UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
| x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
| For the quarterly period ended January 31, 2009 |
| 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: 333-52874
NEEMA, INC.
(Exact name of registrant as specified in its charter)
Nevada
(State or other jurisdiction of incorporation or organization)
20-4126700
(I.R.S. Employer Identification Number)
421 9th Street
Manhattan Beach, CA
(Address of principal executive offices)
90266
(Zip code)
(310) 374-9382
(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 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 o
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. (Check one):
| Large accelerated filer o Non-accelerated filer o | Accelerated filer o 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 o No x
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of March 16, 2009: 2,205,000.
TABLE OF CONTENTS
SECTION | PAGE |
PART I. FINANCIAL INFORMATION | 1 |
Item 1. Financial Statements | 1 |
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operation | 6 |
Item 3. Quantitative and Qualitative Disclosures About Market Risk | 8 |
Item 4T. Controls and Procedures | 8 |
PART II. OTHER INFORMATION | 11 |
Item 1. Legal Proceedings | 11 |
Item 1A. Risk Factors | 11 |
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds | 11 |
Item 3. Defaults Upon Senior Securities | 11 |
Item 4. Submission of Matters to a Vote of Security Holders | 11 |
Item 5. Other Information | 11 |
Item 6. Exhibits | 12 |
SIGNATURES | 13 |
i
PART I.FINANCIAL INFORMATION
ITEM 1. Financial Statements |
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NEEMA, Inc.
Consolidated Balance Sheets
(A Development Stage Company)
| January 31, 2009 | April 30, 2008 |
| (unaudited) |
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ASSETS |
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Current Assets |
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Cash | – | 577 |
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Total Current Assets | – | 577 |
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Property and equipment (Note 4) | 14,374 | 17,402 |
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Other assets | 1,898 | 2,331 |
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Total Assets | 16,272 | 20,310 |
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LIABILITIES AND STOCKHOLDERS’ DEFICIT |
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Current Liabilities |
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Accounts payable | 15,111 | – |
Accrued liabilities | 2,412 | 19,653 |
Due to related party (Note 5) | 33,109 | 27,405 |
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Total Current Liabilities | 50,632 | 47,058 |
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Contingency (Note 1) |
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Stockholder’s Deficit |
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Common stock (Note 3) Authorized: 25,000,000 shares, par value $0.001; 2,205,000 shares issued and outstanding | 2,205 | 2,205 |
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Additional paid-in capital | 63,045 | 63,045 |
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Accumulated other comprehensive loss | 1,179 | (6,388) |
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Deficit accumulated during the development stage | (100,789) | (85,610) |
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Total Stockholders’ Deficit | (34,360) | (26,748) |
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Total Liabilities and Stockholders’ Deficit | 16,272 | 20,310 |
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[The accompanying condensed notes are an integral part of these consolidated financial statements.]
1
NEEMA, Inc.
Consolidated Statements of Operations and Other Comprehensive Loss
(A Development Stage Company)
(unaudited)
| Accumulated from January 16, 2006 (Date of Inception) to January 31, 2009 | For the Three months Ended January 31, 2009 | For the Three months Ended January 31, 2008 | For the Nine months Ended January 31, 2009 | For the Nine months Ended January 31, 2008 |
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Revenue |
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Rental Income | 94,076 | – | 9,510 | 17,884 | 32,284 |
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Operating Expenses |
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General and administrative | 205,553 | 25,159 | 17,800 | 44,541 | 56,393 |
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Total Operating Expenses | 205,553 | 25,159 | 17,800 | 44,541 | 56,393 |
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Operating Loss | (111,477) | (25,159) | (8,290) | (26,657) | (24,109) |
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Other Income (Expenses) |
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Donated Income (Note 6) | 11,478 | 11,478 | – | 11,478 | – |
Interest | (790) | – | 35 | – | (803) |
10,688 | 11,478 | – | 11,478 | (803) | |
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Other Comprehensive Loss |
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Foreign currency translation adjustments | 1,179 | 2,248 | (432) | 7,567 | (6,196) |
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Comprehensive Loss | (99,610) | (11,433) | (8,687) | (7,612) | (31,108) |
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Loss Per Share – Basic and Diluted |
| (0.01) | (0.01) | (0.01) | (0.02) |
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Weighted Average Shares Outstanding |
| 2,205,000 | 1,401,667 | 2,205,000 | 1,401,667 |
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[The accompanying condensed notes are an integral part of these consolidated financial statements.]
2
NEEMA, Inc.
Consolidated Statements of Cash Flows
(A Development Stage Company)
(unaudited)
| Accumulated from January 16, 2006 (Date of Inception) to January 31, 2009 | For the Nine months Ended January 31, 2009 | For the Nine months Ended January 31, 2008 |
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Operating Activities |
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Net loss for the period | (100,789) | (15,179) | (24,109) |
Adjustments to reconcile net loss to net cash provided by operating activities |
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Depreciation | 11,859 | 4,375 | 4,174 |
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Changes in operating assets and liabilities |
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Other assets | (1,898) | 433 | 1,214 |
Accounts payable | 15,111 | 15,111 | (1,330) |
Accrued liabilities | 2,412 | (17,241) | 9,859 |
Due to related parties | 6,981 | 6,981 | (4,298) |
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Net Cash (Used in) Provided by Operating Activities | (66,324) | (5,520) | (14,490) |
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Investing Activities |
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Acquisition of property and equipment | (25,383) | – | – |
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Net Cash Used in Investing Activities | (25,383) | – | – |
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Financing Activities |
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Loan repayment | (93,088) | (18,478) | (51,059) |
Sale of common stock | 5,000 | – | – |
Cash from subscription agreements | 60,250 | – | 10,000 |
Proceeds from related party loans and advances | 114,089 | 17,965 | 8,848 |
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Net Cash Provided by Financing Activities | 86,251 | (513) | (32,211) |
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Effect of Exchange Rate Changes on Cash | 5,456 | 5,456 | (1,245) |
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Change in Cash | – | (577) | (47,946) |
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Cash – Beginning of Period | – | 577 | 49,918 |
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Cash – End of Period | – | – | 1,972 |
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Supplemental Disclosures |
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Interest paid | – | – | – |
Income taxes paid | – | – | – |
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[The accompanying condensed notes are an integral part of these consolidated financial statements.]
3
| 1. | Basis of Presentation and Fiscal Year |
The foregoing unaudited interim financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Regulation S-X as promulgated by the Securities and Exchange Commission. Accordingly, these financial statements do not include all of the disclosures required by generally accepted accounting principles for complete financial statements. These unaudited interim financial statements should be read in conjunction with the audited financial statements for the period ended April 30, 2008. In the opinion of management, the unaudited interim financial statements furnished herein include all adjustments, all of which are of a normal recurring nature, necessary for a fair statement of the results for the interim period presented.
The preparation of financial statements in accordance with generally accepted accounting principles requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities known to exist as of the date the financial statements are published, and the reported amounts of revenues and expenses during the reporting period. Uncertainties with respect to such estimates and assumptions are inherent in the preparation of the Company’s financial statements; accordingly, it is possible that the actual results could differ from these estimates and assumptions that could have a material effect on the reported amounts of the Company’s financial position and results of operations.
The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. As at January 31, 2009, the Company has a working capital deficit of $50,632, and an accumulated deficit of $100,789.
| 2. | Summary of Significant Accounting Principles |
Revenue and Cost Recognition
The Company recognizes revenue from sales when there is persuasive evidence that an arrangement exists, services have been rendered, and the seller’s price to the buyer is determinable. Revenue is recognized as it is earned.
| 3. | Common Stock |
The Company is authorized to issue 25,000,000 shares of $0.001 par value common stock. All shares have equal voting rights, are non-assessable and have one vote per share. Voting rights are not cumulative and, therefore, the holders of more than 50% of the common stock could, if they choose to do so, elect all of the directors of the Company.
During the period ended April 30, 2006, the Company issued 1,000,000 shares of common stock for $5,000 cash.
In August 2006, the Company held an initial public offering of its shares of common stock. The offering was to sell a minimum of 1,200,000 up to 3,800,000 shares of $0.001 par value common stock at $0.05 per share. This offering was closed on July 19, 2007.
For the year ended April 30, 2007, the Company received funds in the amount of $50,250 for the purchase of 1,005,000 common shares at $0.05 per share, which were issued in July 2007. During the period ended July 31, 2007, the Company received an additional $10,000 for the purchase of 200,000 common shares at $0.05. In the year ended April 30, 2008, 1,205,000 shares were issued for the proceeds received totaling $60,250.
4
| 4. | Property and Equipment |
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| January 31, 2009 | April 30, 2008 |
Computer hardware |
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| $ 2,100 | $ 2,100 |
Furniture & Fixtures |
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| 5,198 | 5,198 |
Leasehold Improvements |
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| 17,795 | 17,795 |
Subtotal |
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| 25,093 | 25,093 |
Less accumulated depreciation and amortization |
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| 10,719 | 7,691 |
Property and Equipment, net |
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| $ 14,374 | $ 17,402 |
| 5. | Related Party Transactions |
During the year ended April 30, 2008, the Company repaid its officers $56,688 of the amounts due. Its officers advanced the Company additional funds in the amount of $6,500 and paid $17,840 in expenses on behalf of the Company during the year ended April 30, 2008.
During the nine month period ended January 31, 2009, the Company repaid its former officers $18,478 of the amounts due. Its former officers advanced the Company additional funds in the amount of $17,965 and paid $6,981 in expenses on behalf of the Company. At January 31, 2009, the Company owes $33,109 to the former officers, which is unsecured, non-interest bearing, and has no specific terms of repayment.
| 6. | Donated Income |
On September 10, 2008 the Company’s board of directors (the “Board”) unanimously passed a resolution increasing the size of the Board from four to five, and determined that it is in the best interest of the Company and its shareholders to fill the Board vacancy by appointing J. David Brow (“Mr. Brow”) as a director of the Company.
On September 11, 2008, Nigel Liang (“Mr. Liang”), Nicholas Wu (“Mr. Wu”), Audra Yap (“Ms. Yap”), together with Mr. Liang and Mr. Wu, the “Former Officers”), and Eugene Liang resigned as directors, officers and/or any other positions they held in this Company.
On September 11, 2008, the Board amended Article IV Section 4.02 of its bylaws as follows: (a) the following sentence was deleted in its entirety: “Any one person may hold any two or more of such offices, except that the president shall not also be the secretary.” and (b) the deleted sentence was replaced with the following: “Any one person may hold any two or more of such offices.”
On September 11, 2008, the Board unanimously passed a resolution appointing Mr. Brow Chief Executive Officer and Chief Financial Officer of the Company.
At September 11, 2008, the Company owed an aggregate amount of $11,478 to the Company’s independent registered public accounting firm. The Former Officers agreed to pay the debt on behalf of the Company as an additional capital contribution prior to their resignations (the “Capital Contribution”). On September 11, 2008, Mr. Brow, in consideration of an aggregate amount of $18,500, agreed to purchase 400,000 shares of the Company’s issued and outstanding stock from Mr. Liang (the “Liang Shares”), 400,000 shares of the Company’s issued and outstanding stock from Mr. Wu (the “Wu Shares”), and 200,000 shares of the Company’s issued and outstanding stock from Ms. Yap (together with the Liang Shares and the Wu Shares, the “Shares”). On December 12, 2008, Mr. Brow and the Former Officers amended this agreement to reduce Mr. Brow’s purchase consideration for the Shares to $11,478 (the “Payment”), which Payment was paid directly to the Company’s auditors, by check or wire transfer, in satisfaction of the debt and the Former Officers’ Capital Contribution obligation. In accordance with FAS 116 - “Accounting for Contributions Received and Contributions Made” the Company recorded the donations as other income during the nine month period ended January 31, 2009 in the statement of operations.
5
| ITEM 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations |
Forward-Looking Statements
The information in this Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities
Exchange Act of 1934, as amended (the “Exchange Act”). These forward-looking statements involve risks and uncertainties regarding the intent, belief or current expectations of us, our directors or our officers with respect to, among other things: anticipated financial or operating results, financial projections, business prospects, future product performance, the effect of the current economic and financial conditions on the Company and its operations, and other matters that are not historical facts. The success of our business operations is dependent on factors such as the impact of competitive products, product development, commercialization and technology difficulties, the results of financing efforts and the effectiveness of our marketing strategies, general competitive and economic conditions, conditions of the financial markets and the availability of financing, including equity investors and debt. Any statements contained herein that are not statements of historical facts may be deemed to be forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “may”, “will”, “should”, “expect”, “plan”, “intend”, “anticipate”, “believe”, “estimate”, “predict”, “potential” or “continue”, the negative of such terms or other comparable terminology. Actual events or results may differ materially. In evaluating these statements, you should consider various factors, including the risks we outline from time to time in other reports we file with the Securities and Exchange Commission (“SEC”). These factors may cause our actual results to differ materially from any forward-looking statement. We disclaim any obligation to publicly update these statements, or disclose any difference between our actual results and those reflected in these statements. The information constitutes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Given these uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements.
Cautionary Note Regarding Management’s Discussion and Analysis
This discussion and analysis should be read in conjunction with the accompanying consolidated financial statements and related notes. The discussion and analysis of the financial condition and results of operations are based upon the consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of any contingent liabilities at the financial statement date and reported amounts of revenue and expenses during the reporting period. On an on-going basis the Company reviews its estimates and assumptions. The estimates were based on historical experience and other assumptions that the Company believes to be reasonable under the circumstances. Actual results are likely to differ from those estimates under different assumptions or conditions.
Plan of Operations
We estimate our operating expenditures for the final three months of our fiscal year ending April 30, 2009 to be as follows: rent of $7,000, administrative expenses of $2,500, management fees of $2,500 and professional fees of $12,000. We had a working capital deficit of $50,632 as of January 31, 2009, and no revenues or current assets. We do not currently have sufficient capital to fund our estimated expenditures for the remainder of the fiscal year and intend to fund the expenditures through debt and/or equity financing. The Company needs to raise $40,000 by April 30, 2009 to cover operating expenditures and current liabilities due by that date. Since the Company has no revenue stream, it anticipates raising such funds from debt and/or equity financing. There can be no assurance that financing will be available on acceptable terms, if at all. See, “Liquidity and Capital Resources,” below.
6
The Company may explore other business opportunities or change it business strategy in the future. The Company cannot anticipate the costs of pursuing and/or entering into other business opportunities and does not have sufficient capital to pursue such opportunities without additional financing. There can be no assurance that additional business opportunities or the financing for such opportunities will be available on favorable terms, if at all.
Results of Operations
The Company has not yet realized any significant revenues from its planned operations and received no rental income or other revenues during the three months ended January 31, 2009. The Company is unlikely to generate significant earnings in the immediate or foreseeable future. The continuation of the Company as a going concern is dependent upon its successful efforts to raise additional equity or debt financing to continue operations and generate sustainable significant revenue. The Company must raise money immediately. The Company estimates that it must raise $40,000 by April 30, 2009 to cover general expenditures and current liabilities due by April 30, 2009. There is no guarantee that the Company will be able to raise adequate equity or debt financings or generate profitable operations.
Revenues
In the three and nine months ended January 31, 2009, the Company earned revenues of $0 and $17,884, respectively.
Our operating revenues come directly from the rental of our facility to practitioners with whom True Health Studio has membership agreements. Revenues are collected on a cash basis, however, recognized when the earnings process is complete. In the three and nine-month periods ended January 31, 2009, we earned rental income of $0 and $17,884, respectively, compared to $9,510 and $32,284 earned in the same periods in 2008. The decrease in rental income was a direct result of a terminated lease with one of our practitioners during the first six months of the fiscal year ending April 30, 2008, and the Company’s inability to fill any of the vacant office space in our rental facility. The Company earned no rental income during the quarter ended January 31, 2009, and the Company’s rental facility is completely vacant. Although the Company is attempting to fill this vacant space, there is no guaranty that we will generate revenue from our facility in the near future and the troubled real estate market and disruptions in the global economy may compound our present inability to find tenants.
7
The Company has not accrued, and does not anticipate accruing, any revenue for the Company’s final fiscal quarter ending April 30, 2009.
Operating Expenses and Loss
We incurred $25,159 in operating expenses in the three months ended January 31, 2009, an increase of 41% from $17,800 in the same period in 2008. General and administrative expenses consists of rent ($6,706 - 2009; $6,626 - 2008); administrative ($1,937 - 2009; $3,754 - 2008); professional fees ($12,733 - 2009; $6,152 - 2008); management fees ($2,533 – 2009; $nil – 2008); and depreciation ($1,250 - 2009; $1,268 - 2008). This increase is due primarily to an increase in professional fees and management fees.
We incurred a $25,159 operating loss in the three-month period ended January 31, 2009, as compared to a loss of $8,290 for the same period in 2008. This increase in the Company's operating loss between periods is a result of our increased operating expenses discussed above and a $9,510 drop in revenue from 2008 to 2009 (the Company earned no revenue for the quarter ended January 31, 2009).
We incurred $44,541 in operating expenses in the nine months ended January 31, 2009, a decrease of 21% from $56,393 in the same period in 2008. Operating expenses consists of rent ($19,877 - 2009; $20,947 - 2008); administrative (recovery of $3,348 – 2009; $10,787 - 2008); professional fees ($21,104 - 2009; $20,485 - 2008); management fees ($2,533 – 2009; $nil – 2008); and depreciation ($4,375 - 2009; $4,174 - 2008). In the nine months ended January 31, 2008, we recorded approximately $6,196 in foreign exchange translation loss.
We incurred a $26,657 operating loss in the nine-month period ended January 31, 2009, as compared to a loss of $24,109 for the same period in 2008. This increase in the Company's operating loss between periods is a result of our $14,440 decline in revenue not being completely offset by an $11,852 reduction of operating expenses.
Other Income
During the three and nine month periods ended January 31, 2009, the Company recognized $11,478 in donated income as other income.
On September 11, 2008, Nigel Liang ("Mr. Liang"), Nicholas Wu ("Mr. Wu"), and Audra Yap ("Ms. Yap"; together with Mr. Liang and Mr. Wu, the "Former Officers") resigned from the Company. At September 11, 2008, the Company owed an aggregate amount of $11,478 to the Company's independent registered public accounting firm (the "Auditor"). The Former Officers agreed to pay this debt on behalf of the Company as an additional capital contribution prior to their resignations (the "Capital Contribution"), but did not fulfill this Capital Contribution until December 12, 2008. On September 11, 2008, Mr. Brow, in consideration of an aggregate amount of $18,500, agreed to purchase 400,000 shares of the Company's issued and outstanding stock from Mr. Liang (the "Liang Shares"), 400,000 shares of the Company's issued and outstanding stock from Mr. Wu (the "Wu Shares"), and 200,000 shares of the Company's issued and outstanding stock from Ms. Yap (together with the Liang Shares and the Wu Shares, the "Shares"). On December 12, 2008, Mr. Brow and the Former Officers amended this agreement to reduce Mr. Brow's purchase consideration for the Shares to $11,478 (the "Payment"), which Payment was paid by Mr. Brow directly to the Auditor in satisfaction of the debt owed by the Company to the Auditor and the Former Officers' Capital Contribution obligation to the Company. In accordance with FAS 116 - "Accounting for Contributions Received and Contributions Made" the Company recorded $11,478 in contributions by the Former Officers as other income under donated income during the three and nine month periods ended January 31, 2009 in the statement of operations.
Net Income (Loss)
We incurred a loss of $13,681 for the three months ended January 31, 2009, compared to a loss of $8,255 for the three months ended January 31, 2008. The increased net loss between these periods is primarily due to an increase in operating expenses for the three months ended January 31, 2009 and earning no revenues during the quarter, partially offset by the Company’s recognition of $11,478 in other income as donated income (see Other Income, above) during that period. Absent donated income (see Other Income, above), our losses would have been approximately $25,159 for the quarter ended January 31, 2009. The Company anticipates that the donated income (see Other Income, above) was a one-time non-recurring event and, without revenues from rental income, the Company’s loss position will increase in future periods.
We incurred a net loss of $15,179 for the nine months ended January 31, 2009, compared to a loss of $24,912 for the nine months ended January 31, 2008. By minimizing increases to our operating expenses (except for the three months ended January 31, 2009) and recognizing $11,478 in other income as donated income (see Other Income, above), we were able to reduce our net loss for the nine months ended January 31, 2009 as compared to the same period in 2008, despite a decline of nearly 50% in our rental income. Absent donated income (see Other Income, above), our losses would have been approximately $26,657 for the nine months ended January 31, 2009. The Company anticipates that the donated income (see Other Income, above) was a one-time non-recurring event and, without revenues from rental income, the Company’s loss position will increase in future periods.
Liquidity and Capital Resources
As at January 31, 2009, the Company had no current assets or cash on hand and $50,632 in current liabilities. The current liabilities consisted of accounts payable ($15,111), accrued liabilities ($2,412) and amounts due to related parties ($33,109). As at January 31, 2009, the Company had a working capital deficit of $50,632. We estimate that the cash needed to fund general expenditures for the remainder of the fiscal year ending April 30, 2009, including current liabilities due by that date, is $40,000.
We estimate our cash requirements for the next twelve-month period to be approximately $90,000. As at January 31, 2009, we had a cumulative deficit of $100,789 and expect to incur losses during the last three months of our fiscal year ending April 30, 2009. Since inception, we financed operations through short-term related-party loans and equity financing. During the nine-month period ended January 31, 2009, the Company repaid its former officers $18,478 of the amounts due to them and such former officers advanced the Company additional funds in the amount of $17,965 and paid $6,981 in expenses on behalf of the Company. At January 31, 2009, the Company owed $33,109 to the former officers, which is unsecured, non-interest bearing, and has no specific terms of repayment. Loans from the Company's former officers have been used as working capital. Although our rental income provided nominal cash flow from operations for the first six months of the nine month period ended January 31, 2009, we do not currently have tenants in our rental facility and did not have any rental income for the quarter ended January 31, 2009. We currently have no revenue and do not have sufficient working capital to enable us to finance our normal operations for the next twelve-month period. While we continue to work towards acquiring tenants in our facility, we have no cash on hand to satisfy cash requirements. If we are unable to immediately develop and implement a profitable business plan, we will be required to seek additional avenues to obtain funds necessary to sustain operations, such as the issuance of equity securities or through additional debt financing. There can be no assurance that we will be successful in raising the required capital or that actual cash requirements will not exceed our estimates.
8
Given that we have not achieved significant profitable operations to date, our cash requirements are subject to numerous contingencies and risk factors beyond our control, including operational and development risks, competition from well-funded competitors, and our ability to manage growth. We can offer no assurance that our company will generate cash flow sufficient to achieve profitable operations or that our expenses will not exceed our projections. If our expenses exceed estimates, we will require additional cash beyond our current $90,000 estimate during the next twelve months to execute our business plan.
The Company may explore other business opportunities or change its business strategy in the future. The Company cannot anticipate the costs of pursuing and/or entering into other business opportunities and does not have sufficient capital to pursue for such opportunities without additional financing. There can be no assurance that additional business opportunities or the financing for such opportunities will be available on favorable terms, if at all. If the expenses of pursuing other business opportunities exceed our current estimates, we will require additional cash beyond our current $90,000 estimate for the next twelve months to pursue such opportunities.
There are no assurances that we will be able to obtain funds required for our continued operation. There can be no assurance that additional financing will be available to us when needed or, if available, that it can be obtained on commercially reasonable terms. Unprecedented disruptions in the current credit and financial markets have had a significant material adverse impact on a number of financial institutions and have limited access to capital and credit for many companies. These disruptions could, among other things, make it more difficult for the Company to obtain, or increase its cost of obtaining, capital and financing for its operations. If we are not able to obtain additional financing on a timely basis, we will not be able to meet our other obligations as they become due and we will be forced to scale down or perhaps even cease the operation of our business.
The recent unprecedented events in global financial markets have had a profound impact on the global economy. Many industries, including the wellness industry, are impacted by these market conditions. Some of the key impacts of the current financial market turmoil include contraction in credit markets resulting in a widening of credit risk, devaluations and high volatility in global equity, commodity and foreign exchange markets, and a lack of market liquidity. A continued or worsened slowdown in the financial markets or other economic conditions, including but not limited to, consumer spending, employment rates, business conditions, inflation, fuel and energy costs, consumer debt levels, lack of available credit, the state of the financial markets, interest rates, and tax rates may adversely affect the Company’s growth and profitability. Specifically:
| • | the global credit/liquidity crisis could impact the cost and availability of financing and our overall liquidity; |
| • | a decrease in disposable income, which adversely affects spending in the wellness industry; and |
| • | the devaluation and volatility of global stock markets impacts the valuation of our equity securities. |
These factors could have a material adverse effect on the Company’s financial condition and results of operations.
There is substantial doubt about our ability to continue as a going concern as the continuation of our business is dependent upon obtaining further long-term financing, successfully executing our business plan and achieving a profitable level of operations. The issuance of additional equity securities by us could result in a significant dilution in the equity interests of our current stockholders. Obtaining additional commercial loans, assuming those loans would be available, will increase our liabilities and future cash commitments.
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Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.
| ITEM 3. | Quantitative and Qualitative Disclosures About Market Risk |
Not applicable.
| ITEM 4T. | Controls and Procedures |
Disclosure Controls and Procedures
At the end of the period covered by this report on Form 10-Q for the quarter ended January 31, 2009, an evaluation was carried out under the supervision of and with the participation of the Company’s management, including the CEO/CFO, of the effectiveness of the design and operations of the Company’s disclosure controls and procedures (as defined in Rule 13a - 15(e) and Rule 15d - 15(e) under the Exchange Act). Based on that evaluation the CEO/CFO has concluded that the Company’s disclosure controls and procedures were not effective in ensuring that: (i) information required to be disclosed by the Company in reports that it files or submits to the SEC under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in applicable rules and forms and (ii) material information required to be disclosed in our reports filed under the Exchange Act is accumulated and communicated to our management, including our CEO/CFO, as appropriate, to allow for accurate and timely decisions regarding required disclosure.
During management’s evaluation of the design and operations of the Company’s disclosure controls and procedures for the quarter ended January 31, 2009, management discovered weaknesses in the internal control over financial reporting and, accordingly, adopted the additional review and disclosure systems described in Changes in Internal Control Over Financial Reporting, below. Due to the nature of the weaknesses in the internal control over financial reporting, management concluded that the Company's disclosure controls and procedures were ineffective.
Changes in Internal Control Over Financial Reporting
There were no changes in the Company’s internal control over financial reporting during the quarter ended January 31, 2009 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Subsequent to January 31, 2009, the Company’s new management adopted additional review and disclosure systems designed to improve the Company’s system of internal control over financial reporting, including:
| • | An improved system for financial reporting to guide the Company’s compliance with the requirements of Regulation S-X. Specifically, the Company’s management has implemented procedures designed to ensure that the Company’s consolidated financial statements include all required disclosures for all relevant periods and that the Company’s auditor reviews and reports on the Company’s financial statements for all periods required by SEC rules and regulations. These procedures include (a) retaining legal counsel with experience in SEC reporting; (b) maintaining an open dialogue between the Company’s management and the Company’s auditor and legal counsel to ensure that the Company’s financial statements for each quarterly and annual period satisfy all relevant SEC disclosure requirements; (c) maintaining an open dialogue with the Company’s auditors to ensure that the auditor’s review of and report on the Company’s year-end financial statements is complete and satisfies all relevant SEC rules and regulations; and (d) continuously reviewing the Company’s financial statements while drafting quarterly and annual reports to ensure the statements have not been altered during the preparation or filing of such reports. |
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| • | An improved system for compliance with Item 308T of Regulation S-K (and Item 308 of Regulation S-K following the expiration of Item 308T). Specifically, the Company’s management has implemented procedures to ensure the Company’s Management Report, as filed with future quarterly and annual reports, includes accurate and complete disclosures regarding the Company’s disclosure controls and procedures and internal control over financial reporting. These procedures include (a) maintaining an open dialogue between the Company’s new management and the Company’s legal counsel to ensure that Management’s Report during each applicable reporting period satisfies SEC disclosure requirements; (b) developing a system to collect and retain information pertinent to the Company’s internal control over financial reporting throughout the year to facilitate management’s evaluation and assessment thereof at the end of each fiscal year; and (c) developing a system to record material changes in internal control over financial reporting to facilitate the Company’s obligation to report such changes in quarterly and annual reports. |
| • | Conducting a review of historic financial statements, ledgers and accounting entries to verify their compliance with Regulation S-X, Item 308T of Regulation S-K and other SEC rules and regulations. |
| • | Amending the Company’s financial statements for the year ended April 30, 2008 and the Company’s Form 10-KSB (the “Form 10-KSB”) for the same period in order to rectify the errors and omissions more fully described in the Company’s first and second amendments to the Form 10-KSB, as filed with the SEC on March 4 and March 9, 2009, respectively. |
The Company will continue to review and monitor its disclosure controls and procedures and internal controls over financial reporting and will adopt further changes, if and when management determines that such changes are necessary, to ensure accuracy in the Company’s future filings.
PART II. OTHER INFORMATION
| ITEM 1. | Legal Proceedings |
None.
| ITEM 1A. | Risk Factors |
Not applicable.
| ITEM 2. | Unregistered Sales of Equity Securities and Use of Proceeds |
The Company did not issue any unregistered equity securities during the period covered by this Quarterly Report.
| ITEM 3. | Defaults Upon Senior Securities. |
None.
| ITEM 4. | Submission of Matters to a Vote of Security Holders |
None.
| ITEM 5. | Other Information |
None.
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| ITEM 6. | Exhibits |
31.1 | Certification of the Chief Executive Officer and Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act |
32.1 | Certification pursuant to Section 906 of the Sarbanes-Oxley Act |
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SIGNATURE
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.
NEEMA, INC.
By: /s/ J. David Brow
J. David Brow, President, Chief Executive Officer
and Chief Financial Officer
(On behalf of the Company as Principal Executive Officer
and Principal Financial and Accounting Officer)
Dated: March 16, 2009
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