GALAXY NEXT GENERATION, INC. - Quarter Report: 2011 September (Form 10-Q)

September 30, 2011 10Q

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 quarterly period ended September 30, 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 number 333-51918

FULLCIRCLE REGISTRY, INC.

(Exact Name of Registrant as Specified in Its Charter)


NEVADA (State or Other Jurisdiction of Incorporation or Organization)		87-0653761 (I.R.S. Employer Identification No.)

161 Alpine Drive, Shelbyville, KY 40065

(Address of Principal Executive Offices) (Zip Code)

(502) 410-4500

(Registrant’s Telephone Number, Including Area Code)

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

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” 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 reporting company)	Smaller reporting company	X .

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

FORM 10-Q

State the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date: 107,953,725 Class A common shares certified by Interwest Transfer, and 10,000 Class A preferred shares, and 300,600 Class B shares as of November 2, 2011

FORM 10-Q

FULLCIRCLE REGISTRY, INC.

Table of Contents


			Page
PART I.	Financial Information

	Item 1.	Consolidated Financial Statements	3

		Consolidated Balance Sheets for September 30, 2011 (unaudited) and December 31, 2010	4

		Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2011 and 2010 (unaudited)	5

		Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2011, and 2010 (unaudited)	6

		Notes to Consolidated Financial Statements (unaudited)	7

	Item 2.	Management’s Discussion and Analysis or Plan of Operation	10

	Item 3.	Quantitative and Qualitative Disclosures about Market Risk	15

	Item 4.	Controls and Procedures	15

PART II.	Other Information

	Item 1.	Legal Proceedings	16

	Item 1A.	Risk Factors	16

	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	16

	Item 3.	Defaults Upon Senior Securities	16

	Item 4.	Exhibits	17

	Signatures		17

PART I – FINANCIAL INFORMATION

ITEM 1. UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS.

In the opinion of management, the accompanying unaudited consolidated financial statements of FullCircle Registry, Inc. (the “Company”) have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial statements and with the instructions to Form 10-Q and Regulation S-X for the three month periods ended September 30, 2011 and 2010 and the nine month periods ended September 30, 2011 and 2010. The consolidated financial statements reflect, in the opinion of management, all adjustments, which are of a normal and recurring nature, necessary for a fair presentation of the results for such periods.

The information furnished herein was taken from the books and records of the Company without audit. However, such information reflects all adjustments, which are, in the opinion of management, necessary to properly reflect the results of the interim period presented. The information presented is not necessarily indicative of the results from operations expected for the full fiscal year.

FullCircle Registry, Inc.

Consolidated Balance Sheets


				September 30,		December 31,
				2011		2010
				(Unaudited)
Current assets:
	Cash		$	16,310	$	6,738
	Notes receivable			10,000		10,000
	Prepaid Expenses			5,000		-
	Total Current Assets			31,310		16,738

Fixed Assets
		Georgetown 14 Theater (FCET property)		5,500,000		5,500,000
		Computers and Equipment		82,928		82,928
		Accumulated Depreciation		(202,604)		(82,928)
Total Fixed Assets				5,380,324		5,500,000

Other assets:
		Total Customer Data Base after Amortization		150,572		215,102
Total assets			$	5,562,206	$	5,731,840

LIABILITIES AND EQUITY

Current liabilities:
	Accounts payable		$	66,458	$	61,881
	Accrued expenses			1,916		2,002
	Accrued interest			26,580		20,286
	Preferred Dividends payable			7,527		3,006
	Short term Notes payable			65,000		65,000
	Note Payable - Related Party			76,626		-
	Current portion of mortgage payable			117,843		113,430
Total current liabilities				361,950		265,605

	Long term liabilities
		Mortgage payable		4,844,900		4,934,411
	Total long term liabilities			4,844,900		4,934,411
Total Liabilities				5,206,850		5,200,016

Stockholders equity:
	Preferred stock, authorized 10,000,000 shares of $.001 par value Preferred A, issued and outstanding is 10,000			10		10
	Preferred B, issued and outstanding is 300,600			300		300
	Common stock, authorized 200,000,000 shares of $.001 par value, issued and outstanding 107,953,725 and 101,316,138 shares, respectively			107,953		101,316
	Additional paid-in capital			8,498,949		8,297,582
	Accumulated deficit			(8,251,856)		(7,867,384)
		Total Stockholders' equity		355,356		531,824

Total liabilities and stockholders' equity			$	5,562,206	$	5,731,840

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

FullCircle Registry, Inc.

Consolidated Statements of Operations

(unaudited)


				For the Three Months				For the Nine Months
				Ended September 30,				Ended September 30,
				2011		2010		2011		2010

Revenues			$	331,661	$	424	$	985,062	$	928

Cost of sales				165,071		65		443,358		160

Gross profit				166,590		359		541,704		768

Operating expenses

	Selling, general & administrative			293,195		73,213		684,667		199,744

		Total operating expenses		293,195		73,213		684,667		199,744

Operating income (loss)				(126,605)		(72,854)		(142,963)		(198,976)

Other income (expense)

	Interest expense			(78,490)		(3,929)		(236,988)		(20,565)

	Miscellaneous Income			-		-		-		718

	Total other income (expense)			(78,490)		(3,929)		(236,988)		(19,847)

Net loss before income taxes				(205,095)		(76,783)		(379,951)		(218,823)

Income taxes				-		-		-		-

Net loss			$	(205,095)	$	(76,783)	$	(379,951)	$	(218,823)

Net basic and fully diluted loss per share			$	(0.00)	$	(0.00)	$	(0.00)	$	(0.00)

Weighted average shares outstanding				104,774,626		88,104,659		103,053,948		86,936,520

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

FullCircle Registry, Inc.

Consolidated Statements of Cash Flows

(Unaudited)


				For the Nine Months
				Ended September 30,
				2011		2010
Cash flows from operating activities

	Net loss		$	(379,951)	$	(218,823)

	Adjustments to reconcile net loss to net cash used in operating activities
		Depreciation & amortization		184,206		64,530
		Stock issued for services		49,555		28,279
	Change in assets and liabilities
		(Increase) decrease in prepaid expenses		(5,000)		-
		Increase (decrease) in accounts payable		4,578		(17,439)
		Increase (decrease) in accrued interest		6,294		20,565
		Increase (decrease) in accrued expenses		(86)		(1,087)
	Net cash used in operating activities			(140,404)		(123,975)

Cash flows from investing activities
	Net cash provided by investing activities			-		-

Cash flows from financing activities
	Loan to unrelated party			-		(10,000)
	Payments on mortgage payable			(85,098)		-
	Proceeds from notes payable - related party			76,626		-
	Proceeds from sale of common shares stock			158,448		140,000
	Net cash provided by financing activities			149,976		130,000

	Net increase in cash			9,572		6,025

Cash and cash equivalents at beginning of period				6,738		2,091

Cash and cash equivalents at end of period			$	16,310	$	8,116

Supplemental cash flow information

Cash paid for:

	Interest			230,694		-
	Taxes			-		-

Non-cash transactions
	Unpaid dividends		$	7,527	$	-
	Stock issued for accounts payable and accrued interest		$	7,055	$	-
	Stock issued for notes payable and accrued interest		$	-	$	300,600
	Stock issued for services		$	49,555	$	28,279

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

NOTE 1. BASIS OF FINANCIAL STATEMENT PRESENTATION.

The accompanying un-audited financial statements have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted in accordance with such rules and regulations. The information furnished in the interim financial statements includes normal recurring adjustments and reflects all adjustments, which, in the opinion of management, are necessary for a fair presentation of such financial statements. Although management believes the disclosures and information presented are adequate to make the information not misleading, it is suggested that these interim financial statements be read in conjunction with the Company’s most recent audited financial statements and notes thereto included in its December 31, 2010, Annual Report on Form 10-K/A. Operating results for the three and nine months ended September 30, 2011, are not necessarily indicative of the results that may be expected for the year ending December 31, 2011.

NOTE 2. GOING CONCERN.

The accompanying Consolidated Financial Statements have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company has suffered recurring losses, negative working capital and is dependent upon raising capital to continue operations. The Company has incurred losses resulting in an accumulated deficit of $8,251,856, and $7,867,384 as of September 30, 2011 and December 31, 2010, respectively.

The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. It is management’s plan to generate additional working capital by increasing revenue as a result of new sales and marketing initiatives and by raising additional capital from investors.

Management's plans with regards to these issues are as follows:

Locating and merging with other profitable private companies where the owners of these businesses are seeking liquidity and exit plans.

Expanding revenues by purchasing, or otherwise acquiring, profitable private businesses.

Continued development of Georgetown 14, located in Indianapolis, Indiana, our first acquisition, to increase revenues and profitability.

Completing due diligence with regard to the potential acquisition of the Movie Palace, located in Elizabethtown, Kentucky.

Locating and purchasing additional theaters.

Begin the acquisition process of Independent Insurance Agencies.

Expanding revenues by finding new customers who can benefit by utilizing the Company’s information retrieval service.

Using the 68,000 name prescription customer database to provide the foundation of the FullCircle Prescription Service, Inc. business.

Attracting contractors and agents to independently market our services and assist in our search for business candidates for acquisition.

Locating and working with new Company partners who will provide additional similar products.

Raising new investment capital, either in the form of equity or loans, sufficient to meet the Company's operating expenses until the revenues are sufficient to meet the Company’s operating expenses on an ongoing basis.

The Company cannot ascertain the eventual success of management's plans with any degree of certainty. No assurances can be given that the Company will be successful in raising immediate capital or that the Company will achieve profitability or positive cash flows.

The ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish the plans described above. The accompanying consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

NOTE 3. STOCKHOLDERS’ EQUITY

During the three-month period ending September 30, 2011 the Company issued an aggregate amount of 2,500,000 restricted shares of the Company’s common stock for operating capital at .04 per share to accredited investors. During the September Quarter the Company issued an aggregate amount of 2,000,000 restricted shares of the Company’s common stock for services at .01 per share. Also, during the three-month period ending September 30, 2011 the Company issued 250,000 restricted shares of the Company’s common stock for services at .05 per share. And, during the three-month period ending September 30, 2011 the Company issued an aggregate amount of 426,382 restricted shares of the Company’s common stock for services at .04 per share, resulting in total shares issued during the nine month period ended September 30, 2011 being 6,637,587 restricted shares.

NOTE 4. SIGNIFICANT ACCOUNTING POLICIES

Fair Value of Financial Instruments

On January 1, 2008, the Company adopted FASB ASC 820-10-50, “Fair Value Measurements”. This guidance defines fair value, establishes a three-level valuation hierarchy for disclosures of fair value measurement and enhances disclosure requirements for fair value measures. The three levels are defined as follows:

Level 1 inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.

Level 2 inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.

Level 3 inputs to valuation methodology are unobservable and significant to the fair measurement.

The carrying amounts reported in the balance sheets for the cash and cash equivalents, receivables and current liabilities each qualify as financial instruments and are a reasonable estimate of fair value because of the short period of time between the origination of such instruments and their expected realization and their current market rate of interest.

Capital Structure

In accordance with ASC 505, “Equity,” the Company’s capital structure is as follows:

Preferred stock, authorized 10,000,000 shares of $.001 par value. Class A issued and outstanding is 10,000. Class A preferred shares have no voting rights. Class B issued and outstanding is 300,600 shares. The Class B shares have voting rights of 10 votes for 1 Preferred B share. There is no publicly traded market for our preferred shares.

Common stock, authorized 200,000,000 shares of $.001 par value, issued and outstanding 107,953,725 on October 18, 2011 and 101,316,138 on December 31, 2010. The common stock has one vote per share. The common stock is traded on the OTCBB under the symbol FLCR.

The Company has not paid, nor declared, any dividends since its inception and does not intend to declare any such dividends in the foreseeable future. The Company's ability to pay dividends is subject to limitations imposed by Nevada law. Under Nevada law, dividends may be paid to the extent that the corporation's assets exceed its liabilities and it is able to pay its debts as they become due in the usual course of business.

Class B Preferred shares have a 2% yield payable annually.

Use of Estimates in the Preparation of Consolidated Financial Statements

The preparation of consolidated financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the consolidated financial statements and expenses during the reporting period. In these Consolidated Financial Statements, assets, liabilities and expenses involve extensive reliance on management’s estimates. Actual results could differ from those estimates.

NOTE 5 RELATED STOCKHOLDER DEBT

During the nine month period the Company entered into notes for operating capital with a related stockholder.

NOTE 6. SUBSEQUENT EVENTS

Subsequent to September 30, 2011, the Company issued demand promissory notes bearing interest at the rate of 10% per annum to existing stockholders in the aggregate amount of $96,000 for operating capital for FullCircle Entertainment, Inc. Until such time as the notes are repaid in full, the stockholders have the option at any time to convert the balance due under the notes into class A common stock of the Company. The purpose of this funding is to provide funds to Georgetown 14 operations during the road construction of Lafayette Road and Georgetown Road which provide access to the theater.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS.

General

When used in this report, the words “may,” “will,” “expect,” “anticipate,” “continue,” “estimate,” “project,” “intend,” and similar expressions are intended to identify forward-looking statements within the meaning of Section 27a of the Securities Act of 1933 and Section 21e of the Securities Exchange Act of 1934 regarding events, conditions, and financial trends that may affect the Company’s future plans of operations, business strategy, operating results, and financial position. Persons reviewing this report are cautioned that any forward-looking statements are not guarantees of future performance and are subject to risks and uncertainties and that actual results may differ materially from those included within the forward-looking statements as a result of various factors. Such factors are discussed under the “Item 2. Management’s Discussion and Analysis of Financial Condition or Plan of Operations,” and also include general economic factors and conditions that may directly or indirectly impact the Company’s financial condition or results of operations.

Where this Form 10-Q includes “forward-looking” statements within the meaning of Section 27A of the Securities Act, we desire to take advantage of the “safe harbor” provisions thereof. Therefore, FullCircle Registry, Inc., is including this statement for the express purpose of availing itself of the protections of such safe harbor provisions with respect to all of such forward-looking statements. The forward-looking statements in this Form 10-Q reflect our current views with respect to future events and financial performance. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ from those anticipated. In this Form 10-Q, the words “anticipates,” “believes,” “expects,” “intends,” “future” and similar expressions identify forward-looking statements. We undertake no obligation to publicly revise these forward-looking statements to reflect events or circumstances that may arise after the date hereof. All subsequent written and oral forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by this section. We have based these forward-looking statements on our current expectations and projections about future events, including, among other things:

Attracting immediate financing;

Merging with or acquiring profitable private businesses.

Delivering a quality product that meets customer expectations;

Obtaining and expanding market acceptance of the products we offer; and

Competition in our market.

Our Business

Our initial business began in 2000, with the formation of FullCircle Registry, Inc. We were initially a technology-based business that provided emergency document and information retrieval services. Our service included, providing customers with secure storage and immediate access to their critical medical records, legal documents (living wills, powers of attorney, “do not resuscitate” orders, etc.), and emergency contact information.

In 2008 the new CEO Norman Frohreich developed plans to place FullCircle Registry, Inc. into a holding company and began developing new totally held Companies. Since that time the Company has established FullCircle Prescription Services, Inc., FullCircle Insurance Agency, Inc., and FullCircle Entertainment, Inc. Additional negotiations are on going to add Companies that will give FullCircle a wide range of business activities.

The new mission is to merge with or acquire profitable businesses into our subsidiary companies that will continue on as separate businesses owned by FullCircle Registry, Inc. The driving force of this business model is to provide exit plans for smaller business owners that are generating profits. Many business owners have developed excellent businesses and now when it becomes time to retire, because of the economy and the lack of bank lending, they cannot sell their businesses. Our goal is to provide this exit plan for them and convert the equity in their businesses into shares of FullCircle Registry’s stock where liquidity can occur.

Because of the unavailability of funds the Company has been forced to limit the expansion of the business model. We have had to be extremely conservative about spending Company funds on marketing, salaries and other expenses until more funds are available. The speed of expanding the business model depends principally upon the available capital to fund filing costs associated with the requirements of the SEC for us to acquire additional businesses. The existing economy has made it very difficult to obtain investment funding.

Our Corporate Information

Our principal executive offices are located at 161 Alpine Drive, Shelbyville, Kentucky, 40065, and our telephone number is (502) 410-4500. Our current website addresses are www.fullcircleregistry.com, www.fullcirclerx.com, and www.medshelp4U.com. Our website and the information contained therein or connected thereto shall not be deemed to be incorporated into this report.

SEC Compliance and Regulations

The requirements for regulatory compliance continue to be difficult, and we are receiving new rules and changes on a monthly basis. It is becoming most difficult for an emerging company to be able to afford all of the compliance costs.

Public reporting companies are now required to file electronically with the SEC in both XBRL and HTML formats. The quarter ended June 30, 2011 was the first quarter in which the Company was required to make this filing. Our Form 10-Q filing for the June Quarter was filed on time in both formats. It is the Company’s understanding that we will be required to file our reports in both the HTML and XBRL formats for a period of two years, after which the only required format will be the XBRL format. The additional cost of filing in XBRL format for the first year is $4,000.

Our Business and Strategy

We have formed three new wholly-owned subsidiaries to begin the new business plan as specifically summarized below.

FullCircle Entertainment, Inc.

Our first acquisition was property containing Georgetown 14, a theater complex in northern Indianapolis. In addition the property contains A Save-A-Lot Grocery store, which is providing lease revenue of $34,185 per quarter.

Initially, we experienced positive cash flow from the acquisition. However, our revenues dropped because of construction taking place on Georgetown Road and Lafayette Boulevard, which are arteries necessary to enter the Georgetown theater property in the most recent period (April through September,) ten lanes of traffic are often cut down during the day and evening to two lanes with flag persons. Both streets are torn up and traffic has been directed around our business. Some of the paving has now been completed but the two exits off of Interstate 65 are still a serious issue for our access. We expect that this construction will be completed in mid November and then business should begin to pick up again. In the meantime it has severely impacted our revenues.

To assure the stability of FullCircle Entertainment, Inc., during the construction problems in Indianapolis, three existing stockholders have provided in the aggregate $96,000 at 10% interest rate per annum for operating capital for Georgetown 14 after the close of the September quarter in October, 2011.

Also, during the initial periods of the merger we continued to have higher than normal expenses, including increased auditing expenses and increased infrastructure-restructuring expenses. It is our expectation that Georgetown 14 will soon be able to provide a positive cash flow again.

Our purchase of Georgetown 14 that we announced in an 8K early this year is summarized as follows:

Purchase price was $5,500,000.

Appraised value is $7,850,000.

September 30, 2011 Mortgage payable was $4,884,900.

Shares issued to owners for purchase were 4,521,588 at the rate of $.10 per share or $452,159.

Expected Gross revenue for 2011 is now expected to be more than $1,300,000 adjusted for the impact of the events noted above.

The size of our property in Indianapolis is 6.869 acres or 295,367 square feet. Our Georgetown 14 building is 61,233 square feet. We believe that we have sufficient room to add other businesses on our property. Management is researching the viability of that decision factoring in the occupancy rates in the immediate area. We are energized to add more facilities such that the additional revenue coming from leased facilities lessens the burden of our mortgage.

During the first quarter of 2011 our revenues exceeded 2010 first quarter by 12% while Movieline International reported a first quarter U.S. and Canada Box office trends drop of 19% compared to last year. During the second quarter our revenues dropped slightly below the June quarter 2010 because of the traffic congestion on both accesses to our theater because of street construction.

We believe that we have developed the proper infrastructure to continue on our acquisition process in the FullCircle Entertainment, Inc. In September we issued an Form 8-K and a Press Release disclosing the non-binding Letter of Intent that has been signed by the Company to acquire our second theater which is the Movie Palace in Elizabethtown, Kentucky. We are currently involved in the necessary due diligence with that potential acquisition. As soon as the audit and the appraisals are complete the company will make a final determination on the acquisition.

Our revenues have increased this year and that trend is expected to continue. Our expenses have been larger predominately due to the increased SEC compliance costs and the cost of absorbing Georgetown 14.

FullCircle Insurance Agency, Inc.

We have formed the FullCircle Insurance Agency, Inc. to be our vehicle for our activity in the insurance business. At this time we have not begun operations since we are awaiting funding. The Company has been negotiating for funding for over a year. Several funding companies have come forward with proposals for the needed funding but the cost and terms have not been acceptable.

Independent Insurance Agency Acquisitions

It is our plan to acquire, or otherwise merge with, small insurance agencies with a three to five-year exit plan, as well as offer shares of FullCircle Registry, Inc. to these agency owners to give them the ability to exit their business with the potential to meet or exceed the value of their business and participate financially in the growth of the Company.

The target model for an insurance agency acquisition is:

Agency in a town with a population less than 40,000.

Agency that has gross revenues of $70,000 to $300,000.

Agency owner that is over the age of 55.

We believe that these smaller agencies are not targets for acquisition by larger companies, and, therefore, their individual owners have limited options for an exit strategy.

FullCircle Prescription Services, Inc.

FullCircle Prescription Services, Inc. has been established for the purpose of handling our prescription assistance program. We have, at very little expense, been contacting potential contractors and agents to help move the project forward but are limited as to how aggressive we can be given limited capital.

The www.fullcirclerx.com web page has been launched to begin the process of helping individuals find medications that are safe and that could potentially save up to 40% to 70% of the cost of medications. Our launch with our additional web pages focusing on specific ailments has been delayed pending additional funding.

Summary of Current Status of Business Activity

The process to acquire funding for the development of our new business plans has been slow and difficult because of current economic conditions. We walked into the recession in 2008 just at the time we were ready to launch the new plans. Sourcing funds has been time consuming and currently takes up over fifty percent of the CEO’s time. At some point, when our initial acquisitions begin to provide cash flow then and only then can management turn our efforts into further expansion of the Company.

During the last several years we have managed to move our stockholders’ equity from a negative $500,000 net worth to a positive $355,356 net worth at the end of the third quarter of 2011. Currently, our outside private non-related investor debt burden for FullCircle Registry, Inc. is now down to $65,000 along with notes payable to a related party amounting to $76,626. Over the last four years we have enjoyed the support of several stockholders who have enabled us to continue to develop our business plans.

Again, management is interested in talking with existing stockholders for the purpose of acquiring working capital to maintain our development and to assure that we can soon become a profitable company.

We are continuing to work with our business partners in the development of our materials. Once funding is available we expect to announce these developments and then engage the personnel that are ready to work with these partners.

FullCircle Prescription Services, Inc. was informed that PinPay was ready and able to support the FullCircle Prescription Gift Card. Because of the lack of funding we have been unable to begin the gift card program.

Risks Affecting Us

Our business is subject to numerous risks. We have a limited history of operations as an insurance agency and an owner of theaters, have a history of operating losses, and may not achieve or maintain profitability. We are dependent upon the sale of our products and services to generate a significant percentage of our revenue. The entertainment and insurance industries are highly competitive markets, and we will be competing against companies that have much longer operating histories, more established brands and greater resources than we do.

Employees, Contractors, Agents, and Agreements

The Company currently has twenty-seven employees and three independent contractors.

Results of Operations for the Three-Month and Nine-Month Periods Ended September 30, 2011 and 2010.

Revenues during the three months ended September 30, 2011 were $331,661 with a cost of sales of $165,071 yielding a gross profit of $166,590 compared to $424 in revenues for the same period in 2010 with cost of sales of $65 yielding a gross profit of $359 for the same period in 2010. Revenues during the nine months ended September 30, 2011 were $985,062 with a cost of sales of $443,358 yielding a gross profit of $541,704 compared to $928 in revenues for the same period in 2010 with cost of sales of $160 yielding a gross profit of $768 for the same period in 2010. The increased amounts in 2011 compared to 2010 are the direct result of our theatre acquisition in late 2010.

Operating expenses and selling, general and administrative costs during the current three-month period were $293,195 resulting in an operating loss of $126,605 compared to operating expenses of $73,213 for the three months ended September 30, 2010 resulting in an operating loss of $72,854 in the same period in 2010. Operating expenses and selling, general and administrative costs during the current nine-month period were $684,667 resulting in an operating loss of $142,963 compared to operating expenses of $199,744 for the nine months ended September 30, 2010 resulting in an operating loss of $198,796 in the same period in 2010. Operating expenses for the nine-month period have increased because of the depreciation on our property in Indianapolis and additional operating expenses have occurred for SEC compliance.

Interest expense for the three months ended September 30, 2011 was $78,490 resulting in a net loss from continuing operations of $205,095. For the three months ended September 30, 2010 the Company had interest expense of $3,929 and recognized a net loss of $76,783. Interest expense for the nine months ended September 30, 2011 was $236,988 resulting in a net loss from continuing operations of $379,951. For the nine months ended September 30, 2010 the Company had interest expense of $20,565 and recognized a net loss of $218,823. Interest expense for 2011 is higher because the Company is servicing debt of $4,844,900 as of September 30, 2011 with the purchase of the property in Indianapolis that contains our Georgetown 14 Theater.

Our office operating expenses have been much lower because we have continued to curtail our non-essential activities. By design, most operating expenses and interest expenses will be part of our subsidiaries expenses. FullCircle Registry, Inc.’s operating expenses consists predominately of the cost of accounting, auditing, and legal services for SEC compliance.

Our SEC compliance cost for auditors, accountants and attorneys continue to be the major part of our expenses.

We believe that the results of our acquisition of the Georgetown 14 Theater are good. Once we are able to eliminate our attendance problems because of the road construction we believe that Georgetown 14 will generate positive cash flow.

Subsequent to the September quarter we added one more “silver screen” which allows us to bring in digital movies, which have the capability of showing 3D films. We are currently sourcing additional financing to convert several more screens. The movie companies will provide us with refunds sufficient to cover the cost of financing the screen conversions.

Liquidity and Capital Resources

At September 30, 2011 the Company had total assets of $5,562,206 compared to $254,728 on September 30, 2010, and $5,731,840 at December 31, 2010. On September 30,2011 the Company had total assets consisting of $16,310 in cash, a $10,000 note receivable, prepaid expenses of $5,000, $5,380,324 in fixed assets in Georgetown 14, and $150,572 in our customer database. Total assets at December 31, 2010 consisted of a note receivable of $10,000, $6,738 in cash, $215,102 in our customer database, and fixed assets of $5,500,000.

At September 30, 2011 the Company had $5,206,850 in total liabilities. Total liabilities include $66,458 in accounts payable, $26,580 in accrued interest, $1,916 in accrued expenses, $7,527 in preferred dividends payable, $65,000 in notes payable, $76,626 notes payable related party, $117,843 current portion of mortgage payable and the long term portion of the mortgage payable of $4,844,900. Total liabilities at December 31, 2010 were $5,200,016, which was comprised of $61,881 in accounts payable, $20,286 in accrued interest, $2,002 in accrued expenses, $3,006 in preferred dividends payable, $65,000 in notes payable, $113,430 current portion of mortgage payable and the long term portion of the mortgage payable of $4,934,411.

Net cash used by operating activities for the nine months ended September 30, 2011 was $140,404 compared to net cash used by operating activities for the nine months ended September 30, 2010 of $123,975. During the nine months ended September 30, 2011, $0 was used for investments, and $149,976 was provided by financing activities. For the same period in 2010 $0 was used for investments and $130,000 was provided by financing activities.

As of September 30, 2011 we had commitments of a mortgage for $4,844,940 for the property containing the Georgetown 14 Theater. We are currently focused on increasing revenues from our operations and reducing debt through notes payable to common stock. We may also seek funding from unencumbered securities purchases or from lenders offering favorable terms. No assurance can be given that we will be able to obtain the total capital necessary to fund our new business plans. In such an event, this may have a materially adverse effect on our business, operating results and financial condition.

We require additional capital to supplement our anticipated revenues and fund our continuing operations. We have relied upon advances from officers and shareholders and we have issued stock to finance our operations to this point.

FullCircle currently owes $65,000 in notes payable and $76,626 notes payable to a related party. Our auditors have expressed concern that the Company has experienced losses from operations and negative cash flows from operations since inception. We have negative working capital and a capital deficiency at September 30, 2011. These conditions raise substantial doubt about our ability to continue as a going concern.

However, the Company’s financial position has improved over the last nine months such that now in 2011, we have a positive stockholders’ equity of $355,356. As we continue to locate profitable companies where the owners need exit plans we expect that our stockholders’ equity will continue to improve.

Factors That May Impact Future Results

At the time of this report, we had insufficient cash reserves and receivables necessary to meet forecast operating requirements for FullCircle Registry, Inc. It is our believe that our subsidiary FullCircle Entertainment, Inc. will be providing a positive cash flow once the street construction is completed..

In the event we are unsuccessful in our efforts to raise additional funds, we will be required to significantly reduce cash outflows and, possibly, discontinue our operations. We need to raise capital to continue to be SEC compliant. Our failure to obtain financing, or inability to obtain financing on acceptable terms, could require us to limit our plans, incur indebtedness that has high rates of interest or substantial restrictive covenants, issue equity securities that will dilute your holdings, or discontinue all or a portion of our remaining operations.

The current expansion of the Company’s business demands that significant financial resources be raised to fund capital expenditures, working capital needs, and debt service. Current cash balances and the realization of accounts receivable will not be sufficient to fund the Company’s current business plan for the next twelve months. Consequently, the Company is currently seeking convertible debt and/or additional equity financing in the aggregate amount of at least $700,000, to fund the Company’s expansion needs. Management is currently negotiating with existing shareholders and other accredited investors in order to obtain working capital necessary to meet current and future obligations and commitments.

Management is confident that these efforts will produce financing to further the growth of the Company. Nevertheless, there can be no assurance that the Company will be able to raise additional capital on satisfactory terms or at all. In the event that the Company is unable to obtain capital on acceptable terms or in sufficient amounts, the impact thereof would have a material adverse impact on the Company’s business, operating results, and financial condition as well as its ability to service debt requirements. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Critical Accounting Policies and Estimates

The Company’s discussion and analysis of its financial condition and results of operations are based upon its consolidated financial statements which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these consolidated financial statements may have required the Company to make estimates and judgments that affect the reported amounts of assets and liabilities, revenues and expenses and related disclosures. On an ongoing basis, the Company evaluates estimates, including those related to bad debts, inventories, fixed assets, income taxes, contingencies and litigation. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances; the results of which form the basis of the Company’s judgments on the carrying value of assets and liabilities. Actual results may differ from these estimates under different assumptions or conditions.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures.

Pursuant to Rule 13a-15(b) under the Securities Exchange Act of 1934 (“Exchange Act”), the Company carried out a formal evaluation of the effectiveness of the Company’s disclosure controls and procedures (as defined under Rule 13a-15(e) under the Exchange Act) as of the end of the period covered by this report.

Under the supervision and with the participation of our management, including the Principal Executive Officer and Principal Financial Officer, we have evaluated the effectiveness of our disclosure controls and procedures as required by Exchange Act Rule 13a-15(b) as of the end of the period covered by this report. Based on that evaluation, the Principal Executive Officer and Principal Financial Officer have concluded that these disclosure controls and procedures are not effective since the following material weaknesses exist:

The Company’s management is relying on external consultants for purposes of preparing its financial reporting package; the officers may not be able to identify errors and irregularities in the financial reporting package before its release as a continuous disclosure document.

ii.

The foregoing material weaknesses identified in our disclosure controls and procedures were identified by our external consultants responsible for the preparation of our financial reporting package. The aforementioned material weaknesses did not impact our financial reporting or result in a material misstatement of our financial statements. As of November 2, 2011we have not taken action to correct the material weaknesses identified in our disclosure controls and procedures.

Once the Company has sufficient personnel available, our Board of Directors will nominate an audit committee and audit committee financial expert and we will appoint additional personnel to assist with the preparation of our financial statements; which will allow for proper segregation of duties as well as additional manpower for proper documentation.

Our internal controls over financial reporting are designed by, or under the supervision of, our Chief Executive Officer and Principal Accounting Officer, 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. Our internal control over financial reporting includes those policies and procedures that:

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

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

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.

Conclusions

Based upon the Evaluation, our Chairman and Principal officer has concluded that as a result of material weaknesses described above our disclosure controls and procedures are not effective as of September 30, 2011, based on Internal Control over Financial Reporting - Guidance for Smaller Public Companies issued by COSO.

The Company does not have the resources to employ a dedicated staff with extensive expertise in all facets of SEC disclosure and GAAP compliance. As is the case with many small businesses, the Company will continue to work with its external attorneys and accountants as it relates to new accounting principles and changes to SEC disclosure requirements. The Company has found that this approach worked well in the past and believes it to be the most cost effective solution available for the foreseeable future.

Changes in Internal Controls.

There were no changes in the Company’s internal control over financial reporting identified in connection with the Company’s evaluation of controls that occurred during the Company’s last fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II—OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS.

There are no pending legal proceedings.

ITEM 1A. RISK FACTORS.

Not applicable.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

Unless otherwise noted, the following shares were issued to an accredited investor in a private transaction exempt under Rule 506 of Regulation D promulgated under Section 4(2) of the Securities Act of 1933, as amended.

During the three-month period ending March 31, 2011, in an effort to secure additional operating capital, and to pay down accounts payable, the Company issued 1,336,205 restricted shares for $53,449 at .04 per share.

During the three-month period ending June 30, 2011, in an effort to secure additional operating capital, and to pay down accounts payable, the Company issued 125,000 restricted shares for $5,000 at .04 per share.

During the three-month period ending September 30, 2011, in an effort to secure additional operating capital, and to pay down accounts payable, the Company issued 2,500,000 restricted shares for $149,555.26 at .04 per share.

During the three-month period ending September 30, 2011 the Company issued 2,000,000 restricted shares for services at .01 per share to the CEO.

During the three-month period ending September 30, 2011 the Company issued 250,000 restricted shares for services at .04 per share to a company employee.

During the three-month period ending September 30, 2011 the Company issued 176,382 restricted shares to pay down accounts payable at .04 per share.

During the three-month period ending September 30, 2011 the Company issued 250,000 restricted shares for services at .05 per share to Richard Inza of RMJ Consulting.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

None

ITEM 4. EXHIBITS


Exhibit
Number	Title	Location

31.1	Certification of Chief Executive Officer/Chief Financial Officer pursuant to section 302 of the Sarbanes-Oxley Act of 2002	Attached

32.1	Certification of Chief Executive Officer/Chief Financial Officer pursuant to section 906 of the Sarbanes-Oxley Act of 2002*	Attached

*The Exhibit attached to this Form 10-Q shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934 (the "Exchange Act") or otherwise subject to liability under that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly set forth by specific reference in such filing.

SIGNATURES

In accordance with the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

FULLCIRCLE REGISTRY, INC.

Date: November 9, 2011

/s/ Norman L. Frohreich

Norman L. Frohreich

President

Chief Executive Officer

Chief Financial Officer