UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the
quarterly period ended June 30, 2009
Commission File Number: 333-151312
THE
CONNECT CORP.
(Exact name of registrant as specified in its charter)
Nevada
26-2230717
(State
or other jurisdiction of incorporation or organization)
(I.R.S.
Employer Identification No.)
2118
102
nd
Crescent North Battleford, Saskatchewan Canada
S9A
1J5
(Address
of principal executive offices)
(Zip
Code)
1-800-609-0775
(Registrants 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 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 during the preceding 12 months
(or for such shorter period that the registrant was required to submit and post
such files). [ ] Yes [X] No (Not
required)
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.
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Large
accelerated filer
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[
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Accelerated
filer
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[
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Non-accelerated
filer
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[ ]
(Do not check if a smaller reporting
company)
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Smaller
reporting company
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[X]
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Indicate by check
mark whether the registrant is a shell company (as defined in Rule 12b-2 of the
Exchange Act.) [X] Yes [ ]
No
Indicate
the number of shares outstanding of each of the issuers classes of common
stock, as of the latest practicable date:
As of
September 17, 2009, there were 55,500,000 common shares issued and
outstanding
2
PART I FINANCIAL STATEMENTS
Item 1.
Financial Statements
The
Connect Corp.
(Formerly Iron Head Mining Corporation)
(A
Development Stage Company)
Financial Statements (Unaudited)
For the
period from
April
27, 2007 (Inception)
to June
30, 2009
3
The
Connect Corp.
(Formerly Iron Head Mining Corporation)
(A
Development Stage Company)
Index to
Financial Statements (Unaudited)
For the
period from April 27, 2007 (Inception)
to June
30, 2009
Page(s)
Balance
Sheets as of June 30, 2009 (Unaudited) and December 31, 2008
5
Statements of
Operations (Unaudited) for the three and six months ended
June
30, 2009 and 2008; and from April 27, 2007 (inception) to June 30, 2009
6
Statement of Changes
in Stockholders Deficit (Unaudited) for the period
from
April 27, 2007 (Inception) to June 30, 2009
7
Statements of Cash
Flows (Unaudited) for the six months ended June 30, 2009 and 2008,
and
from April 27, 2007 (inception) to June 30, 2009
8
Notes
to the Unaudited Condensed Financial Statements
9-12
4
The Connect Corp.
(Formerly Iron Head Mining Corporation)
(A Development Stage Company)
Balance Sheets
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June 30,
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December 31,
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2009
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2008
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(Unaudited)
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ASSETS
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$
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-
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$
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-
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LIABILITIES AND
STOCKHOLDERS DEFICIT
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Current
liabilities:
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Accounts
payable
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$
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9,066
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$
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100
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Total current
liabilities
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9,066
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100
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Stockholders
Deficit
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Common
stock, par value $.001, 450,000,000 shares
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authorized,
55,500,000 shares issued and outstanding (see
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Note
4)
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55,500
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55,500
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Additional
paid-in capital
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(21,887)
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(33,004)
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Deficit
accumulated during the development stage
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(42,679)
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(22,596)
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Total
stockholders deficit
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(9,066)
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(100)
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Total
liabilities and stockholders deficit
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$
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-
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$
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-
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See accompanying
notes to financial statements (unaudited).
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8
The Connect Corp.
(Formerly Iron Head Mining Corporation)
(A Development Stage Company)
Notes
to Condensed Financial Statements (Unaudited)
For
the period from April 27, 2007 (Inception) to June 30, 2009
1.
BASIS
OF FINANCIAL STATEMENT PRESENTATION
The
accompanying unaudited condensed financial statements have been prepared by The
Connect Corp. (the Company), formerly known as Iron Head Mining Corporation
pursuant to the rules and regulations of the Securities and Exchange Commission.
Certain information and footnote disclosures normally included in
financial statements prepared in accordance with U.S. generally accepted
accounting principles have been condensed or omitted in accordance with such
rules and regulations. The information furnished in the interim condensed
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 condensed financial
statements be read in conjunction with the Company's audited financial
statements and notes thereto included in its Form 10-K filed on March 20, 2009.
Operating results for the six months ended June 30, 2009 are not
necessarily indicative of the results to be expected for the fiscal year ended
December 31, 2009.
2.
ORGANIZATION
Formerly
known as Adicus Energy Corporation, the Company was incorporated on April 27,
2007 in the State of Nevada. In March, 2009, the Company changed its name
to The Connect Corp. The Companys operations are primarily based in the
state of Florida. The accounting and reporting policies of the Company
conform to accounting principles generally accepted in the United States of
America, and the Companys fiscal year end is December 31.
Formerly
an exploration stage company that primarily engaged in the acquisition,
exploration and development of resource properties, the Company is currently a
development stage company that seeks to identify organizations that have
attained critical mass thresholds of members, affiliates, and customers with
established electronic communication and delivery systems. The Company
provides value added benefits to these organizations that can significantly
enhance the financial well being through the cost effective electronic
installation of the Net Savings Connection Web-based savings system. To
date, the Companys activities have been limited to its formation, minimal
operations, and the raising of equity capital.
3.
SIGNIFICANT
ACCOUNTING POLICIES
USE
OF ESTIMATES
The
preparation of the Companys financial statements in conformity with accounting
principles generally accepted in the United States 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 amount of revenues and expenses during
the reporting period. Actual results could differ from those estimates.
The Companys periodic filings with the Securities and Exchange Commission
include, where applicable, disclosures of estimates, assumptions, uncertainties
and markets that could affect the financial statements and future operations of
the Company.
9
The Connect Corp.
(Formerly Iron Head Mining Corporation)
(A
Development Stage Company)
Notes
to Condensed Financial Statements (Unaudited)
For
the period from April 27, 2007 (Inception) to June 30, 2009
4.
GOING
CONCERN AND LIQUIDITY CONSIDERATIONS
The
accompanying financial statements have been prepared assuming that the Company
will continue as a going concern, which contemplates, among other things, the
realization of assets and satisfaction of liabilities in the normal course of
business. As of June 30, 2009, the Company has a negative working capital
balance of $9,066 and an accumulated deficit of $42,679. The Company
intends to fund operations through equity financing arrangements, which may be
insufficient to fund its capital expenditures, working capital, and other cash
requirements for the next twelve months.
The
ability of the Company to emerge from the development stage is dependent upon,
among other things, obtaining additional financing to continue operations,
successfully implement its newly adopted business plan and realize
profitability, as well as recurring operating cash flows. In response to
these factors, management intends to raise additional funds through public or
private placement offerings, and to expedite to the extent possible the
implementation of its newly adopted business plan.
These
factors, among others, raise substantial doubt about the Companys ability to
continue as a going concern. The accompanying financial statements do not
include any adjustments that might result from the outcome of this
uncertainty.
5. RECENT ACCOUNTING PRONOUNCEMENTS
In
April 2009, the FASB issued Staff Position (FSP) FAS 157-4,
Determining
Fair Value When the Volume of Level of Activity for the Asset or Liability Had
Significantly Decreased and Identifying Transactions That Are Not Orderly
(FSP FAS 157-4). FSP FAS 157-4 provides additional guidance for
estimating fair value in accordance with SFAS No. 157 when the volume or level
of activity for the asset of liability has significantly decreased and requires
that companies provide interim and annual disclosures of the inputs and
valuation technique(s) used to measure fair value. FSP FAS 157-4 is
effective for interim and annual reporting periods ending after June 15, 2009
and is to be applied prospectively. The Company does not expect the
adoption of FSP FAS 157-4 to have a significant impact on its financial
statements.
In
April 2009, the FASB issued FSP FAS 115-2 and FAS 124-2,
Recognition and
Presentation of Other-Than Temporary Impairments.
FSP FAS 115-2 and
FAS 124-2 amends the other-than-temporary impairment guidance to improve the
presentation and disclosure of other-than-temporary impairments on debt and
equity securities in the financial statements. FSP FAS 115-2 and FAS 124-2
is effective for interim and annual reporting periods ending after June 15,
2009. The Company does not expect the adoption of FSP FAS 115-2 and FAS
124-2 to have a significant impact on its financial statements.
10
The Connect Corp.
(Formerly Iron Head Mining Corporation)
(A
Development Stage Company)
Notes
to Condensed Financial Statements (Unaudited)
For
the period from April 27, 2007 (Inception) to June 30, 2009
5. RECENT ACCOUNTING PRONOUNCEMENTS (CONTINUED)
In
April 2009, the FASB issued FSP FAS 107-1 and APB 28-1,
Interim Disclosures
about Fair Value of Financial Instruments
. FSP FAS 107-1 and APB 28-1
requires disclosures about fair value of financial instruments for interim
reporting periods of publicly traded companies as well as in annual financial
statements. FSP FAS 107-1 and APB 28-01 is effective for interim and
annual reporting periods ending after June 15, 2009. The adoption of FSP
107-1 and APB 28-1 will have no impact on the Companys financial
statements.
In
May 2008, the FASB issued SFAS No. 162,
The Hierarchy of Generally Accepted
Accounting Principles
(SFAS 162), SFAS 162 identifies the sources of
accounting principles and the framework for selecting the principles to be used
in the preparation of financial statements that are presented in conformity with
generally accepted accounting principles in the United States. This
Statement is effective 60 days following the SECs approval of the Public
Company Accounting Oversight Board amendments to AU Section 411,
The Meaning
of Present Fairly in Conformity with Generally Accepted Accounting Principles.
The Company does not expect the implementation of this statement to
have an impact on its results of operations or financial position.
In
May 2008, the FASB issued SFAS No. 163,
Accounting for Finance Guarantee
Insurance Contracts an Interpretation of FASB Statement No. 60.
The
premium revenue recognition approach for a financial guarantee insurance
contract links premium revenue recognition to the amount of insurance protection
and the period in which it is provided. For purposes of this statement, the
amount of insurance protection provided is assumed to be a function of the
insured principal amount outstanding, since the premium received requires the
insurance enterprise to stand ready to protect holders of an insured financial
obligation from loss due to default over the period of the insured financial
obligation. This Statement is effective for financial statements issued
for fiscal years beginning after December 15, 2008.
On
May 28, 2009, the FASB announced the issuance of SFAS 165, Subsequent Events.
SFAS 165 should not result in significant changes in the subsequent events that
an entity reports. Rather, SFAS 165 introduces the concept of financial
statements being available to be issued. Financial statements are considered
available to be issued when they are complete in a form and format that complies
with generally accepted accounting principles (GAAP) and all approvals necessary
for issuance have been obtained.
On
June 12, 2009 the FASB issued two statements that amended the guidance for
off-balance-sheet accounting of financial instruments: SFAS No. 166,
Accounting for Transfers of Financial Assets,
and SFAS No.
167,
Amendments to FASB Interpretation No. 46(R).
SFAS
No. 166 revises SFAS No. 140,
Accounting for Transfers and Servicing of
Financial Assets and Extinguishments of Liabilities,
and will require
entities to provide more information about sales of securitized financial assets
and similar transactions, particularly if the seller retains some risk to the
assets. The statement eliminates the concept of a qualifying special-purpose
entity, changes the requirements for the de-recognition of financial assets, and
calls upon sellers of the assets to make additional disclosures about them.
11
The Connect Corp.
(Formerly Iron Head Mining Corporation)
(A
Development Stage Company)
Notes
to Condensed Financial Statements (Unaudited)
For
the period from April 27, 2007 (Inception) to June 30, 2009
5. RECENT ACCOUNTING PRONOUNCEMENTS (CONTINUED)
SFAS
No. 167 amends FASB Interpretation (FIN) No. 46(R),
Consolidation of
Variable Interest Entities,
by altering how a company determines when an
entity that is insufficiently capitalized or not controlled through voting
should be consolidated. A company has to determine whether it should provide
consolidated reporting of an entity based upon the entity's purpose and design
and the parent company's ability to direct the entity's actions.
The
standards will be effective at the start of the first fiscal year beginning
after November 15, 2009, which will mean January 2010 for companies that are on
calendar years. The guidance will have to be applied for first-quarter
filings.
The
FASB issued SFAS No. 168,
The FASB Accounting Standards Codification and the
Hierarchy of Generally Accepted Accounting Principles,
on June 29, 2009
and, in doing so, authorized the Codification as the sole source for
authoritative U.S. GAAP. SFAS No. 168 will be effective for
financial statements issued for reporting periods that end after September 15,
2009. Once it's effective, it will supersede all accounting standards in
U.S. GAAP, aside from those issued by the SEC. SFAS No. 168 replaces SFAS
No. 162 to establish a new hierarchy of GAAP sources for non-governmental
entities under the FASB Accounting Standards Codification.
6. INCOME TAXES
The
Company recognizes the tax effects of transactions in the year in which such
transactions enter into the determination of net income, regardless of when
reported for tax purposes. Deferred taxes are provided in the financial
statement under SFAS No. 109 to give effect to the resulting temporary
differences which may arise from differences in the basis of fixed assets,
depreciation methods, allowances, and start-up costs based on the income taxes
expected to be payable in future years. Minimal development stage deferred
tax assets arising as a result of net operating loss carry forwards have been
offset completely by a valuation allowance due to the uncertainty of their
utilization in future periods. Operating loss carry forwards generated
during the period from April 27, 2009 (date of inception) through June 30, 2009
of $42,679 will begin to expire in 2027. Accordingly deferred tax assets
of approximately $14,938 were offset by a valuation allowance, which increased
by $7,029 and $4,480 during the six months ended June 30, 2009 and 2008,
respectively.
The
Company adopted the provisions of FASB Interpretation No. 48, Accounting for
Uncertainty in Income Taxes, on April 27, 2007. As a result of the
implementation of Interpretation No. 48, the Company recognized approximately no
increase in the liability for unrecognized tax benefits.
The
Company has no tax position at June 30, 2009 and December 31, 2008 for which the
ultimate deductibility is highly certain but for which there is uncertainty
about the timing of such deductibility. The Company recognizes interest accrued
related to unrecognized tax benefits in interest expense and penalties in
operating expenses. No such interest or penalties were recognized during the
periods presented. The Company had no accruals for interest and penalties at
June 30, 2009 or December 31, 2008. The Companys utilization of any net
operating loss carry forward may be unlikely as a result of its intended
development stage activities.
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Item
2. Managements Discussion and Analysis of Financial Condition and Results
of Operations
The Connect Corp. is
a Nevada corporation originally incorporated as Adicus Energy Corp. on April 27,
2007. We changed our name on October 16, 2007, to Iron Head Mining
Corporation. On March 17, 2009, we filed a Certificate of Amendment
changing our name to The Connect Corp.
Previously our
business was focused on mineral exploration. In January 2008, we obtained
an option to acquire a 100% interest in a mineral claim located in the Smithers
Mining Region in the Province of British Columbia, Canada. The option was
terminated due to our inability to meet option payment and exploration cost
requirements. The Company has undergone a revision to its business plan.
The Company has
launched NetSavingsConnection.com (Net Savings). Net Savings is a membership
website focused on offering families options to reduce their monthly spending.
Through Net Savings, members have access to discounts, sales, and other
venues for saving on purchases. Vendors supply these savings to Members
and pay Connect Corp. a commission. Products available through the website
include everything from groceries to dining, travel, shopping, banking, and more
everyday expenses.
The target customers
will be both individuals and large businesses, the latter of which can offer the
savings to employees as a fringe benefit. The cost to the employer will be
small per employee, but the employee will be entitled to savings from
manufacturers, retailers, and other businesses. We will collect fees from
both businesses, individuals who sign up for membership, as well as businesses
that offer discounts through the website.
As of June 30, 2009,
the Company had not generated any revenues. Since inception, the Company
had incurred expenses of $42,679, consisting solely of mining, selling, and
general and administrative expenses. For the six-month period ended June
30, 2009, the Company had expenses totaling $20,083, compared to $12,799 for the
same period in 2008.
Over the next 12
months, it is expected that we will need approximately $50,000 to meet our
expenses. Expenses include legal and accounting fees, salaries and general
and administrative expenses. In order to develop its business plan, the
Company will be required to raise capital through the sale of equity, the
issuance of debt or a combination of both. The failure to raise capital
may result in curtailing the development of its business plan, or potentially
the failure to continue the Companys operations.
Item 3.
Quantitative and Qualitative Disclosures About Market Risk
Not applicable.
Item 4(T).
Controls and Procedures
Evaluation of
Disclosure Controls and Procedures
13
Our Chief Executive
Officer and Chief Financial Officer conducted an evaluation of the effectiveness
of the design and operation of the Company's disclosure controls and procedures,
as defined in Rules 13a-15(e) and Rule 15d-15(e) under the Exchange Act. Based
upon his evaluation as of June 30, 2009, he concluded that those disclosure
controls and procedures are effective.
Internal Control over
Financial Reporting
There have been no
changes in the Company's internal control over financial reporting during the
quarter ended June 30, 2009, that have materially affected, or are reasonably
likely to affect, the Company's internal control over financial reporting.
Management's Report
on Internal Control over Financial Reporting
Connects management
is responsible for establishing and maintaining adequate internal control over
financial reporting as defined in Rule 13a-15(f) under the Exchange Act. Our
internal control over financial reporting is a process designed to provide
reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with
accounting principles generally accepted in the United States of America.
Because of its inherent limitations, internal control over financial reporting
may not prevent or detect misstatements. Also, 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.
We have assessed the
effectiveness of the Company's internal control over financial reporting as of
the quarter end dated June 30, 2009. In making the assessment, we used the
criteria set forth by the Committee of Sponsoring Organizations of the Treadway
Commission (COSO) in "Internal Control-Integrated Framework." Based on that
assessment, we have concluded that, as of the quarter ended June 30, 2009, our
internal control over financial reporting is effective based on those
criteria.
PART
II OTHER INFORMATION
Item 6.
Exhibits
The following
exhibits are incorporated into this Form 10-Q Quarterly Report:
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Exhibit
No.
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Description
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3.1
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Articles of
Incorporation [1]
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3.2
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By-Laws[2]
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3.3
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Articles of
Amendment [3]
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31.1
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Certifications
of Chief Executive Officer Pursuant to Rule 13a-14(a) or 15d-14(a) of the
Securities Exchange Act of 1934
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31.2
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Certifications
of Chief Financial Officer Pursuant to Rule 13a-14(a) or 15d-14(a) of the
Securities Exchange Act of 1934
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14
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32.1
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Certification
of Chief Executive Officer under Section 1350 as Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002
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32.2
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Certification
of Chief Financial Officer under Section 1350 as Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002
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[1]
Incorporated by reference from the Company's S-1 filed with the Commission
on May 30, 2008.
[2]
Incorporated by reference from the Company's S-1 filed with the Commission
on May 30, 2008.
[3]
Incorporated by reference from the Companys Current Report on Form 8-K
filed April 23, 2009.
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.
THE
CONNECT CORP.
Date
September 17, 2009
/s/
Ken Waters
Ken
Waters, President, Chief Financial Officer/Controller, Principal Executive
Officer, Director
15