10-Q 1 advancedcloudstorageincform1.htm ADVANCED CLOUD STORAGE 10-Q 09-30-2012 ADVANCED CLOUD STORAGE, INC.

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549


FORM 10-Q


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


For the quarterly period ended September 30, 2012 or


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


For the transition period from _________ to ___________


333-173537

Commission File Number


ADVANCED CLOUD STORAGE, INC.

(Exact name of registrant as specified in its charter)


Nevada

27-4004890

(State or other jurisdiction of incorporation or organization)

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

112 North Curry Street Nevada

89703-4934

(Address of principal executive offices)

(Zip Code)


775-284-3703

(Registrant’s telephone number, including area code)


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


Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). [ ] Yes [X] No


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


Large accelerated filer [ ]

 Accelerated filer [ ]


Non-accelerated filer [ ] (Do not check if a smaller reporting company)

 Smaller reporting company [X]


Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). [X] Yes [ ] No


Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date. As of November 5,  2012 , Advanced Cloud Storage, Inc. had 10,237,250 shares of common stock issued and outstanding.




359898.2



Table of Contents


PART I-FINANCIAL INFORMATION


Item 1. Financial Statement.

2


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

10


Item 3. Quantitative and Qualitative Disclosures About Market Risk.

10


Item 4. Controls and Procedures.

11


PART II—OTHER INFORMATION

12


Item 1. Legal Proceedings.

12


Item 1A. Risk Factors.

12


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

12


Item 3. Defaults Upon Senior Securities.

12


Item 4. Mine Safety Disclosures.

12


Item 5. Other Information.

12


Item 6. Exhibits.

12


SIGNATURES









1

356535v2



PART I-FINANCIAL INFORMATION




Item 1. Financial Statement.



ADVANCED CLOUD STORAGE, INC.

 (A development stage company)


FINANCIAL STATEMENTS


September 30, 2012

(Unaudited)




BALANCE SHEETS

3

 

 

STATEMENTS OF OPERATIONS

4

 

 

STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)

5

 

 

STATEMENTS OF CASH FLOWS

6

 

 

NOTES TO AUDITED FINANCIAL STATEMENTS

7



2

356535v2



ADVANCED CLOUD STORAGE, INC.

 (A development stage company)


 BALANCE SHEETS


 

September 30,

2012

March 31,

2011

 

(unaudited)

(audited)

ASSETS

 

 

 

CURRENT ASSETS

 

 

     Cash

$                  -

$                290

     Prepaid

2,099

949

 

 

 

TOTAL CURRENT ASSETS

$        2,099 

 $            1,239

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)

 

 

 

CURRENT LIABILITIES

 

 

Accounts payable and accrued liabilities

$          8,834

$             5,000

     Shareholders loans -due to related party (Note 4)

9,809

7,999

 

 

 

 TOTAL CURRENT LIABILITIES

18,643 

12,999

 

 

 

 

 

 

STOCKHOLDERS’ EQUITY (DEFICIT)

 

 

Capital stock

 

 

Authorized

 

 

75,000,000 shares of common stock, $0.001 par value,

 

 

Issued and outstanding

 

 

10,237,250 shares of common stock at September 30, 2012, (March 31, 2012 –               10,237,250)

10,237 

10,237 

      Additional paid in capital

                 9,253

9,253

Deficit accumulated during the development stage

(36,034)

(31,250)

 

 

 

TOTAL  STOCKHOLDERS’ EQUITY (DEFICIT)

(16,544)

(11,760)

 

 

 

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)

$        2,099 

$            1,239 

 

 

 

 

 

 


 



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



3

356535v2



ADVANCED CLOUD STORAGE, INC.

 (A development stage company)


STATEMENTS OF OPERATIONS

(Unaudited)

 

Three Months Ended

September 30



Six Months Ended

September 30

November 18, 2010 (inception) to September 30,

 

  2012

2011

2012

2011

2012

 

 

 

 

 

 

REVENUE

$             -

$               -

$                -

$              -

       $                -                   

 

 

 

 

 

 

EXPENSES

 

 

 

 

 

     Office and general

$2,209

$        4,916 

$     3,284

$      6,067 

$    13,560 

Professional fees

1,500

3,894 

1,500

7,224

22,474 

 

 

 

 

 

 

TOTAL EXPENSES

3,709

8,810

4,784

13,291

36,034

 

 

 

 

 

 

NET LOSS

$    (3,709)

$    (8,810)

$     (4,784)

$   (13,291)

$   (36,034)




BASIC AND DILUTED LOSS PER COMMON SHARE



$      (0.00)



$     (0.00)



$    (0.00)



$   (0.00)

 

 

 

 

 

WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING

-BASIC AND DILUTED



10,237,250



10,000,000



10,237,250



10,000,000



 



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






4

356535v2



ADVANCED CLOUD STORAGE, INC.

 (A development stage company)


 STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)

FOR THE PERIOD FROM NOVEMBER 18, 2010 (INCEPTION) TO SEPTEMBER 30, 2012

(Unaudited)



Common Stock

Additional



Share


Deficit Accumulated During the

 

Number of shares

Amount

Paid-in Capital

Subscription Receivable

Development Stage

Total

 

 

 

 

 

 

 

 Founder shares issued for cash –

   at $0.001 per share, February 2, 2011


10,000,000 


$ 10,000 


$            - 


             - 


    $       - 


$   10,000 

 

 

 

 

 

 

 

Net loss for the year end March 31, 2011

(8,710)

(8,710)

 

 

 

 

 

 

 

Balance, March 31, 2011

10,000,000 

10,000 

(8,710)

1,290 

 

 

 

 

 

 

 

Shares issued for cash-

 

 

 

 

 

 

At $0.04 per share September 1, 2011

237,250

237

9,253

-

-

9,490

 

 

 

 

 

 

 

Net loss for the year end March 31, 2012

(22,540)

(22,540)

 

 

 

 

 

 

 

Balance, March 31, 2012

10,237,250

10,237

9,253

-

(31,250)

(11,760)

 

 

 

 

 

 

 

Net loss for the period ended September 30, 2012


-


-


-


-


(4,784)


(4,784)

 

 

 

 

 

 

 

Balance, September 30, 2012

10,237,250 

$  10,237

$     9,253 

$             - 

$   (36,034)

$     (16,544)



 



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



5

356535v2



ADVANCED CLOUD STORAGE, INC.

 (A development stage company)


 STATEMENTS OF CASH FLOWS

(Unaudited)

 



Six months ended

September 30,

 2012



Six months ended

September 30,

2011


Inception (November 18, 2010) to September 30,

2012

 

 

 

 

OPERATING ACTIVITIES

 

 

 

Net loss for the period

$        (4,784)

$      (13,291)

$     (36,034)

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

 

 

 

  Changes in operating assets and liabilities:

 

 

 

       Expenses paid on company’ behalf by related party

             1,810

2,499

5,759

       Prepaid expenses

(1,150)

(3,374)

(2,099)

   Accounts payable and accrued liabilities

          3,834

(1,043)

8,834 

 

 

 

 

NET CASH USED IN OPERATING ACTIVITIES

(290)

(15,209)

(23,540)

 

 

 

 

FINANCING ACTIVITIES

 

 

 

Proceeds on sale of common stock

 - 

19,490 

   Proceeds from shareholder loans – related parties

             -

10,040

4,050 

 

 

 

 

NET CASH PROVIDED BY FINANCING ACTIVITIES

10,040

23,540

 

 

 

 

NET INCREASE (DECREASE) IN CASH

(290) 

(5,169)

 

 

 

 

CASH, BEGINNING

290 

5,640

 

 

 

 

CASH, ENDING

$              - 

$      471

$              - 

 

 

 

 

SUPPLEMENTAL CASH FLOW INFORMATION AND NON-CASH INVESTING AND FINANCING ACTIVITIES


Cash paid during the period for:

 

 

 

     Interest

$                  - 

$                  - 

$                  - 

 

 

 

 

     Income taxes

$                  - 

$                  - 

$                  - 

 

 

 

 

 



The accompanying notes are an integral part of these financial statements




 

6

356535v2


ADVANCED CLOUD STORAGE, INC.

(a development stage company)

NOTES TO UNAUDITED CONDENSED INTERIM FINANCIAL STATEMENTS

September 30, 2012 (Unaudited)

NOTE 1 – NATURE OF OPERATIONS AND BASIS OF PRESENTATION


Advanced Cloud Storage, Inc. (the “Company”) was incorporated in the State of Nevada on November 18, 2010. The Company is in the initial development stage and was organized to engage in the business of online data storage.


Unaudited Financial Statements

The accompanying unaudited financial statements have been prepared in accordance with generally accepted accounting principles for financial information and with the instructions to Form 10-Q.  They do not include all information and footnotes required by United States generally accepted accounting principles for complete financial statements.  However, except as disclosed herein, there has been no material changes in the information disclosed in the notes to the financial statements for the year ended March 31, 2012 included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission.  The unaudited financial statements should be read in conjunction with those financial statements included in the Form 10-K. In the opinion of Management, all adjustments considered necessary for a fair presentation, consisting solely of normal recurring adjustments, have been made. Operating results for the six months ended September 30, 2012 are not necessarily indicative of the results that may be expected for the year ending March, 2013.


NOTE 2 – GOING CONCERN


Going concern

To date the Company has generated no revenues from its business operations and has incurred operating losses since inception of $36,034.  As at September 30, 2012, the Company has a working capital deficit of $16,544.  The Company requires additional funding to meet its ongoing obligations and to fund anticipated operating losses.  The ability of the Company to continue as a going concern is dependent on raising capital to fund its initial business plan and ultimately to attain profitable operations.  Accordingly, these factors raise substantial doubt as to the Company’s ability to continue as a going concern.  The Company intends to continue to fund its online data storage business by way of private placements and advances from related parties as may be required. These financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts, or amounts and classification of liabilities that might result from this uncertainty.


NOTE 3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES


Basic Income (Loss) Per Share

The Company computes loss per share in accordance with “ASC-260,” “Earnings per Share” which requires presentation of both basic and diluted earnings per share on the face of the statement of operations. Basic loss per share is computed by dividing net loss available to common shareholders by the weighted average number of outstanding common shares during the period. Diluted loss per share gives effect to all dilutive potential common shares outstanding during the period. Dilutive loss per share excludes all potential common shares if their effect is anti-dilutive.


Use of Estimates

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 the financial statements and the reported amount of revenues and expenses during the reporting period. Actual results could differ from those estimates.






7


ADVANCED CLOUD STORAGE, INC.

(a development stage company)

NOTES TO UNAUDITED CONDENSED INTERIM FINANCIAL STATEMENTS

September 30, 2012 (Unaudited)


 

Fair value of financial instruments

The estimated fair values of financial instruments were determined by management using available market information and appropriate valuation methodologies. The carrying amounts of financial instruments including cash approximate their fair value because of their short maturities.


Revenue and Cost Recognition


The Company has no current source of revenue; therefore the Company has not yet adopted any policy regarding the recognition of revenue or cost.


Property


The Company does not own or rent any property.  The office space is provided by the president at no charge.


Advertising


Advertising costs are expensed as incurred.  As of September 30, 2012 and 2011, no advertising costs have been incurred.  


Recent pronouncements

The Company has evaluated all recent accounting pronouncements and believes that none will have a material effect on the company’s financial statements.


NOTE 4 – DUE TO RELATED PARTY


At September 30, 2012, the Company has received $9,809 (March 31, 2012 - $7,999) as a loan from the president of the Company. The loan is unsecured, payable on demand and bears no interest.


NOTE 5 – STOCKHOLDERS’ DEFICIT


The Company’s capitalization is 75,000,000 common shares with a par value of $0.001 per share. No preferred shares have been authorized or issued. As of September 30, 2012 there were 10,237,250 (March 31, 2012 – 10,237,250) common shares issued and outstanding.


On February 2, 2011, the Company issued 10,000,000 founder’s shares at $0.001 per share, with net proceeds to the Company of $10,000.


On September 1, 2011, the Company issued 237,250 shares at $0.04 per share, with net proceeds to the Company of $9,490.


As of September 30, 2012, the Company has not granted any stock options and has not recorded any stock-based compensation.


NOTE 6 – PREPAID


As of September 30, 2012, there was $2,099 (March 31, 2012 – $949), in prepaid expenses, made up of SEC compliance costs. It is expected to be expensed within the next nine months.




8




ADVANCED CLOUD STORAGE, INC.

(a development stage company)

NOTES TO UNAUDITED CONDENSED INTERIM FINANCIAL STATEMENTS

September 30, 2012 (Unaudited)

NOTE 7 – SUBSEQUENT EVENTS


The Company has evaluated subsequent events from the balance sheet date through the date the financial statements were issued and has determined no further events to disclose.









9




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


This section of the Registration Statement includes a number of forward-looking statements that reflect our current views with respect to future events and financial performance. Forward-looking statements are often identified by words like believe, expect, estimate, anticipate, intend, project and similar expressions, or words which, by their nature, refer to future events. You should not place undue certainty on these forward-looking statements. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from our predictions.


Results of Operations


For the period from inception through September 30, 2012 we had no revenue. Expenses for the three months ended September 30, 2012 totaled $3709 as compared to expenses of $8,810 from September 30, 2011 resulting in a Net loss of $3,709. The operating loss for the three months ended September 30, 2012 for professional fees was $1,500 as compared to $3894 for the three months ended September 30, 2011 and office and general expense for the three months ended September 30, 2012 in the amount of $2,209 as compared to $4,916 for the three months ended September 30, 2011.


Capital Resources and Liquidity


Our auditors have issued a “going concern” opinion, meaning that there is substantial doubt if we can continue as an on-going business for the next twelve months unless we obtain additional capital. No substantial revenues are anticipated until we have completed the financing from this offering and implemented our plan of operations. With the exception of cash advances from our sole Officer and Director, our only source for cash at this time is investments by others in this offering. We must raise cash to implement our strategy and stay in business. The amount of the offering will likely allow us to operate for at least one year.


As of September 30, 2012, we had $0 in cash and prepaid expenses of $2,099 totaling $2,099 in assets as compared to $1,239 in total assets for March 31, 2011. The funds available to the Company will not be sufficient to fund the planned operations of the Company and maintain a reporting status. The Company’s sole officer and director, Mr. Meyer has indicated that he may be willing to provide a maximum of $25,000, required to fund the offering expenses and maintain the reporting status, in the form of a non-secured loan for the next twelve months as the expenses are incurred if no other proceeds are obtained by the Company. However, there is no contract or written agreement in place.


We do not anticipate researching and releasing any further features to our software nor do we foresee the purchase or sale of any significant equipment. We also do not expect any significant additions to the number of employees.


Off-balance sheet arrangements


Other than the situation described in the section titled Capital Recourses and Liquidity, the company has no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect or change on the company’s financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors. The term “off-balance sheet arrangement” generally means any transaction, agreement or other contractual arrangement to which an entity unconsolidated with the company is a party, under which the company has (i) any obligation arising under a guarantee contract, derivative instrument or variable interest; or (ii) a retained or contingent interest in assets transferred to such entity or similar arrangement that serves as credit, liquidity or market risk support for such assets

Item 3. Quantitative and Qualitative Disclosures About Market Risk.


The Company is a smaller reporting Company as defined by Rule 12b-2 of the Securities Act of 1934 and are not required to provide the information under this item.



10




Item 4. Controls and Procedures.


The management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting, as required by Section 404(a) of the Sarbanes-Oxley Act of 2002 (SOX). The Company’s internal control over financial reporting is a process designed under the supervision of the Company’s Chief Executive Officer and Chief Financial Officer to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the Company’s financial statements for external purposes in accordance with U.S. generally accepted accounting principles.


As of September 30, 2012, management assessed the effectiveness of the Company’s internal control over financial reporting based on the criteria for effective internal control over financial reporting established in SEC guidance on conducting such assessments. Based on that evaluation, our principle executive officer, also acting as our principle financial officer concluded that, during the period covered by this report, such internal controls and procedures were not effective to detect the inappropriate application of US GAAP rules as more fully described. below. This was due to deficiencies that existed in the design or operation of our internal control over financial reporting that adversely affected our internal controls and that may be considered to be material weaknesses.


The matters involving internal controls and procedures that the Company’s management considered to be material weaknesses under the standards of the Public Company Accounting Oversight Board were: (1) lack of a functioning audit committee and lack of a majority of outside directors on the Company's board of directors, resulting in ineffective oversight in the establishment and monitoring of required internal controls and procedures; (2) inadequate segregation of duties consistent with control objectives; (3) insufficient written policies and procedures for accounting and financial reporting with respect to the requirements and application of US GAAP and SEC disclosure requirements; and (4) ineffective controls over period end financial disclosure and reporting processes. The aforementioned material weaknesses were identified by the Company's Chief Financial Officer in connection with the review of our financial statements as of September 30, 2012 and communicated to our management.


Management believes that the material weaknesses set forth in items (2), (3) and (4) above did not have an effect on the Company's financial results. However, management believes that the lack of a functioning audit committee and lack of a majority of outside directors on the Company's board of directors, resulting in ineffective oversight in the establishment and monitoring of required internal controls and procedures can result in the Company's determination to its financial statements for the future years. We are committed to improving our financial organization. As part of this commitment, we will create a position to segregate duties consistent with control objectives and will increase our personnel resources and technical accounting expertise within the accounting function when funds are available to the Company: i) Appointing one or more outside directors to our board of directors who shall be appointed to the audit committee of the Company resulting in a fully functioning audit committee who will undertake the oversight in the establishment and monitoring of required internal controls and procedures; and ii) Preparing and implementing sufficient written policies and checklists which will set forth procedures for accounting and financial reporting with respect to the requirements and application of US GAAP and SEC disclosure requirements.


Management believes that the appointment of one or more outside directors, who shall be appointed to a fully functioning audit committee, will remedy the lack of a functioning audit committee and a lack of a majority of outside directors on the Company's Board. In addition, management believes that preparing and implementing sufficient written policies and checklists will remedy the following material weaknesses (i) insufficient written policies and procedures for accounting and financial reporting with respect to the requirements and application of US GAAP and SEC disclosure requirements; and (ii) ineffective controls over period end financial close and reporting processes. Further, management believes that the hiring of additional personnel who have the technical expertise and knowledge will result proper segregation of duties and provide more checks and balances within the department. Additional personnel will also provide the cross training needed to support the Company if personnel turn over issues within the department occur. This coupled with the appointment of additional outside directors will greatly decrease any control and procedure issues the company may encounter in the future.


We will continue to monitor and evaluate the effectiveness of our internal controls and procedures and our internal controls over financial reporting on an ongoing basis and are committed to taking further action and implementing additional enhancements or improvements, as necessary and as funds allow.



11





There have been no significant changes in our internal controls over financial reporting that occurred during the transition period ended September 30, 2012 that have materially affected or are reasonably likely to materially affect, our internal controls over financial reporting.


PART II—OTHER INFORMATION

Item 1. Legal Proceedings.


The Company is not a party to any pending legal proceedings, and no such proceedings are known to be contemplated.


No director, officer, or affiliate of the Company and no owner of record or beneficial owner of more than 5.0% of the securities of the Company, or any associate of any such director, officer or security holder is a party adverse to the Company or has a material interest adverse to the Company in reference to pending litigation.

Item 1A. Risk Factors.


We are a smaller reporting company as defined by Rule 12b-2 of the Securities Act of 1934 and are not required to provide the information under this item.

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


None.

Item 3. Defaults Upon Senior Securities.

 

None.

Item 4.

Mine Safety Disclosures.


Not applicable.


Item 5. Other Information.


None.

Item 6. Exhibits.


 

 

31.1

Rule 13(a)-14(a)/15(d)-14(a) Certification of Chief Executive Officer

 

 

31.2

Rule 13(a)-14(a)/15(d)-14(a) Certification of Chief Financial Officer *

 

 

32.1

Section 1350 Certification of Chief Executive Officer

 

 

32.2

Section 1350 Certification of Chief Financial Officer **

 


101.INS
XBRL Instance Document

101.SCH
XBRL Taxonomy Extension Schema Document

101.CAL
XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF
XBRL Taxonomy Extension Definition Linkbase Document

101.LAB
XBRL Taxonomy Extension Label Linkbase Document

101.PRE
XBRL Taxonomy Extension Presentation Linkbase Document

 


 

* Included in Exhibit 31.1

** Included in Exhibit 32.1



SIGNATURES


Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.




12




Advanced Cloud Storage, Inc.

(Registrant)

Date: November 5, 2012


By:/s/ George Fredrik Meyer
Name:  George Fredrik Meyer

Title:  President, Secretary, Treasurer (Principal Executive Officer and Principal Financial Officer)





 

13