Bespoke Extracts, Inc. - Annual Report: 2013 (Form 10-K)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[X]ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended August 31, 2013
Commission File Number: 000-52759
DIMI TELEMATICS INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)
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Nevada
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20-4743354
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(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification No.)
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290 Lenox Avenue, New York, NY 10027
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(Address of principal executive offices) (Zip Code)
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Registrant’s Telephone Number, including area code: (855) 633-3738
Securities registered pursuant to Section 12(b) of the Exchange Act:None
Securities registered pursuant to Section 12(g) of the Exchange Act:Common Stock, par value $.001 par value
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes [ ] No [X]
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes [ ] No [X]
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 [ ]
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 [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of the registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [X]
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
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Large Accelerated Filer [ ]
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Accelerated Filer [ ] Accelerated Filer [ ] Accelerated Filer [ ]
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Non-Accelerated Filer [ ]
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Smaller Reporting Company [X]
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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 aggregate market value of the voting stock held by non-affiliates of the issuer on February 28, 2013, based upon the $0.0122 per share closing price of such stock on that date, was $221,054.
There were 352,716,928shares of common stock outstanding as of November 25, 2013.
Documents incorporated by reference: None
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FORWARD-LOOKING INFORMATION
This Annual Report on Form 10-K contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, and Section 21E of the Securities Exchange Act of 1934. These statements relate to future events or our future financial performance. We have attempted to identify forward-looking statements by terminology including “anticipates,” “believes,” “expects,” “can,” “continue,” “could,” “estimates,”“intends,” “may,” “plans,” “potential,” “predict,” “should” or “will” or the negative of these terms or other comparable terminology. These statements are only predictions; uncertainties and other factors may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels or activity, performance or achievements expressed or implied by these forward-looking statements. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Our expectations are as of the date this Form 10-K is filed, and we do not intend to update any of the forward-looking statements after the date this Annual Report on Form 10-K is filed to confirm these statements to actual results, unless required by law.
ITEM 1. BUSINESS.
Background
On October 28, 2011, DiMi Telematics International, Inc. (“DTII”) entered into a Share Exchange Agreement (the “Share Exchange”) with DiMi Telematics, Inc. (“DTI”) and its stockholders. Pursuant to the agreement, DTII issued 87,450,000 shares of its common stockin exchange for all outstanding shares and warrants to purchase common shares of DTI. As a result of the Share Exchange Agreement, DTI became a subsidiary of DTII. DTII assumed operation of DTI and entered the Telematics/M2M industry. On November 10, 2011, the closing of the Share Exchange occurred. In connection with the Share Exchange, 15,000,000 of DTII’s issued and outstanding shares of common stock were surrendered for cancellation.
The following discussion includes information about the business operations, management and financial condition of DTII and DTI. Unless specifically set forth to the contrary, when used in this report the terms “we,”“us,”“our,” the “Company” and similar terms refer to DTII, a Nevada corporation, and its wholly owned subsidiary DTI, also a Nevada corporation.
General
The Company designs, develops and distributes Machine-to-Machine (“M2M”) communications solutions used to remotely track, monitor, manage and protect multiple mobile and fixed assets in real-time from virtually any web-enabled desktop computer or mobile device. Through our proprietary software and hosted service offerings, the Company is endeavoring to capitalize on the pervasiveness and data transport capabilities of wireless networks in order to facilitate communications and process efficiencies between commercial and industrial business owners/managers and their respective networked control systems, sensors and devices.
Strategically, the Company is focused on the M2M market segments in which we can provide highly differentiated and value-driven solutions capable of unleashing tangible productivity gains, material cost reductions and quantifiable risk mitigation across an enterprise.
Our mission is to earn global distinction as the leading supplier of world class M2M communications solutions that empower our customers to optimize efficiencies and productivity through remote tracking, monitoring, management and protection of their most valuable assets.
The DiMi Solution Platform
Our flagship M2M solution is “DiMi,” a proprietary, patent-pending, business intelligence and two-way communications platform that captures and seamlessly integrates real-time data from networked tracking, monitoring, alarm and alert systems, sensors and devices; and, in turn, centralizes this data onto an online command and control dashboard that is accessible 24/7 by a designated user or community of designated users through the secure DiMi Internet portal, found at www.dimispeaks.com.
To date, we have not yet commenced commercial marketing of DiMi and have not yet generated revenues from operations. DiMi is currently being beta tested in anticipation of initial commercial roll-out of version 4.0, which it is anticipated will take place in thesecond quarter of 2014.
With adoption of the DiMi M2M communications platform, users can remotely control, monitor, manage and acquire data from their operational assets, providing the interface for lighting, temperature, humidity, keycard access, fleet management and many other vital systems that impact the enterprise. DiMi uses established secure technology standards (i.e. LONet, MODbus, BACnet and ELK) combined with a unique, proprietary software interface that keeps users connected to their asset management and control systems through any web-enabled computer or mobile device.
By providing dynamic, real-time access to critical information from a wide array of new or legacy sensors, GPS tracking tools and/or diagnostic devices – irrespective of their make, model or manufacturer, DiMi alerts or reports back to its users via familiar communication tools, like instant messaging, email, HTML and text messaging. Users can even issue global commands to its asset management and control systems through the DiMi software interface. Moreover, DiMi leverages the collected knowledge of a particular asset or assets and compares it to historical performance metrics and other critical benchmarks through an integrated data management module, giving users insight that allows them to rapidly identify and implement proper preventive maintenance measures, efficiency improvements and other key operational activities.
Our proprietary M2M solutions utilize a cloud-based, two-way communications delivery platform, marketed as “DiMi.” Leveraging the power, scalability and flexible turnkey advantages of DiMi’s patent-pendingsoftware and hosting platform, users are able to remotely track, monitor, manage and protect multiple mobile and fixed assets in real-time from virtually any web-enabled desktop computer or mobile device while located anywhere in the world. DiMi features a robust, customized interface that gives its users secure command and control functionality of multiple remote, connected sensors, alarms and diagnostic devices. Moreover, the intuitive DiMi framework readily adapts to and integrates both new and legacy monitoring/sensing equipment – irrespective of make, model or manufacturer – providing for simplified, economical M2M deployments.
OurDiMi solution is currently being used to actively monitor property management systems in several high-rise commercial and residential buildings in New York City – all beta sites which have served to demonstrate the efficacy of the DiMi technology and M2M communications platform. Moving forward, the Company intends to concentrate its DiMi commercialization efforts on marketing the solution to property management companies, commercial property developers, government/military installations, industrial facilities, retail and restaurant chains, colleges and universities, fleet managers, and any business or institutional concern with valuable fixed and mobile assets requiring remote surveillance, regular maintenance or general oversight.
We expect to deliver DiMi as a monthly, hosted service that puts critical information into the palm of its user’s hands with no major hardware investments. Our hosting platform can be tailored for each customer to create secure and reliable end-to-end connectivity between their specific remote connected equipment and DiMi’s proprietary web interface. Once a new client’s core M2M business needs have been confirmed, the Company will closely collaborate with the client to design the organizational and process modifications required to ensure a successful DiMi launch, offering full service project definition, management, user interface customization, implementation services and ongoing quality assurance and testing.
Uses and Benefits of the DiMi Solution
Due to the knowledge and experience of our executive management in real estate operations and management, we have initially targeted the real estate management industry for initial commercialization of the DiMi Platform solution. Among the uses and benefits of DiMi in the real estate industry are the following:
“Smart” Facility Management
Today’s buildings – whether residential, commercial, medical or otherwise – are sustained through operation of various utility systems. Through these systems, electricity, heat, HVAC, water, lighting, security and other necessities, are provided to the buildings.
Some conventional systems are controlled by human operators and, thus, require maintenance staff on-site or on-call to control, maintain and otherwise operate them. Others may be controlled electronically or through a combination of electronic and human control. These systems force building owners to extend additional resources and incur burdensome costs in order to maintain proper operation of the systems, as well as account for human errors that may result from improper system operation or management. Moreover, many conventional systems are not capable of remotely controlling multiple buildings having multiple building functionalities using a single monitor and control device and be adaptable to various control interfaces that are used by the buildings and facility managers.
OurDiMi solution works as a centralizing component of a facility or multiple facilities’ management system, acquiring and interpreting data from literally thousands of networked devices monitoring systems operating in multiple locations.
Whether a facility manager is looking to save oil and gas, monitor carbon emissions, avert a flood or monitor and control temperatures, lighting or remote keycard access, DiMi provides a fully integrated, affordable solution. Moreover, DiMi allows our clients to evaluate their building management practices for strengths, weaknesses and opportunities to be greener, more productive and more efficient. DiMi’s virtual grid can track and sort building data to enable cost savings, reduce the carbon footprint and set new global standards of performance for the facility management industry.
Energy Savings
For boilers to run at peak efficiency, operators must attend to boiler staging, water chemistry, pumping and boiler controls, boiler fuel-air mixtures, burn-to-load ratios and stack temperatures. DiMi can consolidate all the above efficiency-enhancing metrics and provide monitoring of water chemistry and temperature to improve equipment efficiency and reduce energy expenditures. DiMi provides these features on a cost effective platform which empowers users to realize significant cost savings.
DiMi can help maintain consistent temperature throughout buildings and provide the ability for managers to monitor and control irregularities. Users benefit from being able to prevent system wear and tear from operating under stress; increase the life of the systems through proper timing of maintenance; determine peak efficiencies and set pre-defined conditions and alerts. DiMi’s service can also measure water consumption by unit to ascertain actual usage by tenant and carbon emissions to track actual changes.
Enhanced Security
DiMi can provide remote monitoring, control and access to restricted areas. Our technology provides an audit trail that enables users to see who accessed a room and when. The ability to track entries to individual rooms via the audit trail eliminates the cost of replacing locks and lost keys. DiMi readily interfaces with most alarm panels on the market as well as most existing keycard access systems.
Disaster Management
Water leaks and flooding can be costly problems for property managers and owners. DiMi can help by providing the ability to monitor strategically placed water sensors in bathrooms, elevator shafts, rooftop drains or any other problem area. Users will be alerted if there are any irregularities within a defined scope to avert catastrophes. Hurricane shields can be activated from a remote location to avoid disaster and minimize costs in protecting an asset.
Routine Maintenance
All forms of routine maintenance that can be automated can be controlled directly using the DiMi M2M communications solution. From pre-defined schedules, on a demand basis when equipped with the proper sensors, or from a user’s IM account anywhere the Internet is accessible, maintenance can be performed at will. As an example, automated service calls can be enabled when the boiler is operating outside of predetermined optimal ranges. Or, storage tank levels can be preset to enable DiMi to trigger automatic scheduling of oil deliveries.
Building Value
We believe that a building that incorporates DiMi will have a documented pedigree of asset performance. Energy management and efficiency gains, along with maintenance and repair history, are mapped through our Master Data Management module. DiMi’s information management capabilities increase property return on investment and overall property value.
The Marketplace
Although widely heralded as a “transformative” technology, M2M is not new. The concept was first used during World War II for identifying “friend” or “foe” to prevent pilots from hitting the wrong targets. Satellites use M2M to fire engines based on guidance and navigation sensors. Garage door openers respond to the clicker in a car. The difference now is that you can network the sensors in devices and objects, and use the data for extended purposes, such as recognizing that the garage door was left open and notifying the homeowner or security company to close it by way of remote command.
M2M – also commonly called “ubiquitous” or “pervasive” computing – refers to digital microprocessors and sensors embedded in everyday objects and connected to networks. M2M most often refers to “machine-to-machine,” although mobile-to-machine or man-to-machine is also used to describe this fast evolving family of technologies. Because M2M communications can exist in practically any machine, environment and market, it holds the potential to reshuffle entire industry structures, creating an anticipated windfall for technology enablers in the M2M arena and enabling an array of solutions that deliver new levels of “smart services” and commerce.
According to FocalPoint Consulting Group, the global M2M market is expected to reach $50 billion in 2011 and will grow five-fold to $250 billion by 2012. Moreover, GSMA, an industry association representing the interests of over 800 mobile operators worldwide, is forecasting that a connected universe of up to 50 billion M2M devices will develop over the next 15 years.
Juniper Research reported in May 2011 that M2M connections will be the catalyst for over $35 billion of new service revenues across a diverse range of industry sectors by the end of 2016. Specific sectors noted as having particularly strong potential include consumer and commercial telematics, smart metering, point of sale, retail, banking, mobile health monitoring, smart buildings and security.
According to an article published on GoingM2M.com on July 22, 2011, titled “Verizon and AT&T Realize Greater Future in M2M,” the mobile carriers managed to add 3.4 million new subscribers in the second quarter of 2011. Of Verizon’s new adds, 40% came from wholesale and other devices with the majority coming from M2M connections. AT&T reported a similar ratio, noting that 30% of its newly connected devices came from new M2M connections.
Secondary Target Markets
Distilling customer needs to discrete services allows us to target and expand high value opportunities and generate critical need niches in vertical market sectors. Combining these niches into a consolidated service, offering a single point customer interface, is expected to give the Company key competitive differentiation in the marketplace.
Restaurant and Retail Chains – DiMi can provide owners and managers of restaurants and retail businesses the ability to monitor and control multiple locations remotely from any web-enabled computer or mobile device. We can provide the interface that gives users real-time insight and control of critical systems within their establishments that enable them to reduce costs, manage more efficiently and increase their return on investment. As long as there is Internet access, users can monitor and manage all of their properties – whether at home, walking down the street or traveling out of the country.
Specific to restaurants, DiMi provides the ability to monitor the humidity and temperature of walk-in environments, such as freezers, wine cellars and refrigeration units, helping to ensure that meats age properly, cellaring of wines is maintained and cheese or other perishables are well stored. When a power failure or surge occurs, immediate alerts are sent to a manager or owner’s handheld device, enabling quicker response times and reducing the loss of inventory from food spoilage or wine cellar temperature fluctuation.
Weather extremes may also trigger instability in a restaurant environment. DiMi helps by providing the ability to remotely monitor temperatures through one or many restaurants and signal any deviation from normal.
Schools, Colleges and Universities – With DiMi, educational facilities can experience the peace of mind that comes with being able to monitor points of entry as well as restricted areas on-site or remotely from any web-enabled computer or mobile device.
Our solution helps to protect sensitive documents, dormitories and classrooms housing expensive assets, such as computer centers, biotech labs, movie production and digital publishing facilities. Moreover, through use of DiMi’s auditing capabilities, school building managers can mitigate losses due to theft and receive immediate, real-time feedback in emergency situations, including security breaches, fire, smoke, gas leaks, and CO and CO2 alerts, among other potential crises.
Healthcare Facilities – In addition to benefiting from the same remote monitor and control capabilities afforded all sectors involving the management of building systems, healthcare facilities can leverage DiMi M2M communications solutions in highly innovative ways to enhance resident patient care.
For instance, DiMi can provide care facilities with an ability to prevent scalding due to inconsistencies in tap water temperature. The risk is increased where the resident population may be elderly and prone to sensory loss and because nerve reaction times are reduced; thus the intuitive reaction to pull away from the scalding hot water is not sufficient to avoid potentially severe skin burns.
Another potential application is home monitoring of patients suffering from chronic diseases and conditions, such as congestive heart failure, hypertension, diabetes, asthma and obesity. Hospitals, clinics and physician practices can utilize DiMi to establish an additional communication channel with their patients, removing geographic barriers and enhancing the quality of care.
Connecting with Telehealth devices used in the home and accessed via any web-enabled computer or wireless device, DiMi’s powerful interfacecan give medical staff the ability to monitor and quickly assess – in real-time – an at-home patient’s oxygen levels, pulse, blood pressure and other vital statistics, potentially reducing hospitalization rates, improving treatment plans and decreasing emergency room visits. Moreover, DiMi’s data management module captures important patient data for medical records, which can help reduce costs related to paperwork and prevent costly mistakes that could lead to malpractice claims.
Industrial Complexes – DiMi’s cloud-based M2M communications platform supports a vast array of possibilities to employ innovative tracking, sensing, monitoring, alerting and reporting equipment to remotely monitor and manipulate industrial control systems. Integrating with existing or new backend systems, DiMi can serve as the command and control interface for a vast number of industrial M2M applications in sectors that range from oil and gas, water treatment and waste management to manufacturing, green power generation and utilities.
One possible DiMi application is managing an industrial complex’s consumption of energy by reducing or shifting electricity use to improve electric grid reliability, manage electricity costs, and encourage load shifting or load shedding during times when the electric grid is near capacity. Another would be real-time remote monitoring and control of automated irrigation systems for a commercial farming enterprise or monitoring and detecting tank leaks at oil refineries.
Because DiMi is hardware-agnostic and readily customized to address the demands of any industrial sector, we believe that the DiMi interface can be leveraged and applied to protect a vast array of fixed and mobile assets deemed valuable and mission-critical.
Logistics/Fleet Management - Powered by DiMi, DiMi Telematicsprovides the commercial transport industry with a cost effective method of monitoring in real-time all aspects of fleet operations, including driver and vehicle performance, geo-tracking, safety, compliance and efficiency. The resulting benefits range from the successful streamlining of routes and schedules to save money in fuel consumption and personnel costs, to mitigating risk and lowering insurance costs.
Certain U.S. legislation (e.g., Food Safety Act 1990, Quick Frozen Foodstuffs Regs 1995 and the Temperature Control Regs 1995) mandates that mobile transporters of chilled food products closely monitor the temperature of goods in transit to protect them from spoilage. Working in concert with automated, wireless temperature monitoring devices, DiMi is able to transmit alerts directly to fleet managers and/or refrigerated truck drivers when load temperatures approach predefined levels requiring immediate attention.
Competition
Given the positive outlook for the M2M industry and our targeted market segments, we must contend with the reality that we are selling our solutions in intensely competitive markets. Some of our competitors have significantly greater financial, technical, sales and marketing resources than we do. As the markets for our software products and hosting services continue to develop, additional companies, including those with significant market presence in the wireless industry, could enter the markets in which we compete and further intensify competition. In addition, we believe price competition may become a more significant competitive factor in the future.
Several businesses that share the M2M space can be viewed as competitors, such as M2M application service providers, Mobile Virtual Network Operators, system integrators and wireless operators/carriers that offer a variety of the components and services required for the delivery of complete M2M solutions.
We believe we have a competitive advantage and are uniquely positioned as an M2M solution-centric business since our M2M communications platform is hardware-agnostic, and our hosting environment is in the cloud – this gives us the ability to help businesses lower their IT infrastructure costs and management requirements while improving performance, scalability and flexibility.
We have also taken – and will continue to take – the necessary steps to secure the proprietary aspects of our applications through patent filings in the U.S. and in key international markets. Moreover, we intend to remain focused on proactively developing best-of-breed Internet-enabled M2M solutions that are designed to effectively meet the evolving needs of our primary target market, namely web-based remote asset tracking, management and control with applications in the commercial, industrial, educational, government and military sectors.
The markets for our M2M communications solutions will remain characterized by rapid technological change and evolving industry standards. Nonetheless, the principal competitive factors in these markets will continue to be product performance, ease of use, reliability, price, breadth of solution offerings, sales and distribution capability, technical support and service, customer relations, and general industry and economic conditions.
We believe that our consultative approach to enabling hosted M2M technologies for our clients – as well as the attention we give to their specific needs, requirements and circumstances – are critical competitive differentiators that we are dedicated to preserving and nurturing as we grow. Moreover, prudent and timely integration of new and emerging digital and web technologies into our M2M communications platform will remain an underpinning mission for us if we are to earn and maintain distinction as a recognized industry leader.
Among the public companies with which we may compete are: Digi International, Inc. (Nasdaq:DGII); EnerNOC, Inc. (Nasdaq:ENOC);Evolving Systems, Inc. (Nasdaq:EVOL); Gemalto, NV (OTCQB:GTOFF); Numerex Corp. (Nasdaq:NMRX); RF Monolithics, Inc. (Nasdaq: RFMI);Telular Corporation (Nasdaq:WRLS); and Trimble Navigation Ltd. (Nasdaq:TRMB). Many of these competitors have greater name recognition as well as financial and other resources than we have. We may never become a competitive influence in the marketplace.
Plan of Operations
DiMi Telematics, Inc. is headquartered in New York City and incorporated under the laws of Nevada. Aside from the oversight and administration of our corporate, financial and legal affairs by the executive management team, once commercial roll-out of DiMi takes place, our company’s operating activities will be centralized in three core areas:
· Sales and Marketing, which will employ both direct and indirect sales models utilizing an in-house business development team, partners and resellers and self-service through a service on-demand web interface.
Our initial sales and marketing team will be comprised of our current management staff, and supplemented by the hiring of dedicated sales professionals as the Company matures. However, we intend to immediately begin building out its global distribution network through reseller and strategic marketing agreements with qualified third party sources. To support and nurture strong relationships with our future sales and marketing partners, we expect to provide co-marketing, trade show support, product training and DiMi demo units, while also actively engaging in industry awareness and lead generation programs.
Once a new client’s core M2M business needs have been confirmed, our Solutions Team will closely collaborate with the client to design the organizational and process modifications required to ensure a successful DiMi launch, offering full service project definition, management, user interface customization, implementation services and ongoing quality assurance and testing.
In order to achieve accelerated market penetration and sustainable, recurring revenue from a global customer base, the Company expects to ultimately adopt a hybrid sales and marketing model involving the following: direct sales (Solutions Team); channel sales (via leading Value-Added Resellers (“VARs”) and distributors dedicated to niche market applications that DiMi is capable of addressing in target domestic and international markets); and strategic marketing and integration collaborations with industry leading system integrators, Original Equipment Manufacturers (“OEMs”) and large cellular carriers and dealers.
· Operations, which will be responsible for managing daily activities related to monitoring and administering our cloud-based server operations; 24/7 client service/help desk; professional services and installation support; and quality assurance and testing of our DiMi software and hosting platform, as well as the implementation and ongoing administration of our hosted clients’ M2M communications platforms.
Our DiMi solution is currently being used to actively monitor property management systems in numerous high-rise commercial and residential buildings in New York City – all beta sites owned and managed by the FATA Organization. These sites have served to successfully prove out the DiMi software technology and hosting platform and will provide the Company’s sales and marketing team with the capability to provide live demonstrations of the DiMi platform.
After our Solutions Team works in close collaboration with our customers throughout their respective DiMi implementation projects, our Account Service Representatives will assume responsibility for ongoing technical and administrative support following DiMi’s deployment. In addition, our customers will have access to a dedicated team of customer service and technical specialists who can be reached after hours and on weekends through a telephone helpdesk and an online technical support center.
· Product Development, which will be charged with enhancing our existing M2M software applications and services and introducing new and complementary hosted products and applications on a timely basis. We anticipate that the creative formulation of enhancements and new product conceptualization will be performed in-house by our officers and directors. Thereafter, we intend to outsource software enhancement and product development to outside third parties.
Currently, the Company, in collaboration with its outsource software development team, is engaged in developing the next generation of its M2M communications platform: DiMi 4.0.is being designed to provide for a number of technological enhancements and new user benefits being built into the system, including Voice Over Internet Protocol. Based on current development timelines, DiMi 4.0 should be finalized and ready for commercial launch on or before the end of the first quarter of 2014.
At that time, the Company intends to concentrate its DiMi commercialization efforts on marketing the solution to property management companies, commercial property developers, government/military installations, industrial facilities, retail and restaurant chains, colleges and universities, fleet managers, and any business or institutional concern with valuable fixed and mobile assets requiring remote surveillance, regular maintenance or general oversight.
Intellectual Property
Our M2M communications solutions rely on and benefit from our portfolio of intellectual property, including pending patents, trademarks, trade secrets and domain names.
Patent Applications:
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1.
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U.S. Patent Application No. 12/798,923
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· Filed April 13, 2010
· Title: Monitoring and Control Systems and Methods
· Jurisdiction: U.S. Patent and Trademark Office
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2.
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International Application Serial No. PCT/US2010/030882
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· Title: Monitoring and Control Systems and Methods
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Taiwan Patent Application Serial No. 99111633
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· Title: Monitoring and Control Systems and Methods
U.S. Trademark Applications
1. Greenfreak Serial No.: 77724645
2. Domain Names
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http://www.dimispeaks.com
http://www.greenfreak.com
http://www.controlfreak.org
http://www.theicontrol.us
http://www.icontrol.mobi
http://www.icontrolmultiple.com
http://www.icontrolnow.com
http://www.icontrolonline.com
http://www.greened.biz
http://www.greenfreak.biz
http://www.green-freak.com
http://www.green-freak.info
http://www.green-freak.me
http://www.green-freak.mobi
http://www.green-freak.org
http://www.greened.ws
http://www.greenfreak.info
http://www.greenfreak.me
http://www.greenfreak.mobi
http://www.greenfreak.ws
http://www.greened.net
http://www.askdimi.net
http://www.askdimi.org
http://www.askdimi.info
http://www.askdimi.biz
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http://www.askdimi.us
http://www.cntrlfreaks.biz
http://www.cntrlfreaks.us
http://www.cntrlfreaks.com
http://www.cntrlfreaks.info
http://www.cntrlfreaks.net
http://www.cntrlfreaks.org
http://www.greenfreak.us
http://www.greenfreak.com
http://www.Precisionloc8.com
http://www.Precisionloc8.net
http://www.Precisionlok8.com
http://www.Precisionlok8.net
http://www.Precisionlocate.com
http://www.Precisionlocate.net
http://www.DiMiTelematics.com
http://www.DiMiTelematics.net
http://www.DiMiTM.com
http://www.DiMiTM.net
http://www.DiMi-tm.com
http://www.DiMi-tm.net
http://www.DiMi-m2m.com
http://www. DiMi -m2m.net
http://www. DiMi m2m.com
http://www. DiMi m2m.net
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History
History of DTI
DTI was formed as a Nevada corporation on January 28, 2011 under the name Medepet, Inc. On or about May 23, 2011, DTI increased the number of shares it was authorized to issue from 100,000,000 shares, par value $.0001 per share, to 200,000,000 shares of common stock, par value $.0001 per share. On June 30, 2011, Medepet, Inc. changed its name to Precision Loc8, Inc.; on July 28, 2011, Precision Loc8, Inc. changed its name Precision Telematics, Inc.; and on August 10, 2011, Precision Telematics changed its name to DiMi Telematics, Inc.
On or about July 31, 2011, DTI entered into an Asset Purchase Agreement with Roberto Fata pursuant to which Mr. Fata sold, and DTI purchased, the technology encompassing DiMi, including certain specified assets used in the remote monitoring and control of building management systems through unique software interface. See “Certain Relationships and Related Transactions.”
History of DTII
DTII was originally formed as Cine-Source Entertainment, Inc. (“Old Corporation”), a Colorado corporation, on July 29, 1988. Pursuant to a Plan of Merger dated February 24, 2004, the Old Corporation filed Articles and Certificate of Merger with the Secretary of State of the State of Colorado merging the Old Corporation into Cine-Source Entertainment, Inc. (the “Surviving Corporation”), a Colorado corporation. On April 26, 2004, the Surviving Corporation effected a 1-for-200 reverse stock split. Thereafter, on April 27, 2004, the name of the Surviving Corporation was changed to First Quantum Ventures, Inc. On April 13, 2006, the Surviving Corporation formed a wholly owned subsidiary, a Nevada corporation, under the name First Quantum Ventures, Inc., and on May 5, 2006 merged the Surviving Corporation into First Quantum Ventures, Inc. On November 10, 2011, DTII acquired DTI in a “reverse merger” as discussed elsewhere in this Annual Report on Form 10-K.
Fiscal Year End
Following the closing of the Share Exchange Agreement pursuant to which DTII acquired DTI, DTII changed its fiscal year end to August 31, so as to correspond to the fiscal year end of DTI.
Employees
As of November 25, 2013, other than our officers and directors, we had no full time or part time employees.
Properties
We currently lease approximately 500 square feet of general office space at 290 Lenox Avenue, New York, NY 10027 from our Vice President – Operations.
ITEM 1A. RISK FACTORS.
An investment in our common stock involves significant risks. You should carefully consider the following risks and all other information set forth in this Annual Report before deciding to invest in our common stock. If any of the events or developments described below occurs, our business, financial condition and results of operations may suffer. In that case, the value of our common stock may decline and you could lose all or part of your investment.
You should consider each of the following risk factors and any other information set forth in this Form 10-K and the other reports filed by the Company with the Securities and Exchange Commission (the “SEC”), including the Company’s financial statements and related notes, in evaluating the Company’s business and prospects. The risks and uncertainties described below are not the only ones that impact on the Company’s operations and business. Additional risks and uncertainties not presently known to the Company, or that the Company currently considers immaterial, may also impair its business or operations. If any of the following risks actually occurs, the Company’s business and financial condition, results or prospects could be harmed.
Risks Associated with the Company’s Prospective Business and Operations
The Company lacks meaningful operating history and will require substantial capital if it is to be successful. We will require additional funds for our operations.
At August 31, 2013, we had working capital of approximately $416,470. We will require significant cash during fiscal 2014, in order to grow our business, including to implement any acquisitions. No assurances can be given that the Company will be able to obtain the necessary funding during this time to make any acquisitions or for any other purpose. The inability to raise additional funds will have a material adverse affect on the Company’s business, plan of operation and prospects. Acquisitions may be made with cash or our securities or a combination of cash and securities. To the extent that we require cash, we may have to borrow the funds or sell equity securities. The issuance of equity, if available, would result in dilution to our stockholders. We have no commitments from any financing source and we may not be able to raise any cash necessary to complete an acquisition. If we fail to make any acquisitions, our future growth may be limited. If we make any acquisitions, they may disrupt or have a negative impact on our business.
The terms on which we may raise additional capital may result in significant dilution and may impair our stock price. Because of our cash position, our stock price and our immediate cash requirements, it is difficult for us to raise capital for any acquisition. We cannot assure you that we will be able to get financing on any terms, and, if we are able to raise funds, it may be necessary for us to sell our securities at a price that is at a significant discount from the market price and on other terms which may be disadvantageous to us. In connection with any such financing, we may be required to provide registration rights to the investors and pay damages to the investor in the event that the registration statement is not filed or declared effective by specified dates. The price and terms of any financing which would be available to us could result in both the issuance of a significant number of shares and significant downward pressure on our stock price.
The Company’s officers and directors may have conflicts of interest and do not devote their full time to the Company’s operations.
The Company’s officers and directors may have conflicts of interest in that they are and may become affiliated with other companies. In addition, the Company’s officers do not devote their full time to the Company’s operations. Until such time that the Company can afford executive compensation commensurate with that being paid in the marketplace, its officers will not devote their full time and attention to the operations of the Company. No assurances can be given as to when, if ever, the Company will be financially able to engage its officers on a full time basis.
We have not voluntarily implemented various corporate governance measures in the absence of which, stockholders may have more limited protections against interested director transactions, conflicts of interest and similar matters.
Recent federal legislation, including the Sarbanes-Oxley Act of 2002, has resulted in the adoption of various corporate governance measures designed to promote the integrity of the corporate management and the securities markets. Some of these measures have been adopted in response to legal requirements. Others have been adopted by companies in response to the requirements of national securities exchanges, such as the NYSE or The Nasdaq Stock Market, on which their securities are listed. Among the corporate governance measures that are required under the rules of national securities exchanges are those that address board of directors' independence, audit committee oversight, and the adoption of a code of ethics. While our board of directors intends to adopt a Code of Ethics, we have not yet done so nor have we adopted any of these corporate governance measures and, since our securities are not listed on a national securities exchange, we are not required to do so. It is possible that if we were to adopt some or all of these corporate governance measures, stockholders would benefit from somewhat greater assurances that internal corporate decisions were being made by disinterested directors and that policies had been implemented to define responsible conduct. For example, in the absence of audit, nominating and compensation committees comprised of at least a majority of independent directors, decisions concerning matters such as compensation packages to our senior officers and recommendations for director nominees may be made by a majority of directors who have an interest in the outcome of the matters being decided. Prospective investors should bear in mind our current lack of corporate governance measures in formulating their investment decisions.
Provisions of our Articles of Incorporation and Bylaws may delay or prevent take-over which may not be in the best interest of our stockholders.
Provisions of our articles of incorporation and bylaws may be deemed to have anti-takeover effects, which include when and by whom special meetings of our stockholders may be called, and may delay, defer or prevent a takeover attempt. In addition, certain provisions of the Nevada Revised Statutes also may be deemed to have certain anti-takeover effects which include that control of shares acquired in excess of certain specified thresholds will not possess any voting rights unless these voting rights are approved by a majority of a corporation's disinterested stockholders. In addition, our articles of incorporation authorize the issuance of up to 50,000,000 shares of preferred stock with such rights and preferences as may be determined from time to time by our board of directors, of which 1,000 shares of preferred stock are issued and outstanding as of August 31, 2013. Our board of directors may, without stockholder approval, issue preferred stock with dividends, liquidation, conversion, voting or other rights that could adversely affect the voting power or other rights of the holders of our common stock. As a result, our board of directors can issue such stock to investors who support our management and give effective control of our business to our management.
We may be exposed to potential risks relating to our internal control over financial reporting.
As directed by Section 404 of the Sarbanes-Oxley Act of 2002 (“SOX 404”), the SEC has adopted rules requiring public companies to include a report of management on the Company's internal control over financial reporting in its annual reports.
While we expect to expend significant resources in developing the necessary documentation and testing procedures required by SOX 404, there is a risk that we will not comply with all of the requirements imposed thereby. At present, there is no precedent available with which to measure compliance adequately. In the event we identify significant deficiencies or material weaknesses in our internal control over financial reporting that we cannot remediate in a timely manner, investors and others may lose confidence in the reliability of our financial statements and our ability to obtain equity or debt financing could suffer.
Risks Related to the Company’s Common Stock
The Company does not expect to pay dividends in the foreseeable future.
The Company has never paid cash dividends on its common stock and has no plans to do so in the foreseeable future. The Company intends to retain earnings, if any, to develop and expand its business.
“Penny stock” rules may make buying or selling the common stock difficult and severely limit their market and liquidity.
Trading in the Company’s common stock is subject to certain regulations adopted by the SEC commonly known as the “Penny Stock” rules. The Company’s common stock qualifies as penny stock and is covered by Section 15(g) of the Securities and Exchange Act of 1934, as amended (the “1934 Act”), which imposes additional sales practice requirements on broker/dealers who trade in the Company’s common stock in the market. The “Penny Stock” rules govern how broker/dealers can deal with their clients and “penny stock.” For sales of the Company’s common stock, the broker/dealer must make a special suitability determination and receive from clients a written agreement prior to making a trade. The additional burdens imposed upon broker/dealers by the “penny stock” rules may discourage broker/dealers from effecting transactions in the Company’s common stock, which could severely limit its market price and liquidity. This could prevent investors from reselling the Company’s common stock and may cause the price of the common stock to decline.
Although publicly traded, the Company’s common stock has substantially less liquidity than the average trading market for a stock listed on a national securities exchange, and its market price may fluctuate dramatically in the future.
Although the Company’s common stock is eligible quotation on the OTC QB, the trading market in the common stock has substantially less liquidity than shares of companies listed on national securities exchanges. A public trading market having the desired characteristics of depth, liquidity and orderliness depends on the presence in the marketplace of willing buyers and sellers of our common stock at any given time. This presence depends on the individual decisions of investors and general economic and market conditions over which we have no control. Due to,among other reasons, limited trading volume, the market price of the Company’s common stock may fluctuate significantly in the future, and these fluctuations may be unrelated to the Company’s performance. General market price declines or overall market volatility in the future could adversely affect the price of the Company’s common stock, and the current market price may not be indicative of future market prices.
|
ITEM 1B.
|
UNRESOLVED STAFF COMMENTS.
|
Not applicable.
|
ITEM 2.
|
PROPERTIES.
|
The Company’s current executive offices are 290 Lenox Ave, New York City, New York, 10027, the property consist of 500 square feet of finished office space. We currently have a three-year lease through August 31, 2014. We believe that the current office space is adequate to meet our current needs.
|
ITEM 3.
|
LEGAL PROCEEDINGS.
|
None.
|
ITEM 4.
|
MINE SAFETY DISCLOSURES
|
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASERS OF EQUITY SECURITIES.
Market Information
Our shares of common stock are eligible for quotation on the OTC QB under the symbol “DIMI”. However, our shares do not trade other than on an extremely limited and sporadic basis. The following table sets forth for the periods indicated the range of high and low bid quotations per share as reported on the OTC QB since the first period for which figures are available. These quotations represent inter-dealer prices, without retail markups, markdowns or commissions and may not necessarily represent actual transactions.
|
Year 2012
|
High
|
Low
|
||||||
|
First Quarter
|
$ | 0.2775 | $ | 0.0025 | ||||
|
Second Quarter
|
$ | 0.6875 | $ | 0.2775 | ||||
|
Third Quarter
|
$ | 1.35 | $ | 0.50 | ||||
|
Fourth Quarter
|
$ | 1.92 | $ | 0.032 | ||||
|
Year 2013
|
High
|
Low
|
||||||
|
First Quarter
|
$ | 0.048 | $ | 0.013 | ||||
|
Second Quarter
|
$ | 0.0183 | $ | 0.011 | ||||
|
Third Quarter
|
$ | 0.0159 | $ | 0.005 | ||||
|
Fourth Quarter
|
$ | 0.02 | $ | 0.005 | ||||
On November 21, 2013, the closing price of our common stock as reported on the OTC QB was $0.0093 per share.
Holders. As of August 31, 2013, there were approximately 332 holders of record of our common stock, which excludes those stockholders holding stock in street name.
Dividend Policy. We have not declared or paid cash dividends or made distributions in the past, and we do not anticipate that we will pay cash dividends or make distributions in the foreseeable future. We currently intend to retain and reinvest future earnings, if any, to finance our operations.
Equity Compensation Plans. We have not authorized any compensation plans (including individual compensation arrangements) under which our equity securities have been authorized for issuance as of the end of the most recently completed fiscal year ended August 31, 2013. We have not authorized any such plan for the fiscal year ended August 31, 2013.
ITEM 6. SELECTED FINANCIAL DATA.
Not applicable because our company is a smaller reporting company.
|
ITEM 7.
|
MANAGEMENT'S DISCUSSION AND ANALYSISOF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
The following discussion of our financial condition and results of operations should be read in conjunction with the audited financial statements and notes thereto for the fiscal year ended August 31, 2013, found in this Annual Report. In addition to historical information, the following discussion contains forward-looking statements that involve risks, uncertainties and assumptions. Where possible, we have tried to identify these forward looking statements by using words such as “anticipate,” “believe,” “intends,” or similar expressions. Our actual results could differ materially from those anticipated by the forward-looking statements due to important factors and risks including, but not limited to, those set forth under “Risk Factors” in Part I, Item 1A of this Annual Report.
Forward-looking Statements
We and our representatives may from time to time make written or oral statements that are “forward-looking,” including statements contained in this annual report and other filings with the SEC, reports to our stockholders and news releases. All statements that express expectations, estimates, forecasts or projections are forward-looking statements. In addition, other written or oral statements which constitute forward-looking statements may be made by us or on our behalf. Words such as “expect,”“anticipate,”“intend,”“plan,”“believe,”“seek,”“estimate,”“project,”“forecast,”“may,”“should,” variations of such words and similar expressions are intended to identify such forward-looking statements. These statements are not guarantees of future performance and involve risks, uncertainties and assumptions which are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in or suggested by such forward-looking statements. We undertake no obligation to update or revise any of the forward-looking statements after the date of this annual report to conform forward-looking statements to actual results. Important factors on which such statements are based are assumptions concerning uncertainties, including but not limited to, uncertainties associated with the following:
|
•
|
Inadequate capital and barriers to raising the additional capital or to obtaining the financing needed to implement our business plans;
|
|
•
|
Our failure to earn revenues or profits;
|
|
•
|
Inadequate capital to continue business;
|
|
•
|
Volatility or decline of our stock price;
|
|
•
|
Potential fluctuation in quarterly results;
|
|
•
|
Rapid and significant changes in markets;
|
|
•
|
Litigation with or legal claims and allegations by outside parties; and
|
|
•
|
Insufficient revenues to cover operating costs.
|
The following discussion should be read in conjunction with the financial statements and the notes thereto which are included in this annual report. This discussion contains forward-looking statements that involve risks, uncertainties and assumptions. Our actual results may differ substantially from those anticipated in any forward-looking statements included in this discussion as a result of various factors.
Overview
Cine-Source Entertainment, Inc. (the “Old Corporation”) a Colorado corporation, was formed on July 29, 1988. Pursuant to a Plan of Merger dated February 24, 2004, the Old Corporation filed Articles and Certificate of Merger with the Secretary of State of the State of Colorado merging the Old Corporation into Cine-Source Entertainment, Inc. (the “Surviving Corporation”), a Colorado corporation. A previous controlling stockholder group of the Old Corporation arranged the merger for business reasons that did not materialize. On April 26, 2004, the Surviving Corporation effected a 1-for-200 reverse stock split. The name of the Surviving Corporation was changed to First Quantum Ventures, Inc., on April 27, 2004. On April 13, 2006 the Surviving Corporation formed a wholly owned subsidiary, a Nevada corporation named First Quantum Ventures, Inc., and on May 5, 2006 merged the Surviving Corporation with and into this subsidiary, referred to herein as DTII.
As disclosed on a Current Report on Form 8-K filed with the SEC on November 16, 2011, on October 28, 2011, we entered into a Share Exchange Agreement (the “Exchange Agreement”) with Andrew Godfrey, our then Chief Executive Officer, DTI and the holders of all of the issued and outstanding capital stock of DTI (the “DiMi Stockholders”). Under the Exchange Agreement, we exchanged 87,450,000 shares of our common stock (the “First Quantum Shares”) for 100% of the issued and outstanding shares of DTI (the “DiMi Shares”). The exchange of the DiMi Shares for the First Quantum Shares is hereinafter referred to as the “Share Exchange.” The First Quantum Shares issued in the Share Exchange represented 85.8% of our issued and outstanding common stock immediately following the Share Exchange. As a result of the Share Exchange, DTI became DTII’s wholly-owned subsidiary. In connection with the Share Exchange, (a) 15,000,000 shares of our issued and outstanding common stock owned by Kesgood Company, Inc. were surrendered for cancellation and (b) our officers and directors resigned and the following individuals assumed their duties as officers and directors:
|
Name
|
Title(s)
|
|
|
Barry Tenzer
|
President, Chief Executive Officer, Chief Financial Officer, Secretary and Director
|
|
|
Roberto Fata
|
Executive Vice President – Business Development and Director
|
The Share Exchange qualified as a transaction exempt from registration or qualification under the Securities Act of 1933, as amended (the “Securities Act”), and under the applicable securities laws of each jurisdiction where any of the stockholders reside.
On March 15, 2012, the Company changed its name to DiMi Telematics, International, Inc.
On April 16, 2012 the Company issued a 1 for 1 stock dividend to current stockholders whereby the Company issued an additional 101,879,232 shares of common stock. On May 16, 2012 the Company issued an additional 1 for 1 stock dividend to current stockholders whereby an additional 213,858,464 shares were issued. The dividends include outstanding warrants. The Company has reflected the dividends as splits, which have been retroactively reflected in the financial statements.
The Company designs, develops and distributes Machine-to-Machine (“M2M”) communications solutions used to remotely track, monitor, manage and protect multiple mobile and fixed assets in real-time from virtually any web-enabled desktop computer or mobile device. Through our proprietary software and hosted service offerings, DTI is endeavoring to capitalize on the pervasiveness and data transport capabilities of wireless networks in order to facilitate communications and process efficiencies between commercial and industrial business owners/managers and their respective networked control systems, sensors and devices.
The Company is focused on the M2M market segments in which we can provide highly differentiated and value-driven solutions capable of unleashing tangible productivity gains, material cost reductions and quantifiable risk mitigation across an enterprise. Aside from the oversight and administration of our corporate, financial and legal affairs by the executive management team, our Company’s operating activities are centralized in three core areas:
Sales and Marketing, which will employ both direct and indirect sales models utilizing an in-house business development team, partners and resellers and self-service through a service on-demand web interface.
Operations, which will be responsible for managing daily activities related to monitoring and administering our cloud-based server operations; 24/7 client service/help desk; professional services and installation support; and quality assurance and testing of our DiMi software and hosting platform, as well as the implementation and ongoing administration of our hosted clients’ M2M communications platforms.
Product Development, which will be charged with enhancing our existing M2M software applications and services and introducing new and complementary hosted products and applications on a timely basis. We anticipate that the creative formulation of enhancements and new product conceptualization will be performed in-house by our officers and directors. Thereafter, we intend to outsource software enhancement and product development to outside third parties.
Plan of Operations
Product Development Plan
Product development will be charged with enhancing our existing M2M software applications and services and introducing new and complementary hosted products and applications on a timely basis.
The primary building blocks of M2M technology on which the Company has focused its development activities have been and will remain:
· Building an expert knowledge base of existing and emerging electronics/technologies that enable geo-location, remote monitoring and control, auto-diagnostics and object identification;
· Engagement of a cloud computing platform that enables ubiquitous, scalable and on-demand network access;
· Development of proprietary software that controls two-way communication events, acts on predefined rules and delivers users a customized web interface that is accessible 24/7 from any web-enabled computer or device anywhere on Earth; and
· Information systems that enable users to process management solutions that allow for exploiting the information gathered for intelligent decision-making purposes and enhanced situational awareness.
The Company’s proprietary M2M solutions utilize a cloud-based, two-way communications delivery platform, marketed as “DiMi.” Leveraging the power, scalability and flexible turnkey advantages of DiMi’s patent-pending software and hosting platform, users are able to remotely track, monitor, manage and protect multiple mobile and fixed assets in real-time from virtually any web-enabled desktop computer or mobile device while located anywhere in the world.
DiMi features a robust, customized interface that gives its users secure command and control functionality of multiple remote, connected sensors, alarms and diagnostic devices. Moreover, the intuitive DiMi framework readily adapts to and integrates both new and legacy monitoring/sensing equipment – irrespective of make, model or manufacturer – providing for simplified, economical M2M deployments.
DiMi is delivered as a monthly, hosted service that puts critical information into the palm of its user’s hands with no major hardware investments. Our hosting platform can be tailored for each customer to create secure and reliable end-to-end connectivity between their specific remote connected equipment and DiMi’s proprietary web interface
Marketing Plan
Strategically, the Company is focused on the M2M market segments in which we can provide highly differentiated and value-driven solutions capable of unleashing tangible productivity gains, material cost reductions and quantifiable risk mitigation across an enterprise.
We have also taken – and will continue to take – the necessary steps to secure the proprietary aspects of our applications through patent filings in the U.S. and in key international markets. Moreover, we intend to remain focused on proactively developing best-of-breed Internet-enabled M2M solutions that will effectively meet the evolving needs of our primary target market, namely web-based remote asset tracking, management and control with applications in the commercial, industrial, educational, government and military sectors.
At soon as practicable, DTI intends to concentrate its DiMi commercialization efforts on marketing the solution to property management companies, commercial property developers, government/military installations, industrial facilities, retail and restaurant chains, colleges and universities, fleet managers, and any business or institutional concern with valuable fixed and mobile assets requiring remote surveillance, regular maintenance or general oversight.
In order to achieve accelerated market penetration and sustainable, recurring revenue from a global customer base, The Company expects to ultimately adopt a hybrid sales and marketing model involving direct sales (Solutions Team); channel sales (via leading Value-Added Resellers (VARs) and distributors dedicated to niche market applications that DiMi is capable of addressing in target domestic and international markets); and strategic marketing and integration collaborations with industry leading system integrators, Original Equipment Manufacturers (OEMs) and large cellular carriers and dealers.
Employees
As of August 31, 2013, other than its officers and directors, the Company employed no full time and no part time employees.
LIQUIDITY AND CAPITAL RESOURCES
As of August 31, 2013, we had cash and cash equivalents of $437,970 and a net working capital of $416,470.
The accompanying financial statements have been prepared contemplating a continuation of the Company as a going concern. The Company has reported a net loss of $321,645 and had an accumulated deficit of $937,413.
We have not generated positive cash flows from operating activities. The primary source of capital has been from the sale of equity securities. Our primary use of capital has been for professional fees, and general and administrative costs. Our working capital requirements are expected to increase in line with the growth of our business.
OFF-BALANCE SHEET ARRANGEMENTS
We have no significant off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
Not applicable because our company is a smaller reporting company.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
Report of Independent Registered Public Accounting Firm
To the Board of Directors and Stockholders
Dimi Telematics International, Inc.
We have audited the accompanying balance sheets of Dimi Telematics International, Inc. (Formerly First Quantim Ventures, Inc.) (A Development Stage Company) as of August 31, 2013 and 2012, and the related statements of operations, stockholders’ equity, and cash flows for each of the years ended August 31, 2013 and 2012 and for the periods from January 28, 2011 (Inception) through August 31, 2013. These financial statements are the responsibility of the entity’s management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Dimi Telematics, Inc. as of August 31, 2013 and 2012, and the results of its operations and its cash flows for each of the years ended August 31, 2013 and 2012, and for the periods from January 28, 2011 (Inception) through August 31, 2013 in conformity with accounting principles generally accepted in the United States of America.
The accompanying financial statements have been prepared assuming that the entity will continue as a going concern. As discussed in Note 1 to the financial statements, the entity has suffered recurring losses from operations and has a net capital deficiency that raises substantial doubt about its ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
/s/ L.L. Bradford & Company, LLC
Las Vegas, Nevada
November 27, 2013
Dimi Telematics International, Inc.
(Formerly First Quantum Ventures, Inc.)
(A Development Stage Company)
Consolidated Balance Sheet
|
August 31
|
August 31
|
|||||||
|
Assets
|
2013
|
2012
|
||||||
|
Current assets
|
||||||||
|
Cash
|
$ | 437,970 | $ | 733,123 | ||||
|
Prepaid expense
|
- | 9,000 | ||||||
|
Total current assets
|
437,970 | 742,123 | ||||||
|
DiMi Platform
|
241,275 | - | ||||||
|
iPhone applications, net of amortization of $3,667 and $0
|
7,333 | 11,000 | ||||||
|
Intellectual property, net of amortization of $482 and $350
|
1,708 | 1,840 | ||||||
|
Total assets
|
$ | 688,286 | $ | 754,963 | ||||
|
Liabilities and Stockholders' Equity
|
||||||||
|
Accounts payable and accrued liabilities
|
$ | 17,000 | $ | 16,532 | ||||
|
Accounts payable - related party
|
4,500 | - | ||||||
|
Total current liabilities
|
21,500 | 16,532 | ||||||
|
Commitments and contingencies
|
||||||||
|
Stockholders' Equity
|
||||||||
|
Series A Convertible Prefered Stock, $0.001 par value, 50,000,000
|
||||||||
|
authorized shares. 1,000 and 1,000 shares issued and outstanding
|
||||||||
|
August 31, 2013 and August 31, 2012, respectively
|
1 | 1 | ||||||
|
Common stock, $.001 par value: 500,000,000 authorized;
|
||||||||
|
352,716,928 and 327,716,928 shares issued and
|
||||||||
|
outstanding on August 31, 2013 and August 31, 2012, respectively
|
352,717 | 327,717 | ||||||
|
Common stock payable
|
- | - | ||||||
|
Additional paid in capital
|
1,251,481 | 1,026,481 | ||||||
|
Accumulated deficit
|
(937,413 | ) | (615,768 | ) | ||||
|
Total stockholders' equity
|
666,786 | 738,431 | ||||||
|
Total liability and stockholders' equity
|
$ | 688,286 | $ | 754,963 | ||||
The accompanying notes are an integral part of these consolidated financial statements
Dimi Telematics International, Inc.
(Formerly First Quantim Ventures, Inc.)
(A Development Stage Company)
Consolidated Statements of Operations
|
From
|
||||||||||||
|
Inception
|
||||||||||||
|
For the
|
For the
|
January 28,
|
||||||||||
|
year
|
year
|
2011
|
||||||||||
|
ended
|
ended
|
through
|
||||||||||
|
August 31,
|
August 31,
|
August 31,
|
||||||||||
|
2013
|
2012
|
2013
|
||||||||||
|
Revenue
|
$ | - | $ | - | $ | - | ||||||
|
Operating expenses
|
||||||||||||
|
Selling, general and administrative expenses
|
317,847 | 391,551 | 933,484 | |||||||||
|
Amortization expense
|
3,798 | 131 | 3,929 | |||||||||
|
Total operating expenses
|
321,645 | 391,682 | 937,413 | |||||||||
|
Loss before income tax
|
(321,645 | ) | (391,682 | ) | (937,413 | ) | ||||||
|
Provision for income tax
|
- | - | - | |||||||||
|
Net Loss
|
$ | (321,645 | ) | $ | (391,682 | ) | $ | (937,413 | ) | |||
|
Net loss per share: basic and diluted
|
$ | (0.00 | ) | $ | (0.00 | ) | ||||||
|
Weighted average share outstanding
|
341,990,901 | 382,307,654 | ||||||||||
The accompanying notes are an integral part of these consolidated financial statements
Dimi Telematics International, Inc.
(Formerly First Quantum Ventures, Inc.)
(A Development Stage Company)
Consolidated Statement of Stockholders' Equity
For the Years Ended August 31, 2013 and 2012
|
Preferred
|
Preferred
|
Common
|
Common
|
|||||||||||||||||||||||||
|
Shares
|
Par
|
Shares
|
Par
|
Accumulated
|
||||||||||||||||||||||||
|
Outstanding
|
Amount
|
Outstanding
|
Amount
|
APIC
|
Deficit
|
Total
|
||||||||||||||||||||||
|
Beginning Balance
|
- | $ | - | 344,400,000 | $ | 344,400 | $ | (30,210 | ) | $ | (224,086 | ) | $ | 90,104 | ||||||||||||||
|
Shares sold
|
- | - | 25,600,000 | 25,600 | 1,014,400 | - | 1,040,000 | |||||||||||||||||||||
|
Acquisition of DiMi
|
- | - | 57,716,928 | 57,717 | (57,717 | ) | - | - | ||||||||||||||||||||
|
Common stock exchanged for
|
||||||||||||||||||||||||||||
|
1,000 shares preferred stock
|
1,000 | 1 | (100,000,000 | ) | (100,000 | ) | 99,999 | - | - | |||||||||||||||||||
|
Warrant expense
|
- | - | - | - | 9 | - | 9 | |||||||||||||||||||||
|
Net loss
|
- | - | - | - | - | (391,682 | ) | (391,682 | ) | |||||||||||||||||||
|
Ending Balance August 31, 2012
|
1,000 | $ | 1 | 327,716,928 | $ | 327,717 | $ | 1,026,481 | $ | (615,768 | ) | $ | 738,431 | |||||||||||||||
|
Sale of common stock
|
25,000,000 | 25,000 | 225,000 | 250,000 | ||||||||||||||||||||||||
|
Net loss
|
(321,645 | ) | (321,645 | ) | ||||||||||||||||||||||||
|
Ending Balance
|
||||||||||||||||||||||||||||
|
August 31, 2013
|
1,000 | $ | 1 | 352,716,928 | $ | 352,717 | $ | 1,251,481 | $ | (937,413 | ) | $ | 666,786 | |||||||||||||||
The accompanying notes are an integral part of these consolidated financial statements
Dimi Telematics International, Inc.
(Formerly First Quantum Ventres, Inc.)
(A Development Stage Company)
Consolidated Statements of Cash Flows
|
From
|
||||||||||||
|
Inception
|
||||||||||||
|
For the
|
For the
|
January 28,
|
||||||||||
|
year
|
year
|
2011
|
||||||||||
|
ended
|
ended
|
through
|
||||||||||
|
August 31,
|
August 31,
|
August 31,
|
||||||||||
|
2013
|
2012
|
2013
|
||||||||||
|
Cash flows from operating activities
|
||||||||||||
|
Net loss
|
$ | (321,645 | ) | $ | (391,682 | ) | $ | (937,413 | ) | |||
|
Adjustments to reconcile net loss to net
|
||||||||||||
|
cash used in operating activities
|
||||||||||||
|
Amortization expense
|
3,799 | 131 | 4,149 | |||||||||
|
Warrant expense
|
- | 9 | 9 | |||||||||
|
Changes in operating assets and liabilities
|
||||||||||||
|
Prepaid expense
|
9,000 | (9,000 | ) | - | ||||||||
|
Accounts payable
|
468 | (12,717 | ) | 17,000 | ||||||||
|
Accounts payable - related party
|
4,500 | - | 4,500 | |||||||||
|
Net Cash used in operating activities
|
(303,878 | ) | (413,259 | ) | (911,755 | ) | ||||||
|
Cash flows from investing activities
|
||||||||||||
|
DiMi platform
|
(241,275 | ) | - | (241,275 | ) | |||||||
|
iPhone applications
|
- | (11,000 | ) | (11,000 | ) | |||||||
|
Net cash used in investing activities
|
(241,275 | ) | (11,000 | ) | (252,275 | ) | ||||||
|
Cash flow from financing activities
|
||||||||||||
|
Proceeds from common stock sale
|
250,000 | 1,040,000 | 1,602,000 | |||||||||
|
Net cash provided by financing activities
|
250,000 | 1,040,000 | 1,602,000 | |||||||||
|
Net increase in cash and cash equivalents
|
(295,153 | ) | 615,741 | 437,970 | ||||||||
|
Cash and cash equivalents at beginning of period
|
733,123 | 117,382 | - | |||||||||
|
Cash and cash equivalents at end of period
|
$ | 437,970 | $ | 733,123 | $ | 437,970 | ||||||
|
Supplemental disclosure of cash flow information
|
- | |||||||||||
|
Cash paid during period for
|
||||||||||||
|
Cash paid for interest
|
$ | - | $ | - | $ | - | ||||||
|
Cash paid for income taxes
|
$ | - | $ | - | $ | - | ||||||
|
Stock and warrants issued for intellectual property
|
$ | - | $ | - | $ | 1,971 | ||||||
|
Common stock exchanged
|
||||||||||||
|
for 1,000 preferred stock
|
$ | - | $ | - | $ | 100,000 | ||||||
The accompanying notes are an integral part of these consolidated financial statements
DiMi Telematics International, Inc.
(Formerly First Quantum Ventures, Inc.)
(A Development Stage Company
NOTES TO FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION AND NATURE OF BUSINESS OPERATIONS
Basis of Presentation
The accompanying financial statements present on a consolidated basis the accounts of DiMi Telematics International, Inc. (formerly First Quantum Ventures, Inc.), a Nevada corporation (the “Company”), and its wholly owned subsidiary, DiMi Telematics, Inc. (“DTI”). All significant intercompany accounts and transactions have been eliminated in consolidation.
On October 28, 2011, the Company entered into a Share Exchange Agreement (the “Share Exchange”) with DTI and its stockholders. Pursuant to the agreement, the Company issued 87,450,000 shares of its common stock in exchange for all outstanding shares and warrants to purchase common shares of DTI. As a result of the Share Exchange Agreement, DTI became a subsidiary of the Company. The Company assumed operation of DTI and entered the Telematics/M2M industry. On November 10, 2011, the closing of the Share Exchange occurred. In connection with the Share Exchange, (a) 15,000,000 of the Company’s issued and outstanding shares of common stock were surrendered for cancellation and (b) the Company’s officers and directors resigned and the following individuals assumed their duties as officers and directors:
|
Name
|
Title(s)
|
|
|
Barry Tenzer
|
President, Chief Executive Officer, Chief Financial Officer, Secretary and Director
|
|
|
Roberto Fata
|
Executive Vice President – Business Development and Director
|
The Company has accounted for the acquisition under the purchase method of accounting for business combinations. Under the purchase method of accounting in a business combination effected through an exchange of equity interest, the entity that issues the equity interest is generally the acquiring entity. In some business combinations (commonly referred to as reverse acquisitions), however, the acquired entity issues the equity interest. Accounting for business combinations requires consideration of the facts and circumstances surrounding a business combination that generally involves the relative ownership and control of the entity by each of the parties subsequent to the acquisition. Based on a review of these factors, the Share Exchange was accounted for as a reverse acquisition, i.e., the Company was considered the acquired company and DTI was considered the acquiring company. As a result, the Company’s assets and liabilities were incorporated into DTI’s balance sheet based on the fair value of the net assets acquired. Further, the Company’s operating results will not include the Company’s results prior to the date of closing. Accordingly the accompanying financial statements are the financial statements of DTI. In addition, the Company’s fiscal year end changed to DTI’s fiscal year end of August 31 following the closing.
The Company has retroactively reflected the acquisition of DTI’s common stock in a ratio consistent with the Share Exchange.
On March 15, 2012, First Quantum Ventures, Inc., changed its name to DiMi Telematics International, Inc.
Nature of Business Operations
DTI is a development stage company formed on January 28, 2011 as Medepet Inc., a Nevada corporation. During the first year of operations DTI redefined its business purpose and operation. On June 20, 2011, DTI changed its name from Medepet Inc. to Precision Loc8. On July 28, 2011, DTI changed its name from Precision Loc8 to Precision Telematics Inc. On August 9, 2011, DTI changed its name to DiMi Telematics Inc.
On July 28, 2011, DTI entered into an asset purchase agreement for the purchase of intellectual property.
DTI designs, develops and distributes Machine-to-Machine (M2M) communications solutions used to remotely track, monitor, manage and protect multiple mobile and fixed assets in real-time from virtually any web-enabled desktop computer or mobile device. Through our proprietary software and hosted service offerings, DTI is endeavoring to capitalize on the pervasiveness and data transport capabilities of wireless networks in order to facilitate communications and process efficiencies between commercial and industrial business owners/managers and their respective networked control systems, sensors and devices.
DTI is focused on the M2M market segments in which we can provide highly differentiated and value-driven solutions capable of unleashing tangible productivity gains, material cost reductions and quantifiable risk mitigation across an enterprise. Aside from the oversight and administration of our corporate, financial and legal affairs by the executive management team, our operating activities are centralized in three core areas:
|
•
|
Sales and Marketing, which will employ both direct and indirect sales models utilizing an in-house business development team, partners and resellers and self-service through a service on-demand web interface.
|
|
•
|
Operations, which will be responsible for managing daily activities related to monitoring and administering our cloud-based server operations; 24/7 client service/help desk; professional services and installation support; and quality assurance and testing of our DiMi software and hosting platform, as well as the implementation and ongoing administration of our hosted clients’ M2M communications platforms.
|
|
•
|
Product Development, which will be charged with enhancing our existing M2M software applications and services and introducing new and complementary hosted products and applications on a timely basis.
|
Going Concern
The accompanying financial statements have been prepared contemplating a continuation of the Company as a going concern. However, the Company has reported a net loss of $321,645 for the year ended August 31, 2013 and had an accumulated deficit of $937,413 as of August 31, 2013. The Company had net working capital of $416,470 as of August 31, 2013.
Our flagship M2M solution is “DiMi,” a proprietary, patent-pending, business intelligence and two-way communications platform that captures and seamlessly integrates real-time data from networked tracking, monitoring, alarm and alert systems, sensors and devices; and, in turn, centralizes this data onto an online command and control dashboard that is accessible 24/7 by a designated user or community of designated users through the secure DiMi Internet portal, found at www.dimispeaks.com.
With adoption of the DiMi M2M communications platform, users can remotely control, monitor, manage and acquire data from their operational assets, providing the interface for lighting, temperature, humidity, keycard access, fleet management and many other vital systems that impact the enterprise. DiMi uses established secure technology standards (i.e. LONet, MODbus, BACnet and ELK) combined with a unique, proprietary software interface that keeps users connected to their asset management and control systems through any web-enabled computer or mobile device,
By providing dynamic, real-time access to critical information from a wide array of new or legacy sensors, GPS tracking tools and/or diagnostic devices – irrespective of their make, model or manufacturer, DiMi alerts or reports back to its users via familiar communication tools, like IM, email, HTML and text messaging. Users can even issue global commands to its asset management and control systems through the DiMi software interface. Moreover, DiMi leverages the collected knowledge of a particular asset or assets and compares it to historical performance metrics and other critical benchmarks through an integrated data management module, giving users insight that allow them to rapidly identify and implement proper preventive maintenance measures, efficiency improvements and other key operational activities.
Our DiMi solution is currently being used to actively monitor property management systems in several high-rise commercial and residential buildings in New York City – all beta sites which have served to successfully prove out the DiMi technology and M2M communications platform. Moving forward, we intend to concentrate our DiMi commercialization efforts on marketing the solution to property management companies, commercial property developers, government/military installations, industrial facilities, retail and restaurant chains, colleges and universities, fleet managers, and any business or institutional concern with valuable fixed and mobile assets requiring remote surveillance, regular maintenance or general oversight.
Once a new client’s core M2M business needs have been confirmed, we will closely collaborate with the client to design the organizational and process modifications required to ensure a successful DiMi launch, offering full service project definition, management, user interface customization, implementation services and ongoing quality assurance and testing.
Cash and Cash Equivalents
For purposes of these financial statements, cash and cash equivalents includes highly liquid debt instruments with maturity of less than three months.
Concentrations of Credit Risk
Financial instruments and related items, which potentially subject the Company to concentrations of credit risk, consist primarily of cash and cash equivalents. The Company places its cash and temporary cash investments with high credit quality institutions. At times, such investments may be in excess of the FDIC insurance limit. Currently our operating account is above the FDIC limit. The amount in excess of the FDIC limit is $171,709 as of August 31, 2013.
Income Taxes
The Company accounts for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements. Under this method, deferred tax assets and liabilities are determined based on the differences between the financial statements and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date.
The Company records net deferred tax assets to the extent the Company believes these assets will more likely than not be realized. In making such determination, the Company considers all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax planning strategies and recent financial operations. A valuation allowance is established against deferred tax assets that do not meet the criteria for recognition. In the event the Company were to determine that it would be able to realize deferred income tax assets in the future in excess of their net recorded amount, the Company would make an adjustment to the valuation allowance which would reduce the provision for income taxes.
The Company follows the accounting guidance which provides that a tax benefit from an uncertain tax position may be recognized when it is more likely than not that the position will be sustained upon examination, including resolutions of any related appeals or litigation processes, based on the technical merits. Income tax positions must meet a more-likely-than-not recognition threshold at the effective date to be recognized initially and in subsequent periods. Also included is guidance on measurement, recognition, classification, interest and penalties, accounting in interim periods, disclosure and transition.
iPhone Application
The iPhone application is stated at cost. When retired or otherwise disposed, the related carrying value and accumulated amortization are removed from the respective accounts and the net difference less any amount realized from disposition, is reflected in earnings. Minor additions and renewals are expensed in the year incurred. Major additions and renewals are capitalized and depreciated over their estimated useful lives being 3 years.
DiMi Platform.
The DiMi Platform is stated at cost. Anticipated completion is December 2013. When retired or otherwise disposed, the related carrying value and accumulated amortization are removed from the respective accounts and the net difference less any amount realized from disposition, is reflected in earnings. Minor additions and renewals are expensed in the year incurred. Major additions and renewals are capitalized and depreciated over their estimated useful lives being 5 years.
Intellectual Property
Intellectual property is stated at cost. When retired or otherwise disposed, the related carrying value and accumulated amortization are removed from the respective accounts and the net difference less any amount realized from disposition, is reflected in earnings. Minor additions and renewals are expensed in the year incurred. Major additions and renewals are capitalized and depreciated over their estimated useful lives being 3 years up to 15 years.
Revenue Recognition
The Company recognizes revenue on four basic criteria which must be met before revenue can be recognized: (1) persuasive evidence of an arrangement exists; (2) delivery has occurred; (3) the selling price is fixed and determinable; and (4) collectability is reasonably assured. Determination of criteria (3) and (4) are based on management's judgments regarding the fixed nature of the selling prices of the products delivered and the collectability of those amounts. Provisions for discounts and rebates to customers, estimated returns and allowances, and other adjustments are provided for in the same period the related sales are recorded.
Stock Based Compensation
The Company accounts for all compensation related to stock, options or warrants using a fair value based method whereby compensation cost is measured at the grant date based on the value of the award and is recognized over the service period, which is usually the vesting period. The Company uses the Black-Scholes pricing model to calculate the fair value of options and warrants issued to both employees and non-employees. Stock issued for compensation is valued using the market price of the stock on the date of the related agreement.
Recent Accounting Pronouncements
There are no recent accounting pronouncements that are expected to have a material effect on the Company’s financial statements.
Net Loss per Share
Basic and diluted loss per share amounts are computed based on net loss divided by the weighted average number of common shares outstanding. Outstanding warrants to purchase of 12,675,000 common shares were not included in the computation of diluted loss per share because the assumed conversion and exercise would be anti-dilutive for the year ended August 31, 2013.
Management Estimates
The presentation 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 revenues and expenses during the reported period. Actual results could differ from those estimates.
2. INTELLECTUAL PROPERTY
Intellectual property of the following:
|
August 31, 2013
|
August 31, 2012
|
|||||||
|
Intellectual property
|
$
|
2,190
|
$
|
2,190
|
||||
|
Less: amortization
|
482
|
350
|
||||||
|
Net intellectual property
|
$
|
1,708
|
$
|
1,840
|
||||
DTI executed an Asset Purchase Agreement on August 28, 2011 which included various types of intellectual property. Amortization expense for the year months ended August 31, 2013 and 2012 amounted to $132 and $131, respectively.
3. I PHONE APPLICATION
The Company’s purchase of an iPhone application was completed in September 2012. The total cost of the applications is $11,000 and will be amortized over a three year period.
|
August 31, 2013
|
||||
|
Intellectual property
|
$
|
11,000
|
||
|
Less: amortization
|
3,667
|
|||
|
Net intellectual property
|
$
|
7,333
|
||
Amortization expense for the iPhone application for the year ended August 31, 2013 and 2012 amounted to $3,667 and $0, respectively.
4. DiMi PLATFORM
The company has contracted for the development of software to develop and distributes Machine-to-Machine (M2M) communications solutions used to remotely track, monitor, manage and protect multiple mobile and fixed assets in real-time from virtually any web-enabled desktop computer or mobile device. Completion of the software is anticipated to be implemented by second quarter 2014. A total of $241,275 has been paid.
5. EQUITY
Common Stock
The Company was formed in the state of Nevada on April 13, 2006. The Company has authorized capital of 500,000,000 shares of common stock with a par value of $0.001, and 50,000,000 shares of preferred stock with a par value of $0.001.
On April 16, 2012 the Company issued a 1 for 1 stock dividend to current stockholders of record whereby the Company issued an additional 101,879,232 shares of common stock. On May 16, 2012 the Company issued an additional 1 for 1 stock dividend to current stockholders of record whereby an additional 213,858,464 shares were issued. The dividends include outstanding warrants. The Company has reflected the dividends as splits, which have been retroactively reflected in the financial statements.
On July 29, 2011, DTI issued 48,000,000 shares of common stock and 48,000,000 warrants for the purchase of common stock pursuant to an Asset Purchase Agreement for the purchase of intellectual property valued at $2,190.
During the period ended August 31, 2011, DTI issued 296,400,000 shares of common stock through stock purchase agreements in the amount of $312,000.
On September 12, 2011, DTI entered into a Securities Purchase Agreement for the sale of 600,000 shares of common stock at $0.042 per share. The Security Purchase Agreement includes 150,000 Class A warrants and 150,000 Class B warrants. On September 12, 2011, DTI received $25,000.
On September 28, 2011, DTI entered into a Securities Purchase Agreement for the sale of 4,800,000 shares of common stock at $0.042 per share in the amount of $200,000. The Security Purchase Agreement includes 1,200,000 Class A warrants and 1,200,000 Class B warrants.
On October 28, 2011, the Company (f/k/a First Quantum Ventures, Inc.) entered into a Share Exchange Agreement (“Share Exchange”) with DiMi Telematics, Inc. stockholders. Pursuant to the agreement, the Company issued 87,450,000 shares of common stock (pre-split) in exchange for all outstanding shares and warrants to purchase common shares of DTI, the Company received 145,750,000 shares of common stock and warrants to purchase 21,625,000 shares of common stock. In connection with the Share Exchange, (a) 15,000,000 shares of the Company’s issued and outstanding common stock owned by Kesgood Company, Inc. were surrendered for cancellation.
During the second quarter of its fiscal year 2012 the Company sold shares of common stock and warrants in the amount of $815,000. The shares and warrants were unissued as of February 29, 2012. During April 2012, the Company issued 20,200,000 shares of common stock and 16,300,000 warrants.
On June 14, 2012 the Company entered into an exchange agreement with a major stockholder pursuant to which the Company issued 1,000 shares of Series A Convertible Preferred Stock in exchange for the surrender and cancellation of 100,000,000 shares of common stock held by the stockholder. All, and not less than all, shares of Preferred Stock shall, provided that the Corporation shall have reported earnings per share of less than $0.01 in its Annual Report for its fiscal year ended August 31, 2013, be convertible, at any time and from time to time after the filing of such Annual Report, at the option of the Holder thereof, into that number of shares of Common Stock determined by dividing the aggregate Stated Value of all shares of Preferred Stock being converted by the Conversion Price of $0.001 per share. Shares of Preferred Stock converted into Common Stock or redeemed in accordance with the terms shall be canceled and shall not be reissued. If the Company shall have reported earnings per share equal to or greater than $0.01 in its Annual Report, then all such shares of Preferred Stock shall immediately be redeemed by the Company without any consideration payable to the stockholder.
On January 24, 2013 the Company entered into a Securities Purchase Agreement for the sale of 10,000,000 shares of common stock in the amount of $100,000.
On April 24, 2013 the Company entered into a Securities Purchase Agreement for the sale of 15,000,000 shares of common stock in the amount of $150,000.
Warrants
The Company issued 12,000,000 Common Stock warrants, at an exercise price of $0.17 per share, pursuant to an Asset Purchase Agreement on July 29, 2011 for the purchase of intellectual property. The warrants have an expiration date of four years from the issue date and contain provisions for a cash exercise. The estimated value of the warrants granted in accordance with the Asset Purchase Agreement was determined using the Black-Scholes pricing model and the following assumptions:
During the first quarter the Company issued 337,500 Class A warrants at an exercise price of $0.17 per share and issued 337,500 Class B Warrants at an exercise price of $0.25 per share. The estimated value of the warrants granted in accordance with the Asset Purchase Agreement was determined using the Black-Scholes pricing model and the following assumptions:
|
Risk-free interest rate at grant date
|
0.39
|
%
|
||
|
Expected stock price volatility
|
200
|
%
|
||
|
Expected dividend payout
|
--
|
|||
|
Expected option in life-years
|
2
|
Warrant expense was recognized for the period ended February 29, 2012 was $9.
Transactions involving warrants are summarized as follows:
|
Number of
Warrants
|
Weighted-Average
Price Per Share
|
|||||||
|
Beginning balance January 28, 2011
|
-
|
$
|
-
|
|||||
|
Granted
|
12,000,000
|
0.17
|
||||||
|
Exercised
|
-
|
-
|
||||||
|
Cancelled or expired
|
-
|
-
|
||||||
|
Ending balance August 31, 2011
|
12,000,000
|
0.17
|
||||||
|
Granted
|
675,000
|
0.17
|
||||||
|
Exercised
|
-
|
-
|
||||||
|
Canceled or expired
|
-
|
-
|
||||||
|
Outstanding at August 31, 2012
|
12,675,000
|
$
|
0.17
|
|||||
|
Granted
|
-
|
-
|
||||||
|
Exercised
|
-
|
-
|
||||||
|
Canceled or expired
|
-
|
-
|
||||||
|
Outstanding at August 31, 2013
|
12,675,000
|
$
|
0.17
|
|||||
|
Warrants Outstanding
|
Warrants Exercisable
|
||||||||||||||||||
|
Weighted
|
Weighted
|
||||||||||||||||||
|
Average
|
Weighted
|
Average
|
|||||||||||||||||
|
Remaining
|
Average
|
Remaining
|
|||||||||||||||||
|
Exercise
|
Number
|
Contractual
|
Exercise
|
Number
|
Contractual
|
||||||||||||||
|
Prices
|
Outstanding
|
Life (years)
|
Price
|
Exercisable
|
Life (years)
|
||||||||||||||
|
$
|
0.17
|
12,000,000
|
3.0
|
$
|
0.17
|
12,000,000
|
3.0
|
||||||||||||
|
0.17
|
675,000
|
2.75
|
0.17
|
675,000
|
2.75
|
||||||||||||||
|
12,675,000
|
2.98
|
$
|
0.17
|
12,675,000
|
2.98
|
||||||||||||||
6. RELATED PARTY TRANSACTIONS
We currently lease approximately 500 square feet of general office space at 290 Lenox Avenue, New York, NY 10027 from our Vice President – Operations.
As of August 31, 2013, the amount of accounts payable – related party of $4,500, is owed to the CEO.
7. COMMITMENTS AND CONTINGENCIES
As of August 31, 2013 there were no continuing commitments and contingencies.
8. ACQUISITION OF DIMI TELEMATICS, INC.
On October 28, 2011, the Company entered into a Share Exchange Agreement (the “Share Exchange”) with DTI and its stockholders. Pursuant to the agreement, the Company issued 87,450,000 shares of its common stock in exchange for all outstanding shares and warrants to purchase common shares of DTI. As a result of the Share Exchange Agreement, DTI became a subsidiary of the Company. The Company assumed operation of DTI and entered the Telematics/M2M industry. On November 10, 2011, the closing of the Share Exchange occurred. In connection with the Share Exchange, (a) 15,000,000 of the Company’s issued and outstanding shares of common stock were surrendered for cancellation and (b) the Company’s officers and directors resigned and the following individuals assumed their duties as officers and directors:
|
Name
|
Title(s)
|
|
|
Barry Tenzer
|
President, Chief Executive Officer, Chief Financial Officer, Secretary and Director
|
|
|
Roberto Fata
|
Executive Vice President – Business Development and Director
|
The Company has accounted for the acquisition under the purchase method of accounting for business combinations. Under the purchase method of accounting in a business combination effected through an exchange of equity interest, the entity that issues the equity interest is generally the acquiring entity. In some business combinations (commonly referred to as reverse acquisitions), however, the acquired entity issues the equity interest. Accounting for business combinations requires consideration of the facts and circumstances surrounding a business combination that generally involves the relative ownership and control of the entity by each of the parties subsequent to the acquisition. Based on a review of these factors, the Share Exchange was accounted for as a reverse acquisition, i.e., the Company was considered the acquired company and DTI was considered the acquiring company. As a result, the Company’s assets and liabilities were incorporated into DTI’s balance sheet based on the fair value of the net assets acquired. Further, the Company’s operating results will not include the Company’s results prior to the date of closing. Accordingly the accompanying financial statements are the financial statements of DTI. In addition, the Company’s fiscal year end changed to DTI’s fiscal year end of August 31 following the closing.
In connection with the Share Exchange, the outstanding balance on the line of credit and related accrued interest owed by First Quantum Ventures was forgiven. Accordingly, the net assets of the Company was $0.00 on November 10, 2011.
The following table presents the estimated unaudited pro forma consolidated results as if the business combination occurred as of the beginning of the period.
|
For the year ended
August 31, 2013
|
From Inception to
August 31, 2013
|
|||||||
|
Revenues
|
$
|
-
|
$
|
-
|
||||
|
Selling, general and administrative expenses
|
317,847
|
933,484
|
||||||
|
Other expenses
|
3,798
|
3,929
|
||||||
|
Net loss
|
$
|
321,645
|
$
|
937,413
|
||||
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
None.
ITEM 9A. CONTROLS AND PROCEDURES.
Management’s Report on Internal Control Over Financial Reporting
(a) Evaluation of Disclosure Controls and Procedures
Management of the Company conducted an evaluation of the effectiveness of the Company’s disclosure controls and procedures (as such term is defined in Rule 13a-15(e) and Rule 15d-15(e) under the 1934 Act) pursuant to Rule 13a-15 under the 1934 Act. The Company’s disclosure controls and procedures are designed to ensure that information required to be disclosed by the Company in the reports it files or submits under the 1934 Act is recorded, processed, summarized and reported on a timely basis and that such information is communicated to management and the Company’s board of directors, to allow timely decisions regarding required disclosure.
Based on this evaluation, it has been concluded that the design and operation of our disclosure controls and procedures are not effective since the following material weaknesses exist:
|
·
|
Since inception our chief executive officer also functions as our chief financial officer. As a result, our officers may not be able to identify errors and irregularities in the financial statements and reports.
|
|
·
|
We were unable to maintain full segregation of duties within our financial operations due to our reliance on limited personnel in the finance function. While this control deficiency did not result in any audit adjustments to our financial statements, it could have resulted in a material misstatement that might have been prevented or detected by a segregation of duties.
|
|
·
|
Documentation of all proper accounting procedures is not yet complete.
|
To the extent reasonably possible given our limited resources, we intend to take measures to cure the aforementioned weaknesses, including, but not limited to, the following:
|
·
|
Increasing the capacity of our qualified financial personnel to ensure that accounting policies and procedures are consistent across the organization and that we have adequate control over financial statement disclosures.
|
(b) Management’s Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reposting and the assessment of the effectiveness of internal control over financial reporting. As defined by the SEC, internal control over financial reporting is a process designed by, or under the supervision of our principal executive officer and principal financial officer and implemented by our board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of our financial statements in accordance with U.S. generally accepted accounting principles.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
It should be noted that the Company’s management does not expect that the Company’s internal control over financial reporting will necessarily prevent all errors or fraud. A control system, no matter how well conceived or operated, can only provide reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs.
As of August 31, 2013, we conducted an evaluation of the effectiveness of our internal controls over financial reporting based on criteria established in “Internal Control-Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission, or the COSO Framework. Management’s assessment included an evaluation of the design of our internal control over financial reporting and testing of the operational effectiveness of those controls.
A material weakness is defined within the Public Company Accounting Oversight Board’s Auditing Standard No. 5 as a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis.
In conducting his evaluation, our officer noted the following material weaknesses in our internal controls over financial reporting:
|
·
|
While certain accounting procedures have been adopted, compliance with such procedures has been inconsistent.
|
|
·
|
The Board of Directors has not established an Audit Committee. Accordingly, the entire Board, rather than an independent body, has reviewed our financial statements.
|
|
·
|
Segregation procedures could be improved by strengthening cross approval of various functions, including cash disbursements and internal audit procedures where appropriate.
|
As a result of these deficiencies in our internal controls, our officer concluded further that the design and operation of our disclosure controls and procedures may not be effective and that our internal control over financial reporting was not effective.
This annual report does not include an attestation report of the Company’s independent registered public accounting firm regarding internal control over financial reporting. The Company’s internal control over financial reporting was not subject to attestation by the Company’s independent registered public accounting firm pursuant to rules of the SEC that permit the Company to provide only management’s report in this annual report.
(c) Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting that occurred during the last fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
ITEM 9B. OTHER INFORMATION.
None.
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.
In connection with the Share Exchange, we have appointed the following individuals to serve as our executive officers and directors:
|
Name
|
Title(s)
|
|
|
Barry Tenzer
|
President, Chief Executive Officer, Chief Financial Officer, Secretary and Director
|
|
|
Roberto Fata
|
Executive Vice President – Business Development and Director
|
Barry Tenzer, age 80, served as President, Chief Executive Officer, Chief Financial Officer, Secretary and Director of DiMi Telematics prior to the Share Exchange, and assumed those duties with the Company following the Share Exchange. Mr. Tenzer founded, managed and served as a board member of numerous private and public companies operating in a broad range of industries, including real estate, property management, construction, legal services, commercial packaging, cemetery, auto sales and chartered aviation services. From 1968 to 1981, he was General Partner of 527 Madison Avenue Company NY, LP, and No. 34th St. Company, L.P., and Limited Partner in approximately 20 real estate investments. From 1976 to 2003, Mr. Tenzer was the CEO of HIG Corporation, which owned and operated six cemeteries in Maryland, Virginia and Florida. From 1997 to 2003, Mr. Tenzer also founded and served as President and CEO of Motorcars Auto Group, Inc., a company engaged in the ownership and operation of exotic, high performance car dealerships and auto accessory businesses. Mr. Tenzer currently serves as General Partner of Northerly Company, a real estate partnership. Mr. Tenzer graduated from Cornell University, where he was awarded his BA degree, in 1953, and from NYU Law School, where he earned his LLB, in 1956. Mr. Tenzer was admitted to the New York Bar in 1957 and practiced law in private practice until 1961.
Roberto Fata, age 44, served as Executive Vice President – Business Development and Director of DiMi Telematics prior to the Share Exchange, and assumed those duties with the Company following the Share Exchange. Since 1991, Mr. Fata has been employed by the FATA Organization, a New York City-based real estate company that has owned and managed commercial and residential properties in Manhattan, New York for over 70 years. As the firm’s President and Managing Director, he has played a leadership role in the revitalization of Harlem, one of Manhattan’s most famous neighborhoods. He currently serves on the Board of Directors for both the Greater Harlem Board of Realtors and the 125th Street Business Improvement District. In 2006, Mr. Fata founded DiMi PA, Inc. to commercialize DiMiSpeaks, a facility management software and hosting solution that he developed to better manage the many building operating systems that support all of the FATA Organization’s real estate properties. In 2010, Mr. Fata sold the assets of DiMi PA to DiMi Telematics and he now serves as Executive Vice President of Business Development and a Director.
Terms of Office
Our directors are appointed for one-year terms to hold office until the next annual meeting of the holders of our common stock or until removed from office in accordance with our by-laws. Our officers are appointed by our board of directors and hold office until they resign or are removed by our board of directors.
Director Qualifications
The following is a discussion for each director of the specific experience, qualifications, attributes or skills that led to our conclusion that such person should be serving as a member of our Board of Directors as of the date of this report in light of our business and structure. In addition to their individual skills and backgrounds which are focused on our industry as well as financial and managerial experience, we believe that the collectively skills and experience of our Board members are well suited to guide us as we make the transition from a company with limited operations to a company which seeks to expand through acquisitions.
Barry Tenzer’s extensive involvement in real estate ventures, and managerial experience in operating and advising a wide range of public and private companies, offers us valuable insight into company operations and management.
Roberto Fata has been employed by the FATA Organization, a New York City-based real estate company that has owned and managed commercial and residential properties in Manhattan, New York for over 70 years, for approximately 20 years. Mr. Fata’s experience in the real estate business and his role in the development of the Company’s proprietary software, make him a critical resource in our quest to commercialize our DiMi Solution.
Committees of our Board of Directors
We have not established any committees, including an Audit Committee, a Compensation Committee or a Nominating Committee, or any committees performing similar functions. The functions of those committees are currently undertaken by Board of Directors as a whole. Because we have only two directors, neither of which is independent, we believe that the creation of these committees, at this time, would be cumbersome and constitute more form over substance, particularly under circumstances where a substantial majority of our outstanding shares are controlled by one individual (who has approved the appointment of our directors) and at a time when our resources do not permit us to obtain officers’ and directors’ liability insurance.
Stockholder Nominees for Directors
We do not yet have a policy regarding the consideration of any director candidates which may be recommended by our stockholders, including the minimum qualifications for director candidates, nor has our Board of Directors established a process for identifying and evaluating director nominees. We have not yet adopted a policy regarding the handling of any potential recommendation of director candidates by our stockholders, including the procedures to be followed. Our Board has not considered or adopted any of these policies as we have never received a recommendation from any stockholder for any candidate to serve on our Board of Directors. Given our relative size, early stage of development and lack of officers’ and directors’ insurance coverage, we do not anticipate that any of our stockholders will make such a recommendation in the near future. While there have been no nominations of additional directors proposed, in the event such a proposal is made, all members of our Board will participate in the consideration of director nominees. In considering a director nominee, it is likely that our Board will consider the professional and/or educational background of any nominee with a view towards how this person might bring a different viewpoint or experience to our Board.
Audit Committee Financial Expert
Barry Tenzer, our President, Chief Executive Officer, Chief Operating Officer and a Director, is an “audit committee financial expert” within the meaning of Item 407(d)(5) of Regulation S-K. In general, an “audit committee financial expert” is an individual member of the audit committee or, in the absence of an audit committee, of the Board of Directors who:
|
·
|
understands generally U.S. GAAP and financial statements,
|
|
·
|
is able to assess the general application of such principles in connection with accounting for estimates, accruals and reserves,
|
|
·
|
has experience preparing, auditing, analyzing or evaluating financial statements comparable to the breadth and complexity to our financial statements,
|
|
·
|
understands internal controls over financial reporting, and
|
|
·
|
understands audit committee functions.
|
Code of Ethics
A Code of Ethics is a written standard designed to deter wrongdoing and to promote:
|
·
|
honest and ethical conduct,
|
|
·
|
full, fair, accurate, timely and understandable disclosure in regulatory filings and public statements,
|
|
·
|
compliance with applicable laws, rules and regulations,
|
|
·
|
the prompt reporting of any violation of the code, and
|
|
·
|
accountability for adherence to the Code of Ethics.
|
We have not yet adopted a Code of Ethics but expect to consider and approve a Code of Ethics in the near term.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires the Company’s executive officers, directors and persons who beneficially own more than ten percent of a registered class of the Company’s equity securities, to file with the Securities and Exchange Commission initial reports of ownership and reports of changes in ownership of the Company’s common stock. Such officers, directors and persons are required by Securities and Exchange Commission regulation to furnish the Company with copies of all Section 16(a) forms that they file with the SEC.
Based solely on a review of the copies of such forms that were received by the company, or written representations from certain reporting persons that no Form 5s were required for those persons, the Company is not aware of any failures to file reports or report transactions in a timely manner during the Company’s fiscal year ended August 31, 2013.
ITEM 11. EXECUTIVE COMPENSATION.
The following table summarizes all compensation recorded by using 2013 and 2012 for our then principal executive officer, each other executive officer serving as such whose annual compensation exceeded $100,000, and up to two additional individuals for whom disclosure would have been made in this table but for the fact that the individual was not serving as an executive officer of our company at August 31, 2013. The value attributable to any option awards is computed in accordance with FASB ASC Topic 718.
|
Name and Principal Position
|
Year
|
Salary
|
Bonus
|
Stock
Awards
|
Option
Awards
|
Non-Equity
Incentive Plan
Compensation
|
Nonqualified
Deferred
Compensation
Earnings
|
All Other
Compensation
|
Total
|
|||||||||
|
(a)
|
(b)
|
(c)
|
(d)
|
(e)
|
(f)
|
(g)
|
(h)
|
(i)
|
(j)
|
|||||||||
|
Andrew Godfrey,
Former CEO, President and CFO (1)
|
2013
2012
|
--
--
|
--
--
|
--
--
|
--
--
|
--
--
|
--
--
|
--
--
|
--
--
|
|||||||||
|
Barry Tenzer,
CEO, CFO, President, Secretary (2)
|
2013
2012
|
54,000
--
|
7,000 --
|
--
--
|
--
--
|
--
--
|
--
--
|
--
--
|
--
--
|
(1) Mr. Godfrey resigned his positions with the Company on November 10, 2011 at the closing of our acquisition of DTI.
(2) Mr. Tenzer became our Chief Executive Officer, President and Secretary on November 10, 2011 at the closing of our acquisition of DTI.
Outstanding Equity Awards at Fiscal Year-End
None.
Compensation of Directors
We have not established standard compensation arrangements for our directors and do not have any agreements or understandings to compensate directors for their services as such.
|
ITEM 12.
|
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
|
As of August 31, 2013, and following our acquisition of DTI, we had 352,716,928 shares of common stock issued and outstanding. The following table sets forth information known to us relating to the beneficial ownership of such shares as of such date by:
|
·
|
each person who is known by us to be the beneficial owner of more than 5% of our outstanding voting stock;
|
|
·
|
each director;
|
|
·
|
each named executive officer; and
|
|
·
|
all named officers and directors as a group.
|
Unless otherwise indicated, the business address of each person listed is care of DTII at 290 Lenox Avenue, New York, NY 10027. The percentages in the table have been calculated on the basis of treating as outstanding for a particular person, all shares of our common stock outstanding on that date and all shares of our common stock issuable to that holder in the event of exercise of outstanding options, warrants, rights or conversion privileges owned by that person at that date which are exercisable within 60 days of that date. Except as otherwise indicated, the persons listed below have sole voting and investment power with respect to all shares of our common stock owned by them, except to the extent that power may be shared with a spouse.
|
Name of Beneficial Owner
|
Amount and Nature of
Beneficial Ownership
|
Percent of Class
|
||||||
|
Roberto Fata
|
96,000,000 | (1) | 23.96 | % | ||||
|
Barry Tenzer
|
43,200,000 | 12.25 | % | |||||
|
Officers and Directors as a group (2 persons)
|
139,200,000 | (1) | 36.21 | |||||
|
Lyle Hauser (2)
|
143,840,000 | 40.50 | % | |||||
———————
(1) Consists of 48,000,000 outstanding shares and 48,000,000 shares issuable upon exercise of currently outstanding warrants exercisable until August 31, 2015 at $.17 per share.
(2) Mr. Hauser’s address is 1000 Quayside Terrace, Suite 1810, Miami, FL 33138.
|
ITEM 13.
|
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE
|
During the two preceding fiscal years, we did not enter into any transaction, nor is any transaction currently proposed, in which we were or are to be a participant and in which any related person had or will have a direct or indirect material interest, except as follows:
On or about July 31, 2011, DTI entered into an Asset Purchase Agreement with Roberto Fata pursuant to which Mr. Fata sold to DTI, and DTI purchased from Mr. Fata, certain specified assets used in the remote monitoring and control of building management systems through unique software interface. The assets included without limitation, the DiMi M2M solution and related intellectual property. No liabilities of Mr. Fata were assumed in connection with the transaction. The purchase price of the assets consisted of 18,000,000 million shares of DTI common stock and four-year warrants to purchase an additional 18,000,000 shares of DTI at an exercise price of $.10 per share. The 18,000,000 shares and 18,000,000 warrants issued to Mr. Fata were exchanged for 10,800,000 shares of our common stock and warrants to purchase 10,800,000 shares of our common stock (exercisable at $.10 per share until July 31, 2015) at the closing of the Share Exchange Agreement.
By addendum to the Asset Purchase Agreement, Mr. Fata agreed to provide DTI with approximately 500 square feet of office space in facilities controlled by Mr. Fata located at 290 Lenox Avenue, New York, New York 10027 for a period of three years expiring August 31, 2014. As consideration therefor, DTI issued to Mr. Fata 2,000,000 shares of common stock and warrants to purchase 2,000,000 shares of common stock of DTI, exercisable at $.10 per share. The 2,000,000 shares and 2,000,000 warrants issued to Mr. Fata were exchanged for 1,200,000 shares of our common stock and warrants to purchase 1,200,000 shares of our common stock (exercisable at $.1667 per share until August 31, 2015) at the closing of the Share Exchange Agreement.
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
|
Audit Fees
|
Audit-Related Fees
|
Tax Fees
|
All Other Fees
|
||||||
|
2013
|
$ | 14,500 |
none
|
none
|
none
|
||||
|
2012
|
$ | 13,000 |
none
|
none
|
none
|
||||
We have no formal audit committee. However, our entire Board of Directors (the “Board”) is our defacto audit committee. In discharging its oversight responsibility as to the audit process, the Board obtained from the independent auditors a formal written statement describing all relationships between the auditors and us that might bear on the auditors' independence as required by Independence Standards Board Standard No. 1, “Independence Discussions with Audit Committees.” The Board discussed with the auditors any relationships that may impact their objectivity and independence, including fees for non-audit services, and satisfied itself as to the auditors' independence. The Board also discussed with management, the internal auditors and the independent auditors the quality and adequacy of its internal controls. The Board reviewed with the independent auditors their management letter on internal controls.
The Board discussed and reviewed with the independent auditors all matters required to be discussed by auditing standards generally accepted in the United States of America, including those described in Statement on Auditing Standards No. 61, as amended, “Communication with Audit Committees”. The Board reviewed the audited consolidated financial statements of the Company as of and for the year ended August 31, 2013 with management and the independent auditors. Management has the responsibility for the preparation of the Company's financial statements and the independent auditors have the responsibility for the examination of those statements. Based on the above-mentioned review and discussions with the independent auditors and management, the Board of Directors approved the Company's audited consolidated financial statements and recommended that they be included in its Annual Report on Form 10-K for the year ended August 31, 2013, for filing with the Securities and Exchange Commission.
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
(A) Financial Statements
See index to Financial Statements on Page F-1
(B) Exhibits.
|
Exhibit No.
|
Description
|
|
|
101.INS
|
XBRL Instance Document
|
|
|
101.SCH
|
XBRL Taxonomy Extension Schema Document
|
|
|
101.CAL
|
XBRL Taxonomy Calculation Linkbase Document
|
|
|
101.DEF
|
XBRL Taxonomy Extension Definition Linkbase Document
|
|
|
101.LAB
|
XBRL Taxonomy Label Linkbase Document
|
|
|
101.PRE
|
XBRL Taxonomy Presentation Linkbase Document
|
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
|
DIMI TELEMATICS INTERNATIONAL, INC.
|
|||
|
November 27, 2013
|
By:
|
/s/ Barry Tenzer |
|
|
Name:
|
Barry Tenzer
|
||
|
Title:
|
Chief Executive Officer and Chief Financial Officer
|
||
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
|
By:
|
/s/ Barry Tenzer |
|
November 27, 2013
|
|
Name: Barry Tenzer
|
|||
|
Title: Chief Executive Officer (Principal Executive Officer),Chief Financial Officer (Principal Accounting and Financial Officer) and Director
|
|||
|
By:
|
/s/ Roberto Fata |
|
November 27, 2013
|
|
Name: Roberto Fata
|
|||
|
Title: Executive Vice President – Business Development and Director
|
|||
26