- Quarterly Report (10-Q)

U.S. SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended December 31. 2011

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _________ to __________

Commission File No. 0-27633

INTERNET INFINITY, INC.

(Exact name of registrant as specified in its charter)

State of Incorporation: Nevada

IRS Employer I.D. Number: 95-4679342

220 Nice Lane #108

Newport Beach, , California 92663

Telephone 310-493-2244

(Address and telephone number of registrant’s principal

executive offices and principal place of business)

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 twelve months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.

Large accelerated filer [ ] Accelerated filer [ ]

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

As of February 12, 2012, there were 28,718,780 shares of the Registrant’s Common Stock, par value $0.001 per share, outstanding.

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

Transitional Small Business Disclosure Format (check one): Yes [ ] No [X]

TABLE OF CONTENTS

		Page
PART I - FINANCIAL INFORMATION		3

I..	Financial Statements	3

2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	13

4.	Controls and Procedures	14

PART II - OTHER INFORMATION		14

1.	Legal Proceedings	14

Exhibits		14

SIGNATURES		15

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

	Page

Balance Sheet (Unaudited) at December 31, 2011	4

Statements of Operations (Unaudited) for the Three and Nine Month Periods Ended December 31, 2011 and 2010	5

Statements of Cash Flows (Unaudited) for the Nine Month Period ended December 31, 2011 and 2010	7

Notes to Unaudited Financial Statements	8

INTERNET INFINITY, INC.

Balance Sheet

as at December 31, 2011 (unaudited) and March 31, 2011

		December 31,			March 31,
		2011			2011
		(Unaudited)

ASSETS
Cash and cash equivalents	$	949		$	432
Accounts Receivable	$	5,000		$	—

		5,949		$	432
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

Liabilities
Current Liabilities
Accounts Payable and Accrued Expenses	$	11,416		$	9,066
Note Payable - Related Parties		649,696			621,669
Due to Officer		353,880			345,706
Due to related party		7,209			7,209

Total Current Liabilities		1,022,201			983,650

Stockholders' Equity (Deficit)
Preferred Stock, $0.001 par value, 30,000,000 shares authorized,
none issued and outstanding at March 31, 2011 and December 31,2011
Common Stock, $0.001 par value, 100,000,000 shares authorized,
28,718,780 shares issued and outstanding as at December 31, 2011 and March 31, 2011		28,719			28,719
Additional Paid-in Capital		1,161,140			1,161,140
Accumulated Deficit		(2,206,111	)		(2,173,077	)

Total Stockholders' Equity (Deficit)		(1,016,252	)		(983,218	)

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)	$	5,949		$	432

The accompanying notes are an integral part of these financial statements.

INTERNET INFINITY INC.

Statement of Operations

for the Three and Nine Month Periods Ended December 31, 2011 and 2010

(Unaudited)

		For the 3 months ended						For the 9 months ended
		December 31,						December 31,
		2011			2010			2011			2010

Revenue	$	—		$	—		$	5,000		$	—

Cost of Revenue		—			—			—			—

Gross Profit		—			—			5,000			—

Operating Expenses:
Professional Fees		150			990			4,509			6,927
Consulting					—			645			1,100
Other		411			190			888			914
Total Operating Expenses		561			1,180			6,042			8,941

Loss from operations		(561	)		(1,180	)		(1,042	)		(8,941	)

Non-operating income (expense)
Interest expense		(11,378	)		(60	)		(31,992	)		(14,553	)
Total other expense		(11,378	)		(60	)		(31,992	)		(14,553	)
											—
Loss before income taxes		(11,939	)		(1,240	)		(33,034	)		(23,494	)

Provision for income taxes		—			—			—			—

Net Loss	$	(11,939	)	$	(1,240	)	$	(33,034	)	$	(23,494	)

Basic and diluted net loss per common share	$	(0.00	)	$	(0.00	)	$	(0.00	)	$	(0.00	)

Basic and diluted weighted average number of common shares outstanding		28,718,780			28,718,780			28,718,780			28,718,780

The accompanying notes are an integral part of these financial statements

INTERNET INFINITY INC.

Statement of Cash Flows

for the nine months ended December 31, 2011 and 2010

(Unaudited)

		2011			2010

Cash flows from operating activities:
Net loss	$	(33,034	)	$	(23,494	)
Adjustments to reconcile net loss to net cash used by operating activities:		—			—
Change in operating assets and liabilities:
Accounts Receivable		(5,000	)		—
Accounts payable		5,244			(6,454	)
Net cash (used by) operating activities		(32,790	)		(29,948	)

Cash flows from investing activities

Net cash (used by) investing activities		—			—

Cash flows from financing activities:
Increase (decrease) in due to related party		25,133			—
Increase (decrease) in due to officer		8,174			30,361
Net cash provided by financing activities		33,307			30,361

Net increase (decrease) in cash		517			413

Cash, beginning of the period		432			—

Cash, end of the period	$	949		$	413

Supplemental cash flow disclosure:
Interest paid during the year	$	—		$	—
Taxes paid during the year	$	—		$	—

The accompanying notes are an integral part of these financial statements

INTERNET INFINITY, INC.

NOTES TO FINANCIAL STATEMENTS

UNAUDITED

December 31, 2011

NOTE 1 ORGANIZATION

Internet Infinity, Inc. (III or “the Company”) was incorporated in the State of Delaware on October 27, 1995. III was in the business of distribution of electronic media duplication services and electronic blank media. The Company was re-incorporated in Nevada on December 17, 2004. The Company chose March 31 as its fiscal year end. The Company is currently seeking an acquisition or merger to redirect the structure and management to new profitable activities.

NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Unaudited Interim Financial Statements

The accompanying unaudited financial statements have been prepared by the Company, pursuant to the rules and regulations of the Securities Exchange commission (the “SEC”) as applicable to smaller reporting companies, and generally accepted accounting principles for interim accounting reporting. The information furnished herein reflects all adjustments (consisting of normal recurring accruals and adjustments) which are, in the opinion of management, necessary to fairly present the operating results for the respective periods. Certain information and footnote disclosures normally presented in annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) have been omitted pursuant to such rules and regulations. These unaudited condensed financial statements should be read in conjunction with the audited financial statements and footnotes included in the Company’s Annual Report on Form 10-K. The results of the nine month period ended December 31, 2011 are not necessarily indicative of the results to be expected for the full year ending March 31, 2012.

Cash and cash equivalents

The Company considers all liquid investments with a maturity of three months or less from the date of purchase that are readily convertible into cash to be cash equivalents.

Use of estimates

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

Fair value of financial instruments

The Financial Accounting Standards Board issued ASC (Accounting Standards Codification) 820-10 (SFAS No. 157), “Fair Value Measurements and Disclosures" for financial assets and liabilities. ASC 820-10 provides a framework for measuring fair value and requires expanded disclosures regarding fair value measurements. FASB ASC 820-10 defines fair value as the price that would be received for an asset or the exit price that would be paid to transfer a liability in the principal or most advantageous market in an orderly transaction between market participants on the measurement date. FASB ASC 820-10 also establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs, where available. The following summarizes the three levels of inputs required by the standard that the Company uses to measure fair value:

Level 1: Quoted prices in active markets for identical assets or liabilities.

Level 2: Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the related assets or liabilities.

Level 3: Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

The carrying amounts of the Company’s financial instruments as of December 31, 2011, reflect:

Cash: Level One measurement based on bank reporting.

Notes payable to Officers and related parties: Level 2 based on observable inputs.

Income taxes

The Company utilizes FASB ACS 740, “Income Taxes,” which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred tax assets and liabilities are determined based on the difference between the tax basis of assets and liabilities and their financial reporting amounts based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. A valuation allowance is recorded when it is “more likely-than-not” that a deferred tax asset will not be realized .

The Company generated a deferred tax credit through net operating loss carry-forward. However, a valuation allowance of 100% has been established. Net operating losses of approximately $2,206,000 have begun to expire. The balance is available through the year 2025, unless first utilized.

Interest and penalties on tax deficiencies recognized in accordance with ACS accounting standards are classified as income taxes in accordance with ASC Topic 740-10-50-19.

Basic and Diluted Earnings Per Share

Net loss per share is calculated in accordance with FASB ASC 260, Earnings Per Share, for the period presented. Basic net loss per share is based upon the weighted average number of common shares outstanding. Diluted net loss per share is based on the assumption that all dilative convertible shares and stock options were converted or exercised. Dilution is computed by applying the treasury stock method. Under this method, options and warrants are assumed exercised at the beginning of the period (or at the time of issuance, if later), and as if funds obtained thereby were used to purchase common stock at the average market price during the period.

The Company has no potentially dilutive securities outstanding as of December 31, 2011.

Restatement of Audited March 31, 2011 Balance Sheet

The audited balance sheet of March 31, 2011 balance sheet has been restated to transfer accumulated interest on Notes Payable-Related Parties from Accounts Payable into the aggregate balance of Notes Payable Related Parties.

Recent Accounting Pronouncements

On December 1, 2010 the Company adopted guidance issued by the FASB ASU 2010-15 on the consolidation of variable entities. The new guidance requires revised valuations of whether entities represent variable interest entities, ongoing assessments of control over such entities and additional disclosures for variable interests. Adoption of the new guidance did not have a material impact on our financial statements.

The Company has reviewed issued accounting pronouncements and plans to adopt those that are applicable to it. The Company does not expect the adoption of any other pronouncements to have an impact on its results of operations or financial position.

NOTE 3 UNCERTAINTY OF ABILITY TO CONTINUE AS A GOING CONCERN

The Company's financial statements are prepared using the generally accepted accounting principles applicable to a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. However, the Company has incurred significant losses and has an accumulated deficit of $2,206,111 and its total liability exceeds its assets by $1,016,252. The Company incurred net losses of $(33,034) and $(23,494) for the nine months ended December 31, 2011 and 2010, respectively.

In view of the matters described above, recoverability of a major portion of the recorded asset amounts shown in the accompanying balance sheets is dependent upon continued operations of the Company, which in turn is dependent upon the Company’s ability to raise additional capital, obtain financing and to succeed in its future operations. The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

Management has taken the following steps to revise its operating and financial requirements, which it believes are sufficient to provide the Company with the ability to continue as a going concern. The Company is actively pursuing additional funding and potential merger or acquisition candidates to redirect the structure and management to new profitable activities. The Company is also seeking strategic partners, which would enhance stockholders’ investment. Management believes that the above actions will allow the Company to continue operations through the next fiscal year.

NOTE 4 This Note left intentionally blank

NOTE 5 RELATED ENTITIES TRANSACTIONS

George Morris is chief financial officer, vice president, the chairman of the Board of directors of the Company and the controlling shareholder of the Company and its related parties through his beneficial ownership of the following percentages of the outstanding voting shares of the related parties:

Internet Infinity, Inc. (The Company)	85.06	%
Morris & Associates, Inc.	71.30	%
Electronic Media Central, Corp.	82.87	%
Apple Realty, Inc.	100.00	%
L&M Media, Inc.	100.00	%

The Company has notes payable to related parties on December 31, 2011 as follows:

Anna Moras (mother of George Morris), with interest at 6% per annum, unsecured and due upon 90 days written notice. The funds were advanced in stages, and were allocated in part as payables to Anna Moras, Apple Realty, Inc. and George Morris. The amounts were aggregated June 30, 2011 and the fiscal year end balance sheet at March 31, 2010 was recast accordingly
Note, aggregated	$	400,000
Accrued Interest		199,099
Total Anna Moras		599,099

Apple Realty, Inc. (related through a common controlling shareholder), secured by assets of the Company, past due and payable upon demand. Interest accrued at 6% per annum. This note was in connection with consulting fees and office expenses owed. It was reallocated to Anna Moras	$	0

L&M Media, Inc. (related through a common controlling shareholder) – Accounts payable for purchases, converted into a note. The note is due on demand, unsecured and interest accrues at 6% per annum	$	29,466
Accumulated interest thereon		21,131
Total L&M Media, Inc		50,597

Total Notes Payable – Related Parties	$	649,696

Due to Officer

The Company has a payable to officer December 31, 2011 as follows: Unsecured miscellaneous payable upon demand to George Morris, with interest at 6% per annum, with monthly installments of $3,000 beginning June 30, 2000 and paid as available. George Morris is the chairman of the Company. The Company has not made any principle payments to George Morris and is in default of this note	Current	$	14,821

Note payable – Officer Unsecured note payable upon demand to George Morris, with interest at 6% per annum. The Company has not made principle payments to George Morris and is in default of this note	Current		52,630

Officer Draw/Payable	Current		196,287

Other			10,580
Total		$	274,316

Accumulated interest thereon		$	79,562

Total Due to Officer		$	353,880

Due to Related Party		$	7,209

The Company has a payable to Morris Business Development Company and Morris & Associates, Inc., two parties related through a common controlling shareholder, amounting to $7,209 as of December 31, 2011. The amount is interest free, unsecured and due on demand.

During the nine months ended December 31, 2011, the Company’s officers and directors did not charge for their services.

The Company utilizes office space, telephone and utilities provided by Apple Realty, Inc. at estimated fair market values, as follows:

	Monthly		Annually
Rent	$	100	$	1,200
Telephone		100		1,200
Utilities		100		1,200
Office Expense		100		1,200
Total	$	400	$	4,800

The Company has a month-to-month agreements with Apple Realty, Inc. for a total monthly fee of $400 for the above expenses. The charges are currently in abeyance.

NOTE 6 INCOME TAXES

No provision was made for federal income tax for the six months ended December 31 2011, since the Company had significant net operating loss. The net operating loss carry-forwards may be used to reduce taxable income through the year 2028. The availability of the Company’s net operating loss carry-forwards are subject to limitation if there is a 50% or more positive change in the ownership of the Company’s stock. The provision for income taxes consists of the state minimum tax imposed on corporations.

NOTE 7 STOCK OPTIONS

The Company’s 1996 stock option plan provides that incentive stock options and nonqualified stock options to purchase common stock may be granted to directors, officers, key employees, consultants, and subsidiaries with an exercise price of up to 110% of market price at the date of grant. Generally, options are exercisable one or two years from the date of grant and expire three to ten years from the date of grant.

For the nine months ended December 31, 2011, the Company granted no options. As at December 31, 2011 there are no options outstanding.

NOTE 8 CAPITAL

During the nine months ended December 31, 2011, the Company did not issue any shares.

As of December 31, 2011 the Company had authorized 30,000,000 preferred shares of par value $0.001, of which none were issued and outstanding. As of December 31, 2011 the Company had authorized 100,000,000 shares of common stock of par value $0.001, of which 28,718,780 shares were issued and outstanding.

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

The following discussion and analysis should be read in conjunction with the financial statements and the accompanying notes thereto for the three-month period ended December 31, 2011 and is qualified in its entirety by the foregoing and by more detailed financial information appearing elsewhere. See “Item 1. Financial Statements.” The discussion includes management’s expectations for the future.

Results of Operations – Third Quarter (“Q3”) Fiscal 2011 Compared to Third Quarter (“Q3”) Fiscal 2010.

Revenue

Internet Infinity revenues for Q3 2011 were $0 as compared with revenues of $0 in Q3 2010.

Cost of Sales - Gross Margin

Our cost of sales was $0 for Q3 2011, as compared to $0 for Q3

Operating Expenses

Operating expenses for Q3 2011 decreased to $561 from $1,180 for Q3 2010. This decrease in operating expenses is primarily due to tighter control in accounting and government reporting costs.

Net Income (Loss)

The company had a net loss of $11,939 from operations in Q3 2011, as compared with a net loss of $1,240 from operations for Q3 2010. Our main expense was interest expense of $11,378 paid for Q3 2011 compared to $60 paid for Q3 of 2010.

Balance Sheet Items

Our cash position increased to $949 at December 31, 2011 from $413 at December 31, 2010.

Off-Balance Sheet Arrangements

Our company has not entered into any transaction agreement with an entity unconsolidated with us under which we have obligations beyond the mutual development of the new eCommerce Association for mutual future benefit, or:.

a retained or contingent interest in assets transferred to the unconsolidated entity or similar arrangement that serves as credit, liquidity or market risk support to such entity for such assets,

any obligation, including a contingent obligation, under a contract that would be accounted for as a derivative instrument, or

any obligation, including a contingent obligation, arising out of a variable interest in an unconsolidated entity that is held by us and material to us where such entity provides financing, liquidity, market risk or credit risk support to, or engages in leasing, hedging or research and development services with us.

Item 4. Controls and Procedures

Evaluation of disclosure controls and procedures . The Company carried out an evaluation, under the supervision and with the participation of the Company's management, including the Company's Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company's disclosure controls and procedures as of the end of the period covered by this report. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Company's disclosure controls and procedures are effective and are designed to provide reasonable assurances of achieving their objectives. Further, the Company’s officers concluded that its disclosure controls and procedures are also effective to ensure that information required to be disclosed in the reports that it files or submits under the Exchange Act is accumulated and communicated to its management, including its chief executive officer and chief financial officer, to allow timely decisions regarding required disclosure. There were no significant changes in the Company's internal control over financial reporting during the period covered by this report that have materially affected, or are reasonably likely to materially affect our internal controls over financial reporting.

PART II - OTHER INFORMATION

Item Legal Proceedings

We are not, and none of our property is, a party to any pending legal proceedings, and no such proceedings are known to be contemplated.

No director, officer or affiliate of the company, and no owner of record or beneficial owner of more than 5.0% of the securities of the company, or any associate of any such director, officer or security holder is a party adverse to the company or has a material interest adverse to the Company in reference to any litigation.

On December 31, 2011,Internet Infinity, Inc. (“Company”), through and with the vote and recommendation of its controlling shareholder, George Morris and Anna Moras, accepted the resignation of Charles Yesson who retired without cause as a member of the Board of Directors and Chairman of the Audit Committee. Yesson’s position shall be filled by the first Quarter ending March 31, 2012. George Morris, shall assume the position of the Audit Committee Chairman until a new Board member and Audit Committee chairman is appointed.

Exhibits

	2.3		Articles of Merger (Pursuant to NRS 92A.200) which merges Internet Infinity, Inc., a Delaware corporation, with Internet Infinity, Inc., a Nevada corporation, with the Nevada corporation being the surviving entity***
	3		Articles of Incorporation of Internet Infinity, Inc.*
	3.1		Amended Certificate of Incorporation of Internet Infinity, Inc.*
	3.2		Bylaws of Internet Infinity, Inc.*
	3.3		Corporate Charter and Articles of Incorporation of Internet Infinity, Inc., a Nevada corporation***
	3.4		Certificate of Amendment to Articles of Incorporation of Internet Infinity, Inc., a Nevada corporation++
	10.1		Master License and non-exclusive Distribution Agreement between Internet Infinity, Inc. and Lord & Morris Productions, Inc.*
	10.2		Master License and Exclusive Distribution Agreement between L&M Media, Inc. and Internet Infinity, Inc.*
	10.3		Master License and Exclusive Distribution Agreement between Hollywood Riviera Studios and Internet Infinity, Inc.*
	10.4		Fulfillment Supply Agreement between Internet Infinity, Inc. and Ingram Book Company**
	14		Code of Ethics for CEO and Senior Financial Officers+
	31.1		Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
	31.2		Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
	32.1		Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
	32.2		Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
	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 Extension Label Linkbase
	101.PRE		XBRL Taxonomy Presentation Linkbase

*Previously filed with Form 10-SB 10-13-99; Commission File No. 0-27633 incorporated herein.

**Previously filed with Amendment No. 2 to Form 10-SB 02-08-00; Commission File No. 0-27633 incorporated herein.

***Previously filed with Form 8-K Current Report March 14, 2005, Commission File No. 0-27633 incorporated herein.

+Previously filed with Form 10-KSB; Commission File No. 0-27633 incorporated herein.

++Previously filed with Form 8-K Current Report February 17, 2006; Commission File No. 0-27633 incorporated herein.

SIGNATURES

Pursuant to the requirements of the Exchange Act of 1934, the Registrant has caused this report to be signed on its behalf by the undersigned hereunto duly authorized.