,  financial and managerial resources;  working  capital  and  other  financial  requirements;   history  of operation,  if any; prospects for the future;  present and expected competition; the quality and experience of management services which may be available and the depth of that  management;  the potential for further  research,  development or exploration;  specific  risk factors not now  foreseeable  but which then may be anticipated to impact the proposed activities of the Company;  the potential for growth or expansion;  the potential for profit; the perceived public recognition or acceptance of products,  services or trades; name  identification;  and other relevant  factors.  Officers and directors of the Company will meet  personally with   management  and  key  personnel  of  the  firm  sponsoring  the  business opportunity as part of their investigation.  To the extent possible, the Company intends to utilize written reports and personal investigation to evaluate the above factors.  The Company will not acquire or merge with any company for which audited financial statements cannot be obtained.

It may be anticipated that any opportunity in which the Company participates will present certain risks. Many of these risks cannot be adequately identified prior to selection of the specific opportunity, and the Company's shareholders must, therefore, depend on the ability of management to identify and evaluate such risk. In the case of some of the opportunities available to the Company, it may be  anticipated  that the  promoters  thereof  have been unable to develop a going concern or that such business is in its  development  stage in that it has not generated  significant revenues from its principal business activities prior to the  Company's  anticipation.  There is a risk,  even  after  the  Company's participation  in the  activity  and the related  expenditure  of the  Company's funds,  that the  combined  enterprises  will  still be unable to become a going concern or advance beyond the development  stage.  Many of the opportunities may involve new and untested products, processes, or market strategies which may not succeed.  Such risks will be assumed by the Company and, therefore, its shareholders.

 The Company will not restrict its search for any specific kind of business, but may acquire a venture which is in its preliminary or development stage, which is already in operation, or in essentially any stage of its corporate life. It is currently impossible to predict the status of any business in which the Company may become  engaged,  in that such  business may need  additional  capital,  may merely desire to have its shares  publicly  traded,  or may seek other perceived advantages which the Company may offer.


 
6

 

Acquisition of Opportunities

In implementing a structure for a particular business acquisition, the Company may become a party to a merger, consolidation, reorganization, joint venture, franchise or licensing agreement with another corporation or entity. It may also purchase stock or assets of an existing business.  On the consummation of a transaction, it is possible that the present management and shareholders of the Company will not be in control of the Company. In addition, a majority or all of the  Company's  officers  and  directors  may,  as  part  of  the  terms  of the acquisition  transaction,  resign and be replaced by new officers and  directors without a vote of the Company's shareholders.

It is anticipated that any securities issued in any such reorganization would be issued in reliance on exemptions from registration under applicable Federal and state securities laws.  In some circumstances, however, as a negotiated element of this transaction, the Company may agree to register such securities either at the time the transaction is consummated, under certain conditions, or at specified time thereafter.  The issuance of substantial additional securities and their  potential  sale into any  trading  market  which may  develop  in the Company's  Common Stock may have a depressive  effect on such market.  While the actual terms of a transaction  to which the Company  may be a party  cannot be predicted,  it may be expected that the parties to the business transaction will find it desirable to avoid the creation of a taxable event and thereby structure the  acquisition  in  a so  called  "tax  free"  reorganization  under  Sections 368(a)(1) or 351 of the Internal  Revenue Code of 1986, as amended (the "Code"). In order to obtain tax free treatment under the Code, it may be necessary for the owners of the acquired business to own 80% or more of the voting stock of the surviving entity. In such event, the shareholders of the Company,  including investors  in this  offering,  would  retain  less  than 20% of the  issued  and outstanding  shares of the surviving  entity,  which could result in significant dilution in the equity of such shareholders.

As part of the Company's investigation,  officers and directors of the Company will meet personally  with  management and key personnel,  may visit and inspect material  facilities,  obtain  independent  analysis or  verification of certain information provided,  check references of management and key personnel, and take other reasonable  investigative measures, to the extent of the Company's limited financial resources and management expertise.

The manner in which each Company participates in an opportunity will depend on the nature of the  opportunity,  the respective needs and desires of the Company and  other  parties,  the  management  of  the  opportunity,  and  the  relative negotiating strength of the Company and such other management.

With respect to any mergers or acquisitions, negotiations with target company management will be expected to focus on the percentage of the Company which target company shareholders would acquire in exchange for their shareholdings in the target company.  Depending upon, among other things, the target company's assets and liabilities, the Company's shareholders will in all likelihood hold a lesser percentage ownership interest in the Company following any merger or acquisition. The percentage ownership may be subject to significant reduction in the event the Company acquires a target company with substantial assets.  Any merger  or  acquisition  effected  by the  Company  can be  expected  to  have a significant dilutive  effect on the  percentage of shares held by the Company's then shareholders. The Company may not have sufficient funds to undertake any significant development, marketing and manufacturing of any products which may be acquired.

Accordingly, following the acquisition of any such product, the Company may be required to either seek debt or equity financing or obtain funding from third parties,  in exchange for which the Company would probably be required  to give up a  substantial  portion  of its  interest  in any  acquired product.  There is no assurance that the Company will be able either to obtain additional financing or interest third parties in providing funding for the further development, marketing and manufacturing of any products acquired.

It is anticipated that the investigation of specific business opportunities and the  negotiation,  drafting  and  execution of relevant  agreements,  disclosure documents and other  instruments  will require  substantial  management time and attention and  substantial  costs for  accountants,  attorneys and others.  If a decision is made not to participate in a specific business opportunity the costs therefore incurred in the related investigation would not be recoverable.

Furthermore, even if an agreement is reached for the participation in a specific business opportunity, the failure to consummate that transaction may result in a loss to the Company of the related costs incurred.

Management believes that the Company may be able to benefit from the use of "leverage" in the acquisition of a business  opportunity.   Leveraging a transaction involves the acquisition of a business through incurring significant indebtedness for a large percentage of the purchase price for that business.

Through a leveraged transaction, the Company would be required to use less of its available funds for acquiring the business opportunity and, therefore, could commit those funds to the operations of the business opportunity, to acquisition of other business opportunities or to other activities.  The borrowing involved in a leveraged transaction would ordinarily be secured by the assets of the business opportunity to be acquired. If the business opportunity acquired is not able to generate  sufficient  revenues to make  payments on the debt incurred by the Company to acquire that  business  opportunity,  the lender would be able to exercise the remedies provided by law  or  by  contract.  These leveraging techniques, while reducing the amount of funds that the Company must commit to acquiring a business opportunity, may correspondingly increase the risk of loss to the Company.

 
 
7

 
 
No assurance can be given as to the terms or the availability of financing for any acquisition by the Company. During periods when interest rates are relatively high, the benefits of leveraging  are not as great as during  periods of lower interest rates because the investment in the business  opportunity  held on a leveraged basis will only be profitable if it generates  sufficient revenues to cover the related debt and other costs of the  financing.  Lenders  from which the Company may obtain funds for  purposes  of a  leveraged buy-out  may impose  restrictions  on the future borrowing,  distribution, and  operating  policies of the  Company.  It is not possible at this time to predict the restrictions, if any, which lenders may impose or the impact thereof on the Company.

Results of Operations

Comparison of Three Months Ended March 31, 2011 and 2010:

Revenues
We did not generate any revenues from operations during the three months ended March 31, 2011 and 2010.  We do not anticipate earning revenues in the foreseeable future.

General and administrative expenses
 
Our general and administrative expenses for the three months ended March 31, 2011 decreased by $19,151, or 57.8%, to $13,962.  Our general and administrative expense levels decreased due to reduced level of operations after the divesture of UCA in August of 2009.  These expenses principally consisted of audit, professional and consulting expenses.

Net loss
 
As a result of the foregoing, for the three months ended March 31, 2011, net loss decreased by $19,151, or 57.8%, to a net loss of $13,962, compared to a net loss of $33,113 during the three months ended March 31, 2010.

LIQUIDITY AND CAPITAL RESOURCES
 
On March 31, 2011, our working capital was $153,022, compared to a working capital of $166, 984 on December 31, 2010. The decrease was due to the net loss incurred during the three months ended March 31, 2011. During the three months ended March 31, 2011, our operating activities used approximately $101,000 of cash, compared to approximately $44,000 used during the three months ended March 31, 2010.

After the divesture of UCA, we do not have any operations and are debt free. We will explore strategic alternatives including a merger with another entity; however, there is no assurance that such transaction will ever be consummated. Currently, we do not have any agreement or understanding with any person or entity for a merger or other business combination.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Our consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires us to make certain estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and the related disclosures of contingent assets and liabilities as of the date of the financial statements and during the applicable periods. We base these estimates on historical experience and on other factors that we believe are reasonable under the circumstances. Actual results may differ materially from these estimates under different assumptions or conditions and could have a material
impact on our financial statements.   

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future material effect on our financial condition, results of operations or liquidity.

Need For Additional Financing

The Company believes that its existing capital will be sufficient to meet the Company’s cash needs required for the costs of compliance with the reporting requirements of the Securities Exchange Act of 1934, as amended, and for the costs of accomplishing its goal of completing a business combination, for the remainder of 2011.  Once a business combination is completed, the Company’s needs for additional financing are likely to increase substantially.  As current management is under no obligation to extend credit to the Company and/or continue to invest in the Company, there is no assurance that such credit or investment will be sufficient for future periods.
 
 
8

 


ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

  Not applicable for smaller reporting companies.

ITEM 4. CONTROLS AND PROCEDURES

A. EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES:
 
Our disclosure controls and procedures are designed to ensure that information required to be disclosed in the reports filed or submitted under the Securities Exchange Act of 1934 (the "Exchange Act") is recorded, processed, summarized and reported, within the time period specified in the SEC's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in the reports filed under the Exchange Act are accumulated and communicated to management, including the Chief Executive Officer ("CEO") and Chief Financial Officer ("CFO") , as appropriate, to allow timely decisions regarding required disclosure. As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with participation of our management, including our CEO and CFO, of the effectiveness of the design and operation of our disclosure controls and procedures. Based upon and as of the date of that evaluation, the CEO and CFO concluded that our disclosure controls and procedures are effective to ensure that information required to be disclosed in the reports we file and submit under the Exchange Act are recorded, processed, summarized and reported as and when required.

B. CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING:

There were no changes in our internal controls over financial reporting during the most recent fiscal quarter that have materially affected or are reasonably likely to materially affect our internal control over financial reporting.

PART II. OTHER INFORMATION
 
ITEM 1. LEGAL PROCEEDINGS
 
None


ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
 
None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None

ITEM 5. OTHER INFORMATION

None

 
9

 

ITEM 6. EXHIBITS

(a) Exhibits:

31.1 Rule 13a-14(a)/15d-14(a) Certification (CEO)

31.2 Rule 13a-14(a)/15d-14(a) Certification (CFO)

32.1 Section 1350 Certification (CEO)

32.2 Section 1350 Certification (CFO)

 

 
10

 

 

SIGNATURES
 
In accordance with the requirements of Section 13 or 15(d) of the Securities Exchange Act, the registrant has caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Date: May  10 , 2011
By:
/s/ Cristiano Germinario
   
Name: Cristiano Germinario
   
Title: Chairman and Chief Executive Officer
     
 
By:
/s/ Vasan Thatham
   
Name: Vasan Thatham
   
Title: Principal Financial Officer and Vice President

 
 
11

 



EXHIBIT 31.1
 
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 302 OF THE SARBANES OXLEY ACT OF 2002
 
I, Cristiano Germinario certify that:
 
1. I have reviewed this Quarterly Report on Form 10-Q for the quarter ended March 31, 2011 of NetFabric Holdings, Inc. (the “Company”).
 
2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;
 
3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the Company as of, and for, the periods presented in this quarterly report;
 
4. The Company's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Company and have:
 
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
 
b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
 
c) Evaluated the effectiveness of the Company's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
 
d) Disclosed in this report any change in the Company's internal control over financial reporting that occurred during the Company's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting; and
 
5. The Company's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Company's auditors and the audit committee of the Company's board of directors (or persons performing the equivalent functions):
 
a) All significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the Company's ability to record, process, summarize and report financial information; and
 
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the Company's internal control over financial reporting.
 
May  10 , 2011
By:
/s/ Cristiano Germinario
   
Name: Cristiano Germinario
   
Title: Chairman and Chief Executive Officer
 
 
 

 



EXHIBIT 31.2
 
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 302 OF THE SARBANES OXLEY ACT OF 2002
 
I, Vasan Thatham certify that:
 
1. I have reviewed this Quarterly Report on Form 10-Q for the quarter ended March 31, 2011 of NetFabric Holdings, Inc. (the “Company”).
 
2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;
 
3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the Company as of, and for, the periods presented in this quarterly report;
 
4. The Company's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Company and have:
 
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
 
b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
 
c) Evaluated the effectiveness of the Company's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
 
d) Disclosed in this report any change in the Company's internal control over financial reporting that occurred during the Company's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting; and
 
5. The Company's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Company's auditors and the audit committee of the Company's board of directors (or persons performing the equivalent functions):
 
a) All significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the Company's ability to record, process, summarize and report financial information; and
 
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the Company's internal control over financial reporting.

May 10 , 2011
By:
/s/ Vasan Thatham
   
Name: Vasan Thatham
   
Title: Chief Financial Officer

 


 
 

 



EXHIBIT 32.1

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
 
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
 
In connection with the Quarterly Report of NetFabric Holdings, Inc. (the “Company”) on Form 10-Q for the period ended March 31, 2011 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Cristiano Germinario certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:
 
(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
 
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

May  10 , 2011
By:
/s/ Cristiano Germinario
   
Name: Cristiano Germinario
   
Title: Chairman and Chief Executive Officer

A signed original of this written statement required by Section 906 has been provided to NetFabric Holdings, Inc. and will be retained by NetFabric Holdings, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

 

 
 

 



EXHIBIT 32.2
 
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
 
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
 
In connection with the Quarterly Report of NetFabric Holdings, Inc. (the “Company”) on Form 10-Q for the period ended March 31, 2011 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Vasan Thatham, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:
 
(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
 
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

May 10 , 2011
By:
/s/ Vasan Thatham
   
Name: Vasan Thatham
   
Title: Chief Financial Officer
 
A signed original of this written statement required by Section 906 has been provided to NetFabric Holdings, Inc. and will be retained by NetFabric Holdings, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.