UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q/A

(Amendment No. 1)

 

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

 

For the quarterly period ended June 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: 333-210519

 

MON SPACE NET INC.

(Exact name of registrant as specified in its Charter)

 

Nevada		7370		81-2629386
(State or other jurisdiction of		(Primary Standard Industrial		(I.R.S. Employer
incorporation or organization)		Classification Code Number)		Identification Number)

 

100.3.041, 129 Offices,

Block J, Jaya One,

No. 72A, Jalan Universiti,

Section 13, 46200

Petaling Jaya, Malaysia

+60322820888

(Address, including zip code, and telephone number,

Including area code, of registrant’s principal executive offices)

 

VCorp Services, LLC

c/o Mon Space Net Inc.

1645 Village Center Circle, Suite 170

Las Vegas, Nevada 89134

(707) 525-9900

(Name, address, including zip code, and telephone number,

Including area code, of agent for service)

 

Approximate date of commencement of proposed sale to the public: from time to time after this registration statement becomes effective.

 

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 Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (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, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☒
(Do not check if smaller reporting company)		Emerging growth company	☒

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

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

 

Indicate the number of shares outstanding of each of the issuer’s classes of common equity: 213,330,000 shares of the registrant’s common stock, par value of $0.001 per share, were outstanding as of August 21, 2017.

 

 

 

Explanatory Note

 

The purpose of this Amendment No. 1 to Mon Space Net Inc’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2017 (the “Form 10-Q”), filed with the Securities and Exchange Commission (“SEC”) on August 21, 2017 is to restate the Company’s consolidated financial statements and related disclosures for the three six months ended June 30, 2017. The restatement reflects adjustments to correct (1) the non-cash error in the Company’s accounting for the period end revenue cut-off accrual. The error was discovered during the review process; and (2) two invoices that were sent to a customer were incorrectly denominated in U.S. Dollar (USD) when the amount should have been in Chinese Yuan (CNY). This was discovered in connection with the third quarter 2017 closing process by the Company.

 

The nature and impact of these adjustments are described in Note 1: “Basis of Presentation and Restatement” in this Form 10-Q/A. The restatement has resulted in the Company’s reducing its previously reported net income of $8,973 for the three months ended June 30, 2017 to a net loss of $4,522 and increasing its previously reported net loss of $5,203 to $18,698 for the six months ended June 30, 2017.

 

No other changes have been made to the Form 10-Q. This Form 10-Q/A continues to speak as of the original filing date of the Form 10-Q, does not reflect events that may have occurred subsequent to the original filing date, and does not modify or update any related disclosures made in the Form 10-Q.

 

 

Mon Space Net Inc.

 

Quarterly Report on Form 10-Q

 

For the period ended June 30, 2017

 

TABLE OF CONTENTS

 

		PAGE
PART 1 - FINANCIAL INFORMATION		1
Item 1.	Financial Statements	1
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	9
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

 

The following unaudited interim financial statements of Mon Space Net Inc. (referred to herein as the “Company,” “we,” “us” or “our”) are included in this quarterly report on Form 10-Q/A:

 

Mon Space Net Inc. and Subsidiary

Index to Consolidated Financial Statements

 

	Page
Consolidated Balance Sheets as of June 30, 2017 and December 31, 2016 (unaudited)	2
Consolidated Statements of Operations and Comprehensive Loss for the three and six months ended June 30, 2017 and 2016 (unaudited)	3
Consolidated Statements of Cash Flows for the six months ended June 30, 2017 and 2016 (unaudited)	4
Notes to unaudited consolidated financial statements	5

 

 

MON SPACE NET INC.

CONSOLIDATED BALANCE SHEETS

(Unaudited)

 

		June 30,				December 31,
		2017				2016
		(Restated)
ASSETS
Current assets
Cash and cash equivalents		$	24,274			$	65,700
Receivables - related party			33,417				1,599
Other current assets			210				-
Total current assets			57,901				67,299
Total assets		$	57,901			$	67,299
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable and accrued liabilities		$	-			$	2,625
Note payable - related party			11,476				11,476
Due to related party			8,858				-
Total current liabilities			20,334				14,101
Total liabilities			20,334				14,101
Stockholders’ equity
Common stock, $0.001 par value, 1,000,000,000 authorized, 213,330,000 shares issued and outstanding			213,330				213,330
Additional paid-in capital			21,217				18,592
Accumulated deficit			(197,422	)			(178,724	)
Accumulated other comprehensive income			442				-
Total stockholders’ equity			37,567				53,198
Total liabilities and stockholders’ equity		$	57,901			$	67,299

 

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

 

 

MON SPACE NET INC.

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(Unaudited)

 

		Three Months Ended								Six Months Ended
		June 30,								June 30,
		2017				2016				2017				2016
		(Restated)								(Restated)
Revenues – related party		$	26,268			$	-			$	26,268			$	-
Operating expenses
General and administrative			30,809				5,700				44,966				18,217
Total operating expenses			30,809				5,700				44,966				18,217
Loss from operations			(4,541	)			(5,700	)			(18,698	)			(18,217	)
Other income			19				-				-				-
Provision for income tax			-				-				-				-
Net loss		$	(4,522	)		$	(5,700	)		$	(18,698	)		$	(18,217	)
Other comprehensive loss:
Foreign currency translation adjustments			632				-				442				-
Comprehensive loss			(3,890	)			(5,700	)			(18,256	)			(18,217	)
Basic and diluted net loss per common share		$	(0.00	)		$	(0.00	)		$	(0.00	)		$	(0.00	)
Weighted average number of common shares outstanding			213,330,000				213,330,000				213,330,000				10,904,231

 

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

 

 

MON SPACE NET INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 

		Six Months Ended
		June 30,
		2017				2016
		(Restated)
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss		$	(18,698	)		$	(18,217	)
Adjustments to reconcile net loss to net cash used in operating activities:
Receivables - related party			(31,818	)			-
Other current assets			(210	)			-
Accounts payable			(2,625	)			1,125
Net cash used in operating activities			(53,351	)			(17,092	)
CASH FLOWS FROM FINANCING ACTIVITIES
Capital contributions			2,625				17,092
Advance from related party			8,858				201,476
Proceeds from sale of common stock			-				8,330
Net cash provided by financing activities			11,483				226,898
Effect of exchange rate changes on cash and cash equivalents			442				-
Net change in cash and cash equivalents			(41,426	)			209,806
Cash and cash equivalents, beginning of period			65,700				-
Cash and cash equivalents, end of period		$	24,274			$	209,806
SUPPLEMENTAL CASH FLOWS DISCLOSURE
Cash paid for interest		$	-			$	-
Cash paid for income tax		$	-			$	-

 

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

 

 

MON SPACE NET INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 1 – NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

The Company

 

Mon Space Net, Inc (the “Company”) was incorporated in the State of Nevada on December 31, 2015. The Company plans to offer an online marketplace to sell products and services using a business to business to consumer model.

 

On March 28, 2017, the Company incorporated MSNI (M) Sdn. Bhd., a company formed under the laws of Malaysia, as a wholly owned subsidiary. The Company started generating revenue effective April 1, 2017 from the collaboration with Monspacemall Sdn Bhd for the e-commerce business.

 

Restatement of previously issued consolidated financial statements

 

The Company has restated the accompanying quarterly consolidated financial statements as of and for the three and six months ended June 30, 2017 through the filing of this Form 10-Q/A. The restatement reflects adjustments below:

 

1.

The restatement of the Original Form 10-Q reflected in this amendment corrects errors in the amount of revenue recognized for April and May 2017 from a collaborative profit sharing arrangement with Monspacemall Sdn Bhd., a related party. Specifically, the Company mistakenly recorded April and May 2017 sales revenue and costs denominated in Chinese Yuan (CNY) as U.S. Dollar (USD). This was discovered in connection with the third quarter closing process. The effect of the correction on consolidated balance sheet as of June 30, 2017 and consolidated statements of operations and other comprehensive loss for the three months ended June 30, 2017 and for the six months ended June 30, 2017 is summarized in the following table.

2.

The restatement of the Original Form 10-Q reflected in this amendment also adjusts the accrual of June revenues from the collaborative profit sharing arrangement with Monspacemall Sdn Bhd. The error was discovered during the third quarter review process. The effect of the adjustment on the consolidated balance sheet as of June 30, 2017 and consolidated statements of operations and other comprehensive loss for the three months ended June 30, 2017 and for the six months ended June 30, 2017 is summarized in the following table.

 

		As Originally				Currency Error				Accrual
		Reported				Correction				Adjustment				Restated
Consolidated Balance Sheet
Receivables – related party		$	46,726			$	(34,062	)		$	20,753			$	33,417
Accumulated deficit		$	(183,927	)		$	(33,907	)		$	20,412			$	(197,422	)
Accumulated other comprehensive loss		$	256			$	(155	)		$	341			$	442
Consolidated Statement of Operations – for the three months ended
Revenue		$	39,763			$	(33,907	)		$	20,412			$	26,268
Net income (loss)		$	8,973			$	(33,907	)		$	20,412			$	(4,522	)
Foreign currency translation adjustments		$	446			$	(155	)		$	341			$	632
Total comprehensive income (loss)		$	9,419			$	(34,062	)		$	20,753			$	(3,890	)
Consolidated Statement of Operations – for the six months ended
Revenue		$	39,763			$	(33,907	)		$	20,412			$	26,268
Net income (loss)		$	(5,203	)		$	(33,907	)		$	20,412			$	(18,698	)
Foreign currency translation adjustments		$	256			$	(155	)		$	341			$	442
Total comprehensive income (loss)		$	(4,947	)		$	(34,062	)		$	20,753			$	(18,256	)
Consolidated Statement of Cash Flow
Net income (loss)		$	(5,203	)		$	(33,907	)		$	20,412			$	(18,698	)
Receivables - related party		$	(45,127	)		$	34,062			$	(20,753	)		$	(31,818	)
Effect of exchange rate changes on cash and cash equivalents		$	256			$	(155	)		$	341			$	442

 

 

Basis of Presentation

 

The consolidated financial statements and accompanying notes are prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) in all material respects. Certain information and note disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles in the United States of America have been condensed or omitted from these statements pursuant to such rules and regulations and, accordingly, they do not include all the information and notes necessary for comprehensive financial statements and should be read in conjunction with our audited consolidated financial statements for the year ended December 31, 2016.

 

Principles of Consolidation

 

The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary, MSNI (M) Sdn. Bhd. Intercompany transactions and balances have been eliminated.

 

Use of Estimates and Assumptions

 

The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

 

Cash and Cash Equivalents

 

Cash and cash equivalents include cash on hand and on deposit at banking institutions. Balances held by the Company are not typically in excess of FDIC insured limits. As of June 30, 2017, all of the Company’s cash was deposited in two banks. 

 

Revenue Recognition

 

Revenues consist of profit sharing revenues from a collaboration agreement with Monspacemall Sdn Bhd (“MSMSB”). The Company recognizes revenue when it receives the monthly invoice and reconciliation from MSMSB showing products shipped, and all risks and rewards of ownership have been transferred to third-party customers, minus the cost of production and related operating expenses incurred by MSMSB.

 

Loss Per Common Share

 

Loss per common share excludes dilution and is computed by dividing net loss by the weighted average number of common shares outstanding during the period. Diluted loss per common share reflect the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the net income of the entity. As of June 30, 2017, there are no outstanding dilutive securities. 

 

 

Foreign Currency

 

The Company has determined that the functional currency of the Company is U.S. Dollars. Foreign currency transaction gains and losses are included in the statement of operations as other income (expense). MSNI (M) Sdn. Bhd.’s functional currency is the Malaysian Ringgit. The Company translates their financial statements from their functional currencies into the U.S. dollar.

 

An entity’s functional currency is the currency of the primary economic environment in which it operates and is generally the currency in which the business generates and expends cash. MSNI (M) Sdn. Bhd., whose functional currency is the Malaysian Ringgit, translate their assets and liabilities into U.S. dollars at the exchange rates in effect as of the balance sheet date. Revenues and expenses are translated into U.S. dollars at the average exchange rates for the year. Translation adjustments are included in accumulated other comprehensive income (loss), a separate component of equity. Foreign exchange gains and losses included in net income result from foreign exchange fluctuations on transactions denominated in a currency other than an entity’s functional currency.

 

Income taxes

 

An asset and liability approach is used for financial accounting and reporting for income taxes. Deferred income taxes arise from temporary differences between income tax and financial reporting and principally relate to recognition of revenue and expenses in different periods for financial and tax accounting purposes and are measured using currently enacted tax rates and laws. In addition, a deferred tax asset can be generated by net operating loss carry forwards. If it is more likely than not that some portion or all of a deferred tax asset will not be realized, a valuation allowance is recognized. The Company has tax losses that may be applied against future taxable income. The potential tax benefit arising from these loss carryforwards are offset by a valuation allowance due to uncertainty of profitable operations in the future. 

 

Subsequent Events

 

The Company has evaluated all transactions through the financial statement issuance date for subsequent event disclosure consideration.

 

NOTE 2 – GOING CONCERN

 

The Company generated minimal revenue from the collaboration with Monspacemall Sdn Bhd and had an accumulated deficit of $197,422. These factors raise substantial doubt regarding the Company’s ability to continue as a going concern. The Company’s continuation as a going concern is dependent on its ability to execute its operational plan to generate sufficient cash flows from operations to meet its obligations and/or obtaining additional financing from its shareholders or other sources, as may be required. There can be no assurance that the necessary debt or equity financing will be available, or will be available on terms acceptable to our company. We estimate that based on current plans and assumptions, our available cash will not be sufficient to satisfy our cash requirements under our present operating expectations, without further financing, for up to 12 months. 

 

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern; however, the above conditions raise substantial doubt about the Company’s ability to do so. The consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classifications of liabilities that may result should the Company be unable to continue as a going concern.

 

We are attempting to generate sufficient revenue; however, our cash position may not be sufficient to support our daily operations. While we believe in the viability of our strategy to generate sufficient revenues in the future and in our ability to raise additional funds, there can be no assurances to that effect. The ability of our company to continue as a going concern is dependent upon our ability to further implement our business plan, generate sufficient revenue to cover operating expenses and in our ability to raise additional funds.

 

NOTE 3 – EQUITY

 

The Company is authorized to issue 1,000,000,000 shares of common stock.

 

During March 2017, the Company recorded $2,625 in additional paid in capital for filing expenses paid on behalf of the Company from one of its directors, Low Koon Poh.

 

 

NOTE 4 – RELATED PARTY TRANSACTIONS

 

Collaborative Arrangement

 

In April 2017, the Company, through its wholly-owned subsidiary, MSNI (M) Sdn Bhd. (“MSNI”), entered into a collaboration agreement with Monspacemall Sdn Bhd (“MSMSB”) to develop, maintain and operate an e-commerce business. Lai Chai Suang, the Company’s Chief Executive Officer and Chief Financial Officer, is also a shareholder and director of MSMSB.  

 

MSMSB is responsible for the operation of the e-commerce platform and is also the principal in the end-customer product sales. MSMSB has the primary responsibility for order fulfillment, collection of receivables and handling of sales returns in all territories.

 

MSNI contributed a consumer database up to a maximum of 500,000 persons in exchange for the profit sharing arrangement in an amount equal to 50% of the net profits from the collaboration agreement, which is included in net revenue.

 

The agreement is initially valid for a year and automatically renews in one-year increments or whenever both parties agree to terminate it.

 

Net revenue from this collaborative arrangement was $26,268 for the three months and six months ended June 30, 2017. As of June 30, 2017, the Company had a receivable from MSMSB of $33,417.

 

Acquisition Agreement

 

On April 7, 2017, the Company entered into an acquisition agreement with the shareholders of MSMSB pursuant to which the Company agreed to purchase a 100% equity interest, or 100,000 ordinary shares of MSMSB for an aggregate purchase price of $50,000. The consummation of the acquisition is subject to the completion of an audit of MSMSB.

 

Other Related Party Transactions

 

In January 2017, the Company paid certain general and administrative expenses on behalf of Mon Space Plantation Inc, a company whose directors include Lai Chai Suang, Low Koon Poh and Chan Foo Weng, in the amount of $6,599. The amounts are recorded as a receivable on the accompanying balance sheet.

 

In June 2017, the Company’s director, Low Koon Poh, paid employees’ salaries and deposited cash to open a bank account on behalf of the Company of approximately $8,800.

 

 

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

Results of Operations

 

We generated minimal revenue for the three and six months ended June 30, 2017 and no revenue for the three and six months ended June 30, 2016. The following table summarizes our operating expenses, and net income (loss) for all periods presented below. The Company’s operations to date have been limited to offering shares of Common Stock to investors, and collaboration arrangement with Monspacemall Sdn Bhd.

 

The table below sets forth line items from the Company’s unaudited consolidated Statements of Operations.

 

		Three Months Ended
		June 30,												Percentage
		2017				2016				Inc. (Dec.)				Inc. (Dec.)
		(Restated)
Revenue			26,268				-				26,268				100	%
Operating expenses
General and administrative		$	30,809			$	5,700				25,109				441	%
Total operating expenses			30,809				5,700				25,109				441	%
Loss from operations			(4,541	)			(5,700	)			1,159				-20	%
Other income			19				-				19				100	%
Net loss		$	(4,522	)		$	(5,700	)			1,178				-21	%

 

Three Months Ended June 30, 2017 compared with Three Months Ended June 30, 2016

 

Revenue: The consolidated revenue increased $26,268, or 100%, to $26,268 for the three months ended June 30, 2017 from $nil for the three months ended June 30, 2016. The increase in revenue is from the profit sharing arrangement with Monspacemall starting in April 2017, where MSNI Malaysia has agreed to contribute to the business an initial consumer database of up to 500,000 members to receive 50% of the profit generated from monspacemall.com.

 

General and administrative: The consolidated general and administrative expenses increased $25,109, or 441%, to $30,809 for the three months ended June 30, 2017 from $5,700 for the three months ended June 30, 2016. The increase was attributable to secretarial, printing and stationery fees as well as an increase in audit, filing and registration fees.

 

Other income: The consolidated other income increased $19, or 100%, to $19 for the three months ended June 30, 2017 from $nil for the three months ended June 30, 2016. The increase was attributable to foreign currency transactions by MSNI (M) Sdn. Bhd, a company formed under the laws of Malaysia on March 28, 2017, as a wholly owned subsidiary.

 

Net loss: Net loss decreased by $1,178, or 21%, to $4,522, for the three months ended June 30, 2017 from net loss of $5,700 for the three months ended June 30, 2016. The decrease in net loss was driven by revenue from the collaboration arrangement with Monspacemall, offset by increases in general and administrative expenses.

 

 

		Six Months Ended
		June 30,												Percentage
		2017				2016				Inc. (Dec.)				Inc. (Dec.)
		(Restated)
Revenue			26,268				-				26,268				100	%
Operating expenses
General and administrative		$	44,966			$	18,217				26,749				147	%
Total operating expenses			44,966				18,217				26,749				147	%
Loss from operations			(18,698	)			(18,217	)			(481	)			3	%
Other expenses			-				-				-				0	%
Net loss		$	(18,698	)		$	(18,217	)			(481	)			3	%

 

Six Months Ended June 30, 2017 compared with Six Months Ended June 30, 2016

 

Revenue: The consolidated revenue increased $26,268, or 100%, to $26,268 for the six months ended June 30, 2017 from $nil for the six months ended June 30, 2016. The increase in revenue is from the profit sharing arrangement with Monspacemall starting in April 2017, where MSNI Malaysia has agreed to contribute to the business an initial consumer database of up to 500,000 members to receive 50% of the profit generated from monspacemall.com.

 

General and administrative: The consolidated general and administrative expenses increased $26,749, or 147%, to $44,966 for the six months ended June 30, 2017 from $18,217 for the six months ended June 30, 2016. The increase was attributable to secretarial, printing and stationery fees as well as an increase in audit, filing and registration fees.

 

Net loss: Net loss increased by $481, or 3%, to $18,698 for the six months ended June 30, 2017 from $18,217 for the six months ended June 30, 2016. The increase in net loss was driven by increases in general and administrative expenses, offset by revenue from the collaboration arrangement with Monspacemall.

 

Liquidity and Capital Resources

 

As of June 30, 2017, we had a cash balance of $24,274. During the six months ended June 30, 2017, we used approximately $53,351 in cash for operating activities and were provided with approximately $11,483 through financing activities. We can provide no assurance that we can continue to satisfy our cash requirements for at least the next twelve months.

 

We have nominal assets and have generated minimal revenues since inception. We currently have no material commitments for capital expenditures. We may be required to raise additional funds, particularly if we are unable to generate positive cash flow as a result of our operations. We estimate that based on current plans and assumptions, our available cash will not be sufficient to satisfy our cash requirements under our present operating expectations, without further financing, for up to 12 months. In addition, our company may, from time to time, receive continued funding and capital resources from related parties. However, as of the date of this Form 10-Q, such related parties do not have any existing obligation to advance funds or working capital to support our business, nor can our company rely on any advance funds from such related parties. Other than working capital, we presently have no other alternative source of working capital. We may not have sufficient working capital to fund the expansion of our operations and to provide working capital necessary for our ongoing operations and obligations. We may need to raise significant additional capital to fund our operating expenses, pay our obligations, and grow our company. We do not anticipate we will be profitable in 2017. Therefore, our future operations may be dependent on our ability to secure additional financing. Financing transactions may include the issuance of equity or debt securities, obtaining credit facilities, or other financing mechanisms. However, a downturn in the U.S. equity and debt markets could make it more difficult to obtain financing through the issuance of equity or debt securities. Even if we are able to raise the funds required, it is possible that we could incur unexpected costs and expenses, fail to collect amounts owed to us, or experience unexpected cash requirements that would force us to seek alternative financing. Furthermore, if we issue additional equity or debt securities, stockholders may experience additional dilution or the new equity securities may have rights, preferences or privileges senior to those of existing holders of our common stock. The inability to obtain additional capital will restrict our ability to grow and may reduce our ability to continue to conduct business operations. If we are unable to obtain additional financing, we will likely be required to curtail our marketing and development plans and possibly cease our operations. 

 

 

We anticipate that, depending on market conditions and our plan of operations, we may incur operating losses in the foreseeable future. Therefore, our auditors have raised substantial doubt about our ability to continue as a going concern.

 

Our liquidity may be negatively impacted by the significant costs associated with our public company reporting requirements, costs associated with newly applicable corporate governance requirements, including requirements under the Sarbanes-Oxley Act of 2002 and other rules implemented by the Securities and Exchange Commission. We expect all of these applicable rules and regulations to significantly increase our legal and financial compliance costs and to make some activities more time consuming and costly.

 

Going Concern

 

The Company generated minimal revenue from the collaboration with Monspacemall Sdn Bhd and had an accumulated deficit of $197,422. These factors raise substantial doubt regarding the Company’s ability to continue as a going concern. The Company’s continuation as a going concern is dependent on its ability to execute its operational plan to generate sufficient cash flows from operations to meet its obligations and/or obtaining additional financing from its shareholders or other sources, as may be required. There can be no assurance that the necessary debt or equity financing will be available, or will be available on terms acceptable to our company. We estimate that based on current plans and assumptions, our available cash will not be sufficient to satisfy our cash requirements under our present operating expectations, without further financing, for up to 12 months. 

 

 The accompanying consolidated financial statements have been prepared assuming that we will continue as a going concern; however, the above conditions raise substantial doubt about our ability to do so. The consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classifications of liabilities that may result should the we were unable to continue as a going concern.

 

We are attempting to generate sufficient revenue; however, our cash position may not be sufficient to support our daily operations. While we believe in the viability of our strategy to generate sufficient revenues in the future and in our ability to raise additional funds, there can be no assurances to that effect. The ability of us to continue as a going concern is dependent upon our ability to further implement our business plan, generate sufficient revenue to cover operating expenses and in our ability to raise additional funds

 

Significant and Critical Accounting Policies and Practices

 

While our significant accounting policies are more fully described in Note 1 to our consolidated financial statements, we believe that the following accounting policies are the most critical to aid you in fully understanding and evaluating this management discussion and analysis. 

 

Foreign Currency

 

The Company has determined that the functional currency of the Company is U.S. Dollars. Foreign currency transaction gains and losses are included in the statement of operations as other income (expense). MSNI (M) Sdn. Bhd.’s functional currency is the Malaysian Ringgit. The Company translates their financial statements from their functional currencies into the U.S. dollar.

 

An entity’s functional currency is the currency of the primary economic environment in which it operates and is generally the currency in which the business generates and expends cash. MSNI (M) Sdn. Bhd., whose functional currency is the Malaysian Ringgit, translate their assets and liabilities into U.S. dollars at the exchange rates in effect as of the balance sheet date. Revenues and expenses are translated into U.S. dollars at the average exchange rates for the year. Translation adjustments are included in accumulated other comprehensive income (loss), a separate component of equity. Foreign exchange gains and losses included in net income result from foreign exchange fluctuations on transactions denominated in a currency other than an entity’s functional currency.

 

Use of Estimates and Assumptions

 

The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

 

Revenue Recognition

 

Revenues consist of profit sharing revenues from a collaboration agreement with Monspacemall Sdn Bhd (“MSMSB”). The Company recognizes revenue when it receives the monthly invoice and reconciliation from MSMSB showing products shipped, and all risks and rewards of ownership have been transferred to third-party customers, minus the cost of production and related operating expenses incurred by MSMSB.

 

 

Contractual Obligations

 

We do not have any contractual obligations at this time.

 

Off Balance Sheet Arrangements

 

We do not have any off-balance sheet arrangements. 

 

Item 3.

Quantitative and Qualitative Disclosures About Market Risk.

 

Not applicable because we are a smaller reporting company. 

 

Item 4.

Controls and Procedures.

 

Disclosure controls and procedures

 

Pursuant to Rule 13a-15(b) under the Securities Exchange Act of 1934 (“Exchange Act”), the Company carried out an evaluation, with the participation of the Company’s management, including the Company’s Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”) (the Company’s principal financial and accounting officer), of the effectiveness of the Company’s disclosure controls and procedures (as defined under Rule 13a-15(e) under the Exchange Act) as of the end of the period covered by this report. Based upon that evaluation, the Company’s CEO and CFO concluded that the Company’s disclosure controls and procedures are not effective as of June 30, 2017 to ensure that information required to be disclosed by the Company in the reports that the Company files or submits under the Exchange Act, is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to the Company’s management, including the Company’s CEO and CFO, as appropriate, to allow timely decisions regarding required disclosure for the reason described below.

 

Because of our limited operations, we have limited number of employees which prohibits a segregation of duties. In addition, we lack a formal audit committee with a financial expert. As we grow and expand our operations we will engage additional employees and experts as needed. However, there can be no assurance that our operations will expand.

 

Changes in Internal Control Over Financial Reporting

 

There were no changes in our internal control over financial reporting that occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 

 

PART II— OTHER INFORMATION

 

Item 1.

Legal Proceedings.

 

There are no other actions, suits, proceedings, inquiries or investigation before or by any court, public board, government agency, self-regulatory organization or body pending or, to the knowledge of the executive officers of our company or any of our subsidiaries, threatened against or affecting our company, our common stock, any of our subsidiaries or of our companies or our subsidiaries’ officers or directors in their capacities as such, in which an adverse decision could have a material adverse effect.

 

Item 1A.

Risk Factors.

 

Not required because we are a smaller reporting company. 

 

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds.

 

There were no unregistered sales of the Company’s equity securities during the three months ended June 30, 2017, that were not otherwise disclosed in a Current Report on Form 8-K.

 

Item 3.

Defaults Upon Senior Securities.

 

There has been no default in the payment of principal, interest, sinking or purchase fund installment, or any other material default, with respect to any indebtedness of the Company. 

 

Item 4.

Mine Safety Disclosures.

 

Not applicable.

 

Item 5.

Other Information.

 

There is no other information required to be disclosed under this item which was not previously disclosed. 

 

Item 6.

Exhibits.

 

Exhibit Number		Description
21.1*		List of Subsidiary
31.1		Certifications of the Chief Executive Officer and Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1+		Certifications of the Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2+		Certifications of the Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS		XBRL Instance Document
101.SCH		XBRL Taxonomy Extension Schema Document
101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document.
101.LAB		XBRL Taxonomy Extension Label Linkbase Document.
101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document.
101.DEF		XBRL Taxonomy Extension Definition Linkbase Document.

 

+	In accordance with the SEC Release 33-8238, deemed being furnished and not filed.

*	Incorporated by reference to the exhibits to our current report on Form 8-K filed with the SEC on April 20, 2017

 

 

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.

 

	Mon Space Net Inc.
Date: November 20, 2017	By:	/s/ Lai Chuai Suang
		Lai Chuai Suang
		Chief Executive Officer and Chief Financial Officer
		(Principal Executive Officer and Principal Accounting Officer)

 

 

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