Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check one):
As of October 30, 2010, there were 39,999,942 shares of Common Stock, no par value, issued and outstanding.
The accompanying notes are an integral part of the financial statements.
NOTES TO FINANCIAL STATEMENTS
Note 1. Interim Financial Statements
The accompanying financial statements are unaudited, but in the opinion of the management of the Company, contain all adjustments, consisting of only normal recurring accruals, necessary to present fairly the financial position as of September 30, 2010 and the results of operations for the quarter ended September 30, 2010 and 2009 and changes in cash flows for the quarter ended September 30, 2010 and 2009. Certain information and footnote disclosures normally included in financial statements that have been prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission, although management of the Company believes that the disclosures contained in these financial statements are adequate to make the information p resented therein not misleading. For further information, refer to the financial statements and footnotes thereto included in the Company's Annual Report in Form 10-K as of June 30, 2010, as filed with the Securities and Exchange Commission. The results of operations for the quarter ended September 30, 2010 are not necessarily indicative of the results of operations to be expected for the full fiscal year ending June 30, 2011.
Note 2. Fair Value Measurements
Determination of Fair Value
At September 30, 2010, the Company applied fair value to all assets based on quoted market prices, where available. For financial instruments for which quotes from recent exchange transactions are not available, the Company determines fair value based on discounted cash flow analysis and comparison to similar instruments. Discounted cash flow analysis is dependent upon estimated future cash flows and the level of interest rates. Valuation adjustments may be made to ensure that financial instruments are recorded at fair value.
The methods described above may produce a current fair value calculation that may not be indicative of net realizable value or reflective of future fair values. If readily determined market values became available or if actual performance were to vary appreciably from assumptions used, assumptions may need to be adjusted, which could result in material differences from the recorded carrying amounts. The Company believes its methods of determining fair value are appropriate and consistent with other market participants.
However, the use of different methodologies or different assumptions to value certain financial instruments could result in a different estimate of fair value.
Valuation Hierarchy
FASB ASC 820 establishes a three-level valuation hierarchy for the use of fair value measurements based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date:
Level 1. Inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets. Level 1 assets and liabilities include debt and equity securities and derivative financial instruments actively traded on exchanges, as well as U.S. Treasury securities and U.S. Government and agency mortgage-backed securities that are actively traded in highly liquid over the counter markets.
Level 2. Observable inputs other than Level 1 prices such as quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, and inputs that are observable or can be corroborated, either directly or indirectly, for substantially the full term of the financial instrument. Level 2 assets and liabilities include debt instruments that are traded less frequently than exchange traded securities and derivative instruments whose model inputs are observable in the market or can be corroborated by market observable data. Examples in this category are certain variable and fixed rate non-agency mortgage-backed securities, corporate debt securities and derivativ e contracts.
Level 3. Inputs to the valuation methodology are unobservable but significant to the fair value measurement. Examples in this category include interests in certain securitized financial assets, certain private equity investments, and derivative contracts that are highly structured or long-dated.
Application of Valuation Hierarchy
A financial instrument's categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The following is a description of the valuation methodologies used for instruments measured at fair value, as well as the general classification of such instruments pursuant to the valuation hierarchy.
Due from Affiliate. Market prices are not available for the Company's loan due from an affiliate. As a result, the Company bases the fair value utilizing an internally-developed discounted cash flow model which includes assumptions regarding prepayment, the risk of default and the LIBOR forward interest rate curve. The loan due from the affiliate is carried at lower of cost or fair value and is classified within Level 3 of the valuation hierarchy.
The following table presents the financial instruments carried at fair value as of September 30, 2010, by caption on the consolidated balance sheet and by FASB ASC 820 valuation hierarchy described above.
Assets measured at fair value on a recurring and nonrecurring basisat September 30, 2010: | | Level 1 | | Level 2 | | Level 3 | | Total carrying value | |
| Nonrecurring: | | | | | | | | | | | | |
| Loan held for sale | | | - | | | | - | | | $ | 251,294 | | | $ | 251,294 | |
| | | | | | | | | | | | | | | | | |
| Total assets at fair value | | $ | - | | | $ | - | | | $ | 251,294 | | | $ | 251,294 | |
Level 3 Gains and Losses
The following table sets forth a summary of changes in the fair value of the Company’s Level 3 assets for the quarter ended September 30, 2010.
| LEVEL 3 ASSETS | |
| Quarter Ended September 30, 2010 | |
| | | Due from Affiliate | |
| | | | |
| Balance - July 1, 2010 | | $ | 246,028 | |
| Advances and (repayments), net | | | 5,266 | |
| Balance - September 30, 2010 | | $ | 251,294 | |
Note 3. Subsequent Events
In accordance with FASB ASC 855 (formerly SAFS No. 165 Subsequent Events) management evaluated all activities of the Company through November 1, 2010 (the issue date of the financial statements) and concluded that no additional subsequent events occurred that would require recognition or disclosure in these financial statements.
| Management's Discussion and Analysis of Financial Condition and Results of Operations |
The Company is at present dormant and is looking for new opportunities.
The cash needs of the Company will be funded by collections from amount due from its affiliate.
| Quantitative and Qualitative Disclosures about Market Risk. |
N/A
Our management, comprising the Chief Executive Officer and the Chief Financial Officer/Principal Accounting Officer, is responsible for establishing and maintaining disclosure controls and procedures for the Company. It has designed such disclosure controls and procedures to ensure that material information is made known to it, particularly during the period in which this report was prepared.
As of the end of the period covered by this report, our management carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (or Exchange Act)). Based on this evaluation, as of the end of the period covered by this report, our management has concluded that our disclosure controls and procedures are effective considering the fact that the Company is dormant.
Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rule 13a-15(f). Our management conducted an evaluation of the effectiveness of our internal control over financial reporting as of September 30, 2010 based on the criteria set forth in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organization of the Treadway Commission. Based on this evaluation, our management concluded that our internal control over financial reporting was effective as of September 30, 2010 considering the fact that the Company is dormant.
Our independent auditors have not audited and are not required to audit this assessment of our internal control over financial reporting for the period covered by this report.
During our most recent fiscal quarter, there has not occurred any change in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
PART II
OTHER INFORMATION
None
None
| Unregistered Sale of Equity Securities and Use of Proceeds. |
None
| Defaults upon Senior Securities. |
None
| Submission of Matters to a Vote of Security Holders. |
None.
None
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
INTERDYNE COMPANY
(Registrant)
| Date : November 1, 2010 | | By : /s/Sun Tze Whang |
Sun Tze Whang
Director /Chief Executive Officer
By : /s/Kit H. Tan
Kit H. Tan
Director /Chief Financial Officer/Principal Accounting Officer
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