CGS INTERNATIONAL, INC. - Quarter Report: 2016 October (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: October 31, 2016
[ ] 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 of December 15, 2016 was 760,000 shares, $0.001 par value per share.
LINE UP ADVERTISEMENT, INC.
QUARTERLY REPORT
TABLE OF CONTENTS
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| PART I – FINANCIAL INFORMATION |
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| Item 1 | Financial Statements | 3 |
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| Item 2 | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 9 |
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| Item 3 | Quantitative and Qualitative Disclosures About Market Risk | 11 |
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| Item 4 | Controls and Procedures | 11 |
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| PART II – OTHER INFORMATION |
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| Item 1 | Legal Proceedings | 12 |
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| Item 2 | Unregistered Sales of Equity Securities and Use of Proceeds | 12 |
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| Item 3 | Defaults Upon Senior Securities | 12 |
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| Item 4 | (Removed and Reserved) | 12 |
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| Item 5 | Other Information | 13 |
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| Item 6 | Exhibits | 13 |
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LINE UP ADVERTISEMENT, INC.
CONDENSED FINANCIAL STATEMENTS
October 31, 2016
Unaudited
CONDENSED BALANCE SHEETS
CONDENSED STATEMENTS OF OPERATIONS
CONDENSED STATEMENTS OF CASH FLOWS
NOTES TO UNAUDITED CONDENSED INTERIM AUDITED FINANCIAL STATEMENTS
LINE UP ADVERTISEMENT, INC.
CONDENSED BALANCE SHEETS
Unaudited
October 31, April 30,
2016 2016
ASSETS
CURRENT ASSETS
Cash $ - $ -
TOTAL CURRENT ASSETS $ - $ -
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES
Accounts payable and accrued liabilities $ 13,326 $ 10,358
Due to related party 93,947 82,318
TOTAL CURRENT LIABILITIES $ 107,273 $ 92,676
STOCKHOLDERS' EQUITY (DEFICIT)
Capital stock
Authorized
75,000,000 shares of common stock, $0.001 par value,
Issued and outstanding
760,000 shares at October 31, 2016 & at April 30, 2016 $ 760 $ 760
Additional Paid in Capital 26,655 26,655
Accumulated deficit (134,688) (120,091)
TOTAL STOCKHOLDERS' EQUITY/(DEFICIT) $ (107,273) $ (92,676)
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY/(DEFICIT) $ - $ -
The accompanying notes are an integral part of these financial statements
LINE UP ADVERTISEMENT, INC.
CONDENSED STATEMENTS OF OPERATIONS
Unaudited
3 months 3 months 6 months 6 months
ended ended ended ended
October 31, October 31, October 31, October 31,
2016 2015 2016 2015
REVENUE
Revenues $ - $ - $ - $ -
Total Revenues $ - $ - $ - $ -
EXPENSES
Office and general $ 1,264 $ 469 $ 2,064 $ 2,137
Professional Fees 9,318 5,211 12,534 15,765
Total Expenses, before
provision of income
taxes $ 10,582 $ 5,680 $ 14,598 $ 17,902
Provision for income
taxes - - - -
NET LOSS $ (10,582) $ (5,680) $ (14,598) $ (17,902)
BASIC AND DILUTED
LOSS PER COMMON
SHARE $ (0.01) $ (0.01) $ (0.01) $ (0.02)
WEIGHTED
AVERAGE NUMBER
OF COMMON
SHARES
OUTSTANDING 760,000 760,000 760,000 760,000
The accompanying notes are an integral part of these financial statements
LINE UP ADVERTISEMENT, INC.
CONDENSED STATEMENTS OF CASH FLOWS
Unaudited
6 months 6 months
ended ended
October 31, 2016 October 31, 2015
OPERATING ACTIVITIES
Net loss $ (14,598) $ (17,902)
Adjustment to reconcile net loss to net cash
used in operating activities:
Expenses paid on company's behalf by related party 11,629 10,327
Increase (decrease) in accrued expenses 2,969 7,575
NET CASH PROVIDED BY (USED IN) OPERATING
ACTIVITIES $ - $ -
NET INCREASE (DECREASE) IN CASH $ - $ -
CASH, BEGINNING OF PERIOD $ - $ -
CASH, END OF PERIOD $ - $ -
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
LINE UP ADVERTISEMENT, INC.
NOTES TO THE UNAUDITED CONDENSED INTERIM FINANCIAL STATEMENTS
October 31, 2016
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.
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 generally accepted accounting principles 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
$107,273, an accumulated deficit of $134,688. 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 75,000,000 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 December 13, 2014 7,000,000 common shares were retired.
On October 31, 2016 and on April 30, 2015, the Company had 760,000 common shares issued and
outstanding.
As of October 31, 2016, the Company has not granted any stock options and has not recorded any stock-
based compensation.
NOTE 4 - RELATED PARTY TRANSACTIONS
As of October 31, 2016 and April 30, 2015, the Company has received $93,947 and $82,318 respectively,
in loans and payment of expenses from a related party. The loans are payable on demand and without
interest.
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.
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, our former executive officer and former
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 the company remains to introduce advertisement in
nightclub line-ups.
We are a company that intends to provide TV streaming advertisements for 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 to 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, Mr. Vagner Gomes Tome, surrendered for cancellation
7,000,000 shares of common stock of the Company. On March 10, 2014, Ms. Alcantara, our
current sole executive officer and director, acquired the remaining 500,000 shares of common
stock of the Company formerly owned by Mr. Tome 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 potential clients.
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.
We have been unable to raise additional funds to implement our operations, and we do
not believe that we currently have sufficient resources to do so without additional funding. As a
result, our Board of Directors has begun to analyze strategic alternatives available to our
Company to continue as a going concern. Such alternatives include raising additional debt or
equity financing or consummating a merger or acquisition with a partner that may involve a
change in our business plan.
Although our Board of Directors' preference would be to obtain additional funding to
implement our business plan, the Board believes that it must consider all viable strategic
alternatives that are in the best interests of our shareholders. Such strategic alternatives include
a merger, acquisition, share exchange, asset purchase, or similar transaction in which our
present management will no longer be in control of our Company and our business operations
will be replaced by that of our transaction partner. We believe we would be an attractive
candidate for such a business combination due to the perceived benefits of being a publicly
registered company, thereby providing a transaction partner access to the public marketplace to
raise capital.
We have had preliminary discussions with other potential business combination
partners, but have not signed a definitive agreement to engage in a strategic transaction. Any
such business combination and the selection of a partner for such a business combination
involves certain risks, including analyzing and selecting a business partner that is compatible to
engage in a transaction with us or has business operations that are or will prove to be profitable.
In the event we select a partner for a strategic transaction and sign a definitive agreement to
consummate such a transaction, we will report this event on a Form 8-K to be filed with the
Securities and Exchange Commission. If we are unable to locate a suitable business
combination partner and are otherwise unable to raise additional funding, we will likely be forced
to cease business operations.
Results of Operations
Revenue
We did not generate any revenue during the three month periods ending October 31,
2016 and 2015.
Expenses
We incurred expenses in the amount of $14,598 during the six month period ending
October 31, 2016 and $17,920 during the six month period ending October 31, 2015. The
decrease in expenses have been to decreased costs related to legal and accounting cost
associated with filing quarterly and annual reports.
Net Loss
We incurred a net loss of $14,598 and $17,902 during the six month periods ending
October 31, 2016 and 2015, respectively.
Liquidity and Capital Resources
As of October 31, 2016, we had $0 in cash, with liabilities of $107,273, as compared to
$0 in cash and $92,676 in liabilities at April 30, 2016. Our current cash holdings will not satisfy
our liquidity requirements and we will require additional financing to pursue our planned
business activities.
Net cash used in operating activities for the three month periods ending October 31,
2016 and 2015 was $0 and $0, respectively. We had $0 net cash provided by financing
activities for the six month periods ending October 31, 2016 and 2015.
As of October 31, 2016 and April 30, 2016, the Company has received $93,947 and
$82,318, respectively, in loans and payment of expenses from a related party. The loans are
payable on demand and without interest. The funds provided to the Company by the former
President and current President have no interest and no fixed repayment date.
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.
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.
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. The failure to secure additional equity
financing would result in need to seek capital from other resources such as debt financing,
which may not be available to the Company. However, if such financing were available,
because we are a 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
may lose all of their investment.
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.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
We carried out an evaluation, under the supervision and with the participation of our
management, including our Chief Executive Officer (who is our Principal Executive Officer) and
our Chief Financial Officer (who is our Principal Financial Officer and Principal Accounting
Officer), of the effectiveness of the design of our disclosure controls and procedures (as defined
by Exchange Act Rules 13a-15(e) or 15d-15(e)) as of October 31, 2016, pursuant to Exchange
Act Rule 13a-15. Based upon that evaluation, our Principal Executive Officer and Principal
Financial Officer concluded that our disclosure controls and procedures were not effective as of
October 31, 2016 in ensuring that information required to be disclosed by us in reports that we
file or submit under the Exchange Act is recorded, processed, summarized, and reported within
the time periods specified in the Securities and Exchange Commission’s (the “SEC”) rules and
forms. This conclusion is based on findings that constituted material weaknesses. A material
weakness is a deficiency, or a combination of control deficiencies, in internal control over
financial reporting such that there is a reasonable possibility that a material misstatement of the
Company’s interim financial statements will not be prevented or detected on a timely basis.
In performing the above-referenced assessment, our management identified the
following material weaknesses:
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.
Our management feels the weaknesses identified above have not had any material
affect on our financial results. However, we are currently reviewing our disclosure controls and
procedures related to these material weaknesses and expect to implement changes in the near
term, including identifying specific areas within our governance, accounting and financial
reporting processes to add adequate resources to potentially mitigate these material
weaknesses.
Our management team will continue to monitor and evaluate the effectiveness of our
internal controls and procedures and our internal controls over financial reporting on an ongoing
basis and is committed to taking further action and implementing additional enhancements or
improvements, as necessary and as funds allow.
Because of its inherent limitations, internal control over financial reporting may not
prevent or detect misstatements. 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. All internal
control systems, no matter how well designed, have inherent limitations. Therefore, even those
systems determined to be effective can provide only reasonable assurance with respect to
financial statement preparation and presentation.
Changes in Internal Controls Over Financial Reporting
There were no changes in our internal controls over financial reporting that occurred
during the quarterly period ended October 31, 2016 that have materially affected, or are
reasonably likely to materially affect, our internal controls over financial reporting. We believe
that a control system, no matter how well designed and operated, cannot provide absolute
assurance that the objectives of the control system are met, and no evaluation of controls can
provide absolute assurance that all control issues and instances of fraud, if any, within any
company have been detected.
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.
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
None
Item 6. Exhibits
Exhibit No. Document Description
3.1(a) Articles of Incorporation of Line Up Advertisement, Inc. (incorporated
by reference from our Registration Statement on Form S-1 filed on
July 06, 2012)
3.1(b) Amendment to Articles of Incorporation of Line Up Advertisement,
Inc. (incorporated by reference from our Current Report on Form 8-K
filed on November 11, 2013).
3.2 Bylaws of Line Up Advertisement, Inc. (incorporated by reference
from our Registration Statement on Form S-1 filed on July 06, 2012)
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 Interactive Data Files
* Included in Exhibit 31.1
** Included in Exhibit 32.1
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, Secretary, Treasurer, Chief Financial
Officer and Director
(Principal Executive Officer, Principal Financial
Officer, Principal Accounting Officer)
Dated: December 15, 2016