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EX-32.2 - CERTIFICATION - DUESENBERG TECHNOLOGIES INC.vgrbf_ex322.htm
EX-32.1 - CERTIFICATION - DUESENBERG TECHNOLOGIES INC.vgrbf_ex321.htm
EX-31.2 - CERTIFICATION - DUESENBERG TECHNOLOGIES INC.vgrbf_ex312.htm
EX-31.1 - CERTIFICATION - DUESENBERG TECHNOLOGIES INC.vgrbf_ex311.htm
EX-10.24 - LOAN AGREEMENT DATED AUGUST 9, 2018 - DUESENBERG TECHNOLOGIES INC.vgrbf_ex1024.htm
EX-10.23 - LOAN AGREEMENT DATED JULY 12, 2018 - DUESENBERG TECHNOLOGIES INC.vgrbf_ex1023.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: July 31, 2018


[  ]

TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


For the transition period from _______to_______


Commission File Number 000-54800


VGRAB COMMUNICATIONS INC.

(Exact name of registrant as specified in its charter)


British Columbia, Canada

(State or other jurisdiction

of incorporation or organization)

99-0364150

(I.R.S. Employer

Identification No.)


820-1130 West Pender Street, Vancouver, BC V6E 4A4

(Address of principal executive offices) (Zip Code)


(604) 648-0510

(Registrant’s telephone number, including area code)


Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  [X] Yes  [  ] No


Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§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).  [X] Yes  [  ] No


Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):


Large accelerated filer

[  ]

Accelerated filer

[  ]

Non-accelerated filer

[  ]

Smaller reporting company

[X]

(Do not check if a smaller reporting company)

Emerging growth company

[  ]


Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).  [  ] Yes  [X] 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 September 14, 2018, the number of shares of the registrant’s common stock outstanding was 35,513,838.





TABLE OF CONTENTS



PART I - FINANCIAL INFORMATION

F-1

ITEM 1. FINANCIAL STATEMENTS.

F-1

CONSOLIDATED BALANCE SHEETS

F-1

CONSOLIDATED STATEMENTS OF OPERATIONS

F-2

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT

F-3

CONSOLIDATED STATEMENT OF CASH FLOWS

 

NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS

F-5

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

1

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

7

ITEM 4. CONTROLS AND PROCEDURES.

7

PART II - OTHER INFORMATION

8

ITEM 1. LEGAL PROCEEDINGS.

8

ITEM 1A. RISK FACTORS.

8

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

8

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

8

ITEM 4. MINE SAFETY DISCLOSURES.

8

ITEM 5. OTHER INFORMATION.

8

ITEM 6. EXHIBITS.

8

SIGNATURES

11























ii




PART I - FINANCIAL INFORMATION


Item 1. Financial Statements.


VGRAB COMMUNICATIONS INC.

CONSOLIDATED BALANCE SHEETS

(EXPRESSED IN US DOLLARS)



 

July 31, 2018

 

October 31, 2017

 

(Unaudited)

 

 

 

 

 

 

ASSETS

 

 

 

 

 

 

 

Current assets

 

 

 

  Cash

$

1,406

 

$

15,887

  GST recoverable

 

1,138

 

 

798

  Prepaids

 

7,199

 

 

3,303

Total assets

$

9,743

 

$

19,988

 

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' DEFICIT

 

 

 

 

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

  Accounts payable

$

548,885

 

$

265,251

  Accrued liabilities

 

3,166

 

 

10,239

  Due to related parties

 

87,996

 

 

37,484

  Loan payable

 

100,000

 

 

100,000

Total liabilities

 

740,047

 

 

412,974

 

 

 

 

 

 

 

 

 

 

 

 

Stockholders' deficit

 

 

 

 

 

  Common stock, no par value, unlimited number authorized,

    35,013,838 issued and outstanding at

    July 31, 2018 and October 31, 2017

 

5,298,377

 

 

5,298,377

  Obligation to issue shares

 

60,000

 

 

-

  Additional paid in capital

 

123,093

 

 

123,093

  Accumulated other comprehensive income

 

51,538

 

 

51,283

  Deficit

 

(6,263,312)

 

 

(5,865,739)

Total stockholders' deficit

 

(730,304)

 

 

(392,986)

Total liabilities and stockholders' deficit

$

9,743

 

$

19,988








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



F-1




VGRAB COMMUNICATIONS INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(EXPRESSED IN US DOLLARS)

(UNAUDITED)



 

Three Months Ended July 31,

 

Nine Months Ended July 31,

 

2018

2017

 

2018

2017

 

 

 

 

 

 

Operating expenses

 

 

 

 

 

  Accounting

$

4,240

$

3,254

 

$

9,924

$

8,420

  General and administrative expenses

 

12,200

 

12,152

 

 

36,201

 

34,983

  Management fees

 

62,294

 

-

 

 

62,294

 

-

  Professional fees

 

751

 

1,711

 

 

4,736

 

4,718

  Regulatory and filing

 

5,568

 

3,753

 

 

15,970

 

14,620

  Software development costs

 

90,000

 

90,000

 

 

270,000

 

90,000

 

 

(175,053)

 

(110,870)

 

 

(399,125)

 

(152,741)

Other items

 

 

 

 

 

 

 

 

 

  Foreign exchange

 

(8,517)

 

(14,919)

 

 

3,399

 

(12,293)

  Interest expense

 

(800)

 

(3)

 

 

(1,847)

 

(3)

 

 

 

 

 

 

 

 

 

 

Net loss

 

(184,370)

 

(125,792)

 

 

(397,573)

 

(165,037)

  Translation to reporting currency

 

(15,046)

 

2,911

 

 

255

 

6,881

Comprehensive loss

$

(199,416)

$

(122,881)

 

$

(397,318)

$

(158,156)

 

 

 

 

 

 

 

 

 

 

Loss per share - basic and diluted

$

(0.01)

$

(0.00)

 

$

(0.01)

$

(0.00)

 

 

 

 

 

 

 

 

 

 

Weighted average number of shares outstanding:

 

35,013,838

 

35,013,838

 

 

35,013,838

 

35,013,838



















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



F-2




VGRAB COMMUNICATIONS INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT

(EXPRESSED IN US DOLLARS)

(UNAUDITED)



 

 

Shares

Amount

Obligation

to Issue

Shares

Additional

Paid-in

Capital

Accumulated

Other

Comprehensive

Income

Deficit

Total

 

 

 

 

 

 

 

 

 

Balance at October 31, 2016

35,013,838

$

5,298,377

$

-

$

123,093

$

38,326

$

(5,575,872)

$

(116,076)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Translation to reporting currency

-

 

-

 

-

 

-

 

6,881

 

-

 

6,881

 

Net loss

-

 

-

 

-

 

-

 

-

 

(165,037)

 

(165,037)

Balance at July 31, 2017

35,013,838

 

5,298,377

 

-

 

123,093

 

45,207

 

(5,740,909)

 

(274,232)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Translation to reporting currency

-

 

-

 

-

 

-

 

6,076

 

-

 

6,076

 

Net loss

-

 

-

 

-

 

-

 

-

 

(124,830)

 

(124,830)

Balance at October 31, 2017

35,013,838

 

5,298,377

 

-

 

123,093

 

51,283

 

(5,865,739)

 

(392,986)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Management fees paid by shares

-

 

-

 

60,000

 

-

 

-

 

-

 

60,000

 

Translation to reporting currency

-

 

-

 

-

 

-

 

255

 

-

 

255

 

Net loss

-

 

-

 

-

 

-

 

-

 

(397,573)

 

(397,573)

Balance at July 31, 2018

35,013,838

$

5,298,377

$

60,000

$

123,093

$

51,538

$

(6,263,312)

$

(730,304)
























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



F-3




VGRAB COMMUNICATIONS INC.

CONSOLIDATED STATEMENT OF CASH FLOWS

(EXPRESSED IN US DOLLARS)

(UNAUDITED)



 

Nine Months Ended July 31,

 

2018

2017

 

 

 

Cash flow used in in operating activities

 

 

Net loss

$

(397,573)

$

(165,037)

Adjustments to reconcile net loss to net cash used in operating activities

 

 

 

 

  Accrued interest

 

1,847

 

3

  Management fees, non-cash

 

60,000

 

-

  Foreign exchange

 

(1,151)

 

11,590

 

 

 

 

 

Changes in operating assets and liabilities

 

 

 

 

  GST recoverable

 

(351)

 

724

  Prepaids

 

(3,964)

 

(4,278)

  Accounts payable and accrued liabilities

 

277,517

 

122,229

Net cash used in operating activities

 

(63,675)

 

(34,769)

 

 

 

 

 

Cash flows provided by financing activities

 

 

 

 

  Due to related party

 

49,205

 

10,728

Net cash provided by financing activities

 

49,205

 

10,728

 

 

 

 

 

Effect of exchange rate changes on cash

 

(11)

 

545

 

 

 

 

 

Net  decrease in cash

 

(14,481)

 

(23,496)

 

 

 

 

 

Cash, beginning

 

15,887

 

37,055

 

 

 

 

 

Cash, ending

$

1,406

$

13,559













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



F-4




VGRAB COMMUNICATIONS INC.

NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS

JULY 31, 2018



NOTE 1 - ORGANIZATION AND BASIS OF PRESENTATION


Nature of Operations

On January 8, 2015, Vgrab Communications Inc. (the “Company”) entered into a software purchase agreement with Hampshire Capital Limited (the “Vendor”) to acquire the Vgrab Software Application (“Vgrab Application”). Vgrab Application is developed for use with smartphones using the Android and Apple iOS operating systems allowing users to redeem vouchers on their smartphones at a number of retailers and merchants. On February 10, 2015, the Company completed the acquisition of Vgrab Application. As a result of the transaction, the Company changed its principal business focus from the acquisition and exploration of mineral resources to the software development and changed its name to Vgrab Communications Inc. on February 11, 2015.


On June 24, 2015, the Company formed a subsidiary, Vgrab International Ltd., under the Labuan Companies Act 1990 in Federal Territory of Labuan, Malaysia. On May 17, 2018, the Company formed an additional subsidiary, Vgrab Communications Malaysia Sdn Bhd under the Labuan Companies Act 1990 in Federal Territory of Labuan, Malaysia.


Basis of Presentation

The unaudited interim consolidated financial statements of the Company are presented in United States dollars and have been prepared in accordance with United States generally accepted accounting principles (“GAAP”) for interim financial information and the rules and regulations of the Securities and Exchange Commission (“SEC”). They do not include all information and footnotes required by GAAP for complete financial statements. Except as disclosed herein, there have been no material changes in the information disclosed in the notes to the consolidated financial statements for the year ended October 31, 2017, included in the Company’s Annual Report on Form 10-K, filed with the SEC. The unaudited interim consolidated financial statements should be read in conjunction with those financial statements for the year ended October 31, 2017, included in the Company’s Annual Report on Form 10-K. In the opinion of management, all adjustments considered necessary for fair presentation, consisting solely of normal recurring adjustments, have been made. Operating results for the three and nine months ended July 31, 2018, are not necessarily indicative of the results that may be expected for the year ending October 31, 2018.


Going Concern

The accompanying unaudited interim consolidated financial statements have been prepared assuming the Company will continue as a going concern. Continuation as a going concern is dependent upon the ability of the Company to obtain the necessary financing to meet its obligations and pay its liabilities arising from normal business operations when they come due and ultimately upon its ability to achieve profitable operations. The outcome of these matters cannot be predicted with any certainty and raises substantial doubt that the Company will be able to continue as a going concern.  These unaudited interim consolidated financial statements do not include any adjustments to the amounts and classification of assets and liabilities that may be necessary should the Company be unable to continue as a going concern.  Management intends to obtain additional funding by borrowing funds from its directors and officers, issuing promissory notes and/or a private placement of common stock.


NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES


Reclassifications

Certain prior period amounts in the accompanying unaudited interim consolidated financial statements have been reclassified to conform to the current period’s presentation. These reclassifications had no effect on the results of operations or financial position for any period presented.


Principles of Consolidation

The interim consolidated financial statements include the accounts of the Company and its subsidiaries. On consolidation, all intercompany balances and transactions are eliminated.



F-5




NOTE 3 - RELATED PARTY TRANSACTIONS


The following amounts were due to related parties as at:


 

July 31,

2018

 

October 31,

2017

 

 

 

 

Due to a major shareholder for payments made on behalf of the Company(a)

$

728

 

$

728

Notes payable to a major shareholder(b)

 

87,268

 

 

36,719

Due to a former director(c)

 

--

 

 

37

Total due to related parties

$

87,996

 

$

37,484

(a) Amounts are unsecured, due on demand and bear no interest.

(b) Amount is unsecured, due on demand and bears interest at 4%.

(c) Amount due to former director has been included in accounts payable.


During the nine months ended July 31, 2018, the Company received $49,205 in exchange for notes payable to a major shareholder.


During the nine months ended July 31, 2018, the Company recorded $1,847 (July 31, 2017 - $3) in interest expense in connection with the notes payable to a major shareholder.


NOTE 4 - COMMON STOCK


On May 31, 2018, the Company entered into a release agreement with its then current director, Mr. Skurtys. As consideration for Mr. Skurtys’s past services, the Company agreed to issue to Mr. Skurtys 500,000 shares of its common stock as fully paid and non-assessable. The fair value of these shares was calculated to be $60,000, which the Company recorded as management fees.


As at July 31, 2018, the shares remained unissued due to clerical requirements, and were presented as an obligation to issue shares on the Company’s consolidated balance sheets. The shares were issued subsequent to July 31, 2018.


NOTE 5 - SUBSEQUENT EVENT


Subsequent to July 31, 2018, the Company received $7,662 (CAD$10,000) under a loan agreement with its major shareholder. The loan bears interest at 4% per annum compounded monthly, is unsecured, non-convertible and payable on demand.


















F-6




Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.


Forward-Looking Statements


This Quarterly Report on Form 10-Q filed by Vgrab Communications Inc. contains forward-looking statements. These are statements regarding financial and operating performance and results and other statements that are not historical facts. The words “expect,” “project,” “estimate,” “believe,” “anticipate,” “intend,” “plan,” “forecast,” and similar expressions are intended to identify forward-looking statements. Certain important risks could cause results to differ materially from those anticipated by some of the forward-looking statements. These risks include, among other things: general economic conditions; our ability to raise enough money to continue our operations; changes in regulatory requirements that may adversely affect our business; customer acceptance of our proprietary software application; and other risks and uncertainties as set forth in “Part II - Item 1A - Risk Factors.”


Forward-looking statements are based on a number of material factors and assumptions, including, but not limited to: the economic conditions will continue to show modest improvement in the near to medium future, no material change to competitive environment, we will be able to access sufficient qualified staff and there will be no material changes to the tax and other regulatory requirements governing us. While we consider these assumptions as reasonable, based on information currently available to us, these assumptions may prove to be incorrect. Actual results may vary from such forward-looking information for a variety of reasons, including but not limited to risks and uncertainties disclosed in the section titled "Part II - Item 1A - Risk Factors.”


We caution you not to place undue reliance on these forward-looking statements, which reflect our management’s view only as of the date of this report.  We are not obligated to update these statements or publicly release the results of any revisions to them to reflect events or circumstances after the date of this report or to reflect the occurrence of unanticipated events unless required by applicable securities laws. You should refer to, and carefully review, the information in the future documents we file with the United States Securities and Exchange Commission (the “SEC”).


General


You should read this discussion and analysis in conjunction with our interim unaudited consolidated financial statements and related notes included in this Quarterly Report on Form 10-Q and the audited financial statements and related notes for the fiscal year ended October 31, 2017, included in our Annual Report on Form 10-K. The inclusion of supplementary analytical and related information may require us to make estimates and assumptions to enable us to fairly present, in all material respects, our analysis of trends and expectations with respect to our results of operations and financial position taken as a whole. Actual results may vary from the estimates and assumptions we make.


Overview


We were incorporated on August 4, 2010, under the laws of the State of Nevada under the name “SOS Link Corporation”. On April 15, 2011, we changed our place of incorporation from the State of Nevada to the Province of British Columbia, Canada and concurrently changed our name to “Venza Gold Corp.”.  The change from Nevada to British Columbia was approved by our shareholders on April 14, 2011. On January 6, 2014, we changed our name to “CoreComm Solutions Inc.” and on February 11, 2015, we changed our name to Vgrab Communications Inc. to reflect our current business.


On February 10, 2015, we completed an acquisition of the Vgrab software application (the “Vgrab Application”) pursuant to the terms of a software purchase agreement dated January 8, 2015, (the “Software Purchase Agreement”) between us and Hampshire Capital Limited (“Hampshire”). The Vgrab Application is a free mobile voucher application developed for smartphones using the Android and Apple iOS operating systems and allows users to redeem vouchers on their smartphones at a number of retailers and merchants.





1



On June 24, 2015, we formed a subsidiary, Vgrab International Ltd., (the “Subsidiary”, or “Vgrab International”) under the Labuan Companies Act 1990 in Federal Territory of Labuan, Malaysia. The main focus of the Subsidiary is to continue development of the Vgrab Applications and the Vmore Platform, and start their market penetration in Southeast Asia. On May 17, 2018, we incorporated an additional subsidiary, VGrab Communications Malaysia Sdn Bhd (“Vgrab Malaysia”) under the Labuan Companies Act 1990 in Federal Territory of Labuan, Malaysia. Vgrab Malaysia is initially used as a holding corporation.


Our business originally involved the development of mobile applications for merchant and consumer use. We continue working on development of two different types of mobile applications, an application designed for consumers (the “Vgrab Application”) and an application designed for merchants (the “Vgrab Merchant Application”). In addition we are also working on development of an online platform to sell online goods (the “Vmore Platform”), and a new video service portal, Vmore Video, which will focus on filming and supplying HD and 360-degree short videos with an emphasis on sports and extreme sports.


During our fiscal 2018, we started exploring other business opportunities, and as a result added such additional services as online advertising through our promotions & events network. Across our networks and strategic partnerships, we are focused on providing integrated solutions and creating value for brand owners and consumers.


Cooperation Agreement for the Development of the Heritage Duesenberg Brand


On June 25, 2018, our subsidiary, Vgrab International, entered into a cooperation agreement on a profit-sharing basis (the “Agreement”) with Hampshire Motor Group (China) Ltd. (“HMGC”), a related corporation, for the development and marketing of Duesenberg brand (the “Brand”) licensed to HMGC by the original Duesenberg trademark owner. Pursuant to the Agreement, Vgrab International agreed to work with HMGC on developing marketing, advertising and customer relation programs for Duesenberg’s brands, with newly-developed sub-brand, Duesey, and its Duesey Coffee being the initial product offering. Vgrab International also agreed to participate in the development of new products utilizing Duesenberg Trademark.


The term of the Agreement is 10 years, with an option to extend the Agreement for an additional 10-year period. Based on the Agreement, the Company will be entitled to a percentage of revenue generated from the sales of any new products developed by Vgrab International or jointly with HMGC, which percentage will be determined as follows: (i) 94% from revenue of up to $100,000, and (ii) 95% from revenue of over and above $100,000. In addition, the Company will also be entitled to a percentage of revenue generated from the sales of the products developed by HMGC prior to the entry into the Agreement based on the following schedule: (i) 20% from revenue of up to $100,000, (ii) 15% from revenue of up to $500,000, (iii) 10% from revenue of up to $1,000,000, and (iv) 5% from revenue of over and above $1,000,000.


As of the date of this Quarterly Report on Form 10-Q, the Company have not generated any revenue from the Agreement, nor has it incurred any expenses associated with the services contemplated under the Agreement.


Change in Management


On June 22, 2018, Mr. Jacek P. Skurtys tendered his resignation as a member of our board of directors. Mr. Skurtys’s resignation did not result from a disagreement with the board of directors or with our management.


As consideration for Mr. Skurtys’s services, we agreed to issue to Mr. Skurtys  500,000 shares of our common stock as fully paid an non-assessable. The shares were not registered under the United States Securities Act of 1933, as amended (the “Act”) and may not be offered or sold within the United States or to U.S. persons unless an exemption from such registration is available. The shares were issued on September 4, 2018.


Summary of Financial Condition

 

July 31, 2018

 

October 31, 2017

Working capital deficit

$

(730,304)

 

$

(392,986)

Current assets

$

9,743

 

$

19,988

Total liabilities

$

740,047

 

$

412,974

Common stock and additional paid in capital

$

5,421,470

 

$

5,421,470

Deficit

$

(6,263,312)

 

$

(5,865,739)

Accumulated other comprehensive income

$

51,538

 

$

51,283



2



Results of Operation


Our operating results for the three and nine months ended July 31, 2018 and 2017 and the changes in the operating results between those periods are summarized in the table below.


Three and Nine Months Summary


 

Three Months Ended

July 31,

Percentage

Nine Months Ended

July 31,

Percentage

 

2018

2017

Decrease

2018

2017

Decrease

Operating expenses

$(175,053)

$(110,870)

58%

$(399,125)

$(152,741)

161%

Foreign exchange

(8,517)

(14,919)

(43)%

3,399

(12,293)

(128)%

Interest expense

(800)

(3)

26,567%

(1,847)

(3)

61,467%

Net loss

(184,370)

(125,792)

47%

(397,573)

(165,037)

141%

Translation to reporting currency

(15,046)

2,911

(617)%

255

6,881

(96)%

Comprehensive loss

$(199,416)

$(122,881)

62%

$(397,318)

$(158,156)

151%


Revenue


During the three and nine months ended July 31, 2018 and 2017 we did not have any revenue generating operations; as such we can provide no assurances that we will be able to generate enough cash flow from our operations to support our ongoing operations.


Operating Expenses


Our operating expenses for the three and nine months ended July 31, 2018 and 2017 consisted of the following:


 

Three Months Ended

July 31,

Percentage

Nine Months Ended

July 31,

Percentage

 

2018

2017

Decrease

2018

2017

Decrease

Operating expenses:

 

 

 

 

 

 

Accounting

$   4,240

$   3,254

30%

$  9,924

$  8,420

18%

General and administrative expenses

12,200

12,152

0%

36,201

34,983

3%

Management fees

62,294

-

n/a

62,294

-

n/a

Professional fees

751

1,711

(56)%

4,736

4,718

0%

Regulatory and filing

5,568

3,753

48%

15,970

14,620

9%

Research and development

90,000

90,000

0%

270,000

90,000

200%

Total

$ 175,053

$ 110,870

58%

$ 399,125

$152,741

161%


During the three-month period ended July 31, 2018, our operating expenses increased by $64,183 or 58% from $110,870, for the three months ended July 31, 2018, to $175,053 for the three months ended July 31, 2018. The most significant change in our operating expenses was associated with $62,294 in management fees calculated on the grant of 500,000 shares of our common stock to our former director as part of the resignation package that the Company negotiated with the former director.  All other operating expenses stayed relatively consistent as compared to the operating expenses during the three-month period ended July 31, 2017. The largest expense item during the three-month periods ended July 31, 2018 and 2017 was $90,000 (2017 - $90,000) in research and development costs associated with continued development of our Vgrab and Vmore platforms; our general and administrative expenses amounted to $12,200 (2017 - $12,152), and regulatory and filing fees as well as accounting fees resulted in $5,568 (2017 - $3,753) and $4,240 (2017 - $3,254), respectively.





3



During the nine-month period ended July 31, 2018, our operating expenses increased by $246,384 or 161% from $152,741, for the nine months ended July 31, 2017, to $399,125 for the nine months ended July 31, 2018. The most significant change in our operating expenses was associated with our research and development costs, which increased by $180,000, from $90,000 we recorded during the nine-month period ended July 31, 2017, to $270,000 we recorded during the nine-month period ended July 31, 2018. The increased fees were associated with continued development of our Vgrab and Vmore platforms. This increase was augmented by a $62,294 in management fees calculated on the grant of 500,000 shares of our common stock we issued to the former director of the Company as part of the resignation package. All other operating expenses for the nine months ended July 31, 2018, stayed relatively consistent as compared to the operating expenses during the nine-month period ended July 31, 2017. Our general and administrative expenses amounted to $36,201 (2017 - $34,983), and regulatory and filing fees as well as accounting fees resulted in $15,970 (2017 - $14,620) and $9,924 (2017 - $8,420), respectively.


Other Items


During the three-month period ended July 31, 2018, we recorded $8,517 (2017 - $14,919) in foreign exchange losses associated with the fluctuation of foreign exchange rates between the US and Canadian currencies. During the same period we recorded $800 (2017 - $3) in interest associated with our liabilities under the notes payable we issued to our major shareholder.


During the nine-month period ended July 31, 2018, we recorded $3,399 gain (2017 - $12,293 loss) in foreign exchange associated with the fluctuation of foreign exchange rates between the US and Canadian currencies. During the same period we recorded $1,847 (2017 - $3) in interest associated with our liabilities under the notes payable we issued to our major shareholder.


Translation to Reporting Currency


Changes in translation to reporting currency result from a difference between our functional currency, being the Canadian dollar, and reporting currency, being the United States dollar, and are caused by fluctuation in foreign exchange between the two currencies as well as different accounting treatments between various financial instruments.


Liquidity and Capital Resources


GOING CONCERN


The unaudited interim consolidated financial statements included in this Quarterly Report have been prepared on a going concern basis, which implies that we will continue to realize our assets and discharge our liabilities in the normal course of business. We have not generated any revenues from operations since inception, have never paid any dividends and are unlikely to pay dividends or generate significant earnings in the immediate or foreseeable future. Our continuation as a going concern depends upon the continued financial support of our shareholders, our ability to obtain necessary debt or equity financing to continue operations, and the attainment of profitable operations.


Based upon our current plans, we expect to incur operating losses in future periods. At July 31, 2018, we had a working capital deficit of $730,304 and accumulated losses of $6,263,312 since inception. These factors raise substantial doubt about our ability to continue as a going concern. We cannot assure you that we will be able to generate significant revenues in the future. These unaudited interim consolidated financial statements do not give effect to any adjustments that would be necessary should we be unable to continue as a going concern. Therefore, we may be required to realize our assets and discharge our liabilities in other than the normal course of business and at amounts different from those reflected in our financial statements.


Working Capital


 

At July 31, 2018

 

At October 31, 2017

Current assets

$

9,743

 

$

19,988

Current liabilities

 

(740,047)

 

 

(412,974)

Working capital deficit

$

(730,304)

 

$

(392,986)



4



During the nine-month period ended July 31, 2018, our working capital deficit increased by $337,318, from $392,986 at October 31, 2017, to $730,304 at July 31, 2018. The increase in working capital deficit was primarily related to a $283,634 increase to our accounts payable, which resulted from the lack of cash to pay our vendors; and a $50,512 increase in amounts due to related parties, which increased as a result of advances we received from our major shareholder to partially pay down our largest debtors. Our cash balance decreased by $14,481, negatively affecting our working capital.

 

Cash Flows


 

Nine Months

Ended July 31,

 

2018

 

2017

Net cash used in operating activities

$

(63,675)

 

$

(34,769)

Net cash provided by financing activities

 

49,205

 

 

10,728

Effect of exchange rate changes on cash

 

(11)

 

 

545

Net decrease in cash

$

(14,481)

 

$

(23,496)


Net cash used in operating activities


During the nine-month period ended July 31, 2018, we used $63,675 to support our operating activities. This cash was used to cover our cash operating expenses of $336,877, to increase our GST recoverable by $351 and to pay $3,964 towards future expenses. These uses of cash were offset by increase in our accounts payable and accrued liabilities of $277,517.


During the nine-month period ended July 31, 2017, we used $34,769 to support our operating activities. This cash was used to cover our cash operating expenses of $153,444, and to increase our prepaid expenses by $4,278. These uses of cash were offset by increases in our accounts payable and accrued liabilities of $122,229, and by decrease to our GST recoverable of $724.


Non-cash operating activities


During the nine-month period ended July 31, 2018, we recorded $1,151 in foreign exchange fluctuation between the US and Canadian currencies and $1,847 in interest associated with our liabilities under the notes payable we issued to our major shareholder. In addition, we recorded $60,000 as a one-time management fee associated with the fair value of 500,000 shares we issued to our former director on resignation.


During the nine months ended July 31, 2017, we recorded $11,590 in unrealized foreign exchange, which resulted from fluctuation of the US Dollar in relation to Canadian dollar, the functional currency of our parent company and $3 in interest associated with our liabilities under the notes payable we issued to our major shareholder.


Net cash provided by financing activities


During the nine-month period ended July 31, 2018, we received $49,205 under loan agreements with Hampshire Avenue SDN BHD, a parent company of Hampshire Group. The loans bear interest at 4% per annum, are unsecured and payable on demand.


During the nine months ended July 31, 2017, we received $10,000 on account of the loan agreement with Hampshire Avenue. The loan bears interest at 4% per annum, is unsecured and payable on demand. We also recorded $728 due to a major shareholder for payments made on behalf of the Company.


Capital Resources


Our ability to continue our operations and the development and marketing of the Vgrab Applications, Vmore Platform, Vmore Video and any additional new product offerings is subject to our ability to obtain the necessary funding.  We expect to raise funds through sales of our debt or equity securities. We have no committed sources of capital. If we are unable to raise funds as and when we need them, we may be required to curtail, or even to cease, our operations.



5



As of July 31, 2018, we had $1,406 in cash on hand and working capital deficit of $730,304, which raises substantial doubt about our continuation as a going concern. We plan to mitigate our losses in future years by controlling our operating expenses and actively seeking new distribution channels for our Vgrab Applications and services. We cannot provide assurance that we will be successful in generating additional capital to support our development. The financial statements do not include any adjustments that might result from the outcome of these uncertainties.


Off-Balance Sheet Arrangements


We have no off-balance sheet arrangements and no non-consolidated, special-purpose entities.


Critical Accounting Policies


The preparation of financial statements in conformity with United States generally accepted accounting principles requires our management to make estimates and assumptions that affect the reported amount 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. Our management routinely makes judgments and estimates about the effects of matters that are inherently uncertain.


The JOBS Act contains provisions that, among other things, reduce certain reporting requirements for qualifying public companies.  As an “emerging growth company,” we may, under Section 7(a)(2)(B) of the Securities Act, delay adoption of new or revised accounting standards applicable to public companies until such standards would otherwise apply to private companies. We may take advantage of this extended transition period until the first to occur of the date that we (i) are no longer an "emerging growth company" or (ii) affirmatively and irrevocably opt out of this extended transition period. We have elected to take advantage of the benefits of this extended transition period. Our financial statements may therefore not be comparable to those of companies that comply with such new or revised accounting standards. Until the date that we are no longer an "emerging growth company," affirmatively and irrevocably opt out of the exemption provided by Securities Act Section 7(a)(2)(B), or upon issuance of a new or revised accounting standard that applies to our financial statements and that has a different effective date for public and private companies, we will disclose the date on which adoption is required for non-emerging growth companies and the date on which we will adopt the recently issued accounting standard.


Our significant accounting policies are disclosed in the notes to the audited financial statements for the year ended October 31, 2017. The following accounting policies have been determined by our management to be the most important to the portrayal of our financial condition and results of operation:


Principles of Consolidation


The Company’s interim consolidated financial statements include the accounts of the Company and its subsidiaries. On consolidation, the Company eliminates all intercompany balances and transactions.


Internal-Use Software


The Company incurs costs related to the development of its Vgrab Applications, Vmore Platform as well as its website. Costs incurred in the planning and evaluation stage of internally-developed software and website, as well as development costs where economic benefit cannot be readily determined, are expensed as incurred. Costs incurred and accumulated during the development stage, where economic benefit of the software can be readily determined, are capitalized and included as part of intangible assets on the balance sheets. Additional improvements to the web site and applications following the initial development stage are expensed as incurred. Capitalized internally-developed software and website development costs will be amortized over their expected economic life using the straight-line method.


Foreign Currency Translation and Transaction


The Company’s functional currency is the Canadian dollar and reporting currency is the United States dollar. The Company translates assets and liabilities to US dollars using year-end exchange rates, and translates revenues and expenses using average exchange rates during the period. Gains and losses arising on translation to the reporting currency are included in the other comprehensive income.



6



The subsidiaries’ functional and reporting currency is the United States dollar.


Foreign exchange gains and losses on the settlement of foreign currency transactions are included in foreign exchange expense. Except for translations of intercompany balances, all translations of monetary balances to the functional currency at the year end exchange rate are included in foreign exchange expense. The translations of intercompany balances to the functional currency at the year end exchange rate are included in accumulated other comprehensive income or loss.  


Fair Value of Financial Instruments


Our financial instruments include cash, accounts payable, accrued liabilities, amounts due to related parties and loans payable. We believe the fair value of these financial instruments approximate their carrying values due to their short-term nature.


Concentration of Credit Risk


Financial instruments that potentially subject us to significant concentrations of credit risk consist principally of cash.


At July 31, 2018, we had $1,406 in cash on deposit with a large chartered Canadian bank.  As part of our cash management process, we perform periodic evaluations of the relative credit standing of this financial institution.  We have not experienced any losses in cash balances and do not believe we are exposed to any significant credit risk on our cash.


Item 3. Quantitative and Qualitative Disclosures about Market Risk.


Not Applicable.


Item 4. Controls and Procedures.


Disclosure Controls and Procedures


We carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this Quarterly Report.  The evaluation was undertaken in consultation with our accounting personnel.  Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, due to our current size and lack of segregation of duties, our disclosure controls and procedures are not effective in ensuring that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms.


Changes in Internal Control over Financial Reporting


There have been no changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the quarter ended July 31, 2018, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.











7




PART II - OTHER INFORMATION


Item 1. Legal Proceedings.


None.


Item 1A. Risk Factors.


We incorporate by reference the Risk Factors included as Item 1A of our Annual Report on Form 10-K we filed with the Securities and Exchange Commission on February 13, 2018.


Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.


On September 4, 2018, pursuant to the release agreement with Mr. Skurtys, the former director of the Company, the Company issued to Mr. Skurtys 500,000 common shares of the Company pursuant to the provisions of Regulation S of the United States Securities Act of 1933, as amended (the “Act”). Mr. Skurtys represented that he was not a resident of the United States and was otherwise not a “U.S. Person” as that term is defined in Rule 902(k) of Regulation S of the Act.


Item 3. Defaults upon Senior Securities.


None.


Item 4. Mine Safety Disclosures.


Not applicable.


Item 5. Other Information.


Not applicable.


Item 6. Exhibits.


The following table sets out the exhibits either filed herewith or incorporated by reference.



Exhibit

Description

3.1

Notice of Articles.(6)

3.2

Articles.(1)

3.3

Certificate of Continuation.(2)

3.4

Certificate of Change of Name dated January 6, 2014.(6)

3.5

Certificate of Change of Name dated February 11, 2015.(8)

10.2

Property Purchase Agreement dated April 11, 2012 between the Company and Gerald Diakow.(1)

10.4

Software Purchase Agreement between the Company and Hampshire Capital Limited. dated January 8, 2015.(7)

10.5

Service Agreement between Vgrab International Ltd. and Hampshire Infotech SDN BHD dated July 12, 2015.(9)

10.6

Loan Agreement between Vgrab Communications Inc. and Hampshire Avenue SDN BHD dated January 19, 2016.(9)

10.7

Loan Agreement between Vgrab Communications Inc. and Hampshire Avenue SDN BHD dated February 4, 2016.(9)

10.8

Loan Agreement between Vgrab Communications Inc. and Hampshire Avenue SDN BHD dated February 5, 2016.(10)




8




Exhibit

Description

10.9

Loan Agreement between Vgrab Communications Inc. and Hampshire Avenue SDN BHD dated April 12, 2016.(10)

10.10

Release Agreement between Nelson Da Silva and Vgrab Communications Inc. dated July 19, 2016.(11)

10.11

Debt Settlement Agreement between Hampshire Infotech SDN. and Vgrab Communications Inc. dated July 11, 2016.(12)

10.12

Debt Settlement Agreement between Lim Chin Yang and Vgrab Communications Inc. dated July 11, 2016.(12)

10.13

Loan Agreement between BSmart Technology Limited and Vgrab Communications Inc. dated July 12, 2016.(13)

10.14

Loan Agreement between Vgrab Communications Inc. and Hampshire Avenue SDN BHD dated July 25, 2017.(14)

10.15

Loan Agreement between Vgrab Communications Inc. and Hampshire Avenue SDN BHD dated August 8, 2017.(14)

10.16

Loan Agreement between Vgrab Communications Inc. and Hampshire Avenue SDN BHD dated September 15, 2017.(14)

10.17

Loan Agreement between Vgrab Communications Inc. and Hampshire Avenue SDN BHD dated October 6, 2017.(14)

10.18

Loan Agreement between Vgrab Communications Inc. and Hampshire Avenue SDN BHD dated December 13, 2017.(14)

10.19

Loan Agreement between Vgrab Communications Inc. and Hampshire Avenue SDN BHD dated January 23, 2018.(15)

10.20

Loan Agreement between Vgrab Communications Inc. and Hampshire Avenue SDN BHD dated February 6, 2018.(15)

10.21

Loan Agreement between Vgrab Communications Inc. and Hampshire Avenue SDN BHD dated April 24, 2018.(16)

10.22

Loan Agreement between Vgrab Communications Inc. and Hampshire Avenue SDN BHD dated June 12, 2018.(16)

10.23

Loan Agreement between Vgrab Communications Inc. and Hampshire Avenue SDN BHD dated July 12, 2018.

10.24

Loan Agreement between Vgrab Communications Inc. and Hampshire Avenue SDN BHD dated August 9, 2018.

10.25

Release Agreement between Jacek Skurtys and VGrab Communications Inc. dated May 31, 2018.(17)

10.26

Cooperation Agreement between Vgrab International Ltd and Hampshire Motor Group (China) Ltd. dated June 25, 2018.(18)

16.1

Code of Ethics.(3)

31.1

Certification of CEO pursuant to Rule 13a-14(a) and 15d-14(a).

31.2

Certification of CFO pursuant to Rule 13a-14(a) and 15d-14(a).

32.1

Certification of CEO pursuant to Section 1350 of Title 18 of the United States Code.

32.2

Certification of CFO pursuant to Section 1350 of Title 18 of the United States Code.

99.1

Audit Committee Charter(3)

101

The following unaudited interim consolidated financial statements from the registrant’s Quarterly Report on Form 10-Q for the nine months ended July 31, 2018, formatted in XBRL:

(i)

Consolidated Balance Sheets at July 31, 2018 (unaudited), and October 31, 2017;

(ii)

Unaudited Condensed Interim Consolidated Statements of Operations for the Nine Months

ended July 31, 2018 and 2017;

(iii)

Unaudited Condensed Interim Consolidated Statement of Stockholders’ Deficit for the Nine-

Month Period Ended July 31, 2018;

(iv)

Unaudited Condensed Interim Consolidated Statements of Cash Flows for the Nine Months

ended July 31, 2018 and 2017; and

(v)

Notes to the Interim Consolidated Financial Statements.




9




Notes:


(1)

Filed with the SEC as an exhibit to our Registration Statement on Form S-1 filed on June 12, 2012.

(2)

Filed with the SEC as an exhibit to our Registration Statement on Form S-1/A2 filed on August 23, 2012.

(3)

Filed with the SEC as an exhibit to our Annual Report on Form 10-K filed on January 28, 2013.

(4)

Filed with the SEC as an exhibit to our Quarterly Report on Form 10-Q filed on March 8, 2013.

(5)

Filed with the SEC as an exhibit to our Current Report on Form 8-K filed on December 4, 2013.

(6)

Filed with the SEC as an exhibit to our Current Report on Form 8-K filed on January 9, 2014.

(7)

Filed with the SEC as an exhibit to our Current Report on Form 8-K filed on January 14, 2015.

(8)

Filed with the SEC as an exhibit to our Current Report on Form 8-K filed on February 17, 2015.

(9)

Filed with the SEC as an exhibit to our Annual Report on Form 10-K filed on February 9, 2016.

(10)

Filed with the SEC as an exhibit to our Quarterly Report on Form 10-Q filed on September 14, 2016.

(11)

Filed with the SEC as an exhibit to our Current Report on Form 8-K filed on July 15, 2016.

(12)

Filed with the SEC as an exhibit to our Current Report on Form 8-K filed on July 22, 2016.

(13)

Filed with the SEC as an exhibit to our Quarterly Report on Form 10-Q filed on September14, 2016.

(14)

Filed with the SEC as an exhibit to our Annual Report on Form 10-K filed on February 13, 2018.

(15)

Filed with the SEC as an exhibit to our Annual Report on Form 10-Q filed on March 16, 2018.

(16)

Filed with the SEC as an exhibit to our Annual Report on Form 10-Q filed on June 15, 2018.

(17)

Filed with the SEC as an exhibit to our Current Report on Form 8-K filed on June 22, 2018.

(18)

Filed with the SEC as an exhibit to our Current Report on Form 8-K filed on July 2, 2018.































10




SIGNATURES


In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


Dated:  September 14, 2018


 

VGRAB COMMUNICATIONS INC.

 

 

 

 

 

 

By:

/s/ Lim Hun Beng

 

 

 

Lim Hun Beng

Chief Executive Officer and President

(Principal Executive Officer)

 

 

 

 

 

 

 

 

 

 

By:

/s/ Liong Fook Weng

 

 

 

Liong Fook Weng

Chief Financial Officer

(Principal Accounting Officer)

 
































11