See accompanying notes to condensed unaudited financial statements.
6 | Page
ARMA SERVICES, INC.
NOTES TO THE CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
JULY 31, 2017
NOTE 1 ORGANIZATION AND NATURE OF BUSINESS
Arma Services Inc. (the Company, we, us or our) was incorporated under the laws of the State of Nevada on September 2, 2014. Arma Services Inc. is a Destination Management Company (DMC), which aims to provide a full range of services in the field of Meeting, Incentive, Conference, and Exhibition (MICE) tourism in Russia for corporate customers from United States, China and internal Russian clients. We plan to create a variety of events for domestic and foreign companies, including; industry conferences and business meetings, dealer conferences for producers, motivational and incentive arrangements for key employees, and to organize participation in exhibitions and forums.
NOTE 2 SUMMARY OF SIGNIFCANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying unaudited interim financial statements and related notes have been prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP") for interim financial information, and with the rules and regulations of the United States Securities and Exchange Commission set forth in Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. The unaudited interim financial statements furnished reflect all adjustments (consisting of normal recurring accruals) which are, in the opinion of management, necessary to a fair statement of the results for the interim periods presented. Unaudited interim results are not necessarily indicative of the results for the full fiscal year. These financial statements should be read in conjunction with the audited financial statements in the Company's Form 10-K for the year ended October 31, 2016 filed on February 24, 2017 and Management's Discussion and Analysis of Financial Condition and Results of Operations.
Use of Estimates in the Preparation of Financial Statements
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, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
The Company recognizes revenue in accordance with ASC 605-10 when persuasive evidence of an arrangement exists, delivery has occurred or services have been rendered, prices are fixed or determinable, and collectability is reasonably assured.
Commitments and Contingencies
Liabilities for loss contingencies arising from claims, assessments, litigation, fines and penalties, and other sources are recorded when it is probable that a liability has been incurred and the amount of the assessment can be reasonably estimated.
Net Loss per Common Share
Net loss per common share is computed pursuant to section 260-10-45 of the FASB Accounting Standards Codification. Basic net loss per share is computed by dividing net loss by the weighted average number of shares of common stock outstanding during the period. Diluted net loss per share is computed by dividing net loss by the weighted average number of shares of common stock and potentially outstanding shares of common stock during each period. There were no potentially dilutive shares outstanding as of July 31, 2017 or 2016. As the Company has incurred losses for all periods, the impact of the common stock equivalents would be antidilutive, and therefore, are not included in the calculation.
7 | Page
Recent Accounting Pronouncements
The Company does not anticipate any recently released accounting standards pronouncements to have a significant impact on reported financial position or results of operations in these or future financial statements.
NOTE 3 GOING CONCERN
The accompanying financial statements have been prepared in conformity with generally accepted accounting principle, which contemplate continuation of the Company as a going concern. However, the Company had limited revenues as of July 31, 2017. The Company currently has limited working capital, and has not completed its efforts to establish a stabilized source of revenues sufficient to cover operating costs over an extended period of time.
Management anticipates that the Company will be dependent, for the near future, on additional investment capital to fund operating expenses. The Company intends to position itself so that it may be able to raise additional funds through the capital markets. In light of managements efforts, there are no assurances that the Company will be successful in this or any of its endeavors or become financially viable and continue as a going concern.
NOTE 4 REVENUE
In addition to two existing service contracts with Gazetny LLC and Proekta LLC, in March of 2017, Arma Services secured additional agreements with Informed Intercontinental, Corp. The Company has not generated any revenues in the three months ended July 31, 2017. In the nine months ended July 31, 2017, the Company generated revenues of $9,000 from organizing two exhibitions for clients in Moscow and Rostov on Don, Russian Federation. The Company has also generated $900 from hosting a corporate event, on a lesser scale, for another client in April of 2017. The total revenues generated in the three and nine months ended July 31, 2016 were $0 and $5,600 respectively.
NOTE 5 LOANS FROM DIRECTOR
In support of the Companys efforts and cash requirements, it may rely on advances from related parties until such time that the Company can support its operations or attains adequate financing through sales of its equity or traditional debt financing. There is no formal written commitment for continued support by shareholders. Amounts represent advances or amounts paid in satisfaction of liabilities. The advances are considered temporary in nature and have not been formalized by a promissory note.
As of July 31, 2017, the Company had a loan outstanding with the Companys sole director, Mr. Sergey Gandin in the amount of $5,992. The loan is non-interest bearing, due upon demand, and unsecured.
NOTE 6 COMMON STOCK
The Company has 75,000,000, $0.001 par value shares of common stock authorized. During the nine month period ended July 31, 2017, the Company sold 1,820,000 shares of common stock for $18,200. As of July 31, 2017, the Company had 6,240,000 shares issued and outstanding.
NOTE 7 COMMITMENTS AND CONTINGENCIES
The Company neither owns nor leases any real or personal property. An officer has provided office services without charge. There is no obligation for the officer to continue this arrangement. Such costs are immaterial to the financial statements and accordingly are not reflected herein. The officers and directors are involved in other business activities and most likely will become involved in other business activities in the future.
NOTE 8 SUBSEQUENT EVENTS
8 | Page
In accordance with ASC 855, the Company has analyzed its operations subsequent to July 31, 2017 to the date these financial statements were issued and concluded there are no material subsequent events to disclose in these financial statements.
FORWARD LOOKING STATEMENTS
Statements made in this Form 10-Q that are not historical or current facts are "forward-looking statements" made pursuant to the safe harbor provisions of Section 27A of the Securities Act of 1933 (the "Act") and Section 21E of the Securities Exchange Act of 1934. These statements often can be identified by the use of terms such as "may," "will," "expect," "believe," "anticipate," "estimate," "approximate" or "continue," or the negative thereof. We intend that such forward-looking statements be subject to the safe harbors for such statements. We wish to caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made. Any forward-looking statements represent management's best judgment as to what may occur in the future. However, forward-looking statements are subject to risks, uncertainties and important factors beyond our control that could cause actual results and events to differ materially from historical results of operations and events and those presently anticipated or projected. We disclaim any obligation subsequently to revise any forward-looking statements to reflect events or circumstances after the date of such statement or to reflect the occurrence of anticipated or unanticipated events.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION
EMPLOYEES AND EMPLOYMENT AGREEMENTS
At present, we have no employees other than our officer and director. We presently do not have pension, health, annuity, insurance, stock options, profit sharing or similar benefit plans; however, we may adopt such plans in the future. There are presently no personal benefits available to any officers, directors or employees.
Results of Operation
Our financial statements have been prepared assuming that we will continue as a going concern and, accordingly, do not include adjustments relating to the recoverability and realization of assets and classification of liabilities that might be necessary should we be unable to continue in operation.
We expect we will require additional capital to meet our long term operating requirements. We expect to raise additional capital through, among other things, the sale of equity or debt securities.
Three and Nine Months Period Ended July 31, 2017 and 2016
Our net loss for the three months period ended July 31, 2017 was $7,239 compared to a net loss of $42 for the three months ended July 31, 2016. Our net loss for the nine months period ended July 31, 2017 was $13,832 compared to a net income of $634 for the nine months period ended July 31, 2016. During the nine months periods ended July 31, 2017, we have generated income from Consulting Services and secured additional agreements with Informed Intercontinental, Corp. These generated revenues in amounts of $4,000 and $5,000 from organizing two exhibitions for the client in Moscow and Rostov on Don, Russian Federation. The Company has also earned $900 for hosting a corporate event, on a lesser scale, for Informed Intercontinental Corp in April this year. In the three and nine months ended July 31, 2016, the Company generated revenues of $0 and $5,600 respectively. In the nine months ended July 31, 2016, the Company generated revenues of $9,900. In the three months ending July 31, 2016 and 2017 we have not generated any revenue. The increase in revenues is due to allocation of capital, time and effort in furtherance of our business. In line with our fully established business plan and plan of operations, company management has investigated
9 | Page
numerous available marketing platforms within its industry and carried out further analysis of the Russian, Chinese and U.S. commercial markets for the type of services Arma Services, Inc. provides.
The weighted average number of shares outstanding was 6,000,220 for the nine months period ended July 31, 2017.
The weighted average number of shares outstanding was 4,000,000 for the nine months period ended July 31, 2016.
Liquidity and Capital Resources
Nine Months Period Ended July 31, 2017
As at July 31, 2017, our total assets were $1,732 compared to $4,295 as of October 31, 2016. Total assets were comprised of cash and cash equivalents. As at July 31, 2017, our current liabilities were $5,992 compared to $12,923 as of October 31, 2016. Stockholders equity was deficit $4,260 as of July 31, 2017 compared to a deficit of $8,628 as of October 31, 2016.
Cash Flows from Operating Activities
For the nine months period ended July 31, 2017, we have not generated positive cash flows, our net cash flows used in operating activities was $20,763. For the Nine months period ended July 31, 2016, we have generated positive cash flows from operating activities of $634.
Cash Flows from Investing Activities
We have not generated cash flows from investing activities for the nine months period ended July 31, 2017 and 2016.
Cash Flows from Financing Activities
We generated cash flows from financing activities for the nine months period ended July 31, 2017 of $18,200 from selling common stock for cash. For the nine months period ended July 31, 2016, we did not generate cash flows from financing activities.
Plan of Operation and Funding
We expect that working capital requirements will continue to be funded through a combination of our existing funds and further issuances of securities. Our working capital requirements are expected to increase in line with the growth of our business.
Existing working capital, further advances and debt instruments, and anticipated cash flow are expected to be adequate to fund our operations over the next Nine months. We have no lines of credit or other bank financing arrangements. Generally, we have financed operations to date through the proceeds of the private placement of equity and debt instruments. In connection with our business plan, management anticipates additional increases in operating expenses and capital expenditures relating to: (i) acquisition of inventory; (ii) developmental expenses associated with a start-up business; and (iii) marketing expenses. We intend to finance these expenses with further issuances of securities, and debt issuances. Thereafter, we expect we will need to raise additional capital and generate revenues to meet long-term operating requirements. Additional issuances of equity or convertible debt securities will result in dilution to our current shareholders. Further, such securities might have rights, preferences or privileges senior to our common stock. Additional financing may not be available upon acceptable terms, or at all. If adequate funds are not available or are not available on acceptable terms, we may not be able to take advantage of prospective new business endeavors or
10 | Page
opportunities, which could significantly and materially restrict our business operations. We will have to raise additional funds in the next twelve months in order to sustain and expand our operations. We currently do not have a specific plan of how we will obtain such funding; however, we anticipate that additional funding will be in the form of equity financing from the sale of our common stock. We have and will continue to seek to obtain short-term loans from our directors, although no future arrangement for additional loans has been made. We do not have any agreements with our directors concerning these loans. We do not have any arrangements in place for any future equity financing.
Off-Balance Sheet Arrangements
As of the date of this Quarterly Report, we do not have any offbalance 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 are material to investors.
The independent auditors' review report accompanying our October 31, 2016 financial statements contained an explanatory paragraph expressing substantial doubt about our ability to continue as a going concern. The financial statements have been prepared "assuming that we will continue as a going concern," which contemplates that we will realize our assets and satisfy our liabilities and commitments in the ordinary course of business.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
No report required.
ITEM 4. CONTROLS AND PROCEDURES
Our management is responsible for establishing and maintaining a system of disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Exchange Act) that is designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Commissions rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated to the issuers management, including its principal executive officer or officers and principal financial officer or officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.
An evaluation was conducted under the supervision and with the participation of our management of the effectiveness of the design and operation of our disclosure controls and procedures as of July 31, 2017. Based on that evaluation, our management concluded that our disclosure controls and procedures were not effective as of such date to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act, is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms. Such officer also confirmed that there was no change in our internal control over financial reporting during the Nine-month period ended July 31, 2017 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
11 | Page
Management is not aware of any legal proceedings contemplated by any governmental authority or any other party involving us or our properties. As of the date of this Quarterly Report, no director, officer or affiliate is (i) a party adverse to us in any legal proceeding, or (ii) has an adverse interest to us in any legal proceedings. Management is not aware of any other legal proceedings pending or that have been threatened against us or our properties.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
No report required.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
No report required.
ITEM 4. MINE SAFETY DISCLOSURES
ITEM 5. OTHER INFORMATION
No report required.
ITEM 6. EXHIBITS
31.1 Certification of Chief Executive Officer pursuant to Securities Exchange Act of 1934 Rule 13a-14(a) or 15d-14(a).
31.2 Certification of Chief Financial Officer pursuant to Securities Exchange Act of 1934 Rule 13a-14(a) or 15d-14(a).
32.1 Certifications pursuant to Securities Exchange Act of 1934 Rule 13a-14(b) or 15d-14(b) and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes- Oxley Act of 2002.
In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| || |
| || |
Arma Services, Inc.
Dated: September 15, 2017
By: /s/ SERGEY GANDIN
| || |
SERGEY GANDIN, President and Chief Executive Officer and Chief Financial Officer
13 | Page