The accompanying notes are an integral
part of these consolidated condensed financial statements.
The accompanying notes are an integral
part of these consolidated condensed financial statements.
The accompanying notes are an integral
part of these consolidated condensed financial statements.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL
STATEMENTS
DECEMBER 31, 2017
(UNAUDITED)
NOTE 1 – ORGANIZATION
Current Operations and Background
Smartag International, Inc., a Nevada
corporation (“Smartag,” “Company,” “we,” “us,” or “our”), is in the
development stage as defined in Financial Accounting Standards Board Statement No. 7.
In November 2015, Smartag signed an
agreement with Bobby Tang Siu Ki and Yang Ye Cai, the co-owners and founders of Shenzhen Shen Nan Shun Technology Co. Ltd (“SSNST”),
a company based in Shenzhen, China which is involved in e-commerce trading on e-Bay, Amazon and Alipay platforms. Using the expertise
of SSNST, Smartag is developing block chain technology used in the business of e-Commerce trading, procurement, collection and
distribution through a new joint venture company in Hong Kong.
On January 1, 2016, the Company entered
into a revenue sharing agreement with Vander. The Company charged 5% commission as a collection and processing agent for some of
Vander’s Ecommerce platform sales.
On February 2, 2018, Smartag entered
into a Joint Venture & Shareholder’s Agreement with Vander (“JV Agreement”). As a result, the previous agreements
with SSNST and Vander shall terminate upon the formation the new joint venture entity. Under the terms of the JV Agreement, Smartag
and Vander will form a new Hong Kong entity called Smartag e-Business Ltd. (“Newco”). Newco shall pursue e-Commerce
and related Fintech e-Money and e-remittance solutions. Smartag shall own 70% of Newco and Vander shall own 30% of Newco. A copy
of the JV Agreement is attached to this Current Report on Form 8-K as Exhibit 10.1 and is incorporated herein by reference.
NOTE 2 – Basis of Presentation
and Significant of Accounting Policies
Basis of Presentation
—
The unaudited consolidated condensed interim financial statements have been prepared have been prepared in accordance with U.S.
generally accepted accounting principles and include the accounts of Smartag International, Inc. The information furnished herein
reflects all adjustments (consisting of normal recurring accruals and adjustments) which are, in the opinion of management, necessary
to fairly present the operating results for the respective periods. Certain information and footnote disclosures normally present
in annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America
have been omitted pursuant to such rules and regulations. These financial statements should be read in conjunction with the audited
financial statements and notes for the year ended September 30, 2017 included in our Annual Report on Form 10-K. The results of
the three-month period ended June 30, 2017 are not necessarily indicative of the results to be expected for the full year ending
September 30, 2018.
Going Concern
-
The accompanying
consolidated financial statements have been prepared in conformity with generally accepted accounting principles which contemplate
continuation of the company as a going concern. However, we have an accumulated deficit of $3,164,142 as of December 31, 2017.
In view of the matters described above, recoverability of a major portion of the recorded asset amounts shown in the accompanying
balance sheet is dependent upon our continued operations, which in turn is dependent upon our ability to raise additional capital,
and obtain financing. The consolidated financial statements do not include any adjustments relating to the recoverability and classification
of recorded asset amounts or amounts and classification of liabilities that might be necessary should we be unable to continue
as a going concern.
Use of Estimates
—
The preparation of consolidated financial statements in conformity with generally accepted accounting principles in the United
States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities
and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts
of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Cash and Cash Equivalents
— The Company considers investments with original maturities of 90 days or less to be cash equivalents.
Accounts Receivable -
Accounts
receivable are carried at their estimated collectible amounts. Trade accounts receivable are periodically evaluated for collectability
based on past credit history with customers and their current financial condition. The Company has no allowance for doubtful accounts
as of December 31, 2017 and September 30, 2017.
Revenue Recognition
-
The Company recognizes revenue in accordance with ASC 605, Revenue Recognition. ASC 605 requires that four basic criteria must
be met before revenue can be recognized: (1) persuasive evidence of an arrangement exists; (2) delivery of product has met the
criteria established in the arrangement or services rendered; (3) the fee is fixed and determinable; and (4) collectability is
reasonably assured. This occurs when the products or services are completed in accordance with the contracts we have with clients.
In connection with our products and services arrangements, when we are paid in advance, these amounts are classified as deferred
revenue and amortized over the term of the agreement. The Company currently receives its revenue from 5% commissions on payment
processing for Vander, a related party. The Company evaluates the Emerging Issue Task Force (EITF) number 99-19, "Reporting
Revenue Gross as a Principal Versus Net as an Agent,” which sets forth a number of guidelines for the correct treatment of
revenue. We currently treat the related party revenue on a net basis.
Income Taxes
— The
Company records income taxes in accordance with the provisions of the Financial Accounting Standards Board (“FASB”)
Accounting Standards Codification (“ASC”) Topic 740, “Income Taxes.” The standard requires,
among other provisions, an asset and liability approach to recognize deferred tax liabilities and assets for the expected future
tax consequences of temporary differences between the financial statement carrying amounts and tax basis of assets and liabilities. Valuation
allowances are provided if based upon the weight of available evidence, it is more likely than not that some or all of the deferred
tax assets will not be realized.
Stock-Based Compensation
— The Company records transactions under share based payment arrangements in accordance with the provisions of the FASB ASC
Topic 718, “Share Based Payment Arrangements”. The standard requires recognition of the cost of employee
services received in exchange for an award of equity instruments in the consolidated financial statements over the period the employee
is required to perform the services in exchange for the award. The standard also requires measurement of the cost of employee services
received in exchange for an award. The Company is using the modified prospective method allowed under this standard. Accordingly,
upon adoption, prior period amounts have not been restated. Under this application, the Company recorded the cumulative effect
of compensation expense for the unvested portion of previously granted awards that remain outstanding at the date of adoption and
recorded compensation expense for all awards granted after the date of adoption.
The standard provides that income tax
effects of share-based payments are recognized in the consolidated financial statements for those awards that will normally result
in tax deduction under existing law. Under current U.S. federal tax law, the Company would receive a compensation expense deduction
related to non-qualified stock options only when those options are exercised and vested shares are received. Accordingly, the financial
statement recognition of compensation cost for non-qualified stock options creates a deductible temporary difference which results
in a deferred tax asset and a corresponding deferred tax benefit in the income statement. The Company does not recognize a tax
benefit for compensation expense related to incentive stock options unless the underlying shares are disposed in a disqualifying
disposition.
Net Loss Per Share
—
The Company computes net loss per share in accordance with FASB ASC Topic 260, “Earnings per Share,” Under the provisions
of the standard, basic and diluted net loss per share is computed by dividing the net loss available to common stockholders for
the period by the weighted average number of shares of common stock outstanding during the period. Common equivalent shares
related to stock options and warrants have been excluded from the computation of basic and diluted earnings per share because their
effect is anti-dilutive.
Concentration of Credit Risk
— Financial instruments that potentially subject the Company to a concentration of credit risk consist of cash. The
Company maintains its cash with high credit quality financial institutions; at times, such balances with any one financial institution
may exceed FDIC insured limits.
Financial Instruments
— Our financial instruments consist of cash, accounts payable, and notes payable. The carrying values of cash,
accounts payable, and notes payable are representative of their fair values due to their short-term maturities.
Recently Issued Accounting Pronouncements
In May 2014, the FASB issued
ASU No. 2014-09,
Revenue from Contracts with Customers (Topic 606)
("ASU 2014-09"), which supersedes
nearly all existing revenue recognition guidance under U.S. GAAP. The core principle of ASU No. 2014-09 is to recognize revenues
when promised goods or services are transferred to customers in an amount that reflects the consideration to which an entity expects
to be entitled for those goods or services. ASU No. 2014-09 defines a five step process to achieve this core principle and, in
doing so, more judgment and estimates may be required within the revenue recognition process than are required under existing U.S.
GAAP. In March 2016, the FASB issued ASU 2016-08,
Revenue from Contracts with Customers (Topic 606): Principal versus Agent
Considerations (Reporting Revenue Gross versus Net)
(“ASU 2016-08”). The amendments in ASU 2016-08 clarify
the implementation guidance on principal versus agent considerations. In April 2016, the FASB issued ASU 2016-10,
Revenue
from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing
(“ASU 2016-10”).
The amendments in ASU 2016-10 clarify aspects relating to the identification of performance obligations and improve the operability
and understandability of the licensing implementation guidance. In May 2016, the FASB issued ASU No. 2016-12("ASU 2016-12"),
Revenue
from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients.
The amendments in ASU 2016-12
address certain issues identified on assessing collectability, presentation of sales taxes, non-cash consideration, and completed
contracts and contract modifications at transition. For all of the ASUs noted above ("ASC 606"), the effective date for
the Company is October 1, 2018 (for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years).
Either the retrospective or cumulative effect transition method is permitted. The Company has been evaluating the impact
of this new pronouncement and does not believe the implementation of ASC 606 will have a significant effect on the financial results
of the Company for fiscal years beginning on and after October 1, 2018.
In November 2015, the FASB issued
an ASU amending the accounting for income taxes and requiring all deferred tax assets and liabilities to be classified as non-current
on the consolidated balance sheet. The ASU is effective for reporting periods beginning after December 15, 2016, with early adoption
permitted. The ASU may be adopted either prospectively or retrospectively. We have adopted guidance and believe it has not had
a material impact on the Company’s financial statements.
In February 1316, the FASB issued
a new standard to amend certain aspects of recognition, measurement, presentation, and disclosure of financial instruments. Most
prominent among the amendments is the requirement for changes in the fair value of our equity investments, with certain exceptions,
to be recognized through net income rather than other comprehensive income (“OCI”). The new standard will be effective
for us beginning July 1, 2018. The application of the amendments will result in a cumulative-effect adjustment to our consolidated
balance sheets as of the effective date. We are currently evaluating the impact of this standard on our financial statements.
In February 2016, the FASB issued
a new standard related to leases to increase transparency and comparability among organizations by requiring the recognition of
lease assets and lease liabilities on the balance sheet. Most prominent among the amendments is the recognition of assets and liabilities
by lessees for those leases classified as operating leases under previous U.S. GAAP. Under the new standard, disclosures are required
to meet the objective of enabling users of financial statements to assess the amount, timing, and uncertainty of cash flows arising
from leases. We will be required to recognize and measure leases at the beginning of the earliest period presented using a modified
retrospective approach. The new standard will be effective for us beginning July 1, 2019, with early adoption permitted. We
are currently evaluating the impact of this standard on our financial statements.
In February 2016, the FASB issued
ASU 2016-02, Leases (Topic 842), which supersedes the existing guidance for lease accounting, Leases (Topic 840). ASU 2016-02 requires
lessees to recognize leases on their balance sheets, and leaves lessor accounting largely unchanged. The amendments in this ASU
are effective for fiscal years beginning after December 15, 2018 and interim periods within those fiscal years. Early application
is permitted for all entities. ASU 2016-02 requires a modified retrospective approach for all leases existing at, or entered into
after, the date of initial application, with an option to elect to use certain transition relief. The Company is currently evaluating
the impact of this new standard on its financial statements.
In June 2016, the Financial
Accounting Standards Board (“FASB”) issued a new standard to replace the incurred loss impairment methodology in current
U.S. GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and
supportable information to inform credit loss estimates. For trade and other receivables, loans, and other financial instruments,
we will be required to use a forward-looking expected loss model rather than the incurred loss model for recognizing credit losses
which reflects losses that are probable. Credit losses relating to available-for-sale debt securities will also be recorded through
an allowance for credit losses rather than as a reduction in the amortized cost basis of the securities. The new standard will
be effective for us beginning July 1, 2020, with early adoption permitted beginning July 1, 2019. Application of the
amendments is through a cumulative-effect adjustment to retained earnings as of the effective date. We are currently evaluating
the impact of this standard on our financial statements.
In March 2016, the FASB issued
ASU 2016-09,
Compensation - Stock Compensation (Topic 718): Improvement to Employee Share-Based Payment Accounting
.
The new standard contains several amendments that will simplify the accounting for employee share-based payment transactions, including
the accounting for income taxes, forfeitures, statutory tax withholding requirements, classification of awards as either equity
or liabilities, and classification on the statement of cash flows. The Company is currently evaluating the impact of this new standard
on its statements.
Other recent accounting pronouncements
issued by the FASB (including its Emerging Issues Task Force), the AICPA, and the SEC did not or are not believed by management
to have a material impact on our present or future statements.
NOTE 3 –Related Party
During the year ended September 30, 2015, the Company
received $810,000 advances from related. $730,000 was from a related entity to a former director and $80,000 was received from
Chee Song Yap, a former director of the Company. The two parties entered into 0% interest notes which are to be repaid by September
30, 2017. On March 23, 2017, the Company issued 40,500,000 shares of common stock in exchange for the cancelation of this notes.
The Company valued the fair market value of the shares at $0.02 per share on the date of issuance which was the stock price on
the date of issuance.
The Company received $75,000
from Lock Sen Yow under a 0% interest notes which are to be repaid by September 30, 2017.On March 23, 2017, the Company issued
3,750,000 shares of common stock in exchange for the cancelation of this note. The Company valued the fair market value of the
shares at $0.02 per share on the date of issuance which was the stock price on the date of issuance.
As of December 31, 2017 and September
30, 2017, the Company has $41,922 and $(19,861) owed to / (from) SSNST, a related party, which was a temporary underpayment / (overpayment)
and expected to be repaid as soon as practical.
Secured Note
On March 17, 2009, we entered
into a Secured Revolving Promissory Note (the “Secured Note”) with Smartag Solutions Bhd, a Malaysian corporation,
the majority stockholder of the Company. Under the terms of the Note, Smartag Solutions Bhd, agreed to advance to the
Company, from time to time and at the request of the Company, amounts up to an aggregate of $200,000 until September 30, 2014. All
advances shall be paid on or before September 30, 2017 and this advance has an interest rate of 0% per annum. On August 19, 2016,
Smartag Solutions Bhd transferred the balance of the Secured Note to Lock Sen Yow as severance employment package from Smartag
Solutions Bhd. As of September 30, 2017, the balance was $0. On March 23, 2017, the Company issued 9,622,850 shares of common
stock in exchange for the cancelation of this note.
Loan Agreement
On September 19, 2013, we entered
into a Loan Agreement (“Loan Agreement”) with SSB. Under the terms of the agreement, SSB loaned the Company $200,000
(“Loan”). On August 15, 2014, the SSB increased the Loan to $300,000. The Loan shall be repaid on or before September
30, 2017 and this loan has an interest rate of 0% interest per annum. During the nine months ended June 30, 2015, the Company repaid
$100,000 of the Loan. During the year ended September 30, 2016, the Company repaid $50,000 of the Loan. On August 19, 2016, Smartag
Solutions Bhd transferred the balance of the Loan to Lock Sen Yow. On March 23, 2017, the Company issued 7,500,000 shares of common
stock in exchange for the cancelation of this note.
The total amount owed as of December
31, 2017 was $0. During the quarter ended December 31, 2017 and 2016, we recorded imputed interest of $0 and $7,763, respectively,
from all the aforementioned related party debt.
NOTE 4 – Stockholder’s
Deficit
As of September 30, 2017, there were
authorized 500,000,000 shares of common stock, par value $0.001 per share and 25,000,000 shares of preferred stock, par value $0.001
per share. Each common share entitles the holder to one vote, in person or proxy, on any matter on which action of the
stockholder of the corporation is sought.
On March 23, 2017, various related parties
relieved the Company of loans totaling $1,227,457 in exchange for the issuance of 61,372,850 shares of the Company’s common
stock.
On December 29, 2017, we issued 5,000,000
of the Company’s common stock for $100,000 in cash.
There are currently 98,010,001 shares
of common stock issued and outstanding and zero shares of preferred stock issued and outstanding as of December 31, 2017.
ITEM 2. MANAGEMENT’S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The information contained in this
Form 10-Q is intended to update the information contained in our Annual Report on Form 10-K for the year ended September 30, 2017
and presumes that readers have access to, and will have read, the “Management’s Discussion and Analysis of Financial
Condition and Results of Operations” and other information contained in such Form 10-K. The following discussion
and analysis also should be read together with our financial statements and the notes to the financial statements included elsewhere
in this Form 10-Q.
The following discussion contains
certain statements that may be deemed “forward-looking statements” within the meaning of the Private Securities Litigation
Reform Act of 1995. Such statements appear in a number of places in this Report, including, without limitation, “Management’s
Discussion and Analysis of Financial Condition and Results of Operations.” These statements are not guarantees of future
performance and involve risks, uncertainties and requirements that are difficult to predict or are beyond our control. Forward-looking
statements speak only as of the date of this quarterly report. You should not put undue reliance on any forward-looking statements. We
strongly encourage investors to carefully read the factors described in our Annual Report on Form 10-K for the year ended September
30, 2017 in the section entitled “Risk Factors” for a description of certain risks that could, among other things,
cause actual results to differ from these forward-looking statements. We assume no responsibility to update the forward-looking
statements contained in this quarterly report on Form 10-Q. The following should also be read in conjunction with the unaudited
Financial Statements and notes thereto that appear elsewhere in this report.
Overview
Smartag International,
Inc. plans to focus on leveraging existing established players in the e-Commerce business overseas to bring their expertise to
North America and add value with traceability technologies to increase the overall efficiency and reduce logistics costs. Our tracking
supply chain and logistics system are in currently in place. Our next focus is to increase the volume of e-Commerce transactions.
In November 2015, Smartag signed an
agreement with Bobby Tang Siu Ki and Yang Ye Cai, the co-owners and founders of Shenzhen Shen Nan Shun Technology Co. Ltd (“SSNST”),
a company based in Shenzhen, China which is involved in e-commerce trading on e-Bay, Amazon and Alipay platforms. SSNST has been
in the business of e-Commerce for the past 5 years and have consistently been one of the top suppliers of a range of products including
electronic items and toys on eBay and Amazon. As a result of this agreement, Smartag will be able to use its inherent technology
and logistics presence in the United States to offer additional products such as LED lighting, outdoor sports equipment, beauty
products and cosmetics, vehicles accessories and bicycles on the well establish e-Commerce platforms. The agreement with HongKong
Vander Trade Limited, also controlled by Bobby Tang Siu Ki and Yang Ye Cai, shall enable Smartag to enter into the e-Commerce business
which eventually shall combine the usage of its own track & trace solutions to increase efficiency of the supply chain for
online purchases whilst at the same time enable SSNST to further increase its range of products.
On February 2, 2018, Smartag entered
into a Joint Venture & Shareholder’s Agreement with Vander (“JV Agreement”). As a result, the previous agreements
with SSNST and Vander shall terminate upon the formation the new joint venture entity. Under the terms of the JV Agreement, Smartag
and Vander will form a new Hong Kong entity called Smartag e-Business Ltd. (“Newco”). Newco shall pursue e-Commerce
and related Fintech e-Money and e-remittance solutions. Smartag shall own 70% of Newco and Vander shall own 30% of Newco. A copy
of the JV Agreement is attached to this Current Report on Form 8-K as Exhibit 10.1 and is incorporated herein by reference.
Results of Operations
Comparison of the three months
ended December 31, 2017 and 2016
Revenues
For the three months ended December
31, 2017 and 2016, the Company recorded revenue of $538 and $1,694, respectively.
Cost of Sales
Cost of sales was $0 for the three months
ended December 31, 2017 and 2016.
Selling, General and Administrative
Expenses
Selling, general and administrative
expenses were $43,210 and $13,859 for the three months ended December 31, 2017 and 2016, respectively. The increase of $29,351
was due primarily to professional fees.
Liquidity and Capital Resources
The following is a summary of the Company's
cash flows provided by (used in) operating, investing, and financing activities for the three months ended December 31, 2017 and
2016:
|
|
Three Months Ended December 31,
|
|
|
2017
|
|
2016
|
Operating Activities
|
|
$
|
(104,456
|
)
|
|
$
|
(14,276
|
)
|
Investing Activities
|
|
|
—
|
|
|
|
—
|
|
Financing Activities
|
|
|
100,000
|
|
|
|
—
|
|
Net Effect on Cash
|
|
$
|
(4,456
|
)
|
|
$
|
(14,276
|
)
|
In the three months ending December
31, 2017, the Company incurred a net loss of $42,672 and an increase in receivables of $61,784.
In the three months ending December
31, 2016, the Company incurred a net loss of $19,928, an increase in deposits of $2,311 and a increase in accounts payable of $200.
Going Concern Uncertainties
We have sufficient working capital currently
and may secure additional working capital through loans or sales of common stock. Nevertheless, our auditor has issued a "going
concern" qualification as part of his opinion in the Audit Report for the year ended September 30, 2017, and our unaudited
financial statements for the quarter ended December 31, 2017 include a "going concern" footnote contingent on us to be
able to raise working capital to grow our operations.
Commitments and Contractual Obligations
None
Off-Balance Sheet Arrangements
We have not entered into any off-balance
sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in
financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources and would
be considered material to investors.
Recently Issued Accounting Pronouncements
Refer to the notes to the financial
statements for a complete description of recent accounting standards which we have not yet been required to implement and may be
applicable to our operation, as well as those significant accounting standards that have been adopted during the current year.
Critical Accounting Policies
Our financial statements were prepared
in conformity with U.S. generally accepted accounting principles. As such, management is required to make certain estimates, judgments
and assumptions that they believe are reasonable based upon the information available. These estimates and assumptions
affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of income
and expense during the periods presented. The significant accounting policies which management believes are the most critical to
aid in fully understanding and evaluating our reported financial results include the following:
Revenue Recognition -
The Company recognizes revenue in accordance
with ASC 605, Revenue Recognition. ASC 605 requires that four basic criteria must be met before revenue can be recognized: (1)
persuasive evidence of an arrangement exists; (2) delivery of product has met the criteria established in the arrangement or services
rendered; (3) the fee is fixed and determinable; and (4) collectability is reasonably assured. This occurs when the products or
services are completed in accordance with the contracts we have with clients. In connection with our products and services arrangements,
when we are paid in advance, these amounts are classified as deferred revenue and amortized over the term of the agreement.
The Company currently receives its revenue from 5% commissions on payment processing for Vander, a related party. The Company evaluates
the Emerging Issue Task Force (EITF) number 99-19, "Reporting Revenue Gross as a Principal Versus Net as an Agent,”
which sets forth a number of guidelines for the correct treatment of revenue. We currently treat the related party revenue on a
net basis.
Item 3 Quantitative and Qualitative
Disclosures About Market Risk.
As a "smaller reporting company"
as defined by Item 10 of Regulation S-K, the Company is not required to provide information required by this Item
Item 4 Controls and Procedures.
Evaluation of Disclosure
Controls and Procedures
:
We conducted an evaluation under the supervision and with the participation of our management,
including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure
controls and procedures. The term "disclosure controls and procedures", as defined in Rules 13a-15(e) and 15d-15(e)
under the Securities and Exchange Act of 1934, as amended ("Exchange Act"), means controls and other procedures of a
company that are designed to ensure that information required to be disclosed by the company in the reports it files or submits
under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Securities and
Exchange Commission's rules and forms. Disclosure controls and procedures also include, without limitation, controls and
procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under
the Exchange Act is accumulated and communicated to the company's management, including its principal executive and principal financial
officers, or persons performing similar functions, as appropriate, to allow timely decisions regarding required disclosure.
Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded as of December 31, 2017, that our disclosure
controls and procedures are effective to a reasonable assurance level of achieving such objectives. However, it should be
noted that the design of any system of controls is 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,
regardless of how remote.
Management's Report on
Internal Control Over Financial Reporting
:
Our management is responsible for establishing and maintaining adequate
internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Our internal
control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and
the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. The
internal controls for the Company are provided by executive management's review and approval of all transactions. Our
internal control over financial reporting also includes those policies and procedures that:
-
pertain to the maintenance
of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of our assets;
-
provide reasonable
assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S. GAAP,
and that our receipts and expenditures are being made only in accordance with the authorization of our management; and
-
provide reasonable
assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have
a material effect on the financial statements.
Because of its inherent limitations,
internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or
that the degree of compliance with the policies or procedures may deteriorate.
Management assessed the effectiveness
of the Company's internal control over financial reporting as of December 31, 2017. In making this assessment, management
used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control-Integrated
Framework. Management's assessment included an evaluation of the design of our internal control over financial reporting
and testing of the operational effectiveness of these controls.
Based on this assessment, management
has concluded that as of December 31, 2017, our internal control over financial reporting was effective to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance
with U.S. generally accepted accounting principles.
This quarterly report does not
include an attestation report of the Company's registered public accounting firm regarding internal control over financial reporting.
Management's report was not subject to attestation by the Company's registered public accounting firm pursuant to temporary rules
of the Securities and Exchange Commission that permit the Company to provide only management's report in this annual report.
Changes in Internal Control over
Financial Reporting:
There were no changes in our internal control over financial reporting during the quarter ending
December 31, 2017, that have materially affected, or are reasonably likely to materially affect, our internal control over financial
reporting.
PART II -- OTHER INFORMATION
Item 1. Legal
Proceedings.
To the best knowledge of our sole officer
and director, the Company is not a party to any legal proceeding or litigation.
Item 1A. Risk
Factors.
As a "smaller reporting company"
as defined by Item 10 of Regulation S-K, the Company is not required to provide information required by this Item. See the Company's
Annual Report on Form 10-K for the period ending September 30, 2017 which identifies and discloses certain risks and uncertainties
including, without limitation, those "Risk Factors" included in Item 1A of the Annual Report.
Item 2. Unregistered
Sales of Equity Securities and Use of Proceeds.
None.
Item 3. Defaults
Upon Senior Securities.
None.
Item 5. Other
Information.
None.
ITEM 6.
|
|
Exhibits
|
|
|
31
|
Certification of President pursuant to Exchange Act Rule 13a-14 and 15d-14.
|
|
|
|
|
|
|
32
|
Certification of the Company’s Chief Executive Officer and Chief Financial Officer, pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|