UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
Form 10-Q
(Mark one)
[X] Quarterly Report under Section 13 or 15(d) of the Securities Exchange Act of 1934
For the quarterly period September 30, 2014
[ ] Transition Report under Section 13 or 15(d) of the Securities Exchange Act of 1934
For the transition period from ______________ to _____________
Commission file number 333-127389
ZD VENTURES CORPORATION
(Exact name of registrant as specified in its charter)
(Former name or former address, if changes from last report)
Nevada |
| 99-0381956 |
(State or other jurisdiction of incorporation) |
| (IRS Employer Identification No.) |
47 Avenue Road, Suite 200
Toronto, ON Canada M5R 2G3
(Address of principal executive offices)(Zip Code)
Registrant's telephone number, including area code: (416) 929-1806
______________________________________________________________
Indicate by check mark whether the issuer (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act during the preceding 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 ST (ss.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 an accelerated filer, a non-accelerated filer, or a smaller reporting company.
Large accelerated filer [ ] | Accelerated filer [ ] |
Non-accelerated filer [ ] | 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]
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date:
As of November 14, 2014, there were 15,943,300 shares of the Issuer's common stock, par value $0.001 per share outstanding.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
Certain statements in this quarterly report on Form 10-Q contain or may contain forward-looking statements that are subject to known and unknown risks, uncertainties and other factors which may cause actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. These forward-looking statements were based on various factors and were derived utilizing numerous assumptions and other factors that could cause our actual results to differ materially from those in the forward-looking statements. These factors include, but are not limited to, economic, political and market conditions and fluctuations, government and industry regulation, interest rate risk, U.S. and global competition, and other factors. Most of these factors are difficult to predict accurately and are generally beyond our control. You should consider the areas of risk described in connection with any forward-looking statements that may be made herein. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this report. Readers should carefully review this quarterly report in its entirety, including but not limited to our financial statements and the notes thereto. Except for our ongoing obligations to disclose material information under the Federal securities laws, we undertake no obligation to release publicly any revisions to any forward-looking statements, to report events or to report the occurrence of unanticipated events. For any forward-looking statements contained in any document, we claim the protection of the safe harbour for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995.
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INDEX |
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FINANCIAL INFORMATION | 4 | |
Condensed Financial Statements | 4 | |
Management’s Discussion and Analysis or Plan of Operations | 5 | |
Quantitative and Qualitative Disclosures about Market Risk | 8 | |
Controls and Procedures | 8 | |
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OTHER INFORMATION | 9 | |
Legal Proceedings | 9 | |
Risk Factors | 9 | |
Unregistered Sales of Equity Securities and Use of Proceeds | 9 | |
Defaults upon Senior Securities | 9 | |
Mine Safety Disclosures | 9 | |
Other Information | 9 | |
Exhibits | 9 | |
| 10 |
3
PART I
FINANCIAL INFORMATION
Item 1 - Financial Statements
INDEX TO CONDENSED FINANCIAL STATEMENTS
F-2 | |
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F-3 | |
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F-4 | |
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F-5 |
4
ZD Ventures Corporation
Condensed Balance Sheets
As at |
| Sept. 30, 2014 |
| March 31, 2014 | ||
|
| (Unaudited) |
| (Audited) | ||
ASSETS |
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CURRENT ASSETS |
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Cash |
| $ | 2,846 |
| $ | 74,415 |
Prepayments |
|
| 52,100 |
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Investments, available for sale |
|
| 44,100 |
|
| - |
Total Current Assets |
|
| 99,046 |
|
| 74,415 |
Rent deposits |
|
| 11,932 |
|
| - |
Furniture |
|
| 5,608 |
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Intangible assets |
|
| 502,516 |
|
| 502,516 |
Total Assets |
| $ | 619,102 |
| $ | 576,931 |
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LIABILITIES AND STOCKHOLDERS’ DEFICIT |
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CURRENT LIABILITIES |
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Accounts payable and accrued liabilities |
| $ | 59,982 |
| $ | 54,000 |
Advances from stockholder |
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| 358,259 |
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| 186,758 |
Total Current Liabilities |
| $ | 418,241 |
| $ | 240,758 |
LONG-TERM LIABILITIES |
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Convertible debt, net of debt discount |
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| 32,876 |
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| 7,808 |
Note payable |
|
| 325,000 |
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| 325,000 |
Total Long-Term Liabilities |
| $ | 357,876 |
| $ | 332,808 |
Total Liabilities |
| $ | 776,117 |
| $ | 573,566 |
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STOCKHOLDERS’ (DEFICIT) EQUITY |
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Common stock, $0.001 par value, authorized 200,000,000 shares; |
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15,943,300 and 15,943,300 shares issued and outstanding at June 30, 2014 and March 31, 2014, respectively |
|
| 15,943 |
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| 15,943 |
Additional paid-in capital |
|
| 170,157 |
|
| 170,157 |
Accumulated other comprehensive income |
|
| 2,919 |
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| 12,745 |
Deficit accumulated during the development stage |
|
| (346,034) |
|
| (195,480) |
Total Stockholders’ (Deficit) Equity |
| $ | (157,015) |
| $ | 3,365 |
Total Liabilities and Stockholders’ (Deficit) Equity |
| $ | 619,102 |
| $ | 576,931 |
The accompanying notes are an integral part of the condensed financial statements.
F-1
ZD Ventures Corporation
Condensed Statements of Operations
(Unaudited)
The accompanying notes are an integral part of the condensed financial statements.
F-2
ZD Ventures Corporation
Condensed Statements of Cash Flows
(Unaudited)
The accompanying notes are an integral part of the condensed financial statements.
F-3
ZD Ventures Corporation
Six months ended September 30, 2014
NOTES TO CONDENSED FINANCIAL STATEMENTS
NOTE 1 - BUSINESS DESCRIPTION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(A) Business Description
ZD Ventures Corporation (the “Company”), incorporated on February 23, 2005 under the laws of the state of Nevada, operates from rental premises in Barcelona, Spain and from its executive office in Toronto, Ontario, Canada. Most of the activities of the Company to date relate to its organization, funding, and development of a commercial web portal.
In July 2012, the Company acquired certain intellectual properties related to a social website under development (Note 5). The company plans to complete the design and development of this web site and to launch it commercially as soon as possible.
(B) Basis of Presentation
The unaudited interim financial statements as of and for the three and six months ended September 30, 2014 have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”) for interim financial reporting. These financial statements are unaudited and, in the opinion of management, include all adjustments (consisting of normal recurring adjustments and accruals) necessary to present fairly the balance sheets, operating results and cash flows for the periods presented in accordance with accounting principles generally accepted in the United States of America. Operating results for the three and six months ended September 30, 2014 are not necessarily indicative of the results that may be expected for the fiscal year ending March 31, 2015. Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been omitted in accordance with the SEC’s rules and regulations for interim reporting.
The unaudited interim financial statements should be read in conjunction with the Company’s Annual Report filed on Form 10-K for the year ended March 31, 2014. The significant accounting policies followed are same as those detailed in the said Annual Report except for the following new policy adopted during the period ended September 30, 2014:
Investments available for sale
The Company’s investments in emerging private entities through a Spanish investment club (Club) are classified as available for sale and are reported at fair value based on performance report of each of the investee entities provided by the Club. Unrealized gains and losses, net of taxes, are reported as a component of stockholders’ equity. Realized gains and losses on investments are included in investment and other income, net when realized. Any impairment loss to reduce an investment’s carrying amount to its fair market value is recognized as an expense when a decline in the fair market value of an individual security below its cost or carrying value is determined to be other than temporary.
Furniture
Furniture items are stated at cost and depreciated to their estimated residual value over their estimated useful lives. When assets are retired or otherwise disposed of, the assets and related accumulated depreciation are relieved from the accounts and the resulting gains or losses are included in the Statements of Operations. Repairs and maintenance costs are expensed as incurred. Depreciation is provided using the straight-line method.
F-4
ZD Ventures Corporation
Six months ended September 30, 2014
NOTES TO CONDENSED FINANCIAL STATEMENTS
Use of estimates
The financial statements have been prepared in conformity with generally accepted accounting principles (GAAP). In preparing the financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the statement of financial position and revenues and expenses for the period then ended. Actual results may differ significantly from those estimates.
NOTE 2 - GOING CONCERN
The Company’s financial statements are prepared using generally accepted accounting principles in the United States of America applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company has not yet established an ongoing source of revenues sufficient to cover its operating costs and allow it to continue as a going concern. The ability of the Company to continue as a going concern is dependent on the Company obtaining adequate capital to fund operating losses until it becomes profitable. If the Company is unable to obtain adequate capital, it could be forced to cease operations.
In order to continue as a going concern, the Company will need, among other things, additional capital resources. Management’s plan is to obtain such resources for the Company by obtaining capital from significant shareholders sufficient to complete the design and development of its website, to meet its minimal operating expenses and seeking equity and/or debt financing. However, management cannot provide any assurances that the Company will be successful in accomplishing any of its plans.
The ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish the plans described in the preceding paragraph and eventually secure other sources of financing and attain profitable operations. The accompanying financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. As of September 30, 2014, the Company has an accumulated deficit amount of $346,034.
NOTE 3 - RECENT ACCOUNTING PRONOUNCEMENTS
In August 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-15, Presentation of Financial Statements-Going Concern (Subtopic 205-40)-Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern (“ASU 2014-15”). ASU 2014-15 provides guidance to United States Generally Accepted Accounting Principles ("U.S. GAAP") about management’s responsibility to evaluate whether there is a substantial doubt about an entity’s ability to continue as a going concern and to provide related footnote disclosures. Specifically, ASU 2014-15 (1) defines the term substantial doubt, (2) requires an evaluation of every reporting period including interim periods, (3) provides principles for considering the mitigating effect of management’s plan, (4) requires certain disclosures when substantial doubt is alleviated as a result of consideration of management’s plans, (5) requires an express statement and other disclosures when substantial doubt is not alleviated, and (6) requires an assessment for a period of one year after the date that the financial statements are issued (or available to be issued). The amendments in this update are effective for annual periods beginning after December 15, 2016 and interim periods within those reporting periods. Earlier adoption is permitted. This ASU is not anticipated to have a material impact on the Company's consolidated financial statements and notes to the consolidated financial statements.
F-5
ZD Ventures Corporation
Six months ended September 30, 2014
NOTES TO CONDENSED FINANCIAL STATEMENTS
In May 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers.” This ASU is the result of a convergence project between the FASB and the International Accounting Standards Board. The core principle behind ASU 2014-09 is that an entity should recognize revenue to depict the transfer of promised goods and services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for delivering those goods and services. This model involves a five-step process that includes identifying the contract with the customer, identifying the performance obligations in the contract, determining the transaction price, allocating the transaction prices to the performance obligations in the contract and recognizing revenue when (or as) the entity satisfies the performance obligations. The guidance in the ASU supersedes existing revenue recognition guidance and is effective for annual reporting periods beginning after December 15, 2016 with early application not permitted. The ASU allows two methods of adoption; a full retrospective approach where three years of financial information are presented in accordance with the new standard, and a modified retrospective approach where the ASU is applied as a cumulative effect adjustment as of the date of adoption. The Company will evaluate the impact of adopting the new standard once it begins generating revenue.
In June 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update (“ASU”) No. 2014-10, “Development Stage Entities (Topic 915), Elimination of Certain Financial Reporting Requirements, Including an Amendment to Variable Interest Entities Guidance in Topic 810, "Consolidation” (“ASU 2014-10”). The amendments in ASU 2014-10 remove the definition of a development stage entity from the Master Glossary of the Accounting Standards Codification, thereby removing the financial reporting distinction between development stage entities and other reporting entities from accounting principles generally accepted in the United States of America (“U.S. GAAP”). In addition, the amendments eliminate the requirements for development stage entities to: (i) present inception-to-date information in the statements of income, cash flows, and shareholder equity; (ii) label the financial statements as those of a development stage entity; (iii) disclose a description of the development stage activities in which the entity is engaged; and (iv) disclose in the first year in which the entity is no longer a development stage entity that in prior years it had been in the development stage. The presentation and disclosure requirements in ASC Topic 915, "Development Stage Entities" are no longer required for interim and annual reporting periods beginning after December 15, 2014. The revised consolidation standards will take effect in annual periods beginning after December 15, 2015, however, early adoption is permitted. The Company has elected to early adopt the provisions of ASU 2014-10 for this unaudited condensed consolidated financial statements.
The Company evaluates new pronouncements as issued and evaluates the effect of adoption on the Company at the time. The Company has determined that the adoption of recently adopted accounting pronouncements will not have an impact on the financial statements.
NOTE 4 - PREPAYMENTS
|
| September 30, 2014 |
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| March 31, 2014 |
Legal fee paid in advance | $ | 1,700 |
| $ | -- |
Advance towards acquisition (i) |
| 50,400 |
|
| -- |
| $ | 52,100 |
| $ | -- |
(i)
The amount, € 40,000, was advanced in instalments between July 2014 and September 2014 to Mr. Sergi Vargas Vila, a non -related Spanish national who owns Bluesence Innovation Group, S.L., a Spanish private company engaged in commercialization of software and IT consulting services primarily relating to IBM software for small and medium enterprises (Bluesence). The Company is currently negotiating acquisition of all shares in Bluesence from Mr. Vila. The amount lent will be adjusted against the purchase price. While the loan agreement dated July 4, 2014 provides for an interest at 4 basis point over EURIBOR rate, the Company does not intend to charge any interest due to acquisition negotiations. No interest has therefore been accrued. The loan will mature for repayment in six months if no acquisition takes place.
F-6
ZD Ventures Corporation
Six months ended September 30, 2014
NOTES TO CONDENSED FINANCIAL STATEMENTS
NOTE 5 - INTANGIBLE ASSETS
There were no movements during the period.
As explained in Note 4 of the financial statements for the year ended March 31, 2014, further development work on B’Wished website will commence on receiving approval from IBM for use of their technologies
No amortization is applied to the carrying cost of the intangible assets since they are still under development.
The Company’s management adopts the position that, as at September 30, 2014, there were no indicators of any permanent impairment in the intangible assets. The shareholders financially backing the Company currently have expressed their full support to the development of the B’Wished web site.
NOTE 6 - INVESTMENTS, AVAILABLE FOR SALE
On January 27, 2014, the Company became member of Necotium, a pledge fund in Spain. The Fund on behalf of its members invest in early stage companies with strong growth potential in technology sector. The investments are usually disposed of when the Fund manager believes that expected growth is achieved. The proceeds are distributed among the members in proportion to their investments, after the Fund’s fees and related costs.
During the six months ended September 30, 2014, the Company made the following investments through the Fund. The investments constituted less than 5% of the total equity of the related investee entities:
| Original amount | Date of | As at Sept. 30 |
| Invested | investment | 2014 |
Mailtrack Company SL | € 20,000 | June 6, 2014 | $25,200 |
Mobile Media Content | € 15,000 | April 16, 2014 | 18,900 |
|
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| $44,100 |
As at September 30, 2014, the carrying value of these investments is considered equal to their fair value.
NOTE 7 - NOTE PAYABLE
The note payable issued to Birthday Slam Corporation (“BSC”), a Canadian based private company in Ontario, matured for payment on July 17, 2013. However, the Company negotiated a five-year extension up to July 17, 2018. The note holder agreed that no further interest was to be accrued after the original maturity date of July 17, 2013 and that BSC would be entitled to receive 5% of the gross revenue earned by the Company until full settlement of the Note. BSC is owned by Mr. John Robinson who is a shareholder of the Company.
Total interest accrued on this note payable up to July 17, 2013 is $16,250.
F-7
ZD Ventures Corporation
Six months ended September 30, 2014
NOTES TO CONDENSED FINANCIAL STATEMENTS
NOTE 8 - RELATED PARTY TRANSACTIONS
(a)
ADVANCES FROM STOCKHOLDERS/RELATED PARTIES
|
| Six months to September 30, 2014 |
|
| Year ended March 31, 2014 |
Balance, beginning of the period | $ | 186,758 |
| $ | 160,842 |
funds advanced |
| 171,501 |
|
| 25,916 |
Balance, end of the period | $ | 358,259 |
| $ | 186,758 |
Funds were advanced from time to time by Current Capital Corporation (“CCC”), a Canadian based private company in Ontario, fully owned by Mr. John Robinson, a shareholder of the Company and brother of the CEO. Advances are repayable on demand and carry no interest; they have therefore been classified as current liabilities.
(b)
Consulting fee includes $ 12,000 charged by the CFO, $ 29,157 charged by a consultant who owns 31.36% equity interest in the Company and who is a brother of the CEO and $7,108 charged by the CEO.
(c)
Payables include $ 6,000 due to the CFO and $ 4,410 due to the consultant who owns 31.36% equity interest in the Company and is a brother of CEO.
(d)
General and administration expenses include $ 1,133 being telephone expenses and $ 682 travel expenses reimbursed to the consultant who owns 31.36% equity interest in the Company and is a brother of CEO.
NOTE 9 - COMMITMENTS
(a) The Company signed a five year lease in June 2014, for an office space in Barcelona, Spain for a monthly rent of €2,291.74 (approximately $3,140). Landlord agreed to charge only half month’s rent for the first seven months. The lease is cancellable at the option of the Company after twelve months. Monthly rent is fixed for the first three years.
F-8
Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis should be read in conjunction with our Financial Statements and Notes thereto appearing elsewhere in this Report on Form 10-Q as well as our other SEC filings.
Overview
We were incorporated on February 23, 2005 under the laws of the state of Nevada. On June 28, 2013, the Company changed its name from Webtradex International Corporation to ZD Ventures Corporation (“ZDV”, the “Company”).
We have had several changes in our officers and directors since inception up to March 9, 2010 when Mr. Kam Shah became our chairman of the board of directors, president, secretary, treasurer and chief executive officer. On September 30, 2014, Mr. Terence Robinson was appointed as a director and chief executive officer replacing Mr. Shah who continues as chief financial officer and secretary.
We do not have any subsidiaries. Our principal office is located at 47 Avenue Road, Suite 200, Toronto, Ontario, Canada M5R 2G3. Our telephone number is (416) 929-1806. Our fiscal year end is March 31.
Effective June 15, 2014, the Company leased an office space of approximately 180m2 in Barcelona Spain. The office will be used by the Company’s consultants to monitor the Company’s investments and development of B’Wished web site and other future businesses that the Company may get involved in Spain.
The following discussion and analysis should be read in conjunction with the financial statements and accompanying notes of the Company for the three and six months ended September 30, 2014 and the audited financial statements and notes for the year ended March 31, 2014.
Business Plan and Strategy
ZDV’s current business strategy involves, primarily, developing a social website ( B’Wished) aimed at driving traffic for various sellers of products and services which can generate revenue through commissions from the associated sellers and advertisements, as well as other related sources for the Company and secondarily participating in the initial investment in new and emerging companies through a Spanish investment club in which the Company became a member in January 2014. The Company is currently negotiating an acquisition of a private Spanish corporation engaged in marketing and servicing IBM software aimed at small and medium enterprises (SME) and providing IT consulting to the SME market.
The Company has not yet generated any revenues from business operations
Results of operations
The Company did not have any operating income since its inception on February 23, 2005 through September 30, 2014. For the three and six months ended September 30, 2014, the Company recognized a net loss of $84,843 and $150,554 respectively.
Operating expenses for the three and six months ended September 30, 2014, increased significantly from those for the three and six months ended September 30, 2013. The increase is attributable to legal and consulting fees of approximately $ 100,000 charged for the first time during the period under review. Leasing of an office in Spain has also added to the operational costs.
Professional Fees
Professional fees for the three and six months ended September 30, 2014 were $26,460 and $43,278 respectively compared to the fees of $1,500 and $5,500 for the three and six months ended September 30, 2013. Significant increase is mainly in legal fee of approximately $ 36,000 for the six months to September 30, 2014 from a Spanish law firm retained to handle various investments and Bluesence acquisition negotiations and related matters.
There were no legal fees during the three and six months ended September 30, 2013.
5
Consulting fee
Consulting fee for the three and six months ended September 30, 2014 included $ 6,000 and $ 12,000 respectively charged by the chief financial officer , approximately $15,000 and $ 29,000 respectively charged by a consultant who owns approximately 31.36% equity in the Company, who is a brother of the chief executive officer and is based in Barcelona, Spain and provides investor relation services and overseas B’Wished development. The balance of the consulting fees was charged by non-related consultants in Barcelona, Spain, providing administration and web site development services.
No consulting fees were incurred during the three and six months ended September 30, 2013.
Rent
In June 2014, the Company signed a five-year lease on an approximately 180 square metre of office premises in Barcelona , Spain at a monthly lease of € 2,291.74, subject to 50% reduction for the first seven months. The lease is however, cancellable by the Company after twelve months.
Rent costs of approximately $5,500 and $8,700 respectively for the three and six months ended September 30, 2014 included commission of $3,927 charged by a real estate broker .
In addition, the Company also paid additional rent deposit of $11,932, which is included under assets.
There were no rental costs during the three and six months ended September 30, 2013.
The Company does not pay any rent for the use of Toronto office since no operational activities are involved in Toronto. CFO, who is based in Toronto, handles corporate matters from this office.
Interest Expense
Interest expense for the three and six months ended September 30, 2014 totalled $13,863 and $27,575 respectively, and was $757 and $ 4,808 respectively for the three and six months ended September 30, 2013.
Interest expense for the period to September 30, 2014 comprised interest of approximately $ 2,500 at 5% on convertible debt and amortized amount of approximately $ 25,000 representing the convertible feature of the convertible debt.
Interest of $4,808 for the six months ended September 30, 2013 related to interest charged on Note payable for that period. Interest charge on the Note payable was discontinued effective July 17, 2013 under a new arrangement with the Note holder.
Financial Condition, Liquidity and Capital Resources
For the three and six months ended September 30, 2014 and 2013, the Company has not generated cash flow from operations. Consequently, the Company has been dependent upon its shareholders and associates to fund its cash requirements.
Our present material commitments are professional and administrative fees and expenses associated with rented premises and the preparation of our filings with the U.S. Securities and Exchange Commission (“SEC”) and other regulatory requirements and the debt associated with the acquisition of B’Wished.
As of September 30, 2014, the Company had cash of $2,846. Net cash used in the operating activities was approximately $ 180,000 for the six months to September 30, 2014 compared to $37,000 for the six months to September 30, 2013. Significant increase in the operating cost was mainly due to consulting and legal costs as explained earlier in this report. There were approximately $ 50,000 used for investment activities for the six months to September 30, 2014 compared to $ nil for the six months to September 30, 2013.The increased operational costs and new investments were primarily funded from the existing cash and further borrowing of approximately $171,000 from stockholder.
6
The Company continues to seek to raise capital to implement the Company's business strategy. Appointment of a CEO with significant experience in raising financing for small cap and emerging businesses will enable the Company to pursue new investors. However, in the event additional capital is not raised or alternatively debt financing is not available from our shareholders, the Company may seek a merger or outright sale.
Investments
On January 27, 2014, the Company acquired a membership to a private investors’ club in Barcelona, Spain, Necotium Investors Club (Club). The Club has been created as a platform to promote, channel and monitor investment in early stage companies with strong growth potential. The Company will thus have access to investment opportunities in entities with high growth potentials.
Up to September 30, 2014, the Company participated in two such investments:
Mailtrack Company SL | $25,200 |
Mobile Media Content | 18,900 |
| $44,100 |
The Company’s indirect equity interest in both the above entities is under 5%. The Club’s review committee will monitor these investments on behalf of its members and will recommend their disposal at an appropriate time. Approximately 80% of the capital gain on disposal of investments will be distributed to the participating members in proportion to their invested amount. The remaining 20% is retained by the Club as a bonus for the managers of the Club.
The investments are considered as available for sale and are stated at their fair value. The fair value consideration will be based on a quarterly report to be received from the Club manager on each of the investments. As at September 30, 2014, the carrying value is considered to be equal to the fair value.
The Company has also committed to another acquisition - Bluesence Innovation Group, S.L., a Spanish private company engaged in commercialization of software and IT consulting services primarily relating to IBM software for small and medium enterprises as further explained in Note 4 to the financial statements for the three and six months ended September 30, 2014 forming part of this report. We believe that the negotiations to acquire 100% equity in this entity will be concluded within the next month and is unlikely to involve any more cash investment.
Going Concern
The accompanying financial statements have been prepared assuming that we will continue as a going concern. We have an accumulated deficit of approximately $346,000 as at September 30, 2014. The Company realized a net loss from operations of approximately $150,000 and $17,000, respectively, for the six months ended September 30, 2014 and 2013. These conditions raise substantial doubt about our ability to continue as a going concern. Development of Beta one version of B’Wished web portal to its commercial launch will require further funding of at least $ 100,000 plus the Company will need operating costs in connection with its Spanish office, until B’Wished and other investments can start generating revenue. The Company has so far been funded by its shareholder and is currently negotiating with others to raise equity funding needed. However, there is no guarantee that such negotiations will succeed or result in the availability of the required funding. The financial statements do not include any adjustments that might be necessary if we are unable to continue as a going concern.
Off-balance sheet arrangements
The Company has no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect or change on the Company’s financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors.
7
Item 3 - Quantitative and Qualitative Disclosures about Market Risk
As a smaller reporting company, as defined in Rule 12b-2 of the Exchange Act, we are not required to provide the information required by this item.
Item 4 - Controls and Procedures
Evaluation of disclosure controls and procedures
We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports, filed under the Securities Exchange Act of 1934, is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our chief executive officer and chief financial officer to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable and not absolute assurance of achieving the desired control objectives. In reaching a reasonable level of assurance, management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures. In addition, the design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, a control may become inadequate because of changes in conditions or the degree of compliance with policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.
As required by the SEC Rule 13a-15(b), we carried out an evaluation under the supervision and with the participation of our management, including our principal executive officers of the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this From 10-Q. Based on that evaluation, the Company's principal executive and financial officers concluded that due to the material weakness discussed below, the Company's disclosure controls and procedures were not effective, as of September 30, 2014, to provide reasonable assurance that information required to be disclosed in the Company’s reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Commission’s rules and forms.
A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company's annual or interim financial statements will not be prevented or detected on a timely basis. In its assessment of the effectiveness of internal control our financial reporting as of September 30, 2014, the Company determined that the following items constituted material weaknesses:
•
The Company does not have policies and procedures in place to ensure the timely review, disclosure and accurate financial reporting for significant agreements and transactions.
•
The Company did not have duel controls as management consisted of only one person who acts as CEO and CFO on a part time basis . The Company also does not have an independent audit committee in place, which would provide oversight of the Company’s officers, operations and financial reporting function. A CEO has now been appointed who is based in Barcelona, Spain where most of the Company’s business is operating.
Changes in internal control over financial reporting
As explained earlier in this report, a new CEO has been appointed effective September 30, 2014. The CEO is based in Barcelona, Spain where most of the business activities of the Company are conducted. We believe direct involvement of a CEO in operating activities together with division of executive functions between CEO and CFO will significantly improve our internal control over financial reporting in the future.
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PART II
OTHER INFORMATION
Item 1: Legal Proceedings
None.
Item 1A: Risk Factors
As a “smaller reporting company” as defined by Rule 229.10(f)(1), we are not required to provide the information required by this Item 1A.
Item 2: Unregistered Sales of Equity Securities and Use of Proceeds
None.
Item 3: Defaults upon Senior Securities
None
Item 4: Mine Safety Disclosures
None
Item 5: Other Information
None
Item 6: Exhibits
Exhibit |
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Number | Descriptions |
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10.6 | Asset Purchase Agreement, incorporated herein by reference to Form 8-K filed on July 19, 2012. |
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31.1 | Certification of Chief Executive Officer pursuant to Securities Exchange Act Rule 13a-14, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002* |
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31.2 | Certification of Chief Financial Officer pursuant to Securities Exchange Act Rule 13a-14, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002* |
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32.1 | Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002** |
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32.2 | Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002** |
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101 | *The following financial information from our Quarterly Report on Form 10-Q for the quarter ended June 30, 2014 has been formatted in Extensible Business Reporting Language (XBRL): (i) Balance Sheet, (ii) Statement of Operations, (iii) Statement of Cash Flows, and (iv) Notes to Financial Statements |
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*
Filed herewith.
**
Furnished herewith
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SIGNATURE
Pursuant to the requirements of Section 13 or 15(d) 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.
ZD Ventures Corporation
By: /s/ Terence Robinson
Terence Robinson
President and Chief Executive Officer,
By: /s/ Kam Shah
Kam Shah
Chief Financial Officer,
Date: November 14, 2014
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