The accompanying notes are an integral part of these financial statements.
| | | | | |
KINGSMEN CAPITAL GROUP, LTD. (formerly known as Zendex Holdings, Inc.) |
Consolidated Statements of Cash Flows Unaudited |
| For the Six Months Ended |
| June 30, 2016 |
| June 30, 2015 |
Statement of Cash Flows |
|
|
|
|
|
Operating Activities: |
|
|
|
|
|
Net Income (Loss) | $ | (25,150) |
| $ | 1,090 |
|
|
|
|
|
|
Adjustment to reconcile net loss to net cash position: |
|
|
|
|
|
Decrease in prepaid expense |
| - |
|
| 64 |
Increase in accounts payable |
| 7,788 |
|
| 3,421 |
Increase (decrease) in accrued liabilities |
| - |
|
| 52,900 |
Increase (decrease) in income tax payable |
| - |
|
| (100) |
Increase in related party accrued interest | | 4,700 |
| | 4,049 |
Net cash provided by (used for) operating activities | | (12,662) |
| | 61,424 |
Cash flows from Investing Activities | | - |
| | - |
Financing Activities: |
|
|
|
|
|
Proceeds from related party payable | | 11,812 |
| | - |
Net cash provided from financing activities | | 11,812 |
| | - |
Net increase (decrease) in cash |
| (850) |
|
| 61,424 |
Cash and equivalents at start of period | | 850 |
| | 927 |
Cash and equivalents at end of period | $ | - |
| $ | 62,351 |
Supplemental Disclosures |
|
|
|
|
|
Cash paid for interest | $ | - |
| $ | - |
Cash paid for income taxes | $ | - |
| $ | 100 |
|
|
|
|
|
|
Non-cash investing and financing: |
|
|
|
|
|
Net liabilities forgiven upon change of control | $ | 121,965 |
| $ | - |
The accompanying notes are an integral part of these financial statements.
-5-
Kingsmen Capital Group, Ltd.
(formerly known as Zendex Holdings, Inc.)
Notes to Unaudited Financial Statements
June 30, 2016
Note 1: Basis of Presentation
The accompanying unaudited financial statements of Kingsmen Capital Group, Ltd. (the “Company”) were prepared pursuant to the rules and regulations of the United States Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to such rules and regulations. Management of the Company (“Management”) believes that the following disclosures are adequate to make the information presented not misleading. These financial statements should be read in conjunction with the audited financial statements and the notes thereto included in the Company’s Form 10-K report for the year ended December 31, 2015.
These unaudited financial statements reflect all adjustments, consisting only of normal recurring adjustments that, in the opinion of Management, are necessary to present fairly the financial position and results of operations of the Company for the periods presented. Operating results for the six months ended June 30, 2016, are not necessarily indicative of the results that may be expected for the year ending December 31, 2016.
Note 2 – Revenue Recognition
We recognize revenue in accordance with Securities and Exchange Commission Staff Accounting Bulletin No. 104, “Revenue Recognition” (“SAB 104”). Under SAB 104, revenue is recognized at the point of passage to the customer of title and risk of loss, when there is persuasive evidence of an arrangement, the sales price is determinable, and collection of the resulting receivable is reasonably assured. The Company had no revenue during the six months ended June 30, 2016 because we did not engage in any art brokering during that period.. During the six months ended June 30, 2015 we received revenue of $83,250 from the brokering of pieces of artwork and paid out $63,900 in commissions resulting in a gross profit of $19,350.
Note 3– Change in Control
On May 25, 2016, the Company had a change of control. On that date, Wei Chi Lim purchased a total of 1,521,300 of the Company’s shares, representing approximately 80% of its issued and outstanding common stock, from certain shareholders. On the same date, the previous officers and directors of the Company resigned, and Mr. Lim was appointed as the Company’s sole officer and director. The change of control was reported in a Current Report on Form 8-K dated May 25, 2016, and filed with the Securities and Exchange Commission on May 31, 2016.
As part of the change in control, the related party payables owed by the Company to the President and a stockholder of the Company were paid in full. See note 7 for further discussion.
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Note 4– Going Concern
The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company has a limited operating history with a few significant transactions. These factors, among others, may indicate that the Company will be unable to continue as a going concern for a reasonable period of time.
The financial statements do not include any adjustments relating to the recoverability and classification of assets and liabilities that might be necessary should the Company be unable to continue as a going concern. The Company’s continuation as a going concern is dependent upon its ability to generate sufficient cash flow to meet its obligations on a timely basis and ultimately to attain profitability. The Company intends to seek additional funding through equity offerings to fund its business plan. There is no assurance that the Company will be successful in raising additional funds.
Note 5 – Income Taxes
We account for income taxes in accordance with FASC 740-20, “Accounting for Income Taxes”. Under FASC 740-20, deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which the differences are expected to reverse. Deferred tax assets will be reflected on the balance sheet when it is determined that it is more likely than not that the asset will be realized.
Though there were no significant temporary differences between book and taxable income, previously unrecorded deferred tax assets arising from net operating losses carryforwards against which valuation allowances were recorded, were offset against current potential income tax expense. Thus, no provision for income taxes was recorded.
Note 6 – Equity Transactions
The Company is authorized to issue a total of 110,000,000 shares consisting of 10,000,000 shares of preferred stock and 100,000,000 shares of common stock having a par value of $0.001 per share.
On May 25, 2016, the Company had a change of control. On that date, Wei Chi Lim purchased a total of 1,521,300 of the Company’s shares, representing approximately 80% of its issued and outstanding common stock, from certain shareholders. On the same date, the previous officers and directors of the Company resigned, and Mr. Lim was appointed as the Company’s sole officer and director. The change of control was reported in a Current Report on Form 8-K dated May 25, 2016, and filed with the Securities and Exchange Commission on May 31, 2016.
During the year ended December 31, 2015, the Company authorized a reverse split in its issued and outstanding shares of common stock, so that the shares currently issued and outstanding were reverse split on a 1 for 10 basis. Stockholders will receive one share of the post-split common stock for each 10 shares of common stock held. Fractional shares were rounded up. No shareholder who currently had 100 or more shares was reduced below 100shares.The reverse split did not result in any modification of the rights of stockholders and had no effect on the stockholders’ equity of the Company. Total shares outstanding after the reverse split was 1,903,519.
Note 7 – Related Party Transactions
As part of the process of preparing the merger and costs involved, the Company incurred an unsecured payable to the new president. The amount owed is $6,774 as of June 30, 2016. The Company had an unsecured payable to the prior president and sole director with a balance of $18,141 and accrued interest of $4,105 which was paid in full with the change of control at June 30, 2016. The Company also had an unsecured promissory note bearing interest of 18% per annum with a stockholder. The principal balance of $47,323 with accrued interest of »$45,431 was also paid in full with the change in control as of June 30, 2016.
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Note 7 – Subsequent Events
On July 11, 2016, subsequent to the end of the quarter, the Company changed its name from Zendex Holdings, Inc., to Kingsmen Capital Group Ltd. The name change was reported in a Current Report on Form 8-K dated July 11, 2016, and filed with the Securities and Exchange Commission on July 19, 2016.
The Company has evaluated all other subsequent events from the balance sheet date through the date the financial statements were issued, and determined there are no material transactions that have not been disclosed.
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Special Note Regarding ForwardLooking Statements
Certain statements in this Report constitute “forward-looking statements.” Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Factors that might cause such a difference include, among others, uncertainties relating to general economic and business conditions; industry trends; changes in demand for our products and services; uncertainties relating to customer plans and commitments and the timing of orders received from customers; announcements or changes in our pricing policies or that of our competitors; unanticipated delays in the development, market acceptance or installation of our products and services; changes in government regulations; availability of management and other key personnel; availability, terms and deployment of capital; relationships with third-party equipment suppliers; and worldwide political stability and economic growth. The words “believe,” “expect,” “anticipate,” “intend” and “plan” and similar expressions identify forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date the statement was made.
Critical Accounting Policies and Estimates
The preparation of financial statements and related disclosures in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts reported in the Financial Statements and accompanying notes. Management bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. Actual results could differ from these estimates under different assumptions or conditions.
Kingsmen’s accounting policies are more fully described in Note 1 of the audited financial statements in our recently filed Form 10-K. As discussed in Note 1, the preparation of financial statements and related disclosures in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions about the future events that affect the amounts reported in the financial statements and the accompanying notes. Management bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. Actual differences could differ from these estimates under different assumptions or conditions. Kingsmen believes that the following addresses Kingsmen’s most critical accounting policies.
We recognize revenue in accordance with Securities and Exchange Commission Staff Accounting Bulletin No. 104, “Revenue Recognition” (“SAB 104”). Under SAB 104, revenue is recognized at the point of passage to the customer of title and risk of loss, when there is persuasive evidence of an arrangement, the sales price is determinable, and collection of the resulting receivable is reasonably assured.
Our policy for our allowance for doubtful accounts is maintained to provide for losses arising from customers’ inability to make required payments. If there is deterioration of our customers’ credit worthiness and/or there is an increase in the length of time that the receivables are past due greater than the historical assumptions used, additional allowances may be required.
BUSINESS OVERVIEW
Through its wholly-owned subsidiary, Zendex, Inc., the Company has been engaged in art brokering and has been in the process of establishing an online marketing site to assist buyers and sellers of art by offering consignment and brokering services to artists and other sellers of art works. Additional capital will be required to commence operations of the online marketing site
As discussed more fully below, on May 25, 2016, the Company had a change of control, and in conjunction with that change of control, Company management is exploring and considering new business opportunities. However, although its operations have been dormant since the occurrence of the change of control, as of the end of the quarter
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covered by this report, the Company retained ownership of Zendex, Inc., its wholly-owned operating subsidiary.
LIQUIDITY AND CAPITAL RESOURCES
On June 30, 2016, Kingsmen had current assets of $0 with liabilities of $14,562. We had negative working capital of $14,562 on June 30, 2016. On December 31, 2015, we had a negative working capital of $111,377. We will have to obtain additional capital to execute our business plan. Our revenue was generated from art brokerage. Without additional capital we will not be able to execute on our business model.
We anticipate the need for capital to help fund ongoing costs and do not believe debt financing will be available given the new direction we are taking with the business. We believe the online art business will prove to offer more opportunities and better profit margins than the current brokering business due to the ability of economies of scale not present in our current market. Our current reliance on word-of-mouth marketing will not be sufficient to support the successful implementation and growth of an online model.
RESULTS OF OPERATIONS
For the six months ended June 30, 2016 Kingsmen had $0 in revenues and $20,450 in general and administrative expenses. Kingsmen had a net loss of $25,150 for the six months ended June 30, 2016. During the six months ended June 30, 2015, Zendex had $83,250 in revenues with cost of sales of $63,900 resulting in a gross profit of $19,350. Zendex’s general and administrative expenses for the six months ended June 30, 2015, were $14,211. Zendex had net income for the six months ended June 30, 2015 of $1,090. With sporadic revenue and relatively set general and administrative costs, we will need to generate additional sales if we are to be successful. For us to achieve profitability, we will need to increase our volume of sales and have consistent sales revenue. Currently, we are limited to our ability to broker individual art works and by the time we pay commissions, there is not sufficient revenue to cover our general and administrative expenses. We will need to either obtain better sources for art works being sold so we can increase our volume or look to alternative ways to bring buyers and sellers or art work together. We believe our future success is in our ability to generate an online site to broker paintings and other art work. We are still in the process of developing the site and the ultimate costs and revenue the site will generate are unknown at this time. Without prior experience in the online marketplace, our ability to generate such a site is questionable.
Off-balance sheet arrangements
The Company does not have any off-balance sheet arrangements and it is not anticipated that the Company will enter into any off-balance sheet arrangements.
SUBSEQUENT EVENTS
On May 25, 2016, the Company had a change of control. On that date, Wei Chi Lim purchased a total of 1,521,300 of the Company’s shares, representing approximately 80% of its issued and outstanding common stock, from certain shareholders. On the same date, the previous officers and directors of the Company resigned, and Mr. Lim was appointed as the Company’s sole officer and director. The change of control was reported in a Current Report on Form 8-K dated May 25, 2016, and filed with the Securities and Exchange Commission on May 31, 2016.
On July 11, 2016, subsequent to the end of the quarter, the Company changed its name from Zendex Holdings, Inc., to Kingsmen Capital Group Ltd. The name change was reported in a Current Report on Form 8-K dated July 11, 2016, and filed with the Securities and Exchange Commission on July 19, 2016.
Forward-looking Statements
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Our Company 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 Securities and Exchange Commission and in reports to our Company’s stockholders. Management believes that all statements that express expectations and projections with respect to future matters, as well as from developments beyond our Company’s control including changes in global economic conditions are forward-looking statements within the meaning of the Act. These statements are made on the basis of management’s views and assumptions, as of the time the statements are made, regarding future events and business performance. There can be no assurance, however, that management’s expectations will necessarily come to pass. Factors that may affect forward- looking statements include a wide range of factors that could materially affect future developments and performance, including the following:
Changes in Company-wide strategies, which may result in changes in the types or mix of businesses in which our Company is involved or chooses to invest; changes in U.S., global or regional economic conditions, changes in U.S. and global financial and equity markets, including significant interest rate fluctuations, which may impede our Company’s access to, or increase the cost of, external financing for our operations and investments; increased competitive pressures, both domestically and internationally, legal and regulatory developments, such as regulatory actions affecting environmental activities, the imposition by foreign countries of trade restrictions and changes in international tax laws or currency controls; adverse weather conditions or natural disasters, such as hurricanes and earthquakes, labor disputes, which may lead to increased costs or disruption of operations.
This list of factors that may affect future performance and the accuracy of forward-looking statements is illustrative, but by no means exhaustive. Accordingly, all forward-looking statements should be evaluated with the understanding of their inherent uncertainty.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
NA-Smaller Reporting Company
Item 4. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our CEO and Principal Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report. Based on that evaluation, our CEO and Principal Financial Officer concluded that our disclosure controls and procedures as of the end of the period covered by this report were effective such that the information required to be disclosed by us in reports filed under the Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and (ii) accumulated and communicated to our management, including our CEO and Principal Financial Officer, as appropriate to allow timely decisions regarding disclosure.
Changes in internal control over financial reporting
There have been no changes in internal control over financial reporting that occurred during the last fiscal quarter that has materially affected, or is reasonably likely to materially affect, the 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
Recent Sales of Unregistered Securities
-11-
The Company did not issue any shares in the quarter ended June 30, 2016.
Use of Proceeds of Registered Securities
None; not applicable.
-12-
Purchases of Equity Securities by Us and Affiliated Purchasers
During the six months ended June 30, 2016, we have not purchased any equity securities nor have any officers or directors of the Company.
ITEM 3. Defaults Upon Senior Securities
We are not aware of any defaults upon senior securities.
ITEM 4. Mine Safety Disclosure
NA- The Company has no mining activities.
ITEM 5. Other Information.
None.
ITEM 6. Exhibits
a) Index of Exhibits:
Exhibit Table #
Title of Document
Location
31
Rule 13a-14(a)/15d-14a(a) Certification – CEO & CFO
This filing
32
Section 1350 Certification – CEO & CFO
This filing
101.INS
XBRL Instance
101.XSD
XBRL Schema
101.CAL
XBRL Calculation
101.DEF
XBRL Definition
101.LAB
XBRL Label
101.PRE
XBRL Presentation
-13-
SIGNATURES
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.
Kingsman Capital Group, Ltd.,
(Registrant)
Dated: August 19, 2016
By:/s/ Wei Chi Lim
Wei Chi Lim, Principal Executive Officer and
Principal Financial Officer
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