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EXCEL - IDEA: XBRL DOCUMENT - SWISSINSO HOLDING INC. | Financial_Report.xls |
EX-31.1 - CERTIFICATION PURSUANT TO SECTION 302 - SWISSINSO HOLDING INC. | f10q0314ex31i_swissinso.htm |
EX-31.2 - CERTIFICATION PURSUANT TO SECTION 302 - SWISSINSO HOLDING INC. | f10q0314ex31ii_swissinso.htm |
EX-32.2 - CERTIFICATION - SWISSINSO HOLDING INC. | f10q0314ex32ii_swissinso.htm |
EX-32.1 - CERTIFICATION - SWISSINSO HOLDING INC. | f10q0314ex32i_swissinso.htm |
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
☒ QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2014
☐ TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _____ to _____
Commission File Number: 333-151909
SWISSINSO HOLDING INC.
(Exact Name of Registrant as Specified in its Charter)
Delaware | 90-0620127 | |
(State or Other Jurisdiction of Incorporation or Organization) |
(I.R.S. Employer ID Number) |
PSE – Parc Scientifique de l’EPFL
Route J.D. Colladon
Building D – 3rd Floor
1015 Lausanne, Switzerland
(Address of Principal Executive Offices)
(011) 41 21 693 8640
(Registrant’s Telephone Number, Including Area Code)
(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 ☐ 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 (Section 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 ☐ 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. (Check one):
Large accelerated filer ☐ | Accelerated filer ☐ | |
Non-accelerated filer ☐ | Smaller reporting company ☒ |
(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 ☐ No ☒
As of August 13, 2014, there were outstanding 143,625,892 shares of Common Stock, par value $0.0001 per share.
TABLE OF CONTENTS
Page | ||
PART I FINANCIAL INFORMATION | ||
Item 1. | Financial Statements. | 3 |
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations. | 8 |
Item 3. | Quantitative and Qualitative Disclosures About Market Risk. | 9 |
Item 4. | Controls and Procedures. | 10 |
PART II OTHER INFORMATION | ||
Item 1. | Legal Proceedings. | 11 |
Item 1A. | Risk Factors. | 11 |
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds. | 11 |
Item 3. | Defaults Upon Senior Securities. | 11 |
Item 4. | Mine Safety Disclosures. | 11 |
Item 5. | Other Information. | 11 |
Item 6. | Exhibits. | 11 |
2 |
PART I
FINANCIAL INFORMATION
Item 1. Financial Statements.
SWISSINSO HOLDING INC. |
CONSOLIDATED BALANCE SHEETS |
(UNAUDITED) |
March 31, 2014 | December 31, 2013 | |||||||
ASSETS | ||||||||
CURRENT ASSETS | ||||||||
Cash | $ | 1,070 | $ | 6,173 | ||||
Prepaid assets | 3,300 | 16,819 | ||||||
| ||||||||
Total current assets | 4,370 | 22,992 | ||||||
TOTAL ASSETS | $ | 4,370 | $ | 22,992 | ||||
LIABILITIES AND STOCKHOLDERS' DEFICIT | ||||||||
CURRENT LIABILITIES | ||||||||
Bank Loan | 358,125 | 392,367 | ||||||
Accounts payable | 1,049,572 | 1,098,832 | ||||||
Accrued expenses | 179,508 | 172,991 | ||||||
Accrued payroll and benefits | 462,802 | 548,656 | ||||||
Deferred income | 169,616 | 168,501 | ||||||
Convertible loans from related parties | 1,170,099 | 719,697 | ||||||
Loans from third parties | 533,332 | 533,332 | ||||||
Total current liabilities | 3,923,054 | 3,634,376 | ||||||
TOTAL LIABILITIES | $ | 3,923,054 | $ | 3,634,376 | ||||
STOCKHOLDERS' DEFICIT | ||||||||
Stockholders' deficit : | ||||||||
10,000,000 preferred shares, $0.0001 par value | - | - | ||||||
Issued and outstanding shares : 0 | ||||||||
Authorized : | ||||||||
200,000,000 common shares, $0.0001 par value | ||||||||
Issued and outstanding shares : 143,525,892 and 143,525,892 | 14,354 | 14,354 | ||||||
Additional paid in capital | 12,431,924 | 12,431,924 | ||||||
Accumulated deficit | (16,288,374 | ) | (15,986,306 | ) | ||||
Accumulated other comprehensive income | (76,588 | ) | (71,356 | ) | ||||
Total stockholders' deficit | (3,918,684 | ) | (3,611,384 | ) | ||||
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT | $ | 4,370 | $ | 22,992 |
The accompanying notes are an integral part of these unaudited consolidated financial statements.
3 |
SWISSINSO HOLDING INC. |
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS |
(UNAUDITED) |
Three Months Ended | ||||||||
March 31, | ||||||||
2014 | 2013 | |||||||
OPERATING EXPENSES | ||||||||
General and administrative | $ | 324,292 | $ | 407,971 | ||||
Total operating expense | 324,292 | 407,971 | ||||||
OTHER INCOME (EXPENSE) | ||||||||
Interest income | 1 | 1 | ||||||
Abandonment of debts | 27,526 | - | ||||||
Gain (loss) on derivative | - | 440,530 | ||||||
Participation fee | - | 146,942 | ||||||
Foreign currency gain | (73 | ) | - | |||||
Interest expense | (5,230 | ) | (92,372 | ) | ||||
Exchange loss | - | (401 | ) | |||||
Total other income (expense) | 22,224 | 494,700 | ||||||
NET INCOME (LOSS) | $ | (302,068 | ) | $ | 86,729 | |||
Foreign currency adjustment | (5,232 | ) | 77,158 | |||||
COMPREHENSIVE INCOME (LOSS) | (307,300 | ) | 163,887 | |||||
Basic and diluted net income (loss) per share | $ | (0.00 | ) | $ | 0.00 | |||
Weighted average shares outstanding – Basic and diluted | 143,525,892 | 122,857,121 |
The accompanying notes are an integral part of these unaudited consolidated financial statements.
4 |
SWISSINSO HOLDING INC. |
CONSOLIDATED STATEMENTS OF CASH FLOW |
(UNAUDITED) |
Three Months Ended | ||||||||
March 31 | ||||||||
2014 | 2013 | |||||||
NET INCOME (LOSS) | (302,068 | ) | 86,729 | |||||
OPERATING ACTIVITIES | ||||||||
Gain on forgiveness of accrued expense | (27,526 | ) | ||||||
Depreciation | - | 5,866 | ||||||
Shares issued for services | - | 60,000 | ||||||
Capital contributions of interest expense | - | 47,988 | ||||||
Gain on derivative | - | (440,530 | ) | |||||
Changes in Operating Assets and Liabilities: | ||||||||
(Increase) / decrease in prepaids and other receivables | 13,519 | 10,641 | ||||||
Increase (decrease) in accounts payable and accrued expense | (99,956 | ) | (174,279 | ) | ||||
Net cash used in operating activities | (416,031 | ) | (403,585 | ) | ||||
FINANCING ACTIVITIES | ||||||||
Proceeds from third party loans | - | 166,000 | ||||||
Payment on line of credit | (34,242 | ) | - | |||||
Proceeds from related party loans | 450,402 | 347,989 | ||||||
Net cash provided by financing activities | 416,160 | 513,989 | ||||||
Effect of exchange rate on cash | (5,232 | ) | 77,158 | |||||
INCREASE (DECREASE) IN CASH | 129 | 187,562 | ||||||
CASH AT BEGINNING OF PERIOD | 6,173 | 128,271 | ||||||
CASH AT END OF PERIOD | $ | 1,070 | $ | 315,833 | ||||
CASH PAID FOR: | ||||||||
Interest | $ | - | $ | - | ||||
Income taxes | $ | - | $ | - |
The accompanying notes are an integral part of these unaudited consolidated financial statements.
5 |
SWISSINSO HOLDING INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
March 31, 2014
NOTE 1 - Basis of presentation
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 10-K. 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 10-K, have been omitted.
The company has limited operations and is considered to be in the development stage. In the quarter ended March 31, 2014, the Company has elected to early adopt Accounting Standards Update No. 2014-10, Development Stage Entities (Topic 915): Elimination of Certain Financial Reporting Requirements. The adoption of this ASU allows the company to remove the inception to date information and all references to development stage
NOTE 2 - Going Concern
The Company’s financial statements are prepared using generally accepted accounting principles in the United States of America applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company has not yet established an ongoing source of revenues sufficient to cover its operating costs and allow it to continue as a going concern. The ability of the Company to continue as a going concern is dependent on raising additional capital to fund its business plan and ultimately to attain profitable operations through the generation of revenues from the sale of products and technologies. Accordingly, these factors raise substantial doubt as to the Company's ability to continue as a going concern. The Company has funded its initial operations by way of entering into a private placement offering.
The accompanying financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.
NOTE 3 – Related Party Transactions
The Company borrowed $450,402 during the quarter ended March 31, 2014 from InsOglass Holding SA, a business organization controlled by the Company’s Chief Executive Officer (“InsOglass”). The Company is indebted to InsOglass for $678,403 of loans made by such entity to the Company through March 31, 2014 to meet the working capital needs of the Company and its subsidiary. The balance outstanding is unsecured, due on demand and non-interest bearing. Such loans are secured by certain assets of the Company’s subsidiary and are convertible, at the option of InsOglass, into shares of common stock of the Company at a conversion rate of $0.035 per share.
The Company is indebted to Salim Shaikh Ismail, the holder of 13,858,633 shares of our Common Stock, or 9.66%, for $491,696 of loans made by him to the Company to meet the working capital needs of the Company and its subsidiary. Such loans are unsecured, are due on demand and do not bear interest.
6 |
NOTE 4 - Commitments
Under an agreement for the acquisition of industrial technology, the Company through its subsidiary was committed at March 31, 2014 as follows:
- Payments for acquisition of technology over a 4 year period | $ | 56,780 |
NOTE 5 – Bank Loan
During the first quarter of 2014, the Company repaid $34,242 of the $392,367 it had borrowed from Banque Cantonale de Fribourg with the personal guarantee of the Company’s Chief Executive Officer. The total outstanding amount due on this facility as of March 31, 2014 was $358,125.
NOTE 6 – Forgiveness of Accrued Expenses
During the first quarter of 2014, the Company’s subsidiary settled obligations with certain of its creditors resulting in the forgiveness of $27,526 of accrued expenses.
NOTE 7 - Subsequent Events
During the second quarter of 2014, the Company’s subsidiary borrowed approximately $326,077 from InsOglass to meet the working capital needs of the Company and its subsidiary. The loans do not bear interest and are repayable on a to be agreed future date.
During the second quarter of 2014, the Company issued 100,000 shares of its Common Stock to an investor in consideration of $48,000 paid by such investor.
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
As used in this Form 10-Q, references to the “Company,” “we,” “our” or “us” refer to the Registrant and our subsidiary, SwissINSO SA, unless the context otherwise indicates.
Forward-Looking Statements
This Quarterly Report on Form 10-Q contains forward-looking information. Forward-looking information includes statements relating to future actions, future performance, costs and expenses, interest rates, outcome of contingencies, financial condition, results of operations, liquidity, business strategies, cost savings, objectives of management and other such matters of the Company. The Private Securities Litigation Reform Act of 1995 provides a “safe harbor” for forward-looking information to encourage companies to provide prospective information about themselves without fear of litigation so long as that information is identified as forward-looking and is accompanied by meaningful cautionary statements identifying important factors that could cause actual results to differ materially from those projected in the information. Forward-looking information may be included in this Quarterly Report on Form 10-Q or may be incorporated by reference from other documents filed with the Securities and Exchange Commission (the “SEC”) by us. You can find many of these statements by looking for words including, for example, “believes,” “expects,” “anticipates,” “estimates” or similar expressions in this Quarterly Report on Form 10-Q or in documents incorporated by reference in this Quarterly Report on Form 10-Q. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information or future events.
We have based the forward-looking statements relating to our operations on management's current expectations, estimates, and projections about us and the industry in which we operate. These statements are not guarantees of future performance and involve risks, uncertainties and assumptions that we cannot predict. In particular, we have based many of these forward-looking statements on assumptions about future events that may prove to be inaccurate. Accordingly, our actual results may differ materially from those contemplated by these forward-looking statements. Any differences could result from a variety of factors, including, but not limited to general economic and business conditions, competition, and other factors.
The following discussion highlights the principal factors that have affected our financial condition and results of operations as well as our liquidity and capital resources for the periods described. This discussion contains forward-looking statements, as discussed above. Please see the section entitled “Forward-Looking Statements” for a discussion of the assumptions associated with these forward-looking statements.
The following discussion and analysis of our financial condition and results of operations are based on the unaudited financial statements as of March 31, 2014 and 2013, all of which were prepared in accordance with U.S. generally accepted accounting principles (“GAAP”). You should read the discussion and analysis together with such financial statements and the related notes thereto.
Results of Operations – Three months ended March 31, 2014 compared to three months ended March 31, 2013
During the three month periods ended March 31, 2014 and March 31, 2013, the Company has generated no revenues. During the quarter ended March 31, 2014, we incurred $324,292 of general and administrative expenses as we continued the development of the business of SwissINSO. In addition, we incurred $5,230 in interest charges related to a bridge loan received in September 2009 and short-term loans received during 2011, 2012, 2013 and the first three months of 2014. In comparison, during the quarter ended March 31, 2013, we incurred $407,971 of general and administrative expenses as we continued the development of the business of SwissINSO and $92,372 in interest charges related to bridge loans received in September 2009, convertible notes and warrants sold in a private placement from December 2009 through December 2010 and short-term loans received during 2011, 2012 and the first quarter of 2013.
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Our net loss before foreign currency translation adjustments during the quarter ended March 31, 2014 was $302,068, as compared to net income before foreign currency translation adjustments during the quarter ended March 31, 2013 of $86,729, including a non-cash stock warrants gain of $440,530. In 2014, management determined that warrants granted in prior years should not have been accounted for as derivatives and that the liability at March 31, 2014 (as well as at December 31, 2013) should be $-0-. Had this accounting treatment been in place during the quarter ended March 31, 2013, our results for that quarter would have been a net loss before foreign currency translation adjustments of $353,801.
Liquidity and Capital Resources
As of March 31, 2014, we had a working capital deficit of $3,918,684 as compared with a working capital deficit at December 31, 2013 of $3,611,384. During the past twelve (12) months, we have incurred significant operating expenses, and we expect to incur additional, but less significant, operating expenses for overheads, research and development, sampling and certification, sales channel development, general and administrative expenses and debt payments during the next twelve (12) months.
During the three months ended March 31, 2014, we received short-term loans aggregating approximately $450,402 from our Chief Executive Officer to meet the working capital needs of SwissINSO. These loans were sufficient to enable the Company to meet the working capital needs of SwissINSO. We were also able to negotiate settlements or extended payment terms with our creditors, and a large part of these obligations were settled in the quarter ended March 31, 2014.
We do not have any other available credit, bank financing or other external sources of liquidity except those provided by our Chief Executive Officer and will need to obtain additional capital in order to continue SwissINSO’s business operations. In order to obtain such capital, we will need to sell additional securities and/or borrow additional funds from lenders. There can be no assurance that we will obtain additional funding which is sufficient until substantial revenue from sales has started. We will also need to commercialize our Kromatix™ business. If we are not successful in raising sufficient capital, either from sales of securities, additional borrowings, revenues generated by the Kromatix™ business or from the entry into a joint venture with a partner for all or parts of the SwissINSO business, this would have a material adverse effect on our business, results of operations, liquidity and financial condition.
Going Concern Consideration
The accompanying financial statements have been prepared assuming that we will continue as a going concern. As discussed in the notes to the financial statements, we have not yet established an ongoing source of revenues sufficient to cover our operating costs and allow us to continue as a going concern. Our ability to continue as a going concern and ultimately to attain profitable operations is dependent on (a) raising capital to meet our past due, current and future obligations to employees, suppliers, vendors, landlords, service providers and lenders and to fund SwissINSO’s business plan and (b) developing the Kromatix™ business. We incurred a net loss before foreign currency translation adjustments during the three months ended March 31, 2014 of $302,068. These factors continue to raise substantial doubt about our ability to continue as a going concern. As discussed above, management plans include attempting to obtain additional capital from sales of securities and private borrowings, from the commercialization of the Kromatix™ business and from entry into a joint venture with a partner for all or part of SwissINSO’s business. The accompanying financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Off-Balance Sheet Arrangements
We have no off-balance sheet arrangements.
Item 3. Quantitative and Qualitative Disclosures about Market Risk.
We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information under this item.
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Item 4. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
We maintain “disclosure controls and procedures” as such term is defined in Rule 13a-15(e) under the Exchange Act. In designing and evaluating our disclosure controls and procedures, our management recognized that disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of disclosure controls and procedures are met. Additionally, in designing disclosure controls and procedures, our management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible disclosure controls and procedures. The design of any disclosure controls and procedures is also based in part upon 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.
Our management, including our Chief Executive Officer and our Chief Financial Officer, have evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on such evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of the period covered by this Quarterly Report on Form 10-Q, our disclosure controls and procedures were not effective:
• to give reasonable assurance that the information required to be disclosed by us in reports that we file under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms, and
• to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer and our Chief Financial Officer, to allow timely decisions regarding required disclosure.
Changes in Internal Control over Financial Reporting
There has been no change in our internal control over financial reporting during the quarter ended March 31, 2014 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
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PART II
OTHER INFORMATION
Item 1. Legal Proceedings.
None
Item 1A. Risk Factors
We are a “smaller reporting company” as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information under this item.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
On April 18, 2014, the Company issued 100,000 shares of its Common Stock to an investor for a purchase price of $48,000, or $0.48 per share. Such securities were issued under Section 4(2) of the Securities Act of 1933, as amended, and Regulations D and S promulgated by the Securities and Exchange Commission thereunder.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Mine Safety Disclosures.
Not applicable.
Item 5. Other Information.
During the quarter ended March 31, 2014, the Company’s subsidiary borrowed approximately $450,402 from InsOglass Holding SA, a business organization controlled by the Company’s Chief Executive Officer, to meet the working capital needs of the Company’s subsidiary. The loans do not bear interest and are repayable on a to be agreed future date.
Item 6. Exhibits
Exhibit Number | Description | |
31.1 and 31.2 | Certifications of Principal Executive Officer and Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. Filed herewith. | |
32.1 and 32.2 | Certifications of Principal Executive Officer and Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. Filed herewith. |
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SIGNATURES
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.
SWISSINSO HOLDING INC | ||
Date: August 13, 2014 | By: | /s/ Rafic Hanbali |
Name: | Rafic Hanbali | |
Title: | Chief Executive Officer | |
(Principal Executive Officer) |
Date: August 13, 2014 | By: | /s/ Pierre Galster |
Name | Pierre Galster | |
Title: | Chief Financial Officer | |
(Principal Financial Officer and Principal Accounting Officer) |
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