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authID Inc. - Quarter Report: 2014 June (Form 10-Q)

Converted by EDGARwiz


SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

FORM 10-Q

 

(Mark One)


x

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

 

For the quarterly period ended June 30, 2014

 

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 000-54545

 

IIM GLOBAL CORPORATION

(Exact name of registrant as specified in its charter)

 

SILVERWOOD ACQUISITION CORPORATION

(Former Name of Registrant as Specified in its Charter)

 

Delaware

46-2069547

(State or other jurisdiction ofincorporation or organization)

(I.R.S. Employer Identification No.)

 

160 E. Lake Brantley Drive

Longwood, Florida 32779

(Address of principal executive offices) (zip code)

 

407-951-8640

(Registrant's telephone number, including area code)

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

x    Yes      ¨    No

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer", "accelerated filer", "non-accelerated filer", and "smaller reporting company" in Rule 12b-2 of the Exchange Act.

 

 

Large Accelerated filer

¨

Accelerated filer

¨

 

 

Non-accelerated filer

¨

Smaller reporting company

x

(do not check if smaller reporting company)

  

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes    x     No   ¨

 

Indicate the number of shares outstanding of each of the registrant's classes of common stock as of the latest practicable date.

 

Class

Outstanding at June 30, 2014

Common Stock, par value $0.0001

160,623,289 shares

Documents incorporated by reference:

None



 

 



INDEX




PART I - FINANCIAL INFORMATION

3


Item 1 - Condensed consolidated Financial Statements

3

Condensed consolidated Balance Sheets (unaudited) at June 30, 2014 and December 30, 2013

3

Condensed consolidated Statements of Operations (unaudited) For the Three and Six months Ended June 30, 2014 and 2013

4

Condensed consolidated Statements of Cash Flows (unaudited) For the Six months Ended June 30, 2014 and 2013

5

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

6


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

13


ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

16


ITEM 4. CONTROLS AND PROCEDURES

16


PART II

18


ITEM 1. LEGAL PROCEEDINGS

18

Item 1A. Risk Factors

18


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

18


ITEM 3. DEFAULTS UPON SENIOR SECURITIES

18


ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

18


ITEM 6.  EXHIBITS

18


SIGNATURES

18










2


PART I - FINANCIAL INFORMATION

Item 1 - Condensed consolidated Financial Statements



IIM GLOBAL CORP.

(FORMERLY: SILVERWOOD ACQUISITION CORPORATION)

CONDENSED CONSOLIDATED BALANCE SHEETS

  

 

 

 

June 30,

 

 

December 31,

 

 

 

2014

 

 

2013 (1)

 

ASSETS:

 

(unaudited)

 

 

 

 

Current Assets:

 

 

 

 

 

 

 

 

Cash

 

$

20,554

 

 

$

5,349

 

Deposits

 

 

645

 

 

 

112,645

 

Total Current Assets

 

 

21,199

 

 

 

117,994

 

 

 

 

 

 

 

 

 

 

Other Assets:









Property and equipment, net

 

 

446,447

 

 

 

38,011

 

Intangible, net

 

 

457,508

 

 

 

392,501

 

 

 

 

 

 

 

 

 

 

Total Assets

 

$

925,154

 

 

$

548,506

 

 

 

 

 

 

 

 

 

 


 

 

 

 

 

 

 

 

 LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT):

 

 

 

 

 

 

 

 

Current Liabilities:

 

 

 

 

 

 

 

 

Accounts payable and accrued expenses

 

$

63,668

 

 

$

50,500

 

Related party payables

 

 

-

 

 

 

16,175

 

Promissory notes-related party

 

 

910,000

 

 

 

224,625

 

Total Current Liabilities

 

 

973,668

 

 

 

291,300

 

 

 

 

 

 

 

 

 

 

Stockholder's Equity:

 

 

 

 

 

 

 

 

Common stock, 300,000,000 shares authorized

 

 

 

 

 

 

 

 

  $0.0001 par value, 160,623,289 shares issued and outstanding

 

 

 

 

 

 

 

 

   at June 30, 2014 and December 31, 2013, respectively

 

 

16,062

 

 

 

16,062

 

Additional paid-in capital

 

 

1,731,878

 

 

 

1,731,878

 

Accumulated deficit

 

 

(1,796,454

)

 

 

(1,490,734

)

 

 

 

 

 

 

 

 

 

Total  Stockholder's Equity (Deficit)

 

 

(48,514)

 

 

 

257,206

 

 

 

 

 

 

 

 

 

 

Total Liabilities and Stockholders' Equity (Deficit)

 

$

925,154

 

 

$

548,506

 

 



(1)

Derived from audited consolidated financial statements





See accompanying notes to unaudited condensed consolidated financial statements

 




3


IIM GLOBAL CORP.

(FORMERLY: SILVERWOOD ACQUISITION CORPORATION)

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)


 

Three Months Ended

 

Six Months Ended

 

 

June 30,

 

June 30,

 

 

2014

 

2013

 

2014

 

2013

 

 

 

 

 

 

 

 

 

Sales

 

 $                   -

 

 $                  -

 

 $                 -

 

 $                -

 

 

 

 

 

 

 

 

 

Cost of sales

 

-

 

-

 

-

 

-

Gross profit

 

-

 

-

 

-

 

-

 

 

 

 

 

 

 

 

 

Operating (income) expenses:

 

 

 

 

 

 

 

 

Depreciation and amortization expense

 

11,891


-


23,516


-

General and administrative

 

149,495


8,801


250,154


8,871

Total Operating Expenses

 

161,386


8,801


273,670


8,871

 

 

 

 

 

 

 

 

 

Loss from operations

 

(161,386)


(8,801)


(273,670)


(8,871)

 

 

 

 

 

 

 

 

 

Other income (expenses)

 

 

 

 

 

 

 

 

Interest expense

 

(22,500)


-


(32,050)


-

Total other income (expenses):

 

(22,500)


-


(32,050)


-

 

 

 

 

 

 

 

 

 

Net loss

 

 $ (183,886)

 

$    (8,801)

 

 $ (305,720)

 

 $ (8,871)

 

 

 

 

 

 

 

 

 

Loss per common share basic and diluted

 

 $          (0.00)

 

 $            (0.00)

 

 $          (0.00)

 

 $          (0.00)

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding basic and diluted

 

160,623,289

 

1,500,000

 

160,623,289

 

1,500,000





See accompanying notes to unaudited condensed consolidated financial statements


  

 

  





4


IIM GLOBAL CORP.

(FORMERLY: SILVERWOOD ACQUISITION CORPORATION)

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


 

 

 

For the six months ended June 30,

 

 

 

 

2014

 

 

2013

 

 

OPERATING ACTIVITIES:

 

 

 

 

 

 

 

 

Net loss


$

(305,720

)


$

(8,871

)

Adjustment to reconcile net loss to net cash used in operating activities:









Depreciation and amortization



23,516




-


Change in operating assets and liabilities:









Accounts payable and accrued expenses



(3,006

)



1,219


Due from related party



-




(255,590

)

Security deposits



112,000






Net cash used in operating activities

 

 $

            (173,210

)

 

 $

(263,242

)

 

 

 

 

 

 

 

 

 

INVESTING ACTIVITIES:

 

 

 

 

 

 

 

 

Purchase of fixed assets



(419,266

)



-


Investment in intangibles

 

 

(77,694

)

 

 

(243,000

)

 

 

 

 

 

 

 

 

 

Net cash used in investing activities

 

 

(496,960

)

 

 

(243,000

)

 

 

 

 

 

 

 

 

 

FINANCING ACTIVITIES:

 

 

 

 

 

 

 

 

Proceeds from common stock subscriptions

 

 

-

 

 

 

515,000

 

Proceeds from related party notes payable

 

 

910,010


 

 

-

 

Payments on notes payable

 

 

(224,625)

 

 

 

-

 

 

 

 

 

 

 

 

 

 

Net cash provided by financing activities

 

 

685,385

 

 

 

515,000

 

 

 

 

 

 

 

 

 

 

Net increase in cash

 

 

15,205

 

 

 

8,758


 

 

 

 

 

 

 

 

 

CASH AT BEGINNING OF PERIOD

 

 

5,349

 

 

 

150

 

 

 

 

 

 

 

 

 

 

CASH AT END OF PERIOD

 

$

20,554

 

 

$

8,908

 

 

 

 

 

 

 

 

 

 

Supplemental Disclosures of cash flow information

 

 

 

 

 

 

 

 

Cash paid for interest

 

$

22,500

 

 

$

-

 

 



See accompanying notes to unaudited condensed consolidated financial statements

 




5


IIM GLOBAL CORPORATION

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(UNAUDITED)

JUNE 30, 2014


NOTE 1 NATURE OF BUSINESS

 

IIM Global Corporation (formerly Silverwood Acquisition Corporation) ("IIM Global" or the "Company") was incorporated on September 21, 2011 under the laws of the State of Delaware to engage in any lawful corporate undertaking, including, but not limited to, selected mergers and acquisitions. IIM Global has been in the developmental stage since inception. In addition to a change in control of its management and shareholders, the Company's operations to date have been limited to issuing shares and filing a registration statement on Form 10 pursuant to the Securities Exchange Act of 1934. IIM Global was formed to provide a method for a foreign or domestic private company to become a reporting company with a class of securities registered under the Securities Exchange Act of 1934.


Going Concern

The Company has an accumulated deficit of $1,796,454 as of June 30, 2014. The Companys continuation as a going concern is dependent on its ability to generate sufficient cash flows from operations to meet its obligations, which it has not been able to accomplish to date, and/or obtain additional financing from its stockholders and/or other third parties.


These unaudited condensed consolidated financial statements have been prepared on a going concern basis, which implies the Company will continue to meet its obligations and continue its operations for the next fiscal year. The continuation of the Company as a going concern is dependent upon financial support from its stockholders, the ability of the Company to obtain necessary equity financing to continue operations, successfully locating and negotiating with other business entities for potential acquisition and /or acquiring new clients to generate revenues.

 

Management and shareholders used their personal funds to pay for certain expenses incurred by the Company in 2014. There is no assurance that the Company will ever be profitable. These unaudited condensed 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.


Principles of Consolidation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with United States generally accepted accounting principles and include the accounts of the Company and its wholly-owned subsidiaries. All significant intercompany transactions and balances have been eliminated in consolidation.

 

Use of Estimates 

In preparing these unaudited condensed consolidated financial statements in conformity with GAAP, management is required to make estimates and assumptions that may affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the condensed consolidated financial statements and the reported amount of revenues and expenses during the reporting periods. Actual results could differ from those estimates. Significant estimates and assumptions included in our condensed consolidated financial statements relate to the valuation of long-lived assets, accruals for potential liabilities, and valuation assumptions related to equity instruments and share based payments.

 

Concentration of Credit Risk 

The Companys financial instruments that potentially expose the Company to a concentration of credit risk consist of cash, accounts payable, accrued expense and a related party payable. The Companys cash is deposited at a financial institution and insured by the Federal Deposit Insurance Corporation (FDIC). At various times during the year, the Company may have exceeded this amount insured by the FDIC.

 

Income Taxes 

The Company accounts for income taxes under Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 740 Income Taxes. Under the asset and liability method of FASB ASC 740, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Under FASB ASC 740, the effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period the enactment occurs. A valuation allowance is provided for certain deferred tax assets if it is more likely than not that the Company will not realize tax assets through future operations.



6


IIM GLOBAL CORPORATIONNOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(UNAUDITED)

JUNE 30, 2014


NOTE 2 BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES


Property and Equipment, net 

Property and equipment consisted of furniture and fixtures, computer equipment, and real estate, and are stated at cost. Property and equipment are depreciated using the straight-line method over the estimated service lives of from three to five years. Maintenance and repairs are expensed as incurred and improvements are capitalized. Gains or losses on the disposition of property equipment are recorded upon disposal.  Depreciation expense amounted to $10,829 and $0 for the six month periods ended June 30, 2014 and 2013, respectively.


Intangible Assets 

Acquired intangible assets are amortized over their useful lives unless the lives are determined to be indefinite. Acquired intangible assets are carried at cost, less accumulated amortization. Amortization of finite-lived intangible assets is computed over the useful lives of the respective assets. The Company amortizes intangible assets over ten years. Amortization expense amounted to $12,687 and $0 for the six month periods ended June 30, 2014 and 2013, respectively.

 

Impairment of Long-Lived Assets 

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. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to estimated undiscounted future cash flows expected to be generated by the asset.

 

If the carrying amount of an asset exceeds its undiscounted estimated future cash flows, an impairment review is performed. An impairment charge is recognized in the amount by which the carrying amount of the asset exceeds the fair value of the asset. Assets to be disposed of would be separately presented in the balance sheet and reported at the lower of the carrying amount or fair value less costs to sell, and are no longer depreciated. The assets and liabilities of a disposed group classified as held for sale would be presented separately in the appropriate asset and liability sections of the balance sheet. For the six month periods ended June 30, 2014 and 2013, there were no impairment charges.

 

Revenue Recognition 

We recognize revenue for our services when each of the following four criteria is met: persuasive evidence of an arrangement exists; delivery has occurred or services have been rendered; the sellers price to the buyer is fixed or determinable; and collectability is reasonably assured. There were no revenues recognized during the six months ended June 30, 2014 and 2013.

 

Net Loss per Common Share 

The Company computes net loss per share in accordance with ASC 260, "Earnings per Share". ASC 260 requires presentation of both basic and diluted earnings per share (EPS) on the face of the income statement. Basic EPS is computed by dividing net income (loss) available to common shareholders by the weighted average number of common shares outstanding during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period including stock options, using the treasury stock method, and convertible preferred stock, using the if-converted method. In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all dilutive potential common shares if their effect is anti-dilutive.

 

Fair Value Measurements 

ASC 820, Fair Value Measurements, requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 establishes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure fair value. A financial instruments categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. ASC 820 prioritizes the inputs into three levels that may be used to measure fair value: Level 1, defined as observable inputs such as quoted prices in active markets for identical assets or liabilities; Level 2, inputs other than level one that are either directly or indirectly observable such as quoted prices for identical or similar assets or liabilities on markets that are not active; and Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions. The Company had no assets or liabilities required to be recorded at fair value on a recurring basis at June 30, 2014 and December 31, 2013.




7


IIM GLOBAL CORPORATIONNOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(UNAUDITED)

JUNE 30, 2014


NOTE 2 BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued


 

Share-Based Payment Arrangements 

Generally, all forms of share-based payments, including stock option grants, restricted stock grants and stock appreciation rights are measured at their fair value on the awards grant date, based on the estimated number of awards that are ultimately expected to vest. Share-based compensation awards issued to non-employees for services rendered are recorded at either the fair value of the services rendered or the fair value of the share-based payment, whichever is more readily determinable. The expenses resulting from share-based payments are recorded in operating expenses in the statement of operations.


Recent Accounting Pronouncements

 

Adopted 

In February 2013, FASB issued ASU 2013-04, Obligations Resulting from Joint and Several Liability Arrangements for Which the Total Amount of the Obligation is Fixed at the Reporting Date.  The objective of the amendments in this update is to provide guidance for the recognition, measurement, and disclosure of obligations resulting from joint and several liability arrangements for which the total amount of the obligation within the scope of this guidance is fixed at the reporting date, except for those obligations addressed within existing guidance in U.S. GAAP.  The amendment requires an entity to measure obligations resulting from joint and several liability arrangements for which the total amount of the obligation within the scope of this guidance is fixed at the reporting date as the sum of the amount the reporting entity agreed to pay on the basis of its arrangement among its co-obligors and an additional amount the reporting entity expects to pay on behalf of its co-obligors.  The entity is required to disclose the nature and amount of the obligation as well as other information about those obligations.  The Company adopted this ASU as of January 1, 2014.  This adoption did not have an effect on our financial statements.

 

 Not Adopted 

In April 2014, the FASB issued ASU 2014-08, Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity to reduce diversity in practice for reporting discontinued operations. Under the previous guidance, any component of an entity that was a reportable segment, an operating segment, a reporting unit, a subsidiary, or an asset group was eligible for discontinued operations presentation. The revised guidance only allows disposals of components of an entity that represent a strategic shift (e.g., disposal of a major geographical area, a major line of business, a major equity method investment, or other major parts of an entity) and that have a major effect on a reporting entitys operations and financial results to be reported as discontinued operations. The revised guidance also requires expanded disclosure in the financial statements for discontinued operations as well as for disposals of significant components of an entity that do not qualify for discontinued operations presentation. The updated guidance is effective for periods beginning after December 15, 2014. The Company currently has operations that are reported as discontinued operations and does not expect the adoption of this guidance to have a material effect on its financial position, results of operations, or cash flows.

 

Other recent accounting pronouncements issued by the FASB (including its Emerging Issues Task Force), the American Institute of Certified Public Accountants, and the United States Securities and Exchange Commission did not or are not believed by management to have a material impact on the Companys present or future financial statements.


 

 




8


IIM GLOBAL CORPORATIONNOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(UNAUDITED)

JUNE 30, 2014


 

NOTE 3 INTANGIBLE ASSETS

 

Intangible assets consist of the following: 

 

 

June 30, 2014

 

 

December 31, 2013

 

 

 

 

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

HDR

 

$

213,481

 

 

$

146,061

 

SRIO

 

 

109,462

 

 

 

102,259

 

 

New product development



6,213




-


 

Software

 

 

200,000

 

 

 

200,000

 

 

 

 

 

529,156

 

 

 

448,320

 

 

Less: accumulated amortization

 

 

(71,648

)

 

 

(55,819

)

 

 

 

 

 

 

 

 

 

 

 

 

 

$

457,508

 

 

$

392,501

 

 

 


Intangible assets consist of legal and global patent registration costs related to the Companys technology HDR (Handheld biometric mobile devices) and SRIO (Biometric wallet devices).  Intangible assets are amortized over ten years.

 


NOTE 4 FIXED ASSETS

 

Fixed assets consist of the following: 

 

 

June 30, 2014

 

 

December 31, 2013

 

 

 

 

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

Office building

 

$

406,858

 

 

$

-

 

Computer equipment

 

 

44,443

 

 

 

32,035

 

 

Furniture and fixtures



54,015




54,016


 

 

 

 

505,316

 

 

 

86,051

 

 

Less: accumulated depreciation

 

 

(58,869

)

 

 

(48,040

)

 

 

 

 

 

 

 

 

 

 

 

 

 

$

446,447

 

 

$

38,011

 

 

 

Fixed assets consist of furniture and fixtures, computer equipment, and real property which was acquired in May, 2014.  The furniture and computer equipment are being depreciated over a period of from three to five years.  The depreciable cost of the office building is being depreciated over a period of forty years.



NOTE 5 - DEPOSITS 

On October 23, 2013, the Company entered into an office building lease with purchase option, the lease is for the Companys corporate office in Longwood, Florida. The Company had the option to purchase the building at the end of the lease for a total purchase price of $430,000 less the non-refundable deposit of $100,000.  In May, 2014, the Company acquired the office building, and the deposit of $100,000 was applied towards the purchase price of the building.












9


IIM GLOBAL CORPORATIONNOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

JUNE 30, 2014


NOTE 6 ACCOUNTS PAYABLE AND ACCRUED EXPENSES

Accounts payable and accrued expenses consist of the following:

  

 

June 30, 2014

 

 

December 31, 2013

 

 

 

 

(unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

Accounts payable

 

$

27,672

 

 

$

19,638

 

Payroll related liabilities

 

 

4,491

 

 

 

26,069

 

 

Other current liabilities

 

 

31,505

 

 

 

4,803

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

63,668

 

 

$

50,510

 

 

 

 

 

 

 

 

 

 

 

 

Due to Related Parties

 

$

-

 

 

$

16,175

 

 

 


NOTE 7 PROMISSORY NOTES RELATED PARTY

 

Promissory notes related party totaled $910,000 and $224,625 as of June 30, 2014 and December 31, 2013, respectively, as described below:

 

 

 

June 30,2014

 

 

December 31,2013

 

 

 

 

(Unaudited)

 

 

 

 

 

Promissory note issued to a company owned by one of the stockholders in October 2013 with a term of six months and bear interest at the rate of 15%. The proceeds from the note were used to pay the deposit to purchase the Companys building located in Longwood, Florida. In March 2014 the Company paid the promissory note balance of $120,000.

 

$

 

 

$

120,000

 

 

 

 

 

 

 

 

 

 

 

Promissory notes issued to two directors in October 2013, in place of the Companys expense reimbursement, the notes have a term of six months and bear interest at the rate of 15%. In March 2014 the Company paid the promissory notes in the amount of $62,125.

 

 

 

 

 

62,125

 

 

 

 

 

 

 

 

 

 

 

 

Promissory note issued to a stockholder in November 2013 with a term of six months and bear interest at the rate of 15%. In March 2014 the Company paid the promissory note in the amount of $20,000.

 

 

 

 

 

20,000

 

 

 

 

 

 

 

 

 

 

 

 

Promissory note issued to a stockholder in December 2013 with a term of six months and bear interest at the rate of 15%. In March 2014 the Company paid the promissory note in the amount of $22,500.

 

 

 

 

 

22,500

 

 

 

 

 

 

 

 

 

 

 

 

Promissory note issued to a company owned by one of the stockholders in March 2014, due in September 2014 and bear interest at the rate of 15% per annum.

 

 

600,000

 

 

 

 

 










 

Promissory note issued to a company owned by one of the stockholders in June 2014, due in November 2014 and bear interest at the rate of 15% per annum.

 

 

310,000

 

 

 


 

 

 

$

910,000

 

 

$

224,625

 

 



10


IIM GLOBAL CORPORATIONNOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

JUNE 30, 2014


NOTE 8 RESEARCH AND DEVELOPMENT

 

On April 1, 2013, the Company entered into an engineering contract for the hardware and software development of its next generation HDR device called the HDR+.  The device is to be used by government and enterprise customers to capture all forms of machine-readable data as well as the facial and fingerprint biometric information of persons. The total development costs for HDR+ would have amounted to $430,000. As of December 31, 2013, the Company had paid $44,000 in cash, which has been recorded as research and development expense.  Due to slippages in the development deliverables and lack of proper documentation being supplied the Company terminated this agreement on November 11, 2013.


The Company decided to refocus its research and development on its next generation of HDR Intelligent Accessory platform instead of developing the new HDR+.  To achieve this it has contracted a Mechanical Designer and H/W and Embedded S/W Engineer to complete this task.  The project is 30% completed to date and will require an additional 6 months and approximately $200,000 to productize into a device that can be sold to Government, or Enterprise customers.  Up to June 30, 2014, the Company has invested $6,047 towards the development of this new product.


The Company in 2014 has also started to utilize the services of a Kiosk manufacturer, Slabb Inc., for the production of its new Multi-modal Biometric Enrolment and Verification Kiosk.  No formal agreement is in place, beyond a standard Non-Disclosure Agreement and the Company can utilize these services on an as needed basis.   The Company as of June 30, 2014 has invested $10,818 for a Kiosk specifically designed for its markets, which is included in fixed assets on the accompanying condensed consolidated balance sheet as of June 30, 2014.



NOTE 9  STOCK OPTIONS

 

There were no unvested compensation or new stock options granted, exercised or expired during the period ended June 30, 2014.

 

NOTE 10  STOCKHOLDERS EQUITY (DEFICT)

 

The Company has 300,000,000 shares authorized and 160,623,289 issued and outstanding as of June 30, 2014.  There were no equity transactions during the six months ended June 30, 2014.


 

NOTE 11  COMMITMENTS AND CONTINGENCIES

 

Operating Leases

 

The Company purchased the building that serves as it corporate headquarters in May, 2014.  Previously, the Company leased this building under a six months term lease with an option to buy at the end of the term.  During the lease term, the Company was required to make a monthly lease payment of $3,000 per month. Rent expense amounted to $15,180 and $0 during the six month periods ended June 30, 2014 and 2013.


Executive Compensation 

On June 30, 2013, the Company officer agreed to forgive his deferred and accrued salary amounted to $128,456 that was entitled to him under the employment agreement for the period from January to June 2013 and was subsequently included into additional paid in capital because he was a shareholder.

 

On July 1, 2013, the Companys President and CEO, David Jones, agreed to adjust his total compensation to $1.00 per year and will not receive any other benefits or other forms of compensation which shall be paid by the Company. On February 2014 the Company executed a new Employment Agreement with David Jones, at an annual Salary of $60,000 per year and to include all benefits as offered to any other employee at the time.


 In February 2014 the Company hired Thomas Szoke and Douglas Solomon to join the company as acting Chief Technology Officer and Chief Operating Officer respectively, at an annual rate of $60,000 per year to include all benefits as offered to any other employee at the time.



11


IIM GLOBAL CORPORATIONNOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

JUNE 30, 2014


NOTE 12  COMMITMENTS AND CONTINGENCIES (continued)



Legal Matters 

From time to time, claims are made against the Company in the ordinary course of business, which could result in litigation. Claims and associated litigation are subject to inherent uncertainties and unfavorable outcomes could occur, such as monetary damages, fines, penalties or injunctions prohibiting the Company from selling one or more products or engaging in other activities. The occurrence of an unfavorable outcome in any specific period could have a material adverse effect on the Companys results of operations for that period or future periods. The Company is not presently a party to any pending or threatened legal proceedings.

 

NOTE 13  SUBSEQUENT EVENTS


Promissory Notes:


On July 16, 2014 the Company renegotiated its two promissory notes to Penn Investments Inc. to extend the due dates for both the $600,000 and $310,000 notes from September 30, 2014 and November 30, 2014 respectively to now reflect a due date of January 30, 2015 for both.


On July 15, 2014 the Company also was able to secure additional capital of $20,000 from Penn Investments Inc. for which it issued a promissory note. The promissory note issued accrues interest at 15% per annum until paid.  The principal and interest due under the note are payable in full on January 30, 2015.


The Company has negotiated with Penn Investments Inc. for an additional $180,000 in capital, which will be provided to the Company on August 1, 2014.  For this capital the Company shall issue a promissory note dated August 1, 2014 that will accrue interest at 15% per annum until paid, with the principal and interest due in full on January 30, 2015.



 

 




12


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

 

As of June 30, 2014, IIM Global had not generated revenues in 2014 and had accumulated a net loss of $1,796,454 since inception.

 

In August 2013 IIM Global officially entered into a business combination with Innovation in Motion, Inc., a private company operating in two technology fields: the handheld identification market and mobile payment market. Innovation In Motion, Inc. brought a range of state-of-the-art products in these fields and has begun serious market penetration with the sale and placement of units.

 

IIM Global is further looking to enter into a business combination with other target companies with which IIM Global may effect a business combination thus seeking the perceived benefits of a reporting corporation. Such perceived benefits may

include facilitating or improving the terms on which additional equity financing may be sought, providing liquidity for incentive stock options or similar benefits to key employees, increasing the opportunity to use securities for acquisitions, providing liquidity for shareholders and other factors. Business opportunities may be available in many different industries and at various stages of development, all of which will make the task of comparative investigation and analysis of such business opportunities difficult and complex.

 

In analyzing prospective a business combination, the Company may consider such matters as the available technical, financial and managerial resources; working capital and other financial requirements; history of operations, if any; prospects for the future; nature of present and expected competition; the quality and experience of management services which may be available and the depth of that management; the potential for further research, development, or exploration; specific risk factors not now foreseeable but which may be anticipated; the potential for growth or expansion; the potential for profit; the perceived public recognition or acceptance of products, services, or trades; name identification; and other relevant factors. This discussion of the proposed criteria is not meant to be restrictive of the virtually unlimited discretion of the Company to search for and enter into potential business opportunities.

 

The search for a target company will not be restricted to any specific kind of business entities, but may acquire a venture which is in its preliminary or development stage, which is already in operation, or in essentially any stage of its business life. It is impossible to predict at this time the status of any business in which the Company may become engaged, whether such business may need to seek additional capital, may desire to have its shares publicly traded, or may seek other perceived advantages which the Company may offer.

 

It is anticipated that any securities issued in any such business combination would be issued in reliance upon exemption from registration under applicable federal and state securities laws. In some circumstances, however, as a negotiated element of its transaction, the Company may agree to register all or a part of such securities immediately after the transaction is consummated or at specified times thereafter. If such registration occurs, it will be undertaken by the surviving entity after the Company has entered into an agreement for a business combination or has consummated a business combination. The issuance of additional securities and their potential sale into any trading market which may develop in the Company's securities may depress the market value of the Company's securities in the future if such a market develops, of which there is no assurance.

 

While the terms of a business transaction to which the Company may be a party cannot be predicted, it is expected that the parties to the business transaction will desire to avoid the creation of a taxable event and thereby structure the acquisition in a tax-free reorganization under Sections 351 or 368 of the Internal Revenue Code of 1986, as amended.

 





13


THREE AND SIX MONTHS ENDED JUNE 30, 2014 COMPARED TO THE THREE AND SIX MONTHS ENDED JUNE 30, 2013




Three months ended June 30,


Six months ended June 30,



2014


2013


2014


2013

Net Revenues

 

 $                 -   

 

 $                 -   

 

 $                 -   

 

 $                 -   

Cost of sales

 

-

 

-

 

-

 

-

Operating Expenses:

 

 

 

 

 

 

 

 

Depreciation and amortization

 

11,891

 

-

 

23,516

 

-

General and administrative

 

149,495

 

8,801

 

250,154

 

8,871

Total operating expenses

 

161,386

 

8,801

 

273,670

 

8,871

Loss from operation

 

(161,396)

 

(8,801)

 

(273,670)

 

(8,871)

Total other income (expense)

 

(22,500)

 

-

 

(32,050)

 

-

Net income (loss)

 

 $    (183,886)

 

 $        (8,801)

 

 $    (305,720)

 

 $        (8,871)



Six Month Period Ended June 30, 2014


Revenues

 

During the six month period ended June 30, 2014 and for the prior fiscal year we had no revenue


Depreciation and amortization expense.  For the six months ended June 30, 2014, depreciation and amortization expense was $23,516 as compared to $0 for the six months ended June 30, 2013.  The increase in depreciation and amortization expense is due to the reverse merger of Innovation In Motion and investments in further developing the HDR Intelligent Accessory Platform.

 

General and Administrative Expenses. For the six months ended June 30, 2014 general and administrative expenses were $250,154 as compared to $8,871 for the six months ended June 30, 2013, an increase of $241,293. For the six months ended June 30, 2014 and 2013 general and administrative expenses consisted of the following:





Six Months Ended



Six Months Ended





June 30, 2014


 

June 30, 2013


Occupancy

 

$

22,899

 

$

-

 

Employee compensation

 

 

65,913

 

 

-

 

Professional fees

 

 

125,956

 

 

6,539

 

Internet/Phone

 

 

8,715

 

 

-

 

Travel/Entertainment

 

 

5,104

 

 

563

 

Marketing

 

 

8,143

 

 

-

 

Other

 

 

13,424

 

 

1,769

 

 

 

$

250,154

 

$

8,871

 

 

 

 

·

For the six months ended June 30, 2014, Occupancy expense increased to $22,899 as compared to $0.

 

 

 

 

·

For the six months ended June 30, 2014, salaries and related expenses increased to $65,913 as compared to $0.

 

 

 

 

·

For the six months ended June 30, 2014, Professional fee expense increased to $125,956 as compared to $6,539.

 

 

 

 

·

For the six months ended June 30, 2014, travel and entertainment expense increased to $5,104 as compared to $563.

 

 

 

 

·

For the six months ended June 30, 2014, marketing expense increased to $8,143 as compared to $0.




 

·

For the six months ended June 30, 2014, Internet and Telephone expense amounted to $8,715 as compared to $0 for the six months ended June 30, 2013.

 

 

 

 

·

For the six months ended June 30, 2014, Other expense amounted to $13,424 as compared to $1,769 for the six months ended June 30, 2013.


Three Month Period Ended June 30, 2014


During the three months ended June 30, 2014 and for the prior fiscal year we had no revenue.


General and administrative expense. For the three months ended June 30, 2014, general and administrative expenses were $149,495 as compared to $8,801 for the three months ended June 30, 2013, an increase of $140,694. For the three months ended June 30, 2014 and 2013 general and administrative expenses consisted of the following:





Three Months Ended



Three Months Ended




June 30, 2014


 

June 30, 2013

Occupancy

 

$

10,904

 

$

-

Employee compensation

 

 

48,955

 

 

-

Professional fees

 

 

76,100

 

 

6,469

Internet/Phone

 

 

4,355

 

 

-

Travel/Entertainment

 

 

3,566

 

 

563

Marketing

 

 

3,395

 

 

-

Other

 

 

2,220

 

 

1,769

 

 

$

149,495

 

$

8,801



 

·

For the three months ended June 30, 2014, Occupancy expense increased to $10,904 as compared to $0.

 

 

 

 

·

For the three months ended June 30, 2014, salaries and related expenses increased to $48,955 as compared to $0.  The increase is due to increased headcount.

 

 

 

 

·

For the three months ended June 30, 2014, Professional fee expense increased to $76,100 as compared to $6,469.

 

 

 

 

·

For the three months ended June 30, 2014, travel and entertainment expense increased to $3,566 as compared to $563.

 

 

 

 

·

For the three months ended June 30, 2014, marketing expense increased to $3,395 as compared to $0.




 

·

For the three months ended June 30, 2014, Internet and Telephone expense amounted to $4,355 as compared to $0 for the three months ended June 30, 2013.

 

 

 

 

·

For the three months ended June 30, 2014, Other expense amounted to $2,220 as compared to $1,769 for the three months ended June 30, 2013.


 

 Liquidity and Capital Resources

 

As of June 30, 2014, we had total current assets of $21,199 and we had total current liabilities of $973,668.

 

Operating activities used $173,210 in cash for the six months ended June 30, 2014, as compared to using $263,242 in cash for the six months ended June 30, 2013. Our net loss of $305,720 for the six months ended June 30, 2014, was offset by depreciation and amortization expense of $23,516, and a decrease in other assets of $112,000, offset by a decrease in accounts payable of $3,006.  Investing activities for the six months ended June 30, 2014 totaled $496,960, and included the purchase of fixed assets of $419,266, and the investment in intangible assets of $77,694.  Financing activities for the six months ended June 30, 2014 totaled $685,385, and was comprised of notes payable.

 

As of June 30, 2014 and the date of this report, we have insufficient cash to operate our business at the current level for the next twelve months and insufficient cash to achieve our business goals. The success of our business plan is contingent upon us obtaining additional financing. We intend to fund operations through debt and/or equity financing arrangements, which may be insufficient to fund our capital expenditures, working capital, or other cash requirements. We do not have any formal commitments or arrangements for the sales of stock or the advancement or loan of funds at this time. There can be no assurance that such



15


additional financing will be available to us on acceptable terms, or at all. Our failure to obtain financing would have a material adverse effect on our business.

 

Off-Balance Sheet Arrangements

 

The Company has no off-balance sheet arrangements that are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is deemed by our management to be material to investors.

 

Contractual Obligations

 

None.

 

Seasonal Aspects of the Business

 

There are no seasonal aspects of the business that have a material effect on the financial condition or results of the operation.

 

Recent Accounting Policies

 

The recent material accounting policies that may be the most critical to understanding of the financial results and conditions are discussed in Note 2 of the unaudited financial statements.

 

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

 

Information not required to be filed by Smaller Reporting Companies.


ITEM 4. CONTROLS AND PROCEDURES.

 

Evaluation of Disclosure Controls and Procedures.

 

Pursuant to Rule 13a-15(b) under the Securities Exchange Act of 1934 ("Exchange Act"), the Company's management, under the supervision and with the participation of the Chief Operating Officer, who is also the executive principal officer and Chief Financial Officer, has evaluated the effectiveness of the Company's disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) as of June 30, 2014, the end of the period covered by this Quarterly Report on Form 10-Q.

 

Based upon that evaluation, the Chief Operating Officer and Chief Financial Officer concluded that, as of June 30, 2014, the disclosure controls and procedures were not effective. Disclosure controls and procedures means controls and other procedures that are designed to ensure that information required to be disclosed by the Company in the reports it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange 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 the Company in the reports that it files or submits under the Exchange Act is accumulated and communicated to management, including the principal executive and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.

 

The Company's management has identified material weaknesses in its internal control over financial reporting related to the following matters:

 

A lack of sufficient segregation of duties. Specifically, this material weakness is such that the design over these areas relies primarily on defective controls and could be strengthened by adding preventative controls to properly safeguard company assets.

 

A lack of sufficient personnel in the accounting function due to the Company's limited resources with appropriate skills, training and experience to perform certain tasks as it relates to financial reporting.

 

The Company's plan to remediate those material weaknesses remaining is as follows:

 



16


Improve the effectiveness of the accounting group by continuing to augment existing resources with additional consultants or employees to improve segregation procedures and to assist in the analysis and recording of complex accounting transactions. The Company plans to mitigate the segregation of duties issues by hiring additional personnel in the accounting department once it generates significantly more revenue, or raises significant additional working capital.

 

Improve segregation procedures by strengthening cross approval of various functions including quarterly internal audit procedures where appropriate.

 

Changes in Internal Control Over Financial Reporting

 

There was no change in the Company's internal control over financial reporting that was identified in connection with such evaluation that occurred during the period covered by this report that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting.



 




17


PART II

 

ITEM 1. LEGAL PROCEEDINGS

 

There are no pending, threatened or actual legal proceedings in which the Company or any subsidiary is a party.

 

ITEM 1A. RISK FACTORS

 

In  addition to the other information set forth in this report, you should carefully consider the factors discussed under the heading Risk Factors in our Annual Report on Form 10-K filed on January 14, 2014, which could materially affect our business operations, financial condition or future results. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business operations and/or financial condition. There have been no material changes to our risk factors since the filing of our Form 10-K.


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

 

None.


 ITEM 3. DEFAULTS UPON SENIOR SECURITIES

 

Not applicable.


ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

 

There were no matters submitted to a vote of the security holders during the quarter covered by this report.

 

ITEM 5. OTHER INFORMATION

 

(a) Not applicable.

(b) Item 407(c)(3) of Regulation S-K:

 

During the quarter covered by this Report, there have not been any material changes to the procedures by which security holders may recommend nominees to the Board of Directors.

 


ITEM 6.  EXHIBITS

 


(a)

Exhibits

 

 

31.1

Certification of Chief Executive Officer pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act*

 

 

31.2

Certification of Chief Financial Officer pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act*

 

 

32.1

Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002*

 

 

32.2

Certification of Chief Financial Officer and Chief Financial Officer pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002*

 

 

*     Filed herein

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. 



IIM GLOBAL CORPORATION

 

 

By: /s/ David S. Jones

 

President,

 

Principal executive officer and Principal financial officer

Dated: August 14, 2014

 




18