UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q/A
Amendment #1
x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2017
or
¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ___________________________ to ___________________________
Commission file number 333-197056
| Spirit International, Inc. |
| (Exact name of registrant as specified in its charter) |
| Nevada | 38-3926700 | |
| (State or other jurisdiction of | (I.R.S. Employer | |
| incorporation or organization) | Identification No.) |
| 2620 Regatta Drive, Suite 102, Las Vegas, NV | 89128 | |
| (Address of principal executive offices) |
(Zip Code) |
| Registrant’s telephone number, including area code | (702) 359-0881 |
| (Former name, former address and former fiscal year, if changed since last report) |
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.
x Yes ¨ No
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, 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 (or for such shorter period that the registrant was required to submit and post such files).
x Yes ¨ No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer ¨ | Accelerated filer ¨ |
| Non-accelerated filer ¨ (Do not check if a smaller reporting company) | Smaller reporting company x |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). ¨ Yes x No
As of March 31, 2017, the Registrant has 8,110,000 shares of common stock outstanding.
Explanatory note: The number of shares of common stock outstanding should be 8,110,000.
TABLE OF CONTENTS
| i |
PART I – FINANCIAL INFORMATION
SPIRIT INTERNATIONAL, INC
INTERIM FINANCIAL STATEMENTS
(unaudited)
for the three months ended March 31, 2017
| F-1 |
BALANCE SHEETS
(in U.S. Dollars)
March 31 2017 | December 31, 2016 | |||||||
| (unaudited) | ||||||||
| $ | $ | |||||||
| ASSETS | ||||||||
| Current Assets: | ||||||||
| Cash and cash equivalents | 8,399 | 10,459 | ||||||
| Accounts receivable | - | 2,500 | ||||||
| Total current assets | 8,399 | 12,959 | ||||||
| TOTAL ASSETS | 8,399 | 12,959 | ||||||
| LIABILITIES AND STOCKHOLDER’S EQUITY (DEFICIT) | ||||||||
| Current liabilities: | ||||||||
| Accounts payable and accrued liabilities | 11,328 | 8,000 | ||||||
| Loan from related party | 41,537 | 42,037 | ||||||
| Total Liabilities | 52,865 | 50,037 | ||||||
| Stockholder’s Equity (Deficit) | ||||||||
| Common stock, $0.0001 par value, 75,000,000 shares authorized; 8,110,000 shares issued and outstanding as of March 31, 2017 and December 31, 2016 | 811 | 811 | ||||||
| Paid in capital | 21,789 | 21,789 | ||||||
| Accumulated deficit | (67,066 | ) | (59,678 | ) | ||||
| Total Stockholder's Deficit | (44,466 | ) | (37,078 | ) | ||||
| TOTAL LIABILITIES AND STOCKHOLDER’S EQUITY (DEFICIT) | 8,399 | 12,959 | ||||||
The accompanying notes are an integral part of these financial statements.
| F-2 |
STATEMENTS OF OPERATIONS
(in U.S. Dollars)
(unaudited)
Three months ended March 31, | ||||||||
| 2017 | 2016 | |||||||
| Revenue | - | 2,000 | ||||||
| Operating expenses: | ||||||||
| General and administrative:- | ||||||||
| Filing fees | 828 | 2,555 | ||||||
| Other costs | 60 | 130 | ||||||
| Professional fees:- | ||||||||
| - Auditor’s fees | 2,500 | 8,000 | ||||||
| - Legal fees | 4,000 | 2,000 | ||||||
| Total operating expenses | (7,388 | ) | (12,685 | ) | ||||
| Net loss | (7,388 | ) | (10,685 | ) | ||||
| Net loss per share - basic and diluted | ||||||||
| Net loss per common share, basic and diluted, attributable to common shareholders | - | - | ||||||
| Weighted-average number of common shares outstanding - basic and diluted | 8,110,000 | 5,000,000 | ||||||
The accompanying notes are an integral part of these financial statements.
| F-3 |
STATEMENT OF CASH FLOWS
(in U.S. Dollars)
(unaudited)
Three months ended March 31, | ||||||||
| 2017 | 2016 | |||||||
| $ | $ | |||||||
| Cash Flows from Operating Activities | ||||||||
| Net loss | (7,388 | ) | (10,685 | ) | ||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | 2,000 | (2,000 | ) | |||||
| Trade and other payables | 500 | (500 | ) | |||||
| Advances to suppliers | 3,328 | (90 | ) | |||||
| Net cash used by operating activities | (1,560 | ) | (13,275 | ) | ||||
| Cash Flows from Investing Activities | - | - | ||||||
| Cash Flows from Financing Activities | ||||||||
| Short term borrowings - related party | (500 | ) | 12,540 | |||||
| Net cash used by operating activities | (500 | ) | 12,540 | |||||
| Increase/(Decrease) in cash and cash equivalents | (2,060 | ) | (735 | ) | ||||
| Cash and cash equivalents at beginning of the period | 10,459 | 1,441 | ||||||
| 8,399 | 706 | |||||||
The accompanying notes are an integral part of these financial statements.
| F-4 |
NOTES TO THE INTERIM FINANCIAL STATEMENTS
(unaudited)
NOTE 1 – NATURE OF BUSINESS AND BASIS OF PRESENTATION
Spirit International, Inc. (the “Company”) is a Nevada Corporation incorporated on March 10, 2014. The Company plans to market a unique brand of Australian whiskey for export to Western Europe and the Middle East.
Basis of Presentation
The Company maintains its accounting records on an accrual basis in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”).
These financial statements are presented in US dollars.
Fiscal Year End
The Corporation has adopted a fiscal year end of December 31.
Unaudited Interim Financial Statements
The interim financial statements of the Company as of March 31, 2017, and for the periods then ended are unaudited. However, in the opinion of management, the interim financial statements include all adjustments, consisting of only normal recurring adjustments, necessary to present fairly the Company’s financial position as of March 31, 2017, and the results of its operations and its cash flows for the period ended March 31, 2017. These results are not necessarily indicative of the results expected for the calendar year ending December 31, 2017. The accompanying financial statements and notes thereto do not reflect all disclosures required under accounting principles generally accepted in the United States. Refer to the Company’s audited financial statements as of December 31, 2016, filed with the SEC, for additional information, including significant accounting policies.
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The principal accounting policies are set out below, these policies have been consistently applied to the period presented, unless otherwise stated:
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States 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 or revenues and expenses during the reporting period. Actual results could differ from those estimates.
Going concern
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and the liquidation of liabilities in the normal course of business. As at March 31, 2017 the Company has an accumulated deficit from operations of $67,066 and has not earned revenues sufficient to cover operating costs and has a working capital deficit of $44,466. The Company intends to fund operations through equity financing arrangements, which may be insufficient to fund its capital expenditures, working capital and other cash requirements for the year ending December 31, 2017.
The Company will engage in very limited activities without incurring any liabilities that must be satisfied in cash until a source of funding is secured. The Company will offer non-cash consideration as a means of financing its operations. If the Company is unable to obtain revenue-producing contracts or financing or if the revenue or financing it does obtain is insufficient to cover any operating losses it may incur, it may substantially curtail or terminate its operations.
These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern. The accompanying financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Cash and cash equivalents
Cash and equivalents include investments with initial maturities of three months or less. The Company maintains its cash balances at credit-worthy financial institutions that are insured by the Federal Deposit Insurance Corporation ("FDIC") up to $250,000.
| F-5 |
Intangible Assets
Identifiable intangible assets with indefinite lives are not amortized, but instead are tested for impairment annually, or more frequently if circumstances indicate a possible impairment may exist. Intangible assets with estimable useful lives are amortized over their respective estimated useful lives, generally on a straight-line basis, and are reviewed for impairment whenever events or changes in circumstances indicate that the carrying value may not be recoverable.
Impairment of Long-Lived Assets
Under Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 310, “Accounting for the Impairment or Disposal of Long-lived Assets”, the Company periodically reviews whether changes have occurred that would require revisions to the carrying amounts of its definite lived, long-lived assets. When the sum of the expected future cash flows is less than the carrying amount of the asset, an impairment loss is recognized based on the fair value of the asset.
Property, plant and equipment
The Company does not own any property, plant and equipment.
Intellectual Properties
The Company has adopted the provisions of ASC 350-50, Website Development Costs. All costs incurred during the planning phase of a website are expensed as research and development.
Costs incurred in the development stage, including the purchase of a domain name, are capitalized and reviewed annually for impairment.
Expenses subsequent to the launch will be expensed as research and development expenses. The Company will expense upgrades and revisions to its website as incurred.
Once the website is available for use, the asset will be amortized over its useful life on a straight line basis, estimated to be 3 years, and is tested for impairment annually.
Accounts Payable and Accrued Expenses
Accounts payable and accrued expenses are carried at amortized cost and represent liabilities for goods and services provided to the Company prior to the end of the financial year that are unpaid and arise when the Company becomes obliged to make future payments in respect of the purchase of these goods and services.
Revenue Recognition
The Company recognizes revenue when all of the following have occurred: persuasive evidence of an agreement with the customer exists, delivery has occurred or services have been rendered, the selling price is fixed or determinable and collectability of the selling price is reasonably assured.
The Company recognizes revenues when title has passed to the customer, which is generally when products are shipped.
Cost of Sales
Cost of sales consists of the cost of merchandise sold to customers.
Royalty Expense
The Company recognizes royalties expenses according to its license and distribution agreement with New World Distilleries (Pty) Ltd. Royalties are based on 2% of the net profits of any business made throughout Europe and the Middle East on the Blue Harbour Whiskey Brand. Royalties are expensed in the statements of operation in the period that the related revenues are recognized, in cost of goods sold.
Income taxes
Income taxes are accounted for in accordance with ASC Topic 740, “Income Taxes.” Under the asset and liability method, deferred tax assets and liabilities are recognized for the future consequences of differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases (temporary differences). Deferred tax assets and liabilities are measured using tax rates expected to apply to taxable income in the years in which those temporary differences are recovered or settled. Valuation allowances for deferred tax assets are established when it is more likely than not that some portion or all of the deferred tax assets will not be realized.
Earnings per share
The Company computes net loss per share in accordance with ASC 260, “Earnings Per Share” ASC 260 requires presentation of both basic and diluted earnings per share (“EPS”) on the face of the income statement. Basic EPS is calculated by dividing the profit or loss attributable to common shareholders of the Company by the weighted average number of common shares outstanding during the period. Diluted EPS is determined by adjusting the profit or loss attributable to common shareholders and the weighted average number of common shares outstanding for the effects of all potential dilutive common shares. As at March 31, 2017 the Company had no potentially dilutive shares.
| F-6 |
NOTE 3 – LOAN FROM RELATED PARTY
| March 31, | December 31, | |||||||
| 2017 | 2016 | |||||||
| (unaudited) | ||||||||
| $ | $ | |||||||
| Loan from related party | 41,537 | 42,037 | ||||||
| The above loan is unsecured, bears no interest and has no set terms of repayment. This loan is repayable on demand. | ||||||||
NOTE 4 – STOCKHOLDER’S EQUITY (DEFICIT)
Common Stock
On October 11, 2014, the Company issued 5,000,000 shares of common stock to the director of the Company at a price of $0.0001 per share, for $500 cash.
During November 2016, the Company issued 222,000 shares of common stock to various stockholders at price of $0.01 per share, for $22,100 cash.
At November 16, 2016 the company made a share split and gave 5 shares for every share, and issued 20,888,000 shares total 26,110,000.
At December 1, 2016 the director cancelled by 18,000,000 shares of his.
| F-7 |
NOTE 5 – INCOME TAXES
The (benefit)/provision for income taxes for the periods ended March 31, 2017 and December 31, 2016 differ from the amount which would be expected as a result of applying the statutory tax rates to the losses before income taxes due primarily to changes in the valuation allowance to fully reserve net deferred tax assets.
Realization of deferred tax assets is dependent upon sufficient future taxable income during the period that deductible temporary differences and carry-forwards are expected to be available to reduce taxable income.
The components of these differences are as follows:
| March 31, | March 31, | |||||||
| 2017 | 2016 | |||||||
| (unaudited) | ||||||||
| $ | $ | |||||||
| Net tax loss carry-forwards | (7,388 | ) | 10,685 | |||||
| Statutory rate | 15 | % | 15 | % | ||||
| Expected tax recovery | 1,108 | 1,603 | ||||||
| Change in valuation allowance | (1,108 | ) | (1,603 | ) | ||||
| Income tax provision | - | - | ||||||
| March 31, | December 31, | |||||||
| 2017 | 2016 | |||||||
| (unaudited) | ||||||||
| $ | $ | |||||||
| Components of deferred tax assets: | ||||||||
| Non capital tax loss carry forwards | 10,060 | 8,952 | ||||||
| Less: valuation allowance | (10,060 | ) | (8,952 | ) | ||||
| Net deferred tax asset | - | - | ||||||
NOTE 6 – RELATED PARTY TRANSACTIONS
Details of transactions between the Company and related parties are disclosed below:
The following entities have been identified as related parties:
| Zur Dadon | - Director and greater than 10% stockholder |
| March 31, | December 31, | |||||||
| 2017 | 2016 | |||||||
| (unaudited) | ||||||||
| The following transactions were carried out with related parties: | $ | $ | ||||||
| Balance sheets: | ||||||||
| Loan from related party - director | 41,537 | 42,037 | ||||||
| From time to time, the director and stockholder of the Company provides advances to the Company for its working capital purposes. These advances bear no interest and are due on demand. | ||||||||
NOTE 7 – SUBSEQUENT EVENTS
In accordance with ASC 855-10, Company management reviewed all material events through the date of this report and determined that there are no additional material subsequent events to report.
| F-8 |
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
This Management’s Discussion and Analysis includes a number of forward-looking statements that reflect our current views with respect to future events and financial performance. Forward-looking statements are often identified by words like: “believe,” “expect,” “estimate,” “anticipate,” “intend,” “project,” “will,” “should” and similar expressions, or words which, by their nature, refer to future events. You should not place undue certainty on these forward-looking statements, which apply only as of the date of this Form 10-Q. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from historical results or our predictions. We undertake no obligation to update or revise publicly any forward-looking statements, whether because of new information, future events, or otherwise.
Our financial statements are stated in United States dollars and are prepared in accordance with United States generally accepted accounting principles.
In this quarterly report, unless otherwise specified, all dollar amounts are expressed in United States dollars and all references to "common stock" refer to the common shares in our capital stock.
As used in this Quarterly Report, the terms “we,” “us,” “Company,” “our” and “Spirit” mean Spirit International, Inc., unless otherwise indicated.
THERE IS SUBSTANTIAL UNCERTAINTY ABOUT OUR ABILITY TO CONTINUE OUR OPERATIONS AS A GOING CONCERN.
Results of Operations
Our results of operations are presented below:
Comparison for the three months ended March 31, 2017 and 2016
Revenue for the three months ended March 31, 2017 and 2016 were $-0- and $2,000.
General and administrative costs for the three months ended March 31, 2017 and 2016 were $7,388 and $12,685.
Total loss for the three months ended March 31, 2017 and 2016 were $7,388 and $10,685
Liquidity and Capital Resources
As of March 31, 2017 we had $8,399 in cash and $8,399 in total assets, and $52,865 in total liabilities as compared to $10,459 in cash, and $12,959 in total assets, and $50,037 in total liabilities as of December 31, 2016.
We are dependent on our revenues for cash flow, as we have minimized cash flow requirements through equity or debt financing. However, as we intend to expand operations, it is likely that we will require cash flow from financing in the future which could affect our ability to become cash flow positive.
For the three months ending March 31, 2017 net cash of $(1,560) was used by operating activities, compared to net cash of $13,275 used by operating activities for the three months ended March 31, 2016.
During the three months ended March 31, 2017, net cash of $(500) was used by financing activities compared to net cash of $12,540 provided by financing activities for the three months ending March 31, 2016.
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, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to stockholders.
| 2 |
Inflation
The amounts presented in the financial statements do not provide for the effect of inflation on our operations or financial position. The net operating losses shown would be greater than reported if the effects of inflation were reflected either by charging operations with amounts that represent replacement costs or by using other inflation adjustments.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and, as such, are not required to provide the information under this item.
ITEM 4. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
We maintain disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act). Disclosure controls and procedures refer to controls and other procedures designed to ensure that information required to be disclosed in the reports we file or submit under the Securities Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.
As required by Rule 13a-15(e), our management has carried out an evaluation, with the participation and under the supervision of Zur Dadon our President and Principal Accounting Officer, of the effectiveness of the design and operation of our disclosure controls and procedures, as of March 31, 2016. Based upon, and as of the date of this evaluation, Zur Dadon determined that our disclosure controls and procedures were effective at the reasonable assurance level.
Changes in Internal Control over Financial Reporting
During the fiscal quarter ended March 31, 2017, there were no changes in our internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
| 3 |
From time to time, we may become involved in various lawsuits and legal proceedings, which arise in the ordinary course of business. However, litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm business. We are currently not aware of any such legal proceedings or claims that will have, individually or in the aggregate, a material adverse affect on our business, financial condition or operating results.
We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and, as such, are not required to provide the information under this item.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable to our operations.
None.
| Exhibit No. |
Exhibit Description | |
| 3.1 | Articles of Incorporation of the Company (incorporated by reference to Exhibit 3.1 to the Form S-1 filed with the SEC on June 27, 2014) | |
| 3.2 | Bylaws of the Company (incorporated by reference to Exhibit 3.2 to the Form S-1 filed with the SEC on June 27, 2014) | |
| 31.1 | Certification of the Chief Executive and Financial Officer required under Rule 13a-14(a)/15d-14(a) of the Exchange Act (incorporated by reference to Exhibit 31.1 to the original Form 10-Q) | |
| 32.1 | Certification of the Chief Executive and Financial Officer required under Section 1350 of the Exchange Act (incorporated by reference to Exhibit 31.1 to the original Form 10-Q) |
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.
| Spirit International, Inc. | |
| Date: June 30, 2017 | By: /s/ Zur Dadon |
| Zur Dadon | |
| Chief Executive Officer |
| 4 |