| UNITED STATES | |
| SECURITIES AND EXCHANGE COMMISSION | |
| Washington, D.C. 20549 | |
| FORM 10-Q/A | |
| [x] | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES |
| EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED April 30, 2014 | |
| OR | |
| [ ] | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES |
EXCHANGE ACT OF 1934 | |
Commission file number 333-169280
Xumanii International Holdings Corp.
(Exact name of registrant as specified in its charter)
NEVADA
(State or other jurisdiction of incorporation or organization)
9550 South Eastern Ave. Suite 253-A86
Las Vegas, Nevada 89123
(Address of principal executive offices, including zip code.)
800-416-5934
(Registrant’s telephone number, including area code)
N/A
(former name, former address and former fiscal year, if changed since last report)
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 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 (Section 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 [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 [ ] NO [x]
State the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date: June 14, 2014, the registrant had 580,363,536 common shares issued and outstanding.
EXPLANATORY NOTE
This Amendment No. 1 to the Quarterly Report on Form 10-Q/A (the “Amendment”) amends the Quarterly Report on Form 10-Q of Xumanii International Holdings Corp. (the “Company”) for the quarter ended April 30, 2014 (the “Original Filing”), that was originally filed with the U.S. Securities and Exchange Commission on June 23, 2014. The Amendment is being filed to submit Exhibit 101 and updated Financial Statements.
In addition, as required by Rule 12b-15 under the Securities Exchange Act of 1934, as amended (“Exchange Act”), new certifications by the Company’s principal executive officer and principal financial officers are filed as exhibits hereto.
Furthermore, the Amendment does not reflect events occurring after the filing of the Original Filing. Accordingly, the Amendment should be read in conjunction with the Original Filing, as well as the Company’s other filings made with the SEC pursuant to Section 13(a) or 15(d) of the Exchange Act subsequent to the filing of the Original Filing.
PART I - FINANCIAL INFORMATION
PART II - OTHER INFORMATION
| Item 1 | Legal Proceedings | 6 |
| Item 1A. | Risk Factors | 6 |
| Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 6 |
| Item 3. | Defaults Upon Senior Securities | 6 |
| Item 4. | Mine Safety Disclosures | 6 |
| Item 5. | Other Information | 6 |
| Item 6. | Exhibits | 7 |
| SIGNATURES | 7 | |
| EXHIBIT INDEX | 7 | |
| 1 |
PART I – FINANCIAL INFORMATION
Xumanii International Holdings Corp.
(formerly Xumanii, Inc.)
| Balance Sheets (Unaudited) | F-1 |
| Statements of Operations (Unaudited) | F-2 |
| Statements of Cash Flows (Unaudited) | F-3 |
| Notes to Financial Statements (Unaudited) | F-4 |
| 2 |
The accompanying notes are an integral part of these financial statements.
| F-1 |
The accompanying notes are an integral part of these financial statements.
| F-2 |
The accompanying notes are an integral part of these financial statements.
| F-3 |
Xumanii International Holdings Corp.
(formerly Xumanii Inc.)
(unaudited)
NOTE 1 – NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of Business
Xumanii International Holdings Corp. (“Xumanii” or the “Company”) was incorporated in the State of Nevada on May 6, 2010. The Company maintains its statutory registered agent’s office at Nevada Corporate Headquarter, 101 Convention Center Drive, Suite 700 Las Vegas, Nevada 89109 and the Company’s mailing address and business office is located at 9550 South Eastern Ave. Suite 253-A86, Las Vegas, Nevada 89123.
The Company's name and trading symbol were changed from Medora Corp. and MORA, repectively, effective September 7, 2012 to Xumanii, Inc. and XUII, respectively. Subsequently , the name was changed to Xumanii International Holdings Corp.
Xumanii was a platform that broadcasted live events in HD with a new technology that combines hardware and a software platform to broadcast from multiple cameras, wirelessly an event with an extremely low production cost until September 30, 2013. In October 2013, the business plan for Xumanii was changed to enter into the branded tablet market, cloud storage market and app market and pursue acquisitions that may be synergistic to the company’s focus in various technologies.
Basis of Presentation
The accompanying unaudited interim financial statements of the Company 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 (“SEC”), and should be read in conjunction with the audited financial statements and notes thereto contained in Xumanii’s Annual Report filed with the SEC on Form 10-K for the year ended July 31, 2013. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of the 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 financial statements which substantially duplicate the disclosure contained in the audited financial statements for fiscal 2013 as reported in the Form 10-K have been omitted.
Use of Estimates
The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Basic and Diluted Earnings (Loss) Per Common Share
The basic net loss per common share is computed by dividing the net loss by the weighted average number of common shares outstanding. Diluted net loss per common share is computed by dividing the net loss, adjusted on an "as if converted" basis, by the weighted average number of common shares outstanding plus potential dilutive securities. For all periods presented, there were no potentially dilutive securities outstanding.
Cash and Cash Equivalents
The Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents.
| F-4 |
Xumanii International Holdings Corp.
(formerly Xumanii Inc.)
NOTES TO FINANCIAL STATEMENTS
(unaudited)
Impairment of Long-Lived Assets
Management reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount may not be realizable or at a minimum annually during the fourth quarter of the year. If an evaluation is required, the estimated future undiscounted cash flows associated with the asset are compared to the asset’s carrying value to determine if an impairment of such asset is necessary. The effect of any impairment would be to expense the difference between the fair value of such asset and its carrying value.
Financial Derivatives
All derivatives are recorded at fair value on the balance sheet. Fair values for securities traded in the open market and derivatives are based on quoted market prices. Where market prices are not readily available, fair values are determined using market based pricing models incorporating readily observable market data and requiring judgment and estimates.
Fair Value Measurement
The Company values its derivative instruments under FASB ASC 820 which defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements.
As defined in ASC 820, fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). The Company utilizes market data or assumptions that market participants would use in pricing the asset or liability, including assumptions about risk and the risks inherent in the inputs to the valuation technique. These inputs can be readily observable, market corroborated, or generally unobservable. The Company classifies fair value balances based on the observability of those inputs. ASC 820 establishes a fair value hierarchy that prioritizes the inputs used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurement) and the lowest priority to unobservable inputs (level 3 measurement).
The three levels of the fair value hierarchy defined by ASC 820 are as follows:
Level 1 – Quoted prices are available in active markets for identical assets or liabilities as of the reporting date. Active markets are those in which transactions for the asset or liability occur in sufficient frequency and volume to provide pricing information on an ongoing basis. Level 1 primarily consists of financial instruments such as exchange-traded derivatives, marketable securities and listed equities.
Level 2 – Pricing inputs are other than quoted prices in active markets included in level 1, which are either directly or indirectly observable as of the reported date.
Level 3 – Pricing inputs include significant inputs that are generally less observable from objective sources. These inputs may be used with internally developed methodologies that result in management’s best estimate of fair value. The Company uses Level 3 to value its derivative instruments.
Income Taxes
Potential benefits of income tax losses are not recognized in the accounts until realization is more likely than not. The Company computes a deferred tax asset for net operating losses carried forward. The potential benefit of net operating losses have not been recognized in these financial statements because the Company cannot be assured it is more likely than not it will utilize the net operating losses carried forward in future years.
| F-5 |
Xumanii International Holdings Corp.
(formerly Xumanii Inc.)
NOTES TO FINANCIAL STATEMENTS
(unaudited)
Stock-based Compensation
The Company estimates the fair value of each stock option award at the grant date by using the Black-Scholes option pricing model and common shares based on the last quoted market price of the Company’s common stock on the date of the share grant. The fair value determined represents the cost for the award and is recognized over the vesting period during which an employee is required to provide service in exchange for the award. As share-based compensation expense is recognized based on awards ultimately expected to vest, the Company reduces the expense for estimated forfeitures based on historical forfeiture rates. Previously recognized compensation costs may be adjusted to reflect the actual for feature rate for the entire award at the end of the vesting period. Excess tax benefits, if any, are recognized as an addition to paid-in capital.
Recently Issued Accounting Pronouncements
The Company does not expect the adoption of any recently issued accounting pronouncements to have a significant impact on its results of operations, financial position or cash flow.
NOTE 2 – GOING CONCERN
These financial statements have been prepared on a going concern basis, which implies Xumanii will continue to meet its obligations and continue its operations for the next twelve months. As of April 30, 2014, the Company has an accumulated deficit of $3,597,483, limited liquidity and has not completed its efforts to establish a stabilized source of revenues sufficient to cover operating costs for the next twelve month period. These factors raise substantial doubt regarding the Company’s ability to continue as a going concern. The continuation of Xumanii as a going concern is dependent upon financial support from its stockholders, the ability of Xumanii to obtain necessary equity financing to continue operations, and the attainment of profitable operations. Realization value may be substantially different from carrying values as shown and these financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should Xumanii be unable to continue as a going concern.
NOTE 3 – NOTES PAYABLE
As of April 30, 2014, the Company had the following loans payable outstanding:
Convertible notes:
On October 10, 2013, the Company entered into a convertible promissory note with a third party for $37,500, with an initial discount of $2,500. The note bears interest at 8% and a maturity date of July 12, 2014. In the event that the note remains unpaid at that date, the Company will pay default interest at 22%. The lender has the right after a period of 180 days to convert the balance outstanding into the Company's common stock at a rate equal to 51% of the average of the three trading prices during the 10 trading days prior to the conversion date.
On March 17, 2014, the Company entered into a convertible promissory note with a third party for $53,500. The note bears interest at 8% and a maturity date of December 19, 2014. The lender has the right after a period of 270 days to convert the balance outstanding into the Company's common stock at a rate equal to 45% of the lowest trading prices during the 30 trading days prior to the conversion date.
On October 21, 2013, the Company entered into a convertible note with a third party for $25,000. This note bears an interest rate of 12% per annum and is due April 21, 2014. The lender has the right at any time prior to the maturity date to convert the principal and interest outstanding into the Company's common stock at a rate equal to 50% of the average of three lowest closing prices during the ten trading days prior to the conversion date.
| F-6 |
Xumanii International Holdings Corp.
(formerly Xumanii Inc.)
NOTES TO FINANCIAL STATEMENTS
(unaudited)
On March 24, 2014, the Company entered into a convertible promissory note with a third party for $100,000. The note bears interest at 12% and a maturity date of September 24, 2014. The lender has the right after a period of 180 days to convert the balance outstanding into the Company's common stock at a rate equal to 50% of the average of the three trading prices during the 20 trading days prior to the conversion date
On October 23, 2013, the Company entered into a promissory note with a third party for $500,000, with an initial discount of $50,000. During the three months ended October 31, 2013, the Company received the first advance of $50,000. During the three months ended April 30, 2014 the Company received an additional $125,000. The note has a maturity date of two years from effective date of each payment and bears and interest rate of 12%. The note can be converted into the Company’s common stock at lessor of $0.03 or 60% of the lowest trade price in the 25 trading days previous to the conversion.
On December 23, 2013, the Company entered into a note purchase agreement with a third party to purchase a Convertible Promissory Note for $113,500, with an initial discount of $13,500. This note bears an interest rate of 8% per annum and is due December 27, 2014. The lender has the right at any time on or after 90 days from the issuance date to convert the balance outstanding into the Company's common stock at a rate equal to 55% of the lowest sale price of the common stock for the 20 trading immediately prior to the voluntary conversion date. During the quarter ended April 30, 2014, the Company issued $25,000 of common stock. Balance on this note as of April 30, 2014 $73,500.
On December 13, 2013, the Company entered into a convertible note with a third party for $35,000, with an initial discount of $5,000. This note bears an interest rate of 10% per annum and is due June 1, 2014. The lender has the right after a period of 180 days to convert the balance outstanding into the Company's common stock at a rate equal to 60% of the lowest closing prices during the twenty trading days prior to the conversion date.
On March 21, 2014, the Company entered into a convertible promissory note with a third party for $55,000, with and an initial discount of $5,000. The note bears interest at 10% and a maturity date of October 1, 2014. The lender has the right after a period of 180 days to convert the balance outstanding into the Company's common stock at a rate equal to 60% of the lowest trading prices during the 20 trading days prior to the conversion date.
On December 3, 2013, the Company entered into a senior convertible note with a third party for $450,000, with an initial discount of $150,000. The note has a maturity date of June 3, 2014 and bears and interest rate of 12%. The lender has the right at any time to convert the balance outstanding into the Company's common stock at a conversion price of $0.00616 (subject to adjustment).
On December 12, 2013, the Company entered into a convertible note with a third party for $100,000, with an initial discount of $10,000. This note bears an interest rate of 10% per annum and is due December 12, 2014. The lender has the right to convert the balance outstanding into the Company's common stock at a rate equal to 60% of the lowest trading prices during the 15 trading days prior to the holder elected conversion date. During the quarter ended April 30, 2014 the Company converted $90,000 of this note to common stock.
| F-7 |
Xumanii International Holdings Corp.
(formerly Xumanii Inc.)
NOTES TO FINANCIAL STATEMENTS
(unaudited)
On December 12, 2013, the Company entered into a convertible promissory note with a third party for $450,000, with an initial discount of $10,000. $250,000 of the note was advanced prior to January 31, 2014. During the quarter ended April 30, 2014 the additional $200,000 was advanced. This note bears an interest rate of 10% per annum and is due December 12, 2014. The lender has the right to convert the balance outstanding into the Company's common stock at a rate equal to 60% of the lowest trading prices during the 15 trading days prior to the holder elected conversion date. During the quarter ended April 30, 2014 the Company converted $90,000 of this note to common stock.
On October 31, 2013, the Company entered into a convertible note with a third party for $50,000, with an initial discount of $5,500. This note bears an interest rate of 8% per annum and is due October 31, 2014. The lender has the right to convert the balance outstanding into the Company's common stock at a rate equal to 60% of the lowest closing prices during the 20 trading days prior to the conversion date. During the three months ended April 30, 2014, the Company converted $25,750 of this note to common stock, balance outstanding on this note as of April 30, 2014 was $18,750.
On December 27, 2013, the Company entered into a convertible note with a third party for $50,000, with an initial discount of $5,500. This note bears an interest rate of 12% per annum and is due September 30, 2014. The lender has the right to convert the balance outstanding into the Company's common stock at a rate equal to 50% of the lowest closing prices during the 20 trading days prior to the conversion date. During the quarter ended April 30, 2014, , the Company converted $25,750 of this note to common stock, balance outstanding on this note as of April 30, 2014 was $18,750.
On December 27, 2013, the Company also entered into a convertible note with a third party for $50,000, with an initial discount of $5,500. This note bears an interest rate of 12% per annum and is due September 30, 2014. The lender has the right to convert the balance outstanding into the Company's common stock at a rate equal to 50% of the lowest closing prices during the 20 trading days prior to the conversion date.
On March 20, 2014, the Company entered into a convertible promissory note with a third party for $84,000. The note bears interest at 8% and a maturity date of March 20, 2015. The lender has the right after a period of 360 days to convert the balance outstanding into the Company's common stock at a rate equal to 50% of the lowest trading prices during the 20 trading days prior to the conversion date.
On November 18, 2013, the Company entered into a convertible debenture with a third party for $250,000. This note bears an interest rate of 10% per annum and is due May 18, 2014. The lender has the right to convert the balance outstanding into the Company's common stock at a rate equal to 50% of the lowest closing prices during the twenty trading days prior to the conversion date. During the quarter ending April 30, 2014 the Company converted $87,500 of this note to common stock, balance on this note as of April 30, 2014 was $162,500.
On November 18, 2013, the Company entered into a convertible debenture with a third party for $150,000. This note bears an interest rate of 10% per annum and is due May 18, 2014. The lender has the right to convert the balance outstanding into the Company's common stock at a rate equal to 50% of the lowest closing prices during the twenty trading days prior to the conversion date. During the quarter ending January 31, 2014 the Company converted $150,000 of the note to common stock.
| F-8 |
Xumanii International Holdings Corp.
(formerly Xumanii Inc.)
NOTES TO FINANCIAL STATEMENTS
(unaudited)
On November 18, 2013, the Company entered into a convertible debenture with a third party for $150,000. This note bears an interest rate of 10% per annum and is due May 18, 2014. The lender has the right to convert the balance outstanding into the Company's common stock at a rate equal to 50% of the lowest closing prices during the twenty trading days prior to the conversion date. During the quarter ending January 31, 2014, the Company converted $150,000 of the note to common stock.
On November 18, 2013, the Company entered into a convertible debenture with a third party for $225,000. This note bears an interest rate of 10% per annum and is due May 18, 2014. The lender has the right to convert the balance outstanding into the Company's common stock at a rate equal to 50% of the lowest closing prices during the twenty trading days prior to the conversion date.
On December 27, 2013, the Company entered into a convertible note with a third party for $50,000. This note bears an interest rate of 12% per annum and is due September 30, 2014. The lender has the right to convert the balance outstanding into the Company's common stock at a rate equal to 50% of the lowest closing prices during the 20 trading days prior to the conversion date. During the quarter ended April 30, 2014, the Company converted $25,750 of the note to common stock.
On December 27, 2013, the Company also entered into a convertible note with a third party for $50,000. This note bears an interest rate of 12% per annum and is due September 30, 2014. The lender has the right to convert the balance outstanding into the Company's common stock at a rate equal to 50% of the lowest closing prices during the 20 trading days prior to the conversion date.
On April 30, 2014, the Company entered into a convertible promissory note with a third party for $37,500. The note bears interest at 8% and a maturity date of January 30, 2015. The lender has the right after a period of 360 days to convert the balance outstanding into the Company's common stock at a rate equal to 55% of the average lowest 2 day trading prices during the 15 trading days prior to the conversion date.
The Company evaluated the conversion features on the above convertible notes and determined that they created an embedded financial derivative due to there being no explicit limit to the number of shares to be issued upon conversion. The Company recorded the initial fair value of $1,878,951 on the financial derivatives as discount to the convertible notes.
For the nine months ended April 30, 2014, the Company recorded $1,095,201 interest expense under straight-line method to amortize the discounts (both original discount and derivative discount) on the convertible notes. The remaining unamortized discount as of April 30, 2014 was $1,027,522.
Note payable:
The Company has a note payable to Atoll Finance. Interest on the note is 5% per annum. During the nine months ended April 30, 2014, the Company (through its other lenders) repaid $1,204,000 and the balance was reduced from $1,712,242 to $451,009 including accrued interest. The note is unsecured and is currently past due. A lender has an option to purchase $312,242 of the remaining balance. The Company recorded $42,800 of imputed interest on the payable due to Atoll Finance for the nine months ended April 30, 2014.
| F-9 |
Xumanii International Holdings Corp.
(formerly Xumanii Inc.)
NOTES TO FINANCIAL STATEMENTS
(unaudited)
NOTE 4 – DERIVATIVE LIABILITY
The Company evaluated the terms of the convertible notes and concluded that since the conversion prices were not fixed, and the number of shares of the Company’s common stock that are issuable upon the conversion of the convertible notes are indeterminable until such time as the note holder elects to convert to common stock, the embedded conversion features created a derivative liability.
The Company measured the derivative liability using the input attributes at each issuance date and recorded an initial derivative liability of $1,878,951. On April 30, 2014, the Company re-measured the derivative liability using the input attributes below and determined the derivative liability value to be $828,055. Other income of $1,050,896 was recorded for the nine months ended April 30, 2014 and included in the statements of operations in order to adjust the derivative liability to the re-measured value.
| Issuance date | April 30, 2014 | ||
| Stock price | $0.007 - $0.024 | $0.007 | |
| Exercise price | $0.005 - $0.0236 | $0.004 - $0.018 | |
| Shares issuable upon conversion | 97,538,960 shares | 287,785,714 shares | |
| Expected dividend yield | 0.00% | 0.00% | |
| Expected life (years) | 0.5 - 2 years | 0.2 - 2 years | |
| Risk-free interest rate | 0.30% - 0.47% | 0.30% - 0.47% | |
| Expected volatility | 147% - 310% | 174% - 295% |
NOTE 5 – RELATED PARTY TRANSACTIONS
During the nine months ended April 30, 2014, the Company advanced $541,451, to ACLH, LLC, an entity associated with the Company’s CEO. $165,000 was repaid by ACLH, LLC to the Company.
NOTE 6 – EQUITY TRANSACTIONS
During the nine months ended April 30, 2014:
| - | 11,160,023 shares were cancelled and returned to the Company; | |
| - | 9,615,384 shares of common stock, with fair value of $272,500, were issued for the acquisition of RFID patents; | |
| - | 122,723,335 shares of common stock were issued for the conversion of a third-party note payable in the amount of $1,204,000; |
| F-10 |
Xumanii International Holdings Corp.
(formerly Xumanii Inc.)
NOTES TO FINANCIAL STATEMENTS
(unaudited)
| - | 24,518,914 shares of common stock, with fair value of $497,379, were issued for services; and, | |
| - | 33,000,000 shares of common stock were issued for a subscription receivable of $330,000. |
NOTE 7 – SUBSEQUENT EVENTS
Subsequent to April 30, 2014, the Company issued common stock:
| - | 33,956,473 shares were issued in conjunction with debt conversion of Atoll note | |
| - | 26,098,901 shares were issued for the acquisition of RFID patents | |
| - | 70,000,000 shares were issued in connection with the acquisition of Amonshare |
Subsequent to April 30, 2014, the Company received $21,434 on its $330,000 subscription receivable.
On May 2, 2014, the Company entered into a convertible promissory note with a third party for $100,000. The note bears interest at 10% per annum and with a maturity date of November 2, 2014. The lender has the right to convert the balance outstanding into the Company's common stock at a rate equal to 50% of the lowest one day closing prices during the 20 trading days prior to the conversion date.
On May 7, 2014, the Company entered into a convertible promissory note with a third party for $101,500. The note bears interest at 12% per annum and with a maturity date of May 7, 2015. The lender has the right to convert the balance outstanding into the Company's common stock at a rate equal to 55% of the lowest one day closing prices during the 5 trading days prior to the conversion date.
| F-11 |
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following provides information which management believes is relevant to an assessment and understanding of our results of operations and financial condition. The discussion should be read along with our financial statements and notes thereto. The following discussion and analysis contains forward-looking statements, which involve risks and uncertainties. Our actual results may differ significantly from the results, expectations and plans discussed in these forward-looking statements. See “Cautionary Statement on Forward-Looking Information.”
Our auditors have raised substantial doubt as to our ability to continue as an on-going business for the next 12 months.
To meet our need for cash, we have raised funds from third party loans. We cannot guarantee that since we have adopted and implemented a new business plan and have begun operations that we will stay in business after twelve months. We may quickly use up our current cash and will need to find alternative sources, such as a second public offering, or a private placement of securities in order for us to maintain our operations. At the present time, we have not made any arrangements to raise additional cash, other than from the loans that have been received and similar ones we are contemplating. If we need additional cash and cannot raise it, we may either have to suspend operations until we do raise the cash, or cease operations entirely. If we need more money, we will have to revert to obtaining additional funds as described above.
Plan of Operation
Our business plan which Xumanii has commenced is to enter the branded tablet market, app market and pursue acquisitions that may be synergistic to the company’s focus in various technologies.
Currently, do not have any future arrangements or commitments in place other than those listed above to complete any private placement financings and there is no assurance that we will be successful in completing any such financings on terms that will be acceptable to us.
Limited Operating History; Need for Additional Capital
There is limited historical financial information about us upon which to base an evaluation of our performance. We cannot guarantee we will be successful in our business operations. Our business is subject to risks inherent in the establishment of a new business enterprise, including limited capital resources and possible cost overruns due to price and cost increases in services and products.
We have no assurance that future financing will be available to us on acceptable terms. If financing is not available on satisfactory terms, we may be unable to continue, or expand our operations. Equity financing could result in additional dilution to our existing stockholders. We anticipate that we will need to meet our ongoing cash requirements through the generation of revenue or equity and/or debt financing.
We intend to meet our cash requirements for the short term by generating revenue and, if possible, through a combination of debt financing and equity financing by way of private placements. We currently do not have any arrangements or commitments in place to complete any private placement financings and there is no assurance that we will be successful in completing any such financings on terms that will be acceptable to us.
| 3 |
If we are not able to raise all monies needed to fully implement our business plan for the next year as anticipated, we will scale our business development in line with available capital. Our primary priority in that scenario would be to retain our reporting status with the SEC which means that we would first ensure that we have sufficient capital to cover our legal and accounting expenses. Once these costs are accounted for, in accordance with how much financing we are able to secure, we will focus on market awareness, and servicing costs as well as marketing and advertising to social media marketing websites. We will likely not expend funds on the remainder of our planned activities unless we have the required capital.
If we are able to raise the required funds we will fully implement our business plan. If we are not able to raise all required funds, we will prioritize our corporate activities.
Results of Operations
Three Months Ended April 30, 2014 Compared to Three Months Ended April 30, 2013
Revenue
We had $0 of revenues for the three-month period ended April 30, 2014 and $0 for the three-month period ended April 30, 2013.
Operating expenses
For the three months ended April 30, 2014 and 2013, we incurred operating expenses of $1,054,633 and $293,268, respectively. The operating expenses increased due to stock issuance costs for consultants and expenses associated with due diligence and related costs for potential acquisitions.
Other expense
For the three months ended April 30, 2014 and 2013, we incurred other expense of $9,602 and $13,937, respectively. We recognized a $889,581 gain on financial derivatives and $791,323 amortization of debt discount for the three months ended April 30, 2014. In 2013, we only had interest accrued for outstanding loans.
Net loss
For the three months ended April 30, 2014 and 2013, we had a net loss of $1,064,235 and $307,205, respectively. The increase was due to amortization of debt discount and operating expenses, partially offset by gain recognized on the financial derivatives.
Nine Months Ended April 30, 2014 Compared to nine Months Ended April 30, 2013
Revenue
We had $80 of revenues for the nine-month period ended April 30, 2014 and $0 for the nine-month period ended April 30, 2013. We started to generate revenue during the three months ended January 31, 2014.
| 4 |
Operating expenses
For the nine months ended April 30, 2014 and 2013, we incurred operating expenses of $1,544,118 and $961,785, respectively. The increase was due to us spending more in stock issuance costs for consultants in conjunction with acquisitions.
Other expense
For the nine months ended April 30, 2014 and 2013, we incurred other expense of $262,040 and $36,997, respectively. We recognized a $1,050,896 gain on financial derivatives and $1,099,199 amortization of debt discount for the nine months ended April 30, 2014. In 2013, we only had interest accrued for outstanding loans.
Net loss
For the nine months ended April 30, 2014 and 2013, we had net loss of $1,806,158 and $998,782, respectively. The increase was due to amortization of debt discount and operating expenses, partially offset by gain recognized on the financial derivatives.
Liquidity and Capital Resources
As of April 30, 2014, our total assets were $1,109,718, including cash in the amount of $400,149. Our total liabilities were $2,606,742, which primarily consists of loans payable.
We intend to meet our cash requirements for the short term by generating revenue and through a combination of debt financing and equity financing by way of private placements. We currently do not have any arrangements or commitments in place to complete any private placement financings and there is no assurance that we will be successful in completing any such financings on terms that will be acceptable to us. If we are not able to raise the amount needed to fully implement our business plan as anticipated, we will scale our business development in line with available capital.
Our primary priority will be to retain our reporting status with the SEC which means that we will first ensure that we have sufficient capital to cover our legal and accounting expenses.
Once these costs are accounted for, in accordance with how much financing we are able to secure, we will focus on market awareness, testing and servicing costs as well as marketing and advertising to social media marketing websites. We will likely not expend funds on the remainder of our planned activities unless we have the required capital.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and as defined by Rule 229.10(f)(1) of Regulation S-K, and are not required to provide the information under this item.
ITEM 4. CONTROLS AND PROCEDURES.
Evaluation of Disclosure Controls and Procedures
We maintain “disclosure controls and procedures,” as such term is defined in Rule 13a-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”), that are designed to ensure that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission rules and forms, and that such information is accumulated and communicated to our management, including our Principal Executive Officer and Principal Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. We conducted an evaluation under the supervision and with the participation of our Principal Executive Officer and Principal Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this report pursuant to Rule 13a-15 of the Exchange Act. Based on this Evaluation, our Principal Executive Officer and Principal Financial Officer concluded that our Disclosure Controls were not effective as of the end of the period covered by this report due to the lack of adequate segregation of duties and the absence of an audit committee.
| 5 |
Changes in Internal Controls
There were no changes in our internal control over financial reporting during our most recent fiscal quarter that affected, or were reasonably likely to affect, our internal control over financial reporting.
PART II. OTHER INFORMATION
Currently we are not involved in any litigation that we believe could have a material adverse effect on our financial condition or results of operations. There is no action, suit, proceeding, inquiry or investigation before or by any court, public board, government agency, self-regulatory organization or body pending or, to the knowledge of the executive officers of our company or any of our subsidiaries, threatened against or affecting our company, our common stock, any of our subsidiaries or of our companies or our subsidiaries’ officers or directors in their capacities as such, in which an adverse decision could have a material adverse effect.
We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.
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.
None.
| 6 |
The following documents are included herein:
| Incorporated by reference | |||||
| Exhibit | Document Description | Form | Date | Number | Filed herewith |
| 31.1 | Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
X | |||
| 31.2 | CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO RULE 13a-14 | X | |||
| 32.1 | Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
X | |||
| 32.2 | CERTIFICATION OF CHIEF
FINANCIAL OFFICER PURSUANT TO
18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 |
X | |||
Pursuant to the requirements of the Securities Act of 1933, the registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing of this Form 10-K and has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, in Las Vegas, NV on this 2nd day of July 2014.
Xumanii International Holdings Corp. |
|||
| BY: | /s/ Adam Radly | ||
| Adam Radly | |||
President, Director
|
|||
| /s/ Bob Bates | |||
| Bob Bates | |||
| CFO | |||
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following person on behalf of the Registrant and in the capacities.
| Signature | Title | Date | ||
| /s/Adam Radly | President, Director | July 2, 2014 | ||
| Adam Radly | ||||
/s/ Bob Bates |
CFO | |||
| Bob Bates |
| 7 |
Exhibit 31.1
CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO RULE 13a-14
I, Adam Radly, the President and CEO of Xumanii International Holdings Corp. (the “Registrant”), certify that; |
| (1) | I have reviewed this quarterly Report on Form 10-Q of the Registrant; | |
| (2) | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; | |
| (3) | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report; | |
| (4) | I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934) for the Registrant and have: | |
| a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under my supervision, to ensure that material information relating to the Registrant is made known to me by others within those entities, particularly during the period in which this report is being prepared;
b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; | |
| c) | Evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report my conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and | |
| d) | Disclosed in this report any change in the Registrant's internal control over financial reporting that occurred during the Registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Registrant's internal control over financial reporting; and | |
| (5) | I have disclosed, based on my most recent evaluation of the internal control over financial reporting, to the Registrant’s auditors and the audit committee of Registrant’s board of directors (or persons performing the equivalent functions): | |
| a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and | |
| b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting. | |
| July 2, 2014 | ||
| /s/Adam Radly | ||
| By: | Adam Radly | |
| Chief Executive Officer | ||
Exhibit 31.2
|
CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO RULE 13a-14
I, Bob Bates, CFO of Xumanii International Holdings Corp. (the “Registrant”), certify that; |
| (1) | I have reviewed this quarterly Report on Form 10-Q of the Registrant; | |
| (2) | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; | |
| (3) | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report; | |
| (4) | I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934) for the Registrant and have: | |
| a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under my supervision, to ensure that material information relating to the Registrant is made known to me by others within those entities, particularly during the period in which this report is being prepared; | |
| b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; | |
| c) | Evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report my conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and | |
| d) | Disclosed in this report any change in the Registrant's internal control over financial reporting that occurred during the Registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Registrant's internal control over financial reporting; and | |
| (5) | I have disclosed, based on my most recent evaluation of the internal control over financial reporting, to the Registrant’s auditors and the audit committee of Registrant’s board of directors (or persons performing the equivalent functions): | |
| a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and | |
| b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting. | |
| July 2, 2014 | ||
| /s/ Bob Bates | ||
| By: | Bob Bates | |
| Chief Financial Officer | ||
Exhibit 32.1
CERTIFICATION OFCHIEF EXECUTIVE OFFICER OFFICERPURSUANT TO18 U.S.C. SECTION 1350,AS ADOPTED PURSUANT TOSECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
I, Adam Radly, the Chief Executive Officer of Xumanii International Holdings Corp. (the “Company”), hereby certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge:
| (i) | the quarterly report on Form 10-Q of the Company, for the period ended April 30, 2014, and to which this certification is attached as Exhibit 32 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and | |
| (ii) | the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
| July 2, 2014 | |
| /s/Adam Radly | |
| By: | Adam Radly |
| Chief Executive Officer | |
Exhibit 32.2
CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO 18 U.S.C. SECTION 1350,AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
I, Bob Bates, CFO of Xumanii International Holdings Corp. (the “Company”), hereby certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge:
| (i) | the quarterly report on Form 10-Q of the Company, for the period ended April 30, 2014, and to which this certification is attached as Exhibit 32 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and | |
| (ii) | the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
| July 2, 2014 | |
| /s/ Bob Bates | |
| By: | Bob Bates |
| Chief Financial Officer | |