UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

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

 

For the quarterly period ended June 30, 2015

 

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

 

For the transition period from _____ to _____

 

Commission File Number: 333-151909

 

SWISSINSO HOLDING INC.

(Exact Name of Registrant as Specified in its Charter)

 

Delaware   90-0620127

(State or Other Jurisdiction of

Incorporation or Organization)

 

(I.R.S. Employer

Identification No.)

 

Rue de Sebeillon 9b

1004 Lausanne

Switzerland

(Address of Principal Executive Offices)

 

(011) 41 21 625 20 01

(Registrant’s Telephone Number, Including Area Code)

 

845 Third Avenue, 6 th Floor, New York, New York 10022

(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)

 

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

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☐        No ☒

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

 

Large accelerated filer ☐   Accelerated filer                  ☐
Non-accelerated filer   ☐   Smaller reporting company ☒

(Do not check if a smaller reporting company)

 

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

 

As of May 12, 2016, there were outstanding 195,059,576 shares of Common Stock, par value $0.0001 per share.

 

 

 

 

 

TABLE OF CONTENTS

 

    Page
PART I FINANCIAL INFORMATION  
Item 1. Financial Statements (Unaudited). 1
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations. 6
Item 3. Quantitative and Qualitative Disclosures About Market Risk. 8
Item 4. Controls and Procedures. 8
PART II OTHER INFORMATION  
Item 1. Legal Proceedings. 9
Item 1A. Risk Factors. 9
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds. 9
Item 3. Defaults Upon Senior Securities. 9
Item 4. Mine Safety Disclosures. 9
Item 5. Other Information. 9
Item 6. Exhibits. 9

 

 

 

PART I

FINANCIAL INFORMATION

 

Item 1.     Financial Statements.

 

SWISSINSO HOLDING INC.

CONSOLIDATED BALANCE SHEETS

UNAUDITED

 

    June 30,     December 31 ,  
  2015     2014  
ASSETS            
CURRENT ASSETS            
Cash   $ 6,245     $ 2,854  
Prepaid expenses     46,378       20,256  
Other receivables     289,002       4,811  
Total current assets     341,625       27,921  
                 
TOTAL ASSETS   $ 341,625     $ 27,921  
                 
LIABILITIES AND STOCKHOLDERS' DEFICIT                
CURRENT LIABILITIES                
Bank loan   $ 289,968     $ 304,828  
Accounts payable     1,227,563       993,307  
Accrued expenses     285,886       351,264  
Accrued payroll and benefits     590,351       509,319  
Accounts payable due to related parties     -       225,000  
Deferred income     160,121       150,961  
Convertible loans from related parties     1,921,810       1,740,641  
Loans from third parties     772,253       721,452  
Total current liabilities     5,247,952       4,996,772  
                 
TOTAL LIABILITIES     5,247,952       4,996,772  
                 
STOCKHOLDERS' DEFICIT                
Stockholders' deficit:                
Authorized: 10,000,000 preferred shares, $0.0001 par value
Issued and outstanding shares : 0
    -       -  
Authorized: 300,000,000 common shares, $0.0001 par value
Issued and outstanding shares: 143,625,892 and 143,525,892
    14,364        14,364    
Additional paid in capital     12,603,087       12,603,087  
Accumulated deficit     (17,457,643 )     (17,665,290 )
Accumulated other comprehensive income (loss)     (66,135 )     78,988  
Total stockholders' deficit     (4,906,327 )     (4,968,851 )
                 
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT   $ 341,625     $ 27,921  

 

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

 

  1  

 

 

SWISSINSO HOLDING INC.

CONSOLIDATED STATEMENTS OF OPERATION AND COMPREHENSIVE INCOME (LOSS)

(UNAUDITED)

 

    Three Months Ended
June 30,
    Six Months Ended
June 30,
 
    2015     2014     2015     2014  
                         
REVENUES   $ 37,056     $ -     $ 42,199     $ -  
OPERATING EXPENSES                                
General and administrative     173,464       442,014       428,271       766,306  
      173,464       442,014       428,271       766,306  
OTHER INCOME                                
Interest income     -       -       -       1  
Gain from abandonment of debts     -       81,700       -       109,226  
Exchange profit     -       -       14,923       -  
Other Income     (2,087 )     -       -       -  
Reimbursement of prior year expenses     35,064       -       641,134       -  
      32,977       81,700       656,057       109,227  
OTHER EXPENSES                                
Interest expense     23,163       4,591       45,390       9,821  
Exchange loss (gain)     16,948       (73 )     16,948       -  
      40,111       4,518       62,338       9,821  
                                 
NET INCOME (LOSS)   $ (143,542 )   $ (364,832 )   $ 207,647     $ (666,900 )
                                 
Foreign currency gain (loss)     (184,198 )     68,148       (145,123 )     62,916  
                                 
COMPREHENSIVE INCOME (LOSS)     (327,740 )     (296,684 )     62,524       (603,984 )
Basic and diluted net income (loss) per share   $ (0.00 )   $ (0.00 )   $ 0.00     $ (0.00 )
                                 
Weighted average shares outstanding - Basic and diluted     143,625,892       143,607,003       143,625,892       143,566,223  

 

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

 

  2  

 

 

SWISSINSO HOLDING INC.

CONSOLIDATED STATEMENTS OF CASH FLOW

(UNAUDITED)

 

    Six Months Ended June 30,  
    2015     2014  
             
NET INCOME (LOSS)   $ 207,647     $ (666,900 )
                 
Change in Operating activities     (205,231 )     (279,804 )
                 
Net cash provided by (used in) operating activities     2,416       (946,704 )
                 
FINANCING ACTIVITIES                
Proceeds from bank loan     5,047       -  
Payment on bank loan     (19,907 )     (49,849 )
Proceeds from third party loans     55,000       57,555  
Proceeds from related party loans     3,069       871,878  
Net cash provided by financing activities     43,209       879,584  
                 
Effect of exchange rate on cash     (42,234 )     62,916  
                 
INCREASE (DECREASE) IN CASH     3,391       (4,204 )
                 
CASH AT BEGINNING OF PERIOD     2,854       6,173  
                 
CASH AT END OF PERIOD   $ 6,245     $ 1,969  
               
CASH PAID FOR INTEREST AND INCOME TAXES   $ -     $ -  
                 
NON-CASH INVESTING AND FINANCING:                
Related party payment of expenses     48,524       -  
Reclassification of consulting fees     225,000       -  
Subscription receivable     -       48,000  

 

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

 

  3  

 

 

SWISSINSO HOLDING INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

June 30, 2015

 
NOTE 1 - Basis of presentation

 

The accompanying unaudited interim financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission and should be read in conjunction with the audited financial statements and notes thereto contained in the Company’s most recent Annual Financial Statements filed with the SEC on Form 10-K. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim period presented have been reflected herein. The results of operations for the interim period are not necessarily indicative of the results to be expected for the full year. Notes to the financial statements which would substantially duplicate the disclosures contained in the audited financial statements for the most recent fiscal period, as reported in the Form 10-K, have been omitted.

 

NOTE 2 - Revenue Recognition

 

The Company generates revenue from from sales of its Kromatix™ glass sold to producers of solar panels. The Company recognizes revenue on four basic criteria which must be met before revenue can be recognized: (1) persuasive evidence that an arrangement exists; (2) delivery has occurred; (3) the selling price is fixed and determinable; and (4) collectability is reasonably assured.

 

Determination of criteria (3) and (4) are based on management's judgments regarding the fixed nature of the selling prices of the products delivered and the collectability of those amounts. Provisions for discounts and rebates to customers, estimated returns and allowances and other adjustments are provided for in the same period that the related sales are taken into account.

 

NOTE 3 - Going Concern

 

The Company’s financial statements are prepared using generally accepted accounting principles in the United States of America applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company has not yet established an ongoing source of revenues sufficient to cover its operating costs and allow it to continue as a going concern. The ability of the Company to continue as a going concern is dependent on raising additional capital to fund its business plan and ultimately to attain profitable operations through the generation of revenues from the sale of products and technologies. Accordingly, these factors raise substantial doubt as to the Company's ability to continue as a going concern. The Company has funded its initial operations by way of entering into a private placement offering and obtaining loans primarily from related parties.

 

The accompanying financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

 

NOTE 4 - Related Party Transactions

 

The Company borrowed approximately $436,110 during the six months ended June 30, 2015 from InsOglass Holding SA, a business organization controlled by the Company’s Chief Executive Officer (“InsOglass”). Of this amount, $433,041 represents payment of current period expenses, and $3,069 represents cash received by the Company. Offsetting this amount is $513,828 in reimbursements that were paid directly to InsOglass. The Company is indebted to InsOglass for $1,430,114 of loans made by such entity to the Company through June 30, 2015 to meet the working capital needs of the Company and its subsidiary. The balance outstanding is due on demand and non-interest bearing. Such loans are secured by certain assets of the Company’s subsidiary and are convertible, at the option of InsOglass, into shares of common stock of the Company at a conversion rate of $0.035 per share. A reclassification of consulting fees amounting to $225,000 has been recorded in the first quarter 2015. This amount represents indebtedness of the Company to InsOglass and is also convertible into shares of common stock of the Company.

 

The Company is indebted to Salim Shaikh Ismail, the holder of 13,858,633 shares of our Common Stock, or 9.66%, for $491,696 as at June 30, 2015 of loans made by him to the Company to meet the working capital needs of the Company and its subsidiary. Such loans are unsecured, are due on demand and do not bear interest.

 

  4  

 

 

NOTE 5 - Bank Loan

 

During the first half of 2015, the Company repaid a net amount of $14,860 to Banque Cantonale de Fribourg with the personal guarantee of the Company’s Chief Executive Officer. The total outstanding amount due on this facility as of June 30, 2015 was $289,968.

 

NOTE 6 - Promissory Notes  

 

During the second quarter of 2015, the Company borrowed $55,000 from five new investors. The loans bear interest at 5% and have a maturity date of 18 months from issue date.

 

NOTE 7 - Subsequent Events

 

During the third and fourth quarters of 2015, the Company’s subsidiary borrowed approximately $123,401 and $37,998, respectively, from InsOglass to meet the working capital needs of the Company and its subsidiary. These loans are non-interest bearing, and there is no specific repayment date applicable to them.

 

During the third quarter of 2015, InsOglass converted loans aggregating $1,352,445 into 38,641,285 shares of the Company’s common stock, and Salim Shaikh Ismail converted loans aggregating $491,696 into 12,292,400 shares of the Company’s common stock.

 

During the fourth quarter of 2015, the Company issued 250,000 shares of its common stock to each of two investors for a purchase price of $25,000 each.

 

  5  

 

 

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

 

As used in this Form 10-Q, references to the “Company,” “we,” “our” or “us” refer to the Registrant and our subsidiary, SwissINSO SA, unless the context otherwise indicates.

 

Forward-Looking Statements

 

This Quarterly Report on Form 10-Q contains forward-looking information. Forward-looking information includes statements relating to future actions, future performance, costs and expenses, interest rates, outcome of contingencies, financial condition, results of operations, liquidity, business strategies, cost savings, objectives of management and other such matters of the Company. The Private Securities Litigation Reform Act of 1995 provides a “safe harbor” for forward-looking information to encourage companies to provide prospective information about themselves without fear of litigation so long as that information is identified as forward-looking and is accompanied by meaningful cautionary statements identifying important factors that could cause actual results to differ materially from those projected in the information.

 

Forward-looking information may be included in this Quarterly Report on Form 10-Q or may be incorporated by reference from other documents filed with the Securities and Exchange Commission (the “SEC”) by us. You can find many of these statements by looking for words including, for example, “believes,” “expects,” “anticipates,” “estimates” or similar expressions in this Quarterly Report on Form 10-Q or in documents incorporated by reference in this Quarterly Report on Form 10-Q. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information or future events.

 

We have based the forward-looking statements relating to our operations on management's current expectations, estimates, and projections about us and the industry in which we operate. These statements are not guarantees of future performance and involve risks, uncertainties and assumptions that we cannot predict. In particular, we have based many of these forward-looking statements on assumptions about future events that may prove to be inaccurate. Accordingly, our actual results may differ materially from those contemplated by these forward-looking statements. Any differences could result from a variety of factors, including, but not limited to general economic and business conditions, competition, and other factors.  

 

The following discussion highlights the principal factors that have affected our financial condition and results of operations as well as our liquidity and capital resources for the periods described. This discussion contains forward-looking statements, as discussed above. Please see the section entitled “Forward-Looking Statements” for a discussion of the assumptions associated with these forward-looking statements.

 

The following discussion and analysis of our financial condition and results of operations are based on the unaudited financial statements as of June 30, 2015 and 2014, all of which were prepared in accordance with U.S. generally accepted accounting principles (“GAAP”). You should read the discussion and analysis together with such financial statements and the related notes thereto.

 

Results of Operations Three months ended June 30, 2015 compared to Three Months ended June 30, 2014

 

During the three month period ended June 30, 2015, the Company generated revenues totaling $37,056 relating to the sale of Kromatix™ glass. During the three months ended June 30, 2015, we incurred $173,464 of general and administrative expenses as we continued the development of the business of SwissINSO and $23,163 in interest charges related to a bridge loan received in September 2009 and short-term loans received during 2011, 2012, 2013, 2014 and the first six months of 2015. However, as a result of receiving reimbursement of expenses relating to 2014 and totaling $35,064 from Emirates Insolaire, we had total other income of $32,977.

 

In comparison, during the three months ended June 30, 2014, the Company generated no revenues but incurred $442,014 of general and administrative expenses as we continued the development of the business of SwissINSO and $4,591 in interest charges related to bridge loans received in September 2009, convertible notes and warrants sold in a private placement from December 2009 through December 2010 and short-term loans received during 2011, 2012, 2013 and the first six months of 2014 and, as a result of an $81,700 gain from abandonment of debt during the period, had total other income of $32,977.

 

During the three months ended June 30, 2015, we had a net loss before foreign currency translation adjustments of $143,542, as compared to a net loss before foreign currency translation adjustments during the three months ended June 30, 2014 of $364,832.

 

  6  

 

 

Results of Operations Six months ended June 30, 2015 compared to Six Months ended June 30, 2014

 

During the six month period ended June 30, 2015, the Company generated revenues totaling $42,199 relating to the sale of Kromatix™ glass. During the six months ended June 30, 2015, we incurred $428,271 of general and administrative expenses as we continued the development of the business of SwissINSO and $45,390 in interest charges related to a bridge loan received in September 2009 and short-term loans received during 2011, 2012, 2013, 2014 and the first six months of 2015. However, as a result of receiving reimbursement of expenses relating to 2014 and totaling $641,134 from Emirates Insolaire, we had total other income of $656,057.

 

In comparison, during the six months ended June 30, 2014, the Company generated no revenues, but incurred $766,306 of general and administrative expenses as we continued the development of the business of SwissINSO and $9,821 in interest charges related to bridge loans received in September 2009, convertible notes and warrants sold in a private placement from December 2009 through December 2010 and short-term loans received during 2011, 2012, 2013 and the first six months of 2014 and, as a result of a $109,226 gain from abandonment of debt during the period, had total other income of $109,227.

 

During the six months ended June 30, 2015, we had net income before foreign currency translation adjustments of $207,647, as compared to a net loss before foreign currency translation adjustments during the six months ended June 30, 2014 of $666,900.

 

Liquidity and Capital Resources

 

As of June 30, 2015, we had a working capital deficit of $4,906,327 as compared with a working capital deficit at December 31, 2014 of $4,968,851. During the past twelve (12) months, we have incurred significant operating expenses, and we expect to incur additional, but less significant, operating expenses for overheads, research and development, sampling and certification, sales channel development, general and administrative expenses and debt payments during the next twelve (12) months.

 

During the six months ended June 30, 2015, the Company borrowed approximately $436,110 from InsOglass. Of this amount, $433,041 represents payment of current period expenses, and $3,069 represents cash received by the Company. Offsetting this amount is $513,828 in reimbursements that were paid directly to InsOglass. These loans were sufficient to enable the Company to meet the working capital needs of SwissINSO.

 

We do not have any other available credit, bank financing or other external sources of liquidity except those provided by our Chief Executive Officer and will need to obtain additional capital in order to continue SwissINSO’s business operations. In order to obtain such capital, we will need to sell additional securities and/or borrow additional funds from lenders.

 

There can be no assurance that we will obtain additional funding which is sufficient until substantial revenue from sales has started. We will also need to commercialize our Kromatix™ business. If we are not successful in raising sufficient capital, either from sales of securities, additional borrowings, revenues generated by the Kromatix™ business or from the entry into a joint venture with a partner for all or parts of the SwissINSO business, this would have a material adverse effect on our business, results of operations, liquidity and financial condition.

 

Going Concern Consideration

 

The accompanying financial statements have been prepared assuming that we will continue as a going concern. As discussed in the notes to the financial statements, we have not yet established an ongoing source of revenues sufficient to cover our operating costs and allow us to continue as a going concern. Our ability to continue as a going concern and ultimately to attain profitable operations is dependent on (a) raising capital to meet our past due, current and future obligations to employees, suppliers, vendors, landlords, service providers and lenders and to fund SwissINSO’s business plan and (b) developing the Kromatix™ business.

 

We realized net income before foreign currency translation adjustments during the six months ended June 30, 2015 of $207,647. Despite this positive result, which was primarily due to the reimbursement of prior year expenses, there are significant financial challenges that continue to raise concern as to the ability of the Company to continue as a going concern. As discussed above, management plans include attempting to obtain additional capital from sales of securities and private borrowings and from the commercialization of the Kromatix™ business. The accompanying financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 

Off-Balance Sheet Arrangements

 

We have no off-balance sheet arrangements.

 

  7  

 

 

Item 3.     Quantitative and Qualitative Disclosures about Market Risk.

 

We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information under this item.

 

Item 4.     Controls and Procedures.

 

Evaluation of Disclosure Controls and Procedures

 

We maintain “disclosure controls and procedures” as such term is defined in Rule 13a-15(e) under the Exchange Act. In designing and evaluating our disclosure controls and procedures, our management recognized that disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of disclosure controls and procedures are met. Additionally, in designing disclosure controls and procedures, our management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible disclosure controls and procedures. The design of any disclosure controls and procedures is also based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.

 

Our management, including our Chief Executive Officer and our Chief Financial Officer, have evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on such evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of the period covered by this Quarterly Report on Form 10-Q, our disclosure controls and procedures were not effective:

 

- to give reasonable assurance that the information required to be disclosed by us in reports that we file under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms, and

 

- to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer and our Chief Financial Officer, to allow timely decisions regarding required disclosure.

 

Changes in Internal Control over Financial Reporting

 

There has been no change in our internal control over financial reporting during the quarter ended June 30, 2015 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

 

  8  

 

 

PART II

OTHER INFORMATION

 

Item 1.     Legal Proceedings.

 

None.

 

Item 1A.  Risk Factors.

 

We are a “smaller reporting company” as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information under this item.

 

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

 

Between April 20, 2015 and April 28, 2015, the Company issued Convertible Promissory Notes aggregating $55,000 to five individuals. Such notes bear interest at 5% per annum, are due on October 31, 2016 and are convertible, at the option of the holder, into shares of common stock of the Company at a conversion rate of $0.05 per share. Such securities were issued under Section 4(2) of the Securities Act of 1933, as amended, and Regulations D and S promulgated by the Securities and Exchange Commission thereunder.

 

Item 3.     Defaults Upon Senior Securities.

 

None.

 

Item 4.     Mine Safety Disclosures.

 

Not applicable.

 

Item 5.     Other Information.

 

During the quarter ended June 30, 2015, the Company’s subsidiary borrowed approximately $436,110 from InsOglass to meet the working capital needs of the Company’s subsidiary. Of this amount, $433,041 represents payment of current period expenses, and $3,069 represents cash received by the Company. Offsetting this amount is $513,828 in reimbursements that were paid directly to InsOglass. The loans do not bear interest and are repayable on a to be agreed future date.

 

On June 30, 2015, the Company filed a Certificate of Amendment of its Certificate of Incorporation with the Secretary of State of the State of Delaware increasing the authorized number of shares of common stock from 200 Million to 300 Million.

 

Item 6.     Exhibits

 

Exhibit
Number
  Description
31.1 and 31.2   Certifications of Principal Executive Officer and Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. Filed herewith.
     
32.1 and 32.2   Certifications of Principal Executive Officer and Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. Filed herewith.

 

  9  

 

 

SIGNATURES

 

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

 

  SWISSINSO HOLDING INC.
     
Date: May 12, 2016  By: /s/ Rafic Hanbali
  Name: Rafic Hanbali
  Title: Chief Executive Officer
    (Principal Executive Officer)

 

Date: May 12, 2016 By: /s/ Clive D. Harbutt
  Name: Clive D. Harbutt
  Title: Chief Financial Officer
    (Principal Financial Officer and
Principal Accounting Officer)

 

 

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