CGS INTERNATIONAL, INC. - Quarter Report: 2014 January (Form 10-Q)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended:

January 31, 2014

[   ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from

___________

to

____________

Commission file number:

333-182566

Line Up Advertisement, Inc.

(Exact name of registrant as specified in its charter)

Nevada

32-0378469

(State or other jurisdiction of incorporation or organization)

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

2108 Santolan St. San Antonio Village, Makati City, Philippines

(Address of principal executive offices)   (Zip Code)

(702) 478-2122

(Registrant’s telephone number, including area code)

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

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 whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.

Large accelerated filer  [  ]

Accelerated filer [   ]

Non-accelerated filer [   ]  (Do not check if a smaller reporting company)

Smaller reporting company [X]

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

Yes |X| No |_|

The number of shares outstanding of the Registrant's Common Stock as January 31, 2014 was 760,000 shares of common stock, $0.001 par value, issued and outstanding.

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LINE UP ADVERTISEMENT, INC.

QUARTERLY REPORT

TABLE OF CONTENTS

		Page Number
	PART I – FINANCIAL INFORMATION
Item 1	Financial Statements	3
Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	10
Item 3	Quantitative and Qualitative Disclosures About Market Risk	13
Item 4	Controls and Procedures	13
	PART II – OTHER INFORMATION
Item 1	Legal Proceedings	14
Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	15
Item 3	Defaults Upon Senior Securities	15
Item 4	(Removed and Reserved)	15
Item 5	Other Information	15
Item 6	Exhibits	15

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LINE UP ADVERTISEMENT, INC.

(A Development Stage Company)

CONDENSED FINANCIAL STATEMENTS

January 31, 2014

Unaudited

CONDENSED BALANCE SHEETS

CONDENSED STATEMENTS OF OPERATIONS

CONDENSED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)

CONDENSED STATEMENTS OF CASH FLOWS

NOTES TO UNAUDITED CONDENSED INTERIM AUDITED FINANCIAL STATEMENTS

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LINE UP ADVERTISEMENT, INC.
(A Development Stage Company)
CONDENSED BALANCE SHEETS
Unaudited
		January 31, 2014		April 30, 2013
ASSETS
CURRENT ASSETS
Cash	$	-	$	395
TOTAL CURRENT ASSETS	$	-	$	395
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES
Accounts payable and accrued liabilities	$	5,891	$	9,599
Due to related party		25,685		1,163
TOTAL CURRENT LIABILITIES	$	31,576	$	10,762
STOCKHOLDERS' EQUITY (DEFICIT)
Capital stock Authorized
150,000,000 shares of common stock, $0.001 par value,
Issued and outstanding
760,000 shares at January 31, 2014 & 7,760,000 shares at April 30, 2013	$	760	$	7,760
Additional Paid in Capital		26,655		4,940
Deficit accumulated during the development stage		(58,991)		(23,067)
TOTAL STOCKHOLDERS' EQUITY/(DEFICIT)	$	(31,576)	$	(10,367)
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY /(DEFICIT)	$	-	$	395
The accompanying notes are an integral part of these financial statements

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LINE UP ADVERTISEMENT, INC.

(A Development Stage Company)

CONDENSED STATEMENTS OF CASH FLOWS

Unaudited

						9 months ended				9 months ended					April 17, 2012  (date of  inception) to
						January 31, 2014				January 31, 2013					January 31, 2014
OPERATING ACTIVITIES
	Net loss		$			(35,924)		$		(10,664)		$			(58,991)
	Adjustment to reconcile net loss to net cash used in operating activities:
	Expenses paid on company's behalf by related party					24,522				60					25,685
	Increase (decrease) in accrued expenses					(3,708)				(1,201)					5,891
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES			$			(15,110)		$		(11,805)		$			(27,415)
FINANCING ACTIVITIES
	Proceeds from sale of common stock									5,200					12,700
	Contributed capital					14,715									14,715
NET CASH PROVIDED BY FINANCING ACTIVITIES			$			14,715		$		5,200		$			27,415
NET INCREASE (DECREASE) IN CASH			$			(395)		$		(6,605)		$			-
CASH, BEGINNING OF PERIOD			$			395		$		7,000		$			-
CASH, END OF PERIOD			$			-		$		395		$			-
Supplemental cash flow information and noncash financing activities: Cash paid for:
	Interest			$		-		$		-		$				-
	Income taxes			$		-		$		-		$				-
The accompanying notes are an integral part of these financial statements

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LINE UP ADVERTISEMENT, INC.

(A Development Stage Company)

NOTES TO THE UNAUDITED CONDENSED INTERIM FINANCIAL STATEMENTS

January 31, 2014

NOTE 1 – CONDENSED FINANCIAL STATEMENTS

The Company was incorporated in the State of Nevada as a for-profit Company on April 17, 2012 and established a fiscal year end of April 30. It is a development-stage Company, as defined under FASB ASC 915-10, "Development Stage Entities", which intends to provide televisions that will stream advertisements for patrons outside the nightclub line ups.

The Company is currently in the development stage as defined under FASB ASC 915-10, 'Development Stage Entities' and as yet has no products.  All activities of the Company to date relate to its organization, initial funding and share issuances.

In the opinion of management, the accompanying balance sheets and related interim statements of income, cash flows, and stockholders’ equity include all adjustments, consisting only of normal recurring items, necessary for their fair presentation in accordance with accounting principles generally accepted in the United States of America (“US GAAP”).  Preparing financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, and expenses. Actual results and outcomes may differ from management’s estimates and assumptions.

Interim results are not necessarily indicative of results for a full year.  The information included in this Form 10-Q should be read in conjunction with information included in the Form 10-K.

NOTE 2 – GOING CONCERN

The Company’s financial statements are prepared in accordance with generally accepted accounting principles applicable to a going concern.  This contemplates the realization of assets and the liquidation of liabilities in the normal course of business. Currently, the Company has a working capital deficit of $31,576, an accumulated deficit of $58,991 and net loss from operations since inception of $58,991. The Company does not have a source of revenue sufficient to cover its operation costs giving substantial doubt for it to continue as a going concern. The Company will be dependent upon the raising of additional capital through placement of our common stock in order to implement its business plan, or merge with an operating company.  There can be no assurance that the Company will be successful in either situation in order to continue as a going concern.  The Company is funding its initial operations by way of issuing Founder’s shares.

The officers and directors have committed to advancing certain operating costs of the Company, including Legal, Audit, Transfer Agency and Edgarizing costs

NOTE 3 - CAPITAL STOCK

The Company’s capitalization is 150,000,000 common shares with a par value of $0.001 per share.  No preferred shares have been authorized or issued.

On April 25, 2012, the Company issued 7,500,000 Founder's shares for cash at $0.001 per share. In September 2012 the Company issued 260,000 common shares for cash at $0.02 per share.

On November 6, 2013 the Company amended the Articles of Incorporation to reflect an increase of the authorized shares of common stock from 75,000,000 shares to 150,000,000 shares.

On December 13, 2013 the Company retired 7,000,000 Founder's shares of the former President.

On January 31, 2014, the Company had 760,000 & on April 30, 2013 7,760,000 common shares issued and outstanding.

As of January 31, 2014, the Company has not granted any stock options and has not recorded any stock-based compensation.

NOTE 4 - RELATED PARTY TRANSACTIONS

As of January 31, 2014 and April 30, 2013, the Company has received $25,685 and $1,163, respectively, in loans and payment of expenses from a related party. The loans are payable on demand and without interest.

$14,715 of debts owed to parties related to the previous management were forgiven by them.

NOTE 5 - RECENT ACCOUNTING PRONOUNCEMENTS

The company has evaluated all the recent accounting pronouncements and believes that none of them will have a material effect on the company’s financial statement.

NOTE 6 - SUBSEQUENT EVENTS

The Company has evaluated subsequent events from the balance sheet date through the date the financial statements were issued and has determined that there are no further events to disclose.

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

This section of this report includes a number of forward-looking statements that reflect our current views with respect to future events and financial performance.  Forward looking statements are often identified by words like: believe, expect, estimate, anticipate, intend, project and similar expressions or words which, by their nature, refer to future events.  You should not place undue certainty on these forward-looking statements, which apply only as of the date of this report.  These forward looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from historical results or our predictions.

Summary Information

On April 17, 2012, Mr. Vagner Gomes Tome, president and sole director, incorporated the Company in the State of Nevada and established a fiscal year end of April 30th. On May 23, 2013 the Company accepted the resignation of Vagner Gomes Tome as the sole director and officer of the Company and accepted the appointment of Joelyn Alcantara to serve in his stead. The objective of this corporation remains to introduce advertisement in nightclub line-ups.

We are a development-stage Company that intends to provide TVs streaming advertisements for the customers lining up on the outside of the nightclubs. The idea is to showcase pictures of that particular club scene, special events, deals on drink specials and advertisements from local businesses and other companies. We plan on providing the TV at no cost to the club and generate revenue through the sale of advertisements from local restaurants, cigarette companies, alcohol companies, clothing companies, ads for sports and entertainment events, etc.

On December 13, 2013, Vagner Gomes Tome, our founder and former sole executive officer and director, surrendered for cancellation 7,000,000 shares of common stock of the Company. On March 10, 2014, Ms. Alcantara, our current president, acquired the remaining 500,000 shares of common stock of the company formely owned by Vagner Gomes Tome, our former president, for a purchase price of $0.05 per share. Ms. Alcantara is currently the holder of 65.7% of the issued and outstanding shares of common stock of the Company and is the majority shareholder of the Company. 

  

As of the date of this quarterly report, we have not yet contacted any possible client. Furthermore, we have not yet developed our systems and services. The Company has not yet implemented its business model and to date has generated no revenues.

Results of Operations

As of January 31, 2014 we had $0 in cash, with liabilities of $31,576, as compared to $395 in cash and $10,762 in liabilities at April 30, 2013. As of January 31, 2014 and April 30, 2013, the Company has received $25,685 and $1,163, respectively, in loans and payment of expenses from a related party. The loans are payable on demand and without interest.

$14,715 of debts owed to parties related to the previous management has been forgiven by them.

The funds provided to the Company by the former President and current President have no interest and no fixed repayment date.

The Company incurred expenses in the amount of $21,922 and $35,924 during the three and nine month period ending January 31, 2014 and $5,049 and $10,664 during the three and nine month period ending January 31, 2013. The increase in expenses have been to increased costs related to legal and accounting cost associated with filing quarterly and annual reports. The total expenses accumulated since inception is $58,991.

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Our current cash holdings will not satisfy our liquidity requirements and we will require additional financing to pursue our planned business activities.  We have registered 5,000,000 of or our common stock for sale to the public.  Our registration statement became effective on August 29, 2012 and we are in the process of seeking equity financing to fund our operations over the next months. We have issued 260,000 shares in September 2012, totaling $5,200.  

Our officer and director has committed to advancing funds (up to $25,000) for the next twelve months to cover expenses to maintain the reporting status current with the SEC. Ms. Joelyn Alcantara is willing to lend the full amount of these funds to the Company as the expenses are incurred, if necessary or if no other proceeds are obtained by the Company, regardless of the amount raised through this offering. However, there is no contract in place or written agreement with Ms. Alcantara and the funds expressed in the above president’s verbal commitment, would be in the form of a non-secured loan and would have no interest and no fixed repayment date.

Management believes that if subsequent private placements are successful, we will generate sales revenue within the following twelve months thereof. However, additional equity financing may not be available to us on acceptable terms or at all, and thus we could fail to satisfy our future cash requirements.

We are exclusively dependent upon the success of the anticipated offering described herein. Therefore, the failure thereof would result in need to seek capital from other resources such as debt financing, which may not even be available to the Company. However, if such financing were available, because we are a development stage Company with no operations to date, it would likely have to pay additional costs associated with high risk loans and be subject to an above market interest rate. At such time these funds are required, management would evaluate the terms of such debt financing.  If the Company cannot raise additional proceeds via a private placement of its common stock or secure debt financing, it would be required to cease business operations. As a result, investors would lose all of their investment.

Plan of Operation

Our net proceeds (Gross proceeds less Expenses related to this offering, estimated at a fixed cost of $7,636 and Expenses to maintain our reporting status for 12 months after effective date, estimated at a fixed cost of $14,400) are planned to be invested in the following order of importance and the objective of each step:

Market Research	2 months
Equipment Purchase	2 months
Tests and website development	3 months
Secure Contracts with nightclub owners	2 months
Search for local business for initial advertisement	3 months
TOTAL	12 months

Estimated time frame for completion of each step of our Plan of Operations.

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Market research

We plan to have a detailed ‘map’ of night clubs locations and possible local businesses that could benefit from our services. We expect to understand the demographic of the clubs and we also plan to interview patrons who attend and frequent the club, to have an idea of how long they believe they usually stand in line and the usual time frame that people stand outside on particular evenings of operation. Gathering this information is essential to the Company so we can make the proper decisions and outline the best strategies for our Business. The Company’s president will be responsible to conduct the Market Research and/or hire an independent Company to perform this task if finances allow.

We expect to spend between $550 and $25,000 in our Market Research, depending on the funds from the sale of the offered shares herein.

-Equipment purchase

The company estimates that the cost for each outdoor weather proof TV case will range from $1,000 to $6,000; depending on the manufacturer and TV size.

TV’s are widely available and they range in price, depending on the brand and size, from $500 to $3,000.

The Company’s president will be responsible for the equipment purchase.

The Company expects to invest between $1,000 and $32,000 for purchase of equipment, depending on the funds from the sale of the offered shares herein.

-Tests and website development

After we acquire the initial necessary equipment, we plan on running tests simulating actual situations, such as visibility of the TV in different positions, finding the best possible placement for the TV. We may also consider weather conditions, lighting among other factors that may arise.

After we have successfully tested our systems, we intend to finalize our website (www.lineupad.com), currently under construction, including a detailed explanation of our systems with pictures and videos.

We plan on hiring third party technicians and/or engineers to help with the tests and a third party web developer to finalize our website. The president will be responsible to hire the third party personnel and she will oversee all the development. The president may be responsible to run all the tests, depending on the funds available to the Company.

 

We intend to allocate between $504 and $6,500 for our tests and website costs, depending on the funds from the sale of the offered shares herein.

-Secure contracts with nightclub owners

After we decide on a pre-set system and standards for our services and products, we believe that we will have a better understanding of the functionality of our business. At that time, we may be able to present our idea in a more organized manner, and instruct how it will work. These factors would give us a better chance to secure contracts with club owners and managers.

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The Company’s president will deal with all negotiations and she may decide to hire sub-contracted sales personnel, if finances allow.

We expect to allocate $450 and $6,000 to cover costs related to securing contracts with nightclub owners, depending on the funds from the sale of the offered shares herein.

-Search for local businesses for initial advertisement

After securing our initial club contract and setting our first TV(s) up, we plan on finding advertisements from local businesses, such as after hour stores, late night eateries, taxi companies, etc. We estimate that a video to be used for our TV’s can be produced and edited in no more than 7 days.

We believe that our cost to produce the video advertisements will be very low, because we could use existing material from the advertising client’s website or simply use pictures and or videos to be provided by the client (nowadays, digital pictures and videos are very accessible).

The Company’s president will deal with all the negotiations and she may decide to hire sub-contracted sales personnel, if finances allow.

We plan on investing between $400 and $7,300 to search for local businesses for initial advertisement, depending on the funds from the sale of the offered shares herein.

-Office supplies, Stationery, Telephones, Internet

We intend to allocate between $60 and $1,164 to cover these costs, at the president’s discretion, depending on the funds from the sale of the offered shares herein.

We do not currently have any employees and management does not plan to hire employees at this time. We do not expect the purchase or sale of any significant equipment and has no current material commitments.

Off-balance sheet arrangements

 

The Company has no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect or change on the Company’s financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors. The term “off-balance sheet arrangement” generally means any transaction, agreement or other contractual arrangement to which an entity unconsolidated with the Company is a party, under which the Company has (i) any obligation arising under a guarantee contract, derivative instrument or variable interest; or (ii) a retained or contingent interest in assets transferred to such entity or similar arrangement that serves as credit, liquidity or market risk support for such assets.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

Not required.

 

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Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Based upon an evaluation of the effectiveness of disclosure controls and procedures, our principal executive and financial officer  has concluded that as of the end of the period covered by this Quarterly Report on Form 10-Q our disclosure controls and procedures (as defined in Rules 13a-15(e) or 15d-15(e) under the Exchange Act) were not effective.  

The material weaknesses in our disclosure control procedures are as follows:

1.           Lack of formal policies and procedures necessary to adequately review significant accounting transactions.   The Company utilizes a third party independent contractor for the preparation of its financial statements. Although the financial statements and footnotes are reviewed by our management, we do not have a formal policy to review significant accounting transactions and the accounting treatment of such transactions. The third party independent contractor is not involved in the day to day operations of the Company and may not be provided information from management on a timely basis to allow for adequate reporting/consideration of certain transactions.

2.            Audit Committee and Financial Expert. The Company does not have a formal audit committee with a financial expert, and thus the Company lacks the board oversight role within the financial reporting process.

We intend to initiate measures to remediate the identified material weaknesses including, but not necessarily limited to, the following:

 

Changes in Internal Controls over Financial Reporting

There have not been any changes in the Company's internal control over financial reporting during the quarter ended January 31, 2014 that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.

 

 

PART II - OTHER INFORMATION

Item 1. Legal Proceedings

The Company is not a party to any pending legal proceedings, and no such proceedings are known to be contemplated.

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Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

        None.

Item 3. Defaults Upon Senior Securities

        None

Item 4. (Removed and Reserved)

Item 5. Other Information

On December 13, 2013, Vagner Gomes Tome, our founder and former sole executive officer and director, surrendered for cancellation 7,000,000 shares of common stock of the Company.

 

           On March 10, 2014, our current president, Joelyn Alcantara acquired 500,000shares of common stock of the Company formerly owned by Vagner Gomes Tome, our former president,  for a purchase price of $0.05 per share. Ms. Alcantara was the source of the funds used to purchase these shares.  

 

            Pursuant to the transactions described above, Joelyn Alcantaraacquired 65.7% of the issued and outstanding shares of common stock of the Company and became the majority shareholder of the Company thereby.  To our knowledge, there are no arrangements or understandings among Ms. Alcantaraand their associates with respect to election of directors or other matters.  To our knowledge, there are no other arrangements which may result in a subsequent change in control of the Company. 

Item 6. Exhibits

Exhibit No.	Document Description
3.1(a)	Articles of Incorporation [1]
3.1(b)	Amendment to Articles of Incorporation [2]
3.2	By-Laws [1]
31.1	Rule 13(a)-14(a)/15(d)-14(a) Certification of Chief Executive Officer
31.2	Rule 13(a)-14(a)/15(d)-14(a) Certification of Chief Financial Officer *
32.1	Section 1350 Certification of Chief Executive Officer
32.2	Section 1350 Certification of Chief Financial Officer **
101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema Document
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	XBRL Taxonomy Extension Label Linkbase Document
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document

[1]     Incorporated by reference from the Company’s Registration Statement on Form S-1 filed on July 6, 2012.

[2]

Incorporated by reference from the Company’s Current Report on Form 8-K filed on November 12, 2013.

*     Included in Exhibit 31.1

**    Included in Exhibit 32.1

                                   

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SIGNATURES

Pursuant to the requirements of the Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

                        

Line Up Advertisement, Inc.

/s/ Joelyn Alcantara  

Joelyn Alcantara  

President and Director,

Principal Executive Officer,

Principal Financial Officer,

Principal Accounting Officer

Dated: March 21, 2014