ITEM 2. | MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND PLAN OF OPERATIONS. |
Forward-looking Statements
We and our representatives may from time to time make written or oral statements that are “forward-looking,” including statements contained in this quarterly report and other filings with the SEC, reports to our stockholders and news releases. All statements that express expectations, estimates, forecasts or projections are forward-looking statements. In addition, other written or oral statements which constitute forward-looking statements may be made by us or on our behalf. Words such as “expect,” “anticipate,” “intend,” “plan,” “believe,” “seek,” “estimate,” “project,” “forecast,” “may,” “should,” variations of such words and similar expressions are intended to identify such forward-looking statements. These statements are not guarantees of future performance and involve risks, uncertainties and assumptions which are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in or suggested by such forward-looking statements. We undertake no obligation to update or revise any of the forward-looking statements after the date of this quarterly report to conform forward-looking statements to actual results. Important factors on which such statements are based are assumptions concerning uncertainties, including but not limited to, uncertainties associated with the following:
| • | Inadequate capital and barriers to raising the additional capital or to obtaining the financing needed to implement our business plans; |
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| • | Our failure to earn revenues or profits; |
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| • | Inadequate capital to continue business; |
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| • | Volatility or decline of our stock price; |
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| • | Potential fluctuation in quarterly results; |
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| • | Rapid and significant changes in markets; |
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| • | Litigation with or legal claims and allegations by outside parties; and |
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| • | Insufficient revenues to cover operating costs. |
• Inadequate capital and barriers to raising the additional capital or to obtaining the financing needed to implement our business plans;
• Our failure to earn revenues or profits;
• Inadequate capital to continue business;
• Volatility or decline of our stock price;
• Potential fluctuation in quarterly results;
• Rapid and significant changes in markets;
• Litigation with or legal claims and allegations by outside parties; and
• Insufficient revenues to cover operating costs.
The following discussion should be read in conjunction with the financial statements and the notes thereto which are included in this quarterly report. This discussion contains forward-looking statements that involve risks, uncertainties and assumptions. Our actual results may differ substantially from those anticipated in any forward-looking statements included in this discussion as a result of various factors.
Overview
Cine-Source Entertainment, Inc. (“Old Corporation”) a Colorado corporation, was formed on July 29, 1988. Pursuant to a Plan of Merger dated February 24, 2004, the Old Corporation filed Articles and Certificate of Merger with the Secretary of State of the State of Colorado merging the Old Corporation into Cine-Source Entertainment, Inc. (the “Surviving Corporation”), a Colorado corporation. A previous controlling shareholder group of the Old Corporation arranged the merger for business reasons that did not materialize. On April 26, 2004, the Surviving Corporation effected a 1-for-200 reverse stock split. The name of the Surviving Corporation was changed to First Quantum Ventures, Inc., on April 27, 2004. On April 13, 2006 the Surviving Corporation formed a wholly owned subsidiary, a Nevada corporation named First Quantum Ventures, Inc. (the “Company”), and on May 5, 2006 merged Surviving Corporation with and into the Company.
The Company is a start-up, developmental stage company and has not yet generated or realized any revenues from business operations. The Company's auditors have issued a going concern opinion in our audited financial statements for the fiscal year ended June 30, 2010 and 2009. This means that our auditors believe there is doubt that the Company can continue as an on-going business for the next twelve months unless it obtains additional capital to pay its bills. This is because the Company has not generated any revenues and no revenues are anticipated. Accordingly, we must raise cash from sources such as investments by others in the Company and through possible transactions with strategic or joint venture partners. In the event we raise cash, we will likely use such funds to develop a new business plan, which is as yet undetermined. We do not plan to use any capital raised for the purchase or sale of any plant or significant equipment. The following discussion and analysis should be read in conjunction with the financial statements of the Company and the accompanying notes appearing subsequently under the caption "Financial Statements".
As disclosed on a Current Report on Form 8-K filed with the SEC on November 16, 2011, on October 28, 2011, we entered into a Share Exchange Agreement (the “Share Exchange Agreement”) with Andrew Godfrey, our Chief Executive Officer, DiMi Telematics, Inc. (“DiMi Telematics” or “DTI”) and the holders of all of the issued and outstanding capital stock of DiMi Telematics (the “DiMi Shareholders”). Under the Share Exchange Agreement, we exchanged 87,450,000 shares of our common stock (the “First Quantum Shares”) for 100% of the issued and outstanding shares of DiMi TelematicsDTI (the “DiMi Shares”). The exchange of the DiMi Shares for the First Quantum Shares is hereinafter referred to as the “Share Exchange.” The First Quantum Shares issued in the Share Exchange represent 85.8% of our issued and outstanding common stock immediately following the Share Exchange. As a result of the Share Exchange, DiMi Telematics is nowDTI became our wholly-owned subsidiary. In connection with the Share Exchange, (a) 15,000,000 shares of our issued and outstanding common stock owned by Kesgood Company, Inc. were surrendered for cancellation and (b) our officers and directors resigned and the following individuals assumed their duties as officers and directors:
Name | | Title(s) |
Barry Tenzer | | President, Chief Executive Officer, Chief Financial Officer, Secretary and Director |
Roberto Fata | | Executive Vice President – Business Development and Director |
COMPARISON OF OPERATING RESULTS FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2011 AND THE THREE MONTHS ENDED SEPTEMBER 30, 2010.
ResultsThe Exchange qualified as a transaction exempt from registration or qualification under the Securities Act of operations1933, as amended (the “Securities Act”), and under the applicable securities laws of each jurisdiction where any of the stockholders reside.
The Company did not generatedesigns, develops and distributes Machine-to-Machine (M2M) communications solutions used to remotely track, monitor, manage and protect multiple mobile and fixed assets in real-time from virtually any revenues from operations forweb-enabled desktop computer or mobile device. Through our proprietary software and hosted service offerings, DTI is endeavoring to capitalize on the three months ended September 30, 2011 or 2010. Accordingly, comparisons with prior periods are not meaningful. The Company is subjectpervasiveness and data transport capabilities of wireless networks in order to risks inherent in the establishment of a newfacilitate communications and process efficiencies between commercial and industrial business enterprise, including limited capital resourcesowners/managers and cost increases in services
Net Operating Revenues
There was no operating revenue for the three months ended September 30, 2011,their respective networked control systems, sensors and 2010 respectively.
Operating Expenses and Charges
Operating expenses for the three months ended September 30, 2011 was $15,137, an increase of $2,656 from $12,481 for the three months ended September 30, 2010. The increase in our net operating expenses is due to increased professional fees and interest expense offset by a decrease in General and Administrative expenses.
Net Loss
Net loss for the three months ended September 30, 2011 was $15,137, an increase of $2,656 compared to $12,481 for the three months ended September 30, 2010.
At September 30, 2011, our accumulated deficit was $396,066.
Financial Condition, Liquidity and Capital Resources
For the three months ended September 30, 2011 and 2010, the Company has not generated cash flow from operations. Consequently, the Company has been dependent upon third party loans to fund its cash requirements.
As of September 30, 2011, the Company had cash of $334. The Company's total assets were $334 as of September 30, 2011. At September 30, 2011, total liabilities increased from $56,844 to $64,817. This increase is attributable to the new borrowing of $10,000 of convertible debt and $1,478 of accrued interest. As of September 30, 2011, the Company had no outstanding debt other than a long-term line of credit. The Company is seeking to raise capital to implement the Company's business strategy. In the event additional capital is not raised, the Company may seek a merger, acquisition or outright sale.
Business Plan and Strategydevices.
The Company is focused on the M2M market segments in which we can provide highly differentiated and value-driven solutions capable of unleashing tangible productivity gains, material cost reductions and quantifiable risk mitigation across an enterprise. Aside from the oversight and administration of our corporate, financial and legal affairs by the executive management team, our Company’s operating activities are centralized in three core areas:
Sales and Marketing, which will employ both direct and indirect sales models utilizing an in-house business development team, partners and resellers and self-service through a service on-demand web interface.
Operations, which will be responsible for managing daily activities related to monitoring and administering our cloud-based server operations; 24/7 client service/help desk; professional services and installation support; and quality assurance and testing of our DiMi software and hosting platform, as well as the implementation and ongoing administration of our hosted clients’ M2M communications platforms.
Product Development, which will be charged with enhancing our existing M2M software applications and services and introducing new and complementary hosted products and applications on a timely basis. We anticipate that the creative formulation of enhancements and new product conceptualization will be performed in-house by our officers and directors. Thereafter, we intend to outsource software enhancement and product development stage enterprise.to outside third parties.
Going Concern
PLAN OF OPERATIONS
Product Development Plan
Product Development will be charged with enhancing our existing M2M software applications and services and introducing new and complementary hosted products and applications on a timely basis.
The primary building blocks of machine-to-machine (M2M) technology on which DTI has focused its development activities have been and will remain:
· Building an expert knowledge base of existing and emerging electronics/technologies that enable geo-location, remote monitoring and control, auto-diagnostics and object identification;
· Engagement of a cloud computing platform that enables ubiquitous, scalable and on-demand network access;
· Development of proprietary software that controls two-way communication events, acts on predefined rules and delivers users a customized web interface that is accessible 24/7 from any web-enabled computer or device anywhere on Earth; and
· Information systems that enable users to process management solutions that allow for exploiting the information gathered for intelligent decision-making purposes and enhanced situational awareness.
The Company’s proprietary M2M solutions utilize a cloud-based, two-way communications delivery platform, marketed as “DiMi.” Leveraging the power, scalability and flexible turnkey advantages of DiMi’s patent-pending software and hosting platform, users are able to remotely track, monitor, manage and protect multiple mobile and fixed assets in real-time from virtually any web-enabled desktop computer or mobile device while located anywhere in the world.
DiMi features a robust, customized interface that gives its users secure command and control functionality of multiple remote, connected sensors, alarms and diagnostic devices. Moreover, the intuitive DiMi framework readily adapts to and integrates both new and legacy monitoring/sensing equipment – irrespective of make, model or manufacturer – providing for simplified, economical M2M deployments.
DiMi is delivered as a monthly, hosted service that puts critical information into the palm of its user’s hands with no major hardware investments. Our hosting platform can be tailored for each customer to create secure and reliable end-to-end connectivity between their specific remote connected equipment and DiMi’s proprietary web interface
Marketing Plan
Strategically, the Company is focused on the M2M market segments in which we can provide highly differentiated and value-driven solutions capable of unleashing tangible productivity gains, material cost reductions and quantifiable risk mitigation across an enterprise.
We have also taken – and will continue to take – the necessary steps to secure the proprietary aspects of our applications through patent filings in the U.S. and in key international markets. Moreover, we intend to remain focused on proactively developing best-of-breed Internet-enabled M2M solutions that will effectively meet the evolving needs of our primary target market, namely web-based remote asset tracking, management and control with applications in the commercial, industrial, educational, government and military sectors.
At that time, DTI intends to concentrate its DiMi commercialization efforts on marketing the solution to property management companies, commercial property developers, government/military installations, industrial facilities, retail and restaurant chains, colleges and universities, fleet managers, and any business or institutional concern with valuable fixed and mobile assets requiring remote surveillance, regular maintenance or general oversight.
In order to achieve accelerated market penetration and sustainable, recurring revenue from a global customer base, The Company expects to ultimately adopt a hybrid sales and marketing model involving direct sales (Solutions Team); channel sales (via leading Value-Added Resellers (VARs) and distributors dedicated to niche market applications that DiMi is capable of addressing in target domestic and international markets); and strategic marketing and integration collaborations with industry leading system integrators, Original Equipment Manufacturers (OEMs) and large cellular carriers and dealers.
Competition
We believe we have a competitive advantage and are uniquely positioned as an M2M solution-centric business since our M2M communications platform is hardware-agnostic, and our hosting environment is in the cloud – this gives us the ability to help businesses lower their IT infrastructure costs and management requirements while improving performance, scalability and flexibility.
Our consultative approach to enabling hosted M2M technologies for our clients – as well as the attention we give to their specific needs, requirements and circumstances – are critical competitive differentiators that we are dedicated to preserving and nurturing as we grow. Moreover, prudent and timely integration of new and emerging digital and web technologies into our M2M communications platform will remain an underpinning mission for DTI if we are to earn and maintain distinction as a recognized industry leader.
Employees
As of November 30, 2011, other than its officers and directors, the Company employed no full time and no part time employees.
Subsidiaries
In accordance with the Exchange Agreement dated October 28, 2011, DTI became a subsidiary of the Company.
LIQUIDITY AND CAPITAL RESOURCES
As of November 30, 2011, we had cash and cash equivalents of $262,663. We have a net working capital of $255,165.
The accompanying consolidated financial statements have been prepared assuming that we will continue ascontemplating a going concern. We have a stockholder’s deficitcontinuation of $396,066 and a working capital deficit of $8,488 at September 30, 2011, and net losses from operations of $15,137 for the three months ended September 30, 2011. These conditions raise substantial doubt about our ability to continueCompany as a going concern. The consolidated financial statements do not include any adjustments that might be necessary if we are unable to continue asCompany has reported a going concern.
Critical Accounting Policies
Use of Estimates. The financial statements have been prepared in conformity with generally accepted accounting principles. In preparing the financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the statements of financial condition and revenues and expenses for the year then ended. Actual results may differ significantly from those estimates.
Start-Up Costs. Costs of start-up activities, including organization costs, are expensed as incurred, in accordance with generally accepted accounting principles.
Net loss per share. Basic and diluted loss per share amounts are computed based on net loss divided by the weighted average number of common shares outstanding. Outstanding warrants$58,010 and options are not included in the computationhad an accumulated deficit of diluted loss per share because the assumed conversion and exercise would be anti-dilutive for the three months ended September 30, 2011. As of September 30, 2011, there were no outstanding options or warrants.$282,096.
Fair value of financial instruments. The carrying values of cash and accrued liabilities approximate their fair values due to the short maturity of these instruments.
The preparation of financial statements in conformity with generally accepted accounting principles (GAAP) 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 financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results may differ from those estimates.
Off-Balance Sheet Arrangements
We have not entered into any off-balance sheet arrangements. generated positive cash flows from operating activities. The primary source of capital has been from the sale of equity securities. Our primary use of capital has been for professional fees, and general and administrative costs. Our working capital requirements are expected to increase in line with the growth of our business.
OFF-BALANCE SHEET ARRANGEMENTS
We do not anticipate entering into anyhave no significant off-balance sheet arrangements during the next 12 months.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.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
Not applicable
ITEM 4. CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
Each of our principal executive and principal financial officer has evaluated the effectiveness of our disclosure controls and procedures, as defined in Rules 13a - 15(e) and 15d - 15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as of the end of the period covered by this quarterly report. Based on their evaluation, each such person concluded that our disclosure controls and procedures were effective as of SeptemberNovember 30, 2011.
Changes in Internal Control over Financial Reporting.
Our management has evaluated whether any change in our internal control over financial reporting occurred during the last fiscal quarter. Based on that evaluation, management concluded that there has been no change in our internal control over financial reporting during the relevant period that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. REMOVED AND RESERVED
None
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS AND 8K
(a) Documents furnished as exhibits hereto:
Exhibit No. | | Description | |
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31.131.1. | | Certification of the Chief Executive Officer and Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
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32.1 | | Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
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EX-101.INS | | XBRL INSTANCE DOCUMENT |
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EX-101.SCH | | XBRL TAXONOMY EXTENSION SCHEMA DOCUMENT |
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EX-101.CAL | | XBRL TAXONOMY EXTENSION CALCULATION LINKBASE |
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EX-101.DEF | | XBRL TAXONOMY EXTENSION DEFINITION LINKBASE |
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EX-101.LAB | | XBRL TAXONOMY EXTENSION LABELS LINKBASE |
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EX-101.PRE | | XBRL TAXONOMY EXTENSION PRESENTATION LINKBASE |
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.