CHANGING TECHNOLOGIES, INC. - FORM 10-Q/A

Attached files

file	filename
EX-32.1 - SECTION 1350 CERTIFICATION - CHANGING TECHNOLOGIES, INC.	ex_32-1.htm
EX-31 - RULE 13(A)-14(A)/15(D)-14(A) CERTIFICATION - CHANGING TECHNOLOGIES, INC.	ex_31-1.htm
EX-21 - SUBSIDIARIES OF THE REGISTRANT - CHANGING TECHNOLOGIES, INC.	ex_21.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q /A

Amendment No. 1

(MARK ONE)


þ	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2016


o	TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _________ to _________

Commission File Number: 0-55495

CHANGING TECHNOLOGIES, INC.

(Exact name of registrant as specified in its charter)


Nevada		46-3004792
(State or other jurisdiction of Incorporation or organization)		(I.R.S. Employer Identification Number)

14173 Norwest Freeway #240 Houston, TX		77040
(Address of principal executive offices)		(Zip code)

Registrant’s telephone number, including area code: 713-300-3806

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes þ No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months.

Yes þ No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	o	Accelerated filer	o
Non-accelerated filer	o	Smaller reporting company	þ
(Do not check is smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes o No þ

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date. As of June 17, 2016, 60,605,849 shares of common stock are issued and outstanding.

EXPLANATORY NOTE

The purpose of this Amendment No. 1 to our Quarterly Report on Form 10-Q for the period ended March 31, 2016 (“Form 10-Q”) is to submit Exhibit 101 to the Form 10-Q in accordance with Rule 405 of Regulation S-T. Exhibit 101 consists of the Interactive Data Files relating to our Form 10-Q for the period ended March 31, 2016, filed with the Securities and Exchange Commission on June 22, 2016.

Additionally, we corrected two typographical errors as follows:

1. Consolidated Balance Sheets, page 4, under the section “STOCKHOLDERS’ DEFICIT”, the line item labeled “Accumulated deficit”, under the “March 31, 2016” column heading, the incorrect amount of “368,253” has been corrected to “278,369“.

2. Consolidated Statement of Changes in Stockholders’ Deficit, page 6, the line item labeled “BALANCE, March 31, 2016”, under the “Total” column heading, the incorrect amount of “368,253” has been corrected to “278,369“.

TABLE OF CONTENTS


PART I — FINANCIAL INFORMATION	4

Item 1. Financial Statements	4

Consolidated Balance Sheets (Unaudited)	4

Consolidated Statements of Operations (Unaudited)	5

Consolidated Statement of Changes in Stockholders’ Deficit (Unaudited)	6

Consolidated Statements of Cash Flows (Unaudited)	7

Notes to the Unaudited Consolidated Financial Statements	8

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	12

Item 3. Quantitative and Qualitative Disclosures about Market Risk	14

Item 4. Controls and Procedures	14

PART II — OTHER INFORMATION	14

Item 1. Legal Proceedings	14

Item 1A. Risk Factors	14

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	15

Item 3. Defaults upon Senior Securities	15

Item 4. Mine Safety Disclosures	15

Item 5. Other Information	15

Item 6. Exhibits	15

- 2 -

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION

Certain statements in this report contain or may contain forward-looking statements. These statements, identified by words such as “plan”, “anticipate”, “believe”, “estimate”, “should”, “expect” and similar expressions include our expectations and objectives regarding our future financial position, operating results and business strategy. These statements are subject to known and unknown risks, uncertainties and other factors, which may cause actual results, performance, or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward - looking statements. These forward-looking statements were based on various factors and were derived utilizing numerous assumptions and other factors that could cause our actual results to differ materially from those in the forward-looking statements. These factors include, but are not limited to, our ability to secure suitable financing to continue with our existing business or change our business and conclude a merger, acquisition or combination with a business prospect, economic, political and market conditions and fluctuations, government and industry regulation, interest rate risk, U.S. and global competition, and other factors. Most of these factors are difficult to predict accurately and are generally beyond our control. You should consider the areas of risk described in connection with any forward-looking statements that may be made herein. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this report. Readers should carefully review this report in its entirety, including but not limited to our financial statements and the notes thereto and the risks described in our Annual Report on Form 10-K for the fiscal year ended June 30, 2015. We advise you to carefully review the reports and documents we file from time to time with the Securities and Exchange Commission (the “SEC”), particularly our quarterly reports on Form 10-Q and our current reports on Form 8-K. Except for our ongoing obligations to disclose material information under the Federal securities laws, we undertake no obligation to release publicly any revisions to any forward-looking statements, to report events or to report the occurrence of unanticipated events.

OTHER PERTINENT INFORMATION

When used in this report, the terms, “we,” the “Company,” “our,” and “us” refers to Changing Technologies, Inc., a Nevada corporation.

- 3 -

PART I — FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

CHANGING TECHNOLOGIES, INC.

CONSOLIDATED BALANCE SHEETS

(UNAUDITED)


	March 31, 2016			June 30, 2015
ASSETS

CURRENT ASSETS
Cash and cash equivalents	$	11,727		$	1,346
Prepaid expenses		1,375			—
Total current assets		13,102			1,346

TOTAL ASSETS	$	13,102		$	1,346

LIABILITIES AND STOCKHOLDERS’ DEFICIT

CURRENT LIABILITIES
Accounts payable and accrued expenses	$	139,023		$	224,539
Advances payable		4,390			—
Current portion of accrued interest payable		36,651			—
Current portion of convertible notes payable, net of discount of $234,343 and $0, respectively.		70,306			—
Total current liabilities		250,370			224,539

Accrued interest payable		20,110			18,004
Convertible notes payable, net of discount of $448,808 and $383,083, respectively		20,991			19,724
TOTAL LIABILITIES		291,471			262,267

STOCKHOLDERS’ DEFICIT
Common stock, $0.001 par value; 480,000,000 shares authorized; 60,605,849 and 60,000,000 shares issued and outstanding at March 31, 2016 and June 30, 2015, respectively		60,606			60,000
Preferred stock, $0.001 par value; 20,000,000 shares authorized; 1,000,000 and 1,000,000 shares issued and outstanding at March 31, 2016 and June 30, 2015, respectively		1,000			1,000
Additional paid-in capital		853,028			381,807
Accumulated deficit		(1,193,003	)		(703,728	)
Total stockholders’ deficit		( 278,369	)		(260,921	)

TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT	$	13,102		$	1,346

The accompanying notes are an integral part of these unaudited consolidated financial statements.

- 4 -

CHANGING TECHNOLOGIES, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)


	Nine months ended March 31,						Three months ended March 31,
	2016			2015			2016			2015

REVENUE	$	2,330		$	—		$	1,061		$	—

OPERATING EXPENSES
General and administrative expenses		326,748			374,499			104,801			150,601
LOSS FROM OPERATIONS	$	(324,418	)	$	(374,499	)	$	(103,740	)	$	(150,601	)

OTHER INCOME (EXPENSE)
Interest expense		(164,857	)		(22,530	)		(102,274	)		(13,878	)
Total other income (expense)		(164,857	)		(22,530	)		(102,274	)		(13,878	)

NET LOSS	$	(489,275	)	$	(397,029	)	$	(206,014	)	$	(164,479	)

NET LOSS PER COMMON SHARE – Basic and diluted	$	(0.01	)	$	(0.01	)	$	(0.00	)	$	(0.00	)

WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING – Basic and diluted		60,019,243			60,000,000			60,058,151			60,000,000

The accompanying notes are an integral part of these unaudited consolidated financial statements.

- 5 -

CHANGING TECHNOLOGIES, INC.

CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ DEFICIT


	Common Stock			Series E Preferred Stock			Additional Paid-In		Accumulated
	Shares	Amount		Shares	Amount		Capital		Deficit			Total

BALANCE, June 30, 2015	60,000,000	$	60,000	1,000,000	$	1,000	$	381,807	$	(703,728	)	$	(260,921	)

Common stock issued for debt conversion	605,849		606	—		—		53,921		—			54,527
Discount on convertible note payable	—		—	—		—		417,300		—			417,300
Net loss	—		—	—		—		—		(489,275	)		(489,275	)

BALANCE, March 31, 2016	60,605,849	$	60,606	1,000,000	$	1,000	$	853,028	$	(1,193,003	)	$	( 278,369	)

The accompanying notes are an integral part of these unaudited consolidated financial statements.

- 6 -

CHANGING TECHNOLOGIES, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)


	Nine months ended March 31,
	2016			2015

OPERATING ACTIVITIES:
Net loss	$	(489,275	)	$	(397,029	)
Adjustments to reconcile net loss to net cash used in operating activities:
Amortization of discount on convertible note payable		121,232			12,262

Changes in operating assets and liabilities:
Prepaid expenses		(1,375	)		—
Accounts payable and accrued liabilities		(85,516	)		170,807
Accrued interest payable		43,625			10,268

NET CASH USED IN OPERATING ACTIVITIES		(411,309	)		(203,692	)

INVESTING ACTIVITIES
Acquisition of subsidiary		—			(105,000	)
NET CASH USED IN INVESTING ACTIVITIES		—			(105,000	)

FINANCING ACTIVITIES
Proceeds from advances		381,690			284,308
Proceeds from convertible notes		40,000			—
NET CASH PROVIDED BY FINANCING ACTIVITIES		421,690			284,308

NET INCREASE (DECREASE) IN CASH		10,381			(24,384	)

CASH, at the beginning of the period		1,346			26,000

CASH, at the end of the period	$	11,727		$	1,616

Supplemental Disclosures of Cash Flow Information:
Cash paid during the period for:
Interest	$	—		$	—
Taxes	$	—		$	—

Noncash investing and financing transaction:
Conversion of convertible note payable	$	54,527		$	—
Refinancing of advances into convertible notes payable	$	377,300		$	310,308
Beneficial conversion discount on convertible note payable	$	417,300		$	310,308
Original issue discount on convertible note payable	$	4,000		$	—

The accompanying notes are an integral part of these unaudited consolidated financial statements.

- 7 -

CHANGING TECHNOLOGIES, INC.

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2016

Note 1. General Organization and Business

Changing Technologies, Inc., a Nevada corporation (the “Company”), was originally formed to develop apps primarily focused on improving personal and business productivity and health and fitness monitoring. The Company was incorporated on June 18, 2013. The Company’s year-end is June 30.

On June 25, 2014, we formed a new subsidiary, 6th Dimension Technologies, Inc. (“6D3D”), a Texas corporation to pursue opportunities in the 3D printing market.

On July 25, 2014, 6D3D purchased SumLin Technologies, LLC (“SumLin”), a North Carolina corporation for $150,000 to be paid over a five-month period. SumLin specialized in personalizing 3D printing for consumer end use. As a result of the SumLin acquisition, the Company ceased being a shell company on July 25, 2014.

On July 27, 2014, the Board of Directors authorized ten million shares of preferred stock.

On August 13, 2014, we issued a five-for-one stock dividend, where each shareholder at the close of business on July 21, 2014 received four additional shares of common stock for every share they held on the record date. The stock dividend was approved by our Board of Directors and stockholders holding a majority of our voting shares

On November 20, 2014, our board of directors designated 1,000,000 shares of Series E preferred stock, with a par value of $0.001 per share. On the same date, we issued 1,000,000 shares of preferred stock to Bordesley Group Corp. (“Bordesley”) for services provided. On the date of the transaction, Bordesley owned 45,000,000 shares of our common stock. They are a beneficial owner, as they own 75% of our outstanding common shares.

On June 24, 2015, we reincorporated from Florida to Nevada. Each shareholder in the Nevada company received one share of common stock for each share of common stock that they held in the Florida company.

Note 2. Going Concern

During the nine months ended March 31, 2016, the Company incurred net losses of $489,275. For the nine months ended March 31, 2016, the Company had negative cash flow from operating activities of $411,309. As of March 31, 2016, the Company had negative working capital of $237,268. Management does not anticipate having positive cash flow from operating activities in the near future.

These factors raise a substantial doubt about the Company’s ability to continue as a going concern. The accompanying consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classifications of liabilities that may result from the possible inability of the Company to continue as a going concern.

The Company does not have the resources at this time to repay its credit and debt obligations, make any payments in the form of dividends to its shareholders or fully implement its business plan. Without additional capital, the Company will not be able to remain in business.

Management has plans to address the Company’s financial situation as follows:

In the near term, management plans to continue to focus on raising the funds necessary to implement the Company’s business plan. Management will continue to seek out debt financing to obtain the capital required to meet the Company’s financial obligations. There is no assurance, however, that lenders will continue to advance capital to the Company or that the new business operations will be profitable. The possibility of failure in obtaining additional funding and the potential inability to achieve profitability raise doubts about the Company’s ability to continue as a going concern.

- 8 -

In the long term, management believes that the Company’s projects and initiatives will be successful and will provide cash flow to the Company, which we will use to finance the Company’s future growth. However, there can be no assurances that the Company’s planned activities will be successful, or that the Company will ultimately attain profitability. The Company’s long-term viability depends on its ability to obtain adequate sources of debt or equity funding to meet current commitments and fund the continuation of its business operations, and the ability of the Company to achieve adequate profitability and cash flows from operations to sustain its operations.

Note 3. Summary of Significant Accounting Policies

Interim Financial Statements

The accompanying unaudited financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Regulation S-X. Accordingly, the consolidated financial statements do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation have been included and such adjustments are of a normal recurring nature. These consolidated financial statements should be read in conjunction with the consolidated financial statements for the fiscal year ended June 30, 2015 and notes thereto and other pertinent information contained in our Form 10-K the Company has filed with the SEC.

The results of operations for the nine month period ended March 31, 2016 are not necessarily indicative of the results to be expected for the full fiscal year ending June 30, 2016.

Use of Estimates

The preparation of financial statements in conformity with GAAP 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 revenue and expenses during the reporting period. Actual results could differ from those estimates.

Related Parties

The Company follows ASC 850, Related Party Disclosures, for the identification of related parties and disclosure of related party transactions.

Recently Issued Accounting Pronouncements

We have reviewed the FASB issued Accounting Standards Update (“ASU”) accounting pronouncements and interpretations thereof that have effectiveness dates during the periods reported and in future periods. The Company has carefully considered the new pronouncements that alter previous generally accepted accounting principles and does not believe that any new or modified principles will have a material impact on the corporation’s reported financial position or operations in the near term. The applicability of any standard is subject to the formal review of our financial management and certain standards are under consideration.

In April 2015, the FASB issued ASU No. 2015-03, Simplifying the Presentation of Debt Issuance Costs. To simplify presentation of debt issuance costs, the amendments in ASU No. 2015-03 require that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The Company is required to adopt the provisions of ASU 2015-03 beginning with the fiscal year ending June 30, 2017. The Company is currently evaluating the impact that the adoption of ASU No. 2015-03 will have on their financial position and results of operations.

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842), which modifies the recognition of lease assets and lease liabilities by lessees for those leases classified as operating leases under previous GAAP. The core principle of Topic 842 is that a lessee should recognize the assets and liabilities that arise from all leases. A lessee should recognize in the statement of financial position a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying asset for the lease term. The Company is required to adopt the provisions of ASU No. 2016-02 beginning with the fiscal year ending June 30, 2020. Early application is permitted. The Company is currently evaluating the impact that the adoption of ASU No. 2016-02 will have on their financial position and results of operations.

- 9 -

Note 4. Advances from Third Parties

During the nine months ended March 31, 2016 and 2015, the Company received net, non-interest bearing advances totaling $381,690 and $284,308, respectively. These advances are not collateralized, non-interest bearing and payable on demand. These advances are typically converted into convertible notes payable on a quarterly basis as discussed in Note 5 below. The total amount due under these advances as of March 31, 2016 and June 30, 2015 was $4,390 and $0, respectively, which remains as a non-interest bearing demand payable.

Note 5. Convertible Notes Payable

Convertible notes payable consist of the following at March 31, 2016 and June 30, 2015:


	March 31, 2016			June 30, 2015
Convertible note dated September 30, 2014, bearing interest at 10% per annum, maturing on September 30, 2016 and convertible into shares of common stock at $0.50 per share	$	152,390		$	152,390
Convertible note dated December 31, 2014, bearing interest at 10% per annum, maturing on December 31, 2016 and convertible into shares of common stock at $0.41 per share		108,259			108,259
Convertible note dated March 31, 2015, bearing interest at 10% per annum, maturing on March 31, 2017 and convertible into shares of common stock at $0.09 per share		—			49,659
Convertible note dated June 30, 2015, bearing interest at 10% per annum, maturing on June 30, 2017 and convertible into shares of common stock at $0.09 per share.		92,499			92,499
Convertible note dated September 30, 2015, bearing interest at 10% per annum, maturing on September 30, 2018 and convertible into shares of common stock at $0.03 per share.		216,621			—
Convertible note dated January 4, 2016, effective December 31, 2015, bearing interest at 10% per annum, maturing on December 31, 2018 and convertible into shares of common stock at $0.02 per share.		91,465			—
Convertible note dated February 19, 2016, bearing interest at 5% per annum, maturing on February 19, 2017 and convertible into shares of common stock at a 48% discount to the lowest market price over the preceding 20 trading days.		44,000			—
Convertible note dated March 31, 2016, bearing interest per annum, maturing on March 31, 2019, and convertible into shares of common stock at a 60% discount to the volume weighted average price over the preceding 5 trading days, with a minimum conversion rate of $0.01 per share.		69,214			—
Total convertible notes payable	$	774,448		$	402,807

Less: discount on convertible notes payable		(683,151	)		(383,083	)
Less: current portion of convertible notes payable		(70,306	)		—
Convertible notes payable, net of discount	$	20,991		$	19,724

Advances Refinanced into Convertible Promissory Notes

During the nine months ended March 31, 2016, the Company has signed Convertible Promissory Notes to convert non-interest bearing advances into convertible notes payable. The Convertible Promissory Notes bear interest at 10% per annum and are payable along with accrued interest at maturity. The Convertible Promissory Note and unpaid accrued interest are convertible into common stock at the option of the holder.


Date Issued	Maturity Date	Interest Rate		Conversion Rate		Amount of Note		Beneficial Conversion Feature
September 30, 2015	September 30, 2018	10	%	$	0.03	$	216,621	$	216,621
January 4, 2016	December 31, 2018	10	%		0.02		91,465		91,465
March 31, 2016	March 31, 2019	10	%		60% discount		69,214		69,214
Total						$	377,300	$	421,300

- 10 -

The Company evaluated the application of ASC 470-50-40/55, Debtor’s Accounting for a Modification or Exchange of Debt Instrument as it applies to the notes listed above and concluded that there was no modification or extinguishment of debt. On an ongoing basis, non-interest bearing advances are received throughout the quarter and converted to a convertible note payable on a quarterly basis.

The Company evaluated the terms of the new notes in accordance with ASC Topic No. 815 - 40, Derivatives and Hedging - Contracts in Entity’s Own Stock and determined that the underlying common stock is indexed to the Company’s common stock. The Company determined that the conversion features did not meet the definition of a liability and therefore did not bifurcate the conversion feature and account for it as a separate derivative liability. The convertible notes dated September 30, 2015 and January 4, 2016 have a fixed conversion rate and adequate authorized, unissued shares for the conversion requested by the holder. The convertible note dated March 31, 2016 has a minimum conversion rate of $0.01 and adequate authorized, unissued shares for any conversion requested by the holder. The Company evaluated the conversion feature for a beneficial conversion feature. The effective conversion price was compared to the market price on the date of the note and was deemed to be less than the market value of underlying common stock at the inception of the note. Therefore, the Company recognized beneficial conversion discounts of $216,621, $91,465 and $69,214 on September 30, 2015, January 4, 2016 and March 31, 2016, respectively. We recorded the beneficial conversion discount as an increase in additional paid-in capital and a discount to the convertible notes payable. Discounts to the convertible notes payable are being amortized to interest expense over the life of the respective notes using the effective interest method. During the nine months ended March 31, 2016 and 2015, we recorded amortization of discounts on convertible notes payable of $121,232 and $12,262, respectively.

Convertible Promissory Notes Issued for Cash

On February 19, 2016, we signed a convertible promissory note with a face value of $44,000. The note has a $4,000 original issue discount. It bears interest at 5% per annum and is due on February 19, 2017. The noteholder has the right to convert the note into shares of our common stock at a 48% discount to the lowest price of our stock over the preceding 20 trading days beginning six months after the issuance of the note.

We evaluated the terms of the new note in accordance with ASC Topic No. 815 - 40, Derivatives and Hedging - Contracts in Entity’s Own Stock and determined that the underlying common stock is indexed to the Company’s common stock. The Company determined that the conversion features did not meet the definition of a liability and therefore did not bifurcate the conversion feature and account for it as a separate derivative liability, because the note is not convertible until August 19, 2016.

We then evaluated the conversion feature for a beneficial conversion discount. The effective conversion price was compared to the market price on the date of the note and was deemed to be less than the market value of underlying common stock at the inception of the note. Therefore, the Company recognized beneficial conversion discounts of $40,000 on February 19, 2016. We recorded the beneficial conversion discount as an increase in additional paid-in capital and a discount to the convertible notes payable. Discounts to the convertible notes payable are being amortized to interest expense over the life of the respective notes.

Note 6. Debt Commitments


	Year ending March 31,
	2016		2017		2018		2019		2020		Total
Convertible notes payable	$	304,649	$	92,499	$	377,300		—		—	$	774,448
Acquisition of SumLin	$	35,000		—		—		—		—	$	35,000
Total	$	339,649	$	92,499	$	377,300		—		—	$	809,448

Note 7. Subsequent Events

The Company evaluated material events occurring between the end of our fiscal quarter, March 31, 2016, and through the date when the consolidated financial statements were available to be issued for disclosure consideration.

- 11 -

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Overview

On June 25, 2014, we formed a new subsidiary, 6th Dimension Technologies, Inc. (“6D3D”), a Texas corporation to pursue opportunities in the 3D printing market.

On July 27, 2014, the Board of Directors authorized ten million shares of preferred stock.

Critical Accounting Policies

We prepare our consolidated financial statements in conformity with GAAP, which requires management to make certain estimates and apply judgments. We base our estimates and judgments on historical experience, current trends, and other factors that management believes to be important at the time the condensed consolidated financial statements are prepared. On a regular basis, we review our accounting policies and how they are applied and disclosed in our condensed consolidated financial statements.

While we believe that the historical experience, current trends and other factors considered support the preparation of our condensed consolidated financial statements in conformity with GAAP, actual results could differ from our estimates and such differences could be material.

For a full description of our critical accounting policies, please refer to Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report for the year ended June 30, 2015 on Form 10-K.

Results of Operations

Nine months ended March 31, 2016 compared to the nine months ended March 31, 2015.

Revenue

We recognized $2,330 and $0 of revenue during the nine months ended March 31, 2016 and 2015, respectively. We began selling 3D models and 3D printed parts during the current fiscal year.

General and Administrative Expenses

We recognized general and administrative expense in the amount of $326,748 and $374,499 for the nine months ended March 31, 2016 and 2015, respectively. The decrease was due to a reduction in professional fees in the current year.

- 12 -

Interest Expense

Interest expense increased from $22,530 for the nine months ended March 31, 2015 to $164,857 for the nine months ended March 31, 2016. Interest increased to higher average balances of our convertible notes payable.

Interest expense for the nine months ended March 31, 2016 included amortization of discount on convertible notes payable in the amount of $121,232, compared to $12,262 for the comparable period of 2015. The remaining amount is interest accrued on our convertible debt.

Net Loss

We incurred a net loss of $489,275 for the nine months ended March 31, 2016 as compared to $397,029 for the comparable period of 2015. The increase in the net loss was driven by the increase in interest expense, as discussed above.

Three months ended March 31, 2016 compared to the three months ended March 31, 2015.

Revenue

We recognized $1,061 and $0 of revenue during the three months ended March 31, 2016 and 2015, respectively. The revenue is related to the custom 3D modeling and 3D.

General and Administrative Expenses

We recognized general and administrative expenses in the amount of $104,801 and $150,601 for the three months ended March 31, 2016 and ended 2015, respectively. This decrease is the result of decrease in professional fees.

Interest Expense

Interest expense increased from $13,878 for the three months ended March 31, 2015 to $102,274 for the three months ended March 31, 2016. Interest increased to higher average balances of our convertible notes payable.

Interest expense for the three months ended March 31, 2016 included amortization of discount on convertible notes payable in the amount of $84,415, compared to $7,451 for the comparable period of 2015. The remaining amount is interest accrued on our convertible debt.

Net Loss

We incurred a net loss of $206,014 for the three months ended March 31, 2016 as compared to $164,479 for the comparable period of 2015. The increase in the net loss was due to the increase in the aforementioned increases in interest expense.

Liquidity and Capital Resources

As of March 31, 2016, we had cash on hand of $11,727 and negative working capital of $237,268. Net cash used in operating activities for the nine months ended March 31, 2016 was $411,309. Cash on hand is adequate to fund our operations for less than one month. We do not expect to achieve positive cash flow from operating activities in the near future. We will require additional cash in order to implement our business plan. There is no guarantee that we will be able to attain fund when we need them or that funds will be available on terms that are acceptable to the Company. We have no material commitments for capital expenditures as of March 31, 2016.

Additional Financing

Additional financing is required to continue operations. Although actively searching for available capital, the Company does not have any current arrangements for additional outside sources of financing and cannot provide any assurance that such financing will be available.

- 13 -

Off Balance Sheet Arrangements

We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable to a smaller reporting company.

ITEM 4. CONTROLS AND PROCEDURES

Management’s Report on Internal Control over Financial Reporting

We carried out an evaluation, under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, of the effectiveness of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of March 31, 2016. Based upon that evaluation, our principal executive officer and principal financial officer concluded that, as of March 31, 2016, our disclosure controls and procedures were not effective to ensure that information required to be disclosed in reports filed by us under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the required time periods and 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.


	1.	As of March 31, 2016, we did not maintain effective controls over the control environment. Specifically, we have not developed and effectively communicated to our employees our accounting policies and procedures. This has resulted in inconsistent practices. Further, the Board of Directors does not currently have any independent members and no director qualifies as an audit committee financial expert as defined in Item 407(d)(5)(ii) of Regulation S-K. Since these entity level programs have a pervasive effect across the organization, management has determined that these circumstances constitute a material weakness.

	2.	As of March 31, 2016, we did not maintain effective controls over financial statement disclosure. Specifically, controls were not designed and in place to ensure that all disclosures required were originally addressed in our financial statements. Accordingly, management has determined that this control deficiency constitutes a material weakness.

Our management, including our principal executive officer and principal financial officer, who is the same person, does not expect that our disclosure controls and procedures or our internal controls will prevent all error or fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints and the benefits of controls must be considered relative to their costs. Due to the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected.

Change in Internal Controls Over Financial Reporting

There was no change in our internal controls over financial reporting that occurred during the period covered by this report, which has materially affected, or is reasonably likely to materially affect, our internal controls over financial reporting.

PART II — OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

We know of no material, active or pending legal proceedings against us, nor are we involved as a plaintiff in any material proceedings or pending litigation. There are no proceedings in which any of our directors, officers or affiliates, or any registered beneficial shareholder are an adverse party or has a material interest adverse to us.

ITEM 1A. RISK FACTORS

Not applicable to a smaller reporting company.

- 14 -

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

There were no sales of unregistered equity securities during the nine months ended March 31, 2016.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

The Company has not defaulted upon senior securities.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable to the Company.

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS


3.1	Articles of Incorporation (1)

3.2	Bylaws (1)

21	Subsidiaries of the Registrant (2)

31.1	Rule 13(a)-14(a)/15(d)-14(a) Certification of principal executive officer and principal financial and account officer. (2)

32.1	Section 1350 Certification of principal executive officer and principal financial accounting officer. (2)

101	XBRL data files of Financial Statement and Notes contained in this Quarterly Report on Form 10-Q. (2)(3)

__________


(1)	Incorporated by reference to our Form S-1 filed with the Securities and Exchange Commission on July 29, 2013.

(2)	Filed or furnished herewith.

(3)	In accordance with Regulation S-T, the Interactive Data Files in Exhibit 101 to the Quarterly Report on Form 10-Q shall be deemed “furnished” and not “filed.”

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


	Changing Technologies, Inc.


Date: June 24, 2016	BY: /s/ Marco Valenzuela
	Marco Valenzuela
	CEO, President and Chairman

- 15 -

CHANGING TECHNOLOGIES, INC. - FORM 10-Q/A - June 24, 2016

Attached files

CHANGING TECHNOLOGIES, INC. Reports