[X] Quarterly Report under Section 13 or 15(d) of the Securities Exchange Act of 1934
[ ] Transition Report under Section 13 or 15(d) of the Securities Exchange Act of 1934
Indicate by check mark whether the issuer (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ]
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation ST (ss.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.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [X] No [ ]
State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date:
As of November 2, 2016, there were 34,307,116 shares of the Issuer's common stock, par value $0.001 per share outstanding.
Certain statements in this quarterly report on Form 10-Q contain or may contain forward-looking statements that 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, 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 quarterly report in its entirety, including but not limited to our financial statements and the notes thereto. 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. For any forward-looking statements contained in any document, we claim the protection of the safe harbour for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995.
The accompanying notes are an integral part of the condensed financial statements.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
NOTE 1 - BUSINESS DESCRIPTION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(A) Business Description
ZD Ventures Corporation (the Company), incorporated on February 23, 2005 under the laws of the state of Nevada, operates from Barcelona, Spain. Most of the activities of the Company to date relate to its organization, funding, and seeking business opportunities in the emerging technologies.
The Company has not yet been able to conclude satisfactorily on several business negotiations. The management continues its efforts in reviewing business opportunities that will meet its criteria.
(B) Basis of Presentation
The unaudited interim financial statements as of and for the three and six months ended September 30, 2016 have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission (the SEC) for interim financial reporting. These financial statements are unaudited and, in the opinion of management, include all adjustments (consisting of normal recurring adjustments and accruals) necessary to present fairly the balance sheets, operating results and cash flows for the periods presented in accordance with accounting principles generally accepted in the United States of America. Operating results for the three and six months ended September 30, 2016 are not necessarily indicative of the results that may be expected for the fiscal year ending March 31, 2017. Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been omitted in accordance with the SECs rules and regulations for interim reporting.
The unaudited interim financial statements should be read in conjunction with the Companys Annual Report filed on Form 10-K for the year ended March 31, 2016. The significant accounting policies followed are same as those detailed in the said Annual Report.
(C) Use of estimates
The financial statements have been prepared in conformity with generally accepted accounting principles (GAAP). In preparing the financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the statement of financial position and revenues and expenses for the period then ended. Actual results may differ significantly from those estimates.
NOTE 2 - GOING CONCERN
The Companys financial statements are prepared using generally accepted accounting principles in the United States of America applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company has not yet established an ongoing source of revenues sufficient to cover its operating costs and allow it to continue as a going concern. The ability of the Company to continue as a going concern is dependent on the Company obtaining adequate capital to fund operating losses until it becomes profitable. If the Company is unable to obtain adequate capital, it could be forced to cease operations.
In order to continue as a going concern, the Company will need, among other things, additional capital resources. Managements plan is to obtain such resources for the Company by obtaining capital from significant shareholders sufficient to meet its minimal operating expenses and seeking equity and/or debt financing. However, management cannot provide any assurances that the Company will be successful in accomplishing any of its plans.
ZD Ventures Corporation
Six months ended September 30, 2016
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
The ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish the plans described in the preceding paragraph and eventually secure other sources of financing and attain profitable operations. The accompanying financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. As of September 30, 2016, the Company has an accumulated deficit amount of approximately $3,237,533.
NOTE 3 - RECENT ACCOUNTING PRONOUNCEMENTS
Update 2016-15 - Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments
The update addresses eight specific cash flow issues with the objective of reducing the existing diversity in practice. The update is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. This ASU is not anticipated to have a material impact on the Company's financial statements and notes to the financial statements.
Update 2016-13 - Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments
The amendments in this Update replace the incurred loss impairment methodology in current GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. The update is effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. This ASU is not anticipated to have a material impact on the Company's financial statements and notes to the financial statements.
Update 2016-01 - Financial Instruments-Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities
The amendments in this Update address certain aspects of recognition, measurement, presentation, and disclosure of financial instruments and address measurement of credit losses on financial assets in a separate project. The update is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. This ASU is not anticipated to have a material impact on the Company's financial statements and notes to the financial statements.
Update No. 2014-15 - Presentation of Financial Statements-Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entitys Ability to Continue as a Going Concern
The amendments in this Update provide guidance in GAAP about managements responsibility to evaluate whether there is substantial doubt about an entitys ability to continue as a going concern and to provide related footnote disclosures with a view to reducing diversity in the timing and content of footnote disclosures. The update is effective for fiscal years beginning after December 15, 2016, and interim periods within those fiscal years. The Company will review its going concern note to ensure compliance with the amendment for its fiscal year beginning April 1, 2017.
Update No. 2015-03 - Interest-Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs
The amendment changes the presentation of debt issuance costs in financial statements. Under the new guidance, an entity presents such costs in the balance sheet as a direct deduction from the related debt liability rather than as an asset. Amortization of the costs is reported as interest expense. This guidance is effective beginning in the first quarter of fiscal year 2017 and early adoption is permitted in an interim period with any adjustments reflected as of the beginning of the fiscal year that includes that interim period. The Company does not believe the guidance will result in a material impact to its financial statements.
ZD Ventures Corporation
Six months ended September 30, 2016
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
Update 2015-17 - Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes
The amendment will require entities to present all deferred tax liabilities and assets as noncurrent on the balance sheet instead of separating deferred taxes into current and noncurrent amounts. The standard is effective for annual reporting periods beginning after December 15, 2016, and interim periods within those annual periods. Early application is permitted. The standard can be applied either prospectively to all deferred tax liabilities and assets or retrospectively to all periods presented. This ASU is not anticipated to have a material impact on the Company's financial statements and notes to the financial statements.
The Company evaluates new pronouncements as issued and evaluates the effect of adoption on the Company at the time. The Company has determined that the adoption of recently adopted accounting pronouncements will not have an impact on the financial statements.
NOTE 4 - CONVERTIBLE DEBTS
On April 11, 2016, a convertible debt holder of a $38,000 loan having a balance of $ 28,000 as at April 1, 2016, converted $20,000 of the loan into 689,655 common shares as per the terms of the agreement.
The 8% convertible note for $38,000 is covered by a Securities Purchase Agreement dated February 24, 2015 with an independent lender and repayable on November 26, 2015. The note holder, at their discretion, shall have a right to convert the principal amount of the note and interest accrued thereon at any time after 180 days from the date of the issuance of the note into common shares of the Company at a price which is 58% of the market price, being the average of the lowest three trading prices for the Companys common shares during the ten trading days prior to the conversion date. After the expiry of the repayment date, the interest rate went up to 22%. Total interest accrued as of September 30, 2016 was $1,003.
A consultant was issued 100,000 common shares for services rendered during the three months ended June 30, 2016. These shares were valued at $7,000, based on the quoted market price of $0.07 per common share on the date of issuance. The par value of these shares of $100 has been included in the common stock and the balance of $6,900 in additional paid-in capital.
The fees of $14,500 are included in the accrued liabilities as at September 30, 2016 ($ nil as at March 31, 2016). Trade payable includes $ 21,000 due to former CEO and CFO for his past services. (March 31, 2016: $ 21,000)
On March 3, 2016, an entity owned by a shareholder of the Company sent a bill for $36,000 for services provided. The amount was not accepted and the Company received no further communication from the entity for its payment. As at September 30, 2016, the management concluded that this amount would no longer be payable and therefore reversed it.
The Company has evaluated subsequent events from the balance sheet date through the date these financial statements were issued and concluded that there are no events to disclose.
Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis should be read in conjunction with our Financial Statements and Notes thereto appearing elsewhere in this Report on Form 10-Q as well as our other SEC filings.
The Company was incorporated on February 23, 2005 under the laws of the state of Nevada. Effective July 15, 2015, Mr. Terence Robinson was appointed as the Chairman of the Board of directors and is also the Chief Executive Officer and Chief Financial officer of the Company.
On June 28, 2013, the Company changed its name from Webtradex International Corporation to ZD Ventures Corporation (ZDV, the Company).
The Company has no subsidiaries. The Company has no formal lease commitments. Its operations are handled by the CEO from his residence in Barcelona, Spain but its administrative matters are handled from the Toronto office of Current Capital Corp. at 47 Avenue Road, Suite 200, Toronto, ON M5R 2G3 Canada. Current Capital Corp. is owned by one of the shareholders related to the CEO. Our telephone number is (416) 840-0211. Our fiscal year end is March 31.
The following discussion and analysis should be read in conjunction with the financial statements and accompanying notes of the Company for the three and six months ended September 30, 2016 and the audited financial statements and notes for the year ended March 31, 2016.
Business Plan and Strategy
ZDVs business strategy until March 2015 involved developing a social website, B Wished, however, at the end of March 31, 2015, the Management concluded that this was not a commercially viable business and decided to expense all the costs related to this project. The Company continues to review new business opportunities but has been unable to successfully negotiate any closure on any of these deal and is currently continuing its efforts at finding a suitable business proposal that would meet with its business model and attract the investors. The Company currently has no business activities.
Results of operations
The Company did not have any operating income since its inception on February 23, 2005 through September 30, 2016. For the six months ended September 30, 2016, the Company had an operating income of $9,870 after reversal of a liability of $ 36,000 no longer payable compared to the operating loss of $41,755 for the six months ended September 30, 2015.
On September 30, 2016, interest expense of $1,003 (September 30, 2015: $44,408) charged against the operating income(loss) resulted in a net income of $8,867 for the six months ended September 30, 2016 compared to the net loss of $ 86,163 for the same period in the previous year.
Overall operating expenses declined significantly during the six months ended September 30, 2016 compared to the same period in 2015 mainly due to lack of any business activities resulting in no travel costs and reduced overheads.
Professional fees for the three and six months ended September 30, 2016 were $1,100 and $2,200 respectively compared to $1,300 and $7,300 respectively for the three and six months ended September 30, 2015. The fees for the six months ended September 30, 2015 included annual audit fee for fiscal 2015 of $ 4,500. The balance of the professional fees represents fees charged for the review of the quarterly financials by the independent accountant.
Consulting fees for the three and six months to September 30, 2016 includes accrual of $6,250 and $12,500 respectively as fee for the CEO based on an annual estimate of $ 25,000, $nil and $ 7,000 respectively for fees charged by a shareholder holding over 5% equity and $ 1,000 and $ 2,000 respectively for fees by former CFO.
Consulting fees for the three and six months to September 30, 2015 includes $2,000 and $4,255 respectively charged by the former CFO and no fee was charged by the CEO. Approximately$2,000 and $14,500 was charged by three other consultants. These consultants are not currently providing any services except for the ex-CFO who provides accounting services as a consultant for a monthly fee of $2,000. $15,000 fee for the previous quarter charged by the CEO was forgiven and as a result was reversed to additional paid in capital.
General and administrative expenses
General and administrative costs comprise mainly of corporate costs - transfer agent fees, press releases, regulatory filing fees etc.
The levels of these costs were reduced significantly during the three and six months ended September 30, 2016 due to lack of any business activities.
The costs for the three and six months ended September 30, 2015 include rent of approximately $1,807 and $12,808 respectively, furniture written off of $4,673 due to closure of Barcelona office, reversal of fee of $2,800 previously provided for annual renewal of the Companys membership to hedge fund which the management decided to cancel effective January 1, 2015, reversal of fee charged by Current Capital Corp (CCC) for investor relations of $6,000 in the previous period, which CCC decided to forgive and agreed for cancelation of their contract without any further charges.
During the three and six months ended September 30, 2016, there was only one loan of $ 8,000 outstanding and interest cost thereon was $444 and $1,003 respectively.
Interest expense, which also included amortization of BCF value of convertible loans for the three and six months ended September 30, 2015 totalled $22,454 and $44,408 respectively.
Financial Condition, Liquidity and Capital Resources
For the six months ended September 30, 2016, the Company generated a negative cash flow from operations of approximately $4,700 (six months to September 30, 2015: negative cash flow of approximately $33,900) , which was primarily met from existing cash. In absence of any potential revenue in the near future, the Company will continue to be dependent upon its shareholders and associates to fund its cash requirements.
Our present material commitments are professional and administrative fees and expenses associated with the preparation of our filings with the U.S. Securities and Exchange Commission (SEC) and other regulatory requirements
As of September 30, 2016, the Company had cash of $1,228 (as at March 31, 2016: $8,488). The Company's total assets decreased from $9,071 as at March 31, 2016 to $1,461 as at September 30, 2016 mainly due to use of cash on operations. Total liabilities also reduced from $123,052 as of March 31, 2016 to $82,158 as of September 30, 2016, mainly due to reversal of a liability of $ 36,000 considered no longer payable.
The Company is seeking to raise capital to implement the Company's business strategy. In the event additional capital is not raised or alternatively debt financing is not available from our shareholders, the Company may seek a merger or outright sale.
The accompanying financial statements have been prepared assuming that we will continue as a going concern. We have an accumulated deficit of approximately $ 3.2 million. The Company realized a net loss from operations of $9,083 and $26,130, respectively, for the three and six months ended September 30 2016 prior to reversal of a liability of $ 36,000. These conditions raise substantial doubt about our ability to continue as a going concern. The Company continued to secure additional convertible loans and is currently negotiating with others to raise equity funding needed. However, there is no guarantee that such negotiations will success or result in the availability of the required funding. Particularly, if the Company is unable to negotiate a viable business, it may fail to attract further funding. The financial statements do not include any adjustments that might be necessary if we are unable to continue as a going concern.
Off-balance sheet arrangements
The Company has no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect or change on the Companys financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors.
* Filed herewith.
(b) The following sets forth the Company's reports on Form 8-K that have been filed during the quarter for which this report is filed: