ITEM
1.
|
FINANCIAL
STATEMENTS
|
Dimi
Telematics International, Inc.
Consolidated
Balance Sheets
(Unaudited)
|
|
November 30,
|
|
|
August 31,
|
|
|
|
2016
|
|
|
2016
|
|
Assets
|
|
|
|
|
|
|
Current assets
|
|
|
|
|
|
|
Cash
|
|
$
|
14,488
|
|
|
$
|
431
|
|
Total current assets
|
|
|
14,488
|
|
|
|
431
|
|
|
|
|
|
|
|
|
|
|
Intellectual property, net of amortization of $909
and $876, respectively
|
|
|
1,281
|
|
|
|
1,314
|
|
Total assets
|
|
$
|
15,769
|
|
|
$
|
1,745
|
|
|
|
|
|
|
|
|
|
|
Liabilities and Stockholders' Deficit
|
|
|
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
|
|
|
|
Accounts payable and accrued liabilities
|
|
$
|
56,060
|
|
|
|
69,426
|
|
Accounts payable - related party
|
|
|
-
|
|
|
|
14,609
|
|
Note payable - related party
|
|
|
116,000
|
|
|
|
31,500
|
|
Total
current liabilities
|
|
|
172,060
|
|
|
|
115,535
|
|
|
|
|
|
|
|
|
|
|
Stockholders' Deficit
|
|
|
|
|
|
|
|
|
Series A Convertible Preferred Stock, $0.001 par value,
50,000,000 authorized shares; no shares issued and outstanding as of November 30, 2016 and August 31, 2016,
respectively
|
|
|
-
|
|
|
|
-
|
|
Common stock, $0.001 par value: 800,000,000 authorized;
2,922,712 and 2,922,712 shares issued and outstanding as of November 30, 2016 and August 31, 2016, respectively
|
|
|
2,923
|
|
|
|
2,923
|
|
Additional paid-in capital
|
|
|
2,310,876
|
|
|
|
2,310,876
|
|
Accumulated deficit
|
|
|
(2,470,090
|
)
|
|
|
(2,427,589
|
)
|
Total stockholders' deficit
|
|
|
(156,291
|
)
|
|
|
(113,790
|
)
|
Total liability and stockholders'
deficit
|
|
$
|
15,769
|
|
|
$
|
1,745
|
|
The
accompanying notes are an integral part of these unaudited consolidated financial statements.
Dimi
Telematics International, Inc.
Consolidated
Statements of Operations
(Unaudited)
|
|
For the three months ended
|
|
|
|
November 30,
|
|
|
November 30,
|
|
|
|
2016
|
|
|
2015
|
|
|
|
|
|
|
|
|
Operating expenses:
|
|
|
|
|
|
|
Selling, general and administrative expenses
|
|
$
|
8,452
|
|
|
$
|
6,866
|
|
Payroll expense
|
|
|
24,563
|
|
|
|
22,717
|
|
Professional fees
|
|
|
8,613
|
|
|
|
39,692
|
|
Consulting
|
|
|
-
|
|
|
|
11,784
|
|
Amortization expense
|
|
|
33
|
|
|
|
33
|
|
Total operating expenses
|
|
|
41,661
|
|
|
|
81,092
|
|
|
|
|
|
|
|
|
|
|
Loss from operations
|
|
|
(41,661
|
)
|
|
|
(81,092
|
)
|
|
|
|
|
|
|
|
|
|
Other expense
|
|
|
|
|
|
|
|
|
Interest expense
|
|
|
(840
|
)
|
|
|
-
|
|
Total other expense
|
|
|
(840
|
)
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Loss before income tax
|
|
|
(42,501
|
)
|
|
|
(81,092
|
)
|
Provision for income tax
|
|
|
-
|
|
|
|
-
|
|
Net Loss
|
|
$
|
(42,501
|
)
|
|
$
|
(81,092
|
)
|
|
|
|
|
|
|
|
|
|
Net loss per share: basic and diluted
|
|
$
|
(0.01
|
)
|
|
$
|
(0.03
|
)
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding basic and diluted
|
|
|
2,922,712
|
|
|
|
2,956,129
|
|
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 three months ended
|
|
|
|
November 30,
|
|
|
November 30,
|
|
|
|
2016
|
|
|
2015
|
|
Cash flows from operating activities
|
|
|
|
|
|
|
Net loss
|
|
$
|
(42,501
|
)
|
|
$
|
(81,092
|
)
|
Adjustments to reconcile net loss to net cash used in operating activities
|
|
|
|
|
|
|
|
|
Amortization expense
|
|
|
33
|
|
|
|
33
|
|
Stock based compensation
|
|
|
-
|
|
|
|
5,250
|
|
Changes in operating assets and liabilities
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
|
(14,206
|
)
|
|
|
16,702
|
|
Accounts payable - related party
|
|
|
(14,609
|
)
|
|
|
-
|
|
Accrued interest expense
|
|
|
840
|
|
|
|
-
|
|
Prepaid expense
|
|
|
-
|
|
|
|
(2,000
|
)
|
Net Cash used in operating activities
|
|
|
(70,443
|
)
|
|
|
(61,107
|
)
|
|
|
|
|
|
|
|
|
|
Cash flow from financing activities
|
|
|
|
|
|
|
|
|
Payments for note payable - related party
|
|
|
(5,500
|
)
|
|
|
|
|
Proceeds from note payable - related party
|
|
|
90,000
|
|
|
|
-
|
|
Net cash provided by financing activities
|
|
|
84,500
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Net increase (decrease) in cash and cash equivalents
|
|
|
14,057
|
|
|
|
(61,107
|
)
|
Cash and cash equivalents at beginning of period
|
|
|
431
|
|
|
|
185,869
|
|
Cash and cash equivalents at end of period
|
|
$
|
14,488
|
|
|
$
|
124,762
|
|
Supplemental disclosure of cash flow information
|
|
|
|
|
|
|
|
|
Cash paid during period for
|
|
|
|
|
|
|
|
|
Cash paid for interest
|
|
$
|
-
|
|
|
$
|
-
|
|
Cash paid for income taxes
|
|
$
|
-
|
|
|
$
|
-
|
|
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
Basis
of Presentation
The
accompanying unaudited 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 consolidated financial statements and related
notes should be read in conjunction with the Company's annual report on Form 10-K for the fiscal year ended August 31, 2016. In
the opinion of management, these unaudited 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 November 30, 2016, and the results
of operations and cash flows for the three months ended November 30, 2016 and 2015. The results of operations for the three months
ended November 30, 2016 are not necessarily indicative of the results that may be expected for the entire fiscal year.
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 $42,501 for the three months ended November, 2016 and had a working capital deficit of $157,572
as of November 30, 2016. These conditions raise substantial 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 one (1) for three (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 quarterly report.
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.
On
October 30, 2015, the Company issued the 500,000 shares of common stock granted on July 8, 2015 to settle the common stock payable
of $210,000.
2.
NOTE PAYABLE – RELATED PARTY
On
April 27, 2016, the Company issued our CEO a 7% unsecured promissory note in the amount of $2,500 which matured six months from
the date of issuance. On July 5, 2016, the Company issued our CEO a 7% unsecured note in the amount of $3,000 which matured six
months from date of issuance. On November 17, 2016, the Company repaid the principal amount of the note, or$5,500.
The
changes in notes payable to related party consisted of the following during the year ending November 30, 2016:
|
|
November 30,
2016
|
|
|
August 31, 2016
|
|
Notes payable – related party at beginning of period
|
|
$
|
5,500
|
|
|
$
|
-
|
|
Payments on notes payable – related party
|
|
|
(5,500
|
)
|
|
|
-
|
|
Borrowings on notes payable – related party
|
|
|
-
|
|
|
|
5,500
|
|
Convertible debenture – related party at end of period
|
|
$
|
-
|
|
|
$
|
5,500
|
|
On
May 17, 2016, the Company issued to Lyle Hauser, the Company’s largest shareholder, a 7% unsecured promissory note in the
amount of $10,000 which matured six months from the date of issuance. On August 15, 2016, the Company issued a significant shareholder
a 7% unsecured promissory note in the amount of $16,000 which matures six months from the date of issuance. On October 27, 2016,
the Company issued a significant shareholder a 7% unsecured promissory note in the amount of $10,000 which matures six months
from the date of issuance. On November 14, 2016, the Company issued a significant shareholder 7% unsecured promissory note in
the amount of $80,000 which matures six months from the date of issuance
The
changes in notes payable to related party consisted of the following during the year ended November 30, 2016:
|
|
November 30,
2016
|
|
|
August 31, 2016
|
|
Notes payable – related party at beginning of period
|
|
$
|
26,000
|
|
|
$
|
-
|
|
Payments on notes payable – related party
|
|
|
-
|
|
|
|
-
|
|
Borrowings on notes payable – related party
|
|
|
90,000
|
|
|
|
26,000
|
|
Convertible debenture – related party at end of period
|
|
$
|
116,000
|
|
|
$
|
26,000
|
|
3.
RELATED PARTY TRANSACTIONS
We
currently lease approximately 500 square feet of general office space at 290 Lenox Avenue, New York, NY 10027 from our Vice President
– Operations.
On
April 27, 2016, the Company issued our CEO two 7% unsecured promissory note in the aggregate amount of $5,500 which matured six
months from the date of issuance Both notes have been paid off and the remaining principal amount is $0.
On
May 17, 2016, the Company issued to Lyle Hauser, the Company’s largest shareholder, a 7% unsecured promissory note in the
amount of $10,000 which matured six months from the date of issuance.
On
August 15, 2016, the Company issued a significant shareholder a 7% unsecured promissory note in the amount of $16,000 which matures
six months from the date of issuance.
As
of August 31, 2016, the Company had an outstanding payable of $14,609 to the CEO. The payable is unsecured, due on demand and
bears no interest. As of November 30, 2016 the accounts payable – related party has been paid and currently has a balance
of $0.
On
October 27, 2016 the Company issued a significant shareholder a 7% unsecured promissory notes totaling $10,000 which matures six
months from the date of issuance.
One
November 14, 2016 the Company issued a significant shareholder a 7% unsecured promissory note totaling $80,000 which matures six
months from the date of issuance.
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 effectuated 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. Other
than 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 tasked 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 November 30, 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 NOVEMBER 30, 2016 AND 2015.
Selling,
General and Administrative Expenses
Selling,
general and administrative expenses for the three months ended November 30, 2016 and 2015 totaled $8,452 and $6,866, respectively.
Payroll expense amounted to $24,563 and $22,717 for the three months ended November 30, 2016 and 2015, respectively.
Amortization
Expense
Amortization
expense for the three months ended November 30, 2016 and 2015 totaled $33 and $33, respectively. Amortization expense is the expensing
of intellectual property and the iPhone application.
Interest
Expense
Interest
expense on promissory notes for the three months ended November 30, 2016 and 2015, was $840 and $0, respectively. The
Company entered into two unsecured promissory notes with related parties during the three months ended November 30, 2016. The
notes have a 7% interest rate and mature 6 months from the date of issuance. See Note 2.
Net
Loss
For
the reasons stated above, our net loss for the three months ended November 30, 2016 totaled $42,501 or ($0.01) per share, a decrease
of $38,591 compared to a net loss for the three months ended November 30, 2015 of $81,092, or ($0.03) per share. The majority
of the additional loss is due to a decrease in consulting and professional fees.
LIQUIDITY
AND CAPITAL RESOURCES
As
of November 30, 2016, we had cash and cash equivalents of $14,488. Net cash used in operating activities for the three months
ended November 30, 2016 was approximately $70,443. Our current liabilities as of November 30, 2016 totaled $172,060 consisting
of accounts payable and accrued liabilities of $56,060 and note payables of $116,000. We have net negative working capital of
$157,572 as of November 30, 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 $42,501 for the three months ended November 30, 2016 and had an accumulated deficit of $2,470,090 as of
November 30, 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.