Attached files
| file | filename |
|---|---|
| EX-31.2 - CERTIFICATION OF CFO PURSUANT TO SECTION 302 - VRDT Corp | v175088_ex31-2.htm |
| EX-32.2 - CERTIFICATION OF CFO PURSUANT TO SECTION 906 - VRDT Corp | v175088_ex32-2.htm |
| EX-32.1 - CERTIFICATION OF CEO PURSUANT TO SECTION 906 - VRDT Corp | v175088_ex32-1.htm |
| EX-31.1 - CERTIFICATION OF CEO PURSUANT TO SECTION 302 - VRDT Corp | v175088_ex31-1.htm |
SECURITIES
AND EXCHANGE COMMISSION
Washington,
DC 20549
FORM
10-Q/A
|
x
|
QUARTERLY
REPORT UNDER SECTION 13 OR 15 (D) OF THE SECURITIES EXCHANGE ACT OF
1934
|
FOR THE
QUARTERLY PERIOD ENDED SEPTEMBER 30, 2009
|
¨
|
TRANSITION
REPORT UNDER SECTION 13 OR 15 (D) OF THE SECURITIES EXCHANGE ACT OF
1934
|
FOR THE
TRANSITION PERIOD FROM _____ TO_____
Commission
File number:
000-52677
WINWHEEL
BULLION, INC.
(Exact
name of registrant as specified in its charter)
|
Delaware
|
26-3773798
|
|
(State
or other jurisdiction
Of
incorporation)
|
(I.R.S.
Employer
Identification
No.)
|
4695
MacArthur Court, 11th Floor, Newport Beach, California 92660
(Address
of principal executive offices)
202-536-5191
(Issuer’s
telephone number)
Indicate
by check mark whether the registrant (1) filed all reports required to be filed
by Section 13 or 15(d) of the Exchange Act during the preceding 12 months
(or for such shorter period that the Issuer 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 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.
|
Large accelerated filer
|
|
¨
|
Accelerated filer
|
¨
|
|
|
Non-accelerated
filer
|
|
¨
|
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 o No x
As of
October 29, 2009, the registrant had 3,700,726 shares of its Common Stock
outstanding.
TABLE
OF CONTENTS
WINWHEEL
BULLION, INC.
(A
DEVELOPMENT STAGE COMPANY)
|
Part
I – Financial Information
|
||
|
Item
1
|
Financial
Statements
|
|
|
Balance
Sheets as of September 30, 2009 and March 31,
2009
|
3
|
|
|
Statements
of Operations for the Six Months and Three Months Ended September 30,
2009, and 2008 and for the Period from Inception, August 19, 1999, through
September 30, 2009
|
4
|
|
|
Statements
of Cash Flows for the Six Months Ended September 30, 2009, and 2008 and
the Period from Inception, August 19, 1999, through September 30,
2009
|
5
|
|
|
Notes
to the Financial Statements
|
7
|
|
|
Item
2
|
Management’s
Discussion and Analysis or Plan of Operation
|
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
|
14
|
|
Item
3
|
Defaults
Upon Senior Securities
|
14
|
|
Item
4
|
Submission
Of Matters To A Vote Of Security Holders
|
14
|
|
Item
5
|
Other
Information
|
14
|
|
Item
6
|
Exhibits
|
14
|
2
ITEM
1
Winwheel
Bullion, Inc.
(A
Development Stage Company)
Balance
Sheets
|
September 30,
|
March 31,
|
|||||||
|
2009
|
2009
|
|||||||
|
(unaudited)
|
||||||||
|
ASSETS
|
||||||||
|
Current
assets
|
||||||||
|
Cash
|
$ | 493 | $ | 606 | ||||
|
Prepaid
Expenses
|
9,513 | — | ||||||
|
Total
current assets
|
10,006 | 606 | ||||||
|
Total
assets
|
$ | 10,006 | $ | 606 | ||||
|
LIABILITIES
AND STOCKHOLDERS' DEFICIENCY
|
||||||||
|
Current
liabilities
|
||||||||
|
Accounts
payable and accrued expenses
|
$ | 139,558 | $ | 131,709 | ||||
|
Related
party payable
|
76,606 | 46,502 | ||||||
|
Notes
payable to affiliate
|
— | 61,000 | ||||||
|
Interest
payable to shareholder
|
5,880 | 3,593 | ||||||
|
Total
current liabilities
|
222,044 | 242,804 | ||||||
|
Total
liabilities
|
222,044 | 242,804 | ||||||
|
Stockholders'
Deficiency
|
||||||||
|
Common
stock, $.001 par value, 95,000,000 shares authorized; 3,400,726 shares
issued and outstanding
|
3,701 | 3,401 | ||||||
|
Additional
paid-in capital
|
8,334,539 | 8,273,839 | ||||||
|
Accumulated
deficit during the development stage
|
(8,550,278 | ) | (8,519,438 | ) | ||||
|
Total
Stockholders' Deficiency
|
(212,038 | ) | (242,198 | ) | ||||
|
Total
Liabilities and Stockholders' Deficiency
|
$ | 10,006 | $ | 606 | ||||
See
accompanying notes to financial statements.
3
Winwheel
Bullion, Inc.
(A
Development Stage Company)
Statements
of Operations
(unaudited)
|
For the Period
|
||||||||||||||||||||
|
August 19, 1999
|
||||||||||||||||||||
|
Three Months Ended
|
Six Months Ended
|
(Inception) to
|
||||||||||||||||||
|
September 30,
|
September 30,
|
September 30,
|
||||||||||||||||||
|
2009
|
2008
|
2009
|
2008
|
2009
|
||||||||||||||||
|
Sales
|
$ | — | $ | — | $ | — | $ | 811 | $ | 370,800 | ||||||||||
|
Cost
of sales
|
— | — | — | — | — | |||||||||||||||
|
Gross
profit
|
— | — | — | 811 | 370,800 | |||||||||||||||
|
General and administrative
expenses
|
12,971 | 8,984 | 28,553 | 22,948 | 6,791,897 | |||||||||||||||
|
Impairment
of long-lived assets
|
— | 855 | — | 855 | 855 | |||||||||||||||
|
Impairment
of loan receivable
|
— | — | — | — | 130,000 | |||||||||||||||
|
Total
expenses
|
12,971 | 9,839 | 28,553 | 23,803 | 6,922,752 | |||||||||||||||
|
Loss
from operations
|
(12,971 | ) | (9,839 | ) | (28,553 | ) | (22,992 | ) | (6,551,952 | ) | ||||||||||
|
Other
income (expense)
|
||||||||||||||||||||
|
Interest
expense
|
(1,357 | ) | (1,220 | ) | (2,287 | ) | (1,703 | ) | (548,687 | ) | ||||||||||
|
Other
income
|
— | 8,800 | — | 8,800 | 56,889 | |||||||||||||||
|
Loss from conversion of
shareholder
debt
|
— | — | — | — | (1,506,528 | ) | ||||||||||||||
|
Net
Loss
|
$ | (14,328 | ) | $ | (2,259 | ) | $ | (30,840 | ) | $ | (15,895 | ) | $ | (8,550,278 | ) | |||||
|
Basic
and diluted loss per share
|
$ | (0.00 | ) | $ | (0.00 | ) | $ | (0.01 | ) | $ | (0.00 | ) | ||||||||
|
Weighted
average shares outstanding
|
3,514,856 | 3,400,726 | 3,458,103 | 3,400,726 | ||||||||||||||||
See
accompanying notes to financial statements.
4
Winwheel
Bullion, Inc.
(A
Development Stage Company)
Statements
of Cash Flows
(unaudited)
|
For the Period
|
||||||||||||
|
August 19, 1999
|
||||||||||||
|
Six Months Ended
|
(Inception) to
|
|||||||||||
|
September 30,
|
September 30,
|
|||||||||||
|
2009
|
2008
|
2009
|
||||||||||
|
Cash
flows from operating activities
|
||||||||||||
|
Net
loss
|
$ | (30,840 | ) | $ | (15,895 | ) | $ | (8,550,278 | ) | |||
|
Adjustments to reconcile net loss
to net cash used in
operating activities:
|
||||||||||||
|
Depreciation
|
— | 338 | 52,789 | |||||||||
|
Impairment
of long-lived assets
|
— | 855 | 855 | |||||||||
|
Impairment
of loan receivable
|
— | — | 130,000 | |||||||||
|
Accrued
interest payable converted to equity
|
— | — | 209,817 | |||||||||
|
Common
stock issued for services
|
— | — | 123,599 | |||||||||
|
Loss
from conversion of stockholder debt to common stock
|
— | — | 1,506,528 | |||||||||
|
Expenses
paid by stockholder and affiliate
|
— | — | 636,796 | |||||||||
|
Payables
and services converted to common stock
|
— | — | 770,674 | |||||||||
|
Changes
in operating assets and liabilities
|
||||||||||||
|
Accounts
receivable, net
|
— | 4,734 | — | |||||||||
|
Prepaid
expenses
|
(9,513 | ) | — | (9,513 | ) | |||||||
|
Accounts
payable and accrued liabilities
|
7,849 | (5,424 | ) | 148,812 | ||||||||
|
Interest
payable to stockholder
|
2,287 | 1,002 | 341,637 | |||||||||
|
Deferred
revenue
|
— | (810 | ) | — | ||||||||
|
Net
cash used in operating activities
|
(30,217 | ) | (15,200 | ) | (4,638,284 | ) | ||||||
|
Cash
flows from investing activities
|
||||||||||||
|
Acquisition
of property and equipment
|
— | — | (53,644 | ) | ||||||||
|
Loan
receivable
|
— | — | (130,000 | ) | ||||||||
|
Net
cash used in investing activities
|
— | — | (183,644 | ) | ||||||||
|
Cash
flows from financing activities
|
||||||||||||
|
Proceeds
from parent company
|
— | — | 697,193 | |||||||||
|
Proceeds
from notes payable - other
|
— | — | 385,000 | |||||||||
|
Proceeds
from notes payable - stockholder
|
30,104 | — | 1,845,754 | |||||||||
|
Proceeds
from notes payable - affiliates
|
(61,000 | ) | 18,500 | 2,503,191 | ||||||||
|
Proceeds
from conversion of debt to common stock
|
61,000 | — | 61,000 | |||||||||
|
Payments
on notes payable - other
|
— | — | (338,018 | ) | ||||||||
|
Payments
on notes payable - stockholder
|
— | (4,000 | ) | (190,699 | ) | |||||||
|
Payments
on notes payable - affiliates
|
— | — | (141,000 | ) | ||||||||
|
Net
cash provided by financing activities
|
30,104 | 14,500 | 4,822,421 | |||||||||
5
Winwheel
Bullion, Inc.
(A
Development Stage Company)
Statements
of Cash Flows
(unaudited)
|
For the Period
|
||||||||||||
|
August 19, 1999
|
||||||||||||
|
Six Months Ended
|
(Inception) to
|
|||||||||||
|
September 30,
|
September 30,
|
|||||||||||
|
2009
|
2008
|
2009
|
||||||||||
|
Net
increase (decrease) in cash
|
(113 | ) | (700 | ) | 493 | |||||||
|
Cash
at beginning of period
|
606 | 737 | — | |||||||||
|
Cash
at end of period
|
$ | 493 | $ | 37 | $ | 493 | ||||||
|
Supplemental
disclosure of cash flow information
|
||||||||||||
|
Cash
paid during the period for interest
|
$ | — | $ | — | $ | — | ||||||
|
Taxes
paid
|
$ | — | $ | — | $ | — | ||||||
See
accompanying notes to financial statements.
6
WINWHEEL
BULLION, INC.
(A
DEVELOPMENT STAGE COMPANY)
NOTES
TO FINANCIAL STATEMENTS
SEPTEMBER
30, 2009
(Unaudited)
NOTE
1 - BASIS OF PRESENTATION AND RECENT ACCOUNTING PRONOUNCEMENTS
The
accompanying unaudited financial statements of Winwheel Bullion, Inc. (the
Company) have been prepared in accordance with generally accepted accounting
principles for interim financial information and the instructions to Form 10-Q
and Article 10 of Regulation S-X. The results of operations for the interim
period ended September 30, 2009 shown in this report are not necessarily
indicative of results to be expected for the full fiscal year ending March 31,
2010. In the opinion of the Company’s management, the information contained
herein reflects all adjustments necessary for a fair presentation of the
Company’s results of operations, financial position and cash flows. We have
reclassified certain amounts previously reported in our financial statements to
conform to the current presentation. The unaudited interim financial statements
should be read in conjunction with the audited financial statements in the
Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2009
and Management’s Discussion and Analysis of Financial Condition and Results of
Operations.
Recent
Accounting Pronouncements
In April
2008, the FASB issued FASB Staff Position No. 142-3, "Determination of the
Useful Life of Intangible Assets" ("FSP 142-3"). FSP 142-3 amends the factors
that should be considered in developing renewal or extension assumptions used to
determine the useful life of a recognized intangible asset under SFAS No. 142,
"Goodwill and Other Intangible Assets." The intent of FSP 142-3 is to improve
the consistency between the useful life of a recognized intangible asset under
SFAS 142 and the period of expected cash flows used to measure the fair value of
an asset under SFAS 141(R) and other U.S. generally accepted accounting
principles FSP 142-3 applies to intangible assets that are acquired individually
or with a group of other assets acquired in business combinations and asset
acquisitions. FSP 142-3 also requires expanded disclosure related to the
determination of intangible asset useful lives. FSP 142-3 is effective for
fiscal years beginning after December 15, 2008. The Company is currently
evaluating the potential impact of FSP 142-3 on its financial
statements.
In May
2008, the FASB issued SFAS No. 162, "The Hierarchy of Generally Accepted
Accounting Principles" ("SFAS 162"). SFAS 162 is intended to improve financial
reporting by identifying a consistent framework, or hierarchy, for selecting
accounting principles to be used in preparing financial statements that are
presented in conformity with U.S. generally accepted accounting principles for
nongovernmental entities. SFAS 162 will become effective 60 days following the
SEC's approval of the Public Company Accounting Oversight Board Auditing
amendments to AU Section 411, "The Meaning of Present Fairly in Conformity with
Generally Accepted Accounting Principles." The Company is currently evaluating
the impact of SFAS 162.
In
October 2008, the FASB issued FSP No. FAS 157-3, "Determining the Fair Value of
a Financial Asset When the Market for That Asset is Not Active," ("FSP FAS
157-3"), which clarifies application of SFAS 157 in a market that is not active.
FSP FAS 157-3 was effective upon issuance, including prior periods for which
financial statements have not been issued. FSP FAS 157-3 has no impact on the
Company's financial statements.
In
December 2008, the FASB issued FSP No. FAS 140-4 and FIN 46(R)-8, "Disclosures
by Public Entities (Enterprises) about Transfers of Financial Assets and
Interests in Variable Interest Entities." This disclosure-only FSP improves the
transparency of transfers of financial assets and an enterprise's involvement
with variable interest entities, including qualifying special-purpose entities.
This FSP is effective for the first reporting period (interim or annual) ending
after December 15, 2008, with earlier application encouraged. The FSP has no
impact on the Company's financial statements.
In
December 2008, the FASB issued FSP No. FAS 132(R)-1, "Employers' Disclosures
about Postretirement Benefit Plan Assets" ("FSP FAS 132(R)-1"). FSP FAS 132(R)-1
requires additional fair value disclosures about employers' pension and
postretirement benefit plan assets consistent with guidance contained in SFAS
157. Specifically, employers will be required to disclose information about how
investment allocation decisions are made, the fair value of each major category
of plan assets and information about the inputs and valuation techniques used to
develop the fair value measurements of plan assets. This FSP is effective for
fiscal years ending after December 15, 2009. The Company does not expect the
adoption of FSP FAS 132(R)-1 will have a material impact on its financial
statements.
In
January 2009, the FASB issued FSP No. EITF 99-20-1, “Amendments to the
Impairment Guidance of EITF Issue No. 99-20” (FSP No. EITF 99-20-1).
This FSP provided additional guidance with respect to how entities determine
whether an “other-than-temporary impairment” (OTTI) exists for certain
beneficial interests in a securitized transaction, such as asset-backed
securities and mortgage-backed securities, that (1) do not have a high
quality rating or (2) can be contractually prepaid or otherwise settled
such that the holder would not recover substantially all of its investment. FSP
No. EITF 99-20-1 amended EITF Issue No. 99-20 to more closely align
its OTTI guidance with that of SFAS No. 115, “Accounting for Certain
Investment in Debt and Equity Securities.” This FSP had no material impact on
the Company’s financial statements.
7
NOTE
2 - RECLASSIFICATIONS
Certain
prior year amounts have been reclassified to conform to the current year
presentation.
NOTE
3 - GOING CONCERN
The
accompanying financial statements have been prepared on a going concern basis,
which contemplates the realization of assets and the satisfaction of liabilities
in the normal course of business. The Company sustained losses of $30,840
and $6,954 for the six months ended September 30, 2009 and the year ended March
31, 2009, respectively. The Company had an accumulated deficit of
$8,550,278 at September 30, 2009. These factors raise substantial doubt
about the ability of the Company to continue as a going concern for a reasonable
period of time. The Company is highly dependent on its ability to continue
to obtain investment capital and loans from an affiliate and shareholder in
order to fund the current and planned operating levels. The financial
statements do not include any adjustments relating to the recoverability and
classification of recorded asset amounts or the amounts and classification of
liabilities that might be necessary should the Company be unable to continue as
a going concern. The Company’s continuation as a going concern is
dependent upon its ability to bring in income generating activities and its
ability to continue receiving investment capital and loans from an affiliate and
shareholder to sustain its current level of operations. No
assurance can be given that the Company will be successful in these
efforts.
The
financial statements do not include any adjustments relating to the
recoverability and classification of recorded asset amounts or the amounts and
classification of liabilities that might be necessary should the Company be
unable to continue as a going concern.
NOTE
4 – BALANCE SHEET DETAILS
Prepaid
expenses consist of the following:
|
Prepaid
insurance
|
$ | 9,513 | ||
|
Total
prepaid expenses
|
$ | 9,513 |
Accounts
payable consists of the following:
|
Vendors
|
$ | 139,558 | ||
|
Total
accounts payable
|
$ | 139,558 |
NOTE
5 - NOTES PAYABLE
Martin
Consultants, Inc. periodically provided loans to the Company for working capital
needs. Martin Consultants, Inc. is 100% owned by Jeffrey Martin, a previous
majority shareholder of the Company. Activity for the six months ended September
30, 2009 and the year ended March 31, 2009 are as follows:
|
Balance
at March 31, 2008
|
$ | 42,500 | ||
|
Issued
|
18,500 | |||
|
Balance
at March 31, 2009
|
61,000 | |||
|
Converted
to common stock
|
(61,000 | ) | ||
|
Balance
at September 30, 2009
|
$ | — |
From the
time of change in control of the Company, Martin Consultants, Inc. and Jeffrey
Martin have agreed to forgo any further interest payments and the Company owes
no interest to Martin Consultants, Inc. In July 2009, the balance was
converted to 300,000 shares of common stock of the Company.
Since the
change in control of the Company, Winwheel Bullion Holdings, LLC (“WBHLLC”,
formerly known as Winwheel Bullion, LLC), the majority shareholder of the
Company, periodically provided loans to the Company for working capital needs.
WBHLLC is 100% owned by Sungjin Kim. Activity for the six months
ended September 30, 2009 and the year ended March 31, 2009 are as
follows:
|
Balance
at March 31, 2008
|
$ | 9,254 | ||
|
Issued
|
37,248 | |||
|
Balance
at March 31, 2009
|
46,502 | |||
|
Issued
|
30,104 | |||
|
Balance
at September 30, 2009
|
$ | 76,606 |
8
The notes
issued to WBHLLC are payable on demand and bears interest at the rate of 8% per
year.
NOTE
6 – RELATED PARTIES
WBHLLC is
owned 100% by Sungjin Kim, who was the Chief Executive Officer and Director of
the Company until his resignation on June 23, 2009. WBHLLC owns 48.6%
of the Company. WBHLLC maintains business interests in other ventures
outside of the Company. Additionally, as discussed in Note 4, the
Company owes WBHLLC $76,606 as of September 30, 2009. The Company has
accrued interest payable to WBHLLC of $5,880 as of September 30,
2009.
NOTE
7 - IMPAIRMENT OF LONG-LIVED ASSETS
In
accordance with Statement of Financial Accounting Standards No. 144, "Accounting
for Impairment on Disposal on Long-lived Assets", the Company reviews for
Impairment of long-lived assets whenever events or circumstances indicate that
the carrying amount of assets may not be recoverable. The Company
considers the carrying value of assets may not be recoverable based upon its
review of the following events or changes in circumstances: the asset's ability
to continue to generate income from operations and positive cash flow in future
periods; loss of legal ownership or title to the assets; significant industry or
economic trends. An impairment of $855 was recognized on long lived
assets during the nine months ended December 31, 2008.
NOTE
8 - STOCKHOLDERS' EQUITY
Common
Stock
On July
28, 2009, the Company’s board of directors by unanimous written consent
authorized the conversion of the $61,000 debt to Martin Consultants, Inc. to
300,000 shares of common stock of the Company (see Note 5).
On May 5,
2008, the Company's board of directors by unanimous written consent authorized
one for ten reverse split. Accordingly, all references to numbers of
common shares and per share data in the accompanying financial statements have
been adjusted to reflect the reverse stock split on a retroactive
basis. Concurrent with the reverse stock split, the board of
directors authorized an increase in common shares from 50,000,000 to
95,000,000.
On
September 5, 2007, the Company converted $167,392 of notes payable to Jeffrey D.
Martin to 669,577 shares of common stock. The common stock issued in
the conversion was valued at $0.25 per share, based on the quoted market price
and the Company recognized a loss on the conversion of $1,506,528 in
2007.
Preferred
Stock
The
Company authorized 5,000,000 shares of preferred stock at $0.001 par
value. As or September 30, 2009, no shares have been issued or are
outstanding.
9
ITEM
2
MANAGEMENT’S
DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
THIS
REPORT 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 FORWARD LOOKING STATEMENTS ARE SUBJECT TO CERTAIN RISKS AND
UNCERTAINTIES THAT COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM
HISTORICAL RESULTS OR ANTICIPATED RESULTS, INCLUDING THOSE SET FORTH UNDER "RISK
FACTORS" IN THIS “MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS" AND ELSEWHERE IN THIS REPORT. THE FOLLOWING
DISCUSSION AND ANALYSIS SHOULD BE READ IN CONJUNCTION WITH "SELECTED FINANCIAL
DATA" AND THE COMPANY'S FINANCIAL STATEMENTS AND NOTES THERETO INCLUDED
ELSEWHERE IN THIS REPORT.
Plan
of Operation
The
Company formerly known as Skreem Entertainment Corp./Diversified Global
Holdings, Inc. was a development stage company that was incorporated in Nevada
on or about August 19, 1999 and was formed to promote, finance and manage
artists and projects in the music industry. The stockholders of
Skreem Entertainment Corp, on or about May 5, 2008, approved the name change
from Skreem Entertainment Corp. to Diversified Global Holdings, Inc., approved a
reverse split of ten shares of common stock for one share of common stock, and
approved the increase of authorized capital to 100,000,000 consisting of
95,000,000 shares of common stock and 5,000,000 shares of preferred stock. On or
about September 4, 2008, Skreem Entertainment Corp. changed to Diversified
Global Holdings, Inc. with effective reverse split and increase of authorized
capital. On or about August 11, 2008, there was a change in control
as noted in Form 8-K dated August 19, 2008. The name of the Company
was officially changed from Diversified Global Holdings, Inc. to Winwheel
Bullion Inc. (“WWB” or the “Company”) as noted in Form 8-K dated October 20,
2008. The Company’s common stock is currently traded on the NASDAQ
OTC Bulletin Board under the symbol “WWBU.OB” whereas prior to the name change
traded as SKNT.OB. With the change of officers and director of the
Company associated with change in control of majority shareholder as noted in
Form 8-K filings dated August 19, 2008 and September 16, 2008, incorporated as
though fully set forth herein, the director and officers, in the best interest
of the Company, have changed the business of the Company to land development.
The Company is a development stage company that was incorporated in Delaware on
August 1, 2008 and is located in the State of California. The Company has been
pursuing potential projects and funding. With the world economic issues and
status, the efforts of the Company are more challenging but will continue to
pursue in efforts to build business and bring in income generating
activities.
Results
of Operations for the Three Months Ended September 30, 2009 as Compared to the
Three Months Ended September 30, 2008.
Overview
Total
revenues did not change from $0 for the three months ended September 30, 2009
from $0 for the three months ended September 30, 2008.
Total
operating expenses increased to $12,971 for the three months ended September 30,
2009 from $9,839 for the three months ended September 30, 2008. This $3,132 or
31.8% increase was primarily attributable to the increase in professional and
consulting fees and insurance expenses.
Results
of Operations for the Six Months Ended September 30, 2009 as Compared to the Six
Months Ended September 30, 2008.
Overview
Total
revenues decreased to $0 for the six months ended September 30, 2009 from $811
for the six months ended September 30, 2008.
Total
operating expenses increased to $28,553 for the six months ended September 30,
2009 from $23,803 for the six months ended September 30, 2008. This $4,750 or
20.0% increase was primarily attributable to the increase in professional and
consulting fees and insurance expenses.
Liquidity
and Capital Resources
As of
September 30, 2009, the Company had cash of $493 and a deficit in working
capital of $273,038. Net loss was $30,840 for the six months ended September 30,
2009. The Company generated a negative cash flow from operations of $30,217 for
the six months ended September 30, 2009. The negative cash flow from operating
activities for the period is primarily attributable to the Company's increase in
prepaid expenses, $9,513. The increase in financing activities is
attributable to the Company’s proceeds from its shareholder,
$30,104.
10
|
Six Months Ended
|
||||||||
|
September 30,
2009
|
September 30,
2008
|
|||||||
|
Cash
used in operating activities
|
$ | (30,217 | ) | $ | (15,200 | ) | ||
|
Cash
used in investing activities
|
— | — | ||||||
|
Cash
provided by financing activities
|
30,104 | 14,500 | ||||||
|
Net
changes to cash
|
$ | (113 | ) | $ | (700 | ) | ||
Cash used
in operations increased by $15,017 to $30,217 for the six months ended September
30, 2009 from $15,200 for the corresponding prior period. The increase is
attributable to increases in professional and consulting fees and other general
and administrative expenses.
GOING
CONCERN
The
accompanying unaudited financial statements have been prepared on a going
concern basis, which contemplates the realization of assets and the satisfaction
of liabilities in the normal course of business. The Company sustained
income of $0 and losses of $30,840 for the six months ended September 30, 2009
compared to $811 and $15,895 for the six months ended September 30, 2008.
The Company had an accumulated deficit of $8,550,278 at September 30,
2009. These factors raise substantial doubt about the ability of the
Company to continue as a going concern for a reasonable period of time.
The Company is highly dependent on its ability to continue to obtain
investment capital and loans from an affiliate and shareholder in order to fund
the current and planned operating levels. The financial statements do not
include any adjustments relating to the recoverability and classification of
recorded asset amounts or the amounts and classification of liabilities that
might be necessary should the Company be unable to continue as a going concern.
The Company’s continuation as a going concern is dependent upon its
ability to bring in income generating activities and its ability to continue
receiving investment capital and loans from an affiliate and shareholder to
sustain its current level of operations. No assurance can be given that
the Company will be successful in these efforts.
OUR
BUSINESS IS SUBJECT TO MANY RISK FACTORS, INCLUDING THE FOLLOWING (REFERENCES TO
"OUR," "US," "WE," AND WORDS OF SIMILAR MEANING) IN THESE RISK FACTORS REFER TO
THE COMPANY.
We
have not paid any cash dividends in the past and have no plans to issue cash
dividends in the future, which could cause the value of our common stock to have
a lower value than other similar companies which do pay cash
dividends.
We have
not paid any cash dividends on our common stock to date and do not anticipate
any cash dividends being paid to holders of our common stock in the foreseeable
future. While our dividend policy will be based on the operating results and
capital needs of the business, it is anticipated that any earnings will be
retained to finance our future expansion. As we have no plans to issue cash
dividends in the future, our common stock could be less desirable to other
investors and as a result, the value of our common stock may decline, or fail to
reach the valuations of other similarly situated companies who have historically
paid cash dividends in the past.
It
is more difficult for our shareholders to sell their shares because we are not,
and may never be, eligible for NASDAQ or any national stock
exchange.
We are
not presently, nor is it likely that for the foreseeable future we will be,
eligible for inclusion in NASDAQ or for listing on any United States national
stock exchange. To be eligible to be included in NASDAQ, a company is
required to have not less than $4,000,000 in net tangible assets, a public float
with a market value of not less than $5,000,000, and a minimum bid price of
$4.00 per share. At the present time, we are unable to state when, if ever, we
will meet the NASDAQ application standards. Unless we are able to increase
our net worth and market valuation substantially, either through the
accumulation of surplus out of earned income or successful capital raising
financing activities, we will never be able to meet the eligibility requirements
of NASDAQ. As a result, it will more difficult for holders of our common
stock to resell their shares to third parties or otherwise, which could have a
material adverse effect on the liquidity and market price of our common
stock.
Sungjin
Kim owns indirectly through related parties approximately 48.6% of our
outstanding common stock, and has significant influence over our corporate
decisions, and as a result, if you invest in us, your ability to affect
corporate decisions will be limited.
Sungjin
Kim holds 1,800,000 shares of our common stock indirectly through Winwheel
Bullion Holdings, LLC (“WBHLLC”, formerly known as Winwheel Bullion, LLC),
representing approximately 48.6% of the outstanding shares of our common
stock. Accordingly, Mr. Kim will have significant influence in
determining the outcome of all corporate transactions or other matters,
including mergers, consolidations and the sale of all or substantially all of
our assets, and also the power to prevent or cause a change in control even
after such conversion and exercise by other investors, as Mr. Kim will likely
continue to be our largest shareholder. The interests of Mr. Kim may differ from
the interests of the other stockholders and thus result in corporate decisions
that are adverse to other shareholders. Additionally, potential investors should
take into account the fact that any vote of shares purchased will have limited
effect on the outcome of corporate decisions.
11
The
Company has entered into indemnification agreements with the officers and
directors and we may be required to indemnify our Directors and Officers, and if
the claim is greater than $1,000,000, it may create significant losses for the
Company.
We have
authority under Delaware and California law to indemnify our directors and
officers to the extent provided in that statute. Our Bylaws require the Company
to indemnify each of our directors and officers against liabilities imposed upon
them (including reasonable amounts paid in settlement) and expenses incurred by
them in connection with any claim made against them or any action, suit or
proceeding to which they may be a party by reason of their being or having been
a director or officer of the company. We maintain officer's and director's
liability insurance coverage with limits of liability of $1,000,000.
Consequently, if such judgment exceeds the coverage under the policy, the
Company may be forced to pay such difference. We have entered into
indemnification agreements with each of our officers and directors containing
provisions that may require us, among other things, to indemnify our officers
and directors against certain liabilities that may arise by reason of their
status or service as officers or directors (other than liabilities arising from
willful misconduct of a culpable nature) and to advance their expenses incurred
as a result of any proceeding against them as to which they could be
indemnified. Management believes that such indemnification provisions and
agreements are necessary to attract and retain qualified persons as directors
and executive officers. We are subject to claims arising from
disputes with employees, vendors and other third parties in the normal course of
business. These risks may be difficult to assess or quantify and their
existence and magnitude may remain unknown for substantial periods of time. If
the plaintiffs in any suits against us were to successfully prosecute their
claims, or if we were to settle such suits by making significant payments to the
plaintiffs, our operating results and financial condition would be harmed. In
addition, our organizational documents require us to indemnify our senior
executives to the maximum extent permitted by Delaware and California law.
If our senior executives were named in any lawsuit, our indemnification
obligations could magnify the costs of these suits.
Future
changes in financial accounting standards and other applicable regulations by
various governmental regulatory agencies may cause lower than expected operating
results and affect our reported results of operations.
Changes
in accounting standards and their application may have a significant effect on
our reported results on a going forward basis and may also affect the recording
and disclosure of previously reported transactions. New standards have occurred
and will continue to occur in the future. For example, in December 2004, the
Financial Accounting Standards Board issued SFAS No. 123 (revised 2004), as
amended, “Share Based Payment” (“SFAS No. 123R”), which requires us to
expense stock options at fair value effective January 1, 2006. Under SFAS
No. 123R, the recognition of compensation expense for the fair value of
stock options reduces our reported net income and net income per share
subsequent to implementation; however, this accounting change will not have any
impact on the cash flows of our business. Under the prior rules, expensing of
the fair value of the stock options was not required and therefore, no
compensation expense for stock options was included in reported net income and
net income per share in fiscal 2006. The Company issued 100,000 shares of stock
options in fiscal 2007, recognizing $24,150 of compensation
expense. Any future issuances of stock options, in addition to the
fiscal 2006 issuances, will cause additional compensation expense to be
recognized. As of September 30, 2009, there are no outstanding stock
options.
The
Sarbanes-Oxley Act of 2002 and various new rules subsequently implemented by the
Securities and Exchange Commission (“SEC”) and the NASDAQ National Market have
imposed additional reporting and corporate governance practices on public
companies.
In
addition, if we do not adequately continue to comply with the requirements of
Section 404 of the Sarbanes-Oxley Act in the future, we may not be able to
accurately report our financial results or prevent error or fraud, which may
result in sanctions or investigation by regulatory authorities, such as the SEC.
Any such action could harm our business, financial results or investors’
confidence in our company, and could cause our stock price to fall.
The
nature of our businesses exposes us to the risk of litigation and liability
under environmental, health and safety and product liability laws.
Certain
aspects of our businesses involve risks of liability. In general, litigation in
our industry, including class actions that seek substantial damages, arises with
increasing frequency. Claims may be asserted under environmental, labor, health
and safety or product liability laws. Litigation is invariably expensive,
regardless of the merit of the plaintiffs’ claims. Given the general
risks, as stated, there is a chance that the Company could be named as a
defendant in the future, and there can be no assurance that regardless of the
merit of such claims, we will not be required to make substantial settlement
payments in the future.
If
the Company decides to operate internationally, there are risks which could
adversely affect operating results.
Currently,
we have no projects, projections or foreign interest involving international
operations. However, the Company may in the future, given the
opportunity, decide to pursue projects, business, or otherwise conduct
operations internationally. Doing business in foreign countries does
subject the Company to additional risks, any of which may adversely impact
future operating results, including:
|
•
|
international
political, economic and legal
conditions;
|
12
|
•
|
our
ability to comply with foreign regulations and/or laws affecting
operations and projects;
|
|
•
|
difficulties
in attracting and retaining staff and business partners to operate
internationally;
|
|
•
|
language
and cultural barriers;
|
|
•
|
seasonal
reductions in business activities and operations in the countries where
our international projects are
located;
|
|
•
|
integration
of foreign operations;
|
|
•
|
potential
adverse tax consequences; and
|
|
•
|
potential
foreign currency fluctuations.
|
ITEM
3
QUANTITATIVE
AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
As the
Company is a “smaller reporting company,” this item is
inapplicable.
ITEM
4
CONTROLS
AND PROCEDURES
Evaluation
of Disclosure Controls and Procedures
The
Company’s Chief Executive Officer and Interim Chief Financial Officer have
evaluated the effectiveness of the Company’s disclosure controls and procedures
(as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of
September 30, 2009, the end on the period covered by this report. Based upon
such evaluation, the Chief Executive Officer and Chief Financial Officer have
concluded that, as of the end of such period, the Company’s disclosure controls
and procedures were not effective as required under Rules 13a-15(e) and
15d-15(e) under the Exchange Act. The Company, due to the lack of
staffing, did not have proper segregation of duties.
Changes
in Internal Control over Financial Reporting
During
the quarter ended September 31, 2009, there were no changes in our internal
control over financial reporting that occurred during the period covered by this
report that have materially affected, or are reasonably likely to materially
affect, our internal control over financial reporting.
Limitations
on the Effectiveness of Controls
The
Company’s management, including the CEO and CFO, does not expect that our
disclosure controls and procedures or our internal control over financial
reporting will prevent or detect all error and all fraud. A control
system, no matter how well designed and operated, can provide only reasonable,
not absolute, assurance that the control system’s objectives will be
met. Further, the design of the control system must reflect that
there are resource constraints and that the benefits must be considered relative
to their costs. Because of the inherent limitations in all control systems, no
evaluation of controls can provide absolute assurance that all control issues
and instances of fraud, if any, within the company have been
detected. These inherent limitations include the realities that
judgments in decision-making can be faulty and that breakdowns can occur because
of simple error or mistake. Controls can also be circumvented by the
individual acts of some persons, by collusion of two or more people, or by
management override of controls. The design of any system of controls
is based in part on certain assumptions about the likelihood of future events,
and there can be no assurance that any design will succeed in achieving its
stated goals under all potential future conditions. Projections of
any evaluation of controls effectiveness to future periods are subject to
risks. Over time, controls may become inadequate because of changes
in conditions or deterioration in the degree of compliance with policies or
procedures.
13
PART
II - OTHER INFORMATION
|
ITEM
1.
|
LEGAL
PROCEEDINGS
|
None
|
ITEM
2.
|
UNREGISTERED
SALES OF EQUITY SECURITIES AND USE OF
PROCEEDS
|
None
|
ITEM
3.
|
DEFAULTS
UPON SENIOR SECURITIES
|
None
|
ITEM
4.
|
SUBMISSION
OF MATTERS TO A VOTE OF SECURITY
HOLDERS
|
None
|
ITEM
5.
|
OTHER
INFORMATION
|
None
|
ITEM
6.
|
EXHIBITS
|
|
Number
|
Description
|
|
3.1
(1)
|
Articles
of Incorporation, as Amended
|
|
3.2
(1)
|
Bylaws
|
|
31.1 (2)
|
Certification
of Chief Executive Officer of Winwheel Bullion, Inc. Required by Rule
13a-14(1) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as
adopted pursuant to Section 302 of the Sarbanes-Oxley Act of
2002
|
|
31.2 (2)
|
Certification
of Chief Financial Officer of Winwheel Bullion, Inc. Required by Rule
13a-14(1) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as
adopted pursuant to Section 302 of the Sarbanes-Oxley Act of
2002
|
|
32.1 (2)
|
Certification
of Chief Executive Officer of Winwheel Bullion, Inc. Pursuant to Section
906 of the Sarbanes-Oxley Act of 2002 and Section 1350 Of 18 U.S.C.
63
|
|
32.2 (2)
|
Certification
of Chief Financial Officer of Winwheel Bullion, Inc. Pursuant to Section
906 of the Sarbanes-Oxley Act of 2002 and Section 1350 Of 18 U.S.C.
63
|
|
(1)
|
Previously
filed with the form 8-K filed on April 7, 2004 and is incorporated herein
by reference.
|
|
(2)
|
Filed
herewith
|
14
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, as amended, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the date indicated.
|
WINWHEEL
BULLION, INC.
|
||
|
|
||
|
Date:
February 22, 2010
|
By:
|
/s/
Stephen V. Williams
|
|
Stephen
V. Williams
|
||
|
Chief
Executive Officer
|
||
|
Date:
February 22, 2010
|
By:
|
/s/
Bruce Harmon
|
|
Bruce
Harmon
|
||
|
Interim
Chief Financial Officer
|
||
15