Quality Online Education Group Inc. - Quarter Report: 2010 March (Form 10-Q)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended March 31, 2010 or

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

For the transition period from ______ to ________

LIFE NUTRITION PRODUCTS, INC.

(Exact name of registrant as specified in its charter)

Commission File Number: 001-34274

Delaware

(State or other jurisdiction of incorporation or organization)

42-1743717
(I.R.S. Employer Identification No.)

Michael M. Salerno
Chief Executive Officer
121 Monmouth Street, Suite A
Red Bank, New Jersey 07701
(732)758-1577
(Address of principal executive offices)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. (X)Yes ( )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

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. 

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

As of March 31, 2010 there were 17,882,800 shares of common stock outstanding with a par value of $0.0001.

DOCUMENTS INCORPORATED BY REFERENCE

None

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The accompanying footnotes are an integral part of the condensed financial statements.

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Life Nutrition Products, Inc.
Condensed Statements of Operations (Unaudited)

The accompanying footnotes are an integral part of the condensed financial statements.

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The accompanying footnotes are an integral part of the condensed financial statements.

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Life Nutrition Products, Inc.
Notes to the Condensed Financial Statements (unaudited)

1. NATURE OF OPERATIONS AND BASIS OF PRESENTATION

The accompanying unaudited condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States for the interim financial information and with the instructions to Form 10-Q and Regulation S-K as promulgated by the Securities and Exchange Commission. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements. In the opinion of management, all normal recurring adjustments considered necessary for a fair statement of the results of operations have been included. The results of operations for the three months ended March 31, 2010 are not necessarily indicative of the results of operations for the full year. When reading the financial information contained in this Quarterly Report, reference should be made to the financial statements, schedule, and notes contained in the Company's annual report for the year ended, December 31, 2009.

Our primary business purpose is to market over-the-counter, all-natural dietary supplements under the trade names: Trim For Life3 Appetite Control and Trim For Life3 Energy Formula. The Trim For Life3 Appetite Control Formula is patent pending and supported by scientific studies. The Trim For Life3 Energy Formula is a proprietary formula blend.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America ("GAAP") requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from these estimates.

Cash and Cash Equivalents

The Company considers all highly liquid investments purchased with original maturities of three months or less to be cash equivalents. The Company maintains cash balances at financial institutions and are insured by the Federal Deposit Insurance Corporation up to federally insured limits. At times during the year, balances in certain bank accounts may exceed the FDIC insured limits. As of  March 31, 2010 and December 31, 2009 there were no cash balances which exceeded the FDIC insured limits.

Inventory

Inventory is stated at the lower of cost or market. Cost is determined using the first-in first-out method. Inventories consist of only finished goods.

Property and Equipment

Property and equipment are stated at cost. Depreciation and amortization are computed on the straight-line method based on the estimated useful lives of the assets. Repairs and maintenance charges, which do not increase the useful lives of the assets, are charged to operations as incurred.

Revenue Recognition

The Company recognizes revenue upon shipment of goods, and the price is fixed and determinable, and collectability is reasonably assured.

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Life Nutrition Products, Inc.
Notes to the Condensed Financial Statements (unaudited)
(Continued)

Net (Loss) Per Share of Common Stock

Historical net loss per common share is computed using the weighted average number of common shares outstanding. Diluted earnings per share (EPS) include additional dilution from common stock equivalents, such as stock issuable pursuant to the exercise of stock options and warrants. Common stock equivalents are not included in the computation of diluted earnings per share when the Company reports a loss because to do so would be anti-dilutive for the periods presented.

Recent Accounting Pronouncements

As noted in our annual report on Form 10-K for the year ended December 31, 2009 filed April 2009, recent accounting pronouncements issued by the Financial Accounting Standards Board are not believed by the Company to have a significant material impact on the financial statements.

Shipping and Handling

Shipping and handling costs have been expensed as incurred and have been included in operating expenses. Shipping and handling expense was $0 and $107 for the three month period ended March 31, 2010 and 2009.

Advertising

Advertising costs have been expensed as incurred and have been included in operating expenses. Advertising expense was $0 and $525 for the three month period ended March 31, 2010 and 2009.

Income Taxes

The Company utilizes ASC 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 income taxes are recognized for the tax consequences in future years of differences between the tax bases of assets and liabilities and their financial reporting amounts at each period end based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.

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Life Nutrition Products, Inc.
Notes to the Condensed Financial Statements (unaudited)
(Continued)

The Company accounts for income taxes in accordance with generally accepted accounting standards. Federal, state and local income tax returns for years prior to 2007 are no longer subject to examination by tax authorities.

The Company continually evaluates its tax positions in order to determine whether they meet a more-likely-than-not recognition threshold.

The tax effect of temporary differences, primarily net operating loss carryforwards, gave rise to the Company's deferred tax asset in the accompanying March 31, 2010 and December 31, 2009 balance sheets.

Deferred income taxes are recognized for the tax consequence of such temporary differences at the enacted tax rate expected to be in effect when the differences reverse. Because of the current uncertainty of realizing the benefit of the tax carry forward, a valuation allowance equal to the tax benefit for deferred taxes has been established. The full realization of the tax benefit associated with the carry forward depends predominantly upon the Company's ability to generate taxable income during the carry forward period.

As of March 31, 2010 and December 31, 2009, the Company has net operating loss carry forwards of approximately $520,000 and $510,200 that can be utilized to offset future taxable income for Federal income tax purposes through 2029. Utilization of these net loss carry forwards is subject to the limitations of Internal Revenue Code Section 382.

Significant components of the Company's deferred tax assets and liabilities are summarized as follows:

Fair Value Measurements

The carrying amounts of the Company's financial instruments including cash, prepaid expenses, accrued expenses and officer loans, approximate fair value because of their short-term nature.

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Life Nutrition Products, Inc.
Notes to the Condensed Financial Statements (unaudited)
(Continued)

The Company evaluates the fair value using valuation techniques based on observable and unobservable inputs. Observable inputs reflect readily obtainable data from independent sources, while unobservable inputs reflect our market assumptions. These inputs are evaluated under the following hierarchy:

Level 1 Inputs- Quoted prices for identical instruments in active markets.

Level 2 Inputs- Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations whose inputs are observable or whose significant value drivers are observable.

Level 3 Inputs- Instruments with primarily unobservable value drivers.

Going Concern

The accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which contemplates continuation of the Company as a going concern. The Company has suffered recurring losses and experiences a deficiency of cash flow from operations. These matters raise substantial doubt about the Company's ability to continue as a going concern. The continued operations of the Company are dependent upon the Company's ability to raise capital and/or generate positive cash flows from operations. Management may achieve profitability and generate positive cash flows through possible acquisition or merger.

However, there is no guarantee that a suitable offer may exist or that funding will be available to close on such a transaction. These financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts and classification of liabilities that might be necessary in the event the Company cannot continue in existence.

3. PROPERTY AND EQUIPMENT

At March 31, 2010 and December 31, 2009, property and equipment consists of the following:

The Company applies Statement of Financial Accounting Standards No. 123R, Share-based Payment, codified in ASC 718 Compensation - Stock Compensation, to stock-based compensation awards. ASC 718, Compensation, requires the measurement and recognition of non-cash compensation expense for all share-based payment awards made to employees and directors, including employee stock options, based on fair values.

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Life Nutrition Products, Inc.
Condensed Notes to the Financial Statements (unaudited)
(Continued)

Stock compensation arrangements with non-employee service providers are accounted for in accordance with EITF No. 96-18, Accounting for Equity Instruments that are issued to Other than Employees for Acquiring, or in Conjunction with Selling, Goods or Services, codified in ASC 505-50 Equity-Based Payments to Non-Employees, using a fair value approach. The compensation costs of these arrangements are subject to remeasurement over the vesting terms as earned.

5. RELATED PARTIES

The Company from time to time receives financial advances for certain relations and related transactions such as payroll for the three months ended March 31, 2010 and 2009. The recorded amounts were $0 and $3,015 for the three months ended March 31, 2010 and 2009. The Company leases office space on a month to month basis in the amount of $500 from 121 Monmouth Street, LLC, a limited liability company owned, in part, by our CEO, Michael M. Salerno. In addition, our CEO has controlling interest in Northeast Professional Planning Group, Salerno Realty Group, and Arbor Real Estate Holdings. Each company, including 121 Monmouth Street has been issued shares of common stock either for a cash investment or for services rendered.

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

FORWARD LOOKING STATEMENT

This quarterly filing ending March 31, 2010 contains forward-looking statements that involve substantial risks and uncertainties. You can identify these statements by forward-looking words such as “may,” “expect,” “plans,” “intends,” “anticipate,” “believe,” “estimate” and “continue” or similar words and are intended to identify forward looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Securities Exchange Act of 1934. You should read statements that contain these words carefully because they discuss our future expectations or may contain projections of our future results of operations or of our financial condition or state other “forward-looking” information. We believe that it is important to communicate our future expectations to our investors. However, there may be events in the future that the Company is not able to accurately predict or control. Before you invest in the Company’s common stock, you should be aware that the occurrence of the events described as risk factors and elsewhere in this annual filing could have a material adverse effect on our business, operating results and financial condition.

APPLICATION OF CRITICAL ACCOUNTING PRACTICES

This Management’s Discussion and Analysis of Financial Condition and Results of Operations in this Quarterly Report ending March 31, 2010 on Form 10-Q should be read in conjunction with the accompanying Financial Statements and related notes. Our discussion and analysis of our financial condition and results of operations are based upon our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. (“GAAP”).

Our significant accounting policies are more fully described in Notes to the financial statements. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and the related disclosures of contingent assets and liabilities. Actual results could differ from those estimates under different assumptions or conditions.

We review our estimates and assumptions on an on-going basis. Our estimates are based on our historical experience and other assumptions that we believe to be reasonable under the circumstances. Actual results are likely to differ from those estimates under different assumptions or conditions, but we do not believe such differences will materially affect our financial position or results of operations.

OVERVIEW AND PLAN OF OPERATION

We are a dietary supplement company specializing in the development, marketing and distribution of all natural, proprietary, dietary supplements under the names Trim For Life3 Appetite Control and Trim For Life3 Energy Formula.

In our original business plan, we outlined a marketing strategy to compete more effectively in the dietary supplement marketplace. However, due to a lack of available financing, we are unable to implement the marketing strategy or invest in product expansion. As a result, we may look to explore and identify other viable options that may provide the potential to generate a positive cash flow to accommodate the costs of being a public company. With volatile economic conditions and unknown opportunities, we are unable to adequately determine if there are indeed, business opportunities that would lend to the Company acquiring additional capital or having the available resources to construct such a deal.

The Company has been approved by the Financial Industry Regulatory Authority (FINRA) to publicly quote common stock shares on the Over-The-Counter Bulletin Board (OTCBB). The Company’s trading symbol is LIPN which became effective on January 20, 2009. As a public company with the potential for

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shares to trade on the open market, we believe our company may be in a better position to raise additional capital to meet our operating costs. However, we cannot claim nor guarantee that by having Company stock publicly quoted that it will provide the opportunity to raise additional capital.

Our current operating costs are minimal due to limited business activities, but we do incur an expense in ongoing legal and professional services to meet our SEC obligations as a publicly held company. The Company may continue to meet these expenses by opting to raise additional capital through sales of our common stock, loans from our board of directors, and/or other transactions to meet these obligations.

We were originally organized as a New Jersey limited liability company in February 2005 under the name Life Nutrition Products, LLC ("LNP"). On September 24, 2007, Life Nutrition Products, Inc. a Delaware Corporation was formed and merged with LNP. On August 27, 2008 the Life Nutrition Products, Inc. Registration statement on Form S-1 became effective. Our principal executive office is located at 121 Monmouth Street, Red Bank, New Jersey 07701 and our phone number is (732)758-1577. Our fiscal year ends December 31.

RESULTS OF OPERATIONS

Three months ended March 31, 2010 compared to three months ended March 31, 2009

Revenue: Revenue was $118 for the three months ended March 31, 2010 compared to $959 for the three months ended March 31, 2009, a decrease of $841. This decrease is a result of limited marketing activities and expired inventory.

Gross Profit: Gross profit was $48 for the three months ended March 31, 2010 compared to $959 for the three months ended March 31, 2009, a decrease of $911. This decrease in gross profit is primarily attributed to the decrease in sales and the cost of the product.

Selling, General and Administrative Expenses: Selling, general and administrative expenses were approximately $9,732 for the three months ended March 31, 2010 compared to $15,357 for the three months ended March 31, 2009, a decrease of $5,805 due to reduced payroll costs.

IMPACT of INFLATION

Inflation has not had a material effect on our results of operations.

LIQUIDITY and CAPITAL RESOURCES

Net cash used in operating activities was $1,306 for the three months ended March 31, 2010, compared to net cash used by operating activities $0 for the three months ended March 31, 2009. This decrease in cash used relates to the net loss offset by account expenses and prepaid rent.

As of March 31, 2010, the Company had $3,155 in cash. It is meeting its working capital needs by relying upon the proceeds from stock issuances. As of March 31, 2010 there are no outstanding line(s) of credit.

Obligations are being met on a month-to-month basis as cash becomes available. There can be no assurances that the Company’s present flow of cash will be sufficient to meet current and future obligations. The Company has incurred losses since its inception, and continues to require additional capital to fund operations and meet SEC requirements of being a publicly held company. As such, the Company’s ability to pay its already incurred obligations is mostly dependent on the Company achieving its revenue goals or raising additional capital in the form of equity or debt.

OFF-BALANCE SHEET FINANCINGS

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None

GOVERNMENTAL REGULATIONS

Dietary supplements are subject to federal laws dealing with drugs and regulations imposed by the FDA. Those laws regulate, among other things, health claims, ingredient labeling and nutrition content claims characterizing the level of nutrient in the product. They also prohibit the use of any health claim for dietary supplements, unless the health claim is supported by significant scientific agreement and is pre-approved by the FDA.

The Federal Trade Commission (the"FTC"), which exercises jurisdiction over the marketing practices and advertising of products similar to those we offer, has in the past several years instituted enforcement actions against several dietary supplement companies for deceptive marketing and advertising practices. These enforcement actions have frequently resulted in consent orders and agreements. In certain instances, these actions have resulted in the imposition of monetary redress requirements. Importantly, the FTC requires that "competent and reliable scientific evidence" corroborate each claim of health benefit made in advertising before the advertising is first made. A failure to have that evidence on hand at the time an advertisement is first made violates federal law. While we have not been the subject to enforcement action for the advertising of our products, there can be no assurance that the FTC or other agencies will not question our advertising or other operations in the future.

We believe we are in compliance with all material government regulations which apply to our products. However, we are unable to predict the nature of any future laws, regulations, interpretations or applications, nor can we predict what effect additional governmental regulations or administrative orders, when and if promulgated, would have on our business in the future.

RESEARCH AND DEVELOPMENT

Not Applicable

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

We do not hold instruments that are sensitive to changes in interest rates, foreign currency exchange rates or commodity prices. Therefore, we believe that we are not materially exposed to market risks resulting from fluctuations from such rates or prices.

MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Market Information

Our securities may be quoted on the Over-The-Counter-Bulletin-Board ("OTCBB"). The Company's trading symbol, LIPN became effective on January 20, 2009 to be quoted on either the Over The Counter Bulletin Board ("OTCBB"), OTC-Other, or the "Pink Sheets." In general there is greater liquidity for traded securities on the OTCBB, and less through quotation in the Pink Sheets.

Even though our common stock is quoted on the OTCBB, the OTCBB provides a limited trading market, and we can make no assurances that any market-maker will agree to provide such quotations. Failure to develop or maintain an active trading market could negatively affect the value of our shares and make it difficult for shareholders to sell their shares or recover any part of their investment in the company. Even if a market for our common stock does develop, the market price of our common stock may be highly volatile so that holders of our common stock will not be able sell their shares at prices that allow them to recover any or all of their investment. Market and industry factors may adversely affect the market price of our common stock, regardless of our actual operating performance. Factors that could cause fluctuations in our stock price may include, among other things:

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• Introductions of new products or new pricing policies by us or by our competitors;
• The gain or loss of significant customers or product orders;
• Actual or anticipated variations in our quarterly results;
• The announcement of acquisitions or strategic alliances by us or by our competitors;
• Recruitment or departure of key personnel;
• The level and quality of securities research analyst coverage for our common stock;
• Changes in the estimates of our operating performance or changes in recommendations by us or any research analysts that follow our stock or any failure to meet the estimates made by research analysts; and
• Market conditions in our industry and the economy as a whole.

Common Stock

We have authorized 50,000,000 shares of common stock, par value $.0001 per share. For the period ending March 31, 2010, there were approximately 47 common stock shareholders.

Preferred Stock

We have authorized 2,000,000 shares of blank check preferred stock, none of which are issued and outstanding.

Dividends

We have never paid a dividend on our Common Stock and we currently intend to retain earnings for use in our business to finance operations and growth. Any future determination as to the distribution of cash dividends will depend upon our earnings and financial position at that time and such other factors as the Board of Directors may deem appropriate.

Securities Authorized for Issuance under Equity Compensation Plans

The Company does not have any equity compensation plans or any individual compensation arrangements with respect to its common stock or preferred stock. The issuance of any of our common or preferred stock is within the discretion of our Board of Directors, which has the power to issue any or all of our authorized but unissued shares without stockholder approval.

Item 4. Controls and Procedures.

(a) Evaluation of disclosure controls and procedures

The Company's management, with the participation of the Company's Chief Executive Officer, has evaluated the effectiveness of the Company's disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the "Exchange Act")) as of the end of the period covered by this report. Based on such evaluation, the Company's Chief Executive Officer has concluded that, as of the end of such period, the Company's disclosure controls and procedures are not effective.

The matters involving internal controls and procedures that our management considered to be material weaknesses under the standards of the Public Company Accounting Oversight Board were: (1) inadequate segregation of duties consistent with control objectives; and (2) ineffective controls over period end financial disclosure and reporting processes. The aforementioned material weaknesses were identified by our Chief Executive Officer in connection with the review of our financial statements as of March 31, 2010.

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Management believes that the material weaknesses set forth in items (1) and (2) above did not have an effect on our financial results. At this time, the Company does not have an audit committee and relies on its' Board of Directors and executive management to monitor internal controls and procedures to ensure the Company is meeting its SEC obligations

(b) Changes in Internal Control over Financial Reporting

There have not been any changes in the Company's internal control over financial reporting during the fiscal quarter to which this report relates that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.

(c) Inherent Limitations on Effectiveness of Controls

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. Because of the inherent limitations of internal control, there is a risk that material misstatements may not be prevented or detected on a timely basis by internal control over financial reporting. However, these inherent limitations are known features of the financial reporting process. Therefore, it is possible to design into the process safeguards to reduce, though not eliminate, this risk.

PART II-OTHER INFORMATION

Item 1. Legal Proceedings

Not Applicable

Item 1A. Risk Factors

None. We are a small reporting company as defined by Rule 12b-2 of the Securities Act of 1934 and are not required to provide information under this item.

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

On January 15, 2010, the Company issued a total of 1,800,000 shares of common stock valued at $18,000, to Northeast Professional Planning Group which was approved during the fourth quarter of 2009 for services rendered in 2009.

This issuance was made in reliance upon exemptions from registration under Section 4(2) of the Securities Act.

Item 3. Defaults Upon Senior Securities

Not Applicable

Item 4. Submission of Matters to a Vote of Security Holders

There were no matters submitted to a vote of security holders through the solicitation of proxies or otherwise during the period covered in this filing ending March 31, 2010.

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Item 5. Other Information.

Unregistered Sales of Equity Securities

As reported in item 2, "Unregistered Sales of Equity Securities and use of Proceeds" of the quarterly report ending, March 31, 2010 the detail of the transaction(s):

On January 15, 2010, the Company issued a total of 1,800,000 shares of common stock valued at $18,000, to Northeast Professional Planning Group which was approved during the fourth quarter of 2009 for services rendered in 2009.

Item 6. Exhibits.

Exhibit Number:

Name:

32.1 Certification of Principal Executive Officer and Principal Financial Officer Sec. 302
32.2 Certification of Chief Executive Officer and Chief Financial Officer Sec. 906

SIGNATURES

Pursuant to the requirements 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 on May 14, 2010.

LIFE NUTRITION PRODUCTS, INC.:

By: /s/ Michael M. Salerno
Name: Michael M. Salerno
Title: Chief Executive Officer

Date: May 14, 2010

By: /s/ Michael M. Salerno
Name: Michael M. Salerno
Title: Chief Executive Officer, Chairman
Principal Financial Officer
Principal Accounting Officer

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