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EX-32 - EXHIBIT 32 - QMC Systems, Inc.exhibit32.htm
EX-31 - EXHIBIT 31 - QMC Systems, Inc.exhibit31.htm

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 10-Q

 

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

FOR THE QUARTERLY PERIOD ENDED June 30, 2017

OR

 

[   ] 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: 333-206157

  

QMC Systems, Inc.

(Exact name of registrant as specified in its charter)

 

  Wyoming 46-3021464   
 

(State or other jurisdiction

of incorporation or organization)

(I.R.S. Employer Identification No.)  
       
 

3995 Hagers Grove Road

Salem, OR  

 

97317

(Zip Code)

 
   (Address of Principal Executive Offices)    

 

Indicate by check mark whether the registrant (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for such shorter period that the 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 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 [X] No

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer or a small reporting company. See definition of large accelerated filer, accelerated filer and small reporting company in Rule 12b-2 of the Securities Exchange Act of 1934.

 

Large accelerated filer     Accelerated filer     Non-accelerated filer  
(Do not check if a smaller reporting company)
Smaller reporting company     Emerging growth company      

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [  ]

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

 

 [X] Yes [ ] No

 

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

 

As of February 20, 2018 the issuer had 5,074,500 shares of its common stock issued and outstanding. As of February 20, 2018 there were no shares of preferred stock issued and outstanding.

 

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Table of Contents

 

INDEX

 

      Page 
PART I - FINANCIAL INFORMATION 
     
ITEM 1 FINANCIAL STATEMENTS - UNAUDITED   F1
  BALANCE SHEETS - UNAUDITED   F1
  STATEMENTS OF OPERATIONS - UNAUDITED    F2
  STATEMENTS OF CASH FLOWS - UNAUDITED   F3
  NOTES TO UNAUDITED FINANCIAL STATEMENTS    F4
ITEM 2 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS   3
ITEM 3 QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK   3
ITEM 4 CONTROLS AND PROCEDURES   4
 
PART II-OTHER INFORMATION
 
ITEM 1 LEGAL PROCEEDINGS   5
ITEM 1A RISK FACTORS    
ITEM 2 UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS   5
ITEM 3 DEFAULTS UPON SENIOR SECURITIES   5
ITEM 4 MINE SAFETY DISCLOSURES   5
ITEM 5 OTHER INFORMATION   5
ITEM 6 EXHIBITS   5
   
SIGNATURES   6

 

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Table of Contents

 

PART I - FINANCIAL INFORMATION

  

ITEM 1 FINANCIAL STATEMENTS

 

QMC SYSYEMS, INC.

BALANCE SHEETS

(UNAUDITED) 

 

  As of June 30, 2017 As of December 31, 2016
ASSETS    
  $ $
Current assets    
Cash and cash equivalents                         1,229                                         493
Other current assets                          78,984                                    75,631
Total current assets                        80,213                                  76,124
Total assets                        80,213                                  76,124
     
LIABILITIES AND STOCKHOLDERS’ EQUITY    
     
Current liabilities    
Accrued expenses                          27,657                                      3,100
Due to related party                          79,999                                    75,245
Total current liabilities                      107,656                                  78,345
Total liabilities                      107,656                                  78,345
     
Stockholders’ equity    
   
Common stock, par value $0.0001, 50,000,000 authorized, 5,074,500 issued & outstanding as of  June 30, 2017 and as of December 31, 2016 respectively 507                                         507
 
Additional paid in capital                          74,493                                    74,493
Retained earnings / (deficit)                      (102,443)                                  (77,221)
Total stockholders’ equity                       (27,443)                                   (2,221)
Total liabilities and stockholders’ equity                        80,213                                  76,124

 

The accompanying notes are an integral part of these unaudited financial statements.

 

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Table of Contents

QMC SYSTEMS, INC.

STATEMENT OF OPERATIONS

(UNAUDITED) 

 

  Three Months ended June 30, 2017 Three Months ended June 30, 2016 Six Months ended June 30, 2017 Six Months ended June 30, 2016
  $ $ $ $
         
Revenue - - - -
         
Operating expenses 21,736 14,441 28,575 28,867
Total operating expenses                 21,736                 14,441                 28,575                 28,867
         
Other income        
Accrued interest on loan                     1,677  -                     3,353  -
Total other income                    1,677  -                    3,353  -
         
Net profit / (Net loss)                (20,059)                (14,441)                (25,222)                (28,867)
         
Net income / loss per common share - basic and diluted:               (0.0040)               (0.0029)               (0.0050)               (0.0057)
         
Net income / loss per share attributable to common stockholders               (0.0040)               (0.0029)               (0.0050)               (0.0057)
         
Weighted-average number of common shares outstanding            5,074,500            5,047,132            5,074,500            5,023,566

 

The accompanying notes are an integral part of these unaudited financial statements. 

 

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Table of Contents

 

QMC SYSTEMS, INC.

STATEMENT OF CASH FLOWS

(UNAUDITED) 

  

` Six Months ended June 30, 2017 Six Months ended June 30, 2016
  $ $
Cash flows from operating activities    
Net income                                                (25,222)                                                (28,867)
Changes in:    
Other current assets                                                  (3,353)  - 
Accrued expenses                                                  24,557                                                    4,767
Due to related party                                                    4,754                                                  24,086
Net cash provided / (used) in operating activities                                                      736                                                      (14)
     
Cash flow from investing activities  -  -
     
Cash flows from financing activities   -   -
Increase in additional paid in capital  -                                                  74,493
Increase in stockholder's equity  -                                                           7
Net cash provided / (used) in financing activities -                                 74,500
Net change in cash and cash equivalents                                                      736                                                74,486
Cash and cash equivalents at beginning of the period                                                       493                                                       405
Cash and cash equivalents at end of the period                                                  1,229                                                74,891

  

 The accompanying notes are an integral part of these unaudited financial statements.

 

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Table of Contents

QMC SYSTEMS, INC.

NOTES TO THE FINANCIAL STATEMENTS

AS OF June 30, 2017

(UNAUDITED) 

 

Note 1. Organization, History and Business

 

QMC Systems, Inc. (the “Company”) is a Wyoming corporation, incorporated under the laws of the State of Wyoming on April 17, 2015. The business plan of the Company is to offer a comprehensive network of educational and informational resources as well as vetted service providers for foreign investors interested in direct investments in U.S. companies or in the U.S. real estate market.

 

The accompanying unaudited financial statements of QMC Systems, Inc. have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission, or the SEC, including the instructions to Form 10-Q and Regulation S-X. In the opinion of the management of the Company, all adjustments, which are of a normal recurring nature, necessary for a fair statement of the results for the three month period, have been made. Results for the interim periods presented are not necessarily indicative of the results that might be expected for the entire fiscal year. When used in these notes, the terms “Company”, “we”, “us” or “our” mean the Company.

 

Note 2. Summary of Significant Accounting Policies

  

Revenue Recognition 

 

The Company will recognize revenue in accordance with Accounting Standards Codification No. 605, “Revenue Recognition” ("ASC-605"), ASC-605 requires that four basic criteria must be met before revenue can be recognized: (i) persuasive evidence of an arrangement exists; (ii) delivery has occurred; (iii) the selling price is fixed and determinable; and (iv) collectability is reasonably assured. Determination of criteria (iii) and (iv) are based on management's judgments regarding the fixed nature of the selling prices of the products delivered and the collectability of those amounts. Provisions for discounts and rebates to customers, estimated returns and allowances, and other adjustments are provided for in the same period the related sales are recorded. The Company will defer any revenue for which the product has not been delivered or is subject to refund until such time that the Company and the customer jointly determine that the product has been delivered or no refund will be required.

  

Accounts Receivable

Accounts receivable is reported at the customers’ outstanding balances, less any allowance for doubtful accounts. Interest is not accrued on overdue accounts receivable.

 

Allowance for Doubtful Accounts

An allowance for doubtful accounts on accounts receivable is charged to operations in amounts sufficient to maintain the allowance for uncollectible accounts at a level management believes is adequate to cover any probable losses.  Management determines the adequacy of the allowance based on historical write-off percentages and information collected from individual customers.  Accounts receivable are charged off against the allowance when collectability is determined to be permanently impaired.

 

Stock Based Compensation 

When applicable, the Company will account for stock-based payments to employees in accordance with
ASC 718, “Stock Compensation” (“ASC 718”).  Stock-based payments to employees include grants of stock, grants of stock options and issuance of warrants that are recognized in the statement of operations based on their fair values at the date of grant. 

The Company accounts for stock-based payments to non-employees in accordance with ASC 505-50, “Equity-Based Payments to Non-Employees.”  Stock-based payments to non-employees include grants of stock, grants of stock options and issuances of warrants that are recognized in the statement of operations based on the value of the vested portion of the award over the requisite service period as measured at its then-current fair value as of each financial reporting date. 

The Company calculates the fair value of option grants and warrant issuances utilizing the Binomial pricing model.  The amount of stock-based compensation recognized during a period is based on the value of the portion of the awards that are ultimately expected to vest.  ASC 718 requires forfeitures to be estimated at the time stock options are granted and warrants are issued to employees and non-employees, and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates.  The term “forfeitures” is distinct from “cancellations” or “expirations” and represents only the unvested portion of the surrendered stock option or warrant.  The Company estimates forfeiture rates for all unvested awards when calculating the expense for the period.  In estimating the forfeiture rate, the Company monitors both stock options and warrants.  

Warrant exercises as well as employee termination patterns.  The resulting stock-based compensation expense for both employee and non-employee awards is generally recognized on a straight-line basis over the period in which the Company expects to receive the benefit, which is generally the vesting period. 

During the period April 17, 2015 (inception) through June 30, 2017, the Company did not recognize any stock-based compensation. No options have been granted to date.  

 

Income / Loss per Share

 

The Company reports earnings (loss) per share in accordance with ASC Topic 260-10, "Earnings per Share. Basic earnings (loss) per share are computed by dividing income (loss) available to common shareholders by the weighted average number of common shares available. Diluted earnings (loss) per share is computed similar to basic earnings (loss) per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive. Diluted earnings (loss) per share have not been presented since there are no dilutive securities.

 

Cash and Cash Equivalents

 

For purpose of the statements of cash flows, the Company considers cash and cash equivalents to include all stable, highly liquid investments with maturities of three months or less.

 

Concentration of Credit Risk

 

The Company primarily transacts its business with one financial institution. The amount on deposit in that one institution may from time to time exceed the federally-insured limit.

  

Use of Estimates

 

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.  Actual results could differ from those estimates.

 

Business Segments

 

ASC 280, “Segment Reporting” requires use of the “management approach” model for segment reporting. The management approach model is based on the way a company’s management organizes segments within the company for making operating decisions and assessing performance. The Company determined it has one operating segment as of June 30, 2017.

 

Income Taxes

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

 

Recent Accounting Pronouncements

 

The Company continually assesses any new accounting pronouncements to determine their applicability to the Company. Where it is determined that a new accounting pronouncement affects the Company’s financial reporting, the Company undertakes a study to determine the consequence of the change to its financial statements and assures that there are proper controls in place to ascertain that the Company’s financials properly reflect the change. The Company currently does not have any recent accounting pronouncements that they are studying and feel may be applicable.

 

Note 3. Income Taxes

 

Deferred income tax assets and liabilities are computed annually for differences between financial statement and tax bases of assets and liabilities that will result in taxable or deductible amounts in the future based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. Income tax expense is the tax payable or refundable for the period plus or minus the change during the period in deferred tax assets and liabilities.

 

The effective tax rate on the net loss before income taxes differs from the U.S. statutory rate as follows:

             
             
          06/30/2017  
U.S statutory rate             34 %
Less valuation allowance             (34) %
Effective tax rate             0 %

 

The significant components of deferred tax assets and liabilities are as follows:

 

  Three Months Ended June 30, 2017 Three Months ended June 30, 2016 Six Months Ended June 30, 2017 Six Months ended June 30, 2016
Deferred tax assets    $  $  $                           $
         
Net operating losses (20,059) (14,441) (25,222) (28,867)
         
Deferred tax liability      
Net deferred tax assets 6,820 4,910 8,575 9,815
Less valuation allowance -6,820 -4,910 -8,575 -9,815
Deferred tax asset - net valuation allowance - - - -

 

On an interim basis, the Company has a net operating loss carryover of approximately ($102,443) available to offset future income for income tax reporting purposes, which will expire in various years through 2032, if not previously utilized. However, the Company’s ability to use the carryover net operating loss may be substantially limited or eliminated pursuant to Internal Revenue Code Section 382.

 

The Company adopted the provisions of ASC 740-10-50, formerly FIN 48, and “Accounting for Uncertainty in Income Taxes”. The Company had no material unrecognized income tax assets or liabilities as of June 30, 2017.

 

The Company’s policy regarding income tax interest and penalties is to expense those items as general and administrative expense but to identify them for tax purposes. During the period January 1, 2017 to June 30, 2017, there was no income tax, or related interest and penalty items in the income statement, or liabilities on the balance sheet. The Company files income tax returns in the U.S. federal jurisdiction and Nevada state jurisdiction. We are not currently involved in any income tax examinations.

 

Note 4. Related Party Transactions

 

Our Chief Executive Officer has extended a loan of $79,999 to the Company. The loan has no term and is payable upon demand. The loan bears no interest.

 

On May 29, 2015, the Company issued 5,000,000 of its authorized common stock to Renae Bell for $500.00.

 

Note 5. Stockholders’ Equity

 

Common Stock

 

The holders of the Company's common stock are entitled to one vote per share of common stock held.

 

As of June 30, 2017, the Company had 5,074,500 shares issued and outstanding.

 

Note 6. Commitments and Contingencies 

 

Commitments:

 

The Company currently has no long term commitments as of our balance sheet date.

 

Contingencies:

 

None as of our balance sheet date.

 

Note 7. Net Income (Loss) Per Share

The following table sets forth the information used to compute basic and diluted net income per share attributable to QMC Systems, Inc. for the period January 1, 2017 through June 30, 2017:

 

  Three Months Ended June 30, 2017 Three Months ended June 30, 2016 Six Months Ended June 30, 2017 Six Months ended June 30, 2016
  $ $ $ $
Net income (loss) (20,059) (14,441) (25,222) (28,867)
         
Weighted-average common shares outstanding  basic: 5,074,500 5,047,132 5,074,500 5,023,566
         
Weighted-average common stock      
Equivalents 5,074,500 5,047,132 5,074,500 5,023,566
  Stock options - - - -
  Warrants - - - -
  Convertible Notes - - - -
Weighted-average common shares Outstanding Diluted - - - -
Basic and Diluted Loss Per Share (0.0040) (0.0029) (0.0050) (0.0057)

 

Note 8. Other Current Assets

 

On November 1, 2016, the Company advanced a loan of $74,513 to Red Wolf Management for a term not exceeding 2 years at an interest rate of 9% annually. The loan is fully repayable by December 31, 2018 and is personally guaranteed by Timothy Remple, CEO of Red Wolf Management. 

 

Thus, as on June 30, 2017, an interest on loan has been accrued amounting to $4,471 on the above mentioned loan.

 

Note 9. Going Concern

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. Currently, the Company has no operating history and as of June 30, 2017 has incurred an operating profit / (loss) of ($25,222), working capital loss of ($27,443) and the Company had an accumulated deficit of ($102,442). These factors raise substantial doubt about the Company’s ability to continue as a going concern. Management believes that the Company’s capital requirements will depend on many factors including the success of the Company’s development efforts and its efforts to raise capital. Management also believes the Company needs to raise additional capital for working capital purposes. There is no assurance that such financing will be available in the future. The conditions described above raise substantial doubt about our ability to continue as a going concern. The financial statements of the Company do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts and classifications of liabilities that might be necessary should the Company be unable to continue as a going concern.

 

Note 10. Subsequent Events

  

On August 31, 2017, the Company filed a Certificate of Amendment with the Wyoming Secretary of State to amend article number 5 thereby increasing company’s authorized common stock from 50,000,000 to 5,000,000,000. This amendment was adopted on August 31, 2017.

 

Further, the Company held a Board of Directors meeting on August 31, 2017, where it was unanimously approved that the Company will conduct a forward stock split wherein every one share of issued and outstanding common stock will become one hundred shares of common stock. The forward stock split became effective on August 31, 2017.  

 

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Table of Contents

ITEM 2 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Forward-Looking Statements

 

Certain statements, other than purely historical information, including estimates, projections, statements relating to our business plans, objectives, and expected operating results, and the assumptions upon which those statements are based, are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These forward-looking statements generally are identified by the words “believes,” “project,” “expects,” “anticipates,” “estimates,” “intends,” “strategy,” “plan,” “may,” “will,” “would,” “will be,” “will continue,” “will likely result,” and similar expressions. We intend such forward-looking statements to be covered by the safe-harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995, and are including this statement for purposes of complying with those safe-harbor provisions. Forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties which may cause actual results to differ materially from the forward-looking statements. Our ability to predict results or the actual effect of future plans or strategies is inherently uncertain. Factors which could have a material adverse effect on our operations and future prospects on a consolidated basis include, but are not limited to: changes in economic conditions, legislative/regulatory changes, availability of capital, interest rates, competition, and generally accepted accounting principles. These risks and uncertainties should also be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements.

 

Company Overview

 

Corporate History

 

The Company was incorporated on April 17, 2015 under the laws of the state of Wyoming.

 

On May 29, 2015 the Company issued 5,000,000 of its authorized common stock to Renae Bell, our Chief Executive Officer, in exchange for $500.00.

 

On April 5, 2016, our Registration Statement on Form S-1 was deemed effective by the Securities and Exchange Commission. During April and May of 2016 an aggregate of 74,500 shares of common stock were sold to 34 purchasers at a purchase price of $1.00 per share for aggregate gross proceeds of $74,500. 

 

Business Information

 

QMC Systems, Inc. is an early stage company that plans to offer a comprehensive network of educational material and services targeted towards Asian investors with a median income who are looking to invest in the United States real estate market or in other U.S-based businesses, but may lack the knowledge and/or resources to do so themselves. The Company intends to provide future clients with financial planning education, training, and a vetted network of resources and service providers who can guide customers through the investment process. We plan to offer our clients a comprehensive array of services that will educate them about the current climate of potential non-traditional investments (e.g. small business; real estate) and put them in touch with trusted parties that can help them with those investments, such as accountants and real estate brokers. By providing this largely untapped section of the market with comprehensive training and services, we plan to generate new clients through referrals from previous satisfied clients. We have yet to acquire any clients as of June 30, 2017. We believe our first clients will arise from personal and or business connections of our sole officer and director however, there is no guarantee this may occur.

 

We are currently in the developmental stages for the creation of a mobile application that will be designed to showcase our services. It is our intention to make a user friendly platform through which users can further educate themselves on potential investments in the United States. We are in the very early stages of development and will continue to explore the possibility of implementing additional features and uses for our pending application as development progresses.

 

Liquidity and Capital Resources 

 

Our cash and cash equivalents balance is $1,229 as of June 30, 2017. Our cash balance is not sufficient to fund our limited levels of operations for any period of time. Our accountants have issued, in their audit report, a going concern opinion reflecting a conclusion that our operations may not be able to continue because of a lack of financial resources.

 

Our Chief Executive Officer has extended the Company a loan in the amount of $79,999. The loan has no term and is payable upon demand. The loan bears no interest.

 

If we need additional cash and cannot raise it, we will either have to suspend operations until we do raise the cash we need, or cease operations entirely.

 

Net Profit/Loss

 

We have recorded a net loss of $20,059 and $14,441 for the three months ended June 30, 2017 and 2016, respectively.

 

Going Concern

 

The Company’s financial statements are prepared in accordance with generally accepted accounting principles applicable to a going concern that contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company demonstrates adverse conditions that raise substantial doubt about the Company's ability to continue as a going concern for one year following the issuance of these financial statements. These adverse conditions are negative financial trends, specifically operating loss, working capital deficiency, and other adverse key financial ratios. The Company has not established any source of revenue to cover its operating costs. Management plans to fund operating expenses with related party contributions to capital. There is no assurance that management's plan will be successful. The financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts and classification of liabilities that might be necessary in the event that the Company cannot continue as a going concern.

 

ITEM 3 QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

As a “smaller reporting company” as defined by Item 10 of Regulation S-K, the Company is not required to provide the information required by this Item.

 

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Table of Contents 

ITEM 4 CONTROLS AND PROCEDURES

Management’s Report on Disclosure Controls and Procedures

 

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports filed under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms, and that such information is accumulated and communicated to our management, (our sole executive officer) to allow for timely decisions regarding required disclosure.

 

As of June 30, 2017, the end of the fiscal period covered by this report, we carried out an evaluation, under the supervision of our chief executive officer, with the participation of our chief financial officer, of the effectiveness of the design and the operation of our disclosure controls and procedures. The officers concluded that the disclosure controls and procedures were not effective as of the end of the period covered by this report due to material weaknesses identified below. 

 

The matters involving internal controls and procedures that our management considered to be material weaknesses under the standards of the Public Company Accounting Oversight Board were: domination of management by a limited individuals without adequate compensating controls, lack of a majority of outside directors on board of directors, resulting in ineffective oversight in the establishment and monitoring of required internal controls and procedures; inadequate segregation of duties consistent with control objectives, lack of well-established procedures to identify, approve and report related party transactions, and lack of an audit committee. These material weaknesses were identified by our Chief Executive Officer who also serves as our Chief Financial Officer in connection with the above annual evaluation.

 

Inherent limitations on effectiveness of controls

 

Internal control over financial reporting has inherent limitations which include but is not limited to the use of independent professionals for advice and guidance, interpretation of existing and/or changing rules and principles, segregation of management duties, scale of organization, and personnel factors. Internal control over financial reporting is a process which involves human diligence and compliance and is subject to lapses in judgment and breakdowns resulting from human failures. Internal control over financial reporting also can be circumvented by collusion or improper management override. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements on a timely basis, however these inherent limitations are known features of the financial reporting process and it is possible to design into the process safeguards to reduce, though not eliminate, this risk. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

 

Changes in Internal Control over Financial Reporting

 

There have been no changes in our internal controls over financial reporting that have occurred for the three months ending June 30, 2017, that have materially or are reasonably likely to materially affect, our internal controls over financial reporting.

 

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Table of Contents

PART II-OTHER INFORMATION

 

ITEM 1 LEGAL PROCEEDINGS

There are no legal proceedings against the Company and the Company is unaware of such proceedings contemplated against it.

 

ITEM 1A RISK FACTORS

As a “smaller reporting company” as defined by Item 10 of Regulation S-K, the Company is not required to provide the information required by this Item.

 

ITEM 2 UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

 

ITEM 3 DEFAULTS UPON SENIOR SECURITIES

None

 

ITEM 4 MINE SAFETY DISCLOSURES

Not applicable.

 

ITEM 5 OTHER INFORMATION

None

 

ITEM 6 EXHIBITS

 

(a) Exhibits required by Item 601 of Regulation S-K.

 

Exhibit No.

 

Description

3.1   Certificate of Incorporation (1)
     
3.2   By-laws (1)
     
31   Certification of the Company’s Principal Executive and Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, with respect to the registrant’s report on Form 10-Q for the period ended June 30, 2017 (2)
   
32   Certification of the Company’s Principal Executive and Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (2)
     
101.INS   XBRL Instance Document (3)
     
101.SCH   XBRL Taxonomy Extension Schema (3)
     
101.CAL   XBRL Taxonomy Extension Calculation Linkbase (3)
     
101.DEF   XBRL Taxonomy Extension Definition Linkbase (3)
     
101.LAB   XBRL Taxonomy Extension Label Linkbase (3)
     
101.PRE   XBRL Taxonomy Extension Presentation Linkbase (3)

 

(1) Filed as an exhibit to the Company's S-1/A Registration Statement, as filed with the SEC on August 6, 2015, and incorporated herein by this reference.
(2) Filed herewith.
(3) In accordance with Regulation S-T, the XBRL-formatted interactive data files that comprise Exhibit 101 in this Quarterly Report on Form 10-Q shall be deemed “furnished” and not “filed”.

 

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Table of Contents

 

SIGNATURES

 

In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, there unto duly authorized.

 

QMC Systems, Inc.

(Registrant)

 

By: /s/ Renae Bell 

Name: Renae Bell

Chief Executive Officer, Chief Financial Officer, Director

Dated: February 20, 2018 

 

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