UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
☒ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended June 30, 2018
☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File No. 0-4454
(Exact name of registrant as specified in its charter)
|(State or other jurisdiction of incorporation or organization)||(I.R.S. Employer Identification No.)|
|(Address of principal executive officer)||(Zip Code)|
Registrant's telephone number, including area code: (805) 322-3883
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: Common Stock, no par value
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 preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes ☒ 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 (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Yes ☒ No ☐
Check if there is no disclosure of delinquent filers in response to Item 405 of Regulation S-K contained in this form, and no disclosure will be contained, to the best of 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. (Check one):
|Large accelerated filer ☐||Non-accelerated filer ☐|
|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 whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes ☒ No ☐
Total revenues for registrants fiscal year ended June 30, 2018 were zero.
The aggregate market value of voting Common Stock held by non-affiliates of the Registration on December 31, 2017 was $141,999.
As of September 7, 2018, there were 39,999,942 shares of Common Stock, no par value, issued and outstanding.
Transfer Agent for the Company is: OTR Inc., 1001 SW Fifth Ave., Suite 1550, Portland, OR 97204-1143, Tel: 503-225-0375.
INTERDYNE COMPANY, INC.
|Item 1. Business||3|
|Item 2. Properties||3|
|Item 3. Legal Proceedings||3|
|Item 4. Submission of Matters to a Vote of Security Holders||3|
|Item 5. Market for Registrant’s Common Equity and Related Stockholder Matters||4|
|Item 6. Selected Financial Data||4|
|Item 7. Management’s Discussion and Analysis or Plan of Operations||4|
|Item 7A. Quantitative and Qualitative Disclosures about Market Risk||6|
|Item 8. Financial Statements and Supplementary Data||6|
|Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosures||17|
|Item 9A. Controls and Procedures||17|
|Item 9B. Other Information||18|
|Item 10. Directors, Executive Officers and Corporate Governance||18|
|Item 11. Executive Compensation||19|
|Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters||20|
|Item 13. Certain Relationships and Related Transactions, and Director Independence||20|
|Item 14. Principal Accountant Fees and Services||20|
|Item 15. Exhibits, Financial Statement Schedules||21|
For purposes of this report, unless otherwise indicated or the context otherwise requires, all references herein to “Interdyne Company”, “the Company”, “we,” “us,” and “our,” refer to Interdyne Company, a California corporation.
The following discussion contains forward-looking statements regarding us, our business, prospects and results of operations that are subject to certain risks and uncertainties posed by many factors and events that could cause our actual business, prospects and results of operations to differ materially from those that may be anticipated by such forward-looking statements. Factors that may affect such forward-looking statements include, without limitation: our ability to successfully develop new products and services for new markets; the impact of competition on our revenues, changes in law or regulatory requirements that adversely affect or preclude clients from using us for certain applications; delays our introduction of new products or services; and our failure to keep pace with our competitors.
When used in this discussion, words such as “believes”, “anticipates”, “expects”, “intends” and similar expressions are intended to identify forward-looking statements, but are not the exclusive means of identifying forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this report. We undertake no obligation to revise any forward-looking statements in order to reflect events or circumstances that may subsequently arise. Readers are urged to carefully review and consider the various disclosures made by us in this report and other reports filed with the Securities and Exchange Commission that attempt to advise interested parties of the risks and factors that may affect our business.
ITEM 1. BUSINESS
The Company is currently dormant and is looking for new opportunities.
ITEM 2. PROPERTIES
The Company uses the home office of an officer. This officer charges the Company $6,000 per annum during fiscal years 2018 and 2017 for the use of his home office and for providing accounting and other services.
ITEM 3. LEGAL PROCEEDINGS
The Company is not a party to any pending legal proceedings and no such proceedings are known to be contemplated.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matter was submitted to a vote of security holders of the Company during the fiscal year 2018.
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The following table sets forth the range of low and high bid prices for the Company's common stock, for each fiscal quarter commencing July 1, 2016 and ending June 30, 2018. The prices for year ended June 30, 2018 were extracted from the Nasdaq website. Such quotations reflect inter-dealer prices, without retail mark-up, mark-down or commission and do not necessarily represent actual transactions.
|Quarter ended September 30||$||0.009||$||0.009|
|Quarter ended December 31||$||0.009||$||0.02|
|Quarter ended March 31||$||0.011||$||0.02|
|Quarter ended June 30||$||0.011||$||0.07|
|Quarter ended September 30||$||0.015||$||0.03|
|Quarter ended December 31||$||0.01||$||0.015|
|Quarter ended March 31||$||0.01||$||0.028|
|Quarter ended June 30||$||0.019||$||0.05|
As of August 31, 2018, the high and low bid prices for the Company's Common Stock were $0.0115 and $0.0115 respectively. There were approximately 1,620 record owners of such Common Stock. To management's knowledge, the Company has never paid dividends on its common stock. The Company does not intend to pay dividends in the foreseeable future.
ITEM 6. SELECTED FINANCIAL DATA
Not applicable to smaller reporting companies.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
The Company is currently dormant and is looking for new opportunities.
Results of Operations
The Company is currently dormant and therefore does not generate any revenue other than the interest income it earns from the advances to an affiliated company detailed below.
Between October 8, 1990 and June 30, 1991, the Company made advances to Acculogic, Inc., an affiliate, totaling $395,000. At June 30, 2018, there was no outstanding balance due from Acculogic, Inc. The advances bear interest at a rate of 8.5% per annum and is payable on demand. Interest earned from the affiliate was $0 and $1,100 for the years ended June 30, 2018 and 2017, respectively. On July 25, 2016, the outstanding amount of $195,204 due from Acculogic, Inc. was repaid in full.
For the years ended June 30, 2018 and 2017, the following expenses were incurred:
|•||Professional fees of $14,025 for auditing and $600 for tax preparation compared to $11,796 and $600, respectively, in the previous year;|
|•||General and administrative expenses totaled $9,026 compared to $10,222 in the previous year;|
|•||Management fee of $6,000 remained unchanged compared to the previous year’s.|
The Company reported a net loss of $30,451 compared to a net loss of $28,318 in the previous year.
Liquidity and Capital Resources
As of June 30, 2018, the Company has a cash balance of $124,604. The Company has sufficient cash in hand to fund its operations for the next twelve months.
Off-Balance Sheet Arrangements
The Company does not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on its financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.
The Company presently has no employees and is managed by the two incumbent directors: Sun Tze Whang, Chairman of the Board and Chief Executive Officer, and Kit Heng Tan, Chief Financial Officer/Principal Accounting Officer and Secretary. Kit Heng Tan charged the Company the sum of $6,000 per annum for fiscal years 2018 and 2017 for providing accounting and other services and also for the use of his home office. Neither of the Company's officers is currently represented by any labor union.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable to smaller reporting companies.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The audited financial statements as of June 30, 2018 and 2017 and for the years then ended are set forth on the following pages.
Report of Independent Registered Public Accounting Firm
To the Shareholders and Board of Directors of
Opinion on the Financial Statements
We have audited the accompanying balance sheets of Interdyne Company (the “Company”) as of June 30, 2018 and 2017, and the related statements of operations, stockholders’ equity, and cash flows for the years 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 June 30, 2018 and 2017, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.
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 audits. 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 audits 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. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting 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.
Our audits 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 audits 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 audits provide a reasonable basis for our opinion.
/s/ MaloneBailey, LLP
We have served as the Company's auditor since 2016.
September 7, 2018
JUNE 30, 2018 AND 2017
|Total current assets||$||124,604||$||147,611|
|LIABILITIES AND STOCKHOLDERS’ EQUITY|
|Accrued professional fees||$||7,100||$||7,100|
|Due to related party||9,000||3,000|
|Other accrued expenses||3,819||2,375|
|Total current liabilities||$||19,919||$||12,475|
|Preferred stock, no par value; 50,000,000 shares authorized; 0 shares issued and outstanding||—||—|
|Common stock, no par value; 100,000,000 shares authorized; 39,999,942 shares issued and outstanding as of June 30, 2018 and 2017||500,000||500,000|
|Total stockholders' equity||$||104,685||$||135,136|
|TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY||$||124,604||$||147,611|
See accompanying notes to financial statements.
STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED JUNE 30, 2018 AND 2017
|General and administrative||9,026||10,222|
|Management fees to related party||6,000||6,000|
|Interest from related party||—||1,100|
|Total other income||—||1,100|
|LOSS BEFORE INCOME TAXES||(29,651||)||(27,518||)|
|INCOME TAX EXPENSE||(800||)||(800||)|
|NET LOSS PER COMMON SHARE BASIC AND DILUTED||$||(0.00||)||$||(0.00||)|
|WEIGHTED AVERAGE COMMON SHARES OUTSTANDING BASIC AND DILUTED||39,999,942||39,999,942|
See accompanying notes to financial statements.
STATEMENTS OF STOCKHOLDERS’ EQUITY
FOR THE YEARS ENDED JUNE 30, 2018 AND 2017
|Shares||Amount||Additional Paid-in Capital||Accumulated Deficit|
|Balance, June 30, 2016||39,999,942||$||500,000||$||—||$||(336,546||)||$||163,454|
|Balance, June 30, 2017||39,999,942||500,000||—||(364,864||)||135,136|
|Balance, June 30, 2018||39,999,942||$||500,000||$||—||$||(395,315||)||$||104,685|
See accompanying notes to financial statements.
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED JUNE 30, 2018 AND 2017
|CASH FLOWS FROM OPERATING ACTIVITIES:|
|Adjustments to reconcile net loss to net cash used in operating activities:|
|Changes in operating assets and liabilities:|
|Interest due from related party||—||(1,100||)|
|Due to related party||6,000||(18,500||)|
|Accrued professional fees||—||500|
|Other accrued expenses||1,469||(1,566||)|
|Net cash used in operating activities||(22,982||)||(48,984||)|
|CASH FLOWS FROM INVESTING ACTIVITIES:|
|Cash received from related party||—||195,204|
|Net cash provided by investing activities||—||195,204|
|CASH FLOWS FROM FINANCING ACTIVITIES:|
|Repayment to related party||(25||)||(674||)|
|Net cash used in financing activities||(25||)||(674||)|
|Net increase (decrease) in cash||(23,007||)||145,546|
|CASH, BEGINNING OF YEAR||147,611||2,065|
|CASH, END OF YEAR||$||124,604||$||147,611|
|SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION|
|Income taxes paid||$||800||$||800|
|Operation expenses paid by related party||$||25||$||25|
See accompanying notes to financial statements.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2018 and 2017
1. NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of Business - Interdyne Company (the "Company") was incorporated in October 1946 in the state of California. The Company is a dormant shell currently seeking new opportunities. On November 22, 1988, the Company filed a voluntary petition for reorganization under Chapter 11 of the Bankruptcy Code in the United States Bankruptcy Court for the Central District of California. On May 17, 1990, the Company’s Amended Plan of Reorganization (the “Plan”) was confirmed by Bankruptcy Court, and the Plan became effective May 29, 1990. On July 20, 1990, the Bankruptcy Court approved a stipulation for nonmaterial modifications to the Plan. All claims and interest have been settled in accordance with the terms of the Plan. On August 22, 1990, the Board of Directors approved a change in the Company’s year-end to June 30, pursuant to the Plan.
Basis of Preparation – The accompanying financial statements have been prepared in accordance with generally accepted accounting principles used in the United States of America.
Related Party –The Company follows ASC 850, “Related Party Disclosure”, for the identification of related parties and disclosure of related party transactions. A party is considered to be related to the Company if the party directly or indirectly or through one or more intermediaries, controls, is controlled by, or is under common control with the Company. Related parties also include principal owners of the Company, its management, members of the immediate families of principal owners of the Company and its management and other parties with which the Company may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests. A party which can significantly influence the management or operating policies of the transacting parties or if it has an ownership interest in one of the transacting parties and can significantly influence the other to an extent that one or more of the transacting parties might be prevented from fully pursuing its own separate interests is also a related party.
Transactions involving related parties cannot be presumed to be carried out on an arm’s-length basis, as the requisite conditions of competitive, free-market dealings may not exist. Representations about transactions with related parties, if made, shall not imply that the related party transactions were consummated on terms equivalent to those that prevail in arm’s-length transactions unless such representations can be substantiated.
Income Taxes – The Company accounts for income taxes in accordance with the provisions of theFinancial Accounting Standards Board (“FASB”) codified within Accounting Standards Codification (“ASC”) Topic No. 740-10, Income Taxes. Deferred income taxes are recognized for the temporary differences between the tax basis of assets and liabilities and their financial reporting amounts. The Company assesses, on an annual basis, the realizability of its deferred tax assets. A valuation allowance for deferred tax assets is established if, based upon available evidence, it is more likely than not that all or a portion of the deferred tax assets will not be realized.
Use of Estimates – The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make certain estimates and assumptions that affect the reported amounts and timing of revenues and expenses, the reported amounts and classification of assets and liabilities, and the disclosure of contingent assets and liabilities. These estimates and assumptions are based on the Company’s historical results as well as management’s future expectations. The Company’s actual results may vary from those estimates and assumptions.
Net Loss per Share – The Company adopted ASC No. 260, “Earnings Per Share”, that requires the reporting of both basic and diluted earnings (loss) per share. Basic earnings (loss) per share is computed by dividing net income (loss) available to common stockholders by the weighted average number of common shares outstanding for the period. Diluted earnings (loss) per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock. In accordance with ASC No. 260, “Earnings Per Share”, any anti-dilutive effects on net income (loss) per share are excluded. The Company has no potentially dilutive securities outstanding for any years presented. Weighted average shares for computing net loss per share were 39,999,942 for each of the years presented.
Fair Value of Financial Instruments -The Company applies the provisions of accounting guidance, FASB Topic ASC 825 that requires all entities to disclose the fair value of financial instruments, both assets and liabilities recognized and not recognized on the balance sheet, for which it is practicable to estimate fair value, and defines fair value of a financial instrument as the amount at which the instrument could be exchanged in a current transaction between willing parties.
Fair Value Measurement – The Company’s financial instruments consist principally of cash, accrued professional fees, due to related party and other accrued expenses. ASC 820, Fair Value Measurements and Disclosures and ASC 825, Financial Instruments establish a framework for measuring fair value, establishes a fair value hierarchy based on the quality of inputs used to measure fair value, and enhances disclosure requirements for fair value measurements.
Fair Value Hierarchy
The Company has categorized its financial instruments, based on the priority of inputs to the valuation technique, into a three-level fair value hierarchy. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3).
Financial assets and liabilities recorded on the balance sheet are categorized based on the inputs to the valuation techniques as follows:
Level 1 Financial assets and liabilities for which values are based on unadjusted quoted prices for identical assets or liabilities in an active market that management has the ability to access.
Level 2 Financial assets and liabilities for which values are based on quoted prices in markets that are not active or model inputs that are observable either directly or indirectly for substantially the full term of the asset or liability (commodity derivatives and interest rate swaps).
Level 3 Financial assets and liabilities for which values are based on prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement. These inputs reflect management’s own assumptions about the assumptions a market participant would use in pricing the asset or liability.
When the inputs used to measure fair value fall within different levels of the hierarchy, the level within which the fair value measurement is categorized is based on the lowest level input that is significant to the fair value measurement in its entirety. The carrying amounts of cash, accrued professional fees and other accrued expenses approximate fair value because of the short-term nature of these items. Per ASC Topic 820 framework these are considered Level 3 inputs where estimates are unobservable by market participants outside of the Company and must be estimated using assumptions developed by the Company.
It is not, however, practical to determine the fair value of amounts due to related party because the transactions cannot be assumed to have been consummated at arm’s length, the terms are not deemed to be market terms, there are no quoted values available for these instruments, and an independent valuation would not be practical due to the lack of data regarding similar instruments, if any, and the associated potential costs.
Recent Accounting Pronouncements – In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842)”. Under ASU 2016-02, lessees will be required to recognize all leases (with the exception of short-term leases) at the commencement date including a lease liability, which is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis; and a right-of-use (ROU) asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. Lessees (for capital and operating leases) must apply a modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. The modified retrospective approach would not require any transition accounting for leases that expired before the earliest comparative period presented. Lessees may not apply a full retrospective transition approach.
The standard will be effective for the Company beginning July 1, 2019, with early adoption permitted. The Company plans to adopt the standard effective July 1, 2019. The Company does not expect adoption will have a material impact on the Company’s balance sheets and statements of operations.
In March 2018, the FASB issued ASU 2018-05, “Income Taxes (Topic 740) - Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 118”. This ASU adds SEC paragraphs pursuant to the SEC Staff Accounting Bulletin No. 118, which expresses the view of the staff regarding application of Topic 740, Income Taxes, in the reporting period that includes December 22, 2017 - the date on which the Tax Cuts and Jobs Act was signed into law. The amendments are effective upon addition to the FASB Accounting Standards Codification. The Company is currently evaluating the impact of the adoption of this guidance on its balance sheets and statements of operations.
2. RELATED PARTY TRANSACTIONS
In prior years, the Company made advances to Acculogic, Inc., an affiliated company through common ownership and management. The advances bear interest at a rate of 8.5% per annum and are payable on demand. Interest income from the affiliate totaled $0 and $1,100, respectively, for the years ended June 30, 2018 and 2017. The Company received payments of $0 and $195,204 from the affiliate, respectively, for the years ended June 30, 2018 and 2017. There was no balance due from Acculogic, Inc. as of June 30, 2018 and 2017.
An officer of the Company charged a management fee totaling $6,000 for each of the years ended June 30, 2018 and 2017 for the use of a home office, accounting and other services. During the years ended June 30, 2018 and 2017, the officer also paid operating expense of $25 and $25, respectively, on behalf of the Company to support the Company’s operation and these payments were fully reimbursed to him. The balance due to this officer was $9,000 and $3,000 as of June 30, 2018 and 2017, respectively. The amounts due to this officer are unsecured, bearing no interest and are repayable on demand.
3. INCOME TAXES
The Tax Cuts and Jobs Act of 2017 (the "Tax Act 2017") was signed into law on December 22, 2017. The Tax Act 2017, among other things, reduces the statutory U.S. federal corporate tax rate from 34% to 21%, requires companies to pay a one-time transition tax on earnings of certain foreign subsidiaries that were previously tax deferred, changes rules related to uses and limitations of net operating loss carryforwards created in tax years beginning after December 31, 2017, eliminates the corporate alternative minimum tax ("AMT"), and changes how existing AMT credits can be realized, creates the base erosion anti-abuse tax, a new minimum tax, and creates a new limitation on deductible interest expense.
With the enactment of the Tax Act 2017, the Company’s financial results for the year ended June 30, 2018 included a re-valuation of the U.S. deferred tax assets and corresponding valuation allowance at the new lower 21% U.S. federal statutory tax rate. There was no impact of the re-valuation to the net income because it was fully offset by the valuation allowance that was recorded against the deferred tax asset. The Company has suffered recurring losses from operations and retained tax accumulated deficit of $395,315 as of June 30, 2018. The Company therefore did not recognize any one-time transition tax. The impact of the Tax Act 2017 on the Company may differ from management's estimates. These estimates will be evaluated when necessary based on future regulations or guidance issued by the U.S. Department of the Treasury, and on specific actions the Company may take in the future.
Income taxes for the years ended June 30, 2018 and 2017 represent state minimum franchise tax of $800. The Company had net operating loss carryovers for federal income tax purposes totaling approximately $129,248 and $98,797, as of the years ended June 30, 2018 and 2017, respectively. The ultimate realization of such loss carryovers will be dependent on the Company attaining future taxable earnings. Based on the level of historical operating results and projections of future taxable earnings, management believes that it is more likely than not that the Company will not be able to utilize the benefits of these carryovers. The effective tax rates for the years ended June 30, 2018 and 2017 were 21% and 34%, respectively. The reduction of the effective tax rate was primarily due to the reduced federal income tax rate arising from the Tax Act 2017. As of June 30, 2018 and 2017, the Company had a full valuation allowance recorded against the deferred tax assets of $27,142 and $33,591, respectively. If not utilized, the carryovers expire beginning in fiscal 2027.
The Company files income tax returns in the U.S. federal jurisdiction and in the state of California. With few exceptions, the Company is no longer subject to U.S. federal and state tax examinations by tax authorities for the years ending June 30, 2012 and earlier. According to Section 382 of the Internal Revenue Code of 1986, as amended (the "Code"), ownership changes may limit the amount of the NOL carry forwards that can be utilized annually to offset future taxable income and tax, respectively.
4. COMMITMENTS AND CONTINGENCIES
In March 2017, the Company received a letter from the County of Santa Clara, California, which claimed that the Company is delinquent on its property taxes relating to tax year 1988/1989 in the amount of $80,238.07 including penalties which should be paid immediately. The Company believes that these property taxes were related to the period prior to the filing of the reorganization of the Company under Chapter 11 of the Bankruptcy Code in the United States Bankruptcy Court for the Central District of California on November 22, 1988 and the eventual confirmation of the Company’s Amended Plan of Reorganization (the “Plan”) by the Bankruptcy Court on May 17, 1990, and thus have been settled in accordance with the terms of the Plan and are therefore invalid. The Company has informed the County of Santa Clara that if it wants to assert its claim, it would have to petition to the Bankruptcy Court for relief. The Company does not recognize the said claim and therefore has not recorded any tax liabilities related to this claim. If the County of Santa Clara claim is adjudicated to be valid and the Company is liable, the tax liabilities imposed could have a material effect on the Company’s result of operations and financial position.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURES
ITEM 9A. CONTROLS AND PROCEDURES
Disclosure Controls - The Company’s management, comprising the Chief Executive Officer and Chief Financial Officer/Principal Accounting Officer, are responsible for establishing and maintaining disclosure controls and procedures for the Company. Management has designed such disclosure controls and procedures to ensure that material information is made known to them, 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 not effective considering the fact that the Company, being dormant, has only one person on staff, the Chief Financial Officer/Principal Accounting Officer, to (1) handle all accounting transactions (consisting of primarily collecting funds from a related party and paying all expenses, including fees to this same officer); (2) reconcile the bank account, and (3) prepare all financial statement disclosures. The above duties have no supervision or review to insure proper segregation of duties and review of disclosures. As a result, material weaknesses over disclosure controls and procedures exist.
Management's Report on Internal Control Over Financial Reporting – The Company’s 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). The Company’s management conducted an evaluation of the effectiveness of the Company’s internal control over financial reporting as of June 30, 2018 based on the criteria set forth inInternal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organization of the Treadway Commission. Based on this evaluation, our management has concluded that our internal control over financial reporting was not effective as of June 30, 2018 because of the following material weaknesses as of June 30, 2018: (i) lack of supervision or review to insure proper internal control over financial reporting, (ii) inadequate segregation of duties and effective risk assessment, (iii) lack of well-established procedures to authorize and approve related party transactions. As a result, material weakness over internal control over financial reporting exists.
This annual report does not include an attestation report of the Company’s independent registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the Company’s independent registered public accounting firm pursuant to temporary rules of the SEC that permit the Company to provide only management’s report in this annual report on Form 10-K.
Changes in Internal Controls - During the quarter ended June 30, 2018, there has not been any change in the Company’s 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, the Company’s internal control over financial reporting.
ITEM 9B. OTHER INFORMATION
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
The following table sets forth the names and ages of the directors and executive officers of the Company as of the date of this report, and indicates all positions and offices with the Company held by each person:
|Dr. Sun Tze Whang||74||Chairman of the Board and Chief Executive Officer|
|Kit Heng Tan||68||Chief Financial Officer/Principal Accounting Officer and Secretary|
The terms of office of each director of the Company ends at the next annual meeting of the Company's shareholders or when his or her successor is elected and qualified. No date for the next annual meeting of shareholders has been fixed by the Board of Directors. The term of office of each officer of the Company ends at the next annual meeting of the Company's Board of Directors which is expected to take place immediately after the next annual meeting of shareholders. Except as otherwise indicated below, no organization by which any officer or director previously has been employed is an affiliate, parent, or subsidiary of the Company. The Company's Bylaws provide that the number of directors of the Company shall be not less than five nor more than nine. The exact number of directors is set at five unless changed within the foregoing limits by a bylaw adopted by the Board of Directors or the shareholders. At present, there are two persons serving as directors and three vacancies on the Board of Directors.
Dr. Sun Tze Whang has been Chairman of the Board and Chief Executive Officer since August 17, 1990. From December 1994 to the present, Dr. Whang has been a director of Metal Containers Pte Ltd ("Metal Containers"), a company incorporated in the Republic of Singapore, which engaged in the manufacturing and sale of metal containers and in investment activities. Metal Containers is the ultimate parent company of Acculogic, Inc. From January 1985 to the present, Dr. Whang has also been a director of Riviera Development Pte. Ltd. ("Riviera"), a company incorporated in the Republic of Singapore, whose principal business is investment holding. Riviera is a 53.2% owned subsidiary of Metal Containers. From May 1985 to the present, Dr. Whang has also been the Chairman and a director of Carlee Electronics Pte. Ltd. ("Carlee Electronics"), a company incorporated in the Republic of Singapore, whose principal business is the manufacture and sale of industrial electronic products. Carlee is a 64.3% owned subsidiary of Riviera and the controlling shareholder of the Company. From October 1972 to the present, Dr. Whang has been a director of Lam Soon (Hong Kong) Limited, a company incorporated in Hong Kong and listed on the Stock Exchange of Hong Kong. From October 1984 to the present, Dr. Whang has been a director of AMT Datasouth Corp. (previously known as Advanced Matrix Technology, Inc.), a California corporation, which is an affiliate of Metal Containers.
Kit Heng Tan has been Chief Financial Officer/Principal Accounting Officer, Secretary and a director of the Company since August 17, 1990. On June 8, 2006, Mr. Tan was appointed as director of Metal Containers. From October 1989 to the present, Mr. Tan has been a director and also the Chief Financial Officer of Acculogic, Inc., a California corporation, which is an affiliate of Metal Containers. From April 1990 to the present, Mr. Tan has been the Chief Financial Officer and a director of AMT Datasouth Corp. (previously known as Advanced Matrix Technology, Inc.), a California corporation, which is an affiliate of Metal Containers. Mr. Tan is a Chartered Accountant of England & Wales and a Chartered Accountant of Singapore.
ITEM 11. EXECUTIVE COMPENSATION
For the fiscal years ended June 30, 2018 and 2017, there was no cash compensation paid to executive officers of the Company other than a sum of $6,000 per annum charged by an officer of the Company for each of the fiscal years 2018 and 2017 for providing accounting and other services and for the use of a home office.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
The following sets forth information, as of June 30, 2018, with respect to the beneficial ownership of the Company's Common Stock, no par value, by each person known by the Company to be the beneficial owner of more than five percent (5%) of the outstanding Common Stock, by each of the Company's directors, and by the officers and directors of the Company as a group:
|Beneficial Owner||Shares Owned Beneficially and of Record||Percent of Class|
|Carlee Electronics Pte. Ltd.|
159 Gul Circle
|Officers and directors as a group (two persons)||(1||)||(1||)|
(1) By virtue of Dr. Sun Tze Whang's direct and indirect ownership of Carlee Electronics Pte. Ltd., he may be deemed the beneficial owner of the shares held by Carlee Electronics Pte. Ltd. in the Company.
The Company is not aware of any voting trusts.
The Company's capital consists of 100,000,000 shares of Common Stock, no par value and 50,000,000 shares of Preferred Stock, no par value. As of the date hereof, 39,999,942 shares of Common Stock have been issued and are outstanding.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE
Between October 8, 1990 and June 30, 1991, the Company made advances to Acculogic, Inc., an affiliate, totaling $395,000. At June 30, 2018, there was no outstanding balance due from Acculogic, Inc. The advances bear interest at a rate of 8.5% per annum and is payable on demand. Interest earned from the affiliate was $0 and $1,100 for the years ended June 30, 2018 and 2017, respectively. On July 25, 2016, the total amount due from Acculogic, Inc. was repaid in full.
The Company uses the home office of an officer at 26 Briarwood, Irvine, CA 92604, and was charged management fees of $6,000 per annum by the officer for each of the fiscal years 2018 and 2017 for the use of the home office and for providing accounting and other services. During the years ended June 30, 2018 and 2017, the officer paid expenses in the amount of $25 and $25 on behalf of the Company to support the Company’s operation, respectively. The amounts due to the officer are unsecured, bearing no interest and are repayable on demand.
Dr. Sun Tze Whang may be considered to be the indirect beneficial owner of the shares of the Company's stock owned by Carlee Electronics, and thus Dr. Whang would be considered a control person of the Company.
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
The aggregate fees billed to the Company for professional services rendered for the audit of the Company's annual financial statements, review of the Company's quarterly financial statements, and other services normally provided in connection with statutory and regulatory filings or engagements was $14,025 in the fiscal year ended June 30, 2018, and $11,796 in the fiscal year ended June 30, 2017.
Other fees billed to the Company by its independent registered public accounting firm for the preparation of its required federal and state income tax returns totaled $600 and $600 for the fiscal years ended June 30, 2018 and 2017, respectively.
ITEM 15. Exhibits, Financial Statement Schedules.
|a.||The following financial statements are filed as part of this report:|
|Report of Independent Registered Public Accounting Firm|
|Interdyne Company Balance Sheets at June 30, 2018 and 2017|
|Interdyne Company Statements of Operations for the Years Ended June 30, 2018 and 2017|
|Interdyne Company Statements of Stockholders’ Equity for the Years Ended June 30, 2018 and 2017|
|Interdyne Company Statements of Cash Flows for the Years Ended June 30, 2018 and 2017|
|Notes to Financial Statements|
|b.||No financial statement schedules are filed as part of this report.|
|c.||The following exhibits are filed as part of this report:|
|d.||The following XBRL documents are filed as part of this report:|
|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 Linkbase Document|
|101.PRE XBR Taxonomy Extension Presentation Linkbase Document|
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 hereunto duly authorized.
|Dated: September 7, 2018||By:||/s/ Kit H. Tan|
|Kit H. Tan|
|Chief Financial Officer/Principal Accounting Officer|
In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the Registrant in the capacities and on the dates indicated.
|Signature & Title||Capacity||Date|
|/s/ Sun Tze Whang||September 7, 2018|
|Sun Tze Whang||Director and Chief Executive Officer|
|Chief Executive Officer|
|/s/ Kit H. Tan||September 7, 2018|
|Kit H. Tan||Director and|
|Chief Financial Officer/Principal Accounting Officer||Chief Financial Officer/Principal Accounting Officer|