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

FORM 10-Q/A
___________________

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

 

For the quarterly period ended September 30, 2016

  

Commission File Number: 0-55081

 

 

K inerja P ay C orp.

(Exact name of small business issuer as specified in its charter)

 

 

Delaware 42-1771817
(State of Incorporation) (I.R.S. Employer Identification No.)
   
Jl. Multatuli, No.8A, Medan, Indonesia 20151
(Address of Principal Executive Offices) (ZIP Code)

 

Registrant's Telephone Number, Including Area Code: +62-819-6016-168

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

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer (as defined in Rule 12b-2 of the Exchange Act) or a smaller reporting company .

Large accelerated filer ¨ Accelerated filer ¨ Non-Accelerated filer ¨ Smaller reporting company x

On November 21, 2016, the Registrant had 8,227,013 shares of common stock outstanding.


TABLE OF CONTENTS

Item
Description
Page
 

PART I - FINANCIAL INFORMATION

 
ITEM 1.    FINANCIAL STATEMENTS. 3
ITEM 2.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND PLAN OF OPERATIONS. 12
ITEM 3.    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK. 14
ITEM 4.    CONTROLS AND PROCEDURES. 14
   

PART II - OTHER INFORMATION

   
ITEM 1.    LEGAL PROCEEDINGS. 14
ITEM 1A.    RISK FACTORS. 14
ITEM 2.    UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS. 14
ITEM 3.    DEFAULT UPON SENIOR SECURITIES. 14
ITEM 4.    MINE SAFETY DISCLOSURE. 15
ITEM 5.    OTHER INFORMATION. 15
ITEM 6.    EXHIBITS. 15

PART I - FINANCIAL INFORMATION

 

ITEM 1. FINANCIAL STATEMENTS Back to Table of Contents

 

Consolidated Balance Sheets as of September 30, 2016 (Unaudited) and December 31, 2015 F-3
Consolidated Statements of Operations for the Three and Nine-Month Periods Ended September 30, 2016 and 2015 (Unaudited) F-4
Consolidated Statements of Comprehensive Loss for the Three and Nine-Month Periods Ended September 30, 2016 and 2015 (Unaudited) F-4
Consolidated Statements of Cash Flows for the Nine-Month Periods September 30, 2016 and 2015 (Unaudited) F-6
Notes to Unaudited Interim Consolidated Financial Statements F-7
  
KINERJAPAY CORP.
(formerly Solarflex Corp.)
Consolidated Balance Sheets
As of September 30, 2016 (Unaudited) and December 31, 2015
Back to Table of Contents
  
September 30, 2016
(Unaudited) December 31, 2015

ASSETS

Current assets:
   Cash $ - $ 81
   Restricted cash   150,000   250,113
   Prepaid expenses 4,616 -
      Total current assets 154,616 250,194
  
   Equipment, net of accumulated depreciation of $103 and $0, respectively.   2,617   -
        Total assets $ 157,233 $ 250,194
 

LIABILITIES AND STOCKHOLDERS' DEFICIT

 
Current liabilities:
   Accounts payable - trade $ 31,230 $ -
   Accrued expenses   7,109 -
   Accrued interest - 15
   Unissued stock subscriptions 150,000 250,013
   Notes payable - 24,439
      Total current liabilities 188,339 274,467
       
      Total liabilities 188,339 274,467
 
Stockholders' equity (deficit):
   Preferred stock, par value $0.0001 per share; 10,000,000 shares authorized; none issued   -   -
   Common stock, par value $0.0001 per share; 500,000,000 shares authorized;
     8,227,013 shares issued and outstanding at September 30, 2016 and
     4,653,680 shares issued and outstanding at December 31, 2015 822 465
   Additional paid-in capital 3,300,622 863,093
   Accumulated deficit   (3,341,206)   (887,831)
   Accumulated other comprehensive loss 8,656 -
     Total stockholders' equity (deficit) (31,106) (24,273)
       Total liabilities and stockholders' equity $ 157,233 $ 250,194
 
See notes to unaudited interim consolidated financial statements.

KINERJAPAY CORP.
(formerly Solarflex Corp.)
Consolidated Statements of Operations
For the Three and Nine Months Ended September 30, 2016 and 2015
(Unaudited)
Back to Table of Contents
 
For the For the For the For the
Three Months Ended Three Months Ended Nine Months Ended Nine Months Ended
September 30, 2016 September 30, 2015 September 30, 2016 September 30, 2015
Revenue $ - $ - $ - $ -
Expenses:    
   General and administrative   363,434   7,174 2,444,238 32,208
   Depreciation expense   17   - 103 -
Total general and administrative expenses   363,451   7,174 2,444,341 32,208
     
(Loss) from operations   ( 363,451 )   ( 7,174 ) ( 2,444,341) ( 32,208 )
     
Other income (expense):    
   Interest expense   (137)   (3,651) (31) (10,551)
   Amortization of debt discount   -   (12,162) - (37,058)
   Loss on extinguishment of debt   -   (199,305) (9,003) (199,305)
   Total costs and expenses   (363,588)   ( 222,292 ) ( 2,453,375) (279,122)
     
Net loss before income taxes   (363,588)   (222,292) (2,453,375) (279,122)
Income taxes   -   - - -
Net loss $ (363,588) $ (222,292) $ (2,453,375) $ (279,122)
     
Basic and diluted per share amounts:    
Basic and diluted net loss $ (0.04) $ (0.05) $ (0.33) $ (0.04)
     
Weighted average shares outstanding (basic and diluted)   8,195,491   4,508,333 7,405,638 7,405,638
 
See notes to unaudited interim consolidated financial statements.

KINERJAPAY CORP.
Consolidated Statements of Comprehensive Loss
For the Three and Nine Months Ended September 30, 2016 and 2015
(Unaudited)
Back to Table of Contents
  
Three months Three months Nine months Nine months
ended ended ended ended
September 30, 2016 September 30, 2015 September 30, 2016 September 30, 2015
Net loss $ (363,588) $ (222,292) $ (2,453,375) $ (279,122)
Foreign currency translation adjustments 8,430 - 8,656 -
   Total comprehensive loss, net of tax $ (355,158) $ (222,292) $ (2,444,719) $ (279,122)
  
See notes to unaudited interim consolidated financial statements.


KINERJAPAY CORP.
(formerly Solarflex Corp.)
Consolidated Statements of Cash Flows
For the Nine Months Ended September 30, 2016 and 2015
(Unaudited)
Back to Table of Contents
For the For the
  Nine Months Ended Nine Months Ended
  September 30, 2016 September 30, 2015
Cash flows from operating activities:
Net loss $ (2,453,375) $ (279,122)
Adjustments required to reconcile net loss to cash used in operating activities:
   Depreciation and amortization 103 -
   Amortization of debt discount - 37,058
   Loss on extinguishment of debt 9,003 199,305
   Common stock issued for services 1,508,133 -
Changes in net assets and liabilities:
   (Increase) decrease in prepaid expenses (4,616) -
   Increase (decrease) in accounts payable 31,230 -
   Increase (decrease) in accrued liabilities   7,094   18,951
     Net cash used in operating activities (902,428) (23,808)
 
Cash flows from investing activities:
   Purchase of equipment (2,720) -
     Cash used in investing activities (2,720) -
         
Cash flows from financing activities:
   Proceeds from issuance of common stock 804,987 -
   Proceeds from debt - 23,000
   Principal payments made on debt (8,689) -
     Net cash provided by financing activities 796,298 23,000
  
   Foreign currency adjustment 8,656 -
          
Change in cash (100,194) (808)
Cash - Beginning of period 250,194 1,824
Cash - End of period $ 150,000 $ 1,016
 
Supplemental Cash Flow Disclosure:
Non-cash transactions:        
Settlement of restricted cash with common stock $ 250,013 $ -
Debt discount attributable to beneficial conversion feature $ - $ 13,333
Stock issued to settle debt $ 15,750 $ -
 
See notes to unaudited interim consolidated financial statements.

KINERJAPAY CORP.
(formerly Solarflex Corp.)

Notes to Unaudited Consolidated Financial Statements
Back to Table of Contents

1.  The Company and Significant Accounting Policies

Organizational Background

KinerjaPay Corp. ("Kinerja" or the "Company") is a Delaware corporation and has not commenced operations. The Company was incorporated under the laws of the State of Delaware on February 12, 2010. The business plan of the Company was to develop a commercial application of the design in a patent of a "Solar element and method of manufacturing the same". On November 10, 2015 this plan was abandoned and all related contracts and agreements rescinded.

On December 1, 2015, the Company entered into a license agreement with PT Kinerja Indonesia, an entity organized under the laws of Indonesia and controlled by Mr. Ng ("PT Kinerja"), for an exclusive, world-wide license to use and commercially exploit certain technology and intellectual property and its website, KinerjaPay.com. Pursuant to the License Agreement, the Company was granted the exclusive, world-wide rights to the KinerjaPay IP, an e-commerce platform that provides users with the convenience of e-wallet service for bill transfer and online shopping and is among the first portals to allow users the convenience to top-up phone credit. In conjunction with the agreement the company changed its name from Solarflex Corp. to KinerjaPay Corp. On April 6, 2016, P.T. Kinerja Pay Indonesia a subsidiary was organized under the laws of Indonesia. 

The accompanying financial statements of the Company were prepared from the accounts of the Company under the accrual basis of accounting.

Basis of Presentation:

The accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which contemplate continuation of the Company as a going concern. The Company has not established sufficient revenue to cover its operating costs, and as such, has incurred an operating loss since inception. Further, as of September 30, 2016, the cash resources of the Company were insufficient to meet its current business plan. These and other factors raise substantial doubt about the Company's ability to continue as a going concern. The accompanying financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the possible inability of the Company to continue as a going concern.

Principles of Consolidation:

The financial statements include the accounts of KinerjaPay Corp. and its wholly owned subsidiary PT KinerjaPay, Indonesia. All significant inter-company balances and transactions have been eliminated.

Significant Accounting Policies

Use of Estimates:

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statement and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from the estimates.

Cash and Cash Equivalents:  For financial statement presentation purposes, the Company considers those short-term, highly liquid investments with original maturities of three months or less to be cash or cash equivalents. There were no cash equivalents as of September 30, 2016 and December 31, 2015.

Property and Equipment:

New property and equipment are recorded at cost. Depreciation is computed using the straight-line method over the estimated useful lives of the assets, generally 5 years. Expenditures for renewals and betterments are capitalized. Expenditures for minor items, repairs and maintenance are charged to operations as incurred. Gain or loss upon sale or retirement due to obsolescence is reflected in the operating results in the period the event takes place.

Valuation of Long-Lived Assets:

We review the recoverability of our long-lived assets including equipment, goodwill and other intangible assets, when events or changes in circumstances occur that indicate that the carrying value of the asset may not be recoverable. The assessment of possible impairment is based on our ability to recover the carrying value of the asset from the expected future pre-tax cash flows (undiscounted and without interest charges) of the related operations. If these cash flows are less than the carrying value of such asset, an impairment loss is recognized for the difference between estimated fair value and carrying value. Our primary measure of fair value is based on discounted cash flows. The measurement of impairment requires management to make estimates of these cash flows related to long-lived assets, as well as other fair value determinations.

Stock Based Compensation:

Stock-based awards are accounted for using the fair value method in accordance with ASC 718, Share-Based Payments. Our primary type of share-based compensation consists of stock options. We use the Black-Scholes option pricing model in valuing options. The inputs for the valuation analysis of the options include the market value of the Company's common stock, the estimated volatility of the Company's common stock, the exercise price of the warrants and the risk free interest rate.

Accounting For Obligations And Instruments Potentially To Be Settled In The Company's Own Stock:

We account for obligations and instruments potentially to be settled in the Company's stock in accordance with FASB ASC 815, Accounting for Derivative Financial Instruments. This issue addresses the initial balance sheet classification and measurement of contracts that are indexed to, and potentially settled in, the Company's own stock.

Fair Value of Financial Instruments:

FASB ASC 825, "Financial Instruments," requires entities to disclose the fair value of financial instruments, both assets and liabilities recognized and not recognized on the balance sheet, for which it is practicable to estimate fair value. FASB ASC 825 defines fair value of a financial instrument as the amount at which the instrument could be exchanged in a current transaction between willing parties. At September 30, 2016 and December 31, 2015, the carrying value of certain financial instruments (cash and cash equivalents, accounts payable and accrued expenses.) approximates fair value due to the short-term nature of the instruments or interest rates, which are comparable with current rates.

Fair Value Measurements:

The Company measures fair value under a framework that utilizes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurements) and the lowest priority to unobservable inputs (level 3 measurements). The three levels of inputs which prioritize the inputs used in measuring fair value are:

Level 1: Inputs to the valuation methodology are unadjusted quoted prices for identical assets or liabilities in active markets that the Company has the ability to access.

Level 2: Inputs to the valuation methodology include:
- Quoted prices for similar assets or liabilities in active markets;
- Quoted prices for identical or similar assets or liabilities in inactive markets;
- Inputs other than quoted prices that are observable for the asset or liability;
- Inputs that are derived principally from or corroborated by observable market data by correlation or other means.
If the asset or liability has a specified (contractual) term, the level 2 input must be observable for substantially the full term of the asset or liability.

Level 3: Inputs to the valuation methodology are unobservable and significant to the fair value measurement.
The assets or liability's fair value measurement level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Valuation techniques used need to maximize the use of observable inputs and minimize the use of unobservable inputs. The following table presents assets that were measured and recognize at fair value on September 30, 2016 and December 31, 2015 and the years then ended on a recurring basis:

Fair Value Measurements at September 30, 2016
Quoted Prices in Active Significant Other Significant
Markets for Identical Assets Observable Inputs Unobservable Inputs

Total

(Level 1) (Level 2) (Level 3)
None $ - $ - $ - $ -
Total assets and liabilities at fair value $ - $ - $ - $ -

 

Fair Value Measurements at December 31, 2015
Quoted Prices in Active Significant Other Significant
Markets for Identical Assets Observable Inputs Unobservable Inputs

Total

(Level 1) (Level 2) (Level 3)
None $ - $ - $ - $ -
Total assets and liabilities at fair value $ - $ - $ - $ -

When the Company changes its valuation inputs for measuring financial assets and liabilities at fair value, either due to changes in current market conditions or other factors, it may need to transfer those assets or liabilities to another level in the hierarchy based on the new inputs used. The Company recognizes these transfers at the end of the reporting period that the transfers occur. For the periods ended September 30, 2016 and 2015, there were no significant transfers of financial assets or financial liabilities between the hierarchy levels.

Revenue Recognition:

Our principal products and services are: (i) our electronic payment service ("EPS") and (ii) our virtual marketplace both of which are available on our portal under the domain name KinerjaPay.com. Through our Portal and Mobile App we provide EPS to consumers and merchants. Our EPS provides an affordable, secure and reliable method to consumers and merchants, as well as friends and family, to pay and transfer money using electronic devices (e.g., mobile, tablets and personal computers). In addition, consumers, merchants and businesses of all sizes can accept payments from merchant websites and mobile devices. Our EPS service enables consumers to conveniently pay utility bills, phone bills, credit card payments and add credit to their cell phone accounts. We developed a proprietary digital e-wallet software, which provides users with the ability to complete EPS transactions safely and conveniently. The e-wallet acts as an escrow account as payments will only be released to the seller once the buyer has received the product. We recognize revenue as a percentage the dollar value of each at the completed transaction.

We pay transaction fees as follows: (i) 3.9% + $0.30 when senders fund payment transactions using PayPal; (ii) no fees when customers fund payment transactions by electronic transfer of funds from a bank accounts; and (iii) fees of $0.25 to $0.50 per transaction if customers fund payment transactions by using a third party payment gateway.

Earnings per Common Share: 

We compute net income (loss) per share in accordance with ASC 260, Earning per Share. ASC 260 requires presentation of both basic and diluted earnings per share (EPS) on the face of the income statement. Basic EPS is computed by dividing net income (loss) available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method and convertible preferred stock using the if-converted method. In computing Diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all dilutive potential shares if their effect is anti-dilutive.

Common Stock Split:

On January 15, 2016 we declared a reverse split of our common stock. The formula provided that every thirty (30) issued and outstanding shares of common stock of the Corporation be automatically split into one (1) share of common stock. The reverse split was effective upon receipt of approval from FINRA. Except as otherwise noted, all share, option and warrant numbers have been restated to give retroactive effect to this split. All per share disclosures retroactively reflect post-split shares.

Income Taxes:

We have adopted ASC 740, Accounting for Income Taxes. Pursuant to ASC 740, we are required to compute tax asset benefits for net operating losses carried forward. The potential benefits of net operating losses have not been recognized in these financial statements because the Company cannot be assured it is more likely than not it will utilize the net operating losses carried forward in future years.

We must make certain estimates and judgments in determining income tax expense for financial statement purposes. These estimates and judgments occur in the calculation of certain tax assets and liabilities, which arise from differences in the timing of recognition of revenue and expense for tax and financial statement purposes.

Deferred tax assets and liabilities are determined based on the differences between financial reporting and the tax basis of assets and liabilities using the tax rates and laws in effect when the differences are expected to reverse. ASC 740 provides for the recognition of deferred tax assets if realization of such assets is more likely than not to occur. Realization of our net deferred tax assets is dependent upon our generating sufficient taxable income in future years in appropriate tax jurisdictions to realize benefit from the reversal of temporary differences and from net operating loss, or NOL, carryforwards. We have determined it more likely than not that these timing differences will not materialize and have provided a valuation allowance against substantially all of our net deferred tax asset. Management will continue to evaluate the realizability of the deferred tax asset and its related valuation allowance. If our assessment of the deferred tax assets or the corresponding valuation allowance were to change, we would record the related adjustment to income during the period in which we make the determination. Our tax rate may also vary based on our results and the mix of income or loss in domestic and foreign tax jurisdictions in which we operate.

In addition, the calculation of our tax liabilities involves dealing with uncertainties in the application of complex tax regulations. We recognize liabilities for anticipated tax audit issues in the U.S. and other tax jurisdictions based on our estimate of whether, and to the extent to which, additional taxes will be due. If we ultimately determine that payment of these amounts is unnecessary, we will reverse the liability and recognize a tax benefit during the period in which we determine that the liability is no longer necessary. We will record an additional charge in our provision for taxes in the period in which we determine that the recorded tax liability is less than we expect the ultimate assessment to be.

ASC 740 which requires recognition of estimated income taxes payable or refundable on income tax returns for the current year and for the estimated future tax effect attributable to temporary differences and carry-forwards. Measurement of deferred income tax is based on enacted tax laws including tax rates, with the measurement of deferred income tax assets being reduced by available tax benefits not expected to be realized.

Uncertain Tax Positions:

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. In accordance with the guidance of FASB ASC 740-10, Accounting for Uncertain Income Tax Positions, 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 should be reflected as a liability for unrecognized tax benefits in the accompanying consolidated balance sheets along with any associated interest and penalties that would be payable to the taxing authorities upon examination.

Our federal and state income tax returns are open for fiscal years ending on or after December 31, 2009. We are not under examination by any jurisdiction for any tax year. At September 30, 2016 we had no material unrecognized tax benefits and no adjustments to liabilities or operations were required under FASB ASC 740-10.

Recent Accounting Pronouncements

In April 2015, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2015-03, "Interest-Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs." ASU 2015-03 requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. Currently, debt issuance costs are recognized as deferred charges and recorded as other assets. The guidance is effective for annual and interim periods beginning after December 15, 2015 with early adoption permitted and is to be implemented retrospectively. Adoption of the new guidance will only affect the presentation of the Company's consolidated balance sheets and will have no impact to our financial statements.

Management does not anticipate that the adoption of these standards will have a material impact on the financial statements.

The accompanying balance sheet as of September 30, 2016, which was derived from audited financial statements, and the unaudited interim financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP") for interim financial information and in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. These financial statements should be read in conjunction with the audited financial statements and related notes for the fiscal year ended December 31, 2015, included in the Company's Annual Report on Form 10-K covering that period.

The preparation of these financial statements in conformity with accounting principles generally accepted in the United States requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an on-going basis, we evaluate our estimates, including those related intangible assets, income taxes, insurance obligations and contingencies and litigation. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other resources. Actual results may differ from these estimates under different assumptions or conditions. The results of operations for the periods presented are not necessarily indicative of the results for the full fiscal year or any future period.

In the opinion of management, the information furnished in these interim financial statements reflects all adjustments necessary for a fair statement of the financial position and results of operations and cash flows as of and for the three and nine-month periods ended September 30, 2016 and 2015. All such adjustments are of a normal recurring nature. The Financial Statements do not include some information and notes necessary to conform to annual reporting requirements.

2. Stockholders' Equity

On January 15, 2016, we amended our certificate of incorporation to increase authorized capital to include 10 million shares of $.0001 par value preferred shares. No preferred shares have been issued.

Transactions in our Common Stock

Stock issued upon conversion of debt:

On February 19, 2016, we issued 30,000 shares of our common stock in settlement of $15,750 in accounts payable. The settlement resulted in a loss of $9,003.

Stock issued upon completion of Regulation S offering:

Beginning December 2015 we offered for sale common shares through a placement of common stock units. Each unit consists of one share of common stock and one warrant to purchase common stock. The units are to be sold for the offering price of $0.50 per unit. The warrants are exercisable at $1.00 and expire two years from the date of issuance. The offering calls for a minimum of $500,000 to be raised up to a maximum of $2,500,000. As of March 31, 2016, the offering was completed and shares and warrants were issued.

In August 2016, we offered for sale common shares through a placement of common stock units. Each unit consists of one share of common stock and one warrant to purchase common stock. The units are to be sold for the offering price of $0.50 per unit. The warrants are exercisable at $1.00 and expire two years from the date of issuance. The offering calls for a minimum of $500,000 to be raised up to a maximum of $2,500,000. As of September 30, 2016, $150,000 has been raised. Until the minimum amount is received, the amounts raised will be carried as restricted cash on the balance sheet and the Company may be required to refund the amounts raised to date.

We received $804,987 during the nine months ended September 30, 2016 and $250,013 in Q4 of 2015 through a placement of common stock units. Each unit consists of one share of common stock and one warrant to purchase common stock. The units were sold for the offering price of $0.50 per unit. The warrants are exercisable at $1.00 and expire two years from the date of issuance.

Stock Issued for Services:

On February 19, 2016, we issued 1,333,333 shares of our common stock to Mr. Ng (an officer and director of the company) individually and as control person of PT Kinerja as payment for services as part of a service agreement resulting from the license agreement. The shares were valued at the closing price as of the date of the agreement ($0.9001) and resulted in full recognition of $1,200,133 in consulting services expense.

On June 15, 2016, we issued 300,000 shares of our common stock to an unrelated party as payment for a service agreement. The shares were valued at the closing price as of the date of the agreement ($0.77) and resulted in full recognition of $231,000 in consulting services expense.

On July 29, 2016, we issued 100,000 shares of our common stock to an unrelated party as payment for a service agreement. The shares were valued at the closing price as of the date of the agreement ($0.77) that was for a total of $77,000 offset by $1,000 in cash received for the shares. This resulted in full recognition of the excess of fair value over cash received of $76,000 that was for a total of as consulting services expense.

3. Related Party Transactions not Disclosed Elsewhere

On December 1, 2015, the Company entered into an agreement with PT Kinerja Indonesia, an entity organized under the laws of Indonesia ("PT Kinerja"), for an exclusive, world-wide license to use and commercially exploit certain KinderjaPay technology and intellectual property. Pursuant to the License Agreement and in consideration for the payment of royalties, the Company has been granted the exclusive, world-wide rights to the KinerjaPay IP, an eCommerce platform that provides users with the convenience of e-Wallet service for bill transfer and online shopping having advanced functionality and "gamification" features, among others, and is among the first portals to allow users the convenience to top-up phone credit. Mr. Ng is a control person of PT Kinerja and a controlling shareholder and board member of KinerjaPay Corp. PT Kinerja Indonesia provides all necessary R&D, technical support, procurement/logistic and IT operational services and other technology support needed to operate our Portal. On December 1, 2015, the Company entered into an agreement with PT Kinerja Indonesia for an exclusive, world-wide license to use and commercially exploit certain KinderjaPay technology and intellectual property. The licensing agreement requires a 1% royalty on sales generated by the Company. The company plans to conduct operations through its subsidiary P.T. Kinerja Pay Indonesia which was formed on April 6, 2016.

4. Going Concern

The accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which contemplate continuation of the Company as a going concern. The Company has not established sufficient revenue to cover its 2016 operating costs, and as such, has incurred an operating loss since inception. Further, as of September 30, 2016, the cash resources of the Company were insufficient to meet its current business plan. These and other factors raise substantial doubt about the Company's ability to continue as a going concern. The accompanying financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the possible inability of the Company to continue as a going concern.

5. Subsequent Events

There were no other material subsequent events following the period ended September 30, 2016 and throughout the date of the filing of Form 10-Q.

 


ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS. Back to Table of Contents

As used in this Form 10-Q, references to the "KinerjaPay," Company," "we," "our" or "us" refer to KinerjaPay Corp. Unless the context otherwise indicates.

The following plan of operation provides information which management believes is relevant to an assessment and understanding of our results of operations and financial condition. The discussion should be read along with our financial statements and notes thereto. This section includes a number of forward-looking statements that reflect our current views with respect to future events and financial performance. Forward-looking statements are often identified by words like believe, expect, estimate, anticipate, intend, project and similar expressions, or words which refer to future events. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from our predictions.

Plan of Operations

The Company was incorporated in Delaware on February 12, 2010 under the name Solarflex Corp. for the purpose of developing, manufacturing and selling a solar photovoltaic element, a device that converts light into electrical flow (also known as a photovoltaic cell) based on certain proprietary technology to enable an increase in solar energy conversion and provide energy at a lower cost. We did not generate any revenues from the sale of any solar photovoltaic element, nor did we successfully manufacturer or construct a working prototype. We determined during the 4th quarter of 2015 to evaluate potential business opportunities.

On December 1, 2015, the Company entered into a license agreement (the "License Agreement") with PT Kinerja Indonesia, an entity organized under the laws of Indonesia and controlled by Mr. Ng ("PT Kinerja"), for an exclusive, world-wide license to use and commercially exploit certain technology and intellectual property (the "KinerjaPay IP") and its website, KinerjaPay.com. Pursuant to the License Agreement, the Company was granted the exclusive, world-wide rights to the KinerjaPay IP, an e-commerce portal.

In connection with the License Agreement, we agreed to: (i) change the name of the Company from Solarflex Corp to KinerjaPay Corp.; (ii) implement a reverse split of our common stock on a one-for-thirty (1:30) basis; and raise equity capital in the minimum offering amount of $500,000 and the maximum offering amount of $2,500,000 through the offering of units at a price of $0.50, each Unit, each consisting of 1 share of common stock (post-reverse) and 1 class A warrant exercisable for a period of 24 months to purchase 1 additional share of common stock (post-reverse) at $1.00. The Unit Offering was made only to "accredited investors" who are not U.S. Persons in reliance upon Regulation S promulgated by the SEC under the Securities Act of 1933, as amended (the "Act"). On January 20, 2016, the Company closed the Minimum Offering after it received subscription proceeds in excess of $500,000. To date, we have raised $655,981 under the Unit Offering, while the Unit Offering is continuing.

In August 2016, we offered for sale common shares through a placement of common stock units. Each unit consists of one share of common stock and one warrant to purchase common stock. The units are to be sold for the offering price of $0.50 per unit. The warrants are exercisable at $1.00 and expire two years from the date of issuance. The offering calls for a minimum of $500,000 to be raised up to a maximum of $2,500,000. As of September 30, 2016, $150,000 has been raised. Until the minimum amount is received, the amounts raised will be carried as restricted cash on the balance sheet and the Company may be required to refund the amounts raised to date.

On October 14, 2016, we filed an S-1A registration statement to register 1,450,000 shares of Common Stock currently held by shareholders.

We will not receive any proceeds from the sale of Common Stock by the Selling Shareholders. All of the net proceeds from the sale of our Common Stock will go to the Selling Shareholders. We have agreed to bear the expenses relating to the registration of the Common Stock for the Selling Shareholders. The Selling Shareholders may sell their shares in the over-the-counter market or otherwise, at market prices prevailing at the time of sale, at prices related to the prevailing market price, or at negotiated prices. We will not receive any proceeds from the sale of Common Stock by the Selling Shareholders. The Common Stock to be sold by the Selling Shareholder is Common Stock that is currently issued. Accordingly, there will be no dilution to our existing shareholders

As of March 10, 2016, the Company's name change to KinerjaPay Corp. and its one-for-thirty reverse stock split became effective. The Company's shares of common stock are subject to quotation on the OTCQB market under the symbol KPAY.

Our principal products and services are (i) our electronic payment service (the "EPS"); and (ii) our virtual marketplace (the "Marketplace") both of which are available on our portal under the domain name KinerjaPay.com (the "Portal"). Our Android-based mobile app not only serves as an extension of desktop or laptop access to our website, but has additional in-app services that cater to mobile users, such as social engagement and digital entertainment (the "Mobile App"). We believe that in combining our EPS function ("PAY") with the ability to buy and sell products via our virtual marketplace ("Buy") enhanced by a gamification component ("Play") our customers and merchants increase their loyalty to our services.

Indonesia, the world's fourth most-populous country, having a population estimated to be 255 million people, is becoming an economic power in the Southeast Asia region. Over 50% of its population is below the age of 30 and we believe that the young Indonesian population is highly adaptive to new technology. The rise of Smartphones and tablets that sell for less than US$100 is rapidly broadening internet access and pushing the Indonesian e-commerce market toward a critical point in terms of scale and profitability, in spite of significant challenges due to poor infrastructure and payment systems. The number of internet users is excepted to double to 125 million by 2017 and Smartphone ownership is to rise from 20 per cent to 52 per cent in the same period, the highest percentage compared to other Southeast Asian countries, according to Redwing, an advisory group.

Notwithstanding our belief that our Portal represents a significant advance as compared to other Indonesian portals, there are a number of potential difficulties that we might face, including the following:

Ÿ We may not be able to raise sufficient additional funds to fully implement our business plan and grow our business;
Ÿ Competitors may develop alternatives that render our Portal services redundant or unnecessary;
Ÿ Our proprietary technology may be shown to have characteristics that may render it insufficient for our business;
Ÿ Our Portal may not become widely accepted by consumers and merchants; and
Ÿ Strict, new government regulations and inappropriate e-commerce policies, especially in an emerging economy such as Indonesia, may hinder the growth of the e-commerce market.

To date, we raised $804,987 in equity capital and we may be expected to require up to an additional $2.5 million in capital during the next 12 months to fully implement our business plan and fund our operations.

Results of Operations during the three months ended September 30, 2016 as compared to the three months ended September 30, 2015

During the three months ended September 30, 2016 and 2015, we did not generate revenues. During the three months ended September 30 , 2016 , we incurred a net loss of $363,588 due to general and administrative expenses of $363,434, depreciation expense of $17 and interest expenses of $137. During the three months ended September 30, 2015 , we incurred a net loss of $222,292 due to general and administrative expenses of $7,174, interest expenses of $3,651, expenses related to amortization of debt discount of $12,162 and expenses related to a loss of $199,305 due to extinguishment of debt .

The significant increase in net loss during the three month ended September 30, 2016 as compared to the same period in the prior year was mainly due to increased professional fees and non-cash compensation expenses.

Results of Operations during the Nine months ended September 30, 2016 as compared to the Nine months ended September 30, 2015

During the nine months ended September 30, 2016 and 2015, we did not generate revenues. During the nine months ended September 30 , 2016 , we incurred a net loss of $2,453,375 due to general and administrative expenses of $2,444,238, depreciation expense of $103, interest expenses of $31 and expenses related to a loss of $9,003 due to conversion of debt . During the nine months ended September 30, 2015 , we incurred a net loss of $279,122 due to general and administrative expenses of $32,208, interest expenses of $10,551, expenses related to amortization of debt discount of $37,058 and expenses related to a loss of $199,305 due to extinguishment of debt .

The significant increase in net loss during the nine month ended September 30, 2016 as compared to the same period in the prior year was mainly due to increased professional fees and non-cash compensation expenses.

Liquidity and Capital Resources

On September 30, 2016, we had $154,616 in current assets represented by $150,000 in restricted cash and $4,616 in prepaid expenses. On December 31, 2015, we had $250,194 in current assets consisting of $81 in cash and $250,113 in restricted cash.

We had fixed assets of $2,617 as of September 30, 2016 and $0 as of December 31, 2015. We had total assets of $157,233 as of September 30, 2016 and $250,194 as of December 31, 2015.

As of September 30, 2016, we had total current liabilities of $188,339 due to accounts payable of $31,230, accrued expenses of $7,109 and $150,000 payable due to unissued stock subscriptions. As of December 31, 2015, we had total current liabilities of $274,467 consisting of $15 in accrued interest, $250,013 in unissued stock subscriptions and $24,439 in short-term notes payable. We had no long-term liabilities as of September 30, 2016 and December 31, 2015.

We used $902,428 in our operating activities during the nine months ended September 30, 2016, which was due to a net loss of $2,453,375 offset by depreciation expense of $103, a loss on extinguishment of debt of $9,003, non-cash compensation charges of $1,508,133, an increase in accounts payable of $31,230, an increase in accrued liabilities of $7,094 and an increase in prepaid expenses of $4,616. We used $23,808 in our operating activities during the nine-month period ended September 30, 2015, which was due to a net loss of $279,122 offset by amortization of debt discount expenses of $37,058, a non-cash charge related to extinguishment of debt of $199,305 and an increase in accounts payable and accrued liabilities of $18,951.

We had investing activities of $2,720 during the nine months ended September 30, 2016 related to the purchase of fixed assets and no investing activities during the same period in the prior year.

We financed our negative cash flow from operations during the nine-month period ended September 30, 2016 through the issuance of common stock of $804,987 reduced by payments of $8,689 related to principal payments on debt. We financed our negative cash flow from operations during the nine-month period ended September 30, 2015 through proceeds of $23,000 from debt issuance.

Availability of Additional Capital

Notwithstanding our success in raising $804,987 from the private sale of equity securities in 2016 and our expectation that we will be successful in raising up to an additional $1.6 million during 2016, there can be no assurance that we will continue to be successful in raising equity capital and have adequate capital resources to fund our operations or that any additional funds will be available to us on favorable terms or in amounts required by us. If we determine that it is necessary to raise additional funds, we may choose to do so through public or private equity or debt financing, a bank line of credit, or other arrangements. If we are unable to obtain adequate capital resources to fund operations, we may be required to delay, scale back or eliminate some or all of our plan of operations, which may have a material adverse effect on our business, results of operations and ability to operate as a going concern.

Any additional equity financing may be dilutive to our stockholders, new equity securities may have rights, preferences or privileges senior to those of existing holders of our shares of common stock. Debt or equity financing may subject us to restrictive covenants and significant interest costs.

Capital Expenditure Plan During the Next Twelve Months

To date, we raised $905,000 in equity capital and we may be expected to require up to an additional $2.5 million in capital during the next 12 months to fully implement our business plan and fund our operations. Our plan is to utilize the equity capital that we raise, together with anticipated cash flow from operations, to fund a very significant investment in sales and marketing, concentration principally on online advertising and incentivizing existing customers for the introduction of new customers, among other strategies. However, there can be no assurance that: (i) we will continue to be successful in raising equity capital in sufficient amounts and/or at terms and conditions satisfactory to the Company; or (ii) we will generate sufficient revenues from operations, to fulfill our plan of operations. Our revenues are expected to come from the sale of our portal services. As a result, we will continue to incur operating losses unless and until we are able to generate sufficient cash flow to meet our operating expenses and fund our planned sales and market efforts. There can be no assurance that the market will adopt our portal or that we will generate sufficient cash flow to fund our enhanced sales and marketing plan. In the event that we are not able to successfully: (i) raise equity capital and/or debt financing; or (ii) market and significantly increase the number of portal users and revenues from such users, our financial condition and results of operations will be materially and adversely affected and we will either have to delay or curtail our plan for funding our sales and marketing efforts.

Going Concern Consideration

Our registered independent auditors have issued an opinion on our financial statements which includes a statement describing our going concern status. This means that there is substantial doubt that we can continue as an on-going business for the next twelve months unless we obtain additional capital to pay our bills and meet our other financial obligations. This is because we have not generated any revenues and no revenues are anticipated until we begin marketing the product. Accordingly, we must raise capital from sources other than the actual sale of the product. We must raise capital to implement our project and stay in business.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK. Back to Table of Contents

A smaller reporting company, as defined by Item 10 of Regulation S-K, is not required to provide the information required by this item.

ITEM 4. CONTROLS AND PROCEDURES. Back to Table of Contents

Evaluation of disclosure controls and procedures.

As of September 30, 2016, the Company's chief executive officer and chief financial officer conducted an evaluation regarding the effectiveness of the Company's disclosure controls and procedures (as defined in Rules 13a-15(e) or 15d-15(e) under the Exchange Act. Based upon the evaluation of these controls and procedures as provided under the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control-Integrated Framework (2013) , our chief executive officer and chief financial officer concluded that our disclosure controls and procedures were ineffective as September 30, 2016. Management has identified corrective actions to address the weaknesses and plans to implement them during the fourth quarter of 2016.

Changes in Internal Control Over Financial Reporting

There were no changes in the Company's internal control over financial reporting during the period covered by this report, which were identified in connection with management's evaluation required by paragraph (d) of Rules 13a-15 and 15d-15 under the Exchange Act, that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS. Back to Table of Contents

There are no pending legal proceedings to which the Company is a party or in which any director, officer or affiliate of the Company, any owner of record or beneficially of more than 5% of any class of voting securities of the Company, or security holder is a party adverse to the Company or has a material interest adverse to the Company. The Company’s property is not the subject of any pending legal proceedings.

ITEM 1A. RISK FACTORS. Back to Table of Contents

A smaller reporting company, as defined by Item 10 of Regulation S-K, is not required to provide the information required by this item.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES UND USE OF PROCEEDS. Back to Table of Contents

In July 2016, we issued 100,000 shares of our common stock to an unrelated party as payment for a service agreement. The shares were valued at the closing price as of the date of the agreement ($0.77) and offset by $1,000 in cash received for the shares. This resulted in full recognition of the excess of fair value over cash received of $76,000 as consulting services expense.

Share based payment transactions were accounted for in accordance with the requirements of ASC 505-50 Equity Based Payments to Non Employees. Paragraph 505-50-30-6 establishes that share-based payment transactions with non-employees shall be measured at the fair value of the consideration received or the fair value of the equity instruments issued, whichever is more reliably measurable. The Company measured share-based payment transactions at the fair value of the shares issued at date of grant, the Company believes that the value of the shares is more reliably measurable.

The Company believes that the issuances and sale of the restricted shares were exempt from registration pursuant to Section 4(2) of the Act as privately negotiated, isolated, non-recurring transactions not involving any public solicitation. The recipients in each case represented their intention to acquire the securities for investment only and not with a view to the distribution thereof. Appropriate restrictive legends are affixed to the stock certificates issued in such transactions. All recipients of restricted shares either received adequate information about the Company or had access, through employment, relation and/or business relationships with the Company to such information.

ITEM 3. DEFAULT UPON SENIOR SECURITIES. Back to Table of Contents

None.

ITEM 4. MINE SAFETY DISCLOSURE. Back to Table of Contents

None.

ITEM 5. OTHER INFORMATION. Back to Table of Contents

None.

ITEM 6. EXHIBITS. Back to Table of Contents

Exhibit No. Description
31.1 Certification of CEO pursuant to Rule 13a-14(a) or 15d-14(a) of the Exchange Act pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2 Certification of CFO pursuant to Rule 13a-14(a) or 15d-14(a) of the Exchange Act pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1 Certification of CEO pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2 Certification of CFO pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

 

SIGNATURES

 

In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

Signature Title Date
/s/ Edwin Witarsa Ng Chief Executive Officer (Principal Executive Officer) October 16, 2017
Edwin Witarsa Ng    
       
/s/ Budi Sidarta Pranata Chief Financial Officer (Principal Financial and Principal Accounting Officer) October 16, 2017
Budi Sidarta Pranata    

 

 

In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

 

Signature Title Date
/s/ Edwin Witarsa Ng Chairman of the Board and CEO October 16, 2017
Edwin Witarsa Ng    
      

 

 


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