UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

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

 

For the quarterly period ended September 30, 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 incorporation or organization)		(I.R.S. Employer 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.

 

☐ 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).

 

☐ 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 ☐

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). ☐ Yes ☐ No

 

As of September 30, 2017, the Registrant has 5,110,000 shares of common stock outstanding.

 

 

TABLE OF CONTENTS

 

PART I – FINANCIAL INFORMATION	1
ITEM 1. FINANCIAL STATEMENTS	1
BALANCE SHEETS	2
STATEMENTS OF OPERATIONS	3
STATEMENTS OF CASH FLOWS	4
NOTES TO FINANCIAL STATEMENTS	5-11
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	9-12
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	12
ITEM 4. CONTROLS AND PROCEDURES	12
PART II – OTHER INFORMATION	13
ITEM 1. LEGAL PROCEEDINGS	13
ITEM 1A. RISK FACTORS	13
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	13
ITEM 3. DEFAULTS UPON SENIOR SECURITIES	13
ITEM 4. MINE SAFETY DISCLOSURES	13
ITEM 5. OTHER INFORMATION	13
ITEM 6. EXHIBITS	13
SIGNATURES	14

 

 

PART I – FINANCIAL INFORMATION

 

ITEM 1. FINANCIAL STATEMENTS

 

SPIRIT INTERNATIONAL INC
INTERIM FINANCIAL STATEMENTS (unaudited)
for the six months ended June 30, 2017

CONTENTS:
Balance Sheets as of June 30, 2017 (unaudited) and December 31, 2016	F-2
Statement of Operations for the three and six months ended June 30, 2017 and 2016 (unaudited)	F-3
Statements of Cash Flows for the six months ended June 30, 2017 and 2016 (unaudited)	F-4
Notes to the interim Financial Statements (unaudited)	F-5

 

 

SPIRIT INTERNATIONAL, INC

BALANCE SHEETS

(in U.S. Dollars)

 

ASSETS		September 30, 2017				December 31, 2016
		(Unaudited)				(Audited)
		$				$
Current Assets:
Cash and cash equivalents			8,958				10,459
Accounts receivable			—				2,500
TOTAL ASSETS			8,958				12,959
LIABILITIES AND STOCKHOLDER’S DEFICIT
Current liabilities:
Accounts payable and accrued liabilities			8,633				8,000
Loan from related party			42,502				42,037
Total Liabilities			51,135				50,037
Stockholder’s Deficit
Common stock, $0.0001 par value, 75,000,000 shares authorized; 5,110,000 and 8,110,000 shares issued and outstanding as of September 30, 2017 and December 31, 2016			500				811
Paid in capital			22,089				21,789
Accumulated deficit			(64,777	)			(59,678	)
Total Stockholder’s Deficit			(42,177	)			(37,078	)
TOTAL LIABILITIES AND STOCKHOLDER’S DEFICIT			8,958				12,959

 

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

 

 

SPIRIT INTERNATIONAL, INC

STATEMENTS OF OPERATIONS

(in U.S. Dollars)

(Unaudited)

 

		Three Months period Ended September 30,								Nine Months period Ended September 30,
		2017				2016				2017				2016
Revenue			12,000				2,000				15,600				9,000
Cost of sales			—				—				—				—
Gross profit			12,000				2,000				15,600				9,000
General and administrative:-
Professional fees
Auditors’ fees			2,500				2,000				5,500				12,000
Legal fees			1,500				—				7,000				2,000
Set up fees			2,500				—				2,500
Tax preparation			900				—				900
Filling fees			2,073				689				4,409				3,022
Other costs			90				90				390				415
Total operating expenses			(9,563	)			(2,779	)			(20,699	)			(17,437	)
Net loss			2,437				(779	)			(5,099	)			(8,437	)
Net loss per common share - basic and diluted:
Net loss per share attributable to common stockholders			—				—				—				—
Weighted-average number of common shares outstanding			5,110,000				5,000,000				6,879,231				5,000,000

 

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

 

 

SPIRIT INTERNATIONAL, INC

STATEMENT OF CASH FLOWS

(in U.S. Dollars)

(Unaudited)

 

		Nine months Ended September 30, 2017				Nine months Ended September 30, 2016
		$				$
Cash Flows from Operating Activities
Net loss			(5,099	)			(8,437	)
Changes in operating assets and liabilities:
Accounts receivable			2,500				(2,000	)
Advances to suppliers			—				(500	)
Accounts payable and accrued liabilities			633				(2,000	)
Net cash used by operating activities			(1,966	)			(12,937	)
Cash Flows from Investing Activities			—				—
Cash Flows from Financing Activities
Short term borrowings - related party			465				16,540
Net cash used by operating activities			465				16,540
Increase/(Decrease) in cash and cash equivalents			(1,501	)			3,603
Cash and cash equivalents at beginning of the period			10,459				1,441
Cash and cash equivalents at end of the period			8,958				5,044

 

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

 

 

SPIRIT INTERNATIONAL, INC

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 September 30, 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 September 30, 2017, and the results of its operations and its cash flows for the three and nine month period ended September 30, 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 September 30, 2017 the Company has an accumulated deficit from operations of $64,777 and has not earned revenues sufficient to cover operating costs and has a working capital deficit of $42,177. 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.

 

 

Property, plant and equipment

 

The Company does not own any property, plant and equipment.

 

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. Sale consist of sale of wine product.

 

Cost of Sales

 

Cost of sales consists of the cost of merchandise sold to customers.

 

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 September 30, 2017 the Company had no potentially dilutive shares.

 

Fair Value of Financial Instruments

 

The Company measures assets and liabilities at fair value based on an expected exit price as defined by the authoritative guidance on fair value measurements, which represents the amount that would be received on the sale of an asset or paid to transfer a liability, as the case may be, in an orderly transaction between market participants. As such, fair value may be based on assumptions that market participants would use in pricing an asset or liability. The authoritative guidance on fair value measurements establishes a consistent framework for measuring fair value on either a recurring or nonrecurring basis whereby inputs, used in valuation techniques, are assigned a hierarchical level.

 

The following are the hierarchical levels of inputs to measure fair value:

 

- Level 1: Quoted prices in active markets for identical instruments;

 

- Level 2: Other significant observable inputs (including quoted prices in active markets for similar instruments);

 

- Level 3: Significant unobservable inputs (including assumptions in determining the fair value of certain investments).

 

 

NOTE 3 – LOAN FROM RELATED PARTY

 

		September 30,				December 31,
		2017				2016
			(unaudited)				(Audited)
			$				$
Loan from related party			42,502				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 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.

 

At June 11, 2017 the director cancelled by 3,000,000 shares of his.

 

NOTE 5 – INCOME TAXES

 

The benefit for income taxes for the periods ended September 30, 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:

 

		September 30,				September 30,
		2017				2016
			(Unaudited)				(Unaudited)
			$				$
Net tax loss carry-forwards			(5,099	)			(8,437	)
Statutory rate			15	%			15	%
Expected tax recovery			(765	)			(1,266	)
Change in valuation allowance			765				1,266
Income tax provision			—				—
			September 30,				December 31,
			2017				2016
			(Unaudited)				(Audited)
			$				$
Components of deferred tax assets:
Non capital tax loss carry forwards			9,717				8,952
Less: valuation allowance			(9,717	)			(8,952	)
Net deferred tax asset			—				—

 

 

The Company has provided a valuation allowance against the full amount of the deferred tax asset due to management’s uncertainty about its realization. As of September 30, 2017 the Company had approximately $34,993 in tax loss carryforwards that can be utilized future periods to reduce taxable income, and expire by the year 2037.

 

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

 

		September 30,				December 31,
		2017				2016
			(unaudited)				(Audited)
The following transactions were carried out with related parties:			$				$
Balance sheets:
Loan from related party - director			42,502				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

 

On October 16, 2017, Spirit International, Inc., a Nevada corporation (the “Company”) entered into a Stock Purchase Agreement (the “SPA”) with Kimho Consultants Company Limited, a Hong Kong limited liability company (the “Purchaser”) and Mr. Zur Dadon (the “Seller”), pursuant to which the Purchaser acquired 4,000,000 shares of common stock of the Company (the “Shares”) from Seller for an aggregate purchase price of $430,000 (“Stock Purchase”). The transaction contemplated in the SPA closed on October 17, 2017 (the “Closing”). For more details, please refer to Form 8-K filed on October 20, 2017.

 

 

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

 

Unless otherwise indicated, references in this Quarterly Report on Form 10-Q to “we,” “us,” and “our” are to the Company, unless the context requires otherwise. The following discussion and analysis by our management of our financial condition and results of operations should be read in conjunction with our unaudited condensed interim financial statements and the accompanying related notes included in this quarterly report and our audited financial statements and related notes and Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the year ended December 31, 2016 filed with the Securities and Exchange Commission.

 

Cautionary Statement Regarding Forward-Looking Statements

 

This report may contain forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Securities Exchange Act, and we intend that such forward-looking statements be subject to the safe harbors created thereby. These forward-looking statements are based on our management’s beliefs and assumptions and on information currently available to our management. Any such forward-looking statements would be contained principally in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Risk Factors.” Forward-looking statements include information concerning our possible or assumed future results of operations, business strategies, financing plans, competitive position, industry environment, potential growth opportunities and the effects of regulation. Forward-looking statements include all statements that are not historical facts and can be identified by terms such as “anticipates,” “believes,” “could,” “estimates,” “expects,” “hopes,” “intends,” “may,” “plans,” “potential,” “predicts,” “projects,” “should,” “will,” “would” or similar expressions.

 

Forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. We discuss many of these risks in greater detail in “Risk Factors.” Given these uncertainties, you should not place undue reliance on these forward-looking statements.

 

Also, forward-looking statements represent our management’s beliefs and assumptions only as of the date of this report. You should read this report and the documents that we reference in this report and have filed as exhibits to the report completely and with the understanding that our actual future results may be materially different from what we expect. Except as required by law, we assume no obligation to update these forward-looking statements publicly, or to update the reasons actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future.

 

Additional information concerning these and other risks and uncertainties is contained in our filings with the Securities and Exchange Commission, including the section entitled “Risk Factors” in our Annual Report on Form 10-K for the year ended April 30, 2016.

 

Unless otherwise indicated or the context otherwise requires, all references in this Form 10-Q to “we,” “us,” “our,” “our company,” “Spirit International” or the “Company” refer to Spirit International , Inc.

 

Our Ability to Continue as a Going Concern

 

Our independent registered public accounting firm has issued its report dated March 30, 2017, in connection with the audit of our annual financial statements as of March 30, 2017, that included an explanatory paragraph describing the existence of conditions that raise substantial doubt about our ability to continue as a going concern and Note 2 to the unaudited financial statements for the period ended September 30, 2017 also describes the existence of conditions that raise substantial doubt about our ability to continue as a going concern.

 

Overview

 

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.

 

Recent Development in our Business

 

Share Purchase by Kimho Consultants Company Limited (“Kimho”) and Change of Control

 

On October 16, 2017, the Company entered into a Stock Purchase Agreement (the “SPA”) with Kimho Consultants Company Limited, a Hong Kong limited liability company (the “Purchaser”) and Mr. Zur Dadon (the “Seller”), pursuant to which the Purchaser acquired 4,000,000 shares of common stock of the Company (the “Shares”) from Seller for an aggregate purchase price of $430,000 (“Stock Purchase”). The transaction contemplated in the SPA closed on October 17, 2017 (the “Closing”). The Stock Purchase is a private transaction exempt from registration pursuant to Regulation S of the Securities Act of 1933, as amended (the “Act”). 

 

 

As the result of the Closing, the Purchaser became the beneficial owner of approximately 78.3% of the Company’s issued and outstanding common stock. The Shares constitute “restricted securities” within the meaning of Rule 144 of the Act and may not be sold, pledged, or otherwise disposed of by the Purchaser without restriction under the Act and applicable state securities laws. The transaction has resulted in a change in control of the Company.

 

The SPA was originally disclosed in our Current Report on Form 8-K filed October 20, 2017, which is incorporated herein by this reference.

 

Share Exchange with I JIU JIU and its Stockholders

 

On November 10, 2017 (the “Closing Date”), the Company, I JIU JIU Limited (“I JIU JIU”) and the shareholders of I JIU JIU entered into the Share Exchange Agreement, which closed on the same date. Pursuant to the terms of the Share Exchange Agreement, we issued 8,000,000 new shares of our common stock, par value $0.0001 per share (the “Common Stock”) for all of the outstanding capital stock of I JIU JIU with the result that I JIU JIU became a wholly owned subsidiary of ours.

 

Pursuant to the Share Exchange, we acquired the business of the I JIU JIU, which is to engage in the business of providing loans to small and medium sized enterprises (“SMEs”) and individuals in the People’s Republic of China (“PRC” or “China”) through online platform. As a result, we have ceased to be a shell company.  

 

At the closing of the Share Exchange, 50,000 shares of I JIU JIU’s capital stock issued and outstanding immediately prior to the closing of the Share Exchange were exchanged for 8,000,000 shares of our common stock.

 

As a result, an aggregate of 8,000,000 shares of our common stock were issued to the stockholders of I JIU JIU.

 

The Share Exchange Agreement was originally disclosed in our Current Report on Form 8-K filed November 13, 2017, which is incorporated herein by this reference.

 

Share Cancellation by Kimho

 

In connection with the Share Exchange Agreement, the Company’s majority shareholder, Kimho entered into a share cancellation agreement with I JIU JIU’s stockholders whereby Kimho, owning an aggregate of 4,000,000 shares of the Company’s Common Stock agreed to cancel all its 4,000,000 shares of Common Stock in exchange of $440,000 paid by I JIU JIU’s stockholders (“Share Cancellation”).

 

The Share Cancellation Agreement was originally disclosed in our Current Report on Form 8-K filed November 13, 2017, which is incorporated herein by this reference.

 

Results of Operations

 

Three Months Ended September 30, 2017 Compared to Three Months Ended September 30, 2017

 

Revenue

 

Our revenue from operations for the three months ended September 30, 2017 was $12,000 compared to $2,000, an increase of $10,000, from the three months ended September 30, 2016.  This increase is primarily due to an increase in sales.

 

Cost of Goods Sold

 

Our cost of goods sold for the three months ended September 30, 2017 was $0 compared to $0 for the three months ended September 30, 2016.

 

Gross Profit

 

Our gross profit for the three months ended September 30, 2017 was $12,000 compared to $2,000 for the three months ended September 30, 2016. This increase in the gross profits is primarily attributed to expanded operations and sales during the fiscal year ended December 2017 to date. 

 

Operating Expenses

 

Our operating expenses increased by $6,784 to $9,563 for the three months ended September 30, 2017, from $2,779 for the three months ended September 30, 2016.  The increase was primarily due to the increases in general and administrative costs related to professional fees.

 

 

Net Income

 

Our net loss decreased by $3,216 to a net gain of $2,437 for the three months ended September 30, 2017 compared to a net loss of $779 for the three months ending September 30, 2016. The increase in net income compared to the prior period is primarily a result of the increase in gross profits. 

 

Nine Months Ended September 30, 2017 Compared to Nine Months Ended September 30, 2017

 

Revenue

 

Our revenue from operations for the nine months ended September 30, 2017 was $15,600 compared to $9,000, an increase of $10,000, from the nine months ended September 30, 2016.  This increase is primarily due to an increase in sales.

 

Cost of Goods Sold

 

Our cost of goods sold for the nine months ended September 30, 2017 was $0 compared to $0 for the nine months ended September 30, 2016.

 

Gross Profit

 

Our gross profit for the nine months ended September 30, 2017 was $15,600 compared to $9,000 for the nine months ended September 30, 2016. This increase in the gross profits is primarily attributed to expanded operations and sales during the fiscal year ended December 2017 to date. 

 

Operating Expenses

 

Our operating expenses increased by $6,262 to $20,699 for the nine months ended September 30, 2017, from $17,437 for the nine months ended September 30, 2016.  The increase was primarily due to the increases in general and administrative costs related to professional fees and setup fees.

 

Net Income

 

Our net loss decreased by $3,338 to a net loss of $5,099 for the nine months ended September 30, 2017 compared to a net loss of $8,437 for the nine months ending September 30, 2016. The increase in net income compared to the prior period is primarily a result of the increase in gross profits. 

 

Liquidity and Capital Resources

 

Introduction

 

During the nine months ended September 30, 2017 we began to reduce our net loss, however, we still used net cash of $(1,966), compared to $(12,937) for the period ended September 30, 2016. Our cash on hand as of September 30, 2017 was $8,952. 

 

Cash Requirements

 

We had cash available of $8,952 as of September.  Based on our revenues, cash on hand and current monthly burn rate, we believe that our operations are not sufficient to fund operations through December 31, 2017. For the three months ended September 30, 2017, the Compay did see a net gain of $2,437, but this gain was not sufficient to cover cashflow for operations.

 

Sources and Uses of Cash

 

Operations

 

We had net cash provided in operating activities of $(1,966) for the nine months ended September 30, 2017, as compared to cash used of $12,937 for the nine months ended September 30, 2017.

 

Net cash provided in operations consisted primarily of the net loss of $5,099. Changes in assets and liabilities consisted of increases in accounts receivable $2,500, and an increase in accounts payable of $633.

 

Investments

 

We had no net cash used in investing activities for the nine months ended September 30, 2017.

 

Financing

 

We had net cash provided in financing activities of $465 for the nine months ended September 30, 2017, as compared to net cash provided in financing activities of $16,540 for the nine months ended September 30, 2016.  

 

 

Off-Balance Sheet Arrangements

 

We have no 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 we consider material.

 

Going Concern

 

Our financial statements are prepared using generally accepted accounting principles, which contemplate the realization of assets and liquidation of liabilities in the normal course of business. Because the business is relatively new and has a short history and relatively few sales, no certainty of continuation can be stated. The accompanying financial statements for the three months and nine months ended September 30, 2017 and 2016 have been prepared assuming that we will continue as a going concern, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business.

 

The Company has incurred losses from operations and has a working capital deficit, which raises substantial doubt about its ability to continue as a going concern.

 

Item 3. Quantitative and Qualitative Disclosures about Market Risk

 

We are a smaller reporting company and therefore, we are not required to provide information required by this Item of Form 10-Q.

 

Item 4. Controls and Procedures

 

Evaluation of Disclosure Controls and Procedures

 

Disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) are designed to ensure that information required to be disclosed in reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms. Disclosure controls and procedures are also designed to ensure that such information is accumulated and communicated to management, including the principal executive officer and principal financial officer, to allow timely decisions regarding required disclosures.

 

We carried out an evaluation, under the supervision and with the participation of management, including our principal executive officer and principal financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of September 30, 2016. In designing and evaluating the disclosure controls and procedures, management recognizes that there are inherent limitations to the effectiveness of any system of disclosure controls and procedures, including the possibility of human error and the circumvention or overriding of the controls and procedures. Accordingly, even effective disclosure controls and procedures can only provide reasonable assurance of achieving their desired control objectives. Additionally, in evaluating and implementing possible controls and procedures, management is required to apply its reasonable judgment. Based on the evaluation described above, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures were not effective as of the end of the period covered by this report because we did not document our Sarbanes-Oxley Act Section 404 internal controls and procedures.

 

As funds become available to us, we expect to implement additional measures to improve disclosure controls and procedures such as implementing and documenting our internal controls procedures.

 

Changes in internal controls over financial reporting

 

There have been no changes in our internal control over financial reporting during the quarter ended September 30, 2017  that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

 

Limitations on the Effectiveness of Controls  

 

A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met.  The Company’s management, including its Principal Executive Officer and its Principal Financial Officer, do not expect that the Company’s disclosure controls will prevent or detect all errors and all fraud. 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.  Because of 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, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Controls can also be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls.  The design of any system of controls is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.  Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with associated policies or procedures. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

 

 

PART II – OTHER INFORMATION

 

ITEM 1. LEGAL PROCEEDINGS

 

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 effect on our business, financial condition or operating results.

 

ITEM 1A. RISK FACTORS

 

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.

 

ITEM 5. OTHER INFORMATION

 

None.

 

ITEM 6. EXHIBITS

 

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
32.1		Certification of the Chief Executive and Financial Officer required under Section 1350 of the Exchange Act
101 INS		XBRL Instance Document
101 SCH		XBRL Taxonomy Schema
101 CAL		XBRL Taxonomy Extension Calculation Linkbase
101 DEF		XBRL Taxonomy Extension Definition Linkbase
101 LAB		XBRL Taxonomy Extension Label Linkbase
101 PRE		XBRL Taxonomy Extension Presentation Linkbase

 

 

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.

 

	Spirit International, Inc.
Date: November 15, 2017	By: /s/ Zur Dadon
	Zur Dadon
	Chief Executive Officer