UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
| x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED JANUARY 31, 2008 |
| 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 NUMBER: 000—51977
MyECheck, Inc.
(Exact name of registrant as specified in its charter)
| Nevada | N/A |
| (State or other jurisdiction of incorporation) | (IRS Employer Identification No.) |
Suite 1100 - 475 Howe Street
Vancouver, British Columbia, Canada, V6C 2B3
(Address of principal executive offices with zip code)
604-801-5995
(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 o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act).
Large accelerated filer o Accelerated filer o Non-accelerated filer x
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes o No x
As of March 12, 2008 there were 151,375,000 shares of the registrant’s common stock outstanding
MYECHECK, INC.
QUARTERLY REPORT ON FORM 10-Q
TABLE OF CONTENTS
PART 1: FINANCIAL INFORMATION | 3 |
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ITEM 1: FINANCIAL STATEMENTS | 3 |
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ITEM 2: MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS | 13 |
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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK | 14 |
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ITEM 4. CONTROLS AND PROCEDURES | 14 |
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PART II OTHER INFORMATION | 14 |
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ITEM 2 CHANGES IN SECURITIES AND USE OF PROCEEDS | |
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ITEM 3 DEFAULTS UPON SENIOR SECURITIES | |
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ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS | |
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SIGNATURES | 15 |
PART 1: FINANCIAL INFORMATION
ITEM 1: FINANCIAL STATEMENTS
SEKOYA HOLDINGS, LTD.
(A Development Stage Company)
Financial Statements
January 31, 2008
(Unaudited)
CONTENTS
| | Page(s) |
| | |
| Financial Statements: | |
| | |
| Balance Sheets - As of January 31, 2008 (Unaudited) and October 31, 2007 (Audited) | 5 |
| | |
| Statements of Operations - | |
| For the Three Months Ended January 31, 2008 and 2007 and for the Period from | |
| May 19, 2005 (inception) to January 31, 2008 (Unaudited) | 6 |
| | |
| Statements of Cash Flows - | |
| For the Three Months Ended January 31, 2008 and 2007 and for the Period from | |
| May 19, 2005 (inception) to January 31, 2008 (Unaudited) | 7 |
| | |
| 8-12 |
(A Development Stage Company)
Balance Sheets
| | | January 31, 2008 | | October 31, 2007 | |
| | (Unaudited) | | (Audited) | |
| | | | | | |
ASSETS | | | | | | | |
Current Assets | | | | | | | |
| Cash | | $ | 269 | | $ | 269 | |
Total Current Assets | | | 269 | | | 269 | |
| | | | | | | | |
Total Assets | | $ | 269 | | $ | 269 | |
| | | | | | | | |
LIABILITIES AND STOCKHOLDERS' DEFICIT | | | | | | | |
| | | | | | | | |
Current Liabilities | | | | | | | |
| Accounts payable | | $ | 23,145 | | $ | 28,000 | |
| Loans payable - related party | | | 22,729 | | | 13,529 | |
Total Current Liabilities | | | 45,874 | | | 41,529 | |
| | | | | | | | |
| Commitments and Contingencies | | | | | | | |
| | | | | | | | |
Stockholders' Deficit | | | | | | | |
| Common stock, $0.001 par value, 200,000,000 shares authorized 151,375,000 shares issued and outstanding | | | 151,375 | | | 151,375 | |
| Additional paid in capital | | | (126,375 | ) | | (126,375 | ) |
| Deficit accumulated during the development stage | | | (70,605 | ) | | (66,260 | ) |
Total Stockholders' Deficit | | | (45,605 | ) | | (41,260 | ) |
| | | | | | | | |
Total Liabilities and Stockholders' Deficit | | $ | 269 | | $ | 269 | |
See accompanying notes to unaudited financial statements
Sekoya Holdings, Ltd.
(A Development Stage Company)
Statements of Operations
(Unaudited)
| | | For the Three Months Ended January 31, | | For the Period from May 19, 2005 (inception) to | |
| | | 2008 | | 2007 | | January 31, 2008 | |
| | | | | | | | |
Revenues | | $ | - | | $ | - | | $ | - | |
| | | | | | | | | | | |
Operating Expenses | | | | | | | | | | |
| General and administrative | | | 264 | | | 2,080 | | | 28,959 | |
| Professional fees | | | 4,081 | | | 3,055 | | | 36,646 | |
| Impairment loss - website development costs | | | - | | | - | | | 5,000 | |
Total Operating Expenses | | | 4,345 | | | 5,135 | | | 70,605 | |
| | | | | | | | | | | |
Loss from Operations | | | (4,345 | ) | | (5,135 | ) | | (70,605 | ) |
| | | | | | | | | | | |
Net Loss | | $ | (4,345 | ) | $ | (5,135 | ) | $ | (70,605 | ) |
| | | | | | | | | | | |
Net Loss Per Share - Basic and Diluted | | $ | (0.00 | ) | $ | (0.00 | ) | $ | (0.00 | ) |
| | | | | | | | | | | |
Weighted average number of shares outstanding during the period - basic and diluted | | | 151,375,000 | | | 151,375,000 | | | 150,504,379 | |
See accompanying notes to unaudited financial statements
(A Development Stage Company)
Statements of Cash Flows
(Unaudited)
| | | For the Three Months Ended January 31, | | May 19, 2005 (inception) to | |
| | | 2008 | | 2007 | | January 31, 2008 | |
Cash Flows from Operating Activities: | | | | | | | | | | |
| Net loss | | $ | (4,345 | ) | $ | (5,135 | ) | $ | (70,605 | ) |
| Adjustments to reconcile net loss to net cash used in operating activities: | | | | | | | | | | |
| Impairment loss - website development costs | | | - | | | - | | | 5,000 | |
| Changes in operating assets and liabilities: | | | | | | | | | | |
| (Increase) decrease in: | | | | | | | | | | |
| Prepaid expenses | | | - | | | - | | | (5,000 | ) |
| Increase (decrease) in: | | | | | | | | | | |
| Accounts payable | | | 145 | | | (800 | ) | | 28,145 | |
Net Cash Used in Operating Activities | | | (4,200 | ) | | (5,935 | ) | | (42,460 | ) |
| | | | | | | | | | | |
Cash Flows from Financing Activities: | | | | | | | | | | |
| Proceeds from issuance of common stock | | | - | | | - | | | 25,000 | |
| Proceeds from loans payable - related party | | | 4,200 | | | 6,000 | | | 17,729 | |
Net Cash Provided by Financing Activities | | | 4,200 | | | 6,000 | | | 42,729 | |
| | | | | | | | | | | |
| Net Increase in Cash | | | - | | | 65 | | | 269 | |
| | | | | | | | | | | |
| Cash - Beginning of Period | | | 269 | | | 275 | | | - | |
| | | | | | | | | | | |
Cash - End of Period | | $ | 269 | | $ | 340 | | $ | 269 | |
| | | | | | | | | | | |
Supplemental Disclosure of Cash Flow Information | | | | | | | | | | |
| Cash Paid for: | | | | | | | | | | |
| Taxes | | $ | - | | $ | - | | $ | - | |
| Interest | | $ | - | | $ | - | | $ | - | |
| | | | | | | | | | | |
Supplemental Disclosure of Non-Cash Investing and Financing activities: | | | | | | | | | | |
| Accrued liability repaid by sole stockholder | | $ | 5,000 | | $ | - | | $ | 5,000 | |
See accompanying notes to unaudited financial statements
Sekoya Holdings, Ltd.
(A Development Stage Company)
Notes to Financial Statements
January 31, 2008
(Unaudited)
Note 1 Basis of Presentation
The accompanying unaudited financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules and regulations of the United States Securities and Exchange Commission for interim financial information. Accordingly, they do not include all the information and footnotes necessary for a comprehensive presentation of financial position, results of operations or cash flows. It is management's opinion, however, that all material adjustments (consisting of normal recurring adjustments) have been made which are necessary for a fair financial statement presentation. The results for the interim period are not necessarily indicative of the results to be expected for the full year.
For further information, refer to the audited financial statements and footnotes of the Company for the year ending October 31, 2007, included in the Company's Form 10-KSB.
Note 2 Nature of Operations and Summary of Significant Accounting Policies
Nature of Operations
Sekoya Holdings, Ltd. (the "Company") was incorporated in Nevada on May 19, 2005.
The Company is in the process of developing an online payment system for use in the Chinese online community.
Development Stage
The Company's financial statements are presented as those of a development stage enterprise. Activities during the development stage primarily include related party debt financing, and the further development of the business plan.
Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.
Sekoya Holdings, Ltd.
(A Development Stage Company)
Notes to Financial Statements
January 31, 2008
(Unaudited)
Cash and Cash Equivalents
For purposes of the statement of cash flows, the Company considers all highly liquid instruments purchased with a maturity of three months or less to be cash equivalents. At January 31, 2008, the Company had no cash equivalents.
Internal Use Software
The Company has adopted the provisions of AICPA Statement of Position (“SOP”) No. 98-1, Accounting for the Costs of Software Developed or Obtained for Internal Use. The type of costs incurred by the Company in developing its web site included the price of computer software purchased from third parties. These costs are either expensed or capitalized depending on the type of cost and the stage of development of the web site.
The Company makes ongoing evaluations of the recoverability of its capitalized web site by comparing the amount capitalized for each module or component of software to their estimated net realizable values. If such evaluations indicate that the unamortized costs exceed the net realizable values, the Company writes off the amount by which the unamortized costs exceed the net realizable values. At October 31, 2007, the Company determined that since the website was non-operational and could not generate any revenues, the previously capitalized website development costs were no longer recoverable; an impairment loss of $5,000 was recorded and charged to the statement of operations.
Net Loss Per Share
Basic loss per share is computed by dividing net loss by weighted average number of shares of common stock outstanding during each period. Diluted loss per share is computed by dividing net loss by the weighted average number of shares of common stock, common stock equivalents and potentially dilutive securities outstanding during each period. At January 31, 2008 and 2007, and for the period from May 19, 2005 (inception) to January 31, 2008, respectively, the Company did not have any outstanding common stock equivalents; therefore, a separate computation of diluted loss per share is not presented.
Stock-based Compensation
All share-based payments to employees will be recorded and expensed in the statement of operations as applicable under SFAS No. 123R “Share-Based Payment”. The Company has not issued any stock based compensation since inception.
Sekoya Holdings, Ltd.
(A Development Stage Company)
Notes to Financial Statements
January 31, 2008
(Unaudited)
Fair Value of Financial Instruments
The carrying amounts of the Company’s short-term financial instruments, including accounts payable and loans payable - related party, approximate fair value due to the relatively short period to maturity for these instruments.
Recent Accounting Pronouncements
On February 15, 2007, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards No. 159,“The Fair Value Option for Financial Assets and Financial Liabilities — Including an Amendment of FASB Statement No. 115” (“SFAS 159”). This standard permits an entity to measure financial instruments and certain other items at estimated fair value. Most of the provisions of SFAS No. 159 are elective; however, the amendment to FASB No. 115,“Accounting for Certain Investments in Debt and Equity Securities,” applies to all entities that own trading and available-for-sale securities. The fair value option created by SFAS 159 permits an entity to measure eligible items at fair value as of specified election dates. The fair value option (a) may generally be applied instrument by instrument, (b) is irrevocable unless a new election date occurs, and (c) must be applied to the entire instrument and not to only a portion of the instrument. SFAS 159 is effective as of the beginning of the first fiscal year that begins after November 15, 2007. Early adoption is permitted as of the beginning of the previous fiscal year provided that the entity (i) makes that choice in the first 120 days of that year, (ii) has not yet issued financial statements for any interim period of such year, and (iii) elects to apply the provisions of FASB 157. Management is currently evaluating the impact of SFAS 159, if any, on the Company’s financial statements. The adoption of SFAS No. 159 is not expected to have a material effect on its financial position, results of operations or cash flows.
In December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in Consolidated Financial Statements, an amendment of Accounting Research Bulletin No 51” (SFAS 160). SFAS 160 establishes accounting and reporting standards for ownership interests in subsidiaries held by parties other than the parent, changes in a parent’s ownership of a noncontrolling interest, calculation and disclosure of the consolidated net income attributable to the parent and the noncontrolling interest, changes in a parent’s ownership interest while the parent retains its controlling financial interest and fair value measurement of any retained noncontrolling equity investment. SFAS 160 is effective for financial statements issued for fiscal years beginning after December 15, 2008, and interim periods within those fiscal years. Early adoption is prohibited. The adoption of SFAS No. 160 is not expected to have a material effect on its financial position, results of operations or cash flows.
Sekoya Holdings, Ltd.
(A Development Stage Company)
Notes to Financial Statements
January 31, 2008
(Unaudited)
In December 2007, the FASB issued SFAS 141R, Business Combinations (“SFAS 141R”), which replaces FASB SFAS 141, Business Combinations. This Statement retains the fundamental requirements in SFAS 141 that the acquisition method of accounting be used for all business combinations and for an acquirer to be identified for each business combination. SFAS 141R defines the acquirer as the entity that obtains control of one or more businesses in the business combination and establishes the acquisition date as the date that the acquirer achieves control. SFAS 141R will require an entity to record separately from the business combination the direct costs, where previously these costs were included in the total allocated cost of the acquisition. SFAS 141R will require an entity to recognize the assets acquired, liabilities assumed, and any non-controlling interest in the acquired at the acquisition date, at their fair values as of that date. This compares to the cost allocation method previously required by SFAS No. 141. SFAS 141R will require an entity to recognize as an asset or liability at fair value for certain contingencies, either contractual or non-contractual, if certain criteria are met. Finally, SFAS 141R will require an entity to recognize contingent consideration at the date of acquisition, based on the fair value at that date. This Statement will be effective for business combinations completed on or after the first annual reporting period beginning on or after December 15, 2008. Early adoption of this standard is not permitted and the standards are to be applied prospectively only. Upon adoption of this standard, there would be no impact to the Company’s results of operations and financial condition for acquisitions previously completed. The adoption of SFAS No. 141R is not expected to have a material effect on its financial position, results of operations or cash flows.
Other accounting standards that have been issued or proposed by the FASB or other standards-setting bodies that do not require adoption until a future date and are not expected to have a material impact on the financial statements upon adoption.
Note 2 Going Concern
As reflected in the accompanying financial statements, the Company has a net loss of $4,345 and net cash used in operations of $4,200 for the three months ended January 31, 2008 and a working capital deficit of $45,605, stockholders’ deficit of $45,605 and an accumulated deficit during the development stage of $70,605 at January 31, 2008. In addition, the Company is in the development stage and has not yet generated any revenues. The ability of the Company to continue as a going concern is dependent on Management's plans, which include potential asset acquisitions, mergers or business combinations with other entities. 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. These financial statements do not include any adjustments relating to the recovery of the recorded assets or the classification of the liabilities that might be necessary should the Company be unable to continue as a going concern.
Sekoya Holdings, Ltd.
(A Development Stage Company)
Notes to Financial Statements
January 31, 2008
(Unaudited)
Note 3 Loans Payable
On October 31, 2006, January 31, 2007, July 31, 2007 and January 31, 2008, the Company’s Chairperson advanced $6,929, $6,000, $600 and $4,200, respectively. The advances were non-interest bearing, unsecured and due on demand.
On January 31, 2008, the Company’s Chairperson paid a vendor $5,000. The payment made personally by the Chairperson has been included as a component of the loans payable account. The payment made on behalf of the Company is non-interest bearing, unsecured and due on demand.
All advances represent a 100% concentration in debt financing.
Note 4 Stockholders’ Deficit
In 2005, the Company issued 125,000,000 shares of common stock to its Chairman and Founder for $5,000 ($0.00004/share).
In 2005, the Company issued 23,750,000 shares of common stock for $9,500 ($0.0004/share).
In 2005, the Company issued 2,625,000 shares of common stock for $10,500 ($0.004/share).
On May 28, 2007, the Company’s Board of Directors authorized a 25 for 1 forward stock split. All share and per share amounts in the accompanying financial statements have been retroactively restated.
Note 5 Subsequent Event
Merger Agreement
The Company and MyECheck, Inc., (“MEC”) a Delaware corporation entered into a Merger Agreement in November 2007, which has been amended and restated as of February 4, 2008. The merger is expected to close in March 2008. The transaction is being treated as a reverse acquisition and recapitalization of MEC.
Item 2: Management's Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis provides information which management of Myecheck, Inc. (the "Company") believes to be relevant to an assessment and understanding of the Company's results of operations and financial condition. This discussion should be read together with the Company's financial statements and the notes to financial statements, which are included in this report.
Caution about Forward-Looking Statements
This management's discussion and analysis or plan of operation should be read in conjunction with the financial statements and notes thereto of the Company for the quarter ended January 31, 2008. Because of the merger with MyECheck Inc., a Delaware corporation (Myecheck) that provides electronic check image and processing services, historic operations will not be predictive of future operations. With respect to the merger of the Company with Myecheck (in which the operations of MyEcheck will be continued, although the Company is the surviving corporation), investors are referred to the Company’s Report on Form 8-K filed February 7, 2008, which disclosures are hereby incorporated by reference.
This section includes a number of forward-looking statements that reflect our current views with respect to future events and financial performance. Forward-looking statements are often identified by words like: believe, expect, estimate, anticipate, intend, project and similar expressions, or words which, by their nature, refer to future events. You should not place undue certainty on these forward-looking statements, which apply only as of the date of this prospectus. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from historical results or our predictions.
Overview
The Company originally intended to commence operations as an E-commerce company which will offer a type of internet payment network for the Asian market. In connection with that intention, it signed a contract with a programmer to create and develop the initial phase of its website, icash.com.cn.
Results of Operations
The Company never generated any revenues, including for the quarter ended January 31, 2008.
The Company experienced general and administration expenses of $264 for the quarter ended January 31, 2008, compared to $2,080 for the quarter ended January 31, 2007. The majority of these expenses were related to paying for the Company's rent for office space. The Company’s expenses for professional services were $4,081 for the quarter ended January 31, 2008, compared to $3,055 for the quarter ended January 31, 2007.
The Company ceased its efforts to raise additional capital in order to proceed with the Company's original business of conducting E-commerce in the Asian market.
For the quarter ended January 31, 2008, the company experienced a net loss for the quarter ended January 31, 2008 of $4,345 compared to a net loss for quarter ended January 31, 2007 of $5,135.
Liquidity and Capital Resources
During the three month period ended January 31, 2008, the Company satisfied its working capital needs by cash received from a shareholder loan made by the Company's president, some of the proceeds of which were used to pay outstanding obligations of the Company. Following the merger, the Company expects to rely on cash from operations and outside financings to provide liquidity for its operations. At January 31, 2008, the Company had $269 on hand.
Other Information
Stock Split
On May 18, 2007, our Board of Directors declared a 25 for 1 forward stock split to our stockholders of record as of May 28, 2007. As a result of the forward stock split, as of January 31, 2008,, the Company had 151,375,000 shares of common stock issued and outstanding. All share and per share amounts in the accompanying financial statements were retroactively restated.
Item 3. Quantitative and Qualitative Disclosure About Market Risk.
Not applicable.
Item 4. Controls and Procedures
(a) Evaluation of Disclosure Controls and Procedures.
Disclosure controls and procedures are designed to ensure that information required to be disclosed in the reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported, within the time period 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 in the reports filed under the Exchange Act is accumulated and communicated to management, as appropriate, to allow timely decisions regarding required disclosure. Our current principal executive officer, who is also our principal financial officer, evaluated the effectiveness of our disclosure controls and procedures as of the end of the quarterly period covered by this report pursuant to Rule 15d-15(b) promulgated under the Exchange Act. Based upon that evaluation, our principal executive and financial officer has concluded that our disclosure controls and procedures were effective in alerting management in a timely fashion to all material information required to be included in our periodic filings with the Commission.
(b) Changes in Internal Controls.
There were no significant changes in our internal control over financial reporting (as defined in Rule 13a-15(f) of the Exchange Act) that occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.
PART II: OTHER INFORMATION
ITEMS 1, 2, 3, 4 , AND 5 ARE INAPPLICABLE.
ITEM 6 EXHIBITS
| (a) | | | |
| | Exhibit No. | | Description |
| | | |
| 31.1 | | Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
| 31.2 | | Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
| 32.1 | | Certification of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
| 32.2 | | Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
SIGNATURES
Pursuant to the requirements of the Exchange Act, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
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. March 14, 2008
| March 14, 2008 | /s/ "Shirley Wong" |
| | Ms. Shirley Wong, President and Chief Financial Officer |
