UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2015
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from __________ to __________
Commission File Number 0-28475
Zendex Holdings, Inc.
(Exact name of registrant as specified in its charter)
Nevada
87-0635270
(State or other jurisdiction of
(IRS Employer Identification No.)
incorporation or organization)
P.O. Box 58052, Salt Lake City, Utah 84158
(Address of principal executive offices)
(Zip Code)
(801) 904-3855
(Registrant’s telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 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).
Yes [X] No [ ]
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
Large Accelerated filer ¨
Accelerated filer ¨
Non-accelerated filer ¨ (Do not check if a smaller reporting company)
Smaller reporting company x
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes [ ] No [X]
Indicate the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date.
1,903,519 shares of $0.001 par value common stock on November 15, 2015
Part I - FINANCIAL INFORMATION
Item 1. Financial Statements
Zendex Holdings, Inc.
(formerly known as Merilus, Inc.)
FINANCIAL STATEMENTS
(UNAUDITED)
September 30, 2015
The financial statements included herein have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted. However, in the opinion of management, all adjustments (which include only normal recurring accruals) necessary to present fairly the financial position and results of operations for the periods presented have been made. These financial statements should be read in conjunction with the accompanying notes, and with the historical financial information of the Company.
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ZENDEX HOLDINGS, INC.
(formerly known as Merilus, Inc.)
Consolidated Balance Sheets
(Unaudited)
| | | | | |
Assets: | | September 30, 2015 | | | December 31, 2014 |
Current Assets: | | | | | |
Cash in bank | $ | 58,269 | | $ | 927 |
Prepaid expense | | - | | | 96 |
Total Assets | $ | 58,269 | | $ | 1,023 |
Liabilities and Stockholders' Deficit: | | | | | |
Accounts payable | $ | 10,765 | | $ | 6,965 |
Accrued commissions | | 52,900 | | | - |
Income tax payable | | - | | | 100 |
Related party note payable | | 57,426 | | | 57,426 |
Related party interest payable | | 42,747 | | | 36,640 |
Total Current Liabilities | | 163,838 | | | 101,131 |
Stockholders' Deficit: | | | | | |
Preferred stock, $0.001 par value, 10,000,000 share authorized, 1 shares issued and outstanding | | - | | | - |
Common stock, $0.001 par value, 100,000,000 shares authorized, 1,903,519 and 1,903,519 shares issued and outstanding, respectively | | 1,904 | | | 1,904 |
Paid in capital | | (72,089) | | | (72,089) |
Accumulated deficit | | (35,384) | | | (29,923) |
Total Stockholders' Deficit | | (105,569) | | | (100,108) |
Total Liabilities and Stockholders' Deficit | $ | 58,269 | | $ | 1,023 |
The accompanying notes are an integral part of these financial statements.
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ZENDEX HOLDINGS, INC.
(formerly known as Merilus, Inc.)
Consolidated Statements of Operations
(Unaudited)
| | | | | | | | | |
| | Three Months Ended September 30, 2015 | | Three Months Ended September 30, 2014 | | Nine Months Ended September 30, 2015 | | Nine Months Ended September 30, 2014 | |
Income Statement | | | | | | | | | |
Revenue | $ | - | $ | - | $ | 83,250 | $ | 40,000 | |
| | | | | | | | | |
Cost of Sales | | - | | - | | 63,900 | | 20,000 | |
| | | | | | | | | |
Gross Profit | | - | | - | | 19,350 | | 20,000 | |
| | | | | | | | | |
Expenses: | | | | | | | | | |
General and administrative | | 4,493 | | 3,015 | | 18,704 | | 13,856 | |
Total Expense | | 4,493 | | 3,015 | | 18,704 | | 13,856 | |
Income (loss) from Operations | | (4,493) | | (3,015) | | 646 | | 6,144 | |
Other Expense | | | | | | | | | |
Interest expense | | 2,058 | | 2,052 | | 6,107 | | 5,909 | |
Total other expense | | 2,058 | | 2,052 | | 6,107 | | 5,909 | |
Income (loss) before provision for income taxes | | (6,551) | | (5,067) | | (5,461) | | 235 | |
(Provision) benefit for income taxes | | - | | 604 | | - | | (1,181) | |
Net Loss | $ | (6,551) | $ | (4,463) | $ | (5,461) | $ | (946) | |
Net Income (Loss) per share of common stock | $ | 0.00 | $ | 0.00 | $ | 0.00 | $ | 0.00 | |
Weighted average number of common shares outstanding | | 1,903,519 | | 1,903,519 | | 1,903,519 | | 1,903,519 | |
| | | | | | | | | |
The accompanying notes are an integral part of these financial statements.
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| | | | | | | |
ZENDEX HOLDINGS, INC. (formerly known as Merilus, Inc.) |
Consolidated Statements of Cash Flows Unaudited |
| For the Nine Months Ended | |
| September 30, 2015 | | September 30, 2014 | |
Statement of Cash Flows | | | | | | |
Operating Activities: | | | | | | |
Net Income (Loss) | $ | (5,461) | | $ | (946) | |
Adjustment to reconcile net loss to net cash position: | | | | | | |
Decrease in prepaid expense | | 96 | | | - | |
Increase in accounts payable | | 3,800 | | | - | |
Increase in accrued liabilities | | 52,900 | | | 20,000 | |
Increase (decrease) in income tax payable | | (100) | | | 1,181 | |
Increase in related party accrued interest | | 6,107 | | | 5,909 | |
Net cash used for operating activities | | 57,342 | | | 26,144 | |
Cash flows from Investing Activities | | - | | | - | |
Financing Activities: | | | | | | |
Proceeds from related party payable | | - | | | 6,650 | |
Net cash provided from financing activities | | - | | | 6,650 | |
Net increase (decrease) in cash | | 57,342 | | | 32,794 | |
Net cash position at start of period | | 927 | | | 1,117 | |
Net cash position at end of period | $ | 58,269 | | $ | 33,911 | |
Supplemental Disclosures | | | | | | |
Cash paid for interest | $ | - | | $ | - | |
Cash paid for income taxes | $ | - | | $ | - | |
The accompanying notes are an integral part of these financial statements.
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Zendex Holdings, Inc.
(formerly known as Merilus, Inc.)
Notes to Unaudited Financial Statements
September 30, 2015
Note 1: Basis of Presentation
The accompanying unaudited financial statements of Zendex Holdings, Inc. (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, 2014.
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 nine months ended September 30, 2015, are not necessarily indicative of the results that may be expected for the year ending December 31, 2015.
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. During the nine months ended September 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– 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 and their operations thus far have consisted of only one significant transaction. 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.
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Zendex Holdings, Inc.
(formerly known as Merilus, Inc.)
Notes to Unaudited Financial Statements
September 30, 2015
Note 4 – 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 5 – 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.
During the nine months ended September 30, 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 100 shares. 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 6 – Related Party Transactions
The Company has an unsecured payable to the president and sole director with a balance of $18,103 at September 30, 2015. Interest of 6% was computed on this balance of the related party payable. Accrued interest is $3,290 as of September 30, 2015. The Company also has an unsecured promissory note bearing interest of 18% per annum with a stockholder. The principal balance as of September 30, 2015, is $39,323 with accrued interest of $39,457.
Note 7 – Subsequent Events
The Company has evaluated all 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 Forward-Looking 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.
Zendex’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. Zendex believes that the following addresses Zendex’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.
BUSINGESS OVERVIEW
The Company is engaged in art brokering and is the process of establishing an online marketing site to assist buyers and sellers of art. The Company intends to utilize an ecommerce site to offer consignment and brokering services to artist and other sellers of art works. Management believes there is a potential market for an online portal used to broker art from both galleries and private sellers. Management believes the art business is fragmented and will rely on local galleries and auctions as the primary way of selling art. By offering an online portal dedicated to art, management believes it will be able to attract individual sellers, galleries and buyers to use its services for a fee. Having one site that can be easily accessed for verification information, viewing and information will benefit both the buyer and seller. To enable this, management has been working on creating a website with ecommerce capabilities that can be accessed by third parties to place art items for sale.
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In addition to the brokering of art, unique content will be written regularly to provide information regarding news, events and spotlight new talent in the art world. By offering a focal point in the art world and driving traffic to the site, management believes art dealers and collectors will have greater incentive to utilize the portal as a venue for buying and selling. This is a new concept and is still being developed. Additional capital will be required to complete the full scale launch of the site.
Effective June 8, 2015 the Company amended it Articles of Incorporation to change the name of the Company to Zendex Holdings, Inc. The Company also authorized a 1 to 10 reverse stock split on the issued and outstanding shares.
LIQUIDITY AND CAPITAL RESOURCES
On September 30, 2015, Zendex had current assets of $58,269 with liabilities of $163,838. We had negative working capital of $105,569 on September 30, 2015. On December 31, 2014, we had a negative working capital of $100,108.
For the nine months ended September 30, 2015, net cash flow from operating activities was $57,342, as a result of our net loss of $5,461, an increases in accrued commission of $52,900, partially offset by decreases in prepaid expenses of $96 and income tax payable of $100, and increases in accounts payable of $3,800 and accrued interest payable – related parties of $6,107.
By comparison, for the nine months ended September 30, 2014, net cash flow from operating activities was $26,144, as a result of our net loss of $946, and increases in accrued commission of $20,000, income tax payable of $1,181 and accrued interest payable – related parties of $5,909.
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 three and nine months ended September 30, 2015, Zendex had $0 and $83,250 in revenues, respectively. General and administrative expenses for the three and nine months ended September 30, 2015, were $4,451 and $18,562, respectively. We had a net loss for the three and nine months ended September 30, 2015 of $6,551 and $5,461, respectively. During the three and nine months ended September 30, 2014, we had a loss of $4,463 and $946, respectively, and $0 and $40,000 in revenue with general and administrative expenses of $3,015 and $13,856, respectively.
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.
Forward-looking Statements
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
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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
The Company did not issue any shares in the nine months ended September 30, 2015 and 2013.
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Use of Proceeds of Registered Securities
None; not applicable.
Purchases of Equity Securities by Us and Affiliated Purchasers
During the nine months ended September 30, 2015, 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.
During the nine months ended September 30, 2015, the Company’s president loaned the Company $6,650 for working capital.
ITEM 6. Exhibits
a) Index of Exhibits:
Exhibit Table #
Title of Document
Location
3 (i)
Articles of Incorporation
Incorporated by reference*
3 (i)
Amended Articles of Incorporation
Incorporated by reference**
3 (i)
Amended Articles of Incorporation
Incorporated by reference***
3 (ii)
Bylaws
Incorporated by reference*
3 (ii)
Revised Bylaws
Incorporated by reference****
4
Specimen Stock Certificate
Incorporated by reference*
11
Computation of loss per share
Notes to financial statements
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
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* Incorporated by reference from the Company's registration statement on Form 10-SB filed with the Commission, SEC file no.000-28475.
** Incorporated by reference from the Company's definitive 14C filed on July 31, 2000, with the Commission, SEC file no.000-28475.
*** Incorporated by reference from the Company's definitive 14C filed on January 9, 2001, with the Commission, SEC file no.000-28475.
**** Incorporated by reference from the Company’s Form 10-QSB, for the quarter ended March 31, 2006, filed with the Commission.
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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.
Zendex Holdings, Inc.,
(Registrant)
Dated: November 16, 2015
By: /s/ Josh Turner
Josh Turner, Principal Executive Officer
By: /s/ Alex Demitriev
Alex Demitriev, Principal Financial Officer
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