UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

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

For the six months ended November 30, 2011

OR

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

For the transition period from ______________ to ______________

Commission file number  000-52511

BIZZINGO, INC.

(Exact name of registrant as specified in its charter)

Nevada		98-0471052
(State or other jurisdiction of incorporation or organization)		(IRS Employer Identification No.)

Suite 202, 63 Main Street, Flemington, New Jersey 08822

(Address of Principal Executive Offices)

(908) 968-0838

(Registrant’s telephone, including area code)

Indicate by check mark whether the registrant (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 12 months 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 [  ]

(Does not currently apply to the Registrant)

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 definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

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

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes [  ]     No [X]

APPLICABLE ONLY TO CORPORATE ISSUERS

State the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date:72,385,807 Shares of $0.001 par value common stock outstanding as of January 13, 2012.

Table of Contents

PART I. FINANCIAL INFORMATION	3
ITEM 1. INTERIM FINANCIAL STATEMENTS.	3
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.	5
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	9
ITEM 4. CONTROLS AND PROCEDURES	9
ITEM 5. OTHER	12
PART II - OTHER INFORMATION	12
ITEM 1. LEGAL PROCEEDINGS	12
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	12
ITEM 3. DEFAULTS UPON SENIOR SECURITIES	12
ITEM 4. (REMOVED AND RESERVED)	12
ITEM 5. OTHER INFORMATION	12
ITEM 6. EXHIBITS	12
SIGNATURES	13

2

PART I. Financial Information

Item 1. Interim Financial Statements.

The accompanying unaudited consolidated financial statements of Bizzingo, Inc. (“Bizzingo”) have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission (“SEC”), and, should be read in conjunction with the audited financial statements and notes thereto contained in Bizzingo’s Annual Report Form 10-K filed with the SEC on August 18, 2011. In the opinion of management, all adjustments consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim period are not necessarily indicative of the results that may be expected for the full year. Notes to the interim financial statements that would substantially duplicate the disclosure contained in the audited financial statements for fiscal 2010 as reported in our Annual Report on Form 10-K filed with the SEC on August 18, 2011 have been omitted.

3

BIZZINGO, INC.

(A Development Stage Company)

Unaudited Financial Statements

(Expressed in U.S. Dollars)

November 30, 2011

Index	Page Number
Consolidated Balance Sheets	F-1
Consolidated Statements of Stockholders’ Deficit	F-2
Consolidated Statements of Operations	F-3
Consolidated Statements of Cash Flows	F-4
Notes to Consolidated Financial Statements	F-5 - 15

4

Bizzingo, Inc.

(A Development Stage Company)

Consolidated Balance Sheets

		November 30, 2011			May 31, 2011
		(unaudited)
Assets
Assets:
Cash	$	109,987		$	4,101
Prepaids		—			10,000
Total Current Assets		109,987			14,101
Total Assets	$	109,987		$	14,101
Liabilities and Stockholders’ Deficit
Liabilities:
Accounts payable and accrued expenses	$	368,803		$	483,180
Interest payable		239,868			139,241
Memberholder loan		2,046			2,046
Stock issuance liabilty		852,956			—
Notes payable		641,000			261,000
Total Current Liabilities		2,104,673			885,467
Total Liabilities		2,104,673			885,467
Stockholders’ Deficit
Preferred stock, $0.001 par value, 100,000 shares authorized, none issued and outstanding		—			—
Common stock, $0.001 par value,525,000,000 shares authorized, 67,392,088 and 73,241,376 shares issued and outstanding, respectively		67,392			73,241
Additional paid in capital		17,549,057			16,614,442
Deficit accumulated during development stage		(19,611,135	)		(17,559,049	)
Total Stockholders’ Deficit		(1,994,686	)		(871,366	)
Total Liabilities and Stockholders’ Deficit	$	109,987		$	14,101

F-1

Bizzingo, Inc

(A Development Stage Company)

Consolidated Statements of Operations

(unaudited)

		Three Months Ended November 30,						Six Months Ended November 30,						From April 3, 2009 (Inception) to
		2011			2010			2011			2010			2011
Revenue	$	—		$	—		$	—		$	—		$	—
General and administrative expenses		1,123,961			233,022			1,650,146			848,930			6,748,558
Operating loss		(1,123,961	)		(233,022	)		(1,650,146	)		(848,930	)		(6,748,558	)
Other Income (Expenses)
Impairment of IP music database and Computer code		—			—			—			—			(6,875,000	)
Interest expense		(62,212	)		(519	)		(122,377	)		(2,275	)		(464,857	)
Gain on forgiveness of debt		—			37,104			66,624			37,105			360,630
Loss on settlement of debt		(346,187	)		—			(346,187	)		—			(5,883,350	)
Total Other Income (Expenses) - Net		(408,399	)		36,585			(401,940	)		34,830			(12,862,577	)
Net Loss	$	(1,532,360	)	$	(196,437	)	$	(2,052,086	)	$	(814,100	)	$	(19,611,135	)
Net Loss per Common Share - Basic and Diluted	$	(0.02	)	$	(0.00	)	$	(0.03	)	$	(0.01	)
Weighted average number of common shares outstanding - basic and diluted		67,338,913			67,289,376			69,038,345			66,285,162

F-2

Bizzingo, Inc.

(A Development Stage Company)

Statements of Stockholders’ Equity (Deficit)

For the period April 3, 2009 (Inception) to November 30, 2011

	Shares			Amount			Additional Paid-in Capital			Subscription Receivable			Deficit Accumulated During the Development Stage			Total Stockholders’ Equity
Shares issued for cash April 3, 2009	1,920,000		$	1,920		$	4,998,092		$	(90	)	$	—		$	4,999,922
Shares issued for cash May 28, 2009	12,480,000			12,480			(12,390	)		—			—			90
Loss for the period from April 3, 2009 to May 31, 2009													(186,902	)		(186,902	)
Balance May 31, 2009	14,400,000		$	14,400		$	4,985,702		$	(90	)	$	(186,902	)	$	4,813,110
Shares issued for cash August 25, 2009	26,969,600			26,970			(26,633	)		(337	)		—			(0	)
Shares cancelled on November 13, 2009	(3,833,600	)		(3,834	)		3,834			—			—			—
Shares issued for cash March 10, 2010	5,782,400			5,782			(5,938	)		—			—			(156	)
Subscription receivable	—			—			—			427			—			427
Recapitalization due to reverse merger	42,700,000			42,700			(83,243	)		—			—			(40,543	)
Shares cancelled due to reverse merger	(32,712,176	)		(32,712	)		32,712			—			—			—
Shares issued for cash on May 20, 2010 @$0.15	1,933,333			1,933			288,067			—			—			290,000
Issuance of common stock in settlement
of notes payable (May 31, 2010)	6,514,310			6,515			6,507,796			—			—			6,514,311
Net loss for the period September 1, 2009 to May 31, 2010	—			—			—			—			(12,990,743	)		(12,990,743	)
Balance May 31, 2010	61,753,867		$	61,754		$	11,702,297		$	—		$	(13,177,645	)	$	(1,413,594	)
Shares issued for cash on June 8, 2010	1,333,333			1,333			198,667			—			—			200,000
Exchange Agreement issuance June 22, 2010	1,334,176			1,334			999,298			—			—			1,000,632
Shares issued for cash on July 16, 2010	2,520,000			2,520			375,480			—			—			378,000
Net loss for the period, June 1, 2010 to August 31, 2010													(617,663	)		(617,663	)
Balance August 31, 2010	66,941,376		$	66,941		$	13,275,742		$	—		$	(13,795,308	)	$	(452,625	)
Shares issued for cash on November 1, 2010	1,080,000		$	1,080			160,920			—			—			162,000
Net loss for the period, Sept 1, 2010 to Nov 30, 2010													(196,438	)		(196,438	)
Balance November 30, 2010	68,021,376			68,021			13,436,662						(13,991,745	)		(487,062	)
Shares issued for cash on December 3, 2010	720,000			720			107,280			—			—			108,000
Shares issued for Services January 31, 2011	2,000,000			2,000			1,198,000									1,200,000
Net loss for the period Dec 1, 2010 to Feb 28, 2011													(1,468,290	)		(1,468,290	)
Balance February 28, 2011	70,741,376			70,741			14,741,942						(15,460,035	)		(647,352	)
Shares issued for asset acquisition March 15, 2011	2,500,000			2,500			1,872,500			—			—			1,875,000
Net loss or the period March 1, 2011 to May 31, 2011													(2,099,013	)		(2,099,013	)
Balance May 31, 2011	73,241,376			73,241			16,614,442			—			(17,559,049	)		(871,366	)
Shares cancelled GLD Holdings July 27, 2011	(6,460,800	)		(6,461	)		6,461			—			—			0
Net loss for the period June 1, 2011 to August 31, 2011													(519,726	)		(519,726	)
Balance August 31, 2011	66,780,576			66,780			16,620,903			—			(18,078,775	)		(1,391,092	)
Shares issued to settle accounts payable	611,512			612			207,303			—			—			207,915
Stock options issued for services	—			—			720,349			—			—			720,349
Warrants issued for services	—			—			502			—			—			502
Net loss for the period September 1, 2011 to November 30, 2011	—			0			0			0			(1,532,360	)		(1,532,360	)
Balance November 30, 2011	67,392,088		$	67,392		$	17,549,057		$	—		$	(19,611,135	)	$	(1,994,686	)

F-3

Bizzingo, Inc.

(A Development Stage Company)

Consolidated Statements of Cash Flows

(unaudited)

		Six Months Ended November 30,						From April 3, 2009 (Inception) to November 30,
		2011			2010			2011
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(2,052,086	)	$	(814,100	)	$	(19,611,135	)
Adjustments to reconcile net loss to net cash used in operating activities:
Impairment of IP music database and computer code		—			—			6,875,000
Loss on business acquisition		—			—			(44,361	)
Loss on settlement of debt		346,187			—			5,883,350
Stock based compensation		747,252			—			1,947,252
Changes in operating assets and liabilities:
(Increase) Decrease in:
Prepaid expenses		10,000			25,000			—
Increase (Decrease) in:
Accounts payable and accrued expenses		(22,651	)		102,765			368,803
Bank overdraft		—			1,088			—
Capitalized interest		—			—			121,145
Stock issuance liability					—			1,073,917
Accrued interest payable - other		82,184			1,222			239,868
Net Cash Used in Operating Activities		(889,114	)		(684,025	)		(3,146,161	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of notes		745,000			(215,000	)		990,000
Proceeds from memberholder loan		—			—			2,046
Shares issued for cash		250,000			740,000			1,388,102
Shares issued in settlement of debt		—			—			876,000
Net Cash Provided By Financing Activities		995,000			525,000			3,256,148
Net Increase (Decrease) in Cash		105,886			(159,025	)		109,987
Cash - Beginning of Period		4,101			159,025			—
Cash - End of Period	$	109,987		$	—		$	109,987
SUPPLEMENTARY CASH FLOW INFORMATION:
Cash Paid During the Period for:
Income Taxes	$	—		$	—			—
Interest	$	—		$	—			—
SUPPLEMENTARY DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:
Conversion of debt into stock issuance liability	$	365,000		$	—		$	365,000
Conversion of payable into common stock	$	91,727		$	—		$	91,727
Conversion of Interest payable into common stock	$	18,443		$	—		$	18,443

F-4

Note 1.               Organization and Summary of Significant Accounting Policies

On April 27, 2010 pursuant to share purchase agreements (the “Purchase Agreements”), Phreadz, Inc. completed the acquisitions of Phreadz USA, LLC (“Phreadz LLC”) and Universal Database of Music USA, LLC (“UDM”).The acquisitions were accounted for as a recapitalization effected by a reverse merger, wherein Phreadz and UDM were considered the acquirer for accounting and financial reporting purposes.  The pre-merger assets and liabilities of the acquired entities have been brought forward at their book value and no goodwill has been recognized.  The consolidated accumulated deficit of Phreadz LLC and UDM has been brought forward, and common stock and additional paid-in-capital of the combined Company have been retroactively restated to give effect to the exchange rates as set forth in the Purchase Agreements.

As set forth above, on April 27, 2010 (the “Closing Date”) and pursuant to the terms and conditions of the Purchase Agreements, we: (i) consummated the acquisitions of Phreadz LLC and UDM, and (ii) each of Phreadz LLC and UDM became our wholly owned subsidiary. More specifically, pursuant to and in connection with the Purchase Agreements:

·  in exchange for 100% of the issued and outstanding membership interests of Phreadz LLC, we issued to the holders of the Phreadz LLC membership interests an aggregate of 21,659,200 shares of our common stock; and      

·  in exchange for 100% of the issued and outstanding membership interests of UDM, we issued to the holders of the UDM membership interests an aggregate of 21,659,200 shares of our common stock. 

·  in addition, pursuant to the terms of the Purchase Agreements, 32,712,176 shares of our issued and outstanding common stock previously held by certain stockholders were cancelled. 

As a result of the acquisitions of Phreadz LLC and UDM, we experienced a change in control and ceased to be a “shell” company as defined in Rule 12b-2 promulgated under the Securities Exchange Act of 1934 (the “Exchange Act”).

Phreadz LLC was organized as a limited liability company in the State of Nevada in April 2009. Its principal place of business is located at 63 Main Street #202, Flemington, New Jersey 08822. Since its inception, Phreadz LLC has not undertaken any material business activities.

UDM was organized as a limited liability company in the State of Nevada in April 2009. Its principal place of business is located at 63 Main Street, Flemington, New Jersey 08858. On May 29, 2009, UDM consummated an asset purchase agreement with Jacques Krischer and UDM, Ltd., pursuant to which it acquired a music database and search tools. Since its inception, UDM has not undertaken any material business activities.

Nature of Operations and Going Concern    

The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which contemplate the Company’s continuation as a going concern. Since April 3, 2009 (inception), the Company has reported net losses of ($19,611,135), operating activities have used cash of ($5,021,161 and the Company has a stockholders’ deficit of ($1,994,686) as of November 30, 2011. These factors raise substantial doubt about the Company’s ability to continue as a going concern.  

The Company is actively involved in discussions and negotiations with investors. We do not believe we have sufficient working capital to operate without additional funding.  Assuming we raise the necessary capital through the sale of equity or equity equivalents, we expect that we will have adequate working capital through 2011.  However, any equity financing may be very dilutive to our existing shareholders.

There is no assurance that continued financing proceeds will be obtained in sufficient amounts necessary to meet the Company’s needs. In view of these matters, continuation as a going concern is dependent upon the Company’s ability to meet its financing requirements, raise additional capital, and the future success of its operations.  The accompanying consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classifications of liabilities that may result from the possible inability of the Company to continue as a going concern.

F-5

Principles of Consolidation      

The accompanying consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, Phreadz LLC and UDM. All intercompany accounts and transactions have been eliminated in consolidation.

Note 2.              Significant Accounting Policies

(a)  Accounting Estimates  

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the period. Actual results may differ from those estimates.      

(b)  Cash Equivalents     

For purposes of the statement of cash flows cash equivalents usually consist of highly liquid investments which are readily convertible into cash with maturity of three months or less when purchased.  

(c)  Concentration of Credit Risk     

The Company has no significant off-balance-sheet concentrations of credit risk such as foreign exchange contracts, options contracts or other foreign hedging arrangements. The Company maintains the majority of its cash balances with one financial institution, in the form of demand deposits.  

(d)  Fair Value of Financial Instruments     

The Company measures assets and liabilities at fair value based on an expected exit price as defined by the authoritative guidance on fair value measurements, which represents the amount that would be received on the sale of an asset or paid to transfer a liability, as the case may be, in an orderly transaction between market participants. As such, fair value may be based on assumptions that market participants would use in pricing an asset or liability. The authoritative guidance on fair value measurements establishes a consistent framework for measuring fair value on either a recurring or nonrecurring basis whereby inputs, used in valuation techniques, are assigned a hierarchical level.  

The following are the hierarchical levels of inputs to measure fair value: 

Level 1: Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.                       

Level 2: Inputs reflect quoted prices for identical assets or liabilities in markets that are not active; quoted prices for similar assets or liabilities in active markets; inputs other than quoted prices that are observable for the assets or liabilities; or inputs that are derived principally from or corroborated by observable market data by correlation or other means.            

Level 3: Unobservable inputs reflecting the Company’s assumptions incorporated in valuation techniques used to determine fair value. These assumptions are required to be consistent with market participant assumptions that are reasonably available.       

F-6

The Company’s financial instruments consisted of notes payable. The carrying amounts of the Company’s financial instruments generally approximated their fair values as of November 30, 2011 and May 31, 2011, due to the nature of these instruments. 

(e)  Income Taxes 

The Company uses the asset and liability method to account for income taxes. Under this method, deferred income taxes are determined based on the differences between the tax basis of assets and liabilities and their reported amounts in the consolidated financial statements which will result in taxable or deductible amounts in future years and are measured using the currently enacted tax rates and laws. A valuation allowance is provided to reduce net deferred tax assets to the amount that,based on available evidence, is more likely than not to be realized. 

(f)  Net Loss per Share 

Net loss per share is computed by dividing net loss attributable to common stockholders by the weighted average number of shares of common stock outstanding during the applicable period. Diluted loss per share is determined in the same manner as basic loss per share, except that the number of shares is increased to include potentially dilutive securities using the treasury stock method. Since the Company incurred a net loss in all periods presented, all potentially dilutive securities were excluded from the computation of diluted loss per share since the effect of including them is anti-dilutive. 

Recent accounting pronouncements

There are no recent accounting pronouncements that are expected to have a material effect on the Company’s financial statements.

Note 3.               Intangible

The Company has valuation reports from Cethial Bossche Content Network (Montreal, Canada) dated January 22, 2007 and Copiliot Partners (France) dated January 19, 2007. The two firms have placed a valuation of between €9.5 and €17 million Euros and €12 million Euros, respectively, on the assets described as UDM music databases and related tools. Based on the above and other comparables, a pro forma five year cash flow analysis, the Company determined that a fair deemed value of $5,000,000 was appropriate with that deemed value attributable to the music database at April 3, 2009 (Inception). As the Company did not obtain a third party valuation report at the end of the fiscal period ended February 28, 2010, we fully impaired the $5,000,000 carrying value of this intellectual property as at that date.

Note 4.               Income Taxes

As of November 30, 2011, the Company had a net operating loss carry-forward for income tax reporting purposes of approximately ($19.6 Million) that may be offset against future taxable income through 2031. Current tax laws limit the amount of loss available to be offset against future taxable income when a substantial change in ownership occurs. Therefore, the amount available to offset future taxable income may be limited. No tax benefit has been reported in the financial statements, because the Company believes there is a 50% or greater chance the carry-forwards will expire unused. Accordingly, the potential tax benefits of the loss carry-forwards are offset by a valuation allowance of the same amount.

F-7

Note 5.               Notes Payable

A member of the Company loaned $250,000 to the Company pursuant to a Note(s) Payable Agreement dated May 15, 2009. The loan included a $20,000 interest bonus and accrued simple interest at a rate of 8% per annum. The note was to mature on April 30, 2012 and become due and payable at that time, including accrued interest and the interest bonus. The $250,000 was received in two parts on May 5, 2009 and May 18, 2009. Interest accrued at the rate of 8% annually and was $22,140.43 for the period April 3, 2009 (inception) to May 31, 2010. The note was assigned by the holder on May 31, 2010 and settled with 1,947,601 shares of our common stock and 973,801 Series A Warrants, with an exercise price of $0.30 per share, expiring June 30, 2019, and 973,801 Series B Warrants, with an exercise price of $0.60 per share, expiring June 30, 2019.

A member of the Company loaned $200,000 to the Company pursuant to a Note(s) Payable Agreement dated August 10, 2009. The loan terms include a $16,000 interest bonus and accrues simple interest at a rate of 8% per annum. The note matured on December 31, 2009 and by agreement was extended to March 31, 2010. Interest accrued at the rate of 8% annually and was $13,776.64 for the period April 3, 2009 (inception) to May 31, 2010. As of May 31, 2010, this Note(s) Payable was in default and as of August 3, 2010, $190,000 of the outstanding amount has been repaid.

A member of the Company loaned $150,000 to the Company pursuant to a Note(s) Payable Agreement dated August 20, 2009. The loan included a $12,000 interest bonus and accrued simple interest at a rate of 8% per annum. The note matured on December 31, 2009 and by agreement was extended to March 31, 2010 and then to May 31, 2010. Interest accrued at the rate of 8% annually and was $9,799.90 for the period from April 3, 2009 (inception) to May 31, 2010. The notes were assigned by the holder on May 31, 2010 and settled with 1,145,332 shares of our common stock, 572,666 Series A Warrants, with an exercise price of $0.30 per share, expiring June 30, 2019, and 572,666 Series B Warrants, with an exercise price of $0.60 per share, expiring June 30, 2019.

A member of the Company loaned $25,000 to the Company pursuant to a Note(s) Payable Agreement dated September 29, 2009. The loan included a $2,000 interest bonus and accrued simple interest at a rate of 8% per annum. The note matured on December 31, 2009 and by agreement was extended to March 31, 2009 and then to May 31, 2010. Interest accrued at the rate of 8% annually and was $1,355.18 for the period from April 3, 2009 (inception) to May 31, 2010. The notes were assigned by the holder on May 31, 2010 and settled with 189,034 shares of our common shares and 94,516 Series A Warrants, with an exercise price of $0.30 per share, expiring June 30, 2019, and 94,516 Series B Warrants, with an exercise price of $0.60 per share, expiring June 30, 2019.

A member of the Company loaned $100,000 to the Company pursuant to a Note(s) Payable Agreement dated September 29, 2009. The loan included a $8,000 interest bonus and accrued simple interest at a rate of 8% per annum. The note matured on December 31, 2009 and by agreement was extended to March 31, 2009 and then to May 31, 2010. Interest accrued at the rate of 8% annually was $5,610.10 for the period from April 3, 2009 (inception) to May 31, 2010. The note was assigned by the holder on May 31, 2010 and settled with 757,400 shares of our common stock, 378,700 Series A Warrants, with an exercise price of $0.30 per share, expiring June 30, 2019, and 378,700 Series B Warrants, with an exercise price of $0.60 per share, expiring June 30, 2019.

A member of the Company loaned $50,000 USD to the Company pursuant to a Note(s) Payable Agreement dated November 15, 2009. The loan included a $4,000 interest bonus and accrued simple interest at a rate of 8% per annum. The note matured on December 31, 2009 and by agreement was extended to March 31, 2009 and then to May 31, 2010. Interest accrued at the rate of 8% annually and was $2,236.92 for the period from April 3, 2009 (inception) to May 31, 2010. The note was assigned by the holder on May 31, 2010 and settled with 374,912 shares of our common stock, 187,456 Series A Warrants, with an exercise price of $0.30 per share, expiring June 30, 2019, and 187,456 Series B Warrants, with an exercise price of $0.60 per share, expiring June 30, 2019.

A member of the Company loaned $100,000 to the Company pursuant to a Note(s) Payable Agreement dated December 11, 2009. The loan included a $8,000 interest bonus and accrued simple interest at a rate of 8% per annum. The note matured on January 31, 2010 and by agreement was extended to March 31, 2009 and then to May 31, 2010. Interest accrued at the rate of 8% annually and was $3,929.44 for the period from April 3, 2009 (inception) to May 31, 2010. The note was assigned by the holder on May 31, 2010 and settled with 746,196 shares of our common stock, 373,098 Series A Warrants, with an exercise price of $0.30 per share, expiring June 30, 2019, and 373,098 Series B Warrants, with an exercise price of $0.60 per share, expiring June 30, 2019.

A member of the Company loaned $100,000 to the Company pursuant to a Note(s) Payable Agreement dated March 26, 2010. The loan included a $75,000 forgiveness clause on the completion of our reverse merger as of April 27, 2010. Interest accrued on a simple basis at a rate of 8% per annum. The note held a maturity date of June 30, 2010. Interest accrued at the rate of 8% annually and was $887.68 for the period from April 3, 2009 (inception) to May 31, 2010. On June 30, 2010, $26,052.06 was paid in settlement of this note, including $164.38 in additional interest for the period from June 1, 2010 to June 30, 2010.

F-8

A member of the Company loaned $100,000 to the Company pursuant to a Note(s) Payable Agreement dated April 9, 2010. The loan included a $75,000 forgiveness clause on the completion of our reverse merger as of April 27, 2010. Interest accrued on a simple basis at a rate of 8% per annum. The note held a maturity date of June 30, 2010. Interest accrued at the rate of 8% annually and was $580.82 for the period from April 3, 2009 (inception) to May 31, 2010. The note was assigned by the holder on May 31, 2010 and settled with 170,538 shares of our common stock, 85,269 Series A Warrants, with an exercise price of $0.30 per share, expiring June 30, 2019, and 85,269 Series B Warrants, with an exercise price of $0.60 per share, expiring June 30, 2019.

A member of the Company loaned $10,000 to the Company pursuant to a Note(s) Payable Agreement dated March 18, 2010. The loan terms included a $7,000 forgiveness clause on the completion of our reverse merger as of April 27, 2010. Interest accrued on a simple basis at a rate of 8% per annum. The note held a maturity date of June 30, 2010. Interest accrued at the rate of 8% annually and was $110.02 for the period from April 3, 2009 (inception) to May 31, 2010. The note was assigned by the holder on May 31, 2010 and settled with 20,734 shares of our common stock, 10,368 Series A Warrants, with an exercise price of $0.30 per share, expiring June 30, 2019, and 10,368 Series B Warrants, with an exercise price of $0.60 per share, expiring June 30, 2019.

A member of the Company loaned $10,000 USD to the Company pursuant to a Note(s) Payable Agreement dated March 23, 2010. The loan included a $7,000 forgiveness clause on the completion of our reverse merger as of April 27, 2010. Interest was accrued on a simple basis at a rate of 8% per annum. The note held a maturity date of June 30, 2010. Interest accrued at the rate of 8% annually and was $99.06 for the period from April 3, 2009 (inception) to May 31, 2010. The note was assigned by the holder on May 31, 2010 and settled with 20,660 shares of our common stock, 10,330 Series A Warrants, with an exercise price of $0.30 per share, expiring June 30, 2019, and 10,330 Series B Warrants, with an exercise price of $0.60 per share, expiring June 30, 2019.

On March 23, 2010 the Company entered into an $85,000 Note(s) Payable Agreement. The loan terms also included a “right” with the note to receive the equivalent amount of the face amount of such note on such terms that notes were settled in consideration of the note. The original note had a maturity date of June 30, 2010 and accrued interest at 8% per annum. The “right” did not accrue interest. Interest accrued was $1,285.48 for the period from April 3, 2009 (inception) to May 31, 2010. The note was assigned by the holder on May 31, 2010 and settled with 1,141,902 shares of our common stock, 570,951 Series A Warrants, with an exercise price of $0.30 per share, expiring June 30, 2019, and 570,951 Series B Warrants, with an exercise price of $0.60 per share, expiring June 30, 2019, including the “right” described above.

On April 27, 2010, Professional Opportunity Fund Ltd. (“POOF”) forgave and cancelled $57,509 that the Company owed to POOF for expenses paid on behalf of the Company. This amount was unsecured, non-interest bearing and had no specific terms of repayment.

On October 31, 2010, Gordon Samson and Groupmark Financial Services, Ltd. forgave $12,976.00 and $24,128.26 respectively in outstanding amounts owed. On February 28, 2011 our former CEO, Christina Domecq forgave $35,393.10 in outstanding accrued management fees. This has created a total gain on forgiveness of debt of $72,497.36.

On February 21, 2011 the Company entered in a promissory note for $110,000.00 The note terms are for 1 year and carry an interest rate of 10% per annum.

On April 7, 2011 the Company entered in a promissory note for $50,000.00. The note terms are for 1 year and carry an interest rate of 10% per annum.

On May 3, 2011 the Company entered in a promissory note for $75,000.00 with a related party. The note terms are for 1 year and carry an interest rate of 10% per annum.

On June 6, 2011 the Company entered in a promissory note for $50,000.00 with a related party. The note terms are for 1 year and carry an interest rate of 10% per annum.

F-9

On June 16, 2011 the Company entered in a promissory note for $40,000.00 with a related party. The note terms are for 1 year and carry an interest rate of 10% per annum.

On July 5, 2011 the Company entered in a promissory note for $50,000.00 with a related party. The note terms are for 1 year and carry an interest rate of 10% per annum

On July 5, 2011 the Company entered in a promissory note for $125,000.00. The note terms are for 1 year and carry an interest rate of 10% per annum.

On July 14, 2011 the Company entered in a promissory note for $100,000.00. The note terms are for 1 year and carry an interest rate of 10% per annum.

On August 2, 2011 the Company entered in a promissory note for $150,000.00. The note terms are for 1 year and carry an interest rate of 10% per annum. Interest expense was $1,191.78 for the period ending August 31, 2011. The Holder was also granted 900,000 Series A Warrants, with an exercise price of $0.30 per share, expiring July 31, 2020.

On October 7, 2011, the Company entered into a secured promissory note for $250,00 with a related party. The note terms are for 6 months and carry an interest rate of 10% per annum.

A member of the Company loaned $2,046 to the Company on no terms.

Note 6.               Commitments

As of November 30, 2011 we have a consulting agreements with Groupmark Financial Services Ltd., providing for $10,000 per month for services rendered each month and with Douglas Toth, our CEO for $20,000 per month for services rendered each month. The Company also has a consulting agreement with an accounting firm to provide accounting and financial reporting services for $7,000 per month.

(a) Employment Agreements

The following agreements were terminated with the incumbent’s resignation.

1.  On April 27, 2010, we entered into an employment agreement with Jonathan Kossmann to serve as President – Phreadz division (the “Kossmann Agreement”).  The Kossmann Agreement has an initial term of two (2) years from the Closing Date, after which it will automatically renew for successive one (1) year periods unless either party terminates the Kossmann Agreement on not less than thirty (30) days notice.  The Kossman Agreement provides for Mr. Kossmann to be paid a monthly salary of $10,000 while he provides services to the Company pursuant to the Kossman Agreement.  Additionally, the Kossman Agreement provides that Mr. Kossmann is eligible to receive a cash bonus, at the discretion of the Board.  The Kossman Agreement provides that, for so long as he is an employee of the Company, Mr. Kossmann is allowed to participate in such employee benefit plans of the Company that may be in effect from time to time and that are offered to the Company’s other similarly situated, full-time employees to the extent he is eligible under the terms of those plans.           

Mr. Kossman submitted his resignation August 4, 2010, which resignation was accepted by the Board of Directors, at which time the Kossman Agreement was terminated.           

2.  On April 27, 2010 we entered into an Employment Agreement with Georges Daou, which, by agreement was rescinded effective the same day. It was intended that the aforementioned Employment Agreement was to be replaced with a Consulting Agreement to be entered into by and between the Company and GJD Holdings, LLC, a wholly owned subsidiary of Georges Daou, on substantially the same terms as found in the Employment Agreement of April 27, 2010.  

Due to Mr. Daou’s resignation on October 5, 2010, we did not enter into such consulting agreement. 

F-10

3.  On July 5, 2010 we entered into an employment agreement with Christina Domecq to serve as our Chief Executive Officer. The agreement provides for an annual base salary during the term of the agreement of $250,000, subject to potential upwards adjustments at the discretion of the compensation committee of the Board of Directors. Ms. Domecq is eligible to receive a bonus of up to 100% of her then current base salary, with 50% of such bonus to be awarded at the discretion of the Board of Directors or the compensation committee and the remaining 50% subject to achievement of milestones to be established by Ms. Domecq, the Board of Directors and the compensation committee. Immediately upon our establishment of an employee stock option plan, we agreed to grant Ms. Domecq an option to purchase 6,748,316 shares of our common stock. The option shall have an exercise price equal to the fair market value of our common stock as of the date of the employment agreement. The option shall vest as follows:  (1) 25% on July 5, 2011 and (2) the remaining 75%  in 18 equal monthly installments beginning July 5, 2011. 

On November 9, 2010, Christina Domecq submitted her resignation as Director and CEO. The resignation was accepted. Ms. Domecq’s resignation was not based upon any disagreement with us on any matter relating to our operations, policies or practices. Due to Ms. Domecq’s resignation no options were granted.

On June 1, 2011 we entered into consulting agreements with each of Mr. Douglas Toth and Mr. Gordon Samson, our CEO and CFO, pursuant to which each has agreed to terms with the Company. Both Mr. Toth and Mr. Samson previously provided services to the Company with no agreement. These agreements provide for a base salary of no less than $240,000 and 180,000 per annum respectively.

Both agreements provide that Mr. Toth and Mr. Samson are eligible for an annual, performance-based bonus if and when the Company implements an applicable annual incentive plan. The Agreements specified that the Compensation Committee of the Board of Directors would establish such a plan.

As an inducement to enter into these Agreements, Mr. Toth and Mr. Samson will be awarded not less than 1,000,000 shares of our common stock under an S-8 plan to be filed. Additionally on the origination of a company stock option plan they are each to be awarded stock options, with a seven year term, in respect of 3,000,000 shares of the Company’s common stock. The exercise price for these stock option’s will be the market price at time of grant or such other amount as established by a plan. The options are scheduled to vest in two equal annual instalments. If Mr. Toth or Mr. Samson were to terminate their agreements voluntarily without good reason as defined in the agreement, they would forfeit any unvested shares related to this option grant.

Additionally, the termination provisions of these agreements, define “Termination for Cause” and “Termination for Good Reason”. Included in the Termination for Good Reason clauses is a triggering event provision pursuant to a “change of control”. A triggering event is defined to include a termination of the agreement by the participant following a reduction in position, pay or other “constructive termination,” or a failure by a new control group to assume or continue any plan awards.

The termination benefit provided to Mr. Toth and Mr. Samson upon an involuntary termination by the Company without cause, or a termination by either Mr. Toth or Mr. Samson for good reason, is a cash severance payment in an amount equal to the sum of (a) the then current base salary and (b) the average of the annual bonuses payable (including in such average a zero for any year for which no such bonus is payable) to him with respect to each of the last three completed fiscal years of the Company for which the amount of such bonus has been determined at the date of such termination.

To qualify for the cash severance benefit, any applicable bonus amounts and opportunity to vest in unvested equity awards available under a stock option plan following an involuntary termination by the Company without cause, or a termination for good reason, Mr. Toth and/or Mr. Samson must execute a release in favour of the Company and agree to provide the Company with certain consulting services for a period of six months after termination. Additionally, during the period of these consulting services, Mr. Toth and/or Mr. Samson, must also agree not to provide any services to entities that compete with any of the Company’s business.

F-11

These agreements became effective June 1, 2011 and have stated terms through May 31, 2012.

On November 11, 2011, the Company and Douglas Toth amended and superceded the June 1, 2011 consulting agreement with an Employment Agreement in which Douglas Toth will serve as Chairman and Chief Executive Officer of the Company. The term of the Agreement ends May 31, 2012. Compensation under the plan will remain at $240,00 per annum with a right to earn incentive compensation. In addition Mr. Toth will receive a stock award of 2,000,000 shares of common stock on or after January 1, 2012. Further, Mr. Toth will be granted 5,000,000 options to purchase company stock. The options will vest as follows: 50% shall vest on June 30,2011, and the remaining 50% shall vest pro-rata monthly from June 2011 through May 2012.

On August 19, 2011, Gordon Samson submitted his resignation as Director and CFO. The resignation was accepted. Mr. Samson’s resignation was not based upon any disagreement with us on any matter relating to our operations, policies or practices.

Note 7.               Options

During the 6 months ended November 30, 2011, the Company issued Directors, Officers and Consultants a total of 7,000,000 stock options. The Company valued the options utilizing an option model and are expensing the options over the vesting periods. The exercise price of the options were issued at fair market value on the date of grant and range from $0.16 to $0.33. All options have a term of 10 years. The Company recorded an expense of $720,349 during the six months ended November 30, 2011.

Note 8.               Warrants

The value of the warrants have been calculated using the Black–Scholes method as of the date of grant based on the following assumptions: an average risk free rate of 1.00%; a dividend yield of 0.00%; a cumulative volatility factor of the expected market price of the Company’s common stock of 275.06%; and an expected life of 9 years.

On May 20, 2010, we entered into a Unit Purchase Agreement with a single accredited investor (the May 20^th Purchaser) pursuant to which the May 20^th Purchaser purchased 10.74074 Units (“Units”) at a purchase price of $27,000 per Unit, for an aggregate purchase price of $290,000. Each Unit purchased consisted of: (a) one hundred eighty thousand (180,000) shares of the Company’s common stock; (b) a Series A Warrant to purchase ninety thousand (90,000) shares of common stock at an exercise price of $0.30 per share; and (c) a Series B Warrant to purchase ninety thousand (90,000) shares of common stock at an exercise price of $0.60 per share. Accordingly, the May 20^th Purchaser received 1,933,333 shares of common stock; a Series A Warrant to purchase 966,667 shares of common stock; and a Series B Warrant to purchase 966,666 shares of common stock.

On May 31, 2010, we entered into Unit Purchase Agreements with nine (9) accredited investors (the May 31^st Purchasers) pursuant to which the May 31^st Purchasers purchased 33.0425 Units at a purchase price of $27,000 per Unit, for an aggregate purchase price of $892,147.34.  The purchase price for the Units were paid via assignment of certain outstanding promissory notes originally issued by our subsidiaries UDM and Phreadz. In addition, one May 31^st Purchaser also received the “right” with their note to receive the equivalent amount of the face amount of such note in Units with the consideration of the original note. Each Unit purchased consisted of: (a) one hundred eighty thousand (180,000) shares of the Company’s common stock; (b) a Series A Warrant to purchase ninety thousand (90,000) shares of common stock at an exercise price of $0.30 per share; and (c) a Series B Warrant to purchase ninety thousand (90,000) shares of common stock at an exercise price of $0.60 per share. Accordingly, in total, the May 31^st Purchasers received 6,514,310 shares of common stock; a Series A Warrant to purchase 3,257,154 shares of common stock; and a Series B Warrant to purchase 3,257,154 shares of common stock.

On June 8, 2010, we entered into a Unit Purchase Agreement with a single accredited investor pursuant to which the Purchaser purchased 7.4074 Units at a Purchase Price of $27,000 per Unit for an aggregate purchase price of $200,000.  Each Unit purchased consisted of (a) one hundred eighty thousand (180,000) shares of the Company’s common stock, par value $0.001 per share (“Common Stock”); (b) a Series A Warrant  (the “Series A Warrants”) to purchase ninety thousand (90,000) shares of Common Stock at an exercise price of $0.30 per share; and (c) a Series B Warrant (the “Series B Warrants”, together with the Series A Warrants, the “Warrants”) to purchase ninety thousand (90,000) shares of Common Stock at an exercise price of $0.60 per share.  Accordingly, Purchaser received 1,333,333 shares of Common Stock (the “Shares”); a Series A Warrant to purchase 666,666 shares of Common Stock and a Series B Warrant to purchase 666,667 shares of Common Stock.

F-12

On July 16, 2010, we entered into a Unit Purchase Agreements with 13 accredited investors pursuant to which the Purchasers purchased 14 Units at a Purchase Price of $27,000 per Unit for an aggregate purchase price of $378,000. Each Unit purchased consisted of (a) one hundred eighty thousand (180,000) shares of the Company’s common stock, par value $0.001 per share (“Common Stock”); (b) a.Series A Warrant  (the “Series A Warrants”) to purchase ninety thousand (90,000) shares of Common Stock at an exercise price of $0.30 per share; and (c) a Series B Warrant (the “Series B Warrants”, together with the Series A Warrants, the “Warrants”) to purchase ninety thousand (90,000) shares of Common Stock at an exercise price of $0.60 per share.  Accordingly, in total, purchasers received 2,520,000 shares of Common Stock (the “Shares”); a Series A Warrant to purchase 1,260,000 shares of Common Stock and a Series B Warrant to purchase 1,260,000 shares of Common Stock

Southridge Investment Group LLC. an SEC Registered Broker/Dealer, Member FINRA/SIPC (“Southridge”) acted as placement agent in connection with the sale of the 13 Units referred to above in the preceding paragraph.  Southridge received $22,140 in commissions and expenses and 54,000 Series A Warrants and 54,000 Series B Warrants.  We also paid $3,500 in escrow fees.  The net proceeds of the offering after payments of the commissions and expenses and escrow fees were approximately $352,360.

In April 2010 the Company entered into an Exchange Agreement with Professional Capital Partners, Ltd.(“PCP”), pursuant to which the Company and PCP agreed to exchange 5,325,824 shares of the Company’s common stock (the “Original Shares”) for $1,000,000 worth of Units in its next financing. The Company has offered and sold Units in a financing, with each Unit consisting of: (i) 180,000 shares of the Company’s common stock; (ii) a Series A Warrant to purchase 90,000 shares of common stock at an exercise price of $0.30 per share; and (iii) a Series B Warrant to purchase 90,000 shares of common stock at an exercise price of $0.60 per share.

On June 22, 2010 PCP exercised this Exchange Agreement and exchanged its Original Shares for 37 Units. As a result, PCP received 6,660,000 shares of common stock; a Series A Warrant to purchase 3,330,000 shares of common stock; and a Series B Warrant to purchase 3,330,000 shares of common stock in exchange of 5,325,824 and net of shares of common stock of the company.

A financing expense of $1,000,632 was recorded as of May 31, 2010 as a stock issuance liability with the exercise of the exchange agreement on June 22, 2010 as this cost became known. The financing cost was determined using the last price of $0.75 as reported on OTCBB.com on June 11, 2010 prior to the June 22, 2010 exercise date, on the additional 1,334,176 shares of common stock issued to PCP pursuant to the Exchange Agreement.

On August 5, 2011 900,000 Series A warrants were granted to the Holder of a note for $150,000.00

The Company analyzed the beneficial nature of the 11,379,488 Series A Warrants and 10,479,488 Series B Warrants based on the conversion terms described above and determined that no material beneficial conversion feature exists.

For certain of the Purchasers described above the Unit Purchase Agreement granted Registration Rights which contained certain rights which included Liquidated Damages. “The Company will be obligated to pay investor a fee equal to 1.0% (which will increase to 2.0% after the first 30 days)  of such investor’s purchase price for each 30 day period (pro-rated for partial periods); provided that such damages shall be capped at 12% of such investor’s total purchase price.

If the Company fails to pay any partial liquidated damages pursuant to paragraph 2) b) & c) of the Registration Rights Agreement in full within 7 days after the date payable, the Company will pay interest thereon at a rate of 18% per annum (or such lesser maximum amount that is permitted to be paid by applicable law) to the Holder, accruing daily from the date such partial liquidated damages are due until such amounts, plus all such interest thereon, are paid in full.

We have not yet filed a Registration Statement, we have a certain number of the Purchaser’s who are entitled to Liquidated Damages as described herein. Accordingly, we have accrued an interest expense as Liquidated Damages for those Purchaser’s that this applies to. We expect to file a Registration Statement in the near term.

On November 11, 2011, the Company issued a public relations firm 150,00 stock purchase warrants with a 10 year term and a strike price of $0.25. The Company valued the warrants using an option pricing model and is expensing the $30,202 fair value over the vesting term of the warrant.

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Note 9.               Common Stock

The acquisition of Phreadz LLC and UDM by the Company on April 27, 2010 was accounted for as a recapitalization by the Company. The recapitalization was the merger of two private LLCs into a non-operating public shell corporation (the Company) with nominal net assets and as such is treated as a capital transaction, rather than a business combination. The transaction is the equivalent to the issuance of stock by the private company for the net monetary assets of the shell corporation. The pre-acquisition consolidated financial statements of Phreadz LLC and UDM are treated as the historical financial statements of the consolidated Company. Therefore the capital structure of the consolidated enterprise, being the capital structure of the legal parent, is different from that appearing in the financial statements of Phreadz LLC and UDM in earlier periods due to the recapitalization.

1. On April 3, 2009, 1,920,000 shares were issued for property. 

2. On May 28, 2009, 12,480,000 shares were issued for cash. 

3. On August 25, 2009, 23,136,000 shares were issued for cash. 

4. On March 10, 2010, 5,782,400 shares were issued for cash. 

5. On April 27, 2010, 42,700,000 were issued and 32,712,176 shares were cancelled upon recapitalization due to the reverse merger. 

6. On May 20, 2010 1,933,333 shares were issued at $0.15 for cash of $290,000 

7. On May 31, 2010, 6,514,310 shares were issued in settlement of $892,147.34 in notes assigned to the Company with one note-holder also receiving the “right” with their settled note to receive the equivalent amount of the face amount of their note in consideration of their note. 

8. On June 8, 2010 1,333,333 shares were issued at $0.15 for cash of $200,00 

9. On June 22, 2010 1,334,176 net shares were issued on account of an April 27, 2010 Exchange Agreement 

10. On July 16, 2010 2,520,000 shares were issued at $0.15 for cash of $378,000 

11. On November 1, 2010 1,080,000 shares were issued at $0.15 for cash of $162,000. 

12. On December 3, 2010 720,000 shares were issued at $0.15 for cash of $108,000. 

13. On January 31, 2010 by resolution the Board caused 2,000,000 shares to be issued for services 

14. On March 15, 2011 2,500,000 shares were issued for an asset acquisition (Zonein2 code) 

15. On July 27, 2011 6,460,800 shares were surrendered to the Company by a former CEO and cancelled. 

16. On September 7, 2011, the Company issued 611,512 shares to a vendor to settle an accounts payable in the amount of $91,726.85. 

Note 10.               Preferred Stock

On July 14, 2011, eight of our shareholders, including our largest shareholder and our Chief Financial Officer, owning 37,562,628 shares, or approximately 51.2% of the total outstanding shares on the record date, approved an amendment to our articles of incorporation to authorize the creation of 100,000,000 shares of preferred stock, in one or more classes, having such designations, preferences, and relative, participating, optional, or other rights (including preferential voting rights), and qualifications, limitations, and/or restrictions thereof, all as may be determined by from time to time by the Board of Directors of the Corporation (the “Charter Amendment”). This type of preferred stock is known as “blank check” preferred. The amendment to the articles of incorporation will be effective twenty

days following the mailing of the information statement. On August 3, 2011 a DEF 14C was filed regarding this change.

Note 11.               Contingencies

There is currently a dispute that arose approximately August 14, 2010, between former Phreadz-division President Jonathan Kossmann and Phreadz, regarding certain intellectual property and confidential information of the Company. Mr. Kossmann has claimed that $30,000 is owed to him pursuant to his 2009-2010 Consulting Agreement with the Company. The Company has conducted an investigation into Mr. Kossmann’s claim with the assistance of counsel and does not believe any money is due to him. Management believes it is unlikely that the outcome of this matter will have an adverse impact on its result of operations and financial condition.

F-14

Note 12.               Subsequent Events

On December 7, 2011, the Company issued 3.2 million shares of common stock to a consultant.

On December 7, 2011, the Company issued 800,000 shares of common stock to a related party in accordance with a consulting agreement.

On December 7, 2011, a note holder converted notes and interest into 1,643,719 shares of common stock.

On December 7, 2011, a note holder converted notes and interest into 50,000 shares of common stock.

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Item 2. Management’s Discussion and Analysis or Plan of Operation.

FORWARD-LOOKING STATEMENTS

Certain matters discussed herein are forward-looking statements.  Such forward-looking statements contained in this Form 10-Q involve risks and uncertainties, including statements as to:

1.  our future operating results;    

2.  our business prospects; 

3.  any contractual arrangements and relationships with third parties; 

4.  the dependence of our future success on the general economy; 

5.  any possible financings; and 

6.  the adequacy of our cash resources and working capital. 

These forward-looking statements can generally be identified as such because the context of the statement will include words such as we “believe,” “anticipate,” “expect,” “estimate” or words of similar meaning.   Similarly, statements that describe our future plans, objectives or goals are also forward-looking statements.   Such forward-looking statements are subject to certain risks and uncertainties which are described in close proximity to such statements and which could cause actual results to differ materially from those anticipated as of the date of filing of this Form 10-Q.   Shareholders, potential investors and other readers are urged to consider these factors in evaluating the forward-looking statements and are cautioned not to place undue reliance on such forward-looking statements.  The forward-looking statements included herein are only made as of the date of filing of this Form 10-Q, and we undertake no obligation to publicly update such forward-looking statements to reflect subsequent events or circumstances.

Corporate History

We were incorporated in the State of Nevada on May 12, 2005.

From May 2005 through May 2009, we were in the mineral exploration stage during which time we never realized any revenues.

On April 27, 2010, pursuant to share purchase agreements (the “Purchase Agreements”), Phreadz, Inc. (f/k/a Atwood Minerals & Mining Corp.),  completed the acquisitions of Phreadz USA LLC and Universal Database of Music USA, LLC.  The acquisitions were accounted for as a recapitalization effected by a reverse merger, wherein Phreadz and UDM were considered the acquirer for accounting and financial reporting purposes.  The pre-merger assets and liabilities of the acquired entities have been brought forward at their book value and no goodwill has been recognized.  The consolidated accumulated deficit of Phreadz and UDM has been brought forward, and common stock and additional paid-in-capital of the combined Company have been retroactively restated to give effect to the exchange rates as set forth in the Purchase Agreements.

As a result of our acquisitions of Phreadz and UDM referred to in the paragraph above, we experienced a change in control and ceased to be a “shell” company as defined in Rule 12b-2 promulgated under the Exchange Act.

Overview

Social Media is often misconstrued as a medium for business-to-consumer or B2C engagement and discounted as a viable communications network for those companies focused on business-to-business or B2B engagement transactions. However, B2B, as in any other field is impacted by online activity and is faced with a prime opportunity to not only cultivate communities in social networks and other social channels, but also amplify awareness, increase lead generation, reduce sales cycles, and perhaps most importantly, learn and adapt to market dynamics in real-time.

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The development of Phreadz and UDM since our acquisition described in our Corporate History above has evolved into Bizzingo. This development has culminated in www.bizzingo.com (“Bizzingo”) www.Bizz.net. This is a social network designed for business and commerce. We are currently finalizing with a number of business’s which we intend to launch on a limited alpha basis. We think of it as an “internet hub” where social networking, e-commerce and marketing will converge within one domain. It is commonly accepted that B2B and B2C social media marketing will focus on three key areas: video, mobile and engagement. Bizzingo will deliver this.

We believe B2B and B2C social media marketing is still in its infancy. Facebook, Twitter, YouTube and most of the social tools we use today are just a few years old. The Bizzingo platform will provide the ability for business to promote product and service with real-time feedback, changing the current social media platforms from that of just “broadcasting” to engaging customers as partners in real-time. Additionally business will be able to real-time assess their analytics, in terms of: 1) how many conversations, and, 2) What was the reach of a product launch.

Bizzingo will provide a business a way to;

1.  Cost effectively introduce their product and/or service to a global network of users; 

2.  Leverage and expand their brand and image; 

3.  Effectively communicate their marketing “message” to a targeted audience; and, 

4.  Sell their product or service. 

Bizzingo is a collection of product and service profiles for businesses, much like Facebook™ and Linkedn™ are a collection of personal profiles for individuals. Each Bizzingo page will include the following information and functionality;

· a product description	· links to additional information
· a video introduction	· social network interaction
· A picture and video library	· tools for marketing
· A posting wall	· advertising

Bizzingo’s goal is to provide the missing link that will lend purpose to social media by facilitating a value proposition for each participant, and give businesses a social network marketing platform to reach their users and encourage transactions.

For the consumer, Bizzingo is a social network that provides online buyers a platform to search, engage and buy from a global universe of sellers. Using a phonebook as a legacy model, Bizzingo is to the yellow pages what Facebook™ is to the white pages.

To market the Bizzingo platform we will be: (1) hiring a sales team to solicit business leaders and Chambers of Commerce’s to offer packages and incentives to become charter members; (2) develop programs for the anchors to drive their existing followers to Bizzingo; (3) advertise and market to existing networks; (4) launch a high energy public relations campaign that is “edgy” and exciting; (5) establish strategic alliances with advertisers and marketers.

Critical Accounting Policies, Judgments and Estimates

Our discussion and analysis of our financial condition and results of operations is based upon our consolidated financial statements, which have been prepared in accordance with Generally Accepted Accounting Principles.  The preparation of these condensed consolidated financial statements requires us to make estimates, judgments and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and the related disclosure of contingent assets and liabilities.  We base our estimates on historical experience and on various other assumptions that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources.  Actual results may differ from these estimates.

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An accounting policy is considered to be critical if it requires an accounting estimate to be made based on assumptions about matters that are highly uncertain at the time the estimate is made, and if different estimates that reasonably could have been used, or changes in the accounting estimate that are reasonably likely to occur, could materially impact the consolidated financial statements.  We believe that the following critical accounting policies reflect the more significant estimates and assumptions used in the preparation of the consolidated financial statements.

Management has discussed the development and selection of these critical accounting estimates with the Board of Directors (“BOD”).  In addition, there may be other items within our financial statements that require estimation, but are not deemed critical as defined above.  Changes in estimates used in these and other items could have a material impact on our financial statements.

Product Development

Product Development and Content: Product development and content expenses consist of contracted personnel costs associated with the development, testing and upgrading of our website and systems, substantially all of our design, translation services, and website management and development services

Contingencies

The Company accrues for contingent obligations, including estimated management support agreements and legal costs, when the obligation is probable and the amount can be reasonably estimated.  As facts concerning contingencies become known we reassess our position and make appropriate adjustments to the financial statements.  Estimates that are particularly sensitive to future changes include those related to tax, legal, and other regulatory matters that are subject to change as events evolve and additional information becomes available.

Income Taxes

The Company uses the asset and liability method to account for income taxes.  Under this method, deferred income taxes are determined based on the differences between the tax basis of assets and liabilities and their reported amounts in the consolidated financial statements which will result in taxable or deductible amounts in future years and are measured using the currently enacted tax rates and laws.  A valuation allowance is provided to reduce net deferred tax assets to the amount that, based on available evidence, is more likely than not to be realized.

Results of Operations

We are in the development stage and consequently is subject to the risks associated with development stage companies, including the need for additional financing; the uncertainty of our technology and intellectual property resulting in successful commercial products or services as well as the marketing and customer acceptance of such products or services; competition from larger organizations; dependence on key personnel; and dependence on corporate partners and collaborators.  To achieve successful operations, we will require additional capital to continue research and development and marketing efforts.  No assurance can be given as to the timing or ultimate success of obtaining future funding.

The processes of developing new approaches to music database management, access, search for UDM and the novel SNS of Phreadz are inherently highly complex, time-consuming, expensive and uncertain. We must make long-term investments and commit significant resources before knowing whether its development programs will result in products that will achieve market acceptance. Product candidates that may appear to be promising at all stages of development may not reach the market for a number of reasons. Product candidates may be found ineffective or may take longer to progress through the beta trials than had been anticipated, may not be able to achieve the pre-defined end point due to changes in the environment, may fail to receive necessary approvals, may prove impracticable to manufacture in commercial quantities at reasonable cost and with acceptable quality, or may fail to achieve market acceptance. For these reasons, we are unable to predict the period in which material net cash in flows from its products and services will commence.

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Comparison of the six months ended November 30, 2011 with the six months ended November 30, 2010

Operating expenses for the period from June 1, 2011 to November 30, 2011 was ($1,650,146), compared to the same six month period June 1, 2010 to November 30, 2010 of ($848,930). The increase in expenses is primarily attributable to a $747,252 increase in stock based compensation issued to officers, directors and outside consultants. In addition, the company incurred additional expenses associated with investor and public relations during period.

Comparison of the three months ended November 30, 2011 with the three months ended November 30, 2010

Operating expenses for the period from September 1, 2011 to November 30, 2011 was ($1,123,961), compared to the same three month period September 1, 2010 to November 30, 2010 of ($233,022). The increase in expenses is primarily attributable to a $747,252 increase in stock based compensation issued to officers, directors and outside consultants. In addition, the company incurred additional expenses associated with investor and public relations during period.

Operating Activities

Cash use in operating activities for the period from June 1, 2011 to November 30, 2011 was ($889,114), and from June 1, 2010 to November 30, 2010 was($684,025). The consolidated Company expects net cash used in operating activities to increase going forward as the Company pursues its business plan, continues in its development and markets its services.

Financing Activities

Net cash provided by financing activities for the period from June 1, 2011 to November 30, 2011 was approximately $995,000, and from June 1, 2010 to November 30, 2010 was approximately $525,000. This consisted of net proceeds received from the issuance of notes payable and shares issued for cash.

Liquidity and Capital Resources

As of November 30, 2011, we had a working capital deficit of ($1,994,686) compared to a working capital deficit of ($871,366) as of May 31, 2011. Cash and cash equivalents at November 30, 2011 was $109,987 compared to a balance of $4,101 as at May 31, 2011. Our current level of operations does not generate sufficient cash to fund our working capital needs.  Accordingly, we will have to raise capital to fund our short-term working capital needs.  No assurance can be made that we will have access to the capital markets in future, or that financing will be available on acceptable terms to satisfy our future and on-going cash requirements that we need to implement its business strategies. Our inability to access the capital markets or obtain acceptable financing could have a material adverse affect on its results of operations and financial condition, and could severely threaten our ability to continue as a going concern.

Plan of Operation and Funding

We expect that working capital requirements will continue to be funded through a combination of note payables and further issuances of securities.

We have no lines of credit or other bank financing arrangements. Generally, we have financed operations to date through the proceeds of the private placement of equity and debt instruments. In connection with our business plan, management anticipates additional increases in operating expenses and capital expenditures relating to: (i) developmental expenses associated with a start-up business; and (ii) marketing expenses. We intend to finance these expenses with further issuances of securities, and debt issuances. Thereafter, we expect we will need to raise additional capital and generate revenues to meet long-term operating requirements. Additional issuances of equity or convertible debt securities will result in dilution to our current shareholders. Further, such securities might have rights, preferences or privileges senior to our common stock. Additional financing may not be available upon acceptable terms, or at all. If adequate funds are not available or are not available on acceptable terms, we may not be able to take advantage of prospective new business endeavors or opportunities, which could significantly and materially restrict our business operations. We will have to raise additional funds in the next twelve months in order to sustain and expand our operations. We currently do not have a specific plan of how we will obtain such funding; however, we anticipate that additional funding will be in the form of equity financing from the sale of our common stock.

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Off-Balance Sheet Arrangements

As of the date of this Quarterly Report on Form 10-Q, we do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors.

Going Concern

The independent auditors’ report accompanying our audited financial statements for the year ended May 31, 2011 contained an explanatory paragraph expressing substantial doubt about our ability to continue as a going concern. The financial statements have been prepared “assuming that we will continue as a going concern,” which contemplates that we will realize our assets and satisfy our liabilities and commitments in the ordinary course of business.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

Not applicable to a “smaller reporting company” as defined in Item 10(f)(1) of SEC Regulation S-K

Item 4. Controls and Procedures

Our Chief Executive Officer and Chief Financial Officer are responsible for establishing and maintaining disclosure controls and procedures for the Company.

(a) Evaluation of Disclosure Controls and Procedures

Based on their evaluation as of the end of the period covered by this Quarterly Report on Form 10-Q, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) are not effective to ensure that information required to be disclosed by us in report that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s (“SECs”) rules and forms and to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

(b) Management’s Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining internal control over financial reporting and disclosure controls. Internal control over financial reporting is a process designed by, or under the supervision of, our principal executive and principal financial officers, or persons performing similar functions, and effected by our Board of Directors, management and other personnel, 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 and includes those policies and procedures that:

1.  Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect our transactions and dispositions of assets; 

2.  Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors; and 

3.  Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements. 

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Disclosure controls and procedures are designed to ensure that information required to be disclosed in reports filed by us under the Exchange Act is appropriately recorded, processed, summarized and reported within the specified time periods.

Management has conducted an evaluation of the effectiveness of our internal control over financial reporting as of August 31, 2011 based on the framework established in the Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”).

Based on this assessment, management concluded that as of November 30, 2011 we had material weaknesses in its internal control procedures.

A material weakness is a control deficiency, or combination of control deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements would not be prevented or detected on a timely basis.

We have concluded that our internal control over financial reporting was ineffective as of November 30, 2011.

Our assessment identified certain material weaknesses which are set forth below:

Financial Statement Close Process

1.  There are insufficient written policies and procedures for accounting and financial reporting with respect to the requirements and application of US GAAP and SEC disclosure requirements. 

2.  There is insufficient supervision and review by our corporate management, particularly relating to complex transactions requiring analysis of equity and debt instruments. 

3.  We currently have an insufficient level of monitoring and oversight controls for review and recording of stock issuances, agreements and contracts, including insufficient documentation and review of the selection and application of US GAAP to significant non-routine transactions. In addition this has resulted in a lack of controls over the issuance of our stock which resulted in names of holders being spelt incorrectly. 

These weaknesses restrict our ability to timely gather, analyze and report information relative to the financial statements.

Entity Level Controls

1.  While we have adopted corporate governance policies, activities and processes are not always formally documented. Specifically, decisions made by the Board of Directors to be carried out by management should be documented and communicated on a timely basis to reduce the likelihood of any misunderstandings regarding key decisions affecting our operations and management. 

2.  We currently have insufficient resources and an insufficient level of monitoring and oversight, which may restrict our ability to gather, analyze and report information relative to the financial statements in a timely manner, including insufficient documentation and review of the selection and application of US GAAP to significant non-routine transactions. In addition, the limited size of the accounting department makes it impractical to achieve an optimum segregation of duties. 

3.  There are limited processes and limited or no documentation in place for the identification and assessment of internal and external risks that would influence the success or failure of the achievement of entity-wide and activity-level objectives. 

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Functional Controls and Segregation of Duties

1.  There is an inadequate segregation of duties consistent with control objectives. Our management is composed of a small number of individuals resulting in a situation where limitations on segregation of duties exist. In order to remedy this situation we would need to hire additional staff to provide greater segregation of duties. Currently, it is not feasible to hire additional staff to obtain optimal segregation of duties. Management will reassess this matter in the following year to determine whether improvement in segregation of duties is feasible. 

2.  There is a lack of top level reviews in place to review targets, product development, joint ventures or financing. All major business decisions are carried out by our officers with Board of Directors approval when needed. 

Accordingly, as the result of identifying the above material weaknesses, we have concluded that these control deficiencies resulted in a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis by the company’s internal controls.

Management believes that the material weaknesses set forth above were the result of the scale of our operations and are intrinsic to our small size. Management believes these weaknesses did not have a material effect on our financial results and intends to take remedial actions upon receiving funding for our business operations.

Management’s report was not subject to attestation by our independent registered public accounting firm pursuant to temporary rules of the SEC that permit us to provide only management’s report herein.

Plan of Remediation

We are committed to improving our financial organization. As part of this commitment, we intend to create a position to segregate duties consistent with control objectives and will increase our personnel resources and technical accounting expertise within the accounting function when funds are available to us by preparing and implementing sufficient written policies and checklists which will set forth procedures for accounting and financial reporting with respect to the requirements and application of US GAAP and SEC disclosure requirements.

Management believes that preparing and implementing sufficient written policies and checklists will remedy the material weaknesses pertaining to insufficient written policies and procedures for accounting and financial reporting with respect to the requirements and application of US GAAP and SEC disclosure requirements. Further, management believes that the hiring of additional personnel who have the technical expertise and knowledge will result in proper segregation of duties and provide more checks and balances within the department. These personnel will provide the depth of knowledge and time commitment to provide a greater level of review for corporate activities. The appointment of additional outside directors with industry expertise will greatly decrease any control and procedure issues the company may encounter in the future.

We will continue to monitor and evaluate the effectiveness of our internal controls and procedures and our internal controls over financial reporting on an ongoing basis and are committed to taking further action and implementing additional enhancements or improvements, as necessary and as funds allow.

We intend to take appropriate and reasonable steps to make the necessary improvements to remediate these deficiencies, including:

1)  We will revise processes to provide for a greater role of independent board members in the oversight and review until such time that we are adequately capitalized to permit hiring additional personnel to address segregation of duties issues, ineffective controls and insufficient supervision and review by our corporate management. 

2)  We will continue to update the documentation of our internal control processes, including formal risk assessment of our financial reporting processes 

3)  Consolidate all books and records into one accounting system 

4)  Commence the development of internal controls and procedures surrounding the financial reporting process, primarily through the use of account reconciliations, and supervision. 

(c) Changes in Internal Controls over Financial Reporting

We intend to undertake a number of measures to remediate the material weaknesses discussed under “Management’s Report on Internal Control Over Financial Reporting” above. Those measures, described under “Plan of Remediation,” will be implemented by us in accordance with its plan of remediation, and when implemented, will materially affect, or are reasonably likely to materially affect, our internal control over financial reporting. Other than as described above, there have been no changes in our internal control over financial reporting during the period ended November 30, 2011 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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Item 5. Other

None

Part II- Other Information

Item 1. Legal Proceedings

We are not a party to any legal proceedings. Management is not aware of any legal proceedings proposed to be initiated against us. However, from time to time, we may become subject to claims and litigation generally associated with any business venture operating in the ordinary course.

Item 1A. Risk Factors

Not applicable to a “smaller reporting company” as defined in Item 10(f)(1) of SEC Regulation S-K

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

See our Current Reports on Form 8-K dated November 2, 2011.

Item 3. Defaults upon Senior Securities

No report required.

Item 4.(Removed and Reserved)

No report required.

Item 5. Other Information

N/A

Item 6. Exhibits

Exhibit Index    

Exhibit No.	Exhibit
31.1	Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*
32.1	Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*
10.17	Employment Agreement dated as of November 11, 2011, but effective as of June 1, 2011, by and between the Company and Douglas Toth.*

101.INS	XBRL Instance Document*
101.SCH	XBRL Taxonomy Extension Schema*
101.CAL	XBRL Taxonomy Extension Calculation Linkbase*
101.DEF	XBRL Taxonomy Extension Definition Linkbase*
101.LAB	XBRL Taxonomy Label Linkbase*
101.PRE	XBRL Taxonomy Presentation Linkbase*

* Filed herewith.

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SIGNATURES

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

	BIZZINGO, INC.
Date:  January 17, 2012	By:	/s/ Douglas Toth
	Douglas Toth, Chief Executive Officer& Chief Financial Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Signature	Title	Date
/s/ Douglas Toth	Chief Executive Officer& Chief Financial Officer	January 17, 2012
Douglas Toth	(Principal Executive Officer& Principal Accounting Officer)

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