U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
Mark One
xQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 20162017
[ ] o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________________ to _________________
Commission File No. 333-185928
AGRO CAPITAL MANAGEMENT CORP.
(Exact name of registrant as specified in its charter)
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(Exact name of registrant as specified in its charter) |
Nevada | 2013 | EIN 33-1230673 | ||
(State or Other Jurisdiction of Incorporation or Organization) |
| (Primary Standard Industrial Classification Number) |
| (IRS Employer Identification Number) |
1255 W. Rio Salado Pkwy, Suite 215
Tempe, AZ 85281
480-339-0181c/o Reitler Kailas & Rosenblatt LLC
885 Third Avenue
New York, New York 10022
(212) 209-3050
(Address and telephone number of principal executive offices)
Indicate by checkmark whether the issuer: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 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 has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). [ ] YesNo xo No
Indicate by check mark whether the registrant is a large accelerated filed, an accelerated filer, a non-accelerated filer, or a smaller reporting company.
Large accelerated filer [ ] Accelerated filer [ ] Non-accelerated filer [ ] Smaller reporting company x
Large accelerated filer | ¨ | Accelerated filer | ¨ |
Non-accelerated filer | ¨ | Smaller reporting company | x |
Indicate by checkmark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes xNo [ ]o
Applicable Only to Issuer Involved in Bankruptcy Proceedings During the Preceding Five Years.
N/A
Indicate by checkmark whether the issuer has filed all documents and reports required to be filed by Section 12, 13 and 15(d) of the Securities Exchange Act of 1934 after the distribution of securities under a plan confirmed by a court. Yes[ ] No[ ]Yes o No x
Applicable Only to Corporate Registrants
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the most practicable date:
Class Common Stock: $0.001 | Outstanding as of September |
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fka GUATE TOURISM INC.
BALANCE SHEETS
June 30, 2016 December 31, 2015 (unaudited) (audited) ASSETS Current Assets Cash and cash equivalents Prepaid expenses and deposits Total Current Assets TOTAL ASSETS LIABILITIES AND STOCKHOLDERS’ EQUITY(DEFICIT) Current Liabilities Accounts payable and accrued liabilities Due to shareholder Total Liabilities Stockholders’ Equity (Deficit) Common stock, par value $0.001, 300,000,000 shares authorized, 72,500,000 and 72,500,000 shares issued and outstanding respectively;* Additional paid-in capital Accumulated deficit Total Stockholders’ Equity (Deficit) TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) $ 45 $ 15,445 6,656 - 6,701 15,445 6,701 15,445 $ 7,939 $ 1,529 65,039 49,074 72,978 50,603 72,500 72,500 (38,633 ) (38,633 ) (100,144 ) (69,025 ) (66,277 ) (35,158 ) $ 6,701 $ 15,445
_________
* Common stock retroactively adjusted for 10:1 forward stock split, effective December 11, 2015.
See accompanying notes to financial statements.
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AGRO CAPITAL MANAGEMENT CORP.
fka GUATE TOURISM INC.
STATEMENTS OF OPERATIONSCONSOLIDATED BALANCE SHEETS
Three Months Ended Six months ended June30, June 30, 2016 2015 2016 2015 (unaudited) (unaudited) (unaudited) (unaudited) REVENUE OPERATING EXPENSES Administrative Expenses Professional fees Total Operating Expenses LOSS BEFORE INCOME TAXES Provision for income taxes NET LOSS NET LOSS PER SHARE: BASIC AND DILUTED WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING: BASIC AND DILUTED* June 30, December 31, ASSETS Current Assets Cash and cash equivalents Prepaid expenses and deposits Total Current Assets TOTAL ASSETS LIABILITIES AND STOCKHOLDERS’ EQUITY(DEFICIT) Current Liabilities Accounts payable and accrued liabilities Due to shareholder Total Liabilities Stockholders’ Equity (Deficit) Common stock, par value $0.001, 75,000,000 shares authorized, 19,912,124 and 18,125,000 shares issued and outstanding respectively; Additional paid-in capital Accumulated deficit Total Stockholders’ Equity (Deficit) TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT) $ - $ - $ - $ - 2,840 - 7,840 4,195 13,254 3,296 23,279 9,569 16,094 3,296 31,119 13,764 (16,094 ) (3,296 ) (31,119 ) (13,764 ) - - - - $ (16,094 ) $ (3,296 ) $ (31,119 ) $ (13,764 ) $ (0.00 ) $ (0.00 ) $ (0.00 ) $ (0.00 ) 72,500,000 70,169,230 72,500,000 69,594,520
2017
2016$ 30 $ 80 - - 30 80 30 80 $ 15,981 $ 6,036 149,355 97,179 165,336 103,215 19,912 18,125 4,972,480 15,742 (5,157,698 ) (137,002 ) (165,306 ) (103,135 ) $ 30 $ 80
_________
* Common stock retroactively adjusted for 10:4:1 forwardreverse stock split, effective December 11, 2015.August 21, 2017
See accompanying notes to financial statements.
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AGRO CAPITAL MANAGEMENT CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWSOPERATIONS
Six months ended June 30, 2016 2015 (unaudited) (unaudited) CASH FLOWS FROM OPERATING ACTIVITIES Net loss Adjustments to reconcile net loss to net cash from operating activities: Changes in operating assets and liabilities: Accounts payable and accrued liabilities Amortization of prepaid expenses Prepaid expense additions Net cash used in operating activities CASH FLOWS FROM INVESTING ACTIVITIES Purchases of property, plant and equipment Net cash used in investing activities CASH FLOWS FROM FINANCING ACTIVITIES Loans from previous director Repayment to previous director Loans from shareholder Proceeds from sale of common stock Net cash provided by financing activities Net decrease in cash and cash equivalents Cash and cash equivalents - beginning of period Cash and cash equivalents - end of period Supplemental Cash Flow Disclosures Cash paid for interest Cash paid for income taxes $ (31,119 ) $ (13,764 ) 6,410 - 5,000 (11,656 ) - (31,365 ) (13,764 ) - - - - - 4,671 - - 15,965 - - 15,965 4,671 (15,400 ) (9,093 ) 15,445 9,093 $ 45 $ - $ - $ - $ - $ -
Three Months Ended Six months ended June 30, June 30, 2017 2016 2017 2016 REVENUE OPERATING EXPENSES Administrative Expenses Professional fees Share based compensation Total Operating Expenses LOSS BEFORE INCOME TAXES Provision for income taxes NET LOSS NET LOSS PER SHARE: BASIC AND DILUTED WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING: BASIC AND DILUTED $ - $ - $ - $ - 75 2,840 10,135 7,840 25,165 13,254 52,037 23,279 3,475,679 - 4,958,524 - 3,500,919 16,094 5,020,696 31,119 (3,500,919 ) (16,094 ) (5,020,696 ) (31,119 ) - - - - $ (3,500,919 ) $ (16,094 ) $ (5,020,696 ) $ (31,119 ) $ (0.18 ) $ (0.00 ) $ (0.27 ) $ (0.00 ) 19,573,962 18,125,000 18,909,911 18,125,000
Common stock retroactively adjusted for 4:1 reverse stock split, effective August 21, 2017
See accompanying notes to financial statements.
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AGRO CAPITAL MANAGEMENT CORP.
fka GUATE TOURISM INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Six months ended June 30, 2017 2016 CASH FLOWS FROM OPERATING ACTIVITIES Net loss Adjustments to reconcile net loss to net cash from operating activities: Stock based compensation Changes in operating assets and liabilities: Accounts payable and accrued liabilities Prepaid expenses Net cash used in operating activities CASH FLOWS FROM FINANCING ACTIVITIES Loans from shareholder Net cash provided by financing activities Net decrease in cash and cash equivalents Cash and cash equivalents - beginning of period Cash and cash equivalents - end of period Supplemental Cash Flow Disclosures Cash paid for interest Cash paid for income taxes $ (5,020,696 ) $ (31,119 ) 4,958,524 - 9,946 6,410 - (6,656 ) (52,226 ) (31,365 ) 52,176 15,965 52,176 15,965 (50 ) (15,400 ) 80 15,445 $ 30 $ 45 $ - $ - $ - $ -
See accompanying notes to financial statements.
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AGRO CAPITAL MANAGEMENT CORP.
fka GUATE TOURISM INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
June 30, 20162017
NOTE 1 – ORGANIZATION AND NATURE OF BUSINESS
Agro Capital Management Corp. (the “Company”) registered as Guate Tourism Inc. in the State of Nevada on November 12, 2013 and was formed to promote tourism in Guatemala. The Company’s office is located at P.T. P7 1556, Sg Miang, Mukim Pekan, Daerah Pekan, Pahang, Malaysia.
On September 11, 2015, the major shareholder of the Company sold 6,000,000 common shares owned by her to unrelated 3rd parties. These 6,000,000 common shares represent 82.8% of common stock of the Company. As a result, the Company changed control on September 11, 2015.
On October 29, 2015, the Company filed Articles of Merger with the Secretary of State of the State of Nevada whereby the Company conducted a statutory merger with its wholly-owned subsidiary Agro Capital Management Corp., which was incorporated on October 29, 2015 and changed its name in connection therewith to “Agro Capital Management Corp”.
In connection therewith the Company also amended its Articles of Incorporation to (i) increase the Company’s authorized number of shares of common stock from 75,000,000 to 300,000,000 and (ii) increase the Company’s total issued and outstanding shares of common stock by conducting a forward split of such shares at the rate of ten (10) shares for every one (1) share currently issued and outstanding (the “Forward Split”).
On December 11, 2015, the name change and Forward Split were effected in the market by Financial Industry Regulatory Authority (“FINRA”). The Company’s ticker symbol became “ACMB”.
The financial statements have been retroactively adjusted to give effect to the 10 for 1 forward split. The par value of each common share outstanding did not change with the stock split. As a result, approximately $62,500 was reclassified from additional paid in capital to common shares – par, resulting in additional paid in capital having a negative balance.
On May 18, 2017, the Company acquired a fully owned subsidiary, ACMC Sdn. Bhd. There have been no material operations to date in the subsidiary.
On August 21, 2017, the Company approved a reverse stock split of the Company’s authorized, issued and outstanding shares of common stock, par value $0.001 per share (the “Common Stock”), at a ratio of 1-for-4 (the “Reverse Stock Split”). On the Effective Date, the trading symbol for the Common Stock will change to “ACMBD” for a period of 20 business days, after which the final “D” will be removed from the Company’s trading symbol, which will revert to the original symbol of “ACMB”. The financial statements have been retroactively adjusted to give effect to the 1 for 4 reverse split. The par value of each common share outstanding did not change with the stock split. As a result, approximately $53,375 was reclassified from to common shares - par to additional paid in capital. As a result of the reverse stock split, 75,000,000 shares of common stock are authorized.
NOTE 2 – SUMMARY OF SIGNIFCANT ACCOUNTING POLICIES
Basis of Presentation
The Company prepares its consolidated financial statements in accordance with rules and regulations of the Securities and Exchange Commission ("SEC"(“SEC”) and accounting principles generally accepted ("GAAP"(“GAAP”) in the United States of America. The accompanying interim consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information in accordance with Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete consolidated financial statements. In the Company'sCompany’s opinion, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the six months ended June 30, 20162017 are not necessarily indicative of the results for the full year. While management of the Company believes that the disclosures presented herein are adequate and not misleading, these interim consolidated financial statements should be read in conjunction with the audited financial statements and the footnotes thereto for the year ended December 31, 20152016 contained in the Company'sCompany’s Form 10-K.
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Basis of Consolidation
The financial statements have been prepared on a consolidated basis, with the Company’s fully owned subsidiary. No intercompany balances or transactions exist during the period ended June 30, 2017.
Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles 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 the financial statements and the reported amount of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Recent Accounting Pronouncements
Management has considered all recent accounting pronouncements issued since the last audit of our financial statements. The Company'sCompany’s management believes that these recent pronouncements will not have a material effect on the Company'sCompany’s financial statements.
NOTE 3 – GOING CONCERN
The accompanying financial statements have been prepared in conformity with generally accepted accounting principle, which contemplate continuation of the Company as a going concern. However, the Company had no revenues from the inception through June 30, 2016.2017. As of June 30, 2017, the Company has an accumulated deficit of $5,157,698. The Company currently has limited working capital, and has not completed its efforts to establish a stabilized source of revenues sufficient to cover operating costs over an extended period of time.
Management anticipates that the Company will be dependent, for the near future, on additional investment capital to fund operating expenses. The Company intends to position itself so that it may be able to raise additional funds through the capital markets. In light of management’s efforts, there are no assurances that the Company will be successful in this or any of its endeavors or become financially viable and continue as a going concern.
These financial statements do not include any adjustments relating to the recoverability and classification of recorded assets or the amounts of and classification of liabilities that might be necessary in the event the company cannot continue in existence.
NOTE 4 – RELATED PARTIESPARTY TRANSACTIONS
In support of the Company'sCompany’s efforts and cash requirements, it may rely on advances from related parties until such time that the Company can support its operations or attains adequate financing through sales of its equity or traditional debt financing. There is no formal written commitment for continued support by shareholders or directors. Amounts represent advances or amounts paid in satisfaction of liabilities. The advances were considered temporary in nature and were not formalized by a promissory note.
During the six months ended June 30, 2016,2017, one of the Company’s shareholders paid on behalf of the Company an amount of $15,965.$52,176. As of June 30, 2016,2017, and December 31, 2015,2016, the Company owed $65,039$149,355 and $49,074$97,179 to this shareholder, respectively.
During the six months ended June 30, 2017, 1,787,124 common shares were issued as stock based compensation, at a fair value of $4,958,524, to management, and related parties. The shares were issued on February 24, March 15 and 24, April 5, 10, 20, and 27, May 5 and 26, and June 7 and 21, 2017. The fair value of the shares issued was between $2.32 and $3.08.
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NOTE 5 – PREPAID EXPENSES
Prepaid expenses consist of regulatory fees paid in advance, and prepayment for services. Prepaid expenses are amortized as the related expense is incurred.
NOTE 6 – COMMON STOCK
The Company has 300,000,000,75,000,000, $0.001 par value shares of common stock authorized.
NoOn August 21, 2017, the Company approved a reverse stock split of the Company’s authorized, issued and outstanding shares of common stock, par value $0.001 per share at a ratio of 1-for-4. The par value of each common share outstanding did not change with the stock split. As a result, approximately $53,375 was reclassified from to common shares - par to additional paid in capital.
During the six months ended June 30, 2017, 1,787,124 common shares were issued during the six month period ending June 30, 2016.as stock based compensation, at a fair value of $4,958,524.
There were 72,500,00019,912,124 and 18,125,000 shares of common stock issued and outstanding as at June 30, 2016,2017, and December 31, 2015.2016.
On May 18, 2017, two of the Company’s Board of Directors’ transferred their shares in the fully owned subsidiary, ACMC Sdn. Bhd, to the Company, for no compensation.
NOTE 76 – COMMITMENTS AND CONTINGENCIES
The Company neither owns nor leases any real or personal property. An officer has provided office services without charge. There is no obligation for the officer to continue this arrangement. Such costs are immaterial to the financial statements and accordingly are not reflected herein. The officers and directors are involved in other business activities and most likely will become involved in other business activities in the future.
The Company has no commitments or contingencies as of June 30, 2016.2017.
From time to time the Company may become a party to litigation matters involving claims against the Company. Management believes that it is adequately insured for its operations and there are no current matters that would have a material effect on the Company'sCompany’s financial position or results of operations.
NOTE 87 – SUBSEQUENT EVENTS
Effective September 19, 2016, the Company rescinded the transactions under the Share Exchange Agreement, dated December 31, 2015 (“Share Exchange Agreement”), by and among, the Company, Capital Epitome Sdn Bhd, a private Malaysian corporation (“CE”), and Dato Mohd Nasir Bin Baba, a Malaysian citizen (“Dato Mohd Nasir” and together with CE, the “Owners”). Pursuant to the Share Exchange Agreement, the Company acquired 100% of the issued and outstanding shares of Agro Capital Management Berhad, a Malaysian corporation (“Target Shares”), in exchange for 30,000,000 shares of the Company’s common stock issued to CE and Dato Mohd Nasir (the “Exchange Shares”).
The Company and the Owners decided to unwind and rescind the transactions and share issuances pursuant to the Share Exchange Agreement due to, among other reasons, the lack of currently available information regarding Agro Capital Management Berhad, a Malaysian corporation (“Target”) necessary for the Company to complete a full financial audit of Target for the two (2) prior fiscal years. As a result, the acquisition held little to no value for the Company’s shareholders, including CE and Dato Mohd Nasir, who became shareholders as a result of such transaction, it therefore became mutually beneficial to all parties for the transactions to be rescinded and return each party to their former positions. In connection with the unwinding and rescission of the transactions under the Share Exchange Agreement, the Target Shares were returned to the Owners and the Exchange Shares were returned to the Company for cancellation.
The Organization’s management has evaluated events through the date that the financial statements were available to be issued, and through the date that they were filed, and has no other significant events to disclose.disclose, other than those noted below.
On August 21, 2017, the Company performed a reverse stock split. Refer to Note 5 above for further detail.
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FORWARD LOOKING STATEMENTS
Statements made in this Form 10-Q that are not historical or current facts are "forward-looking statements" made pursuant to the safe harbor provisions of Section 27A of the Securities Act of 1933 (the "Act") and Section 21E of the Securities Exchange Act of 1934. These statements often can be identified by the use of terms such as "may," "will," "expect," "believe," "anticipate," "estimate," "approximate" or "continue," or the negative thereof. We intend that such forward-looking statements be subject to the safe harbors for such statements. We wish to caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made. Any forward-looking statements represent management's best judgment as to what may occur in the future. However, forward-looking statements are subject to risks, uncertainties and important factors beyond our control that could cause actual results and events to differ materially from historical results of operations and events and those presently anticipated or projected. We disclaim any obligation subsequently to revise any forward-looking statements to reflect events or circumstances after the date of such statement or to reflect the occurrence of anticipated or unanticipated events.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION
This Quarterly Report on Form 10-Q contains “forward-looking” statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements include, our expectations regarding future financial performance and liquidity, our long-term strategy, restructuring and other initiatives, and future operations or operating results. These statements often can be identified by the use of terms such as “may,” “should,” “could,” “will," “expect,” “believe,” “planned,” “anticipate,” “estimate,” “project,” “intend,” “forecast,” “approximate” or “continue,” or similar expressions. Although we believe that our expectations are based on reasonable assumptions within the bounds of our knowledge of our business and operations, we cannot assure that actual results will not differ materially from our expectations. We assume no responsibility to update forward-looking statements made herein or otherwise.
Unless the context requires otherwise, references to “we,” “us,” “our” and “the Company” refer to Agro Capital Management Corp.
GENERAL
Corporate Background
Agro Capital Management Corp. (“Agro Capital” or the “Company”) formerly known as Guate Tourism Inc., was incorporated in the State of Nevada on November 12, 2013.2013 under the name Guate Tourism Inc. Until September 11, 2015, the Companywe operated an online tourist guide company in Guatemala helping public from all over the world to find the best accommodation/restaurant/tour/city/program etc. depending on their budget and interests.Guatemala. On September 11, 2015, the Company underwent a change of control, which was the result of the Company’sour then largest shareholder, Ms. Blanca Bamaca, resigning as an officer and director and selling inentered into a private transactionStock Purchase Agreement with certain third party investors, whereby Ms. Bamaca sold 6 million shares of the Company’sour common stock which representedheld by her, representing at the time 82.8% of the Company’sour issued and outstanding shares of common stock. Upon completion of the sale, we abandoned our business plan and sought an operating company with which to merge or to acquire. On October 29, 2015, Guate Tourism Inc. conducted a statutory merger with its wholly-owned subsidiary, Agro Capital Management Corp. The subsidiary was not an operating company and held no assets. Guate Tourism Inc., as the surviving entity, changed its name in connection therewith to Agro Capital Management Corp. We also amended our Articles of Incorporation to increase our authorized number of shares of common stock from 75 million to 300 million and to increase our total issued and outstanding shares of common stock by conducting a forward split of such shares at the rate of ten shares for every one share then issued and outstanding.
Effective September 19, 2016, the Company rescinded the transactions under theOn December 31, 2015, we entered into a Share Exchange Agreement dated December 31, 2015 (“Share(the “Share Exchange Agreement”), by and among, the Company, with Capital Epitome Sdn Bhd, a private Malaysian corporation (“CE”Capital Epitome”), and DatoMr. Mohd Nasir Bin Baba, a Malaysian citizen (“Dato MohdMr. Nasir” and together with CE, the “Owners”). Pursuant, whereby we agreed to the Share Exchange Agreement, the Company acquired 100%issue 30 million shares of its common stock in exchange for all of the issued and outstanding sharescapital stock of Agro Capital Management Berhad, a Malaysian corporation (“Target Shares”), in exchange for 30,000,000 shares of the Company’s common stock issued to CE and Dato Mohd Nasir (the “Exchange Shares”Agro Malaysia”).
The CompanyOn September 19, 2016, we, Capital Epitome and the Owners decided to unwind and rescind the transactions and share issuances pursuant toMr. Nasir rescinded the Share Exchange Agreement (the “Mutual Rescission”) due to, among other reasons, the lack of currently available information regarding Agro Capital Management Berhad, a Malaysian corporation (“Target”)Malaysia necessary for the Companyus to complete a full financial audit of TargetAgro Malaysia for the two (2) prior fiscal years. As a result, the acquisition held little to no value for the Company’s shareholders, including CE and Dato Mohd Nasir, who became shareholders as a result of such transaction, it therefore became mutually beneficial to all parties for the transactions to be rescinded and return each party to their former positions. In connection with the unwinding and rescission of the transactions under the Share Exchange Agreement, we returned all of the Target Shares wereshares of Agro Malaysia held by us to Capital Epitome and Mr. Nasir and, simultaneously, Capital Epitome and Mr. Nasir returned toall of the Owners and the Exchange Shares were returned toshares of the Company held by them to us for cancellation.
EMPLOYEES AND EMPLOYMENT AGREEMENTSMr. Michael Xavier Dorairaj and Mr. Michael Marcus Liew are former directors of Capital Epitome. At the time of the Share Exchange Agreement and the Mutual Rescission, Mr. Michael Xavier Dorairaj and Mr. Michael Marcus Liew, two of our directors, were not directors of Capital Epitome.
At present,On August 21, 2017, we effected a one-for-four reverse stock split of our common stock.
Business Overview
Agro Capital Management Corp. is a shell company as defined under Rule 12b-2 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), because we have no employees other than our officeror nominal assets and director. We presently do not have pension, health, annuity, insurance, stock options, profit sharingno or similar benefit plans; however, we may adopt such plans in the future. There are presently no personal benefits available to any officers, directors or employees.nominal operations.
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Our current business plan is to enter into a merger, acquisition or other business venture with Agro Malaysia or other companies in the aqua-culture development industry in Malaysia. No assurances can be given that we will be successful in either consummating a transaction with Agro Malaysia or identifying or negotiating a business transaction with another company, or, if we do enter into a business transaction with Agro Malaysia or another company, no assurances can be given as to the terms of a business transaction, or as to the nature of the target company.
If we successfully enter into a merger, acquisition or other business venture with Agro Malaysia in the future, we intend to expand Agro Malaysia into a fully-integrated aquaculture company by developing our own research and development, hatcheries, aquaculture feeds, grow-out operations, processing plant operations, seafood sales and marketing.
Results of Operation
We have incurred recurring losses to date. Our financial statements have been prepared assuming that we will continue as a going concern and, accordingly, do not include adjustments relating to the recoverability and realization of assets and classification of liabilities that might be necessary should we be unable to continue in operation.
We expect we will require additional capital to meet our long term operating requirements. We expect to raise additional capital through, among other things, stockholder loans and the saleissuance of equity or debt securities.
Three Month Periods Ended June 30, 20162017 and 20152016 and Six Month Periods Ended June 30, 20162017 and 20152016
Our net loss for the three monththree-month periods ended June 30, 2017 and 2016 was $3,500,919 and 2015 was $16,094, and $3,296, respectively. Our net loss for the six monthsix-month periods ended June 30, 2017 and 2016 was $5,020,696 and 2015 was $31,119, and $13,764, respectively. During the three and six monthsix-month periods ended June 30, 20162017 and 20152016, we have not generated any revenue.
During the three-month period ended June 30, 2017, our operating expenses were $3,500,919, which consisted of $3,475,679 in share based compensation, $25,165 in professional fees and $75 in administrative expenses, compared to $0, $13,254 and $2,840, respectively for the same period from the prior year. During the six-month period ended June 30, 2017, our operating expenses were $5,020,696, which consisted of $4,958,524 in share based compensation, $52,037 in professional fees and $10,135 in administrative expenses, compared to $0, $23,279 and $7,840, respectively for the same period from the prior year. Our professional fees increased primarily due to an increase in professional fees related to the development of our business plans. The weighted average number of shares outstanding was 18,909,911 for the six-month period ended June 30, 2017, and the weighted average number of shares outstanding was 18,125,000 for the six-month period ended June 30, 2016.
Liquidity and Capital Resources
Six Month Period Ended June 30, 2017
As at June 30, 2016,2017, our total assets were $6,701.$30. As at June 30, 2016,2017, our current liabilities were $72,978.$165,336. Stockholders’ deficitequity (deficit) was $66,277$(165,306) as of June 30, 2016. 2017.
Cash Flows from Operating Activities
We have not generated positive cash flows from operating activities. For the six month period ended June 30, 20162017 and 2015,2016, net cash flows used in operating activities were $31,365was $(52,226) and $13,764,$(31,365), respectively.
Cash Flows from Investing Activities
For the six months periodsmonth period ended June 30, 2017 and 2016, and 2015 we had nodid not have any net cash flows used in, or provided by, investing activities.
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Cash Flows from Financing Activities
For the six month periodsperiod ended June 30, 2016 and 20152017, net cash flows provided byreceived from financing activities werewas $52,176, which was the result of a shareholder’s loan to us, compared to $15,965 and $4,671, respectively.from a shareholder’s loans provided to us for the period ended June 30, 2016.
Plan of Operation and Funding
We expect that working capital requirements will continue to be funded through a combination of our existing funds, shareholders’ loans and further issuances of securities. Our working capital requirements are expected to increase in line with the anticipated growth of our business.
Existing working capital, officer and director loans, and further advances and debt instruments, and anticipated cash flowissuances of securities are expected to be adequate to fund our operations over the next three months. We have no lines of credit or other bank financing arrangements. Generally, we have financed operations to date through the proceeds of officer and director loans and the private placementissuance of equity and debt instruments.securities. In connection with our business plan, management anticipates additional increases in operating expenses and capital expenditures relating to: (i) acquisition of inventory;software; (ii) developmental expenses associated with a start-up business; and (iii) marketing expenses. We intend to finance these expenses with officer and director loans and further issuances of securities, and debt issuances.securities. Thereafter, we expect we will need to raise additional capital and generate revenues to meet long-term operating requirements. Additional issuances of equity or convertible debt securities will result in dilution to our current shareholders.stockholders. Further, such securities might have rights, preferences or privileges senior to our common stock. Additional financing may not be available upon acceptable terms, or at all. If adequate funds are not available or are not available on acceptable terms, we may not be able to take advantage of prospective new business endeavors or opportunities, which could significantly and materially restrict our business operations. We will have to raise additional funds in the next twelve months in order to sustain and expand our operations. We currently do not have a specific plan of how we will obtain such funding; however, we anticipate that additional funding will be in the form of equity financing from the sale of our common stock. We have and will continue to seek to obtain short-term loans from our directors, although no future arrangement for additional loans has been made. We do not have any agreements with our directors concerning these loans. We do not have any arrangements in place for any future equity financing.
Off-Balance Sheet Arrangements
As of the date of this Quarterly Report, we do not have 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 that are material to investors.
Going Concern
The independent auditors' reviewauditor’s report accompanying our December 31, 2015June 30, 2017 financial statements containedcontains an explanatory paragraph expressing substantial doubt about our ability to continue as a going concern. TheAs discussed in the notes to the financial statements, we have been prepared "assuminglimited operations and have yet to obtain profitability. The accompanying financial statements do not include any adjustments that we will continue as a going concern," which contemplates that we will realize our assets and satisfy our liabilities and commitments inmight result from the ordinary courseoutcome of business.this uncertainty.
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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
No report required.We are a smaller reporting company as defined in Item 10 of Regulation S-K and, as a result, we are not required to provide the information under this item.
ITEM 4. CONTROLS AND PROCEDURES
Our management is responsible for establishing and maintaining a system of disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Exchange Act) that is designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed byWe performed an issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated to the issuer’s management, including its principal executive officer or officers and principal financial officer or officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.
An evaluation, was conducted under the supervision and with the participation of our management, including our Chief Executive Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of June 30, 2016. Based on that evaluation, our management concluded that our disclosurethe end of the period covered by this Report. Disclosure controls and procedures were not effective asmeans controls and other procedures of such datea company that are designed to ensureprovide reasonable assurance that material information required to be disclosed by us in the reports that we file or submit under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in SECthe SEC's rules and forms.forms, and that the information is accumulated and communicated to our management, including our Chief Executive Officer, as appropriate to allow timely decisions regarding required disclosure. Based on the existence of the material weaknesses, our management, including our Chief Executive Officer, concluded that our disclosure controls and procedures were not effective at the reasonable assurance level as of the end of the period covered by this Report. Such officer also confirmed that there was no change in our internal control over financial reporting during the three-month period ended June 30, 20162017 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
Management isWe do not awareexpect that our disclosure controls and procedures will prevent all errors and all instances of any legal proceedings contemplated by any governmental authority or any other party involving us or our properties. Asfraud. Disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the datedisclosure controls and procedures are met. Further, the design of this Quarterly Report,disclosure controls and procedures must reflect the fact that there are resource constraints, and the benefits must be considered relative to their costs. Because of the inherent limitations in all disclosure controls and procedures, no director, officer or affiliateevaluation of disclosure controls and procedures can provide absolute assurance that we have detected all our control deficiencies and instances of fraud, if any. The design of disclosure controls and procedures also is (i) a party adverse to usbased partly on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in any legal proceeding, or (ii) has an adverse interest to us in any legal proceedings. Management is not aware of any other legal proceedings pending or that have been threatened against us or our properties.
No report required.achieving its stated goals under all potential future conditions.
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None.
We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and, as a result, we are not required to provide the information under this item.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
Effective April 1, 2016,During the Company closed the transactions under the Share Exchange Agreement, dated December 31, 2015 (“Share Exchange Agreement”), bysix months ended June 30, 2017, we issued 1,787,124 shares of common stock to management and among, the Company, Capital Epitome Sdn Bhd, a private Malaysian corporation (“CE”), and Dato Mohd Nasir Bin Baba, a Malaysian citizen (“Dato Mohd Nasir” and together with CE, the “Owners”). Pursuant to the Share Exchange Agreement, the Company acquired 100% of the issued and outstanding sharesrelated parties of Agro Capital Management Berhad a Malaysian corporation (“Target Shares”),as share compensation. This issuance was undertaken in exchange for 30,000,000 shares ofreliance upon the Company’s common stock issued to CE and Dato Mohd Nasir (the “Exchange Shares”) on June 26, 2016.
The Company issued the Exchange Shares to two (2) non-U.S. persons (as that term is defined in Regulation S of the Securities Act of 1933, as amended) in an offshore transaction in which it relied on the registration exemption provided for in Regulation S and/or Section 4(2) of the Securities Act of 1933, as amended (the “Act”), as the conditions of Regulation S were met, including but not limited to the following conditions:
· Each of the parties receiving shares are residents and citizens of Malaysia and were in Malaysia at the time of the sale of the shares;
· Each of the parties receiving shares agree to resell the shares only in accordance with Regulation S, pursuant to a registration under the Act, or pursuant to an available exemption from registration; and
· The certificate representing the shares sold contain a legend that transfer of the shares is prohibited except in accordance with the provisions of Regulation S, pursuant to a registration under the Act, or pursuant to an available exemption from registration andrequirements of Section 4(2), as a transaction by an issuer not involving a public offering. All recipients had adequate access, through their relationship with us, to information about us. No proceeds were received for the hold may engage in hedging transactions with regards to the Company’sissuance of shares. The common stock unless in compliance with the Act.issuance was recorded as additional paid-in capital.
Effective September 19 2016, the Company unwound and rescinded the transactions and share issuances under the Share Exchange Agreement. See Item 5 “Other Information “ of this Part II.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
No report required.None.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.None.
Effective September 19, 2016, the Company rescinded the transactions under the Share Exchange Agreement, dated December 31, 2015 (“Share Exchange Agreement”), by and among, the Company, Capital Epitome Sdn Bhd, a private Malaysian corporation (“CE”), and Dato Mohd Nasir Bin Baba, a Malaysian citizen (“Dato Mohd Nasir” and together with CE, the “Owners”). Pursuant to the Share Exchange Agreement, the Company acquired 100% of the issued and outstanding shares of Agro Capital Management Berhad, a Malaysian corporation (“Target Shares”), in exchange for 30,000,000 shares of the Company’s common stock issued to CE and Dato Mohd Nasir (the “Exchange Shares”). None.
The Company and the Owners decided to unwind and rescind the transactions and share issuances pursuant to the Share Exchange Agreement due to, among other reasons, the lack of currently available information regarding Agro Capital Management Berhad, a Malaysian corporation (“Target”) necessary for the Company to complete a full financial audit of Target for the two (2) prior fiscal years. As a result, the acquisition held little to no value for the Company’s shareholders, including CE and Dato Mohd Nasir, who became shareholders as a result of such transaction, it therefore became mutually beneficial to all parties for the transactions to be rescinded and return each party to their former positions. In connection with the unwinding and rescission of the transactions under the Share Exchange Agreement, the Target Shares were returned to the Owners and the Exchange Shares were returned to the Company for cancellation. The Company filed a Form 8-K with the Securities and Exchange Commission pertaining to the above transactions on September 23, 2016.
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Exhibits:
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In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
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Dated: September | By: | /s/ | |
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Chief Executive Officer | |||
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