Item 2. Management's Discussion and Analysis of Financial Condition and Plan of Operations
Forward-Looking Statements
This Quarterly Report contains forward-looking statements about our business, financial condition and prospects that reflect managements assumptions and beliefs based on information currently available. We can give no assurance that the expectations indicated by such forward-looking statements will be realized. If any of our managements assumptions should prove incorrect, or if any of the risks and uncertainties underlying such expectations should materialize, our actual results may differ materially from those indicated by the forward-looking statements.
The key factors that are not within our control and that may have a direct bearing on operating results include, but are not limited to, acceptance of our services, our ability to expand our customer base, managements ability to raise capital in the future, the retention of key employees and changes in the regulation of our industry.
There may be other risks and circumstances that management may be unable to predict. When used in this Quarterly Report, words such as,
"believes,"
"expects," "intends,"
"plans,"
"anticipates,"
"estimates"
and similar expressions are intended to identify forward-looking statements, although there may be certain forward-looking statements not accompanied by such expressions.
Overview
We were incorporated in Delaware on May 11, 2011. We currently have no business operations or significant assets. We are a development stage company and plan to identify and acquire a business.
Recent Corporate Developments
The following corporate developments have occurred during the quarter ended June 30, 2014, and up to the date of the filing of this report:
On April 11, 2014, Yan Ming Lui, our former executive officer and former director, entered into a share purchase agreement, with Robert Fedun, our sole executive officer and director. Pursuant to the terms of the Share Purchase Agreement, Mr. Yan Ming Lui sold 36,000,000 shares of our common stock to Mr. Fedun in consideration of the payment of $3,600. As a result of the closing of the Share Purchase Agreement, Mr. Fedun now owns approximately 54.49% of our common stock and Mr. Yan Ming Lui no longer owns any shares of our common stock. As a result, there has been a change in control of the Company.
On April 10, 2014, we received total of $47,910 as subscription to 63,880 shares of our common stock at $0.75. These shares were issued on August 8, 2014.
Results of Operations
Summary of Financial Condition
Table 1 summarizes and compares our financial condition at June 30, 2014, to the year-ended December 31, 2013.
Table 1: Comparison of financial condition
|
| |
|
June 30,
2014
|
December 31,
2013
|
Working capital deficit
|
$ (8,240)
|
$(20,675)
|
Current assets
|
$ 2,607
|
$ -
|
Total liabilities
|
$ 10,847
|
$ 20,675
|
Common stock and additional paid in capital
|
$ 87,930
|
$ 87,930
|
Deficit
|
$ 144,080
|
$ 108,605
|
-7-
Selected Financial Results
Three and Six Months Ended June 30, 2014 and 2013
|
|
|
|
|
| |
|
Three Months Ended
June 30,
|
Percentage Increase /
|
Six Months Ended
June 30,
|
Percentage Increase /
|
|
2014
|
2013
|
(Decrease)
|
2014
|
2013
|
(Decrease)
|
Operating expenses
|
|
|
|
|
|
|
Filing fees
|
$ 1,880
|
$ 2,949
|
(36.2)%
|
$ 7,042
|
$ 2,949
|
138.8%
|
General and administrative
|
12,539
|
-
|
n/a
|
19,321
|
732
|
2,539.5%
|
Professional fees
|
4,871
|
2,750
|
77.1%
|
8,487
|
6,250
|
35.8%
|
Net operating expenses
|
19,290
|
5,699
|
238.5%
|
34,850
|
9,931
|
250.9%
|
Foreign exchange
|
389
|
-
|
n/a
|
625
|
-
|
n/a
|
Net loss
|
$ 19,679
|
$ 5,699
|
245.3%
|
$ 35,475
|
$ 9,931
|
257.2%
|
Revenues
We have not generated any revenues since our inception on May 11, 2011, and there can be no assurance that we will be able to generate or grow revenues in future periods.
Operating Expenses
During the three months ended June 30, 2014, our expenses increased by $ 13,591 or 238.5% from $ 5,699 for the three months ended June 30, 2013 to $ 19,290 for the three months ended June 30, 2014. The increase was associated with our due diligence review of BoomChat Inc., as well as our attempts to secure financing for our operations.
During the six months ended June 30, 2014, our expenses increased by $ 24,919 or 250.9% from $9,931 for the six months ended June 30, 2013 to $34,850 for the six months ended June 30, 2014. The increase was associated with our due diligence review of BoomChat Inc., our attempts to secure financing for our operations, and increased regulatory requirements.
Net Loss
We have experienced net losses in all periods since our inception. Our net loss for the three months ended June 30, 2014 increased by $13,980 from $5,699 incurred during the three months ended June 30, 2013 to $19,679 we incurred during the three months ended June 30, 2014. Our net loss for the six months ended June 30, 2014 increased by $25,544 from $9,931 to $35,475. Our net loss since the date of our inception through June 30, 2014 was $144,080. We anticipate incurring ongoing operating losses and cannot predict when, if at all, we may expect these losses to plateau or narrow.
Liquidity and Capital Resources
Cash Flows
|
| |
|
Six Months Ended
June 30, 2014
|
Six Months Ended
June 30, 2013
|
Cash used in operating activities
|
$ (45,303)
|
$ -
|
Cash provided by financing activities
|
47,732
|
-
|
Effects of foreign currency exchange
|
178
|
-
|
Net increase in cash during the period
|
$ 2,607
|
$ -
|
-8-
During the six months ended June 30, 2014, we used $45,303 in our day-to-day operating activities. We used $35,475 to cover our net loss, and $4,068 and $5,760 to reduce our accounts payable and accrued liabilities, respectively.
Our operations during the six months period ended June 30, 2014, were supported by a CAD$11,500 ($10,405) loan we borrowed from our sole officer and director and by $47,910 we received from a subscription to purchase our shares of common stock. During the same period we repaid the funds we borrowed from our director in full, which resulted in a foreign exchange loss of $178.
In the comparable period ended June 30, 2013, we increased our accounts payable by $5,699 and decreased accrued liabilities by $4,000. Our net loss of $9,931 was in part reduced by $8,232 in the form of donated capital, not expected to be repaid.
As of June 30, 2014, we had $ 2,607 in cash and did not have any other cash equivalents.
We do not have sufficient funds to maintain our operations for the next twelve months, as such, we continue with our ongoing efforts to raise additional capital by conducting additional issuances of our equity and debt securities for cash. The sale of additional equity securities will result in dilution to our stockholders. The incurrence of indebtedness will result in increased debt service obligations and could require us to agree to operating and financial covenants that could restrict our operations or modify our plans to grow the business. Financing may not be available in amounts or on terms acceptable to us, if at all. Any failure by us to raise additional funds on terms favorable to us, or at all, will limit our ability to expand our business operations and could harm our overall business prospects. We cannot assure you that any financing can be obtained or, if obtained, that it will be on reasonable terms. As such, our principal accountants have expressed doubt about our ability to continue as a going concern because we have limited operations and have not fully commenced planned principal operations.
Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements.
Plant and Equipment
We currently do not own any significant plant or equipment that we would seek to sell in the near future.
Related Party Transactions
During the six months ended June 30, 2014 we borrowed CAD$11,500 ($10,405) from our sole director and officer, which we repaid during the same period. We have not paid for expenses on behalf of any of our directors. Our sole officer and director works for us on a part-time basis, and is prepared to devote additional time, as necessary.
Going Concern Consideration
Our auditors have issued an opinion on our annual 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 in the near future. 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.