UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED FEBRUARY 28, 2019
Commission file number 333-180978
SATUSA CORPORATION
(Exact name of registrant as specified in its charter)
Nevada
(State or other jurisdiction of incorporation or organization)
5348 Vegas Dr.
Las Vegas, NV 89108
(Address of principal executive offices, including zip code)
(509)995-2433
(Telephone number, including area code)
Mr. Jeffrey Nichols, Esq.
811 6th Avenue
Lewiston, ID 83501
(415)314-9088
(Name and Address of Agent for Service)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act 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 last 90 days.
YES [X] NO [ ]
Indicate by check mark whether the registrant is a large accelerated filer,
an accelerated filer, a non-accelerated filer, or a smaller reporting
company. See the definitions of "large accelerated filer, "accelerated
filer," "non-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 [X]
Indicate by check mark whether the registrant is a shell company (as defined
in Rule 12b-2 of the Exchange Act). YES [X] NO [ ]
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date: 12,400,000 shares as of
April 15, 2019
-1-
ITEM 1. FINANCIAL STATEMENTS.
The financial statements for the quarter ended February 28, 2017 immediately
follow.
SATUSA Corporation
Unaudited Interim Condensed Balance Sheets
As of February 28, 2019
----------------------------------------------------------------------------
February 28, August 31,
2019 2018
------- --------
Current Assets
Cash $ 10,024 $ 10,704
Accounts Receivable 2,060 4,120
------- --------
Total Current Assets 12,084 14,824
------- --------
LIABILITIES
Current Liabilities
Accrued Liabilities 1,620 3,780
Related Party Payable 0 1,910
------- --------
Total Current Liabilities 1,620 5,690
------- --------
Total Liabilities 1,620 5,690
------- --------
STOCKHOLDERS' EQUITY(DEFICIT)
Common Stock:
Paid-In Capital, Par Value $0.0001 per Share,
75,000,000 Shares Authorized,
12,400,000 Shares Outstanding
as of February 28, 2019 and
August 31, 2018 1,240 1,240
Additional Paid In Capital 10,760 10,760
Accumulated Deficit (1,536) (2,866)
------- --------
Total Shareholders' Equity 10,464 9,135
------- --------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY (DEFICIT) $ 12,084 $ 14,824
------- --------
The accompanying notes are an integral part of these financial statements.
-2-
SATUSA Corporation
Unaudited Interim Condensed Statements of Operations
Three Three Six Six
Months Months Months Months
Ended Ended Ended Ended
February February February February
28,2019 28,2018 28,2019 28,2018
------- ------- ------- -------
Operating Revenue $ 8,110 $ 9,740 $ 19,443 $ 16,944
------ ------ ------ ------
Total Revenue 8,110 9,740 19,443 16,944
Cost of Services 1,758 1,350 1,857 1,570
------ ------- ------ ------
Gross Profit 6,352 8,390 17,586 15,374
------ ------ ------ ------
Expenses:
General & Administrative 6,749 4,282 9,984 8,072
Compensation Expense-Founder 6,272 - 6,272 -
------ ------ ------ ------
Total Expenses 13,021 4,282 16,256 8,072
------ ------ ------ ------
Provision for Income Taxes 0 0 0 0
------ ------ ------ ------
Net Income (Loss) $ (6,669) $ 4,108 $ 1,330 $ 7,302
Net Loss per Common Share -
Basic and Diluted $ (0.00) $ (0.00) $ (0.00) $(0.00)
==== ==== ==== ====
Weighted Average Number of
Shares Outstanding -
Basic and Diluted 12,400,000 12,400,000 12,400,000 12,400,000
========== ========== ========== ==========
The accompanying notes are an integral part of these financial statements.
-3-
SATUSA Corporation
Unaudited Interim Condensed Statements of Cash Flows
Six Months Six Months
Ended Ended
February February
28,2019 28,2018
------- -------
Cash Flows from Operating Activities:
Net Income (Loss) $ 1,330 $ 7,302
Net Change in A/R 2,060 2,746
Net Change in A/P (2,160) (2,700)
----- -----
Net Cash Provided By
(Used In) Operating Activities 1,230 4,348
----- -----
Cash Flows from Financing Activities:
(Repayments to) Advances from Affiliate (1,910) (64,503)
----- -----
Net Cash Flows Provided by
Financing Activities (1,910) (64,503)
----- -----
Net Increase (Decrease) in Cash (680) (57,155)
----- -----
Cash - Beginning of Period 10,704 67,662
Cash - End of Period $ 10,024 $ 10,508
====== ======
Supplemental Disclosure of Cash Flow Information:
Cash Paid For:
Interest $ - $ -
Income Taxes $ - $ -
The accompanying notes are an integral part of these financial statements.
-4-
SATUSA Corporation.
Unaudited Interim Condensed Statements of Shareholders' Equity
For the Period From August 31, 2016 Through February 28, 2019
-----------------------------------------------------------------------------
Deficit
Accumulated
Common Additional During
Common Stock Paid In Development
Stock Amount Capital Stage Total
-----------------------------------------------------
BALANCE,
AUGUST 31, 2016 12,400,000 $ 1,240 $10,760 $ (46,847) $(34,847)
-----------------------------------------------------
Net Income - Year
Ended August 31, 2017 24,439 24,439
-----------------------------------------------------
BALANCE,
AUGUST 31, 2017 12,400,000 $ 1,240 $10,760 $ (22,408) $(10,408)
-----------------------------------------------------
Net Income - Year
Ended August 31, 2018 19,541 19,541
-----------------------------------------------------
BALANCE,
AUGUST 31, 2018 12,400,000 $ 1,240 $10,760 $ (2,865) $ 9,135
-----------------------------------------------------
Net Income - Six Months
Ended February 28, 2019 1,330 1,330
-----------------------------------------------------
BALANCE,
FEBRUARY 28, 2019 12,400,000 $ 1,240 $10,760 $ 1,536 $ 10,465
====================================================
The accompanying notes are an integral part of these financial statements.
-5-
SATUSA Corporation
Unaudited Interim Condensed Notes to the Financial Statements
-----------------------------------------------------------------------------
NOTE 1 - CONDENSED FINANCIAL STATEMENTS
The accompanying financial statements have been prepared by SATUSA
Corporation (the "Company") without audit. In the opinion of management, all
adjustments (which include only normal recurring adjustments) necessary to
present fairly the financial position, results of operations, and cash flows
at February 28, 2019, and for all periods presented herein, have been made.
During its 3rd quarter of fiscal 2016, the Company adopted a new business plan
of offering an SAT exam preparatory course. In doing so, it also changed the
Company's name from Essense Water, Inc. to SATUSA Corporation.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with accounting principles generally
accepted in the United States of America have been condensed or omitted. It
is suggested that these condensed financial statements be read in conjunction
with the financial statements and notes thereto included in the Company's
August 31, 2018 audited financial statements. The results of operations for
the period ended February 28, 2019 are not necessarily indicative of the
operating results for the full year.
NOTE 2 - SUBSEQUENT EVENTS
Company has evaluated subsequent events through the date that the financial
statements were issued. There were no significant subsequent events that need
to be disclosed.
Note 3 - RECENT ACCOUNTING PRONOUNCEMENTS
There are several new accounting pronouncements issued by the Financial
Accounting Standards Board ("FASB") which are not yet effective. Each of
these pronouncements, as applicable, has been or will be adopted by the
Company. As of February 28, 2019, none of these pronouncements is expected to
have a material effect on the financial position, results of operations or
cash flows of the Company
-6-
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
FORWARD LOOKING STATEMENTS
This report contains forward-looking statements that involve risk and
uncertainties. We use words such as "anticipate", "believe", "plan",
"expect", "future", "intend", and similar expressions to identify such
forward-looking statements. Investors should be aware that all forward-
looking statements contained within this filing are good faith estimates of
management as of the date of this report and actual results may differ
materially from historical results or our predictions of future results.
RESULTS OF OPERATIONS
During the 3rd quarter of fiscal 2016, the Company chose to forego its
previous business of a water-based flavored drink and adopt a new business
plan. This new business strategy is to provide an SAT Preparatory program
that has been designed with a focus to expand on a regional and possibly
national basis to help train high-school students for these rigorous and
extremely important college entrance exams.
In doing so, the Company continues to expand this program and has generated
consistent revenues.
During the three months ended February 28, 2019, the Company's revenues
totaled $8,110 versus $9,740 for the same period in the prior year. The
decrease is due to scheduling conflicts with the new location for the
class. These are the revenues derived from class fees for students attending
the SAT prep class.
The Company incurred Cost of Services during the most recent quarter of
$1,758 versus $1,350 for same period previous year for books, copying,
supplies and other class-related expenses. We also incurred $6,749 in General
and Administrative costs for most recent quarter, consisting of $1,920 in
accounting/professional services and $1,096 for insurance and $3,733 in
miscellaneous expenses, including approximately $1,600 for room rental, an
expense that was not incurred in the prior year. For the same period in the
prior year, these expenses totaled $4,282, consisting of $1,920 in
accounting/professional services, insurance of $1,096, and $1,266 in
miscellaneous expenses. In this most recent quarter, the payable to the
Founder was reduced to $0, and the founder took compensation totaling $6,272
during the period.
Since our most recent fiscal year end of August 31, 2018, our cash balance
has remained at roughly the same level, from a balance of $10,704 at year end
to a current balance of $10,024, as the advances from the Founder were paid
back in full and he started to receive remuneration for his services. Our
cash flow from operations totaled $1,230 (after Founder compensation of
$6,272 was paid) for the six-months ended February 28, 2019, and $4,348 for
the same period in the prior year. Net payments (compensation) to Related
Party totaled $6,272 for the most recent quarter.
-7-
Accounts Receivable decreased to $2,060 at February 28, 2019, from $4,120 at
year end, as the Company reflected the billings for classes taught in
February, which is a partial month and is also when a new session of classes
begins versus a full month of billings at year end.
Accrued liabilities are down from $3,780 at year end to $1,620 at present due
to the more expensive year-end "audit" reflected at the August 31 year end
date versus the less expensive accounting "review" done on the Company's
quarterly operations. The balance of Related Party Payable has been reduced
from $1,910 at year end to a present balance of $0 as the founder received
repayment from operations and another $6,272 in compensation during the year
to date. Reflecting the continued positive operating results of our new
business plan, Shareholders' Equity increased from $9,135 at year end to
$10,464 as of February 28, 2019.
In May 2009, a total of 12,000,000 shares of common stock were issued in
exchange for $2,000, or $.0017 per share. These securities were issued to
Kevin Nichols, the sole officer and director of the Company.
During the year ended August 31, 2013, the Company sold a total of 400,000
shares of common stock at $0.025 per share for total proceeds of $10,000.
The following table provides selected financial data about our Company for
the period ended February 28, 2019.
Balance Sheet Data: 2/28/18
------------------- --------
Cash $ 10,024
Total Assets $ 12,084
Total Liabilities $ 1,620
Shareholders' Equity $ 10,464
LIQUIDITY AND CAPITAL RESOURCES
Our cash balance at February 28, 2019 was $10,025. With its new business
plan, the Company is consistently generating operating income and positive
cash flow. Net cash from operating activities for the most recent quarter was
$1,230 (after paying the Founder compensation of $6,272) and totaled $4,348
for the same period in the prior year.
Funds may continue to be provided by the Company's sole officer/director, if
needed. He has agreed to advance funds if the Company is unable to receive
adequate funds from other source(s). However, we have no formal commitment,
arrangement(s), or legal obligation with our founder to advance or loan funds
to us. As of February 28, 2019, these advances that our officer/director had
loaned and paid expenses (net of repayments) directly on the Company's behalf
have been repaid in full.
-8-
PLAN OF OPERATION
Our plan of operation for the next 12 to 24 months consists of the following
steps/stages:
1. Continue with and expand our local area SAT prep program. This is what has
provided the Company's operating revenues over the past three years. The
Company has met with success and is achieving great results from students
with the new curriculum that it has put together for teaching the newly
revised SAT exam.
2. Expand the local area programs through a series of meetings with area high
school administrators, homeschool co-ops, and private schools. Use this to
promote what we do, share the results of the SAT prep program, and provide a
means for them to consider how the Company may help them achieve better test
results for more of their students.
3. As we progress with the above milestones, we will also be further
enhancing our curriculum, class materials, and lesson plans with an eye
towards making them available for use and teaching by others as we expand our
footprint outside the local market area.
4. Look at and meet with representatives within the outlying communities that
might be interested in sponsoring or putting together programs for their
local students. This will include our planned expansions within and to other
communities in western Washington and north Idaho that are within distance of
a few hours commute.
5. Design and establish a better website/presence that will allow us to
market not only to local communities but also to areas in which we look to
expand. As this website is enhanced, the Company will keep an eye towards
making it one that can be copied by partners or franchisees and used by them
in their local areas. We will also keep an eye towards how we may use it to
offer online classes, training, and other resources.
6. Analyze and assess larger markets outside the local areas, such as
Portland, Boise, Salt Lake City, etc. to get an idea of how our program would
best fit in those markets. Make contacts within those various school
districts for interest levels and also for possible tutors that could teach
the program in those markets.
7. Research, assess, and pursue how to best expand on a much larger basis
throughout the U.S. This would include the "franchising" of the business
model and/or through partnerships.
8. Design and prototype video classes that can be established/published via
our web-site for students outside our immediate market area.
8. Research and pursue the means by which the Company could reach outside the
U.S. market to various tutoring groups/companies seeking to enhance their
operations by offering hands-on training in the U.S. We have been approached
by a couple of groups from Asia (China and Korea) that have expressed a
desire to facilitate and teach groups of students that would come to the U.S.
for intensive hands-on training of the SAT.
-9-
OFF-BALANCE SHEET ARRANGEMENTS
We do not have any off-balance sheet arrangements that have or are reasonably
likely to have a current or future effect on our financial condition, changes
in financial condition, revenues or expenses, results of operations,
liquidity, capital expenditures, or capital resources material to investors.
ITEM 4. CONTROLS AND PROCEDURES.
MANAGEMENT'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
Management is responsible for establishing and maintaining adequate internal
control over financial reporting. Internal control over financial reporting
is defined in Rule 13a-15(f) or 15d-15(f) promulgated under the Securities
Exchange Act of 1934 as a process designed by, or under the supervision of,
the Company's principal executive and principal financial officers and
effected by the Company's board of directors, management, and other
personnel, to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external
purposes in accordance with accounting principles generally accepted in the
United States of America and includes those policies and procedures that:
- Pertain to the maintenance of records that in reasonable detail
accurately and fairly reflect the transactions and dispositions of the
assets of the Company;
- Provide reasonable assurance that transactions are recorded as necessary
to permit preparation of financial statements in accordance with
accounting principles generally accepted in the United States of America
and that receipts and expenditures of the company are being made only in
accordance with authorizations of management and directors of the
Company; and
- Provide reasonable assurance regarding prevention or timely detection of
unauthorized acquisition, use or disposition of the Company's assets that
could have a material effect on the financial statements.
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. 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. Because of the inherent limitations of internal
control, there is a risk that material misstatements may not be prevented or
detected on a timely basis by internal control over financial reporting.
However, these inherent limitations are known features of the financial
reporting process. Therefore, it is possible to design into the process
safeguards to reduce, though not eliminate, this risk.
-10-
As of February 28, 2019, management assessed the effectiveness of our
internal control over financial reporting based on the criteria for effective
internal control over financial reporting established in Internal Control -
Integrated Framework issued by the Committee of Sponsoring Organizations of
the Treadway Commission ("COSO"), 2013 version, and SEC guidance on
conducting such assessments. Based on that evaluation, they concluded that,
during the period covered by this report, such internal controls and
procedures were not effective to detect the inappropriate application of US
GAAP rules as more fully described below.
This was due to deficiencies that existed in the design or operation of our
internal controls over financial reporting that adversely affected our
internal controls and that may be considered material weaknesses.
The matters involving internal controls and procedures that our management
considered to be material weaknesses under the standards of the Public
Company Accounting Oversight Board were: (1) lack of a functioning audit
committee due to a lack of a majority of independent members and a lack of a
majority of outside directors on our board of directors, resulting in
ineffective oversight in the establishment and monitoring of required
internal controls and procedures; (2) inadequate segregation of duties
consistent with control objectives; and (3) ineffective controls over period
end financial disclosure and reporting processes. The aforementioned material
weaknesses were identified by our Chief Executive Officer in connection with
the review of our financial statements as of February 28, 2019.
Management believes that the material weaknesses set forth in items (2) and
(3) above did not affect our financial results. However, management believes
that the lack of a functioning audit committee and the lack of a majority of
outside directors on our board of directors results in ineffective oversight
in the establishment and monitoring of required internal controls and
procedures, which could result in a material misstatement in our financial
statements in future periods.
MANAGEMENT'S REMEDIATION INITIATIVES
As an effort to remediate the identified material weaknesses and other
deficiencies and enhance our internal controls, we have initiated, or plan to
initiate, the following series of measures:
We will create a position to segregate duties consistent with control
objectives and will increase our personnel resources and technical accounting
expertise within the accounting function when funds are available to us. And,
we plan to appoint one or more outside directors to our board of directors
who shall be appointed to an audit committee resulting in a fully functioning
audit committee who will undertake the oversight in the establishment and
monitoring of required internal controls and procedures such as reviewing and
approving estimates and assumptions made by management when funds are
available to us.
Management believes that the appointment of one or more outside directors,
who shall be appointed to a fully functioning audit committee, will remedy
the lack of a functioning audit committee and a lack of a majority of outside
directors on our Board.
-11-
We anticipate that these initiatives will be at least partially, if not
fully, implemented by December 31, 2019. Additionally, we plan to test our
updated controls and remediate our deficiencies by December 31, 2018.
CHANGES IN INTERNAL CONTROLS OVER FINANCIAL REPORTING
There was no change in our internal controls over financial reporting that
occurred during the period covered by this report, which has materially
affected, or is reasonably likely to materially affect, our internal controls
over financial reporting.
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS.
Incorporated by Reference
Exhibit No. Exhibit or Filed Herewith
---------- ------- -----------------------------
3.1 Articles of Incorporation Incorporated by reference to
the Registration
Statement on Form S-1 filed
with the SEC on May 20, 2010
File No. 333-162824
3.2 Bylaws Incorporated by reference to
the Registration
Statement on Form S-1 filed
with the SEC on May 20, 2010
File No. 333-162824
31.1 Section 302 Certification of Filed herewith
Chief Executive Officer
31.2 Section 302 Certification of Filed herewith
Chief Financial Officer
32 Section 906 Certification of Filed herewith
Chief Executive Officer and
Chief Financial Officer
-12-
SIGNATURES
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.
April 15, 2019 SATUSA Corporation
/s/ Kevin Nichols
-------------
By: Kevin Nichols
(Chief Executive Officer, Chief Financial Officer,
Principal Accounting Officer, President, Secretary,
Treasurer & Sole Director)