UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

[X]	QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

[_]	TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT

For the transition period from ____________ to ______________

Commission file number: 000-54629

GMCI CORP.

(Exact name of registrant as specified in its charter)

Level 1 Tower 1 Avenue 3

The Horizon

Bangsar South City, Kuala Lumpur 59200

---

 (Address of principal executive offices)

60-3-2242-2259

---

 (Registrant's telephone number)

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 [X] No [X]

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 [X]

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.

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 [X]

The number of shares of the issuer's common stock outstanding as of December 12, 2017 was 720,802,346 shares, par value $0.001 per share.

 

GMCI CORP.

FORM 10-Q

Quarterly Period Ended September 30, 2017

INDEX

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

*Derived from audited information

 

 

 

GMCI Corp., formerly Pacific Metals Corp. ("GMCI" or the "Company") was incorporated in Nevada on June 28, 2006.

 

On March 17, 2015, the Company filed Articles of Merger with the Nevada Secretary of State whereby it entered into a statutory merger with its wholly-owned subsidiary, GMCI Corp., pursuant to Nevada Revised Statutes 92A.200 et. seq. The effect of such merger is that the Company was the surviving entity and changed its name to "GMCI Corp."

 

On March 19, 2015, the Company filed an Issuer Company-Related Action Notification Form with FINRA requesting that the aforementioned name change be effected in the market. The Company also requested that its ticker symbol be changed to "GMCI". On April 16, 2015, FINRA granted approval for the name change and the ticker symbol change.

 

On March 26, 2015, GMCI entered into and closed a Share Exchange Agreement (the "SBS Agreement") with all of the shareholders of SBS Mining Corp. Malaysia Sdn. Bhd., ("SBS") a Malaysian corporation whose primary business is mining and exploration of properties located in Malaysia.  Pursuant to the SSBS Agreement, the Company acquired 600,000 shares of capital stock of SBS from the SBS Shareholders and in exchange issued 500,000,000 restricted shares of its common stock to the SBS Shareholders.

 

As a result of the completion of the aforementioned recapitalization, SBS is now the Company's wholly-owned subsidiary.  The aforementioned SBS Agreement was accounted for as recapitalization whereby the financial statements subsequent to the date of the transaction are presented as a continuation of SBS.  Under recapitalization accounting SBS (subsidiary) is treated as the accounting parent (acquirer) and the Company (parent) is treated as the accounting subsidiary (acquiree). All outstanding shares have been restated to reflect the effect of the business combination. 

 

SBS is a producer of metal ore and is focused on producing iron ore, bauxite and tin ore. Currently SBS is principally engaged in the prospecting of minerals and ultimately the mining of minerals upon successful exploration.  During fiscal 2017 SBS commenced revenue generating operations as a result of its mineral trading business (See Note 3), which have resulted in revenues during the three months ended September 30, 2017 of $49,281, as a result of concluded shipments of 49,006 net tonnes of bauxite.  Essentially all of the Company's property, plant and equipment assets are held in Malaysia.  The functional currency of the Company's Malaysian subsidiary, SBS, is the Malaysian Ringgit.

Revenue Recognition

Revenues are presented net of discounts. In general, the Company recognizes revenue when (i) persuasive evidence of an arrangement exists, (ii) delivery has occurred or services have been rendered to the customer, (iii) the fee is fixed or determinable, and (iv) collectibility is reasonably assured.

The Company applies judgment with respect to whether it can establish a selling price based on third party evidence. The Company does not have any product offerings that would be considered multiple deliverables; therefore the pricing model is determined based on competitor prices for similar product offerings, and/or contracts independently negotiated between the Company and purchasers.

To date, all of the revenue recognized by the Company has been derived from transactions with related parties (See Note 3).  In addition, all of the revenue recognized with those related parties has been based on verbal conditions.  To date the Company has not entered into a formal written agreement for its commissions earned on the trading of unwashed bauxite ore.  The Company has determined that in recording its revenue through September 30, 2017, that the selling price and other conditions derived from its transactions with related parties were not fixed and determinable until those trading commissions were paid to the Company by its related party.  Because of this, through September 30, 2017, the Company has recorded its trading commissions earned with Sincere Pacific Mining(M) Sdn. Bhd. ("Sincere") on the cash basis.  In the future, should the Company enter into formal agreements, the recognition method may change.

The company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents.  At September 30, 2017 and June 30, 2017, cash includes cash on hand and cash in the bank.  The Company's subsidiary operates in Malaysia where deposit insurance for deposits is provided up to RM$250,000 (approximately US$59,224). From time to time the Company's account balances may exceed that limit.

Plant and equipment are stated at cost less accumulated depreciation and impairment loss, if any. Depreciation is calculated on straight line basis to write off the cost of plant and equipment over their expected useful lives at the following annual rates:

 

 

Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable through the estimated undiscounted cash flows expected to result from the use and eventual disposition of the assets. Whenever any such impairment exists, an impairment loss will be recognized for the amount by which the carrying value exceeds the fair value. During the three months ended September 30, 2017 and 2016, there was no impairment of long-lived assets.

FASB ASC 820 "Segments Reporting" establishes standards for reporting information about operating segments on a basis consistent with the Company's internal organization structure as well as information about geographical areas, business segments and major customers in financial statements. Our proposed business segments are expected to span more than one geographical area. Specifically, the Company intends to generate revenue through subsidiary SBS in the area of mineral trading and exploration activities (see Note 3  and 10), while the Company, GMCI, will continue to manage the Company's reporting requirements and carry out on-going business development activities in search of new reporting segments which may include hospitality, manufacturing and other service based businesses.

The company accounts for income taxes in accordance with ASC Topic 740, Income Taxes.  This statement prescribes the use of the asset and liability method whereby deferred tax asset and liability account balances are determined based on differences between financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse.  The Company recognizes interest and penalties related to unrecognized tax benefits or failure to comply with local tax legislation within the income tax expense line in the accompanying Consolidated Statement of Operations and Comprehensive Loss. Accrued interest and penalties are included within the related tax liability line in the Consolidated Balance Sheets.

The company follows the provisions of ASC Topic 260, Earnings per Share.  Basic net loss per share is computed by dividing net loss available to common stockholders by the weighted average number of common shares outstanding during the period.  Basic and diluted losses per share are the same as all potentially dilutive securities are anti-dilutive.

 

Basic earnings per share is computed by dividing net income available to common shareholders by the weighted average number of common shares outstanding during the period. Diluted earnings per share reflects the potential dilution that could occur if stock options and other commitments to issue common stock were exercised or equity awards vest resulting in the issuance of common stock or conversion of notes into shares of the company's common stock that could increase the number of shares outstanding and lower the earnings per share of the company's common stock.  This calculation is not done for periods in a loss position as this would be antidilutive.  As of the three months ended September 30, 2017 and 2016, there were no stock options or stock awards, or other convertible securities that would have been included in the computation of diluted earnings per share that could potentially dilute basic earnings per share in the future.

At September 30, 2017 and September 30, 2016, the Company reported a net loss of $225,580 and $231,377, respectively. The Company believes that its existing capital resources are not adequate to enable it to execute its business plan. These conditions raise substantial doubt as to the Company's ability to continue as a going concern. The Company estimates that it will require additional cash resources during 2018 and beyond based on its current operating plan and condition. The Company expects cash flows from operating activities to improve, primarily as a result of an increase in revenue and a decrease in certain operating expenses, although there can be no assurance thereof. The accompanying consolidated financial statements do not include any adjustments that might be necessary should we be unable to continue as a going concern. If we fail to generate positive cash flow or obtain additional financing, when required, we may have to modify, delay, or abandon some or all of our business and expansion plans.

The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts, or amount and classification of liabilities that might cause results from this uncertainty.

Note 3 –Advance Payment on Mineral Trading – Related Party

During the fiscal year ended June 30, 2016 the Company's subsidiary, SBS, advanced $614,226 (RM$2,574,000) to Sincere (see Note 8), a related party corporation by virtue of directors in common, for the purpose of commencing bauxite trading and financing activities.

During the fiscal year ended June 30, 2016, SBS and Sincere have verbally agreed to work in partnership to acquire and arrange transport for stockpiled bauxite shipments to Mainland China. Services required for the loading, processing and transport of bauxite from mine sites to the port will be provided by SBS and Sincere directly under an export license granted by the Ministry of Mines in Malaysia which is currently in force and pending renewal prior to expiry.  As at June 30, 2016 the Company had advanced proceeds for the purpose of securing mineral resources for shipment.  Sincere has agreed to manage all labor, processing, transport and export of the ore until such time as the parties have concluded a total of seven (7) shipments.  As at September 30, 2017 a total of 5 shipments have been concluded.

It is anticipated that the sales price obtained by Sincere for unwashed bauxite will total gross US$24.50 to US$26.00 per dry, delivered metric tonne, free on board stowed and trimmed, subject to certain penalties or bonus based on the percentage of certain mineral compounds present, primarily aluminum oxide and silicon dioxide. Sincere will issue payment to SBS upon successful conclusion of shipments, at an agreed $1 USD per delivered dry tonne, net any applicable fees such as storage. It is anticipated that the Company will continue to conduct its bauxite trading activities under these verbal terms of agreement until such time as deposits advanced to commence trading operations are recovered, as well as income from the shipments.  The parties intend to formalize a written agreement for future mineral trading activities following successful conclusion of approximately seven (7) shipments whereby SBS will receive commissions on up to 140,000 gross tonnes.

During the three months ended September 30, 2017 the Company earned revenue from its bauxite trading activities and concluded shipments for a total of 60,000 tonnes of gross washed bauxite (net dry weight of 49,006 tonnes) for net commissions of US$49,281 converted at an agreed fixed rate of conversion to RM between 4.2805 and 4.2895 for total proceeds of RM$210,005.

Funds advanced by SBS will be used for the continuing purchase of minerals for transport over the course of several planned shipments.  SBS does not intend to take physical possession of the minerals at any time. It has been agreed between the parties that SBS shall receive a commission based on gross washed bauxite tonnage of up to 20,000 tonnes per shipment. Thereafter, if successful, the two parties will enter a formal agreement with respect to further shipments under newly negotiated terms.  SBS does not expect the initial advances made to Sincere to be returned until several shipments of ore have been completed. As at June 30, 2016 the Company has partially impaired the advance payment in the original amount $614,226 by $413,179, net amounts payable by SBS to Sincere, due to the uncertainty around the timing of collectibility.  During the three months ended September 30, 2017, the Company received RM$800,000 from Sincere to reduce advances paid. A balance of $nil and $186,372 (RM$800,000) remains collectible on the Company's balance sheets as of September 30, 2017, and June 30, 2017, respectively.

 

 

 

 

Essentially all of the Company's property, plant and equipment assets are held in Malaysia.  The functional currency of the Company's Malaysian subsidiary, SBS, is the ringgit.

Depreciation for the three months ended September 30, 2017 and 2016 was $12,006 and $9,376, respectively.

On July 10, 2015, SBS entered into a two-year lease commencing August 1, 2015 for office premises in Lorong 3/137C, Off Jalan Klang Lama, 58000 Kuala Lumpur.  Under the terms of the lease the Company will pay monthly rent of $606 USD at current exchange rate (RM$2,600) and shall be responsible for all monthly utilities.  The Company has paid a deposit of two months' rent and a deposit for utilities with a cumulative total of $1,823 USD (RM$7,800).   The annual lease commitment, exclusive of utilities is noted below:

On July 25, 2016 and September 15, 2016 respectively, the Company entered into lease agreements for two individual corporate offices at Tower 1, Avenue 3, The Horizon, Bangsar South City, Kuala Lumpur, Malaysia 59200.  The leased premises occupy a total of 5,652 square feet on level 1 and 5,773 square feet on level 5, and each allowed for one-month free rent in order to renovate and occupy the space.

Under the terms of the lease(s) the Company will pay monthly rent of $7,364 USD (RM$31,086) for Level 1 and $7,522 USD (RM$31,752) for Level 5, and shall be responsible for all monthly utilities.  The Company has recorded deferred rent for each of the Level 1 and Level 5 leases in the amount of one month's rent respectively for each of the leases in order to account for the free month of occupancy included in the terms of the lease.   Deferred rent is being amortized over the term of the lease(s). Security deposits of two months' rent for Level 1 and Level 5 totaling $44,658 USD (RM$188,513), and a deposit for utilities with a cumulative total of $7,443 USD (RM$31,419) were remitted by a related party.   The annual lease commitments, exclusive of utilities is noted as: Fiscal 2018 - US$178,633 (RM$754,056).

 

During the three months ended September 30, 2017 and 2016 the Company expended a total of $46,158 (RM$196,697) and $25,179 (RM$103,887) with respect to all of its leasing obligations. The Company has passed on recording deferred rent for the built-in inflation contained within the lease as it has been determined to be immaterial.

From time to time the Company may be subject to proceedings, lawsuits, and other claims related to government agencies, operations, shareholders and contracts.  The Company is required to assess the likelihood of any adverse judgments or outcomes to these matters as well as potential ranges of probable losses.  A determination of the amount of accrual required, if any, for these contingencies is made after analysis of each matter. The required accrual, if any, may change in the future due to new developments in each matter or changes in settlement strategies. The Company does not believe that there are presently any such matters that will have a material adverse effect on its financial condition or results of operations.

Further directors of the Company have leased shared office space for corporate operations the cost of which is $355 (RM$1,500 per quarter), the use of which is provided to the Company free of charge by our directors.  We have recorded an amount of $352 and $364 as contributed capital during the three months ended September 30, 2017 and 2016.

During the fiscal year ended June 30, 2016, the Company was advanced $614,226 by entities with common directors with the Company or by directors, which funds were used to advance to another related entity for the purpose of setting up a trading operation in the sale and transport of bauxite ore to entities in mainland China (see Note 3). 

The advances from the related entities were non-interest bearing, unsecured and not evidenced by a note. In addition, during the fiscal year ended June 30, 2017 and 2016, the Company was advanced a total of $893,748 and $396,010, respectively, by directors or entities with common directors to meet operational shortfalls.  During the year ended June 30, 2017, related parties were repaid $678,991. During the three months ended September 30, 2017, related parties were repaid a total of $132,146.

The Company has imputed interest at the rate of 6.51% on the above advances made to the Company in the amount of $27,404 during the three months ended September 30, 2017, and has imputed interest at the rate of 6.48% on the above advances made to the Company in the amount of $22,633 during the three months ended September 30, 2016.

The aforementioned fees were paid directly by the sole director of the Company and have been included in advances payable to related parties.

Note 7 – Advances from Related Parties / Related Parties Transactions (cont'd)

During the fiscal year ended June 30, 2017, the Company was advanced a total of $127,156 by a third party to meet operational shortfalls. The advances from the third party are due on demand, non-interest bearing, unsecured and not evidenced by a note. The entire amount of the advances remains payable at September 30, 2017.

During the three months ended September 30, 2017, the Company was advanced a further $126,645 by a third party to meet operational shortfalls. The advances from the third party are due on demand, non-interest bearing, unsecured and not evidenced by a note. The entire amount of the advances remains payable at September 30, 2017.

The Company has treated the aforementioned advances in the same manner as if they were made by related parties and has imputed interest at the rate of 6.51% on the advances made to the Company in the amount of $11,721 during the three months ended September 30, 2017 and $nil during the same period ended September 30, 2016.

The Company's authorized common stock consists of 4,000,000,000 common shares with par value of $0.001 and 10,000,000 shares of preferred stock with par value of $0.001 per share.

The Company had 500,000,000 common shares issued and outstanding as of December 31, 2014, as a result of the recapitalization and reverse merger transaction described above in Note 3. In addition, as of the transaction date, there were 802,346 common shares issued and outstanding which are reflected as part of the recapitalization.

On June 15, 2015, the Company entered into Subscription Agreements with its President and CEO, Mr. Lok Khing Ming, and Mr. Liew Kin Sing, a resident of Malaysia, whereby the Company sold to Mr. Lok 120 million shares of its common stock and sold to Mr. Liew 100 million shares of common stock. Both sales were priced at the par value of $0.001 for a total of $220,000.  Mr. Lok and Mr. Liew paid cash for these shares in July of 2016. As at June 30, 2016 the amounts payable under the aforementioned subscription agreements has been recorded on the balance sheet as "subscription receivable- related party".

As of September 30, 2017, and June 30, 2017 the Company has 720,802,346 shares of common stock issued and outstanding.

The Company has authorized 10,000,000 shares of preferred stock.  As of September 30, 2017, and June 30, 2017, the Company has no designated or outstanding shares of preferred stock.

As of June 30, 2017, and 2016, the Company had no instruments outstanding that were convertible into or exercisable into either common or preferred shares of the Company.

The Company currently only operates in one Segment.  However, the Company operates corporate entities and has assets and operations in the United States and Malaysia.  The following tables show the breakdown of operations and assets by Country:

Note 12 – Subsequent events

Subsequent to September 30, 2017, SBS has received advances of approximately $63,372 (RM$180,000) from a director of the Company in order to fund shortfalls in operational activities.  The Company has also received advances of a total of $5,873 from a related third party which funds have been used as general working capital.

In March 2017, the Company became aware of an opportunity to acquire a thirty (30) year leasehold over 6.0701 hectares of real property located in the Province of Kampar, Malaysia, that the Company believes has a significant deposit of granite (the "Property"). This opportunity was presented to the Company by Pembinaan Kaya Hebat Sdn Bhd, a Malaysian corporation ("PKH"). PKH is controlled by the Company's majority shareholder, LYF & Son Realty Sdn. Bhd.

On May 3, 2017, the Company entered into a Letter of Intent with PKH and PKH's shareholders to acquire all of the issued and outstanding shares of PKH from its shareholders in exchange for shares of the Company, which will be an amount equal to the fair market value of PKH, as determined by an independent, professional appraiser.

The acquisition of PKH is contingent upon: (a) PKH completing the transfer of title to the Property; (b) issuance of a mineral resource report that provides an estimate of the granite resources in place and exploration potential of resources located on the Property prepared by a licensed geologist that complies with the applicable rules and regulations promulgated by the SEC; and (c) the parties entering a definitive Share Purchase Agreement.

Note 12 – Subsequent events (cont'd)

The transfer of title to the Property to PKH has been approved by the Ministry of Malaysian on July 26, 2017. Therefore, the Company has commenced negotiations for the terms of the definitive Share Purchase Agreement and expects to execute such agreement upon completion of the Company's ongoing due diligence review and satisfaction of the issuance of a technical report by a licensed geologist. As at the date of this report the geological report is being complied by a third party.

On December 11, 2017, GMCI entered into a Letter of Intent with NAMI Corp., a Nevada corporation ("NAMI") for the acquisition by NAMI of up to one hundred percent (100%) of the issued and outstanding capital stock of GMCI in exchange for shares of capital stock of NAMI (the "Acquisition). The completion of the Acquisition is subject to various conditions precedent, including but not limited to negotiating and execution a form of Share Exchange Agreement that is acceptable to both parties, approval of the financial statements of both parties, valuation of GMCI's stock and NAMI's stock and receiving approval of at least seventy percent (70%) of the issued and outstanding shares of GMCI. Moreover, NAMI will need to prepare a registration statement and file it with the United States Securities and Exchange Commission under which the shares of NAMI to be exchanged for shares of GMCI will be registered.

 

In the event that NAMI is able to complete the Acquisition, it intends to operate GMCI as its wholly-owned subsidiary or a majority-owned subsidiary.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS.

This report contains forward-looking statements.  These statements relate to future events or our future financial performance.  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 statements or to reflect the occurrences of anticipated or unanticipated events.

Description of Business

GMCI Corp. ("GMCI," or the "Company") was incorporated in the State of Nevada on June 28, 2006, under the name "Pacific Metals Corp." On March 17, 2015, the Company changed its name to "GMCI Corp." by conducting a statutory merger with its wholly-owned subsidiary, GMCI Corp., pursuant to Nevada Revised Statutes 92A.200 et. seq. As a result of such merger, the Company was the surviving entity.

On December 12, 2014, a change in control of the Company occurred by virtue of the Company's largest shareholder, Pacific Gold Corp., selling 15,110,823 shares of the Company's common stock to Legacy Fiduciary Services Limited. Such shares represented 75.2% of the Company's total issued and outstanding shares of common stock at the time of the transaction. As part of the transaction, Legacy Fiduciary Services Limited arranged to appoint Mr. Lok Khing Ming as the sole officer and director of the Company at the time.

On January 2, 2015, the Company filed a Certificate of Amendment with the State of Nevada to (a) increase the number of authorized shares of Common Stock from 200 million shares to 4 billion shares; and (b) decrease all of the Company's then issued and outstanding shares of Common Stock at a ratio of one (1) share for every 25 existing shares, with all fractional shares to be purchased by the Company at the price of $0.02 per share (the "Reverse Split"). These actions were taken by the Company's Board of Directors after receiving the written consent of shareholders holding 82.7% of the Company's voting shares.

On June 28, 2016, the Board of Directors of the Company adopted a resolution to change the Company's fiscal year end from December 31 to June 30, effective immediately.

SBS Transaction and Operations

On March 26, 2015, the Company, entered into a Share Exchange Agreement (the "SBS Agreement") with all of the shareholders of SBS Mining Corp. Malaysia Sdn. Bhd. ("SBS"), a Malaysian corporation whose primary business is mining and exploration of properties located in Malaysia.  Pursuant to the SBS Agreement, the Company acquired 600,000 shares of capital stock of SBS from the SBS Shareholders and in exchange issued 500,000,000 restricted shares of its common stock to the SBS Shareholders.

The 600,000 shares of SBS constituted all of the issued and outstanding shares of SBS and were held by a total of three (3) shareholders, including the Company's sole director and Chief Executive Officer, Mr. Lok Khing Ming. Mr. Lok Khing Ming owned ten percent (10%) of SBS, or 60,000 shares. The remaining shares were owned by Mr. Liew Chin Loong (90,000 shares; 15%), who resides in Malaysia and LYF & Son Realty Sdn. Bhd., a Malaysian corporation (450,000 shares; 75%). Pursuant to the SBS Agreement, Mr. Lok received 50 million shares of the Company's common stock; Mr. Liew received 75 million shares; and LYF & Son Realty Sdn. Bhd. received 375 million shares, respectively. As a result of the SBS Agreement, SBS became a wholly owned subsidiary of the Company and the Company now carries on the business of SBS as its primary business. The closing of the SBS Agreement occurred on April 23, 2015.

Until 2016, SBS was focused on exploration activities in order to develop properties for producing metal ores, such as iron ore, bauxite and tin ore. SBS held licenses to two (2) properties located in Malaysia and on which it was prospecting for iron ore mining. The total mining area included as part of those two (2) licenses consisted of 100 (hectares (247 acres)). At the time that the SBS Agreement was concluded (approximately the second quarter of 2015), the market price for iron ore was between $45 and $65. SBS believed that there would be a downward trend for iron ore prices and eventually the market price fell below $45 in December 2015. Therefore, SBS Mining commenced a plan to move into financing bauxite mining and trading in the surrounding area. In January 2016, SBS' two (2) licenses expired and as a result of the lack of economic viability in the marketing of iron ore, management determined not to renew these licenses on expiry.

SBS believes that shipments and demand for bauxite will increase, as illustrated by the fact that People's Republic of China ("China") imported 14 times more bauxite from Malaysia in November 2014 than in March 2014, after an export ban in Indonesia stopped supplies of the ore to the world's biggest consumer of industrial metals. As at the date of this report, the ban imposed on Indonesia has been lifted, which could lessen China's increased purchase of bauxite from Malaysia. (see http://www.themalaymailonline.com/money/article/indonesias-bauxite-ban-malaysias-boom#Y9AbyelSfUL4o1Uj.97)

Bauxite mines are springing up in Malaysia and shipping an ever-increasing amount of the raw material used for the production of aluminum to China, helping fill a gap since Indonesia banned ore exports in January 2015 in a bid to encourage value-added processing at home.

According to an article published on March 2, 2017, on Fairplay.IHS.com, China is the world's largest aluminum producer, representing 54% of the global primary aluminum production. China will need around 130 million tonnes of bauxite each year to feed its aluminum industry and in 2016, China imported 51.8 million tonnes of bauxite (see https://fairplay.ihs.com/commerce/article/4282936/bauxite-shipments-set-for-shake-up).

In 2014, Malaysia exported 3.2 million tonnes of bauxite globally, compared to 154,044 tonnes in 2013. In 2015, Malaysia exported 24.3 million tonnes, resulting $1.1 billion revenue to exporters. China accounts for 99% of Malaysia's export of bauxite. In 2016, the government of Malaysia halted all mining activities and ordered to clear about the country's huge stockpile of bauxite, requiring all exports to be done pursuant to approved permits issued by the Malaysia government. This ban on the mining of bauxite remains in place as of the date of this filing. As a result, Malaysia exported 7.4 million tonnes of bauxite in 2016. (see http://www.alcircle.com/bauxite/newscircle/market/detail/26443/malaysia-exported-24-million-tons-of-bauxite-to-china-in-2015-up-650-yoy).

GMCI, through its wholly-owned subsidiary, SBS, provides financing for the acquisition, stockpiling storage, exporting and shipment of bauxite ore from Malaysia. Currently, SBS has provided funding to Sincere Pacific Mining Sdn. Bhd. ("Sincere Pacific") to purchase and sell/export bauxite through verbal agreement. Sincere Pacific is considered as a related party as Mr. Liew Chin Loong, is also a fifty percent (50%) owner and a director of Sincere Pacific.

SBS and Sincere Pacific have verbally agreed to work in partnership to acquire and arrange transport for stockpiled bauxite shipments to Mainland China. Services required for the loading, processing and transport of bauxite from mine sites to the port will be provided by SBS and Sincere Pacific directly.   Sincere Pacific has agreed to manage all labor, processing, transport and export of the ore until such time as the parties have concluded a total of seven (7) shipments, of which to date five (5) have been completed.

Sincere Pacific holds an export license from the government of Malaysia which allows it to export up to 1.8 million tonnes of bauxite. It is the Company's understanding that Sincere Pacific can renew this license upon having exported the total amount of 1.8 million tonne, and that the license remains in effect until that time. Sincere Pacific acquires or purchases bauxite from multiple sources in Malaysia for selling the ore to customers in China.

Upon purchasing bauxite in Malaysia, Sincere Pacific processes the ore in its facilities, then stockpiles the ore pending shipment. Each shipment of bauxite consists of up to 55,000 tonnes. SBS does not take physical possession of the minerals at any time. It has been agreed between the parties that SBS shall receive a commission based on gross washed bauxite tonnage of up to 20,000 tonnes per shipment. Thereafter, if successful, the two parties will enter a formal agreement with respect to further shipments under newly negotiated terms.  It is anticipated that the sales price obtained by Sincere Pacific for unwashed bauxite will total gross US$24.50 to US$26.00 per dry, delivered metric tonne, free on board stowed and trimmed, subject to certain penalties or bonus based on the percentage of certain mineral compounds present, primarily aluminum oxide and silicon dioxide. Sincere Pacific issues payment to SBS upon successful conclusion of shipments, at an agreed $1 USD per delivered dry tonne, net any applicable fees such as storage.  The parties intend to formalize a written agreement for future mineral trading activities following successful conclusion of approximately seven (7) shipments whereby SBS will receive commissions on up to 140,000 gross tonnes.

However, the price at which Sincere Pacific sells a shipment of bauxite is subject to negotiation and current market prices. Therefore, this average net income of US$1.00 per tonne payable to SBS is subject to adjustment and possible volatility.

To date, Sincere Pacific has completed five (5) shipments of bauxite and SBS has provided Sincere Pacific with $614,226 (MYR$2,504,769) of financing used towards a portion of these shipments. Of the total financing advanced by SBS,$186,744 (MYR$800,000) has been repaid by Sincere Pacific as of the date of this filing. Through September 30, 2017, SBS has received a total of $82,018 (MYR$350,306) in commissions from Sincere Pacific from its bauxite trading operations.

Currently SBS only deals with Sincere Pacific for the bauxite trading business and it is the only source of income of SBS.

PKH Transaction

In March 2017, the Company became aware of an opportunity to acquire a thirty (30) year leasehold over 6.0701 hectares (15 acres) of real property located in the Province of Kampar, State of Perak, Malaysia, that the Company believes has a significant deposit of granite (the "Proposed Property"). This opportunity was presented to the Company by Pembinaan Kaya Hebat Sdn Bhd, a Malaysian corporation ("PKH"). PKH is controlled by GMCI's majority shareholder, LYF & Son Realty Sdn. Bhd.

On May 3, 2017, the Company entered into a Letter of Intent with PKH and PKH's shareholders to acquire all of the issued and outstanding shares of PKH from its shareholders in exchange for shares of GMCI, which will be an amount equal to the fair market value of PKH, as determined by an independent, professional appraiser.

The acquisition of PKH is contingent upon: (a) PKH completing the transfer of title to the Property; (b) issuance of a mineral resource report that provides an estimate of the granite resources in place and exploration potential of resources located on the Property prepared by a licensed geologist that complies with the applicable rules and regulations promulgated by the SEC; and (c) the parties entering a definitive Share Purchase Agreement.

The transfer of title to the Property to PKH has been approved by the Ministry of Malaysia on July 26, 2017. Therefore, the Company has commenced negotiations for the terms of the definitive Share Purchase Agreement and expects to execute such agreement upon completion of the Company's ongoing due diligence review and satisfaction of the issuance of a technical report by a licensed geologist. While the Company expects to close this transaction in the next six months, there can be no assurance at the time of the filing of Form 10-Q that it will do so.

Currently, the Company is engaging an independent, licensed geologist for the preparation of a mineral resource report and feasibility study reports. Such reports will provide an estimate of the granite resources and exploration potential at this Kampar property.

On December 11, 2017, GMCI entered into a Letter of Intent with NAMI Corp., a Nevada corporation ("NAMI") for the acquisition by NAMI of up to one hundred percent (100%) of the issued and outstanding capital stock of GMCI in exchange for shares of capital stock of NAMI (the "Acquisition). The completion of the Acquisition is subject to various conditions precedent, including but not limited to negotiating and execution a form of Share Exchange Agreement that is acceptable to both parties, approval of the financial statements of both parties, valuation of GMCI's stock and NAMI's stock and receiving approval of at least seventy percent (70%) of the issued and outstanding shares of GMCI. Moreover, NAMI will need to prepare a registration statement and file it with the United States Securities and Exchange Commission under which the shares of NAMI to be exchanged for shares of GMCI will be registered.

 

In the event that NAMI is able to complete the Acquisition, it intends to operate GMCI as its wholly-owned subsidiary or a majority-owned subsidiary.

 

Implications of Being an Emerging Growth Company

We qualify as an emerging growth company as that term is used in the JOBS Act. An emerging growth company may take advantage of specified reduced reporting and other burdens that are otherwise applicable generally to public companies. These provisions include:

Results of Operations

During the three-month period ended September 30, 2017, we realized gross revenue of $49,821 from our bauxite financing activities, and $Nil in the three-month period ended September 30, 2016. We commenced revenue generating operations in the three-month period ended March 31, 2017.

Our consolidated expenses for the three months period ended September 30, 2017 and 2016:

Over the comparative three months ended September 30, 2017 and 2016 the Company incurred a slight increase to total operating expenses from $204,851 (2016) to $235,736, primarily due to an increase in professional fees as well as an increase in rent and executive wages, offset by decreases in  salaries and other general and administrative expenses. During the quarter period ended September 30, 2017 professional fees increased from $53,040 (2016) to $65,546 as a result of legal fees incurring during the current quarter relative to the Company's filing of certain regulatory documents with the Securities and Exchange Commission.  General and administrative expenses also increased in the comparative periods from $151,811 (2016) to $170,190. During the fiscal quarter ended September 30, 2017 we experienced a substantive increase in executive wages from $33,205 in 2016 to $63,372 in 2017 as a result of the formal appointment of a Chief Executive Officer, Chief Financial Officer, Chief Operating Officer, Chief Marketing Officer and Chief Sales Officer. We also experienced a decrease in salaries from $52,927 in 2016 to $38,836 in the current quarter ended September 30, 2017 as the Company was able to reduce its supporting staff upon the new executive hires.  Rent increased substantially from $25,542 in 2016 to $46,510 as the Company entered two new lease agreements in Malaysia commencing July 2016 and September 2016 for substantially expanded executive and operational office space. Utilities and maintenance charges year over year also increased accordingly.  Other general and administrative expenses experienced  a decrease from $22,071 in 2016 to $(2,040) in the three months ended September 30, 2017 as the Company incurred less travel expense.

Executive wages of $63,372 and $33,205 for the three-month periods ended September 30, 2017 and 2016 include the following compensation breakdown:

The aforementioned fees were paid directly by the sole director of the Company and have been included in advances payable to related parties.  The Chief Marketing Officer and Chief Sales Officer are not involving in the decision making of the Company and are not considered "named executive officers" of the Company.

We expect the general and administrative expenses, salaries and wages to increase in future periods as we continue to grow our recently acquired bauxite financing business, commence operations of granite mining operation and as a result of the addition of management staff and professional consultants to help manage growth in our business. The Company is also developing plans and moving towards further acquisition of profitable companies and businesses in order to expand our operations.

Net losses in the quarter period ended September 30, 2017 and 2016 totaled $225,580 and $231,377, respectively.

The Company believes that its existing capital resources are not adequate to satisfy its cash requirements for the next twelve months or enable it to execute its business plan. Through the date of this report we have been able to rely on related parties and third party entities to continue to fund shortfalls in our operations. The Company estimates that it will require additional cash resources during fiscal 2018 based on its current operating plan and condition.  The Company estimates that it will need approximately $500,000 in order to sustain its existing operations for the next 12 months, however, should the Company successfully close a proposed transaction with NAMI as discussed above, these expenditures are expected to be dramatically reduced to approximal $220,000 for the coming 12 months.  The Company also expects cash flows from operating activities to improve, primarily as a result of an increase in revenues from our current operating activities.  We have commenced earning revenues as of March 2017, however these revenues are not yet sufficient to meet our operational overhead and there can be no assurance that we will ever achieve profitable operations. We continue to rely on funding from our officers, directors and controlling shareholders to meet our operational shortfalls.  While we expect to continue to have these resources available to us, there is no guarantee we will be able to continue to meet our obligations in the normal course. If we fail to generate positive cash flow or obtain additional financing, when required, we may have to modify, delay, or abandon some or all of our business and expansion plans.

Liquidity and Capital Resources

As of September 30, 2017, the Company had total current assets of $100,204 and a working capital deficit of $2,467,820 compared to total current assets of $258,116 and a working capital deficit of $2,265,806 as of June 30, 2017. The increase in our working capital deficit was due to an increase in advances payable to a related party which allowed us to fund ongoing operations. Further the Company's current assets were reduced substantially in the current quarter period as a result of the collection of certain previously paid deposits, which funds were used to carry out ongoing operational activities.

During the quarter period ended September 30, 2017, cash used by operating activities totaled $166,445, primarily as a result of a net loss from operations of $225,580, offset by imputed interest of $39,125 and expenses paid directly by a related party of $63,372.  During the quarter period ended September 30, 2016, the Company used cash in operating activities of $204,313.

Net cash provided by investing activities was $186,135 (September 30, 2016 – net cash used in investing activities of $23,185) and net cash used in financing activities was $5,501 during the quarter period ended September 30, 2017 (September 30, 2016 – net cash provided by financing activities of $373,596).

As has been noted in our financial statements included in this Form 10-Q the Company is unable to fund its ongoing operations from its new revenue sources, bauxite trading operations and potentially from sales of granite, of which bauxite trading commenced only recently in the quarter ended March 31, 2017 and we are only in the negotiation phase to potentially acquire acreage and enter the exploration stage for mining for granite.  To date the Company has relied upon entities related to it through its board of director and its subsidiary board of director members to advance it the funds required to continue operating.  While the Company believes that its related entities will continue to fund its operations until such time as it can generate sufficient profits from its new revenue sources described above, it can give no assurances that this will be the case.

 

Off-balance sheet arrangements

We did not have during the periods presented, and we do not currently have, any off-balance sheet arrangements, as defined in the rules and regulations of the Securities and Exchange Commission ("SEC").

Critical Accounting Policies

The preparation of our consolidated financial statements and notes thereto requires management to make estimates and assumptions that affect the amounts and disclosures reported within those financial statements. On an ongoing basis, management evaluates its estimates, including those related to revenue recognition, contingencies, litigation and income taxes. Management bases its estimates and judgments on historical experiences and on various other factors believed to be reasonable under the circumstances. Actual results under circumstances and conditions different than those assumed could result in differences from the estimated amounts in the financial statements. Refer to Note 1 of the consolidated financial statements included herein.

The preparation of financial statements in conformity with generally accepted accounting principles 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 of revenue and expenses during the reporting period. Actual results when ultimately realized could differ from these estimates.

Revenues are presented net of discounts. In general, the Company recognizes revenue when (i) persuasive evidence of an arrangement exists, (ii) delivery has occurred or services have been rendered to the customer, (iii) the fee is fixed or determinable, and (iv) collectibility is reasonably assured.

The Company applies judgment with respect to whether it can establish a selling price based on third party evidence. The Company does not have any product offerings that would be considered multiple deliverables; therefore the pricing model is determined based on competitor prices for similar product offerings, and/or contracts independently negotiated between the Company and purchasers.

To date, all of the revenue recognized by the Company has been derived from transactions with related parties (See Note 3 to the audited financial statements contained herein).  In addition, all of the revenue recognized with those related parties has been based on verbal conditions.  To date the Company has not entered into a formal written agreement for its commissions earned on the trading of unwashed bauxite ore.  The Company has determined that in recording its revenue through September 30, 2017, that the selling price and other conditions derived from its transactions with related parties were not fixed and determinable until those trading commissions were paid to the Company by its related party.  Because of this, through September 30, 2017, the Company has recorded its trading commissions earned with Sincere Pacific on the cash basis.  In the future, should the Company enter into formal agreements, the recognition method may change.

 

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Pursuant to Item 305(e) of Regulation of S-K (§229.305(e)), the Company is not required to provide the information required by this Item as it is a "smaller reporting company," as defined by Rule 229.10(f)(1).

ITEM 4. CONTROLS AND PROCEDURES

Disclosure 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 Commission's 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 issuer's 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 September 30, 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.

Changes in Internal Control Over Financial Reporting

During the fiscal quarter covered by this Quarterly Report, there has been no change in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) 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

Management is not aware of any legal proceedings contemplated by any governmental authority or any other party involving us. 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.

ITEM 1A. RISK FACTORS

As a "smaller reporting company" as defined by Item 10 of Regulation S-K, the Company is not required to provide this information.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

There were no unregistered sales of our equity securities during the period covered by this quarterly report.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS

Exhibits:

SIGNATURES

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.