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EXCEL - IDEA: XBRL DOCUMENT - DIGILITI MONEY GROUP, INC. | Financial_Report.xls |
EX-32.1 - CERTIFICATION - DIGILITI MONEY GROUP, INC. | f10q0813ex32i_deacquisition.htm |
EX-31.1 - CERTIFICATION - DIGILITI MONEY GROUP, INC. | f10q0813ex31i_deacquisition.htm |
EX-32.2 - CERTIFICATION - DIGILITI MONEY GROUP, INC. | f10q0813ex32ii_deacquisition.htm |
EX-31.2 - CERTIFICATION - DIGILITI MONEY GROUP, INC. | f10q0813ex31ii_deacquisition.htm |
FORM 10-Q
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended August 31, 2013
OR
o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________ to ________
Commission file number 000-53925
DE Acquisition 2, Inc.
(Exact name of registrant as specified in its charter)
Delaware
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27-2205650
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(State or other jurisdiction
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(I.R.S. Employer
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of incorporation or organization)
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Identification Number)
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3017 W. 97th St., Suite 117, Minneapolis, MN 55431
(Address of principal executive offices)
(612) 889-8729
(Registrant’s telephone number, including area code)
N/A
(Former name, former address and former fiscal year, if changed since last report)
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 o.
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 o.
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 definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer
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o
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Accelerated filer
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o |
Non-accelerated filer
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o
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Smaller reporting company
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x |
(Do not check if a smaller reporting company)
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes x No o.
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING
THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes o No o.
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: 5,000,000 shares of common stock, par value $.0001 per share, outstanding as of September 30, 2013.
DE ACQUISITION 2, INC.
- INDEX -
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2
Item 1. Financial Statements.
DE ACQUISITION 2, INC.
(A Development Stage Company)
Balance Sheets
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August 31,
2013
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February 28,
2013
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ASSETS
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Prepaid expenses
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$ | 6,000 | $ | - | ||||
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TOTAL ASSETS
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$ | 6,000 | $ | - | ||||
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LIABILITIES
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Accrued expenses
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$ | 3,000 | $ | - | ||||
Loan payable - related parties
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- | 2,673 | ||||||
Total current liabilities
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3,000 | 2,673 | ||||||
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Notes and interest payable – related parties
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77,584 | 43,473 | ||||||
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TOTAL LIABILITIES
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80,584 | 46,146 | ||||||
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SHAREHOLDERS' DEFICIT
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Preferred stock: $0.0001 par value; 20,000,000 shares authorized; no shares issued or outstanding
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- | - | ||||||
Common stock: $0.0001 par value; 500,000,000 shares authorized; 5,000,000 shares issued and outstanding at August 31, 2013 and February 28, 2013
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500 | 500 | ||||||
Additional paid-in capital
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22,734 | 22,734 | ||||||
Deficit accumulated during the development phase
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(97,818 | ) | (69,380 | ) | ||||
TOTAL SHAREHOLDERS' DEFICIT
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(74,584 | ) | (46,146 | ) | ||||
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TOTAL LIABILITIES AND SHAREHOLDERS' DEFICIT
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$ | 6,000 | $ | - |
The accompanying notes are an integral part of these financial statements.
3
(A Development Stage Company)
Statements of Operations
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Three Months
Ended
August 31,
2013
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Three Months
Ended
August 31,
2012
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Six Months
Ended
August 31,
2013
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Six Months
Ended
August 31,
2012
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From
Inception
(February 24, 2010) to
August 31,
2013 |
|||||||||||||||
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Revenues
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$ | - | $ | - | $ | - | $ | - | $ | - | ||||||||||
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OPERATING EXPENSES
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General and administrative expenses
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6,375 | - | 26,099 | 250 | 89,026 | |||||||||||||||
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Net operating loss
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(6,375 | ) | - | (26,099 | ) | (250 | ) | (89,026 | ) | |||||||||||
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Interest expense
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1,417 | 770 | 2,339 | 1,539 | 8,792 | |||||||||||||||
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Net loss
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$ | (7,792 | ) | $ | (770 | ) | $ | (28,438 | ) | $ | (1,789 | ) | $ | (97,818 | ) | |||||
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Net loss per share, basic and fully diluted
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$ | (0.00 | ) | $ | (0.00 | ) | $ | (0.01 | ) | $ | (0.00 | ) | $ | (0.03 | ) | |||||
Weighted average number of shares outstanding
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5,000,000 | 5,000,000 | 5,000,000 | 5,000,000 | 3,722,405 |
The accompanying notes are an integral part of these financial statements.
4
(A Development Stage Company)
Statements of Shareholders' Deficit
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Common Stock
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Additional
Paid In
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Deficit
Accumulated
During the
Development
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Total
Shareholders'
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||||||||||||||||
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Date
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Shares
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Amount
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Capital
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Stage
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Deficit
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February 24, 2010 (inception)
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02/25/10
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10,000 | $ | 1 | $ | 999 | $ | - | $ | 1,000 | |||||||||||
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Net loss
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- | - | - | (1,139 | ) | (1,139 | ) | |||||||||||||
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Balance, February 28, 2010
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10,000 | 1 | 999 | (1,139 | ) | (139 | ) | |||||||||||||
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Expenses paid by affiliates
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- | - | 2,793 | - | 2,793 | |||||||||||||||
Repurchase shares to treasury
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01/19/11
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(10,000 | ) | (1 | ) | (5,771 | ) | - | (5,772 | ) | |||||||||||
Issue new shares to investors
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01/19/11
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5,000,000 | 500 | 2,479 | - | 2,979 | |||||||||||||||
Net loss
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- | - | - | (37,358 | ) | (37,358 | ) | |||||||||||||
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Balances, February 28, 2011
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5,000,000 | 500 | 500 | (38,497 | ) | (37,497 | ) | |||||||||||||
Expenses paid by affiliates
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- | - | 14,508 | - | 14,508 | ||||||||||||||||
Net loss
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- | - | - | (30,306 | ) | (30,306 | ) | ||||||||||||||
Balances, February 29, 2012
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5,000,000 | 500 | 15,008 | (68,803 | ) | (53,295 | ) | ||||||||||||||
Loan forgiveness
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- | - | 7,726 | - | 7,726 | ||||||||||||||||
Net loss
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- | - | - | (577 | ) | (577 | ) | ||||||||||||||
Balances, February 28, 2013
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5,000,000 | 500 | 22,734 | (69,380 | ) | (46,146 | ) | ||||||||||||||
Net loss
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- | - | - | (28,438 | ) | (28,438 | ) | ||||||||||||||
Balances, August 31, 2013
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5,000,000 | $ | 500 | $ | 22,734 | $ | (97,818 | ) | $ | (74,584 | ) |
The accompanying notes are an integral part of these financial statements.
5
(A Development Stage Company)
Statements of Cash Flows
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Six Months
Ended
August 31,
2013
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Six Months
Ended
August 31,
2012
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From Inception
(February 24, 2010) to
August 31,
2013
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CASH FLOWS FROM OPERATING ACTIVITIES
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Net loss
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$ | (28,438 | ) | $ | (1,789 | ) | $ | (97,818 | ) | |||
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Adjustments to reconcile net loss with cash used in operations:
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Common stock issued for services
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- | - | 1,000 | |||||||||
Reimbursement of expenses by affiliate
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- | - | 17,301 | |||||||||
Compensation expense related to stock repurchase
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- | - | 34,228 | |||||||||
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Changes in operating assets and liabilities:
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Prepaid expenses
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(6,000 | ) | - | (6,000 | ) | |||||||
Accrued expenses
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3,000 | 250 | 3,000 | |||||||||
Related-party interest
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2,339 | 1,539 | 8,791 | |||||||||
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Net cash used in operating activities
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(29,099 | ) | - | (39,498 | ) | |||||||
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CASH FLOWS FROM INVESTING ACTIVITIES
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Net cash provided by (used in) investing activities
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- | - | - | |||||||||
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CASH FLOWS FROM FINANCING ACTIVITIES
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Proceeds from loans payable - related parties
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29,099 | - | 39,728 | |||||||||
Repayment of loans from related parties
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- | (291 | ) | (291 | ) | |||||||
Proceeds from loans payable
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- | - | 1,000 | |||||||||
Repayment of loans payable
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- | (939 | ) | (939 | ) | |||||||
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Net cash provided by (used in) financing activities
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29,099 | (1,230 | ) | 39,498 | ||||||||
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NET DECREASE IN CASH
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- | (1,230 | ) | - | ||||||||
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Cash and cash equivalent at beginning of period
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- | 1,230 | - | |||||||||
Cash and cash equivalent at end of period
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$ | - | $ | - | $ | - | ||||||
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SUPPLEMENTAL CASH FLOW DISCLOSURES
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Cash paid for interest
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$ | - | $ | - | $ | - | ||||||
Cash paid for income taxes
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$ | - | $ | - | $ | - | ||||||
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NON-CASH FINANCING ACTIVITIES
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Reimbursement of expenses by affiliate through additional paid-in capital
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$ | - | $ | - | $ | 17,301 |
The accompanying notes are an integral part of these financial statements.
6
(A Development Stage Company)
Notes to Financial Statements
For the Three and Six Months Ended August 31, 2013 and 2012
(Unaudited)
Note 1 – Basis of Presentation
DE Acquisition 2, Inc. (a development stage company) (the “Company”) was incorporated in Delaware on February 24, 2010, with an objective to acquire, or merge with, an operating business.
The accompanying unaudited interim financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission, and should be read in conjunction with the audited financial statements and notes thereto contained in the Company’s most recent Annual Financial Statements filed with the SEC on Form 10K. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim period presented have been reflected herein. The results of operations for the interim period are not necessarily indicative of the results to be expected for the full year. Notes to the financial statements which would substantially duplicate the disclosures contained in the audited financial statements for the most recent fiscal period, as reported in the Form 10K, have been omitted.
Note 2 – Change in Control
On September 27, 2012, Pinnacle Investment Group, LLC ("Pinnacle"), an existing stockholder of the Company purchased an aggregate of 4,196,500 shares (the "Shares") of the Company's common stock, par value $0.0001 per share (the "Common Stock") from New Asia Partners, LLC (the "Seller" or "NAP") for an aggregate purchase price equal to $15,000 (the "Purchase Price") pursuant to the terms and conditions of a securities purchase agreement (the "Purchase Agreement") dated as of such date. On October 10, 2012, upon the closing of the transactions set forth in the Purchase Agreement (the "Closing"), and as a result of the acquisition by Pinnacle of the Shares, it owns an aggregate of 4,839,500 shares of the Company's Common Stock, representing 96.79% of the total issued and outstanding Common Stock of the Company.
Concurrent with this transaction:
●
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NAP forgave loans due to them in the amount of $7,665. This was recorded as additional paid in capital.
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●
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Outstanding accrued expenses of $5,150 were forgiven and recorded as a part of general and administrative expenses.
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Note 3 – Related Party Notes Payable and Loan Payable
The Company has notes bearing interest at 8.25% annually and are due at the earlier of (a) January 19, 2016 or (b) the date that the Company, or any wholly-owned subsidiary of the Company, consummates a business combination with an operating company in a reverse merger or reverse takeover transaction, or enters into any transaction that would cause the Company to cease being a shell as defined in Rule 12b-2 of the Securities Exchange Act of 1934, as amended. In addition to the principal amount of $37,021, as of August 31, 2013 and February 28, 2013 there was $7,991 and $6,452, respectively, of accrued interest on these notes.
During the year ended February 29, 2012, a shareholder paid expenses on behalf of the Company of $7,956. During the three months ended May 31, 2012, the Company repaid $291 of the loan. The loan had a balance of $7,665 when it was forgiven by the shareholder in October 2012. This loan was unsecured, non-interest bearing and payable on demand.
During the three and six months ended August 31, 2013 and the year ended February 28, 2013, a shareholder paid expenses on behalf of the Company of $17,975 (and accrued interest of $647), $29,099 (and accrued interest of $800) and $2,673, respectively. The Company had recorded a liability as of August 31, 2013 and February 28, 2013 of $32,572 and $2,673, respectively. On July 3, 2013, the Company issued a promissory note to a shareholder in the amount of $2,673, which represented the amount the shareholder had advanced the Company for operating expenses through February 28, 2013. The principal amount of the promissory note will increase as the shareholder advances additional funds to the Company for operating expenses.
The note bears interest at 12% annually and is due at the earlier of (a) January 18, 2016 or (b) the date that the Company, or any wholly-owned subsidiary of the Company, consummates a business combination with an operating company in a reverse merger or reverse takeover transaction, or enters into any transaction that would cause the Company to cease being a shell as defined in Rule 12b-2 of the Securities Exchange Act of 1934, as amended.
7
Note 4 – Going Concern
The Company's financial statements are prepared using generally accepted accounting principles applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company has had no revenues and has generated from operations an accumulated loss of $97,818 from February 24, 2010 (inception) to August 31, 2013.
In order to continue as a going concern and achieve a profitable level of operations, the Company will need, among other things, additional capital resources and developing a consistent source of revenues. Management's plans include seeking a merger with an existing operating company.
The ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish the plan described in the preceding paragraph and eventually attain profitable operations. The accompanying financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.
8
Forward Looking Statement Notice
Certain statements made in this Quarterly Report on Form 10-Q are “forward-looking statements” (within the meaning of the Private Securities Litigation Reform Act of 1995) in regard to the plans and objectives of management for future operations. Such statements involve known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements of DE Acquisition 2, Inc. (“we”, “us”, “our” or the “Company”) to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. The forward-looking statements included herein are based on current expectations that involve numerous risks and uncertainties. The Company's plans and objectives are based, in part, on assumptions involving the continued expansion of business. Assumptions relating to the foregoing involve judgments with respect to, among other things, future economic, competitive and market conditions and future business decisions, all of which are difficult or impossible to predict accurately and many of which are beyond the control of the Company. Although the Company believes its assumptions underlying the forward-looking statements are reasonable, any of the assumptions could prove inaccurate and, therefore, there can be no assurance the forward-looking statements included in this Quarterly Report will prove to be accurate. In light of the significant uncertainties inherent in the forward-looking statements included herein, the inclusion of such information should not be regarded as a representation by the Company or any other person that the objectives and plans of the Company will be achieved.
Description of Business
DE Acquisition 2, Inc. (a development stage company) (the “Company”) was incorporated in Delaware on February 24, 2010 (Inception), with an objective to acquire, or merge with, an operating business. The Company filed a registration statement on Form 10 with the U.S. Securities and Exchange Commission (the “SEC”) on April 6, 2010, and since its effectiveness, the Company has focused its efforts to identify a possible business combination. As of August 31, 2013, the Company had not yet commenced any operations.
The Company, based on proposed business activities, is a “blank check” company. The SEC defines those companies as "any development stage company that is issuing a penny stock, within the meaning of Section 3(a)(51) of the Securities Exchange Act 1934, as amended (the “Exchange Act”), and that has no specific business plan or purpose, or has indicated that its business plan is to merge with an unidentified company or companies." Many states have enacted statutes, rules and regulations limiting the sale of securities of "blank check" companies in their respective jurisdictions. The Company is also a “shell company,” defined in Rule 12b-2 under the Exchange Act as a company with no or nominal assets (other than cash) and no or nominal operations. Management does not intend to undertake any efforts to cause a market to develop in our securities, either debt or equity, until we have successfully concluded a business combination. The Company intends to comply with the periodic reporting requirements of the Exchange Act for so long as we are subject to those requirements.
In addition, the Company is an “emerging growth company”, as defined in the Jumpstart Our Business Startups Act of 2012 (“JOBS Act”), and may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies” including, but not limited to, not being required to comply with the auditor attestation requirements of section 404(b) of the Sarbanes-Oxley Act, and exemptions from the requirements of Sections 14A(a) and (b) of the Securities Exchange Act of 1934 to hold a nonbinding advisory vote of shareholders on executive compensation and any golden parachute payments not previously approved.
The Company has also elected to use the extended transition period for complying with new or revised accounting standards under Section 102(b)(1) of the JOBS Act. This election allows us to delay the adoption of new or revised accounting standards that have different effective dates for public and private companies until those standards apply to private companies. As a result of this election, our financial statements may not be comparable to companies that comply with public company effective dates.
We will remain an “emerging growth company” until the earliest of (1) the last day of the fiscal year during which our revenues exceed $1 billion, (2) the date on which we issue more than $1 billion in non-convertible debt in a three year period, (3) the last day of the fiscal year following the fifth anniversary of the date of the first sale of our common equity securities pursuant to an effective registration statement filed pursuant to the Securities Act of 1933, as amended, or (4) when the market value of our common stock that is held by non-affiliates exceeds $700 million as of the last business day of our most recently completed second fiscal quarter. To the extent that we continue to qualify as a “smaller reporting company”, as such term is defined in Rule 12b-2 under the Securities Exchange Act of 1934, after we cease to qualify as an emerging growth company, certain of the exemptions available to us as an emerging growth company may continue to be available to us as a smaller reporting company, including: (1) not being required to comply with the auditor attestation requirements of Section 404(b) of the Sarbanes Oxley Act; (2) scaled executive compensation disclosures; and (3) the requirement to provide only two years of audited financial statements, instead of three years.
9
The Company was organized as a vehicle to investigate and, if such investigation warrants, acquire a target company or business seeking the perceived advantages of being a publicly held corporation. The Company’s principal business objective for the next 12 months and beyond such time will be to achieve long-term growth potential through a combination with an operating business. The Company will not restrict its potential candidate target companies to any specific business, industry or geographical location and, thus, may acquire any type of business.
The Company currently does not engage in any business activities that provide cash flow. During the next twelve months we anticipate incurring costs related to:
(i) filing Exchange Act reports, and
(ii) investigating, analyzing and consummating an acquisition.
We believe we will be able to meet these costs through use of funds in our treasury, through deferral of fees by certain service providers and additional amounts, as necessary, to be loaned to or invested in us by our stockholders, management or other investors. As of the date of the period covered by this report, the Company has no cash in its treasury. There are no assurances that the Company will be able to secure any additional funding as needed. Currently, however, our ability to continue as a going concern is dependent upon our ability to generate future profitable operations and/or to obtain the necessary financing to meet our obligations and repay our liabilities arising from normal business operations when they come due. Our ability to continue as a going concern is also dependent on our ability to find a suitable target Company and enter into a possible reverse merger with such Company. Management’s plan includes obtaining additional funds by equity financing through a reverse merger transaction and/or related party advances; however, there is no assurance of additional funding being available.
The Company may consider acquiring a business which has recently commenced operations, is a developing company in need of additional funds for expansion into new products or markets, is seeking to develop a new product or service, or is an established business which may be experiencing financial or operating difficulties and is in need of additional capital. In the alternative, a business combination may involve the acquisition of, or merger with, a company which does not need substantial additional capital but which desires to establish a public trading market for its shares while avoiding, among other things, the time delays, significant expense, and loss of voting control which may occur in a public offering.
Since our Registration Statement on Form 10 went effective, our management has had contact and discussions with representatives of other entities regarding a business combination with us, however, we have not entered into any definitive agreements or arrangements regarding such a transaction. Any target business that is selected may be a financially unstable company or an entity in its early stages of development or growth, including entities without established records of sales or earnings. In that event, we will be subject to numerous risks inherent in the business and operations of financially unstable and early stage or potential emerging growth companies. In addition, we may effect a business combination with an entity in an industry characterized by a high level of risk, and, although our management will endeavor to evaluate the risks inherent in a particular target business, there can be no assurance that we will properly ascertain or assess all significant risks. Our management anticipates that it will likely be able to effect only one business combination, due primarily to our limited financing and the dilution of interest for present and prospective stockholders, which is likely to occur as a result of our management’s plan to offer a controlling interest to a target business in order to achieve a tax-free reorganization. This lack of diversification should be considered a substantial risk in investing in us, because it will not permit us to offset potential losses from one venture against gains from another.
The Company anticipates that the selection of a business combination will be complex and extremely risky. Through information obtained from industry professionals including attorneys, investment bankers, and other consultants with significant experience in the reverse merger industry, and publications, such as the Reverse Merger Report, our management believes that there are numerous firms seeking even the perceived benefits of becoming a publicly traded corporation. Such perceived benefits of becoming a publicly traded corporation include, among other things, facilitating or improving the terms on which additional equity financing may be obtained, providing liquidity for the principals of and investors in a business, creating a means for providing incentive stock options or similar benefits to key employees, and offering greater flexibility in structuring acquisitions, joint ventures and the like through the issuance of stock. Potentially available business combinations may occur in many different industries and at various stages of development, all of which will make the task of comparative investigation and analysis of such business opportunities extremely difficult and complex.
10
Liquidity and Capital Resources
As of August 31, 2013 and February 28, 2013, the Company had assets of $6,000 and $0, respectively. The Company’s liabilities as of August 31, 2013 totaled $80,584, comprised primarily of notes and interest payable to related parties and accrued expenses. This compares with liabilities of $46,146, comprised primarily of notes and interest payable to related parties, as of February 28, 2013. The Company can provide no assurance that it can continue to satisfy its cash requirements for at least the next twelve months.
The following is a summary of the Company's cash flows provided by (used in) operating, investing, and financing activities:
|
Six Months
Ended
August 31, 2013
|
Six Months
Ended
August 31, 2012
|
For the Cumulative
Period from
February 24,
2010 (Inception)
to
August 31, 2013
|
|||||||||
Net Cash Used in Operating Activities
|
$ | (29,099 | ) | $ | - | $ | (39,498 | ) | ||||
Net Cash Provided by Investing Activities
|
$ | - | $ | - | $ | - | ||||||
Net Cash Provided by (Used in) Financing Activities
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$ | 29,099 | $ | (1,230 | ) | $ | 39,498 | |||||
Net Decrease in Cash and Cash Equivalents
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$ | - | $ | (1,230 | ) | $ | - |
The Company has nominal assets and has generated no revenues since inception. The Company is also dependent upon the receipt of capital investment or other financing to fund its ongoing operations and to execute its business plan of seeking a combination with a private operating company. In addition, the Company is dependent upon certain related parties to provide continued funding and capital resources. If continued funding and capital resources are unavailable at reasonable terms, the Company may not be able to implement its plan of operations.
Results of Operations
The Company has not conducted any active operations since inception, except for its efforts to locate suitable acquisition candidates. No revenue has been generated by the Company from February 24, 2010 (Inception) though August 31, 2013. It is unlikely the Company will have any revenues unless it is able to effect an acquisition or merger with an operating company, of which there can be no assurance. It is management's assertion that these circumstances may hinder the Company's ability to continue as a going concern. The Company’s plan of operation for the next twelve months shall be to continue its efforts to locate suitable acquisition candidates.
For the three and six months ended August 31, 2013, the Company had a net loss of $7,792 and $28,438 consisting of professional service fees incurred in relation to the preparation and filing of the Company’s periodic reports and interest expense. This compares with a net loss of $770 and $1,789 for the three and six months ended August 31, 2012, respectively, consisting of professional service fees incurred in relation to the preparation and filing of the Company’s periodic reports and interest expense. The increase in net loss for the three and six months ended August 31, 2013 as compared to the three and six months ended August 31, 2012 is primarily due to the company not filing its periodic reports with the Securities and Exchange Commission in 2012. During the three and six months ended August 31, 2013, the Company incurred expenses filing the delinquent reports.
For the period from February 24, 2010 (Inception) to August 31, 2013, the Company had a net loss of $97,818 comprised of professional service fees incurred in relation to the formation of the Company, the filing of the Company’s Registration Statement on Form 10 in April of 2010, the preparation and filing of the Company’s periodic reports on Form 10-Q and Form 10-K, and interest expense.
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Off-Balance Sheet Arrangements
The Company does not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on the Company’s financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.
Contractual Obligations
As a “smaller reporting company” as defined by Item 10 of Regulation S-K, the Company is not required to provide this information.
Emerging Growth Company
As an “emerging growth company” under the Jumpstart Our Business Startups Act (the “JOBS Act”), the Company has elected to use the extended transition period for complying with new or revised accounting standards under Section 102(b)(1) of the JOBS Act. This election allows us to delay the adoption of new or revised accounting standards that have different effective dates for public and private companies until those standards apply to private companies. As a result of this election, our financial statements may not be comparable to companies that comply with public company effective dates.
As a “smaller reporting company” as defined by Item 10 of Regulation S-K, the Company is not required to provide information required by this Item.
Evaluation of Disclosure Controls and Procedures
Disclosure controls and procedures, within the meaning of Rule 13a-15 and Rule 15d-15 of the Exchange Act, are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed pursuant to the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules, regulations and related forms, and that such information is accumulated and communicated to our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.
As of August 31, 2013, we carried out an evaluation, under the supervision and with the participation of our principal executive officer and our principal financial officer of the effectiveness of the design and operation of our disclosure controls and procedures. Based on this evaluation, our principal executive officer and our principal financial officer concluded that our disclosure controls and procedures were effective as of the end of the period covered by this report.
Changes in Internal Controls
There have been no changes in our internal controls over financial reporting during the quarter ended August 31, 2013 that have materially affected or are reasonably likely to materially affect our internal controls.
There are presently no pending legal proceedings to which the Company, any of its subsidiaries, any executive officer, any owner of record or beneficially of more than five percent of any class of voting securities is a party or as to which any of its property is subject, and no such proceedings are known to the Company to be threatened or contemplated against it.
As a “smaller reporting company” as defined by Item 10 of Regulation S-K, the Company is not required to provide information required by this Item.
None.
12
None.
Not applicable.
On July 3, 2013, the Company issued a $2,673 promissory note to Pinnacle Investment Group, LLC, a shareholder of the Company (the “Note”). The Note represents certain amounts advanced by the shareholder to the Company for operating expenses through February 28, 2013. The principal amount under the Note will increase as the shareholder advances additional funds to the Company for operating expenses. The Note bears interest at 12% annually and is due at the earlier of (i) January 18, 2016 or (ii) the date that the Company, or any wholly-owned subsidiary of the Company, consummates a business combination with an operating company in a reverse merger or reverse takeover transaction, or enters into any transaction that would cause the Company to cease being a shell within the meaning of Rule 12b-2 of the Exchange Act. A copy of the Note was filed as an exhibit to the Form 10-Q filed with the SEC on July 15, 2013, and incorporated herein by reference.
(a) Exhibits required by Item 601 of Regulation S-K.
Exhibit
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Description
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*3.1
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Certificate of Incorporation, as filed with the Delaware Secretary of State on February 24, 2010.
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*3.2
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By-Laws.
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**10.1
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Promissory Note issued to Pinnacle Investment Group, LLC on July 3, 2013.
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31.1
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Certification of the Company’s Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, with respect to the registrant’s Quarterly Report on Form 10-Q for the quarter ended May 31, 2013.
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31.2
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Certification of the Company’s Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, with respect to the registrant’s Quarterly Report on Form 10-Q for the quarter ended May 31, 2013.
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32.1
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Certification of the Company’s Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
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32.2
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Certification of the Company’s Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
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EX-101.INS
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XBRL Instance Document
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EX-101.SCH
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XBRL Taxonomy Extension Schema
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EX-101.CAL
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XBRL Taxonomy Extension Calculation Linkbase
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EX-101.DEF
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XBRL Taxonomy Extension Definition Linkbase
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EX-101.LAB
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XBRL Taxonomy Extension Label Linkbase
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EX-101.PRE
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XBRL Taxonomy Extension Presentation Linkbase
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*
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Filed as an exhibit to the Company's Registration Statement on Form 10, as filed with the SEC on April 6, 2010, and incorporated herein by this reference.
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**
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Filed as an exhibit to the Company's Form 10-Q, as filed with the SEC on July 15, 2013, and incorporated herein by this reference.
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13
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
Dated: September 30, 2013
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DE ACQUISITION 2, INC.
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By:
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/s/ Terril Peterson
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Terril Peterson
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Principal Executive Officer
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Principal Financial Officer
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14