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EX-32 - EX-32 - QMC Systems, Inc.ex32_8718.htm
EX-31 - EX-31 - QMC Systems, Inc.ex31_8718.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 SEPTEMBER 30, 2018

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 47-3946093   
 

(State or other jurisdiction

of incorporation or organization)

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

2195 Hyacinth Street, Suite 108b,

Salem, OR

 

97305

(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. [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 (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). [X] Yes [ ] 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 November 19, 2018 the issuer had 507,450,000 shares of its common stock issued and outstanding. As of November 19, 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 THE 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 - UNAUDITED

 

QMC SYSTEMS, INC.

BALANCE SHEETS

(UNAUDITED) 

 

  As of September 30, 2018 As of December 31, 2017
ASSETS    
  $ $
Current assets    
Cash and cash equivalents 519 229
Due from related party 2,800 -
Other current assets 89,866 82,337
Total current assets 93,185 82,566
Total assets 93,185 82,566
     
LIABILITIES AND STOCKHOLDERS’ EQUITY    
     
Current liabilities    
Accrued expenses 5,172 16,203
Due to related party 135,158 114,127
Other current liabilities 3,000 -
Total current liabilities 143,330 130,330
Total liabilities 143,330 130,330
     
Stockholders’ equity    
Common stock, par value $0.0001, 5,000,000,000 shares authorized and 50,745 50,745
507,450,000 shares issued & outstanding as of September 30, 2018 and December 31, 2017
Additional paid in capital 24,255 24,255
Retained earnings / (deficit) (125,146) (122,764)
Total stockholders’ equity (50,146) (47,764)
Total liabilities and stockholders’ equity 93,185 82,566

   

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

 

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Table of Contents

QMC SYSTEMS, INC.

STATEMENT OF OPERATIONS

(UNAUDITED)

  Three months ended Nine months ended
  September 30, 2018 September 30, 2017 September 30, 2018 September 30, 2017
  $ $ $ $
Revenue        
Subscription income 3,000 - 9,000 -
Total operating income 3,000 - 9,000 -
         
Operating expenses        
Operation and administrative 10,615 562 16,411 29,137
Total operating expenses 10,615 562 16,411 29,137
         
Profit / (loss) from operations (7,615) (562) (7,411) (29,137)
         
Other income / expenses        
Accrued interest on loan 1,677 1,677 5,030 5,030
Total other income 1,677 1,677 5,030 5,030
         
Net profit / (loss) before income tax (5,939) 1,115 (2,381) (24,107)
Tax expense - - - -
Net profit / (loss) after income tax (5,939) 1,115 (2,381) (24,107)
         
Net income / (loss) per common share - basic and diluted (0.000012) 0.000002 (0.000005) (0.000048)
         
Weighted-average common shares outstanding- basic and diluted 507,450,000 507,450,000 507,450,000 507,450,000

 

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) 

 

  Nine months ended
  September 30, 2018 September 30, 2017
  $ $
Cash flows from operating activities:    
Net income (2,381) (24,107)
Changes in:    
Due from related party (2,800) -
Other current assets (7,529) (5,030)
Accrued expenses (11,031) (427)
Other current liabilities 3,000 -
Net cash provided / (used) in operating activities (20,741) (29,564)
     
Cash flow from investing activities - -
     
Cash flows from financing activities    
Increase in additional paid in capital - (50,238)
Increase in stockholder's equity - 50,238
Due to related party 21,031 30,750
Net cash provided / (used) in financing activities 21,031 30,750
     
Net change in cash and cash equivalents 290 1,186
Cash and cash equivalents at beginning of the period 229 493
Cash and cash equivalents at end of the period 519 1,679

 

 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 SEPTEMBER 30, 2018

(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.

  

Note 2. Summary of significant accounting policies

  

Revenue recognition 

 

The Company recognizes 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 September 30, 2018, 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 September 30, 2018.

 

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.

 

Reconciliation of the income tax expense / (benefit) computed at the U.S. Federal income tax rate to the Company’s reported income tax expense / (benefit) for the three month ended September 30, 2018 and September 30, 2017 is as follows:

 

  For three months ended For nine months ended
  September 30, 2018 September 30, 2017 September 30, 2018 September 30, 2017
  $ $ $ $
Profit / (loss) from operations before income tax (5,939) 1,115 (2,381) (24,107)
Income tax rate 21% 34% 21% 34%
Income tax expense at the U.S Federal tax (1,247) 379 (500) (8,196)
Adjustments to derive effective tax rate:        
State and local net of federal benefit - - - -
Non-deductible stock bases compensation - - - -
Other non-deductible expenses - - - -
Foreign rate differentials - - - -
Non allowable carryover of losses 249 - 100 -
Valuation allowance 998 (379) 400 8,196
Income tax (benefit) / expenses - - -

 

The ultimate realization of deferred tax assets depends primarily on the Company’s ability to generate sufficient timely future income of the appropriate character in the appropriate taxing jurisdiction.

 

At September 30, 2018, Company has no unrecognized tax benefits.

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

 

  For three months ended For nine months ended
  September 30, 2018 September 30, 2017 September 30, 2018 September 30, 2017
Deferred tax assets - - - -
Net income / (loss) (5,939) 1,115 (2,381) (24,107)
Deferred tax liability - -
Net deferred tax assets (998) 379 (400) (8,196)
Less: Valuation allowance 998 (379) 400 8,196
Deferred tax asset - net valuation allowance - -  - -

  

On an interim basis, the Company has a net operating loss of $125,146 and an allowable loss carryover of approximately $124,670 available to offset future income for income tax reporting purposes, out of which $122,765 which will expire in various years through 2037, 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 September 30, 2018.

 

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, 2018 to September 30, 2018, 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.

 

Impact of the Tax Cuts and Jobs Act

 

The tax Cuts and Jobs Act (the “Tax Reform Act”) was enacted on December 22, 2017 and provides for significant changes to U.S. tax law. Among other provisions, the Tax Reform Act reduces the U.S. corporate income tax rate to 21%, effective in 2018. The Tax Reform Act also provides for a transition to a new territorial system of taxation and generally requires companies to include certain untaxed foreign earnings of non-U.S. subsidiaries into taxable income in 2017 (“Transition Tax”). Additionally, the Securities Exchange Commission staff has issued SAB 118, which allows the Company to record provisional amounts during a measurement period not to extend beyond one year of the enactment date. On December 22, 2017, Staff Accounting Bulletin No. 118 (“SAB 118”) was issued to address the application of U.S. GAAP in situations when a registrant does not have the necessary information available, prepared, or analyzed (including computations) in reasonable detail to complete the accounting for certain income tax effects of the Act. Because the Company is still in the process of analyzing certain provisions of the Tax Act, the Company has determined that the adjustment to its deferred taxes and the Transition Tax are provisional amounts as permitted under SAB 118.

 

Note 4. Related Party Transactions

 

Our Chief Executive Officer (“CEO”) has extended a loan of $135,158 to the Company. The loan has no term and is payable upon demand. The loan bears no interest.

 

As on September 30, 2018, the number of shares held by Renae Bell is 500,000,000 after the forward stock split affected on August 31, 2017.

 

Further, during the nine months ending September 30, 2018, QMC Consulting Inc, a related party due to common control collected subscription income of $12,000 for and on behalf of the Company. This subscription income was received in connection with the vendor subscription agreement executed by the Company with 10 vendors offering an advertising space and "preferred" status to them for a period of one year at an agreed rate of $1,200 per subscription. As on September 30, 2018, the Company has received an amount of $9,200 and the remaining balance of $2,800 is due from related party.

 

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.

 

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.

 

As of September 30, 2018, the Company had 507,450,000 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, 2018 through September 30, 2018 in comparison with January 1, 2017 through September 30, 2017:

 

  Three months ended Nine months ended
  September 30, 2018 September 30, 2017 September 30, 2018 September 30, 2017
  $ $  $  $
Net income / (loss) (5,939) 1,115 (2,381) (24,107)
         
Weighted-average common shares outstanding  basic: 507,450,000 507,450,000 507,450,000 507,450,000
         
Weighted-average common stock        
Equivalents :        
  Stock options - - - -
  Warrants - - - -
  Convertible notes - - - -
Weighted-average common shares outstanding diluted 507,450,000 507,450,000 507,450,000 507,450,000
Basic and diluted Income / (Loss) per share (0.000012) 0.000002 (0.000005) (0.000048)

  

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 September 30, 2018, an interest on loan has been accrued amounting to $12,854 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. As of September 30, 2018, the Company has a working capital loss of $50,146 and had an accumulated deficit of $125,146. 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

 

None.

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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.

 

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 per share for aggregate gross proceeds of $74,500. 

 

Business Information

 

QMC Systems, Inc. is an early stage company that 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. 

The services that application comprises of include, but are not strictly limited to, business training material and a list of service providers, vetted by our CEO, displayed in easily navigable search format. 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 early stages of development and will continue to explore the possibility of implementing additional features and uses for our pending application as development progresses

In December 2017, the Company conducted a free trial month to showcase the services. A promotional offer through an email was sent to 2,000 users in China since at the moment it is the only user interface language to sign up our mobile application. Of those users, approximately half signed up, used the app to contact vendors, and provided feedback on performance, structure, and usability. This free trial was conducted solely for feedback, and no cost was incurred by the Company. The free trial lasted approximately two weeks, and users were gathered through the business connections of our Chief Executive Officer.

The Company is currently in beta testing phase of its mobile application and expects the formal rollout of the app in September 2018. The Company has executed subscription agreements with 10 vendors offering an advertising space and "preferred" status to them for a period of one year at an agreed rate of $1,200 per subscription. The normal rate of such preferred status is $7,500 per year.

 

Liquidity and Capital Resources 

 

Our cash and cash equivalents balance is $519 as of September 30, 2018. 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 $135,158. 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 $5,939 for three months ended September 30, 2018.

 

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 September 30, 2018, 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 September 30, 2018, 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 September 30, 2018 (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: November 19, 2018

 

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