Item 1. Business
Overview
The Company
GENERAL
GMCI Corp. (“GMCI,” or the “Company”) was incorporated in the State of Nevada on June 28, 2006, under the name “Pacific Metals Corp.”. On March 17, 2015, the Company changed its name to “GMCI Corp.” by conducting a statutory merger with its wholly-owned subsidiary, GMCI Corp., pursuant to Nevada Revised Statutes 92A.200 et. seq. As a result of such merger, the Company was the surviving entity.
On December 12, 2014, a change in control of the Company occurred by virtue of the company's largest shareholder, Pacific Gold Corp., selling 15,110,823 shares of the Company's common stock to Legacy Fiduciary Services Limited. Such shares represented 75.2% of the Company's total issued and outstanding shares of common stock at the time of the transaction. As part of the sale of the shares, Legacy Fiduciary Services Limited arranged to appoint Mr. Lok Khing Ming as the sole officer and director of the Company at the time.
On January 2, 2015, the Company filed a Certificate of Amendment with the State of Nevada to (a) increase the number of authorized shares of Common Stock from 200 million shares to 4 billion shares; and (b) decrease all of the Company's then issued and outstanding shares of Common Stock at a ratio of one (1) share for every 25 existing shares, with all fractional shares to be purchased by the Company at the price of $0.02 per share (the "Reverse Split"). These actions were taken by the Company's Board of Directors after receiving the written consent of shareholders holding 82.7% of the Company's voting shares.
On March 26, 2015, the Company, entered into a Share Exchange Agreement (the "SBS Agreement") with all of the shareholders of SBS Mining Corp. Malaysia Sdn. Bhd., ("SBS") a Malaysian corporation whose primary business is mining and exploration of properties located in Malaysia. Pursuant to the Share Exchange Agreement, the Company acquired 600,000 shares of capital stock of SBS from the SBS Shareholders and in exchange issued 500,000,000 restricted shares of its common stock to the SBS Shareholders.
The 600,000 shares of SBS constituted all of the issued and outstanding shares of SBS and were held by a total of three (3) shareholders, including the Company's sole director and Chief Executive Officer, Mr. Lok Khing Ming. Mr. Lok Khing Ming owned ten percent (10%) of SBS, or 60,000 shares. The remaining shares were owned by Mr. Liew Chin Loong (90,000 shares; 15%), who resides in Malaysia and LYF & Son Realty Sdn. Bhd., a Malaysian corporation (450,000 shares; 75%). Pursuant to the Share Exchange Agreement, Mr. Lok received 50 million shares of the Company's common stock; Mr. Liew received 75 million shares; and LYF & Son Realty Sd. Bhd. received 375 million shares. As a result of the Share Exchange Agreement, SBS became a wholly owned subsidiary of the Company and the Company now carries on the business of SBS as its primary business. The closing of the SBS Agreement occurred on April 23, 2015.
SBS Mining Corp. Malaysia Sdn. Bhd. is a producer of metal ore and is focused on producing iron ore, bauxite and tin ore. Currently SBS is principally engaged in the prospecting of minerals and to carry out the mining of minerals upon successful exploration. The Company is not in actual development or production of any mineral deposits.
CURRENT INVESTMENTS
At the time of the acquisition of SBS by GMCI, SBS held licenses to the following two (2) properties on which it is prospecting for iron ore mining:
NO
Mining Land
Mining Area
(Hectares)
Sungai Bekil, Mukim Of Batu Talam, State Of Pahang Darul Makmur, Malaysia
Sungai Semeriang, Mukim Of Batu Talam, State Of Pahang Darul Makmur, Malaysia
The total mining area measures approximately 100 hectares (247 Acres).
In January 2016, the licenses for these concessions expired. SBS is in negotiations with the owners of these concessions.
At the time that the SBS Agreement was concluded (approximately the second quarter of 2015), the market price for iron ore was between $45 and $65. SBS believed that there would be a downward trend for iron ore prices and eventually the market price fell below $45 in December 2015. Therefore, SBS Mining commenced a plan to move into financing bauxite mining and trading in the surrounding area. SBS believes that shipments and demand for bauxite will increase, as illustrated by the fact that China imported 14 times more bauxite from Malaysia in November 2014 than in March 2014, after an export ban in Indonesia stopped supplies of the ore to the world's biggest consumer of industrial metals.
Bauxite mines are springing up in Malaysia and shipping an ever-increasing amount of the raw material used for the production of aluminum to China, helping fill a gap since Indonesia banned ore exports in January 2015 in a bid to encourage value-added processing at home.
China will need around 130 million tonnes of bauxite next year to feed its fast-growing aluminum industry and must import about 36.8 million of that, according to consultancy CRU. "Definitely bauxite imports from Malaysia will increase significantly next year," said Wan Ling, an analyst with CRU in Beijing, forecasting the country's shipments to China could reach 10 million tonnes. During the first nine (9) months of 2014, Malaysia supplied just 1.27 million tonnes to China and that was 12 times more than the 105,000 tonnes shipped in the same period of 2013.
COMPETITION
Currently, we do not have any direct competition with respect to the specific properties we hold licenses to. If we develop production capacity with respect to bauxite, we would compete with other suppliers of these materials. Because bauxite is sourced world-wide, our competition would include companies operating in diverse locations such as Australia, the People’s Republic of China, Brazil, and India, among others. The companies that commonly are producing materials of this nature are large capitalization companies, with established mining clams and operations. Their deposits are often refined and sold through related parties or to and through companies with which they have long standing relationships.
In terms of developing our business plan and conducting exploration and later deposit development, we also expect to compete for qualified geological and environmental experts to assist us in our exploration of mining prospects, as well as any other consultants, employees and equipment that we may require in order to conduct our operations.
Currently, there is significant competition for financial capital to be deployed in mining and material extraction. Therefore, it is difficult for smaller companies such as us to attract investment for its exploration activities. We cannot give any assurances that we will be able to compete for capital funds, and without adequate financial resources management cannot assure that the Company will be able to compete in exploration activities and ultimately in material deposit development, production and sales.
REGULATION
The exploration and development of a mining prospect in Malaysia is subject to regulation by a number of governmental authorities. The regulations address many environmental issues relating to air, soil and water contamination and apply to many mining related activities including exploration, mine construction, mineral and ore extraction, ore milling, water use, waste disposal and use of toxic substances. In addition, we are subject to regulations relating to labor standards, occupational health and safety, mine safety, general land use, export of minerals and taxation. Many of the regulations require permits or licenses to be obtained and the filing of certain notices, the absence of which or inability to obtain will adversely affect the ability for us to conduct our exploration, development and operation activities. The failure to comply with the regulations and terms of permits and licenses may result in fines or other penalties or in revocation of a permit or license or loss of a prospect.
EMPLOYEES
Effective December 12, 2014, Mr. Lok Khing Ming was added as the Chief Executive Officer, President, Treasurer and sole director of the Company.
As of the closing of the SBS Agreement, Mr. Lok does not draw a salary. Notwithstanding the current arrangement, the Company may pay Mr. Lok a salary or other compensation on a bonus basis in the future, in amounts determined in the discretion of the Company or as negotiated, which compensation may take the form of cash, stock issuances, employee options and promissory notes.
On October 5, 2016, the Board of Directors (the “Board”) of GMCI Corp., a Nevada corporation (the “Company”), appointed its current Chief Executive Officer, Mr. Lok Khing Ming, as the Company’s Chairman of the Board.
Concurrently therewith, Mr. Calvin Chin, the Company’s current Chief Financial Officer (“CFO”) was appointed as the Chief Executive Officer (“CEO”), which left a vacancy for the position of Chief Financial Officer. The following individuals were therefore appointed to their respective positions:
M.W. Jason Chan as the Company’s Chief Financial Officer.
S.N. Loh as the Company’s Chief Operating Officer.
Dr. Brian Kee Mun Wong as the Company’s Chief Marketing Officer.
Kevin Chea Lin Liu as the Company’s Chief Sales Officer.
Following is biographical information for each of the new Officers listed above.
M.W. “Jason” Chan
From August 2010 to September 2016, Mr. Chan managed a portfolio of audit clients with divergent operations, including but not limited to, public offerings, due diligence audits, restructuring and reverse takeovers for Baker Tilly Monteiro Heng, an accounting and audit firm located in Kuala Lumpur, as its Director of Transaction Reporting division.
S.N. Loh
From April 2012 to October 2015, Mr. Loh was the General Manager responsible for marketing, sales, business development and planning for WRP Asia Pacific Sd. Bhd., a medical glove manufacturing company located in Malaysia. From August 2009 to March 2012, Mr. Loh was the Operations Director, responsible for factory operations, for Vinh Chanh Co. Ltd., a bio mass fuel supplier in Vietnam.
Dr. Brian Kee Mun Wong
From March 2016 to August 2016, Dr. Wong was Marketing Director for Putra Business School in Serdang, Malaysia. While in this position he was responsible for implementing new marketing strategies for the school. From November 2014 to February 2016, he was Head of Infrastructure Segment (Marketing) for Lafarge Malaysia Bhd, a construction company located in Damansara, Malaysia. His responsibilities in this position included overseeing the budget and growth of the infrastructure segment business. From February 2013 to October 2014, Dr. Wong was responsible for market intelligence data as Head of Research & Informatics at Malaysia Healthcare Travel Council in Malaysia. From July 2009 to June 2011, Dr. Wong was a faculty member in Taylor’s University, Malaysia.
Kevin Chea Lin Liu
From March 2014 to March 2016, Mr. Liu was Managing Director responsible for recruitment at AIMS Select, a human resources management and services company located in Kuala Lumpur, Malaysia. From November 2010 to January 2014, Mr. Liu was Head of Retail Sales for Maxis, a telecommunications company located in Malaysia.
Executive Offices
Our principal executive offices are located at Level 1 Tower 1 Avenue 3 The Horizon, Bangsar South City, Kuala Lumpur, Malaysia 59200. Our telephone number is 60-3-2242-2259.
Item 1A.
Item 1A. Risk Factors
RISK FACTORS RELATING TO GMCI CORP. AND ITS BUSINESS
LOSSES FROM CONTINUING OPERATIONS MAY OCCUR AND, AS A RESULT, THE PRICE OF OUR COMMON STOCK MAY BE NEGATIVELY AFFECTED. IF WE ARE NOT ABLE TO GROW OUR BUSINESS, THE RESULTS OF OUR OPERATIONS AND OUR FINANCIAL CONDITION MAY BE ADVERSELY IMPACTED.
Risks Related to Our Business
We are an "emerging growth company" under the JOBS Act of 2012, and we cannot be certain if the reduced disclosure requirements applicable to emerging growth companies will make our common stock less attractive to investors.
We are an “emerging growth company”, as defined in the Jumpstart Our Business Startups Act of 2012 (“JOBS Act”), and we may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies” including, but not limited to, not being required to comply with the auditor attestation requirements of section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. We cannot predict if investors will find our common stock less attractive because we may rely on these exemptions. If some investors find our common stock less attractive as a result, there may be a less active trading market for our common stock and our stock price may be more volatile.
In addition, Section 107 of the JOBS Act also provides that an “emerging growth company” can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an “emerging growth company” can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We are choosing to take advantage of the extended transition period for complying with new or revised accounting standards.
We will remain an “emerging growth company” for up to five years, although we will lose that status sooner if our revenues exceed $1 billion, if we issue more than $1 billion in non-convertible debt in a three year period, or if the market value of our common stock that is held by non-affiliates exceeds $700 million as of any June 30.
Our status as an “emerging growth company” under the JOBS Act of 2012 may make it more difficult to raise capital as and when we need it. Because of the exemptions from various reporting requirements provided to us as an “emerging growth company” and because we will have an extended transition period for complying with new or revised financial accounting standards, we may be less attractive to investors and it may be difficult for us to raise additional capital as and when we need it. Investors may be unable to compare our business with other companies in our industry if they believe that our financial accounting is not as transparent as other companies in our industry. If we are unable to raise additional capital as and when we need it, our financial condition and results of operations may be materially and adversely affected.
We have elected not to have to comply with new and revised accounting standard while we are an emerging growth company until such standards apply to private companies, which means our financial statements may not be comparable to other public companies.
The JOBS Act affords us the ability to delay the adoption of new or revised accounting standards that have different effective dates for public and private companies until those standards apply to private companies. This election, which we have made, is irrevocable. The result of this election means that our financial statements may not be comparable to other public companies that comply with the accounting standards when effective.
There is substantial doubt as to whether we can continue as a going concern.
At December 31, 2015 and December 31, 2014, the Company reported a net loss of $435,185 and $385,329, respectively. The Company believes that its existing capital resources may not be adequate to enable it to execute its business plan. These conditions raise substantial doubt as to the Company’s ability to continue as a going concern. The Company estimates that it will require additional cash resources during 2015 and beyond based on its current operating plan and condition. The Company expects cash flows from operating activities to improve, primarily as a result of commencement of revenues from our proposed operating activities. While we expect to commence revenues within the next 24 months, there can be no assurance that we will ever achieve profitable operations. We continue to rely on funding from our officers, directors and controlling shareholders to meet our operational shortfalls. While we expect to continue to have these resources available to us, there is no guarantee we will be able to continue to meet our obligations in the normal course. The accompanying consolidated financial statements do not include any adjustments that might be necessary should we be unable to continue as a going concern. If we fail to generate positive cash flow or obtain additional financing, when required, we may have to modify, delay, or abandon some or all of our business and expansion plans.
If we are not able to face and solve one or more of the challenges that a developing company in the mining industry typically encounters, we will not succeed in implementing our business plan.
We expect to face many challenges in our business. These will include, but are not limited to:
The failure to address one or more of these above factors may impair our ability to carry out our business plan. In that event, an investment in the company would be substantially impaired.
We will be dependent on locating and hiring, at economical rates, independent consultants and occasional workers for the implementation of our business plan.
To locate, obtain and evaluate prospects and to conduct initial testing and later on any excavation and processing, we will rely on consultants and occasional workers in addition to our own staff. We may not be able to locate, employ or retain persons with the appropriate experience and skills to successfully execute our business plan. The inability to do the proposed actions on a timely basis or at all may result in the delay of implementing our business plan, thereby causing additional expense or our business failure.
Mineral and ore extraction has many risks associated with it, which risks may make our business more costly or more difficult to pursue. We may have to curtail our operations if we are not able to surmount any issues that we encounter.
Mineral and ore exploration has significant risks. Some of the exploratory risks include the following:
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Engaging and retaining the services of qualified geological, engineering and mining personnel and consultants;
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Establishing and maintaining budgets;
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Implementing appropriate financial controls;
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Acquiring relevant mineral and ore deposit data efficiently;
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Staking and evaluating appropriate prospects;
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Establishing initial exploration plans for mining prospects;
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Obtaining and verifying studies to determine mineral and ore deposit levels on our prospects;
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Ensuring the necessary exploratory and operational permits are filed on a timely basis, and the necessary permits are maintained and approved by the federal and state authorities; and
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Adhering to regulatory requirements.
Any of these individually or together could delay or halt implementation of the business plan or raise costs to levels that may make it unprofitable or impractical to pursue our business objectives.
Our business future is dependent on finding prospects with sufficient mineral and ore grade and consistency without which it may not be practical to pursue the business plan, and investors will lose their investment.
Our business model depends on locating prospects with commercially sufficient amounts of iron ore, bauxite, and tin ore. Until actual extraction and processing is undertaken, we will not know if our prospects have commercially viable mineral or ore deposits that can be profitably marketed. Even if initial reports about a particular prospect are positive, subsequent activities may determine that the prospect is not commercially viable. Thus, at any stage in the exploration and development process, we may determine there is no business reason to continue, and at that time, our financial resources may not enable us to continue exploratory operations and will cause us to terminate our current business plan. If we do substantially curtail or terminate our business, investors will lose their entire investment.
The properties that the Company holds licenses to may not have any of the mineral or ore deposits sought by the Company or if there are such mineral or ore deposits, they may not be commercially viable, therefore causing a total loss of investment in the Company.
The probability of the properties that the Company holds licenses to having mineral or ore deposits of iron ore, bauxite or tin ore that are commercially viable is remote. The fact that mining is a capital intensive and operationally an expensive business, and natural resources are subject to market volatility, makes commercial viability difficult to assess and obtain. Therefore, the exploration activities may result in a final decision that there is no commercial point in pursing the mining properties. In that event, investors will lose their investment in the Company with no prospect of realizing on their investment.
Regulatory compliance is complex and the failure to meet all the various requirements could result in loss of a prospect, fines or other limitations on the proposed business.
We will be subject to regulation by numerous governmental authorities in Malaysia. The failure or delay in making required filings and obtaining regulatory approvals or licenses will adversely affect our ability to explore for viable mineral or ore deposits and carry out subsequent aspects of our business plan. The failure to obtain and comply with any regulations or licenses may result in fines or other penalties, and even the loss of our rights over a prospect. We expect compliance with these regulations to be a substantial expense in terms of time and cost. Therefore, compliance with or the failure to comply with applicable regulation will affect our ability to succeed in our business plan and ultimately to generate revenues and profits.
Our business plan is premised on the price of minerals and ores in the global markets.
Our business plan depends on the price of minerals and ores in the global markets. The viability of any commercialization of minerals and ores will depend on the cost of recovery versus the market price of the mineral or ore and whether or not it has uses in the markets. An increase in market use and price will encourage industry interest in mine development of smaller operations such as our prospects and improve the likelihood of our overall success. The viability of our business plan is also dependent on the price of minerals and ores remaining at least at current prices. If prices fall substantially from the current levels, then our costs will be such that there will be insufficient profit margins and incentives to pursue our business plan. In that event, the Company will have to curtail its business plan and investors will lose their investment.
The Company faces competition from established mining operations and competition may develop among the junior mining companies, which will be better able to locate, stake and explore new mineral and ore sources more cost effectively and quicker than us.
There are many established mining companies that command greater resources than those available to the Company. These established companies have adequate financing, established claims, operations that are working and established means of extracting, processing and distribution. Additionally, there are numerous junior mining, exploration and production companies in existence that may be compete with us if the prices iron ore, bauxite or tin ore increase. These smaller companies may be more established and have resources unavailable to the Company, which will provide them advantage in their exploration, development and extraction activities. These companies likely would be able to reach production stages sooner than the Company and obtain market share before us. If our competition is such that we cannot compete and generate a sufficient return on our investment and operations, we may be forced to curtail our operations, resulting in a loss to investors.
We will compete with other mining enterprises for appropriate consultants and employees.
We will compete in the hiring of appropriate geological, engineering, permitting, environmental and other operational experts to assist with the location, exploration and development of prospects and implementation of our business plan. We believe we will have to offer or pay appropriate cash compensation and options to induce persons to be associated with an early-stage exploration company. If we are unable to make appropriate compensation packages available to induce persons to be associated with the Company because of its limited resources, we will not be able to hire the persons we need to carry out our business plan. In that event, investors will have their investment impaired or it may be entirely lost.
The Company will require additional capital to fund expanded operations, without which we will have to curtail our plans and investors, may lose the potential of their investment.
To commence our business plan, we will need additional capital. We believe we will need substantial amounts of equity investment in the early stages of our business plan. If we encounter unexpected expenses, the initial amounts of working capital will have to be increased, therefore, we may need additional capital sooner than expected during the exploratory stages of the business plan. The mining business, in all of its aspects, requires significant capital. Without additional capital the Company will have to curtail or substantially modify its overall business plan or abandon elements of it.
As of December 31, 2015 the Company had approximately $869,011 in debt, which if it cannot repay when due, will permit the holders to seek renegotiation or bankruptcy alternatives, the result of which could terminate implementation of the business plan.
The Company has $869,011 of debt related toaccounts payable, including trade payables, and advances from related parties. If the Company is unable to repay any of its obligations when due, the creditors could put the company into bankruptcy or force renegotiation of the terms of outstanding debt on terms that may be substantially less favorable. In either event, the ability of the Company to pursue its business plan will be impaired and the equity of the company will become worthless. To settle existing debt and any other debt outstanding from time to time, the Company may seek agreement with the holders to exchange the debt or obligation for shares of capital stock. In that case, there may be dilution experienced by investors in the Company. The management cannot predict whether it will be able to use any capital stock in this manner or the amount of capital stock that may have to be issued.
The Company does not have any identified sources of additional capital, the absence of which may prevent it from continuing its operations.
The Company does not have any arrangements with any investment banking firms or institutional lenders. Because we will need additional capital in the future, we will have to expend significant effort to raise operating funds. These efforts may not be successful, and they may be disruptive to our executives other responsibilities and our operations. In the absence of necessary capital, we will have to limit or curtail operations.
A majority stockholder has the ability to control our business direction.
Because our majority stockholder owns approximately 52% of the issued and outstanding shares of common stock, it is in a position to control the election of our board of directors and the selection of officers, management and consultants. Therefore, investors will be entirely dependent on its judgment in implementing the business plan of the Company.
There is not an active trading market for our common stock, and if a market for our common stock does not develop, our investors may be unable to sell their shares.
Our common stock is currently quoted on the OTC Pink trading system. The OTC Pink trading system is not a listing service or exchange, but is instead a dealer quotation service for subscribing members. The securities that trade on the OTC Pink trading system tend to be highly illiquid, and there is a greater chance of market volatility for securities that trade on the OTC Pink. In addition, the value of our common stock could be affected by many factors such as the following, some of which we may not be able to control or influence:
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Actual or anticipated variations in our operating results;
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Changes in the market valuations of other companies operating in our industry;
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Announcements by us or our competitors of significant acquisitions, strategic partnerships, joint ventures or capital commitments;
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Additions or departures of key personnel;
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Sales of our common stock or other securities in the open market; and
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Conditions or trends in the market in which we operate.
In a volatile market, investors may experience wide fluctuations in the market price of our securities. These fluctuations may prevent investors from obtaining a market price equal to the purchase price upon an attempt to sell our securities in the open market. In these situations, investors may be required either to sell our securities at a market price which is lower than the purchase price, or to hold our securities for a longer period of time than planned. An inactive market may also impair our ability to raise capital by selling shares of capital stock and may impair our ability to acquire other companies, assets or technologies by using common stock as consideration.
A decline in the price of our common stock could affect our ability to raise further working capital, it may adversely impact our ability to continue operations and we may go out of business.
A prolonged decline in the price of our common stock could result in a reduction in the liquidity of our common stock and a reduction in our ability to raise capital. Because we may attempt to acquire a significant portion of the funds we need in order to conduct our planned operations through the sale of equity securities, or convertible debt instruments, a decline in the price of our common stock could be detrimental to our liquidity and our operations because the decline may cause investors to not choose to invest in our stock. If we are unable to raise the funds we require for all our planned operations, we may be forced to reallocate funds from other planned uses and may suffer a significant negative effect on our business plan and operations, including our ability to develop new products and continue our current operations. As a result, our business may suffer, and not be successful and we may go out of business. We also might not be able to meet our financial obligations if we cannot raise enough funds through the sale of our common stock and we may be forced to go out of business
Because our principal assets will be located in Malaysia, outside of the United States, and our officers and directors, reside outside of the United States, it may be difficult for an investor to enforce any right based on U.S. federal securities laws against us and/or our officers and directors, or to enforce a judgment rendered by a United States court against us or our officers or directors.
Our principal operations and assets will be located in Malaysia, outside of the United States, and our officers and directors are non-residents of the United States. Therefore, it may be difficult to effect service of process on all our officers or directors in the United States, and it may be difficult to enforce any judgment rendered against our officers or directors. As a result, it may be difficult or impossible for an investor to bring an action against all our officers or directors, in the event that an investor believes that such investor's rights have been infringed under the U.S. securities laws, or otherwise. Even if an investor is successful in bringing an action of this kind, the laws of Malaysia, or any other country, may render that investor unable to enforce a judgment against the assets of our officers or directors. As a result, our shareholders may have more difficulty in protecting their interests through actions against our management, officers or directors, compared to shareholders of a corporation doing business and whose officers and directors reside within the United States.
Additionally, because of our assets are located outside of the United States, they will be outside of the jurisdiction of United States courts to administer, if we become subject of an insolvency or bankruptcy proceeding. As a result, if we declare bankruptcy or insolvency, our shareholders may not receive the distributions on liquidation that they would otherwise be entitled to if our assets were to be located within the United States under United States bankruptcy laws. We believe that if the prospective investors are located outside of the United States, that the protection afforded them by the United States bankruptcy code will be unavailable for them, or that it may not be enforceable where the primary assets are located.
We cannot assure you that we will declare dividends or have the available cash to make dividend payments, and as a result you may not receive any return on investment unless you sell your common stock for a price greater than that which you paid for it.
Although we do not currently intend to pay dividends, to the extent we decide in the future to pay dividends on our common stock, we will pay such dividends at such times and in such amounts as the board of directors determines appropriate and in accordance with applicable law. Our board of directors may take into account general and economic conditions, our financial condition and results of operations, our available cash and current and anticipated cash needs, capital requirements, contractual, legal, tax and regulatory restrictions and implications on the payment of dividends by us to our stockholders or by our subsidiaries to us and such other factors as our board of directors may deem relevant. There can be no assurance that we will pay dividends going forward or as to the amount of such dividends. As a result, you may not receive any return on an investment in our common stock unless you sell our common stock for a price greater than that which you paid for it.
Our common stock is and will be subordinate to all of our existing and future indebtedness.
Shares of our common stock are common equity interests in us and, as such, will rank junior to all of our existing and future indebtedness and other liabilities. Additionally, our right to participate in a distribution of assets upon any of our subsidiaries’ liquidation or reorganization is subject to the prior claims of that subsidiary’s creditors.
Because we may be subject to the “penny stock” rules, you may have difficulty in selling our common stock.
Our common stock may be subject to regulations of the SEC relating to the market for penny stocks. Penny stock, as defined by the Penny Stock Reform Act, is any equity security not traded on a national securities exchange that has a market price of less than $5.00 per share. The penny stock regulations generally require that a disclosure schedule explaining the penny stock market and the risks associated therewith be delivered to purchasers of penny stocks and impose various sales practice requirements on broker-dealers who sell penny stocks to persons other than established customers and accredited investors. The broker-dealer must make a suitability determination for each purchaser and receive the purchaser’s written agreement prior to the sale. In addition, the broker-dealer must make certain mandated disclosures, including the actual sale or purchase price and actual bid offer quotations, as well as the compensation to be received by the broker-dealer and certain associated persons. The regulations applicable to penny stocks may severely affect the market liquidity for your common stock and could limit your ability to sell your securities in the secondary market.
The Financial Industry Regulatory Authority (“FINRA”) sales practice requirements may also limit your ability to buy and sell our common stock, which could depress the price of our shares.
FINRA has adopted rules that require broker-dealers to have reasonable grounds for believing that an investment is suitable for a customer before recommending that investment to the customer. Prior to recommending speculative low-priced securities to their non-institutional customers, broker-dealers must make reasonable efforts to obtain information about the customer’s financial status, tax status and investment objectives, among other things. Under interpretations of these rules, FINRA believes that there is a high probability such speculative low-priced securities will not be suitable for at least some customers. Thus, FINRA requirements make it more difficult for broker-dealers to recommend that their customers buy our common stock, which may limit your ability to buy and sell our shares, have an adverse effect on the market for our shares, and thereby depress our share price.
Item 1B.
Item 1B. Unresolved Staff Comments
Not applicable.
Item 2.
Item 2. Properties
The Company office is located at Level 1 Tower 1 Avenue 3 The Horizon, Bangsar South City, Kuala Lumpur, Malaysia 59200. The SBS office is located at No 1, 1st Floor, Lorong Sekilau 1, Bukit Sekilau, 25200 Kuanan, Pahang Darul Makmur, Malaysia.
Item 3.
Item 3. Legal Proceedings
In the ordinary course of business, the Company may become involved in legal proceedings from time to time. The Company is not currently party to any legal proceedings, nor is it aware of any material pending legal proceedings.
Item 4.
Item 4. Mine Safety Disclosures
Not applicable.
PART II
Item 5.
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
Market Information
Our common stock is available for trading on the OTC Pink trading platform. Currently, there is only very occasional, sporadic trading and at such times only minimal volume. The common stock does not exhibit any consistent trading or regular prices to report herein. There can be no assurance given that the common stock will continue to be available for trading in any public market or that there will develop an active public market in the security. Therefore, holders of our common stock may not be able to sell their securities from time to time in the future, if at all.
Number of Holders
As of March 14, 2017, we had 204 shareholders of record of our common stock and believe that there may be additional beneficial holders of our common stock.
Dividends
We have not paid any cash dividends to our shareholders. The declaration of any future cash dividends is at the discretion of our board of directors and depends upon our earnings, if any, our capital requirements and financial position, our general economic conditions, and other pertinent conditions. It is our present intention not to pay any cash dividends in the foreseeable future, but rather to reinvest earnings, if any, in our business operations.
Equity Compensation Plans
The Company has not adopted any equity compensation plans and does not anticipate adopting any equity compensation plans in the near future. Notwithstanding the foregoing, because the Company has limited cash resources at this time, it may issue shares or options to or enter into obligations that are convertible into shares of common stock with its employees and consultants as payment for services or as discretionary bonuses. The Company does not have any arrangements for such issuances or arrangements at this time.
Recent Sales of Unregistered Securities
1. On May 20, 2014, the Company acquired numerous maps, old drill log results and other data from a mining data base. In exchange for the data, 100,000 shares of common stock were issued. The acquired data was recognized as an intangible asset and measured at the market value of the common stock on date of issuance of $0.025; as such the cost base of the assets was $2,500.
2. On November 20, 2014, the Company entered a Debt Swap agreement with its former parent company Pacific Gold Corp, whereby the company indebtedness to the parent company from $204,932 as of November 20, 2014 to $195,000 in 10% interest rate convertible notes with conversion price at $0.05 per share. The notes were later waived and released by the holder.
3. During the period ended December 31, 2014, the Company received funds in the amount of $23,468 from a third party. These amounts are due on demand and bear no interest.
4. On March 26, 2015, the Company entered into a Share Exchange Agreement (the "Share Exchange Agreement") with all of the shareholders of SBS Mining Corp. Malaysia Sdn. Bhd., ("SBS") a Malaysian corporation. Pursuant to the Share Exchange Agreement, the Company acquired 600,000 shares of capital stock of SBS from the SBS Shareholders and in exchange issued 500,000,000 restricted shares of its common stock to the SBS Shareholders.
The 600,000 shares of SBS constituted all of the issued and outstanding shares of SBS and were held by a total of three (3) shareholders, including the Company's sole director and Chief Executive Officer, Mr. Lok Khing Ming. Mr. Ming owned ten percent (10%) of SBS, or 60,000 shares. The remaining shares were owned by Mr. Liew Chin Loong (90,000 shares; 15%), who resides in Malaysia and LYF & Son Realty Sdn. Bhd., a Malaysian corporation (450,000 shares; 75%). Pursuant to the Share Exchange Agreement, Mr. Lok received 50 million shares of the Company's common stock; Mr. Liew received 75 million shares; and LYF & Son Realty Sdn. Bhd. received 375 million shares.
5. On June 15, 2015, the Company entered into Subscription Agreements with its President and CEO, Mr. Lok Khing Ming, and Mr. Liew Kin Sing, a resident of Malaysia, whereby the Company sold to Mr. Lok 120 million shares of its common stock and sold to Mr. Liew 100 million shares of common stock. Both sales were priced at the par value of $0.001. Mr. Lok and Mr. Liew paid cash for these shares.
Exemptions from Registration
The shares of common stock and debt referenced in items #1 -3 above were issued in reliance upon an exemption from registration afforded under Section 4(2) of the Securities Act for transactions by an issuer not involving a public offering, or Regulation D promulgated thereunder. These issuances were exempt transactions pursuant to Section 4(2) of the Securities Act as they were private transactions by the Company and did not involve any public offering.
The sales described in items #4 and #5 above were made pursuant to the exemption from registration set forth in Regulation S, promulgated by the Securities Exchange Commission under the Securities Act of 1933. No underwriters were utilized in connection with this sale of securities.
Each issuance of these securities was to a single “non-U.S. person” (as that term is defined in Regulation S of the Securities Act of 1933, as amended) in an offshore transaction in which the Company relied on the registration exemption provided for in Regulation S and/or Section 4(2) of the Securities Act of 1933, as amended (the “Act”), as the conditions of Regulation S were met, including but not limited to the following conditions:
- Mr. Lok is a Malaysian citizen and was in Malaysia at the time of the sale of the shares;
- Mr. Lok agreed to resell the shares only in accordance with Regulation S, pursuant to a registration under the Act, or pursuant to an available exemption from registration;
- Mr. Liew is a Malaysian citizen and was in Malaysia at the time of the sale of the shares;
- Mr. Liew agreed to resell the shares only in accordance with Regulation S, pursuant to a registration under the Act, or pursuant to an available exemption from registration;
Each certificate representing the shares sold contains a legend that transfer of the shares is prohibited except in accordance with the provisions of Regulation S, pursuant to a registration under the Act, or pursuant to an available exemption from registration and the hold may engage in hedging transactions with regards to the Company’s common stock unless in compliance with the Act.
Issuer Purchases of Equity Securities
There were no repurchases of common stock for the fiscal year ended December 31, 2015.
Item 6.
Item 6. Selected Financial Data
Not applicable.
Item 7.
Item 7. Management’s Discussion and Analysis of Financial Condition and Result of Operations
The following discussion is intended to assist in the understanding and assessment of significant changes and trends related to the results of operations and financial condition of GMCI CORP. This discussion and analysis should be read in conjunction with our financial statements and notes thereto included elsewhere in this Annual Report on Form 10-K for the fiscal year ended December 31, 2015.
Results of Operations
Revenues
During the fiscal year ended December 31, 2015 we did not realize any revenues as we did not commence mining activities on our properties due to the depressed value of iron ore. Further we had not commenced our bauxite lead financing activities until subsequent to the fiscal year end. We expect the first quarter in which we will commence earning revenue will be the quarter ended March 31, 2017.
Operating Expenses
Our consolidated expenses for the fiscal years ended December 31, 2015 and 2014:
Our general and administrative expenses include rent, telephone, internet services, banking charges, salaries and miscellaneous office costs.
The increase in expenses for the fiscal year ended December 31, 2015 is primarily due to a substantive increase in professional fees incurred including legal, filing and accounting fees as the Company completed a reverse merger transaction in March of fiscal 2015. Salaries for ongoing staffing requirements following the conclusion of our prospecting efforts were allocated to General and administrative expense, which explains the period over period increase in that category of expenditure. General and administrative fees experienced a slight reduction from $246,596 in fiscal 2014 to $230,923 in fiscal 2015 as a result of a reduction to overall office costs.
We expect the general and administrative expenses to increase in future periods as we continue to grow our recently acquired bauxite financing business, as a result of the addition of management staff to help manage growth in the financing business. The Company is also developing plans and aggressively moving towards further acquisition of profitable companies and businesses in order to expand our operations.
Further in fiscal 2015 the Company recorded impairment on collection of other receivables in the total amount $128,358 with no comparative entry in fiscal 2014. During fiscal 2014 the Company provided an advance of $128,358 (RM$500,000) to a third party, the collectability was determined to be impaired in the current fiscal year.
Net losses in fiscal 2015 and 2014 totaled $563,543 and $385,329 respectively.
Liquidity and Capital Resources
As of December 31, 2015, the Company had total current assets of $44,999 and a working capital deficit of $824,012, compared to total current assets of $162,666 and a working capital deficit of $332,559 as of December 31, 2014. The increase in our working capital deficit was due to an increase in our accounts payable, and advances payable to a related party which allowed us to fund ongoing operations. Further the Company’s current assets were reduced by $128,358 in the current fiscal year as a result of the impairment of certain other accounts receivable. A substantive portion of our current assets relate to sundry receivables and deposits on leased property, as well as a deposit paid to a third party by our subsidiary, SBS, which is expected to be recovered in fiscal 2017.
During the fiscal year ended December 31, 2015, cash provided by operating activities totaled $10,360, primarily as a result of a net loss from operations of $563,543 where we experienced a significant increase in advances from related parties of $356,413, a reduction to other receivables of $128,358 as a result of the impairment of certain other accounts receivable, an increase in accounts payable of $88,400, an increase in accounts receivable of $24,722, and depreciation expense of $25,454. During fiscal 2014 we reported cash used by operating activities of $312,917 as a result of advances from related parties of $204,650, an increase in accounts payable of $1,755, an increase in accounts receivable of $163,395, and depreciation expense of $29,402.
Net cash used in investing activities was $3,370 (December 31, 2014 - $21,836) and net cash provided by financing activities was $35 (December 31, 2014 - $152,925) during the fiscal year ended December 31, 2015 as the Company did not receive proceeds from any further share subscriptions.
Off-balance sheet arrangements
We did not have during the periods presented, and we do not currently have, any off-balance sheet arrangements, as defined in the rules and regulations of the Securities and Exchange Commission (‘SEC”).
Critical Accounting Policies
The preparation of our consolidated financial statements and notes thereto requires management to make estimates and assumptions that affect the amounts and disclosures reported within those financial statements. On an ongoing basis, management evaluates its estimates, including those related to revenue recognition, contingencies, litigation and income taxes. Management bases its estimates and judgments on historical experiences and on various other factors believed to be reasonable under the circumstances. Actual results under circumstances and conditions different than those assumed could result in differences from the estimated amounts in the financial statements. Refer to Note 1 of the audited financial statements included herein.
There have been no material changes to these policies during fiscal 2016.
Item 7A.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Not applicable.
Item 8.
Item 8. Financial Statements and Supplementary Data
The financial statements appear beginning on page, immediately following the signature page of this report.
FINANCIAL STATEMENTS
FOR THE FISCAL YEARS ENDED
DECEMBER 31, 2015 AND 2014
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders of GMCI Corp.:
We have audited the accompanying consolidated balance sheets of GMCI Corp. (“the Company”) as of December 31, 2015 and 2014 and the related statement of operations, stockholders’ equity (deficit) and cash flows for the years then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statement referred to above present fairly, in all material respects, the financial position of GMCI Corp., as of December 31, 2015 and 2014, and the results of its operations and its cash flows for the year then ended, in conformity with generally accepted accounting principles in the United States of America.
The company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the Company's internal control over financial reporting. Accordingly, we express no such opinion.
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company has suffered recurring losses from operations and has a significant accumulated deficit. In addition, the Company continues to experience negative cash flows from operations. These factors raise substantial doubt about the Company's ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
/s/ BF Borgers CPA PC
BF Borgers CPA PC
Lakewood, CO
May 23, 2017
GMCI Corp.
Consolidated Balance Sheets
See accompanying notes to the financial statements
GMCI Corp.
Consolidated Statements of Operations
See accompanying notes to the financial statements
GMCI Corp.
Consolidated Statements of Changes in Stockholders' Deficit
See accompanying notes to the financial statements
GMCI Corp.
Consolidated Statements of Cash Flows
See accompanying notes to the financial statements
GMCI Corp.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2015
Note 1 - Organization and Summary of Significant Accounting Policies
GMCI Corp., formerly Pacific Metals Corp. (“GMCI” or the “Company”) was incorporated in Nevada on June 28, 2006.
On March 17, 2015, the Company filed Articles of Merger with the Nevada Secretary of State whereby it entered into a statutory merger with its wholly-owned subsidiary, GMCI Corp., pursuant to Nevada Revised Statutes 92A.200 et. seq. The effect of such merger is that the Company was the surviving entity and changed its name to "GMCI Corp."
On March 19, 2015, the Company filed an Issuer Company-Related Action Notification Form with FINRA requesting that the aforementioned name change be effected in the market. The Company also requested that its ticker symbol be changed to "GMCI". On April 16, 2015, FINRA granted approval for the name change and the ticker symbol change.
On March 26, 2015, GMCI entered into and closed a Share Exchange Agreement (the "Agreement") with all of the shareholders of SBS Mining Corp. Malaysia Sd. Bhd., ("SBS") a Malaysian corporation whose primary business is mining and exploration of properties located in Malaysia. Pursuant to the Share Exchange Agreement, the Company acquired 600,000 shares of capital stock of SBS from the SBS Shareholders and in exchange issued 500,000,000 restricted shares of its common stock to the SBS Shareholders.
As a result of the completion of the aforementioned acquisition, SBS is now the Company's wholly-owned subsidiary. The aforementioned business combination was accounted for as a reverse acquisition and recapitalization using accounting principles applicable to reverse acquisitions whereby the financial statements subsequent to the date of the transaction are presented as a continuation of SBS. Under reverse acquisition accounting SBS (subsidiary) is treated as the accounting parent (acquirer) and the Company (parent) is treated as the accounting subsidiary (acquiree). All outstanding shares have been restated to reflect the effect of the business combination. As a result of the aforementioned transactions a total of 802,346 shares of the Company’s common stock issued and outstanding at December 31, 2014 are reflected as part of the recapitalization transactions impacted March 26, 2015, in our Statements of Stockholder’s Equity (Deficit).
SBS Mining Corp. Malaysia Sdn. Bhd. is a producer of metal ore and is focused on producing iron ore, bauxite and tin ore. Currently SBS is principally engaged in the prospecting of minerals and ultimately the mining of minerals upon successful exploration. As at the date of this report SBS is not yet generating revenues as a result of its mineral exploration and ore acquisition efforts.
Principals of Consolidation
The consolidated financial statements include the accounts of GMCI and its wholly-owned subsidiary SBS. All significant intercompany balances and transactions have been eliminated.
Basis of Presentation
The accompanying consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America ("US GAAP") and are presented in U.S. dollars.
Reclassification
Certain reclassifications have been made to the prior period’s financial statements to conform to the current period’s presentation.
GMCI Corp.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2015
Note 1 - Organization and Summary of Significant Accounting Policies (cont’d)
Significant Accounting Principles
Use of Estimates and Assumptions.
The preparation of financial statements in conformity with generally accepted accounting principles 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 revenue and expenses during the reporting period. Actual results when ultimately realized could differ from these estimates.
Cash and Cash Equivalents
The company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents. At December 31, 2015, cash includes cash on hand and cash in the bank.
Fair Value of Financial Instruments
The carrying value of financial instruments including cash and cash equivalents, receivables, prepaid expenses, accounts payable and accrued expenses, approximates their fair value due to the relatively short-term nature of these instruments.
Foreign Currencies
Functional and presentation currency - Items included in the consolidated financial statements of each of the Company and its subsidiary are measured using the currency of the primary economic environment in which the entity operates (the ‘functional currency’). The consolidated financial statements are presented in US Dollars, which is the Company’s functional and presentation currency. The functional currency of the Company’s subsidiary, SBS is the Malaysian Ringgit.
Transactions and balances - Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at quarter end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognized in the statement of operations.
Subsidiaries The results and financial position of the subsidiary that has a functional currency different from the presentation currency are translated into the presentation currency as follows:
i) assets and liabilities are translated at the closing rate at the date of the balance sheet;
ii) income and expenses are translated at average exchange rates;
iii) all resulting exchange differences are recognized as other comprehensive income, a separate component of equity.
Plant and equipment and depreciation
Plant and equipment are stated at cost less accumulated depreciation and impairment loss, if any. Depreciation is calculated on straight line basis to write off the cost of plant and equipment over their expected useful lives at the following annual rates:
Motor Vehicles
%
Office equipment
%
Tools and equipment
%
Computer and software
%
GMCI Corp.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2015
Note 1 - Organization and Summary of Significant Accounting Policies (cont’d)
Mineral Properties
The Company is primarily engaged in the business of the acquisition, exploration, development, mining, and production of mineral properties and or resources, with a current emphasis on iron ore, bauxite and tin. Mineral claims and other property acquisition costs are capitalized as incurred. Such costs are carried as an asset of the Company until it becomes apparent through exploration activities that the cost of such properties will not be realized through mining operations. Mineral exploration costs are expensed as incurred, and when it becomes apparent that a mineral property can be economically developed as a result of establishing proven or probable reserve, the exploration costs, along with mine development costs, are capitalized. The costs of acquiring mineral claims, capitalized exploration costs, and mine development costs are recognized for depletion and amortization purposes under the units-of-production method over the estimated life of the probable and proven reserves. If mineral properties, exploration, or mine development activities are subsequently abandoned or impaired, any capitalized costs are charged to operations in the current period.
Exploration expenditures
Exploration, acquisition (except for property purchase costs), and general and administrative costs related to exploration projects and prospecting activities are charged to expense as incurred. During the years ended 2015 and 2014, the Company incurred exploration expenses of $2,829 and $134,762, respectively. As at June 30, 2014 the Company had completed its prospecting activities in relation to certain iron ore resources, at which time all associated overhead pending the extraction of the resource in place has been allocated to general operating expense, save certain annual expenses for permitting and licensing of the property which are recorded in the current period.
Impairment of Long-Lived Assets
Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable through the estimated undiscounted cash flows expected to result from the use and eventual disposition of the assets. Whenever any such impairment exists, an impairment loss will be recognized for the amount by which the carrying value exceeds the fair value. During the years ended December 31, 2015and 2014, there was no impairment of long-lived assets.
Income Taxes
The company accounts for income taxes in accordance with ASC Topic 740, Income Taxes. This statement prescribes the use of the asset and liability method whereby deferred tax asset and liability account balances are determined based on differences between financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse.
Loss Per Share
The company follows the provisions of ASC Topic 260, Earnings per Share. Basic net loss per share is computed by dividing net loss available to common stockholders by the weighted average number of common shares outstanding during the period. Basic and diluted losses per share are the same as all potentially dilutive securities are anti-dilutive.
Basic earnings per share is computed by dividing net income available to common shareholders by the weighted average number of common shares outstanding during the period. Diluted earnings per share reflects the potential dilution that could occur if stock options and other commitments to issue common stock were exercised or equity awards vest resulting in the issuance of common stock or conversion of notes into shares of the company’s common stock that could increase the number of shares outstanding and lower the earnings per share of the company’s common stock. This calculation is not done for periods in a loss position as this would be antidilutive. As of December 31, 2015, and 2014, there were no stock options or stock awards that would have been included in the computation of diluted earnings per share that could potentially dilute basic earnings per share in the future.
GMCI Corp.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2015
Note 1 - Organization and Summary of Significant Accounting Policies (cont’d)
Recently issued accounting pronouncements
In November 2015, the FASB issued ASU No. 2015-17, "Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes." Under this guidance, deferred tax liabilities and assets are required to be classified as noncurrent in a classified statement of financial position. Prior to this guidance, the deferred taxes for each jurisdiction (or tax-paying component of a jurisdiction) would be presented as a net current asset or liability and net non-current asset or liability. This guidance is effective for interim and annual reporting periods beginning after December 15, 2016 with earlier application permitted. This amendment will not have a material impact on our financial statements.
On September 25, 2015, the FASB issued Accounting Standards Update, Business Combinations (Topic 805): Simplifying the Accounting for Measurement-Period Adjustments. The amendments are effective for fiscal years beginning after December 15, 2015, including interim periods within those fiscal years. The amendments should be applied prospectively to adjustments to provisional amounts that occur after the effective date of this Update with earlier application permitted for financial statements that have not been issued. This amendment will not have a material impact on our financial statements.
In April 2015, the FASB issued ASU 2015-03, Simplifying the Presentation of Debt Issuance Costs. The new standard will require debt issuance costs to be presented on the balance sheet as a direct reduction of the carrying value of the associated debt liability, consistent with the presentation of debt discounts. Currently, debt issuance costs are presented as a deferred asset. The recognition and measurement requirements will not change as a result of this guidance. The standard is effective for the annual reporting periods beginning after December 15, 2015 and will be applied on a retrospective basis. This amendment will not have a material impact on our financial statements.
There are several new accounting pronouncements issued by the Financial Accounting Standards Board (“FASB”) which are not yet effective. Each of these pronouncements, as applicable, has been or will be adopted by the Company. As of December 31, 2015, none of these pronouncements is expected to have a material effect on the financial position, results of operations or cash flows of the Company.
Note 2 - Going Concern
At December 31, 2015 and December 31, 2014, the Company reported a net loss of $563,543 and $385,329, respectively. The Company believes that its existing capital resources may not be adequate to enable it to execute its business plan. These conditions raise substantial doubt as to the Company’s ability to continue as a going concern. The Company estimates that it will require additional cash resources during 2016 and beyond based on its current operating plan and condition. The Company expects cash flows from operating activities to improve, primarily as a result of an increase in revenue and a decrease in certain operating expenses, although there can be no assurance thereof. The accompanying consolidated financial statements do not include any adjustments that might be necessary should we be unable to continue as a going concern. If we fail to generate positive cash flow or obtain additional financing, when required, we may have to modify, delay, or abandon some or all of our business and expansion plans.
The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts, or amount and classification of liabilities that might cause results from this uncertainty.
GMCI Corp.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2015
Note 3 - Business Combination
On March 17, 2015, the Company filed Articles of Merger with the Nevada SOS whereby it entered into a statutory merger with its wholly-owned subsidiary, GMCI Corp., pursuant to Nevada Revised Statutes 92A.200 et. seq. The effect of such merger is that the Company was the surviving entity and changed its name to "GMCI Corp."
On March 19, 2015, the Company filed an Issuer Company-Related Action Notification Form with FINRA requesting that the aforementioned name change be effected in the market. The Company also requested that its ticker symbol be changed to "GMCI". On April 16, 2015, FINRA granted approval for the name change and the ticker symbol change.
On March 26, 2015, GMCI entered into a Share Exchange Agreement (the "Agreement") with all of the shareholders of SBS Mining Corp. Malaysia Sdn. Bhd., ("SBS") a Malaysian corporation whose primary business is mining and exploration of properties located in Malaysia. Pursuant to the Share Exchange Agreement, the Company acquired 600,000 shares of capital stock of SBS from the SBS Shareholders and in exchange issued 500,000,000 restricted shares of its common stock to the SBS Shareholders. As a result of the aforementioned transactions a total of 802,346 shares of the Company’s common stock issued and outstanding at December 31, 2014 are reflected as part of the recapitalization transactions impacted March 26, 2015, in our Statements of Stockholder’s Equity (Deficit).
As a result of the completion of this acquisition, SBS is now the Company's wholly-owned subsidiary.
Pursuant to the terms and conditions of the acquisition agreement, we acquired 100% of the issued capital stock (600,000 common shares) of SBS in exchange for 500,000,000 shares of common stock of the Company.
The following table summarizes the estimated fair values of the assets acquired and liabilities assumed relative to the Parent company operations, at the business combination transaction date:
Cash and bank balance
$
Other receivable and deposits
6,000
Total identifiable assets
$
6,035
Other payables and accruals
$
9,448
Amounts due to related parties
47,043
Convertible notes
195,000
Total identifiable liabilities
$
251,491
Net identifiable assets
$
(245,456
)
Note 4 - Plant and Equipment
GMCI Corp.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2015
Note 4 - Plant and Equipment (cont’d)
Note 5 - Prepaid expenses and deposits
Note 6 - Mineral Licenses
On January 6, 2014 the Company’s subsidiary, SBS, entered into two agreements with unrelated third parties, YM Tengku Dato’ Kalsom Ibni Al-Marhum Sultan Abu Bakar and YM Tengku Dato’ Norazahan Ibni Al-Marhum Sultan Abu Bakar where under the Company was granted in consideration of all work and fees payable on the underlying lands a power of attorney granting a license to prospect, extract and monetize iron ore on the following two (2) properties:
GMCI Corp.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2015
Note 6 - Mineral Licenses (Cont’d)
NO
Mining Land
Mining Area
(Hectares)
Sungai Bekil, Mukim Of Batu Talam, State Of Pahang Darul Makmur, Malaysia
Sungai Semeriang, Mukim Of Batu Talam, State Of Pahang Darul Makmur, Malaysia
The total mining area measures approximately 100 hectares (247 Acres). Under the terms of the agreements the Company may extract and sell the iron ore subject to the payment of 5% royalties, tributes, and all such other fees and expenses as may be assessed. Concurrently with the aforementioned agreements the Company and each of the respective parties entered into an exclusive operating agreement the terms of which set out terms and conditions for the mining operation including the annual costs of the mineral license, rents and other fees over the two-year term of the mineral license, totaling US$7,219 (RM$31,000) per mining area.
Note 7 - Convertible Note
During the fiscal year ended December 31, 2014 the Company’s former parent company, Pacific Gold Corp. advanced a further $42,335 to fund our ongoing operations. On November 20, 2014, the Company entered a Debt Swap agreement with Pacific Gold Corp, whereby the Company indebtedness to the parent company totaling $204,932 as of November 20, 2014 was converted to $195,000 in convertible notes bearing interest at a rate of 10% per annum, with a conversion price of $0.05 per share, due and payable on November 20, 2016. The convertible note is payable to the brother of our former officer and director. On May 6, 2015, a General Release and Waiver of debt was entered into between the Company and the brother of our former office and director. Under the General Release and Waiver of debt, the debtor provided the Company a full waiver and release of the convertible note and deemed the convertible note null and void in exchange for the Company quit claiming certain mining claims in return.
The Company recorded a total of $201,999 in respect of the aforementioned debt extinguishment of which $195,000 was principal and $6,999 was accrued interest. The entire amount was allocated to additional paid in capital.
Note 8 - Office Lease
On February 28, 2014, the Company’s subsidiary entered into a two-year sublease commencing March 1, 2014 for shared office premises in Kuala Lumpur. Under the terms of the sublease the Company will pay monthly rent of $233 USD (RM$1,000) and shall be responsible for all monthly utilities. The Company has paid a deposit of two months rent and a deposit for utilities with a cumulative total of $466 USD (RM$2,000). In February 2015, the Company verbally agreed with the landlord to assume additional office space upon departure of the tenant with whom the sublease had been agreed. For the period February 2015 until November 2015, the Company paid base rent of $513 USD (RM$2,200). In November 2015, the Company and the landlord agreed to terminate the lease with no further obligation.
On July 10, 2015, the Company’s subsidiary entered into a two-year lease commencing August 1, 2015 for office premises in Kuala Lumpur. Under the terms of the lease the Company will pay monthly rent of $605 USD (RM$2,600) and shall be responsible for all monthly utilities. The Company has paid a deposit of two months rent and a deposit for utilities with a cumulative total of $1,816 USD (RM$7,800). The annual lease commitment, exclusive of utilities is noted below:
Fiscal 2016 - US$6,660 (RM$28,600)
Fiscal 2017 - US$7,266 (RM$31,200)
Fiscal 2018 - US$605 (RM$2,600)
GMCI Corp.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2015
Note 9 - Advances from Related Parties / Related Parties Transactions
(a) Expenses paid by related parties:
(1)
Sincere Pacific Mining is a company which shares a director in common with SBS.
Note 10 - Common Stock
The Company’s authorized common stock consists of 4,000,000,000 common shares with par value of $0.001 and 10,000,000 shares of preferred stock with par value of $0.001 per share.
The Company had 500,000,000 common shares issued and outstanding as of December 31, 2014 as a result of the recapitalization and reverse merger transaction described above in Note 3. In addition, as of the transaction date, there were 802,346 common shares issued and outstanding which are reflected as part of the recapitalization.
On June 15, 2015, the Company entered into Subscription Agreements with its President and CEO, Mr. Lok Khing Ming, and Mr. Liew Kin Sing, a resident of Malaysia, whereby the Company sold to Mr. Lok 120 million shares of its common stock and sold to Mr. Liew 100 million shares of common stock. Both sales were priced at the par value of $0.001. Mr. Lok and Mr. Liew paid cash for these shares in July of 2016. As at December 31, 2015, the amounts payable under the aforementioned subscription agreements has been recorded on the balance sheet as “subscription receivable”
As of December 31, 2015 and December 31, 2014, the Company has 720,802,346 and 500,000,000 shares of common stock issued and outstanding.
Note 11 - Income Taxes
The Company uses the liability method, where deferred tax assets and liabilities are determined based on the expected future tax consequences of temporary differences between the carrying amounts of assets and liabilities for financial and income tax reporting purposes. During 2015 and 2014, the Company incurred net losses and, therefore, has no tax liability. The net deferred tax asset generated by the loss carry-forward has been fully reserved. The cumulative net operating loss carry-forward is approximately $1,001,468 and $437,925 at December 31, 2015 and 2014, respectively, and will begin to expire in the year 2034.
GMCI Corp.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2015
Note 11 - Income Taxes (Cont’d)
The Company had deferred income tax assets as of December 31, 2015, and 2014 as follows:
Item 9.
Item 9. Changes in and Disagreements with Accountants and Financial Disclosure
None.
Item 9A.
Item 9A. Controls and Procedures
(a)
Evaluation of Disclosure Controls
Our management evaluated the effectiveness of our disclosure controls and procedures as of December 31, 2015. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Securities and Exchange Act of 1934, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized, and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files and submits under the Exchange Act is accumulated and communicated to management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure. Based on the evaluation of our disclosure controls and procedures as of December 31, 2015, our chief executive officer and chief financial officer concluded that, as of such date, our disclosure controls and procedures were not effective.
(b)
Management’s Responsibility for Financial Statements
Our management is responsible for the integrity and objectivity of all information presented in this report. The consolidated financial statements were prepared in conformity with accounting principles generally accepted in the United States of America and include amounts based on management’s best estimates and judgments. Management believes the consolidated financial statements fairly reflect the form and substance of transactions and that the financial statements fairly represent the Company’s consolidated financial position and results of operations for the periods and as of the dates stated therein.
(c)
Management’s Assessment of Internal Control over Financial Reporting
The Company management is responsible for establishing and maintaining adequate internal control over financial reporting as defined by Rules 13a-15(f) and 15(d)-15(f) under the Securities and Exchange Act of 1934. This system is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted accounting principles.
Our internal control over financial reporting includes those policies and procedures that: (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, a system of internal control over financial reporting can only provide reasonable assurance and may not prevent or detect misstatements. Further, because of changes in conditions, effectiveness of internal control over financial reporting may vary over time.
Under the direction of Chief Executive Officer and Chief Financial Officer, management evaluated the effectiveness of the system of internal control over financial reporting based on the framework in Internal Control-Integrated Framework, published by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). During fiscal 2015 the Company achieved increased segregation of duties by retaining additional employees to deal with general administrative and financial matters, as well as segregated duties for corporate officers. While management has retained additional employees and has implemented additional control procedures within the framework of controls over financial reporting, the Company is still evaluating possible weaknesses in our system of controls. Management periodically re-evaluates this situation and reports to the registered public accounting firm to the Company about this condition. Based on our overall controls, and considering the reporting and interaction by our Board of Directors, management determined that the Company’s system of internal control over financial reporting was not effective as of December 31, 2015. Management is continuing to implement further measures to ensure an effective framework of controls is in place for our future reporting periods.
(d)
Report of Independent Registered Public Accounting Firm
This annual report does not include an attestation report of the company’s registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the company’s registered public accounting firm.
During the Company’s last fiscal quarter there were no changes in internal control over financial reporting that materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
Item 9B.
Item 9B. Other Information
None
PART III
Item 10.
Item 10. Directors, Executive Officers and Corporate Governance
(a) - (b) Identification of Directors and Executive Officers.
The Company: The following table identifies all of the members of the Company’s Board of Directors and its Executive Officers, as of March 14, 2017. The members of the Board serve until the next annual meeting and a successor is appointed and qualified, or until resignation or removal.
Name
Age
Positions Held
Date of Appointment
Lok Khing Ming
Sole Director, Chairman of the Board
October 5, 2016(1)
Calvin Chin
Chief Executive Officer
October 5, 2016(2)
M.W. “Jason” Chan
Chief Financial Officer
October 5, 2016
S.N. Loh
Chief Operating Officer
October 5, 2016
(1)
Mr. Lok was originally appointed as an officer and director on December 12, 2014.
(2)
Mr. Chin was originally appointed as the Chief Financial Officer of GMCI on October 1, 2015.
(c) Identification of certain significant employees. The Company currently does not have any significant employees.
(d) Family relationships. None.
(e) Business experience
Mr. Lok Khing Ming, Sole Director and Chairman of Board
Mr. Lok Khing Ming was previously the managing director of SBS Mining Corporation Malaysia Sdn. Bhd., a company engaged in mining and trading iron ore. Mr. Lok's responsibilities include leading the exploration for mining opportunities in and around Malaysia, developing business strategies and implementing the Company's marketing plan. From 2007-2010, Mr. Lok was General Manager of Asia East Coast Mining Sdn. Bhd., a company engaged in gold mining.
In November 1991 Mr. Lok earned a Diploma in Electronic Engineering from the Federal Institute of Technology, Malaysia.
Calvin Chin - Chief Executive Officer
Mr. Chin was the Head of Finance for HCM-Hygenic Corporation (M) Sdn. Bhd. (US multinational corporation) located in Batu Gajah, Perak, Malaysia) from July 2004 to October 2015. Mr. Chin’s duties included leading and emerging the finance team and assisting the managing auditor in management of the daily business operations. Mr. Chin, acting as one of the local directors for the Malaysia entity and sat on the Board of Directors as part of a decision maker for the Malaysia business entity. Mr. Chin reported directly to the CFO based in the Unites States on the financial position of the Malaysia Corporation.
Mr. Chin was a lead auditor with Ernst & Young from 2004 to 2008 and has auditing experience in specializing in Manufacturing, retailing, plantation and property development industry.
Mr. Chin earned a Professional degree from the Association of Certified Chartered Accountants. (ACCA , UK)
M.W. “Jason” Chan - Chief Financial Officer
From August 2010 to September 2016, Mr. Chan managed a portfolio of audit clients with divergent operations, including but not limited to, public offerings, due diligence audits, restructuring and reverse takeovers for Baker Tilly Monteiro Heng, an accounting and audit firm located in Kuala Lumpur, as its Director of Transaction Reporting division.
S.N. Loh - Chief Operating Officer
From April 2012 to October 2015, Mr. Loh was the General Manager responsible for marketing, sales, business development and planning for WRP Asia Pacific Sdn. Bhd., a medical glove manufacturing company located in Malaysia. From August 2009 to March 2012, Mr. Loh was the Operations Director, responsible for factory operations, for Vinh Chanh Co. Ltd., a bio mass fuel supplier in Vietnam.
(f) Involvement in certain legal proceedings.
None of the Company’s executive officers or directors have been involved in any legal proceedings during the past ten (10) years.
(g) Promoters and control persons.
LYF & Son Realty Sdn. Bhd. is the Company’s controlling shareholder and is a Malaysian corporation. LYF & Son has not been a party to any legal proceedings at any time during the past ten (10) years.
Corporate Governance
Nominating Committee. We have not established a Nominating Committee because of our limited operations; and because we have only one director, we believe that we are able to effectively manage the issues normally considered by a Nominating Committee.
Audit Committee. We do not have an Audit Committee. The Company's board of directors performs some of the same functions of an Audit Committee, such as; recommending a firm of independent certified public accountants to audit the financial statements; reviewing the auditors' independence, the financial statements and their audit report; and reviewing management's administration of the system of internal accounting controls. The Company does not currently have a written audit committee charter or similar document.
Code of Ethics. We do not currently have a Code of Ethics in place for the Company, although our Board of Directors has developed a framework for adoption in the coming months. Our business operations are currently not complex and are very limited. The Company seeks advice and counsel from outside experts such as our lawyers and accountants on matters relating to corporate governance and financial reporting.
Item 11.
Item 11. Executive Compensation
Executive Compensation
The Company has not paid any compensation to any of its officers or directors and does not have any agreements in place or understandings to pay any compensation to its officers and directors.
Item 12.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
The following table sets forth certain information concerning the number of shares of our common stock owned beneficially as of March 14, 2017 by: (1) each person, or group of affiliated persons, who is known by us to beneficially own more than 5% of our common stock; (2) each of our directors and named executive officers; and (3) all of our current directors and executive officers as a group. Unless otherwise indicated, the stockholder listed possesses sole voting and investment power with respect to the shares shown.
(1)
Under Rule 13d-3, a beneficial owner of a security includes any person who, directly or indirectly, through any contract, arrangement, understanding, relationship, or otherwise has or shares: (i) voting power, which includes the power to vote, or to direct the voting of shares; and (ii) investment power, which includes the power to dispose or direct the disposition of shares. Certain shares may be deemed to be beneficially owned by more than one person (if, for example, persons share the power to vote or the power to dispose of the shares). In addition, shares are deemed to be beneficially owned by a person if the person has the right to acquire the shares (for example, upon exercise of an option) within 60 days of the date as of which the information is provided. In computing the percentage ownership of any person, the amount of shares outstanding is deemed to include the amount of shares beneficially owned by such person (and only such person) by reason of these acquisition rights. As a result, the percentage of outstanding shares of any person as shown in this table does not necessarily reflect the person’s actual ownership or voting power with respect to the number of shares of common stock actually outstanding on March 14, 2017. As of March 14, 2017, there were 720,802,346 shares of our company’s common stock issued and outstanding.
(2)
Lok Khing Ming, was appointed sole director of the Company effective December 12, 2014 and then appointed Chairman of the Board on October 5, 2016. Included in his 140,461,820 shares are 82,159,951 shares held by My Premier Trustee (Malaysia) Berhad for the sole benefit of Mr. Lok and 58,301,869 shares held by Victory Global Trustee Company Limited for the sole benefit of Mr. Lok.
(3) These shares, beneficially owned and controlled by Mr. Liew, are held in trust by MyPremier Trustee (Malaysia) Berhand.
Changes in Control
We are unaware of any contract or other arrangement or provisions of our Articles or Bylaws the operation of which may at a subsequent date result in a change of control of our company. There are not any provisions in our Articles or Bylaws, the operation of which would delay, defer, or prevent a change in control of our company.
Item 13.
Item 13. Certain Relationships and Related Transactions and Director Independence
During Fiscal Year 2015, there were no other material transactions between the Company and any officer, director or related party that has not been disclosed in Note 9 the financial statements.
Additionally, except as provided in the preceding sentence, there are no officers, directors or other related parties that since the date of incorporation, had any material interest, direct or indirect, in any transaction with us or in any presently proposed transaction that has or will materially affect us:
·
The Officers and Directors;  Any person proposed as a nominee for election as a director;  
·
Any other person who beneficially owns, directly or indirectly, shares carrying more than 5% of the voting rights attached to the outstanding shares of common stock;  
·
Any relative or spouse of any of the foregoing persons who have the same house as such person; and
·
 Any future transactions between us and our Officers, Directors, and Affiliates will be on terms no less favorable to us than can be obtained from unaffiliated third parties. Such transactions with such persons will be subject to approval of our Board of Directors.  
Item 14.
Item 14. Principal Accountant Fees and Services
The aggregate fees billed for the most recently completed fiscal year ended December 31, 2015 and for the fiscal year ended December 31, 2014 for professional services rendered by the principal accountant for the audit of our annual financial statements and review of the financial statements included in our quarterly reports on Form 10-Q and services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for these fiscal periods were as follows:
Our board of directors pre-approves all services provided by our independent auditors. All of the above services and fees were reviewed and approved by the board of directors either before or after the respective services were rendered.
Our board of directors has considered the nature and amount of fees billed by our independent auditors and believes that the provision of services for activities unrelated to the audit is compatible with maintaining our independent auditors’ independence.
PART IV
Item 15.
Item 15. Exhibits, Financial Statements, Schedules
(a) Financial Statements and Schedules.
The following documents have been filed as a part of this annual report on Form 10-K. The financial statements and schedules required to be filed hereunder are set forth at the end of this Annual Report on Form 10-K beginning on page, and are accompanied by a Financial Statements Index.
Exhibits.
The Exhibit Index attached behind the signature page is incorporated herein by reference.
FINANCIAL STATEMENTS INDEX
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
GMCI CORP.
(the "Registrant")
/s/ Calvin Chin
Name: Calvin Chin
Title: Chief Executive Officer
Date: May 24, 2017
/s/ M.W. Chan
Name: M.W. Chan
Title: Chief Financial Officer
Date: May 24, 2017
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
Date:
May 24, 2017
By:
/s/ Lok Khing Ming
Name:
Lok Khing Ming
Title:
Sole Director and Chairman of the Board
EXHIBIT INDEX
Certain of the following exhibits are incorporated by reference from prior filings. The form with which each exhibit was filed and the date of filing are as indicated below.