ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 

Special Note Regarding Forward Looking Statements

Certain statements in this Report constitute “forward-looking statements.” Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Factors that might cause such a difference include, among others, uncertainties relating to general economic and business conditions; industry trends; changes in demand for our products and services; uncertainties relating to customer plans and commitments and the timing of orders received from customers; announcements or changes in our pricing policies or that of our competitors; unanticipated delays in the development, market acceptance or installation of our products and services; changes in government regulations; availability of management and other key personnel; availability, terms and deployment of capital; relationships with third-party equipment suppliers; and worldwide political stability and economic growth. The words “believe,” “expect,” “anticipate,” “intend” and “plan” and similar expressions identify forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date the statement was made.

Critical Accounting Policies and Estimates

The preparation of financial statements and related disclosures in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts reported in the Financial Statements and accompanying notes. Management bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. Actual results could differ from these estimates under different assumptions or conditions.

Kingsmen’s accounting policies are more fully described in Note 1 of the audited financial statements in our recently filed Form 10-K. As discussed in Note 1, the preparation of financial statements and related disclosures in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions about the future events that affect the amounts reported in the financial statements and the accompanying notes. Management bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. Actual differences could differ from these estimates under different assumptions or conditions. Kingsmen believes that the following addresses Kingsmen’s most critical accounting policies.

We recognize revenue in accordance with Securities and Exchange Commission Staff Accounting Bulletin No. 104, “Revenue Recognition” (“SAB 104”). Under SAB 104, revenue is recognized at the point of passage to the customer of title and risk of loss, when there is persuasive evidence of an arrangement, the sales price is determinable, and collection of the resulting receivable is reasonably assured.

Our policy for our allowance for doubtful accounts is maintained to provide for losses arising from customers’ inability to make required payments. If there is deterioration of our customers’ credit worthiness and/or there is an increase in the length of time that the receivables are past due greater than the historical assumptions used, additional allowances may be required.

BUSINESS OVERVIEW

Through its wholly-owned subsidiary, Zendex, Inc., the Company has been engaged in art brokering and has been in the process of establishing an online marketing site to assist buyers and sellers of art by offering consignment and brokering services to artists and other sellers of art works. Additional capital will be required to commence operations of the online marketing site

On May 25, 2016, the Company had a change of control. On that date, Wei Chi Lim purchased a total of 1,521,300 of the Company’s shares, representing approximately 80% of its issued and outstanding common stock, from certain shareholders. On the same date, the previous officers and directors of the Company resigned, and Mr. Lim was appointed as the Company’s sole officer and director. The change of control was reported in a Current Report on Form 8-K dated May 25, 2016, and filed with the Securities and Exchange Commission on May 31, 2016.

On July 11, 2016 the Company changed its name from Zendex Holdings, Inc., to Kingsmen Capital Group Ltd. The name change was reported in a Current Report on Form 8-K dated July 11, 2016, and filed with the Securities and Exchange Commission on July 19, 2016.

LIQUIDITY AND CAPITAL RESOURCES

On September 30, 2016, Kingsmen had current assets of $0 with liabilities of $23,287. We had negative working capital of $23,287 on September 30, 2016. On December 31, 2015, we had a negative working capital of $111,377. We will have to obtain additional capital to execute our business plan. Our revenue was generated from art brokerage. Without additional capital we will not be able to execute on our business model.

We anticipate the need for capital to help fund ongoing costs and do not believe debt financing will be available given the new direction we are taking with the business. We believe the online art business will prove to offer more opportunities and better profit margins than the current brokering business due to the ability of economies of scale not present in our current market. Our current reliance on word-of-mouth marketing will not be sufficient to support the successful implementation and growth of an online model.

RESULTS OF OPERATIONS

For the nine months ended September 30, 2016 Kingsmen had $0 in revenues and $29,175 in general and administrative expenses. Kingsmen had a net loss of $33,875 for the nine months ended September 30, 2016. During the nine months ended September 30, 2015, Zendex had $83,250 in revenues with cost of sales of $63,900 resulting in a gross profit of $19,350. Zendex’s general and administrative expenses for the nine months ended September 30, 2015, were $18,704. Zendex had a net loss for the nine months ended September 30, 2015 of $5,461. With sporadic revenue and relatively set general and administrative costs, we will need to generate additional sales if we are to be successful. For us to achieve profitability, we will need to increase our volume of sales and have consistent sales revenue. Currently, we are limited to our ability to broker individual art works and by the time we pay commissions, there is not sufficient revenue to cover our general and administrative expenses. We will need to either obtain better sources for art works being sold so we can increase our volume or look to alternative ways to bring buyers and sellers or art work together. We believe our future success is in our ability to generate an online site to broker paintings and other art work. We are still in the process of developing the site and the ultimate costs and revenue the site will generate are unknown at this time. Without prior experience in the online marketplace, our ability to generate such a site is questionable.

Off-balance sheet arrangements

The Company does not have any off-balance sheet arrangements and it is not anticipated that the Company will enter into any off-balance sheet arrangements.

Forward-looking Statements

Our Company and our representatives may from time to time make written or oral statements that are “forward-looking,” including statements contained in this Quarterly Report and other filings with the Securities and Exchange Commission and in reports to our Company’s stockholders. Management believes that all statements that express expectations and projections with respect to future matters, as well as from developments beyond our Company’s control including changes in global economic conditions are forward-looking statements within the meaning of the Act. These statements are made on the basis of management’s views and assumptions, as of the time the statements are made, regarding future events and business performance. There can be no assurance, however, that management’s expectations will necessarily come to pass. Factors that may affect forward- looking statements include a wide range of factors that could materially affect future developments and performance, including the following:

Changes in Company-wide strategies, which may result in changes in the types or mix of businesses in which our Company is involved or chooses to invest; changes in U.S., global or regional economic conditions, changes in U.S. and global financial and equity markets, including significant interest rate fluctuations, which may impede our Company’s access to, or increase the cost of, external financing for our operations and investments; increased competitive pressures, both domestically and internationally, legal and regulatory developments, such as regulatory actions affecting environmental activities, the imposition by foreign countries of trade restrictions and changes in international tax laws or currency controls; adverse weather conditions or natural disasters, such as hurricanes and earthquakes, labor disputes, which may lead to increased costs or disruption of operations.

This list of factors that may affect future performance and the accuracy of forward-looking statements is illustrative, but by no means exhaustive. Accordingly, all forward-looking statements should be evaluated with the understanding of their inherent uncertainty.