Attached files
| file | filename |
|---|---|
| EX-32.2 - EXHIBIT 32.2 - NextGlass Technologies Corp. | v446606_ex32-2.htm |
| EX-32.1 - EXHIBIT 32.1 - NextGlass Technologies Corp. | v446606_ex32-1.htm |
| EX-31.2 - EXHIBIT 31.2 - NextGlass Technologies Corp. | v446606_ex31-2.htm |
| EX-31.1 - EXHIBIT 31.1 - NextGlass Technologies Corp. | v446606_ex31-1.htm |
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
| x | QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2016 |
| ¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM TO |
Commission file number: 000-55385
NEXTGLASS TECHNOLOGIES CORPORATION
(Exact name of registrant as specified in its charter)
BLACK GROTTO ACQUISITION CORPORATION
(Former name of registrant as specified in its charter)
| Delaware | 47-3150674 |
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
| 9454 Wilshire Boulevard, Suite 612 | |
| Beverly Hills, California | 90210 |
| (Address of principal executive offices) | (Zip code) |
Registrant's telephone number, including area code: (888)588-7974
Indicate by check mark whether the registrant (1) has filed all reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a small reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ¨ | Accelerated filer | ¨ | |
| Non-accelerated filer | ¨ | Smaller reporting company | x |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes x No ¨
As of August 8, 2016, the registrant had 10,000,000 shares of common stock outstanding.
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PART I - FINANCIAL INFORMATION
Item 1. Unaudited Condensed Financial Statements
See accompanying notes to unaudited financial statements.
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See accompanying notes to unaudited financial statements.
3
See accompanying notes to unaudited financial statements.
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NextGlass Technologies Corporation
Notes to Unaudited Condensed Financial Statements
NOTE 1 – ORGANIZATION AND BUSINESS DESCRIPTION
General
NextGlass Technologies Corporation (the “Company”) is an early-stage company planning to produce and distribute glass products (which the Company calls “smart glass” solutions). The Company was incorporated in the State of Delaware in January 2015, and was formerly known as Black Grotto Acquisition Corporation (“Black Grotto” or “Black Grotto Acquisition”).
In June 2015, the Company implemented a change of control by issuing shares to new shareholders, redeeming shares of existing shareholders, electing new officers and directors and accepting the resignations of its then existing officers and directors. In connection with the change of control, the shareholders of the Company and its board of directors unanimously approved the change of the Company’s name from Black Grotto Acquisition Corporation to NextGlass Technologies Corporation in May 2015.
The Company is located at 9454 Wilshire Boulevard, Suite 612, Beverly Hills, California 90210. The Company’s main phone number is (888)588-7974.
Our Business
The Company plans to produce and distribute glass products (which the Company calls “smart glass” solutions). The Company intends to make these products based on technology that is covered by patents that it licenses from another company.
The Company plans to make smart glass solutions for many types of applications, including car windows, car sunroofs and airplane windows.
The Company’s smart glass solutions are expected to include adhesive film inside the smart glass, bullet-proofing, non-scattering effects, noise reduction, ITO-coated film, PDLC-coated Film and functional glass. The Company’s smart glass solutions are intended to help users of the products control room temperature and change the color and the amount of light passing through the smart glass product.
In the future, the Company plans to raise additional funds in order to build its own factory and purchase machineries to manufacture the smart glass internally using the patented technologies licensed under the License Agreement.
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NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The financial statements have been prepared on a historical cost basis to reflect the financial position and results of operations of the Company in accordance with the accounting principles generally accepted in the United States of America (“US GAAP”).
Use of Estimates
The preparation of the financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, revenues and expenses, and the related disclosures of contingent assets and liabilities. Management makes its estimates based on historical experience and on various other assumptions it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Actual results could differ from those estimates.
Cash and Cash Equivalents
Cash and cash equivalents represent cash on hand, demand deposits, and other short-term highly liquid investments placed with banks, which have original maturities of three months or less and are readily convertible to known amounts of cash.
Income Taxes
The Company accounts for income taxes in accordance with ASC 740, Income Taxes (“ASC 740-10”) which requires the recognition of deferred tax liabilities and assets for the expected future tax consequences of events that have been included in the financial statement or tax returns. Under this method, deferred tax liabilities and assets are determined based on the difference between financial statements and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. This method also requires the recognition of future tax benefits such as net operating loss and tax credit carryforwards, to the extent that realization of such benefits is more likely than not. A valuation allowance is recorded when the realization of future tax benefits is uncertain.
Earnings (Loss) Per Share
Basic earnings per share are computed based on the weighted average number of shares of common stock outstanding during the period. Diluted earnings per share are computed based on the weighted average number of shares of common stock plus the effect of dilutive potential common shares outstanding during the period using the treasury stock method and if converted method.
Property and Equipment
Property and equipment are recorded at cost and depreciated or amortized using the straight-line method over the estimated useful life of the asset or the underlying lease term for leasehold improvements, whichever is shorter. The estimated useful life by asset description is noted in the following table:
| Asset Description | Estimated Useful Life (years) | |
| Computer | 5 |
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Additions are capitalized and maintenance and repairs are charged to expense as incurred. Gains and losses on dispositions of equipment are reflected in other income.
Effect of Recent Accounting Pronouncements
On June 12, 2015, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (ASU) No. 2015-10—Technical Corrections and Improvements. The amendments in this Update cover a wide range of Topics in the Codification. The amendments in this Update represent changes to make minor corrections or minor improvements to the Codification that are not expected to have a significant effect on current accounting practice or create a significant administrative cost to most entities. This Accounting Standards Update is the final version of Proposed Accounting Standards Update 2014-240—Technical Corrections and Improvements, which has been deleted. Transition guidance varies based on the amendments in this Update. The amendments in this Update that require transition guidance are effective for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. Early adoption is permitted, including adoption in an interim period. All other amendments will be effective upon the issuance of this Update. Management is in the process of assessing the impact of this ASU on the Company's financial statements.
NOTE 3 – GOING CONCERN
The Company has not yet generated any revenue since inception to date and has sustained net loss of $147,608 for the six months ended June 30, 2016. The Company had a positive working capital of $64,087 and an accumulated deficit of $155,101 as of June 30, 2016. The Company’s continuation as a going concern is dependent on its ability to generate sufficient cash flows from operations to meet its obligations and/or obtaining additional financing from its members or other sources, as may be required.
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern; however, the above condition raises substantial doubt about the Company’s ability to do so. The financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classifications of liabilities that may result should the Company be unable to continue as a going concern.
In order to maintain its current level of operations, the Company will require additional working capital from either cash flow from operations or from the sale of its equity. However, the Company currently has no commitments from any third parties for the purchase of its equity.
NOTE 4 – PROPERTY AND EQUIPMENT
Property and equipment consists of the following as of June 30, 2016:
| June 30, 2016 | December 31, 2015 | |||||||
| Computer | $ | 2,286 | $ | - | ||||
| Less: accumulated depreciation and amortization | (62 | ) | - | |||||
| Plant, property and equipment, net | $ | 2,224 | $ | - | ||||
Depreciation expense for the three months ended June 30, 2016 amounted to $62.
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NOTE 5 – NOTE RECEIVABLE
During the three months ended March 31, 2016, the Company advanced $90,000 to a third party, SWIS Co., Ltd., which the Company entered into a Share Exchange Agreement (the “Exchange Agreement”) on April 28, 2016 to acquire. The purpose of the funds loaned to SWIS Co., Ltd. is to finance their outstanding bills and operating expenses, which is in the Company’s interest due to the planned acquisition. The $90,000 advanced was in the form of a promissory note bearing interest at 4% per annum. The note and relative interest are due and receivable on March 3, 2018.
During the three months ended June 30, 2016, the Company advanced another $247,000 to the third party under the same promissory note. This principal amount also bears interest at 4% per annum, and is due and receivable on March 3, 2018 with the related interest.
NOTE 6 – LOAN PAYABLE TO RELATED PARTY
During the three months ended June 30, 2016, the Company received $494,000 of cash proceeds from its chief executive officer. This related party loan bears interest at 7% per annum over the term from the issuance date through maturity date on October 1, 2018. Interest on this related party loan will be due on maturity date. During the three months ended June 30, 2016, the Company paid back $94,000. Therefore, the balance of the loan payable to related party was $400,000 on June 30, 2016.
NOTE 7 – STOCKHOLDERS’ EQUITY
On January 22, 2015, the Company issued 20,000,000 founders common stock to two directors and officers of which 19,500,000 were redeemed at par on June 1, 2015. On June 2, 2015, the Company issued 4,500,000 shares of its common stock to nine investors to effect change in control. On June 30, 2015, a further 5,000,000 shares of common stock were issued at a purchase consideration of $500. As of June 30, 2016, 10,000,000 shares of common stock and no preferred stock were issued and outstanding.
NOTE 8 – DEPOSIT FOR STOCK TO BE ISSUED
The Company received $61,000 as funds designated for issuing of common stock in 2015. As of June 30, 2016, no agreement has been signed; thus, the price per share and the number of shares have not been decided yet.
NOTE 9 – CONVERTIBLE PROMISSORY NOTES
During the three months ended March 31, 2016, the Company received $150,000 of cash proceeds through the issuance of convertible promissory notes bearing interest at 5% per annum over the term from the issuance date through maturity date on March 7, 2019. Interest on the notes shall be payable quarterly in arrears on January 1, April 1, July 1, and October 1 of each year.
During the term of the notes, each lender has the right to convert the notes into common shares at $5.00 per share.
During the six months ended June 30, 2016, there was no conversion. As of June 30, 2016, the balance of the convertible promissory notes was $150,000.
NOTE 10 – SUBSEQUENT EVENT
On August 10, 2016, the Korean government approved the acquisition of a third party company, SWIS Co., Ltd., which was in connection with the Share Exchange Agreement (the “Exchange Agreement”) entered into on April 28, 2016. SWIS Co., Ltd. was established on September 2, 2014. Its major business is to research and develop PDLC film and the technology associated with making smart glass. Technology will be owned by the Company through the acquisition. The transaction closed on August 10, 2016 for a total purchase price of 1,000,000 South Korean Won, which is equivalent to $900 US Dollars.
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The Company is an early-stage company (only recently emerging from its status as a development-stage company) and was incorporated in the State of Delaware in January 2015. The Company has not yet generated any revenue since inception to date.
The Company anticipates that it would need substantial working capital over the next 12 months to continue as a going concern and to expand its operations to develop, build, manufacture and market smart glass products and solutions.
Revenues and Losses
Since its inception, the Company has focused its efforts on conducting market research, construction planning and development, and has devoted little attention or resources to sales and marketing or generating near-term revenues and profits. The Company has limited revenues to date and has not realized any profits as of yet. In order to succeed, the Company needs to develop a viable strategy to build, develop and market its products once they are ready to be sold.
The Company has posted no revenues and net losses of $147,608 during the six months ended June 30, 2016.
Equipment Financing
The Company has no existing equipment financing arrangements.
Pricing
The Company anticipates offering products at market-competitive prices.
Potential Revenue
The Company does not expect any potential revenue for the foreseeable future.
Alternative Financial Planning
The Company has no alternative financial plans at the moment. If the Company is not able to successfully raise monies as needed through a private placement or other securities offering (including, but not limited to, a primary public offering of securities), the Company’s ability to survive as a going concern and implement any part of its business plan or strategy will be severely jeopardized.
Critical Accounting Policies
The financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires making estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. The estimates are based on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis of making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.
Early Stage of the Company and Capital Resources
Since its inception, the Company has devoted most of its efforts to business planning, research and development, recruiting management and staff and raising capital. Accordingly, the Company was considered to be in the development stage until it recently began formal operations. The Company has not generated significant revenues from its operations, and there is no assurance of future revenues.
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The Company’s proposed activities will necessitate significant uses of capital, including in the next 12 months and then beyond. There is no assurance that the Company’s activities will generate sufficient revenues to sustain its operations without additional capital, or if additional capital is needed, that such funds, if available, will be obtainable on terms satisfactory to the Company. Accordingly, given the Company’s limited cash and cash equivalents on hand, the Company will be unable to implement its business plans and proposed operations unless it obtains additional financing or otherwise is able to generate revenues and profits. The Company may raise additional capital through sales of debt or equity, obtain loan financing or develop and consummate other alternative financial plans.
Results of Operation
Revenue
We did not generate revenues since our inception. We have incurred losses since inception.
Operating Expenses
Three Months ended June 30, 2016 compared to Three Months ended June 30, 2015
Operating expenses increased to $72,796 for the three months ended June 30, 2016 from $0 for the three months ended June 30, 2015. The increase is primarily due to consulting fees for business development and professional fees related to SEC filing.
Six Months ended June 30, 2016 compared to the Period from Inception January 12, 2015 to June 30, 2015
Operating expenses increased to $144,543 for the six months ended June 30, 2016 from $712 for the period from inception January 12, 2015 to June 30, 2015. The increase is primarily due to consulting fees for business development and professional fees related to SEC filing.
Other Income
Three Months ended June 30, 2016 compared to Three Months ended June 30, 2015
Other income increased to $1,810 for the three months ended June 30, 2016 from $0 for the three months ended June 30, 2015. Other income consisted entirely of interest income. The increase is primarily due to the advances to a third party incurred in 2016.
Six Months ended June 30, 2016 compared to the Period from Inception January 12, 2015 to June 30, 2015
Other income increased to $1,963 for the six months ended June 30, 2016 from $0 for the period from inception January 12, 2015 to June 30, 2015. Other income consisted entirely of interest income. The increase is primarily due to the advances to a third party that occurred in 2016.
Other Expense
Three Months ended June 30, 2016 compared to Three Months ended June 30, 2015
Other expense increased to $4,549 for the three months ended June 30, 2016 from $0 for the three months ended June 30, 2015. Other expense consisted entirely of interest expense. The increase is primarily due to the convertible notes issued in March 2016 and the advances from officer.
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Six Months ended June 30, 2016 compared to the Period from Inception January 12, 2015 to June 30, 2015
Other expense increased to $5,028 for the six months ended June 30, 2016 from $0 for the period from inception January 12, 2015 to June 30, 2015. Other expense consisted entirely of interest expense. The increase is primarily due to the convertible notes issued in March 2016 and the advances from officer.
Net Loss
Three Months ended June 30, 2016 compared to Three Months ended June 30, 2015
We incurred a net loss of $75,535 for the three months ended June 30, 2016, compared to a net loss of $0 for the three months ended June 30, 2015.
Six Months ended June 30, 2016 compared to the Period from Inception January 12, 2015 to June 30, 2015
We incurred a net loss of $147,608 for the six months ended June 30, 2016, compared to a net loss of $712 for the period from inception January 12, 2015 to June 30, 2015.
Liquidity and Capital Resources
The Company has an accumulated deficit of ($155,101) for the six months ended June 30, 2016. These matters raise substantial doubt about the Company’s ability to continue as a going concern. The Company’s continuation as a going concern is dependent on its ability to generate sufficient cash flows from operations to meet its obligations, which it has not been able to accomplish to date, and /or obtain additional financing from its stockholders and/or other third parties.
Operating activities used $141,844 in cash for the six months ended June 30, 2016, as compared with $0 used for the period from inception January 12, 2015 to June 30, 2015. Our negative operating cash flow for June 30, 2016 was mainly a result of our net loss for the period.
Investing activities used $339,286 in cash for the six months ended June 30, 2016, as compared with $0 used for the period from inception January 12, 2015 to June 30, 2015. Our negative investing cash flow for June 30, 2016 was mainly a result of advances to a third party. During the six months ended June 30, 2016, the Company advanced $337,000 to a third party in investing activities. We also spent $2,286 on purchase of computer for the Company.
Financing activities for the six months ended June 30, 2016 generated $550,000 in cash, as compared with cash flows provided by financing activities of $0 for the period from inception January 12, 2015 to June 30, 2015. Proceeds from financing activities consisted primarily of proceeds from convertible notes and the advances from officer.
The Company does not anticipate that it will generate revenue sufficient to cover its planned operating expenses in the foreseeable future, and the Company must obtain additional financing in order to develop and implement its business plan and proposed operations. If the Company is not successful in generating sufficient revenues and/or obtaining additional funding to develop its business plan and proposed operations, this could have a material adverse effect on its business, results of operations liquidity and financial condition.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Information is not required to be filed by smaller reporting companies.
Item 4. Controls and Procedures
Pursuant to Rules adopted by the Securities and Exchange Commission, the Company carried out an evaluation of the effectiveness of the design and operation of its disclosure controls and procedures pursuant to Exchange Act Rules. This evaluation was done as of the end of the period covered by this report under the supervision and with the participation of the Company’s principal executive officer (who is also the principal financial officer).
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Based upon that evaluation, he believes that the Company’s disclosure controls and procedures are not effective in gathering, analyzing and disclosing information needed to ensure that the information required to be disclosed by the Company in its periodic reports is recorded, processed, summarized and reported, within the time periods specified in the Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Act is accumulated and communicated to the issuer’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.
This Quarterly Report does not include an attestation report of the Company’s registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the Company’s registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit the Company to provide only management’s report in this Quarterly Report.
Changes in Internal Control
There was no change in the Company’s internal control over financial reporting that was identified in connection with such evaluation that occurred during the period covered by this report that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.
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There are currently no pending, threatened or actual legal proceedings of a material nature in which the Company is a party.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
On January 22, 2015, the Company issued 20,000,000 founders common stock to two directors and officers of which 19,500,000 were redeemed at par on June 1, 2015.
| Name | Number of Shares |
| James Cassidy | 10,000,000 |
| James McKillop | 10,000,000 |
On June 2, 2015, the Company issued 4,500,000 shares of its common stock to nine investors to effect change in control.
| Name | Number of Shares |
| Low Koon Poh | 700,000 |
| Willy Chan Foo Weng | 700,000 |
| Chew Wei Kiat | 100,000 |
| Shin Jong Dae | 390,000 |
| Kim Sung Su | 1,200,000 |
| Kim Chang Young | 300,000 |
| Son Young Ho | 300,000 |
| Kim Jeong Geon | 60,000 |
| Thor Seng Wah | 750,000 |
On June 30, 2015, a further 5,000,000 shares of common stock were issued at a purchase consideration of $500.
As of June 30, 2016, 10,000,000 shares of common stock and no preferred stock were issued and outstanding.
Item 3. Defaults upon Senior Securities
Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders
Not applicable.
(a) Not applicable.
(b) Item 407(c)(3) of Regulation S-K:
During the quarter covered by this Report, there have not been any material changes to the procedures by which security holders may recommend nominees to the Board of Directors.
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(a) Exhibits
| Exhibit No. | Description of Exhibits | |
| 31.1 | Certification Pursuant to Section 302 | |
| 31.2 | Certification Pursuant to Section 302 | |
| 32.1 | Certification Pursuant to Section 906 | |
| 32.2 | Certification Pursuant to Section 906 | |
| 101.INS | XBRL Instance Document | |
| 101.SCH | XBRL Taxonomy Extension Schema | |
| 101.CAL | XBRL Taxonomy Extension Calculation Linkbase | |
| 101.LAB | XBRL Taxonomy Extension Label Linkbase | |
| 101.PRE | XBRL Taxonomy Extension Presentation Linkbase | |
| 101.DEF | XBRL Taxonomy Extension Definition Linkbase |
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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.
NEXTGLASS TECHNOLOGIES INC.
By: /s/ Low Koon Poh
Chief Financial Officer
Dated: August 15, 2016
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