FORWARD LOOKING STATEMENTS
Statements made in this Form 10-Q that are not historical or current facts are "forward-looking statements" made pursuant to the safe harbor provisions of Section 27A of the Securities Act of 1933 (the "Act") and Section 21E of the Securities Exchange Act of 1934. These statements often can be identified by the use of terms such as "may," "will," "expect," "believe," "anticipate," "estimate," "approximate" or "continue," or the negative thereof. We intend that such forward-looking statements be subject to the safe harbors for such statements. We wish to caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made. Any forward-looking statements represent management's best judgment as to what may occur in the future. However, forward-looking statements are subject to risks, uncertainties and important factors beyond our control that could cause actual results and events to differ materially from historical results of operations and events and those presently anticipated or projected. We disclaim any obligation subsequently to revise any forward-looking statements to reflect events or circumstances after the date of such statement or to reflect the occurrence of anticipated or unanticipated events.
PART I
ITEM 1. FINANCIAL STATEMENTS
WHITE SMILE GLOBAL, INC.
(formerly Shawcore Development Corp.)
(A Development Stage Company)
Financial Statements
As of May 31, 2012
(Unaudited)
Balance Sheets
6
Statements of Operations
7
Statements of Cash Flows
8
Notes to Financial Statements
9
WHITE SMILE GLOBAL, INC.
(formerly Shawcore Development Corp.)
(A Development Stage Company)
Balance Sheets
(Unaudited)
| | | |
| | May 31, 2012 | August 31, 2011 |
| | | |
ASSETS | | | |
| | | |
Current Assets | | | |
Cash | | $ – | $ 1,265 |
Current portion of deferred compensation | | 144,500 | – |
| | | |
Total Current Assets | | 144,500 | 1,265 |
| | | |
Equipment, net | | 3,341 | – |
Deferred Compensation | | 439,266 | – |
| | | |
Total Assets | | $ 587,107 | $ 1,265 |
| | | |
LIABILITIES | | | |
| | | |
Current Liabilities | | | |
| | | |
Bank overdraft | | $ 196 | $ -– |
Accounts payable and accrued liabilities | | 187,701 | 3,020 |
Loan payable | | 550,000 | – |
Due to related party | | 120,361 | 35,476 |
| | | |
Total Current Liabilities | | 858,258 | 38,496 |
| | | |
STOCKHOLDERS’ DEFICIT | | | |
| | | |
Preferred Stock | | | |
Authorized: 25,000,000 common shares, par value of $0.001 per share | | | |
Issued and outstanding: nil preferred shares | | – | – |
| | | |
Class A Preferred Stock | | | |
Authorized 25,000,000 preferred shares, par value of $0.001 per share | | | |
Issued and outstanding: 2,000,000 and nil preferred shares, respectively | | 2,000 | – |
| | | |
Common Stock | | | |
Authorized: 550,000,000 common shares, par value of $0.001 per share | | | |
Issued and outstanding: 253,000,000 and 215,000,000 common shares, respectively | | 253,000 | 215,000 |
| | | |
Additional paid-in capital | | 800,000 | – |
| | | |
Accumulated deficit during the development stage | | (1,326,151) | (252,231) |
| | | |
Total Stockholders’ Deficit | | (271,151) | (37,231) |
| | | |
Total Liabilities and Stockholders’ Deficit | | $ 587,107 | $ 1,265 |
| | | |
The accompanying notes are an integral part of these financial statements.
6
WHITE SMILE GLOBAL, INC.
(formerly Shawcore Development Corp.)
(A Development Stage Company)
Statements of Operations
(Unaudited)
| | | | | |
| For the Three Months Ended May 31, 2012 | For the Three Months Ended May 31, 2011 | For the Nine Months Ended May 31, 2012 | For the Nine Months Ended May 31, 2011 | From Inception (September 25, 2008) to May 31, 2012 |
| | | | | |
Revenues | $ – | $ – | $ – | $ – | $ – |
| | | | | |
Operating Expenses | | | | | |
| | | | | |
Impairment of intangible assets | 146,000 | - | 146,000 | - | 146,000 |
Depreciation | 349 | - | 847 | - | 847 |
Director fees | - | - | 360,000 | - | 360,000 |
General and administrative | 266,900 | (86) | 743,280 | 16,639 | 802,011 |
| | | | | |
Total Expenses | 413,249 | (86) | 1,250,127 | 16,639 | 1,308,858 |
| | | | | |
Net operating loss | (413,249) | (86) | (1,250,127) | (16,639) | (1,308,858) |
| | | | | |
Other income (expense) | | | | | |
| | | | | |
Interest expense | (10,170) | - | (17,293) | - | (17,293) |
| | | | | |
Net Loss | $ (423,419) | $ (86) | $(1,267,420) | $ (16,639) | $(1,326,151) |
Net Loss per Share – Basic | $ – | $ – | $ 0. 005 | $ – | |
Weighted Average Shares Outstanding – Basic | 253,000,000 | 215,000,000 | 243,573,331 | 215,000,000 |
|
| | | | | |
The accompanying notes are an integral part of these financial statements.
7
WHITE SMILE GLOBAL, INC.
(formerly Shawcore Development Corp.)
(A Development Stage Company)
Statements of Cashflow
(Unaudited)
| | | |
| For the Nine Months Ended May 31, 2012 | For the Nine Months Ended May 31, 2011 | Accumulated from Inception (September 25, 2008) to May 31, 2012 |
| | | |
Operating Activities | | | |
| | | |
Net loss | $(1,267,420) | $(16,639) | $(1,326,151) |
| | | |
Adjustments to reconcile net loss to net cash | | | |
used in operating activities: | | | |
Impairment of intangible assets | 146,000 | - | 146,000 |
Depreciation expenses | 847 | – | 847 |
Shares issued for director’s fee
| 360,000 | – | 360,000 |
Share based compensation | 56,734 | - | 56,734 |
| | |
Changes in operating assets and liabilities: | | | |
| | | |
Deferred compensation | (20,500) | (433) | (20,500) |
Accounts payable and accrued liabilities | 143,381 | (3,323) | 146,401 |
| | | |
Net cash used in operating activities | (580,958) | (20,395) | (636,669) |
| | | |
Investing Activities | | | |
| | | |
Purchase of equipment | (4,188) | – | (4,188) |
Purchase of intangible assets | (51,200) | – | (51,200) |
| | | |
Net cash used in investing activities | (55,388) | – | (55,388) |
| | | |
Financing Activities | | | |
| – | | |
Increase in bank overdraft | 196 | – | 196 |
Proceeds from issuance of common shares | – | – | 21,500 |
Proceeds from note payable | 550,000 | – | 550,000 |
Advance from a related party | 84,885 | 13,427 | 120,361 |
| | | |
Net cash provided by financing activities | 635,081 | 13,427 | 692,057 |
| | | |
Increase (Decrease) in Cash | (1,265) | (6,968) | – |
| | | |
Cash – Beginning of Period | 1,265 | 6,972 | – |
| | | |
Cash – End of Period | $ - | $ 4 | $ - |
| | | |
| | | |
Supplemental Disclosures | | | |
| | | |
Interest paid | – | – | – |
Income tax paid | – | – | – |
| | | |
Non-cash investing and financing activities | | | |
| | | |
Shares issued for acquisition of intangible assets | 46,000 | – | 46,000 |
| | | |
The accompanying notes are an integral part of these financial statements.
8
WHITE SMILE GLOBAL, INC.
(formerly Shawcore Development Corp.)
(A Development Stage Company)
Notes to Financial Statements
(Unaudited)
1.
Nature of Operations and Continuance of Business
White Smile Global, Inc. (formerly Shawcore Development Corp.) ("the Company") was incorporated under the laws of the State of Nevada, U.S. on September 25, 2008. The Company is in the development stage as defined under Financial Accounting Standards Board Accounting Standards Codification (FASB ASC 915-205) "Development-Stage Entities" and it intends to focus on the OTC teeth whitening and “tooth paste” industry. The White Smile brand of products includes patent-pending intellectual property centered around the inventions of Dr. Martin S. Giniger, DMD, PhD, MsD, FICD. On October 7, 2011 and December 21, 2011, the Company acquired certain patents and intellectual property relating to dental health and care, and changed its operating name to White Smile Global, Inc.
Going Concern
These financial statements have been prepared on a going concern basis, which implies that the Company will continue to realize its assets and discharge its liabilities in the normal course of business. As at May 31, 2012, the Company has a working capital deficit of $713,758 and an accumulated deficit of $1,519,651. The continuation of the Company as a going concern is dependent upon the continued financial support from its management, and its ability to identify future investment opportunities and obtain the necessary debt or equity financing, and generating profitable operations from the Company’s future operations. These factors raise substantial doubt regarding the Company’s ability to continue as a going concern. These financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.
2.
Summary of Significant Accounting Policies
a)
Basis of Presentation
The financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States (“US GAAP”) and are expressed in U.S. dollars. The Company’s fiscal year end is August 31.
b)
Use of Estimates
The preparation of financial statements in conformity with US GAAP 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 revenues and expenses during the reporting period. The Company regularly evaluates estimates and assumptions related to the deferred income tax asset valuation allowances. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Company’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected.
c)
Interim Financial Statements
These interim unaudited financial statements have been prepared on the same basis as the annual financial statements and in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary to present fairly the Company’s financial position, results of operations and cash flows for the periods shown. The results of operations for such periods are not necessarily indicative of the results expected for a full year or for any future period.
9
WHITE SMILE GLOBAL, INC.
(formerly Shawcore Development Corp.)
(A Development Stage Company)
Notes to Financial Statements
(Unaudited)
2.
Summary of Significant Accenting Policies (continued)
d)
Cash and Cash Equivalents
The Company considers all highly liquid instruments with a maturity of three months or less at the time of issuance to be cash equivalents.
e)
Equipment
Equipment is comprised of computer and office equipment and is recorded at cost. The Company amortizes the cost of the equipment on a straight-line basis over their estimated useful lives of three years.
f) Intangible Assets
Intangible assets include all costs incurred to acquire patents and other intangible assets related to tooth whitening technology. Intangible assets are recorded at cost.
The Company evaluates the recoverability of long-lived assets and the related estimated remaining lives at each balance sheet date. The Company records an impairment or change in useful life whenever events or changes in circumstances indicate that the carrying amount may not be recoverable or the useful life has changed.
g) Impairment of Long-lived Assets
The Company evaluates the recoverability of long-lived assets and the related estimated remaining lives at each balance sheet date. The Company records an impairment or change in useful life whenever events or changes in circumstances indicate that the carrying amount may not be recoverable or the useful life has changed.
h)
Basic and Diluted Net Loss per Share
The Company computes net loss per share in accordance with ASC 260,Earnings per Share. ASC 260 requires presentation of both basic and diluted earnings per share (“EPS”) on the face of the income statement. Basic EPS is computed by dividing net loss available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method and convertible preferred stock using the if-converted method. In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all dilutive potential shares if their effect is anti dilutive.
i) Financial Instruments
Pursuant to ASC 820,Fair Value Measurements and Disclosures, an entity is required to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 establishes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. ASC 820 prioritizes the inputs into three levels that may be used to measure fair value:
Level 1
Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities.
10
WHITE SMILE GLOBAL, INC.
(formerly Shawcore Development Corp.)
(A Development Stage Company)
Notes to Financial Statements
(Unaudited)
2.
Summary of Significant Accenting Policies (continued)
i) Financial Instruments (continued)
Level 2
Level 2 applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data.
Level 3
Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities.
The Company’s financial instruments consist principally of cash, accounts payable and accrued liabilities, and amounts due to related parties. Pursuant to ASC 820, the fair value of our cash is determined based on “Level 1” inputs, which consist of quoted prices in active markets for identical assets. We believe that the recorded values of all of our other financial instruments approximate their current fair values because of their nature and respective maturity dates or durations.
j) Comprehensive Loss
ASC 220,Comprehensive Income, establishes standards for the reporting and display of comprehensive loss and its components in the financial statements. As at May 31, 2012 and August 31, 2011, the Company has no items that represent a comprehensive loss and, therefore, has not included a schedule of comprehensive loss in the financial statements.
k)
Revenue Recognition
The Company recognizes revenue from the sale of oral health care products. Revenue is recognized only when the price is fixed or determinable, persuasive evidence of an arrangement exists, the service has been provided, and collectability is reasonably assured. The Company is not exposed to any credit risks as amounts are prepaid prior to performance of services.
l)
Recent Accounting Pronouncements
The Company has implemented all new accounting pronouncements that are in effect. These pronouncements did not have any material impact on the financial statements unless otherwise disclosed, and the Company does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.
3. Deferred Compensation
On December 16, 2011, the Company entered into an employment agreement with the Company’s President and CEO (refer to Note 9). As part of the the terms of the employment agreement the Company granted 2,000,000 Class A Preferred Stock of the Company to the CEO for his services. The shares issued were fair valued as of the date of issuance. As the shares related to future services to be received by the Company over the term of the agreement the value of these shares has been recorded as deferred compensation and as the services are provided to the Company the related expense for the period is reallocated to employment expense.The portion of the shares which relate to future services have been recorded as other current assets. The portion which relates to services to be provided over the 12 months has been included in other current assets and the remaining portion in other non-current asset.
11
WHITE SMILE GLOBAL, INC.
(formerly Shawcore Development Corp.)
(A Development Stage Company)
Notes to Financial Statements
(Unaudited)
4.
Property and Equipment
| | | | |
| Cost | Accumulated depreciation | May 31, 2012 Net carrying value | August 31, 2011 Net carrying value |
Computer | $ 3,749 | $ 762 | $ 2,987 | $ – |
Office equipment | 439 | 85 | 354 | – |
| | | | |
Total property and equipment | $ 4,188 | $ 847 | $ 3,341 | $ – |
5.
Intangible Assets
On October 7, 2011, the Company entered into an asset purchase agreement with a newly appointed Director appointed on October 13, 2011 of the Company. Under the terms of the agreement the Company received five US patent applications and other intellectual property in exchange for the issuance of 36,000,000 common shares with a fair value of $36,000 (Note 8) and payment of $100,000 cash.
On December 21, 2011, the Company entered into an asset purchase agreement with a newly appointed Director of the Company. Under the terms of the agreement, the Company received 100% interest in certain assets held by the Director. In exchange for this interest, the Director received 20,000,000 shares of the Company common stock with a fair value of $10,000. As part of the agreement, the Company’s President cancelled 20,000,000 shares of the Company’s stock held in his name.
During the period ended May 31, 2012, the Company reviewed the intangible assets for indications of impairment and decided to fully impair these assets based on the uncertainty of future cash flows expected to be generated from the assets and recognized an impairment loss of $146,000 on the intangible assets.
6.
Loan Payable
As at May 31, 2012, the Company owed $550,000 (August 31, 2011 – $nil) for amounts loaned to the Company from a non-related party. The amounts owing are unsecured, with interest accruing at 8% per annum, and due on demand. As at May 31, 2012, accrued interest of $17,293 (August 31, 2011 - $nil) was recorded in accounts payable and accrued liabilities.
7. Related Party Transactions
As at May 31, 2012, the Company owed $120,361 (August 30, 2011 - $35,476) to the President and Director of the Company for financing of day-to-day expenditures incurred on behalf of the Company. The amounts owed are unsecured, non-interest bearing, and due on demand.
8. Preferred Shares
The authorized capital of the Company is 50,000,000 preferred shares with a par value of $0.001 per share. Of the 50,000,000 authorized shares of preferred stock, 25,000,000 have been designated as Class A preferred shares. These Class A preferred shares entitle the holder to convert the shares for 20 common shares for each Class A preferred share converted and entitles the holder 100 votes for each Class A preferred share held.
12
WHITE SMILE GLOBAL, INC.
(formerly Shawcore Development Corp.)
(A Development Stage Company)
Notes to Financial Statements
(Unaudited)
8. Preferred Shares (continued)
On December 16, 2011, the Company issued 2,000,000 shares of the Company’s Class A preferred stock pursuant to an employment agreement with the Company’s President and CEO. Subsequently, the President and CEO agreed based upon mutual considerations, to waive his right to convert Class A Preferred Stock into Common Stock of the Company. All other rights and preferences contained in the Class A Preferred Stock share remain the same.
Under the terms of the employment agreement, these shares were issued as compensation related to the term of the contract. Accordingly, the Company has capitalized the value of these shares as deferred compensation and is expensing them ratedly over the agreement contract term.
Deferred compensation of $144,300 has been included in current assets at May 31, 2012. Deferred compensation of $439,266 has been included in assets as of May 31, 2012.
9.
Common Shares
The authorized capital of the Company is 550,000,000 common shares with a par value of $0.001 per share.
a)
In February 2009, the Company issued 180,000,000 shares of common stock at a price of $0.000025 per share for total cash proceeds of $4,500.
b)
In February, April, May and June 2009, the Company issued 24,000,000 shares of common stock at a price of $0.00025 per share for total cash proceeds of $6,000.
c)
In June, July and August 2009, the Company issued 11,000,000 shares of common stock at a price of $0.001 per share for total cash proceeds of $11,000.
d)
On June 27, 2011, Omar John Ahmadzai (“Mr. Ahmadzai”) acquired control of three million (3,000,000) pre-split shares of the Company’s issued and outstanding common stock from Gary Burkinshaw (“Mr. Burkinshaw:”) in accordance with Stock Purchase Agreements between Mr. Ahmadzai and Mr. Burkinshaw. Pursuant to the Stock Purchase Agreements, Mr. Ahmadzai paid a purchase price of ten thousand ($10,000) to Mr. Burkinshaw in exchange for the shares.
e)
On July 6, 2011, the Company effected a forward stock split on the basis of 20 new shares of common stock for each 1 share of common stock outstanding as of July 20, 2011. All reference in these financial statements and notes to financial statements to number of shares, price per shares and weighted average number of shares outstanding of common stock prior to this forward split have been adjusted to reflect the forward stock split on a retroactive basis unless otherwise noted.
f)
On October 7, 2011, the Company issued 36,000,000 shares with a fair value of $36,000 pursuant to the asset purchase agreement with a recently appointed Director, in exchange for five US patent applications as well as other intellectual property (Note 4).
g)
On December 15, 2011, the Company issued 1,000,000 pre-split and 2,000,000 post-split common shares with a fair value of $360,000 to a newly appointed Director in consideration for his services as a member of the Board of Directors.
h)
On December 27, 2011, the Company effected a forward stock split on the basis of 2 new shares of common stock for each 1 share of common stock outstanding as of January 6, 2012. All reference in these financial statements and notes to financial statements to number of shares, price per shares and weighted average number of shares outstanding of common stock prior to this forward split have been adjusted to reflect the forward stock split on a retroactive basis unless otherwise noted.
13
WHITE SMILE GLOBAL, INC.
(formerly Shawcore Development Corp.)
(A Development Stage Company)
Notes to Financial Statements
(Unaudited)
10.
Commitments
a)
On October 13, 2011, the Company entered into an employment agreement with a newly appointed Executive and Chief Science Officer (CSO) for a period of three years, expiring October 13, 2015. The agreement may be extended for an additional five years upon prior written mutual agreement between the Company and the Executive. As compensation for his services, the Executive will receive a base salary of $180,000 and will be increased to $250,000 when the Company generates in excess of $10,000,000 in annualized Gross Revenue and to $500,000 when the Company generates in excess of $500,000,000 in annualized Gross Revenue. The Executive shall be entitled to receive an annual bonus of no less than two percent of Adjusted Gross Sales and shall be entitled to participate in all stock option plans.
b)
On December 16, 2011, the Company entered into an employment agreement with the Company’s President and CEO. The term of the agreement is for five years and expires on December 15, 2016. Under the terms of the employment agreement the Company will pay an annual salary as follows: $175,000 for the first year beginning December 16, 2011, $225,000 for the second year and $250,000 for the duration of the Agreement, beginning on December 16, 2013. The President and CEO is also eligible to receive any bonuses available under any Board Incentive Plan, as authorized and outlined by the Company’s Board of Directors, with a minimum amount of $250,000 in cash bonuses. The agreement also authorized an annual bonus of no less than 2% of the Adjusted Gross Sales (as defined in the employment agreement).
14
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION
GENERAL
WHITE SMILE GLOBAL, INC. was incorporated under the laws of the State of Nevada on September 25, 2008, as Shawcore Development Corp. The Company filed Restated and Amended Articles of Incorporation on July 20, 2011. Our registration statement was filed with the Securities and Exchange Commission on September 1, 2010.
Please note that throughout this Quarterly Report, and unless otherwise noted, the words "we," "our," "us," the "Company," refers to WHITE SMILE GLOBAL, INC.
CURRENT BUSINESS OPERATIONS
White Smile Global specializes in oral health and teeth whitening products. The Company’s core focus is on the OTC teeth whitening and “tooth paste” industry. The White Smile brand of products includes patent-pending intellectual property centered around the inventions of bio-chemist and cosmetic dentist, Dr. Martin S. Giniger DMD, PhD, MsD, FICD.
White Smile Global was created with the intent of offering the most effective, cutting edge technologies to the cosmetic dental industry, both domestically and abroad. Our mission is to create new products that promote oral health through the use of “All-Natural” ingredients in all products.
The Company owns and operates the White Smile ™ brand, which includes multiple patent-pending formulations that at present are being clinically tested, packaged and prepared for consumer retail availability. The Company is working to have these new product lines ready to be released to the general public through retail product placement and online sales during 2012. All White Smile ™ Products will be formulated, designed, and manufactured in America, and distributed worldwide through global partnerships.
Products
These White Smile ™ products will be introduced in several key categories. These categories include but are not limited to:
White Smile Naturals ™ - “All Natural” fruit tooth paste and foam including natural ingredients and natural sweeteners that do not promote tooth decay.
White Smile Premier ™ At-Home LED teeth whitening system – a “professional grade” over-the-counter (OTC) strength handheld teeth whitening system which consists of a handheld LED teeth whitening light paired with a two part pen system and the White Smile ™ Tooth Gloss. Clinical study on this product is nearing completion. Preliminary product packaging design has been recently completed and will be finalized upon receiving the final results of the clinical study, at which time White Smile Global will make the results of the study public before the products becomes available for purchase to consumers.
White Smile Organics ™ - This product line will include certified organic ingredients with naturally occurring enzymes and flavors.
White Smile Complete ™ dual oral health foam, featuring “Oxygen-Infused Technology” invented by Dr. Giniger, and acquired by the Company. This product consists of two part complete foam that includes a cleaning and whitening effervescence foam, and was created to replace tooth “pastes” and “gels” for daily oral care use. The clinical study of this product is entering the final stage and results will be available to the public and the dental community once completed.
White Smile Professional ™ Teeth Whitening System – A professional “in-office” teeth whitening system sold to dentists.
15
Also created is the packaging for the “EU-Friendly” non-peroxide version of the Smile Premier ™ “At-Home” professional grade LED teeth whitening system which will make this product the first “At-Home” LED teeth whitening system available to consumers in the European Union market due to technology of the patent-pending micro-encapsulated teeth whitening gel created by Dr. Giniger.
White Smile Global will be introducing additional distributors in multiple countries in Asia, Europe, Africa, and South Africa in 2012.
RESULTS OF OPERATIONS
Working Capital
| | | | |
| | | | |
| May 31 | | August 31, | |
| 2012 | | 2011 | |
Current Assets | $144,500 | | $ 1,265 | |
Current Liabilities | 858,258 | | 38,496 | |
Working (Deficit) | (713,758 | ) | (37,231 | ) |
Cash Flows
| | |
| | |
| For the nine months ended May 31, 2012 | For the nine months ended May 31, 2011 |
Cash Flows from (used in) Operating Activities | $(580,958) | $(20,395) |
Cash Flows from (used in) Investing Activities | (55,388) | - |
Cash Flows from (used in) Financing Activities | 635,081 | 13,427 |
Net Increase (decrease) in Cash During Period | (1,265) | (6,968) |
Operating Revenues
We have not generated any revenues since inception.
Operating Expenses and Net Loss
Operating expenses and net loss for the nine months ended May 31, 2012 was $1,250,127 and $1,267,420 compared with $16,639 and $16,639 during the nine months ended May 31, 2011. The increase in operating expenses and net loss were attributed to the fact the Company had more overall operating activities compared to prior year as well as recording amounts for Directors Fees to the CEO and CSO of $80,208 and $112,500 respectively, pursuant to their employment agreements that were not incurred for the nine month period ended May 31, 2011.
Net loss per share as at May 31, 2012 and 2011 was $0.005 and $nil.
Liquidity and Capital Resources
As at May 31, 2012, the Company’s cash balance was $0 compared with $1,265 as at August 31, 2011. The decrease in cash was attributed to cash used in equipment and intangible asset purchase. The total assets as at May 31, 2012 were $587,107 compared with $1,265 as at August 31, 2011. The increase in total assets is attributed to the purchase of computer equipment net of depreciation of $3,341 and deferred compensation expense recorded for the issuance of Class A Preferred Shares issued to the CEO of the Company for $583,766, of which $144,500 relates to the amount to be expensed within the next year and $439,266 over the remaining term of the agreement.
As at May 31, 2012, the Company had total liabilities of $858,258 compared with total liabilities of $38,496 as at August 31, 2011. The increase in total liabilities were attributed to an increase of $184,681 in accounts payable and accrued liabilities due to increase in the amount of operating expenses related to the Company’s new business objectives, $550,000 for a loan payable, and an increase of $84,885 due to related parties for out-of-pocket expenses borne by management as well as unpaid management fees.
16
Cashflow from Operating Activities
During the nine months ended May 31, 2012, the Company incurred $580,958 of cash flows for operating activities compared with $20,395 of cash flows for operating activities during the period ended May 31, 2011. The increase in overall cash used for operating activities was attributed to the fact that the Company had raised new cash flow from financing activities during the period which allowed the Company to utilize more operating expenses to further the Company’s business objectives.
Cashflow from Investing Activities
During the nine months ended May 31, 2012, the Company incurred $55,388 of cash flows for investing activities relating to the purchase of computer equipment and intangible assets for the Company. The Company did not have any investing activities during the period ended May 31, 2011.
Cashflow from Financing Activities
During the period ended May 31, 2012, the Company received $635,081 of cash flows from financing activities compared with $13,427 of cash flows during the period ended May 31, 2011. The increase in cash flows from financing activities was attributed to proceeds received from loan payable and due from related parties for financing of operating costs for the Company.
OFF-BALANCE SHEET ARRANGEMENTS
As of the date of this Quarterly Report, 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 are material to investors.
GOING CONCERN
The independent auditors' report accompanying our August 31, 2011 financial statements contained an explanatory paragraph expressing substantial doubt about our ability to continue as a going concern. The financial statements have been prepared "assuming that we will continue as a going concern," which contemplates that we will realize our assets and satisfy our liabilities and commitments in the ordinary course of business.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
Not required.
ITEM 4. CONTROLS AND PROCEDURES
Our management is responsible for establishing and maintaining a system of disclosurecontrols andprocedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Exchange Act) that is designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Commission’s rules and forms. Disclosurecontrols andprocedures include, without limitation,controls andprocedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated to the issuer’s management, including its principal executive officer or officers and principal financial officer or officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.
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An evaluation was conducted under the supervision and with the participation of our management of the effectiveness of the design and operation of our disclosure controls and procedures as May 31, 2012. Based on that evaluation, our management concluded that our disclosure controls and procedures are not effective as of such date to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act, is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms. Such officer also confirmed that there was no change in our internal control over financial reporting during the nine-months ended May 31, 2012, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Management is not aware of any legal proceedings contemplated by any governmental authority or any other party involving us or our properties. As of the date of this Quarterly Report, no director, officer or affiliate is (i) a party adverse to us in any legal proceeding, or (ii) has an adverse interest to us in any legal proceedings. Management is not aware of any other legal proceedings pending or that have been threatened against us or our properties.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
On September 1, 2010, we filed a registration statement on Form S-1 with the Securities and Exchange Commission pursuant to which we registered 60,000,000 shares of our restricted common stock to be issued to certain shareholders and 47,500,000 shares were registered for resale.
On June 27, 2011, Omar John Ahmadzai(“Mr. Ahmadzai”) acquired control of three million (3,000,000) pre-split shares of the Company’s issued and outstanding common stock, representing approximately 58.81% of the Company’s total issued and outstanding common stock, from Gary Burkinshaw (“Mr. Burkinshaw”), in accordance with stock purchase agreements between Mr. Ahmadzai and Mr. Burkinshaw, (the “Stock Purchase Agreements”). Pursuant to the Stock Purchase Agreements, Mr. Ahmadzaipaid a purchase price of ten thousand dollars ($10,000) to Mr. Burkinshaw in exchange for the shares.
On July 6, 2011, the Company effected a forward stock split on the basis of 20 new shares of Common Stock for each 1 share of Common Stock outstanding as of July 20, 2011. All references in these financial statements and notes to financial statements to number of shares, price per share and weighted average number of shares outstanding of Common Stock prior to this forward stock split have been adjusted to reflect the forward stock split on a retroactive basis unless otherwise noted.
On October 7, 2011, the Company issued 36,000,000 post split shares with a fair value of $36,000 pursuant to the asset purchase agreement with a recently appointed Director, in exchange for five US patent applications as well as other intellectual property
On December 15, 2011, the Company issued 2,000,000 post split shares with a fair value of $360,000 to a newly appointed Director in consideration for his services as a member of the Board of Directors.
On December 16, 2011, the Company effected a forward stock split on the basis of 2 new shares of common stock for each 1 share of common stock outstanding as of January 6, 2012. All reference in these financial statements and notes to financial statements to number of shares, price per shares and weighted average number of shares outstanding of common stock prior to this forward split have been adjusted to reflect the forward stock split on a retroactive basis unless otherwise noted.
On December 21, 2011, the Company entered into an asset purchase agreement with a newly appointed Director of the Company. Under the terms of the agreement, the Company received 100% interest in certain assets held by the Director. In exchange for this interest, the Director received 20,000,000 shares
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of the Company common stock with a fair value of $10,000. As part of the agreement, the Company’s President cancelled 20,000,000 shares of the Company’s stock held in his name.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
No report required.
ITEM 4. MINE SAFETY DISCLOSURES
No report required.
ITEM 5. OTHER INFORMATION
No report required.
ITEM 6. EXHIBITS
Exhibits:
31.1 Certification of Chief Executive Officer pursuant to Securities Exchange Act of 1934 Rule 13a-14(a) or 15d-14(a).
31.2 Certification of Chief Financial Officer pursuant to Securities Exchange Act of 1934 Rule 13a-14(a) or 15d-14(a).
32.1 Certifications pursuant to Securities Exchange Act of 1934 Rule 13a-14(b) or 15d-14(b) and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes- Oxley Act of 2002.
101* XBRL Exhibits
* XBRL Information is furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended and otherwise is not subject to liability under these sections.
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SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
WHITE SMILE GLOBAL, INC.
Dated: July 23, 2012
By:Omar John Ahmadzai
________________________________
Omar John Ahmadzai, President and
Chief Executive Officer
Dated: July 23, 2012
By:/s/ Omar John Ahmadzai
_________________________________
Omar John Ahmadzai, Chief Financial Officer
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