UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM S-1
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933

Advanced Credit Technologies, Inc.
(Name of small business issuer in its charter)

NEVADA
 
7372
 
26-2118480
(State or other jurisdiction of organization)
 
(Primary Standard Industrial Classification Code)
 
(Tax Identification Number)
 
1915 Plaza Drive
Suite 202
Eagan, Minnesota 55122
651-905-2932
 
InCorp Services, Inc.
375 N Stephanie St., Suite 1411
Henderson, Nevada 89014-8909
702-866-2500
(Address and telephone number of registrant's executive office)
 
(Name, address and telephone number of agent for service)

With copies to:
Wani Iris Manly, Esq.
W. Manly, P.A.
10 SW South River Drive, Suite 1712
Miami, Florida  33130
Telephone:  (305) 408-9236

APPROXIMATE DATE OF PROPOSED SALE TO THE PUBLIC:
 
From time to time after this Registration Statement becomes effective.

If any securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933 other than securities offered only in connection with dividend or interest reinvestment plans, check the following box : x
 
If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.   p
 
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.   p
 
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.   p
 
If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. p
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a small reporting company.  See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
 
Large Accelerated Filer
p
 
Accelerated Filer
p
Non-accelerated Filer
p
 
Smaller reporting company
x
(Do not check if a smaller reporting company)
   
 
CALCULATION OF REGISTRATION FEE

Title of each class of
securities to be
registered
Number of
shares to be
registered
 
Proposed
maximum
offering
price per
share(1)
 
Proposed
maximum
aggregate
offering price(2)
 
Amount of
registration fee
Common Stock for sale by selling stockholders
 
  2,891,000  
 $
0.10
 
 $
289,100  
 $
103.06
 
 
(1)
The proposed maximum offering price is based on the estimated high end of the range at which the common stock will initially be sold.
 
(2)
Estimated solely for purposes of calculating the registration fee in accordance with Rule 457(e) under the Securities Act of 1933.

The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.
 
The information in this Prospectus is not complete and may be changed. The selling stockholders may not sell these securities until the registration statement is filed with the Securities and Exchange Commission and becomes effective. This Prospectus is not an offer to sell these securities and is not soliciting an offer to buy these securities in any state where the sale is not permitted.
 
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Prospectus Subject to Completion dated ______________, 2010

ADVANCED CREDIT TECHNOLOGIES, INC.

  2,891,000 Shares of Common Stock

This prospectus relates to the resale by certain selling security holders of Advanced Credit Technologies of up to ___2,891,000___________ shares of common stock held by security holders.  We will not receive any of the proceeds from the sale of the shares by the selling stockholders.

The selling security holders will be offering our shares of common stock at a fixed price of $0.10 per share until our shares are quoted on the OTC Bulletin Board and thereafter at prevailing market prices or privately negotiated prices. Each of the selling stockholders may be deemed to be an “underwriter” as such term is defined in the Securities Act of 1933, as amended (the “Securities Act”).

There has been no market for our securities and a public market may never develop, or, if any market does develop, it may not be sustained. Our common stock is not traded on any exchange or on the over-the-counter market.  After the effective date of the registration statement relating to this prospectus, we hope to have a market maker file an application with the Financial Industry Regulatory Authority for our common stock to be eligible for trading on the Over-the-Counter Bulletin Board. We do not yet have a market maker who has agreed to file such application. There can be no assurance that our common stock will ever be quoted on a stock exchange or a quotation service or that any market for our stock will develop.

OUR BUSINESS IS SUBJECT TO MANY RISKS AND AN INVESTMENT IN OUR SHARES OF COMMON STOCK WILL ALSO INVOLVE A HIGH DEGREE OF RISK. YOU SHOULD CAREFULLY CONSIDER THE FACTORS DESCRIBED UNDER THE HEADING “RISK FACTORS” BEGINNING ON PAGE 7 BEFORE INVESTING IN OUR SHARES OF COMMON STOCK.

NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
 
The information in this prospectus is not complete and may be changed. This prospectus is included in the registration statement that was filed by us with the Securities and Exchange Commission. The selling security holders may not sell these securities until the registration statement becomes effective. This prospectus is not an offer to sell these securities and is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.

The date of this prospectus is October __, 2010.

 
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TABLE OF CONTENTS
 
 Industry Background 15
 Our Services  15
 The Market 15
 Marketing Strategy 16
 Competition 17
 
 
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SUMMARY OF OUR OFFERING

Prospectus Summary

This summary highlights selected information about our company, Advanced Credit Technologies, Inc. This summary is intended to highlight information contained elsewhere in this prospectus. You should carefully read the entire prospectus, including the section entitled “Risk Factors.”

Our Business

Advanced Credit Technologies, Inc. (the “Company” or “ACT”) is a development stage company. The Company was organized under the laws of the state of Nevada on February 25, 2008.  We formed our Company for the purpose of offering an easy-to-use technology platform that streamlines the credit management process.  We also intend to offer additional e-books and Facebook applications for other financial products to compliment our system.

ACT is poised with “First to Market Advantage” to leverage the current market conditions as the defacto standard for credit management. With the rise in unemployment and debt, ACT is positioned to leverage the need for an automated credit management tool for the millions of Americans with sub par credit scores. There are very few instances where a client would not want to raise his/her credit scores, generally the only impediment to pursuing this course of action is the cost. Today’s cash strapped society has little extra discretionary income to hire a professional.  By using our proprietary software system, clients can now perform affordable credit management with an automated process which makes it easy to understand and is results driven. Our system is changing the dynamic within the industry; we didn’t reinvent the wheel per say, we just simplified it.

We maintain a sophisticated back office component that can be accessed by anyone with minimal computer experience. Clients will see how simple the ACT software program is to use especially when compared to traditional routes of credit management. We believe this will establish a brand loyalty to any additional products we will offer in the future.

We intend to continue our focus on cutting-edge technology to stay ahead of the competition and on improving our user-friendly system and products along with price points which leaves room for our upsell of products.  Contata Solutions, our technological partner, will provide the updates and additions to our Internet platform as required.

We intend to begin marketing our products in the U.S. under our retail portal “700creditmd.” which was designed to change the way individuals understand the credit management process.
 
In addition to that, we have our wholesale and Facebook applications to market our software.

Our principal executive offices are located at 1915 Plaza Drive, Suite 202, Eagan, MN 55122 and our telephone number is 651-905-2932.

Our Financial Situation

Since inception of our Company until present, we have enjoyed profitable operations.  Our financial statements for the years ended December 31, 2008 and 2009 are prepared using the accrual basis of accounting under which revenues are recognized when earned and available as current assets and expenditures are generally recognized when the related liability is incurred for the goods or services received.

In order to become more profitable, we will need to generate increased revenues to offset our cost of sales and marketing, and general and administrative expenses.

Recent Developments

We are an operating company that has been implementing and improving our proprietary software system and credit management services.  Our business plan was designed to create a viable, sustainable business. We have filed this registration statement in an effort to become a fully reporting company with the Securities and Exchange Commission in order to enhance our ability to raise additional capital. Our operations to date have been devoted primarily to developing and improving our proprietary software platform.

 
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Our software development team has created a unique back office that is integrated with three different front end delivery systems to take advantage of three very distinct marketing strategies.

1.   Wholesale:  This will be the first and foremost opportunity within the three segments. From Realtors, Auto Dealers, Loan Originators, to countless other business’s whose sales are dependent on a clients credit score to deliver their products. In short, these individuals and companies will purchase access (seat licenses) to our proprietary software and “GIVE” it away to their clients. Access will be given to clients through a secure server (web based) and will give them the opportunity to manage their own credit profiles, in turn, when something positive occurs the wholesale client is given a “notification” e-mail which prompts the wholesaler to contact the client and pursue the “sale”. What better way to build lasting relationships with past, present and future clients than helping them with their buying power. (credit score)

2.   Facebook:  This is in conjunction with the wholesale opportunity. Our technology partner has developed a unique Facebook application that allows business to market its products, services, or brand on Facebook - the most powerful social media tool to date. Currently there are 500,000,000 million users and it is growing everyday. The @mywork tool has integrated the credit management tool developed by ACT and we are joint marketing this one of a kind application.  Imagine the possibilities of marketing your Real Estate or Auto’s on Facebook, plus having an integrated credit management tool to offer “complimentary” credit management to the masses. The tool itself has complete customization, SEO and tracking capability. Nothing has reached the market with these two powerful combinations. Many more applications and tools for social media such as Facebook etc, are currently under development as well to enhance our platform.

3.   Retail:  Our retail portal (“700creditmd”) was designed to change the way individuals understand the credit management process. The American public has been conditioned by the three major credit bureaus that they are virtually helpless when it comes to errors and blemishes within their credit profiles. Our website was designed to educate them on the inner workings of the credit bureaucracy. Simply put, the software allows them to manage their own credit profiles and correct errors and omissions which in turn will raise his/her credit scores all in the privacy of their home. This privacy factor alleviates the burden of having to use the traditional route of having to disclose a very personal financial matter and information to someone they don’t know. The system is simple, safe, secure, and accessible from any personal computer with web access. Because the client is managing his/her own credit profile, the cost is minimal compared to the traditional methods practiced within the industry. This is one of the strengths of using technology to assist regular everyday Americans who might not be able to afford to hire a professional or afraid to disclose their information to them.

The aforementioned reasons are why we created the personalized e-books, video tutorial library into our proprietary software services. The system allows individual users access to the system from the privacy of his/her home or office and to monitor their progress with their own personalized dashboard -- all the while, passing the personal savings directly to them. We understand that individuals learn with different formats, that’s why all of the tutorials are in text and video formats. All of the training and tutorials are accessible through our social media application as well.

By using our proprietary software system, clients can now perform affordable credit management with an automated process which makes it easy to understand and is results driven. Our system is changing the dynamic within the industry.  We didn’t reinvent the wheel per say, we just simplified it.

Giving everyday Americans the tools necessary to manage their credit profiles is not a choice a lot of companies would make. By choosing this methodology we feel we will have a huge lead in the marketplace. Advanced Credit Technologies has reduced the workload from traditional methods by as much as 75%, with our Phase II build-out, that number could rise to as high as 90%. The software takes away much of the paperwork and human error and removes it from the process entirely.

In addition, we will offer affiliate programs to assist us in marketing our platform. From in-house custom graphics to co-branding the back office -- all in an effort to enhance monthly recurring revenue. In addition to these services, we will offer webbinars, SEO training, and website consulting that coincide with Facebook marketing. These training services alone can run from several hundreds to several thousand dollars. We will incorporate all this under the ACT umbrella for an access fee of only $30.00 per month , per individual.  All these services combined would be very difficult to find under one roof as well as the many applications and upgrading we will constantly be implementing -- not to mention at this price.

Our proprietary system replaces the workload of several employees, reducing costs and offering a profit margin rarely seen in this competitive field. This is precisely why we believe the wholesale side of the industry will blossom because it is virtually untapped.

By focusing on the wholesale and social media segments, our Company is ready to capture a unique opportunity within the industry. Companies all across the country are looking for ways to keep clients in the purchasing mindset. Our product will produce an unparalleled pipeline of future sales. To do nothing only ensures failure. Companies are keenly aware that they need to tune into efficient ancillary revenue streams in order to succeed. By using our software system they will do just that. We are poised to capture ALL segments of the credit management and social media market.

 
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ACT is currently fully operational.  In order to increase revenues, we must successfully address the following areas:

1.   The Company must actively seek additional strategic relationships and alliances in the credit management industry.

2.  Continually develop and implement a marketing and advertising plan:  In order to promote our products and establish public awareness, we will be required to develop and implement a comprehensive marketing plan necessary to sell our products and services.  We also intend to seek additional acquisitions which compliment our business plan.  We intend to continuously generate awareness of our products and services through the implementation of multiple marketing platforms.

3.   Create customer loyalty:  It is critical that we maintain strong client relationships by marketing and advertising our services and then delivering on a consistent basis.

Our Offering

This prospectus relates to the sale of a total of __2,891,000_________ shares by the selling stockholders as set forth under the caption “Selling Stockholders”. The distribution of the shares by the Selling Stockholders is not subject to any underwriting agreement. We will receive none of the proceeds from the sale of the shares by the Selling Stockholders. We will bear all expenses of the registration incurred in connection with this offering, but all selling and other expenses incurred by the Selling Stockholders will be borne by the Selling Stockholders.

Summary of Selected Financial Information

The following table sets forth summary financial data derived from our financial statements. The data should be read in conjunction with the financial statements and the related notes thereto as well as the “Management’s Discussion and Plan of Operation” included elsewhere in this Prospectus.

Financial Data Summary

Balance Sheet Data
 
ASSETS
 
July 31,
2010
 
Cash
  $ 31,240.00  
Total Assets
  $ 31,240.00  
 
       
LIABILITIES AND STOCKHOLDERS’ EQUITY
       
     Accounts Payable
  $ 8,717.00  
          Total Current Liabilities
  $ 8,717.00  
 
       
STOCKHOLDERS’ EQUITY
  $ 534,792.00  
         
         
         
Additional paid-in-capital
  $ 368,292.00  
Accumulated Deficit
  $ -345,769.00  
         
Total stockholders’ equity
  $ 22,523.00  
         
Total liabilities and stockholders’ equity
  $ 31,240.00  


 
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Statements of Operations Data
   
Inception on
February 25, 2008 to
July 31, 2010
 
Revenues
  $ 80,700.00  
         
Operating Expenses
  $ 425,175.00  
         
Earnings (Loss)
  $ -344,475.00  
 
       
Weighted average number of shares of common stock outstanding
    17,102,000  

RISK FACTORS

Investment in the securities offered hereby involves a high degree of risk and is suitable only for investors of substantial financial means who have no need for initial liquidity in their investments.  Prospective investors should carefully consider the following risk factors:

RISKS RELATING TO OUR BUSINESS

We are seeking additional financing to expand our product development and operations, and if we are unable to obtain funding when needed, our business may not grow

We need additional capital to continue to grow our core competencies and to expand into new, industry related opportunities. We will be required to fund the growth of our existing operations through the sale of equity shares and will not be able to continue our current growth if we are unsuccessful in selling such shares.  Any additional equity financing may be dilutive to stockholders and such additional equity securities may have rights, preferences or privileges that are senior to those of our existing common stock.

Furthermore, debt financing, if available, will require payment of interest and may involve restrictive covenants that could impose limitations on our operating flexibility. Our failure to successfully obtain additional future funding may jeopardize our ability to continue to grow our existing business and operations.

If we are unable to establish and maintain relationships with our targeted client base, we would not be able to continue with operations

We intend to establish strong relationships with clients offering various products and services through a multifaceted marketing plan designed to assist our clients in reaching their respective credit management goals.  There is intense competition for these relationships and we may not be able to attract and retain these relationships in light of competitors with larger budgets and pre-existing relationships. If we cannot successfully secure these relationships, our business would be adversely affected and any investment made into the Company could be lost in its entirety.

Our success is dependent on our officers and directors to properly manage the Company and their loss or unavailability could cause the business to fail

We are heavily dependent on the personal efforts and abilities of our Officers and Directors.  They have been and continue to expect to be able to commit full time to the continuing development of ACT’s business plan. The loss or unavailability of their services would have a materially adverse effect on our business prospects and potential earning capacity.  We do not currently carry any insurance to compensate for any such loss.

As a result of becoming a reporting company, our expenses will increase significantly

As a result of becoming a reporting company whose shares are registered pursuant to the Securities Act of 1933, as amended, our ongoing expenses are expected to increase significantly, including expenses in compensation to our officer, ongoing public company expenses, including increased legal, accounting expenses as a result of our status as a reporting company, and expenses incurred in complying with the internal control requirements of the Sarbanes-Oxley Act. These increased expenses may negatively impact our ability to become profitable.
 
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Changing and unpredictable market conditions may impact the demand for our business solutions

There can be no guarantee that current demand for our marketing and advertising platforms will continue. There are several other companies currently offering similar services and if these companies are successful in developing new marketing platforms, our marketing platforms may become obsolete and undesirable in the marketplace. In such a scenario, our current products and services may well no longer be salable to our prospective clients.
 
RISKS RELATED TO OUR COMMON STOCK

We are controlled by current officers, directors and principal stockholders

Our officers and directors and principal founding stockholders beneficially own approximately _61___% of the outstanding shares of our common stock. So long as our officers and directors and principal founding stockholders control a majority of our fully diluted equity, they will continue to have the ability to elect our directors and determine the outcome of votes by our stockholders on corporate matters, including mergers, sales of all or substantially all of our assets, charter amendments and other matters requiring stockholder approval. This controlling interest may have a negative impact on the market price of our common stock by discouraging third-party investors.

If you purchase shares in this offering, you will experience immediate and substantial dilution

The $0.10 per share offering price of the common stock being sold under this prospectus has been arbitrarily set. The price does not bear any relationship to our assets, book value, earnings or net worth and it is not an indication of actual value. Accordingly, if you purchase shares in this offering, you will experience immediate and substantial dilution. You may also suffer additional dilution in the future from the sale of additional shares of common stock or other securities.

There is currently no market for Advanced Credit Technologies, Inc. common stock, but if a market for our common stock does develop, our stock price may be volatile

There is currently no market for our common stock and there is no assurance that a market will develop. If a market develops, it is anticipated that the market price of our common stock will be subject to wide fluctuations in response to several factors including:

●
The ability to continue the development of our technology and improving our user-friendly system and products;

●
The ability to generate increased revenues from sales;

●
The ability to generate brand recognition of the ACT products and services and acceptance by clients;

●
Increased competition from competitors who offer competing products and services; and

●
ACT’s financial condition and results of operations.

While Advanced Credit Technologies, Inc. expects to apply for listing on the OTC bulletin board (OTCBB), we may not be approved, and even if approved, we may not be approved for trading on the OTCBB; therefore shareholders may not have a market to sell their shares, either in the near term or in the long term

We can provide no assurance to investors that our common stock will be traded on any exchange or electronic quotation service. While we expect to apply to the OTC Bulletin Board, we may not be approved to trade on the OTCBB, and we may not meet the requirements for listing on the OTCBB.  If we do not meet the requirements of the OTCBB, our stock may then be traded on the “Pink Sheets,” and the market for resale of our shares would decrease dramatically, if not be eliminated.

 
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There are legal restrictions on the resale of the common shares offered, including penny stock regulations under the U.S. federal securities laws. These restrictions may adversely affect the ability of investors to resell their shares

We anticipate that our common stock will continue to be subject to the penny stock rules under the Securities Exchange Act of 1934, as amended. These rules regulate broker/dealer practices for transactions in “penny stocks.”  Penny stocks are generally equity securities with a price of less than $5.00. The penny stock rules require broker/dealers to deliver a standardized risk disclosure document that provides information about penny stocks and the nature and level of risks in the penny stock market. The broker/dealer must also provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker/dealer and its salesperson and monthly account statements showing the market value of each penny stock held in the customer's account. The bid and offer quotations and the broker/dealer and salesperson compensation information must be given to the customer orally or in writing prior to completing the transaction and must be given to the customer in writing before or with the customer's confirmation. In addition, the penny stock rules require that prior to a transaction, the broker and/or dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser's written agreement to the transaction. The transaction costs associated with penny stocks are high, reducing the number of broker-dealers who may be willing to engage in the trading of our shares. These additional penny stock disclosure requirements are burdensome and may reduce all of the trading activity in the market for our common stock. As long as the common stock is subject to the penny stock rules, holders of our common stock may find it more difficult to sell their shares.

Future sales of the company’s common stock by the selling shareholders could cause our stock price to decline

We cannot predict the effect, if any, that market sales of shares of the Company’s common stock or the availability of shares for sale will have on the market price prevailing from time to time. Sales by the Selling Shareholders named herein of our common stock in the public market, or the perception that sales by the Selling Shareholders may occur, could cause the trading price of our stock to decrease or to be lower than it might be in the absence of those sales or perceptions.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This prospectus includes forward-looking statements relating to revenue, revenue composition, demand and pricing trends, future expense levels, competition in our industry, trends in average selling prices and gross margins, product and infrastructure development, market demand and acceptance, the timing of and demand for products, customer relationships, employee relations, plans and predictions for acquired companies and assets, future acquisition plans, restructuring charges, the incurrence of debt, and the level of expected capital and research and development expenditures. Such forward-looking statements are based on the beliefs of, estimates made by, and information currently available to the Company’s management and are subject to certain risks, uncertainties and assumptions. Any other statements contained herein (including without limitation statements to the effect that the Company or management “estimates,” “expects,” “anticipates,” “plans,” “believes,” “projects,” “continues,” “may,” “could,” or “would” or statements concerning “potential” or “opportunity” or variations thereof or comparable terminology or the negative thereof) that are not statements of historical fact, reflect our current views with respect to future events and financial performance, and any other statements of a future or forward looking nature are forward looking statements. The actual results of the Company may vary materially from those expected or anticipated in these forward-looking statements. The realization of such forward-looking statements may be impacted by certain important unanticipated factors, including those discussed in “Risk Factors” and elsewhere in this prospectus.

Because of these and other factors that may affect our operating results, our past performance should not be considered as an indicator of future performance, and investors should not use historical results to anticipate results or trends in future periods. We undertake no obligation to publicly release the results of any revisions to these forward-looking statements that may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events. Readers should carefully review the risk factors described in this and other documents that we file from time-to-time with the Securities and Exchange Commission, including subsequent Current Reports on Form 8-K, Quarterly Reports on Form 10-Q and Annual Reports on Form 10-K.

USE OF PROCEEDS

We will not receive any proceeds from the sale of shares offered by the Selling Stockholders.


DETERMINATION OF OFFERING PRICE

The $0.10 per share offering price of the common stock being sold under this prospectus has been arbitrarily set. The price does not bear any relationship to our assets, book value, earnings or net worth and it is not an indication of actual value.

 
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DILUTION

Dilution represents the difference between the offering price of the shares of Common Stock and the net book value per share of common stock immediately after completion of the offering. “Net book value” is the amount that results from subtracting total liabilities from total assets. The following table below sets forth the dilution assuming the sale of 100% of the securities offered for sale in this offering by the Company:


   
Pre-Offering
   
Post Offering
 
             
Offering price per share
  $ .10     $ .10  
                 
Net Tangible book value
  $ -.0219     $ .0203  
                 
Increase in net tangible book value (per share)
               
                 
Dilution to investors
          $ .0016  

SELLING SECURITY HOLDERS

The persons listed in the following table plan to offer the shares shown opposite their respective names by means of this prospectus. The owners of the shares to be sold by means of this prospectus are referred to as the “selling” shareholders”.  Each Selling Stockholder purchased the securities registered hereunder in the ordinary course of business of the Company. Other than registration rights granted by the Company in connection with the issuance of such securities at the time of purchase of the securities to be resold, no Selling Stockholder had any agreement or understanding, directly or indirectly with any person to distribute the securities. The Selling Stockholders and any underwriters, broker-dealers or agents participating in the distribution of the shares of our common stock may be deemed to be “underwriters” within the meaning of the Securities Act of 1933, and any profit from the sale of such shares by the Selling Stockholders and any compensation received by any underwriter, broker-dealer or agent may be deemed to be underwriting discounts under the Securities Act. The Selling Stockholders may agree to indemnify any underwriter, broker-dealer or agent that participates in transactions involving sales of the shares against certain liabilities, including liabilities arising under the Securities Act.

In completing sales, brokers or dealers engaged by the selling shareholders may arrange for other brokers or dealers to participate. Brokers or dealers may receive commissions or discounts from selling shareholders in amounts to be negotiated. As to any particular broker-dealer, this compensation might be in excess of customary commissions. Neither, we nor the selling stockholders can presently estimate the amount of such compensation.

The selling shareholders and any broker/dealers who act in connection with the sale of the shares will be deemed to be “underwriters” within the meaning of the Securities Acts of 1933, and any commissions received by them and any profit on any resale of the shares as a principal might be deemed to be underwriting discounts and commissions under the Securities Act.

If any selling shareholders enters into an agreement to sell his or her shares to a broker/dealer as principal and the broker/dealer is acting as an underwriter, we will file a post-effective amendment to the registration statement, of which this prospectus is a part, identifying the broker/dealer, providing required information concerning the plan of distribution, and otherwise revising the disclosures in this prospectus as needed. We will also file the agreement between the selling shareholder and the broker/dealer as an exhibit to the post-effective amendment to the registration statement.

We have advised the selling shareholders that they and any securities broker/dealers or others who will be deemed to be statutory underwriters will be subject to the prospectus delivery requirements under the Securities Act of 1933. We have advised each selling shareholder that in the event of a “distribution” of the shares owned by the selling shareholder, such selling shareholder, any “affiliated purchasers”, and any broker/dealer or other person who participates in the distribution may be subject to Rule 102 of Regulation M under the Securities Exchange Act of 1934 (“1934 Act”) until their participation in that distribution is complete. Rule 102 makes it unlawful for any person who is participating in a distribution to bid for or purchase stock of the same class, as is the subject of the distribution. A “distribution” is defined in Rule 102 as an offering of securities “that is distinguished from ordinary trading transaction by the magnitude of the offering and the presence of special selling efforts and selling methods”. We have advised the selling shareholders that Rule 101 of Regulation M under the 1934 Act prohibits any “stabilizing bid” or “stabilizing purchase” for purpose of pegging, fixing or stabilizing the price of the common stock in connection with this offering.

To our knowledge, there are currently no plans, arrangements or understandings between any Selling Stockholder and any underwriter, broker-dealer or agent regarding the sale of shares of our common stock by the Selling Stockholders. The Selling Stockholders will pay all fees, discounts and brokerage commissions in connection with any sales, including any fees to finders.

Any shares of common stock covered by this prospectus that qualify for sale under Rule 144 of the Securities Act may be sold under Rule 144 rather than under this prospectus. The shares of our common stock may be sold in some states only through registered or licensed brokers or dealers. In addition, in some states, the shares of our common stock may not be sold unless they have been registered or qualified for sale or the sale is entitled to an exemption from registration.

 
-10-
 
Under applicable rules and regulations under Regulation M under the Exchange Act, any person engaged in the distribution of the common stock may not simultaneously engage in market making activities, subject to certain exceptions, with respect to the common stock for a specified period set forth in Regulation M prior to the commencement of such distribution and until its completion. In addition and with limiting the foregoing, the Selling Stockholders will be subject to the applicable provisions of the Securities Act and the Exchange Act and the rules and regulations thereunder, including, without limitation, Regulation M, which provisions may limit the timing of purchases and sales of shares of the common stock by Selling Stockholders. The foregoing may affect the marketability of the common stock offered hereby. There can be no assurance that any Selling Stockholders will sell any or all of the common stock pursuant to this prospectus.

We will pay all expenses of preparing and reproducing this prospectus with respect to the offer and sale of the shares of common stock registered for sale under this prospectus, including expenses or compliance with state securities laws and filing fees with the SEC. We expect such expenses related to the issuance and distribution of the shares of common stock offered by us and the Selling Stockholders to be approximately $25,000.

The Company is registering for offer and sale by the holders thereof 2,891,000 of common stock held by such shareholders. All the Selling Shareholders’ Shares registered hereby will become tradeable on the effective date of the registration statement of which this prospectus is a part.

The following table sets forth ownership of the shares held by each person who is a selling shareholder.

Name
 
Shares
Beneficially
Owned
Prior To
Offering(1)
 
Percent
Beneficially
Owned Before
Offering
 
Shares
to be
Offered
   
Amount
Beneficially
Owned
After
Offering
   
Percent
Beneficially
Owned
After
Offering
 
Roy Aafedt
    450,000         225,000       225,000       1.30 %
Richard Wagner
    100,000         50,000       50,000       *  
Paul Staffile
    50,000         25,000       25,000       *  
J. Michael Cullen
    100,000         50,000       50,000       *  
Todd Thomas
    100,000         50,000       50,000       *  
Edward Roos
    50,000         25,000       25,000       *  
Tabatha and Eric Melby
    50,000         25,000       25,000       *  
Karl Benardchik
    60,000         30,000       30,000       *  
Charles Gillette
    100,000         50,000       50,000       *  
Craig Tevedahl
    50,000         25,000       25,000       *  
Pablo Silva
    12,500         6,250       6,250       *  
Darrell Vasvick
    50,000         25,000       25,000       *  
Kim Winters
    50,000         25,000       25,000       *  
Joyce Lehr
    50,000         25,000       25,000       *  
Donald E. Smith
    50,000         25,000       25,000       *  
Chad Wolf
    25,000         12,500       12,500       *  
Jill Komblatt
    100,000         50,000       50,000       *  
Lawrence Hauskins
    50,000         25,000       25,000       *  
Mary McAlpin
    50,000         25,000       25,000       *  
Paul and Beth Norcia
    100,000         50,000       50,000       *  
Timothy E. Wolfe
    50,000         25,000       25,000       *  
Trident Merchant Group, Inc.
    40,000         20,000       20,000       *  
Mike Mathieu
    20,000         10,000       10,000       *  
Ron Onopa
    8,000         4,000       4,000       *  
Mike Rosenbaum
    40,000         20,000       20,000       *  
Donna Merendino
    20,000         10,000       10,000       *  
Joel Honegger
    8,000         4,000       4,000       *  
Allan Carter
    8,000         4,000       4,000       *  
Mercury Asset Partners, LLC
    1,208,000         604,000       604,000       3.50 %
Phoenix Holdings, LLC
    820,000         410,000       410,000       2.00 %
Gemini Funding Group, LLC
    800,000         400,000       400,000       2.00 %
Guy M. James
    40,000         20,000       20,000       *  
Galileo Russell
    40,000         20,000       20,000       *  
Stuart Briggs
    40,000         20,000       20,000       *  
Elisa Giordano
    120,000         60,000       60,000       *  
Marie and Donald McAndrew
    40,000         20,000       20,000       *  
Bella Capital Holdings, LLC
    200,000         100,000       100,000       *  
Robert Schneiderman
    20,000         10,000       10,000       *  
Mary Beth Alloco
    8,000         4,000       4,000       *  
Louise Befumo
    12,000         6,000       6,000       *  
Teresa Apolei
    40,000         20,000       20,000       *  
Birchwood Capital Advisors, LLC
    200,000         100,000       100,000       *  
Richard P. Greene
    240,000         120,000       120,000       *  
Chris Giordano
    700000         0       700000       *  
Theresa Gruber
    120,000         0       120,000       *  
Patrick Derosa
    25,000         12,500       12,500       *  
Ruben Zak
    62,500         31,250       31,250       *  
John Cancellie
    12,500         6,250       6,250       *  
Dave O’Brien
    12,500         6,250       6,250       *  
TOTAL
    6,602,000         2,891,000       3,711,000          
                                   
 
   *
Less than one percent (1%).
 
(1)
Assumes current issued and outstanding ______17,102,000________ shares of common shares
 
     

 
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Section 15(g) of the Exchange Act

Our shares are “penny stocks” covered by Section 15(g) of the Exchange Act, and Rules 15g-1 through 15g-6 and Rule 15g-9 promulgated thereunder. They impose additional sales practice requirements on broker/dealers who sell our securities to persons other than established customers and accredited investors (generally institutions with assets in excess of $5,000,000 or individuals with net worth in excess of $1,000,000 or annual income exceeding $200,000 or $300,000 jointly with their spouses). While Section 15(g) and Rules 15g-1 through 15g-6 apply to brokers-dealers, they do not apply to us.

Rule 15g-1 exempts a number of specific transactions from the scope of the penny stock rules.

Rule 15g-2 declares unlawful broker/dealer transactions in penny stocks unless the broker/dealer has first provided to the customer a standardized disclosure document.

Rule 15g-3 provides that it is unlawful for a broker/dealer to engage in a penny stock transaction unless the broker/dealer first discloses and subsequently confirms to the customer current quotation prices or similar market information concerning the penny stock in question.

Rule 15g-4 prohibits broker/dealers from completing penny stock transactions for a customer unless the broker/dealer first discloses to the customer the amount of compensation or other remuneration received as a result of the penny stock transaction.

Rule 15g-5 requires that a broker/dealer executing a penny stock transaction, other than one exempt under Rule 15g-1, disclose to its customer, at the time of or prior to the transaction, information about the sales persons compensation.

Rule 15g-6 requires broker/dealers selling penny stocks to provide their customers with monthly account statements.

Rule 15g-9 requires broker/dealers to approved the transaction for the customer's account; obtain a written agreement from the customer setting forth the identity and quantity of the stock being purchased; obtain from the customer information regarding his investment experience; make a determination that the investment is suitable for the investor; deliver to the customer a written statement for the basis for the suitability determination; notify the customer of his rights and remedies in cases of fraud in penny stock transactions; and, FINRA’s toll free telephone number and the central number of the North American Administrators Association, for information on the disciplinary history of broker/dealers and their associated persons. The application of the penny stock rules may affect your ability to resell your shares.

FINRA has adopted rules that require that in recommending an investment to a customer, a broker/dealer must have reasonable grounds for believing that the investment is suitable for that customer. Prior to recommending speculative low priced securities to their non-institutional customers, broker-dealers must make reasonable efforts to obtain information about the customer's financial status, tax status, investment objectives and other information. Under interpretations of these rules, FINRA believes that there is a high probability that speculative low priced securities will not be suitable for at least some customers.  FINRA requirements make it more difficult for broker/dealers to recommend that their customers buy our common stock, which may have the effect of reducing the level of trading activity and liquidity of our common stock. Further, many brokers charge higher transactional fees for penny stock transactions. As a result, fewer broker/dealers may be willing to make a market in our common stock, reducing a stockholder's ability to resell shares of our common stock.

Again, the foregoing rules apply to broker/dealers. They do not apply to us in any manner whatsoever. Since our shares are covered by Section 15(g) of the Exchange Act, which imposes additional sales practice requirements on broker/dealers, many broker/dealers may not want to make a market in our shares or conduct any transactions in our shares. As such, your ability to dispose of your shares may be adversely affected.

DESCRIPTION OF SECURITIES

We have __17,102,000____________ shares of our common stock issued and outstanding as of October  15th __, 2010. There is currently no public market for our common stock and there can be no guarantee that any such market will ever develop.

Common Stock

The Company is authorized to issue up to 100,000,000 shares of common stock, par value $.001. Holders of our common stock are entitled to one vote for each share in the election of directors and on all matters submitted to a vote of stockholders. There is no cumulative voting in the election of directors.

The holders of the common stock are entitled to receive dividends, when and as declared, from time to time, by our board of directors, in its discretion, out of any assets of the Company legally available.

Upon the liquidation, dissolution or winding up of the Company, the remaining assets of the Company available for distribution to stockholders will be distributed among the holders of common stock, pro rata based on the number of shares of common stock held by each.

Holders of common stock generally have no preemptive, subscription, redemption or conversion rights. The outstanding shares of common stock are, when issued, fully paid and non-assessable.

 
-12-
 
Preemptive Rights

No holder of any shares of Advanced Credit Technologies, Inc. stock has preemptive or preferential rights to acquire or subscribe for any unissued shares of any class of stock or any unauthorized securities convertible into or carrying any right, option or warrant to subscribe for or acquire shares of any class of stock not disclosed herein.

Non-Cumulative Voting

Holders of our common stock do not have cumulative voting rights, which means that the holders of more than 50% of the outstanding shares voting for the election of directors can elect all of the directors to be elected, if they so choose, and, in such event, the holders of the remaining shares will not be able to elect any of ACT’s directors.

Preferred Stock

The company has no preferred stock authorized at this time.

Dividend Policy

The payment by us of dividends, if any, in the future rests within the discretion of our Board of Directors and will depend, among other things, upon our earnings, capital requirements and financial condition, as well as other relevant factors. We have not paid any dividends since our inception and we do not intend to pay any cash dividends in the foreseeable future, but intend to retain all earnings, if any, for use in our business.

Transfer Agent

ClearTrust, LLC, 17961 Hunting Bow Circle, Suite 102, Lutz, Florida 33558, telephone 813-235-4490.

INTERESTS OF NAMED EXPERTS AND COUNSEL

No expert or counsel named in this prospectus as having prepared or certified any part of this prospectus or having given an opinion upon the validity of the securities being registered or upon other legal matters in connection with the registration or offering of the common stock was employed on a contingency basis, or had, or is to receive, in connection with the offering, a substantial interest, direct or indirect, in the registrant or any of its parents or subsidiaries. Nor was any such person connected with the registrant or any of its parents or subsidiaries as a promoter, managing or principal underwriter, voting trustee, director, officer, or employee.

The law office of W. Manly, P.A., of Miami, Florida, an independent legal counsel, has provided an opinion and consent on the validity of Advanced Credit Technologies, Inc.’ issuance of common stock and is presented as an exhibit to this filing.

The financial statements included in this Prospectus and in the Registration Statement have been audited by Stan J.H. Lee, CPA, P.A., of 2160 North Central Road, Suite 203, Fort Lee, NJ 07024 to the extent and for the period set forth in their report appearing elsewhere herein and in the Registration Statement, and are included in reliance upon such report given upon the authority of said firm as experts in auditing and accounting.

DESCRIPTION OF BUSINESS

Background

Advanced Credit Technologies, Inc. (the “Company” or “ACT”) is a development stage company. The Company was organized under the laws of the state of Nevada on February 25, 2008.  We formed our Company for the purpose of offering an easy-to-use technology platform that streamlines the credit management process.  We also intend to offer additional e-books and Facebook applications for other financial products to compliment our system.

ACT is poised with “First to Market Advantage” to leverage the current market conditions as the defacto standard for credit management. With the rise in unemployment and debt, ACT is positioned to leverage the need for an automated credit management tool for the millions of Americans with sub par credit scores. While giving the separate platforms a distinct advantage compared to the competition.  There are very few instances where a client would not want to raise his/her credit scores, generally the only impediment to pursuing this course of action is the cost. Today’s cash strapped society has little extra discretionary income to hire a professional.  By using our proprietary software system, clients can now perform affordable credit management with an automated process which makes it easy to understand and is results driven. Our system is changing the dynamic within the industry; we didn’t reinvent the wheel per say, we just simplified it.

We maintain a sophisticated back office component that can be accessed by anyone with minimal computer experience. Clients will see how simple the ACT software program is to use especially when compared to traditional routes of credit management. We believe this will establish a brand loyalty to any additional products we will offer in the future.
 
-13-
 

We intend to continue our focus on cutting-edge technology to stay ahead of the competition and on improving our user-friendly system and products along with price points which leaves room for our upsell of products.  Contata Solutions, our technological partner, will provide the updates and additions to our Internet platform as required.

We intend to begin marketing our products in the U.S. under our retail portal “700creditmd.” which was designed to change the way individuals understand the credit management process.

ACT has never declared bankruptcy, has never been in receivership, and has never been involved in any legal action or proceedings. Since becoming incorporated, ACT has not made any significant purchase or sale of assets, nor has it been involved in any mergers, acquisitions or consolidations.  ACT is not a blank check registrant as that term is defined in Rule 419(a)(2) of Regulation C of the Securities Act of 1933, since it has a specific business plan or purpose.

Since our inception, we have been engaged in business activities, including researching the industry, developing our technology platform, performing due diligence regarding potential customers most suitable for our ACT services and identifying future business platforms.

Currently, ACT has two officers and directors who have assumed responsibility for all planning, development and operational duties. Other than the officers and directors, there are two employees at the present time.  We do anticipate hiring employees when the need arises.

ACT currently has no intention to engage in a merger or acquisition with an unidentified company.  We may pursue strategic acquisitions that compliment our current business model within the advertising industry which may allow us to expand our activities and capabilities.

ACT’s fiscal year end is December 31.

Business of Issuer

Our services are in the U.S. under the brand name Advanced Credit Technologies, Inc.  Our services, while not technically difficult to provide, must be continually developed to provide our clients the most current platforms.

By using our proprietary software system, a client can perform affordable credit management with an automated process which is easier than it has been done for years by professionals in the industry. We did not re-invent the process, but we automated and simplified it.

The credit management process is not a difficult one; however, due to our automation we feel we will have a huge lead in the marketplace. ACT and 700CreditMD has engineered methods to reduce the workload for credit management by up to 75 % and, with phase II build out technology, could be reduced by as much as 90%.  ACT and 700CreditMD now have a reliable system that takes the paperwork and much of the human error out of the process.

In addition, we are offering affiliate websites that will give affiliates a custom home page for them to use as a portal for their customers. This is an excellent profit center and gives us high retention for those affiliates.

Our technology will focus initially on two channels:

 
Retail.  End users who would traditionally have to buy a kit or hire a credit management specialist to do this for them. The drawback to most self-help methods is that it usually doesn’t work, and in some cases makes the situation worse. Our software, along with video tutorials, makes it impossible for a client to fail. The process is the same for everyone, why would you pay hundreds or thousands if you could do it yourself for minimal expense.

 
Wholesale.  Those who wish to offer as a complimentary service to existing and potential clients to close more sales in their particular business -- from real estate, automotive, loan originators, boat and RV facilities, to insurance professionals. All in an effort to build a client network of profitable sales.

We plan to initially focus on North America and as it grows, the technology will work in all first world countries that have credit driven economies, such as Latin America, Asia and the Pacific Rim, and similar markets. As it grows, it will look for additional leverage by taking on partnerships and expanding the services to meet the needs of our market.
 
 
-14-
 
Industry Background
 
The number of Americans with bad credit has risen sharply since 2007, with more than 45 million now affected by a negative credit history( scores below 599 ), according to a study by FICO ( July 2010 ). The increase reflects a spike in delinquencies on home loans and credit cards by middle-class Americans.

The credit management business consists of thousands of smaller firms, organizations and individual consultants for everyone of the few dozen well-known companies. There are currently thousands of companies in the U.S. offering credit management and debt elimination services. credit management participants range from major consultants to thousands of individuals.

The Better Business Bureau has received more than 3,500 complaints about debt-relief companies since the beginning of the recession.

Due to widespread abuses, the Federal Trade Commission recently approved a rule (July 29, 2010, taking effect in October 2010) which will make it very hard for companies to pitch their business by advertising dubious claims related to their success rates. Among others, it will prevent them from charging upfront fees. This will thin the ranks of the credit management business sector and will surely put out of business a great number of unprofessional companies.

We would like to emphasize here that ACT is not in the business of settling debts on behalf of clients, nor collects upfront fees as a partial payment for service rendered or to be rendered in the future. We merely sell a product that involves a process to challenge information on credit reports, which may be wrong. The client is the one using the software to assist themselves.
 
Our Services
 
ACT and 700CreditMD offers a proprietary software platform which will allow customers to monitor and manage their credit from the privacy of their own homes.  They can sign up from their home or office via the Internet and manage their credit. The technology is unique in the industry and offers a reminder service and prompts the customer through the entire process.

In addition, we are offering affiliate websites that will give affiliates a custom home page to use as a portal for their customers.  Our system can replace the work of up to 25 employees, saving hundreds if not thousands of manpower hours.

Our web-based platform has been put through numerous tests by Contata, our software partner.  Contata ran thousands of trials using real people as mock clients going through the whole process. These thorough and comprehensive tests resulted in our current glitch-free platform, which can operate with thousands of clients at the same time and it can be scaled to any dimension if required.  Our services include the following:

 
The customer is provided with everything they need, that can be provided over the Internet, to manage their credit. This service is offered at a price that cannot be matched by anyone operating a traditional credit management firm because of the need for employees.
 
 
The ACT and 700CreditMD system creates your own personalized home page and organizes your credit profile which is updated in real time and is accessible 24/7.  The three major credit bureaus are hoping you get distracted, dejected, or simply give up and settle for a sub-par credit score. This means that credit card companies, banks and mortgage lenders can charge you a higher rate of interest, costing you thousands of dollars in wealth building capabilities
 
 
The wholesale division (ACT) also offers the processing of credit management to other firms that wish to offer this service or for those that do offer this service. ACT will increase their profit and reduce overhead.
 
 
We also offer private label websites allowing customers to use their store front to offer our services.
 
 
In addition, we offer consulting services.

The Market
 
ACT and 700CreditMD will be focusing initially on the general consumer market and on any company that bases the majority of it's sales through their customers credit such as mortgage companies, real estate companies and auto and marine dealers.

We will also market heavily to large organizations who can offer ACT as a service to their members such as unions, non-profits, churches, etc. Part of our marketing will be to the general consumer as it is our largest market it is also the most difficult and expensive to reach.

Improving FICO scores by using our software will necessarily take some time, which will pass anyway. There are millions of individuals who currently have no credit buying power but who will once the economy improves. By buying our service now, they will save time, and as soon as their buying power is restored, they will be able to buy on credit.
 
-15-
 
 
We have compiled an ebook as well as video tutorials which explain the credit management process and also help to sell the online software component. This ebook will give the consumer added value to their purchase and give us an additional opportunity to upsell them for added services in the process.

Because exposure, response and overall efficiency of Internet media are easier to track than traditional off-line media – through the use of web analytics for instance – Internet credit management can offer a greater sense of accountability for clients.  Marketers and their clients are becoming aware of the need to measure the collaborative effects of marketing (i.e., how the Internet affects in-store sales) rather than siloing each advertising medium. The effects of multi-channel marketing can be difficult to determine, but are an important part of ascertaining the value of media campaigns.
 
Marketing Strategy
 
The retail market will be initially web based advertising such as Facebook, MSN ad campaigns and other banner advertising. As we go along, we plan to use traditional media such as radio interviews and advertising on radio and television as well. We feel the wholesale side of the market is where the majority of our success will be. Retail will ultimately come but the power of the recurring revenue we will achieve through the wholesale market is ultimately where our longevity in the marketplace will lie.

Networking through social media is the future. A product needs a media to spread the word. This can be achieved very efficiently using social media by communicating with an ever expanding number of potential clients, answering their questions, promoting new features, getting feedback, criticism and kudos as well as suggestions. Some of those hundreds of millions of individuals active in social media may become our best, unpaid marketing agents

ACT together with our technology partner, Contata, will be expanding revenue streams through social networking. We firmly believe that this is where the next technology revolution resides.

Television (Infomercial): We intend to invest a substantial amount of funds in professionally made infomercials in order to reach as many potential clients as possible. According to some studies, about 1/3 of the U.S. population watch infomercials.

Facebook: This segment has recently presented itself to us through Contata. We have developed an application which bundles the credit management tool along with an application for business branding on Facebook. This is the most unique opportunity within the platform. No one has been able to master the Facebook application yet, however, we believe we've got a niche because this is where the people are: 500 million and growing.  Facebook is likely the most important free advertising media for our product and it is increasingly the way people learn more about a business or product by visiting the site.

Some Facebook Statistics: http://www.facebook.com/press/info.php?statistics

o  More than 500 million users.
o  50% of active users log on to Facebook in any given day.
o  Average user has 130 friends
o  People spend over 700 billion minutes per month on Facebook.

There is a new Nielsen study (August 2nd, 2010) focused on the power of networking. Findings include that Americans spend one quarter of the time they are on the internet equivalent to six hours a month on social networking sites and blogs, a quantum leap from a year ago. Additionally, the report reveals that U.S. consumers spend 36% of their time online on networking and blogs.

YouTube: Our company intends to take full advantage of the increasing popularity of this site to advertise its product.

We start with a critical competitive edge: We've not been able to locate any firm having a fully automated software platform to handle a large scale client base on a monthly basis. There are currently no less than 8,550 companies in the U.S. offering credit management and debt elimination services. With our current pricing structure on the retail market at $88/and $5 on the wholesale side of the equation, our positioning on this point is very hard to match, but only if we maintain this focus in our strategy, marketing, business development, and fulfillment. By using technology to keep your clients on the right track you ensure the success they want and desire.
 
-16-
 

Our web based platform includes a number of video tutorials which will provide all the relevant information guiding the client in the procedure to achieve the expected results.

Additionally, Contata, Inc., our technological partner, has created Gofaceit -- a name through which to market @work, a powerful Facebook application which allows certain businesses and individuals to market their products and services on Facebook, as well as the credit management tool developed by ACT.  It is an extremely easy application to install and use and is a perfect tool for realtors, lenders, insurance professionals, the automotive and recreational sales business, and anyone else who would benefit from marketing their product or service on their Facebook fan page and whose sales are dependent on their customers obtaining financing. It is our belief that these products marketed together are more powerful than either of them individually, and easier to market and sell together.

Initially, the product will be marketed on Facebook focusing on very specific targeted markets. Our company has the ability to market to certain firms, groups, cities and other demographic criteria. Because Facebook and followers respond differently to advertising than traditional Google, PPC and CPM, we intend to test a few different landing page concepts seeking opt-ins to attend webinars and training about our product Gofaceit and how it can be used to increase their sales revenue. With proper follow up, this should lead to anticipated conversion numbers of approximately 20%.

Search Engine Optimization and branding our product with blogging, video blogging and article submission will be used in conjunction with our Facebook advertising efforts driving people to either a contact up opt-in or weekly Facebook marketing list.

Direct selling will also be used to warm up markets and referrals to realtors, lenders and auto dealers.

All our Gofaceit customers will have access to training videos in our training library that will be used to educate them in the use of Mycmtools, Gofaceit, Facebook marketing tips and other technical marketing tools and tricks including the appropriate Google Apps.  Many of these same videos will be re-syndicated for video blogging and our opt-in list to increase SEO and sales conversions

We plan to develop a department that not only supports Gofaceit and all the updates that will enhance this product like worbix and other ideas yet to be developed by our software partner Contata, but a full fledged group of web developers to help create business Facebook fan pages and other websites and pages so we can offer a complete turnkey web presence that benefits the business and its individual employees in their marketing efforts on Facebook and the web
 
Competition
 
Competition in the credit management industry is growing. Many of our competitors are larger and have greater financial resources than we do. Accordingly, we must rely on our innovative, proprietary software platform to gain market share in the industry.

Employees

Other than our officers and directors, there are two employees of the Company.  Our officers and directors intend to do whatever work is necessary to increase revenues from operating.  Human resource planning will be part of an ongoing process that will include constant evaluation of operations and revenue realization.

Board Committees

ACT has not yet implemented any board committees as of the date of this Prospectus.

Directors

There is no maximum number of directors ACT is authorized to have. However, in no event may ACT have less than one director. Although the Company anticipates appointing additional directors, it has not identified any such person(s).

 
-17-
 

DESCRIPTION OF PROPERTY

ACT’s corporate office is located at 1919 Plaza Drive, Suite 202, Eagan, Minnesota 55122 and our telephone number is 651-905-2932.  This office space is leased by an officer of the Company.

ACT’s management does not currently have policies regarding the acquisition or sale of real estate assets primarily for possible capital gain or primarily for income.  ACT does not presently hold any investments or interests in real estate, investments in real estate mortgages or securities of or interests in persons primarily engaged in real estate activities.


LEGAL PROCEEDINGS

We are not currently a party to any legal proceedings.  ACT’s officers and directors have not been convicted in any criminal proceedings nor has they been permanently or temporarily enjoined, barred, suspended or otherwise limited from involvement in any type of business, securities or banking activities.

The Company’s officers and directors have not been convicted of violating any federal or state securities or commodities law.

There are no known pending legal or administrative proceedings against the Company.

MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

This section must be read in conjunction with the Audited Financial Statements included in this prospectus.

Plan of Operation

We are an operational company, incorporated on February 25, 2008.  We have generated revenues and expect to generate increased revenues in the foreseeable future.   See “Description of Business” contained herein.

Our Officers and Directors are responsible for our managerial and organizational structure which will include preparation of disclosure and accounting controls under the Sarbanes Oxley Act of 2002. When these controls are implemented, they will be responsible for the administration of the controls. Should they not have sufficient experience, they may be incapable of creating and implementing the controls which may cause us to be subject to sanctions and fines by the Securities and Exchange Commission which ultimately could cause you to lose your investment.

Since incorporation, the Company has financed its operations through private investment.  As of July 31, 2010, we had $__31,240____ cash on hand. We had total expenses of $___8717.00_____.

To date, the Company has successfully implemented its business plan and is attempting to secure additional funding to continue the expansion process into the credit management industry. The Company intends to continue developing its own internet properties including lead generation websites, social communities, and directory services targeting specific industries.

October 2010 Update : As of this writing our phase one software platform is complete and working without any issues. We have secured a bid from our software partner ( Contata Solutions ) and will be pursuing the build out of this in Q1 of 2011. The expenditure for this upgrade is $25,000 US dollars. Details of the software upgrade are available from the CEO.
 
Since our inception in February of 2008 we have had a very extensive “BETA” test on our core product ( automated credit management platform ) which was very successful. It allowed us to generate a small amount of revenue in 2009, but more importantly it validated our business model and propelled us to upgrade our technology for a massive growth opportunity. Now that our product is complete we are in the initial stages of sales and marketing our product to the general public.

Profit/Loss: ACT has yet to produce a profit in a given quarter, simply put, our development costs are complete, we now have a working product with minimal overhead. Short of monthly rent, servers, and misc. expenses the cost of our product to produce is ZERO. We do however understand that there will be constant upgrades to our technology platform to maintain its cutting edge capability. This is why we have already outlined a phase II upgrade as discussed in the previous paragraph. Our direct selling efforts have begun in earnest and we anticipate being profitable in Q1 of 2011.
 
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Marketing Directives: With the completion of the initial software platform our software partner  Contata Solutions has engaged us in a joint marketing agreement for one of their products ( @mywork ) which is a Facebook Application. We've since co-branded the products and have created a unique hybrid that in our view will generate tremendous cash flow for ACT in the coming years. To understand the power of this product you simply need to know how many folks are on the social media ( FACEBOOK ) on any given moment in the course of a normal day. Millions of Americans spend hours upon hours per day, the fact that we've developed an application to target these people and their business activities with a unique branding tool is one of the reasons we have high expectations for our company. Our product allows a small business owner or entrepenuer to brand his/her company and tell “Stories” on Facebook, the customizable  application has many powerful tools to assist the client in building his/her business. Having the ability to “Give Away” an automated credit management tool to assist clients simply seperates you from your competition and builds lasting relationships with your client base. No one wants to help people today if they have issues with their credit profiles. They simply get taken advantage of, we want to help them  regain the American Dream. In addition to marketing our products therough the Facebook channel we will have direct sales, webinars, and e-commerce.

Trends:   Our management team went through an exhaustive Risk Analysis Report to identify trends from all conceivable angles. That outline will be attached at the end of this MD&A. In some cases you may feel we went into too much detail, our thought was to provide potential investors with more critical analysis than less.

Funding:   Once the company receives a cash infusion ( $1 million US Dollars ) with our current expense structure the company would be viable for no less than 24-36 months. More than enough time to get our internal and external sales underway to be profitable. Again, our software is already paid for ( small upgrade required $25k ) so in essense our funding is to be used for marketing support and a small portion for management salary. Our RAR has configured over 100,000 different scenarios for failure and the probability is very small. Simply put, management believes we have a unique opportunity to capture a huge segment of the market based upon common sense marketing strategies.

Management Compensation: Since the inception mangement ( CEO/Treasurer) have worked for equity, more important is that management realizes we must work from a minimal expense structure and will take small salaries until revenues warrant. Our goal is to build a successful company, not deplete the treasury for short term gain.

Liabilities: As of this writing the company has no long term liabilites, notes, or legal action against it. We do however have monthly rent, hosting for servers, and misc. expenses for day to day operations.

RISK ANALYSIS REPORT
 
Executive Summary
 
The objective of this analysis is to estimate EBIT-Earnings before interest and tax which we define as operating earnings by creating and running a simulation model which will consider assumptions and random events of various types. The purpose is to provide the entrepreneur and potential investors with a realistic forecast of earnings, thus enabling decision-makers the power of making informed decisions.
 
This risk analysis report includes the results of the model built as well as the assumptions chosen on which the model is based. This transparency will enable anyone reading the report the possibility of evaluating the robustness of the model and thus, its results.
 
After various discussions held with the entrepreneurs, we have selectively chosen assumptions and random events believed to be those having the greatest potential of affecting forecasts the most.
 
The data surveyed was provided by or agreed upon with the client and taken from various sources published on the internet. Where data was lacking, qualitative assessments through expert opinion is unavoidable but valuable nonetheless. All sources are listed throughout the report.
 
In general terms, in our opinion the results obtained indicate that the project has an above average probability of achieving an attractive level of operating earnings which translates into an above average return on investment.
 
Conclusions

After evaluating the results obtained by modeling the one year operating earnings forecast of Advanced Credit Technologies, our overall impression is that the project is feasible and attractive, from the ROI-Return on investment. We base our opinion on the operating earnings amount resulting at a 75% probability confidence level and a total investment of $1,000,000. This scenario depicts operating earnings amounting to an expected minimum of $259,451 (to ∞) attaining a 26%+ ROI on the original investment.
 
We carried out a stress test by means of including the “Armageddon Event” (see appendix 4) which essentially involves the combined impact of most of the risks events listed in the p-i table. Under a 75% probability (to ∞) confidence level, results show an operating loss amounting to ($40,478). On the other hand, there is 99%+ (AE excluded) and 73+% (AE included), probability that the project will break even in the first year of operation.

 
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A traditional deterministic analysis, of the type routinely being presented to potential investors would show in this particular case operating earnings of $442,691 and a 44+%+% ROI on the original investment (not on the total capital at the end of the year). The probability of reaching the latter figure within the framework of our analysis is about 30% (excl. AE) and 16%+ (incl. AE).

General

This model was built with the purpose of providing help to the entrepreneur as well as to potential investors, in making a decision based on the attractiveness of the project, from the point of view of its return on investment.

Assumptions and random events were selected toward the creation of a robust model. Uncertainty about the future means that we do not know for sure –for example- what the outcome of a particular forecast will be. Obviously, 20-20 hindsight makes all the difference, meaning that after the fact, we know then what the best solution would have been, had we had 100% certitude about the outcome before the event or assumption occurred. While this is not within the realm of what is possible, we can indeed add robustness to the model, by factoring in possible scenarios into our strategy and “risk” them, to provide for this ex ante , ex post conundrum.

We live in a dynamic world, where events of interest and otherwise occur non-stop, irrespective of what we do (or don‟t do). Our strategy to confront this, is to introduce changes in the model, to provide for this non spatial continuum situation in terms of events which succeed one another, from past to present to future. In short, as old events change values, these new values need to be factored in into the model in order to gain accuracy. Further, it is also possible that an interval in this non spatial continuum may present a scenario in which some events which were originally part of the model will lose all significance, while new ones are bound to play a role. This should also be confronted and dealt with by making appropriate modifications to the model.

How to read the results of the analysis

The results of the analysis depict the values obtained after running thousands of trials. The values represent the probability of an event occurring, under different confidence levels. This quantification of the probability of achieving a certain level of operating earnings will allow the entrepreneur and potential investors the possibility of evaluating the convenience of going ahead with the project and investing funds in it. This will depend on the yield objective of each individual and his or her risk tolerance. Thus, the perception of what a “mediocre”, “good” or “very good” project may be for the entrepreneur, a particular individual or among the various potential investors may differ considerably. One very important benefit of applying stochastic in lieu of deterministic processes is the fact that the former allow individuals with different needs and risk expectations the possibility of making informed decisions.

Introduction to the Problem

Mr Chris Jackson and Mr Enrico Giordano (“The Entrepreneurs”), the company principals, wish to launch a business venture related to the credit management sector. They have developed a unique automated platform to operate on the internet which allows individuals the possibility of challenging blemishes on their credit reports. Their intention is to approach the retail as well as the wholesale markets in the U.S. at the beginning and other countries later on. Details about their venture are provided in the corresponding business plan.

Project Impact Analysis

The venture –as any project- has vulnerable points which may affect the forecasted operating earnings. These vulnerabilities are due to unexpected variances in the various items of the P&L statement, as well as to random events of exogenous nature (risks and opportunities), which can also have an impact on the bottom line of the company. All these are included in the model built.

Forecast variations were determined taking into consideration the business model, the current and expected status of the economy. Also playing an important role are random events we included in the model which would also have an economic impact on earnings. We selected these possible events and its impact arbitrarily.

Supporting information

The information on which we have based our analysis is derived from various sources, essentially from various publications available on the internet and expert opinion (our own and that of the entrepreneurs).Sources have been cited and made available in each case, when statements or data is provided or factored into the model.

 
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Objective and Purpose of the Analysis

The objective of this risk analysis is to estimate the EBIT-Earnings before interest and tax of the company at end of the first year of operation, after considering the variance potential in sales volume, cost of goods sold and general & administrative expenses. Additionally, selected random events and its possible economic impact will also be introduced in the analysis and will also play a role in the final outcome.

Strategy

The entrepreneurs plan to raise $1 million to finance their project by approaching various sources. The entrepreneurs are aware of the importance of providing investors with a clear exit option enabling investors the possibility of cashing out. In view of this, the company is in the process of filing an S-1 form with the SEC to launch an IPO in the near future.
 
In order to estimate the probability of the project achieving an above average rate of return, we have selected three assumptions from the company‟s one year proforma P&L statement, plus ten random events which we believe could have positive and negative economic impacts on the company‟s bottom line. All this is detailed in the corresponding sections.

Scope

The analysis‟ horizon is one year from the date it was prepared but could be extended to 16 months by introducing timely modification with new information as it becomes available, that is, it would be valid roughly until the end of 2011. This means that all the assumptions, random events and variance built in some of the items in the P&L pro forma statement of the company, are expected to play a role (if occurring) through 2011.We are working under the premise that the company will launch its project at the beginning of the second half of 2010.
 
Challenges

We worked closely with the entrepreneurs to determine the variability of some of the proforma P&L statement items, as well as in the selection of the random events capable of causing an impact on the operating profit of the company.

One important challenge was to select those possible random events which had the potential of most likely affecting the particular project of interest, either due to economic, social or military occurrences. Furthermore, we have correlated some of those events which we believe have a direct incidence on others, by increasing its certitude of occurring.

Selection of Assumptions – Income, Cost and Expenses

These are assumptions related to the first year proforma profit & loss statement of the company, assessing the likelihood of achieving the expected EBIT-Earnings before interest and tax, as per the company‟s business plan estimate. The three P&L items modeled involve variances from the ML-Most Likely occurrence, depicted as Min-Minimum, and Max-Maximum. For example, first year sales of $1,800,000 (ML) may vary between $1,620,000 (Min) to $1.980,000 (Max). We need to emphasize that, while we are using a Minimum, Most Likely and Maximum scenario format, this should not be confused with the traditional deterministic excel, three single point scenarios. In our analysis we will plug these values in the model, creating 100,000 possible scenarios of each item modeled. Furthermore, we will estimate the certitude of occurrence at various confidence levels. Compare this to the mere Excel three point scenarios, which traditionally refer to sales only, and on top of that, gives the same probability of occurring to the three of them.

Sales Volume. This estimate is based on what the entrepreneurs think their company will sell during the first year. As per prior discussions with the entrepreneurs, they will devote a substantial amount of money in a promotional and advertising campaign. This is considered to be a vital point in their early growth strategy.

Cost of Sales. The cost of sales (aka cost of goods sold) was determined, together with the entrepreneurs. Components of cost of goods sold were arbitrarily determined due to the nature of the company, which essentially operates a web based automated platform on the internet.

Administrative and Marketing Expenses . These costs were determined with a reasonable level of accuracy, for the same reason as mentioned above, namely, the nature of the company which allows for a more or less clear identification.
 
 
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Selection of Assumptions – Random Events

In this section we will justify the reason why these particular assumptions or random event were selected. It is expected that if occurring they would affect the outcome of the original business plan forecasts. We have considered random events of economic as well as of political nature. While both create uncertainty among people, significant events of political origin may intensify uncertainty even more.

We do believe that consumer demand for the company‟s product will continue to prosper under almost any economic environment regardless, of its origin. However, we also consider that high levels of uncertainty may lead to a drop in spending, thus indirectly affecting company sales.

In other words, in the face of high levels of general political instability, business may diminish investing and people may slow down on their assets acquisitions, especially on credit 1 .

The probability of occurrence of these events has been arbitrarily quantified. The corresponding possible economic impact on sales was restricted to most likely values under 10% of estimated sales; events causing a higher impact surpassing the 10% threshold would be of a rather exceptional nature. It must be emphasized that sales has also been modeled as a distribution, not as a single point value. Our information was obtained from various sources available on the internet, including those from data mining companies.

Product launched by the competition (Risk) .

 After doing extensive research, the entrepreneurs have informed us that they could not find any company with a product similar to their offering. They have also filed a patent application to protect their business method. While this describes the current situation and the measures taken to prevent the competition from emulating their offering, the entrepreneurs are aware of the fact that the possibility of a competing product cannot be ruled out. There may be various reasons for it, such as the U.S. Patent and Trademark Office deciding against the granting of a patent, thus paving the way for competing products to appear in the market. In such an event, and even taking into account their head start advantage, the entrepreneurs consider that the competition could however carve up about 20% of the market for themselves during 2011. However, due to the great size of the market this possible event would not occur fully at the expense of the company‟s sales.

U.S. GDP growth 3% for all of 2011 (Opportunity).

Barring some unexpected event such as a double dip recession, we estimate that the U.S. GDP growth in 2011 will exceed 3% which as of August 2010 is a higher rate than that forecasted by some institutions (Goldman Sachs and others). We base our forecast on the lavish, unrelenting and unsparing spending which the current administration cum Federal Reserve backing and cheering is all too eager to shower the economy with at the first sign of faltering. In view of all this, we are comfortable with our 3%+ GDP growth rate forecast.

Laws detrimental to the company enacted by the Fair Credit Reporting Act (Risk).

The FCRA occasionally issues new rules affecting credit management firms such as a very recent one taking effect in September and October 2010 2 which does not address the company‟s business model. However possible, it is not likely that the FCRA will issue any ruling detrimental to the specific business procedure offered by the company. However, if it does, it would affect sales, depending on the restrictions imposed.

One or more European countries default on their sovereign debt (Risk).

The main impact that such an occurrence would cause (apart of the local social aspects) would be on the European banking system. Due to the existing world interlocking fragility, this will cause a ripple effect on the world financial system, and could have an effect on the company‟s sales.

The recent bank stress test carried out on European banks has been referred to as a charade and as an outright fraud. We subscribe to that point of view. It is increasingly seen as an outright self serving engineered stress test result orchestrated by the Committee of European Banking Supervisors to appease the public . There were 91 banks in 20 countries analyzed and all except seven passed the test. The seven which did not were selected as sacrificial lambs , included a bank in Greece, five relatively minor Spanish banks, as well as the much larger state-owned German property and municipal funding specialist, Hypo Real Estate. The latter had a portfolio heavily weighted by „atomic bomb” type of real estate assets, which made it impossible to “pass the stress test”, lest it would give the game away.
 
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Notwithstanding this undemanding stress test, several other banks passed so narrowly that they may face market pressure to increase reserves. That group included Postbank, one of Germany‟s biggest publicly traded banks, which is based in Bonn and is 25 percent owned by Deutsche Bank. It is difficult not to question the validity of the stress test of European banks saturated with government bonds and other long-term public debt instruments considering that the supposed “worst case scenario” envisions no possibility of a sovereign debt default in Europe, This, in the face of countries on the verge of economic collapse such as Greece.

Furthermore, apparently not a single UK bank is in danger from worsening economic developments, despite a warning issued by analysts at the Royal Bank of Scotland to senior British policymakers in January 2009, entitled “Living on a Prayer,” which stated that almost the entire banking sector of the United Kingdom was “technically insolvent.”
 
In February 2009, the European Union‟s own executive branch, the European Commission, issued a confidential report, subsequently leaked to the British newspaper, The Daily Telegraph, which warned that European banks collectively held as much as 18.6 trillion Euros in toxic assets.While we do not believe that the stress test performed on U.S. banks was much more rigorous, the European version seems to be conspicuously lacking in this characteristic.

CPI over 6% (Opportunity).

While it is difficult to fathom when would such an event occur, we believe firmly that it eventually will. The current administration is increasingly looking similar to that of Jimmy Carter which led to the U.S. economy experiencing inflation seen only very few times since the Civil War, leading to a record high 21.5% prime rate in 1980 and a CPI of 13.5% in the same year.

The current administration –with the blessings of the Fed- has been shoveling enormous amounts of money into the financial system. The problem is that banks have chosen to sit on that cash, and it is not being lent out to consumers and firms. Compounding the situation, corporations are also sitting on cash amounting about a trillion dollars which is not directed at investments or hiring of personnel. This situation is most likely due to the uncertainty prevailing in the economy. However, once there is a generalized perception that the economy is on the growth path, all this money will be showered over the economy, probably with explosive consequences, in the sense that people will have money in their pockets, but the service and manufacturing structure may not be prepared to fulfill short and medium term demand, after years of cutbacks in production and personnel. At a certain point, this will most likely create a high level of inflation.

We estimate that such an economic environment would favor the company greatly, as most people will prefer to buy assets now, exchanging it for their money which is losing its value. To be able to buy assets however, people with the means to buy them on credit will need to improve their FICO scores.
 
Israel (the U.S. or both) attacks Iran militarily (Risk).

We estimate that there is a higher than 50% chance that Israel will attack Iran militarily before the end of 2011, either alone or together with the U.S. because Israel perceives Iran as a serious threat to its national security. Furthermore, in an August 13 th 2010 article John Bolton (former U.S. ambassador) calls for an immediate attack on Iran. He argues that Russias‟s impending loading of nuclear fuel into Iran plant merits it 3 . In December of this year, the Pentagon expects to have a new super bunker buster bomb ready for deployment which does not allay fears of a strike on Iran. The first 15 ton MAP-Massive Ordnance penetrator behemoth is estimated to be the only munitions in the U.S. arsenal with the required capability of penetrating and destroying Iran‟s deep underground nuclear facilities It is unclear why some developed countries strongly fear that a nuclear Iran would attack Israel, a country widely believed to have an important number of atomic bombs in its arsenal and the necessary delivery systems. Most likely, U.S. satellites would give Israel early warning of such an attack, which could in turn launch a devastating hit on Iran. It is likely that Iran is very much aware of this for which it is hard to believe it would execute such a misguided aggression. Nevertheless, considering that Israel has launched preemptive attacks before (Iraq, Syria) without suffering major political-economic consequences, it would seem it is poised to do it again.

Iran on the other hand is a much more powerful country than Iraq or Syria, and we estimate that such a move by Israel would have far more negative reaching effects, mainly because we believe this may trigger massive retaliatory attacks on Israeli and western targets around the world. We have no doubts that in such a case, the price of oil will escalate to new heights and the world may sink into a deep recession.
 
According to the CIA Fact Book 2010 estimates, Iran‟s population stands at 67,037,517 compared to 22,198,110 inhabitants for Syria, the object of the latest Israeli major pre emptive strike. A further comparison between both countries on the economic front shows the following data:
 
Syria

GDP (purchasing power parity): $100.7 billion (2009 est.)
GDP - per capita (PPP): $4,600 (2009 est.)

Iran

GDP (purchasing power parity $876 billion (2009 est .)
GDP - per capita (PPP):$12,900 (2009 est.)

 
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The point we are trying to make is that, while an unprovoked publicly unacknowledged attack on Syria in 2007 did not bring much fallout, and certainly no retaliatory reaction from Syria, a preemptive attack on Iran could prove to be a very different matter, as the latter has a much larger industrial base, population and armaments industry. This is well apart of the power of Iran to inflict serious attacks on Israeli targets using proxy terrorist movements such as Hezbollah. Furthermore, we do not reject out of hand the possibility that Iran has planted “sleeping cells” in western countries and Israel, which would become active once Iran is attacked.

North Korea attacks a third country (Risk).

We believe that an attack by North Korea against South Korea or Japan could involve nuclear weapons. The totalitarian regime has atomic bombs and the required delivery system. A simple onrush of troops powered by conventional weapons, crossing the border would be eventually contained, and rapidly followed by a decisive counter attack of South Korean forces and her allies leading to a loss of face and matériel difficult to replace, considering the dire condition of North Korea‟s economy. This is well apart of the political consequences for North Korea‟s government. Conversely, a –by some accounts- mentally unbalanced Kim Jong il may conceivably think that a “localized” tactic nuclear strike would be the cheapest and most decisive way to “make a statement” to get more concessions from the West, thinking for example, that the U.S. would not retaliate with a nuclear counter attack, provided that his own nuclear strike hits a relatively unpopulated area of the targeted country (or hitting an area say, 20-50 miles off the coast of Japan, for example). We all know how moves like this have resulted in rather tragic miscalculations. Kim Jong Il seems to be ready to hand over power to his son who is currently in his 20s and is the chief of the country‟s secret police. He may want to establish credibility for his son with some radical measure. The CIA considers this a dangerous period 4 .
 
A major terrorist attack in the U.S. soil occurs (Risk).

  We find it quite remarkable that since 9/11 2002 no terrorist organization has found a way to perpetrate an attack of any magnitude somewhere in the U.S. This can, however happen anytime; it would be a “black swan” event (see appendix 4) and depending on the magnitude, it could also have serious economic consequences derived from the political fallout. The consequences could be substantially bigger if the attack is clearly identified as originating from a hostile country.

Chaos in Iraq (Risk).

The current U.S. administration is announcing a complete troop withdrawal from Iraq effective next year, ending thus U.S. intervention in that country. The White House issued assurances that Iraqi troops are up to the task. Contrary to this assessment, Lt. Gen. Babakir Zebari 5 told reporters in a news conference on August 12 th that it will be another 10 years before Iraq's military is able to cope without help from U.S. forces. He stated “At this point, the withdrawal (of US forces) is going well, because they are still here," Zebari told AFP on the sidelines of a defense ministry conference in Baghdad. "But the problem will start after 2011 -- the politicians must find other ways to fill the void after 2011”.

All American troops must leave Iraq by the end of next year, according to the terms of a bilateral security pact, and President Barack Obama has insisted that the ongoing withdrawal is on schedule and will not be altered.

We find some strong similarities with the situation in Viet Nam in 1972-73. In December 1972 Nixon wanted to end an unpopular war as soon as possible, so he unleashed Operation Linebacker II (aka “The Christmas bombing”). It was the largest and most intense heavy bomber strike launched by the U.S. Air Force since the end of World War II. We could call it “The Surge”, using current terminology. It did bring the North Vietnamese to the negotiation table. In January 1973 the Paris Peace Accord was signed, the U.S. declared victory and started the troop pullout, leaving the military responsibility to the South Vietnamese troops. As soon as the bulk of U.S. troops left, the North Vietnamese moved in, restarted the war and took over South Vietnam in less than two years.In the case of Iraq, “The Surge” has decreased military violence because the country was saturated with U.S. and allied troops, and due to the deployment of cutting edge technology. The problem is that as in the case of Viet Nam, in Iraq the U.S. is dealing with a most determined enemy who does not care about human losses and is bidding his time until the U.S. leaves. When this happens, there is a good chance that with the help of Iran, the insurgents will topple the democratic government, execute many and send many others to “Madrasas” for reeducation: In short, a Vietnam redux. As in the case of Viet Nam, after pulling out of Iraq, there is hardly any probability of the U.S. “going in” again.
 
A double dip recession occurs (Risk).

There is discussion among some economists about the possibility of the economy falling into a new recession after a short lived recovery period. Some countries in Europe are coming out of the recession led by Germany and the same is occurring in many other countries in the world. It is very likely that the recovery will be uneven, taking more time in some countries than in others. However, when we consider the sheer numbers representing the billions of dollars governments worldwide have poured into the various economies, it is difficult to think that recession will return in the near future after the recovery -however slow- is underway.

Some stimulus packages like those introduced by the U.S. and many governments have been the focus of most of the attention. However, many other countries in the world including emerging countries have jumped in the bandwagon trying to boost their economies by pumping in billions of dollars. China‟s stimulus for example, has been substantially larger as a percentage of GDP than the one enacted by the U.S. government. While all this money in circulation will most likely be the cause of a substantial rise in inflation rates later on, we do not believe that in the near future any government will allow its economy to slip back into a new recession.
 
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A common definition of a double dip recession is for the US economy entering into a recession within a period less than 12 months following the end of the previous recession.

According to the National Bureau of Economic Research (NBER), the most authoritative source of information regarding business cycles, there have been 33 recessions registered in the US since 1854. Over this entire time frame, there have been only three recorded instances of a double-dip recession by the definition provided above. The first one was in 1913, the second in 1920, and the third in 1981.
 
Should we make the definition of a double-dip more to include all recessions within 18 months of the end of the previous recession, the number of occurrences of double-dips rises only slightly to five.There were two instances of double-dips in the 91 year period from 1854 to 1945, which comprised a total of 22 business cycles. And there was just one instance a double-dip in the 11 business cycles that took place during the 65 years that have transpired since 1945. We may also add that the 1981 was induced by the Carter Administration to put a stop to the high level of inflation raging in the U.S. U.S. President Jimmy Carter imposed credit controls in March 1980, which resulted in a sharp but short-lived recession before the economy expanded again for 12 months. Then U.S. Federal Reserve Chairman Paul A. Volcker hiked short-term interest rates to 20% in the summer of 1981, as he pushed the economy back into recession while dealing a death blow to inflation. This time around, we firmly believe that the current administration will be ready and willing to keep the money spigot open, irrespective of the consequences, as long as it helps dodging a double-dip downturn. There is one scenario which we believe could create severe political turmoil, sending the price of oil up to record levels plunging the world into a new recession, this time originated by a political and military event: We are referring to a military attack against Iran. We consider this a potentially catastrophic event if it occurs and one that is considered and is factored in our model. Furthermore, we have correlated this event with the possibility of a double dip recession.

Description of the Model

The company wishes to estimate the certitude of achieving a certain level of EBIT, as forecasted in the first year P&L pro forma statement included in the business plan (see table below). Sales for the first year have been estimated at $1.8 million. Cost of goods and operating expenses are expected to be $156,529 and $1,200,780 respectively. The results obtained after running the model will show the amount of operating expenses that can be expected under various probability confidence levels.
 
TOTAL SALES
  $ 1,800,000       100 %
                 
Cost of Goods Sold
  $ 156,529       9 %
                 
Gross Profit
  $ 1,643,417       67 %
                 
Operating Expenses
  $ 1,200,780       91 %
                 
EBIT ( Operating Earnings )
  $ 442,691       25 %

We have modeled operating earnings, generating results under four confidence levels. The characteristics of the distributions used to forecast operating earnings are:

●  Sales :BetaPERT $1,620,000, $$1,800,000, $1,980,000
 
●  Cost of Goods Sold :BetaPERT $125,000, $156,529, $187,835

●  Operating Expenses :BetaPERT $1,080,702, $1,200,780, $1,320,858

●  Random Events :Binomial (Bernoulli). The probability estimated for each event is indicated in the risk matrix above.

●  Economic impact :BetaPERT. The values for the min., most likely and max. results are detailed in each case in the risk matrix above as a percentage on sales.

●  Number of trials :100,000

 
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EBIT PROB . TO
 
This means that the expected value may be at least the minimum shown in the first column.

$442,691                                           29.64%                                Original forecasted operating earnings
$320,571                                           60.00%                                Highest modeled result
$259,451                                           75.00%                                Medium modeled result
$181,539                                           90.00%                                Lowest modeled result

PROBABILITY – CERTAINTY RANGES

This means that the expected value may fall within the interval, at the stated confidence level.

Confidence level : 90%
Max : $623,352
Min : $145,441

Confidence level : 75%
Max : $546,065
Min : $203,027

Confidence level : 60%
Max : $495,149
Min : $238,447

Stress test

This type of test involves subjecting the model to financial stressful conditions by adding what we call the “Armageddon Event (see appendix 4) to the other random events in order to evaluate its effect on the forecast. In this particular case, the origins of the events causing the extreme negative effects are irrelevant which is fine, because they may be totally unfathomable a priori . What is relevant is the effect such events would cause if taking place. Subjecting the model to extreme values will help us learn the magnitude of the consequence of such very unlikely impact, in the event that it occurs.
 
After running the model under stress condition (all previous modeled events plus the AE, we obtain the following results.

Probability 75% ∞ : ($40,478)

PROBABILITY – CERTAINTY RANGES
 
This means that the expected value may fall within the interval, at the stated confidence level.

Confidence level : 90%
Max : $ 592,808
Min : $(271,499)

Confidence level : 75%
Max : $498,351
Min : $(192,503)

 
-26-
 
Confidence level : 60%
Max : $442,084
Min : $(101,830)

Black Swan Results

We estimate the values to be obtained (including the AE) by calculating the mean of the first and 99 th percentiles, that is, of the distribution tails.

1% : $(442,341) This value is the highly unlikely minimum EBIT level.

99% : $ 780,311 This value is the highly unlikely maximum EBIT level.

Sensitivity Analysis

These charts depict the assumptions influencing operating earnings the most. They reflect the sensitivity of the forecasted earnings vis á vis the assumptions and the assumption‟s uncertainty.
 
As we can see below, the sensitivity chart shows that the two most influential assumptions are Operating Expenses and Sales, in that order. What this means is that, by diminishing the uncertainty in the highest ranking influential assumptions in future revisions with more data at hand, a higher degree of accuracy in the estimated forecast could be achieved.

Validation

We have checked the syntax and general formulae of the model and are confident that they do not contain errors. Furthermore, we believe that the logic based upon which variances and random events assumptions were selected is correct. We have also tested results using different distributions to detect possible important variances in the results and if so, investigate the underlying reasons. No significant deviations from the original results were found.

Startup Investment & ROI

To launch the project, the company requires a certain amount of money, broken down as follows:

$115,000                                           Startup investments in period zero
$885,000                                           Required cash
$1,000,000                                        Total

The estimated ROI (on the original investment) considering operating earnings at a 75% to ∞ certitude level would be the following:
 
Probability
    60 %     75 %     90 %
                         
ROI
    32 %     26 %     18 %
                         
Operating Earnings
    320,571       259,451       181,539  
Investment
    1,000,000       1,000,000       1,000,000  
 
-27-
 
  APPENDICES

We have added a section containing appendices related to issues concerning quantitative risk analysis, its origins, applications and results. The reason to include these appendices is to provide additional information on the fundaments of the technique used in this analysis.

PROBABILITY THEORY
 
It should firstly be said, that there is no technology or methodology available today, capable of predicting future events with 100% certitude. Having said that, it should also be noted that by using statistical techniques like Monte Carlo simulation, it is possible to determine the probability of events occurring in the future, under various probability confidence levels. Girolamo Cardano, an Italian 16 th century physician wrote a book describing his observations throwing dice, providing thus some insight in the area of probability. However, he as well as Galileo some years later stopped short of determining whether there was a way to use their findings to predict the future. Most agree today that the modern probability theory has its origins in an exchange of letters between the Frenchmen Blaise Pascal and Pierre de Fermat in 1654. This was the foundation on which a general theory to predict likely events in the future was created.

The probability theory affects us all in our daily lives, as it is used to determine the cost of premiums of life policies for example, the weather forecast, estimate the success probability of a surgical procedure, predict the winner in a presidential race and much more. We make every day decisions of many kinds based on the probabilities associated with a particular situation.

Nowadays, all kind of traditional forecasts (sales, profits, construction projects, etc.) are made using deterministic models (excel spread sheets) to estimate possible outcomes, such as the typical worst, most likely and optimistic scenarios of a particular event occurring in the future. Departing from the perceived risk, others characterize the attractiveness of a particular project as being “good”, “very good”, “more or less good”, “good but….”, “acceptable”, “bad”, “not very good”, etc. These adjectives provide a limited assessment of the risk involved, especially when uttered by other people who may have a different risk tolerance than others.

By building and running simulation models it is possible to quantify risk by assigning probability levels to future outcomes. Now, instead of using adjectives, we can state that a particular forecast has a say, 75% probability of occurring. If the latter refers to say, the expected profit to be earned, based on that and depending on their particular yields expectations and risk tolerance, each will determine how attractive (or not) is that project. This is a quantum leap vis à vis the traditional spread sheet deterministic models allowing for a few possible scenarios only.

TECHNOLOGY USED, ITS ORIGINS AND DESCRIPTION

Monte Carlo simulation is a statistical methodology developed by the scientists John von Neumann and Stanislaw Ulan to work on solving statistical problems related to atomic bomb design, within the “Manhattan Project” during WWII. Monte Carlo was the code word for the methodology being developed. Since that time, the Monte-Carlo method has been used for the simulation of random variables and is based upon the principle of taking samples of random variables from their defined probability density functions.
 
Up to a few years ago, simulation analyses could only be made by using very powerful computers available only to big corporations and government institutions. Nowadays, most PCs have enough processing speed to run simulations. The method may be described as the most powerful and commonly used technique for analyzing complex statistical problems which cannot be solved mathematically.

A Monte Carlo simulation model like the one used in this risk analysis report is a technique part of the armamentarium resorted to by the largest corporations, routinely making investment decisions running into the millions of dollars. A model like the one presented here allows you to peek into the future, by testing thousand of possible outcomes, and the probability of their occurrence, under different confidence levels. In fact, we could say a simulation model maps the future and on top of that, it tells us the probability of a certain occurrence taking place.

Applying this technique, it is possible to answer a question such as, what is the probability of reaching a certain profit amount, a certain sales level or the probabilities that a certain construction project will be completed within the time and budget allotted. For example, after running the model we may find that the probability of achieving or surpassing the likely case scenario (sales, profits, etc.) is 84%. This will allow investors, banks, your boss or yourself to make an informed decision. Conversely, you may find out, that the certainty of the most likely case scenario is 12%. This is not what we expected, in which case, we will factor in new assumptions in the model and run new trials to see if the results can be improved.

 
-28-
 
THE GERMAN V1 FLYING BOMB

While stochastic simulation is increasingly being used nowadays especially by larger companies with great success, the results of these analyses rarely reach the general public. There is however one well known, very famous historical example which provided information that can safely be characterized to have had literally life or death consequences.

From mid 1944 on during WWII the Germans began showering London with V1 flying (“Buzz”) bombs, the precursor of the guided cruise missile. Within a year 1600 people had been killed by flying bombs.

It was unknown at that time, whether the V1s possessed an accurate aiming devise which would allow precision hits, or were built with a very rudimentary guidance system. If the bombs were accurate, the British authorities would have to immediately start evacuating people living close to high value targets. Otherwise, there was no point in ordering any evacuation. As the Germans were not about to tell the British how accurate their V1s were, authorities tapped British statisticians who decided to build a model based on the Poisson distribution to determine the accuracy of the bombs.
 
They divided the entire area where the bombs landed into a grid of 576 small areas of size one quarter square kilometer each. The table below records the number of squares with 0, 1, 2, 3 etc hits each. The total number of hits is 537. The average number of hits per square is then 537/576= 0.9323 hits per square. Had the bombs been accurate, there would be a higher frequency of squares with either no impacts or many (1, 2, 3 or more) impacts. On the other hand, if there were no tendency of the impacts to cluster, then the probability that a square is hits one or more times is governed by a Poisson distribution.

As can be observed below, the Poisson model described with great approximation the frequency of the impacts. For example, 211 squares were hit with one bomb; the Poisson distribution predicted that 211.4 bombs would land on one square.

V1 FLYING-BOMB HITS ON SOUTH LONDON (576 squares with 537 hits)
 
Nr of hits
    0       1       2       3       4       5  
Nr of cells with # of hits above
    229       211       93       35       7       1  
Poisson prediction
    226.7       211.4       98.5       30.6       7.1       1.6  

With the information generated by the Poisson model in hand, it was clear now that the V1 bombs did not have an accurate aiming devise due to which no evacuation was necessary.

OF BLACK SWANS AND ARMAGEDDON

Black Swan Events .
For about 1500 years, people thought all swans were white, until in 1697 cygnes atratus (black swan) was discovered in Australia. Before that, people referred to a black swan as something that was impossible. The theory of the black swan was recently developed by Nasim Taleb who defines a black swan event as:

●  An outlier, as it lies outside the realm of regular expectations, because nothing in the past can convincingly point to its possibility.
 
●  It carries an extreme impact.

●  In spite of its outlier status, human nature makes us concoct explanations for its occurrence after the fact, making it explainable and predictable.

 
-29-
 
Black swan events are impossible to predict by definition and we would seem to contradict this tenet with our estimation, which is of course true. The idea however is to define a black swan arbitrarily, for the company to provide for the case that negative events occurs and to be ready to exploit the positive ones. Past and recent history is full of black swan events, positive and negatives. Wars, the success of ideas, religious thought, the dynamics of historical events, elements of our own personal lives, the 9/11 attack on the twin towers, the emergence of Microsoft and Google, all are black swans. The point is that chance (luck) is an exceedingly more important factor than the overwhelming majority of people imagine.

 This notwithstanding, the media is constantly inflicting upon us the "expert opinion" of self appointed financial "pundits" dishing out all kinds of predictions most of which are wrong, while others continue to write misguided books about what you need to imitate from millionaires, to become one.

The reality is that chance/luck trumps skills every time. When Bill Gates created Microsoft for example, there were thousands upon thousands of other people with the same or better skills (some may even have had the same name as his!) and all the other attributes Bill Gates had, who did not succeed as he did. The difference was that the others were not presented the opportunities Bill Gates was.

What this all mean is that the traditional deterministic analysis is definitely and clearly out, and that the only sensible approach to confront randomness is by applying stochastic processes like the quantitative risk analysis presented here. Additionally, it is also advisable to stress the model by factoring in the possible consequences of rare and unpredictable, but devastating events like the Armageddon event, discussed next. The possible positive black swans reside in the 99 th percentile of the frequency distribution as highly unlikely events and the negative in the 1 st percentile, as depicted in the report.
 
Globalization creates interlocking fragility among institutions worldwide, thus multiplying the destructive (or positive) effect of many local events.

The Armageddon Event.

To stress test the results of the model, we factor in a composite indicator which we call the “Armageddon event”, developed by our company. It is a mathematical aggregation of a set of events likely to affect the company plus other considerations, having a certain probability of occurring and resulting in an exceedingly negative event. One difference between a Black Swan and an Armageddon event is that while Black Swan events may be positive as well as negative, the Armageddon event is negative only. Black Swans reside in the tails of the distributions. The Armageddon event has a higher probability of occurring, as it is variously estimated as between the 50 th and 90 th percentile of the various probability values in the probability-impact table. We may increase/decrease the level of stress of the test if required. The point is to submit the forecast of interest to a significant economic impact, originating however from the events listed in the probability-impact table.

Some may say that there is no need to create a composite indicator representing an exceedingly negative event. In other words, that it does not need to be composite. Others may also opine that it does not jive with the essence of an unpredictable devastating event which could be of a more devastating magnitude.
 
We want it to be of a systemic nature, so to achieve this it is necessary to involve data related to the particular project. By using this procedure we build an event of certain characteristics, different in each case. The Armageddon event carries an overwhelming devastating power.

Conceptually however, we could hardly say it is the „worst case scenario” because there may always be an even worse case scenario lurking out there. For example, no matter how devastating an economic scenario we factor into the stress test, it would be easily surpassed by the consequences of an asteroid the size of the state of New Hampshire hitting the Atlantic ocean off the Florida coast, especially if your project involves a hotel located in Miami Beach!. On the other hand, a financial risk so large as to cause the demise of the company is –for all practical purposes- not more important than the consequences of the asteroid impact above described. While in the case of the asteroid there would obviously be a great loss of lives to regret, the consequence for the company would be the same, namely its demise in either case. We believe that our stress test provides a valuable insight into the possible consequences of a highly negative event taking place. The economic impact will vary depending on the degree of certitude and the value of the economic impact caused by the other random events listed.
 
Characteristics of the Armageddon event as follows:

●  Conceptually, it is not the absolute worst case scenario, as there is no such thing which can be confidently factored into a model. It would be hardly possible to determine every possible rare event that could conceivably occur affecting the project. On the other hand, it carries an overwhelming devastating potential, as if most of the negative events listed in the project‟s p-i table, occur.
●  It is systemic. While it has no specific origin, the probability of it occurring and its economic effects are related to the dynamics and the data of the project of interest.
●  It is composite because it is an indicator containing many negative elements; it does not mean it should be considered as a bevy of “bad black swans”.
 
REFERENCES

( 1 ) http://money.cnn.com/2010/08/30/news/economy/debt_fears.fortune/index.htm
( 2 ) http://www.ftc.gov/opa/2010/07/tsr.shtm
( 3 ) http://www.newsmax.com/Headline/John--Bolton--Iran--Nuclear--israel/2010/08/13/id/367449
( 4 ) http://www.sinolinx.com/frame/?url=http://rss.businessweek.com/~r/bw_rss/asiaindex/~3/41yezl7jgdM/cia-chief-panetta-says-north-korea-s-kim-preparing-succession.html
( 5 ) http://www.guardian.co.uk/world/2010/aug/12/iraqi-army-not-ready-general

 
-30-
 
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table provides the names and addresses of each person known to ACT who own more than 5% of the outstanding common stock as of the date of this prospectus, and by the officers and directors, individually and as a group. Except as otherwise indicated, all shares are owned directly.

Name and address of beneficial owner
 
Amount of
beneficial
ownership
 
Percent
owned
Chris Jackson
1915 Plaza Drive, Suite 202, Eagan, MN 55122
    5,500,000    
Enrico Giordano
1915 Plaza Drive, Suite 202, Eagan, MN 55122
    5,000,000    
Chris Giordano (1)
1915 Plaza Drive, Suite 202, Eagan, MN 55122
    900,000    
Mercury Assets Partners, LLC
1915 Plaza Drive, Suite 202, Eagan, MN 55122
    1,208,000    
Phoenix Holdings, LLC
1915 Plaza Drive, Suite 202, Eagan, MN 55122
    820,000    
Gemini Funding Group, LLC
1915 Plaza Drive, Suite 202, Eagan, MN 55122
    800,000    
           
All officers and directors as a group (2)
    10,500,000    

 
(1)
Principal of Birchwood Capital LLC and includes ownership of 200,000 shares.

The percent of class is based on _____17,102,000________ shares of common stock issued and outstanding as of the date of this prospectus.

OFF-BALANCE SHEET ARRANGEMENTS

ACT does not have any off-balance sheet arrangements.

EXECUTIVE COMPENSATION

The table below sets forth all cash compensation paid or proposed to be paid by us to the chief executive officer and the most highly compensated executive officers, and key employees for services rendered in all capacities to the Company during fiscal years, 2008 and 2009.

 
-31-
 
Summary Compensation Table


                   
  Name and Principal Position
Year
Salary
($)
Bonus
($)
Stock
Awards
($)
Option
Awards
($)
Non-Equity
Incentive
Plan
Compensation
($)
Change in
Pension
Value and
Non qualified
Deferred
Compensation
Earnings
($)
All Other
Compensation
($)
Total
($)
  
                 
Chris Jackson, COO, Director
2008
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
  
2009
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Enrico Giordano, Treasurer
2008
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
 
2009
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil

Compensation Policy . Our officers are expected to receive the compensation set forth above..

Stock Option . At this time, our directors and officers have not received any stock options or freestanding SARs.

Bonuses . To date no bonuses have been granted. Any bonuses granted in the future will relate to meeting certain performance criteria that are directly related to areas within the executive’s responsibilities with the Company. As the Company continues to grow, more defined bonus programs will be created to attract and retain our employees at all levels.

Stock Option Plans

Our board of directors has not adopted any Stock Option Plans as of the date of this prospectus, however, we do intend to reserve 3,500,000 shares for a Stock Option Plan for management and employees.

Compensation of Directors

Directors are currently reimbursed for expenses incurred during their duties.
 
DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS

Our executive officers and directors and their ages as of June 30, 2010 are as follows:

Executive Officers and Directors

Name
 
Age
 
 Office
Since
Chris Jackson
    45  
 President, Chief Operating Officer, Director
Inception
Enrico Giordano
    51  
 Treasurer
Inception
 
 
-32-
 

The term of office for each director is one year, or until the next annual meeting of the shareholders.

Biographical Information

Set forth below is a brief description of the background and business experience of our executive officers and directors.

Chris Jackson. Mr. Jackson is a founder and will serve as the President and Chief Operating Officer. Mr. Jackson graduated from Texas Lutheran University with a BA degree in Marketing. He has been in sales management for the better part of 15 years. Mr. Jackson ran several automotive dealerships sales departments and has a keen awareness of the credit markets importance. During the past four years, Mr. Jackson has been involved with all aspects of the credit management software industry. While owning his own company during the past 5 years, he has overseen the construction and implementation of ACT’s technology platform. His personal hands on experience in the industry is key to the Company’s long term success and growth strategies.

Mr. Jackson’s main focus will be the implementation of sales strategies for growing the Company’s revenues. Mr. Jackson will devote 100% of his time to revenue generation and sales support within the Company.

Enrico Giordano. Mr. Giordano is a founder and will serve as the Company Treasurer and will take on a more significant role as he helps grow the company. Mr. Giordano holds a BA degree in Mass Communications from the University of South Florida and has excelled in Mass Communication Law as his elective studies. Mr. Giordano has been a consultant for over 20 years and has worked with various types of deal structures, from helping structure the proposed sale and relocation of an NBA franchise to working with a structure on e-business companies and the web integration field that included associations with executives of corporations such as Compaq, Digital Equipment Corp., Apple Computer, VisiCorp, Fortress Technologies and IBM. He has also been instrumental in structuring and negotiating on behalf of ACT. Mr. Giordano has already been successful in creating alliances that can be significant to the Company's future growth potential. Mr. Giordano will devote most of his time to this effort, thus helping ensure the success of ACT.

For the past two years all of Mr. Giordano's time and efforts have been solely concentrated on ACT. From price point to structure as well as the marketing of the product to affiliate programs which are now ready to rolled out. These are all part of the vision along with Mr. Jackson in order to bring to market a product that is reliable, affordable and one that can help thousands upon thousands of people in today's economy. Mr. Giordano has taken no salary as a testament to his devotion and belief in the potential of the ACT system. The Company will seek out further management to insure its success and growth.

Advisory Board

ACT intends to add seasoned professionals to its advisory board from time to time.

Board Committees

ACT has not yet implemented any board committees as of the date of this prospectus.

Employment Agreements

There are currently two employment agreements with each of the Company’s officers.  The Agreements have been filed as exhibits to this registration.

Significant Employees

ACT has no significant employees other than the officers and directors described above, whose time and efforts are being provided to Advanced Credit Technologies, Inc. with compensation.


 
-33-
 
MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

Market Information

As of the date of this prospectus, there is no public market in our common stock.  This prospectus is a step toward creating a public market for our common stock, which may enhance the liquidity of our shares.  However, there can be no assurance that a meaningful trading market will ever develop.  ACT and its management make no representation about the present or future value of ACT’s common stock.

As of the date of this prospectus, there are no outstanding options or warrants to purchase, or other instruments convertible into, common equity of the Company and other than the stock registered under this Registration Statement, there is no stock that has been proposed to be publicly offered resulting in dilution to current shareholders.

As of the date of this document we have approximately ____17,102,000________ shares of common stock outstanding held by _51____ shareholders.  These shares of common stock are restricted from resale under Rule 144 until registered under the Securities Act, or an exemption is applicable.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Conflict of Interest

The current President of the Company currently devotes full-time to the Company.  If a specific business opportunity becomes available, such person may face a conflict in selecting between our business interest and their other business interests.  The policy of the Board is that any personal business or corporate opportunity incurred by an officer or director of ACT must be examined by the Board and turned down by the Board in a timely basis before an officer or director can engage or take advantage of a business opportunity which could result in a conflict of interest.

None of the following parties has, since the date of incorporation, had any material interest, direct or indirect, in any transaction with the Company or in any presently proposed transaction that has or will materially affect us:

 
●
The Officers and Directors;
  
●
Any person proposed as a nominee for election as a director;
 
●
Any person who beneficially owns, directly or indirectly, shares carrying more than 5% of the voting rights attached to the outstanding shares of common stock;
 
●
Any relative or spouse of any of the foregoing persons who have the same house as such person.

There are no promoters being used in relation with this offering. No persons who may, in the future, be considered a promoter will receive or expect to receive any assets, services or other consideration from the Company.  No assets will be or are expected to be acquired from any promoter on behalf of the Company.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE

Since inception until the present time, the principal independent accountant for the Company has neither resigned, declined to stand for reelection, nor have been dismissed. The independent accountant for the Company is Stan J.H. Lee, CPA, P.A.

DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION

Our By-laws provide for the elimination of the personal liability of our officers, directors, corporate employees and agents to the fullest extent permitted by the provisions of Nevada law. Under such provisions, the director, officer, corporate employee or agent who in his/her capacity as such is made or threatened to be made, party to any suit or proceeding, shall be indemnified if it is determined that such director or officer acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of our Company. Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers, and persons controlling our Company pursuant to the foregoing provision, or otherwise, we have been advised that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act of 1933 and is, therefore, unenforceable.  In the event that a claim for indemnification against such liabilities is asserted by one of our directors, officers, or controlling persons in connection with the securities being registered, we will, unless in the opinion of our legal counsel the matter has been settled by controlling precedent, submit the question of whether such indemnification is against public policy to a court of appropriate jurisdiction. We will then be governed by the court's decision.
 
-34-
 
ADVANCED CREDIT TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
FINANCIAL STATEMENTS
FOR THE PERIOD FROM FEBRUARY 25, 2008 (INCEPTION)
THROUGH JULY 31, 2010
 
-35-
 

Advanced Credit Technologies, Inc.
(A development stage enterprise)
Balance Sheets
   
(Unaudited)
       
   
July 31,
   
December 31,
 
   
2010
   
2009
 
Assets
           
             
Current assets
           
Cash in bank
  $ 31,240     $ 9,626  
                 
Total assets
    31,240       9,626  
                 
Liabilities and stockholders' deficit
               
                 
Current liabilities
               
Accrued expenses
    3,000       6,000  
Notes payable - Related parties
    --       6,400  
Accrued interest
    193       1,027  
Due to related parties
    5,524       5,524  
                 
Total liabilities
    8,717       18,951  
                 
Stockholders' deficit
               
Common stock 100,000,000, $.001 par value shares
               
  authorized, 15,800,000 and 14,515,000 issued
               
  and outstanding
    15,800       14,515  
Additional paid-in capital
    352,492       224,660  
Deficit accumulated during the development stage
    (345,769 )     (248,500 )
                 
Total stockholders' deficit
    22,523       (9,325 )
                 
Total liabilities and stockholders' deficit
  $ 31,240     $ 9,626  
                  


 See accompanying notes to financial statements
 
-36-
 
 
Advanced Credit Technologies, Inc.
(A development stage enterprise)
Statements of Operations
(Unaudited)
                   
               
February 25, 2008
 
   
Seven Months
   
Seven Months
   
(Inception)
 
   
Ended
   
Ended
   
through
 
   
July 31, 2010
   
July 31, 2009
   
May 31, 2010
 
                   
Revenues
  $ 15,091     $ 37,657     $ 80,700  
Commissions paid
    -       25,877       44,360  
Gross margin
    15,091       11,780       36,340  
                         
Operating expenses
                       
Professional fee
    12,864       1,750       18,864  
Consulting fees
    -       -       213,975  
Officer's compensation
    24,375       -       24,375  
Travel and entertainment
    10,531       11,438       30,179  
Rent
    4,800               4,800  
Computer and internet
    7,100               7,100  
Research and development
    34,500       6,708       52,400  
Office supplies and expenses
    14,726               14,726  
Other operating expenses
    3,197       5,830       14,396  
Total operating expenses
    112,093       25,726       380,815  
                         
Loss from operations
    (97,002 )     (13,946 )     (344,475 )
                         
Interest expense
    267       267       1,294  
                         
Net loss
  $ (97,269 )   $ (14,213 )   $ (345,769 )
                         
Earnings per share
  $ (0.01 )   $ (0.00 )        
                         
Weighted average shares outstanding
    14,908,009       14,265,000          
                          
 See accompanying notes to financial statements
 
-37-
 
 
ADVANCED CREDIT TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS
FOR THE PERIOD FROM FEBRUARY 25, 2008 (INCEPTION)
THROUGH JULY 31, 2010

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Organization and Nature of Business

On February 25, 2008, Advanced Credit Technologies, Inc.  (the “Company”) was incorporated in the State of Nevada. 

Advanced Credit Technologies, Inc. provides a state of the art credit management platform that is a web based delivery system.  Industries that benefit from the Company’s technology include realtors, auto dealers and loan originators.
 
The Company has limited operations and in accordance with Financial Accounting Standards Board Accounting Standards Codification (FASB ASC)  is considered to be in the development stage.
 
Basis of Presentation
 
Our financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires us to make estimates and assumptions that affect reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues, costs and expenses during the reporting period. Actual results could differ from the estimates.
 
Certain reclassifications have been made to conform previously reported data to the current presentation. These reclassifications have no effect on our net income (loss) or financial position as previously reported.

Cash and Cash Equivalents

Cash equivalents are comprised of certain highly liquid investments with maturities of three months or less when purchased. The Company maintains its cash in bank deposit accounts, which at times, may exceed federally insured limits. The Company has not experienced any losses related to this concentration of risk. As of July 31, 2010 and December 31, 2009 the Company had $0 in deposits in excess of federally-insured limits.

Research and Development, Software Development Costs, and Internal Use Software Development Costs
 
Research and development costs are charged to operations as incurred.
 
Software development costs are accounted for in accordance with ASC Topic No. 985. Software development costs are capitalized once technological feasibility of a product is established and such costs are determined to be recoverable. For products where proven technology exists, this may occur very early in the development cycle. Factors we consider in determining when technological feasibility has been established include (i) whether a proven technology exists; (ii) the quality and experience levels of the individuals developing the software; (iii) whether the software is similar to previously developed software which has used the same or similar technology; and (iv) whether the software is being developed with a proven underlying engine. Technological feasibility is evaluated on a product-by-product basis. Capitalized costs for those products that are cancelled or abandoned are charged immediately to cost of sales. The recoverability of capitalized software development costs is evaluated on the expected performance of the specific products for which the costs relate.
 
Internal use software development costs are accounted for in accordance with ASC Topic No. 350 which requires the capitalization of certain external and internal computer software costs incurred during the application development stage. The application development stage is characterized by software design and configuration activities, coding, testing and installation. Training costs and maintenance are expensed as incurred, while upgrades and enhancements are capitalized if it is probable that such expenditures will result in additional functionality.
 
In accounting for website software development costs, we have adopted the provisions of ASC Topic No. 350. ASC Topic No. 350 provides that certain planning and training costs incurred in the development of website software be expensed as incurred, while application development stage costs are to be capitalized.
 
 
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During the seven months ended July 31, 2010, and for the period February 25, 2008 (inception) through July 31, 2010, we have capitalized  external and internal use software and website development costs totaling $-0-  and $-0-, respectively. The estimated useful life of costs capitalized is evaluated for each specific project and ranges from one to three years.

Advertising Expenses
 
Advertising costs are expensed as incurred. The total advertising expenses included in the Statement of Operations for the five months ended July 31, 2010 and for the period February 25, 2008 (inception) through July 31, 2010 were $144 and $144, respectively.

Fixed Assets

The Company records its fixed assets at historical cost. The Company expenses maintenance and repairs as incurred. Upon disposition of fixed assets, the gross cost and accumulated depreciation are written off and the difference between the proceeds and the net book value is recorded as a gain or loss on sale of assets. The Company depreciates its fixed assets over their respective estimated useful lives ranging from 3 to 5 years.

Intangible and Long-Lived Assets

The Company follows FASB ASC 360-10, “Property, Plant, and Equipment,” which established a “primary asset” approach to determine the cash flow estimation period for a group of assets and liabilities that represents the unit of accounting for a long-lived asset to be held and used. Long-lived assets to be held and used are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The carrying amount of a long-lived asset is not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the asset. Long-lived assets to be disposed of are reported at the lower of carrying amount or fair value less cost to sell. Through July 31, 2010, the Company had not experienced impairment losses on its long-lived assets.

Research and Development

In accordance with ASC Topics 985 and 350 the Company has recorded all costs incurred to establish the technological feasibility of computer software product to be sold, leased, or otherwise marketed are researched and development costs.  For the seven months ended July 31, 2010 and for the period February 25, 2008 (inception) through July 31, 2010 the Company recorded research and development costs of  $34,500 and $52,400 respectively.

Revenue Recognition

The Company recognizes revenue when it is realized or realizable and earned. The Company considers revenue realized or realizable and earned when it has persuasive evidence of an arrangement, delivery has occurred, the sales price is fixed and determinable, and collectability is reasonably assured. Determining whether some or all of these criteria have been met involves assumptions and judgments that can have a significant impact on the timing and amount of revenue the Company reports.

Cost of Revenues

The Company records commissions paid to subcontractors directly involved in the production of revenue as cost of sales.

Fair Value Measurements

For certain financial instruments, including accounts receivable, accounts payable, accrued expenses, interest payable, advances payable and notes payable, the carrying amounts approximate fair value due to their relatively short maturities.

 
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The Company has adopted FASB ASC 820-10, “Fair Value Measurements and Disclosures.” FASB ASC 820-10 defines fair value, and establishes a three-level valuation hierarchy for disclosures of fair value measurement that enhances disclosure requirements for fair value measures. The carrying amounts reported in the consolidated balance sheets for receivables and current liabilities each qualify as financial instruments and are a reasonable estimate of their fair values because of the short period of time between the origination of such instruments and their expected realization and their current market rate of interest. The three levels of valuation hierarchy are defined as follows:

·  
Level 1 inputs to the valuation methodology are quoted prices 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 the valuation methodology are unobservable and significant to the fair value measurement.

The Company did not identify any other non-recurring assets and liabilities that are required to be presented in the balance sheets at fair value in accordance with FASB ASC 815.

In February 2007, the FASB issued FAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities,” now known as ASC Topic 825-10 “Financial Instruments.” ASC Topic 825-10 permits entities to choose to measure many financial assets and financial liabilities at fair value. Unrealized gains and losses on items for which the fair value option has been elected are reported in earnings. FASB ASC 825-10 is effective as of the beginning of an entity’s first fiscal year that begins after November 15, 2007. The Company has adopted FASB ASC 825-10. The Company chose not to elect the option to measure the fair value of eligible financial assets and liabilities.

Segment Reporting

FASB ASC 280, “Segment Reporting” requires use of the “management approach” model for segment reporting. The management approach model is based on the way a company’s management organizes segments within the company for making operating decisions and assessing performance. The Company determined it has one operating segment as of July 31, 2010.
Income Taxes

Deferred income taxes are provided using the liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss and tax credit carryforwards, and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of the changes in tax laws and rates of the date of enactment.

When tax returns are filed, it is highly certain that some positions taken would be sustained upon examination by the taxing authorities, while others are subject to uncertainty about the merits of the position taken or the amount of the position that would be ultimately sustained. The benefit of a tax position is recognized in the financial statements in the period during which, based on all available evidence, management believes it is more likely than not that the position will be sustained upon examination, including the resolution of appeals or litigation processes, if any. Tax positions taken are not offset or aggregated with other positions. Tax positions that meet the more-likely-than-not recognition threshold are measured as the largest amount of tax benefit that is more than 50 percent likely of being realized upon settlement with the applicable taxing authority. The portion of the benefits associated with tax positions taken that exceeds the amount measured as described above is reflected as a liability for unrecognized tax benefits in the accompanying balance sheets along with any associated interest and penalties that would be payable to the taxing authorities upon examination.

Applicable interest and penalties associated with unrecognized tax benefits are classified as additional income taxes in the statements of operations.

Net Earnings (Loss) Per Share

Earnings per share is calculated in accordance with the FASB ASC 260-10, “Earnings Per Share.” Basic earnings (loss) per share is based upon the weighted average number of common shares outstanding. Diluted earnings (loss) per share is based on the assumption that all dilutive convertible shares and stock options were converted or exercised. Dilution is computed by applying the treasury stock method. Under this method, options and warrants are assumed to be exercised at the beginning of the period (or at the time of issuance, if later), and as if funds obtained thereby were used to purchase common stock at the average market price during the period.
 
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At December 31, 2009 and December 31, 2008, no potentially dilutive shares were outstanding.

The computation of earnings per share of common stock is based on the weighted average number of shares outstanding at the date of the financial statements.

   
Income (loss)
 
Shares
Per Share
(Numerator)
(Denominator)
Amount
       
  
 
For the Year Ended December 31, 2009:
 
$
             (24,548)
 
                 14,280,753
$
(0.00)
Basic and diluted EPS
Income to common stockholders
For the period February 25, 2008 (inception) through  December 31, 2008:
 
$
                  (223,952)
 
4,064,548
$
(0.06)
Basic and diluted EPS
Income to common stockholders

Stock Based Compensation

The Company adopted FASB ASC Topic 718 – Compensation – Stock Compensation (formerly SFAS 123R), which  establishes the use of the fair value based method of accounting for stock-based compensation arrangements under which compensation cost is determined using the fair value of stock-based compensation determined as of the date of grant and is recognized over the periods in which the related services are rendered.  For stock based compensation the Company recognizes an expense in accordance with FASB ASC Topic 718 and values the equity securities based on the fair value of the security on the date of grant.  Stock option awards are valued using the Black-Scholes option-pricing model.

The Company accounts for stock issued to non-employees where the value of the stock compensation is based upon the measurement date as determined at either (a) the date at which a performance commitment is reached, or (b) at the date at which the necessary performance to earn the equity instruments is complete.

As there is no trading history and the Company securities are not offered to the public, the Company has determined that the fair value of its stock is the price paid when it raises funds.   For the seven months ended July 31, 2010 the Company issued 50,000 common stock shares for consulting services valued at $5,000.  For the period February 25, 2008 (inception) through December 31, 2009, the Company issued 4,500,000 common shares to consultants for services valued at $67,500 and 9,765,000 shares to the Company’s founders for services valued at $146,475, or $.015 per share.  The value of these shares totaling 14,265,000 and $213,975, was determined by the Company’s Board of Directors since at the time of issuance, the Company had no operations, business plan, website or software.

Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts and disclosures.  Accordingly, actual results could differ from those estimates.

Recent Accounting Pronouncements
 
In June 2009, the FASB issued SFAS No. 166, “Accounting for Transfers of Financial Assets — an amendment of FASB Statement No. 140” (“SFAS 166”), codified as FASB ASC 860, which requires entities to provide more information regarding sales of securitized financial assets and similar transactions, particularly if the entity has continuing exposure to the risks related to transferred financial assets. FASB ASC 860 eliminates the concept of a “qualifying special-purpose entity,” changes the requirements for derecognizing financial assets and requires additional disclosures. FASB ASC 860 is effective for fiscal years beginning after November 15, 2009. The adoption of FASB ASC 860 did not have an impact on the Company’s financial condition, results of operations or cash flows.

 
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In June 2009, the FASB issued SFAS No. 167, “Amendments to FASB Interpretation No. 46(R)” (“SFAS 167”), codified as FASB ASC 810-10, which modifies how a company determines when an entity that is insufficiently capitalized or is not controlled through voting (or similar rights) should be consolidated. FASB ASC 810-10 clarifies that the determination of whether a company is required to consolidate an entity is based on, among other things, an entity’s purpose and design and a company’s ability to direct the activities of the entity that most significantly impact the entity’s economic performance. FASB ASC 810-10 requires an ongoing reassessment of whether a company is the primary beneficiary of a variable interest entity. FASB ASC 810-10 also requires additional disclosures about a company’s involvement in variable interest entities and any significant changes in risk exposure due to that involvement. FASB ASC 810-10 is effective for fiscal years beginning after November 15, 2009. The adoption of FASB ASC 810-10 did not have an impact on the Company’s financial condition, results of operations or cash flows.

In June 2009, the FASB issued FASB ASC 105, Generally Accepted Accounting Principles, which establishes the FASB Accounting Standards Codification as the sole source of authoritative generally accepted accounting principles. Pursuant to the provisions of FASB ASC 105, the Company has updated references to GAAP in these financial statements. The adoption of FASB ASC 105 did not impact the Company’s financial position or results of operations.

NOTE 2 – STOCKHOLDERS’ DEFICIT

Common Stock

The Company has 100,000,000 shares of $.001 par value Common stock authorized at July 31, 2010. There were 15,800,040 and 14,515,000 shares outstanding at July 31, 2010 and December 31, 2009, respectively.

During the seven months ended July 31, 2010 the Company issued 1,285,000 shares of common stock for cash proceeds of $124,117 and for services rendered in the amount of $5,000..

NOTE 3 – COMMITMENTS

The Company rents office space for its main office in Eagan, Minnesota on a month-to-month basis.  Monthly rent for this space is $600.

NOTE 4 – RELATED PARTY TRANSACTIONS

Related Party Loans Payable

The following is a summary of related party loans payable:

     
July 31,
2010
 
December 31, 2009
Liabilities
         
Due to   related parties
 
 
5,524
 
5,524
Notes payable to related parties
 
 
--
 
6,400

Note Payable to Related Parties

On May 17, 2008, the Company entered into a promissory note with an officer of the Company in the amount of $6,400. The promissory note represents the value of software development costs advanced to the Company during May and June, 2008. The note accrues interest at 10%  and is due on demand. During the seven months ended July 31, 2010 the Company repaid a total of $6,400 on the note leaving a balance of $-0-.  Accrued interest totaled $193 and $1,027 as of July 31, 2010 and December 31, 2009, respectively.

Due to Related Parties

During 2009, an officer of the Company advanced to the Company $5,524 in the form of expenses incurred on behalf of the Company.  The balance was $5,524 at July 31, 2010 and December 31, 2009 respectively.

Officers Compensation Expense totaled  $24,375 for the seven months ended July 31, 2010.
 
-42-
 

NOTE 5 – GOING CONCERN
 
The accompanying financial statements have been prepared assuming that the company will continue as a going concern. The Company has not achieved profitability and has not enacted its entire business plan as of July 31, 2010 and has not achieved profitability.  This raises substantial doubt about the Company’s ability to continue as a going concern. Without realization of additional capital, it would be unlikely for the Company to continue as a going concern. The financial statements do not include any adjustments that might result from this uncertainty.
 
The Company’s activities to date have been supported by related party debt and  equity financing. It has sustained losses in all previous reporting periods with an inception to date loss of $345,769. Management continues to seek funding from its shareholders and other qualified investors to pursue its business plan.
 
NOTE 6 – INCOME TAXES

At December 31, 2009, the Company had available federal and state net operating loss carryforwards to reduce future taxable income.  The amount available was approximately $345,500 for federal and state purposes.  The federal and state net operating loss carryforwards begin to expire in 2028 .   Given the Company’s history of net operating losses, management has determined that it is more likely than not that the Company will not be able to realize the tax benefit of the net operating loss carryforwards.  Accordingly, the Company has not recognized a deferred tax asset for this benefit.

FASB ASC Topic 740 – Income Taxes (formerly SFAS 109) requires that the Company establish a valuation allowance when it is more likely than not that all or a portion of deferred tax assets will not be realized.  Due to restrictions imposed by Internal Revenue Code Section 382 regarding substantial changes in ownership of companies with net operating loss carryforwards, the utilization of the Company’s net operating loss carryforwards will likely be limited as a result of cumulative changes in stock ownership.  The Company has not recognized a deferred asset and, as a result, the change in stock ownership will not result in any change to the valuation allowances.  Upon the attainment of taxable income by the Company, management will assess the likelihood of realizing the tax benefit associated with the use of the carryforwards and will recognize a deferred tax asset at that time.
 
Significant components of the Company’s deferred income tax assets are as follows as of:
  
         
 
Deferred income tax asset:
 
December 31,
 2009
 
 
Net operating loss carry forward
  $ 345,000  
 
Valuation allowance
    (345,000 )
 
Net deferred income tax asset
    —  
 
The Company has adopted FASB  ASC Topic 740 – Income Taxes  (formerly FIN 48) — an interpretation of former FASB Statement No. 109.  The Interpretation addresses the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements. Under this ASC Topic we may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position should be measured based on the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate settlement. This ASC Topic also provides guidance on derecognition, classification, interest and penalties on income taxes, accounting in interim periods and requires increased disclosures. As of December 31, 2009, the Company does not have a liability for unrecognized tax benefits.
  
The Company files income tax returns in the U.S. federal jurisdiction and various states. The Company is subject to U.S. federal or state income tax examinations by tax authorities for five years after 2008. During the periods open to examination, the Company has net operating loss and tax credit carry forwards for U.S. federal and state tax purposes that have attributes from closed periods. Since these NOL’s and tax credit carry forwards may be utilized in future periods, they remain subject to examination.

NOTE 7 – SUBSEQUENT EVENTS

In 2009, the FASB ASC Topic 865 (formerly FASB 165, Subsequent Events) , which defines the period after the balance sheet date that subsequent events should be evaluated and provides guidance in determining if the event should be reflected in the current financial statements.  This ASC Topic  also requires disclosure regarding the date through which subsequent events have been evaluated.  The Company adopted the provisions of Statement 165 as of December 31, 2009.

The Company has evaluated subsequent events through the time the July 31, 2010 financial statements were issued on September 24, 2010.  No events have occurred subsequent to July 31, 2010 that require disclosure or recognition in these financial statements other than as listed below.
 
-43-
 
 
ADVANCED CREDIT TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
FINANCIAL STATEMENTS
FOR THE PERIOD FROM FEBRUARY 25, 2008 (INCEPTION)
THROUGH DECEMBER 31, 2009
 
-44-
 

Stan J.H. Lee, CPA
2160 North Central Rd. Sutie 203 t Fort Lee t   NJ 07024
P.O. Box 436402 t   San Ysidro t   CA 92143-9402
619-623-7799 t   Fax 619-564-3408 t   E-mail) stan2u@gmail.com



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders
   Advanced Credit Technologies, Inc.

We have audited the accompanying balance sheets of Advanced Credit Technologies, Inc.  (the “Company”) (a development stage enterprise) as of December 31, 2009 and December 31, 2008, and the related statements of operations, stockholders’ deficit and cash flows for the year ended December 31, 2009 and for the period February 25, 2008 (inception) through December 31, 2008. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.
 
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Advanced Credit Technologies, Inc.  as of December 31, 2009 and December 31, 2008, and the results of its operations and its cash flows for the year ended December 31, 2009 and for the period February 25, 2008 (inception) through December 31, 2008 in conformity with accounting principles generally accepted in the United States of America.

The accompanying financial statements have been prepared assuming that the Company would continue as a going concern. As discussed in Note 5 to the financial statements, the Company has not generated profits to date and has a working capital deficit which raises substantial doubt as to its ability to continue as a going concern.  The financial statements do not include any adjustments that might result from the outcome of this uncertainty.



/s/ Stan J.H. Lee, CPA
_____________________
Stan J.H. Lee, CPA
June 5, 2010
 
 
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Advanced Credit Technologies, Inc.
(A development stage enterprise)
Balance Sheets
             
   
December 31,
 
   
2009
   
2008
 
Assets
           
             
Current assets
           
Cash in bank
  $ 9,626     $ 10  
                 
Total assets
    9,626       10  
                 
Liabilities and stockholders' deficit
               
                 
Current liabilities
               
Accrued expenses
    6,000       3,000  
Notes payable - Related parties
    6,400       6,400  
Accrued interest
    1,027       387  
Due to related parties
    5,524       --  
                 
Total liabilities
    18,951       9,787  
                 
Stockholders' deficit
               
Common stock 100,000,000, $.001 par value shares
               
  authorized, 14,515,000 and 14,265,000 issued
               
  and outstanding
    14,515       14,265  
Additional paid-in capital
    224,660       199,910  
Deficit accumulated during the development stage
    (248,500 )     (223,952 )
                 
Total stockholders' deficit
    (9,325 )     (9,777 )
                 
Total liabilities and stockholders' deficit
  $ 9,626     $ 10  
                  
 See accompanying notes to financial statements
 
-46-
 
Advanced Credit Technologies, Inc.
(A development stage enterprise)
Statements of Operations
         
February 25, 2008
   
February 25, 2008
 
         
(Inception)
   
(Inception)
 
   
Year Ended
   
through
   
through
 
   
December 31,
   
December 31,
   
December 31,
 
   
2009
   
2008
   
2009
 
                   
Revenues
  $ 64,554     $ 1,055     $ 65,609  
Commissions paid
    44,360       --       44,360  
Gross margin
    20,194       1,055       21,249  
                         
Operating expenses
                       
Professional fee
    3,000       3,000       6,000  
Consulting fees
    -       213,975       213,975  
Travel and entertainment
    19,608       40       19,648  
Research and development
    11,500       6,400       17,900  
Other operating expenses
    9,994       1,205       11,199  
Total operating expenses
    44,102       224,620       268,722  
                         
Loss from operations
    (23,908 )     (223,565 )     (247,473 )
                         
Interest expense
    640       387       1,027  
                         
Net loss
  $ (24,548 )   $ (223,952 )   $ (248,500 )
                         
Earnings per share
  $ (0.00 )   $ (0.06 )        
                         
Weighted average shares outstanding
    14,280,753       4,064,548          
                         
See accompanying notes to financial statements
 
-47-
 

Advanced Credit Technologies, Inc.
(a development stage enterprise)
Statements of Stockholders' Deficit
                     
Deficit
       
                     
Accurmulated
       
               
Additional
   
During
       
   
Common stock
   
Paid-In
   
Development
       
   
Shares
   
Amount
   
Capital
   
Stage
   
Total
 
                               
Balance, February 25, 2008
    --     $ --     $ --     $ --     $ --  
                                         
Proceeds from issuance of
                                       
Capital contributed by founders
    --       --       200       --       200  
                                         
Stock issued for consulting
    14,265,000       14,265       199,710       --       213,975  
                                         
Net loss for the period from
                                       
February 25, 2008 (inception)
                                 
  through December 31, 2008
    --       --       --       (223,952 )     (223,952 )
                                         
Balance, December 31, 2008
    14,265,000       14,265       199,910       (223,952 )     (9,777 )
                                         
Proceeds from issuance of
                                       
  common stock
    250,000       250       24,750       --       25,000  
                                         
Net loss for the year ended
                                       
  December 31, 2009
    --       --       --       (24,548 )     (24,548 )
                                         
Balance, December 31, 2009
    14,515,000     $ 14,515     $ 224,660     $ (248,500 )   $ (9,325 )
                                         
See accompanying notes to financial statements
 
-48-
 
Advanced Credit Technologies, Inc.
(A development stage enterprise)
Statements of Cash Flows
         
February 25, 2008
   
February 25, 2008
 
         
(Inception)
   
(Inception)
 
   
Year Ended
   
through
   
through
 
   
December 31,
   
December 31,
   
December 31,
 
   
2009
   
2008
   
2009
 
Cash flows used by operating activities:
                 
Net loss
  $ (24,548 )   $ (223,952 )   $ (248,500 )
Adjustments to reconcile net loss to
                       
  net cash provided by operations
                       
Stock issued for consulting services
    --       213,975       213,975  
Changes in liabilities
    3,000       3,000       6,000  
Accrued interest
    640       387       1,027  
                         
Net cash provided by operations
    (20,908 )     (6,590 )     (27,498 )
                         
Cash flows from financing activities:
                       
Proceeds from common stock issuance
    25,000       200       25,200  
Proceeds from related party loans
    5,524       6,400       11,924  
                         
Cash flows from financing activities
    30,524       6,600       37,124  
                         
Increase in cash
    9,616       10       9,626  
                         
Cash - Beginning
    10       --       --  
                         
Cash - Ending
  $ 9,626     $ 10     $ 9,626  
                         
See accompanying notes to financial statements
 
-49-
 
ADVANCED CREDIT TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS
FOR THE PERIOD FROM FEBRUARY 25, 2008 (INCEPTION)
THROUGH DECEMBER 31, 2009

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Organization and Nature of Business

On February 25, 2008, Advanced Credit Technologies, Inc.  (the “Company”) was incorporated in the State of Nevada. 

Advanced Credit Technologies, Inc. provides a state of the art credit management platform that is a web based delivery system.  Industries that benefit from the Company’s technology include realtors, auto dealers and loan originators.
 
The Company has limited operations and in accordance with Financial Accounting Standards Board Accounting Standards Codification (FASB ASC)  is considered to be in the development stage.
 
Basis of Presentation
 
Our financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires us to make estimates and assumptions that affect reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues, costs and expenses during the reporting period. Actual results could differ from the estimates.
 
Certain reclassifications have been made to conform previously reported data to the current presentation. These reclassifications have no effect on our net income (loss) or financial position as previously reported.

Cash and Cash Equivalents

Cash equivalents are comprised of certain highly liquid investments with maturities of three months or less when purchased. The Company maintains its cash in bank deposit accounts, which at times, may exceed federally insured limits. The Company has not experienced any losses related to this concentration of risk. As of December 31, 2009 and   2008, the Company had $0 in deposits in excess of federally-insured limits.

Research and Development, Software Development Costs, and Internal Use Software Development Costs
 
Research and development costs are charged to operations as incurred.
 
Software development costs are accounted for in accordance with ASC Topic No. 985. Software development costs are capitalized once technological feasibility of a product is established and such costs are determined to be recoverable. For products where proven technology exists, this may occur very early in the development cycle. Factors we consider in determining when technological feasibility has been established include (i) whether a proven technology exists; (ii) the quality and experience levels of the individuals developing the software; (iii) whether the software is similar to previously developed software which has used the same or similar technology; and (iv) whether the software is being developed with a proven underlying engine. Technological feasibility is evaluated on a product-by-product basis. Capitalized costs for those products that are cancelled or abandoned are charged immediately to cost of sales. The recoverability of capitalized software development costs is evaluated on the expected performance of the specific products for which the costs relate.
 
Internal use software development costs are accounted for in accordance with ASC Topic No. 350 which requires the capitalization of certain external and internal computer software costs incurred during the application development stage. The application development stage is characterized by software design and configuration activities, coding, testing and installation. Training costs and maintenance are expensed as incurred, while upgrades and enhancements are capitalized if it is probable that such expenditures will result in additional functionality.
 
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In accounting for website software development costs, we have adopted the provisions of ASC Topic No. 350. ASC Topic No. 350 provides that certain planning and training costs incurred in the development of website software be expensed as incurred, while application development stage costs are to be capitalized.
 
During the year ended December 31, 2009 and for the period February 25, 2008 (inception) through December 31, 2008, we have capitalized  external and internal use software and website development costs totaling $-0- and $-0-, respectively. The estimated useful life of costs capitalized is evaluated for each specific project and ranges from one to three years.

Advertising Expenses
 
Advertising costs are expensed as incurred. The total advertising expenses included in the Statement of Operations for the year ended December 31, 2009 and for the period February 25, 2008 (inception) through December 31, 2008 were $-0- and $-0-, respectively.

Fixed Assets

The Company records its fixed assets at historical cost. The Company expenses maintenance and repairs as incurred. Upon disposition of fixed assets, the gross cost and accumulated depreciation are written off and the difference between the proceeds and the net book value is recorded as a gain or loss on sale of assets. The Company depreciates its fixed assets over their respective estimated useful lives ranging from 3 to 5 years.

Intangible and Long-Lived Assets

The Company follows FASB ASC 360-10, “Property, Plant, and Equipment,” which established a “primary asset” approach to determine the cash flow estimation period for a group of assets and liabilities that represents the unit of accounting for a long-lived asset to be held and used. Long-lived assets to be held and used are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The carrying amount of a long-lived asset is not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the asset. Long-lived assets to be disposed of are reported at the lower of carrying amount or fair value less cost to sell. Through December 31, 2009, the Company had not experienced impairment losses on its long-lived assets.

Research and Development

In accordance with ASC Topics 985 and 350 the Company has recorded all costs incurred to establish the technological feasibility of computer software product to be sold, leased, or otherwise marketed are researched and development costs.  For the year ended December 31, 2009 and for the period February 25, 2008 (inception) through December 31, 2008 the Company recorded research and development costs of $11,500 and $6,400 respectively.

Revenue Recognition

The Company recognizes revenue when it is realized or realizable and earned. The Company considers revenue realized or realizable and earned when it has persuasive evidence of an arrangement, delivery has occurred, the sales price is fixed and determinable, and collectability is reasonably assured. Determining whether some or all of these criteria have been met involves assumptions and judgments that can have a significant impact on the timing and amount of revenue the Company reports.

Cost of Revenues

The Company records commissions paid to subcontractors directly involved in the production of revenue as cost of sales.

Fair Value Measurements

For certain financial instruments, including accounts receivable, accounts payable, accrued expenses, interest payable, advances payable and notes payable, the carrying amounts approximate fair value due to their relatively short maturities.

 
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The Company has adopted FASB ASC 820-10, “Fair Value Measurements and Disclosures.” FASB ASC 820-10 defines fair value, and establishes a three-level valuation hierarchy for disclosures of fair value measurement that enhances disclosure requirements for fair value measures. The carrying amounts reported in the consolidated balance sheets for receivables and current liabilities each qualify as financial instruments and are a reasonable estimate of their fair values because of the short period of time between the origination of such instruments and their expected realization and their current market rate of interest. The three levels of valuation hierarchy are defined as follows:

·  
Level 1 inputs to the valuation methodology are quoted prices 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 the valuation methodology are unobservable and significant to the fair value measurement.

The Company did not identify any other non-recurring assets and liabilities that are required to be presented in the balance sheets at fair value in accordance with FASB ASC 815.

In February 2007, the FASB issued FAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities,” now known as ASC Topic 825-10 “Financial Instruments.” ASC Topic 825-10 permits entities to choose to measure many financial assets and financial liabilities at fair value. Unrealized gains and losses on items for which the fair value option has been elected are reported in earnings. FASB ASC 825-10 is effective as of the beginning of an entity’s first fiscal year that begins after November 15, 2007. The Company has adopted FASB ASC 825-10. The Company chose not to elect the option to measure the fair value of eligible financial assets and liabilities.

Segment Reporting

FASB ASC 280, “Segment Reporting” requires use of the “management approach” model for segment reporting. The management approach model is based on the way a company’s management organizes segments within the company for making operating decisions and assessing performance. The Company determined it has one operating segment as of December 31, 2009 and  2008.
 
Income Taxes

Deferred income taxes are provided using the liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss and tax credit carryforwards, and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of the changes in tax laws and rates of the date of enactment.
 
 When tax returns are filed, it is highly certain that some positions taken would be sustained upon examination by the taxing authorities, while others are subject to uncertainty about the merits of the position taken or the amount of the position that would be ultimately sustained. The benefit of a tax position is recognized in the financial statements in the period during which, based on all available evidence, management believes it is more likely than not that the position will be sustained upon examination, including the resolution of appeals or litigation processes, if any. Tax positions taken are not offset or aggregated with other positions. Tax positions that meet the more-likely-than-not recognition threshold are measured as the largest amount of tax benefit that is more than 50 percent likely of being realized upon settlement with the applicable taxing authority. The portion of the benefits associated with tax positions taken that exceeds the amount measured as described above is reflected as a liability for unrecognized tax benefits in the accompanying balance sheets along with any associated interest and penalties that would be payable to the taxing authorities upon examination.

Applicable interest and penalties associated with unrecognized tax benefits are classified as additional income taxes in the statements of operations.

Net Earnings (Loss) Per Share

Earnings per share is calculated in accordance with the FASB ASC 260-10, “Earnings Per Share.” Basic earnings (loss) per share is based upon the weighted average number of common shares outstanding. Diluted earnings (loss) per share is based on the assumption that all dilutive convertible shares and stock options were converted or exercised. Dilution is computed by applying the treasury stock method. Under this method, options and warrants are assumed to be exercised at the beginning of the period (or at the time of issuance, if later), and as if funds obtained thereby were used to purchase common stock at the average market price during the period.
 
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At December 31, 2009 and December 31, 2008, no potentially dilutive shares were outstanding.

The computation of earnings per share of common stock is based on the weighted average number of shares outstanding at the date of the financial statements.

   
Income (loss)
 
Shares
Per Share
(Numerator)
(Denominator)
Amount
       
  
 
For the Year Ended December 31, 2009:
 
$
             (24,548)
 
                 14,280,753
$
(0.00)
Basic and diluted EPS
Income to common stockholders
For the period February 25, 2008 (inception) through  December 31, 2008:
 
$
                  (223,952)
 
4,064,548
$
(0.06)
Basic and diluted EPS
Income to common stockholders

Stock Based Compensation

The Company adopted FASB ASC Topic 718 – Compensation – Stock Compensation (formerly SFAS 123R), which  establishes the use of the fair value based method of accounting for stock-based compensation arrangements under which compensation cost is determined using the fair value of stock-based compensation determined as of the date of grant and is recognized over the periods in which the related services are rendered.  For stock based compensation the Company recognizes an expense in accordance with FASB ASC Topic 718 and values the equity securities based on the fair value of the security on the date of grant.  Stock option awards are valued using the Black-Scholes option-pricing model.

The Company accounts for stock issued to non-employees where the value of the stock compensation is based upon the measurement date as determined at either (a) the date at which a performance commitment is reached, or (b) at the date at which the necessary performance to earn the equity instruments is complete.

As there is no trading history and the Company securities are not offered to the public, the Company has determined that the fair value of its stock is the price paid when it raises funds.   For the year ended December 31, 2009 the Company issued no stock for compensation .  For the period February 25, 2008 (inception) through December 31, 2008, the Company issued 4,500,000 common shares to consultants for services valued at $67,500 and 9,765,000 shares to the Company’s founders for services valued at $146,475, or $.015 per share.  The value of these shares totaling 14,265,000 and $213,975, was determined by the Company’s Board of Directors since at the time of issuance, the Company had no operations, business plan, website or software.

Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts and disclosures.  Accordingly, actual results could differ from those estimates.

Recent Accounting Pronouncements
 
In June 2009, the FASB issued SFAS No. 166, “Accounting for Transfers of Financial Assets — an amendment of FASB Statement No. 140” (“SFAS 166”), codified as FASB ASC 860, which requires entities to provide more information regarding sales of securitized financial assets and similar transactions, particularly if the entity has continuing exposure to the risks related to transferred financial assets. FASB ASC 860 eliminates the concept of a “qualifying special-purpose entity,” changes the requirements for derecognizing financial assets and requires additional disclosures. FASB ASC 860 is effective for fiscal years beginning after November 15, 2009. The adoption of FASB ASC 860 did not have an impact on the Company’s financial condition, results of operations or cash flows.

 
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In June 2009, the FASB issued SFAS No. 167, “Amendments to FASB Interpretation No. 46(R)” (“SFAS 167”), codified as FASB ASC 810-10, which modifies how a company determines when an entity that is insufficiently capitalized or is not controlled through voting (or similar rights) should be consolidated. FASB ASC 810-10 clarifies that the determination of whether a company is required to consolidate an entity is based on, among other things, an entity’s purpose and design and a company’s ability to direct the activities of the entity that most significantly impact the entity’s economic performance. FASB ASC 810-10 requires an ongoing reassessment of whether a company is the primary beneficiary of a variable interest entity. FASB ASC 810-10 also requires additional disclosures about a company’s involvement in variable interest entities and any significant changes in risk exposure due to that involvement. FASB ASC 810-10 is effective for fiscal years beginning after November 15, 2009. The adoption of FASB ASC 810-10 did not have an impact on the Company’s financial condition, results of operations or cash flows.

In June 2009, the FASB issued FASB ASC 105, Generally Accepted Accounting Principles, which establishes the FASB Accounting Standards Codification as the sole source of authoritative generally accepted accounting principles. Pursuant to the provisions of FASB ASC 105, the Company has updated references to GAAP in these financial statements. The adoption of FASB ASC 105 did not impact the Company’s financial position or results of operations.

NOTE 2 – STOCKHOLDERS’ DEFICIT

Common Stock

The Company has 100,000,000 shares of $.001 par value Common stock authorized at December 31, 2009, and December 31, 2008.  There were 14,515,000 and 14,265,000 shares outstanding at December 31, 2009 and 2008, respectively.

NOTE 3 – COMMITMENTS

The Company rents office space for its main office in Eagan, Minnesota on a month-to-month basis.  Monthly rent for this space is $600.
 
The Company entered into an agreement on December 10, 2009 for professional services to improve the technology and features of the Company’s current website ( www.700credit md.com ) and to build a solution that will meet the needs of both the Company’s retail customers and its wholesale customers and resellers.  The term of the agreement is expected to be approximately three months.  The total costs per the agreement is $46,000 due as follows:
       
Paid upon signing of the agreement
  $ 11,500.  
Due upon completion of user functionality
    5,000  
Due upon completion of administrative functionality
    6,500  
Due upon completion of user acceptance testing and
       
  final rollout of the product
    23,000  
 
The Company and the contractor may, within 60 days upon signing of the contract, negotiate an equity participation in lieu of the last $23,000 cash payment.

NOTE 4 – RELATED PARTY TRANSACTIONS

Related Party Loans Payable

The following is a summary of related party loans payable:

   
December 31, 2009
   
December 31, 2008
 
Liabilities
           
Due to related parties
    5,524       -  
Notes payable to related parties
    6,400.       6,400  

 
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Note Payable to Related Parties

On May 17, 2008, the Company entered into a promissory note with an officer of the Company in the amount of $6,400. The promissory note represents the value of software development costs advanced to the Company during May and June, 2008. The note accrues interest at 10%  and is due on demand. The note remains unpaid as of December 31, 2009. The balance on the note was $6,400 and $6,400 as of December 31, 2009 and 2008, respectively.  Accrued interest totaled $1,027 and $387 as of December 31, 2009 and 2008, respectively.

Due to Related Parties

During 2009, an officer of the Company advanced to the Company $5,524 in the form of expenses incurred on behalf of the Company.  The balance was $5,524 at December 31, 2009.

Officers Compensation Expense: Our financial statements reflect consulting fees paid to our founders and officers in the amount of $146,47.  See Stock Based Compensation in Note 1.

NOTE 5 – GOING CONCERN
 
The accompanying financial statements have been prepared assuming that the company will continue as a going concern. The Company has not achieved profitability and has not enacted its entire business plan as of December 31, 2009.  In addition, the Company has a working capital deficit in the amount of $9,325.  This raises substantial doubt about the Company’s ability to continue as a going concern. Without realization of additional capital, it would be unlikely for the Company to continue as a going concern. The financial statements do not include any adjustments that might result from this uncertainty.
 
The Company’s activities to date have been supported by related party debt and  equity financing. It has sustained losses in all previous reporting periods with an inception to date loss of $248,500. Management continues to seek funding from its shareholders and other qualified investors to pursue its business plan.
 
NOTE 6 – INCOME TAXES

At December 31, 2009, the Company had available federal and state net operating loss carryforwards to reduce future taxable income.  The amount available was approximately $28,000 for federal and state purposes.  The federal and state net operating loss carryforwards begin to expire in 2028 .   Given the Company’s history of net operating losses, management has determined that it is more likely than not that the Company will not be able to realize the tax benefit of the net operating loss carryforwards.  Accordingly, the Company has not recognized a deferred tax asset for this benefit.

FASB ASC Topic 740 – Income Taxes (formerly SFAS 109) requires that the Company establish a valuation allowance when it is more likely than not that all or a portion of deferred tax assets will not be realized.  Due to restrictions imposed by Internal Revenue Code Section 382 regarding substantial changes in ownership of companies with net operating loss carryforwards, the utilization of the Company’s net operating loss carryforwards will likely be limited as a result of cumulative changes in stock ownership.  The Company has not recognized a deferred asset and, as a result, the change in stock ownership will not result in any change to the valuation allowances.  Upon the attainment of taxable income by the Company, management will assess the likelihood of realizing the tax benefit associated with the use of the carryforwards and will recognize a deferred tax asset at that time.
 
Significant components of the Company’s deferred income tax assets are as follows as of:
  
Deferred income tax asset:
   
December 31,
 2009
 
 
Net operating loss carry forward
  $ 248,500  
 
Valuation allowance
    (248,500 )
 
Net deferred income tax asset
    —  
 

 
-55-
 

The Company has adopted FASB  ASC Topic 740 – Income Taxes  (formerly FIN 48) — an interpretation of former FASB Statement No. 109.  The Interpretation addresses the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements. Under this ASC Topic we may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position should be measured based on the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate settlement. This ASC Topic also provides guidance on derecognition, classification, interest and penalties on income taxes, accounting in interim periods and requires increased disclosures. As of December 31, 2009, the Company does not have a liability for unrecognized tax benefits.
  
The Company files income tax returns in the U.S. federal jurisdiction and various states. The Company is subject to U.S. federal or state income tax examinations by tax authorities for five years after 2008. During the periods open to examination, the Company has net operating loss and tax credit carry forwards for U.S. federal and state tax purposes that have attributes from closed periods. Since these NOL’s and tax credit carry forwards may be utilized in future periods, they remain subject to examination.

NOTE 7 – SUBSEQUENT EVENTS

In 2009, the FASB ASC Topic 865 (formerly FASB 165, Subsequent Events) , which defines the period after the balance sheet date that subsequent events should be evaluated and provides guidance in determining if the event should be reflected in the current financial statements.  This ASC Topic  also requires disclosure regarding the date through which subsequent events have been evaluated.  The Company adopted the provisions of Statement 165 as of December 31, 2009.

The Company has evaluated subsequent events through the time the December 31, 2009 financial statements were issued on June 5, 2010.  No events have occurred subsequent to December 31, 2009 that require disclosure or recognition in these financial statements other than as listed below.

Subsequent to December 31, 2009 the Company received proceeds of $48,500 from the issuance of 485,000 shares of common stoc k.
 
 
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PART II: INFORMATION NOT REQUIRED IN PROSPECTUS

INDEMNIFICATION OF DIRECTORS AND OFFICERS

Advanced Credit Technologies, Inc. Bylaws provide for the indemnification of a present or former director or officer.  ACT indemnifies any director, officer, employee or agent who is successful on the merits or otherwise in defense on any action or suit.  Such indemnification shall include, but not necessarily be limited to, expenses, including attorney’s fees actually or reasonably incurred by him.  Texas law also provides for discretionary indemnification for each person who serves as or at ACT request as an officer or director.  ACT may indemnify such individual against all costs, expenses and liabilities incurred in a threatened, pending or completed action, suit or proceeding brought because such individual is a director or officer.  Such individual must have conducted himself in good faith and reasonably believed that his conduct was in, or not opposed to, ACT’s best interests.  In a criminal action, he must not have had a reasonable cause to believe his conduct was unlawful.

Nevada Law
 
Pursuant to the provisions of the Nevada Statutes, the Company shall have power to indemnify any person who was or is a party to any proceeding (other than an action by, or in the right of, the corporation), by reason of the fact that he or she is or was a director, officer, employee, or agent of the corporation or is or was serving at the request of the corporation as a director, officer, employee, or agent of another corporation, partnership, joint venture, trust, or other enterprise against liability incurred in connection with such proceeding, including any appeal thereof, if he or she acted in good faith and in a manner he or she reasonably believed to be in, or not opposed to, the best interests of the corporation and, with respect to any criminal action or proceeding, had no reasonable cause to believe his or her conduct was unlawful. The termination of any proceeding by judgment, order, settlement, or conviction or upon a plea of nolo contendere or its equivalent shall not, of itself, create a presumption that the person did not act in good faith and in a manner which he or she reasonably believed to be in, or not opposed to, the best interests of the corporation or, with respect to any criminal action or proceeding, had reasonable cause to believe that his or her conduct was unlawful.
 
A corporation shall have power to indemnify any person, who was or is a party to any proceeding by or in the right of the corporation to procure a judgment in its favor by reason of the fact that the person is or was a director, officer, employee, or agent of the corporation or is or was serving at the request of the corporation as a director, officer, employee, or agent of another corporation, partnership, joint venture, trust, or other enterprise, against expenses and amounts paid in settlement not exceeding, in the judgment of the board of directors, the estimated expense of litigating the proceeding to conclusion, actually and reasonably incurred in connection with the defense or settlement of such proceeding, including any appeal thereof. Such indemnification shall be authorized if such person acted in good faith and in a manner he or she reasonably believed to be in, or not opposed to, the best interests of the corporation, except that no indemnification shall be made under this subsection in respect of any claim, issue, or matter as to which such person shall have been adjudged to be liable unless, and only to the extent that, the court in which such proceeding was brought, or any other court of competent jurisdiction, shall determine upon application that, despite the adjudication of liability but in view of all circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which such court shall deem proper.
 
Other Expenses of Issuance and Distribution

The following table sets forth the costs and expenses payable by ACT in connection with the sale of the common stock being registered. ACT has agreed to pay all costs and expenses in connection with this offering of common stock.  The estimated expenses of issuance and distribution, assuming the maximum proceeds are raised, are set forth below.

Legal and Accounting
  $ 22,500  
SEC EDGAR Filing
  $ 1,500  
Transfer Agent
  $ 1,000  
Total
  $ 25,000  

RECENT SALES OF UNREGISTERED SECURITIES

During the past year, Advanced Credit Technologies, Inc. issued the following unregistered securities in private transactions without registering the securities under the Securities Act:

The Company has issued ___6,602,000_________ shares of its common stock in private transactions for total consideration of $__166,000 and certain services provided on behalf of the company.________. The Company believes that the issuance was exempt from registration pursuant to Section 4(2) and Rule 504 of Regulation D of the Securities Act of 1933, as amended, as a transaction by an issuer not involving any public offering.

 
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INDEX OF EXHIBITS

Exhibit
 
Description
3.1
 
Certificate of Formation of Limited Liability Company filed on February 26, 2007
3.1.1
 
Certificate of Conversion  and Certificate of Formation For-Profit Corporation filed on July 13, 2010
3.2
 
By-laws adopted on July 13, 2010
4.1
 
Specimen Common Stock Certificate
5.1
 
Opinion of W. Manly, P.A.
10.1
 
Employment Agreement with Chris Jackson, dated March 1, 2008
10.2
 
Employment Agreement with Enrico Giordano, dated March 1, 2008
10.3   Contata Marketing Agreement
23.1
 
Consent of Stan J.H. Lee, CPA, P.A.
23.2
 
Consent of W. Manly, P.A. (see exhibit 5.1)

UNDERTAKINGS

The registrant hereby undertakes:

To file, during any period in which it offers or sells securities, a post-effective amendment to this registration statement to:

       (i)  Include any prospectus required by Section 10(a)(3) of the Securities Act;
 
      (ii)  Reflect in the prospectus any facts or events which, individually or together, represent a fundamental change in the information in the registration statement;
 
     (iii)  Include any additional or changed material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement.
 

For determining liability under the Securities Act, to treat each post-effective amendment as a new registration statement of the securities offered, and the offering of the securities at that time to be the initial bona fide offering.

To file a post-effective amendment to remove from registration any of the securities that remain unsold at the end of the offering.

Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a Director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.

For determining any liability under the Securities Act, to treat the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant under Rule 424(b)(1), or (4) or 497(h) under the Securities Act as part of this registration statement as of the time the Commission declared it effective.
 
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For determining any liability under the Securities Act, to treat each post-effective amendment that contains a form of prospectus as a new registration statement for the securities offered in the registration statement, and that offering of the securities at that time as the initial bona fide offering of those securities.

For determining liability of the undersigned registrant under the Securities Act to purchaser in the initial distribution of the securities, the undersigned registrant undertakes that in a primary offering of securities of the undersigned registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned registrant will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser:

      (iv)  Any preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule 424;
 
       (v)  Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by the undersigned registrant;
 
      (vi)  The portion of any other free writing prospectus relating to the offering containing material information about the undersigned registrant or its securities provided by or on behalf of the undersigned registrant; and
 
     (vii)  Any other communication that is an offer in the offering made by the undersigned registrant to the purchaser.
 

Each prospectus filed pursuant to Rule 424(b) as part of a registration statement relating to an offering, other than registration statements relying on Rule 430B or other than prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and included in the registration statement as of the date it is first used after effectiveness. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such date of first use.
 
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SIGNATURES

In accordance with the requirements of the Securities Act of 1933, the Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements of filing on Form S-1 and authorized this Registration Statement to be signed on its behalf by the undersigned, in the City of  Eagan State of Minnesota on  October 19,  2010
 
 
ADVANCED CREDIT TECHNOLOGIES, INC.
 
       
 
By:
/s/  Chris Jackson  
   
Chris Jackson
 
   
President and Chief Operating Officer
 
       
In accordance with the requirements of the Securities Act of 1933, this registration statement was signed by the following persons in the capacities stated on __October 19,____________, 2010:
 
 
Signature
 
Title
 
       
 
 
/s/ Chris Jackson
 
Principal Executive Officer,
Principal Financial Officer,
Principal Accounting Officer and Director
 
Chris Jackson
     
       
/s/ Enrico Giordano
 
Title
 
Enrico Giordano
     
       


 
-60-
 
BACK COVER
Dealer Prospectus Delivery Obligation

Prior to the expiration of 90 days after the effective date of this registration statement or prior to the expiration of 90 days after the first date upon which the security was bona fide offered to the public after such effective date, whichever is later, all dealers that effect transactions in these securities, whether or not participating in this offering, may be required to deliver a prospectus.  This is in addition to the dealers' obligation to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions.


 
-61-
 
DEAN HELLER
Secretary of State
206 North Carson Street
Carson City, Nevada 89701-4299
(775)684-5708
Website: secretaryofstate.biz
 
 
 
Articles of Incorporation
(PURSUANT TO NRS 78)
Filed in the office of
/s/ Ross Miller
Ross Miller
Secretary of State
State of Nevada
Document Number
20080124536-71
Filing Date and Time
2/25/2008  9:20 AM
Entity Number
E0113192008-9
 
 
 
 1. Name of Corporation   ADVANCED CREDIT TECHNOLOGIES, INC.
     
 2. Resident Agent Name and Street Address  
REGISTERED AGENTS OF AMERICA, INC.
1802 NORTH CARSON STREET, SUITE 212
CARSON CITY, NEVADA 89701
     
 3. Shares   NUMBER OF SHARES WITH PAR VALUE: ____ PAR VALUE: _____NUMBER OF SHARES WITHOUT PAR VALUE:  1500
     
 4. Name and Address of Board of Directors/Trustees  
CHRISTOPHER S. JACKSON
5200 HUMBOLDT AVE. S #205  , BLOOMINGTON , MN 55431
     
 5. Purpose  
The purpose of this Corporation shall be:
BUSINESS CONSULTING SERVICES
     
 6. Name, Address and Signature of Incorporator  
PRESIDENTIAL SERVICES INCORPORATED
28015 SMYTH DR, VALENCIA, CA 91355
/s/ Kein Wessell
     
 7. Certificate of Acceptance of Appointment of Resident Agent  
 I hereby accept appointment as Resident Agent for the above named corporation.
/s/ Authorized Signature of RA or on Behalf of RA Company
 
DEAN HELLER
Secretary of State
206 North Carson Street
Carson City, Nevada 89701-4299
(775)684-5708
Website: secretaryofstate.biz
 
 
 
Certificate of Amendment
(PURSUANT TO NRS 78.385 and 78.390)
 
 
 
 
 
Certificate of Amendment to Articles of Incorporation
For Nevada Profit Corporations
(Pursuant to NRS 78.385 and 78.390 - After Issuance of Stock)
 
 1. Name of Corporation   ADVANCED CREDIT TECHNOLOGIES, INC.
     
 2. The Articles have been amended as follows:  
Article 3 to be amended to:
 
NUMBER OF SHARES WITH PAR VALUE: 100,000,000
PAR VALUE SHARE: $.001
     
 3.   The vote by which the stockholders holding shares in the corporation entitling them to exercise at least a majority of the voting power, or such greater proportion of the voting power as may be required in the case of a vote by classes or series, or as may be required by the provisions of the articles of incorporation have voted in favor of the amendment is:  100 percent
     
 4. Effective date of filing:  
5/4/10
 
     
 5. Office Signature  
/s/
     
     
 
 
 
 
 
 
DEAN HELLER
Secretary of State
206 North Carson Street
Carson City, Nevada 89701-4299
(775)684-5708
Website: secretaryofstate.biz
 
 
 
Certificate of Amendment
(PURSUANT TO NRS 78.380)
 
 
 
 
 
Certificate of Amendment to Articles of Incorporation
For Nevada Profit Corporations
(Pursuant to NRS 78.380 - Before Issuance of Stock)
 
 1. Name of Corporation   ADVANCED CREDIT TECHNOLOGIES, INC.
     
 2. The Articles have been amended as follows:  
Article 3 to be amended to:
 
NUMBER OF SHARES WITH PAR VALUE: 100,000,000
PAR VALUE SHARE: $.001
     
 3.  The undersigned declare that they constitute at least two-thirds of the Incorporators o , or of the board of directors x
     
 4. Effective date of filing:  
5/4/10
 
     
 5. Signature of Represented Entity /s/ ______________________________   5-4-10
     
 6. I hereby accept appointment as Resident Agent for the above named corporation.
/s/ Authorized Signature of RA or on Behalf of RA Company    5-4-2010
 
 
 
DEAN HELLER
Secretary of State
206 North Carson Street
Carson City, Nevada 89701-4299
(775)684-5708
Website: secretaryofstate.biz
 
 
 
Statement of Change of
Registered Agent
by Represented Entity
(PURSUANT TO NRS 77.340)
 
 
 
 
 
 
 1. Name of entity as currently on file:   ADVANCED CREDIT TECHNOLOGIES, INC.
     
 2. Entity File Numer:  
 
     
 3.  Type of information being changed by this statement:
   
  x Change of Commercial Registered Agent
  o Change of Name and Address of Noncommercial Registered Agent
  o Change of Name, Title of Officer or Other Position with Entity to whom service is to be sent and Address of the Business Office of that Person
     
 4. Information in effect upon the filing of this statement.
   
a) Commercial Registered Agent:
InCorp Services, Inc
 
b)Noncommercial Registered Agent:
________________________
 
c) Title of Office or Other Position with Entity:
____________________________
     
 5. The undersigned affirmatively declare that to the date of this certificate, no stock of the corporation has been issued.
     
 6. Signatures     /s/___________________________________     /s/___________________________________
 
 
 
 
 
 
 
BYLAWS
of
ADVANCED CREDIT TECHNOLOGIES, INC.



ARTICLE I
SHAREHOLDERS

SECTION 1.                                  Annual Meetings

(a)           The annual meeting of the shareholders of the Corporation, shall be held at the principal office of the Corporation in the State of Minnesota or at such other place within or without the State of Minnesota as may be determined by the Board of Directors and as may be designated in the notice of such meeting.  The meeting shall be held on the third Tuesday of March of each year or on such other day as the Board of Directors may specify.  If said day is a legal holiday, the meeting shall be held on the next succeeding business day not a legal holiday.

(b)           Business to be transacted at such meeting shall be the election of directors to succeed those whose terms are expiring and such other business as may be properly brought before the meeting.

(c)           In the event that the annual meeting, by mistake or otherwise, shall not be called and held as herein provided, a special meeting may be called as provided for in Section 2 of this Article I in lieu of and for the purposes of and with the same effect as the annual meeting.

SECTION 2.                                  Special Meetings

(a)           A special meeting of the shareholders of the Corporation may be called for any purpose or purposes at any time by the President of the Corporation, by the Board of Directors or by the holders of not less than 10% of the outstanding capital stock of the Corporation entitled to vote at such meeting.

(b)           At any time, upon the written direction of any person or persons entitled to call a special meeting of the shareholders, it shall be the duty of the Secretary to send notice of such meeting pursuant to Section 4 of this Article I. It shall be the responsibility of the person or persons directing the Secretary to send notice of any special meeting of shareholders to deliver such direction and a proposed form of notice to the Secretary not less than 15 days prior to the proposed date of said meeting.

(c)           Special meetings of the shareholders of the Corporation shall be held at such place, within or without the State of Minnesota, on such date, and at such time as shall be specified in the notice of such special meeting.

SECTION 3.                                  Adjournment

(a)           When the annual meeting is convened, or when any special meeting is convened, the presiding officer may adjourn it for such period of time as may be reasonably necessary to reconvene the meeting at another place and time.

(b)           The presiding officer shall have the power to adjourn any meeting of the Shareholders for any proper purpose, including, but not limited to, lack of a quorum, securing a more adequate meeting place, electing officials to count and tabulate votes, reviewing any shareholder proposals or passing upon any challenge which may properly come before the meetings.

(c)           When a meeting is adjourned to another time or place, it shall not be necessary to give any notice of the adjourned meeting if the time and place to which the meeting is adjourned are announced at the meeting at which the adjournment is taken, and any business may be transacted at the adjourned meeting that might have been transacted on the original date of the meeting.  If, however, after the adjournment the Board fixes a new record date for the adjourned meeting, a notice of the adjourned meeting shall be given in compliance with Section 4(a) of this Article I to each shareholder of record on the new record date entitled to vote at such meeting.
 
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SECTION 4.                                  Notice of Meetings, Purpose of Meeting, Waiver

(a)           Each shareholder of record entitled to vote at any meeting shall be given in person, or by first class mail, postage prepaid, written notice of such meeting which, in the case of a special meeting, shall set forth the purpose(s) for which the meeting is called, not less than 10 or more than 60 days before the date of such meeting. If mailed, such notice is to be sent to the shareholder’s address as it appears on the stock transfer books of the Corporation, unless the shareholder shall be requested of the Secretary in writing at least 15 days prior to the distribution of any required notice that any notice intended for him or her be sent to some other address, in which case the notice may be sent to the address so designated.  Notwithstanding any such request by a shareholder, notice sent to a shareholder’s address as it appears on the stock transfer books of this Corporation as of the record date shall be deemed properly given.  Any notice of a meeting sent by United States mail shall be deemed delivered when deposited with proper postage thereon with the United States Postal Service or in any mail receptacle under its control.

(b)           A shareholder waives notice of any meeting by attendance, either in person or by proxy, at such meeting or by waiving notice in writing before, during or after such meeting.  Attendance at a meeting for the express purpose of objecting that the meeting was not lawfully called or convened, however, will not constitute a waiver of notice by a shareholder who states at the beginning of the meeting, his or her objection that the meeting is not lawfully called or convened.

(c)           A waiver of notice signed by all shareholders entitled to vote at a meeting of shareholders may also be used for any other proper purpose including, but not limited to, designating any place within or without the State of Minnesota as the place for holding such a meeting.

(d)           Neither the business to be transacted at, nor the purpose of, any regular or special meeting of shareholders need be specified in any written waiver of notice.

SECTION 5.                                  Closing of Transfer Books, Record Date, Shareholders’ List

(a)           In order to determine the holders of record of the capital stock of the Corporation who are entitled to notice of meetings, to vote a meeting or adjournment thereof, or to receive payment of any dividend, or for any other purpose, the Board of Directors may fix a date not more than 60 days prior to the date set for any of the above-mentioned activities for such determination of shareholders.

(b)           If the stock transfer books shall be closed for the purpose of determining shareholders entitled to notice of or to vote at a meeting of shareholders, such books shall be closed for at least 10 days immediately preceding such meeting.

(c)           In lieu of closing the stock transfer books, the Board of Directors may fix in advance a date as the date for any such determination of shareholders, such date in any case to be not more than 60 days prior to the date on which the particular action, requiring such determination of shareholders, is to be taken.

(d)           If the stock transfer books are not closed and no record date is fixed for the determination of shareholders entitled to notice or to vote at a meeting of shareholders, or to receive payment of a dividend, the date on which notice of the meeting is mailed or the date on which the resolution of the Board of Directors declaring such dividend is adopted, as the case may be, shall be the record date for such determination of shareholders.

(e)           When a determination of shareholders entitled to vote at any meeting of shareholders has been made as provided in this Section, such determination shall apply to any adjournment thereof, unless the Board of Directors fixes a new record date under this Section for the adjourned meeting.

(f)           The officer or agent having charge of the stock transfer books of the Corporation shall make, as of a date at least 10 days before each meeting of shareholders, a complete list of the shareholders entitled to vote at such meeting or any adjournment thereof, with the address of each shareholder and the number and class and series, if any, of shares held by each shareholder. Such list shall be kept on file at the registered office of the Corporation, at the principal place of business of the Corporation or at the office of the transfer agent or registrar of the Corporation for a period of 10 days prior to such meeting and shall be available for inspection by any shareholder at any time during usual business hours.  Such list shall also be produced and kept open at the time and place of any meeting of shareholders and shall be subject to inspection by any shareholder at any time during the meeting.

(g)           The original stock transfer books shall be prima facie evidence as to the shareholders entitled to examine such list or stock transfer books or to vote any meeting of shareholders.
 
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(h)           If the requirements of Section 5(f) of this Article I have not been substantially complied with, then, on the demand of any shareholder in person or by proxy, the meeting shall be adjourned until such requirements are complied with.

(i)           If no demand pursuant to Section 5(h) of this Article I is made, failure to comply with the requirements of this Section shall not affect the validity of any action taken at such meeting.

(j)           Section 5(g) of this Article I shall be operative only at such time(s) as the Corporation shall have 6 or more shareholders.

SECTION 6.                                  Quorum

At any meeting of the shareholders of the Corporation, the presence, in person or by proxy, of shareholders owning a majority of the issued and outstanding shares of the capital stock of the Corporation entitled to vote thereat shall be necessary to constitute a quorum for the transaction of any business.  If a quorum is present, the vote of a majority of the shares represented at such meeting and entitled to vote on the subject matter shall be the act of the shareholders. If there shall not be quorum at any meeting of the shareholders of the Corporation, then the holders of a majority of the shares of the capital stock of the Corporation who shall be present at such meeting, in person or by proxy, may adjourn such meeting from time to time until holders of all of the shares of the capital stock shall attend.  At any such adjourned meeting at which a quorum shall be present, any business may be transacted which might have been transacted at the meeting as originally scheduled.

SECTION 7.                                  Presiding Officer, Order of Business

(a)           Meetings of the shareholders shall be presided over by the Chairman of the Board, or, if he or she is not present or there is no Chairman of the Board, by the President or, if he or she is not present, by the senior Vice President present or, if neither the Chairman of the Board, the President, nor a Vice President is present, the meeting shall be presided over by a chairman to be chosen by a plurality of the shareholders entitled to vote at the meeting who are present, in person or by proxy.  The presiding officer of any meeting of the shareholders may delegate his or her duties and obligations as the presiding officer as he or she sees fit.

(b)           The Secretary of the Corporation, or, in his or her absence, an Assistant Secretary shall act as Secretary of every meeting of shareholders, but if neither the Secretary nor an Assistant Secretary is present, the presiding officer of the meeting shall choose any person present to act as secretary of the meeting.

(c)           The order of business shall be as follows:

1.            Call of meeting to order.
2.            Proof of notice of meeting.
3.             Reading of minutes of last previous shareholders’ meeting or a waiver thereof.
4.            Reports of officers.
5.            Reports of committees.
6.            Election of directors.
7.            Regular and miscellaneous business.
8.            Special matters.
9.            Adjournment.

(d)           Notwithstanding the provisions of Section 7(c) of this Article I, the order and topics of business to be transacted at any meeting shall be determined by the presiding officer of the meeting in his or her sole discretion.  In no event shall any variation in the order of business or additions and deletions from the order of business as specified in Section 7(c) of this Article I invalidate any actions properly taken at any meeting.
 
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SECTION 8.                                  Voting

(a)           Unless otherwise provided for in the Articles of Incorporation, each shareholder shall be entitled, at each meeting and upon each proposal to be voted upon, to one vote for each share of voting stock recorded in his name on the books of the Corporation on the record date fixed as provided for in Section 5 of this Article I.

(b)           The presiding officer at any meeting of the shareholders shall have the power to determine the method and means of voting when any matter is to be voted upon.  The method and means of voting may include, but shall not be limited to, vote by ballot, vote by hand or vote by voice.  No method of voting may be adopted, however, which fails to take account of any shareholder’s right to vote by proxy as provided for in Section 10 of this Article I.  In no event may any method of voting be adopted which would prejudice the outcome of the vote.

SECTION 9.                                  Action Without Meeting

(a)           Any action required to be taken at any annual or special meeting of shareholders of the Corporation, or any action which may be taken at any annual or special meeting of such shareholders, may be taken without a meeting, without prior notice and without a vote, if a consent in writing, setting forth the action so taken, shall be signed by the holders of a majority of the Corporation’s outstanding stock.

(b)           In the event that the action to which the shareholders consent is such as would have required the filing of a certificate under the Nevada General Corporation Act if such action had been voted on by shareholders at a meeting thereof, the certificate filed under such other section shall state that written consent has been given in accordance with the provisions of Section 9 of this Article I.

(c)           If shareholder action is taken by written consent in lieu of meeting signed by less than all of the Corporation’s shareholders, then all non participating shareholders shall be provided with written notice of the action taken within 10 days after the date of the written instrument taking such action.

(d)           No action by written consent in lieu of meeting shall be valid if it is in contravention of applicable proxy or informational rules adopted pursuant to the Securities Exchange Act of 1934, as amended, including, without limitation, the requirements of Section 14 thereof.

SECTION 10.  Proxies

(a)           Every shareholder entitled to vote at a meeting of shareholders or to express consent or dissent without a meeting, or his or her duly authorized attorney-in-fact, may authorize another person or persons to act for him or her by proxy.

(b)           Every proxy must be signed by the shareholder or his or her attorney-in-fact.  No proxy shall be valid after the expiration of 11 months from the date thereof unless otherwise provided in the proxy.  Every proxy shall be revocable at the pleasure of the shareholder executing it, except as otherwise provided in this Section 10.

(c)           The authority of the holder of a proxy to act shall not be revoked by the incompetence or death of the shareholder who executed the proxy unless, before the authority is exercised, written notice of any adjudication of such incompetence or of such death is received by the corporate officer responsible for maintaining the list of shareholders.

(d)           Except when other provisions shall have been made by written agreement between the parties, the record holder of shares held as pledges or otherwise as security or which belong to another, shall issue to the pledgor or to such owner of such shares, upon demand therefore and payment of necessary expenses thereof, a proxy to vote or take other action thereon.
 
-4-
 


(e)           A proxy which states that it is irrevocable is irrevocable when it is held by any of the following or a nominee of any of the following:  (i) a pledgee;  (ii) a person who has purchased or agreed to purchase the shares:  (iii) a creditor or creditors of the Corporation who extend or continue to extend credit to the Corporation in consideration of the proxy, if the proxy states that it was given in consideration of such extension or continuation of credit, the amount thereof, and the name of the person extending or continuing credit;  (iv) a person who has contracted to perform services as an officer of the Corporation, if a proxy is required by the contract of employment, if the proxy states that it was given in consideration of such contract of employment and states the name of the employee and the period of employment contracted for; and  (v) a person designated by or under an agreement as provided in Article XI hereof.

(f)           Notwithstanding a provision in a proxy stating that it is irrevocable, the proxy becomes revocable after the pledge is redeemed, the debt of the Corporation is paid, the period of employment provided for in the contract of employment has terminated, or the agreement under Article XI hereof has terminated and, in a case provided for in Section 10(e) (iii) or Section 10(e) (iv) of this Article I, becomes revocable three years after the date of the proxy or at the end of the period, if any, specified therein, whichever period is less, unless the period of irrevocability of the proxy as provided in this Section 10.  This Section 10(f) does not affect the duration of a proxy under Section 10(b) of this Article I.

(g)           A proxy may be revoked, notwithstanding a provision making it irrevocable, by a purchaser of shares without knowledge of the existence of the provisions unless the existence of the proxy and its irrevocability is noted conspicuously on the face or back of the certificate representing such shares.

(h)           If a proxy for the same shares confers authority upon two or more persons and does not otherwise provide, a majority of such persons present at the meeting, or if only one is present then that one, may exercise all the powers conferred by the proxy. If the proxy holders present at the meeting are equally divided as to the right and manner of voting in any particular case, the voting of such shares shall be prorated.

(i)           If a proxy expressly so provides, any proxy holder may appoint in writing a substitute to act in his or her place.

(j)           Notwithstanding anything in the Bylaws to the contrary, no proxy shall be valid if it was obtained in violation of any applicable requirements of Section 14 of the Securities Exchange Act of 1934, as amended, or the Rules and Regulations promulgated thereunder.

SECTION 11.  Voting of Shares by Shareholders

(a)           Shares standing in the name of another corporation, domestic or foreign, may be voted by the officer, agent, or proxy designated by the bylaws of the corporate shareholder; or, in the absence of any applicable bylaw, by such person as the board of directors of the corporate shareholder may designate.  Proof of such designation may be made by presentation of a certified copy of the bylaws or other instrument of the corporate shareholder.  In the absence of any such designation, or in case of conflicting designation by the corporate shareholder, the chairman of the board, president, any vice president, secretary and treasurer of the corporate shareholder, in that order, shall be presumed to possess authority to vote such shares.

(b)           Shares held by an administrator, executor, guardian or conservator may be voted by him or her, either in person or by proxy, without a transfer of such shares into his or her name.  Shares standing in the name of a trustee may be voted as shares held by him or her without a transfer of such shares into his name.

(c)           Shares standing in the name of a receiver may be voted by such receiver.  Shares held by or under the control of a receiver but not standing in the name of such receiver, may be voted by such receiver without the transfer thereof into his name if authority to do so is contained in an appropriate order of the court by which such receiver was appointed.

(d)           A shareholder whose shares are pledged shall be entitled to vote such shares until the shares have been transferred into the name of the pledgee.

(e)           Shares of the capital stock of the Corporation belonging to the Corporation or held by it in a fiduciary capacity shall not be voted, directly or indirectly, at any meeting, and shall not be counted in determining the total number of outstanding shares.
 
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ARTICLE II
DIRECTORS

SECTION 1.                                  Board of Directors, Exercise of Corporate Powers

(a)           All corporate powers shall be exercised by or under the authority of, and the business and affairs of the Corporation shall be managed under the direction of, the Board of Directors except as may be otherwise provided in the Articles of Incorporation or in Shareholder’s Agreement.  If any such provision is made in the Articles of Incorporation or in Shareholder’s Agreement, the powers and duties conferred or imposed upon the Board of Directors shall be exercised or performed to such extent and by such person or persons as shall be provided in the Articles of Incorporation or Shareholders’ Agreement.

(b)           Directors need not be residents of this state or shareholders of the Corporation unless the Articles of Incorporation so require.

(c)           The Board of Directors shall have authority to fix the compensation of directors unless otherwise provided in the Articles of Incorporation.

(d)           A director shall perform his or her duties as a director, including his or her duties as a member of any committee of the Board upon which he may serve, in good faith, in a manner he or she reasonably believes to be in the best interests of the Corporation, and with such care as an ordinarily prudent person in a like position would use under similar circumstances.

(e)           In performing his or her duties, a director shall be entitled to rely on information, opinions, reports or statements, including financial statements and other financial data, in each case prepared or presented by:  (i) one or more officers or employees of the Corporation whom the director reasonably believes to be reliable and competent in the matters presented;  (ii) legal counsel, public accountants or other persons as to matters which the director reasonably believes to be within such persons’ professional or expert competence; or  (iii) a committee of the Board upon which he or she does not serve, duly designated in accordance with a provision of the Articles of Incorporation or these By-Laws, as to matters within its designated authority, which committee the director reasonably believes to merit confidence.

(f)           A director shall not be considered to be acting in good faith if he or she has knowledge concerning the matter in question that would cause such reliance described in Section 1(e) of this Article II to be unwarranted.

(g)           A person who performs his or her duties in compliance with Section 1 of this Article II shall have no liability by reason of being or having been a director of the Corporation.

(h)           A director of the Corporation who is present at a meeting of the Board of Directors at which action on any corporate matter is taken shall be presumed to have assented to the action taken unless he or she votes against such action or abstains from voting in respect thereto because of an asserted conflict of interest.

SECTION 2.                                  Number, Election, Classification of Directors, Vacancies

(a)           The Board of Directors of this Corporation shall consist of not less than one director.  The Board shall have authority, from time to time, to increase the number of directors or to decrease it to not less than one member, provided that no decrease in the number of directors shall deprive a serving director of the right to serve throughout the term of his or her election.

(b)           Each person named in the Articles of Incorporation as a member of the initial Board of Directors shall serve until his or her successor shall have been elected and qualified or until his or her earlier resignation, removal from office, or death.

(c)           At the first annual meeting of shareholders and at each annual meeting thereafter, the shareholders shall elect directors to hold office until the next succeeding annual meeting, except in case of the classification of director as permitted by the Nevada General Corporation Act.  Each Director shall hold office for the term for which he or she is elected and until his or her successor shall have been elected and qualified or until his or her earlier resignation, removal from office, or death.
 
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(d)           The shareholders, by amendment to these Bylaws, may provide that the directors be divided into not more than four classes, as nearly equal in number as possible, whose terms of office shall respectively expire at different times, but no such term shall continue longer than four years, and at least one fourth of the directors shall be elected annually.  If Directors are classified and the number of directors is thereafter changed, any increase or decrease in directorship shall be so apportioned among the classes as to make all classes as nearly equal in number as possible.

(e)           Any vacancy occurring in the Board of Directors, including any vacancy created by reason of an increase in the number of directors may be filled only by the Board of Directors.  A director elected to fill a vacancy shall hold office only until the next election of directors by the shareholders.

SECTION 3.                                  Removal of Directors

At a meeting of shareholders called expressly for that purpose, directors may be removed in the manner provided in this Section 3.  Any director or the entire Board of Directors may be removed, with or without cause, by the vote of the holders of two-thirds of the shares then entitled to vote at an election of directors.

SECTION 4.                                  Director Quorum and Voting

(a)           A majority of the directors fixed in the manner provided in these Bylaws shall constitute a quorum for the transaction of business.

(b)           A majority of the members of an Executive Committee or other committee shall constitute a quorum for the transaction of business at any meeting of such Executive Committee or other committee.

(c)           The act of a majority of the directors present at a Board meeting at which a quorum is present shall be the act of the Board of Directors.

(d)           The act of a majority of the members of an Executive Committee present at an Executive Committee meeting at which a quorum is present shall be the act of the Executive Committee.

(e)           The act of a majority of the members of any other committee present at a committee meeting at which a quorum is present shall be the act of the committee.

(f)           Directors may, if not contrary to applicable law, vote either in person or by proxy, provided that the proxy holder must be either another director, an officer or a shareholder of the Corporation; however, any director who elects to vote by proxy more than three times during any single fiscal year shall, unless otherwise determined by the Board of Directors, be automatically removed as a director.

SECTION 5.                                  Director Conflicts of Interest

(a)           No contract or other transaction between this Corporation and one or more of its director or any other corporation, firm, association or entity in which one or more of its directors are Directors or officers or are financially interested shall be either void or voidable because of such relationship or interest or because such director or directors are present at the meeting of the Board of Directors or a committee thereof which authorizes, approves or ratifies such contract or transaction or because their votes are counted for such purpose, if:

(i)            The fact of such relationship or interest is disclosed or known to the Board of Directors or committee which authorizes, approves or ratifies the contract or transaction by a vote or consent sufficient for the purpose without counting the votes or consents of such interested directors; or

(ii)            The fact of such relationship or interest is disclosed or known to the shareholders entitled to vote and they authorize, approve or ratify such contract or transaction by vote or written consent; or

(iii)            The contract or transaction is fair and reasonable as to the Corporation at the time it is authorized by the Board, a committee, or the shareholders.

(b)           Interested directors, whether or not voting, may be counted in determining the presence of a quorum at a meeting of the Board of Directors or a committee thereof which authorizes, approves or ratifies such contract or transaction.
 
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SECTION 6.                                  Executive and Other Committees, Designation, Authority

(a)           The Board of Directors, by resolution adopted by the full Board of Directors, may designate from among its directors an Executive Committee and one or more other committees each of which, to the extent provided in such resolution or in the Articles of Incorporation or these Bylaws, shall have and may exercise all the authority of the Board of Directors, except that no such committee shall have the authority to : (i) approve or recommend to shareholders actions or proposals required by the Nevada General Corporation Act to be approved by shareholders; (ii) designate candidates for the office of director for purposes of proxy solicitation or otherwise; (iii) fill vacancies on the Board of Directors or any committee thereof; (iv) amend these Bylaws; (v) authorize or approve the reacquisition of shares unless pursuant to a general formula or method specified by the Board of Directors; or (vi) authorize or approve the issuance or sale of, or any contract to issue or sell, shares or designate the terms of a series of a class of shares, unless the Board of Directors, having acted regarding general authorization for the issuance or sale of shares, or any contract therefore, and, in the case of a series, the designation thereof has specified a general formula or method by resolution or by adoption of a stock option or other plan, authorized a committee to fix the terms upon which such shares may be issued or sold, including, without limitation, the price, the rate or manner of payment of dividends, provisions for redemption, sinking fund, conversion, and voting or preferential rights, and provisions for other features of a class of shares, or a series of a class of shares, with full power in such committee to adopt any final resolution setting forth all the terms of a series for filing with the Department of State under the Nevada General Corporation Act.

(b)           The Board, by resolution adopted in accordance with Section 6(a) of this Article II, may designate one or more directors as alternate members of any such committee, who may act in the place and stead of any absent member or members at any meeting of such committee.

(c)           Neither the designation of any such committee, the delegation thereto of authority, nor action by such committee pursuant to such authority shall alone constitute compliance by a member of the Board of Directors, not a member of the committee in question, with his responsibility to act in good faith, in manner he reasonably believes to be in the best interests of the Corporation, and with such care as an ordinarily prudent person in a like position would use under similar circumstances.

SECTION 7.  Place, Time, Notice and Call of Directors’ Meeting.

(a)           Meetings of the Board of Directors, regular or special, may be held either within or without the State of Minnesota.

(b)           A regular meeting of the Board of Directors of the Corporation shall be held for the election of officers of the Corporation and for the transaction of such other business as may come before such meeting as promptly as practicable after the annual meeting of the shareholders of this Corporation without the necessity of notice other than this Bylaw.  Other regular meetings of the Board of Directors of the Corporation may be held at such places as the Board of Directors of the Corporation may from time to time resolve without notice other than such resolution.  Special meetings of the Board of Directors may be held at any time upon call of the Chairman of the Board of Directors or a majority of the Directors of the Corporation, at such time and at such place as shall be specified in the call thereof.  Notice of any special meeting of the Board of Directors must be given at least two days prior thereto, if by written notice delivered personally; or at least five days prior thereto, if mailed; or at least two days prior thereto, if by telegram; or at least two days prior thereto, if by telephone.  If such notice is given by mail, such notice shall be deemed to have been delivered when deposited with the United States Postal Service addressed to the business address of such Director with postage thereon prepaid.  If notice be given by telegram, such notice shall be deemed delivered when the telegram is delivered to the telegraph company.  If notice is given by telephone, such notice shall be deemed delivered when the call is completed.

(c)           Notice of a meeting of the Board of Directors need not be given to any Director who signs a waiver of notice either before or after the meeting.  Attendance of a Director at a meeting shall constitute a waiver of notice of such meeting and waiver of any and all objections to the place of the meeting, the time of the meeting, or the manner in which it has been called or convened, except when a Director states, at the beginning of the meeting, any objection to the transaction of business because the meeting is not lawfully called or convened.

(d)           Neither the business to be transacted at, nor the purpose of, any regular of special meeting of the Board of Directors need be specified in the notice or waiver of notice of such meeting.

(e)           A majority of the directors present, whether or not a quorum exists, may adjourn any meeting of the Board of Directors to another time and place.  Notice of any such adjourned meeting shall be given to the Directors who were not present at the time of the adjournment and, unless the time and place of the adjourned meeting are announced at the time of the adjournment, to the other Directors.
 
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(f)           Members of the Board of Directors may participate in a meeting of such Board by means of a conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other at the same time.  Participation by such means shall constitute presence in person at a meeting.

SECTION 8.                                  Action by Directors Without a Meeting

(a)           Any action required by the Nevada General Corporation Act to be taken at a meeting of the Directors of the Corporation, or any action which may be taken at a meeting of the Directors or a committee thereof, may be taken without a meeting if a consent in writing, setting forth the action so to be taken, signed by all of the Directors, or all of the members of the committee, as the case may be, and is filed in the minutes of the proceedings of the Board or of the committee.  Such consent shall have the same effect as a unanimous vote.

(b)           If not contrary to applicable law, directors may take action as the Board of Directors or committees thereof through a written consent to action signed by a number of directors sufficient to have carried a vote of the Board of Directors or committee thereof with all members present and voting; provided, that all directors not joining in such written instrument shall be deemed for all purposes to have cast dissenting votes, and that all directors not parties to such instrument shall receive written notice of all action taken through such instrument within three days after such instrument shall have been subscribed by the requisite number of directors required for such action.

SECTION 9.                                  Compensation

The Directors and members of the Executive and any other committee of the Board of Directors shall be entitled to such reasonable compensation for their services and on such basis as shall be fixed from time to time by resolution of the Board of Directors.  The Board of Directors and members of any committee of that Board of Directors shall be entitled to reimbursement for any reasonable expenses incurred in attending any Board or committee meeting.  Any Director receiving compensation under this Section shall not be prevented from serving the Corporation in any other capacity and shall not be prohibited from receiving reasonable compensation for such other services.

SECTION 10.  Resignation

Any Director of the Corporation may resign at any time by providing the Board of Directors with written notice indicating the Director’s intention to resign and the effective date thereof.


ARTICLE III
OFFICERS

SECTION 1.                                  Election, Number, Terms of Office

(a)           The officers of the Corporation shall consist of a Chairman of the Board, a Chief Executive officer, a President, a Chief Operating Officer, a Chief Financial Officer, one or more Vice-Presidents, a Secretary and a Treasurer, each of whom shall be elected by the Board of Directors at such time and in such manner as may be prescribed by these Bylaws.  Such other officers and assistance officers and agents as may be deemed necessary may be elected or appointed by the Board of Directors.  The officers of the Corporation shall be hereinafter collectively referred to as the “Officers.”

(b)           All officers and agents, as between themselves and the Corporation, shall have such authority and perform such duties in the management of the Corporation as are provided in these Bylaws, or as may be determined by resolution of the Board of Directors not inconsistent with these Bylaws.

(c)           Any two or more offices may be held by the same person, except for the offices of President and Secretary.

(d)           A failure to elect a Chairman of the Board, Chief Executive Officer, President, Chief Operating Officer, Chief Financial Officer, a Vice President, a Secretary or a Treasurer shall not affect the existence of the Corporation.
 
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SECTION 2.                                  Removal

An officer of the Corporation shall hold office until the election and qualification of his successor; however, any Officer of the Corporation may be removed from office by the Board of Directors whenever in its judgment the best interests of the Corporation will be served thereby.  Such removal shall be without prejudice to the contract rights, if any, of the person so removed.  Election or appointment of an officer shall not of itself create any contract right to employment or compensation.

SECTION 3.                                  Vacancies

Any vacancy in any office from any cause may be filled for the unexpired portion of the term of such office by the Board of Directors.

SECTION 4.                                  Powers and duties

(a)           The Chairman of the Board of Directors shall preside over meetings of the Board of Directors and the Shareholders.  Unless a separate Chief Executive Officer is elected, the Chairman shall exercise the powers hereafter granted to that office.  Unless a Chairman of the Board is specifically elected, the President shall be deemed to be the Chairman of the Board.

(b)           The Chief Executive Officer shall be the principal officer of the Corporation to whom all other officers shall be subordinate.  In the event no Chief Executive Officer is separately elected, such office shall be assumed by the Chairman of the Board, and if no such office has been filled, by the President.  Except where by law the signature of the President is required or unless the Board of Directors shall rule otherwise, the Chief Executive Officer shall possess the same power as the President to sign all certificates, contracts and other instruments of the Corporation which may be authorized by the Board of Directors.

(c)           The Chief Operating Officer of the Corporation shall be responsible for management of the day to day affairs of the Corporation, subject to compliance with the directions of the Board of Directors and of the Chief Executive Officer.  He shall be responsible for the general day-to-day supervision of the business and affairs of the Corporation.  He shall sign or countersign all certificates, contracts or other instruments of the Corporation as authorized by the Board of Directors.  He may, but need not, be a member of the Board of Directors.

(d)           Unless otherwise provided by specific resolution of the Board of Directors, the President shall be the Chief Operating Officer of the Corporation.  In the absence of a separately elected or available Chief Executive Officer or Chairman of the Board, the President shall be the Chief Executive Officer of the Corporation and shall preside at all meetings of the shareholders and the Board of Directors.  He shall make reports to the Board of Directors.  The Board of Directors will at all times retain the power to expressly delegate the duties of the President to any other Officer of the Corporation.

(e)           The Chief Financial Officer shall be responsible for coordinating all financial aspects of the Corporation’s operations, including strategic financial planning, supervision of the Corporation’s Treasurer, Comptroller and outside auditors.  In the event an Audit Committee of the Board of Directors is designated and serving, he shall be responsible for keeping such committee fully and timely informed of all matters under its jurisdiction.  In addition, the Chief Financial Officer shall be responsible for overseeing preparation and filing of all reports of the Corporation’s activities required to be filed, either periodically or on a special basis with the United States Internal revenue Service and Securities and Exchange Commission and other federal and state governmental agencies.

(f)           The Vice President(s), if any, in the order designated by the Board of Directors, shall exercise the functions of the President in the event of the absence, disability, death, or refusal to act of the President.  During the time that any Vice President is properly exercising the functions of the President, such Vice President shall have all the powers of and be subject to all restrictions upon the President.  Each Vice President shall have such other duties as are assigned to him from time to time by the Board of Directors or by the President of the Corporation.

(g)           The Secretary of the Corporation shall keep the minutes of the meetings of the shareholders of the Corporation, and, unless provided otherwise by the Chairman at any meeting of the Board of Directors, the Secretary shall keep the minutes of the meetings of the Board of Directors of the Corporation.  The Secretary shall be the custodian of the minute books of the Corporation and such other books and records of the Corporation as the Board of Directors of the Corporation may direct.  The Secretary of the Corporation shall have the general responsibility for maintaining the stock transfer books of the Corporation, or of supervising the maintenance of the stock transfer books of the Corporation by the transfer agent, if any, of the Corporation. The Secretary shall be the custodian of the corporate seal of the Corporation and shall affix the corporate seal of the Corporation on contracts and other instruments as the Board of Directors may direct.  The Secretary shall perform such other duties as are assigned to him from time by the Board of Directors or the President of the Corporation.
 
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(h)           The Treasurer of the Corporation shall be directly subordinate to the Chief Financial Officer.  In the absence of a Chief Financial Officer, such office shall be filled by the Treasurer.  The Treasurer shall have custody of all funds and securities owned by the Corporation.  The Treasurer shall cause to be entered regularly in the proper books of account of the Corporation full and accurate accounts of the receipts and disbursements of the Corporation.  The Treasurer of the Corporation shall render a statement of the cash, financial and other accounts of the Corporation whenever he is directed to render such a statement by the Board of Directors or by the President of the Corporation.  The Treasurer shall at all reasonable times make available the Corporation’s books and financial accounts to any Director of the Corporation during normal business hours.  The Treasurer shall perform all other acts incident to the Office of Treasurer of the Corporation, and he shall have such other duties as are assigned to him from time to time by the Board of Directors or the President of the Corporation.

(i)           Other subordinate or assistant officers appointed by the Board of Directors or by the President, if such authority is delegated to him by the Board of Directors, shall exercise such powers and perform such duties as may be delegated to them by the Board of Directors, the Chief Executive Officer or by the President, as the case may be.

(j)           In case of the absence or disability of any Officer of the Corporation and of any person authorized to act in his place during such period of absence or disability, the Board of Directors may from time to time delegate the powers and duties of such Officer or any Director or any other person whom it may select.

SECTION 5.                                  Salaries

The salaries of all Officers of the Corporation shall, except as otherwise determined or required by an agreement entered into among all the shareholders of the Corporation, be fixed by the Board of Directors.  No Officer shall be ineligible to receive such salary by reason of the fact that he is also a Director of the Corporation and receiving compensation therefore.


ARTICLE IV
LOANS TO EMPLOYEES AND OFFICERS,
GUARANTEE OF OBLIGATIONS OF EMPLOYEES AND OFFICERS

This Corporation may lend money to, guarantee any obligation of, or otherwise assist any Officer or other employee of the Corporation or of a subsidiary, including any Officer or employee who is a Director of the Corporation or of a subsidiary, whenever, in the judgment of the Directors, such loan, guarantee or assistance may reasonably be expected to benefit the Corporation.  The loan, guarantee or other assistance may be with or without interest, and may be unsecured or secured in such manner as the Board of Directors shall approve including, without limitation, a pledge of shares of stock of the Corporation.  Nothing in this Article shall be deemed to deny, limit or restrict the powers of guarantee or warranty of this Corporation at common law or under any statute.


ARTICLE V
STOCK CERTIFICATES, VOTING TRUSTS, TRANSFERS

SECTION 1.                                  Certificates Representing Shares

(a)           Every holder of shares of this Corporation shall be entitled to one or more certificates, representing all shares to which he is entitled and such certificates shall be signed by the Chairman, Chief Executive Officer, the President or a Vice President and the Secretary or an Assistant Secretary of the Corporation and may be sealed with the seal of the Corporation or a facsimile thereof.  The signatures of the Chairman, the Chief Executive Officer, the President or Vice President and the Secretary or Assistant Secretary may be facsimiles if the certificate is manually signed on behalf of a transfer agent or a registrar, other than the Corporation itself or an employee of the Corporation.  In case any Officer who signed or whose facsimile signature has been placed upon such certificate shall have ceased to be such Officer before such certificate is issued, it may be issued by the Corporation with the same effect as if it were executed by the appropriate Officer at the date of its issuance.

(b)           Every certificate representing shares issued by this Corporation shall, if shares are divided into one or more classes or series with differing rights, state that the Corporation will furnish to any shareholder upon request and without charge a full statement of:  (i) the designations, preferences, limitations, and relative rights of the shares of each class or series authorized to be issued, and (ii) the variations in the relative rights and preferences between the shares of each such series, if the Corporation is authorized to issue any preferred or special class in series and so far as the same have been fixed and determined, and the authority of the Board of Directors to fix and determine, the relative rights and preferences of subsequent series.
 
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(c)           Every certificate representing shares which are restricted as to sale, disposition or other transfer (including restrictions based on federal or state securities and other laws) shall state that such shares are restricted as to transfer and shall set forth or fairly summarize upon the certificate, or shall state that the Corporation will furnish to any shareholder upon request and without charge a full statement of, such restrictions.

(d)           Each certificate representing shares shall state upon the face thereof:  (i) the name of the Corporation;  (ii) that the Corporation is organized under the laws of the State of Nevada;  (iii) the name of the person or persons to whom issued;  (iv) the number and class of shares, and the designation of the series, if any, which such certificate represents; and (v) the par value of each share represented by such certificate, or a statement that the shares are without par value.

(e)           No certificate shall be issued for any shares until they are fully paid for.

SECTION 2.                                  Transfer Books

The Corporation shall keep at its registered office or principal place of business or in the office of its transfer agent or registrar, a book (or books where more than one kind, class, or series of stock is outstanding) to be known as the Stock Book, containing the names, alphabetically arranged, addresses and Social Security numbers of every shareholder and the number of shares each kind, class or series of stock held of record.  Where the Stock Book is kept in the office of the transfer agent, the Corporation shall keep at its office in the State of Minnesota copies of the stock lists prepared from said Stock Book and sent to it from time to time by said transfer agent.  The Stock Book or stock lists shall show the current status of the ownership of shares of the Corporation provided that, if the transfer agent of the Corporation be located elsewhere, a reasonable time shall be allowed for transit or mail.

SECTION 3.                                  Transfer of Shares

(a)           The name(s) and address(es) of the person(s) to whom shares of stock of this Corporation are issued, shall be entered on the Stock Transfer Books of the Corporation, with the number of shares and date of issue.

(b)           Transfer of shares of the Corporation shall be made on the Stock Transfer Books of the Corporation by the Secretary or the transfer agent, subject to compliance with any restrictions specified on such certificate, only when the holder of record thereof or the legal representative of such holder of record or the attorney-in-fact of such holder of record, authorized by power of attorney duly executed and filed with the Secretary or transfer agent of the Corporation, shall surrender the Certificate representing such shares for cancellation.  Lost, destroyed or stolen Stock Certificates shall be replaced pursuant to Section 5 of this Article V.

(c)           The person or persons in whose names shares stand on the books of the Corporation shall be deemed by the Corporation to be the owner of such shares for all purposes, except as otherwise provided pursuant to Sections 10 and 11 of Article I, or Section 4 of Article V.

(d)           Shares of the Corporation capital stock shall be freely transferable without the required Board of Directors’ consent, unless such consent requirement has been imposed pursuant to a binding written contract subscribed to by the holder or his or her predecessor in interest.

SECTION 4.                                  Voting Trusts

(a)           Any number of shareholders of the Corporation may create a voting trust for the purpose of conferring upon a trustee or trustees the right to vote or otherwise represent their shares, for a period not to exceed ten years, by:  (i) entering into a written voting trust agreement specifying the terms and conditions of the voting trust;  (ii) depositing a counterpart of the agreement with the Corporation at its registered office; and (iii) transferring their shares to such trustee or trustees for the purposes of this Agreement.  Prior to the recording of the agreement, the shareholder concerned shall render the stock certificate(s) described therein to the Corporate Secretary who shall note on each certificate:

This Certificate is subject to the provisions of a voting trust agreement dated ______________, recorded in Minute Book __________ of the Corporation.

_______________________
Secretary
 
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(b)           Upon the transfer of such shares, voting trust certificates shall be issued by the trustee or trustees to the shareholders who transfer their shares in trust.  Such trustee or trustees shall keep a record of the holders of voting trust certificates evidencing a beneficial interest in the voting trust, giving the names and addresses of all such holders and the number and class or the shares in respect of which the voting trust certificates held by each are issued, and shall deposit a copy of such record with the Corporation at its registered office.

(c)           The counterpart of the voting trust agreement and the copy of such record so deposited with the Corporation shall be subject to the same right of examination by a shareholder of the Corporation, in person or by agent or attorney, as are the books and records of the Corporation, and such counterpart and such copy of such record shall be subject to examination by any holder of record of voting trust certificates either in person or by agent or attorney, at any reasonable time for any proper purpose.

(d)           At any time before the expiration of a voting trust agreement as originally fixed or as extended one or more times under this Section 4(d), one or more holders of voting trust certificates may, by agreement in writing, extend the duration of such voting trust agreement, nominating the same or substitute trustees, for an additional period not exceeding 10 years.  Such extension agreement shall not affect the rights or obligations or persons not parties to the agreement, and such persons shall be entitled to remove their shares from the trust and promptly to have their stock certificates reissued upon the expiration of the original term of the voting trust agreement.  The extension agreement shall in every respect comply with and be subject to all the provisions of this Section 4, applicable to the original voting trust agreement except that the 10 year maximum period of duration shall commence on the date of adoption of the extension agreement.

(e)           The trustees under the terms of the agreements entered into under the provisions of this Section 4 shall not acquire the legal title to the shares but shall be vested only with the legal right and title to the voting power which is incident to the ownership of the shares.

(f)           Notwithstanding generally applicable prohibitions against a corporation’s voting of treasury stock, if the Corporation is the trustee under a voting trust, it shall have full authority to vote such shares in accordance with the terms of the voting trust agreement, even if such agreement vests absolute and unfettered voting discretion in the trustee and notwithstanding that the voting trust was created at the prompting or direction of the Corporation, its officers or directors.

SECTION 5.                                  Lost, Destroyed, or Stolen Certificates

No Certificate representing shares of stock in the Corporation shall be issued in place of any Certificate alleged to have been lost, destroyed, or stolen except on production of evidence, satisfactory to the Board of Directors, of such loss, destruction or theft, and, if the Board of Directors so requires, upon the furnishing of an indemnity bond in such amount (but not to exceed twice the fair market value of the shares represented by the Certificate) and with such terms and with such surety as the Board of Directors may, in its discretion, require.


ARTICLE VI
BOOKS AND RECORDS

(a)           The Corporation shall keep correct and complete books and records of account and shall keep minutes of the proceedings of its shareholders, Board of Directors and committees of Directors.

(b)           Any books, records and minutes may be in written form or in any other form capable of being converted into written form within a reasonable time.

(c)           Any person who shall have been a holder of record of shares, or the holder of record of voting trust certificates for, at least five percent of the outstanding shares of any class or series of the Corporation, upon written demand stating the purpose thereof, shall; subject to the qualifications contained in subsection (d) hereof, have the right to examine, in person or by agent or attorney, at any reasonable time or times, for any purpose, its relevant books and records of account, minutes and records of shareholders and to make extracts therefrom.
 
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(d)           No shareholder who within two years has sold or offered for sale any list of shareholders or of holders of voting trust certificates for shares of this Corporation or any other corporation; has aided or abetted any person in procuring any list of shareholders or of holders of voting trust certificates for any such purpose; or has improperly used any information secured through any prior examination of the books and records of account, minutes, or record of shareholders or of holders of voting trust certificates for shares of the Corporation of any other corporation; shall be entitled to examine the documents and records of the Corporation as provided in Section (c) of this Article VI.  No shareholder who does not act in good faith or for a proper purpose in making his demand shall be entitled to examine the documents and records of the Corporation as provided in Section (c) of this Article VI.

(e)           Unless modified by resolution of the Shareholders, this Corporation shall prepare not later than four months after the close of each fiscal year:

(i)            A balance sheet showing in reasonable detail the financial conditions of the Corporation as of the date of the close of its fiscal year.

(ii)            A Profit and Loss statement showing the results of its operation during its fiscal year.

(f)           Upon the written request of any shareholder or holder of voting trust certificates for shares of the Corporation, the Corporation shall mail to such shareholder or holder of voting trust certificates a copy of its most recent balance sheet and profit and loss statement.

(g)           Such balance sheets and profit and loss statements shall be filed and kept for at least five years in the registered office of the Corporation in the State of Minnesota and shall be subject to inspection during business hours by any shareholder or holder of voting trust certificates, in person or by agent.


ARTICLE VII
DIVIDENDS

The Board of Directors of the Corporation may, from time to time, declare, and the Corporation may pay dividends on its own shares, except when the Corporation is insolvent or when the payment thereof would render the Corporation insolvent, subject to the following provisions:

(a)           Dividends in cash or property may be declared and paid, except as otherwise provided in this Article VII, only out of the unreserved and unrestricted earned surplus of the Corporation or out of capital surplus, however arising, but each dividend paid out of capital surplus shall be identified as a distribution of capital surplus, and the amount per share paid from such capital surplus shall be disclosed to the shareholders receiving the same concurrently with the distribution.

(b)           If the Corporation shall engage in the business of exploiting natural resources or other wasting assets and if the Articles of Incorporation so provide, dividends may be declared and paid in cash out of depletion or similar reserves, but each such dividend shall be identified as distribution of such reserves and the amount per share paid from such reserves shall be disclosed to the shareholders receiving the same concurrently with the distribution thereof.

(c)           Dividends may be declared and paid in the Corporation’s treasury shares.

(d)           Dividends may be declared and paid in the Corporation’s authorized but unissued shares, out of any unreserved and unrestricted surplus of the Corporation, upon the following conditions:

(i)            If a dividend is payable in the Corporations’ own shares having a par value, such shares shall be issued at not less than the par value thereof and there shall be transferred to stated capital at the time such dividend is paid an amount of surplus equal to the aggregate par value of the shares to be issued as a dividend.

(ii)            If a dividend is payable in the Corporations’ own shares without par value, such shares shall be issued at a stated value fixed by the Board of Directors by resolution adopted at the time such dividend is declared, and there shall be transferred to stated capital at the time such dividend is paid an amount of surplus equal to the aggregate stated value so fixed and the amount per share so transferred to stated capital shall be disclosed to the shareholders receiving such dividend concurrently with the payment thereof.
 
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(e)           No dividend payable in shares of any class shall be paid to the holders of shares of any other class unless the Articles of Incorporation so provide or such payment is authorized by the affirmative vote or the written consent of the holders of at least a majority of the outstanding shares of the class which the payment is to be made.

(f)           A split or division of the issued shares of any class into a greater number of shares of the same class without increasing the stated capital of the Corporation shall not be construed to be a stock dividend within the meaning of this Article VII.


ARTICLE VIII
SEAL

The Board of Directors shall adopt a Corporate Seal which shall be circular in form and shall have inscribed thereon the name of the Corporation, the state of incorporation and the year of incorporation.


ARTICLE IX
INDEMNIFICATION

This Corporation may, in its discretion, indemnify any director, officer, employee, or agent in the following circumstances and in the following manner:

(a)           The Corporation may indemnify any person who was or is a part, or is threatened to be made a party to any threatened, pending, or completed action, suit, or proceeding, whether civil, criminal, administrative, or investigative (other than an action by, or in the right of, the Corporation) by reason of the fact that he is or was a director, officer, employee, or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust, or other enterprise, against expenses (including attorneys’ fees at all trial and appellate levels), judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with such action, suit, or proceeding, including any appeal thereof, if he acted in good faith and in a manner he reasonably believed to be in, or not opposed to, the best interests of the Corporation and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful.  The termination of any action, suit, or proceeding by judgment, order, settlement, conviction or upon a plea of nolo contendere or its equivalent shall not, of itself, create a presumption that the person did not act in good faith and in a manner which he reasonable believed to be in, or not opposed to, the best interests of the Corporation or, with respect to any criminal action or proceeding, had reasonable cause to believe that his conduct was unlawful.

(b)           The Corporation may indemnify any person who was or is a party, or is threatened to be made a party to any threatened, pending, or completed action or suit by or in the right of the Corporation to procure a judgment in its favor by reason of the fact that he is or was a director, officer, employee, or agent of the Corporation or is or was serving at the request of the Corporation as a director, officer, employee, or agent of the Corporation as a director, officer, employee, or agent of another corporation, partnership, joint venture, trust, or other enterprise against expenses (including attorneys’ fees at all trial and appellate levels), actually and reasonable incurred by him in connection with the defense of settlement of such action or suit, including any appeal thereof, if he acted in good faith and in a manner he reasonably believed to be in, or not opposed to, the best interest of the Corporation, except that no indemnification shall be made in respect of any claim, issue, or matter as to which such person shall have been adjudged to be liable for negligence or misconduct in the performance of his duty to the Corporation unless, and only to the extent that, the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all circumstances of the case, such person is rarely and reasonably entitled to indemnity for such expenses which such court shall deem proper.

(c)           To the extent that a Director, Officer, employee, or agent of the Corporation has been successful on the merits or otherwise in defense of any action, suit, or proceeding referred to in Sections (a) or (b) of this Article IX, or in defense of any claim, issue, or matter therein, shall be indemnified against expenses (including attorneys’ fees at trial and appellate levels) actually and reasonably incurred by him in connection therewith.
 
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(d)           Any indemnification under Sections (a) or (b) of this Article IX, unless pursuant to a determination by a court, shall be made by the Corporation only as authorized in the specific case upon a determination that indemnification of the director, officer, employee, or agent is proper in the circumstances because he has met the applicable standard of conduct set forth in Sections (a) or (b) or this Article IX.  Such determination shall initially be made by the Board of Directors by a majority vote of a quorum consisting of Directors who were not parties to such action, suit, or proceeding.  If the Board of Directors shall, for any reason, decline to make such a determination, then such determination shall be made by the shareholders by a majority vote of a quorum consisting of shareholders who were not parties to such action, suit or proceeding; provided, however, that a determination made by the Board of Directors pursuant to this Section may be appealed to the shareholders by the party seeking indemnification or any party entitled to call a special meeting of the shareholders pursuant to Section 2 of Article I and, in such case, the determination made by the majority vote of a quorum consisting of shareholders who were not parties to such action, suit, or proceeding shall prevail over a contrary determination of the Board of Directors pursuant to this Section.

(e)           Expenses (including attorneys’ fees at all trial and appellate levels) incurred in defending a civil or criminal action, suit or proceeding may be paid by the Corporation in advance of the final disposition of such action, suit or proceeding upon a preliminary determination following one of the procedures set forth in this Article IX, that a Director, Officer, employee or agent met the applicable standard of conduct set forth in this Article IX, and upon receipt of an undertaking by or on behalf of the director, officer, employee or agent to repay such amount, unless it shall ultimately be determined that he is entitled to be indemnified by the Corporation as authorized in this section.

(f)           The Corporation may make any other or further indemnification, except an indemnification against gross negligence or willful misconduct, under any agreement, vote of shareholders or disinterested Directors or otherwise, both as to action in the indemnified party’s official capacity and as to action in another capacity while holding such office.

(g)           Indemnification as provided in this Article IX may continue as to a person who has ceased to be a director, officer, employee or agent and may inure to the benefit of the heirs, executors and administrators of such a person upon a proper determination initially made by the Board of Directors by a majority vote of a quorum consisting of Directors who were not parties to such action, suit, or proceeding.  If the Board of Directors shall, for any reason, decline to make such a determination, then such determination may be made by the shareholders by a majority vote of a quorum consisting of shareholders who were not parties to such action, suit or proceeding; provided, however, that a determination made by the Board of Directors pursuant to this Section may be appealed to the shareholders by the party seeking indemnification or his representative or by any party entitled to call a special meeting of the shareholders pursuant to Section 2 or Article I and in such case, the determination made by the majority vote of quorum consisting of shareholders who were not parties to such action, suit, or proceeding shall prevail over a contrary determination of the Board of Directors pursuant to this Section (g).

(h)           The Corporation may purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against any liability asserted against him and incurred by him in any such capacity or arising out of his status as such, whether or not the Corporation would have the power to indemnify him against such liability under the provisions of this Article IX.

(i)           If any expenses or other amounts are paid by way of indemnification, otherwise than by court order or action by the shareholders or by an insurance carrier pursuant to insurance maintained by the Corporation, the Corporation shall, not later than the time of delivery to shareholders or written notice of the next annual meeting of shareholders unless such meeting is held within three months from the date of such payment, and, in any event, within 15 months from the date of such payment, deliver either personally or by mail to each shareholder of record at the time entitled to vote for the election of Directors a statement specifying the persons paid, the amount paid, and the nature and status at the time of such payment of the litigation of threatened litigation.

(j)           This Article IX shall be interpreted to permit indemnification to the fullest extent permitted by law.  If any part of this Article shall be found to be invalid or ineffective in any action, suit of proceeding, the validity and effect of the remaining part thereof shall not be affected.  The provisions of this Article IX shall be applicable to all actions, claims, suits, or proceedings made or commenced after the adoption hereof, whether arising from acts or omissions to act occurring before or after its adoption.
 
-16-
 



ARTICLE X
AMENDMENT OF BYLAWS

The Board of Directors shall have the power to amend, alter, or repeal these Bylaws, and to adopt new Bylaws.


ARTICLE XI
FISCAL YEAR

The Fiscal Year of this Corporation shall be determined by the Board of Directors.


ARTICLE XII
MEDICAL REIMBURSEMENT

SECTION 1.                                  Benefits

The Corporation may, subject to approval of the Board of Directors reimburse all employees for expenses incurred by themselves and their dependents, as defined in Section 152 of the Internal Revenue Code of 1954, as amended (the “IRC”), for medical care, as defined in IRC Section 213(e) or any successor section thereto, subject to the conditions and limitations hereinafter set forth.

It is the intention of the Corporation that the benefits payable to employees hereunder will be excluded from their gross income pursuant IRC Section 105 or any successor section thereto.

SECTION 2.                                  Employees Defined

The term “employees” as used in this medical expense plan is hereby defined to include all individuals employed by the corporation except the following:

(a)           Employees who have not completed three months of service as is provided in IRC Section 105(h)(3) (b)(i), or any successor section thereto;

(b)           Employees who have not attained the age of 25 years;

(c)           Employees who are part-time or seasonal as is defined in IRC Section 105(h)(3)(B)(iii) or any successor section thereto;

(d)           Employees who are included in a unit of employees covered by an agreement between employee representatives and one or more employers found to be a collective bargaining agreement; where accident and health benefits were the subject of good faith bargaining between such employee representatives and such employer(s) as is defined in IRC Section 105(h)(3)(B)(iv) or any successor section thereto;
 
-17-
 


(e)           Employees who are nonresident aliens and who receive no earned income from the employer which constitutes income from sources within the United States as is further defined in IRC Section 105(h)(5)(B)(v) or any successor section thereto.

SECTION 3.                                  Limitations

(a)           The Corporation will reimburse any employee no more than $5,000.00 in any fiscal year for medical care expenses;

(b)           Reimbursement or payment provided under this plan will be made by the Corporation only in the event and to the extent that such reimbursement or payment is not provided under any insurance policy(ies), whether owned by the Corporation or the employee, or under any other health and accident or wage continuation plan;

(c)           In the event that there is such an insurance policy or plan in effect providing for reimbursement in whole or in part, then to the extent of the coverage under such policy or plan, the Corporation will be relieved of any and all liability hereunder.

SECTION 4.                                  Submission of Proof

Any employee applying for reimbursement under this plan will submit to the Corporation, at least quarterly, all bills for medical care, including premium notices for accident or health insurance, for verification by the Corporation prior to payment.  Failure to comply herewith may, at the discretion of the Board of Directors, terminate such employee’s right to said reimbursement.

SECTION 5.                                  Discontinuation

This plan will be subject to termination at any time by vote of the Board of Directors; provided, however, that medical care expenses incurred prior to such termination will be reimbursed or paid in accordance with the terms of this plan.

SECTION 6.                                  Determination

The Chief Executive Officer will determine all questions arising from the administration and interpretation of the Plan except where reimbursement is claimed by the President.  In such case, determination will be made by the Board of Directors.

 
-18-
 


*      *     *


The Undersigned, being the duly elected and acting secretary of the Corporation, hereby certifies that the foregoing constitute the validly adopted and true Bylaws of the Corporation, as of the date set forth below.


Dated: _________________                                                                 _____________________________
Secretary


(Corporate Seal)
 
-19-
 

 
NUMBER
     00
SHARES
 
Advanced Credit Technologies, Inc.
INCORPORATED UNDER THE LAWS OF THE STATE OF NEVADA
Authorized to Issue 100,000,000 Shares Common Stock At $.001 Par Value
 
This Certifies That ____________________________________ is hereby issued __________________________________________fully paid and non-assessable Shares of the Stock of the above named Corporation transferable only on the books of the Corporation by the holder hereof in person or by duly authorized Attorney upon surrender of this Certificate properly endorsed.
 
In Witness Whereof, the said Corporation has caused this Certificate to be signed by its duly authorized officer and its Corporate Seal to be hereunder affixed this ______ day of _________A.D._______.
 
 
_________________________
Secretary
_________________________
President
 
 
 



 
October 24, 2010
 



Securities and Exchange Commission
100 F Street, N.E.
Washington, D. C. 20549
 
Re:  Advanced Credit Technologies, Inc.
 
 
Gentlemen:
 
 
Please be advised that I have reached the following conclusions regarding the above offering:
 
1.  Advanced Credit Technologies, Inc. (the “Company”) is a duly and legally organized and existing Nevada state corporation, with its registered office located and principal place of business located in Eagan, Minnesota.  The Articles of Incorporation with registration fees were submitted to the Nevada Secretary of State and filed with the office on February 25, 2008.  The Company’s existence and form is valid and legal pursuant to Nevada law.
 
2.  The Company is a fully and duly incorporated Nevada corporate entity. The Company has one class of Common Stock at this time. Neither the Articles of Incorporation, Bylaws nor subsequent resolutions change the non-assessable characteristics of the Company’s common shares of stock. The Common Stock previously issued by the Company is in legal form and in compliance with the laws of the State of Nevada, its Constitution and reported judicial decisions interpreting those laws and, when such stock was issued, it was duly authorized, fully paid for and non-assessable. The common stock to be sold under this Form S-1 Registration Statement is likewise legal under the laws of the State of Nevada, its Constitution and reported judicial decisions interpreting those laws and when such stock is issued it will be duly authorized, fully paid for and non-assessable.
 
3.  To my knowledge, the Company is not a party to any legal proceedings nor are there any judgments against the Company, nor are there any actions or suits filed or threatened against it or its officers and directors, in their capacities as such, other than as set forth in the registration statement.  I know of no disputes involving the Company and the Company has no claim, actions or inquires from any federal, state or other government agency, other than as set forth in the registration statement.  I know of no claims against the Company or any reputed claims against it at this time, other than as set forth in the registration statement.
 
 
 
 
 
4.  The Company’s outstanding shares are all common shares. There are no liquidation preference rights held by any of the Shareholders upon voluntary or involuntary liquidation of the Company.
 
5.  The directors and officers of the Company are indemnified against all costs, expenses, judgments and liabilities, including attorney’s fees, reasonably incurred by or imposed upon them or any of them in connection with or resulting from any action, suit or proceedings, civil or general, in which the officer or director is or may be made a party by reason of being or having been such a director or officer. This indemnification is not exclusive of other rights to which such director or officer may be entitled as a matter of law.
 
6.  All tax benefits to be derived from the Company’s operations shall inure to the benefit of the Company. Shareholders will receive no tax benefits from their stock ownership, however, this must be reviewed in light of the Tax Reform Act of 1986.
 
7.  The Company has authorized the issuance of to 2,891,000 shares of common stock on the Form S-1 Registration Statement for sale by selling shareholders.
 
The Company’s Articles of Incorporation presently provide the authority to the Company to issue 100,000,000 shares of common stock, with a par value of $.001 per share.  Therefore, a Board of Directors’ Resolution which authorized the issuance for sale of up to 2,891,000 shares of common stock is within the authority of the Company’s directors and the shares, when issued, will be validly issued, fully paid and non-assessable.
 
I hereby consent to the use of my opinion as herein set forth as an exhibit to the Registration Statement and to the use of my name under the caption “Legal Matters” in the prospectus forming a part of the Registration Statement.
 
 
Very truly yours,
 
       
 
By:
/s/ Wani Manly  
   
Wani Iris Manly, Esq.
 
   
W. MANLY, P.A.
For the Firm
 
       
 
 
 
EMPLOYMENT AGREEMENT, entered into and effective as of March 1, 2008 between (Advanced Credit Technologies, Inc), and ("Chris Jackson'').
 
1.     Employment, Duties and Acceptance
 
1.1 Company hereby employs Employee for the Term (as defined in Section 2 hereof) to render substantial but not full-time services in an executive capacity to Company and to the subsidiaries of Company engaged in the business of investment banking and in connection therewith to devote his best efforts to the affairs of the Company and to perform such duties as Employee shall reasonable be directed to perform by officers of the Company.
 
1.2 Employee hereby accepts such employment and agrees to render such services. Employee agrees to render such services at Company's offices located in the Minneapolis area, but Employee will travel on temporary trips to such other place or places as may be required from time to time to perform his duties hereunder. During the Term hereof, Employee will not render any services for other competitors, or for Employee's own benefit , in the business of investment banking and corporate services unless otherwise agreed upon between the parties.
 
2.     Term of Employment
 
2.1 The term of Employee's employment pursuant to this Agreement (the "Term") shall begin on the date hereof, and shall end on , subject to the provisions of Article 4 of this Agreement providing for earlier termination of Employee's employment in certain circumstances.
 
3.     Compensation
 
3.1 As an Executive of ACT Mr. Jackson will be paid an annual salary of 100,000 for a period of 3 years.
 
The compensation set forth hereinabove shall be payable in accordance with the regular payroll practices of the Company for executives. All payments hereunder shall be subject to the provisions of Article 4 hereof.
 
3.2 Company shall pay or reimburse Employee for all necessary and reasonable expenses incurred or paid by Employee in connection with the performance of services under this Agreement upon presentation of expense statements or vouchers or such other supporting information as it from time to time requests evidencing the nature of such expense, and, if appropriate, the payment thereof by Employee, and otherwise in accordance with Company procedures from time to time in effect.
 
3.3 During the Term, Employee shall be entitled to participate in any group insurance, qualified pension, hospitalization, medical health and accident, disability, or similar plan or program of the Company now existing or hereafter established to the extent that he is eligible under the general provisions thereof. Notwithstanding anything herein to the contrary, however, Company shall have the right to amend or terminate any such plans or programs.
 
4.     Termination
 
4.1 Disability. If Employee shall be prevented from performing Employee's usual duties for a period of 3 consecutive months, or for shorter periods aggregating more than 4 months in any 12 month period by reason of physical or mental disability, total or partial, (herein referred to as "disability"), Company shall nevertheless continue to pay full salary up to and including the last day of the third consecutive month of disability, or the day on which the shorter periods of disability shall have equalled a total of 4 months, but Company may at any time or times on or after such last day (but before the termination of such disability), elect to terminate this Agreement upon written notice to employee, effective on such 1st day, without further obligation or liability to Employee, except for any compensation accrued hereunder but not yet paid. If Company does not so elect, this Agreement shall remain in full force and effect, except that Company shall not be obligated to pay any compensation set forth in Article 3 hereof to Employee during the remaining period of disability.
 
 
-1-
 
4.2 Death. In the event of Employee's death during the Term, this Agreement shall automatically terminate, except that (a) Employee's estate shall be entitled to receive the compensation provided for hereunder to the last day of the month in which Employee's death occurs; and (b) such termination shall not affect any amounts payable as insurance or other death benefits under any plans or arrangements then in force or effect with respect to Employee.
 
4.3 Specified Cause. Company may at any time during the Term, by notice, terminate the employment of Employee for malfeasance, misfeasance, or nonfeasance in connection with the performance of Employee's duties, the cause to be specified in the notice of termination. Without limiting the generality of the foregoing, the following acts during the Term shall constitute grounds for termination of employment hereunder:
 
4.3.1 Any willful and intentional act having the effect of injuring the reputation, business, business relationships of Company or its affiliates;
 
4.3.2 Conviction of or entering a plea of nolo contendere to a charge of a felony or a misdemeanor involving moral turpitude;
 
4.3.3 Material breach of covenants contained in this Agreement; and
 
4.3.4 Repeated or continuous failure, neglect, or refusal to perform Employee's duties hereunder.
 
5. Protection of Confidential Information
 
5.1 In view of the fact that Employee's work as an employee of Company will bring Employee into close contact with many confidential affairs of the Company and its affiliates, including matters of a business nature, such as information about costs, profits, markets, sales, and any other information not readily available to the public, and plans for future developments, Employee agrees:
 
5.1.1 To keep secret all confidential matters of Company and its affiliates and not to disclose them to anyone outside of Company, either during or after Employee's employment with Company, except with Company's written consent; and
 
5.1.2 To deliver promptly to Company on termination of Employee's employment by Company, or at any time Company may so request, all memoranda, notes, records, reports, and other documents (and all copies thereof) relating to Company's and its affiliates' businesses which Employee may then possess or have under the Employee's control.

6. Notices:

6.1 All notices, requests, consents and other communications required or permitted to be given hereunder shall be in writing and shall be deemed to have been duly given if delivered personally or sent by prepaid telegram, or mailed first-class, postage prepaid, as follows:
 
If to Employee: address
 
If to Company: address
 
With copies to: address
 
or as such other addresses as either party may specify by written notice to the other as provided in this Section 7.1.
 
 
-2-
 
7. General
 
7.1 It is acknowledged that the rights of Company under this Agreement are of a special, unique, and intellectual character which gives them a peculiar value, and that a breach of any provision of this Agreement (particularly, but not limited to, the exclusivity provisions hereof and the provisions of Article 5 hereof), will cause Company irreparable injury and damage which cannot be reasonably or adequately compensated in damages in an action at law. Accordingly, without limiting any right or remedy which Company may have in the premises, Employee specifically agrees that Company shall be entitled to seek injunctive relief to enforce and protect its rights under this Agreement.
 
7.2 This Agreement sets forth the entire agreement and understanding of the parties hereto, and supersedes all prior agreements, arrangements, and understandings. Nothing herein contained shall be construed so as to require the commission of any act contrary to law and wherever there is any conflict between any provision of this Agreement and any present or future statute, law, ordinance or regulation, the latter shall prevail, but in such event the provision of this Agreement affected shall be curtailed and limited only to the extent necessary to bring it within legal requirements. Without limiting the generality of the foregoing, in the event that any compensation or other monies payable hereunder shall be in excess of the amount permitted by any such statute, law, ordinance, or regulation, payment of the maximum amount allowed thereby shall constitute full compliance by Company with the payment requirements of this Agreement.
 
7.3 No representation, promise, or inducement has been made by either party that is not embodied in this Agreement, and neither party shall be bound by or liable for any alleged representation, promise, or inducement not so set forth. The section headings contained herein are for reference purposes only and shall not in any way affect the meaning or interpretation of this Agreement.
 
7.4 The provisions of this Agreement shall inure to the benefit of the parties hereto, their heirs, legal representatives, successors, and assigns. This Agreement, and Employee's rights and obligations hereunder, may not be assigned by Employee. Company may assign its rights, together with its obligations, hereunder in connection with any sale, transfer or other disposition of all or substantially all of its business and assets. Company may also assign this Agreement to any affiliate of Company; provided, however, that no such assignment shall (unless Employee shall so agree in writing) release Company of liability directly to Employee for the due performance of all of the terms, covenants, and conditions of this Agreement to be complied with and performed by Company. The term "affiliate", as used in this agreement, shall mean any corporation, firm, partnership, or other entity controlling, controlled by or under common control with Company. The term "control" (including "controlling", "controlled by", and "under common control with"), as used in the preceding sentence, shall be deemed to mean the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such corporation, firm, partnership, or other entity, whether through ownership of voting securities or by contract or otherwise.

7.5 This Agreement may be amended, modified, superseded, cancelled, renewed or extended, and the terms or covenants hereof may be waived, only by a written instrument executed by both of the parties hereto, or in the case of a waiver, by the party waiving compliance. The failure of either party at any time or times to require performance of any provisions hereof shall in no manner affect the right at a later time to enforce the same. No waiver by either party of the breach of any term or covenant contained in this Agreement, whether by conduct or otherwise, in any one or more instances, shall be deemed to be, or construed as, a further or continuing waiver of any such breach, or a waiver of the breach of any other term or covenant contained in this Agreement.
 
7.6 This Agreement shall be governed by and construed according to the laws of the State of Minnesota applicable to agreements to be wholly performed therein.
 
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the date first above written.
 
Chris Jackson

/s/ Megan J. Ritchie ________________________ /s/ Chris Jackson ____________________________
By

Notary                                                                                                                                           
Title
Date
3/1/2008                                                                  3/1/2008                                                                 
Date
 
-3-
 
EMPLOYMENT AGREEMENT, entered into and effective as of March 1, 2008 between (Advanced Credit Technologies, Inc), and ("Enrico Giordano'').
 
1.     Employment, Duties and Acceptance
 
1.1 Company hereby employs Employee for the Term (as defined in Section 2 hereof) to render substantial but not full-time services in an executive capacity to Company and to the subsidiaries of Company engaged in the business of investment banking and in connection therewith to devote his best efforts to the affairs of the Company and to perform such duties as Employee shall reasonable be directed to perform by officers of the Company.
 
1.2 Employee hereby accepts such employment and agrees to render such services. Employee agrees to render such services at Company's offices located in the Minneapolis area, but Employee will travel on temporary trips to such other place or places as may be required from time to time to perform his duties hereunder. During the Term hereof, Employee will not render any services for other competitors, or for Employee's own benefit , in the business of investment banking and corporate services unless otherwise agreed upon between the parties.
 
2.     Term of Employment
 
2.1 The term of Employee's employment pursuant to this Agreement (the "Term") shall begin on the date hereof, and shall end on , subject to the provisions of Article 4 of this Agreement providing for earlier termination of Employee's employment in certain circumstances.
 
3.     Compensation
 
3.1 As an Executive of ACT Mr. Giordano will be paid an annual salary of 100,000 for a period of 3 years.
 
The compensation set forth hereinabove shall be payable in accordance with the regular payroll practices of the Company for executives. All payments hereunder shall be subject to the provisions of Article 4 hereof.
 
3.2 Company shall pay or reimburse Employee for all necessary and reasonable expenses incurred or paid by Employee in connection with the performance of services under this Agreement upon presentation of expense statements or vouchers or such other supporting information as it from time to time requests evidencing the nature of such expense, and, if appropriate, the payment thereof by Employee, and otherwise in accordance with Company procedures from time to time in effect.
 
3.3 During the Term, Employee shall be entitled to participate in any group insurance, qualified pension, hospitalization, medical health and accident, disability, or similar plan or program of the Company now existing or hereafter established to the extent that he is eligible under the general provisions thereof. Notwithstanding anything herein to the contrary, however, Company shall have the right to amend or terminate any such plans or programs.
 
4.     Termination
 
4.1 Disability. If Employee shall be prevented from performing Employee's usual duties for a period of 3 consecutive months, or for shorter periods aggregating more than 4 months in any 12 month period by reason of physical or mental disability, total or partial, (herein referred to as "disability"), Company shall nevertheless continue to pay full salary up to and including the last day of the third consecutive month of disability, or the day on which the shorter periods of disability shall have equalled a total of 4 months, but Company may at any time or times on or after such last day (but before the termination of such disability), elect to terminate this Agreement upon written notice to employee, effective on such 1st day, without further obligation or liability to Employee, except for any compensation accrued hereunder but not yet paid. If Company does not so elect, this Agreement shall remain in full force and effect, except that Company shall not be obligated to pay any compensation set forth in Article 3 hereof to Employee during the remaining period of disability.
 
4.2 Death. In the event of Employee's death during the Term, this Agreement shall automatically terminate, except that (a) Employee's estate shall be entitled to receive the compensation provided for hereunder to the last day of the month in which Employee's death occurs; and (b) such termination shall not affect any amounts payable as insurance or other death benefits under any plans or arrangements then in force or effect with respect to Employee.
 
 
-1-
 
4.3 Specified Cause. Company may at any time during the Term, by notice, terminate the employment of Employee for malfeasance, misfeasance, or nonfeasance in connection with the performance of Employee's duties, the cause to be specified in the notice of termination. Without limiting the generality of the foregoing, the following acts during the Term shall constitute grounds for termination of employment hereunder:
 
4.3.1 Any willful and intentional act having the effect of injuring the reputation, business, business relationships of Company or its affiliates;
 
4.3.2 Conviction of or entering a plea of nolo contendere to a charge of a felony or a misdemeanor involving moral turpitude;
 
4.3.3 Material breach of covenants contained in this Agreement; and
 
4.3.4 Repeated or continuous failure, neglect, or refusal to perform Employee's duties hereunder.
 
5. Protection of Confidential Information
 
5.1 In view of the fact that Employee's work as an employee of Company will bring Employee into close contact with many confidential affairs of the Company and its affiliates, including matters of a business nature, such as information about costs, profits, markets, sales, and any other information not readily available to the public, and plans for future developments, Employee agrees:
 
5.1.1 To keep secret all confidential matters of Company and its affiliates and not to disclose them to anyone outside of Company, either during or after Employee's employment with Company, except with Company's written consent; and
 
5.1.2 To deliver promptly to Company on termination of Employee's employment by Company, or at any time Company may so request, all memoranda, notes, records, reports, and other documents (and all copies thereof) relating to Company's and its affiliates' businesses which Employee may then possess or have under the Employee's control.

6. Notices:

6.1 All notices, requests, consents and other communications required or permitted to be given hereunder shall be in writing and shall be deemed to have been duly given if delivered personally or sent by prepaid telegram, or mailed first-class, postage prepaid, as follows:
 
If to Employee: address
 
If to Company: address
 
With copies to: address
 
or as such other addresses as either party may specify by written notice to the other as provided in this Section 7.1.
 
 
-2-
 
7. General
 
7.1 It is acknowledged that the rights of Company under this Agreement are of a special, unique, and intellectual character which gives them a peculiar value, and that a breach of any provision of this Agreement (particularly, but not limited to, the exclusivity provisions hereof and the provisions of Article 5 hereof), will cause Company irreparable injury and damage which cannot be reasonably or adequately compensated in damages in an action at law. Accordingly, without limiting any right or remedy which Company may have in the premises, Employee specifically agrees that Company shall be entitled to seek injunctive relief to enforce and protect its rights under this Agreement.
 
7.2 This Agreement sets forth the entire agreement and understanding of the parties hereto, and supersedes all prior agreements, arrangements, and understandings. Nothing herein contained shall be construed so as to require the commission of any act contrary to law and wherever there is any conflict between any provision of this Agreement and any present or future statute, law, ordinance or regulation, the latter shall prevail, but in such event the provision of this Agreement affected shall be curtailed and limited only to the extent necessary to bring it within legal requirements. Without limiting the generality of the foregoing, in the event that any compensation or other monies payable hereunder shall be in excess of the amount permitted by any such statute, law, ordinance, or regulation, payment of the maximum amount allowed thereby shall constitute full compliance by Company with the payment requirements of this Agreement.
 
7.3 No representation, promise, or inducement has been made by either party that is not embodied in this Agreement, and neither party shall be bound by or liable for any alleged representation, promise, or inducement not so set forth. The section headings contained herein are for reference purposes only and shall not in any way affect the meaning or interpretation of this Agreement.
 
7.4 The provisions of this Agreement shall inure to the benefit of the parties hereto, their heirs, legal representatives, successors, and assigns. This Agreement, and Employee's rights and obligations hereunder, may not be assigned by Employee. Company may assign its rights, together with its obligations, hereunder in connection with any sale, transfer or other disposition of all or substantially all of its business and assets. Company may also assign this Agreement to any affiliate of Company; provided, however, that no such assignment shall (unless Employee shall so agree in writing) release Company of liability directly to Employee for the due performance of all of the terms, covenants, and conditions of this Agreement to be complied with and performed by Company. The term "affiliate", as used in this agreement, shall mean any corporation, firm, partnership, or other entity controlling, controlled by or under common control with Company. The term "control" (including "controlling", "controlled by", and "under common control with"), as used in the preceding sentence, shall be deemed to mean the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such corporation, firm, partnership, or other entity, whether through ownership of voting securities or by contract or otherwise.

7.5 This Agreement may be amended, modified, superseded, cancelled, renewed or extended, and the terms or covenants hereof may be waived, only by a written instrument executed by both of the parties hereto, or in the case of a waiver, by the party waiving compliance. The failure of either party at any time or times to require performance of any provisions hereof shall in no manner affect the right at a later time to enforce the same. No waiver by either party of the breach of any term or covenant contained in this Agreement, whether by conduct or otherwise, in any one or more instances, shall be deemed to be, or construed as, a further or continuing waiver of any such breach, or a waiver of the breach of any other term or covenant contained in this Agreement.
 
7.6 This Agreement shall be governed by and construed according to the laws of the State of Minnesota applicable to agreements to be wholly performed therein.
 
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the date first above written.
 
Enrico Giordano

/s/ David W. Opatosky                                                         /s/ Enrico Giordano  
By

Notary                                                                                                                                           
Title
Date
9/7/10                                                                                     9/7/10                                                                 
Date

 
-3-
 
Schedule to Product Sales Representative Agreement -
@MyWork-CM
 
This Schedule forms part of the Product Sales Representative Agreement between Advanced Credit Technologies, Inc. ("Representative") and InterTech Systems. LLC d/b/a Contata Solutions L.L.C ("Contata") signed June  __ 2010.
 
Product: @MyWork-CM
This is a customized version of Contata's @MyWork application, featuring tight integration with Representative's Credit Management ("CM") application.
 
The integration with Representative's Credit Management application will be realized in one or more of following ways:
·   Provide a link to go to CM application portal
·   Provide auto-login from within the @MyWork application into CM portal
·   Provide updates and other information from CM portal directly into @MyWork application
 
Contata will own all intellectual property rights to @MyWork-CM. Specifically, Contata owns the @MyWork application and shall own all integration code developed by it and incorporated into @MyWork-CM, the customized version of Contata's @MyWork application.
 
Representative shall continue to own all of its intellectual property rights in its Credit Management application, and Contata makes no claim thereto.
 
Terms and Compensation to Representative:
1.  
Pricing: Contata and Representative will decide on general or per customer pricing for @MyWork-CM application
2.  
Contata Responsibilities: Contata will be responsible for:
 
o   Ongoing maintenance, enhancements to the Product
o   Preparation of marketing collateral for the Product
o   Hosting and support of the Product as a web-based on-demand Service
o   All costs associated with the above responsibilities
o   Customer support as defined below
 
3.       Representative Responsibilities: Representative will be responsible for:
 
o   Direct sales to customers
o   All direct and indirect costs associated with sales efforts
o   Any marketing/sales and/or other collateral materials over and above those provided by Contata
 
 
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4.  
Revenue Share: Contata will retain 50% of Net Revenues and will pay Representative an amount equal to 50% of Net Revenues. Net Revenues means the amounts billed and received by Contata under contracts solicited by Representative for use of the Product less Refunds and credit card fees and charges.
5.  
Third Party Agents: For third party agents that have potential to bring in more than 500 user seats, Contata and Representative may agree to designate such agents as Volume Agents, and share up to 20% of Net Revenue from such seats. Volume Agent fees will be deducted from the Net Revenues before splitting between Representative and Contata.
 
Fees to any third parties not mutually designated by Contata and Representative as Volume Agents, will be borne by Representative out of its 50% split.
 
6.  
Minimum Revenue: Notwithstanding any of the foregoing, Contata will retain an amount each month not less than $8 per user of the Product, and the amounts payable to Representative shall be reduced to the extent that the remainder of Net Revenues in any month is less than 50% of total Net Revenues.
 
7.  
Payment: On or before the fifteenth day of each calendar month, Contata shall pay Representative the amounts due to Representative with respect to Net Revenues received in the previous calendar month. With each payment, Contata shall provide a summary statement of the calculation of the amounts due to Representative. Appropriate adjustments shall be made in subsequent months to take into account refunds of amounts included in Net Revenues in any prior month.
 
8.  
Support: Representative will provide initial training and ongoing first level support to licensees of Product. Contata will provide support to Representative on issues that have been diagnosed as technical problems and not user issues.
 
CONTATA:
InterTech Systems, LLC d/b/a Contata Solutions L.L.C.
900 2nd Ave S, #495
Minneapolis, MN 55402
Email:
 
By:  /s/ Pradeep Sinha
Name:     Pradeep Sinha
 
REPRESENTATIVE:
Advanced Credit Technologies, Inc. 1915 Plaza Drive #202
Eagan, MN 55122

By: /s/ Chris Jackson
Name:  Chris Jackson 
 
 
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PRODUCT SALES REPRESENTATIVE AGREEMENT
 
This Agreement is entered into as of June 17, 2010 between InterTech Systems,
 
LLC, a Minnesota limited liability c pany, dba Contata Solutions L.L.C. ("Contata") , and Advanced Credit Technologies, Inc. ("Representative").
 
The parties agree as follows:
 
1.   Engagement and Duties.
 
Subject to the terms of this Agreement, Representative agrees to act as an independent sales representative to solicit contracts for the license of the Contata software products described on any attached Schedule ("Product").
 
Representative will use Representative's reasonable best efforts to identify potential customers for Products, promote the use of the Products by such potential customers, present proposals for the license of the Products and undertake such other activities as are appropriate leading to executed contracts. Representative shall coordinate solicitation activities with the Contata employee identified on the attached Schedule or such other person as may be designated from time to time.
 
All terms of any proposals and contracts, including pricing, shall be approved by Contata prior to submission to a potential customer. Representative agrees not to make any representations regarding the Products or Contata except those expressly authorized by Contata. All contracts solicited by Representative shall be submitted to Contata for acceptance or rejection, and Representative has no authority to enter into contracts on behalf of Contata.
 
2.      Compensation.
 
As consideration for Representative's services, Contata agrees to pay Representative the amounts set forth on the attached Schedule, at the times stated on the Schedule.
 
  3. Ownership of Intellectual Property; Confidentiality Obligations.   a. Intellectual Property
During the term of this Agreement, Representative may generate ideas, inventions, improvements, suggestions, copyrightable materials or other information of value to Contata ("Intellectual Property") which falls into one of two categories:
 
(1)  
Intellectual Property generated in connection with Representative's efforts under this Agreement;
 
(2)  
Intellectual Property not generated in connection with Representative's efforts under this Agreement;

All Intellectual Property described in subparagraph (1), whether made alone or in conjunction with others, shall be disclosed to and belong to Contata, and Representative agrees to assign and hereby does assign all of Representatives rights, title and interest in such Intellectual Property to Contata. Representative further agrees to render such assistance as Contata may require to perfect such assignment and to protect Contata's rights in such Intellectual Property in any manner decided at the sole discretion of Contata, including but not limited to obtaining patent protection. To the extent allowed under copyright law, copyrightable material described in subparagraph (1) shall be deemed to be a "work made for hire"; however, in the event any such copyrightable material is deemed not to be a "work made for hire", Representative agrees to assign, and hereby does assign all rights in and title to such copyrightable material to Contata. Representative will not disclose to Contata or use in connection with the services provided by Representative under this Agreement any Intellectual Property described in subparagraph (2) except as provided in the next paragraph.
 
Intellectual Property, including software, developed by Representative prior to entering this Agreement or developed outside of this Agreement, and not a direct result hereof, shall remain in Representative and shall not be used by Representative in the performance of this Agreement without the express written agreement of Contata. If any of such Intellectual Property, including software, is used, modified or provided to Contata by Representative to fulfill its obligations under this Agreement, Representative grants and Contata hereby accepts, a perpetual, worldwide, royalty-free, non-exclusive license to use such Intellectual Property. With respect to software, Contata's right to use under this license includes the right to use internally the software in object or source code form for any purpose, the right to make enhancements, modifications and derivatives of the software, and the right to sublicense and distribute the software, enhancements and derivatives.
 
 
-3-
 
Contata agrees that Representative shall have the right to continue to use any tools, methods, concepts and techniques ("Tools") previously developed and used by Representative in the development of software deliverables under this Agreement, but which do not form part of such deliverables, except to the extent that Representative's Tools have been incorporated into the source code or architecture of a software deliverable and must be accessed to utilize the software deliverable as intended. If Representative's Tools are so incorporated into a deliverable under this Agreement, Representative grants Company a license to use the Tools as is necessary to utilize the deliverable, and title to Representative's Tools remains with Representative.
 
b. Confidentiality
 
As a result of this Agreement, Representative may obtain confidential information of Contata, of customers of Contata, or of third parties involved in joint undertakings with Contata, which Contata is under obligation to protect. Representative will not, during or after the term of this Agreement, use or divulge to others any of such confidential information unless authorized in writing to do so by Contata. Representative agrees to treat as confidential information and not to use or disclose to third parties any information provided by Contata which is marked or otherwise identified so as to indicate its confidential nature or information obtained by Representative during the term of this Agreement which under the circumstances Representative should reasonably know is being disclosed in confidence.
 
Upon termination of this Agreement, Representative agrees to return to Contata all materials and property furnished by Contata to Representative.
 
4.   Non-Solicitation
 
During the term of this Agreement and for a period of two (2) years thereafter, Representative and Contata shall not directly or indirectly solicit any licensees of Product or any potential licensees of Product to whom Representative or Contata have made a written proposal.
 
For purposes of this Section 4:
–  
Solicit means making any contact with, directing any proposal to, or taking any other action for the purpose of entering into a business relationship outside the terms of this Agreement, with the licensee or potential licensee, directly or on behalf of a third party, involving any product or service that competes with the Product
–  
The term licensee will apply to specific division of use within a company/organization. Divisions not mentioned in proposals or licensing agreements are not subject to this Section 4.
 
5.   Status of Representative as Independent Contractor.
 
Representative shall devote such time and effort as may be necessary to satisfactorily provides the services described in this Agreement. Representative may engage in other business activities, provided that such business activities do not interfere with Representative's duties under this Agreement, and provided Representative complies with its confidentiality and other obligations under this Agreement. Representative represents that Representative has disclosed to Contata the existence of any of Representative's activities which may conflict with Contata's competitive interests.
 
Representative shall be an independent contractor in the performance of this Agreement, and neither Representative nor any of its employees, shall be deemed an employee of Contata for any purpose whatsoever. Representative and Representative's employees, if any, shall not participate in any benefit programs for Contata employees, including without limitation health benefits, life insurance, pension or profit sharing plans and paid vacation and sick leave.
 
Representative specifically agrees to comply with all federal and state tax laws applicable to operation of a business such as Representative's, including without limitation, the reporting and payment of all applicable self-employment and income taxes, compliance with all employment tax requirements for employees of Representative and compliance with state unemployment and worker's compensation laws.
 
Representative shall have no power to act as an agent of Contata or bind Contata in any respect.
 
 
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6.   Termination.
 
This Agreement may be terminated at any time by either party by giving written notice at least two (2) weeks in advance of the desired termination date. Termination of this Agreement shall not affect liabilities which have accrued prior to termination. In addition, the obligations of the parties which by their nature are continuing, including without limitation the obligations of the parties under Sections 3 and 4, shall survive termination.
 
7.   Miscellaneous.
 
a.  
Entire Agreement. This Agreement sets forth the entire agreement of the parties with respect to the subject matter hereof, and supersedes all prior agreements. This Agreement may not be amended or modified in any manner except by an instrument in writing signed by the parties.
 
b.  
No Assignment. Representative shall not subcontract or assign any of Representative's rights or obligations hereunder without the prior express written consent of Contata, which may be given or withheld in the sole discretion of Contata.
 
c.  
Severability. The invalidity or unenforceability of one or more provisions of this Agreement shall not affect the validity or enforceability of any of the other provisions, and this Agreement shall be construed as if such invalid or unenforceable provisions were omitted.
 
d.  
Construction. This Agreement shall be deemed to have been entered into in, and shall be construed and enforced in accordance with the laws of, the State of Minnesota.
 
e.  
Waivers. The failure of any party to insist, in any one or more instances, upon the performance of any of the terms or conditions of this Agreement or to exercise any right shall not be construed as a waiver of the future performance of any such term or condition or the future exercise of such right.
 
f.  
Headings. The heading of the paragraphs used in this Agreement are included for convenience only and are not to be used in construing or interpreting this
Agreement.
 
g.  
Notices. Any notice to be given shall be sufficiently given when received. Notices may be sent by email and shall be deemed received the earlier of the time the party to be notified replies to the notice whether or not specifically acknowledging receipt or, absent proof of network failure preventing receipt, twenty four hours after sending. Notice which is mailed certified mail or sent by a recognized overnight express service shall be deemed received on the date indicated on the return receipt or proof of delivery provided by the express service. Notices shall be sent to the parties at the address set forth below or such other address as may be provided by notice appropriately given.
 
h.  
Additional Terms in Schedule. The attached Schedule may include additional terms or agreements of the parties. The attached Schedule and any additional terms or agreements form a part of this Agreement In case of conflict, the terms in the Schedule override those in the Agreement.
 
In Witness Whereof, the parties have signed this Agreement. CONTATA:
InterTech Systems, LLC d/b/a Contata Solutions L.L.C. 900 2nd Ave S, #495
Minneapolis, MN 55402
 
By:   /s/ Pradeep Sinha
 
REPRESENTATIVE:
Advanced Credit Technologies, Inc. 1915 Plaza Drive #202
Eagan, MN 55122

By: /s/ Chris Jackson
 
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Stan J.H. Lee, CPA
2160 North Central Rd Suite 203 t   Fort Lee t   NJ 07024
P.O. Box 436402 t San Ysidro t CA 92143-9402
619-623-7799 t   Fax 619-564-3408 t   stan2u@gmail.com
 
 
 

 
To Whom It May Concerns:

The firm of Stan J.H. Lee, Certified Public Accountants,  consents to the inclusion of our report of June 5, 2010, on the audited financial statements of  Advanced Credit Technologies, Inc. . as of December 31, 2009 and 2008 and for fiscal year and for the period from February 25, 2008 ( its inception) to December 31, 2008 then ended in any filings that are necessary now or in the near future with the U.S. Securities and Exchange Commission.
 
Very truly yours,
 
 
 /s/ Stan J.H. Lee, CPA
______________________
Stan J.H. Lee, CPA
June 5, 2010