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EX-31.1 - EXHIBIT 31.1 - Skajaquoda Group inc. | exhibit31-1.htm |
EX-32.2 - EXHIBIT 32.2 - Skajaquoda Group inc. | exhibit32-2.htm |
EX-32.1 - EXHIBIT 32.1 - Skajaquoda Group inc. | exhibit32-1.htm |
EX-31.2 - EXHIBIT 31.2 - Skajaquoda Group inc. | exhibit31-2.htm |
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[x] Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the quarterly period ended June 30, 2014.
[ ] Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the transition period from to .
Commission file number: 333-17627
SKAJAQUODA GROUP, INC.
(Exact name of registrant as specified in its charter)
Delaware (State or other jurisdiction of incorporation or organization) |
45-2117356 (I.R.S. Employer Identification No.) |
1204 11th Avenue, Clarkfield, Minnesota, 56223
(Address of principal executive offices) (Zip Code)
(302) 504-4448
(Registrant’s telephone number, including area code)
1001 Society Drive, Claymont, Delaware 19703
(Former name, former address and former fiscal year, if changes since last report)
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 past 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 [ x ].
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes [x] No [ ]
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company as defined by 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 [ ] No [x]
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
The number of shares outstanding of the issuer’s common stock, $0.00001 par value (the only class of voting stock), at August 19, 2014, was 1,000,000.
1 |
TABLE OF CONTENTS PART 1- FINANCIAL INFORMATION | ||
Item1. | Financial Statements: | 3 |
Item 2. | Management's Discussion and Analysis of Financial Condition and Results of Operations | 4 |
Item 3. | Quantitative and Qualitative Disclosures about Market Risk | 10 |
Item 4. | Controls and Procedures | 10 |
|
PART II-OTHER INFORMATION
|
|
Item 1. | Legal Proceedings | 10 |
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 |
Signatures | 12 |
2 |
PART I – FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
As used herein, the terms “Company,” “we,” “our,” and “us” refer to Skajaquoda Group, inc., a Delaware corporation, and our subsidiaries and predecessors, unless otherwise indicated. In the opinion of management, the accompanying unaudited financial statements included in this Form 10-Q reflect all adjustments (consisting only of normal recurring accruals) necessary for a fair presentation of the results of operations for the periods presented. The results of operations for the periods presented are not necessarily indicative of the results to be expected for the full year.
Unaudited Consolidated Balance Sheets as of June 30, 2014 and December 31, 2013 | F-1 |
Unaudited Consolidated Statements of Operations for the three months ended June 30, 2014 and 2013 and for the period from April 29, 2011 (Inception) through June 30, 2014. | F-2 |
Unaudited Consolidated Statements of Cash Flows for the three months ended June 30, 2014 and 2013 and for the period from April 29, 2011 (Inception) through June 30, 2014. | F-3 |
Unaudited Consolidated Notes to Financial Statements | F-4 |
3 |
Skajaquoda Group, Inc. | ||||||||
(A Development Stage Entity) | ||||||||
Consolidated Balance Sheet (Unaudited) | ||||||||
June 30, 2014 and December 31, 2013 | ||||||||
June 30, 2014 | December 31, 2013 | |||||||
(Unaudited) | (Unaudited) | |||||||
Assets | ||||||||
Current assets | ||||||||
Cash and cash equivalents | $ | 884,459 | $ | 884,459 | ||||
Accounts receivable | 180,253 | 179,545 | ||||||
Inventory | 487 | 487 | ||||||
Total current assets | 1,065,199 | 1,064,491 | ||||||
Noncurrent assets | ||||||||
Equity Stakes in other companies | 100 | 100 | ||||||
Property, plant, and equipment, Net | 901 | 901 | ||||||
Goodwill | 50,000 | 50,000 | ||||||
Intangible Assets | 13,500,000 | 13,500,000 | ||||||
Interest accrued | 3,052 | 3,052 | ||||||
Loan receivable | 41,020 | 41,020 | ||||||
Total noncurrent assets | 13,595,073 | 13,595,073 | ||||||
Total assets | $ | 14,660,272 | $ | 14,659,564 | ||||
Liabilities and Stockholders’ Equity | ||||||||
Current liabilities | ||||||||
Current income taxes payable | $ | — | $ | — | ||||
Deferred tax liability | 4,855,897 | 4,855,897 | ||||||
Loan | 71,447 | 71,447 | ||||||
Accounts payable | 340,538 | 315,513 | ||||||
Total current liabilities | 5,267,882 | 5,242,857 | ||||||
Total liabilities | 5,267,882 | 5,242,857 | ||||||
Stockholders' Equity | ||||||||
Common stock, $0.00001 par value, | ||||||||
10,000,000 shares authorized, 1,000,000 | ||||||||
shares issued and outstanding at | ||||||||
June 30, 2014 and December 31, 2013 | 10 | 10 | ||||||
Additional paid-in capital | 20,129 | 20,129 | ||||||
Accumulated deficit during the development stage | 9,372,251 | 9,396,568 | ||||||
Total stockholders’ equity | 9,392,390 | 9,416,707 | ||||||
Total liabilities and stockholders’ equity | $ | 14,660,272 | $ | 14,659,564 | ||||
The accompanying notes are an integral part of these financial statements. |
F-1 |
Skajaquoda Group, Inc. | ||||||||||||
(A Development Stage Entity) | ||||||||||||
Consolidated Statement Of Operations (Unaudited) | ||||||||||||
For the three months ended June 30, 2014 and 2013 | ||||||||||||
For the periods from April 29, 2011 (Inception) to June 30, 2014 | ||||||||||||
Three Months Ended June 30, 2014 | Three Months Ended June 30, 2013 | Cumulative From April 29, 2011 (Inception) to June 30, 2014 | ||||||||||
(Unaudited) | (Unaudited) | (Unaudited) | ||||||||||
Revenue | ||||||||||||
Product sales | 0 | 0 | 16,606,234 | |||||||||
Services | — | 1,430,570 | 14 | |||||||||
Services - related party | $ | 0 | $ | $ | 131,932 | |||||||
Interest income | — | 513 | 3,121 | |||||||||
Commission income | — | — | 22 | |||||||||
Total revenue | 0 | 1,430,570 | 16,741,323 | |||||||||
Cost of goods sold | 0 | 0 | 2,316,939 | |||||||||
Gross profit | 0 | 1,430,570 | 14,424,384 | |||||||||
Expenses | ||||||||||||
General administrative | 0 | 11,110 | 196,237 | |||||||||
Total expenses | 0 | 11,110 | 196,237 | |||||||||
Total income before income taxes | 0 | 1,419,460 | 14,228,147 | |||||||||
Income tax expense | 0 | 0 | 0 | |||||||||
Deferred tax expense | — | 0 | 4,855,897 | |||||||||
Net income (loss) | $ | 0 | $ | 1,419,460 | $ | 9,372,250 | ||||||
Earnings per share | ||||||||||||
Basic | $ | (0.00) | $ | 1.42 | ||||||||
Diluted | $ | (0.00) | $ | 1.42 | ||||||||
Weighted average common shares | ||||||||||||
Basic | 1,000,000 | 1,000,000 | ||||||||||
Diluted | 1,000,000 | 1,000,000 | ||||||||||
The accompanying notes are an integral part of these financial statements. |
F-2 |
Skajaquoda Group, Inc. | ||||||||||||
(A Development Stage Entity) | ||||||||||||
Consolidated Statement Of Cash Flows (Unaudited) | ||||||||||||
For the three months ended June 30, 2014 and 2013 | ||||||||||||
For the periods from April 29, 2011 (Inception) to June 30, 2014 | ||||||||||||
Three Months Ended June 30, 2014 | Three Months Ended June 30, 2013 | Cumulative From April 29, 2011 (Inception) to June 30, 2014 | ||||||||||
Cash flow from operating activities | ||||||||||||
Net income (loss) | $ | $ | 1,419,458 | $ | 9,372,250 | |||||||
Adjustments to reconcile net income to net cash | ||||||||||||
provided by operating activities: | ||||||||||||
Depreciation | — | 410 | ||||||||||
Changes to Assets and Liabilities: | ||||||||||||
Increase (Decrease) in accounts receivable | 371,404 | (180,253 | ) | |||||||||
Increase (Decrease) in Accounts payable | (562,751) | 340,538 | ||||||||||
Increase (Decrease) in Inventory assets | — | 6,228 | (486 | ) | ||||||||
Increase (Decrease) in deferred tax liability | — | 4,855,897 | ||||||||||
Interest Accrued | — | (3,052 | ) | |||||||||
Increase (Decrease) in loan | — | 71,447 | ||||||||||
Net cash provided by operating activities | $ | — | $ | 1,234,339 | $ | 14,456,751 | ||||||
Net cash provided by investing activities | ||||||||||||
Purchase of property and equipment | 0 | — | (1,311 | ) | ||||||||
Purchase of Goodwill | — | (50,000) | (50,000 | ) | ||||||||
Acquired intangible assets | — | (1,000,000) | (13,500,000 | ) | ||||||||
Cash flow from investing activities | — | (1,028) | (100 | ) | ||||||||
Issuance of loan receivable | 0 | — | (41,020 | ) | ||||||||
Cash flow used in investing activities | $ | — | $ | (1,051,028) | $ | (13,592,431 | ) | |||||
Cash flow from financing activities | ||||||||||||
Issuance of common stock | 0 | 0 | 20,139 | |||||||||
Payment of deferred offering costs | 0 | 0 | 0 | |||||||||
Proceeds from demand loans from related party | 0 | 0 | 0 | |||||||||
Payment to demand loans from related party | 0 | (5,600) | 0 | |||||||||
Cash flow provided by financing activities | $ | 0 | $ | (5,600) | $ | 20,139 | ||||||
Net increase in cash and cash equivalents | — | 177,711 | 884,459 | |||||||||
Cash and cash equivalents at beginning of period | 884,459 | 448,707 | 0 | |||||||||
Cash and cash equivalents at end of period | $ | 884,459 | $ | 626,431 | $ | 884,459 | ||||||
Supplemental Cash Flow Information | ||||||||||||
Interest paid | $ | 0 | $ | 0 | $ | 0 | ||||||
Taxes paid | $ | 0 | $ | 0 | $ | 0 | ||||||
The accompanying notes are an integral part of these financial statements. |
Skajaquoda Group, Inc.
F-3 |
(A Development Stage Company)
Unaudited Consolidated Notes to Financial Statements as of June 30, 2014
1. Incorporation and Operations
Skajaquoda Group Inc. ("Skajaquoda" or the "Company") is domiciled in Delaware, and commenced operations on
April 29, 2011 (Inception). The Company plans to become a registered investment advisor. The company is a licensed metals retailer
in the state of Delaware and started offering the sale and storage of precious metals to its clients. We see this service as a
part of our planned investment management service and allows us to provide our clients with a broader range of investment opportunities.
Based on the Company's business plan, it is a development stage company since planned principle operations have not yet commenced.
Accordingly, the Company has prepared its financial statements in accordance with accounting principles generally accepted in the
United States of America ("GAAP") that apply to developing enterprises. As a development stage entity, the Company discloses
its retained earnings during the development stage and the cumulative statements of operations and cash flows from commencement
of development stage to the current balance sheet date. The development stage began on April 29, 2011, when the Company was organized.
During the quarter ended September 30, 2013, The Skajaquoda Group moved their headquarters from Claymont, Delaware to a much larger
building in Clarkfield, Minnesota. The new headquarters will house Skajaquoda and their research facility. The relocation to a
larger building will be a valuable asset for growth in the market and the overall expansion of the company.
The new 144.000 square-foot building allows Skajaquoda to open a new research facility. The expansion benefits the Skajaquoda Group because it allows for greater and more advanced research and development, which will enable the company to develop cutting edge technology for the future challenges and needs of our world’s growing population. Skajaquoda aims to evolve technological solutions that will minimize human pollution and global impact as well as restore balance to our ecosystem. The expansion of their headquarters will also enable Skajaquoda to provide services and products to more clients, consequently diversifying their client base to a greater extent. Skajaquoda is an investment firm quoted on the OTC (ticker symbol: SKAJ) that invests according to its socially responsible investment policy. Furthermore, moving the company to a larger headquarters will provide jobs, as the companies will need to recruit more employees to accommodate for this expansion. The relocation of Skajaquoda’s headquarters is an important factor for the company, which has up to this point only been an investment company. Skajaquoda proudly announces that they will soon launch a completely new research program that deals with renewable energy, which makes them a progressive company offering financial solutions, research, and development in renewable energy. Skajaquoda aims to begin operating its renewable research facility in their new headquarters before the end of the year. Skajaquoda plans to research and develop improvements for current renewable energy technology and take today’s technology to the next level.
F-4 |
2. Going Concern
The preparation of financial statements in accordance with GAAP contemplates that operations will be sustained for a reasonable
period. The Company is in the development stage and is dependent on outside sources of financing for continuation of its operations.
These conditions raise substantial doubt about the ability of the Company to continue as a going concern for a reasonable period.
The company plans to improve its financial condition thru a private placement. However, there is no assurance that the company
will be successful in accomplishing this objective. Management believes that this plan provides an opportunity for the Company
to continue as a going concern. We cannot give any assurances regarding the success of management's plans. Our financial statements
do not include adjustments relating to the recoverability of recorded assets or liabilities that might be necessary should we be
unable to continue as a going concern.
3. Significant Accounting Policies
Cash and Cash Equivalents - For purposes of the statements of cash flows, the Company considers all highly liquid investments
with original maturities of three months of less to be cash equivalents. Cash and cash equivalents are stated at cost which approximates
fair value.
Accounts Receivable - The Company grants credit to customers in the normal course of operations. Accounts receivables are
based on management's evaluation of outstanding receivables at year end. Allowance for doubtful accounts, if any, is provided based
on the review of outstanding receivables, historical experience and economic conditions. Uncollectible accounts are expensed in
the period such amounts are determined.
Property and Equipment - Property and equipment are recorded at cost, less accumulated depreciation. Depreciation and amortization
on capital leases and property and equipment are determined using the straight line method over the estimated useful lives (usually
ten years) of the assets or terms of the leases. Expenditures for maintenance and repairs are expensed when incurred and betterments
are capitalized. Gains and losses on the sale of property and equipment are reflected in operations.
Loan Receivable
- Loans receivable are financial assets with fixed or determinable payments that are not quoted in an active market are measured
at amortized cost using the effective interest method, less any impairment. Loans receivable are assessed for indicators of impairment
at the end of each reporting period, and are considered to be impaired when there is objective evidence that, as a result of one
or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows of the investment
have been affected.
Revenue - Revenue is recognized as earned from the performance of services in accordance with SEC Staff Bulletin No. 104,
"Revenue Recognition" ("SAB 104"). Under SAB 104, service revenues are recognized when persuasive evidence
of an arrangement exists, service has been performed, the sales price is fixed and determinable, and collectability is reasonably
assured.
Income Taxes - The Company follows
the asset and liability method of accounting for future income taxes. Under this method, future income tax assets and liabilities
are recorded based on temporary differences between the carrying amount of assets and liabilities and their corresponding tax basis.
In addition, the future benefits of income tax assets including unused tax losses, are recognized, subject to a valuation allowance
to the extent that it is more likely than not that such future benefits will ultimately be realized. Future income tax assets and
liabilities are measured using enacted tax rates and laws expected to apply when the tax liabilities or assets are to be either
settled or realized. As of June 30, 2014, the Company has deferred tax liabilities of $4,855,897. The Company's effective tax rate
approximates the Federal statutory rates.
Earnings Per Share - Basic earnings per share is computed by dividing net income by the weighted average number of shares
of common stock outstanding during the period. Diluted earnings per share is computed by dividing net income by the weighted average
number of shares of common stock, common stock equivalents and potentially dilutive securities outstanding during each period.
The Company has no potentially dilutive common shares at June 30, 2014.
F-5 |
Other Comprehensive Income - Other comprehensive loss represents the change in equity of an enterprise during a period from
transactions from non-owner sources. The company has no accounts or transactions that give rise to other comprehensive income.
Fair Value - The fair values of accounts receivable and taxes payable approximates their carrying values due to the short-term
nature of these instruments. The fair value of loan receivable approximates its carrying value due the proximity of its issuance
date to the date of the accompanying financial statements.
Use of Estimates - The preparation
of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those estimates. Management believes that the estimates are reasonable.
4. Loan Receivable
On June 23, 2011, the Company disbursed $20,730 under a $25,000 line of credit ("Note") to an unrelated party. The unpaid
principal of this line of credit shall bear simple interest at the rate of 5% per annum. Interest shall be calculated based on
the principal balance as may be adjusted from time to time to reflect additional advances made hereunder. The loan does not bear
interest in 2011. Interest on the unpaid balance of this Note shall accrue monthly beginning in January 1 2012 but shall not be
due and payable until June 22, 2016, when the principal balance of this Note becomes due and payable. No consideration was received
for this disbursement.
On June 30, 2012, the Company disbursed $20,290 under a loan ("Note") to an unrelated party. The unpaid principal of
this loan shall bear simple interest at the rate of 5% per annum. Interest shall be calculated based on the principal balance as
may be adjusted from time to time to reflect additional advances made hereunder. Interest on the unpaid balance of this Note shall
accrue monthly but shall not be due and payable until June 30, 2014, when the principal balance of this Note becomes due and payable.
No consideration was received for this disbursement.
Accrued interest on both the loan receivable as at June 30, 2014 and December 31, 2013 was $3,052 and $3,052 respectively.
5. Stockholders' Equity
Common Stock - The Company is authorized to issue ten million (10,000,000) shares of shares of Common Stock, par value $.00001
per share (the "Common Stock").
As of June 30, 2014, ten million (10,000,000) shares of Common Stock, par value $.00001 per share, are authorized, of which 1,000,000
shares are issued and outstanding.
All shares of the Company's Common Stock have equal rights and privileges with respect to voting, liquidation and dividend rights. Each share of Common Stock entitles the holder thereof to:
F-6 |
· | One non-cumulative vote for each share held of record on all matters submitted to a vote of the stockholders; |
· | To participate equally and to receive any and all such dividends as may be declared by the Board of Directors out of funds legally available therefore; and |
· | To participate pro rata in any distribution of assets available for distribution upon liquidation. |
Stockholders have no preemptive rights to acquire additional shares of Common Stock or any other securities. Common shares are
not subject to redemption and carry no subscription or conversion rights. All outstanding shares of Common Stock are fully paid
and non-assessable.
Preferred Stock - As of June 30, 2014, no shares of Preferred Stock are authorized and no shares are issued and outstanding.
6. Related Party Transactions
As of June 30, 2014 the outstanding amount of loan agreement between the Company and Einar Agustsson, the chief executive officer
of the company is $71,447. The loan does not bear interest and is due on demand.
7. Demand Loan Payable
Effective September 30, 2011, the Company entered into a loan agreement with a related party to borrow $110,000 to fund operations.
The loan does not bear interest and is due on demand.
8. Acquisition Of Skajaquoda Limited
During the three month period ended
June 30, 2013, the company acquired 100% of Skajaquoda Limited in Ireland for $50,000 which has been recorded as goodwill. The
company does not record impairment on goodwill for the three months ended June 30, 2014.
9. Income Taxes
The Company uses the asset and liability
method of accounting for deferred income taxes wherein deferred tax assets and liabilities are determined based on the expected
future tax consequences of temporary differences between the carrying amounts of assets and liabilities for financial and income
tax reporting purposes at rates expected to be in effect when the differences are realized.
During the three months ended June 30, 2013, deferred tax liability of $4,855,897 was recognized due to the acquisition of Skajaquoda
Limited. Deferred tax liability was recognized on the revenue of $14,282,050 at the effective income tax rate of 34%.
10. Energy Research
Skajaquoda Group inc. is trying to find a cost effective way to maintain superconductivity for use in generators, power distribution, energy storage and many other applications. Superconductors transport electricity without resistance so there is no power loss due to friction or distances. If successful it will greatly reduce carbon emissions and other pollutants and open up many scientific and technological possibilities that are hard to imagine today.
F-7 |
Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
This Management’s Discussion and Analysis of Financial Condition and Results of Operations and other parts of this current report contain forward-looking statements that involve risks and uncertainties. Forward-looking statements can also be identified by words such as “anticipates,” “expects,” “believes,” “plans,” “predicts,” and similar terms. Forward-looking statements are not guarantees of future performance and our actual results may differ significantly from the results discussed in the forward-looking statements. Factors that might cause such differences include but are not limited to those discussed in the subsection entitled Forward-Looking Statements and Factors That May Affect Future Results and Financial Condition below. The following discussion should be read in conjunction with our financial statements and notes thereto included in this current report. Our fiscal year end is December 31.
PLAN OF OPERATIONS:
Our plan of operations for the next twelve months is to proceed with the implementation of our business plan. We will strive to launch all aspects of our operations. We may require up to $200,000 in additional financing to expand our operations as outlined in the table below, subject to our cash on hand and actual revenues.
Goal | Expected Manner of occurance or Method of Achievement | Date When Steps Should Be Accomplished | Cost of Completion |
Complete IA Registration | Complete investment advisor registration process | 3 - 6 months | $30,000 |
Launch Marketing Phase | Implementation of markting plan | 3 - 6 months | $70,000 |
Create Corporate Identity and brand recognition | Build our image as a trusted service provider | 6 - 18 months | $50,000 |
Our total expenditures over the next twelve months are anticipated to be approximately $150,000. Our cash on hand as of June 30, 2014 is $884,459
Our monthly expenses consist of rent, legal fees, accounting and audit fees. We are currently in the beginning stages of the investment advisor registration process which has created minor costs.
All steps will be undertaken contemporaneously.
Limited operating history; need for additional capital
We cannot guarantee we will be successful in our business operations. Our business is subject to risks inherent in the establishment of a business enterprise, including limited capital resources and possible cost overruns due to price and cost increases in services and products.
We have no assurance that future financing will be available to us on acceptable terms. If financing is not available on satisfactory terms, we may be unable to continue, develop or expand our operations. Equity financing could result in dilution to shareholders.
Long-Term Liquidity Needs
We plan to meet our most significant liquidity needs beyond the next 12 months through future cash flow, the private or public issuance of debt or equity securities. We cannot provide any assurances that we will be able to access the capital markets on favorable terms, if at all.
4 |
Cash Requirements
Our cash on hand as of June 30, 2014 is $884,459. However, we will require additional financing in order to proceed with some or all of our goals as projected at more than twelve (12) months. We presently do not have any arrangements for additional financing, and no potential lines of credit or sources of financing are currently available for the purpose of proceeding with any of our goals projected at more than twelve (12) months.
Any additional growth of the Company may require additional cash infusions. We may face expenses or other circumstances such that we will have additional financing requirements. In such event, the amount of additional capital we may need to raise will depend on a number of factors. These factors primarily include the extent to which we can achieve revenue growth, the profitability of such revenues, operating expenses, research and development expenses, and capital expenditures. Given the number of programs that we have ongoing and not complete, it is not possible to predict the extent or cost of these additional financing requirements.
Notwithstanding the numerous factors that our cash requirements depend on, and the uncertainties associated with each of the major revenue opportunities that we have, we believe that our plan of operation can build long-term value if we are able to demonstrate clear progress toward our objectives.
Progress in the development of our business plan will likely lend credibility to our plan to maintain profitability. We anticipate that we will hire several members to our sales, marketing, research and development, regulatory and administrative staff during the course of 2013 in order to fully implement our plans for growth.
The failure to secure any necessary outside funding would have an adverse affect on our development and results therefrom and a corresponding negative impact on shareholder liquidity.
Future Financings
Our plan of operation calls for significant expenses in connection with the implementation of our business plan over the course of the next 24 months. For the next twelve months, management anticipates that the minimum cash requirements to fund our proposed goals and our continued operations will be at least $150,000. We plan to seek additional financing to meet our planned expenditures through a private placement of our common stock in the near future. These plans, if successful, will mitigate the factors which raise substantial doubt about the Company's ability to continue as a going concern. Obtaining additional financing would be subject to a number of factors, including development of our business plan and interest in our company. These factors may make the timing, amount, terms or conditions of additional financing unavailable to us.
RESULTS OF OPERATIONS
Results of Operations for the Three Months Ended June 30, 2014 and 2013
Revenues
We had revenues of $0 during the three months ended June 30, 2014, compared to $1,419,460 in revenues during the corresponding three month period ended June 30, 2013. The revenue came from product sales, consulting services and interest on loan assets.
Fluctuations in our revenues are primarily the result of the nature of the business model we operate. The Company can neither predict or assess, nor prevent fluctuations. We attempt to offer services at competitive prices. Because of the unpredictable nature of fluctuations, we do not attribute fluctuations to any particular item or event. Our business model is designed to respond to fluctuation with immediate change. We do not account for or analyze the fluctuations as we do not believe it to be a prudent use of resources, given our business model.
Cost of Goods Sold
We had cost of goods sold of $0 and $0 for the three months ended June 30, 2014 and 2013 respectively.
5 |
Expenses
We incurred operating expenses in the amount of $0 during the three months ended June 30, 2014, compared to $11,110 for the corresponding three months ended June 30, 2013. Expenses consisted primarily of general operating expenses including professional fees. Our operating expenses are mostly attributable to our accounting and legal expenses. Our Chief executive officer is currently not receiving salary so we did not have any significant costs associated with salary.
Net Profit (Loss)
We incurred a net income (loss) of $0 during the three months ended June 30, 2014, compared to $1,419,460 during the corresponding three months ended June 30, 2013. This translates to income (loss) per share of $ 0.000 and $1.42 for the three months ended June 30, 2014 and 2013, respectively.
Results of Operations for the period from April 29, 2011 (Inception) to March 31, 2014
Revenues
We had revenues of $16,741,323 for the period from April 29, 2011 (Inception) to June 30, 2014. The revenue came from product sales, consulting services and interest on loan assets.
Fluctuations in our revenues are primarily the result of the nature of the business model we operate. The Company can neither predict or assess, nor prevent fluctuations. We attempt to offer services at competitive prices. Because of the unpredictable nature of fluctuations, we do not attribute fluctuations to any particular item or event. Our business model is designed to respond to fluctuation with immediate change. We do not account for or analyze the fluctuations as we do not believe it to be a prudent use of resources, given our business model.
Cost of Goods Sold
We had cost of goods sold of $2,316,939 for the period from April 29, 2011 (Inception) to June 30, 2014.
Expenses
We incurred operating expenses in the amount of $196,237 for the period from April 29, 2011 (Inception) to June 30, 2014. Expenses consisted primarily of general operating expenses including professional fees. Our operating expenses are mostly attributable to our accounting and legal expenses. Our Chief executive officer is currently not receiving salary so we did not have any significant costs associated with salary.
Net Profit (Loss)
We incurred a net profit of $9,372,250 for the period from April 29, 2011 (Inception) to June 30, 2014
LIQUIDITY AND CAPITAL RESOURCES
Since its inception, the Company has financed its cash requirements from the sale of common stock. Uses of funds have included activities to establish our business, professional fees and other general and administrative expenses.
The Company’s principal sources of liquidity as of June 30, 2014 consisted of $884,459 in cash equivalents.
Off-Balance Sheet Arrangements
The Company has no material transactions, arrangements, obligations (including contingent obligations), or other relationships with unconsolidated entities or other persons that have or are reasonably likely to have a material current or future impact on its financial condition, changes in financial condition, results of operations, liquidity, capital expenditures, capital resources, or significant components of revenues or expenses.
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Market Risk
In the normal course of business, the Company is exposed
to foreign currency exchange rate and interest rate risks that could impact its results of operations. Substantial portion of the
company's net sales, cost of sales and operating expenses could be denominated in foreign currencies. This exposes the Company
to risks associated with changes in foreign currency exchange rates that can adversely impact revenues, net income and cash flow.
Critical Accounting Policies and Estimates
Management has identified the following policies and estimates
as critical to the Company's business operations and the understanding of the Company's results of operations. Note that the preparation
of this report requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities,
disclosure of contingent assets and liabilities at the date of the Company's financial statements, and the reported amounts of
revenue and expenses during the reporting period. Actual results could differ from those estimates, and the differences could be
material.
Revenue Recognition
SAB No. 104 requires that four basic criteria be met before revenue can be recognized: (1) persuasive evidence of an arrangement exists; (2) delivery has occurred or services have been rendered; (3) the fee is fixed or determinable; and (4) collectibility is reasonably assured. Should changes in conditions cause management to determine that these criteria are not met for certain future transactions, revenue recognized for a reporting period could be adversely affected.
Goodwill
The Company has recorded a goodwill of $50,000 due to acquisition of Skajaquoda Limited during the three month period ended June 30, 2013.
Accounting for Income Taxes
The Company accounts for income taxes under the asset and liability method. Under this method, deferred assets and liabilities are recognized based on anticipated future tax consequences attributable to differences between financial statement carrying amounts of assets and liabilities and their respective tax bases. The Company establishes a valuation allowance to the extent that it is more likely than not that deferred tax assets will not be recoverable against future taxable income.
Code of Ethics
We have adopted a Code of Ethics and Business Conduct for Officers, Directors and Employees that applies to all of our officers, directors and employees.
Investment Advisor Registration Process
In recent years the registration system for Investment advisers was overhauled. Previously, Investment advisers were required to register with the SEC, and with each state in which they did business. Today Investment advisers are regulated by either the SEC or the States, but not both. Of course, both groups of regulators maintain jurisdiction over the activities of these advisers, the change has been in the registration requirements.
Simplifying the structure, firms that have less than $25 million of assets under continuous and regular management generally must register with the state or states in which they have a place of business and in which they have clients, while firms that have more than $30 million under management must register with the SEC. Between $25 and $30 million the firm is allowed to register with the SEC or applicable states. (There are other exceptions to state registration, such as for firms doing business in 30 or more states and firms doing an Internet based business.) Firms that are registered with the SEC usually have to provide a copy of their Form ADV and pay a filing fee to states in which they have clients.
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Filings
The main document in the registration of an investment adviser is Form ADV. All advisers now register with the SEC and the States
electronically through IARD, a secure Internet based data system. Setting Up an IARD Account is the first step in the registration
process. Once an adviser establishes an IARD account, the adviser can access Form ADV (Part 1) on IARD, complete this part of Form
ADV, and submit it electronically through IARD to the SEC. Part II of Form ADV is completed in paper form as discussed below.
The SEC generally has 45 days after receipt of the Form ADV to declare an applicant's registration effective. The SEC will mail
an Effective Order to an adviser once an adviser's registration is declared effective. An adviser can also check on IARD under
the heading "Registration Status" to see if its registration has been declared effective by the SEC. The process for
State registered advisers varies from state to state, but is similar to the SEC process.
Form ADV has two parts.
Part 1 asks for information about an adviser's business, the persons who own or control the adviser, and whether the
adviser or certain of its personnel have been sanctioned for violating the securities laws or other laws. Part 1 is available in
electronic format and is both filed and amended through IARD. See the General Instructions to Form ADV (No. 4) for information
on updating Form ADV.
Part II is a written disclosure statement (or a written brochure) that provides information about business practices, fees, and conflicts of interest the adviser may have with its clients. Part II must be completed in paper format. IARD is not prepared to accept an electronic filing of Part II at this time. You can print a blank copy of Part II from the SEC website.
Part II is a disclosure statement that an adviser must use to provide information to clients and potential clients. Read rule 204-3 under the Investment Advisers Act of 1940 regarding your legal obligations 1) to deliver a copy of Part II (or a brochure containing comparable information) to prospective clients and 2) to offer annually a copy of Part II (or a brochure containing comparable information) to all current customers. You must keep your Part II current, maintain a copy in your files, and make it available to SEC staff upon request. Do not send your Part II to the SEC. Check with state securities authorities to determine what their filing requirements are for Part II.
Ongoing Requirements
While the requirements for registration and maintaining the registration vary from state to state, there are some general principles
which apply in all states. Each state requires that IAs who do business in their state:
State advisers to register or become licensed.
Federal covered advisers to make a notice filing of their Form ADV.
A passing score on a competency examination for each individual acting as an investment
adviser or investment adviser representative.
Payment of a fee for processing the applications.
Certain disclosures to the securities agency and/or the public.
Registration of branch offices of the adviser.
A bond or minimum net capital.
A notice filing for a federal covered adviser is usually made by:
Filing a complete copy of its Form ADV as filed with the US SEC.
Filing a Form U-4 application for each investment adviser representative who will provide
services on behalf of the investment adviser.
Payment of any required notice filing fees.
The State and the SEC require electronic filing via the Investment Adviser Registration Depository (IARD). Firms must register
with the IARD prior to making a filing. Complete information regarding the IARD system is available at http://www.iard.com/GetStarted.asp
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Annual Renewals
Investment advisers and investment adviser representatives must renew their registration/license annually. In many states, the
term is from January 1 to December 31 of a given year. However, some states have different renewal dates. If an adviser becomes
registered/licensed in the middle of a year, the fee is usually not prorated. Today, the renewal process for investment advisers
is handled by IARD.
Market Price of and Dividends on the Registrant's Common Equity and Related Stockholder Matters
(a) The Company application to FINRA for the Company's shares to be quoted on the OTCBB was approved and the shares are trading with the ticker symbol SKAJ
Company's common stock is traded in the OTCBB and the shares are subject to the provisions of Section 15(g) and Rule 15g-9 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), commonly referred to as the "penny stock" rule. Section 15(g) sets forth certain requirements for transactions in penny stocks and Rule 15g9(d)(1) incorporates the definition of penny stock as that used in Rule 3a51-1 of the Exchange Act.
The Commission generally defines penny stock to be any equity security that has a market price less than $5.00 per share, subject to certain exceptions. Rule 3a51-1 provides that any equity security is considered to be a penny stock unless that security is: registered and traded on a national securities exchange meeting specified criteria set by the Commission; authorized for quotation on The NASDAQ Stock Market; issued by a registered investment company; excluded from the definition on the basis of price (at least $5.00 per share) or the issuer's net tangible assets; or exempted from the definition by the SEC. If the Company's shares are deemed to be a penny stock, trading in the shares will be subject to additional sales practice requirements on broker-dealers who sell penny stocks to persons other than established customers and accredited investors, generally persons with assets in excess of $1,000,000 or annual income exceeding $200,000, or $300,000 together with their spouse.
For transactions covered by these rules, broker-dealers must make a special suitability determination for the purchase of such securities and must have received the purchaser's written consent to the transaction prior to the purchase. Additionally, for any transaction involving a penny stock, unless exempt, the rules require the delivery, prior to the first transaction, of a risk disclosure document relating to the penny stock market. A broker-dealer also must disclose the commissions payable to both the broker-dealer and the registered representative, and current quotations for the securities. Finally, the monthly statements must be sent disclosing recent price information for the penny stocks held in the account and information on the limited market in penny stocks. Consequently, these rules may restrict the ability of broker dealers to trade and/or maintain a market in the Company's common stock and may affect the ability of shareholders to sell their shares.
(b) Holders. At June 30, 2014, there were 41 record holders
of 1,000,000 shares of the Company's Common Stock.
(c) Dividends. The Registrant has not paid any cash dividends to date and does not anticipate or contemplate paying dividends in
the foreseeable future. It is the present intention of management to utilize all available funds for the development of the Registrant's
business.
Equity Compensation Plans
We have no equity compensation program including no stock
option plan and none are planned for the foreseeable future.
Dividends
There are no restrictions in our articles of incorporation or bylaws that prevent us from declaring dividends.
We have not declared any dividends, and we do not plan to declare any dividends in the foreseeable future.
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Going Concern
Our auditors included an explanatory statement in their report on the Company’s financial statements for the year ended December 31, 2013, expressing an opinion as to our ability to continue as a going concern as a result of a working capital deficit. Our ability to continue as a going concern is subject to the ability of the Company to obtaining additional funding from outside sources. Management’s plan to address the Company’s ability to continue as a going concern includes (i) increasing our gross profit; (ii) financing from private placement sources; and (iii) converting outstanding debt to equity. Although the Company believes that it will be able to remain a going concern, through the methods discussed above, there can be no assurances that such methods will prove successful.
Stock-Based Compensation
We have adopted Accounting Standards Codification Topic (“ASC”) 718, Share-Based Payment, which addresses the accounting for stock-based payment transactions in which an enterprise receives employee services in exchange for (a) equity instruments of the enterprise or (b) liabilities that are based on the fair value of the enterprise’s equity instruments or that may be settled by the issuance of such equity instruments.
We account for equity instruments issued in exchange for the receipt of goods or services from other than employees in accordance with ASC 505. Costs are measured at the estimated fair market value of the consideration received or the estimated fair value of the equity instruments issued, whichever is more reliably measurable. The value of equity instruments issued for consideration other than employee services is determined on the earliest of a performance commitment or completion of performance by the provider of goods or services.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not required.
ITEM 4. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
In connection with the preparation of this report on Form 10-Q, an evaluation was carried out by the Company’s management, with the participation of the chief executive officer and the chief financial officer, of the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (“Exchange Act”)). Disclosure controls and procedures are designed to ensure that information required to be disclosed in reports filed or submitted under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the Commission’s rules and forms and that such information is accumulated and communicated to management, including the chief executive officer and the chief financial officer, to allow timely decisions regarding required disclosures.
Based on that evaluation, the Company’s management concluded, as of the end of the period covered by this report, that the Company’s disclosure controls and procedures were ineffective in recording, processing, summarizing, and reporting information required to be disclosed, within the time periods specified in the Commission’s rules and forms, and that such information was not accumulated and communicated to management, including the chief executive officer and the chief financial officer, to allow timely decisions regarding required disclosures.
Changes in Internal Control over Financial Reporting
There have been no changes in internal control over financial reporting (as defined in Rule 13a-15(f) of the Exchange Act) during the period ended June 30, 2014, that materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
PART II – OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None
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ITEM 1A. RISK FACTORS
The information to be reported under this item has not changed since the previously filed 10Q, for the quarter ended June 30, 2013.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
None.
ITEM 3. DEFAULTS ON SENIOR SECURITIES
None.
ITEM 4. Mine Safety Disclosures
None.
ITEM 5. OTHER
INFORMATION
None.
ITEM 6. EXHIBITS
Exhibit | Description | |
Number | ||
31.1 * | Certification of the Chief Executive Officer required by Rule 13a - 14(a) or Rule 15d - 14(a) | |
31.2 * | Certification of the Chief Financial Officer required by Rule 13a - 14(a) or Rule 15d - 14(a) | |
32.1 * | Certification of the Chief Executive Officer required by Rule 13a - 14(b) or Rule 15d - 14(b) and 18 U.S.C. 1350 | |
32.2 * | Certification of the Chief Financial Officer required by Rule 13a - 14(b) or Rule 15d - 14(b) and 18 U.S.C. 1350 | |
101* | The following materials from the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2013 formatted in Extensible Business Reporting Language (XBRL) |
* Provided 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.
Skajaquoda Group, inc. Date
/s/ Einar Agustsson August 19, 2014
By: Einar Agustsson
Its: Chief Executive Officer and Director
/s/ Einar Agustsson August 19, 2014
By: Einar Agustsson
Its: Chief Financial Officer and Principal Accounting Officer
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