10-Q 1 v405536_10q.htm 10-Q

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

____________________

FORM 10-Q

 

(Mark One)

 

xQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For quarterly period ended February 28, 2015

 

¨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: 333-146404

 

MICROCHANNEL TECHNOLOGIES CORPORATION

(Exact name of registrant as specified in its charter)

 

Nevada 98-0539775
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
   
10632 Little Patuxent Parkway, Suite 406   
Columbia, Maryland 21044
(Address of principal executive offices) (Zip Code)

  

(951) 756-9840

(Registrant's telephone number, including area code)

 

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 x No ¨

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, 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 x

 

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 (Do not check if a smaller reporting company)  ¨   Smaller reporting company x

 

Indicate by check mark whether the registrant is a shell company (as defined in 12b-2 of the Exchange Act.) Yes x No ¨

 

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: 53,864,600 shares of common stock, par value $0.0001, were outstanding on April 14, 2015.

 

 

 

 
 

 

MICROCHANNEL TECHNOLOGIES CORPORATION

 

FORM 10-Q

 

For the Period Ended February 28, 2015

 

Table of Contents

  

PART I FINANCIAL INFORMATION
     
Item 1 Financial Statements (Unaudited)  
     
Balance Sheets 3
     
Statements of Operations 4
     
Statements of Cash Flows 5
     
Notes to Financial Statements 6
     
Item 2 Management's Discussion and Analysis of Financial Condition and Results of Operations 8
     
Item 4 Controls and Procedures 10
     
PART II OTHER INFORMATION
     
Item 1 Legal Proceedings 11
     
Item 2 Unregistered Sales of Equity Securities and Use of Proceeds 11
     
Item 3 Defaults Upon Senior Securities 11
     
Item 4 Mine Safety Disclosures 11
     
Item 5 Other Information 11
     
Item 6 Exhibits 11
     
Signatures 12
     
Certifications  

 

 
 

 

PART I — FINANCIAL INFORMATION

 

Item 1. Financial Statements (Unaudited)

 

MICROCHANNEL TECHNOLOGIES CORPORATION

 

BALANCE SHEETS

(Unaudited)

 

   February 28,   August 31, 
   2015   2014 
         
ASSETS        
Current assets          
Cash and cash equivalents  $21,373   $51,744 
Prepaid expenses   500    - 
Total current assets   21,873    51,744 
Total assets  $21,873   $51,744 
           
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)          
           
Current liabilities          
Accounts payable  $500   $3,315 
Accrued interest   5,571    - 
Note payable to shareholder   70,000    - 
Total current liabilities   76,071    3,315 
           
Accrued interest   -    3,141 
Note payable to shareholder   -    70,000 
Total liabilities   76,071    76,456 
           
Stockholders' equity (deficit)          
Common stock: $0.0001 par value; 300,000,000 shares authorized, 53,864,600 issued and outstanding at February 28, 2015 and August 31, 2014   5,386    5,386 
Additional paid-in capital   556,711    556,711 
Retained deficit   (616,295)   (586,809)
Total stockholders' equity (deficit)   (54,198)   (24,712)
Total liabilities and stockholders' equity (deficit)  $21,873   $51,744 

 

(The accompanying notes are an integral part of these financial statements)

 

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MICROCHANNEL TECHNOLOGIES CORPORATION

 

STATEMENTS OF OPERATIONS

(Unaudited)

 

   Three Months Ended   Six Months Ended 
   February 28,   February 28, 
   2015   2014   2015   2014 
                 
Revenue  $-   $-   $-   $- 
                     
Operating expenses                    
Director and officer fees   2,250    2,250    4,500    4,500 
Professional fees   7,806    8,011    21,389    20,202 
Other operating expenses   1,027    560    1,167    1,475 
Total operating expenses   11,083    10,821    27,056    26,177 
                     
Loss from operations   (11,083)   (10,821)   (27,056)   (26,177)
                     
Other income (expense)                    
  Interest expense   (1,208)   (671)   (2,430)   (671)
Total other income (expense)   (1,208)   (671)   (2,430)   (671)
                     
Net loss  $(12,291)  $(11,492)  $(29,486)  $(26,848)
                     
Net loss per common share: basic  $(0.00)  $(0.00)  $(0.00)  $(0.00)
                     
Weighted average number of common shares outstanding: basic   53,864,600    53,864,600    53,864,600    53,864,600 

 

(The accompanying notes are an integral part of these financial statements)

 

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MICROCHANNEL TECHNOLOGIES CORPORATION

 

STATEMENTS OF CASH FLOWS

(Unaudited)

 

   Six Months Ended 
   February 28, 
   2015   2014 
         
Cash flows from operating activities          
Net loss  $(29,486)  $(26,848)
Adjustments to reconcile net loss to net cash used in operating activities:          
(Increase) decrease in prepaid expenses   (500)   241 
(Decrease) increase in accounts payable   (2,815)   5,299 
Increase in accrued interest   2,430    671 
Net cash used in operating activities   (30,371)   (20,637)
           
Cash flows from financing activities          
Proceeds from the issuance of note payable to shareholder   -    70,000 
Net cash provided by financing activities   -    70,000 
           
(Decrease) increase in cash and cash equivalents   (30,371)   49,363 
           
Cash and cash equivalents at beginning of period   51,744    21,135 
           
Cash and cash equivalents at end of period  $21,373   $70,498 
           
Supplemental disclosure of cash flow information:          
Interest paid in cash  $-   $- 
Income taxes paid in cash  $-   $-

 

(The accompanying notes are an integral part of these financial statements)

 

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MICROCHANNEL TECHNOLOGIES CORPORATION

 

NOTES TO FINANCIAL STATEMENTS

 

February 28, 2015

(Unaudited)

 

Note 1. Organization and Description of Business

 

MicroChannel Technologies Corporation (the “Company”) was formed as a wholly-owned subsidiary of New Energy Technologies, Inc. (“New Energy”). New Energy spun off its issued and outstanding shares to New Energy’s shareholders on December 18, 2007. The Company was incorporated under the name MultiChannel Technologies Corporation on February 28, 2005 in the State of Nevada, and changed to its existing name on April 4, 2005.

 

The Company is not currently engaged in any business operations. It is, however, in the process of attempting to identify, locate, and if warranted, acquire new commercial opportunities.

 

Note 2. Going Concern Uncertainties

 

The Company has not generated any revenues, has an accumulated deficit of $616,295 as of February 28, 2015, and does not have positive cash flows from operating activities. The Company expects to incur additional losses as it continues to identify and develop new commercial opportunities. The Company will be subject to the risks, uncertainties, and difficulties frequently encountered by early-stage companies. The Company may not be able to successfully address any or all of these risks and uncertainties. Failure to adequately do so could cause the Company’s business, results of operations, and financial condition to suffer. These conditions raise substantial doubt about the Company’s ability to continue as a going concern.

 

The Company’s ability to continue as a going concern is an issue due to its net losses and negative cash flows from operations, and its need for additional financing to fund future operations. Management plans to identify commercial opportunities and to obtain necessary funding from outside sources. There can be no assurance that such funds, if available, can be obtained on terms reasonable to the Company. The accompanying financial statements have been prepared assuming that the Company will continue as a going concern and do not include any adjustments that may result from the outcome of this uncertainty. Based on the Company’s current level of expenditures, management believes that cash on hand is adequate to fund operations for approximately the next six months.

 

Note 3. Significant Accounting Policies

 

Basis of Presentation

 

The accompanying unaudited interim financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission and should be read in conjunction with the audited financial statements and notes thereto contained in the Company's latest Annual Report filed with the SEC on Form 10-K for the year ended August 31, 2014. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim periods presented have been reflected herein. The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year. Notes to the unaudited interim financial statements that would substantially duplicate the disclosures contained in the audited financial statements for the most recent fiscal year as reported in the Form 10-K have been omitted. The Company did not record an income tax provision during the periods presented due to net taxable losses.

 

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Estimates

 

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, and expenses during the reporting period. On an on-going basis, the Company evaluates its estimates. Actual results and outcomes may differ materially from the estimates as additional information becomes known.

 

Recently Issued Accounting Pronouncements

 

The Company reviews new accounting standards as issued. Although some of these accounting standards issued or effective after the end of our previous fiscal year may be applicable to the Company, we have not identified any standards that we believe merit further discussion. We do not expect the adoption of any recently issued accounting pronouncements to have a significant impact on our financial position, results of operations, or cash flows.

 

Note 4. Net Loss Per Share

 

During the three and six months ended February 28, 2015 and 2014, the Company recorded a net loss. The Company does not have any potentially dilutive securities outstanding. Therefore, basic and diluted net loss per share is the same for those periods.

 

Note 5. Note Payable to Shareholder

 

On January 9, 2014, the Company issued a $70,000 note payable to a shareholder of the Company. The note payable bears interest at an annual rate of 7%. Principal and accrued interest on the note payable are due on January 9, 2016. The outstanding balance of principal and accrued interest may be prepaid without penalty. During the three months ended February 28, 2015 and 2014, the Company recorded interest expense of $1,208 and $671 related to the note payable. During the six months ended February 28, 2015 and 2014, the Company recorded interest expense of $2,430 and $671 related to the note payable. Accrued interest at February 28, 2015 and August 31, 2014 related to the note payable was $5,571 and $3,141. At February 28, 2015, the original principal balance of $70,000 on the note payable remained outstanding.

 

7
 

 

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

 

Forward-Looking Statements

 

Except for the historical information presented in this document, the matters discussed in this Form 10-Q for the quarter ended February 28, 2015, contain forward-looking statements which involve assumptions and our future plans, strategies, and expectations. These statements are generally identified by the use of words such as “may,” “will,” “should,” “expect,” “anticipate,” “estimate,” “believe,” “intend,” or “project,” or the negative of these words or other variations on these words or comparable terminology. These statements are expressed in good faith and based upon a reasonable basis when made, but there can be no assurance that these expectations will be achieved or accomplished.

 

Such forward-looking statements include statements regarding, among other things, (a) our potential profitability and cash flows, (b) our growth strategies, (c) our future financing plans, and (d) our anticipated needs for working capital. This information may involve known and unknown risks, uncertainties, and other factors that may cause our actual results, performance, or achievements to be materially different from the future results, performance, or achievements expressed or implied by any forward-looking statements. These statements may be found under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” as well as in this Form 10-Q generally. Actual events or results may differ materially from those discussed in forward-looking statements as a result of various factors, including, without limitation, the matters described in this Form 10-Q generally. In light of these risks and uncertainties, there can be no assurance that the forward-looking statements contained in this filing will in fact occur. In addition to the information expressly required to be included in this filing, we will provide such further material information, if any, as may be necessary to make the required statements, in light of the circumstances under which they are made, not misleading.

 

Although forward-looking statements in this report reflect the good faith judgment of our management, forward-looking statements are inherently subject to known and unknown risks, business, economic and other risks and uncertainties that may cause actual results to be materially different from those discussed in these forward-looking statements. Readers are urged not to place undue reliance on these forward-looking statements, which speak only as of the date of this report. We assume no obligation to update any forward-looking statements in order to reflect any event or circumstance that may arise after the date of this report, other than as may be required by applicable law or regulation. Readers are urged to carefully review and consider the various disclosures made by us in our reports filed with the Securities and Exchange Commission which attempt to advise interested parties of the risks and factors that may affect our business, financial condition, results of operation and cash flows. If one or more of these risks or uncertainties materialize, or if the underlying assumptions prove incorrect, our actual results may vary materially from those expected or projected.

 

Except where the context otherwise requires and for purposes of this Form 10-Q only, “we,” “us,” “our,” “Company,” “our Company,” and “MicroChannel” refer to MicroChannel Technologies Corporation.

 

Overview

 

The following discussion and analysis of our financial condition and results of operations (“MD&A”) should be read in conjunction with our financial statements and the accompanying notes to the financial statements included in this Form 10-Q.

 

The MD&A is based on our financial statements, which have been prepared in accordance with U.S. GAAP. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities and expenses and related disclosure of contingent assets and liabilities. Management bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

 

8
 

 

Background

 

We were formed as a wholly-owned subsidiary of New Energy Technologies, Inc. New Energy spun off its issued and outstanding shares to New Energy’s shareholders on December 18, 2007. We were incorporated under the name MultiChannel Technologies Corporation on February 28, 2005 in the State of Nevada, and changed to our existing name, MicroChannel Technologies Corporation, on April 4, 2005.

 

We are not currently engaged in any business operations. We are, however, in the process of attempting to identify, locate, and if warranted, acquire new commercial opportunities.

 

Results of Operation

 

Three and Six Months Ended February 28, 2015 and 2014

 

Director and officer fees during the periods presented are comparable due to the same level of operations during those periods.

 

Professional fees during the three months ended February 28, 2015 and 2014 are comparable due to the same level of operations during those periods. The increase in professional fees for the six months ended February 28, 2015 compared to the same period in 2014 is due to an increase in the audit fees for the year ended August 31, 2014 as compared to 2013.

 

The increase in other operating expenses for the three months ended February 28, 2015 compared to the same period in 2014 is due to the timing of the accrual for state tax and business filing fees. Other operating expenses during the six months ended February 28, 2015 and 2014 are comparable due to the same level of operations during those periods.

 

Interest expense for the three and six month periods ended February 28, 2015 and the same periods in 2014 is related to the note payable that the Company issued on January 9, 2014, in the amount of $70,000, to a shareholder of the Company. The note payable bears interest at an annual rate of 7%. Principal and accrued interest on the note payable are due on January 9, 2016.

 

Liquidity and Capital Resources

 

As of February 28, 2015, we had an accumulated deficit of $616,295. At February 28, 2015, we had cash and cash equivalents of $21,373 compared to $51,744 at August 31, 2014.

 

Net cash used in operating activities was $30,371 for the six months ended February 28, 2015, compared to net cash used in operating activities of $20,637 for the prior year. Based on our current level of expenditures, we believe that cash on hand is adequate to fund our operations for approximately the next six months.

 

Other Contractual Obligations

 

As of February 28, 2015, we do not have any contractual obligations other than the $70,000 note payable and related accrued interest.

 

Off-Balance Sheet Arrangements

 

We have no off-balance sheet arrangements.

 

Recently Issued Accounting Pronouncements

 

We review new accounting standards as issued. Although some of these accounting standards issued or effective after the end of our previous fiscal year may be applicable to us, we have not identified any standards that we believe merit further discussion. We believe that none of the new standards will have a significant impact on our financial statements.

 

9
 

 

Item 4. Controls and Procedures

 

Disclosure Controls and Procedures

 

Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of the effectiveness of the design and operation of our 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”), as of the end of the period covered by this quarterly report. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that as of February 28, 2015, that our disclosure controls and procedures were effective such that the information required to be disclosed in our United States Securities and Exchange Commission (the “SEC”) reports is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

 

Internal Control over Financial Reporting

 

There were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the period covered by this report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

 

10
 

 

PART II – OTHER INFORMATION

 

Item 1. Legal Proceedings

 

None.

 

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

 

None.

 

Item 3. Defaults Upon Senior Securities

 

None.

 

Item 4. Mine Safety Disclosures

 

Not applicable.

 

Item 5. Other Information

 

None.

 

Item 6. Exhibits

 

Exhibit No. Description of Exhibit
   
3.1 Articles of Incorporation, as amended. (1)
   
3.2 By Laws. (2)
   
31.1 Certification of Principal Executive Officer and Principal Financial Officer Pursuant to Rule 13(a)-14 of the Securities Exchange Act of 1934, As Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. *
   
32.1 Certification of Principal Executive Officer and Principal Financial Officer Pursuant to 18 USC. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. *

 

101.INS XBRL Instance Document
   
101.SCH XBRL Taxonomy Extension Schema Document
   
101.CAL XBRL Taxonomy Extension Calculation Linkbase Document
   
101.DEF XBRL Taxonomy Extension Definition Linkbase Document
   
101.LAB XBRL Taxonomy Extension Label Linkbase Document
   
101.PRE XBRL Taxonomy Extension Presentation Linkbase Document

_______________________________________

 

*Filed herewith.

 

(1) Incorporated by reference to the exhibits filed as part of the report on Form 10-Q filed by MicroChannel Technologies Corporation on April 8, 2010.

 

(2) Incorporated by reference to the exhibits filed as part of the report on Form SB-2 filed by MicroChannel Technologies Corporation on October 1, 2007.

 

11
 

 

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.

 

  MicroChannel Technologies Corporation
  (Registrant)
     
April 14, 2015 By:  /s/ David Gamache
  David Gamache
  President, Chief Executive Officer,
  Chief Financial Officer, and Director

 

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