UNITED STATESSECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-K
☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2017
or
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Transition Period from to .
Commission file number 000-1592411
DKG CAPITAL, INC.
(Exact name of registrant as specified in its charter)
NEVADA | 46-3787845 |
| (State or other jurisdiction of | (I.R.S. Employer |
| incorporation or organization) | Identification No.) |
No. 17-2-2, Jalan 3/62D, Medan Putra Business Centre
Bandar Menjalara, 522C
Kuala Lumpur, WP Kuala Lumpur
Malaysia
(Address of principal executive offices, including zip code.)
(702) 560-4373
(Telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Name of each exchange on which registered |
| Common | OTC Markets |
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, par value $0.001 per share
(Title of class)
Indicate by check mark if the registrant is a well-known seasoned issuer as defined in Rule 405 of the Securities Act. Yes ☐ No ☒
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐ (Not required)
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the Registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ☐
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 ☐ | Smaller reporting company ☒ |
| | Emerging Growth Company ☒ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES ☐ NO ☒
State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrant’s most recently completed second fiscal quarter: $117,848 as of June 30, 2017
Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date: 14,893,714 shares of common stock as of April 13, 2018.
Documents Incorporated By Reference: None
DKG CAPITAL, INC.
FOR THE FISCAL YEAR ENDED
DECEMBER 31, 2016
INDEX TO FORM 10-K
| | | | Page No. |
| | | PART I | |
| Item 1. | | Business | 3 |
| Item 1A. | | Risk Factors | 3 |
| Item 1B. | | Unresolved Staff Comments | 3 |
| Item 2. | | Properties | 3 |
| Item 3. | | Legal Proceedings | 3 |
| Item 4. | | Mine Safety Disclosures | 4 |
| | | PART II | |
| Item 5. | | Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities | 5 |
| Item 6. | | Selected Financial Data | 6 |
| Item 7. | | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 6 |
| Item 7A. | | Quantitative and Qualitative Disclosures About Market Risk | 9 |
| Item 8. | | Financial Statements and Supplementary Data | 9 |
| Item 9. | | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure | 10 |
| Item 9A. | | Controls and Procedures | 10 |
| Item 9B. | | Other Information | 11 |
| | | PART III | |
| Item 10. | | Directors, Executive Officers and Corporate Governance | 12 |
| Item 11. | | Executive Compensation | 13 |
| Item 12. | | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters | 13 |
| Item 13. | | Certain Relationships and Related Transactions, and Director Independence | 14 |
| Item 14. | | Principal Accounting Fees and Services | 14 |
| | | PART IV | |
| Item 15. | | Exhibits and Financial Statement Schedules | 15 |
| | | Signatures | 16 |
PART I
Note about Forward-Looking Statements
Certain statements in this report, other than purely historical information, including estimates, projections, statements relating to our business plans, objectives, and expected operating results, and the assumptions upon which those statements are based, are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements may appear throughout this report, including without limitation, the following sections: "Business," "Management's Discussion and Analysis," and "Risk Factors." These forward-looking statements generally are identified by the words "believe," "project," "expect," "anticipate," "estimate," "intend," "strategy," "future," "opportunity," "plan," "may," "should," "will," "would," "will be," "will continue," "will likely result," and similar expressions. Forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties which may cause actual results to differ materially from the forward-looking statements. A detailed discussion of risks and uncertainties that could cause actual results and events to differ materially from such forward-looking statements is included in the section titled "Risk Factors" (Part I, Item 1A of this Form 10-K). We undertake no obligation to update or revise publicly any forward-looking statements, whether because of new information, future events, or otherwise.
Item 1, Business
DKG Capital Inc. (formerly known as Star Ally Inc. and Reraise Gaming Corporation), (the “Company”) located in Las Vegas, Nevada, was incorporated on October 2, 2013, in the State of Nevada.
Our founder Mr. Ron Camacho acquired a variety of poker games, some with patents and some with patents pending, in addition to those we are developing. Each of the games has been acquired or is being developed for different segments of the poker market, namely video poker, brick and mortar, as well as online poker. Several of the games are available on line, at no charge, to test their viability.
After Mr. Ron Camacho resigned as President and Chief Executive Officer, Secretary and Treasurer of our Company on July 8, 2016, Mr. Andy Kim was appointed as President and Chief Executive Officer, Secretary and Treasurer. Mr. Kim ended the development and distribution of poker game and shifted focus to develop the binary option software, a financial software for the trading of binary option.
Mr. Andy Kim resigned as President and Chief Executive Officer, Secretary and Treasurer of our Company on January 11, 2017 and Mr. Tesheb Casimir became the President and Chief Executive Officer, Secretary and Treasurer. Mr. Tesheb Casimir ended the binary option software development. Mr. Casimir he shifted the business focus to the development of mobile application development, online marketing, social media platform and provision of various leisure services to high net worth clients. During the last quarter of 2017, the Company started to tapping into the asset tokenization market and startede selling the assets tokenization solutions.
Item 1A, Risk Factors
The Company is a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and is not required to provide the information under this item.
Item 1B, Unresolved Staff Comments
The Company is a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and is not required to provide the information under this item.
Item 2, Properties
The Company maintains its principal office at No. 17-2-2, Jalan 3/62D, Medan Putra Business Centre, Bandar Menjalara, 522C Kuala Lumpur, WP Kuala Lumpur, Malaysia. Our telephone number is (702) 560-4373. The Company has no full time employees and operates out of the President’s office facilities at no cost.
Item 3, Legal Proceedings
From time to time, we may become involved in various lawsuits and legal proceedings that arise in the ordinary course of business. However, litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm our business. We are currently not aware of any such legal proceedings or claims that we believe will have, individually or in the aggregate, a material adverse effect on our business, financial condition or operating results.
Item 4, Mine Safety Disclosures
Not applicable.
PART II
Item 5, Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
Our Common Stock is listed to trade in the over-the-counter securities market through the Financial Industry Regulatory Authority ("FINRA") Automated Quotation Bulletin Board System, under the symbol "DKGH".
The following table sets forth the quarterly high and low closing prices for our Common Stock during the last fiscal year, as reported by OTCMarkets. The quotations reflect inter-dealer prices, without retail mark-up, markdown or commission, and may not necessarily represent actual transactions.
| | | Closing Price | |
| 2017 Fiscal Year | | Hi | | | Low | |
| March 31, 2017 | | $ | 20.16 | | | | 0.32 | |
| June 30, 2017 | | $ | 1.71 | | | | 0.32 | |
| September 30, 2017 | | $ | 1.40 | | | | 0.42 | |
| December 31, 2017 | | $ | 6.50 | | | | 1.40 | |
| | | | | | | | | |
| 2016 Fiscal Year | | | | | | | | |
| March 31, 2016 | | $ | 0.04 | | | | 0.04 | |
| June 30, 2016 | | $ | 0.04 | | | | 0.04 | |
| September 30, 2016 | | $ | 0.3 | | | | 0.3 | |
| December 31, 2016 | | $ | 0.15 | | | | 0.15 | |
On April 13, 2018, the closing price for the common stock on OTC Markets was $12.05 per share.
Holders
As of December 31, 2017, we had 20 holders of our common stock.
Dividend Policy
We have not declared or paid any cash dividends on our common stock or other securities and do not anticipate paying any cash dividends in the foreseeable future. Any future determination to pay cash dividends will be at the discretion of the board of directors and will be dependent upon our financial condition, results of operations, capital requirements, and such other factors as the board of directors deem relevant.
Equity Compensation Plan Information
None
Recent Sales of Unregistered Securities
On January 11, 2017 our Board of Directors and a majority of our shareholders’ voting power approved an increase in our authorized shares of common stock to 5,000,000,000 shares from 100,000,000 shares and a 30:1 forward split of our common stock. These corporate actions are now effective. All share amounts have been retroactively adjusted.
On July 6, 2017, the Company’s Board of Directors approved a merger with DKG Mobilepay Inc., a wholly owned subsidiary incorporated in the State of Nevada. The plan of merger provided for an exchange ratio of 1:35 for the common stock of both constituent corporations, which had the practical effect of a 1 for 35 reverse split of the Company’s common stock, with fractional shares to be rounded up to the nearest whole number of shares. This corporate action was approved by the Company’s Board of Directors as authorized by Nevada corporate law. The 1 for 35 reverse stock split effected by the Merger was effective August 4, 2017. All share amounts have been retroactively adjusted.
On November 27, 2017, the Company's Articles of Incorporation were amended to 1,000,000,000 shares from 5,000,000,000 shares and to authorize the Company to issue up to 4,000,000,000 shares of preferred stock, par value $0.00001 per share.
During the year ended December 31, 2015, the Company issued 47,143 shares (55,000 shares prior to forward and reverse splits) of its common stock, for services provided, at $0.429 per share ($0.50 per share prior to forward split) for a total cost of $27,500. The fair value of the shares issued was based on the most recent per share price of shares issued for cash.
During the year ended December 31, 2015, the Company issued, for cash, 42,857 shares (50,000 shares prior to forward and reverse splits) of its common stock, at a cost of $0.429 per share ($0.50 per share prior to forward split), recorded at a cost of $25,000.
Use of Proceeds from Registered Securities
The Company is using the proceeds from the sale of its common stock for general working capital purposes.
Purchases of Equity Securities by the Issuer and Affiliated Purchasers
None
Item 6, Selected Financial Data
Not required for smaller reporting companies.
Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations
Results of Operations
The following discussion of the financial condition and results of operations should be read in conjunction with the consolidated financial statements included herewith. This discussion should not be construed to imply that the results discussed herein will necessarily continue into the future, or that any conclusion reached herein will necessarily be indicative of actual operating results in the future.
For the years ended December 31, 2017 and 2016:
We have generated revenue of $1,187,811 during the year ended December 31, 2017. We did not generate any revenue during the year ended December 31, 2016. During the fourth quarter of 2017, we commenced the tokenization and other software solutions sales to customers in Asia Pacific region.
Total operating expenses for the years ended December 31, 2017 and 2016 were $171,884 and $34,873 respectively. General and administrative expenses were $171,884 for the year ended December 31, 2017 compared to $34,873 for the year ended December 31, 2016. Interest expense was $0 and $500 during the years ended December 31, 2017 and 2016, respectively. The overall increase in operating expenses was due to the increase in license fee of $ 118,781 and sub-contact wages of $10,560 during the year ended December 31, 2017.
Our accumulated deficit on December 31, 2017 was $2,042,984 compared to $2,808,320 on December 31, 2016.
Liquidity and Capital Resources
As of December 31, 2017 we had current assets of $1,209,779; current liabilities of $455,249, and a working capital of $754,530 as compared to current assets of $ Nil ; current liabilities of $10,806, and a working capital deficit of $10,806 at December 31, 2016.
Cash Flows from Operating Activities
During the year ended December 31, 2017, the Company generated cash, for operating activities, in the amount of $890,900 compared to used cash of $20,861 for the year ended December 31, 2016. For the year ended December 31, 2017, cash generated from operating activities included a profit before provision for income tax of $1,015,927 compared to a net loss of $35,373 for the year ended December 31, 2016. During the year ended December 31, 2017, accounts receivable and deposits increased by $318,879 and accounts payable and accrued liabilities increased by $193,852, compared to no change in accounts receivable and deposits and increase in accounts payable and accrued liabilities by $11,304 for the year ended December 31, 2016. The loss for the year ended December 31, 2016 also included amortization and written-off of intangible asset in the amount of $3,208 and a non-cash written back of loan and other payables.
Cash Flows used in Investing Activities
During the years ended December 31, 2017 and 2016, no cash was used in investing activities.
Cash Flows from Financing Activities
During the year ended December 31, 2017, no cash was used in financing activities, compared to $9,210 generated from note payable from a related party during the year ended December 31, 2016.
Going Concern
The Company started generating revenue and incurred a net profit of $765,336 for the year ended December 31, 2017, compared to a net loss of $35,373 for the year ended December 31, 2016. The Company has accumulated net losses of $2,042,984 at December 31, 2017 and $2,808,320 at December 31, 2016. These conditions raise substantial doubt about the Company's ability to continue as a going concern.
These consolidated financial statements do not include adjustments relating to the recoverability and classification of reported asset amounts or the amount and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. The Company's continuation as a going concern is dependent upon its ability to obtain additional financing or sale of its common stock and ultimately to attain profitability.
Plan of Operations
The Company were in the business of developing software including gaming products and investment products and after the appointment of our current CEO, Mr. Tesheb Casimir, he shifted the focus to business to the development of mobile application development, online marketing, social media platform and provision of various leisure services to high net worth clients. During the last quarter of 2017, the Company started to tapping into the asset tokenization market and startede selling the assets tokenization solutions.
Summary of Significant Accounting Policies
Our financial statements and related public financial information are based on the application of accounting principles generally accepted in the United States ("GAAP"). GAAP requires the use of estimates; assumptions, judgments and subjective interpretations of accounting principles that have an impact on the assets, liabilities, revenues and expense amounts reported. These estimates can also affect supplemental information contained in our external disclosures including information regarding contingencies, risk and financial condition. We believe our use of estimates and underlying accounting assumptions adhere to GAAP and are consistently and conservatively applied. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Actual results may differ materially from these estimates under different assumptions or conditions. We continue to monitor significant estimates made during the preparation of our financial statements.
Our significant accounting policies are summarized in Note 2 of our financial statements. While all these significant accounting policies impact our financial condition and results of operations, we view certain of these policies as critical. Policies determined to be critical are those policies that have the most significant impact on our financial statements and require management to use a greater degree of judgment and estimates. Actual results may differ from those estimates. Our management believes that given current facts and circumstances, it is unlikely that applying any other reasonable judgments or estimate methodologies would cause effect on our results of operations, financial position or liquidity for the periods presented in this report.
We believe the following critical accounting policies and procedures, among others, affect our more significant judgments and estimates used in the preparation of our financial statements:
Cash
Cash and cash equivalents consist primarily of cash on deposit, certificates of deposit, money market accounts, and investment grade commercial paper that are readily convertible into cash and purchased with original maturities of three months or less.
Website Development
The Company capitalizes the costs associated with the development of its website. Other costs related to the maintenance of the website are expensed as incurred. Amortization will be provided over the estimated useful life of 3 years using the straight-line method for financial statement purposes.
Stock Based Payments
The Company recognizes stock-based compensation, including stock option grants, warrants and restricted stock grants at their fair value on the grant date. Share based payment awards issued to non-employees for services rendered are recorded at either the fair value of the services rendered or the fair value of the share-based payment, whichever is more readily determinable. Compensation expense is generally recognized on a straight-line basis over the vesting period.
Recent Accounting Pronouncements
There are no recent accounting pronouncements that are expected to have a material effect on the Company's financial statements.
Off Balance Sheet Arrangements
We do not have any off-balance sheet arrangements, financings, or other relationships with unconsolidated entities or other persons, also known as "special purpose entities" (SPEs).
Item 7A Quantitative and Qualitative Disclosures About Market Risk
Not required for smaller reporting companies.
Item 8 Financial Statements and Supplementary Data
See F-1.
DKG CAPITAL, INC.
REPORTS OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRMS
AND
FINANCIAL STATEMENTS
For the Years Ended
December 31, 2017 and 2016
TABLE OF CONTENTS
| Reports of Independent Registered Public Accounting Firms | F-3 |
| | |
| Consolidated Balance Sheets | F-5 |
| | |
| Consolidated Statements of Operations | F-6 |
| | |
| Consolidated Statements of Changes in Stockholders' Deficit | F-7 |
| | |
| Consolidated Statements of Cash Flows | F-8 |
| | |
| Notes to Consolidated Financial Statements | F-9 |
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTANT FIRM
To the Board of Directors and Stockholders of
DKG Capital, Inc. (formerly known as Star Ally, Inc. and Reraise Gaming Corporation)
We have audited the accompanying balance sheets of DKG Capital, Inc. (formerly known as Star Ally, Inc. and Reraise Gaming Corporation) (the “Company”) as of December 31, 2016, and the related statements of operations, changes in stockholders’ deficit, and cash flows for the year then ended. These financial statements are the responsibility of the entity’s management. Our responsibility is to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform an audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of DKG Capital, Inc. (formerly known as Star Ally, Inc. and Reraise Gaming Corporation) as of December 31, 2016, and the results of its operations and its cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States of America.
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 3 to the financial statements, the Company has suffered recurring losses from operations and has a net capital deficit that raises substantial doubt about its ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 3. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
/s/ MaloneBailey, LLP
www.malonebailey.com
Houston, Texas
April 6, 2017
Report of Independent Registered Public Accounting Firm
To the shareholders and the board of directors of DKG Capital, Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheet of DKG Capital, Inc. (the "Company") as of December 31, 2017, the related statement of operations, stockholders' equity (deficit), and cash flows for the year then ended, and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2017, and the results of its operations and its cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.
Substantial Doubt about the Company’s Ability to Continue as a Going Concern
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 3 to the financial statements, the Company’s significant operating losses raise substantial doubt about its ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
/s BF Borgers CPA PC
BF Borgers CPA PC
We have served as the Company's auditor since 2018
Lakewood, CO
April 29, 2018
DKG Capital, Inc.
Consolidated Balance Sheets
| | | December 31, | | | December 31, | |
| | | 2017 | | | 2016 | |
| | | | | | | | | |
ASSETS | |
| | | | | | | | | |
| Current assets | | | | | | | | |
| Cash and cash equivalents | | $ | 890,900 | | | $ | - | |
| Accounts receivable and deposits | | | 318,879 | | | | - | |
| Total current assets | | | 1,209,779 | | | | - | |
| Total assets | | $ | 1,209,779 | | | $ | - | |
| | | | | | | | | |
LIABILITIES AND STOCKHOLDERS' EQUITY | |
| | | | | | | | | |
| Current liabilities | | | | | | | | |
| Accounts payable and accrued liabilities | | $ | 135,339 | | | $ | 8,500 | |
| Amount due to former director | | | 2,306 | | | | 2,306 | |
| Amount due to shareholder | | | 67,013 | | | | - | |
| Tax payable | | | 250,591 | | | | - | |
| Total current liabilities | | | 455,249 | | | | 10,806 | |
| | | | | | | | | |
| Stockholders' equity/ (deficit) | | | | | | | | |
Common stock, 1,000,000,000 shares authorized, at
$0.001 par value, 14,893,714 shares
issued and outstanding, respectively | | | 14,894 | | | | 14,894 | |
Preferred stock, 4,000,000,000 shares authorized, at $0.00001 par value, 0 shares issued and outstanding | | | - | | | | - | |
| Additional paid-in capital | | | 2,782,620 | | | | 2,782,620 | |
| Accumulated deficit | | | (2,042,984 | ) | | | (2,808,320 | ) |
| Total stockholders' equity/ (deficit) | | | 754,530 | | | | (10,806 | ) |
| | | | | | | | | |
| Total liabilities and stockholders' equity/ (deficit) | | $ | 1,209,779 | | | $ | - | |
The accompanying notes are an integral part of these consolidated financial statements
DKG Capital, Inc.
Consolidated Statements of Operations
| | | For the Years Ended | |
| | | December 31, | |
| | | 2017 | | | 2016 | |
| | | | | | | | | |
| Revenue | | $ | 1,187,811 | | | $ | - | |
| | | | | | | | | |
| Operating expenses | | | | | | | | |
| General and administrative | | | 171,884 | | | | 34,873 | |
| Total operating expenses | | | 171,884 | | | | 34,873 | |
| | | | | | | | | |
| Profit/ (loss) from operations | | | 1,015,927 | | | | (34,873 | ) |
| | | | | | | | | |
| Other expenses | | | | | | | | |
| Interest expense | | | - | | | | (500 | ) |
| Total other expenses | | | - | | | | (500 | ) |
| | | | | | | | | |
| Profit/ (loss) before provision for income taxes | | | 1,015,927 | | | | (35,373 | ) |
| | | | | | | | | |
| Income taxes | | | 250,591 | | | | - | |
| Net profit/ (loss) | | $ | 765,336 | | | $ | (35,373 | ) |
| | | | | | | | | |
| Basic and diluted net profit/ (loss) per common share | | $ | 0.05 | | | $ | (0.00 | ) |
| | | | | | | | | |
Weighted average common shares outstanding
Basic and diluted | | | 14,893,714 | | | | 14,893,714 | |
The accompanying notes are an integral part of these consolidated financial statements
DKG Capital, Inc.
Consolidated Statements of Changes in Stockholders' Equity
For the years ended December 31, 2017 and 2016
| | | | Common shares | | | Additional
paid-in | | | Accumulated | | | | Stockholders' | |
| | | | Shares | | | par value | | | capital | | | deficit | | | | equity/ (deficit) | |
| | | | | | | | | | | | | | | | | | | | | |
| Balance, December 31, 2015 | | | 14,893,714 | | | $ | 14,894 | | | $ | 2,685,105 | | | $ | (2,772,947 | ) | | $ | (72,948 | ) |
| | | | | | | | | | | | | | | | | | | | | |
Related party notes and payables forgiven | | | - | | | | - | | | | 97,515 | | | | - | | | | 97,515 | |
| Net loss | | | - | | | | - | | | | - | | | | (35,373 | ) | | | (35,373 | ) |
| | | | | | | | | | | | | | | | | | | | | |
| Balance, December 31, 2016 | | | 14,893,714 | | | $ | 14,894 | | | $ | 2,782,620 | | | $ | (2,808,320 | ) | | $ | (10,806 | ) |
| | | | | | | | | | | | | | | | | | | | | |
| Net profit | | | - | | | | - | | | | - | | | | 765,336 | | | | 765,336 | |
| | | | | | | | | | | | | | | | | | | | | |
| Balance, December 31, 2017 | | | 14,893,714 | | | $ | 14,894 | | | $ | 2,782,620 | | | $ | (2,042,984 | ) | | $ | 754,530 | |
The accompanying notes are an integral part of these consolidated financial statements
DKG Capital, Inc.
Consolidated Statements of Cash Flows
| | | For the Years Ended | |
| | | December 31, | |
| | | 2017 | | | 2016 | |
| Cash flows from operating activities | | | | | | | | |
| Net profit/ (loss) | | $ | 1,015,927 | | | $ | (35,373 | ) |
Adjustments to reconcile net profit/ (loss) to net cash generated from/ (used
in) operating activities | | | | | | | | |
| Amortization and impairment of intangible asset | | | - | | | | 3,208 | |
| Change in operating assets and liabilities: | | | | | | | | |
| Increase in accounts receivable and deposits | | | (318,879) | | | | - | |
| Increase in accounts payable and accrual liabilities | | | 193,852 | | | | 11,304 | |
| Net cash generated from/ (used in) operating activities | | | 890,900 | | | | (20,861 | ) |
| | | | | | | | | |
| Cash flows from financing activities | | | | | | | | |
| Net proceeds from note payable-related party | | | - | | | | 9,210 | |
| Net cash provided by financing activities | | | - | | | | 9,210 | |
| | | | | | | | | |
Net (Decrease) in cash | | | 890,900 | | | | (11,651 | ) |
| Cash, beginning | | | - | | | | 11,651 | |
| Cash, ending | | $ | 890,900 | | | $ | - | |
| | | | | | | | | |
| Supplementary information | | | | | | | | |
| Cash paid: | | | | | | | | |
| Interest | | $ | - | | | $ | - | |
| Income taxes | | $ | - | | | $ | - | |
| | | | | | | | | |
| Non-cash financing and investing activities | | | | | | | | |
| Related party notes and payables forgiven | | $ | - | | | $ | 97,515 | |
| Due to shareholder for payment of expenses on behalf of the company | | $ | 67,013 | | | $ | 2,306 | |
The accompanying notes are an integral part of these consolidated financial statements
DKG Capital, Inc.
Notes to Consolidated Financial Statements
NOTE 1 - ORGANIZATION AND OPERATIONS
DKG Capital, Inc., (the “Company”) located in Las Vegas, Nevada, was incorporated on October 2, 2013, in the State of Nevada.
Mr. Andy Kim resigned as President and Chief Executive Officer, Secretary and Treasurer of our Company on January 11, 2017 and Mr. Tesheb Casimir became the President and Chief Executive Officer, Secretary and Treasurer. Mr. Tesheb Casimir ended the binary option software development. Mr. Tesheb Casimir’s new business focuses are: 1. Mobile application development; 2. Provision of online marketing services; 3. Operation of self-developed social media platform; and 4. Provision of various leisure services to high net worth clients who are users of our social media platform.
On January 11, 2017 our Board of Directors and a majority of our shareholders’ voting power approved (1) a corporate name change to “DKG Capital, Inc.”, (2) an increase in our authorized shares of common stock to 5,000,000,000 shares from 100,000,000 shares and (3) a 30:1 forward split of our common stock. These corporate actions are now effective. All share and per share amounts herein have been retroactively restated to reflect the split.
On July 6, 2017, the Company’s Board of Directors approved a merger with DKG Mobilepay Inc., a wholly owned subsidiary incorporated in the State of Nevada. The Merger is related to the Company’s revised business plan and the Company will be the surviving company of the Merger. The plan of merger provides for an exchange ratio of 1:35 for the common stock of both constituent corporations, which has the practical effect of a 1 for 35 reverse split of the Company’s common stock, with fractional shares to be rounded up to the nearest whole number of shares. This corporate action was approved by the Company’s Board of Directors as authorized by Nevada corporate law. The 1 for 35 reverse stock split effected by the Merger was effective on August 4, 2017. All share and per share amounts herein have been retroactively restated to reflect the split.
On November 27, 2017, the Company's Articles of Incorporation were amended to 1,000,000,000 shares from 5,000,000,000 shares and to authorize the Company to issue up to 4,000,000,000 shares of preferred stock, par value $0.00001 per share.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
Management acknowledges that it is solely responsible for adopting sound accounting practices, establishing and maintaining a system of internal accounting control and preventing and detecting fraud. The Company’s system of internal accounting control is designed to assure, among other items, that (1) recorded transactions are valid; (2) all valid transactions are recorded and (3) transactions are recorded in the period in a timely manner to produce consolidated financial statements which present fairly the financial condition, results of operations and cash flows of the company for the respective periods being presented.
The Company’s consolidated financial statements are prepared using the accrual basis of accounting in accordance with accounting principles generally accepted in the United States. The Company has elected a December 31 fiscal year-end.
Principle of Consolidation
The consolidated financial statements of the Company include the Company and its wholly-owned subsidiary DKG HUB SDN BHD. All material intercompany balances and transactions have been eliminated.
Use of Estimates
The preparation of consolidated financial statements in accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. A change in managements’ estimates or assumptions could have a material impact on the Company’s financial condition and results of operations during the period in which such changes occurred. Actual results could differ from those estimates.
Cash and Cash Equivalents
For purposes of the statements of cash flows, cash equivalents include all highly liquid investments with original maturities of three months or less which are not securing any corporate obligations. The Company maintains its cash in bank deposit accounts, which, at times, may exceed federally insured limits. The Company has not experienced any losses in such accounts.
Accounts Receivable And Deposits
Accounts receivable are recorded at the invoiced amount and do not bear interest, which are due within contractual payment terms. Credit is extended based on evaluation of a customer's financial condition, the customer’s credit-worthiness and their payment history. Accounts receivable outstanding longer than the contractual payment terms are considered past due. Past due balances over 90 days and over a specified amount are reviewed individually for collectability. At the end of each period, the Company specifically evaluates individual customer’s financial condition, credit history, and the current economic conditions to monitor the progress of the collection of accounts receivables. The Company will consider the allowance for doubtful accounts for any estimated losses resulting from the inability of its customers to make required payments. For the receivables that are past due or not being paid according to payment terms, the appropriate actions are taken to exhaust all means of collection, including seeking legal resolution in a court of law. Account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. The Company does not have any off-balance-sheet credit exposure related to its customers. Based on the evaluation, the Company has determined that no allowance for doubtful accounts is required as of December 31, 2017 and 2016.
Impairment of Long-lived Assets
The Company reviews long-lived assets for impairment when circumstances indicate the carrying amount of an asset may not be recoverable based on the undiscounted future cash flows of the asset. If the carrying amount of the asset is determined not to be recoverable, a write-down to fair value is recorded. Fair values are determined based on quoted market values, discounted cash flows, or external appraisals, as applicable. The Company reviews long-lived assets for impairment at the individual asset or the asset group level for which the lowest level of independent cash flows can be identified. During the year ended December 31, 2016, the Company fully impaired its capitalized website development costs.
Revenue Recognition
The Company follows paragraph 605-10-S99-1 of the FASB Accounting Standards Codification for revenue recognition. The Company recognizes revenue when it is realized or realizable and earned. The Company considers revenue realized or realizable and earned when all of the following criteria are met: (i) persuasive evidence of an arrangement exists, (ii) products are installed and/or the contracted services have been rendered to the customer, (iii) the sales price is fixed or determinable and (iv) collectability is reasonably assured.
All development services are invoiced when completed. Revenues are recognized at the point of sale, which occurs when the service is completed and/or installation services are complete.
Income Taxes
Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the consolidated financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance is provided for deferred tax assets if it is more likely than not these items will either expire before the Company is able to realize their benefits, or that future deductibility is uncertain.
The Company also follows the guidance related to accounting for income tax uncertainties. In accounting for uncertainty in income taxes, the Company recognizes the consolidated financial statement benefit of a tax position only after determining that the relevant tax authority would more likely than not sustain the position following an audit. For tax positions meeting the more likely than not threshold, the amount recognized in the consolidated financial statements is the largest benefit that has a greater than 50 percent likelihood of being realized upon ultimate settlement with the relevant tax authority. No liability for unrecognized tax benefits was recorded as of December 31, 2017 or December 31, 2016.
Stock-Based Compensation
The Company records stock-based compensation at fair value as of the date of grant and recognizes the corresponding expense over the requisite service period (usually the vesting period), utilizing the Black-Scholes option-pricing model. The volatility component of the calculation is based on the historic volatility of the Company’s stock or the expected future volatility. The expected life assumption is primarily based on historical exercise patterns and employee post-vesting termination behavior. The risk-free interest rate for the expected term of the option is based on the U.S. Treasury yield curve in effect at the time of grant.
Profit/ (loss) per Common Share
Basic earnings per share are calculated dividing income available to common stockholders by the weighted average number of common shares outstanding. Diluted earnings per share are based on the assumption that all dilutive convertible shares and stock options and warrants were converted or exercised. Dilution is computed by applying the treasury stock method. Under this method, warrants and options are assumed to be exercised at the beginning of the period (or at the time of issuance, if later), and as if funds obtained thereby were used to purchase common stock at the average market price during the period. There were no dilutive shares, options or warrants outstanding as of December 31, 2017 and 2016.
Recently Adopted Accounting Pronouncements
There are no other recent accounting pronouncements that are expected to have a material effect on the Company’s consolidated financial statements.
NOTE 3 - GOING CONCERN
The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the recoverability of assets and the satisfaction of liabilities in the normal course of business. Since its inception, the Company has been engaged substantially in financing activities and developing its business plan and marketing. As a result, the Company incurred accumulated net losses from inception (October 2, 2013) through the period ended December 31, 2017 of $2,042,984 and $2,808,320 as of December 31, 2016, of which $2,393,750 was the result of compensation in the form of stock issuances for consulting and other services paid in 2014 and an additional $27,500 paid during 2015. As of December 31, 2017, the Company has a working capital deficit. In addition, the Company’s development activities since inception have been financially sustained through the sale of capital stock and capital contributions from note holders. These conditions raise substantial doubt as to the Company’s ability to continue as a going concern.
The ability of the Company to continue as a going concern is dependent upon its ability to raise additional capital from the sale of common stock or through debt financing and, ultimately, the achievement of significant operating revenues. These consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts, or amounts and classification of liabilities that might result from this uncertainty.
NOTE 4 – COMMITMENTS AND CONTINGENCIES
On May 21, 2014 the Company entered into an agreement with Chris Moneymaker, an individual to use his name and likeness alongside a brief positive quote on the Company's website, paraphernalia or literature. In exchange, the Company will compensate Chris Moneymaker the following:
| · | $1,000 per month – 24 months consulting contract after we have raised $1,000,000 from the time this contract is initiated. |
| · | Additional $500 per month – 24 month consulting contract for every $1,000,000 thereafter that is raised. The above consulting terms are concurrent, meaning, the 2nd contract will be added to the first contract and every other contract thereafter. |
On June 30, 2016, the agreement is terminated.
NOTE 5 – INTANGIBLE ASSETS
During the year ended December 31, 2014, and as part of its marketing strategy to acquaint users with its product, the Company has undertaken to build its own interactive website. The Company capitalized website development costs of $6,400 for the period from January 1, 2014 through website launch on September 1, 2014. The Company’s has written off the remaining balance of website development costs in the year ended December 31, 2016. The Company's capitalized website amortization and impairment is included in general and administrative expenses in the Company's statements of operations, and totaled $0 and $3,208 for the year ended December 31, 2017 and 2016, respectively. Intangible assets were fully impaired during 2016.
NOTE 6 – ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
Accounts payable and accrued liabilities consisted of royalty fee payable to a third party and other professional charges.
NOTE 7 – RELATED PARTY TRANSACTIONS
During the year, December 31, 2013, the Company accrued expenses for $30,000 for the payment of services provided by an entity controlled by the Company's former sole officer and director. The loan is non-interest bearing, unsecured and has no specific repayment terms or maturity date. As of December 31, 2015, the entire $30,000 was outstanding. Pursuant to a loan waiver letter dated June 30, 2016, the entire balance was forgiven during 2016.
On June 2, 2014 the Company borrowed $25,000 from a former related party with interest of 5% repayable in one payment of $26,250, on June 1, 2015. In the event of default, the note is secured by not less than 2,000,000 shares of the Company's common stock. On August 14, 2015 the note was extended, with an additional interest charge of 5% or $1,322, the entire balance of $26,322, repayable on June 1, 2016. Pursuant to a loan waiver letter dated June 30, 2016, the entire balance was forgiven during 2016.
On June 8, 2015 the Company borrowed $25,000 from a former related party with interest of 2% repayable in one payment of $25,042, on July 8, 2015. On August 14, 2015 the note was extended, under the same terms and conditions, until July 8, 2016, the entire balance of $25,682 payable in one lump sum. In the event of default, unless such default is cured within 10 days, holder has the option of charging the Company an additional 10% of the note amount. Pursuant to a loan waiver letter dated June 30, 2016, the entire balance was forgiven during 2016.
On May 18, 2016, the Company borrowed $10,000 from a former related party and $790 was paid back on June 30, 2016. Pursuant to a loan waiver letter dated June 30, 2016, the entire remaining balance of $9,210 was forgiven during 2016.
On June 30, 2016, $97,515 was the total of the above former related party loan, notes payable and accrued interest which was waived. Since this transaction was with a related party the write-off of the debt was recorded as additional paid–in capital.
As of March 31, 2016, the Company had an outstanding advance to the former Company's President, in the amount of $1,351. The advance was for working capital purposes. The advance has no specific repayments terms or maturity and is non-interest bearing and unsecured. Pursuant to a waiver letter dated June 30, 2016, the entire balance was forgiven by the Company during 2016.
As of December 31, 2017 and 2016, the Company was obligated to a former director for an unsecured, non-interest demand bearing loan with a balance of $2,306.
As of December 31, 2017, the Company was obligated to Mr. Tesheb Casimir, CEO for an unsecured, non-interest demand bearing loan with a balance of $67,013, for the Company’s business expenses paid directly by the CEO on behalf of the Company.
The Company has been provided office space by its chief executive officer at no cost. Management has determined that such cost is nominal and has not recognized any rent expense in its consolidated financial statements.
NOTE 8 – GENERAL AND ADMINISTRATIVE EXPENSES
General and administrative expenses mainly consist of the operating costs of the Company’s head office in Malaysia and the professional fee incurred on the US company level.
NOTE 9 – STOCKHOLDERS’ EQUITY
On January 11, 2017 our Board of Directors and a majority of our shareholders’ voting power approved an increase in our authorized shares of common stock to 5,000,000,000 shares from 100,000,000 shares and a 30:1 forward split of our common stock. These corporate actions is now effective. All share and per share amounts herein have been retroactively restated to reflect the split.
On July 6, 2017, the Company’s Board of Directors approved a 1 for 35 reverse split of our common stock. These corporate actions are now effective. All share and per share amounts herein have been retroactively restated to reflect the split.
On November 27, 2017, the Company's Articles of Incorporation were amended to 1,000,000,000 shares from 5,000,000,000 shares and to authorize the Company to issue up to 4,000,000,000 shares of preferred stock, par value $0.00001 per share.
There were 14,893,714 shares (17,376,000 shares prior to forward split) of common stock issued and outstanding at December 31, 2017 and 2016, respectively.
NOTE 10—INCOME TAXES
Net deferred tax assets consist of the following components:
| | December 31, | | December 31, | |
| | 2016 | | 2017 | |
| Deferred tax asset: | | | | |
| Net operating loss carryforwards | | | (72,650 | ) | | | (82,250 | ) |
| Valuation allowance | | | 72,650 | | | | 82,250 | |
| Net deferred tax asset | | $ | - | | | $ | - | |
The Company has accumulated net operating loss carryovers of approximately $235,000 as of December 31, 2017 which are available to reduce future taxable income. Due to the change in ownership provisions of the Tax Reform Act of 1986, net operating loss carry forwards for federal income tax reporting purposes may be subject to annual limitations. A change in ownership may limit the utilization of the net operating loss carry forwards in future years. The tax losses begin to expire in 2033. The fiscal years 2013 through 2017 remains open to examination by federal tax authorities and other tax jurisdictions.
NOTE 11— SUBSEQUENT EVENTS
The Company has evaluated the existence of significant events subsequent to the balance sheet date through the date the financial statements were issued and has determined that there were no subsequent events or transactions which would require recognition or disclosure in the financial statements.
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
On March 23, 2018, MaloneBailey LLP resigned as the Company’s independent registered accountant. Thereafter, the Company engaged BF Borgers CPA PC as its new independent registered public accountant. There were no disagreements between the Company and MaloneBailey LLP.
Item 9A Controls and Procedures
Management's Report on Disclosure Controls and Procedures
Disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the "Exchange Act"), are our controls and other procedures that are 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 SEC's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Act is accumulated and communicated to our management to allow timely decisions regarding required disclosure. Rules 13a-15(b) and 15d-15(b) under the Exchange Act, requires us to carry out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of December 31, 2017. This evaluation was implemented under the supervision and with the participation of our officers and directors.
Based on this evaluation, management concluded that, as of December 31, 2017, our disclosure controls and procedures are ineffective in ensuring that information required to be disclosed in our Exchange Act reports is (1) recorded, processed, summarized and reported in a timely manner and (2) accumulated and communicated to our management to allow timely decisions regarding required disclosure.
Our officers and directors have concluded that our disclosure controls and procedures had the following material weaknesses:
• We were unable to maintain any segregation of duties within our financial operations due to our reliance on limited personnel in the finance function. While this control deficiency did not result in any audit adjustments to our financial statements, it could have resulted in a material misstatement that might have been prevented or detected by a segregation of duties;
• We do not have an independent Board of Directors, nor do we have a board member designated as an independent financial expert. The Board of Directors is comprised of two members who also serve as executive officers. As a result, there is a lack of independent oversight of the management team, lack of independent review of our operating and financial results, and lack of independent review of disclosures made by us; and
• Documentation of all proper accounting procedures is not yet complete.
To the extent reasonably possible given our limited resources, we intend to take measures to cure the aforementioned weaknesses, including, but not limited to, the following:
• Engaging consultants to assist in ensuring that accounting policies and procedures are consistent across the organization and that we have adequate control over financial statement disclosures;
• Hiring additional qualified financial personnel;
• Expanding our current board of directors to include additional independent individuals willing to perform directorial functions; and
• Increasing our workforce in preparation for exiting the development stage and commencing revenue producing operations.
Since the recited remedial actions will require that we hire or engage additional personnel, these material weaknesses may not be overcome in the near-term due to our limited financial resources. Until such remedial actions can be realized, we will continue to rely on the limited advice of outside professionals and consultants. These initiatives will be subject to our ability to obtain sufficient future financing and subject to our ability to start generating revenue.
Management's Annual Report on Internal Control over Financial Reporting
Management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Our internal control system was designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation and fair presentation of our financial statements for external purposes in accordance with generally accepted accounting principles. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Our officers have assessed the effectiveness of our internal controls over financial reporting as of December 31, 2017. In making this assessment, management used the criteria established in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based upon its assessment, management concluded that, as of December 31, 2017, our internal control over financial reporting was ineffective.
Management has identified a lack of sufficient personnel in the accounting function due to our limited resources with appropriate skills, training and experience to perform the review processes to ensure the complete and proper application of generally accepted accounting principles. We are in the process of developing and implementing remediation plans to address our material weaknesses in our internal controls.
Management has identified specific remedial actions to address the material weaknesses described above:
• Improve the effectiveness of the accounting group by augmenting our existing resources with additional consultants or employees to improve segregation procedures and to assist in the analysis and recording of complex accounting transactions and preparation of tax disclosures. We plan to mitigate the segregation of duties issue by hiring additional personnel in the accounting department once we have achieved positive cash flow from operations and/or have raised significant additional working capital; and
• Improve segregation procedures by strengthening cross approval of various functions including cash disbursements and quarterly internal audit procedures where appropriate.
Due to its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.
This Annual Report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management's report was not subject to attestation by our registered public accounting firm pursuant to an exemption for smaller reporting companies under Section 989G of the Dodd-Frank Wall Street Reform and Consumer Protection Act.
Changes in Internal Control over Financial Reporting
During the fourth quarter ended December 31, 2017, there were no changes in our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Item 9B Other Information
None
PART III
Item 10. Directors, Executive Officers and Corporate Governance
Below are the names and certain information regarding our executive officers and directors during the year ended December 31, 2017.
Andy Kim | President, CEO, Secretary and Treasurer (appointed on July 8, 2016 and resigned on August 15, 2016) and Director (appointed on July 8, 2016 and resigned on January 11, 2017) |
Jung Choung Hun | President, CEO, Secretary, Treasurer and Director (appointed on August 15, 2016 and resigned on January 11, 2017) |
| Tesheb Casimir | President, CEO, CFO, Secretary, Treasurer and Director (appointed on January 11, 2017) |
Andy Kim, former President, CEO, Secretary, Treasurer and Director
Andy Kim was President of Seoul Group of Companies consisting of Face Seoul Share Holding Company, Face Seoul Beauty Consultancy and Face Seoul Beauty and Health Club since 2103. Among some of his responsibilities he managed and maintained awareness of both internal and external competitive landscapes for expansion and new industry developments. He succeeded in formulating and implementing strategic plans that guided the objectives of the company. In early 2004 Mr. Kim was Overseas Department Manager for Hyundai Group, Korea a leading car manufacturer in Korea and a large conglomerate. Some of his responsibilities consisted of monitoring international wholesale and retail vehicle sales, meet market penetration objectives, lead merchandising and sales promotion support and assist Overseas Dealers with CRM and Interactive Marketing initiatives, Mr. Kim attended Yonsei University and Peking University obtaining his Bachelor Degree. Mr. Kim is qualified to lead our company into the future. His management experience makes him a perect fit for this position.
Jung Choung Hun, former President, CEO, Secretary, Treasurer and Director
Mr. Jung Choung “Patrick” Hun, age 47, has served as Foreign General CEO of Chelsea Investment Advisors (Asia Pacific region) during 2016 to present. He was CEO of the I Plus Group of Companies (Philippines) from 2011 to 2014. From 2007 to 2010, Patrick was Senior Vice President of Premier Entertainment Philippine. Prior to that, he was an independent consultant from 1996 to 2007, principally for Korean organizations expanding into the Philippines. Jung Choung Hun attended Bu-Kyung University (f/k/a Gong-Up) from 1994 to 1996, completing two years of a four year Bachelor of Print Engineering course of study. He has also served as Vice President of the Korea Sports Council – Philippines, from 2010 to present.
Tesheb Casimir, President, CEO, CFO, Secretary, Treasurer and Executive Director
Tesheb Casimir, 41, having worked originally as a corporate lawyer, quickly transitioned to private banking and worked in Lippo Bank TBK in Indonesia. He has worked in the offshore finance industry for the past few years. In 2011, Mr. Casimir and set up a licensed private wealth management company, Elgin Associates Malaysia Inc, in conjunction with a Swiss private bank headquartered in Baar, Switzerland. He has helped to set up a number of successful enterprises and continues to play an active part in Private Equity and Investments. He has also worked in a series of roles ranging from group CFO, management committee, as well as branding and restructuring roles. Mr. Casimir presently sits on the board of Rorine International Holding Corporation (trading symbol “RIHC”) and Elgin Capital Inc. He has a Master of Law (Corporate) from Australia Bond University (2008) and is fluent in English
His experience qualifies him to be and Officer and Director of DKG Capital Inc.
Directors
The authorized number of directors of the corporation shall be fixed from time to time by resolution adopted by the Board.
Term of Office
Directors shall be elected at the annual meeting of stockholders and each director shall hold office until his successor is elected and qualified or until his death, retirement, earlier resignation or removal.
Board of Director Committees
We do not have any board committees due to the limited size of the Board and the Company, and as such the board as a whole carries out the functions of audit, nominating and compensation committees.
Item 11. Executive Compensation
The following table sets forth the compensation paid to our officers and directors for the years ended December 31, 2015, 2016 and 2017:
Name & Principal Position | | Year | | Salary ($) | | Bonus ($) | | Stock Awards ($) | | Option Awards ($) | | Non- Equity Incentive Plan Compensation ($) | | Change in Pension Value and Non- Qualified Deferred Compensation Earnings ($) | | All Other Compensation ($) | | Total ($) | |
| | | | | | | | | | | | | | | | | | | | | |
| Camacho (1) | | 2015 | | | | | | | | | | | | | | | | $ | 0.00 | |
| | | | | | | | | | | | | | | | | | | | | |
Andy Kim (1) | | 2016 2017 | | | | | | | | | | | | | | | | $ | 0.00 | |
| | | | | | | | | | | | | | | | | | | | | |
Jung Choung Hun (1) | | 2016 2017 | | | | | | | | | | | | | | | | $ | 0.00 | |
| | | | | | | | | | | | | | | | | | | | | |
Tesheb Casimir | | 2016 | | | | | | | | | | | | | | | | $ | 0.00 | |
| | | 2017 | | | | | | | | | | | | | | | | $ | 0.00 | |
| (1) | Former President, Secretary, Treasurer and Director |
Employment Agreements
None
Director Compensation
None
Equity Compensation Plans
The following table set forth information regarding the outstanding equity awards as of December 31, 2017 for our officers and directors:
| Name | | Number of Securities Underlying Unexercised options (#) | | | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) | | | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) | | | Option Exercise Price ($) | | | Option Expiration Date | | | Number of Shares or Units of Stock That Have Not Vested (#) | | | Market Value of Shares or Units of Stock That Have Not Vested ($) | | | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) | | | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($) | |
| Andy Kim | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | |
Jung Choung Hun | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Tesheb Casimir | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | |
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
The following table sets forth certain information regarding beneficial ownership of our common stock as of December 31, 2017.
| · | By each person who is known by us to beneficially own more than 5% of our common stock; |
| · | By each of our officers and directors; and |
| · | By all of our officers and directors as a group. |
Title of class | Amount of beneficial ownership | Amount of beneficial ownership | Percent of class |
| | | | |
| Common | Tesheb Casimir President, CEO and Director No. 17-2-2, Jalan 3/62D, Medan Putra Business Centre Bandar Menjalara, 522C Kuala Lumpur, WP Kuala Lumpur Malaysia | 10,965,429 | 73.62% |
| | | | |
| | | | |
| | All officers and directors as a group | 10,965,429 | 73.62% |
| | | | |
| | | |
| Common | Tesheb Casimir President, CEO and Director No. 17-2-2, Jalan 3/62D, Medan Putra Business Centre Bandar Menjalara, 522C Kuala Lumpur, WP Kuala Lumpur Malaysia | 10,965,429 | 73.62% |
| | | | |
| | 5% shareholders as a group | 10,965,429 | 73.62% |
| | | | |
| | Officers, Directors and 5% Shareholders as a group | 10,965,429 | 73.62% |
As used in this table, "beneficial ownership" means the sole or shared power to vote, or to direct the voting of, a security, or the sole or shared investment power with respect to a security (i.e., the power to dispose of, or to direct the disposition of, a security).
In addition, for purposes of this table, a person is deemed, as of any date, to have "beneficial ownership" of any security that such person has the right to acquire within 60 days after such date.
Other than the shareholders listed above, we know of no other person who is the beneficial owner of more than five percent (5%) of our common stock.
The persons named above have full voting and investment power with respect to the shares indicated. Under the rules of the Securities and Exchange Commission, a person (or group of persons) is deemed to be a "beneficial owner" of a security if he or she, directly or indirectly, has or shares the power to vote or to direct the voting of such security, or the power to dispose of or to direct the disposition of such security. Accordingly, more than one person may be deemed to be a beneficial owner of the same security. A person is also deemed to be a beneficial owner of any security, which that person has the right to acquire within 60 days, such as options or warrants to purchase our common stock.
Item 13. Certain Relationships and Related Transactions, and Director Independence
We currently operate with one directors, Tesheb Casimir. We have determined that he is not an "independent director" as defined in NASDAQ Marketplace Rule 4200(a)(15).
Item 14. Principal Accounting Fees and Services
The fees billed for professional services rendered by our principal accountant are as follows:
Fiscal Year | | Audit Fees | | | Fees | | | Tax Fees | | | All Other Fees | |
| 2016 MaloneBailey, LLP | | $ | 15,500 | | | | - | | | | - | | | | - | |
| 2017 MaloneBailey, LLP | | $ | 10,000 | | | | | | | | | | | | | |
| 2017 BF Borgers CPA, PC | | $ | 48,600 | | | | - | | | | - | | | | - | |
Pre-Approval Policies and Procedures
The board of directors must pre-approve any use of our independent accountants for any non-audit services. All services of our auditors are approved by our whole board and are subject to review by our whole board.
PART IV
Item 15 Exhibits, Financial Statement Schedules
| Number | Exhibit |
| 31.1 | |
| 32.1 | |
| 101.INS* | XBRL Instance Document |
| 101.SCH* | XBRL Taxonomy Extension 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 |
| * | Pursuant to applicable securities laws and regulations, we are deemed to have complied with the reporting obligation relating to the submission of interactive data files in such exhibits and are not subject to liability under any anti-fraud provisions of the federal securities laws as long as we have made a good faith attempt to comply with the submission requirements and promptly amend the interactive data files after becoming aware that the interactive data files fail to comply with the submission requirements. Users of this data are advised that, pursuant to Rule 406T, these interactive data files are deemed not filed and otherwise are not subject to liability. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following person on behalf of the Registrant and in the capacities on this 30th day of April, 2018.
| | DKG CAPITAL INC. |
| | | |
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| | BY: | Tesheb Casimir |
| | | |
| | /s/ | Tesheb Casimir |
| | | Principal Executive Officer |
| | | Principal Financial Officer and |
| | | Principal Accounting Officer |
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