These unaudited condensed financial statements
have been prepared by the registrant, pursuant to the rules and regulations of the Securities and Exchange Commission. These condensed
financial statements and the notes attached hereto should be read in conjunction with the financial statements and notes included
in the registrant’s Form 10-K for its fiscal year ended August 31, 2015 as filed with the SEC on December 30, 2015. In the
opinion of the registrant, all adjustments, including normal recurring adjustments necessary to present fairly the financial position
of the Company, as of February 29, 2016 and August 31, 2015 and the results of its operations and cash flows for the periods ended
February 29, 2016 and 2015 have been included. The results of operations for the interim period are not necessarily indicative
of the results for the full year.
ITEM 1. FINANCIAL
STATEMENTS
Dimi Telematics International, Inc.
Consolidated Balance Sheets
(unaudited)
|
|
|
|
|
|
|
|
|
Feb 29,
|
|
|
August 31,
|
|
|
|
2016
|
|
|
2015
|
|
Assets
|
|
|
(unaudited)
|
|
|
|
|
|
Current assets
|
|
|
|
|
|
|
|
|
Cash
|
|
$
|
34,024
|
|
|
$
|
185,869
|
|
Prepaid expenses-stock based
|
|
|
–
|
|
|
|
21,000
|
|
Total current assets
|
|
|
34,024
|
|
|
|
206,869
|
|
|
|
|
|
|
|
|
|
|
Prepaid expense-stock based
|
|
|
–
|
|
|
|
74,375
|
|
Intellectual property, net of amortization of $811 and $745, respectively
|
|
|
1,379
|
|
|
|
1,445
|
|
Total assets
|
|
$
|
35,403
|
|
|
$
|
282,689
|
|
|
|
|
|
|
|
|
|
|
Liabilities and Stockholders' Equity
|
|
|
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
|
|
|
|
Accounts payable and accrued liabilities
|
|
$
|
24,200
|
|
|
$
|
31,514
|
|
Total current liabilities
|
|
|
24,200
|
|
|
|
31,514
|
|
|
|
|
|
|
|
|
|
|
Stockholders' Equity
|
|
|
|
|
|
|
|
|
Series A Convertible Prefered Stock, $0.001 par value, 50,000,000
|
|
|
|
|
|
|
|
|
authorized shares; no shares issued and outstanding as of
|
|
|
|
|
|
|
|
|
February 29, 2016 and August 31, 2015, respectively
|
|
|
–
|
|
|
|
–
|
|
Common stock, $0.001 par value: 800,000,000 authorized;
|
|
|
|
|
|
|
|
|
2,923,907 and 2,422,712 shares issued and outstanding as of
|
|
|
|
|
|
|
|
|
February 29, 2016 and August 31, 2015, respectively
|
|
|
2,923
|
|
|
|
2,423
|
|
Common stock payable
|
|
|
–
|
|
|
|
210,000
|
|
Additional paid-in capital
|
|
|
2,310,876
|
|
|
|
2,101,376
|
|
Accumulated deficit
|
|
|
(2,302,596
|
)
|
|
|
(2,062,624
|
)
|
Total stockholders' equity
|
|
|
11,203
|
|
|
|
251,175
|
|
Total liabilities and stockholders' equity
|
|
$
|
35,403
|
|
|
$
|
282,689
|
|
The accompanying notes are an integral part of these
unaudited consolidated financial statements.
Dimi Telematics International, Inc.
Consolidated Statements of Operations
(unaudited)
|
|
For the
|
|
|
For the
|
|
|
|
|
|
|
|
|
|
three months
|
|
|
three months
|
|
|
For the six months
|
|
|
For the six months
|
|
|
|
ended
|
|
|
ended
|
|
|
ended
|
|
|
ended
|
|
|
|
February 29,
|
|
|
February 28,
|
|
|
February 29,
|
|
|
February 28,
|
|
|
|
2016
|
|
|
2015
|
|
|
2016
|
|
|
2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses
:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and administrative expenses
|
|
$
|
3,926
|
|
|
$
|
6,385
|
|
|
$
|
10,793
|
|
|
$
|
11,106
|
|
Payroll expense
|
|
|
22,295
|
|
|
|
36,331
|
|
|
|
41,512
|
|
|
|
49,500
|
|
Professional fees
|
|
|
47,692
|
|
|
|
45,000
|
|
|
|
69,692
|
|
|
|
68,738
|
|
Consulting
|
|
|
106,125
|
|
|
|
8,000
|
|
|
|
117,909
|
|
|
|
21,355
|
|
Amortization expense
|
|
|
33
|
|
|
|
950
|
|
|
|
66
|
|
|
|
1,899
|
|
Total operating expenses
|
|
|
180,071
|
|
|
|
96,666
|
|
|
|
239,972
|
|
|
|
152,598
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from operations
|
|
|
(180,071
|
)
|
|
|
(96,666
|
)
|
|
|
(239,972
|
)
|
|
|
(152,598
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss before income tax
|
|
|
(180,071
|
)
|
|
|
(96,666
|
)
|
|
|
(239,972
|
)
|
|
|
(152,598
|
)
|
Provision for income tax
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
Net Loss
|
|
$
|
(180,071
|
)
|
|
$
|
(96,666
|
)
|
|
$
|
(239,972
|
)
|
|
$
|
(152,598
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss per share: basic and diluted
|
|
$
|
(0.06
|
)
|
|
$
|
(0.01
|
)
|
|
$
|
(0.09
|
)
|
|
$
|
(0.02
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding
|
|
|
2,923,907
|
|
|
|
7,268,136
|
|
|
|
2,784,756
|
|
|
|
7,268,136
|
|
basic and diluted
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying
notes are an integral part of these unaudited consolidated financial statements.
Dimi Telematics International, Inc.
Consolidated Statements of Cash Flows
(unaudited)
|
|
For the six months ended
|
|
|
|
February 29,
|
|
|
February 28,
|
|
|
|
2016
|
|
|
2015
|
|
Cash flows from operating activities
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(239,972
|
)
|
|
$
|
(152,598
|
)
|
Adjustments to reconcile net loss to net
|
|
|
|
|
|
|
|
|
cash used in operating activities
|
|
|
|
|
|
|
|
|
Amortization expense
|
|
|
66
|
|
|
|
1,899
|
|
Changes in operating assets and liabilities
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
|
(7,314
|
)
|
|
|
3,365
|
|
Prepaid expense
|
|
|
95,375
|
|
|
|
–
|
|
Net Cash used in operating activities
|
|
|
(151,845
|
)
|
|
|
(147,334
|
)
|
Net increase in cash and cash equivalents
|
|
|
(151,845
|
)
|
|
|
(147,334
|
)
|
Cash and cash equivalents at beginning of period
|
|
|
185,869
|
|
|
|
437,772
|
|
Cash and cash equivalents at end of period
|
|
$
|
34,024
|
|
|
$
|
290,438
|
|
Supplemental disclosure of cash flow information
|
|
|
|
|
|
|
|
|
Cash paid during period for
|
|
|
|
|
|
|
|
|
Cash paid for interest
|
|
$
|
–
|
|
|
$
|
–
|
|
Cash paid for income taxes
|
|
$
|
–
|
|
|
$
|
–
|
|
Noncash investing and financing activities:
|
|
|
|
|
|
|
|
|
Common stock payable being issued
|
|
$
|
210,000
|
|
|
$
|
–
|
|
The accompanying
notes are an integral part of these unaudited consolidated financial statements.
DiMi Telematics International, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. BASIS OF PRESENTATION AND NATURE OF BUSINESS
OPERATIONS
Basis of Presentation
The accompanying unaudited condensed consolidated
financial statements of DiMi Telematics International, Inc. (formerly known as First Quantum Ventures, Inc.), a Nevada corporation
(the “
Company
”), have been prepared in accordance with the instructions to Form 10-Q and do not include all
of the information and footnotes required by accounting principles generally accepted in the United States of America for complete
consolidated financial statements. These unaudited condensed consolidated financial statements and related notes should be read
in conjunction with the Company's Form 10-K for the fiscal year ended August 31, 2015. In the opinion of management, these unaudited
condensed consolidated financial statements reflect all adjustments that are of a normal recurring nature and which are necessary
to present fairly the financial position of the Company as of February 29, 2016, and the results of operations and cash flows for
the six months ended February 29, 2016 and February 28, 2015. The results of operations for the three and six months ended February
29, 2016 are not necessarily indicative of the results that may be expected for the entire fiscal year.
The Company accounted for the acquisition under
the purchase method of accounting for business combinations. Under the purchase method of accounting in a business combination
effected through an exchange of equity interest, the entity that issues the equity interest is generally the acquiring entity.
In some business combinations (commonly referred to as reverse acquisitions), however, the acquired entity issues the equity interest.
Accounting for business combinations requires consideration of the facts and circumstances surrounding a business combination that
generally involves the relative ownership and control of the entity by each of the parties subsequent to the acquisition. Based
on a review of these factors, the acquisition was accounted for as a reverse acquisition, i.e., the Company was considered the
acquired company and DTI was considered the acquiring company for accounting purposes. As a result, the Company’s assets
and liabilities were incorporated into DTI’s balance sheet based on the fair value of the net assets acquired. Further, the
Company’s operating results do not include the Company’s results prior to the date of closing. Accordingly the accompanying
financial statements are the financial statements of the DTI. In addition, the Company’s fiscal year end changed to DTI’s
fiscal year end of August 31 following the closing.
The Company has retroactively reflected the
acquisition in DTI’s common stock in a ratio consistent with the share exchange (the “Share Exchange”).
On March 15, 2012, First Quantum changed its
name to DiMi Telematics International, Inc.
Certain prior period amounts have been reclassified
to conform to current period presentation.
Going Concern
The accompanying financial statements have
been prepared assuming a continuation of the Company as a going concern. However, the Company has reported a net loss of $239,972
for the six months ended February 29, 2016 and had an accumulated deficit of $2,302,596 as of February 29, 2016. These
conditions raise significant doubt about our ability to continue as a going concern.
The Company's ability to continue as
a going concern is dependent upon the Company generating profitable operations in the future and/or obtaining the necessary financing
to meet its obligations and repay its liabilities arising from normal business operations when they come due. There is no assurance
that this series of events will be satisfactorily completed."
2. EQUITY
Common Stock
The Company was formed in the state of Nevada
on April 13, 2006. The Company has authorized capital of 800,000,000 shares of common stock with a par value of $0.001,
and 50,000,000 shares of preferred stock with a par value of $0.001.
On October 1, 2015, the Board of Directors
and a majority of the Company’s shareholders approved an amendment of the Company’s Articles of Incorporation to effect
a 1 for 3 reverse stock split of the Company’s outstanding common stock (the “Reverse Split”). The Reverse Split
became effective on December 1, 2015. As a result of the Reverse Split, each three (3) shares of common stock issued and outstanding
prior to the Reverse Split have been converted into one (1) share of common stock, The effect of the Reverse Split has been applied
retroactively throughout this document.
On, July 8, 2015, the Company authorized the
issuance of 250,000 shares of common stock for consulting fees in the amount of $105,000. The shares were issued on October 30,
2015.
On, July 8, 2015, the Company authorized the
issuance of 250,000 shares of common stock for stock based compensation in the amount of $105,000. The shares were issued on October
30, 2015.
$114,625 was expensed under these stock awards
during the year ended August 31, 2015 and the remaining $95,375 was expensed during the six months ended February 29, 2016.
3. RELATED PARTY TRANSACTIONS
We currently lease approximately 500 square
feet of general office space at 290 Lenox Avenue, New York, NY 10027 from Roberto Fata, our Vice President – Business Development
and Director.
ITEM 2. MANAGEMENT'S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND PLAN OF OPERATIONS.
Forward-looking Statements
We
and our representatives may from time to time make written or oral statements that are “forward-looking,” including
statements contained in this Quarterly Report and other filings with the SEC, reports to our stockholders and news releases. All
statements that express expectations, estimates, forecasts or projections are forward-looking statements. In addition, other written
or oral statements which constitute forward-looking statements may be made by us or on our behalf. Words such as “expect,”
“anticipate,” “intend,” “plan,” “believe,” “seek,” “estimate,”
“project,” “forecast,” “may,” “should,” and variations of such words and similar
expressions are intended to identify such forward-looking statements. These statements are not guarantees of future performance
and involve risks, uncertainties and assumptions which are difficult to predict. Therefore, actual outcomes and results may differ
materially from what is expressed or forecasted in or suggested by such forward-looking statements. We undertake no obligation
to update or revise any of the forward-looking statements after the date of this Quarterly Report to conform forward-looking statements
to actual results. Important factors on which such statements are based are assumptions concerning uncertainties, including but
not limited to, uncertainties associated with the following:
•
|
|
Inadequate
capital and barriers to raising the additional capital or to obtaining the financing
needed to implement our business plans;
|
•
|
|
Our
failure to earn revenues or profits;
|
•
|
|
Inadequate
capital to continue business;
|
•
|
|
Volatility
or decline of our stock price;
|
•
|
|
Potential
fluctuation in quarterly results;
|
•
|
|
Rapid
and significant changes in markets;
|
•
|
|
Litigation
with or legal claims and allegations by outside parties; and
|
•
|
|
Insufficient
revenues to cover operating costs.
|
The
following discussion should be read in conjunction with the financial statements and the notes thereto which are included in this
Quarterly Report. This discussion contains forward-looking statements that involve risks, uncertainties and assumptions. Our actual
results may differ substantially from those anticipated in any forward-looking statements included in this discussion as a result
of various factors.
Overview
Cine-Source
Entertainment, Inc. (the “
Old Corporation
”) a Colorado corporation, was formed on July 29, 1988. Pursuant to
a Plan of Merger dated February 24, 2004, the Old Corporation filed Articles and Certificate of Merger with the Secretary of State
of the State of Colorado merging the Old Corporation into Cine-Source Entertainment, Inc. (the “
Surviving Corporation
”),
a Colorado corporation. A previous controlling stockholder group of the Old Corporation arranged the merger for business reasons
that did not materialize. On April 26, 2004, the Surviving Corporation effected a 1 for 200 reverse stock split. The name of the
Surviving Corporation was changed to First Quantum Ventures, Inc., on April 27, 2004. On April 13, 2006 the Surviving Corporation
formed a wholly owned subsidiary, a Nevada corporation named First Quantum Ventures, Inc., and on May 5, 2006 merged the Surviving
Corporation with and into this subsidiary, referred to herein as DTII.
Name
|
|
Title(s)
|
Barry Tenzer
|
|
President, Chief Executive Officer, Chief Financial Officer,
Secretary and Director
|
Roberto Fata
|
|
Executive Vice President – Business Development and Director
|
The Share Exchange
qualified as a transaction exempt from registration or qualification under the Securities Act of 1933, as amended (the “
Securities
Act
”), and under the applicable securities laws of each jurisdiction where any of the stockholders reside.
On March 15,
2012, the Company changed its name to DiMi Telematics, International, Inc.
On April 16,
2012, the Company issued a 1 for 1 stock dividend to current stockholders whereby the Company issued an additional 33,959,744
shares of common stock. On May 16, 2012 the Company issued an additional 1 for 1 stock dividend to current stockholders
whereby an additional 71,286,155 shares were issued. The dividends were also applied to outstanding warrants. The Company
has reflected the dividends as splits, which have been retroactively reflected in the financial statements.
The Company
designs, develops and distributes Machine-to-Machine (“M2M”) communications solutions used to remotely track, monitor,
manage and protect multiple mobile and fixed assets in real-time from virtually any web-enabled desktop computer or mobile device.
Through our proprietary software and hosted service offerings, the Company is endeavoring to capitalize on the pervasiveness and
data transport capabilities of wireless networks in order to facilitate communications and process efficiencies between commercial
and industrial business owners/managers and their respective networked control systems, sensors and devices.
The Company
is focused on the M2M market segments in which we can provide highly differentiated and value-driven solutions capable of unleashing
tangible productivity gains, material cost reductions and quantifiable risk mitigation across an enterprise. Aside from the oversight
and administration of our corporate, financial and legal affairs by the executive management team, our Company’s operating
activities are centralized in the following three core areas:
Sales and
Marketing
will employ both direct and indirect sales models utilizing an in-house business development team, partners and
resellers and self-service through a service on-demand web interface;
Operations
will be responsible for managing daily activities related to monitoring and administering our cloud-based server operations,
24/7 client service/help desk, professional services and installation support and quality assurance and testing of our
DiMi
software and hosting platform, as well as the implementation and ongoing administration of our hosted clients’ M2M communications
platform; and
Product Development
will be charged with enhancing our existing M2M software applications and services and introducing new and complementary hosted
products and applications on a timely basis. We anticipate that the creative formulation of enhancements and new product conceptualization
will be performed in-house by our officers and directors. Thereafter, we intend to outsource software enhancement and product
development to outside third parties.
Plan of Operations
Product Development
Plan
Product development
will be charged with enhancing our existing M2M software applications and services and introducing new and complementary hosted
products and applications on a timely basis.
The primary
building blocks of M2M technology on which the Company has focused its development activities have been and will remain:
|
●
|
Building an expert knowledge base of existing and emerging electronics/technologies
that enable geo-location, remote monitoring and control, auto-diagnostics and object identification;
|
|
●
|
Engagement of a cloud computing platform that enables ubiquitous,
scalable and on-demand network access;
|
|
●
|
Development of proprietary software that controls two-way communication
events, acts on predefined rules and delivers users a customized web interface that is accessible 24/7 from any web-enabled
computer or device anywhere on Earth; and
|
|
●
|
Information systems that enable users to process
management solutions that allow for exploiting the information gathered for intelligent decision-making purposes and enhanced
situational awareness.
|
Marketing
Plan
Strategically,
the Company is focused on the M2M market segments in which we can provide highly differentiated and value-driven solutions capable
of unleashing tangible productivity gains, material cost reductions and quantifiable risk mitigation across an enterprise.
We have also
taken, and will continue to take, the necessary steps to secure the proprietary aspects of our applications through patent filings
in the U.S. and in key international markets. Moreover, we intend to remain focused on proactively developing best-of-breed Internet-enabled
M2M solutions that will effectively meet the evolving needs of our primary target market, namely web-based remote asset tracking,
management and control with applications in the commercial, industrial, educational, government and military sectors.
As soon as practicable,
the Company intends to concentrate its
DiMi
commercialization efforts on marketing the solution to property management
companies, commercial property developers, government/military installations, industrial facilities, retail and restaurant chains,
colleges and universities, fleet managers, and any business or institutional concern with valuable fixed and mobile assets requiring
remote surveillance, regular maintenance or general oversight.
In order to
achieve accelerated market penetration and sustainable, recurring revenue from a global customer base, the Company expects to
ultimately adopt a hybrid sales and marketing model involving direct sales (solutions team), channel sales (via leading Value-Added
Resellers (“VARs”) and distributors dedicated to niche market applications that
DiMi
is capable of addressing
in target domestic and international markets) and strategic marketing and integration collaborations with industry leading system
integrators, Original Equipment Manufacturers (“OEMs”) and large cellular carriers and dealers.
Employees
As of February
29, 2016 the Company employed no full time and no part time employees other than its Chief Executive Officer.
RESULTS OF
OPERATIONS FOR THE THREE MONTHS ENDED FEBRUARY 29, 2016 AND FEBRUARY 28, 2015.
Selling,
General and Administrative Expenses
Selling, general
and administrative expenses for the three months ended February 29, 2016 and February 28, 2015 totaled $3,926 and $6,385, respectively.
Payroll expense amounted to $22,295 and $36,331 for the three months ended February 29, 2016 and February 28, 2015, respectively.
Consulting expense amounted to $106,125 and $8,000 for the three months ended February 29, 2016 and February 28, 2015, respectively.
Professional fees amounted to $47,692 and $45,000 for three months ended February 29, 2016 and February 28, 2015, respectively.
Amortization
Expense
Amortization
expense for the three months ended February 29, 2016 and February 28, 2015 totaled $33 and $950, respectively. Amortization expense
is the expensing of intellectual property and the iPhone application.
Net Loss
For the reasons
stated above, our net loss for the three months ended February 29, 2016 totaled $180,071 or ($0.06) per share, an increase of
$83,405 compared to a net loss for the three months ended February 28, 2015 of $96,666, or ($0.01) per share.. The majority of
the additional loss is due to an increase in consulting and professional fees.
RESULTS OF
OPERATIONS FOR THE SIX MONTHS ENDED FEBRUARY 29, 2016 AND FEBRUARY 28, 2015.
Selling,
General and Administrative Expenses
Selling, general
and administrative expenses for the six months ended February 29, 2016 and February 28, 2015 totaled $10,793 and $11,106, respectively.
Payroll expense amounted to $41,512 and $49,500 for the six months ended February 29, 2016 and February 28, 2015, respectively.
Consulting expense amounted to $117,909 and $21,355 for the six months ended February 29, 2016 and February 28, 2015, respectively.
Professional fees amounted to $69,692 and $68,738 for six months ended February 29, 2016 and February 28, 2015, respectively.
Amortization
Expense
Amortization
expense for the six months ended February 29, 2016 and February 28, 2015 totaled $66 and $1,899, respectively. Amortization expense
is the expensing of intellectual property and the iPhone application.
Net Loss
For the reasons
stated above, our net loss for the six months ended February 29, 2016 totaled $239,972 or ($0.09) per share, an increase of $87,374
compared to a net loss for the six months ended February 28, 2015 that was $152,598 or ($0.02) per share. The majority of the
additional loss is due to an increase in consulting and professional fees.
LIQUIDITY
AND CAPITAL RESOURCES
As of February
29, 2016, we had cash and cash equivalents of $34,024. Net cash used in operating activities for the six months ended February
29, 2016 was approximately $151,845. Our current liabilities as of February 29, 2016 totaled $24,200 consisting of accounts payable
and accrued liabilities. We have net working capital of $9,824 as of February 29, 2016.
The accompanying
financial statements have been prepared assuming a continuation of the Company as a going concern. The Company has reported a
net loss of $239,972 for the six months ended February 29, 2016 and had an accumulated deficit of $2,302,596 as of February 29,
2016. These conditions raise significant doubt about our ability to continue as a going concern.
We have not
generated positive cash flows from operating activities. The primary source of capital has been from the sale of equity securities.
Our primary use of capital has been for professional fees and general and administrative costs. Our working capital requirements
are expected to increase in line with the growth of our business.
OFF-BALANCE
SHEET ARRANGEMENTS
We have no significant
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.