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 October 31, 2011
[]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:333-152679
DNA SYSTEMS, INC.
(Exact name of registrant as specified in its charter)
Nevada |
| 98-0557273 |
(State or other jurisdiction of incorporation) |
| (IRS Employer Identification Number) |
| ||
Room 306, 3rd Floor, Beautiful Group Tower, 77 Connaught Road, Central, Hong Kong | ||
(Address of principal executive offices) | ||
(852) 2802-8663 | ||
(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 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. [ X ] Yes [ ] No
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). [X] Yes [ ] No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and smaller reporting company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer [ ] | Accelerated filer [ ] |
Non-accelerated filer [ ] (Do not check if a smaller reporting company) | Smaller reporting company [ X ] |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).[ ] Yes [ X ] No
As of December 9, 2011, there were 8,700,000 shares of voting common stock, $0.001 par value, of DNA Systems, Inc. issued and outstanding.
- 1 -
PART I – FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
The financial statements of DNA Systems, Inc. (“we”, “us”, “our”, “DNAS” or the “Company”) a Nevada corporation, included herein were prepared, without audit, pursuant to rules and regulations of the Securities and Exchange Commission. Because certain information and notes normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America were condensed or omitted pursuant to such rules and regulations, these financial statements should be read in conjunction with the financial statements and notes thereto included in the audited financial statements of DNA Systems, Inc., for the fiscal year ended April 30, 2011 included in the Company’s Form 10-K filed with the Securities and Exchange Commission on July 28, 2011, and all amendments thereto.
DNA SYSTEMS, INC.
(A DEVELOPMENT STAGE COMPANY)
CONDENSED FINANCIAL STATEMENTS
FOR THE THREE AND SIX MONTHS ENDED OCTOBER 31, 2011 AND 2010
INDEX
Page
Condensed balance sheets
3
Condensed statements of operations and comprehensive loss
4
Condensed statements of cash flows
5
Notes to condensed financial statements
6 - 10
- 2 -
DNA SYSTEMS, INC.
(A DEVELOPMENT STAGE COMPANY)
CONDENSED BALANCE SHEETS
AS OF OCTOBER 31, 2011 AND APRIL 30, 2011
| As of |
|
| As of |
|
| October 31, |
|
| April 30, |
|
| 2011 |
|
| 2011 |
|
| (Unaudited) |
|
|
|
|
| US$ |
|
| US$ |
|
ASSETS |
|
|
|
|
|
|
|
|
|
|
|
Current assets |
|
|
|
|
|
Cash and cash equivalents | 880 |
|
| 1,066 |
|
|
|
|
|
|
|
Total assets | 880 |
|
| 1,066 |
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS’ DEFICIT |
|
|
|
|
|
|
|
|
|
|
|
Current liabilities |
|
|
|
|
|
Accrued audit fee | 8,296 |
|
| 5,857 |
|
Amount due to a stockholder (Note 7) | 33,261 |
|
| 30,225 |
|
|
|
|
|
|
|
Total liabilities | 41,557 |
|
| 36,082 |
|
|
|
|
|
|
|
Stockholders’ deficit |
|
|
|
|
|
Common stock - US$0.001 par value (Note 4) |
|
|
|
|
|
Authorized 65,000,000 shares; |
|
|
|
|
|
issued and outstanding 8,700,000 shares | 8,700 |
|
| 8,700 |
|
Additional paid in capital | 99,800 |
|
| 99,800 |
|
Accumulated deficit during the development stage | (148,834 | ) |
| (143,218 | ) |
Accumulated other comprehensive income (loss) | (343 | ) |
| (298 | ) |
|
|
|
|
|
|
Total stockholders’ deficit | (40,677 | ) |
| (35,016 | ) |
|
|
|
|
|
|
Total liabilities and stockholders’ deficit | 880 |
|
| 1,066 |
|
See accompanying notes to condensed financial statements.
- 3 -
DNA SYSTEMS, INC.
(A DEVELOPMENT STAGE COMPANY)
CONDENSED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
FOR THE THREE AND SIX MONTHS ENDED OCTOBER 31, 2011 AND 2010
AND FROM INCEPTION ON OCTOBER 25, 2007 THROUGH OCTOBER 31, 2011
| Three months |
| Six months |
|
| Cumulative |
| ||||
| ended October 31, |
| ended October 31, |
|
| total since |
| ||||
| 2011 |
| 2010 |
| 2011 |
| 2010 |
|
| inception |
|
| (Unaudited) |
| (Unaudited) |
| (Unaudited) |
| (Unaudited) |
|
| (Unaudited) |
|
| US$ |
| US$ |
| US$ |
| US$ |
|
| US$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue | - |
| - |
| - |
| - |
|
| 6,407 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses |
|
|
|
|
|
|
|
|
|
|
|
Formation expenses | - |
| - |
| - |
| - |
|
| 513 |
|
General and administrative expenses | 3,530 |
| 4,500 |
| 5,616 |
| 6,708 |
|
| 154,728 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss before income taxes | (3,530 | ) | (4,500 | ) | (5,616 | ) | (6,708 | ) |
| (148,834 | ) |
Income taxes (Note 2) | - |
| - |
| - |
| - |
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss | (3,530 | ) | (4,500 | ) | (5,616 | ) | (6,708 | ) |
| (148,834 | ) |
Other comprehensive (loss) income |
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation adjustment | (155 | ) | 111 |
| (45 | ) | 128 |
|
| (343 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
Total comprehensive loss | (3,685 | ) | (4,389 | ) | (5,661 | ) | (6,580 | ) |
| (149,177 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
Net loss per share : |
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted (Note 3) | (0.00 | ) | (0.00 | ) | (0.00 | ) | (0.00 | ) |
| (0.02 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of shares : |
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted | 8,700,000 |
| 8,582,609 |
| 8,700,000 |
| 8,541,304 |
|
| 8,305,926 |
|
See accompanying notes to condensed financial statements.
- 4 -
DNA SYSTEMS, INC.
(A DEVELOPMENT STAGE COMPANY)
CONDENSED STATEMENTS OF CASH FLOWS
FOR THE THREE AND SIX MONTHS ENDED OCTOBER 31, 2011 AND 2010
AND FROM INCEPTION ON OCTOBER 25, 2007 THROUGH OCTOBER 31, 2011
| Three months |
| Six months |
|
| Cumulative |
| ||||
| ended October 31, |
| ended October 31, |
|
| total since |
| ||||
| 2011 |
| 2010 |
| 2011 |
| 2010 |
|
| inception |
|
| (Unaudited) |
| (Unaudited) |
| (Unaudited) |
| (Unaudited) |
|
| (Unaudited) |
|
| US$ |
| US$ |
| US$ |
| US$ |
|
| US$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from operating activities |
|
|
|
|
|
|
|
|
|
|
|
Net loss | (3,530 | ) | (4,500 | ) | (5,616 | ) | (6,708 | ) |
| (148,834 | ) |
Change in liability |
|
|
|
|
|
|
|
|
|
|
|
Other payables | - |
| (12,019 | ) |
| - |
| - |
| - |
|
Accrued audit fee | 1,187 |
| (2,055 | ) | 2,439 |
| (2,056 | ) |
| 8,296 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash used in operating activities | (2,343 | ) | (18,574 | ) | (3,177 | ) | (8,764 | ) |
| (140,538 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities |
|
|
|
|
|
|
|
|
|
|
|
Proceeds from issuance of |
|
|
|
|
|
|
|
|
|
|
|
common stock | - |
| 100,000 |
| - |
| 100,000 |
|
| 108,500 |
|
Advances from (Repayment to) a stockholder | 2,424 |
| (85,115 | ) | 3,036 |
| (92,032) |
|
| 33,261 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by financing activities | 2,424 |
| 14,885 |
| 3,036 |
| 7,968 |
|
| 141,761 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of foreign exchange rate changes in |
|
|
|
|
|
|
|
|
|
|
|
cash and cash equivalents | (155 | ) | 111 |
| (45 | ) | 128 |
|
| (343 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
Net change in cash and cash equivalents | (74 | ) | (3,578 | ) | (186 | ) | (668 | ) |
| 880 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents, beginning |
|
|
|
|
|
|
|
|
|
|
|
of period | 954 |
| 4,762 |
| 1,066 |
| 1,852 |
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents, end of period | 880 |
| 1,184 |
| 880 |
| 1,184 |
|
| 880 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental cash flow information : |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash paid for : |
|
|
|
|
|
|
|
|
|
|
|
Income taxes | - |
| - |
| - |
| - |
|
| - |
|
Interest | - |
| - |
| - |
| - |
|
| - |
|
See accompanying notes to condensed financial statements.
- 5 -
DNA SYSTEMS, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONDENSED FINANCIAL STATEMENTS
FOR THE THREE AND SIX MONTHS ENDED OCTOBER 31, 2011 AND 2010
AND FROM INCEPTION ON OCTOBER 25, 2007 THROUGH OCTOBER 31, 2011
1.
NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES
Corporate information
DNA Systems, Inc. (the “Company”) was incorporated in the State of Nevada on October 25, 2007 for the purpose of exploring new business opportunities. The Company is a development stage company and has not yet generated any significant revenue from its operations.
On April 11, 2008, the Company entered into an agreement with DNA Financial Systems (HK) Limited (“DNAF Limited”), a Hong Kong corporation founded in 2005, pursuant to which the Company agreed to provide venues for DNAF Limited to organize conferences, seminars, corporate trainings and programs in line with professional events.
Continuance of operations
These financial statements are prepared on a going concern basis, which has considered the realization of assets and satisfaction of liabilities in the Company’s normal course of business. As of October 31, 2011, the Company had cash and cash equivalents of US$880, working capital deficit and stockholders’ deficit of US$40,677 and accumulated deficit during the development stage of US$148,834 respectively. Also, the Company is a development stage company and has not produced significant revenue. These factors raise substantial doubt about the Company’s ability to continue as a going concern.
Management plans on the continuation of the Company as a going concern include financing the Company’s existing and future operations through additional issuance of common stock and/or advances from the major stockholder and seeking for profitable business opportunities. However, the Company has no assurance with respect to these plans. The accompanying financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.
Basis of preparation
The accompanying condensed financial statements are unaudited. These condensed financial statements have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (the “SEC”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) have been omitted pursuant to such SEC rules and regulations; nevertheless, the Company believes that the disclosures are adequate to make the information presented not misleading. These condensed financial statements and the notes hereto should be read in conjunction with the financial statements and notes thereto included in the Company’s financial report for the year ended April 30, 2011.
In the opinion of the management of the Company, the unaudited condensed financial statements for the interim periods presented include all adjustments, including normal recurring adjustments, necessary to fairly present the results of such interim periods and the financial position as of the end of the said periods. The results of operations for the interim periods are not necessarily indicative of the results for the full year.
- 6 -
Cash and cash equivalents
Cash equivalents comprise highly liquid investments with original maturity of three months or less. At October 31, 2011, cash equivalents consisted of bank balance of US$396 and cash on hand of US$484.
Concentration of risk
The Company keeps cash in Hong Kong dollar (“HKD”) and maintains a HKD savings account with a commercial bank in Hong Kong, which are financial instruments that are potentially subject to concentration of credit risk. During the reporting periods, the Company did not engage in any hedging activities.
Income taxes
The Company accounts for income tax in accordance with ASC 740 ‘’Income taxes’’, which requires recognition of deferred tax assets and liabilities for the expected future tax consequences of the events that have been included in the financial statements or tax returns. Deferred income taxes are recognized for all significant temporary differences between tax and financial statement bases of assets and liabilities. A valuation allowance is recognized on deferred tax assets when it is more likely than not that these deferred tax assets will not be realized.
Foreign currency translation
The Company kept cash and cash equivalents and incurred expenses in HKD during the reporting periods and thus HKD is considered to be the Company’s functional currency. Transactions denominated in currencies other than HKD are translated into HKD at the applicable rates of exchange prevailing at the dates of the transactions. Monetary assets and liabilities denominated in other currencies are translated into HKD at the rates of exchange prevailing at the balance sheet date. Exchange gains and losses are included in the determination of net loss.
For financial reporting purposes, HKD has been translated into United States dollars (“US$”) as the reporting currency. Assets and liabilities are translated into US$ at the exchange rate in effect at the period end. Income and expenses are translated at average exchange rate prevailing during the period. Translation adjustments arising from the use of different exchange rates from period to period are included as a component of stockholders’ deficit as “Accumulated other comprehensive income (loss)”. Gains and losses resulting from foreign currency translation are included in other comprehensive income / (loss).
Conversion of amounts from HKD into US$ has been made at the exchange rate of US$1.00 for HKD7.7626 as of October 31, 2011.
Use of estimates
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in these financial statements and the accompanying notes during the reporting periods. Actual results could differ from those estimates.
Fair values of financial instruments
The Company’s financial instruments include cash and cash equivalents, accrued audit fee and amount due to a stockholder. Management of the Company does not believe that the Company is subject to significant interest, currency or credit risks arising from these financial instruments. The respective carrying values of these financial instruments approximate their fair values since they are short-term in nature or they are receivable or payable on demand.
- 7 -
Recently issued accounting pronouncements
In July 2010, the FASB issued ASU 2010-20 “Receivables (Topic 310): Disclosures about the Credit Quality of Financing Receivables and the Allowance for Credit Losses”. The objective of ASU 2010-20 is to provide financial statement users with greater transparency about an entity’s allowance for credit losses and the credit quality of its financing receivables. Under ASU 2010-20, an entity is required to provide disclosures so that financial statement users can evaluate the nature of the credit risk inherent in the entity’s portfolio of financing receivables, how that risk is analyzed and assessed to arrive at the allowance for credit losses, and the changes and reasons for those changes in the allowance for credit losses. ASU 2010-20 is applicable to all entities, both public and non-public and is effective for interim and annual reporting periods beginning on or after December 15, 2010. Comparative disclosure for earlier reporting periods that ended before initial adoption is encouraged but not required. However, comparative disclosures are required to be disclosed for those reporting periods ending after initial adoption. The adoption of this ASU has no material impact on the Company’s financial statements.
In May 2011, the FASB issued ASU 2011-04 “Fair Value Measurement (Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs”. The FASB and the International Accounting Standard Board (IASB) work together to ensure that fair value has the same meaning in U.S. GAAP and IFRSs and that their respective fair value measurement and disclosure requirements are the same (except for minor differences in wording and style). The Boards concluded that the amendments in this ASU will improve the comparability of fair value measurements presented and disclosed in financial statements prepared in accordance with U.S. GAAP and IFRSs. The amendments in this ASU explain how to measure fair value. They do not require additional fair value measurements and are not intended to establish valuation standards or affect valuation practices outside of financial reporting. The amendments in this ASU are to be applied prospectively. For public entities, the amendments are effective during interim and annual periods beginning after December 15, 2011. Early application by public entities is not permitted. The management is assessing the impact of this ASU on the Company’s financial statements.
In June 2011, the FASB issued ASU 2011-05 “Comprehensive Income (Topic 220): Presentation of Comprehensive Income”. In this ASU, the entity has the option to present the total of comprehensive income, the components of net income, and the components of other comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive statements. In both choices, an entity is required to present each component of net income along with total net income, each component of other comprehensive income along with a total for other comprehensive income, and a total amount for comprehensive income. This Update eliminates the option to present the components of other comprehensive income as part of the statement of changes in stockholders' equity. The amendments in this ASU do not change the items that must be reported in other comprehensive income or when an item of other comprehensive income must be reclassified to net income. The amendments in this ASU are to be applied retrospectively. For public entities, the amendments are effective for fiscal years, and interim periods within those years, beginning after December 15, 2011. Early application by public entities is permitted. The management is assessing the impact of this ASU on the Company’s financial statements.
- 8 -
2.
INCOME TAXES
A reconciliation of income taxes at statutory rate in the United States is as follows :-
| Six months |
|
| Cumulative |
| ||
| ended October 31, |
|
| total since |
| ||
| 2011 |
| 2010 |
|
| inception |
|
| (Unaudited) |
| (Unaudited) |
|
| (Unaudited) |
|
| US$ |
| US$ |
|
| US$ |
|
|
|
|
|
|
|
|
|
Loss before income taxes | (5,616 | ) | (6,708 | ) |
| (148,834 | ) |
|
|
|
|
|
|
|
|
Expected benefit at statutory rate of 15% | (842 | ) | (1,006 | ) |
| (22,325 | ) |
Valuation allowance | 842 |
| 1,006 |
|
| 22,325 |
|
|
|
|
|
|
|
|
|
Income taxes | - |
| - |
|
| - |
|
ASC 740 requires recognition and measurement of uncertain income tax positions using a “more-likely-than-not” approach. The management evaluated the Company’s tax position and considered that no additional provision for uncertainty in income taxes is necessary as of October 31, 2011.
Recognized deferred income tax assets is as follows :-
|
|
| As of |
|
| As of |
|
|
|
| October 31, |
|
| April 30, |
|
|
|
| 2011 |
|
| 2011 |
|
|
|
| (Unaudited) |
|
|
|
|
|
|
| US$ |
|
| US$ |
|
|
|
|
|
|
|
|
|
Operating losses available for future periods |
|
| 22,325 |
|
| 21,483 |
|
Valuation allowance |
|
| (22,325 | ) |
| (21,483 | ) |
|
|
|
|
|
|
|
|
|
|
| - |
|
| - |
|
As of October 31, 2011, the Company had incurred operating losses of US$148,834which, if unutilized, will expire through to 2031. Future tax benefits arising as a result of these losses have been offset by a valuation allowance.
3.
NET LOSS PER SHARE
During the reporting periods, the Company did not have any dilutive instruments. Accordingly, the reported basic and diluted loss per share is the same.
4.
COMMON STOCK
The Company was incorporated on October 25, 2007 with authorized capital of 65,000,000 shares of common stock of US$0.001 par value. On December 7, 2007, 8,500,000 shares of common stock of US$0.001 par value totaling US$8,500 were issued for cash.
On September 24, 2010, 200,000 shares of common stock of US$0.001 par value totaling US$200 were issued to 25 investors for cash of US$100,000.
- 9 -
5.
STOCK INCENTIVE PLAN
The Company has not established any stock incentive plan since its incorporation.
6.
COMMITMENTS AND CONTINGENCIES
The Company had no commitments or contingent liabilities as of October 31, 2011.
7.
RELATED PARTY TRANSACTIONS
The majority stockholder, who is also the director, advanced US$33,261 to the Company to finance its working capital as of October 31, 2011. The advance is interest-free, unsecured and repayable on demand.
The Company paid management fee of US$Nil and US$38,664 to a related company for the provision of general administrative services and office premises during the six months ended October 31, 2011 and from inception on October 25, 2007 through October 31, 2011 respectively. The related company is controlled by the Company’s director.
8.
SUBSEQUENT EVENTS
The Company has evaluated all subsequent events through the date the financial statements were issued and has determined that there were no subsequent events or transactions that required recognition or disclosure in the financial statements.
- 10 -
ITEM 2.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
Special Note of Caution Regarding Forward Looking Statements
CERTAIN STATEMENTS IN THIS REPORT INCLUDE FORWARD-LOOKING STATEMENTS THAT INCLUDE RISKS AND UNCERTAINTIES. WE USE WORDS SUCH AS "ANTICIPATES," "BELIEVES," "PLANS," "EXPECTS," "FUTURE," "INTENDS" AND SIMILAR EXPRESSIONS TO IDENTIFY SUCH FORWARD-LOOKING STATEMENTS. THIS FORM ALSO CONTAINS FORWARD-LOOKING STATEMENTS ATTRIBUTED TO CERTAIN THIRD PARTIES RELATING TO THEIR ESTIMATES REGARDING THE OPERATION AND GROWTH OF OUR BUSINESS AND SPENDING. YOU SHOULD NOT PLACE UNDUE RELIANCE ON THESE FORWARD-LOOKING STATEMENTS, WHICH APPLY ONLY AS OF THE DATE HEREOF. WE HAVE BASED THESE FORWARD-LOOKING STATEMENTS ON OUR CURRENT EXPECTATIONS AND PROJECTIONS ABOUT FUTURE EVENTS. OUR ACTUAL RESULTS COULD DIFFER MATERIALLY FROM THOSE DISCUSSED IN THIS REPORT. OUR ABILITY TO GENERATE REVENUE IS SUBJECT TO SUBSTANTIAL RISKS.
Overview
DNA Systems, Inc. was incorporated in the State of Nevada on October 25, 2007. Our business operations are oriented towards providing event organizing services to business partners. Our overall objective is to create an event organizing business by building a corporate image as a reliable, trustworthy partner that provides high quality event planning and organizing service to our clients. Since inception, the Company has generated very limited revenue through its business operations.
Plan of Operations in the next 12 months
During the next twelve months, the Company expects to continue its efforts to seek for any potential business partners to provide event organizing services to them. We hope to build up our corporate reputation and align ourselves with additional business partners to provide our event organizing services to them. The Company does not have sufficient assets or capital resources to pay its on-going expenses while it is seeking out business opportunities. The main stockholder plans to temporarily advance capital to maintain normal operations. The main stockholder has agreed to provide temporary financing to the Company, but is not contractually obligated to do so. Accordingly, there can be no assurance that any additional funds will be available to the Company to allow it to cover its expenses. If the main stockholder ceases to advance capital and we fail to raise additional funding to fund our operating expenses, we may have to delay, scale back or discontinue some or all of our operations.
We have no real property and currently operate from office space provided by Easterly Financial Investment Limited (“Easterly”). On May 1, 2009, the Company started paying the management fee of US$2,581 to Easterly for its provision of general administrative services and office premises. Easterly is located at Room 2213-14, 22nd Floor, Jardine House, 1 Connaught Place, Central, Hong Kong. The agreement was terminated on April 30, 2010, and we moved to Room 306, 3rd Floor, Beautiful Group Tower, 77 Connaught Road, Central, Hong Kong in late May which is provided by Easterly for free. We have no plans to obtain additional office space for the next twelve months until our business is more developed.
Results of Operations
The following discussion and analysis provides information that we believe is relevant to an assessment and understanding of our results of operation and financial condition for the fiscal period ended October 31, 2011. The following discussion should be read in conjunction with the Financial Statements and related Notes appearing elsewhere in this Form 10-Q. Our financial statements are
- 11 -
stated in US Dollars and are prepared in accordance with accounting principles generally accepted in the United States of America.
Results of Operation for DNA Systems, Inc. for the Three Months Ended October 31, 2011 Compared to the Three Months Ended October 31, 2010.
Revenue
Revenue. During the three month period ended October 31, 2011 and 2010, the Company had no revenue due to the fact that the Company was unable to locate any prospective business partners.
Expenses
Expenses. During the three month period ended October 31, 2011, the Company had general and administrative expenses of $3,530 as compared to expenses of $4,500 during the three month period ended October 31, 2010, a decrease of $970. The decrease in expenses experienced by the Company was primarily attributable to decreases experienced by the Company regarding business operations, the exploration of new business opportunities, meeting with potential customers, and locating business partners.
Net Loss
Net Loss. The Company had a net loss of $3,530 for the three month period ended October 31, 2011 as compared to net loss of $4,500 for the three month period ended October 31, 2010, a change of $970. The decrease in net loss experienced by the Company was primarily attributable to decreases experienced by the Company in its expenses.
Results of Operation for DNA Systems, Inc. for the Six Months Ended October 31, 2011 Compared to the Six Months Ended October 31, 2010.
Revenue
Revenue. During the six month period ended October 31, 2011 and 2010, the Company had no revenue due to the fact that the Company was unable to locate any prospective business partners.
Expenses
Expenses. During the six month period ended October 31, 2011, the Company had general and administrative expenses of $5,616 as compared to expenses of $6,708 during the six month period ended October 31, 2010, a decrease of $1,092. The decrease in expenses experienced by the Company was primarily attributable to decreases experienced by the Company regarding business operations, the exploration of new business opportunities, meeting with potential customers, and locating business partners.
Net Loss
Net Loss. The Company had a net loss of $5,616 for the six month period ended October 31, 2011 as compared to net loss of $6,708 for the six month period ended October 31, 2010, a change of $1,092. The decrease in net loss experienced by the Company was primarily attributable to decreases experienced by the Company in its expenses.
Liquidity and Capital Resources
As of October 31, 2011, our unaudited balance sheet reflects that we have total assets of $880, as compared to total assets of $1,066 as of April 30, 2011, a decrease of $186. As of October 31, 2011,
- 12 -
our unaudited balance sheet reflects that we have total liabilities of $41,557, as compared to total liabilities of $36,082 as of April 30, 2011, an increase of $5,475. As of October 31, 2011, the Company has an accumulated deficit of $148,834.
The Company does not have sufficient assets or capital resources to pay its on-going expenses while it is seeking out business opportunities. The Company has no agreement in place with its shareholder or other persons to pay expenses on its behalf, but it is currently anticipated that the Company will rely on loans from the shareholder, Mr. Wilson Cheung, to pay any daily operating expenses prior to any fund raising exercise. The Company anticipates that this arrangement will not change until the Company is able to generate enough revenue to cover the Company’s operating expenses.
Off Balance Sheet Arrangements
The Company does not have any off-balance sheet arrangements.
ITEM 3.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
Not Applicable
ITEM 4.
CONTROLS AND PROCEDURES.
Disclosure Controls and Procedures
The Securities and Exchange Commission defines the term “disclosure controls and procedures” to mean the company’s controls and other procedures of an issuer that are designed to ensure that information required to be disclosed in the reports that it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Securities Exchange Act of 1934 is accumulated and communicated to the issuer’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. The Company maintains such a system of controls and procedures in an effort to ensure that all information which it is required to disclose in the reports it files under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified under the SEC’s rules and forms and that information required to be disclosed is accumulated and communicated to principal executive and principal financial officers to allow timely decisions regarding disclosure.
As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation of our principal executive officer and principal financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures. Based on this evaluation, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures are designed to provide reasonable assurance of achieving the objectives of timely alerting them to material information required to be included in our periodic SEC reports and of ensuring that such information is recorded, processed, summarized and reported with the time periods specified. Our principal executive officer and principal financial officer also concluded that our disclosure controls and procedures were effective as of the end of the period covered by this report to provide reasonable assurance of the achievement of these objectives.
Changes in Internal Control over Financial Reporting
- 13 -
There was no change in the Company’s internal control over financial reporting during the quarter ended October 31, 2011, that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.
PART II – OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
The Company is not a party to any pending legal proceedings, and no such proceedings are known to be contemplated. No director, officer or affiliate of the Company, and no owner of record or beneficial owner of more than 5.0% of the securities of the Company, or any associate of any such director, officer or security holder is a party adverse to the Company or has a material interest adverse to the Company in reference to pending litigation.
ITEM 1A. RISK FACTORS.
Not Applicable.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
None.
ITEM 4. (REMOVED AND RESERVED).
ITEM 5. OTHER INFORMATION.
None.
ITEM 6. EXHIBITS.
The following exhibits are filed herewith:
3.1
Articles of Incorporation (herein incorporated by reference from Registration Statement on Form S-1 filed with the Securities and Exchange Commission on July 31, 2008).
3.2
Bylaws (herein incorporated by reference from Registration Statement on Form S-1 filed with the Securities and Exchange Commission on July 31, 2008).
10.1
Contract with DNA Financial Systems (HK) Limited signed on April 11, 2008 (herein incorporated by reference from Registration Statement on Form S-1 filed with the Securities and Exchange Commission on July 31, 2008).
31.1
Certifications pursuant to Rule 13a-15(a) or 15d-15(a) under the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*
31.2
Certifications pursuant to Rule 13a-15(a) or 15d-15(a) under the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*
32.1
Certifications pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*
- 14 -
32.2
Certifications pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*
101
SCH XBRL Schema Document.*
101
CAL XBRL Taxonomy Extension Calculation Linkbase Document.*
101
LAB XBRL Taxonomy Extension Label Linkbase Document.*
101
PRE XBRL Taxonomy Extension Presentation Linkbase Document.*
101
DEF XBRL Taxonomy Extension Definition Linkbase Document.*
* Filed Herewith
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
DNA SYSTEMS, INC.
By: /s/ Wilson Cheung, President, Principal Executive Officer, Principal Financial Officer, Principal Accounting Officer and Director
Date: December 12, 2011
- 15 -